M/s.Sky Consstruction Pvt. Ltd., Pune V. ITO, Ward 10(1), Pune

ITA 1217/PUN/2010

• Counselvise Citation: 121724514 RSA 2010
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 08-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMANT KUMAR C LUAVA
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1217/PN/2010 (ASSESSMENT YEAR : 2005-06) M/S SKY CONSTRUCTION PVT. LTD. PLOT NO. 501, SECTOR 25, PRADHIKRAN NIGDI, PUNE 410 044 PAN : AAKCS3300G . APPELLANT VS. INCOME TAX OFFICER WARD 10 (1), PUNE . RESPONDENT APPELLANT BY : MR. NIKHIL PATHAK RESPONDENT BY : MR. HEMANT KUMAR C. LUAVA DATE OF HEARING : 23-05-2013 DATE OF PRONOUNCEMENT : 24-05-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - V, PUNE DATE D 17.06.2010 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 14.09.2009 PASSED BY THE ASSESSING OFFICER, UNDER SECTION 271(1)(C) OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. IN THIS APPEAL, THE SOLITARY GRIEVANCE OF THE AS SESSEE IS WITH REGARD TO THE LEVY OF PENALTY UNDER SECTION 271(1)( C) OF THE ACT AMOUNTING TO RS. 3,26,695/-. 3. IN BRIEF, THE FACTS ARE AS FOLLOWS. THE APPELLAN T IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS INTER-ALIA ENGAGED IN THE BUSINESS OF CONSTRUCTION. FOR THE ASSESSMENT YEAR 2005-06, IT FILED A RETURN OF INCOM E DECLARING TOTAL INCOME OF RS.49,150/- WHICH WAS SUBJECT TO SCRUTINY ASSESSMENT ITA NO. 1217/PN/2010 M/S SKY CONSTRUCTION PVT. LTD. A.Y. 2005-06 UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 28 .12.2007 WHEREBY THE TOTAL INCOME WAS DETERMINED AT RS. 26,1 9,192/-. IN THE DETERMINATION OF THE TOTAL INCOME, THE ASSESSING OF FICER MADE AN ADDITION OF RS. 8,92,790/- ON ACCOUNT OF CERTAIN SU NDRY CREDITORS. AS PER THE ASSESSING OFFICER THE FOLLOWING THREE CREDI TORS I.E. (A) M/S MAHAVIR CONSTRUCTION RS. 3,70,290/-, (B) M/S GANES H CONSTRUCTION RS. 2,79,000/- AND (C) MR. ZAMAL KHAN RS. 2,96,500 /- TOTALING TO RS.8,92,790/- WERE UNEXPLAINED AND ASSESSABLE AS IN COME OF THE ASSESSEE. SUBSEQUENTLY, THE ASSESSING OFFICER HAS H ELD THE ASSESSEE GUILTY OF FURNISHING INACCURATE PARTICULAR S OF INCOME QUA THE AFORESAID ADDITION, WHICH IS LIABLE TO BE PENAL IZED UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, VIDE ORDER DATED 14.09.2009, THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271 (1)(C) OF THE ACT OF RS.3,26,695/- BEING 100% OF THE TAX SOUGHT T O BE EVADED ON THE AFORESAID ADDITION. THE CIT(A) HAS ALSO SUSTAIN ED THE PENALTY AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED REPRESENTATIVE FOR THE AS SESSEE POINTED OUT THAT BEFORE THE ASSESSING OFFICER, THE APPELLANT HAD SUBMITTED THE BILLS RAISED BY THE THREE CREDITORS A ND ALSO THE DETAIL OF WORK CARRIED OUT BY THEM AND MERELY BECAUSE THE ASS ESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION FURNISHED, T HE ADDITION MAY BE JUSTIFIED BUT THE PENALTY UNDER SECTION 271(1)(C) O F THE ACT WAS NOT LEVIABLE. WITH RESPECT TO THE TWO CREDITORS NAMELY, M/S MAHAVIR CONSTRUCTION AND M/S GANESH CONSTRUCTION, IT WAS PO INTED OUT THAT THE SAID PARTIES COULD NOT RESPOND TO THE VERIFICAT ION EXERCISE CARRIED OUT BY THE ASSESSING OFFICER MERELY BECAUSE OF CHAN GE OF THE ADDRESS BUT THERE WAS NO EVIDENCE TO PROVE THAT THE RE WAS ANY FALSITY IN THE CLAIM OF THE ASSESSEE. EVEN WITH REG ARD TO THE THIRD CREDITOR I.E. MR. ZAMAL KHAN, IT WAS POINTED OUT TH AT THE SAID PERSON APPEARED BEFORE THE ASSESSING OFFICER AND ADMITTED OF HAVING ITA NO. 1217/PN/2010 M/S SKY CONSTRUCTION PVT. LTD. A.Y. 2005-06 CARRIED OUT THE WORK FOR THE ASSESSEE. THE ONLY DIS CREPANCY WAS THAT THE QUANTUM OF WORK ADMITTED DID NOT CORRESPOND TO THE AMOUNT SHOWN BY THE ASSESSEE AS OUTSTANDING TO THE SAID CR EDITOR. THE LEARNED COUNSEL POINTED OUT THAT HAVING REGARD TO T HE PARITY OF REASONING IN THE CASE OF NATIONAL TEXTILES VS. CIT (2001) 249 ITR 125 (GUJ.), NO PENALTY IS LEVIABLE ON ADDITIONS MAD E IN TERMS OF THE DEEMING SECTIONS, FOR THE INSTANCE, SECTION 68 OF T HE ACT IN THE PRESENT CASE. 5. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE FO R THE REVENUE POINTED OUT THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN CORRECTLY LEVIED IN THE PRESENT CASE I NASMUCH AS THE PARTICULARS OF INCOME FILED BY THE ASSESSEE HAVE BE EN FOUND TO BE INCORRECT WITHIN THE MEANING OF SECTION 271(1)(C) O F THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THE PRESENT CASE, THE THREE CREDITORS WHOSE BALANCE WAS SHOWN AS OUTSTANDING IN THE ASSESSEES BOOKS OF ACCOUNT AMOU NTING TO RS.8,92,790/- WAS CONSIDERED BY THE ASSESSING OFFIC ER TO BE IN-GENUINE FOR THE FAILURE OF THE ASSESSEE TO OFFER A SATISFACTORY EXPLANATION THEREOF. IN SO FAR AS THE TWO CREDITORS NAMELY, M/S MAHAVIR CONSTRUCTION AND M/S GANESH CONSTRUCTION AM OUNTING TO RS.3,70,290/- AND RS.2,79,000/- RESPECTIVELY ARE CO NCERNED, IT IS CLEAR THAT IT IS A CASE WHERE ASSESSEES EXPLANATIO N LIES UNSUBSTANTIATED AND IT IS NOT A CASE WHERE THE ASSE SSEES EXPLANATION HAS BEEN FOUND TO BE FALSE OR DISPROVED . NOTABLY, THE VERIFICATION EXERCISE CARRIED OUT BY THE ASSESSING OFFICER WITH REGARD TO THE TWO CREDITORS DOES NOT REVEAL A POSITIVE INF ERENCE THAT THE CREDIT BALANCES WERE FALSE. NO DOUBT THE FAILURE ON THE PART OF THE ASSESSEE TO EXPLAIN THE TWO BALANCES SATISFACTORILY BY EVIDENCE WOULD RESULT IN AN ADDITION UNDER SECTION 68 OF THE ACT AND THE SAME ITA NO. 1217/PN/2010 M/S SKY CONSTRUCTION PVT. LTD. A.Y. 2005-06 IS QUITE JUSTIFIED IN THE PRESENT CASE, HAVING REGA RD TO THE FACTS AND CIRCUMSTANCES. SO, HOWEVER, IN THE PENALTY PROCEEDI NGS UNDER SECTION 271(1)(C) OF THE ACT, THERE IS NO POSITIVE MATERIAL TO SAY THAT THE CREDIT BALANCES WERE INDEED FALSE. THEREFORE, I N SO FAR AS THE PENALTY LEVIED WITH RESPECT TO THE CREDIT BALANCES PERTAINING TO M/S MAHAVIR CONSTRUCTION AND M/S GANESH CONSTRUCTION IS CONCERNED, THE SAME IS UNTENABLE, AND IS HEREBY DIRECTED TO BE DELETED. 7. THE CASE OF THE THIRD CREDITOR I.E. MR. ZAMAL KH AN AMOUNTING TO RS.2,96,500/-, IN OUR VIEW STANDS ON A DIFFERENT FO OTING. IN THIS CASE, THE VERIFICATION EXERCISE CARRIED OUT BY THE ASSESS ING OFFICER ESTABLISHED THAT THE CREDIT BALANCE WAS FALSE AND T HEREFORE, IN OUR VIEW THE SAME FALLS WITHIN THE MISCHIEF OF SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, WITH RESPECT TO THE AFORESAID ADD ITION, PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS HEREBY AFFIRMED. 8. IN THE RESULT, THE ASSESSEE PARTLY SUCCEEDS AS A BOVE. 9. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MAY, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 24 TH MAY, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY I.T.A.T., PUNE