M/s. Govinda Processers, Surat V. The ACIT.,Circle-4, Surat

ITA 1159/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9895 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-09-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 15-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Keywords: Additional evidence; Corroborative evidences; Tax effect
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.1159/AHD/2010 A. Y.: 2005-06 M/S. GOVINDA PROCESSORS, C/O. SONI ASSOCIATES, 105, RESHAMWALA MARKET, RING ROAD, SURAT VS THE A. C. I. T. CIRCLE,4, C/O. INCOME TAX OFFICER, WARD 6(2), SURAT PA NO. AACFG 5272 G (APPELLANT) (RESPONDENT) APPELLANT BY WRITTEN SUBMISSION RESPONDENT BY SHRI K. M. MAHESH, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-IV, SURAT DATED 15- 12-2009 FOR ASSESSMENT YEAR 2005-06 CHALLENGING LEVY OF PENALT Y U/S 271 (1) ( C ) OF THE IT ACT. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. THE ASSESSEES REPRESENTATIVE FILED A WRITTEN SUBMI SSION. 3. WE HAVE HEARD THE LEARNED DR AND PERUSED THE FIN DINGS OF THE AUTHORITIES BELOW. THE WRITTEN SUBMISSION FILED BY THE ASSESSEE IS ALSO TAKEN INTO CONSIDERATION. 4. THE FACTS OF THE CASE FOR LEVYING PENALTY AND PA SSING THE PENALTY ORDER ARE THAT ON VERIFICATION OF ANNEXURE B AND D OF THE AUDIT REPORT FILED ALONG WITH THE RETURN OF INCOME IT WAS NOTICE D THAT THE ASSESSEE HAD SHOWN TO HAVE RECEIVED SUMS FROM EMPLOYEES TOWARDS CONTRIBUTION TO PROVIDENT FUND. THE ASSESSEE MADE TOTAL CONTRIBUTIO N AMOUNTING TO RS.5,81,022/-. IT WAS BROUGHT TO THE NOTICE THAT NO SUPPORTING EVIDENCES WERE FOUND ON RECORD WITH REGARD TO THE PROOF OF HA VING DEPOSITED THE ITA NO.1159/AHD/2010 M/S. GOVINDA PROCESSORS VS ACIT, CIR-4, SURAT 2 AMOUNT OF PF AND ESI CONTRIBUTION TO THE RESPECTIVE ACCOUNT. THE ASSESSEE WAS GIVEN OPPORTUNITIES TO APPEAR BEFORE T HE AO TO FURNISH THE DETAILS FOR THE ABOVE. BUT THE ASSESSEE FAILED TO D O SO. THEREFORE, THE AO OBSERVED THAT AS PER SECTION 36(1) OF THE IT ACT, T HE ASSESSEE FAILED TO MAKE PAYMENTS AND DEPOSIT WITH REGARD TO PF AND ESI WITHIN STIPULATED TIME. SIMILARLY, THE ASSESSEE FAILED TO EXPLAIN THE INFLATED ADMINISTRATIVE EXPENSES AMOUNTING TO RS.6,98,116/-. THEREFORE, THE AO DISALLOWED RS.1,42,263/- @ 0.35% BEING THE DIFFERENCE OF PERCE NTAGE OF ADMINISTRATIVE EXPENSES ON THE TURNOVER AS COMPARED TO THE PRECEDING YEAR. FOR BOTH OF THESE, THE AO MADE QUANTUM ADDITI ON OF RS.7,23,285/-. TREATING THIS QUANTUM ADDITION OF RS.7,23,285/- AS ASSESSEES CONCEALED INCOME THE AO INITIATED PENALTY PROCEEDINGS AND LEV IED PENALTY OF RS.2,64,668/-. THE ASSESSEE IS IN CONTENT OF THIS P ENAL PROCEEDINGS. 5. IT WAS EXPLAINED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE COULD NOT HAVE PRODUCED THE REQUIRED EVIDENCES BUT EXPENS ES WERE INCURRED FOR THE PURPOSE OF BUSINESS. IT WAS CLARIFIED THAT PAYM ENTS REGARDING CONTRIBUTED FUNDS WERE DEPOSITED TO THE CREDIT OF T HE RESPECTIVE DEPARTMENT AND DATE OF PAYMENTS WERE MENTIONED IN T HE AUDIT REPORT. IT IS ALSO STATED THAT OFFICE AND ADMINISTRATIVE EXPEN SES HAVE NOT BEEN INFLATED. THE REMAND REPORT FROM THE AO WAS CALLED FOR IN WHICH THE AO SUBMITTED BEFORE THE LEARNED CIT(A) THAT NO APPEAL HAS BEEN FILED AGAINST THE QUANTUM ORDER WHERE ADDITIONS WERE MADE AND THE RE WAS NO TAX EFFECT. REPLY WAS ALSO FILED REGARDING EVIDENCES NO W FILED. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE NOTED THAT NO WHERE THE ASSESSEE HAS BEEN ABLE TO BRING OUT REASONS FOR ITS REPEATED AND UTTER FAILURE TO FURNISH THE RELEVANT SUPPORTING EVIDENCE S WHICH WERE REQUIRED BY THE AO CONSTANTLY DURING THE ASSESSMENT PROCEEDI NGS. THE ASSESSEE HAS NOT MADE OUT ANY CASE THAT THE AO HAS REFUSED T O ENTERTAIN THE EVIDENCES FURNISHED BEFORE HIM. THE LEARNED CIT(A), THEREFORE, DID NOT ITA NO.1159/AHD/2010 M/S. GOVINDA PROCESSORS VS ACIT, CIR-4, SURAT 3 CONSIDER THE ADDITIONAL EVIDENCES AND ALSO CONFIRME D THE PENALTY ORDER AND DISMISSED THE APPEAL OF THE ASSESSEE. 6. ON CONSIDERATION OF THE SUBMISSION OF THE LEARNE D DR AND CONSIDERING THE WRITTEN SUBMISSION OF THE ASSESSEE, WE DO NOT FIND IT TO BE A FIT CASE FOR INTERFERENCE. ADMITTEDLY, THE AO PASSED EX-PARTE ASSESSMENT ORDER U/S 144 READ WITH SECTION 14(3) OF THE IT ACT BECAUSE THE ASSESSEE DID NOT COMPLY WITH THE STATUTORY NOTI CES. THE AO SPECIFICALLY NOTED THAT NO SUPPORTING EVIDENCES HAV E BEEN FILED ON RECORD TO PROVE OF HAVING MADE PAYMENTS OF PROVIDENT FUND AND ESI CONTRIBUTIONS. SIMILARLY, FOR OTHER EXPENSES, THE A O NOTED THAT THE EXPENSES OF THE ASSESSEE WERE 1.72% OF THE TURNOVER , WHEREAS IN THE PRECEDING ASSESSMENT YEAR IT WAS 1.37% OF THE TURNO VER. IN THE ABSENCE OF ANY SUPPORTING DETAILS AND NON-APPEARANCE BY THE ASSESSEE, THE ADDITION WAS ALSO MADE ON ACCOUNT OF OTHER EXPENSES . THE AO ALSO NOTED IN THE ASSESSMENT ORDER THAT SEVERAL STATUTORY NOTI CES WERE ISSUED TO THE ASSESSEE BUT NONE HAD BEEN COMPLIED WITH. IT WOULD, THEREFORE, SHOW THAT THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE AND DET AILS BEFORE THE AO AT THE ASSESSMENT STAGE AS REQUIRED BY THE AO. WHEN TH E PENALTY PROCEEDINGS WERE INITIATED THE AO GAVE SPECIFIC NOT ICES TO THE ASSESSEE TO SHOW CAUSE WHY PENALTY SHOULD NOT BE IMPOSED. HOWEV ER, THE ASSESSEE DID NOT RESPOND TO ANY OF THE STATUTORY NOTICES AND DID NOT FILE ANY EXPLANATION OR SUBMISSION BEFORE THE AO AT THE PENA LTY STAGE. THE AO, THEREFORE, CONSIDERING THE FINDING OF THE ASSESSMEN T ORDER AND THAT THE ASSESSEE FAILED TO EXPLAIN ANY OF THE ISSUES NOTED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND IS LIABLE FOR P ENALTY. BEFORE THE LEARNED CIT(A), THE ASSESSEE FILED SOME DETAILS, BU T THE ASSESSEE FAILED TO MAKE OUT ANY CASE FOR ADMISSION OF ADDITIONAL EVIDE NCES AT THE APPELLATE STAGE AS PER RULE 46A OF THE IT RULES. THE ASSESSEE IN THE GROUND OF APPEAL ALSO HAS NOT RAISED ANY SPECIFIC GROUND FOR ADMISSION OF ADDITIONAL GROUND OF APPEAL EITHER AT THE FIRST APP ELLATE STAGE OR BEFORE ITA NO.1159/AHD/2010 M/S. GOVINDA PROCESSORS VS ACIT, CIR-4, SURAT 4 THE TRIBUNAL. EVEN THE FINDINGS OF THE LEARNED CIT( A) HAVE NOT BEEN CHALLENGED WITH REGARD TO NON-CONSIDERATION OF ADDI TIONAL EVIDENCES AT THE FIRST APPELLATE STAGE. THE ASSESSEE IN THE WRIT TEN SUBMISSION FILED COPY OF THE AUDIT REPORT AND SOME RECEIPTS SHOWING PAYMENTS OF PROVIDENT FUND AND ESI CONTRIBUTION BUT THE RECEIPT S COULD NOT BE TAKEN INTO CONSIDERATION AS THE ASSESSEE HAS NOT MADE ANY CASE FOR ADMISSION OF ADDITIONAL EVIDENCES EITHER BEFORE THE LEARNED C IT(A) OR BEFORE THE TRIBUNAL. IT, THEREFORE, STANDS PROVED THAT THE ASS ESSEE HAS NOT FILED ANY EVIDENCES OR DETAILS TO SUPPORT BOTH THE ITEMS ON W HICH PENALTY HAS BEEN IMPOSED. THE ASSESSEE HAS FAILED TO OFFER ANY EXPLA NATION BEFORE THE AO AT THE ASSESSMENT PROCEEDINGS AS WELL AT THE PENALT Y PROCEEDINGS. NO APPEAL IS FILED ON QUANTUM TO CHALLENGE THE ADDITIO N ON MERIT. THEREFORE, ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER HAS CORROBORATIVE VALUE TO SUSTAIN THE ORDER OF PENALTY. EXPLANATION (1) TO SECTION 271 (1) (C) OF THE IT ACT READS AS UNDER: EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFIC ER OR THE [***] [COMMISSIONER (APPEALS)] [OR THE COMMISSIONER] TO B E FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE I S NOT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANAT ION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE P URPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. HONBLE M.P. HIGH COURT IN THE CASE OF VIMAL GINNING AND PRESSING FACTORY V. CIT [2005] 279 ITR 100 AND IN THE CASE O F RUKMINI BAI V. COMMISSIONER OF INCOME-TAX [2005] 276 ITR 650 CONFI RMED THE PENALTY ITA NO.1159/AHD/2010 M/S. GOVINDA PROCESSORS VS ACIT, CIR-4, SURAT 5 WHEN NO EXPLANATION WAS FILED AT THE PENALTY STAGE. CONSIDERING THE FACTS OF THE CASE AS NOTED ABOVE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT MADE ANY ATTEMPT TO EXPLAIN ANY OF THE ADDITIONS AT THE PENALTY STAGE AND HAS THUS FAILED TO OFFER ANY EXPLANATION BEFORE THE AO. THEREFORE, EXPLANATION (1) TO SECTION 271 (1) ( C ) OF THE IT ACT IS CLEARLY ATTRACTED IN THE CASE OF THE ASSESSEE. THE AO HAS THEREFORE, PR OVED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. THEREFORE, PENALTY WAS RIGHTLY LEVIED. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22-09-2010. SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 22-09-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD