M/s. Natural Energy Processing Co., CHENNAI V. ITO, CHENNAI

ITA 1090/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64208 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 1995-1996
• Appeal Filed On: 18-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DAS GUPTA IRS
• Assessee Lawyers: R SIVARAMAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER ITA NOS.1089 & 1090(MDS)/2012 ASSESSMENT YEAR : 1995-96 M/S.NATURAL ENERGY PROCESSING CO., 36, WALLAJAH ROAD, CHENNAI-600 002. PAN AAAFN9319H. VS. THE INCOME-TAX OFFICER, BUSINESS WARD VII(1), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.SIVARAMA N, ADVOCATE RESPONDENT BY : SHRI S.DASGUPTA, IR S, JCIT DATE OF HEARING : 21 ST AUGUST, 2012 DATE OF PRONOUNCEMENT : 21 ST AUGUST, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THESE TWO APPEALS ARE FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 1995-96. THE APPEALS A RE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TA X(APPEALS)- IX AT CHENNAI, BOTH DATED 17-2-2012. BOTH THE APPE ALS ARE PENALTY APPEALS; ONE ARISING OUT OF SECTION 271(1)( B) AND THE - - ITA 1089 & 1090 OF 2012 2 OTHER ARISING OUT OF SECTION 271(1)(C) OF THE INCOM E-TAX ACT, 1961. THE PENALTY LEVIED UNDER SECTION 271(1)(B) I S ` 10,000/-. THE PENALTY LEVIED UNDER SECTION 271(10(C) IS ` 7,77,644/-. 2. FIRST WE WILL CONSIDER THE PENALTY APPEAL UNDER SECTION 271(1)(C) OF THE ACT. THERE WERE CREDITS R EFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE TO THE EXTENT OF ` 20,47,53,849/-, IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEA R UNDER APPEAL. THE ASSESSEE WAS DIRECTED TO EXPLAIN THE S OURCES AND BONA FIDES OF THOSE CREDITS. AT THE FIRST INSTANCE , THOSE CREDITS WERE ADDED TO THE INCOME OF THE ASSESSEE. LATER ON , IN SECOND APPEAL, THE APPELLATE TRIBUNAL REMANDED THE MATTER BACK TO THE ASSESSING OFFICER FOR PROPERLY VERIFYING THE INDIVI DUAL CREDITS REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE. THE DIRECTION GIVEN BY THE TRIBUNAL WAS COMPLIED WITH BY THE ASSE SSING OFFICER AND, ON VERIFICATION, HE ACCEPTED THE EXPLANATION O FFERED BY THE ASSESSEE TO A GREAT EXTENT. THE ASSESSEE WAS SUCCE SSFUL IN EXPLAINING BEFORE THE ASSESSING OFFICER THE GENUINE NESS OF THE CREDITS EXCEPT FOR AN AMOUNT OF ` 19,44,110/-. THIS AMOUNT WAS OFFERED BY THE ASSESSEE FOR ASSESSMENT AND THE ASSE SSMENT WAS COMPLETED AFTER MAKING AN ADDITION TO THE EXTEN T OF - - ITA 1089 & 1090 OF 2012 3 ` 19,44,110/-. THE QUANTUM ASSESSMENT WAS THUS COMP LETED AND ACCEPTED. 3. THE ASSESSING OFFICER INITIATED PENALTY PROCEED INGS WITH REFERENCE TO THE SAID ADDITION OF ` 19,44,110/-. THE EXPLANATIONS OFFERED BY THE ASSESSEE WERE REJECTED. THE COMMISSIONER OF INCOME-TAX(APPEALS) ALSO UPHELD THE LEVY OF PENALTY. THE ASSESSEE IS AGGRIEVED AND, THEREFORE, THE PRESENT APPEAL BEFORE US. 4. WE HEARD SHRI R.SIVARAMAN, THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE AND SHRI S.DASGUPTA, THE LEARNED JOINT COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENUE. 5. IT IS TO BE SEEN THAT AS AGAINST A HUGE AMOUNT OF ` 20,47,53,849/-, THE ASSESSEE HAS PROVED THE GENUIN ENESS EXCEPT IN THE CASE OF A SMALL PORTION AMOUNTING TO ` 19,44,110/-. IN OTHER WORDS, THE ASSESSEE HAS PROVED THE GENUINE NESS OF CREDITS AMOUNTING TO ` 20,28,09,739/- AGAINST THE TOTAL CREDITS OF ` 20,47,53,849/-. EVEN THOUGH SUMMONS WERE ISSUED B Y THE ASSESSING AUTHORITY, THE CREDITORS DID NOT RESPOND AND THE BALANCE AMOUNT OF ` 19,44,110/- REMAINED TO BE PROVED EITHER BY - - ITA 1089 & 1090 OF 2012 4 CONFIRMATION LETTERS OR BY PRESENCE OF THE CREDITOR S. THIS AMOUNT WAS ADDED AS INCOME OF THE ASSESSEE. 6. WHEN WE GO THROUGH THE BASIC FACTS OF THE CASE, WE FIND THAT THE ASSESSEE WAS SUCCESSFUL IN PROVING TH E CREDITS ALMOST TO THE FULL, EXCEPT A SMALL FRACTION OF THE TOTAL CREDITS. IT IS ALSO TO BE SEEN THAT THE ENQUIRY WAS MADE BY THE AS SESSING OFFICER AFTER A LONG SPAN OF PERIOD AS A RESULT OF THE REMAND ORDERED BY THE TRIBUNAL. THIS TIME FACTOR ALSO IMP AIRED THE POSSIBILITY OF GETTING PROPER EVIDENCES FROM THE RE MAINING CREDITORS. THE ASSESSEE HAS ADMITTED THE DIFFERENC E TO BE TREATED AS ITS INCOME. WE CANNOT SAY THAT THERE IS A CASE OF FURNISHING OF INACCURATE PARTICULARS. NEITHER CAN WE HOLD THAT THERE IS ANY CONCEALMENT OF INCOME, ONLY FOR THE RE ASON THAT THE SUFFICIENCY OF EVIDENCE DEMANDED BY THE ASSESSING A UTHORITY WAS SOMETHING HIGHER THAN THE EXPLANATION OFFERED B Y THE ASSESSEE. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LEVY OF PENALTY UNDER SECTION 271(1)(C) IS NOT AT ALL JUSTIFIED IN THIS CASE. THE PENALTY IS ACCORDINGLY DELETED. - - ITA 1089 & 1090 OF 2012 5 8. NOW, REGARDING THE PENALTY OF ` 10,000/- LEVIED UNDER SECTION 271(1)(B), WE HAVE TO APPRECIATE THE FACTS OF THE CASE. THE FIRM HAS ALREADY BECOME DEFUNCT. THE BU SINESS HAS COME TO A STANDSTILL AND THERE IS NO DAY-TO-DAY MAN AGEMENT OF THE AFFAIRS OF THE FIRM. IN THESE CIRCUMSTANCES, T HE TECHNICAL DEFAULT CONCEIVED UNDER SECTION 271(10(B) IS NOT JU STIFIED SO AS TO LEVY PENALTY OF ` 10,000/- ON THE ASSESSEE. THE PENALTY IS ACCORDINGLY DELETED. 9. IN RESULT, THESE TWO APPEALS FILED BY THE ASSES SEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 21 ST OF AUGUST, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 21 ST AUGUST, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.