Swati Pearls & Jewellers, Hyderabad V. Dy.CIT., Circle-5(1), Hyderabad

ITA 1401/HYD/2014

• Counselvise Citation: 140122514 RSA 2014
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 13-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Keywords: Bogus purchase; Gift; Revised return
• Section: 143(3); 139(5); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1401/HYD/2014 ASSESSMENT YEAR: 2006-07 SWATI PEARLS & JEWELLERS, HYDERABAD. PAN ABEFS 1227L VS. DY. COMMISSIONER OF INCOME- TAX, CIRCLE 5(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HARI AGARWAL REVENUE BY : SHRI B. KURMI NAIDU DATE OF HEARING 13-11-2015 DATE OF PRONOUNCEMENT 04-12-2015 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - V, HYDERABAD, DATED 28/03/2015 FOR THE AY 2006-07. 2. BRIEF FACTS OF THE CASE ARE, FOR THE AY 2006-07, ASSESSEE HAD FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME O F RS. 29,518 FROM BUSINESS OF JEWELLERY TRADING WITH THE STATUS OF FI RM. THE CASE WAS REOPENED ON THE SPECIFIC INFORMATION FROM THE JAIPU R INVESTIGATION WING THAT THE ASSESSEE HAD MADE BOGUS PURCHASES FRO M M/S VIJAY GEMS, JAIPUR BEARING BILL NO. 83, DATED 09/03/2006 FOR RS. 5,92,973/-. THIS WAS BROUGHT TO THE KNOWLEDGE OF THE ASSESSEE B Y THE DEPARTMENT. DUE TO THE FACT THAT IT WAS NOT VERIFIA BLE AND ASSESSEE AGREED TO FILE REVISED RETURN OF INCOME FOR THE AY 2006-07 ADMITTING THE ABOVE PURCHASES AS ADDITIONAL INCOME, DECLARED THE TAXABLE INCOME OF RS. 6,22,490. SUBSEQUENTLY, NOTICE U/S 14 8 WAS ISSUED. IN 2 ITA NO. 1401/HYD/2014 SWATI PEARLS & JEWELLERS, HYD. RESPONSE TO THE NOTICE U/S 148, ASSESSEE REPLIED BA CK TO CONSIDER THE REVISED RETURN OF INCOME FILED ADMITTING ADDITIONAL INCOME AS RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 148. THE ASS ESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT, CONSIDE RING THE TAXABLE INCOME AT RS. 6,22,490. 3. SINCE, THE ASSESSEE FILED REVISED RETURN OF INCO ME ADMITTING THE SAME AS ADDITIONAL INCOME, THE AO TREATED THE ADDIT IONAL INCOME AS CONCEALED INCOME CONSIDERING THE FACT THAT ONLY AFT ER THE FINDING OF THE BOGUS PURCHASES BY THE DEPARTMENT, ASSESSEE ACC EPTED AND FILED THE REVISED RETURN OF INCOME. HENCE, PENALTY OF RS. 1,99,600 WAS LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 4. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE FILED A PPEAL BEFORE THE CIT(A). THE CIT(A) HAD DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: 6. IN THIS CASE, IT CAN BE CLEARLY HELD THAT THE APPEL LANT CONCEALED THE BOGUS PURCHASE OF RS. 5,92,973 AND OFFERED THE SAM E IN THE REVISED RETURN OF INCOME ONLY SUBSEQUENT TO DETECTION OF THE SAME BY THE DEPARTMENT DURING THE SCRUTINY PROCEEDINGS FOR THE AY 2008-09 . 6.1 FOR MY ABOVE OBSERVATIONS, I DO NOT FIND ANY I NFIRMITY IN THE ACTION OF THE AO LEVYING PENALTY OF RS. 1,99,600, AND HEN CE, I CONFIRM THE SAME. 5. THE LD. AR PRAYED TO FILE ADDITIONAL GROUNDS OF APPEAL. ON VERIFICATION, IT WAS NOTICED THAT THE ADDITIONAL GR OUNDS WERE NOT RELATING TO THE APPEAL UNDER CONSIDERATION I.E. PEN ALTY U/S 271(1)(C) OF THE ACT. THE ADDITIONAL GROUNDS WERE RELATING TO TH E REOPENING PROCEEDINGS INITIATED BY THE AO AND ORDER U/S 143(3 ) R.W.S. 147. THE ADDITIONAL GROUNDS WERE REJECTED, AS THEY WERE IRRE LEVANT CONSIDERING THE PRESENT APPEAL UNDER CONSIDERATION ARE RELATING TO PENALTY U/S 271(1)(C) OF THE AC. 6. LD. AR SUBMITTED THAT THE ASSESSEE HAD ACCEPTED TO OFFER THE ADDITIONAL INCOME TO BUY PEACE WITH THE DEPARTMENT AND FURTHER LITIGATION. HE FURTHER SUBMITTED THAT THE PENALTY C ANNOT BE LEVIED, WHEN THE ASSESSEE ACCEPTS TO OFFER AS THE ADDITIONA L INCOME AND FILES 3 ITA NO. 1401/HYD/2014 SWATI PEARLS & JEWELLERS, HYD. REVISED RETURN OF INCOME VOLUNTARILY TO BUY PEACE. HE RELIED ON THE FOLLOWING CASE LAWS: 1. ACIT VS. ASHOK RAJ NATH, [2013] 33 TAXMANN.COM 588 (DELHI TRIB.) 2. ACIT VS. PREM CHAND GARG, [2009] 31 SOT 97 (DEL HI) (TM) 7. LD. DR RELIED ON THE ORDER OF CIT(A). 8. AFTER CONSIDERING THE SUBMISSIONS MADE BY BOTH T HE SIDES AND PERUSING THE MATERIAL FACTS ON RECORD, IT IS OBSER VED THAT THERE IS NO DOUBT THAT THE ASSESSEE HAD FILED REVISED RETURN OF INCOME AND ACCEPTED THE BOGUS PURCHASE AS ADDITIONAL INCOME SI NCE THE ASSESSEE WAS NOT IN A POSITION TO VERIFY THE SAME A ND ACCEPTED THE ADDITION TO AVOID UNNECESSARY LITIGATION, BUT, ON RECORD ASSESSEE MADE THE PAYMENT FOR THE PURCHASES ONLY THROUGH CHE QUE. MOREOVER, ASSESSEE ACCEPTED THE ADDITION DURING THE COURSE OF ASSESSMENT PROCEEDING. CONSIDERING THE FACT THAT THE SURVEY WA S CONDUCTED IN JAIPUR AND SOME INFORMATION WAS RECEIVED FROM JAIPU R INVESTIGATION WING THAT THE ASSESSEE HAD INVOLVED IN PURCHASE OF GEMS FROM VIJAY GEMS. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD AC CEPTED THE ADDITION ONLY TO BUY PEACE AND AVOID LITIGATION. 9. LD. AR SUBMITTED, PENALTY CANNOT BE LEVIED BECAU SE ASSESSEE ACCEPTED THE ADDITIONAL INCOME TO AVOID UNNECESSARY LITIGATION BY RELYING ON THE DECISION IN CASE OF ACIT VS. ASHOK R AJNATH (SUPRA). IN THE SAID CASE, THE ASSESSEE FILED VOLUNTARILY THE R EVISED RETURN OF INCOME BEYOND THE TIME PRESCRIBED U/S 139(5) OF THE ACT. THE AO ACCEPTED THE REVISED RETURN AND ALSO LEVIED THE PEN ALTY U/S 271(1)(C). AS FAR AS OTHER CASE OF ACIT VS. PREM CHAND GARG IS CONCERNED, THIS IS IN RELATION TO THE PROCEEDINGS U/S 153. NOTICE W AS ISSUED TO THE ASSESSEE SEEKING INFORMATION RELATING TO RECEIPT OF GIFTS. THERE WAS NO SPECIFIC ENQUIRY FROM THE AO IN THIS ASPECT NOR DETECTION OF ANY EVIDENCE. THE ASSESSEE VOLUNTARILY AGREED TO OFFER THE GIFTS AS ADDITIONAL INCOME. 4 ITA NO. 1401/HYD/2014 SWATI PEARLS & JEWELLERS, HYD. 10. IN THE PRESENT CASE, THE ASSESSEE HAD ACCEPTED THE BOGUS PURCHASE AS ADDITIONAL INCOME VOLUNTARILY DUE TO TH E FACT THAT ASSESSEE WAS NOT IN A POSITION TO SUBSTANTIATE THE CLAIM, EVEN THOUGH, THE TRANSACTION WAS MADE THROUGH BANKING CHANNEL. T HE ASSESSEE HAD DECLARED THE ADDITIONAL INCOME VOLUNTARILY AND FILED RETURN OF INCOME, WHICH THE AO ACCEPTED THE REVISED RETURN OF INCOME TO COMPLETE THE ASSESSMENT U/S 143(3) R.W.S. 147. BY A PPLYING THE RATIOS OF THE ABOVE CITED JUDGMENTS, WE ARE INCLINED TO NO TE THAT THE ASSESSEE FILED THE REVISED RETURN OF INCOME WHICH W AS DULY ACCEPTED BY THE AO. FROM THE ABOVE OBSERVATIONS, IT IS CLEAR THAT THE ASSESSEE HAD NEITHER CONCEALED THE PARTICULARS OF THE INCOME NOR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HENCE, THIS IS NOT A FIT CASE TO ATTRACT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE AC T. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 4 TH DECEMBER, 2015. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 4 TH DECEMBER, 2015 KV COPY TO:- 1) SWATI PEARLS & JEWELLERS, C/O HARI AGARWAL AND ASSOCIATES, CAS., 304, GUPTA ESTATE, BASHEERBAGH, HYDERABAD 2) DCIT, CIRCLE 5(1), 6 TH FLOOR, AAYAKAR BHAVAN, HYDERABAD 500073. 3) CIT (A)- V , HYDERABAD. 4) CIT IV, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 5 ITA NO. 1401/HYD/2014 SWATI PEARLS & JEWELLERS, HYD. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S. 2. DRAFT PLACED BEFORE AUTHOR SR.P.S 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER VP 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P S. 7. FILE SENT TO THE BENCH CLERK SR.P.S. 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER