Shri K. Athiappan, Salem V. ITO, Salem

ITA 127/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73829 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 15-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T S LAKSHMIVENKATARAMAN
• Keywords: Depreciation
• Section: 133A; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! ' , # $ BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO S . APPELLANT /RESPONDENT 124 TO 127 /MDS/201 4 (A.YS. 2002-03 TO 2005-06) MR. K.ATHIAPPAN 4/494-A, KANDAPPA COLONY, ANNATHANAPATTY, SALEM-636 002 PAN:ADCPA4296P INCOME TAX OFFICER, WARD-I (2), SALEM. 128/MDS/2014 (A.Y.2003-04) MR. A.SATHYAMOORTHY , 4/494-A, KANDAPPA COLONY, ANNATHANAPATTY, SALEM-636 002 PAN:AMQPS4242N INCOME TAX OFFICER, WARD-I (2), SALEM. / APPELLANT BY : MR. T.S.LAKSHMI VENKATARAMAN, CA /RESPONDENT BY : MR. SHAJI P.JACOB, ADDL. CIT / DATE OF HEARING : 11 TH MARCH , 2014 /DATE OF PRONOUNCEMENT : 28 TH MARCH, 2014 % / O R D E R PER CHALLA NAGENDRA PRASAD, JM: ALL THESE APPEALS ARE FILED BY THE ASSESSEES AGAI NST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEA LS)-, SALEM DATED 29.11.2013 IN SUSTAINING THE PENALTY L EVIED UNDER SECTION 271(1)(C) OF THE ACT. 2. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2002-03 TO 200 5-06 IN ITA NOS.124 TO 128/MDS/2014 2 THE CASE OF ASSESSEE MR. K.ATHIAPPAN AND THE ASSES SMENT IN CASE OF MR. A.SATHYAMOORTHY FOR THE ASSESSMENT Y EAR 2003-04 MADE ADDITIONS ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK, DIFFERENCE IN CLAIM OF DEPRECIATION, UNPROVE D TRADE CREDITORS, DISALLOWANCE OF JEWEL LOAN, DIFFERENCE I N PURCHASE OF TAPIOCA AND SUPPRESSION OF COMMISSION RECEIVED BY MR. A.SATHYAMOORTHY. THE ADDITIONS MADE BY THE ASSESSIN G OFFICER IN THE COURSE OF ASSESSMENT WERE AGREED. T HE ASSESSEES HAVE AGREED FOR THESE ADDITIONS WHILE COM PLETING THE ASSESSMENTS AND PAID TAXES. THE ASSESSING OFFIC ER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( C) OF THE ACT AND ISSUED NOTICES TO THE ASSESSEES CALLING FOR EXPLANATION AS TO WHY PENALTY SHOULD NOT BE IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEES DID NO T FILE ANY EXPLANATION IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEES WERE SEEKING TI ME AND ASKING ADJOURNMENTS FROM TIME TO TIME FOR FURNISHI NG OF REPLY. FINALLY, THE CASES WERE HEARD ON 25.06.2009 AND BO TH THE ASSESSEES DID NOT FURNISH ANY REPLY SATISFACTORILY EXPLAINING OR PRODUCING ANY MATERIAL EVIDENCE WITH REGARD TO P ENALTY ITA NOS.124 TO 128/MDS/2014 3 PROCEEDINGS INITIATED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF T HE ACT AS THE ASSESSEES HAVE NO SATISFACTORY EXPLANATION TO O FFER IN CONNECTION WITH THE PENALTY PROCEEDINGS. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) AFFIRMED THE P ENALTY LEVIED BY THE ASSESSING OFFICER IN BOTH THE CASES H OLDING THAT THERE WAS A SURVEY UNDER SECTION 133A OF THE ACT IN THE PREMISES OF THE ASSESSEES ON 27.10.2006 AND BOOKS W ERE IMPOUNDED IN THE COURSE OF SURVEY. BASED ON THE INCRIMINATING MATERIALS, BOOKS AND DOCUMENTS IMPOUN DED IN THE COURSE OF SURVEY ASSESSMENTS WERE REOPENED AND ASSESSMENTS WERE MADE MAKING ADDITIONS WHICH WERE A GREED BY THE ASSESSEES. BUT FOR THE SURVEY CONDUCTED BY T HE DEPARTMENT, THE ASSESSEES WOULD NOT HAVE OFFERED IN COME THEREFORE, ASSESSEES HAVE CONCEALED THEIR INCOME AN D FURNISHED INACCURATE PARTICULARS. AGGRIEVED, ASSE SSEES ARE IN APPEAL BEFORE US. 3. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEES SUBM ITS THAT IN ALL THESE ASSESSMENT YEARS ADDITIONS WERE M ADE BY ITA NOS.124 TO 128/MDS/2014 4 THE ASSESSING OFFICER AND THE ADDITIONS LIKE DIFFE RENCE IN CLOSING STOCK, DIFFERENCE IN CLAIM OF DEPRECIATION, DISALLOWANCE OF TRADE CREDITORS, DISALLOWANCE OF JEWEL LOAN, DIF FERENCE IN PURCHASE OF TAPIOCA ETC. HE SUBMITS THAT ALL THE A DDITIONS FOR THE ABOVE ASSESSMENT YEARS WERE COMPLETED ON AGREED BASIS. THE ASSESSEES HAVE PAID THE DEMANDS RAISED BUT FOR THE SMALL AMOUNT OUTSTANDING FOR THE ASSESSMENT YEA R 2002- 03 AND THE ASSESSEES CO-OPERATED WITH THE DEPARTMEN T IN FINALIZATION OF ASSESSMENT PROCEEDINGS AND ALSO PAI D SUBSTANTIAL TAX DEMAND. THE AUTHORIZED REPRESENTATI VE SUBMITS THAT ASSESSEES DID NOT HAVE MUCH OF EDUCATI ON AND WAS GUIDED BY ACCOUNTING STAFF WHICH RESULTED IN DI SCREPANCY IN MAINTENANCE OF BOOKS OF ACCOUNT WHICH ULTIMATELY RESULTED IN THE ABOVE ADDITIONS. HE SUBMITS THAT FOR INSTAN CE CLOSING STOCK AS ON 31.3.2002 AMOUNTING TO ` 11,17,600/- WAS BROUGHT FORWARD AS OPENING STOCK ON 1.4.2002 AS ` 19,48,525/- WHICH RESULTED IN ADDITION OF ` 8,32,925/- FOR THE ASSESSMENT YEAR 2002-03. HE SUBMITS THAT DIFFERENCE COULD BE ASSESSED ONLY FOR THE ASSESSMENT YEAR 2003-04 BU T STILL TO BUY PEACE WITH THE DEPARTMENT ASSESSEE HAS ACCEPTED ITA NOS.124 TO 128/MDS/2014 5 ADDITION FOR ASSESSMENT YEAR 2002-03 AND PAID TAXES . HE PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (322 ITR 158), DECISION OF HONBLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF CIT VS. METAL PRODUCTS OF INDIA (150 ITR 714), BANGALORE BENCH TRIBUNAL DECISION IN THE CASE OF V ASAVI SHELTERS VS. ITO (141 ITD 590), AND THE ORDER OF A HMEDABAD BENCH TRIBUNAL IN THE CSE OF DINESH L.MALI VS. ACIT IN ITA NO.574/AHD/2012 IN SUPPORT OF HIS CONTENTIONS. 4. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT BECAUSE OF THE SURVEY AND BOOKS & DOCUMENTS WERE IMPOUNDED, TH E ASSESSEES HAVE AGREED FOR THE ASSESSMENTS AND THERE WAS NO EXPLANATION FROM THE ASSESSEES AGAINST ADDITIONS MADE BY THE ASSESSING OFFICER. HE SUBMITS THAT BUT FOR THE SURVEY CONDUCTED BY THE DEPARTMENT, THE ASSESSEES WOULD NO T HAVE OFFERED THEIR CORRECT INCOME AND THE ADDITIONS WERE MADE BASED ON THE INCRIMINATING MATERIALS FOUND. DEPARTM ENTAL REPRESENTATIVE SUBMITS THAT THERE IS CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ITA NOS.124 TO 128/MDS/2014 6 ASSESSEES. HE FURTHER SUBMITS THAT THERE IS NO EVID ENCE ON RECORD TO SUGGEST THAT BUT FOR THE MISTAKES COMMIT TED BY THE ACCOUNTING STAFF THE ADDITIONS CAME TO BE MADE IN T HE ASSESSMENT. PLACING RELIANCE ON THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF MAC DATA (358 ITR 593) , DEPARTMENTAL REPRESENTATIVE SUBMITS THAT PENALTY UN DER SECTION 271(1)(C) OF THE ACT IS ATTRACTED EVEN IF T HE ASSESSEE AGREES FOR ADDITION FOR PURCHASE OF PEACE WITH THE DEPARTMENT WITHOUT PROPER EXPLANATION THAT THERE IS NO CONCEA LMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. HE SUBMITS THAT IN THIS CASE ASSESSEES HAVE NOT GIVEN ANY EXPL ANATION WHATSOEVER AND THEREFORE COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED IN SUSTAINING THE PENALTY LE VIED UNDER SECTION 271(1)(C) OF THE ACT. HE ALSO PLACES RELIAN CE ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS:- I) M.S.MOHAMMED MARZOOK VS. ITO (283 ITR 254)(MAD) II) CIT VS. DR.A.MOHD. ABDUL KHADAR (260 ITR 650) (MAD) III) CIT VS. C.ANANTHAN CHETTIAR (273 ITR 401) (MA D) ITA NOS.124 TO 128/MDS/2014 7 IV) M.N.RAJARAMAN VS. ACIT., 310 ITR (AT) 88 (TRIB) 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE CASE LAWS RELIED ON. THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN BOT H THE ASSESSEES CASES FOR THE ADDITIONS MADE IN THE ASSE SSMENTS FOR THE ASSESSMENT YEARS 2002-03 TO 2005-06 FOR DI FFERENCE IN CLOSING STOCK, DIFFERENCE IN CLAIM OF DEPRECIAT ION, FOR THE DISALLOWANCE OF TRADE CREDITORS, JEWEL LOAN AND DIF FERENCE IN PURCHASE OF TAPIOCA AND SUPPRESSION OF COMMISSION RECEIVED. ADMITTEDLY ASSESSEES AGREED FOR THESE ADDITIONS/DISALLOWANCES. THE ASSESSEES HAVE NEVER F ILED ANY EXPLANATION AS TO WHY PENALTY UNDER SECTION 271(1)( C) OF THE ACT IS NOT ATTRACTED. THE ASSESSEES WERE ALL ALONG SUBMITTING THAT THEY HAVE AGREED FOR ADDITIONS AND THEY HAVE C O- OPERATED WITH THE DEPARTMENT AND PAID TAXES AND THE RE IS NO CONCEALMENT OF INCOME. HOWEVER, IT IS THE FINDING O F THE LOWER AUTHORITIES THAT THERE WAS A SURVEY UNDER SECTION 1 33A OF THE ACT IN THE PREMISES OF THE ASSESSEES, BOOKS AND DOC UMENTS ITA NOS.124 TO 128/MDS/2014 8 WERE IMPOUNDED, BASED ON WHICH ASSESSMENTS WERE REOPENED BY ISSUE OF NOTICE AND THE ASSESSEES FILED RETURNS IN RESPONSE TO NOTICE UNDER SECTION 148 ADMITTING INCO ME WITH A MEAGRE INCREASE THAN WHAT WAS RETURNED IN ORIGINAL RETURN. EVEN AT THE STAGE OF FILING RETURNS UNDER SECTION 1 48 NO FULL DISCLOSURE WAS MADE BY THE ASSESSEES. IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER PROPOSED TO MAKE VARIOUS ADDITIONS/DISALLOWANCES TO WHICH ASSES SEES HAVE AGREED. THERE WAS NO EXPLANATION WHATSOEVER BY THE ASSESSEES AS TO WHY PROVISIONS OF SECTION 271(1)(C ) ARE NOT ATTRACTED AND IT WAS THE ONLY SUBMISSION OF THE ASS ESSEES THAT TO PURCHASE PEACE WITH THE DEPARTMENT ADDITIONS WER E AGREED. HOWEVER, THIS STATEMENT ALONE IS OF NO HELP TO THE ASSESSEE IN DISCHARGING HIS DUTY TO EXPLAIN AS TO W HY THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS ESPECIALLY WHEN THERE WAS A SURVEY AND BOOKS & INCRIMINATING DOCUMENTS WERE IMPOUNDED AND BASED ON WHICH ASSESSMENTS WERE MADE BRINGING TO TAX VARIOUS INCOMES WHICH WERE OMITTED TO HAVE CONSIDERED BY TH E ASSESSEES IN THE RETURNS BY FURNISHING CORRECT PART ICULARS OF ITA NOS.124 TO 128/MDS/2014 9 INCOME. WE AGREE WITH THE LOWER AUTHORITIES THAT BU T FOR THE SURVEY CONDUCTED BY THE DEPARTMENT, CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME W OULD NOT HAVE BEEN DETECTED IN THE CASE OF ASSESSEES. THE CA SE LAWS RELIED ON BY THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE . IN SUCH CIRCUMSTANCES, WE UPHOLD THE PENALTY LEVIED BY THE ASSESSING OFFICER AND REJECT THE GROUNDS RAISED BY THE ASSESS EES. 6. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 28 TH DAY OF MARCH, 2014 AT CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) (CHALLA NAGEN DRA PRASAD) ACCOUNTANT MEMBER JUDI CIAL MEMBER CHENNAI, DATED THE 28 TH MARCH, 2014. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R (3) CIT (6) G.F.