BMW Industries Limited Vs DCIT (ITAT Kolkata)
ITAT Kolkata Deletes Penalties u/s 271(1)(c): No Penalty Where Income Already Disclosed and Additions Lead to Double Taxation
The Kolkata Bench of the ITAT allowed the appeals of BMW Industries Ltd. for AYs 2012-13, 2015-16 and 2016-17, deleting penalties levied under section 271(1)(c) in respect of additions made under sections 68, 36(1)(va) and 40A(7). The Tribunal held that where sales and other items were duly recorded in the books and offered to tax, subsequent recharacterisation or addition by the Assessing Officer could not give rise to penalty for concealment or furnishing of inaccurate particulars.
For AY 2012-13 and 2015-16, the Tribunal noted that sales treated as bogus and added again under section 68 had already been included in business income, resulting in impermissible double taxation. Relying on the Supreme Court ruling in Mahaveer Kumar Jain, it held that income cannot be taxed twice in the absence of express legislative sanction. Applying Explanation 4 to section 271(1)(c), the ITAT observed that since there was no difference between returned income and assessed income after excluding such double additions, the “tax sought to be evaded” was nil and penalty was not leviable.
With respect to penalties arising from disallowance of delayed PF/ESI contributions and provision for gratuity, the Tribunal held that all material facts were fully disclosed in the audited accounts and returns. Following CIT v. Reliance Petroproducts Pvt. Ltd., it reiterated that a disallowance or an unsustainable claim in law, by itself, does not amount to concealment or furnishing of inaccurate particulars.
For AY 2016-17, even in respect of additions under section 68 relating to unsecured loans, the Tribunal found that the assessee had furnished complete details to discharge the onus and that non-response to section 133(6) notices by lenders could not justify penalty. Accordingly, all penalties were deleted and the appeals were allowed in full.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
