The ACIT, Circle-2, Bhavnagar V. Shri Bachubhai Dudhwala Pvt.Ltd., Bhavnagar

ITA 1372/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6807 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-04-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 29-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: P M MEHTA
• Keywords: Depreciation
• Section: 115JB; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 19/4/2011 DRAFTED ON: 19/ 4/2011 ITA NO.1372/AHD/2009 ASSESSMENT YEAR : 2003-04 THE ACIT CIRCLE-2 BHAVNAGAR VS. BACHUBHAI DUDHWALA PVT.LTD. PLOT NO.44-45, VITHALWADI UDYOGNAGAR BHAVNAGAR PAN/GIR NO. : AABCB 3358 C ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI R.K.DHANESTA, SR.D.R. RESPONDENT BY: SHRI P.M. MEHTA, A.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -I, AHMEDABAD, DATED 20/01/2009 AND THE SUBSTANTIVE GROUND IS IN R ESPECT OF DELETION OF PENALTY OF RS.2,48,060/- LEVIED U/S.271(1)(C) OF TH E I.T.ACT. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT, 1961 DATED 28 /03/2008 AND ASSESSMENT ORDER PASSED U/S.153A(B) DATED 27/12/200 6 WERE THAT A RETURN WAS FILED ON 24/10/2003 DECLARING AN INCOME OF RS.2 ,62,667/- FOR ASSESSMENT YEAR 2003-04. THEREAFTER A SEARCH U/S.1 32 OF THE ACT WAS CONDUCTED ON 30/11/2004. CONSEQUENT THEREUPON ASSE SSEE FILED A RETURN ITA NO.1372/AHD /2009 ACIT VS. BACHUBHAI DUDHWALA PVT.LTD. ASST.YEAR 2003-04 - 2 - ON 20/09/2005 AND THEREIN MADE A DISCLOSURE U/S.153 A OF RS.6,75,000/-. AS PER ASSESSING OFFICER, HAD THE SEARCH BEEN NOT C ONDUCTED, THE SAID INCOME WOULD NOT HAVE BEEN DISCLOSED. AS PER A.O. THE DISCLOSURE WAS NOT CONSIDERED AS A VOLUNTARY DISCLOSURE ON THE PAR T OF THE ASSESSEE. RELEVANT OBSERVATION OF THE ASSESSING OFFICER IS EX TRACTED BELOW:- 4. FROM THE ABOVE FACTS IT BECOMES CLEAR THAT THE ASSESSEE HAS FILED ITS ORIGINAL RETURN OF INCOME ON 24.10.2003 D ECLARING TOTAL INCOME OF RS.262667/-. DUE TO SEARCH CONDUCTED U/S .132 OF THE ACT AND ALSO DUE TO THE FACT THAT EVIDENCES WERE FO UND AND SEIZED DURING THE COURSE OF SEARCH INDICATING UNACCOUNTED PURCHASES MADE FROM LAXMI DAIRY AND KARMA BHUMI DAIRY, ASSESS EE HAS FILED RETURN U/S.153A OF THE ACT DISCLOSING ADDITIO NAL INCOME OF RS.675000/-. THUS ASSESSEE HAS NOT FULLY DISCLOSED ITS CORRECT INCOME IN THE RETURN FILED ON 24.10.2003. THUS THE DISCLOSURE OF ADDITIONAL INCOME OF RS.675000/- WAS NOT VOLUNTARY. HAD THERE BEEN NO SEARCH OPERATION AND CONSEQUENTIAL SEIZURE OF INCRIMINATING MATERIAL, ASSESSEE WOULD HAVE NEVER D ISCLOSED ADDITIONAL INCOME OF RS.675000/-. THEREFORE IT IS PROVED BEYOND DOUBT THAT THE ASSESSEE HAS CONCEALED PARTICULARS O F INCOME TO THE EXTENT OF RS.675000/- FOR WHICH IT IS LIABLE FOR PE NALTY U/S.271(1)(C) OF THE ACT. UNDER THE SIMILAR FACTS AND CIRCUMSTAN CES, VARIOUS COURTS/ITAT HAVE ALSO HELD THAT THE PENALTY U/S.271 (1)(C) IS LEVIABLE. 2.1. ON THE IMPUGNED AMOUNT, A MINIMUM PENALTY OF R S.2,48,060/- WAS LEVIED. THE MATTER WAS CARRIED BEFORE THE FIRS T APPELLATE AUTHORITY. 