Itta/108/2014 Of The Commissioner Of Income Tax-Iv v. Natco Pharma Ltd

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. NO.108 OF 2014 DATED:25.2.2014 Between: The Commissioner of Income Tax – IVHyderabad … Appellant And M/s. Natco Pharma Limited‘Natco House’, Road No.2Banjara HillsHyderabad … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA ANDTHE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. NO.108 OF 2014 JUDGMENT:(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be preferred against the judgment andorder of the learned Tribunal dt.22.2.2013 and sought to be admittedon the following suggested questions of law: 1.Whether on the facts and in the circumstances of the case, theITAT was justified in law in holding that the reasons offered by theassessee are bona fide and supported by reasonable causeignoring the fact that the assessee has deliberately furnishedinaccurate particulars of his income, by reflecting boguspurchases and sales, and claiming a fictitious loss ofRs.1,17,43,125/-, in addition to bogus commission payments onsuch transactions, which would not have come to light except forthe search & seizure operation conducted on him ?ITAT was justified in law in holding that the reasons offered by theassessee are bona fide and supported by reasonable causeignoring the fact that the assessee has deliberately furnishedinaccurate particulars of his income, by reflecting boguspurchases and sales, and claiming a fictitious loss ofRs.1,17,43,125/-, in addition to bogus commission payments onsuch transactions, which would not have come to light except forthe search & seizure operation conducted on him ? 2.Whether on the facts and in the circumstances of the case, theITAT was correct in ignoring the fact that this was a well-plannedand deliberate act by the appellant to create a web of falseevidence and make a fraudulent claim of loss ?ITAT was correct in ignoring the fact that this was a well-plannedand deliberate act by the appellant to create a web of falseevidence and make a fraudulent claim of loss ? We have heard Sri J.V. Prasad, learned counsel for theappellant, and gone through the impugned judgment and order of thelearned Tribunal. The learned Tribunal on facts observed as follows: “…The fact that the tax audit report was filed along with the return andthat it unequivocally stated that the provision for payment was not allowableunder section 40A(7) of the Act indicated that the assessee made acomputation error in its return of income. The contents of the tax audit reportsuggested that there was no question of the assessee concealing its incomeor of the assessee furnishing any inaccurate particulars. Apart from the factthat the assessee did not notice the error, it was not even noticed even bythe Assessing Officer who framed the assessment order. All that hadhappened was that through a bona fide and inadvertent error, the assessee while submitting its return, failed to add the provision for gratuity to its totalincome. The assessee should have been careful but the absence of duecare, in a case such as the present, did not mean that the assessee wasguilty of either furnishing inaccurate particulars or attempting to conceal itsincome.” After concluding thus, the learned Tribunal recorded its findingas under: “We find the reasons offered by the assessee are bona fide andsupported by reasonable cause and acceptable”. In view of the aforesaid fact finding, we think that the learnedTribunal has correctly concluded that the pre-conditions for imposingpenalty are not satisfied. The question of fact cannot be scrutinized byus in this appeal. Hence, we dismiss the appeal. There will be no order as tocosts. ________________________ K.J. SENGUPTA, CJ _______________________ SANJAY KUMAR, J 25.2.2014 bnr