Shri Radhey Shipping Co, GANDHIDHAM V. The Assistant Commissioner of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 1089/RJT/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7344 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY SHAH
• Assessee Lawyers: CJ MANIAR
• Keywords: Corroborative evidences
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.1089/RJT/2010 (ASSESSMENT YEAR 2006-07) SHREE RADHEY SHIPPING CO VS THE ACIT, GANDHIDHAM C IRCLE 15-C, GREEN PARK GANDHIDHAM TAGORE ROAD, GANDHIDHAM PAN : AFRFS7174G (APPELLANT) (RESPONDENT) DATE OF HEARING : 23-11-2011 DATE OF PRONOUNCEMENT : 25-11-2011 ASSESSEE BY : SHRI CJ MANIAR REVENUE BY : SHRI SANJAY SHAH O R D E R PER T.K. SHARMA (JM) THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER D ATED 30-06-2010 PASSED BY THE CIT(A)-II, RAJKOT CONFIRMING PENALTY OF RS. 47,260 FOR THE ASSESSMENT YEAR 2006-07 2. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN BUSINESS OF STEVEDORER, C&F TRANSPORTER. FOR THE ASSESSMENT YEAR UNDER APPEAL IT FILED THE RETURN OF INCOME DECLARIN G TOTAL INCOME OF RS. 8,88,550 WHEREIN HE DISALLOWED RS. 1,40,400 OUT OF SUNDRY EX PENSES ON THE GROUND THAT THESE WERE PAID IN CASH AND ASSESSEE DID NOT FURNIS H ANY SUPPORTING EVIDENCE FOR THE SAME. FOR MAKING THIS DISALLOWANCE, PENALT Y PROCEEDINGS U/S 271(1)(C) WERE INITIATED. IN REPLY TO SHOW CAUSE NOTICE ISSU ED BEFORE LEVYING PENALTY U/S 271(1)(C) ASSESSEE PLEADED THAT IN RESPECT OF DISAL LOWANCE OF ROUTINE NATURE, ITA NO.1089/RJT/2010 2 PENALTY U/S 271(1)(C) IS NOT LEVIABLE. THE ASSESSI NG OFFICER REJECTED THIS CONTENTION AND LEVIED PENALTY OF RS.47,260 WHICH IS 100% OF TAX SOUGHT TO BE EVADED ON DISALLOWANCE OF RS.1,40,400 FOLLOWING THE DECISION OF THE APEX COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS AND OT HERS (2008) 306 ITR 277 (SC). ON APPEAL IN THE IMPUGNED ORDER, THE LD.CIT( A) CONFIRMED THE PENALTY LEVIED U/S 271(1)(C) AMOUNTING TO RS. 47,260 ON THE GROUND THAT THERE IS A WILLFUL ATTEMPT ON THE PART OF THE ASSESSEE TO INFLATE CERT AIN TYPE OF EXPENDITURE SO AS TO REDUCE ITS TAXABLE INCOME. AGGRIEVED WITH THIS ORD ER OF LD.CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE ASSESSEE, SHRI SANJAY SHAH APPEARED AND POINTED OUT THAT THE BOOKS OF ACC OUNT OF THE ASSESSEE ARE AUDITED U/S 44AB OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT PRODUCE VOUCHER IN RESPECT OF CE RTAIN EXPENSES. HE POINTED OUT THAT NON PRODUCTION OF CERTAIN VOUCHERS, MAY RE SULT IN DISALLOWANCE OF EXPENSES, BUT ON THAT BASIS PENALTY U/S 271(1)(C) I S NOT LEVIABLE. IN SUPPORT OF THIS, COUNSEL OF THE ASSESSEE RELIED UPON THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS 322 ITR 158 ( SC). HE ACCORDINGLY CONTENDED THAT THE PENALTY OF RS. 47,260 CONFIRMED BY THE LD.CIT(A) IN THE IMPUGNED ORDER BE CANCELLED. 4. AS AGAINST THIS, THE LD.DR FOR THE REVENUE VEHEM ENTLY SUPPORTED THE ORDER OF LD.CIT(A). HE POINTED OUT THAT IT WAS THE DUTY OF THE ASSESSEE TO MAINTAIN AND PRODUCE THE SUPPORTING VOUCHERS IN RESPECT OF EXPEN SES DEBITED UNDER THE HEAD SUNDRY EXPENSES SINCE SUPPORTING VOUCHERS WERE N OT PRODUCED, PENALTY OF RS. ITA NO.1089/RJT/2010 3 47,,260 U/S 271(1)(C) IS RIGHTLY LEVIED AND CONFIRM ED BY THE LD.CIT(A) IN THE IMPUGNED ORDER. 5. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF AUTH ORITIES BELOW. IT IS PERTINENT TO NOTE THAT BOOKS OF ACCOUNT OF THE ASSE SSEE ARE AUDITED U/S 44AB OF THE ACT. IT IS WELL SETTLED LAW THAT PENALTY U/S 2 71(1)(C) IS NOT AUTOMATIC. THE MERE FAILURE ON THE PART OF THE ASSESSEE TO PRODUCE VOUCHERS IN RESPECT OF SUNDRY EXPENSES TO THE EXTENT OF RS. 1,40,400 IS A GOOD GR OUND FOR DISALLOWANCE OF THE RELEVANT EXPENSES BUT ON THIS BASIS ALONE IT CANNOT BE HELD THAT THE SAID EXPENSES CLAIMED ARE BOGUS OR INFLATED. IT IS WELL SETTLED LAW THAT IN RESPECT OF ROUTINE DISALLOWANCES, PENALTY U/S 271(1)(C) IS NOT LEVIABLE. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROP RODUCTS PVT LTD 322 ITR 158 (SC) HAS HELD THAT MAKING INCORRECT CLAIM DOES NOT AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME FOR THE PURPOSE OF LEVYI NG PENALTY U/S 271(1) OF THE ACT. WE, THEREFORE, CANCEL THE PENALTY OF RS. 47,2 60 LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER HAS BEEN PRONOUNCED ON THE DATE AS MENTI ONED ABOVE. SD/- SD/- (A.L. GEHLOT) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 25 TH NOVEMBER, 2011 PK/- ITA NO.1089/RJT/2010 4 COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-II, RAJKOT 4. THE CIT-I, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT