Asst.CIT., Circle-4(1), Hyderabad V. M/s. Vasu Pharma Distributors, Hyderabad

ITA 1210/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5516 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NOS. 1210/HYD/2013 ASSESSMENT YEAR: 2009-10 ASST. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 4(1), HYDERABAD. VS. M/S VASU PHARMA DISTRIBUTORS, RESPONDEN T HYDERABAD. (PAN AACFV3660M) ITA NOS. 1211/HYD/2013 ASSESSMENT YEAR: 2009-10 ASST. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 4(1), HYDERABAD. VS. M/S VASU AGENCIES, RESPONDENT HYDERABAD. (PAN AABFV3596M) ITA NOS. 1212/HYD/2013 ASSESSMENT YEAR: 2009-10 ASST. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 4(1), HYDERABAD. VS. M/S VENKAT SAI AGENCIES, RESPONDENT HYDERABAD. (PAN AACFV0068) REVENUE BY : SMT. K. HARITHA ASSESSEE BY : SHRI K.C. DEVDAS DATE OF HEARING : 11/03/2014 DATE OF PRONOUNCEMENT : 14/03/2 014 ORDER PER P. MADHAVI DEVI, J.M.: ALL THESE APPEALS ARE FILED BY THE REVENUE FOR THE AY 2009-10 IN RESPECT OF GROUP COMPANIES, VIZ., I) M/S VASU ITA NOS. 1210 TO 1212/HYD/13 M/S VASU PHARMA DISTRIBUTORS AND OTHERS 2 PHARMA DISTRIBUTORS, II) M/S VASU AGENCIES, AND III ) M/S VENKAT SAI AGENCIES AND SINCE THE FACTS INVOLVED IN ALL THESE APPEALS ARE COMMON, ALL THESE APPEALS WERE HEARD TO GETHER AND ARE DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER. 2. IN THESE APPEALS, REVENUE IS AGGRIEVED BY THE OR DER OF THE CIT(A) IN DELETING PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SUR VEY CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEES ON 04/02/2009, DURING THE COURSE OF WHICH, CERTAIN DIS CREPANCIES WERE FOUND AND THE SAME WERE CONFRONTED TO THE RESP ECTIVE ASSESSEES. THE RESPECTIVE ASSESSEES THEREAFTER FILE D THEIR RETURNS OF INCOME OFFERING ADDITIONAL INCOME IN ADD ITION TO THE NORMAL INCOME AS PER THEIR BOOKS OF ACCOUNT FOR AY 2009-10. THE ASSESSMENT WAS COMPLETED BY MAKING ADDITION ON ACCOUNT OF DISALLOWANCE OF 10% OF EXPENDITURE CLAIM ED BY THE RESPECTIVE ASSESSEES. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) BY ISSUANCE OF NOTICE U/S 274 R.W.S 271 OF THE IT ACT DATED 22/12/2011. THE RESPECTIVE ASSESSEES FILED THEIR EXPLANATIONS STATING THAT OFFER OF ADDI TIONAL INCOME BY THEM WAS MADE VOLUNTARILY WITH A VIEW TO BUY PEA CE WITH THE DEPARTMENT AND THAT THERE WAS NO CONCEALMENT OF INCOME AS IT WAS ONLY DISALLOWANCE OF EXPENDITURE GENUINEL Y MADE. IT WAS ALSO STATED THAT DURING THE COURSE OF SURVEY AL SO, THERE WAS NO DISCOVERY OF ANY CONCEALMENT OF INCOME AND, THEREFORE, PENALTY U/S 271(1)(C) IS NOT ATTRACTED. THE AO, HOWEVER, WAS NOT CONVINCED WITH THE CONTENTIONS OF THE RESPECTIVE ASSESSEES AND HELD THAT, BUT, FOR THE SU RVEY ACTION BY THE REVENUE AUTHORITIES, THE RESPECTIVE ASSESSEE S WOULD ITA NOS. 1210 TO 1212/HYD/13 M/S VASU PHARMA DISTRIBUTORS AND OTHERS 3 NOT HAVE ADMITTED ADDITIONAL INCOME AND, THEREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, PENALTY OF 100% OF THE TAX SOUGHT TO B E EVADED WAS LEVIED ON ALL THE THREE ASSESSEES FOR THE ASSES SMENT YEAR UNDER CONSIDERATION. 4. AGGRIEVED, THE ASSESSEES PREFERRED APPEALS BEFO RE THE CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFO RE THE AO. THE CIT(A) DELETED THE PENALTY HOLDING THAT THE RE WAS NO SPECIFIC INCRIMINATING MATERIAL FOUND IN THE BUSINE SS PREMISES OF THE ASSESSEES DURING THE COURSE OF SURVEY FOR T HE AY UNDER CONSIDERATION AND ALSO THAT ADDITIONAL INCOME WAS O FFERED VOLUNTARILY BY THE ASSESSEES AND MERELY BECAUSE OF THE SAID OFFERING OF ADDITIONAL INCOME, PENALTY IS NOT AUTO MATICALLY ATTRACTED. HE CAME TO THE CONCLUSION THAT THERE IS NO MATERIAL BEFORE THE AO TO COME TO THE CONCLUSION THAT THERE WAS CONCEALMENT OF INCOME BY THE RESPECTIVE ASSESSEES. HE, ACCORDINGLY, DELETED THE PENALTIES IN THE CASES OF ALL THE ASSESSEES UNDER CONSIDERATION. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 6. THE LEARNED DR, SMT. K. HARITHA SUPPORTED THE OR DER OF THE AO WHILE THE LEARNED COUNSEL FOR THE ASSESSE E, SHRI K.C. DEVDAS PLACED RELIANCE UPON THE ORDER OF THE C IT(A). THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE SURVEY HAD TAKEN PLACED ON 04/02/2009 I.E. BEFORE T HE EXPIRY OF THE DATE OF FILING OF RETURN OF INCOME FOR THE R ELEVANT AY 2009-10. HE SUBMITTED THAT AT THE TIME OF SURVEY, B OOKS OF ACCOUNT OF THE ASSESSEES WERE NOT COMPLETE AND AFT ER RECONCILING THE BOOKS OF ACCOUNT, ASSESSEES HAVE F ILED THEIR ITA NOS. 1210 TO 1212/HYD/13 M/S VASU PHARMA DISTRIBUTORS AND OTHERS 4 RETURNS OF INCOME ON 29/09/2009, WHICH HAVE BEEN AC CEPTED BY THE DEPARTMENT. THEREFORE, ACCORDING TO HIM, THE RE WAS NO CONCEALMENT OF INCOME AND ALSO AS RIGHTLY POINTED O UT BY THE CIT(A) THERE WAS NO MATERIAL FOUND DURING THE COURS E OF SURVEY AND THUS THERE WAS NO CONCEALMENT OF INCOME BY THE ASSESSEES. 7. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THEIR RIVAL SUBMISSIONS AND ALSO MATERIAL ON RECORD , WE FIND THAT THE ASSESSEES HAD FILED THEIR RETURNS OF INCO ME AFTER THE SURVEY AND THE ONLY ALLEGATION OF THE REVENUE IS TH AT THE ASSESSEES HAD OFFERED ADDITIONAL INCOME IN THE RET URNS OF INCOME AS AGAINST THE INCOME IN THE BOOKS OF ACCOUN T AS ON THE DATE OF SURVEY. AS POINTED OUT BY THE LEARNED C OUNSEL FOR THE ASSESSEE, ON THE DATE OF SURVEY, THERE MAY BE C ERTAIN DISCREPANCIES IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEES. THE CONTENTION OF THE ASSESSEES THAT THE BOOKS OF ACCOUNT HAVE BEEN RECONCILED SUBSEQUENTLY BEFORE FILING OF THE RETURNS OF INCOME CANNOT BE SIMPLY BRUSHED ASID E. MORE SO, IN VIEW OF THE FACT THAT NO DISCREPANCY HAS BEE N FOUND BY THE REVENUE DEPARTMENT IN THE BOOKS OF ACCOUNT MAIN TAINED BY THE ASSESSEES (AND THE SAME WERE AVAILABLE DURI NG THE ASSESSMENT PROCEEDINGS), ON THE BASIS OF WHICH, RET URNS OF INCOME HAVE BEEN PREPARED. FURTHER, AS POINTED OUT BY THE LEARNED CIT(A), THE AO HAS NOT BROUGHT OUT ANY EVID ENCE IN THE PENALTY ORDER, SUCH AS, ANY MATERIAL FOUND DURI NG THE COURSE OF SURVEY ON THE BASIS OF WHICH HE HAS COME TO THE CONCLUSION THAT, BUT, FOR THE SURVEY OPERATION, THE ASSESSEES WOULD NOT HAVE OFFERED THE ADDITIONAL INCOME. IN TH E ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE O F SURVEY, FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, WE AR E IN ITA NOS. 1210 TO 1212/HYD/13 M/S VASU PHARMA DISTRIBUTORS AND OTHERS 5 AGREEMENT WITH THE FINDING OF THE CIT(A) THAT THE P ENALTY IS NOT ATTRACTED IN SUCH A SITUATION. IN VIEW OF THE S AME, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT (A). ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE IN A LL THE THREE APPEALS ARE DISMISSED. 8. IN THE RESULT, ALL THE THREE REVENUE APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 14/03/2014. SD/- SD/- (CHANDRA POOJARI) (P. MADHAV I DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 14/03/2014 KV COPY TO:- 1) ACIT, CIRCLE 4(1), HYDERABAD. 2) M/S VASU PHARMA DISTRIBUTORS 3) M/S VASU AGENCIES 4) M/S VENKAT SAI AGENCIES, 3-6-516, VASUS PHARMA HOUSE, STREET NO. 6, HIMAYATNAGAR , HYDERABAD. 5) CIT(A)-V, HYDERABAD 4) THE CIT-IV, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A. T., HYDERABAD.