M/s Shingar Garments, New Delhi V. ACIT, New Delhi

ITA 1140/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91039 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 12-02-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 27-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Keywords: Retraction
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G , NEW DELHI BEFORE SHRI H.S.SIDHU, J.M. AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 1140 /DEL/201 3 AY: 200 3 - 04 SHINGAR GARMETS VS. ACIT, CIRCLE 32(1) 66, SAROJINI NAGAR MARKET NEW DELHI NEW DELHI PAN: AABFS 4984 L (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI BRR KUMAR, SR.D.R. ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE O RDER OF THE LD.CIT(APPEALS) - XXVI, DELHI DATED 27.12.2012 PERTAINING TO THE AY 2003 - 04. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE ISSUAL OF NOTICE. THERE IS NO REQUEST FOR ADJOURNMENT EITHER. UNDER THESE CIRCUMSTANCES WE DISPOSE OF THE CASE EX PARTE QUA THE ASSESSEE ON MERITS AFTER HEARING THE SHRI BRR KUMAR, THE LD. SR. D.R. ON BEHALF OF THE REVENUE. 3. FACTS IN BRIEF: - THE FACTS OF THE CASE ARE BROUGHT OUT AT PARAS 2 TO 2.3 OF THE LD.CIT(A) S ORDER WHICH ARE EXTRACTED FOR READY REFERENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT, A PARTNERSHIP FIRM, IS ENGAGED IN THE BUSINESS OF TRADING IN READYMADE GARMENTS. A SURVEY OPERA TION U/S 133A OF THE INCOME - TAX ACT, 1961 WAS CONDUCTED AT THE BUSINESS PREMISES OF THE APPELLANT ON 10.1.2003 WHEREIN AN ADDITIONAL INCOME OF RS.60,00,000 / - WAS SURRENDERED. HOWEVER, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE APPELLANT DECLARED ONLY RS.44,82,981/ - ON ACCOUNT OF EXCESS STOCK AS AGAINST RS.60,00,000 / - SURRENDERED DURING THE SURVEY THEREBY RETRACTING TO THE EXTENT OF RS.14,25,928/ - . THIS RETRACTION WAS MADE ON THE GROUND THAT THE DISCOUNT ON THE TAG PRICE WAS 25% WHEREAS IT WAS ALLOWED @ 10% AT THE TIME SURVEY PROCEEDINGS. THE ASSESSING OFFICER DISALLOWED THIS GROUND OF APPELLANT AND ADDED THE RETRACTED AMOU NT OF RS.14,25,928/ - TO THE INCOME OF THE APPELLANT. 2.1 ON APPEAL, THE CIT (A) ALLOWED PARTIAL RELIEF TO THE APPELLANT BY RESTRICTING THE DISCOUNT AT 20% AS AGAINST 10% ALLOWED BY THE ASSESSING OFFICER. 2.2 ON FURTHER APPEAL BY THE DEPARTMENT AND ON FI LING THE CROSS OBJECTION BY THE APPELLANT, THE HON'BLE IT AT DETERMINED THE DISCOUNT ALLOWABLE AT 15% AS AGAINST 20% ALLOWED BY THE CIT(A). HOWEVER, SUBSEQUENTLY, ON A MISCELLANEOUS APPLICATION FILED BY THE APPELLANT, THE HON'BLE ITAT VIDE ITS ORDER DATED 4.9.2009 DIRECTED TO ALLOW 20% DISCOUNT ON THE TAG PRICE, AS BOTH THE DEPARTMENT AND THE APPELLANT AGREED THAT REDUCTION OF 20% ON TAG PRICE WOULD MEET THE ENDS OF JUSTICE. IN ORDER TO GIVE EFFECT T~ THIS ORDER OF THE HON'BLE ITAT, THE ASSESSING OFFICER RE COMPUTED THE INCOME OF THE APPELLANT AT RS.50,82,445/ - INSTEAD OF INCOME DETERMINED IN THE ORIGINAL ASSESSMENT ORDER OF RS.61 ,21 ,620 / - AS AGAINST THE RETURNED INCOME OF RS.45,97,920 / - . THE ASSESSING OFFICER HAD ALSO INITIATED PENALTY PROCEEDINGS U/S 271 (1 )(C) OF THE INCOME - TAX ACT, 1961. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE APPELLANT HAD SUBMITTED BEFO R E THE ASSESSING OFFICER THAT THE HON'BLE ITAT HAD DIRECTED TO ALLOW 20% DISCOUNT ON A MISCELLANEOUS APPLICATION MOVED BY THE APPELLANT WHEN BOTH THE DEPARTMENT AND THE APPELLANT HAD AGREED FOR REDUCTION OF 20% DISCOUNT ON TAG PRICE. IT WAS SUBMITTED THAT SINCE THE PENALTY PROCEEDINGS ARE DIFFERE NT PROCEEDINGS, IN VIEW OF VARIOUS CASE LAWS INCLUDING ANANTHRAM VEERSINGHAIAN & CO. 123 ITR 457 (SC), CIT VS. DEVANDAS PERUMAL & CO. (1983) 140 ITR 943 (BOM.), CIT VS. KALICHARAN AGGRAWALLA & CO. 146 ITR 634 (CAL.) AND CIT VS. NAWAB AND BROS 107 ITR 681 ( AIL), NO PENALTY IS LEVIABLE IN THIS CASE. 2.3. THE ASSESSING OFFICER CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND DID NOT FIND ANY MERIT IN THE SAME. THE ASSESSING OFFICER OBSERVED THAT THE CASE LAWS CITED BY THE APPELLANT ARE NOT RELEVANT AND ARE DIS TINGUISHABLE. HE OBSERVED THAT EVEN AFTER ALLOWING REDUCTION OF 20% ON THE TAG PRICE THERE WAS STILL A DIFFERENCE OF RS.4,40,853/ - WHICH THE APPELLANT COULD NOT JUSTIFY. THE ASSESSING OFFICER OBSERVED THAT EVEN THE HON'BLE ITAT DID NOT APPROVE THE RETRACTI ON MADE BY THE APPELLANT AND CONFIRMED THE ADDITION OF RS.4,40,853/ - ON THE BASIS OF 20 % DISCOUNT ON TAG PRICE. THE ASSESSING OFFICER FURTHER OBSERVED THAT HAD THIS CASE WAS NOT TAKEN UP FOR SCRUTINY, THE AMOUNT OF RS.4,40,853/ - WOULD HAVE REMAINED UNDET ECTED AND TAX THEREON WOULD HAVE BEEN EVADED. THE ASSESSING OFFICER THEREFORE, OBSERVED THAT THIS IS A CASE WHERE THE APPELLANT HAD WILLFULLY AND DELIBERATELY FILED INACCURATE PARTICULARS OF ITS INCOME AND CONCEALED INCOME TO AVOID INCIDENCE OF TAX. THE AS SESSING OFFICER ACCORDINGLY INVOKED THE PROVISIONS OF SECTION 271(1)(C) READ WITH EXPLANATION - I AND IMPOSED A PENALTY OF RS.1,62,012/ - . THE ASSESSING OFFICER JUSTIFIED THE IMPOSITION OF PENALTY U/S 271 (1 )(C) IN THIS CASE IN THE LIGHT OF JUDGMENT OF THE H ON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA & ORS. VS. DHARAMENDRA TEXTILES PROCESSORS & ORS. 306 ITR 277 (2008) AND THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. DRAPCO ELECTRIC CORPORATION 122 ITR 341. 4. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL WITHOUT SUCCESS. FURTHER AGGRIEVED THE ASSESSEE IS BEFORE US ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) ERRED IN CONFIRMING THE LEVY OF THE PENALTY OFRS. L,62,OI2 UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) ERRED IN HOLDING THAT THERE ARE SUFFICIENT GROUNDS IN SUSTAINING THE FINDING OF THE A.O. ABOUT THE CONCEALMENT. 3. ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) S ERRED IN HOLDING THAT THE APPELLANT MADE A BREACH OF ITS DUTY WHEN THE STOCK OF RS.60,OO,OOOI _ WAS NOT FOUND RECORDED IN THE BOOKS OF ACCOUNTS AT THE TIME OF SURVEY AND IT COULD NOT OFFER ANY EXPLANATION OF THE BREACH. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) S ERRED IN HOLDING THAT THE AMOUNT OF SURRENDER DURING THE COURSE OF SURVEY WAS NOT VOLUNTARY. HE FURTHER ERRED IN HOLDING THAT HAD THE SU RVEY PROCEEDINGS U/S 133A NOT CONDUCTED THE ASSESSEE WOULD NOT HAVE DECLARED THIS UNRECORDED STOCK. 5. FURTHER. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) S ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) BY IGNORING THE FAC TS THAT : (I) ADDITION CONFIRMED IS ONLY IN RESPECT OF DISCOUNT RATE NOT ON QUANTITY. (II) VALUATION OF THE STOCK BY SURVEY TEAM WAS DONE ONLY ON ESTIMATE BASIS BY REDUCING THE DISCOUNT RATE APPLIED BY THE ASSESSEE. (III) NO DISCREPANCIES IN THE BOOKS OF ACCOUNTS OR IN THE QUANTITIES OF CLOSING STOCK WERE FOUND. 6. THE ASSESSEE CRAVES LEAVE TO RAISE ANY NEW GROUND OR , MODIFY, OR DELETE OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEAL. PRAYER: YOUR HONOUR IS HUMBLY PR AYED TO ISSUE NECESSARY ORDER FOR CANCELLING THE IMPUGNED PENALTY ORDER U/S 271(1) OF THE INCOME TAX ACT. 5. AFTER HEARING THE LD. SR. D.R. AND PERUSING PAPERS ON RECORD, ORDERS OF AUTHORITIES BELOW, WE HOLD AS FOLLOWS. 5.1. AT PARA 6 PAGE 9 THE LD.CIT (A) HELD AS FOLLOWS. 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE A PPELLANT. I HAVE ALSO PERUSED THE CASE LAWS CITED BY BOTH BY THE ASSESSING OFFICER AS WELL AS BY THE APPELLANT. ON CONSIDERING ALL THE FACTS OF THE CASE AND THE A PPELLANT'S CONDUCT DURING THE PROCEEDINGS IN THIS CASE, I FIND THAT THERE IS SUFFICIENT G ROUND IN SUSTAINING THE FINDINGS OF THE ASSESSING OFFICER ABOUT THE C ONCEALMENT. IN THE INSTANT CASE, ON PERUSAL OF THE RECORD, IT IS NOTED THAT SURVEY U/S 133A WAS C ONDUCTED AT THE BUSINESS PREMISES OF THE APPELLANT. THE APPELLANT IN THE COURSE OF SURVEY HAD SURRENDERED R S .60,00,000/ - ON ACCOUNT OF EXCESS STOCK. HOWEVER, WHILE FILING THE RETURN OF INCOME THE APPELLANT DECLARED AN AMOUNT OF RS.44,82,981/ - THEREBY RETRA CTING TO THE EXTENT OF RS.14,25,928/ - OUT OF THE TOTAL AMOUNT SURRENDERED DURING THE COURSE OF SURVEY. THIS CONDUCT OF THE APPELLANT WAS NOT APPROVED EVEN BY THE HON'BLE ITAT WHO HAVE CONFIRMED THE ADDITION UPHOLDING THE PERCENTAGE OF DISCOUNT ALLOWED BY THE CIT (A) @ 20% OF TAG PRICE. THE PENALTY PROVISIONS WOULD OPERATE WHEN THERE IS CONCEALMENT OF PARTICULARS OF INCOME OR FAILURE TO DISCLOSE FULLY AND TRULY THE INACCURATE PARTICULARS OF INCOME. I AM OF THE VIEW THAT THE APPELLANT MADE A BREACH OF ITS DU TY WHEN THE STOCK OF S,60,00,OOO/ - WAS NOT FOUND RECORDED IN THE BOOKS OF ACCOUNTS AT THE TIME OF SURVEY AND IT COULD NOT OFFER ANY SATISFACTORY EXPLANATION OF THE BREACH. THE FAILURE OF THIS DUTY - TO MAKE A CORRECT AND COMPLETE DISCLOSURE OF PARTICULARS O F INCOME IS ONLY WHEN A PERSON FAILS IN HIS DUTY, HE CONCEALS THE PARTICULARS OF HIS INCOME. THEREFORE, IF THE DISCLOSURE MADE IS INCORRECT, HE MADE A BREACH OF HIS DUTY AND SUCH DEFAULT ENTAIL THE PENAL CONSEQUENCES CONTEMPLATED U/S 271(1)(C). THE AMOUNT SURRENDERED DURING THE COURSE OF SURVEY WAS NOT VOLUNTARILY. HAD THE SURVEY PROCEEDINGS U/S 133A NOT BEEN CONDUCTED BY THE DEPARTMENT THE APPELLANT WOULD HAVE NEVER DECLARED THIS UNRECORDED STOCK. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE, I HOLD THAT THE ASSESSING OFFICER HAS RIGHTLY IMPOSED PENALTY U/S 271(1)(C) OF THE INCOME - TAX ACT IN THIS CASE. ACCORDINGLY, THE PENALTY OF RS.1 ,62,012/ - LEVIED BY THE ASSESSING OFFICER IS CONFIRMED . 5.2. WE FIND NO INFIRMITY IN THIS ORDER OF THE FIRST APPELLATE AUTHORITY. IN THE RESULT WE UPHOLD THE SAME AND DISMISS THIS APPEAL OF THE ASSESSEE. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH MAY, , 2015. SD/ - SD/ - ( H.S. SIDHU ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: THE 07 TH MAY, 2015 *MANGA COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR