M/s. Nanak Carriers, New Delhi V. ITO, New Delhi

ITA 1280/DEL/2012

• Counselvise Citation: 128020114 RSA 2012
• Duration Of Justice: 3 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 15-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: SM MATHUR
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

ITA NO. 1280/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 1280/DEL/2012 A.Y. : 2005-06 M/S NANAK CARRIERS, B-1/470, JANAKPURI, NEW DELHI 110 058 (PAN: AAFFN4309Q) VS. INCOME TAX OFFICER, WARD 27(4), NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. S.M. MATHUR, CA DEPARTMENT BY : SH. P. DAM KANUNJNA, SR. DR DATE OF HEARING: DATE OF HEARING: DATE OF HEARING: DATE OF HEARING: 16 1616 16- -- -11 1111 11- -- -201 201 201 2015 55 5 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 2 22 20 00 0- -- -11 1111 11- -- -201 201 201 2015 55 5 ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU, H.S. SIDHU, H.S. SIDHU, H.S. SIDHU, J JJ JM MM M THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVIII, NEW DELHI DA TED 16.12.2011 PERTAINING TO ASSESSMENT YEAR 2005-06 ON THE FOLLOW ING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS MUCH AS ON THE FACTS OF THE CASE BY CONFIRMING THE PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 OF RS. 8,24,617/-. ITA NO. 1280/DEL/2012 2 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AS MUCH AS ON THE FACTS OF THE CASE BY NOT APPRECIATING THAT THE APPELLANT HAS FULLY DISCLOSED ALL THE MATERIAL FACTS IN THE STATEMENT OF ACCOUNTS FIL ED ALONG WITH THE RETURN OF INCOME, THEREFORE, THERE IS NO CASE OF E ITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. IT IS, THEREFORE, KINDLY PRAYED THAT THE UNWARRANTE D PENALTY OF RS. 8,24,617/- LEVIED U/S. 271(1)(C) OF THE ACT MAY PLEAS E BE DELETED AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE APPE LLANT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN O F INCOME WAS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 ON 31.10.2005 DECLARING INCOME OF RS. 41,911/- AND WAS ASSESSED U/S. 143(3) AT RS. 21,38,920/- BY MAKING THE ADDITION OF RS. 20,97,009/- ON ACCOUNT OF INCLUSION OF INCOME OF FR EIGHT RECEIPT FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT HAS SHOWN THE GROSS TRANSPORTATION RECEIPT OF RS. 9,71,74,860/-, OUT OF WHICH A SUM OF RS. 20,97,009/- HAS BEEN REDUCED UNDER THE HEAD FREIGH T RECEIVED, BUT ACKNOWLEDGEMENT NOT RECEIVED. DURING THE ASSESSME NT PROCEEDINGS THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THESE RECEIPTS SHOUL D NOT BE ADDED TO ITS INCOME. ASSESSEE PUT FORTH THE ARGUMENTS BEFORE THE AO, BU T THE AO DID NOT AGREE WITH THE ARGUMENTS AND ACCORDINGLY, THE AMOUNT OF RS. 20,97, 009/- WAS ADDED TO THE INCOME OF THE ASSESSEE, KEEPING IN VIEW THE PROVISI ONS OF SECTION 145(1) OF THE ACT WHICH LAID DOWN THE PRINCIPLES TO BE FOLLOWED IN TH E MERCANTILE SYSTEM OF ACCOUNTING ON ACCRUAL BASIS. ACCORDINGLY, PENALT Y PROCEEDINGS U/S. 271(1)(C) WERE INITIATED BY ISSUE OF A SHOW CAUSE NOTICE U/S. 274 READ WITH SECTION 271 OF THE ACT DATED 18.12.2007 FOR FURNISHING OF REPLY, WHICH WAS NOT REPLIED. ANOTHER SHOW ITA NO. 1280/DEL/2012 3 CAUSE NOTICE DATED 2.5.2008 WAS SENT ON 12.5.2008 AN D ON 16.5.2008, BUT THE SAME WERE REMAINED UNCOMPLIED WITH. ACCORDINGLY, T HE AO OBSERVED THAT ASSESSEE CONCEALED / FURNISHED INACCURATE PARTICUL ARS OF ITS INCOME AND IS LIABLE FOR PENALTY U/S 271(1)(C) AND PENALTY OF RS. 8,24,617/- W AS IMPOSED VIDE ORDER DATED 26.5.2008. 3. AGAINST THE ABOVE PENALTY ORDER DATED 26.5.2008 PASSED BY THE ASSESSING OFFICER, ASSESSEE APPEALED BEFORE THE LD. FIRST APP ELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 16.12.2011 DISMISSED THE APPEA L OF THE ASSESSEE. 4. AGAINST THE ABOVE ORDER OF THE LD. CIT(A) DATED 1 6.12.2011, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL OF THE ASSESSEE IN ORDER TO SUPP ORT HIS CONTENTION REITERATED THE GROUNDS OF APPEAL. LD. COUNSEL FOR THE ASSESSEE HA S DRAWN OUR ATTENTION TOWARDS THE PAGE NO. 8 TO 10 OF THE PAPER BOOK WHEREIN THE TRANSPORTATION RECIEPT OF RS. 9,71,74,860/- WAS FULLY DISCLOSED BY THE ASSESSEE IN THE AUDITIED FINANCIAL STATEMENT FOR THE FINANCIAL YEAR ENDED ON 31.3.2005. THE ASSESSEE HAD REDUICED RS. 20,97,009/- FROM RS. 9,71,74,960/- WITH THE REM ARK FREIGHT RECEIVED, BUT ACKNOLWEDGEMENT NOT RECEIVED. THIS REDUCTION WAS D ONE DUE TO NON-RECEIVING THE ACKNOLWEDGEMENT OF RECEIPT OF THE VEHICLE FROM THE RESPECTIVE DEALERS/STOCKIEST WHICH WERE RECEIVED IN THE NEXT FY 2005-06 RELEVANT TO AY 2006-07 AND WAS DECLARED AS RECEIPT IN THAT YEAR. HE FURTHER SUB MITTED THAT THE ALL THE FACTS WERE DULY EXPLAINED TO THE LD. CIT(A) AND COPY OF FINANCI AL STATEMENT OF THE NEXT FINANCIAL YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR 2006-07 WERE FILED AND EXPLAINED THAT OUT OF THE SAID INCOME OF RS.20,97,0 09/-, RS.19,87,644/- HAD BEEN SHOWN AND DECLARED AS INCOME DURING ASSESSMENT YEAR 2006-07 AND THE ITA NO. 1280/DEL/2012 4 SAME HAD ALSO BEEN ASSESSED IN HIS ASSESSMENT FOR A SSESSMENT YEAR 2006-07 COMPLETED ON 22.12.2008 U/S. 143(3) OF THE ACT BY THE SAME ASSESSING OFFICER WHO HAD DISALLOWED THE CLAIM OF DEDUCTION DURING THE AS SESSMENT YEAR 2005-06. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE DECIS ION OF THE APEX COURT CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR-158 (SC ). UNDER THESE CIRCUMSTANCES, THE ASSESSEE SUBMITTED THAT THE PENA LTY IN DISPUTE IS UNWARRANTED AND MAY BE DELETED. 6. LD. DEPARTMENTAL REPRESENTATIVE CONTROVERTED THE ARGUMENTS ADVANCED BY THE LD. COUNSEL OF THE ASSESSEE AND HE RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES. WE FIND THAT RETURN OF INCOME IN THIS CASE WAS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 ON 31.10.2005 D ECLARING INCOME OF RS. 41,911/- AND WAS ASSESSED U/S. 143(3) AT RS. 21,38,920/- BY MAKING THE ADDITION OF RS. 20,97,009/- ON ACCOUNT OF INCLUSION OF INCOM E OF FREIGHT RECEIPT FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT HAS SHOWN THE GROSS TRANSPORTATION RECEIPT OF RS. 9,71,74,860/-, O UT OF WHICH A SUM OF RS. 20,97,009/- HAS BEEN REDUCED UNDER THE HEAD FREIGH T RECEIVED, BUT ACKNOWLEDGEMENT NOT RECEIVED. DURING THE ASSESSME NT PROCEEDINGS THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THESE RECEIPTS SHOUL D NOT BE ADDED TO ITS INCOME. ASSESSEE PUTFORTH THE ARGUMENTS BEFORE THE AO, BUT THE AO DID NOT AGREE WITH THE ARGUMENTS AND ACCORDINGLY, THE AMOUNT OF RS. 20,97, 009/- WAS ADDED TO THE INCOME OF THE ASSESSEE, KEEPING IN VIEW THE PROVISI ONS OF SECTION 145(1) OF THE ACT WHICH LAID DOWN THE PRINCIPLES TO BE FOLLOWED IN TH E MERCANTILE SYSTEM OF ITA NO. 1280/DEL/2012 5 ACCOUNTING ON ACCRUAL BASIS. ACCORDINGLY, PENALT Y PROCEEDINGS U/S. 271(1)(C) WERE INITIATED BY ISSUE OF A SHOW CAUSE NOTICE U/S. 274 READ WITH SECTION 271 OF THE ACT DATED 18.12.2007 FOR FURNISHING OF REPLY, WHICH WAS NOT REPLIED. ANOTHER SHOW CAUSE NOTICE DATED 2.5.2008 WAS SENT ON 12.5.2008 AN D ON 16.5.2008, BUT THE SAME WERE REMAINED UNCOMPLIED WITH. ACCORDINGLY, T HE AO OBSERVED THAT ASSESSEE CONCEALED / FURNISHED INACCURATE PARTICUL ARS OF ITS INCOME AND IS LIABLE FOR PENALTY U/S 271(1)(C) AND PENALTY OF RS. 8,24,617/- W AS IMPOSED VIDE ORDER DATED 26.5.2008, WHICH DID NOT ESTABLISH THAT HOW THE ASS ESSEE HAS CONCEALED/ FURNISHED INACCURATE PARTICULARS OF ITS INCOME. WE FURTHER FIND THAT SIMILARLY, LD. CIT(A) HAS UPHELD THE ACTION OF THE AO AND RELIED UP ON THE CASE LAW OF APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 AND HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. ZOOM COMMUNICA TION P LTD. (2010) 327 ITR 0510 WHICH SAYS ABOUT THE INCORRECT CLAIM/ SUBMISSIO N OF INACCURATE PARTICULARS OF INCOME. 7.1 AS REGARDS THE FURNISHING OF INACCURATE PARTICU LARS, NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. WE FURTHER FIND THAT SECTION 271(1)(C) POSTULATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. WE FIND CONSDIERABLE COGENC Y IN THE SUBMISSIONS OF THE ASSESSEES COUNSEL THAT AS PER PAGE NOS. 8 TO 10 OF THE PAPER BOOK IT HAS BEEN MENTIOEND THAT THE TRANSPORTATION RECIEPT OF RS. 9, 71,74,860/- WAS FULLY DISCLOSED BY THE ASSESSEE IN THE AUDITIED FINANCIAL STATEMENT FOR THE FINANCIAL YEAR ENDED ON 31.3.2005. HENCE, THE ASSESSEE HAD REDUCED RS. 20, 97,009/- FROM RS. ITA NO. 1280/DEL/2012 6 9,71,74,960/- WITH THE REMARK FREIGHT RECEIVED, BUT ACKNOLWEDGEMENT NOT RECEIVED. THIS REDUCTION WAS DONE DUE TO NON-RECEI VING THE ACKNOLWEDGEMENT OF RECEIPT OF THE VEHICLE FROM THE RESPECTIVE DEALERS/ STOCKIEST WHICH WERE RECEIVED IN THE NEXT FY 2005-06 RELEVANT TO AY 2006-07 AND WAS DECLARED AS RECEIPT IN THAT YEAR. FROM THE ABOVE, IT IS CLEAR THAT ALL THE FA CTS WERE DULY EXPLAINED TO THE LD. CIT(A) AND COPY OF FINANCIAL STATEMENT OF THE NEXT F INANCIAL YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR 2006-07 WERE FILED AND EXPLAINED THAT OUT OF THE SAID INCOME OF RS.20,97,009/-, RS.19,87,644/- HAD BEEN SHOWN AND DECLARED AS INCOME DURING ASSESSMENT YEAR 2006-07 AND THE SAME HAD ALS O BEEN ASSESSED IN HIS ASSESSMENT FOR ASSESSMENT YEAR 2006-07 COMPLETED ON 22.12.2008 U/S. 143(3) OF THE ACT BY THE SAME ASSESSING OFFICER WHO HAD DISAL LOWED THE CLAIM OF DEDUCTION DURING THE ASSESSMENT YEAR 2005-06. WE FURTHER NOTE THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) IN PARA 4.1 OF THE APPELLATE ORD ER HAD HELD THAT 'FURTHER, THE FINANCIAL STATEMENT OF NEXT YEAR FILED BY THE APPEL LANT ALSO DOES NOT REVEAL THAT THE DIFFERENCE HAS BEEN ACCOUNTED FOR IN THE NEXT YEAR' , WHICH APPEARS TO BE NOT CORRECT BECAUSE DURING FINANCIAL YEAR 2005-06 RELEV ANT TO ASSESSMENT YEAR 2006- 07, THE ASSESSEE HAD FREIGHT EARNINGS OF RS.13,59,7 5,820/- WHICH IS CLEAR FROM THE COPY OF ACCOUNT OF M/S MARUTI UDYOG LTD. WHICH IS A PPEARING ON PAGE NO. 29 TO 32 OF THE PAPER BOOK. IN ADDITION TO THIS INCOME, TH E ASSESSEE HAD ALSO CONSIDERED ITA NO. 1280/DEL/2012 7 RS.19,87,643/- AS INCOME OF THE SAID FINANCIAL YEAR I.E. 2005-06 WHICH IN FACT WAS RECEIVED DURING PREVIOUS FINANCIAL YEAR 2004-05 BUT DUE AS INCOME ONLY DURING FINANCIAL YEAR 2005-06 AS THE ACKNOWLEDGEMENT OF D ELIVERY OF VEHICLES TRANSPORTED BY HIM WERE RECEIVED DURING THE FINANC IAL YEAR 2005-06. THE ASSESSEE THUS HAD DECLARED THE TOTAL FREIGHT RECEIPT OF RS. 13,79,63,464/- (RS.13,59,75,820/- PLUS RS.19,87,6454/-) IN THE PROFI T & LOSS ACCOUNT FOR THE FINANCIAL YEAR ENDED ON 31ST MARCH, 2006 WHICH IS A PPEARING ON PAGE NO. 24 OF THE PAPER BOOK. BASED ON THIS TOTAL RECEIPTS OF RS .13,79,63,464/-, THE NET PROFIT OF RS.74,198/- WAS DETERMINED FOR THE FINANCIAL YEAR 2 005-06 WHICH WAS ALSO ASSESSED IN HIS ASSESSMENT FOR ASSESSMENT YEAR 200 6-07 AS DECLARED. COPY OF AUDITED STATEMENT OF ACCOUNTS FOR THE FINANCIAL YEA R ENDED ON 31.03.2006 AND COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 20 06-07 ARE ALSO APPEARING ON PAGE NO. 19 AND 21 TO 25 OF THE PAPER BOOK. WE FURTH ER FIND THAT THE AFORESAID INCOME OF RS.19,87,643/- HAD BEEN ASSESSED IN THE NE XT FINANCIAL YEAR 2005-06 PERTAINING TO ASSESSMENT YEAR 2006-07 FOR THE REASO NS EXPLAINED ABOVE AND THERE IS NO CONCEALMENT OF INCOME. THEREOFRE, THE ASSESSEE HAD FULLY DISCLOSED ALL THE MATERIAL FACTS IN THE PROFIT & LOSS ACCOUNT ITSELF F ILED BY HIM FOR THE FINANCIAL YEAR 2004-05 WHICH WAS ATTACHED ALONG WITH THE RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06, ALL THE DETAILS AND PARTICULARS OF INCOME WERE ALSO DISCLOSED TO THE ITA NO. 1280/DEL/2012 8 LEARNED OFFICER DURING THE COURSE OF ASSESSMENT PRO CEEDINGS AS WELL AS BEFORE THE COMMISSIONER OF INCOME TAX (A). THEREFORE, THE ASSESS EE HAS NOT AT ALL CONCEALED ANY PARTICULARS OF SUCH INCOME AND HAS ALSO NOT FUR NISHED INACCURATE PARTICULARS OF INCOME. WE FURTHER FIND FORCE IN THE CONTENTION O F THE ASSESSEES COUNSEL IN RELYING UPON THE DECISION OF THE HON'BLE CIT VS. RELIANCE PET ROPRODUCTS PVT. LTD. (2010) 322 ITR-158 (SC) WHEREIN THE HON'BLE SUPREME COURT HAS HE LD THAT 'WHERE THERE IS NO FINDINGS THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE ISNO QUESTIO N OF INVITING THE PENALTY U/SEC. 271(1)(C) OF THE ACT. A MERE MAKING A CLAIM, WHICH I S NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT OF FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO FURNISHING A INACCURATE PARTICULARS OF INCOME. AS THE ASSESSEE HAS FURNISHE D ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETUR N OR NOT. MERELY, BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM W AS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT , IN OUR OPINION, ATTRACT THE PENALTY U/SEC. 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED B Y THE ASSESSING OFFICER FOR ANY ITA NO. 1280/DEL/2012 9 REASON, THE ASSESSEE WILL INVITE PENALTY U/SEC. 271( 1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE'. 7.2 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENT, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS NEITHER CONCE ALED THE INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME AND THERE ARE NO F INDINGS OF THE ASSESSING OFFICER AND THE CIT (APPEALS) THAT THE DETAILS FURNISHED BY T HE ASSESSEE IN HIS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. UNDER THESE CIRCUMSTANCES, IN OUR VIEW THE PENALTY IN DISPUTE IS TOTALLY UNWARRANTED AND D ESERVE TO BE DELETED. ACCORDINGLY, WE DELETE THE PENALTY OF RS. 8,24,617/- MADE U/S. 271(1)(C) OF THE I.T. ACT AND QUASHED THE ORDERS OF THE AUTHORITIES BEL OW ON THE ISSUE IN DISPUTE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/11/2015. SD SDSD SD/ // /- -- - S SS SD DD D/ // /- -- - [ [[ [PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI] ]] ] [H.S. SIDHU] [H.S. SIDHU] [H.S. SIDHU] [H.S. SIDHU] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATE: DATE: DATE: DATE: 2 22 20 00 0- -- -11 1111 11- -- -2015 2015 2015 2015 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR ITA NO. 1280/DEL/2012 10