The ACIT, Circle 3, JAMNAGAR V. Indian Construction company (Guj) Ltd, JAMNAGAR

ITA 1196/RJT/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56750 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 29-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: TDS
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI D.K. TYAGI (JM) AND SHRI A.L. GEHLOT (A M) I.T.A. NO.1196/RJT/2010 (ASSESSMENT YEAR 2005-06) ACIT, CIR.3 VS INDIAN CONSTRUCTION CO (GUJ) LTD JAMNAGAR JAM JODHPURWALA BLDG 1 ST FLOOR, NEAR TOWN HALL JAMNAGAR PAN : AAACI7845N (APPELLANT) (RESPONDENT) DATE OF HEARING : 30-09-2011 DATE OF PRONOUNCEMENT : 21-11-2011 APPELLANT BY : SHRI MK SINGH RESPONDENT BY: NONE O R D E R PER BENCH THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A), JAMNAGAR DATED 20-07-2010 PERTAINING TO ASSESSMENT YEAR 2005-06 WHEREBY HE CANCELLED THE PENALTY OF RS. 4,89,453 IMPOSED BY TH E ASSESSING OFFICER U/S 271(1)(C) OF THE ACT.. 2. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. AFT ER HEARING THE LD.DR WE PROCEED TO DISPOSE OF THE APPEAL ON MERIT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE CIT(A) CANCELLED THE PENALTY OBSERVING THAT THE ADDITION OF RS.1,84,000 BEING EX CESS DEBIT OF RENT WAS MADE INADVERTENTLY WHICH WAS RECTIFIED SUBSEQUENTLY. AN OTHER ADDITION ON WHICH ITA NO.1196/RJT/2010 2 PENALTY WAS IMPOSED IS RS.5,93,942 BEING UNDER-STAT EMENT OF RECEIPTS, WHICH WAS MADE ON AGREED BASIS AND THE SAME REPRESENTED D IFFERENCE BETWEEN RECEIPTS RECORDED IN THE BOOKS OF ACCOUNT AND THE R ECEIPTS REFLECTED IN THE TDS CERTIFICATES. THE CIT(A) NOTED THAT THE ASSESSING OFFICER HAS LEVIED PENALTY SIMPLY ON THE REASON THAT THE ASSESSEE HAD AGREED F OR THE ADDITION AND THAT THE ASSESSING OFFICER HAS IGNORED THE FACT THAT THE SAI D AGREEMENT WAS SUBJECT TO THE CONDITION THAT NO PENALTY WOULD BE LEVIED. THE CIT( A) ALSO NOTED THAT THE MISTAKE WAS DUE TO THE INCORRECT APPRECIATION OF ACCOUNTING SYSTEM FOLLOWED BY THE THE ASSESSEE AND THE AGENCY WHICH AWARDED CONTRACT TO T HE ASSESSEE WHICH IS A GOVERNMENT AGENCY. A GOVERNMENT AGENCY FOLLOWS CAS H SYSTEM OF ACCOUNTING WHEREAS THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF A CCOUNTING. THE CIT(A) WAS OF THE VIEW THAT THE ADDITION WAS MADE BY DISAPPROV ING THE METHOD OF ACCOUNTING AND THEREFORE, NO CONCEALMENT PENALTY CAN BE LEVIED . THIRD AMOUNT ON WHICH PENALTY WAS LEVIED IS RS.5,59,633 ON ACCOUNT OF ADD ITIONAL WORK-IN-PROGRESS. THE ADDITION WAS MADE ON THE GROUND THAT THE ASSESSEE H AS FAILED TO SUBSTANTIATE ITS CLAIM THAT THE SAID AMOUNT WAS NOT REFLECTED IN THE BOOKS OF ACCOUNT AS NO WORK WAS CARRIED OUT ON THE PROJECT. THE CIT(A) OBSERVE D THAT THE ASSESSEE HAS AGREED TO THE ADDITION SUBJECT TO THE CONDITION THA T NO PENALTY WOULD BE LEVIED. ACCORDINGLY THE CIT(A) CANCELLED THE PENALTY ON THI S ADDITION, TOO. 4. WE FIND THAT THE REVENUE HAS NOT MADE OUT A CASE THAT THE ASSESSEE HAS FAILED TO FURNISH THE FULL AND TRUE PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. ON THE OTHER HAND, THE CIT(A) HAS RIGHTLY ITA NO.1196/RJT/2010 3 APPRECIATED THE FACTS OF THE CASE IN RESPECT OF EAC H OF THE ADDITIONS SUBJECTED TO PENALTY AND CANCELLED THE PENALTY. THE ADDITIONS W ERE MADE ONLY ON AGREED BASIS ON THE CONDITION THAT NO PENALTY WOULD BE LEV IED. APART FROM THAT THE ADDITION WAS ON ACCOUNT OF DIFFERENCE BETWEEN THE M ETHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE AND THE GOVERNMENT DEPARTM ENT WHICH AWARDED CONTRACT TO THE ASSESSEE. ONE OF THE ADDITIONS ON WHICH PENALTY WAS IMPOSED WAS THE RESULT OF AN INADVERTENT MISTAKE WHICH WAS RECTIFIED SUBSEQUENTLY. IN THE CIRCUMSTANCES, ON CONSIDERATION OF THE TOTALITY OF THE FACTS OF THE CASE AND THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS SAS PHARMACEUTICALS LTD 335 ITR 259 (DEL), WE UPHOLD THE ORDER OF CIT(A). 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON -10-2011. SD/- SD/- (D.K. TYAGI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT, DT : OCTOBER, 2011 PK/- ORDER PRONOUNCED ON 21-11-2011 SD/- SD/- JM AM COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A), JAMNAGAR 4. THE CIT, JAMNAGAR 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT