M/s. Sadbhav Builders, Anand V. The Income tax Officer, Ward-1, Anand

ITA 1418/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2269 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-01-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 22-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY RAI
• Assessee Lawyers: A L THAKKAR
• Keywords: Business expenditure
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI T K SHARMA, JUDICIAL MEMBER AND SHRI N S SAINI, ACCOUNTANT MEMBER ITA NO.1418/AHD/2008 (ASSESSMENT YEAR:-2002-03) M/S SADHBHAV BUILDERS, C/O. VANDANA TRADING, JAY RAJ COMPLEX, ANAND- SOJITRA ROAD, NEAR BORSAD CHOKDI, ANAND V/S THE INCOME-TAX OFFICER, WARD-1, ANAND PAN: 5150 - S/WARD - 1/ANAND [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI A L THAKKAR, AR RESPONDENT BY:- SHRI SANJAY RAI, SR. DR O R D E R PER N S SAINI: THIS APPEAL BY AN ASSESSEE AGAINST AN ORDER DATED 18-02-2008 OF THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS)-IV, BARODA [THE CIT(A)] FOR ASSESSMENT YEAR (AY) 2002-03, RAISES THE FOLLOWING GROUND:- THE LEARNED CIT(A)-IV, BARODA ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY LEVIED RS.4,58,240/- U/S 271(1)( C) OF I.T. ACT. 2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. IN THE INSTANT CASE PENALTY OF RS.4,58,240/- WAS LEVIE D U/S 271(1)(C) OF THE INCOME-TAX ACT. THE ASSESSEE FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.69,880/-. THE LEARNED ASSESSING OFFICER COMPLETED THE ASSESSMENT AT A TOTAL INCOME OF RS.14,88,640/- AFTER DISALLOWING VARIOUS EXPENSES O N THE GROUND 2 OF CERTAIN DEFECTS IN THE VOUCHERS AND INCREASE IN EXPENSES DISPROPORTIONATE TO THE TURNOVER OF THE ASSESSEE. F URTHER THE LEARNED COMMISSIONER OF INCOME TAX PASSED AN ORDER U/S 263 OF THE ACT DIRECTING THE LEARNED ASSESSING OFFICER TO MAKE A SEPARATE ADDITION OF RS.8 LACS WHICH WAS DISCLOSED BY THE ASSESSEE AS UNDISCLOSED INCOME DURING THE COURSE OF THE SURVEY ON 25-07-2002. THE TRIBUNAL IN THE QUANTUM APPEAL V IDE ORDER DATED 15-10-2010 PASSED IN ITA NO.2659/AHD/2005 AND ITA NO.842/AHD/2006 IN ASSESSMENT YEAR 2002-03 OBSERVED THAT THE REJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE WAS P ROPER AND THEREFORE DIRECTED THE LEARNED ASSESSING OFFICER TO COMPUTE THE TOTAL INCOME OF THE ASSESSEE AT 5% OF ITS TURNOVER AND ALSO TO SEPARATELY ADD THEREAFTER RS.8 LACS WHICH WAS DISCL OSED BY THE ASSESSEE DURING THE COURSE OF SURVEY. THUS THE TOT AL INCOME OF THE YEAR ON WHICH THE ASSESSEE WAS ULTIMATELY ASSES SED, CAME TO RS.10.07 LACS IN PLACE OF RETURNED INCOME OF RS.69, 880/-. 3 BEFORE US THE LEARNED AUTHORISED REPRESENTATIVE O F THE ASSESSEE SUBMITTED THAT INCOME OF RS.8 LACS WHICH W AS DETECTED DURING THE COURSE OF SURVEY WAS DULY DISCLOSED AS S EPARATE INCOME IN THE RETURN OF INCOME FILED BY THE ASSESSE E ON 29-11- 2002. FURTHER THE TRIBUNAL ESTIMATED THE INCOME OF THE ASSESSEE AT RS.2,07,940/- IN PLACE OF LOSS OF RS.7,30,120/- DUE TO REJECTION OF BOOKS OF ACCOUNT ON ESTIMATE BASIS ONLY AND THER EFORE LEVY OF PENALTY U/S 271(1)(C) IS NOT JUSTIFIED. 4 THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE O THER HAND, SUBMITTED THAT THE INCOME OF RS.8 LACS WAS DI SCLOSED BY THE ASSESSEE AFTER THE END OF THE ACCOUNTING YEAR DURIN G THE COURSE OF 3 THE SURVEY AND HAD THERE BEEN NO SURVEY THE ASSESSE E WOULD NOT HAVE DISCLOSED THE SAID INCOME OF RS.8 LACS. HE FUR THER SUBMITTED THAT ULTIMATELY THE ASSESSED INCOME OF THE ASSESSEE IS ALMOST 16 TIMES OF THE RETURNED INCOME AND THEREFORE PENALTY U/S 271(1)(C) WAS CORRECTLY LEVIED IN THE INSTANT CASE. 5 WE FIND THAT IT IS NOT IN DISPUTE THAT INCOME OF RS.8 LACS WAS DISCLOSED BY THE ASSESSEE DURING THE COURSE OF SURVEY ON 25- 07-2002 AND IT IS ALSO NOT IN DISPUTE THAT THE ASSE SSEE FOR THE FIRST TIME FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 29-11-2002 WHERE THIS INCOME WAS D ULY DISCLOSED THEREIN. UNDER SECTION 271(1)(C) THE CONC EALMENT OF INCOME IS TO BE INFERRED FROM THE RETURN OF INCOME AND NOT FROM ANYTHING ELSE. WHAT IS PUNISHABLE U/S 271(1)(C) IS ACTUAL CONCEALMENT OF INCOME IN THE RETURN OF INCOME AND N OT MERELY AN ATTEMPT TO MAKE CONCEALMENT. IF THE ASSESSEE RECTIF IES ITSELF AND DECLARES THE CORRECT INCOME IN THE VALID RETURN OF INCOME AND DOES NOT FILE ANY RETURN BY CONCEALING THE INCOME T HEN SUCH ACT IS NOT PUNISHABLE U/S 271(1)(C) OF THE ACT. THEREFORE, IN OUR CONSIDERED OPINION, NO PENALTY CAN BE LEVIED IN RES PECT OF INCOME OF RS.8 LACS WHICH WAS DULY DISCLOSED BY THE ASSESS EE IN ITS VALID RETURN OF INCOME. 6 FURTHER WE FIND THAT THE REMAINING AMOUNT OF ASSE SSED INCOME WAS DETERMINED ON THE BASIS OF ESTIMATION OF THE INCOME BECAUSE OF REJECTION OF BOOKS OF ACCOUNT. NO POSITI VE MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT A NY BOGUS OR NON GENUINE EXPENDITURE WAS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. IN RESPECT OF VOUCHERS OF EXPENDI TURES WHICH 4 WERE IN THE NAME OF SISTER CONCERN, WE FIND THAT RE VENUE HAS BROUGHT NO MATERIAL BEFORE US TO SHOW THAT THE SAID VOUCHERS WERE BOGUS OR THAT THE SAID SISTER CONCERN ALSO CLA IMED DEDUCTION IN RESPECT OF SAID VOUCHERS. THUS, MERELY BECAUSE S OME BUSINESS EXPENDITURE OF THE ASSESSEE WAS INCURRED THROUGH IT S SISTER CONCERN DOES NOT ENTITLE THE DEPARTMENT TO LEVY PEN ALTY U/S 271(1)(C) WITH REFERENCE TO SUCH EXPENDITURE AND TH IS ALSO DOES NOT LEAD TO THE CONCLUSION THAT THE SAID EXPENDITUR ES WERE NOT GENUINE BUSINESS EXPENDITURES OF THE ASSESSEE. WE D O NOT FIND ANY FORCE IN THE CONTENTION OF THE LEARNED DEPARTME NTAL REPRESENTATIVE THAT AS ULTIMATELY ASSESSED INCOME I S ALMOST 16 TIMES OF THE RETURNED INCOME, THEREFORE, PENALTY U/ S 271(1)(C) SHOULD BE LEVIED. IN OUR CONSIDERED OPINION, PENALT Y U/S 271(1)(C) CAN BE LEVIED ONLY WHEN IT IS FOUND THAT THE ASSESS EE HAS ACTUALLY CONCEALED PARTICULARS OF INCOME IN THE RETURN OF IN COME FILED BY IT OR HAS FURNISHED ANY INACCURATE PARTICULARS OF I NCOME IN THE RETURN OF INCOME AND THE SAME HAS NO RELEVANCE WITH THE QUANTUM OF ASSESSED INCOME AS A NUMBER OF TIMES OF THE RETU RNED INCOME. IT IS A SETTLED POSITION OF LAW THAT THE CONSIDERAT ION WHICH APPLIES IN A PENALTY PROCEEDINGS IS DIFFERENT FROM THE CONS IDERATION WHICH APPLIES IN AN ASSESSMENT PROCEEDINGS. MERELY INABILITY OF THE ASSESSEE TO SUBSTANTIATE ITS RETURN OF INCOME A ND THEREFORE ESTIMATION OF INCOME DOES NOT NECESSARILY MEAN EITH ER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME IN THE RETURN OF INCOME BY THE ASSESSEE. THE RE IS DIFFERENCE BETWEEN UNPROVED AND DISPROVED. THUS , IT IS OBSERVED THAT NO MATERIAL COULD BE BROUGHT ON RECOR D BY THE REVENUE TO SHOW THAT THE ASSESSEE HAS EITHER CONCEA LED ANY PARTICULARS OF INCOME IN THE RETURN OF INCOME OR HA S FURNISHED 5 ANY INACCURATE PARTICULARS OF INCOME IN THE RETURN OF INCOME FILED BY IT. WE, THEREFORE, DELETE THE PENALTY OF RS.4,58 ,240/- LEVIED U/S 271(1)(C) OF THE ACT IN THE INSTANT CASE AND AL LOW THE APPEAL OF THE ASSESSEE. ORDER PRONOUNCED IN THE COURT TODAY ON 21-01-20 11 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (N S SAINI) ACCOUNTANT MEMBER DATE : 21 -01-2011 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. CIT CONCERNED 4. CIT(A)-IV, BARODA 5. THE DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD