The ITO, Ward-5(4), Baroda V. Shri Goyal Phoolchand, Baroda

ITA 1082/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50546 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-08-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 09-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PG A
• Keywords: Difference of opinion
• Section: 143(3)

Judgement Text

ITA.NO.108 2/AHD/2009 ASSESSMENT YEAR 2001-02. 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH,A HMEDABAD. (BEFORE SHRI T. K.SHARMA AND SHRI R. .C. SHARMA) I.T.A. NO. 1082/AHD/2009 (ASSESSMENT YEAR 2001-02) INCOME TAX OFFICER, WARD 5(4), 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA. (APPELLANT) VS. M/S GOYAL PHOOLCHAND PROP. BALAJI ROAD CARRIERS, C-26 SHREEJI MARKET, HARNI ROAD, BARODA. (RESPONDENT) PAN: ABYPG 0654 A APPELLANT BY : SHRI S.K. MEENA, SR. D.R. RESPONDENT BY : SHRI MILINMEHTA. DATE OF HEARING : 10-8-2011. DATE OF PRONOUNCEMENT : 19-8-2011 ( (( ( )/ )/)/ )/ ORDER PER: SHRI R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF CIT (A) DATED 19-1-2009 FOR ASSESSMENT YEAR 2001-02, IN THE MATTER OF LEVY OF PENALTY OF RS. 3,05,720/- UNDER SECTION 271(1)(C ) OF THE ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE BRIEF FACTS OF THE CASE ARE THAT THE REGULAR ASSESSMENT ORDER U /S.143(3) OF THE ACT WAS ITA.NO.108 2/AHD/2009 ASSESSMENT YEAR 2001-02. 2 FINALIZED BY THE AO ON 24-3-2004 DETERMINING THE TOTAL INCOME AT RS. 38,96,660/- WHEREIN ADDITIONS ON ACCOUNT OF (I) BOG US CREDITORS OF RS. 33,76,179/- AND (II) ADDITION ON ACCOUNT OF SHARE T RANSACTIONS OF RS. 70,991/- WERE MADE BY THE AO. THE AO WHILE FINALIZING THE AS SESSMENT HAS REJECTED THE BOOK RESULTS GIVING CERTAIN REASONS AND ESTIMAT ED NET PROFIT @ 8% WHICH WORKED OUT TO RS.19,62,646/-. FURTHER THE AO HAS TREATED THE CREDITORS AND FREIGHT PAYABLE FOR THE LAST 3 MONTHS AS GENUIN E AND BALANCE AMOUNT AS IN-GENUINE AND ACCORDINGLY HELD THE CREDITORS OF RS . 11,55,885/- OUT OF THE TOTAL CREDITORS OF RS.13,52,885/- AND FREIGHT PAYAB LE OF RS.22,20,294/- AS BOGUS AND ACCORDINGLY MADE AN ADDITION OF RS. 33,76 ,179/- ON ACCOUNT OF BOGUS CREDITORS. THE AO HAS HOWEVER CLUBBED THE NE T PROFIT ADDITION WITH THE ADDITION MADE ON ACCOUNT OF BOGUS CREDITORS AND ACCORDINGLY MADE NET ADDITION OF RS.33,76,179/-. THE AO HAS ALSO MADE AN ADDITION OF RS. 70,991/- TREATING SHARE TRANSACTION AS SPECULATIVE BUSINESS AND ACCORDINGLY DISALLOWED THE LOSS OF RS.70,991/- AS CLAIMED BY TH E ASSESSEE ON ACCOUNT OF SHARE TRANSACTIONS. IN VIEW OF THIS, THE AO OPINED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND BASED ON TH IS OBSERVATION, THE AO HAS INITIATED THE PENALTY PROCEEDINGS FOR THE ABOVE ADDITIONS/DISALLOWANCES AND IMPOSED PENALTY OF RS. 3,05,720/- ACCORDINGLY. 3. BY THE IMPUGNED ORDER, CIT (A) DELETED THE ADDIT ION AFTER HAVING THE FOLLOWING OBSERVATION. I HAVE GONE THROUGH THE FACTS OF THE CASE, ARGUME NTS PUT FORTH BY THE AR OF THE ASSESSEE AS WELL AS ALSO THE OBSER VATIONS OF THE AO. IT IS SEEN THAT THE AO HAS MADE TWO ADDITIONS BY REJEC TING THE BOOKS AND APPLYING GP AT 8% AND ADDITION ON ACCOUNT OF SHARE TRANSACTION. IN AS MUCH AS GP ADDITION IS CONCERNED, THE CIT (A) HA S NOT APPROVED ITA.NO.108 2/AHD/2009 ASSESSMENT YEAR 2001-02. 3 THE SAME AND REDUCED THE ADDITION. IN EFFECT, THE C IT (A) HAS UPHELD THE ADDITION MADE ON ACCOUNT OF NET PROFIT TO THE E XTENT OF RS.2,00,000/- AND WITH REGARD TO CREDITORS AND BALA NCE FREIGHT PAYABLE, THE CIT (A) HAS SUSTAINED ADDITION TO THE EXTENT OF RS.6,00,000/-. THUS, THERE IS AN UNCERTAINTY IN THE VIEW POINTS OF THE AO AND THE CIT (A) REGARDING THE CORRECT INCOME ON WHICH THE ASSESSEE HAS TO BE TAXED. IF THERE IS A DIFFERENCE OF OPINION AS TO WHAT CONSTITUTES CORRECT INCOME OF THE ASSESSEE, ON SUCH INCOME THE AO IS NOT JUSTIFIED IN LEVYING CONCEALMENT PENALTY. IN AS MUCH AS OTHER PART OF THE ADDITION OF RS. 70,991/- IS CONCERNED, IT MA Y BE NOTED HERE THAT IT IS A SETTLED LAW THAT THE FINDINGS GIVEN IN THE ASSESSMENT PROCEEDINGS FOR DETERMINING TAX IS NOT CONCLUSIVE FOR LEVY OF C ONCEALMENT PENALTY. IT MAY FURTHER BE NOTED HERE THAT THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS OR CONCEALED THE PARTICULARS , BECAUSE ENTIRE FACTS HAVE BEEN DISCLOSED IN THE RETURN WHICH HAVE BEEN DISCUSSED BY THE AO IN THE BODY OF THE ORDER PASSED U/S. 143(3) OF THE YEAR UNDER CONSIDERATION. THUS, I AM OF THE OPINION THAT THE CONCEALMENT PENALTY, IN THE GIVEN FACTS AND CIRCUMSTANCES, IS N OT SUSTAINABLE. 4. AGGRIEVED BY THE ABOVE ORDER THE REVENUE IS IN F URTHER APPEAL BEFORE US. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM THE R ECORD THAT IN THE QUANTUM ASSESSMENT A.O. HAS MADE TWO ADDITIONS BY APPLYING G.P. RATE OF 8% AND ALSO ON ACCOUNT OF SHARE TRANSACTION. IN AN APPEAL FILED BEFORE THE CIT (A), HE DID NOT AGREE WITH THE G.P. ADDITION MADE BY THE AO AND REDUCED THE SAME SUBSTANTIALLY TO THE EXTENT OF NET PROFIT OF R S.2 LACS. HOWEVER, WITH REGARD TO CREDITORS AND BALANCE FREIGHT PAYABLE, TH E CIT (A) WAS NOT AGREEING AND THERE WAS DIFFERENCE OF OPINION. THE CIT (A) HA S DELETED THE PENALTY BY OBSERVING THAT ASSESSEE HAS NOT FURNISHED ANY INACC URATE PARTICULARS NOR CONCEALED THE PARTICULARS OF INCOME IN SO FAR AS EN TIRE FACTS HAVE BEEN ITA.NO.108 2/AHD/2009 ASSESSMENT YEAR 2001-02. 4 DISCLOSED IN THE RETURN OF INCOME FILED BY THE ASSE SSEE. IT WAS ALSO OBSERVED BY CIT (A) THAT WITH REGARD TO THE ITEMS DISALLOWED BY AO AND SUBSEQUENT ALLOWED BY CIT (A), THERE WAS A DIFFERENCE OF OPINI ON AND WITH RESPECT OF SUCH ADDITION THE AO WAS NOT JUSTIFIED IN LEVYING T HE CONCEALMENT PENALTY. ACCORDINGLY WE CONFIRM THIS PART OF ORDER OF CIT(A) FOR DELETING THE PENALTY. WITH REGARD TO THE PENALTY LEVIED ON ACCOU NT OF ADDITION OF RS. 70,991/- MADE ON ACCOUNT OF SHARE TRANSACTION, WE F IND THAT PENALTY WAS CORRECTLY LEVIED BY THE AO AS THE ASSESSEE HAS FURN ISHED WRONG PARTICULARS WITH REGARD TO THE LOSS INCURRED ON SHARE TRANSACTI ON. ACCORDINGLY, WE DIRECT THE A.O. TO CONFINE THE PENALTY ONLY WITH RESPECT T O ADDITION OF RS.70,991/- WITH RESPECT TO TRANSACTION IN SHARES. THE SAID AD DITION IS CONFIRMED BY THE CIT (A) FOR DISALLOWING THE PENALTY. 5. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN OPEN COURT ON 19 - 08 - 2011. SD/- SD/- (T K.SHARMA) (R. .C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. DATED: 19 - 08 - 2011. S.A.PATKI. ITA.NO.108 2/AHD/2009 ASSESSMENT YEAR 2001-02. 5 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 3 - 8 -2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 5 / 8 / 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2011. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2011 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2011 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2011. 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..