3. IT WAS ARGUED BEFORE THE LEARNED CIT(APPEALS) TH AT THOUGH AS PER THE ORIGINAL RETURN, THE INCOME WAS DECLARED AT RS. 2,62,667/-, HOWEVER, FOR THE PURPOSE OF TAXATION THE INCOME AS PER BOOK PROFIT U/S.115JB WAS TAXED AT RS.16,28,110/-. EVEN AFTER CONSIDERING TH E ADDITIONAL INCOME OF RS.6,75,000/-, TAXED AS PER REGULAR COMPUTATION OF INCOME, WAS LESS THAN ITA NO.1372/AHD /2009 ACIT VS. BACHUBHAI DUDHWALA PVT.LTD. ASST.YEAR 2003-04 - 3 - THE TAX PAYABLE AS PER SECTION 115JB OF THE I.T.ACT . IT HAS ALSO BEEN MENTIONED THAT A QUANTUM ADDITION WAS ALREADY DELET ED BY THE LEARNED CIT(APPEALS). THEREFORE, IT WAS PLEADED THAT THE TAX LEVIED ON THE BASIS OF INCOME DECLARED U/S.115JB AND NOT ON THE BASIS O F INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. IT WAS ALSO PLEADED THAT THE RETURN OF INCOME AS WELL AS THE ASSESSED INCOME BOTH WERE FIN ALLY DETERMINED AS SUCH UNDER THE PROVISIONS OF SECTION 115JB, THEREFO RE, THERE WAS NO INCIDENCE OF LEVY OF PENALTY FOR CONCEALMENT. IN SU PPORT A CITED DECISION OF JAYCO INDIA (P) LTD. REPORTED AT 152 TAXMAN PAG E 14 (MAGAZINE). THE LEARNED CIT(APPEALS) HAS FOLLOWED THE SAID PREC EDENT AND DIRECTED TO DELETED THE PENALTY AS PER THE FOLLOWING OBSERVA TION:- 5.6. IN CASE OF THE APPELLANT, AFTER GIVING APPEAL EFFECT TO THE CIT(A)S ORDER THE TOTAL INCOME HAS BEEN ASSESSED A T NIL. HOWEVER, APPELLANT HAS PAID TAXES U/S.115JB ON BOOK PROFIT OF RS.16,19,250/- AS RETURNED BY THE APPELLANT WHICH I S MUCH MORE THAN THE ADDITIONAL INCOME OF RS.6,75,000/- DECLARE D BY THE APPELLANT IN COMPLIANCE TO NOTICE U/S.153A AND ON W HICH CONCEALMENT PENALTY U/S.271(1)(C) UNDER REFERENCE H AS BEEN WORKED OUT. SINCE THE RETURNED INCOME HAS BEEN ACC EPTED AS THE ASSESSED INCOME, THE RATIO OF THE CASE CITED BY THE APPELLANT BECOMES SQUARELY APPLICABLE. HENCE, THE PENALTY OF RS.2,48,060/- LEVIED, NOT BEING SUSTAINABLE, IS HEREBY DELETED. 4. WITH THIS BRIEF BACKGROUND, WE HAVE HEARD BOTH T HE SIDES. FROM THE SIDE OF THE REVENUE LEARNED DEPARTMENTAL REPRES ENTATIVE MR.R.K. DHANESTA APPEARED AND PLACED RELIANCE ON THE DECISI ON OF HON'BLE MADRAS HIGH COURT IN THE CASE OF RAVI AND CO. VS. A SSISTANT CIT REPORTED AT [2004] 271 ITR 286 FOR THE PROPOSITION THAT THE DISCLOSURE WAS NOT VOLUNTARY, HENCE, IMPOSITION OF PENALTY WAS JUSTIFIED. ON THE ITA NO.1372/AHD /2009 ACIT VS. BACHUBHAI DUDHWALA PVT.LTD. ASST.YEAR 2003-04 - 4 - OTHER HAND, FROM THE SIDE OF THE RESPONDENT-ASSESSE E MR.P.K. MEHTA APPEARED AND RELIANCE WAS PLACED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. REPORTED AT [2010] 327 ITR 543 (DELHI), WHEREIN THE HON'BLE COU RT HAS HELD AS FOLLOWS:- UNDER THE SCHEME OF THE INCOME-TAX ACT, 1961, THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT AND TAX PAYABLE ON SUCH TOTAL INCOME IS COMPARE D WITH THE PRESCRIBED PERCENTAGE OF THE BOOK PROFITS COMPUTED UNDER SECTION 115JB OF THE ACT. THE HIGHER OF THE TWO AMOUNTS IS REGARDED AS TOTAL INCOME AS TAX IS PAYABLE WITH REFERENCE TO SU CH TOTAL INCOME. IF THE TAX PAYABLE UNDER THE NORMAL PROVISIONS IS H IGHER, SUCH AMOUNT IS THE TOTAL INCOME OF THE ASSESSEE, OTHERWI SE, THE BOOK PROFITS ARE DEEMED AS THE TOTAL INCOME OF THE ASSES SEE IN TERMS OF SECTION 115JB OF THE ACT. WHERE THE INCOME COMPUTED IN ACCORDANCE WITH THE NORMAL PROCEDURE IS LESS THAN THE INCOME DETERMINED BY LEGAL FICTION, NAMELY, THE BOOK PROFI TS UNDER SECTION 115JB OF THE ACT AND THE INCOME OF THE ASSESSEE IS ASSESSED UNDER SECTION 115JB AND NOT UNDER THE NORMAL PROVISIONS, THE TAX IS PAID ON THE INCOME ASSESSED UNDER SECTION 115JB OF THE A CT. CONCEALMENT OF INCOME WOULD HAVE NO ROLE TO PLAY AN D WOULD NOT LEAD TO TAX EVASION. THEREFORE, PENALTY CANNOT BE IMPOSED ON THE BASIS OF DISALLOWANCES OR ADDITIONS MADE UNDER THE REGULAR PROVISIONS. 5. AN ANOTHER DECISION OF ITAT MUMBAI BENCHES D M UMBAI HAS ALSO BEEN CITED IN THE CASE OF M/S.RUCHI STRIPS & A LLOYS LTD. VS. DY.CIT BEARING ITA NOS.6940 & 6941/MUM/2008 FOR AYS 2003-0 4 & 2005-06 RESPECTIVELY, DATED 21/01/2011, WHEREIN IT WAS FI NALLY HELD AS UNDER:- ITA NO.1372/AHD /2009 ACIT VS. BACHUBHAI DUDHWALA PVT.LTD. ASST.YEAR 2003-04 - 5 - 7. IN OUR VIEW THE AFORESAID RULING OF THE HON'BLE DELHI HIGH COURT APPLIES TO THE FACTS OF THE PRESENT CASE. I N THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE NO PENALTY COULD HAVE BEEN IMPOSED ON THE ASSESSEE BECAUSE THERE WAS NO TAX SO UGHT TO BE EVADED BECAUSE THE ADDITION IN RESPECT OF WHICH PEN ALTY WAS IMPOSED WAS MADE WHILE COMPUTING TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT AND ULTIMATELY THE TOTAL INCO ME OF THE ASSESSEE WAS DETERMINED ON THE BASIS OF BOOK PROFIT S U/S.115JB OF THE ACT. WE, THEREFORE, CANCEL THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). 6. IN THE LIGHT OF THE ABOVE DISCUSSION AND THE CAS E LAWS CITED, THE QUESTION WHETHER PENALTY CAN BE IMPOSED IN RESPECT OF THE ASSESSMENT OF TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT WHEN ULTIMATELY THE TOTAL INCOME IS DETERMINED U/S.115JA OF THE I.T.ACT HAS BEEN ANSWERED IN FAVOUR OF THE ASSESSEE. IN ADDITION TO THE ABOVE D ETAILS, BEFORE US, AN ORDER DATED 21.5.2007 GIVING EFFECT TO THE ORDER O F CIT(A)S JUDGEMENT DATED 30/04/2007 HAS BEEN PLACED ACCORDING TO WHICH IN QUANTUM APPEAL A RELIEF OF RS.16,77,152/- WAS GRANTED, HENCE, LEAV ING BEHIND THE NET TAXABLE INCOME ONLY AT OF RS.2,62,667/- AGAINST WHI CH THERE WAS BROUGHT FORWARD DEPRECIATION OF RS.7,37,850/-, HENCE, THE R EVISED TOTAL INCOME REMAINED AT NIL. IT HAS ALSO BEEN BROUGHT TO OUR NOTICE THAT WHILE FILING THE RETURN U/S.153A OF THE I.T.ACT, THE BOOK PROFIT U/S.115JA WAS DISCLOSED AT RS.16,28,110/- AND THE TAX WAS ACCORDI NGLY PAID. ON ACCOUNT OF THESE UNDISPUTED INFORMATION, THE CASE B EFORE US IS DIRECTLY COVERED BY THE AFORE CITED DECISION THAT IN SUCH CI RCUMSTANCES THE CONCEALMENT OF INCOME WOULD HAVE NO ROLE TO PLAY ON CE THE INCOME IS ASSESSED ON THE BOOK PROFIT U/S.115JA AND NOT UNDER THE NORMAL ITA NO.1372/AHD /2009 ACIT VS. BACHUBHAI DUDHWALA PVT.LTD. ASST.YEAR 2003-04 - 6 - PROVISIONS OF THE ACT. RESULTANTLY, WE HEREBY AFFIRM THE FINDINGS OF THE LEARNED CIT(APPEALS) AND REJECT THE GROUND OF THE R EVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 21 ST APRIL, 2011. SD/- SD/- ( D.C. AGRAWAL ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED 21 / 04 /2011 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-I, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION..19/4/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19/4/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S21.4.2011 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.4.2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER