M/s Sharma Handloom Industries, Agra V. Dy. C.I.T., Circle-2, Agra

ITA 103/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0719 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 1 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-05-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 11-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: NAVIN GARGH
• Keywords: Wrong claim; Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 103/AGRA/ 2013 ASSESSMENT YEAR 2005-06 M/S SHARMA HANDLOOM INDUSTRIES VS. DY. COMM ISSIONER OF INCOME. TAX, 5/89/A-2/3 SOUTH KI MANDI, (CIRCLE-2), MATHURA ROAD AAYAKAR BHAWAN, SANJA Y PLACE AGRA-282007 (U.P.) AGRA-282002 (U.P.) (PAN AAAFS1883A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARGH, ADVOCATE RESPONDENT BY : SHRI K.K.MISHRA, JR. D.R. DATE OF HEARING : 22.05.2013 DATE OF PRONOUNCEMENT : 31.05.2013 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER OF LEARNED CIT(A)-I, AGRA DATED 05.10.2012 FOR A.Y. 2005-06, CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT ON ADDITION OF RS.94,633/-. 2. BRIEFLY FACTS OF THE CASE ARE THAT THE ASSESSEE HAD SHOWN LIABILITY OF RS.1,20,850/- IN THE NAME OF SUNDRY CREDITOR M/S SH RI RAM UDYOG. THE ACCOUNT ITA NO.103/AGRA/2013 A.YS.2005-06 2 OF ASSESSEE IN THEIR BOOKS WAS OBTAINED AND PLACED ON RECORD WHICH SHOWS THE BALANCE OF RS.26,217/-. THE ASSESSEE WAS DIRECTED T O EXPLAIN THE DIFFERENCE AS TO WHY THE ADDITION OF RS.94,633/- MAY NOT BE ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE FILED RECONCILIATION BEFORE A.O. WHICH REVEALS THAT THERE IS A DIFFERENCE OF RS.94,758/- DUE TO THE OPENING BALANC E AS ON 01.04.2004 WHICH HAS NOT BEEN EXPLAINED BY THE ASSESSEE. THE A.O. ACCORD INGLY ADDED THIS AMOUNT TO THE INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS WER E INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME ON ACCOUNT OF LIAB ILITY IN THE NAME OF SUNDRY CREDITOR M/S SHRI RAM UDYOG. IT IS STATED THAT THOU GH THE ASSESSEE PREFERRED APPEAL BEFORE LEARNED CIT(A), BUT THE ASSESSEE DID NOT PRESS THIS GROUND BEFORE LEARNED CIT(A), THEREFORE, THE ADDITION WAS CONFIRM ED TREATING THE GROUND AS DISMISSED. THE A.O. VIDE SEPARATE ORDER LEVIED THE PENALTY AGAINST THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS. THE ASSESSEE REITERATED THE SAME FACTS BEFORE LEARNED CIT(A). HOWEVER, LEARNED CIT(A) DID NOT ACC EPT THE CONTENTION OF THE ASSESSEE AND FOUND THAT THE INFORMATION GIVEN BY TH E CREDITOR WHICH SUPPORTED THE FINDINGS OF THE AUTHORITIES BELOW THAT THERE WERE N O LIABILITY OF THE ASSESSEE TOWARDS THIS CREDITOR FOR EARLIER YEAR AND ACCORDIN GLY ASSESSEE HAS SHOWN BOGUS LIABILITY OF THIS CREDITOR IN THE BOOKS ACCOUNT. AC CORDINGLY PENALTY WAS CONFIRMED ON THIS AMOUNT. ITA NO.103/AGRA/2013 A.YS.2005-06 3 3. LEARNED COUNSEL FOR ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE HAS S HOWN LIABILITY OF RS.1,20,850/- IN THE NAME OF SUNDRY CREDITOR M/S SHRI RAM UDYOG B UT IN THE BOOKS OF THE CREDITOR THE BALANCE WAS SHOWN OF RS.26,217/-. THE ASSESSEE FILED RECONCILIATION BEFORE A.O. AND EXPLAINED THAT THERE WAS NO DIFFERE NCE IN THE ACCOUNTS BECAUSE THE DIFFERENCE DUE TO AMOUNT OF RS.94,758/- WAS DUE TO OPENING BALANCE AND IF THE BANK CHARGES OF RS.125/- ARE REDUCED, THE DIFFE RENCE WOULD BE IN A SUM OF RS.94,633/-. IT WAS SUBMITTED THAT DIFFERENCE WAS D UE TO OPENING BALANCE OF RS.94,758/- . HE HAS SUBMITTED THAT THE SAME AMOUNT OF RS.94,758/- IS SHOWN AS CLOSING BALANCE IN THE BALANCE SHEET OF THE ASSESSE E ENDING AS ON 31.03.2004. COPY OF THE BALANCE SHEET OF EARLIER YEAR IS ALSO F ILED IN SUPPORT OF THE CONTENTION. HE HAS SUBMITTED THAT FOR THE BALANCE COMING UP FRO M THE EARLIER YEAR CANNOT BE CONSIDERED FOR THE PURPOSE OF ADDITION EVEN THOUGH THE ASSESSEE DID NOT PRESS THIS ADDITION BEFORE LEARNED CIT(A), THEREFORE ON THE SA ME REASONING PENALTY CANNOT BE LEVIED AGAINST THE ASSESSEE. THE CLAIM OF THE AS SESSEE WAS NOT FOUND FALSE AND THE ASSESSEE EXPLAINED THIS ADDITION TO THE SATISFA CTION OF THE AUTHORITIES BELOW, THEREFORE, LEVY OF PENALTY IS UNJUSTIFIED. HE HAS R ELIED UPON THE FOLLOWING DECISIONS :- ITA NO.103/AGRA/2013 A.YS.2005-06 4 I) PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT, 348 ITR 306 (SC) II) CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD., 322 ITR 158 (SC) III) CIT VS. GARG ENGINEERING CO., 235 ITR 451 (ALLD. H. C.) IV) NEWS S. V. LEATHER STORE VS. ITO, ITA NO. 325/DEL/9 4 (ITAT AGRA BENCH, AGRA V) RAMILABEN RATILAL SHAH VS. ACIT, 60 TTJ 171 (AHMEDA BAD B BENCH) 4. ON THE OTHER HAND, LEARNED D.R. RELIED UPON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE FURNISHED INACCURATE PA RTICULARS OF INCOME, THEREFORE, PENALTY WAS RIGHTLY LEVIED AND RELIED UPON THE DECI SION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. LAL CHAND TIRATH RAM 225 ITR 675. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS FILED COPY OF THE ACCOUNT OF M/S S HRI RAM UDYOG FOR THE ASSESSMENT YEAR UNDER APPEAL AT PAGE 6 OF THE PAPER BOOK TO SHOW THAT THERE WAS OPENING CREDIT BALANCE OF RS.94,758.60 AS ON 01.04. 2004. AT THE END OF THE YEAR, ON 31.03.2005 THERE IS CREDIT BALANCE OF RS.1,20,85 0/-. THE ASSESSEE HAS ALSO FILED COPY OF THE BALANCE SHEET OF THE PRECEDING ASSESSME NT YEAR AS ON 31.03.2004 IN WHICH THE CREDIT BALANCE ON 31.03.2004 IN THE NAME OF M/S SHRI RAM UDYOG IS MENTIONED AS RS.94,758.60. THUS, THE AFORESAID AMOU NT IS COMING UP FROM THE ITA NO.103/AGRA/2013 A.YS.2005-06 5 PRECEDING ASSESSMENT YEAR AND WAS SHOWN AS OPENING BALANCE IN THE ACCOUNT OF THE ASSESSEE ON 01.04.2004. IT IS, THEREFORE, NOT A TRANSACTION RELATED TO THE ASSESSMENT YEAR UNDER APPEAL EVEN IF THE ADDITION I S MAINTAINED ON QUANTUM AS WAS NOT PRESSED BEFORE LD. CIT(A). BUT THE PENALTY PROCEEDING IS INDEPENDENT AND DIFFERENT IN NATURE, WE CANNOT IGNORE THIS IMPORTAN T FACT AT THE TIME OF CONSIDERING THE PENALTY MATTER. THUS, THE ITEM WHICH DID NOT PE RTAIN TO ASSESSMENT YEAR UNDER APPEAL AND WAS MERELY A OPENING BALANCE IN THE ASSE SSMENT YEAR UNDER APPEAL WHICH WAS COMING UP FROM THE EARLIER YEAR, CANNOT B E CONSIDERED FOR ANY PURPOSES FOR FASTENING LIABILITY UPON ASSESSEE. THE BOOKS OF ACCOUNT OF ASSESSEE FOR PRECEDING ASSESSMENT YEAR HAVE NOT BEEN DOUBTED BY THE REVENUE AUTHORITIES BEFORE US. FOR OPENING BALANCE NO ADVERSE VIEW COUL D BE TAKEN AGAINST ASSESSEE IN THE ASSESSMENT YEAR UNDER APPEAL . THE ASSESSEE HAS NOT FAILED TO OFFER ANY EXPLANATION AND THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE FALSE. THE ASSESSEE HAS MADE BONA-FIDE EXPLANATION BASED UPON THE ENTRIES IN BOOKS OF ACCOUNT MAINTAINED OF THE EARLIER YEARS. 5.1 HONBLE SUPREME COURT IN THE CASE OF M/S RAJAST HAN SPINNING WEAVING MILLS, 2009-TIOL-63 HELD THAT ON EVERY DEMAND PENA LTY IS NOT AUTOMATIC. HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F COMMISSIONER OF INCOME ITA NO.103/AGRA/2013 A.YS.2005-06 6 TAX, VS THE SHAHABAD COOP. SUGAR MILLS, 322 ITR 73 HELD THAT MAKING A WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF I NACCURATE INFORMATION, WHICH MAY CALL FOR LEVY OF PENALTY UNDER SECTION 271(1)(C ) OF THE I.T. ACT. 5.2 HONBLE SUPREME COURT IN THE CASE OF CIT VS. RE LIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) HELD THAT WHERE THERE IS NO FINDI NG THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C). MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 6. CONSIDERING THE ABOVE DISCUSSION IN THE LIGHT OF THE FACT THAT THE PENALTY IS LEVIED IN RESPECT OF DIFFERENCE CREDITED DUE TO NON CONSIDERATION OF OPENING BALANCE BROUGHT FORWARD FROM EARLIER YEARS, PENALTY SHOULD NOT BE IMPOSED AGAINST THE ASSESSEE. 7. IN VIEW OF ABOVE DISCUSSION, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE FOR IMPOSITION OF PENALTY. WE ACCORDINGLY SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCEL THE PENALTY. ITA NO.103/AGRA/2013 A.YS.2005-06 7 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (A.L. GEHLOT) (BHAV NESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY