M/s Shri Ram Krupa Corporation, RAJKOT-GUJARAT V. The Income Tax Officer, Ward 2(4), RAJKOT-GUJARAT

CO 34/RJT/2010

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2555 (ITAT-RAJKOT)
• Duration Of Justice: 11 year(s) 2 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-10-2021
• Assessment Year: 2003-2004
• Appeal Filed On: 13-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RATHI
• Assessee Lawyers: RM MANEK
• Keywords: Income from undisclosed sources
• Section: 271(1)(c); 143(3); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (THROUGH VIRTUAL COURT) BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ./C.O. NO. 34/RJT/2010 (IN ITA NO. 768/RJT/2010) ( / ASSESSMENT YEAR: 2003-04) M/S. SHRI RAMKRUPA CORPORATION 7, LATI PLOT, KUVADAVA ROAD, RAJKOT / VS. ITO WARD-2(4), RAJKOT ./ ./PAN/GIR NO. : AAQFS1834G ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R. M. MANEK, AR / RESPONDENT BY : SHRI S. S. RATHI, SR. DR / DATE OF HEARING 06/10/2021 / DATE OF PRONOUNCEMENT 29/10/2021 !' /O R D E R PER MADHUMITA ROY, JM: THE CROSS OBJECTION FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER DATED 11.12.2009 PASSED BY THE LD. CIT(A)-III, RAJK OT ARISING OUT OF THE PENALTY ORDER DATED 16.06.2009 PASSED BY THE ITO, W ARD-2(4), RAJKOT UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED AS TO THE ACT) FOR A.Y. 2003-04 WITH THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT IN CONFIRMING THE PROPORTIONATE PENALTY TO EXTENT OF RS. 28,00,317/- LEVIED BY A.O. U/S 271(1)(C) OF INCOME-TAX ACT. 2. THE LEVY OF PENALTY BY THE A.O. IS BAD IN LAW AB INTIO AS IT WAS ONLY ON THE BASIS OF FACTS THAT NO QUANTUM APPEAL BEFORE THE CIT(A) HAS BEEN FILED THOUGH THE APPEAL WAS FILED BEFORE CIT(A). 3. THE LEARNED CIT(A) HAS CONFIRMED THE PROPORTIONA TE PENALTY ONLY ON THE BASIS OF DISALLOWANCE/ADDITION WHICH IS BAD IN LAW. 4. THE ADDITION CONFIRMED BY THE LEARNED CIT(A) IS WITHOUT APPRECIATING THE MATERIALS AND FACTS THOUGH THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME. C.O. NO. 34/RJT/2010 A.Y. 2003-04 - 2 - 2. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE L D. AR WHICH IS ALSO APPEARING IN THE RECORDS BEFORE US THAT THE INITIAT ION OF THE PROCEEDING UNDER SECTION 271(1)(C) WAS ON THE ALLEGED GROUND OF CONC EALMENT OF PARTICULAR OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME WHEREAS THE PENALTY HAS BEEN IMPOSED FOR CONCEALMENT OF INCOME. THE RE LEVANT PORTION OF THE ASSESSMENT ORDER IN THIS RESPECT IS AS FOLLOWS: 6. AS PER THE ORIGINAL ASSESSMENT ORDER, THE COMM ISSION INCOME OF RS. 36,57,013/- HAS BEEN TREATED AS INCOME FROM UNDISCLOSED SOURCES. T HE SAME IS ALSO HELD TO BE INCOME FROM UNDISCLOSED SOURCES IN THE ABSENCE OF ANY EVIDENCE OF EARNING COMMISSION AS THE SAME IS NOT VERIFIABLE AND NOON-COMPLIANCE BY THE ASSESSEE LEADS TO THE CONCLUSION THAT ASSESSEE DOES NOT WANT PROPER SCRUTINY OF HIS CASE. 7. SUBJECT TO THE ABOVE, TOTAL INCOME IS COMPUTED A S UNDER: TOTAL INCOME AS PER RETURN OF INCOME RS. 6,295/ - ADD: (I) UNSECURED LOAN U/S. 68(PARA 5.1(I) RS. 5,00, 000/- (II) INTRODUCTION OF FRESH CAPITAL BY THE PARTNERS (PARA-5.1(II) RS. 35,92,745/- (III) INTEREST ACCRUED WHICH WAS CLAIMED AS PAYABLE IN THE RETURN BUT WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. (PARA-5.1(III) RS. 33,71,217/- (IV) INCOME FROM UNDISCLOSED SOURCES (PARA-6) RS. 36,57,013/- ASSESSED INCOME RS. 1,11,27,270/- ASSESSED U/S. 143(3) OF THE I.T. ACT. CHARGE INTE REST U/S. 234-B & 234-C OF THE I.T. ACT, IF ANY. ISSUE DEMAND NOTICE AND CHALLAN. ISS UE NOTICE OF PENALTY U/S.271(1)(C) R.W.S. 274 FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. WHILE LEVYING THE PENALTY LD. AO OBSERVED AS FOLLO WS: 7. IN VIEW OF THE ABOVE FACTS, I AM OF THE VIEW T HAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND THUS HAS C ONCEALED HIS INCOME TO THE EXTENT OF RS. 1,11,20,975/-. I AM SATISFIED THAT THIS IS A FIT C ASE FOR LEVY OF PENALTY U/S. 271(1)(C) FOR CONCEALMENT OF INCOME OF RS. 1,11,20,975/-. IN SUC H A SITUATION, I THEREFORE LEVY A MINIMUM PENALTY U/S. 271(1)(C) OF THE I.T. ACT AT THE RATE OF 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED WHICH WORKS OUT TO RS. 40,89,272/- AS AGAINST MAXIMUM PENALTY @300% OF THE TAX SOUGHT TO BE EVADED WHICH COMES TO RS. 1,22,67,816/ -. 3. FROM THE ABOVE IT APPEARS THAT NO SPECIFIC CHARG E HAS BEEN ALLEGED BY THE AO WHILE INITIATING THE PENALTY PROCEEDING. FU RTHER THAT PENALTY HAS BEEN LEVIED ON ALLEGED CONCEALMENT OF PARTICULARS OF INC OME BY THE ASSESSEE. IN THIS REGARD, WE HAVE CONSIDERED THE JUDGMENT PASSED BY T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE SNITA TRANSPORT PVT. LTD. VS . ASSISTANT COMMISSIONER OF INCOME TAX REPORTED IN, 42 TAXMANN.COM 54 AS REL IED BY THE LD. AR. THE C.O. NO. 34/RJT/2010 A.Y. 2003-04 - 3 - RELEVANT DISCUSSION ON THIS ISSUE AS MADE IN THE SA ID ORDER IS REPRODUCED HEREINBELOW: 9. REGARDING THE CONTENTION THAT THE ASSESSING OFFIC ER WAS AMBIVALENT REGARDING UNDER WHICH HEAD THE PENALTY WAS BEING IMPOSED NAME LY FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS, WE MAY RECORD THAT THOUGH IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DID ORDER INITIATION OF PENALTY ON BOTH COUNTS, IN THE ULTIMATE ORDER OF PENALTY THAT HE PASSED, HE CLEARLY HELD TH AT LEVY OF PENALTY IS SUSTAINED IN VIEW OF THE FACT THAT THE ASSESSEE HAD CONCEALED THE PARTIC ULARS OF INCOME. THUS INSOFAR AS FINAL ORDER OF PENALTY WAS CONCERNED, THE ASSESSING OFFIC ER WAS CLEAR AND PENALTY WAS IMPOSED FOR CONCEALING PARTICULARS OF INCOME. IN LIGHT OF T HIS, WE MAY PERUSE THE DECISION OF THIS COURT IN CASE OF MANU ENGINEERING WORKS (SUPRA). IN THE SAID DECISION, THE DIVISION BENCH CAME TO THE CONCLUSION THAT LANGUAGE OF 'AND/OR' MA Y BE PROPER IN ISSUING A NOTICE FOR PENALTY, BUT IT WAS INCUMBENT UPON THE ASSESSING AU THORITY TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE A SSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY TH EM. IF NO SUCH CLEAR CUT FINDING IS REACHED BY THE AUTHORITY, PENALTY CANNOT BE LEVIED. IT WAS A CASE IN WHICH IN FINAL CONCLUSION THE AUTHORITY HAD RECORDED THAT 'I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR T HAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' IT WAS IN THIS RESPECT THE BENCH OBSERVED THAT 'NOW THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOT ICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI-CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOM E HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR CUT FINDING WAS REACHED BY THE IAC AN D, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS LIABLE TO BE STRUCK D OWN. 4. THE PRINCIPLES LAID DOWN BY THE HONBLE JURISDIC TIONAL HIGH COURT IN THE ABOVE CASE ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE IN HAND. WE FIND THAT THE AO HAS NOT LEVELLED ANY SPECIFIC CHARGE IN ITS PENALTY ORDERS AS TO WHETHER IT WAS LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, IN OUR CONSIDERE D VIEW, THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LEARNED CIT (A) IS N OT SUSTAINABLE IN THE EYE OF LAW. THE ORDER OF PENALTY, THEREFORE, IS DELETED . HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE C.O. FILED BY THE ASSESSEE IS ALLOWED. SD/- SD/- (AMARJIT SINGH) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 29/10/2021 TANMAY TRUE COPY THIS ORDER PRONOUNCED IN OPEN COURT ON 29/10/2021 C.O. NO. 34/RJT/2010 A.Y. 2003-04 - 4 - / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. ! / ASSESSEE 3. #$% & / CONCERNED CIT 4. & - / CIT (A) 5. '( ) **$% , $% , +,! # ! / DR, ITAT, AHMEDABAD 6. ) -. / / GUARD FILE. BY ORDER/ !' , / ( DY./ASSTT.REGISTRAR) ! ' , 0 / ITAT, RAJKOT 1.DATE OF DICTATION ON 06.10.2021 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 25.10.2021 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 29.10.2021 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR . P.S./P.S 29 .10.2021 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29 .10.2021 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER