The ACIT, Circle-4, Baroda V. M/s. Shree Benzophen Industries Ltd., Baroda

ITA 1313/AHD/2012

• Counselvise Citation: 131320514 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-08-2015
• Assessment Year: 1997-1998
• Appeal Filed On: 15-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D V SINGH
• Keywords: Reasonable cause
• Section: 68; 143(3)

Judgement Text

ITA NO . 1313 /AHD/ 20 12 ASSESSMENT YEAR: 1997 - 98 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH , AHMEDABAD [CORAM: PRAMOD KUMAR AM AND KUL BHARAT JM ] ITA NO. 1 313 / AHD / 2 012 ASSESSMENT YEAR: 1997 - 98 A SSISTANT COMMISSIONER OF INCOME TAX, .......... .. . APPELLANT CIRCLE - 4, BARODA. VS. SHREE BENZOPHEN INDUSTRIES LTD., .... ........ .... .. .. .... RESPONDENT C/O. ORGANO METALICS, 47/1/22, GIDC, NANDESARI, BARODA. [PAN: A ACCS 6072 K ] APPEARANCES BY: D.V. SINGH , FOR THE APPELLANT NONE , FOR THE RESPONDENT DATE OF CONCLUDING TH E HEARING : A UGUST 11 TH , 201 5 DATE OF PRONOUNCING THE ORDER : AUGUST 14 TH , 2015 O R D E R PER PRAMOD KUMAR AM : BY WAY OF THIS A PPEAL, THE ASSESSING OF FICER HAS CALLED INTO QUESTION CORRECTNESS OF ORDER DATED 6 TH MARCH, 2012 PASSED BY THE LD. CIT(A) , IN THE MATTER OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR 1997 - 98, ON THE FOLLOWING GROUNDS: - 1. ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) H A S ERRE D IN DELETING PENALTY U/S 271 (1)(C) OF THE ACT WITHOUT CONSIDERING THE FACT THAT EXPLANATION 1 TO SECTION 271 OF THE ACT IS CLEARLY APPLICABLE TO THE CASE OF THE ASSESSEE AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE EXPLANATION OFFERED BY HIM. ITA NO . 1313 /AHD/ 20 12 ASSESSMENT YEAR: 1997 - 98 PAGE 2 OF 6 2. ON T HE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR ALTER THE ABOVE GROUNDS A S MAY BE DEEMED NECESSARY . RELIEF CLAIM ED IN APPEAL. IT I S, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) ON THE ISSUES RAISED IN THE AFORESAID G R OUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. IT IS SECOND ROUND OF PROCEEDINGS BEFORE US, AS, IN THE CONSIDERED VIEW OF THE CO - ORDINATE BENC H, THE ASSESSEE WAS PREVENTED, BY SUFFICIENT CAUSE, FROM FURNISHING REQUISITE INFORMATION BEFORE THE ASSESSING OFFICER WITH RESPECT TO DEPOSIT OF RS.10,00,000/ - RECEIVED FROM ONE KAMLESH A MEHTA. IN THE REMANDED PROCEEDINGS BEFOR E THE ASSESSING OFFICER, T HE ASSESSEE FURNISHED CONFIRMATION LETTER FROM KAMLESH A MEHTA A S ALSO A COPY OF THE BANK STATEMENT OF KAMLESH A MEHTA WHICH SHOWED THE TRANSACTION IN QUESTION. HOWEVER, THE ASSESSEE DID NOT CONTEST THIS ADDITION IN APPEAL A S T HE ASSESSEE HAD ACCUMULATED LOSSES AGGREGATING TO RS.2,30,62,904/ - . ON THESE FACTS, THE ASSESSING OFFICER IMPOSED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY JUSTIFYING THE S A ME A S FOLLOWS : - I HAVE CONSIDERED THE REPLY OF THE ASSESSEE. IN THIS CASE, IN THE REASSESSMENT, THE ADDITION WAS REPEATED AS THE ASSESSEE COULD NOT GIVE THE NAME OF THE ASSESSING OFFICER WITH WHOM THE CREDITOR WAS ASSESSED AND, THUS, IT WAS HELD THAT THE ASSESSEE HAD NOT DISCHARGED ITS ONUS IN PROVING THE CREDIT WORTHINESS OF THE CREDITOR. IT WAS THE C ONTENTION OF THE ASSESSEE THAT THE INFORMATION WAS AVAILABLE TO THE INCOME - TAX DEPARTMENT AND THE ASSESSING OFFICER COULD HAVE MADE ACCESS TO THIS DATA BASE. THIS CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE AS THE LOAN TAKEN BY THE ASSESSEE RELATED TO PR EVIOUS YEAR 1996 - 97 RELEVANT TO ASSESSMENT YEAR 1997 - 98. MOREOVER, AS PER SECTION 68 OF THE INCOME - TAX ACT, 1961, WHERE A NY SUM IS FOUND CREDITED ITA NO . 1313 /AHD/ 20 12 ASSESSMENT YEAR: 1997 - 98 PAGE 3 OF 6 IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR , AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT TH E NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE IN HAT PREVIOUS YEAR. IN THE INSTANT CASE, THE ASSE SSEE HAD NOT BEEN ABLE TO PROVE THE CREDITWORTHINESS OF THE CREDITOR FROM WHOM A LOAN OF RS.10 LAKHS HAS BEEN TAKEN. IT WAS THE FURTHER CONTENTION OF THE ASSESSEE THAT BECAUSE OF HEAVY LO S S OF ASST. YEAR 1997 - 98 A ND ALSO HEAVY BROUGHT FORWARD LOSS, THE AS SESSEE DID NOT FILE ANY APPEAL BEFORE THE LD. CIT ( APPEALS ). IT IS FURTHER S TATED THAT NON - FILING OF APPEAL BEFORE THE CIT (APPEALS) DOES NOT AMOUNT TO FILING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. THIS CONTENTION OF THE ASSESSEE IS ALSO NOT ACCEPTABLE. IN THIS CASE, THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE CREDIT WORTHINESS OF THE CREDITOR FROM WHOM A CREDIT OF RS.10 LAKHS HAS BEEN SHOWN TO HAVE BEEN CREDITED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR THE PREVIOUS YEAR RE LEVANT TO ASSESSMENT YEAR 1997 - 98. THEREFORE, FILING OR NON - FILING OF APPEAL BEFORE THE CIT (APPEALS) WILL NOT MAKE ANY DIFFERENCE SO FAR A S LEVY OF PEN A LTY U/S. 271(1)(C) OF THE INCOME - TAX ACT, 1961 IS CONCERNED. IN THIS CASE, THE FACT REMAINS THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE CREDIT OF RS.10 LAKHS IN THE NAME OF S HRI KAMLEH A MEHTA BY BRINGING ON RECORD THE CREDITWORTHINESS OF THE SAID PERSON. THE SAME AMOUNT TO FILING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. CLAUSE (C) O F SUB - SECTION (1) OF SECTION 271 PROVIDES FOR PENALTY IN CASE WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY PERSON HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME . BY WAY OF DEEMING PROVISIONS IN EXPLANATIO N 1 TO SUB - SECTION 1, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME SHALL BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAV E BEEN CONCEALED. THUS, ANY VARIATION BETWEEN THE RETU R NED AND ASSE SSED INCOME SHALL BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THUS, ANY VARIATION BETWEEN THE RETURNED AND ASSESSED INCOME SHALL BE DEEMED TO BE THE RESULT OF CONCEALMENT/FURNISHING OF INACCURATE PARTICULARS OF INCOME. EXPLANATION 1 STATES A RULE OF LAW THAT IN E VERY CASE OF ADDITION TO THE RETURNED INCOME, THERE IS A PRESUMPTION OF CONCEALMENT. THIS PRESUMPTION IS REBUTTABLE. THE ONUS OF REBUTTING SUCH PRESUMPTION IS ON THE TAX PAYER. THE PRESUMPTION CAN BE REBUTTED BY OFFERING A PLAUSIBL E EXPLANATION. WHERE NO EXPLANATION IS OFFERED, THE ASSESSEE WOULD BE LIABLE FOR PENALTY. IN THE INSTANT CASE, NO PLAUSIBLE REPLY COULD BE OFFERED BY THE ASSESSEE BY A DDUCING ANY CORROBORATIVE EVIDENCE. THE SAME MOUNTS TO FURNISHING OF INACCURATE PARTIC UL ARS OF INCOME. IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS [294 ITR], THE APEX COURT HAS HELD THAT THERE I S NO NECESSITY OF MENS REA IN PENALTY PROCEEDINGS U/S. 271(1)(C) . THE PENALTY IS AGAINST CIVIL WRONG AND NOT AGAINST CRIMINAL OFFENCE, THEREFORE , THE DEPARTMENT DID NOT HAVE TO PROVE POSITIVE ACT OF CONCEALMENT. IN THESE CIRCUMSTANCES, IT IS HELD THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME AND ALSO FURNISHED INACCURATE PARTICULARS IN RESPECT OF THE INCOME AS STATED ABOVE. AS PE R EXPLANATION 1 TO SECTION 271(1), WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL ITA NO . 1313 /AHD/ 20 12 ASSESSMENT YEAR: 1997 - 98 PAGE 4 OF 6 INCOME OF ANY PERSON, ADDITIONS ARE MADE BECAUSE OF THE FOLLOWING TWO REASONS, THE AMOUNT SO ADDED SHALL BE DEEMED TO BE THE INCOME IN RESPECT OF WHICH PA RTICULARS HAVE BEEN CONCEALED : [A] SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR COMMISSIONER TO BE FALSE; OR [B] SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. IN THESE CIRCUMSTANCES AND THAT THE ASSESSEE HAS FAI LED TO OFFER ANY PLAUSIBLE EXPLANATION, I AM SATISFIED THAT THE ASSESSEE H AS WILFULLY, KNOWINGLY AND WITHOUT REASONABLE CAUSE FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND, THUS , TRIED TO CONCEAL THE INCOME SO AS TO EVADE PAYMENT OF T A X THEREON. THUS , EXPLANATION 1 TO SECTION 271 OF THE INCOME - TAX ACT, 1961 IS CLEARLY APPLICABLE TO THE CASE OF THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE INCOME FOR WHICH IT IS LIABLE TO FOR PENALTY U/S. 271(1)(C) OF THE INCOME - TAX AC T, 1961. I, THEREFORE, LEVY A PENALTY OF RS.4,60,000/ - AS AGAINST MINIMUM PENALTY LEVIABLE AT RS.4,60,000/ - AND MAXIMUM PENALTY LEVIABLE T RS.13,80,000/ - IN THIS CASE. 3. AGGRIEVED BY THE PENALTY SO IMPOSED BY THE ASSESSING OFFICER, ASSESSEE CARRIED TH E MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE SAID PENALTY . WHILE DOING SO, HIS LINE OF REASONING WAS A S SET OUT BELOW : - 5. I HAVE CONSIDERED THE CONTENTIONS OF THE A.O. AND THE SUBMISSIONS M A DE BY THE APPELLANT. IN THIS CASE THE ADDITION HA S BE EN MADE ONLY BECAUSE THE APPELLANT COULD NOT FURNISH THE DETAIL OF THE A.O. WITH WHOM THE CREDITOR WAS BEING ASSESSED. THE ORDER U/S 143(3) IN PURSUANCE OF THE SETTING ASIDE OF THE ORIGINAL ORDER BY ITAT WAS PASSED ON 21.11.2008. O N THAT DATE, THE A.O. C OULD HAVE EASILY OBTAINED THE DETAILS OF THE A.O. FROM THE DEPARTMENTAL NETWORK. THE APPELLANT HAS BEEN ABLE TO FILE THE CONFIRMATION LETTER A ND BANK STATEMENT OF THE CREDITOR. THE APPELLANT HAS ALSO GIVEN PLAUSIBLE EXPLANATION FOR NOT FILING ANY APPEAL AGAINST THIS ASSESSMENT ORDER AS IT WAS HAVING HEAVY LOSSES. THE EXPLANATIONS FILED BY THE APPELLANT REGARDING THIS CREDIT APPEARS TO BE BONAFIDE AND THE A.O. HAS NOT MADE OUT ANY CASE IN THE ORDER WHILE LEVYING THE PENALTY TO SHOW THAT THE EXPLANATION IS EITHER FALSE OR IS NOT BONAFIDE EXCEPT FOR AGAIN MENTIONING THE FACT THAT ITA NO . 1313 /AHD/ 20 12 ASSESSMENT YEAR: 1997 - 98 PAGE 5 OF 6 THE APPELLANT DID NOT PROVIDE THE DETAILS OF THE A.O. U NDER SUCH CIRCUMSTANCES, PENALTY U/S 271(1)(C) IS NOT LEVIABLE IN THIS CASE. HENCE , THE A.O. IS DIRECTED TO DELETE THIS PENA LTY . 4. THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APPEAL BEFORE US . 5. WE HAVE HEARD THE LEARNED D EPARTMENTAL REPRESENTATIVE , BUT NONE APPEARED FOR THE ASSESSEE. W E HAVE ALSO PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE C A SE IN TH E LIGHT OF THE APPLICABLE LEGAL POSITION. 6. WE FIND THAT, AS LEARNED CIT(A) HAS RIGHTLY NOTED, THE ASSESSEE HAS GIVEN REASONABLE DETAILS SHOWING CONFIRMATION BY THE LENDER, BANK STA T EMENT DETAILS ETC. WHILE SUCH EVIDENCES MAY NOT PROVE THE GENUINENESS OF THE TRANSACTION TO THE HILT , THE S E EVIDENCES DO INDEED SHOW PRIMA FACIE BONAFIDES OF THE ASSESSEE. THESE EVIDENCES HAVE NOT BEEN FOUND TO BE FALSE , INCORRECT OR DOUBTFUL. IN THESE CIRCUMSTANCES, MAINLY BECAUSE THE ASSESSEE HA S NOT BEEN ABLE TO GIVE DETA ILS OF LENDER S ASSESSING OFFICER, THE EXPLANATION OF THE ASSESSEE CANNOT INDEED BE REJECTED. THE ASSESSEE ALSO HAS A REASONABLE EXPLANATION FOR NOT PURSUING THE QUANTUM ADDITION IN APP E AL AS THE RELATED QUANTUM ADDITION IS COMPLETELY TAX NEUTRAL. IN VIE W OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE WELL REASONED CONCLUSION ARRIVED AT BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN C OURT ON 14 TH AUGUST, 2015 ) SD/ - SD/ - KUL BHAR A T PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD , THE 14 TH DAY OF AUGUST, 201 5 ITA NO . 1313 /AHD/ 20 12 ASSESSMENT YEAR: 1997 - 98 PAGE 6 OF 6 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD