J.D.ELECTRONICS INDUSTRIES P. LTD., Ahmedabad V. THE ITO-, Gandhinagar

ITA 1203/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60245 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-03-2012
• Assessment Year: 1994-1995
• Appeal Filed On: 17-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A TIRKEY
• Assessee Lawyers: U S BHATI
• Keywords: Loose papers

Judgement Text

ITA NO.1 203/AHD/2009 ASSESSME NT YEAR 1994- 95 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, A HMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T.A. NO. 1203 /AHD/2009 (ASSESSMENT YEAR: 1994- 95) J.D. ELECTRONICS INDUSTRIES PRIVATE LTD., SAKAR-7, NEHRU BRIDGE CORNER, ASHRAM ROAD, AHMEDABAD. (APPELLANT) VS. THE INCOME TAX OFFICER, WARD 2, GANDHINAGAR. (RESPONDENT) PAN: AAACJ 5317J APPELLANT BY : SHRI U.S.BHATI RESPONDENT BY : SHRI A. TIRKEY, SR. D.R. ( )/ ORDER DATE OF HEARING : 7-3-2012 DATE OF PRONOUNCEMENT : 13/4/2012 PER: SHRI ANIL CHATURVEDI, A.M. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. CIT (A), GANDHINAGAR DATED 7-1-2009 FOR THE ASSESSMENT YEAR 1994-95. 2. THE ONLY EFFECTIVE GROUND IS REGARDING DELETION OF PENALTY OF RS.1,48,466/- LEVIED U/S. 271(1)(C) OF THE INCOME T AX, 1961. ITA NO.1 203/AHD/2009 ASSESSME NT YEAR 1994- 95 . 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF TRADING OF ELECTRONICS I TEMS LIKE BLACK AND WHITE TELEVISION, CONVERTERS, BOOSTERS ETC. AS WELL AS TRADING OF ELECTRIC GOODS. DURING THE COURSE OF SEARCH ON 20-8 -1993 AT THE FACTORY PREMISES OF THE ASSESSEE AT GANDHINAGAR, TH E ASSESSEE HAD DISCLOSED RS.8,07,994/- ON THE BASIS OF EXCESS STOC K OF RS.1,61,750/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THERE WAS DIFFERENCE OF RS.2,19,876/- ON VERIFICATION OF RECONCILIATION CHART SUBMITTED BY THE ASSESSEE AND DISCREPANCY IN THE ST OCK TO THAT EXTENT WAS ADDED TO INCOME. FURTHER ON THE BASIS OF VARIOU S LOOSE PAPERS SEIZED, THE ASSESSEE ADMITTED CONCEALMENT OF RS.11, 43,632/- AND OUT OF THIS, A SUM OF RS.3,22,811/- WAS PERTAINING TO A .Y. 1994-95, THE SAME WAS ADDED TO THE TOTAL INCOME. THUS THE TOTAL ADDITION MADE TO THE TOTAL INCOME WAS OF RS 5,42,687/- ( RS. 2,19,87 6 + RS. 3,22,811/-). PENALTY U/S. 271(1) (C) OF RS.2,49,590/- (BEING 100 % OF TAX SOUGHT TO BE EVADED) WAS LEVIED VIDE ORDER DATED 26-9-2008. 4. AGAINST THE ORDER OF A.O. LEVYING PENALTY, ASSES SEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). 5. BEFORE CIT(A), THE ASSESSEE CONTENDED THAT THE A DDITION OF RS.2,19,876/- THAT WAS MADE ON ACCOUNT OF ALLEGED D ISCREPANCY OF STOCK WAS REDUCED BY CIT(A)-VI AND THE ADDITION WAS REDUCED TO RS.1,06,197/- AND WHICH WAS ALSO SUBJECT TO FURTHER VERIFICATION BY A.O. ACCORDINGLY, THE SAME WAS SET ASIDE AND MATTE R RESTORED TO A.O. FOR FRESH ADJUDICATION. IT WAS FURTHER STATED BY TH E ASSESSEE THAT NO ITA NO.1 203/AHD/2009 ASSESSME NT YEAR 1994- 95 . 3 ORDER WAS PASSED BY A.O. PURSUANT TO THE DIRECTIONS OF CIT(A) AND THE FIGURE OF RS.1,06,197/- HAS BEEN TAKEN AS IF CIT(A) HAS CONFIRMED THE ADDITION. WITH REFERENCE TO SECOND ADDITION OF RS.3 ,22,811/-, IT WAS STATED BEFORE CIT(A) THAT A.O. HAS NOT DISCUSSED TH E NATURE OF DISCLOSURE AT ALL. NO DISCUSSION HAD TAKEN PLACE IN THE PENALTY ORDER. THE APPELLANT HAD REQUESTED FOR A COPY OF STATEMENT OF THE DIRECTOR RECORDED DURING THE COURSE OF SEARCH BY THE A.O., B UT THE SAME WAS NOT SUPPLIED TO ASSESSEE. THE ASSESSEE STATED THAT THE ADDITION OF RS.3,22,811/- WHICH HAS BEEN MADE IS WITHOUT GIVING PROPER OPPORTUNITY TO THE APPELLANT TO GO THROUGH THE SEIZ ED MATERIALS AND NO OPPORTUNITY HAS BEEN GRANTED TO THE ASSESSEE TO SUB MIT ITS EXPLANATION. AFTER CONSIDERING THE SUBMISSIONS, CI T(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 7. THE MATTER HAS BEEN GIVEN DUE CONSIDERATION. IN THE SUBMISSION BEFORE ME, THE APPELLANT HAS RAISED A NU MBER OF ISSUES WHICH CHALLENGE THE VERY BASIS OF THE ASSESS MENT FRAMED FOR THE YEAR, IN CONTEXT OF WHICH THE PENALTY HAS B EEN INITIATED AND LEVIED. NO DOUBT THE PENALTY PROCEEDINGS ARE SE PARATE PROCEEDINGS THAN THE ASSESSMENT PROCEEDINGS, YET TH E ASSESSMENT FRAMED CANNOT BE REOPENED THROUGH THIS I NDIRECT ROUTE FOR THE PURPOSE OF LEVY OF THE PENALTY. THIS WOULD BE PARTICULARLY TRUE WHEN THE ASSESSMENT HAS ALREADY G ONE THROUGH THE ENTIRE PROCESS OF LITIGATION UPTO ITAT STAGE AN D THE FACTUAL POSITION STANDS SETTLED. KEEPING THAT IN MIND, THE ARGUMENTS OF THE ASSESSEE REGARDING THE MERGER OF THE DISCLOSURE S BY VARIOUS DIRECTORS LOCATED AT DIFFERENT STATIONS OR NON-AVAI LABILITY OF STATEMENT OR ORDERS PASSED BY CIT, WEST BENGAL-IX U /S. 132(12) WOULD BECOME REDUNDANT. WHAT WOULD BE MATERIAL IS T HE ADDITION WHICH FINALLY CAME TO BE SUSTAINED AFTER T HE ORDER OF THE ITAT DATED 12-12-2007 AND WHETHER PENALTY CAN BE LE VIED U/S. 271(1)(C) IN CONTEXT OF THOSE ADDITIONS. ITA NO.1 203/AHD/2009 ASSESSME NT YEAR 1994- 95 . 4 8. THE FIRST ADDITION TAKEN UP BY THE ASSESSING OFF ICER IN THE PENALTY ORDER IS ON ACCOUNT OF DISCREPANCY OF STOCK OF RS.2,19,876/-, WHICH HE HAS GONE AHEAD TO TAKE AS C ONCEALED INCOME. THUS, DOES NOT APPEAR TO BE CORRECT POSITIO N. ON THE OTHER HAND, THE FACTUAL POSITION AS BROUGHT OUT BY THE AUTHORIZED REPRESENTATIVE IN THIS CONTEXT APPEARS T O BE CORRECT. VIDE ORDER DATED 6-1-2001 THE CIT(A)-VI HAS OBSERVE D THAT THE APPELLANT HAS FURNISHED A RECONCILIATION OF THE CLO SING STOCK WHICH WOULD RESTRICT THE ADDITION TO RS.1,06,197/- BUT THIS RECONCILIATION IS STILL SUBJECT TO VERIFICATION AT THE ASSESSING OFFICERS STAGE, WHICH HE WAS EXPECTED TO DO WHILE GIVING THE APPEAL EFFECT TO THE CIT(A)S ORDER. IT IS CLEAR TH AT NO SUCH RECONCILIATION OR VERIFICATION WAS UNDERTAKEN BY TH E ASSESSING OFFICER AND THE ADDITION OF RS.2,19,876/- CONTINUED TO BE ADOPTED. NEITHER OF THE PARTIES HAS APPEALED ON THE ISSUE. HENCE, NOT ONLY THE FINAL ADDITION DIRECTED OF RS.1 ,06,197/- IS DIFFERENCE FROM THE ADDITION, I.E. RS.2,35,045/- ON THIS ACCOUNT, THE SAID FIGURE ITSELF IS NOT FINAL FIGURE AS PER C IT(A)S ORDER. THEREFORE, ONCE THE FIGURES FOR A PARTICULAR SET OF ADDITIONS ARE NOT FINAL AND THE ASSESSING OFFICER WHILE PASSING T HE ASSESSMENT ORDER IS CLEAR ABOUT THE EXTENT OF DISCR EPANCY, IT IS VERY CLEAR THAT AS A CONSEQUENCE THERETO IT CANNOT BE A CASE OF THE APPELLANT FURNISHING OF INACCURATE PARTICULARS LEADING TO CONCEALMENT OF INCOME FOR THE PURPOSES OF LEVY OF P ENALTY U/S. 271(1) (C ). A FIRM FINDING OF DEFAULT WILL BE A PR E-REQUISITE. 9. ON THE OTHER HAND, REGARDING THE SECOND ADDITION OF RS.3,22,811/-,MADE ON ACCOUNT OF DISCLOSURE WITH RE SPECT TO CONCEALED INCOME, AS PER THE CIT(A)S ORDER DATED 1 6-1-2001, THE ASSESSEE VIDE ITS LETTER DATED 4-8-1999 HAD IMPLICI TLY AGREED THAT IT WAS POSSIBLE UNDER MISIMPRESSION THAT THE SAME H AD BEEN DECLARED BY THE SISTER CONCERN M/S. J. D. COMPONENT S BUT HAD LATER CLARIFIED THAT NO SUCH DECLARATION HAD BEEN M ADE IN THAT CONCERN. HENCE THE ADDITION WHICH WAS BASED ON LOOS E PAPERS FOUND DURING THE COURSE OF SEARCH WAS CONFIRMED BY THE CIT (A). AT THE ITAT STAGE, VIDE ITS ORDER DATED 12-12-2007, IT HAS BEEN HELD THAT THE RECONCILIATION AS CLAIMED OR AS ASKED FOR HAVE NOT BEEN FILED BY THE APPELLANTS REPRESENTATIVE AND IT HAS BEEN ITA NO.1 203/AHD/2009 ASSESSME NT YEAR 1994- 95 . 5 ADMITTED THAT THE AMOUNTS WERE NOT IN THE BOOKS OF ACCOUNTS. CONSEQUENTLY, THE ADDITION WAS UPHELD. THEREFORE, A S FAR AS THIS ADDITION IS CONCERNED, THE SAME IS BASED ON THE LOO SE PAPERS FOUND FROM THE ASSESSEES PREMISES AND THERE HAS BE EN NO DECLARATION WITH RESPECT TO THE AMOUNTS COVERED IN THESE PAPERS AND THE ADDITION STANDS UPHELD BY THE AUTHORITIES. AS RIGHTLY POINTED OUT BY THE ASSESSING OFFICER, IN SUCH CIRCU MSTANCES, THE IMMUNITY GRANTED BY EXPLANATION-5 TO SECTION 271(1) (C) WOULD NOT BE AVAILABLE TO THE ASSESSEE. CONSEQUENTLY, THE SUM OF RS.3,22,811/- WOULD REPRESENT THE CONCEALED INCOME OF THE ASSESSEE. 10. HENCE, TO SUM UP, OUT OF THE TWO ADDITIONS CONS IDERED BY THE ASSESSING OFFICER, IN MY VIEW, ONLY THE SUM OF RS.3,22,811/- CAN BE CONSIDERED FOR LEVY OF PENALTY FOR THE PURPO SE. 6. AGAINST THE ORDER OF CIT (A), ASSESSEE IS NOW IN APPEAL BEFORE US. BEFORE US, THE LD. A.R. SUBMITS THAT A.O. HAS LEVIED PENALTY ONLY ON BASIS OF ADMISSION MADE DURING THE COURSE OF SEA RCH AND NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL. HE FURTHER SUBMITTED THAT THE COPY OF THE STATEMENT OF SHRI PRAKASH SHETHIA THAT WAS RECORDED ON 28-9-93 HAS NOT BEEN MADE AVAILABLE TO ASSESSEE. LD . A.R. ALSO PLACED ON RECORD ITS LETTER DATED 22-12-2008, WHEREIN IT H AS REITERATED THE FACT ABOUT NON AVAILABILITY OF THE COPY OF STATEMENT. A. R. ALSO DREW OUR ATTENTION TO THE FACT THAT PENALTY HAS BEEN LEVIED ONLY ON THE BASIS OF LOOSE PAPERS. 7. LD. D.R. ON THE OTHER HAND VEHEMENTLY URGED THAT THE PENALTY LEVIED BY A.O. SHOULD BE UPHELD AND HE RELIED ON TH E ORDER OF THE A.O. ITA NO.1 203/AHD/2009 ASSESSME NT YEAR 1994- 95 . 6 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE PENALTY H AS BEEN LEVIED AND IT IS ALSO A FACT THAT IT HAS BEEN LEVIED NOT ON THE B ASIS OF ANY INCRIMINATING MATERIAL SEIZED. IT IS ALSO A FACT TH AT THE ASSESSEE HAS NOT BEEN MADE AVAILABLE WITH THE COPY OF STATEMENT OF MR. PRAKASH SETHIA, WHICH WAS RECORDED ON 28-9-93 DURING THE CO URSE OF SEARCH. THE ASSESSEE HAS NOT BEEN GRANTED PROPER OPPORTUNIT Y TO GO THROUGH SEIZED MATERIAL AND SUBMIT ITS EXPLANATION. IT IS A LSO A FACT THAT THE ASSESSEE HAD SUBMITTED A RECONCILIATION OF CLOSING STOCK ACCORDING TO WHICH THE ADDITION SHOULD HAVE BEEN OF RS 1,06,197/ - AS AGAINST THE ADDITION OF RS.2,19,876/- MADE AND FURTHER THE ADDI TION IS SUBJECT TO VERIFICATION BY THE A.O. THE ASSESSEE HAS SUBMITTED EXPLANATION BUT THE EXPLANATION HAS NOT BEEN ACCEPTED, WITHOUT PROV ING IT TO BE FALSE OR UNTRUE. THE A.O. HAS ALSO NOT DISCHARGED THE BUR DEN TO PROVE THE CONCEALMENT. IN VIEW OF ALL THE AFORESAID FACTS, WE ARE OF THE VIEW THAT PENALTY U/S. 271(1)(C) CANNOT BE LEVIED. WE THEREFO RE CANCEL THE PENALTY OF RS.1,48,466/- LEVIED U/S. 271(1)(C). 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13- 4 - 2012. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. ITA NO.1 203/AHD/2009 ASSESSME NT YEAR 1994- 95 . 7 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) GANDHINAGAR. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 19 - 3 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 3 / 4 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 9 - 4 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 13 - 4 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 13 -4 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13 - 4 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..