The ACIT, Circle-8, Ahmedabad V. M/s. Varia Engineering Works Pvt.Ltd., Ahmedabad

ITA 1379/AHD/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8367 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-08-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 25-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Third party statement
• Section: 143(3); 133A; 131; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORESHRI S.S. GODA RA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.1379/AHD/2012 / ASSESSMENT YEAR: 2008-09 ACIT, CIRCLE-8, AHMEDABAD VS. M/S. VARIA EN G INEERIN G WORKS PRIVATE LIMITED, 2005, PHASE-IV, GIDC, VATVA, AHMEDABAD PAN : AABCV 0398 G [ / (APPELLANT) / (RESPONDENT) REVENUE B Y : SHRI K. MADHUSUDAN, SR DR ASSESSEE B Y : SHRI G Y ANPIPARA, AR / DATE OF HEARING : 09/08/2017 / DATE OF PRONOUNCEMENT: 06/10/2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THIS APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2008-09 IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XIV, AHMEDABAD VIDE APPEAL NO.CIT(A) XIV/AC.CIR.8/46/11-12, DATE D 13.04.2012, ARISING OUT OF ORDER UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), FRAMED ON 29.06.2011 BY THE ACIT, CIRCLE-8, AHMEDABAD. 2. THE SOLE GRIEVANCEOF THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A) IN DELETING THE PENALTY OF RS.56,08,350/- IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT , FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS FILED RETURN OF INCOME ON 29.09.2008 DECLARING TOTAL INCOME OF RS.1,88,43,160/-. THEREAFTER, ASSESSING OFFICER FRAMED ASSESSMENT UNDER ITA NO. 1379/AHD/2012 ACIT VS.VARIAENGG WORKS PVT LTD AY : 2008-09 - 2 SECTION 143(3) OF THE ACT ON 28.12.2010, DETERMINING TOTAL INCOME AT RS.4,05,36,160/- AFTER MAKING AN ADDITION OF RS.1,65,00,000/- ON ACCOUNT OF UNACCOUNTED INCOME OF THE ASSESSEE IN TH E FORM OF SHARE APPLICATION MONEY. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND LEVIED PENALTY OF RS.56,08,350/- BEING THE 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED VIDE ORDER DATED 29.06.2011. 4. AGGRIEVED BY THE AFORESAID ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A), WH O, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE PENALTY IN QUESTION BY FOLLOWING OBSERVATIONS;- 2.3 I HAVE CAREFULLY CONS IDERED THE PENALTY ORDER AND THE SUBMISSION MADE BY THE APPELLANTDURING THE COURSE OF APPE LLATE PROCEEDINGS. THE APPELLANT HAS SUBMITTED THAT THE AMOUNT OF RS.1,65,00 ,000/- FOR WHICH TH E PENALTY HAS BEEN IMPOSED WAS RECEIVED BY THE APPELLANT IN THE PAST AND THE APPELLANT OFFERED THE SAID SUM FOR ADDITION TO ITS TOTAL INCO ME FOR THE CURRENT ASSESSMENT YEAR TO BUY PEACE OF MIND AND AVOID LONG DRAWN LITIGATION. THE APPELLANT HAD DULY EXPLAINED THE SOURCE, IDENTITY AND CAPACITY OF ALL THE PARTIES FROM WHOM THE SAID SUM WERE RECEIVED. DUE CONFIRMATIONS FROM THOSE PA RTIES HAVE ALSO BEEN FILED. IT IS NOTED FROM THE FACTUAL INFORMATION SUBMITTED BY THE APPELLANT THAT ALL THE PAYMENTS FOR SHARE APPLICATION MONEY WERE RECEIVED THRO UGH CHEQUE. THE A PPELLANT HAD ALSO GIVEN PHOTO COPY OF THE ACKNOWLEDGEMENT OF THE IT RETURN OF TH E PARTIES WHO HAVE GIVEN THE SHARE APPLICATION MONEY. TH E AMOUNTS HAVE COME THROUGH BANKING CHANNEL. FURTHER, IT IS ALSO NOTED FR OM THE STATEMENT OF THE DIRECTOR OF THE APPELLANT RECORDED DURING THE COURSE OF SURVEY THAT THE APPELLANT HAS HIMSELF MADE THE DISCLOSURE BEFORE THE SURVEY PARTY. THERE IS NO FACT WHICH SHOW THAT THE DEPARTMENT HAS DETECTED THE CONCEALMENT PRIOR TO THE DISCLOSURE BY THE APPELLANT. IT IS FURTHER NOTED THAT THE AO HAS ALSO NOT POINTED OUT ANY CONTRARY FACT TO PROVE THAT THE SHARE APPLICATION MONEY REC EIVED BY THE APPELLANT WAS NOT GENUINE EXCEPT FOR THE DISCLOSURE MADE BY THE APPE LLANT, THERE IS NO EVIDENCE TO SHOW THAT THE SHARE APPLICATION MONEY RECEIVED ARE NOT GENUINE. IN VIEW OF THE ABOVE MENTIONED FACTS, I AM OF THE CONSIDERED OPINION THAT NO PENALTY U/S 271(1)(C) CAN BE IMPOSED ON THE APPELLANT COMPANY. THE SAME IS, THEREFORE, DIRECTED TO BE DELETED AND THE APPEAL IS ALLOWED. ITA NO. 1379/AHD/2012 ACIT VS.VARIAENGG WORKS PVT LTD AY : 2008-09 - 3 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE FILED BEFORE US A PAPER-BOOK CONTAINING TH E BREAK-UP OF SHARE APPLICATION MONEY RECEIVED ALONGWITH COPIES OF CONFIRMA TION LETTERS/ACCOUNTS, BANK STATEMENTS, COPY OF IT RETURNS ETC.. APART FROM AB OVE, COPY OF REVISED STATEMENT OF TOTAL INCOME FOR ASSESSMENT YEAR 2008-09 AL ONG WITH A LETTER ADDRESSED TO ACIT REGARDING THE REVISED STATEMENT OF INCO ME DISCLOSING THE ADDITIONAL INCOME SUO-MOTO DISCLOSED BY THE ASSESSEE WERE ALSO PLACED ON RECORD. HE THUS PLEADED THAT THE SHARE APPLICATION MONE Y OF RS.1,65,00,000/-, THOUGH EXPLAINED AS GENUINE, HAS BEEN OFFERED AS INCOME VOLUNTARILY AND SUO-MOTO TO BUY PEACE AND TO AVOID COSTLY LONG DRAWN LITIGATION. 7. LEARNED DEPARTMENTAL REPRESENTATIVE , ON THE OTHER HAND SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND RELIA NCE IS PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA P. LTD. VS. CIT, REPORTED (2013) 358 ITR 593, FOR THE PROPOSITION THAT PENALTY IS CIVIL LIABILITY AND ASSESSEES OWN ADMISSION CONSTITU TES ADMISSION OF LIABILITY. 8. WE HAVE HEARD THE RIVAL CONTENTI ONS AND PERUSED THE RECORD PLACED BEFORE US. THE ONLY GROUND OF APPEAL RAISED BY THE REVENUE IS WITH REGARD TO THE DELETION OF PENALTY OF RS.56,08,35 0/- UNDER SECTION 271(1)(C) OF THE ACT, WHICH WAS IMPOSED BY THE ASSESSING OFFICER FOR FURNISHING INACCURATE PARTICULARS OF INCOME FOR TH E INCOME OFFERED BY THE ASSESSEE AT RS.1,65,00,000/-. WE OBSERVE THAT THE RETURN OF INCOME FOR THE YEAR WAS FILED ON 29.09.2008. SUBSEQUENTLY, SURVEY PROCEEDINGS UNDER SECTION 133A OF THE ACT WERE CARRIED OUT ON 08.08.2010. DURING THE COURSE OF SURVEY, THE ASSESSEE ACCEPTED A SUM OF ITA NO. 1379/AHD/2012 ACIT VS.VARIAENGG WORKS PVT LTD AY : 2008-09 - 4 RS.1.65 CRORES AS UNACCOUNTED INCOME WI TH REGARD TO INTRODUCTION OF SHARE CAPITAL FROM VARIOUS PARTIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A REVISED STATEMENT OF INCOME WAS FILED DI SCLOSING ADDITIONAL INCOME OF RS.1.65 CRORES. IMPUGNED PE NALTY HAS BEEN LEVIED ON TH E ALLEGED UNACCOUNTED INCOME OF RS.1.65 CRORES. WE FURT HER OBSERVE THAT THE ASSESSEE WAS IN POSSESSION OF ALL NECESSARY EVIDENCES TO PROVE THE IDENTI TY, GENUINENESS AND CREDITWORTHINESS OF THE COMPANIES INVESTING INTO THE SHAR E CAPITAL OF THE COMPANY. THESE DOCUMENTS INCLUDED CONTRA CONFIRMATION OF ALL TH E SHARE APPLICATION MONEY RECEIVED BY THE APPLICANT, COPIES OF LATE ST INCOME-TAX RETURNS, BALANCE-SHEETS OF THE APPLICANTS SHOWING INVESTMENT IN THEIR BOOKS, ALL THE SHARE APPLICATION MONEY RECEIVED BY ACCOUNT PAYEE CH EQUES ETC... DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NONE OF THESE DE TAILS HAS BEEN FOUND TO BE WRONG BY THE ASSESSING OFFICER, EXCEPT IN THE CASE OF KEN SECURITIES LTD WHICH MADE THE PAYMENT OF RS.25 LACS. IN THE CASE OF KE N SECURITIES LTD, DIRECTOR SHRI DEEPAK R. PATEL, IN HIS STATEMENT RECORDED UNDER SECTION 131 OF THE ACT STATED TO HAVE PROVIDED ACCOMMODATION ENTRY, BUT SU BSEQUENTLY KEN SECURITIES LIMITED CONFIRMED IN WRITING THAT IT HAS ADVANC ED AN AMOUNT OF RS.25 LACS TOWARDS SHARE APPLICATION MONEY TO THE APPELLANT. FROM ABOVE DISCU SSION RELATING TO THE ALLEGED UNACCOUNTED INCOME VOLUNTARILY ACCEPTED BY THE ASSESSEE AND OFFERED TO TAX AT RS.1.65 CRORES, WE FIND THAT THE PARTICULARS FURNISHED BY THE ASSESSEE CANNOT BE CATEGORIZED AS INACCURATE PARTICULARS, BECAUSE THE DETAILS ENTERED IN THE BOOKS OF ACCOUNTS WE RE DULY SUPPORTED BY DOCUMENTARY EVIDENCES WHICH HAVE NOT BEEN CONTRO VERTED AT ANY STAGE BY THE REVENUE AUTHORITIES. 9. NOW COMING TO THE QUESTION AS TO WHETHER THE ASSESSEE IS LIABLE TO PAY PENALTY UNDER SECTION 271(1)(C) OF THE AC T FOR FURNISHING INACCURATE PARTICULARS OF INCOME, WE FIND FORCE IN THE ARGUMENT S OF LEARNED COUNSEL THAT THE ASSESSEE ITA NO. 1379/AHD/2012 ACIT VS.VARIAENGG WORKS PVT LTD AY : 2008-09 - 5 HAD FURNISHED FULL PARTICULARS OF INCO ME AND NOTHING HAS BEEN HIDDEN OR CONCEALED. ALL THE DETAILS HAVE BEEN F ILED ALONG WITH RETURN OF INCOME AND IN DUE COURSE OF ASSESSMENT PROCEEDINGS. WE FURTHER FIND THAT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCT (P) LTD, REPO RTED IN 322 ITR 158, HONBLE SUPREME COURT HAS HELD THAT IN THE ABSENCE OF A FINDING BY TH E AO THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEO US OR FALSE, THERE WOULD BE NO QUESTION OF INVITING PENALTY UN DER SECTION 271(1)(C) OF THE ACT . IT HAS FURTHER HELD THAT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICUL ARS REGARDING THE INCOME OF THE ASSESSEE '. FURTHER, DURING THE COURSE OF HEARIN G, LEARNED DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED UPON THE JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF MAK DATA P. LTD. (SUPRA), WHEREIN THE HONBLE APEX COURT CONFIRMED THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WITH REGARD TO SURRENDER MADE IN THE COURSE OF SEARCH ABOUT THE ALLEGED RE CEIPT OF SHARE APPLICATION MONEY. WE, HOWEVER, OBSERVE THAT FACTS OF MAK DATA P. LTD (SUPRA) VARY WITH THE FACTS OF THE ASSESSEE. IN THE CASE OF MAK DATA P. LTD, THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE DATE OF FILING THE RETURN OF INCOME. IN THE RETURN OF INCOME, THE ASSESSEE HAD NOT DECLARED THE INCOME SURRENDERED NOR IT WAS SURRENDERED DURING THE COURSE OF ASSESS MENT PROCEEDINGS; WHEREAS IN THE CASE OF THE ASSESSEE, SURVEY PROCEEDINGS WERE INITIATED AFTER THE DATE OF FILING THE RETURN OF INCOME BY THE ASSESSEE.THE ASSESSEE SUO-MOTO SURRENDERED THE INCOME DURING THE COURSE OF ASSESSMENT PROC EEDINGS AND PAID TAXES THEREON. NO INCRIMINATING MATERIAL HAS BEEN UNEART HED BY THE REVENUE AUTHORITIES. WE, THEREFORE, ARE OF THE VIEW THAT JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF MAK DATA P. LTD. IS NOT APPLICAB LE ON THE ASSESSEE. WE, THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCT (P) LTD (SUPRA) AN D IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, ARE OF THE VIEW THAT MERELY BECAUSE THE ASSESSEE HAS OFFERED THE ITA NO. 1379/AHD/2012 ACIT VS.VARIAENGG WORKS PVT LTD AY : 2008-09 - 6 SUM, WHICH WAS RECEIVED BY IT IN THE PAST , FOR ADDITION TO ITS TOTAL INCOME FOR THE CURRENT ASSESSMENT YEAR TO BUY PEACE OF MIND AND TO AVOID LONG LITIGATION, IT CANNOT BE AUTOMATICALLY HELD THAT THE CA SE IS LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN VIEW OF THE ABOVE, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE SEE NO REASONS TO INTERFERE IN TH E LUCID FINDINGS OF THE LD. CIT(A). WE ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 10. IN THE RESULT, THE APPEAL FILE D BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 6 TH OCTOBER2017 AT AHMEDABAD. SD/- SD/- ( S.S. GODARA ) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED, 06/10/2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ) ( / THE CIT(A)- 5. , , /DR,ITAT, AHMEDABAD, 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT.REGISTRAR) ITAT, AHMEDABAD