Case Number: ITA 3018/DEL/2022
Appellant: Hindustan Coca-Cola Beverages Co. P. Ltd., Gurugram
Respondent: JCIT, Range-74, New Delhi
Assessment Year: 2005-06
Case Filed On: 2022-12-26
Order Type: Final Tribunal Order
Date of Order: 2023-01-17
Pronounced On: 2023-01-17
In the case of Hindustan Coca-Cola Beverages Co. P. Ltd. vs. JCIT, Range-74, New Delhi, the appellant, Hindustan Coca-Cola Beverages Co. P. Ltd., challenged the penalty levied under Section 271C of the Income-tax Act for the assessment year 2005-06. The case was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘B’ on 11th January 2023, with the final order pronounced on 17th January 2023.
The appeal arose from the order passed by the Commissioner of Income-tax (Appeals) dated 3rd November 2022. The appellant, represented by Shri Sachit Jolly and Shri Soham Dua, Advocates, argued that the penalty of Rs.1,05,36,376 was imposed without proper justification and that the penalty proceedings were initiated after an unreasonable delay of 14 years.
The appellant’s counsel contended that the penalty proceedings were barred by limitation and initiated after an unreasonable period. They argued that the penalty was imposed based on the assessment completed under Section 143(3) of the Act on 17th December 2008, and that the Joint Commissioner of Income Tax (JCIT) had knowledge of the disallowance under Section 40(a)(i) since prior to that date. They further contended that the penalty proceedings initiated in 2019 were beyond the permissible time limit.
The appellant also argued that there was a reasonable cause for the failure to deduct tax at source, as the disallowances were made on year-end provisions created on estimations. They cited various judicial precedents to support their claims that the penalty should not be levied in such circumstances.
The ITAT bench, comprising Shri Shamim Yahya (Accountant Member) and Ms. Astha Chandra (Judicial Member), found in favor of the appellant. The tribunal agreed that the penalty proceedings were initiated after an unreasonable delay and were therefore time-barred. They cited the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. NHK Japan Broadcasting and Bharti Airtel vs. UOI, which supported the appellant’s contention that penalty proceedings must be initiated within a reasonable period.
The tribunal also noted that the penalty order was passed beyond the six-month limitation period from the initiation of the proceedings, as required under Section 275 of the Act. The penalty order was issued on 31st October 2019, whereas it should have been issued by 30th September 2019 based on the initiation date of 27th March 2019.
As a result, the tribunal set aside the orders of the lower authorities and deleted the penalty levied under Section 271C.
The ITAT’s decision underscores the importance of adhering to the statutory time limits for initiating and completing penalty proceedings. It also highlights the necessity of providing a reasonable cause for non-compliance with tax provisions and the need for a fair and timely assessment process.
Order Pronounced: In the open court on 17th January 2023.
Bench: Shri Shamim Yahya, Accountant Member and Ms. Astha Chandra, Judicial Member
Copy forwarded to:
Date of Hearing: 11th January 2023
Date of Order: 17th January 2023
The appellant, Hindustan Coca-Cola Beverages Co. P. Ltd., filed an application on 26th December 2022 against the order dated 3rd November 2022 by the CIT (Appeals), challenging the penalty levied by the JCIT under Section 271C for the assessment year 2005-06.
The tribunal considered the appellant’s arguments and decided to remit the issues back to the JCIT for verification and fresh adjudication, ensuring that the appellant is given an adequate opportunity to present their case.
The tribunal’s decision emphasizes the need for due process and fairness in tax assessments, allowing taxpayers to correct errors and provide necessary documentation to substantiate their claims.
Overall, the ITAT’s order serves as a reminder of the importance of accurate and fair assessment procedures in tax matters, ensuring that all parties are given a fair chance to present their case and that decisions are made based on thorough verification and consideration of all relevant facts.
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