The Commissioner Of Income Tax, Alwar v. Gillette India Ltd., 65-A, Bhiwadi Industrial Area, Bhiwadi, Distt. Alwar

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No.641/2011 The Commissioner of Income Tax, Alwar. ----Appellant Versus Gillette India Ltd., 65-A, Bhiwadi Industrial Area, Bhiwadi, Distt. Alwar. ----Respondent _____________________________________________________ For Petitioner(s) : Mrs. Parinitoo JainFor Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 06/12/2017 1.By way of this appeal, the appellant has assailed thejudgment and order of the tribunal whereby tribunal has dismissedthe appeal of the department and allowed the appeal of theassessee. 2.This court while admitting the appeal on 30.3.2015 framedfollowing substantial question of law:- “(2) Whether the Tribunal was legallyjustified in cancelling the penalty levied u/s271(1)(c) of Rs.1,17,46,000/- out of whichpenalty of Rs.78,30,667/- was upheld bythe CIT(A)?” 3.The facts of the case are that the impugned assessment year it came to the notice of the AO that the assessee had claimedexcess loss in profit and loss account under the head Foreign Exchange Fluctuation. It was found by the AO that the assesseecould claim a loss of Rs.2,06,31,512/- which pertained to the yearunder consideration and the balance of Rs.1,51,31,726/- inrespect of the earlier year could not be claimed as loss when thebooks of accounts were maintained on mercantile system. 4.Taking into consideration the observations made by thetribunal while considering the penalty which reads as under:- “2.8 We have perused the assessmentorder. In the assessment order, the AOwhile initiating penalty has mentioned thatthe claim of the assessee company isdubious nature having colourful device toavoid tax. Therefore, the penaltyproceedings have been initiated for thewhole disallowances. However, the AOwhile passing the penalty order u/s 271(1)(c) has considered the difference betweenthe foreign exchange fluctuation claimedoriginally on the basis of principle ofdeferred expenditure and the claim onaccrual basis. Since the assessee alreadyclaimed the loss on foreign exchangefluctuation on accural basis for earlieryears, therefore, it was but natural to havemade less claim in respect of foreignexchange fluctuation. Thus the basis onwhich penalty proceedings were initiated,have not been considered for the purposeof imposing penalty because the additionhas not been confirmed on the ground thatthe claim was a colourful device. From thefacts on record, it is very much clear thatrevised claim is supported by sufficientexplanation and reasons. The explanationas given by the assessee is neither falsenor the assessee has also not been able tosubstantiate the explanation. Hence, it isnot the case where penalty is required tobe imposed. We, therefore, hold that theld. CIT(A) was not justified in holding that the imposition of penalty. Thus the penaltyimposed by the AO is cancelled.” 5.We are in complete agreement with the view taken by thetribunal. Therefore, the issue is answered in favour of theassessee and against the department. 6.The appeal stands dismissed. (VIJAY KUMAR VYAS) J. (K.S. JHAVERI)J. Brijesh 77.