JSL Industries Ltd., Anand V. The ACIT., Anand Circle, Anand

ITA 1228/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9825 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-11-2016
• Assessment Year: 1997-1998
• Appeal Filed On: 01-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G C DAMINI
• Assessee Lawyers: J P SHAH
• Keywords: Business income; Depreciation; Wrong claim

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 1228/AHD/2013 ( / ASSESSM ENT YEAR : 1997-98) JSL INDUSTRIES LTD. NATIONAL HIGHWAY NO.8, AT MOGAR, DIST. ANAND / VS. ASST. COMMISSIONER OF INCOME TAX, ANAND CIRCLE, ANAND ./ ./ PAN/GIR NO. : AAACJ 4986 E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI J.P. SHAH, A.R. / RESPONDENT BY : SHRI G.C. DAMINI, SR. D.R. / DATE OF HEARING 10/11/2016 / DATE OF PRONOUNCEMENT 20/12/2016 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPOSITION OF PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT, WHICH WAS CONFIRMED BY THE LD. CIT(A). 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPANY IS ENGAGED IN THE MANUFACTURING BUSINESS OF SWITCHGEARS, SWITCH BOARDS, TRANSFORMERS, AIR CIRCUIT BREAKERS AND ITEMS AND PRODUCTS RELATED TO ELECTRICAL ENGINEERING INDUSTRY. THE GOODS BEING MANUFACTURED BY THE COMPANY ARE MAINLY OF TWO CATEGORIES (I) TAILORMADE MANUFACTURING PROCESS OF WHICH IS COMPLEX AND INVOLVES VARIOUS ITEMS, MATERIAL, LABOUR ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 2 - AND ENGINEERING SKILL AND (II) OFF THE SHELF WHICH PROCESS IS MAINLY ROUTINE ASSEMBLING. 3. A DETAILED SCRUTINY OF THE TRADING ACCOUNT SHOWS THAT DURING THE PREVIOUS YEAR RELEVANT TO CURRENT ASSTT. YEAR, THE ASSESSEE HAS MADE A NET SALE AFTER EXCLUDING THE EXCISE DUTY AMOUNTING TO RS.12,43,56,787/-. OUT OF THE TOTAL SALES MADE BY THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION SALES OF APPROXIMATELY 81% IS TO ITS SISTER CONCERN I.E. M/S JMP MARKETING SERVICES LIMITED, I.E. AMOUNTING TO RS.10,04,46,002/-. A PERUSAL OF THE BOOKS OF ACCOUNTS AND DETAILS FURNISHED BY THE ASSESSEE REVEALS THAT THESE SALES ARE MADE THROUGH JMP MARKETING SERVICES LIMITED COMPRISES OF TWO PARTS I.E. (A) SALES MADE ON PRINCIPLE TO PRINCIPLE BASIS AND (B) SALES MADE ON PRINCIPLE TO AGENT BASIS. 4. THE SALES MADE ON PRINCIPLE TO PRINCIPLE BASIS ARE DIRECT SALES WHERE NO COMMISSION EXCEPT CERTAIN DISCOUNT IS PAID, WHEREAS ON ACCOUNT OF SALES ON PRINCIPLE TO AGENT BASIS, COMMISSION IS PAID ON AND ABOVE SALES PRICE. DURING THE YEAR UNDER CONSIDERATION, IT IS NOTED THAT THE ASSESSEE COMPANY HAS PAID TOTAL COMMISSION AMOUNTING TO RS.44,68,222/- ON TOTAL SALES BEING MADE FROM THE FOLLOWING SEVEN PARTIES, AS UNDER:- SR.NO. NAME OF THE PARTY AMOUNT NATURE OF PAYMENT 1. J.M.P. MARKETING SERVICES LTD 40,18,188 COMMISSION @ 4% FOR ORDER RECEIVED. 2. SUDHARISH ENTERPRISES, 2,79,828 COMMISSION @ 2% FOR ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 3 - MUMBAI ORDER OF THE SIMONS LTD. 3. AROR AGENCIES, CHENNAI 76,259 COMMISSION @ 2.5% FOR ORDER OF TNEB AND @ 1.5% AGAINST INVOICES OF TNEB. 4. HETAL ENTERPRISES, BARODA. 24,253 COMMISSION @ 1.5% AGAINST ORDER OF GEB. 5. EVERST TRADERS, JODHPUR 4,300 COMMISSION @ 5% FOR ORDER OF SHRI RAM & CHEMICALS JODHPUR. 6. IDRISHI ELECTRICALS, LUCKNOW 4,392 COMMISSION @ 4% FOR ORDERS OF CESPO. 7. SANMAN ENGINEERING SERVICES VADODARA 61,000 COMMISSION @ 1% FOR ORDERS OF SURAT MUNICIPAL CORPORATION. TOTAL 44,68,222 5. THUS FROM THE ABOVE CHART, IT IS NOTED THAT THE SALES COMMISSION GIVEN TO THE THIRD PARTIES IS AROUND 2% OR LESS EXCEPT IN THE CASES OF AROR AGENCIES, CHENNAI AND IDRISHI ELECTRICALS, LUCKNOW (WHERE THE VOLUME OF COMMISSION PAID IS ALMOST NEGLIGIBLE) WHEREAS THE COMMISSION CLAIMED TO HAVE PAID BY THE ASSESSEE IN RESPECT OF ITS SISTER CONCERN/ ASSOCIATE CONCERN M/S. JMP MARKETING SERVICES LIMITED IS @ 4% AGAINST 7.5% IN THE IMMEDIATELY PROCEEDINGS ASSTT. YEAR. 6. IN THE PREVIOUS ASSESSMENT YEAR I.E. 1996-97 ALSO THE SAME ISSUE WAS INVOLVED WHERE IT WAS NOTED THAT THE ASSESSEE HAS PAID COMMISSION TO JMP MARKETING SERVICES LIMITED. MOGAR OF RS. 20,60,057/- AT THE RATE OF 7.5% FOR ORDERS RECEIVED AND ADDITIONAL COMMISSION @ 2.5% TO 3% DEPENDING ON THE NEGOTIATIONS, ON NET SALES MADE THROUGH BY JMP MARKETING SERVICES LTD. OF RS.8,64,43,000/- ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 4 - 7. ON ACCOUNT OF THESE FACTS AND REASONS AND FURTHER TAKING INTO CONSIDERATION, THE PROVISIONS OF SECTION 40A(2)(B) OF THE I.T. ACT, THE COMMISSION PAID TO ITS SISTER CONCERN WAS RESTRICTED AT THE RATE OF 2% AND THE EXCESS COMMISSION PAID WAS DISALLOWED. THE ABOVE DISALLOWANCE HAS BEEN CONFIRMED BY THE LD.CIT(A)-II, BARODA VIDE HIS ORDER NO. CAB/1- 522/98-99 DATED 20-12-1999 FOR THE ASSTT. YEAR 1996-97. 8. THE FACTS AND REASONS AS ENUMERATED ABOVE IN THE PREVIOUS ASSESSMENT I.E. ASSTT. YEAR 1996-97 REMAINS SAME FOR THE CURRENT ASSESSMENT YEAR AS WELL. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO SHOW CAUSE AND EXPLAIN IN THIS REGARD. ASSESSEE HAS REPEATED THE SAME CONTENTION VIDE ITS SUBMISSION AS MADE IN THE PREVIOUS ASSESSMENT YEAR. THE SAME WERE GONE THROUGH BUT NOT FOUND TO BE TENABLE IN VIEW OF THE REASONS AND FACTS AS ELABORATED THEREIN. THE ASSESSEE HAS PAID COMMISSION AT THE RATE OF 4% WHICH IS IN EXCESS OF ROUTINE 2% OF COMMISSION PAID BY IT TO THIRD PARTIES. FURTHER THE ASSESSEE HAS NOT GIVEN ANY BREAK UP OF COMMISSION PAID TO JMP MARKETING SERVICES LTD ON THE BASIS OF (I) PRINCIPLE TO PRINCIPLE BASIS AND (II) PRINCIPLE TO AGENT BASIS. IN VIEW OF THIS, THE ENTIRE COMMISSION PAID TO JMP MARKETING SERVICES LTD IS TREATED AS PAID ON PRINCIPLE TO PRINCIPLE BASIS. THUS ON THIS ACCOUNT, EXCESS COMMISSION PAID ABOVE 2% TO ITS SISTER/ASSOCIATE CONCERN WHICH WORKS OUT TO RS.20,09,268/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. THE SCRUTINY ASSESSMENT U/S.143(3) WAS FINALIZED ON 22/02/2000 DETERMINING THE TOTAL INCOME AT RS.80,43,735/-. THE ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 5 - FOLLOWING ADDITIONS WERE MADE IN RESPECT OF WHICH THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE IT ACT, 1961 WERE INITIATED. SR. NO. NATURE OF ADDITION AMOUNT (RS.) 1. DISALLOWANCE ON ACCOUNT OF EXCESS COMMISSION PAYMENT 2009263 2. DISALLOWANCE ON ACCOUNT OF EXCESS DEPRECIATION CLAIM 525000 3. DISALLOWANCE ON ACCOUNT OF R & D EXPENSES 1476411 9. PENALTY PROCEEDINGS 271(1)(C) OF THE ACT WERE INITIATED FOR CONCEALMENT OF INCOME AND FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME. ACCORDINGLY, A NOTICE U/S 274 RWS 271(1)(C) OF THE ACT DATED 22/02/2000 WAS ISSUED AND SERVED UPON THE ASSESSEE ON 28/02/2000 ALONG WITH THE ASSESSMENT ORDER, NOTICE OF DEMAND & CHALLAN. 10. THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE LD.CIT(A)-V, BARODA AGAINST THE ASSESSMENT ORDER OF THE ASSESSING OFFICER. THE STATUS OF THE ABOVE ADDITIONS/DISALLOWANCES DEALT WITH BY THE LD.CIT(A)-V, BARODA VIDE HIS ORDER DTD. 08/04/2003 IS AS UNDER: SR.NO. NATURE OF ADDITION AMOUNT (RS.) AMOUNT OF RELIEF (RS.) AMOUNT CONFIRMED (RS.) 1. DISALLOWANCE ON ACCOUNT OF EXCESS COMMISSION PAYMENT 2009263 2009263 0 2. DISALLOWANCE ON ACCOUNT OF EXCESS DEPRECIATION CLAIM 525000 0 525000 3. DISALLOWANCE ON ACCOUNT OF R & D CAPITAL EXPENSES 1476411 1476411 0 11. ON BEING AGGRIEVED WITH THE ORDER OF THE LD.CIT(A), THE ASSESSEE AND THE REVENUE PREFERRED 2 ND APPEAL BEFORE THE HONBLE ITAT. THE ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 6 - STATUS OF THE ABOVE ADDITIONS/DISALLOWANCES DEALT WITH BY THE HONBLE ITAT, AHMEDABAD VIDE ITS CONSOLIDATED ORDER DATED 02/11/2007 IS AS UNDER: SR NO. NATURE OF ADDITION AMOUNT (RS.) AMOUNT OF RELIEF (RS.) AMOUNT CONFIRMED (RS.) 1. DISALLOWANCE ON ACCOUNT OF EXCESS COMMISSION PAYMENT 2009263 DISMISSED AND CIT(A)S ORDER UPHELD 0 2. DISALLOWANCE ON ACCOUNT OF EXCESS DEPRECIATION CLAIM 525000 NO APPEAL BY ASSESSEE 525000 3. DISALLOWANCE ON ACCOUNT OF R & D EXPENSES 1476411 RESTORED BACK TO THE FILE OF AO 0 AS PER THE DIRECTION OF HONBLE ITAT, AHMEDABAD VIDE ITS CONSOLIDATED ORDER DATED 02/11/2007, THE AO DECIDED THE SET ASIDE ISSUE OF DISALLOWANCE ON ACCOUNT OF R&D EXPENSES OF RS. 1476411/- AGAINST THE ASSESSEE VIDE ORDER DATED 24/10/2008 GIVING EFFECT TO THE ITAT'S ORDER AND ADDED IT IN THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-IV, BARODA AGAINST THE ABOVE ORDER DATED 24/10/2008 GIVING EFFECT TO HON'BLE ITAT'S ORDER. THE LEARNED CIT(A)-IV, BARODA VIDE HIS ORDER DATED 19/10/2009 DISMISSED THE ASSESSEE'S APPEAL ON THIS POINT AND CONFIRMED THE ADDITION. 12. THE DISALLOWANCE OF RS.5,25,000/- WAS MADE ON ACCOUNT OF EXCESS DEPRECIATION CLAIM. IN AY: 1996-97, VIDE ORDER U/S.143(3) DATED ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 7 - 31/12/1998, THE AO FOUND THE ENTIRE TRANSACTION OF PURCHASE OF SOLAR ENERGY SYSTEM AS TO BE NON-GENUINE AND ACCORDINGLY THE CLAIM OF ASSESSEE FOR 100% DEPRECIATION WAS HELD TO BE BOGUS AND IN THE 1 ST APPELLATE AUTHORITY VIDE ORDER DATED 20/12/1999 CONFIRMED THE ABOVE ADDITION. THEREFORE, THE DEPRECIATION CLAIMED IN CURRENT AY ON THE SOLAR ENERGY SYSTEM WAS DISALLOWED AND ADDED IN THE TOTAL INCOME. THUS, IT WAS FOUND BY THE AO THAT THERE IS CONCEALMENT OF INCOME AND PENALTY PROCEEDINGS U/S.271(1 )(C) WERE INITIATED ON THIS POINT. 13. IT WAS FOUND BY THE AO THAT THE ASSESSEE HAS REDUCED WDV OF PLANT AND MACHINERY ON ACCOUNT OF TRANSFER OF TWO MACHINES TO R & D DEPARTMENT AND CLAIMED THE REDUCTION IN WDV U/S.35(L)(IV). IT WAS FURTHER FOUND MAT THE MACHINES IN QUESTION WERE NOT SUCH FROM WHICH QUALITATIVE RESULT OF THE PRODUCTS MANUFACTURED BY THE ASSESSEE COULD BE IDENTIFIED TO FIND OUT ANY DRAW BACK IN THE MANUFACTURED MACHINES. THE AO ALSO FOUND THAT THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE REGARDING EXPENDITURE ON SHIFTING OR INSTALLATION OF TWO MACHINES IN THE R & D DEPARTMENT AND ACTUAL USE OF THE MACHINES FOR SCIENTIFIC RESEARCH PURPOSE. ALSO, NO EVIDENCES OR TECHNICAL REPORTS SHOWING UTILIZATION OF TWO MACHINES FOR ANALYSIS OF COMPLAINTS RECEIVED ABOUT THE EXISTING PRODUCTS OR FOR THE DEVELOPMENT OF NEW PRODUCT DESIGNS HAVE BEEN FILED. IT ALSO FAILED TO SATISFACTORILY EXPLAIN AS TO HOW MANUFACTURING CONTINUED WITHOUT REPLACING THE TWO MACHINES. IN THE CIRCUMSTANCES, THE AO DISALLOWED THE CLAIM 100% DEDUCTION OF RS.1476411/- NET OF ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 8 - DEPRECIATION OF RS.492137/- U/S.35(L)(IV) OF THE ACT AND ADDED IN THE TOTAL INCOME OF THE ASSESSEE. THE PENALTY PROCEEDINGS U/S.271(L)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME WERE INITIATED ON THIS POINT. 14. SINCE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AS DISCUSSED ABOVE, A NOTICE U/S.274 RWS 271(L)(C) OF THE I.T.ACT,.1961 WAS ISSUED ON 20/11/2008 AND WAS DULY SERVED UPON THE ASSESSEE BY RPAD ON 09/12/2008. A FURTHER REMINDER SHOW CAUSE NOTICE WAS ISSUED ON 28/01/2011 WHICH WAS ALSO DULY SERVED UPON THE ASSESSEE. 15. IN RESPONSE TO THE NOTICE AS ABOVE, A REPLY DATED 12/02/2011 WAS RECEIVED ON 01/03/2011 INTER ALIA MAINLY STATING THAT: I) THE DEPRECIATION CLAIM WAS DISALLOWED ALMOST ON THE SIMILAR GROUNDS AS WAS DONE IN ORIGINAL ASSESSMENT. THE ASSETS ON WHICH DEPRECIATION DISALLOWED WAS PURCHASED FROM THE SISTER CONCERN WHO HAS ACCOUNTED FOR THE SALES AS ITS INCOME WHICH IS EXPENDITURE OF THE ASSESSEE SHOWN IN ITS BOOKS. NOW THIS BECOMES A CASE OF DOUBLE DISALLOWANCE. II) THIS IS A CASE WHERE THERE IS NO LOSS OF REVENUE. IT IS ONE THING TO DISALLOW CLAIM BUT WOULD BE TOTALLY INCORRECT TO IMPOSE PENALTY WHERE THERE HAS BEEN NO LOSS OF REVENUE. III) THERE WERE TWO VIEWS POSSIBLE IN RESPECT OF DISALLOWANCE ON ACCOUNT OF R & D EXPENSES AND WHEN TWO VIEWS ARE POSSIBLE, THERE CAN NEVER ARISE A CASE FOR INITIATION AND IMPOSITION OF PENALTY IN VIEW OF VARIOUS DECISIONS OF COURTS. IV) THE GUILT FRAME OF MIND AND INTENTION TO DEFRAUD REVENUE IS MISSING IN THE CASE OF THE ASSESSEE. V) IT WAS REQUESTED TO DROP THE PENALTY PROCEEDINGS. ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 9 - 16. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE IN THIS REGARD AND THE SAME IS NOT FOUND TO BE SATISFACTORY ON ACCOUNT OF FOLLOWING REASONS: I) THE ENTIRE TRANSACTION OF PURCHASE OF SOLAR ENERGY SYSTEM WAS FOUND TO BE BOGUS AND ACCORDINGLY CONFIRMED BY THE 1 ST APPELLATE AUTHORITY IN AY: 1996-97. AND ON THE SAME ASSETS THE ASSESSEE HAD CLAIMED DEPRECIATION IN THE INSTANT AY. IN VIEW OF THE TRANSACTIONS OF PURCHASE OF SOLAR ENERGY SYSTEM WAS ALREADY HELD BOGUS; THE CLAIM OF DEPRECIATION ON THE SOLAR ENERGY SYSTEM WAS ALSO BOGUS AND THEREFORE CORRECTLY DISALLOWED. II) WHETHER THERE IS A LOSS OF REVENUE OR NOT IS NOT THE REASONABLE REASON FOR NON-LEVYING THE PENALTY PARTICULARLY IN VIEW OF THE DETAILED DISCUSSION MADE IN THE ASSESSMENT ORDER IN RESPECT OF WRONG CLAIM OF DEPRECIATION ON THE TRANSACTION OF PURCHASE OF ASSET HELD BOGUS AND UNSUBSTANTIATED CLAIM OF R & D EXPENSES. III) THE ID. CIT(A) HAS UPHELD BOTH THE ADDITION / DISALLOWANCES ON MERITS. IV) ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE DECISIONS REFERRED ARE NOT APPLICABLE IN THE PRESENT CASE. V) IN VIEW OF THE DISCUSSION MADE IN THE ASSESSMENT ORDERS AND THE APPEAL EFFECT ORDER IN THIS REGARD, THE FACTS ARE CRYSTAL CLEAR AND THERE IS NO POSSIBILITY OF TWO VIEWS OR OPINION AND THE PENALTY PROCEEDINGS ARE CLEARLY ATTRACTED. 17. IN VIEW OF ABOVE DISCUSSION, IT WAS HELD THAT THE ASSESSEE HAS CONCEALED AND FURNISHED INACCURATE PARTICULARS OF ITS INCOME, WHICH ATTRACTS PROVISIONS OF SECTION 271(L)(C) OF THE ACT. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, AO WAS SATISFIED THAT THE ASSESSEE HAS CONCEALED THE INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(L)(C) OF THE ACT AND FOUND IT WAS A FIT CASE FOR LEVY OF PENALTY U/S. 271(L)(C) OF THE IT ACT. ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 10 - 18. AGAINST THE SAID ORDER, THE APPELLANT/ASSESSEE PREFERRED STATUTORY FIRST APPEAL BEFORE THE CIT(A) APPEAL, BUT HE DECLINED TO GIVE ANY KIND OF RELIEF TO THE ASSESSEE AND CONFIRMED THE PENALTY UNDER SECTION 271(1)(C) BY STATING THAT ASSESSEE HAS CONCEALED THE INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME, WITHIN THE AMENDMENT OF SECTION 271(1)(C). 19. WE HAVE GONE THROUGH THE IMPUGNED ORDER AND RELEVANT RECORD IN OUR CONSIDERED OPINION ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. NOW, THE LANGUAGE OF AND/OR MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE BUT IT WAS INCUMBENT UPON THE INSPECTING ASSISTANT COMMISSIONER TO COME TO A POSITIVE FINDING AS TO WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR-CUT FINDING WAS REACHED BY THE INSPECTING ASSISTANT COMMISSIONER AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE INSPECTING ASSISTANT COMMISSIONER IS LIABLE TO BE STRUCK DOWN. 20. THE PENALTY ORDER AND THE ORDER OF THE COMMISSIONER (APPEAL) SHOW THAT NO CLEAR-CUT FINDING HAS BEEN REACHED AND APPLYING THE RATIO TO THE FACTS OF THE CASE NEW SORATHIA ENGINEERING COMPANY VS. COMMISSIONER OF INCOME TAX (2006) 282 ITR 642 (GUJARAT). IT IS APPARENT THAT THE ORDER OF PENALTY CANNOT BE SUSTAINED AND THE TRIBUNAL ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 11 - COULD NOT HAVE SUSTAINED THE SAME. THE TRIBUNAL HAVING FAILED TO TAKE INTO CONSIDERATION AND DEAL WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT IT WOULD CONSTITUTE AN ERROR IN LAW WHICH GOES TO THE VERY BASIS OF THE CONTROVERSY INVOLVED AND HENCE, THE IMPUGNED ORDER OF THE TRIBUNAL CANNOT BE UPHELD. 21. IN THE VIEW THAT THE HONBLE GUJARAT HIGH COURT HAS TAKEN IT IS NOT NECESSARY TO REPRODUCE AND DEAL WITH THE OTHER CONTENTIONS RAISED BY LEARNED COUNSEL ON THE FACTS AND MERITS OF THE MATTER IN THE FACT SITUATION AND ASSESSEE/APPELLANT APPEAL WAS ALLOWED AND PENALTY ORDER U/S.271(1)(C) SET ASIDE BY THE HONBLE HIGH COURT. 22. IN VIEW OF THE ABOVE DISCUSSION ORDER OF THE CIT(A) IS SET ASIDE. 23. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 20/12/2016 SD/- SD/- (PRAMOD KUMAR ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20/12/2016 PRITI YADAV TRUE COPY ITA NO.1228/AHD/2013 JSL INDUSTRIES LTD VS. ACIT ASST.YEAR 1997-98 - 12 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-IV, BARODA 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD