2018 (11) TMI 989 - AT - Income Tax

Assessee's Appeal Partly Allowed, Revenue's Appeal Dismissed: Penalties Upheld for Inaccurate Particulars

M/s. Dishman Pharmaceuticals & Chemicals Ltd. Versus The ACIT, (OSD) Range – 1, Ahmedabad And (Vice-Versa)

M/s. Dishman Pharmaceuticals & Chemicals Ltd. Versus The ACIT, (OSD) Range – 1, Ahmedabad And (Vice-Versa) - [2018] 67 ITR (Trib) 578 Issues Involved:1. Provision for Doubtful Debts2. Foreign Exchange Fluctuation Loss3. Penalty Expenses4. Addition under Section 2(22)(e) of the Act5. Deduction under Section 80G6. Transfer Pricing Addition7. Prior Period Income8. Miscellaneous Expenses Written Off9. Excess Depreciation on Electric Installation10. Disallowance under Section 14A11. Disallowance under Section 40(a)(i)12. Disallowance under Section 10BIssue-Wise Detailed Analysis:1. Provision for Doubtful Debts:The assessee claimed a deduction for the provision for doubtful debts, which was not eligible under Section 36(2) of the Act. The AO and CIT(A) confirmed the addition. The Tribunal noted that the assessee furnished inaccurate particulars of income, thus upholding the penalty under Section 271(1)(c).2. Foreign Exchange Fluctuation Loss:The Tribunal set aside the penalty issue to the AO for fresh adjudication, as the quantum addition was also set aside for re-adjudication in light of the Hon'ble Supreme Court's judgment.3. Penalty Expenses:The penalty was confirmed by the AO and CIT(A) due to the disallowance of penalty expenses claimed by the assessee. The Tribunal upheld the penalty, citing the Hon'ble Delhi High Court's judgment in Zoom Communication Pvt. Ltd., which addressed the furnishing of inaccurate particulars of income.4. Addition under Section 2(22)(e) of the Act:The Tribunal noted that the quantum addition was deleted by the Hon'ble ITAT in the assessee's own case. Consequently, the penalty under Section 271(1)(c) was not sustainable and was deleted.5. Deduction under Section 80G:The Tribunal observed that the quantum addition was deleted by the Hon'ble ITAT in the assessee's own case. Therefore, the penalty under Section 271(1)(c) was not sustainable and was deleted.6. Transfer Pricing Addition:The penalty was levied on two components: Interest on loan and Insurance. The quantum addition on interest was deleted by the Hon'ble ITAT, thus the penalty was not sustainable. For the insurance expenses, the Tribunal held that there was no concealment of income or furnishing inaccurate particulars, thus upholding the CIT(A)'s decision to delete the penalty.7. Prior Period Income:The Tribunal noted that the quantum addition was deleted by the Hon'ble ITAT in the assessee's own case. Therefore, the penalty under Section 271(1)(c) was not sustainable and was deleted.8. Miscellaneous Expenses Written Off:The addition was made on an ad hoc basis, which the Hon'ble Gujarat High Court in Navjivan Oil Mills vs. CIT held that penalty cannot be sustained on such additions. The Tribunal upheld the deletion of the penalty.9. Excess Depreciation on Electric Installation:The addition was due to the rate of depreciation applied by the assessee. The Tribunal, following the judgment in Lala Harbhagwan Das & Memorial & Dr. Prem Hospital (P.) Ltd. Vs. CIT, held that no penalty is leviable on such additions and upheld the deletion of the penalty.10. Disallowance under Section 14A:The Tribunal cited the Hon'ble Supreme Court's judgment in Reliance Petro Products Ltd., which held that no penalty is leviable for disallowances made under Section 14A. Thus, the penalty was deleted.11. Disallowance under Section 40(a)(i):The quantum addition was deleted by the Hon'ble ITAT in the assessee's own case. Consequently, the penalty under Section 271(1)(c) was not sustainable and was deleted.12. Disallowance under Section 10B:The quantum addition was deleted by the Hon'ble ITAT in the assessee's own case. Therefore, the penalty under Section 271(1)(c) was not sustainable and was deleted.Conclusion:The Tribunal partly allowed the assessee's appeal for statistical purposes and dismissed the Revenue's appeal, resulting in the deletion of penalties where the quantum additions were deleted or where the penalties were not sustainable based on legal precedents.