M/s. Katira Construction Ltd., Bhuj V. The Assistant Commissioner of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 107/RJT/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2299 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-01-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 04-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA SR DR
• Assessee Lawyers: SHRI M J RANPURA
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] - , !' #$, %& BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ I.T.A. NO.107/RJT/2011 ( / ASSESSMENT YEAR : 2004-05) M/S.KATIRA CONSTRUCTION LTD. KLC HOUSE, NEW STATION ROAD, BHUJ / VS. THE ACIT GANDHIDHAM CIRCLE GANDHIDHAM + %& ./ ./ PAN/GIR NO. AACCK 5024 D ( +- / APPELLANT ) .. ( ./+- / RESPONDENT ) +- 0 % / APPELLANT BY : SHRI SHRI M.J.RANPURA, C.A. ./+- 1 0 % / RESPONDENT BY : SHRI C.S. ANJARIA, SR.DR !23 1 & / DATE OF HEARING 27/ 01/2016 4' 1 & / DATE OF PRONOUNCEMENT 10/02/2016 % / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XX, AHMEDABA D [CIT(A) IN SHORT] DATED 21/01/2011 PERTAINING TO ASSESSMEN T YEAR (AY) 2004-05. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL:- 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHO UT PREJUDICE TO ONE ANOTHER. ITA NO.107/RJT/ 2011 M/S.KATIRA CONSTRUCTION LTD. VS. ACIT ASST.YEAR 2004-05 - 2 - 2.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XX , AHMEDABAD [HEREINAFTER REFERRED TO AS THE CIT(A)] ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY U/S.271(1)(C ) OF THE INCOME-TAX ACT, 1961 OF 8,91,620/-. THE PENALTY U/S.271(1)(C) OF THE ACT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW AND MAY KINDLY BE DELETED. 3.0 YOUR HONOURS APPELLANT CRAVES LEAVE TO ADD, TO AME ND, ALTER, OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 30/03/2006, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION OF RS.67,38,881/-, APART FROM OTHER ADDIT IONS OF RS.1,02,938/- AND RS.14,17,200/-. WHILE FRAMING THE ASSESSMENT, THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. IN Q UANTUM PROCEEDINGS, THE ISSUE OF ADDITION TRAVELLED UPTO THE STAGE OF T HE TRIBUNAL AND IN THE MEANWHILE THE AO LEVIED PENALTY ON ADDITION OF RS.2 4,85,345/- AMOUNTING TO RS.8,91,620/-. THE ASSESSEE BEING AGG RIEVED BY THE ASSESSMENT ORDER, PREFERRED AN APPEAL BEFORE THE LD .CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DISMISS ED THE APPEAL. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE AS SESSEE IS IN APPEAL BEFORE US. 3. THE ONLY ISSUE IN THIS APPEAL IS AGAINST LEVY OF PENALTY AND CONFIRMATION OF THE SAME BY THE LD.CIT(A). ITA NO.107/RJT/ 2011 M/S.KATIRA CONSTRUCTION LTD. VS. ACIT ASST.YEAR 2004-05 - 3 - 4. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT D URING THE COURSE OF SURVEY U/S.133A OF THE ACT, THE STATEMENT OF THE DI RECTOR OF THE COMPANY WAS RECORDED. AS PER THIS STATEMENT, THE DIRECTOR ADMITTED THE INCOME IN THE FOLLOWING MANNER:- SR. NO. PARTICULARS ADMISSION ( ) A.Y. 2003-04 2004-05 1. CONSTRUCTION EXPENSES NOT RECORDED IN BOOKS OF ACCOUNT 32,58,976 26,41,826 2. CONSTRUCTION EXPENSES INFLATED IN BOOKS OF ACCOUNT 8,73,213 16,12,132 3. CONSTRUCTION EXPENSES AS PER DIARY MARKED AS ANNEXURE X-17 -- 13,17,612 4. STOCK IN TRADE NOT RECORDED IN THE BOOKS OF ACCOUNT AS ON 10.10.03 -- 9,62,564 5. DIFFERENCE IN CASH AS PER PHYSICAL VERIFICATION AND AS PER BOOKS OF ACCOUNT AS ON 10.10.03 -- 2,04,747 6. TOTAL 41,32,189 67,38,881 4.1. THEREFORE, DISCLOSURE WAS AT RS.67,38,881/-. H OWEVER, SUBSEQUENTLY, ON PROPER VERIFICATION OF THE RECORDS, IT WAS NOTIC ED AT THE TIME OF SURVEY IN GIVING DEPOSITION, TELESCOPING OF FUNDS AVAILABL E OUT OF THE INCOME ADMITTED RELEVANT TO THE IMMEDIATELY PRECEDING YEAR AS ALSO CURRENT YEAR WAS REMAINED TO BE CONSIDERED THE APPELLANT, THERE FORE, AFTER ITA NO.107/RJT/ 2011 M/S.KATIRA CONSTRUCTION LTD. VS. ACIT ASST.YEAR 2004-05 - 4 - CONSIDERING THE TELESCOPING OF FUNDS AVAILABLE RECT IFIED THE ADMITTED INCOME TO RS.42,53,536/-. THE AO DID NOT ALLOW TEL ESCOPING MADE THE ADDITION OF RS.24,85,345/- WHICH WAS CONFIRMED BY T HE LD.CIT(A). HOWEVER, THE HONBLE ITAT, ALLOWED TELESCOPING TO T HE EXTENT OF RS.8,73,213/- (WHICH PERTAINED TO THE A.Y. 2003-04) ONLY. THE AO LEVIED PENALTY OF RS.8,91,620/- ON TOTAL ADDITION O F RS.24,85,345/- MADE AND CONFIRMED BY LD.CIT(A). THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT CONCEALED ANY INCOME NOR HAS IT FURNISHED ANY INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THA T THE ASSESSEE FURNISHED EXPLANATION FOR TELESCOPING BASED ON RECO RDS AVAILABLE WITH THE DEPARTMENT THAT WAS NOT ACCEPTED. THE AO AS ALSO A PPELLATE AUTHORITIES APPRECIATED THE FACTS DIFFERENTLY. THE LD.CIT(A) W AS OF THE OPINION THAT THE ASSESSEE IS NOT ENTITLED FOR TELESCOPING OUT OF INFLATED EXPENSES, WHEREAS THE HONBLE TRIBUNAL HELD THAT THE FUNDS AV AILABLE OUT OF INFLATED EXPENSES OF THE IMMEDIATELY PRECEDING YEAR WOULD BE AVAILABLE. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT NOTHING INCORRECT OR INCORRECT WAS FOUND IN THE RETURN NOR ANY INACCURATE PARTICUL ARS WAS FURNISHED OR FOUND TO BE INCORRECT. THIS IS ONLY A CASE WHERE T HE ASSESSEES SUBMISSION IS DISBELIEVED AND NOT THE CASE OF FURNI SHING OF INACCURATE PARTICULARS OR CONCEALING OF ANY INCOME. THE LD.C OUNSEL FOR THE ASSESSEE RELIED UPON THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 3 22 ITR 158 (SC) AND ALSO THE JUDGEMENT OF THE HONBLE HIGH COURT OF GUJ ARAT RENDERED IN THE ITA NO.107/RJT/ 2011 M/S.KATIRA CONSTRUCTION LTD. VS. ACIT ASST.YEAR 2004-05 - 5 - CASE OF NATIONAL TEXTILES VS. CIT (2001) 249 ITR 12 5 (GUJ). HE SUBMITTED THAT UNDER THE FACTS OF THE PRESENT CASE, THE AO OUGHT NOT TO HAVE LEVIED THE PENALTY AND LD.CIT(A) LOST SIGHT OF THE FACT THAT THE ASSESSEE HAS NOT CONCEALED ANYTHING WHATEVER DISCLO SURE WAS MADE. AFTER VERIFICATION OF CORRECT STATEMENT OF INCOME W AS FURNISHED. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN OTH ERWISE ALSO, THE STATEMENT RECORDED DURING THE COURSE OF SURVEY U/S. 133A OF THE ACT CANNOT BE READ A PART OF THE EVIDENCE AGAINST THE A SSESSEE. HE FURTHER SUBMITTED THAT THE QUANTUM PROCEEDINGS AND THE PENA LTY PROCEEDINGS ARE TWO DIFFERENT AND DISTINCT PROCEEDINGS AND THE ASSE SSEE CANNOT BE BURDENED WITH THE PENALTY PROCEEDINGS ON THE BASIS OF MERE CONJECTURES AND GUESS-WORK. 4.2. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENTS RELIED UPON BY THE LD.COU NSEL FOR THE ASSESSEE. WE FIND THAT THE TRIBUNAL IN THE QUANTUM APPEAL HAD RESTRICTED THE ADDITION TO THE EXTENT OF RS.16,12,132/- ON THE BAS IS THAT THERE WAS NO NEXUS OF FUNDS MADE AVAILABLE BY INFLATION OF EXPEN SES DURING THE YEAR UNDER CONSIDERATION. THE CONTENTION OF THE ASSESSEE IS THAT ON PROPER VERIFICATION FROM THE RECORDS, IT WAS NOTICED THAT AT THE TIME OF SURVEY IN GIVING DEPOSITION, TELESCOPING OF FUNDS AVAILABLE O UT OF THE INCOME ITA NO.107/RJT/ 2011 M/S.KATIRA CONSTRUCTION LTD. VS. ACIT ASST.YEAR 2004-05 - 6 - ADMITTED RELEVANT TO THE IMMEDIATELY PRECEDING YEAR AS ALSO CURRENT YEAR WAS REMAINED TO BE CONSIDERED. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RIVAL CONTENTIONS. THERE IS N O DISPUTE WITH REGARD TO THE FACT THAT DURING THE COURSE OF SURVEY, THE TOTA L UNACCOUNTED AMOUNT DISCLOSED BY THE ASSESSEE WAS RS.67,38,881/-. HOWE VER, WHILE FILING THE RETURN, THE ASSESSEE OFFERED FOR TAX OUT OF RS.67,3 8,881/- A SUM OF RS.42,53,536/-. OUT OF WHICH, THE TRIBUNAL (ITAT R AJKOT BENCH, RAJKOT) IN ITA NO.122/RJT/2007 FOR AY 2004-05, VIDE ORDER D ATED 28/08/2008, IN PARA-17 HAS DELETED A SUM OF RS.8,73,213/-, THER EFORE THE BALANCE ADDITION SURVIVES IS OF RS.16,12,132/-. LOOKING TO THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW TH AT THE AO WAS NOT JUSTIFIED IN LEVYING THE PENALTY AS THE CASE OF THE ASSESSEE WAS THAT THE TELESCOPING WAS REQUIRED TO BE GIVEN. ACCORDINGLY, WE HEREBY DIRECT THE AO TO DELETE THE PENALTY. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 10 TH DAY OF FEBRUARY, 2016 AT AHMEDABAD. SD/- SD/- ( !' #$) ( ) %& ( MANISH BORAD ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD ; DATED 10/ 02 /2016 .., .../ T.C. NAIR, SR. PS ITA NO.107/RJT/ 2011 M/S.KATIRA CONSTRUCTION LTD. VS. ACIT ASST.YEAR 2004-05 - 7 - / COPY OF THE ORDER FORWARDED TO : 1. +- / THE APPELLANT 2. ./+- / THE RESPONDENT. 3. (#( 8 / CONCERNED CIT 4. 8 ( ) / THE CIT(A)-XX, AHMEDABAD 5. :; . , , /DR,ITAT, RAJKOT 6. ;FG H3 / GUARD FILE. / BY ORDER, /: . //TRUE COPY// / ( DY./ASSTT.REGISTRAR) & ' , / ITAT, RAJKOT 1. DATE OF DICTATION .. 4.2.16 (DICTATION-PAD 11+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 5.2.16 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 10.2.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 10.2.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER