ACIT, Coimbatore V. Krishnaveni Carbon Products Pvt. Ltd., Coimbatore

ITA 1348/CHNY/2013

• Counselvise Citation: 134821714 RSA 2013
• Duration Of Justice: 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-05-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 13-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI IRS
• Assessee Lawyers: D ANAND
• Section: 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . . !' , # '$ % BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO. 1348/MDS/2013 # & '& / ASSESSMENT YEAR : 2004-05 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(2), INCOME-TAX BUILDING, RACE COURSE ROAD, COIMBATORE 641 018. V. M/S KRISHNAVENI CARBON PRODUCTS PVT. LTD., 63/3, ATHIPALAYAM ROAD, CHINNAVEDAMPATTI, COIMBATORE 641 006. PAN : AACCK 0858 R ()*/ APPELLANT) (,-)*/ RESPONDENT) )* . / APPELLANT BY : SHRI T.N. BETGERI, IRS, JCIT ,-)* . / RESPONDENT BY : SHRI D. ANAND, ADVOCATE / . 01 / DATE OF HEARING : 5 TH MAY, 2014 2!' . 01 / DATE OF PRONOUNCEMENT : 5 TH MAY, 2014 / O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2004-05. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I I AT COIMBATORE, PASSED ON 6.3.2013. - - I.T.A. NO. 1348/MDS/13 2 2. THE GROUND RAISED BY THE REVENUE IN THE PRESENT APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN DELETING THE PENALTY OF ` 18,65,500/-, PLACING RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F DILIP N. SHROFF V. CIT (291 ITR 519). IT IS THE CASE OF THE REVENUE THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CO NSIDERED THAT THIS CASE WAS DISAPPROVED BY THE HONBLE SUPRE ME COURT IN THEIR JUDGMENT IN THE CASE OF UNION OF INDIA V. DHA RMENDRA TEXTILE PROCESSORS (306 ITR 277). 3. WE HEARD BOTH SIDES IN DETAIL. THE ASSESSEE HAD FILED ITS ORIGINAL RETURN OF INCOME DECLARING THE TAXABLE INC OME OF ` 67,84,218/-. SUBSEQUENTLY, THERE WAS A SEARCH ACTI ON UNDER SECTION 132. NOTICE UNDER SECTION 153A WAS ISSUED. IN COMPLIANCE TO THE NOTICE, RETURN WAS FILED BY THE A SSESSEE. IN THE SAID RETURN, THE ASSESSEE HAD ADMITTED A TOTAL INCOME OF ` 1,19,84,220/-. THE ADDITIONAL INCOME ADMITTED SUBS EQUENT TO THE SEARCH AND REFLECTED IN THE CONSEQUENT RETURN W AS ` 52 LAKHS. THE ASSESSING OFFICER OBSERVED THAT THERE I S NOTHING VOLUNTARY ON THE PART OF THE ASSESSEE IN DISCLOSING A HIGHER - - I.T.A. NO. 1348/MDS/13 3 AMOUNT OF INCOME IN THE RETURN FILED UNDER SECTION 153A. IN THE PRESENT CASE, THE ADDITIONAL INCOME WAS RETURNED ON LY BECAUSE OF THE SEARCH CARRIED OUT BY THE DEPARTMENT. ACCOR DING TO THE ASSESSING OFFICER, THE ASSESSEE ITSELF HAS ADMITTED THE ADDITIONAL INCOME AT THE TIME OF SEARCH. THE ASSESSING OFFICE R HELD THAT THE ADMISSION OF ASSESSEE DURING THE ASSESSMENT REG ARDING CONCEALMENT WOULD BE SUFFICIENT TO LEVY PENALTY AND THAT NO INDEPENDENT ENQUIRY TO PROVE THE CONCEALMENT IS NEC ESSARY. HE HAS RELIED ON THE JUDGMENT OF HONBLE MADRAS HIGH C OURT RENDERED IN THE CASE OF H.V. VENUGOPAL CHETTIAR V. CIT (153 ITR 376). 4. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONSIDERED THE LEVY OF PENALTY IN A VERY DETAILED M ANNER. THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT THE SEARCH ACTION WAS TAKEN PLACE ON 27.9.2005 AND THEREFORE, THE ASSESSEE IS ELIGIBLE FOR THE BENEFIT PROVIDED UNDER EXPLANATION 5 TO SECTION 271(1)(C). HE FOUND THAT THE MANAGING D IRECTOR OF THE ASSESSEE-COMPANY HAD GIVEN A STATEMENT IN THE COURS E OF SEARCH AND HE HAD ADMITTED THE ADDITIONAL INCOME IN THE SAID STATEMENT ITSELF. THE ASSESSEE-COMPANY ADMITTED TH E CONCEALED - - I.T.A. NO. 1348/MDS/13 4 INCOME IN THE COURSE OF SEARCH AND THEREAFTER PAID TAX THEREON. THE LAW IN CLAUSE (2) UNDER THE EXPLANATION 5 TO SE CTION 271(1)(C) PROVIDES THAT WHERE AN ASSESSEE IN THE CO URSE OF ASSESSMENT ADMITS ADDITIONAL INCOME AND PAYS TAX TH EREON, SHOULD BE EXONERATED FROM THE LEVY OF PENALTY UNDER SECTION 271(1)(C). THE COMMISSIONER OF INCOME TAX (APPEALS ) RELIED ON THE HONBLE SUPREME COURT DECISION IN THE CASE OF D ILIP N. SHROFF V. CIT (291 ITR 519), WHEREIN IT WAS HELD THAT MERE DIFFERENCE IN INCOME RETURNED IS NOT A JUSTIFICATION FOR LEVY OF PENALTY. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO FOUND THA T THE ADDITIONAL INCOME AROSE OUT OF THE SAME MATERIAL FA CTS THAT WERE AVAILABLE IN THE COURSE OF SEARCH AND NOTHING IS AV AILABLE ON RECORD BY THE ADMISSION MADE BY THE ASSESSEE IN THE COURSE OF SEARCH ITSELF. THEREFORE, HE HELD THAT THE PENALTY IS NOT SUSTAINABLE IN THE CASE OF THE ADDITIONAL AMOUNT DI SCLOSED BY THE ASSESSEE IN THE COURSE OF SEARCH. 5. THE COMMISSIONER OF INCOME TAX (APPEALS), HOWEVE R, CONFIRMED THE PENALTY ATTRIBUTABLE TO THE EXTENT ` 3,02,857/- AS THE SAID AMOUNT OF CONCEALED INCOME DID NOT HAVE TH E PROTECTION OF EXPLANATION 5 TO SECTION 271(1)(C). - - I.T.A. NO. 1348/MDS/13 5 6. WE CONSIDERED THE MATTER. THE DECISION OF HONB LE SUPREME COURT IN THE CASE OF UNION OF INDIA V. DHAR MENDRA TEXTILE PROCESSORS (306 ITR 277) IS NOT APPLICABLE IN THE PRESENT CASE. THE RATIO LAID DOWN BY THE HON'BLE APEX COUR T IN THE SAID DECISION IS THAT MENS REA IS NOT NECESSARILY ATTRIBUTABLE IN LEVYING PENALTY UNDER SECTION 271(1)(C) AS THE PENA LTY IS A CIVIL LIABILITY. IN THE PRESENT CASE, THE QUESTION IS NO T REGARDING THE MENS REA OR THE NATURE OF LIABILITY. THE QUESTION IS WHETH ER THE STATUTORY BENEFIT EXTENDED TO THE ASSESSEE IS AVAIL ABLE IN THE PRESENT CASE OR NOT. EXPLANATION 5 TO SECTION 271 (1)(C) PROVIDES PROTECTION TO THE ASSESSEE FROM LEVY OF PE NALTY ON SUCH INCOME THE ASSESSEE HAS OFFERED IN THE COURSE OF SE ARCH AND PAID TAX THEREON. THIS IS BASED ON THE PRINCIPLE O F ENCOURAGING COMPLIANCE OF LAW WHICH IS BETTER THAN PRINCIPLE OF MECHANICAL PUNISHMENT. THAT IS WHY THE LAW MAKERS HAVE THOUGH T IT FIT TO GIVE SUCH A BREATHING HALT TO AN ASSESSEE ATLEAST I N THE COURSE OF SEARCH TO SUBMIT ITSELF TO RULE OF LAW. INSPITE OF SUCH A STATUTORY PROTECTION, IF PENALTY IS LEVIED ON THE ASSESSEE, I T IS SOMETHING LIKE PUNISHING AN APPROVER WHO HAS MADE CONFESSION IN A CRIMINAL PROCEEDING. - - I.T.A. NO. 1348/MDS/13 6 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE U PHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A S SUSTAINABLE IN LAW. 8. IN RESULT, THE APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON MONDAY, THE 5 TH OF MAY, 2014 AT CHENNAI. SD/- SD/- (S.S. GODARA) (DR. O.K. NARAYANAN) ( . . !') ( . . . ) # '$ /JUDICIAL MEMBER /VICE-PRESIDENT /CHENNAI, 4' /DATED, THE 5 TH MAY, 2014. KRI. '5 . ,#067 87'0 /COPY TO: 1. )* /APPELLANT 2. ,-)* /RESPONDENT 3. / 90 () /CIT(A)-II, COIMBATORE 4. / 90 /CIT, CENTRAL-III, CHENNAI 5. 7: ,#0# /DR 6. & ; /GF.