Amar Quarry Pvt.Ltd., Baroda V. The Dy.CIT., Circle-1(1), Baroda

ITA 1126/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76894 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-06-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 15-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Keywords: Question of law; Reasonable cause; Wrong claim; Corroborative evidences
• Section: 273B; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NOS.1125 & 1126/AHD/2011 A.YS.2002-03 & 2004-05 AMAR QUARRY WORKS PVT. LTD., C-22, ISHWARSHANTI SOCIETY, KARELIBAUG, PAN: AABCA 5871D VS DCIT, CIRCLE-1(1), AAYKAR BHAVAN, RACE COURSE, BARODA. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J.P. JHANGID, SR.D.R. , ASSESSEE(S) BY : MS. URVASHI SHODHAN, A.R. / DATE OF HEARING : 25/06/2014 / DATE OF PRONOUNCEMENT: 30/06/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THESE TWO APPEALS HAVE BEEN FILED BY THE APPELLANT ARISING FROM THE ORDERS OF LEARNED CIT(A)-I, BARODA, RESPECTIVEL Y, DATED 28.02.2011 AND 07.02.2011. BOTH THE APPEALS ARE HEREBY DECIDED AS FOLLOWS: A. APPEAL AGAINST LEVY OF PENALTY U/S. 271(1)(C) 2. THE APPELLANT HAS CHALLENGED THE PENALTY LEVIED U/S.271(1)(C) OF RS.1,00,700/-. FACTS IN BRIEF AS EMERGED FROM THE C ORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 28.03.2005 AND DATED 27.03.2008 WERE THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF CONSTRUCTION OF ROAD. CERTAIN ADDITIONS HAVE BEEN M ADE AND THE PENALTY PROCEEDINGS WERE INITIATED IN RESPECT OF FOLLOWING DISALLOWANCES:- (I) PREVIOUS YEARS ADJUSTMENTS RS.2,443/- (II) OUT OF STAFF WELFARE EXPENSES RS.56,342/- ITA NOS.1125 & 1126/AHD/2011 AMAR QUARRY WORKS PVT. LTD. VS. DCIT, BARODA. A.YS. 2002-03 & 2004-05. - 2 (III) OUT OF MISCELLANEOUS EXPENSES RS.21,538/- (IV) UNACCOUNTED PURCHASES RS.29,949/- (V) FICTITIOUS LIABILITY RS.70,086/- (VI) UNACCOUNTED PURCHASES RS.31,695/- (VII) FICTITIOUS LIABILITY RS.19,793/- (VIII) UNACCOUNTED CASH PAYMENT RS.50,000/- 3. LEARNED AR HAS INFORMED THAT PENALTY IN RESPECT OF ITEM NOS. (II) & (III) PERTAINED TO DISALLOWANCE OF STAFF-WELFARE AND MISCELLANEOUS EXPENSES HAD ALREADY BEEN DELETED BY LEARNED CIT(A) BECAUSE IN QUANTUM PROCEEDINGS ADHOC DISALLOWANCES WERE MADE B Y AO ADOPTING 20% RATE OF DISALLOWANCE WHICH WAS REDUCED TO 10% B Y LEARNED CIT(A). IN RESPECT OF REST OF THE ITEMS, THE LEVY OF PENALT Y WAS CONFIRMED. 3.1 WE HAVE HEARD BOTH THE SIDES AND EXAMINED THE F ACTS. THE ITEM- WISE DECISION IN RESPECT OF THE ABOVE REFERRED DISA LLOWANCES IS AS UNDER: (A) IN RESPECT OF PREVIOUS YEAR ADJUSTMENT OF RS.2, 443/-, WE HAVE NOTED THAT THE SAME PERTAINED TO PREVIOUS YEAR AND SINCE THE EXPENDITURE DID NOT RELATE TO THE CURRENT FINANCIAL YEAR; HENCE, IT WAS DISALLOWED BY THE AO. ALTHOUGH, THE ASSESSEE HA D AGREED FOR THIS ADDITION BUT WE HAVE NOTED THAT THE DISALLOWAN CE WAS BASICALLY ON QUESTION OF LAW WHETHER THE IMPUGNED PREVIOUS YE AR ADJUSTMENT COULD BE ALLOWED DURING THE YEAR UNDER CONSIDERATIO N OR NOT. THIS IS NOT THE CASE OF THE REVENUE THAT THE SAID ADJUST MENT WAS A FALSE CLAIM. FOLLOWING RELIANCE PETRO PRODUCTS, 323 ITR 158 (SC) WE HEREBY DIRECT NOT TO LEVY THE CONCEALMENT PENALTY F OR THIS ITEM. (B) IN RESPECT OF UNACCOUNTED PURCHASES OF RS.29,94 9/- AND RS.31,695/- (ITEM NOS. 4 AND 6), WE HAVE FOUND THAT THE AO HAD GIVEN A FINDING ON FACTS THAT THE ASSESSEE HAD NOT RECORDED THE PURCHASES IN THE BOOKS OF ACCOUNT. ACCORDING TO AO, IT WAS ITA NOS.1125 & 1126/AHD/2011 AMAR QUARRY WORKS PVT. LTD. VS. DCIT, BARODA. A.YS. 2002-03 & 2004-05. - 3 DETECTED THAT THE SAID PARTY HAD RECORDED THE SALE OF THOSE ITEMS BUT THE ASSESSEE HAD NOT RECORDED THE PURCHASES, WHICH MEANS THE PURCHASES WERE UNACCOUNTED. FURTHER, IT WAS ALSO NO TED BY THE AO THAT THE ASSESSEE ITSELF HAD ADMITTED THE ELEMENT O F UNACCOUNTED PURCHASES AND AGREED FOR THE ADDITION. DUE TO THE C LEAR FINDING OF UNACCOUNTED PURCHASES WHICH WERE DETECTED AT THE TI ME OF ASSESSMENT PROCEEDINGS AND THAT FINDING SO FAR HAS NOT BEEN CONTRADICTED WITH SUPPORTING EVIDENCES, THEREFORE, AFFIRM THE LEVY OF PENALTY IN RESPECT OF THESE TWO ITEMS. (C) IN RESPECT OF ALLEGED FICTITIOUS LIABILITY OF R S.70,086/- AND RS.19793/- IT WAS NOTED BY THE AO THAT AS PER THE B OOKS OF THE ASSESSEE A LIABILITY OF RS.70,086/- IN THE NAME OF M/S. TIKITAR INDUSTRY WAS SHOWN, BUT ON THE OTHER HAND THE SAID CONCERN HAS SHOWN NIL BALANCE. THEY HAVE AFFIRMED THAT NOTHING WAS RECOVERABLE FROM THE ASSESSEE. THE ASSESSEE WAS ASK ED TO GIVE AN EXPLANATION ABOUT THE SAID DISCREPANCY IN THE RESPE CTIVE BOOKS OF ACCOUNTS BUT NO SATISFACTORY EXPLANATION WAS OFFERE D. WE, THEREFORE, OF THE OPINION THAT THE LIABILITY BEING FICTITIOUS BY ITS NATURE ITSELF; HENCE, LIABLE TO BE PENALIZED FOR SU CH UNTRUE CLAIM. WE, THEREFORE, FIND NO FALLACY IN THE ORDER OF LEAR NED CIT(A). HENCE, LEVY OF PENALTY IS CONFIRMED. FURTHER, WE HA VE NOTED THAT IN RESPECT OF SI WORKS QUARRY PVT. LTD. THERE WAS A DI SCREPANCY IN THE BALANCES SHOWN IN RESPECTIVE BOOKS OF ACCOUNT A ND THAT WAS NOT RECONCILED; THEREFORE, WE ARE ALSO OF THE VIEW THAT IN RESPECT OF LIABILITY OF RS.19793/- LEARNED CIT(A) HAS RIGHTLY UPHELD THE LEVY OF PENALTY, WHICH WAS ALSO ADMITTED BY THE APPELLAN T BEFORE HIM. ITA NOS.1125 & 1126/AHD/2011 AMAR QUARRY WORKS PVT. LTD. VS. DCIT, BARODA. A.YS. 2002-03 & 2004-05. - 4 (D) IN RESPECT OF UNACCOUNTED CASH PAYMENT OF RS.50 ,000/-, THE AO HAD INQUIRED FROM THE LEDGER ACCOUNT OF M/S. SI WORK QUARRY PVT. LTD. AND NOTED THAT THE IMPUGNED CASH PAYMENT WAS MADE WHICH WAS NOT RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. SINCE, THE ASSESSEE HAD FAILED TO GIVE EXPLANATION ABOUT THE SOURCE OF SUCH CASH PAYMENT, THEREFORE, IT WAS HELD AS UNE XPLAINED EXPENDITURE. EVEN BEFORE US, NO EXPLANATION ABOUT T HE REASON OF CASH PAYMENT NOT REFLECTED IN THE BOOKS OF ACCOUNT OF THIS ASSESSEE WAS GIVEN; HENCE, WE ARE UNABLE TO TAKE ANY OTHER V IEW BUT A VIEW TAKEN BY THE LOWER AUTHORITIES. HENCE, HEREBY AFFIR M THE LEVY OF PENALTY ON THIS AMOUNT. WE DIRECT ACCORDINGLY. GROU ND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. B. APPEAL AGAINST PENALTY U/S.271E OF IT ACT. 4. IT WAS NOTED BY THE AO IN THE ORDER PASSED U/S.2 71E OF IT ACT DATED 30 TH OF AUGUST, 2007 THAT THE ASSESSEE HAD REPAID THE L OANS BY WAY OF CASH DURING THE YEAR. HE HAS NOTED THAT AMOUNT O F LOAN REPAID IN CASH TO M/S. ASHOK LEYLAND FINANCE LTD. AND ASHOK LEYLAN D FINANCE LTD. (ROLLER). IN COMPLIANCE OF NOTICE U/S.271E, IT WAS INFORMED BY THE ASSESSEE THAT THE LOANS WERE TAKEN IN THE FINANCIAL YEAR 2001-02. THE ASSESSEE HAD ISSUED POST DATED CHEQUES TOWARDS REPA YMENT OF THE SAID LOAN. SOME OF THE POST DATED CHEQUES WERE DISHONOUR ED. THE EXPLANATION OF THE ASSESSEE WAS THAT IT WAS FORCED TO PAY THE A MOUNT IN CASH. THE ASSESSEE HAS ALSO CITED CBDT CIRCULAR NO.345 DATED 28 TH JUNE, 1982 AND REQUESTED THAT THE DISCRETION OF THE REVENUE AUTHOR ITIES U/S.273B SHOULD BE APPLIED FAVOURABLY. THE ASSESSEE HAS ALSO FURNIS HED ACCOUNT STATEMENT ISSUED BY M/S. ASHOK LEYLAND WHICH INDICATED THAT T HE AMOUNTS REPAID ITA NOS.1125 & 1126/AHD/2011 AMAR QUARRY WORKS PVT. LTD. VS. DCIT, BARODA. A.YS. 2002-03 & 2004-05. - 5 WERE DULY RECORDED IN THE BOOKS OF ACCOUNT OF THE S AID COMPANY AND ADJUSTED AGAINST THE LOAN ACCOUNT. IT WAS ALSO ARGU ED THAT THE GENUINENESS OF THE REPAYMENT OF LOAN WAS NEVER DOUBTED BY THE A O. THERE WAS APPREHENSION OF UNPLEASANT ACTION BY THE SAID FINAN CE COMPANY, THEREFORE, TO AVOID THE SAME IT WAS FORCED BY THE S AID COMPANY TO MAKE A PAYMENT IN CASH. HOWEVER, THE AO WAS NOT CONVINCED AND LEVIED THE PENALTY OF RS.4,57,500/- UPON THE ASSESSEE. 5 WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPE LLATE AUTHORITY, THE ACTION OF THE AO WAS JUSTIFIED. 6. HEARD BOTH THE SIDES. CASE RECORD PERUSED. WE HA VE NOTED THAT IN THE PAPER BOOK FILED BY THE ASSESSEE SEVERAL STATEM ENTS OF ACCOUNT OF RESPECTIVE YEARS IN WHICH THE LOAN WAS TAKEN BY THE ASSESSEE FROM M/S. ASHOK LEYLAND FINANCE LTD. ANNEXED. HENCE, THE FACT OF LOAN TAKEN IN THE PAST BY THE ASSESSEE WAS NOT IN DISPUTE. THE ASSESS EES EXPLANATION WAS THAT CERTAIN CHEQUES WERE DISHONOURED WHICH WERE TO WARDS REPAYMENT OF LOAN, DUE TO WHICH THE ASSESSEE WAS UNDER FEAR OF L EGAL ACTION BY THE SAID FINANCIAL COMPANY. THEREFORE TO AVOID UNPLEASANT LE GAL ACTION THE ASSESSEE HAS MADE THE REPAYMENT OF LOAN IN CASH. IN THE LIGHT OF THESE FACTUAL BACKGROUNDS, WE HAVE CONSIDERED THE PROVISI ONS OF SECTION 273B WHICH SAYS THAT IN SPITE OF ANYTHING CONTAINED IN T HE PROVISIONS OF SECTION 271E, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON FOR ANY FAILURE REFERRED TO IN THE SAID PROVISION IF HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. ACCORDING TO US, THERE WAS A FACT OF DISHONOURING OF CHEQUE AND IN CONSEQUENCE REPAYMENT OF LOAN IN CASH APPEARS TO BE A REASONABLE CAUSE, HENCE, NOT A FIT CASE TO IMPOSE A PENALTY ITA NOS.1125 & 1126/AHD/2011 AMAR QUARRY WORKS PVT. LTD. VS. DCIT, BARODA. A.YS. 2002-03 & 2004-05. - 6 U/S.271E OF IT ACT. SECTION 273B HAS EMPHASIZED THA T THERE SHOULD BE A REASONABLE CAUSE, WHICH CAN REASONABLY BE SAID TO BE A CAUSE WHICH PREVENTS A PERSON OF ORDINARY PRUDENCE AND AVERAGE INTELLIGENCE ACTING UNDER NORMAL CIRCUMSTANCES WITHOUT NEGLIGENCE AND U NDER BONA FIDE BELIEF. ASSIGNING THIS REASON, WE HEREBY REVERSE TH E FINDING OF LOWER AUTHORITIES AND DIRECT TO DELETE THE PENALTY. RESUL TANTLY, THE GROUND RAISED IS ALLOWED. 7. IN THE RESULT, THE APPEAL FOR A.Y.2002-03 IS PAR TLY ALLOWED AND THE APPEAL FOR A.Y.2004-05 IS ALLOWED. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 30/06/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD