Sri Gayathri Timber & Hardwares, CHENNAI V. ITO, Krishnagiri

ITA 1456/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81234 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-10-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 28-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: K S B ALAKRISHNAN
• Keywords: Gift; Initiation of penalty proceedings; Condonation of delay
• Section: 143(3)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI . , . ! ! ! ! , ' ' ' ' # # # # BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A.NOS.1456 AND 1457/MDS/2014 ' ! $! / ASSESSMENT YEARS :2001-02 AND 2003-04 M/S. SRI GAYATHRI TIMBER & HARDWARES, NO.4/550, THIRUPATTUR MAIN ROAD, CUTCHERRY MEDU, HARUR 636 903, DHARMAPURI DISTRICT. [PAN: ABAFS6406R] VS. THE INCOME TAX OFFICER, WARD I(1), 46-I, KRN COMPLEX, EAST PARALLEL ROAD, KRISHNAGIRI. ( %& %& %& %& /APPELLANT ) ( '(%& '(%& '(%& '(%& / RESPONDENT ) %& ) * / APPELLANT BY : SHRI K.S. BALAKRISHNAN, ADVOCATE '(%& ) * / RESPONDENT BY : SHRI S. DAS GUPTA, JCIT ) + / DATE OF HEARING : 28.10.2014 ,$ ) + /DATE OF PRONOUNCEMENT : 30.10.2014 - - - - / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THESE TWO APPEALS FILED BY THE SAME ASSESSEE ARE DI RECTED AGAINST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX ( APPEALS), SALEM, BOTH DATED 28.02.2014 RELEVANT TO THE ASSESSMENT YEARS 2 001-02 AND 2003-04. 2. BOTH THE APPEALS OF THE ASSESSEE ARE FOUND TO HAVE BEEN FILED LATE BY NINE DAYS. THE LD. COUNSEL FOR THE ASSESSEE HAS FILED PETITION FOR CONDONATION OF DELAY IN SUPPORT OF AFFIDAVIT OF THE ASSESSEE SUBMITTING THAT THE SPOUSE AND ONE OF THE PARTNERS OF THE FIRM WAS I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .14 1414 1456 & 1457 56 & 1457 56 & 1457 56 & 1457/M/ /M/ /M/ /M/1 11 14 44 4 2 UNDER MEDICAL TREATMENT AND POST OPERATIVE CARE. IN SUPPORT OF THE MEDICAL TREATMENT, THE ASSESSEE HAS FILED DETAILED MEDICAL REPORT ALONG WITH CERTIFICATE, ETC. AND PRAYED FOR CONDONING THE DELAY AND TO ADMIT THE APPEAL FOR HEARING. THE LD. DR HAS NOT SERIOUSL Y OBJECT TO THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THAT T HE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE AND ACCORDINGLY, WE C ONDONE THE DELAY OF NINE DAYS IN FILING BOTH THE APPEALS AND ADMIT T HE APPEALS FOR HEARING. I.T.A. NO. 1456/MDS/2014 [A.Y. 2001-02] 3. BRIEF FACTS OF THE CASE ARE THAT THERE WAS AN E NQUIRY UNDER SECTION 131(1A) OF THE INCOME TAX ACT IN THE CASE OF M/S. S RI GAYATHIRI TIMBER AND HARDWARES, HARUR. THEREAFTER, THE ASSESSMENT WAS CO MPLETED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. DURING THE COURSE OF SURVEY PROCEEDINGS, IT WAS FOUND THAT AN AMOUNT OF .50,000/- IN THE NAME OF MISS. GAYATHIRI, A MINOR WAS INTRODUCED AS INITIAL CAPITAL IN THE ABOVE FIRM . THE SOURCE FOR THE ABOVE INVESTMENT WAS NOT EXPLAINED BY THE PARTNERS IN THE COURSE OF ENQUIRY CONDUCTED BY THE ADIT (INV.). SUBSEQUENTLY, THE ASS ESSING OFFICER HAS ASKED THE ASSESSEE TO FILE DETAILS ABOUT THE SOURCE OF INVESTMENT OF .50,000/-. THE ASSESSEES REPRESENTATIVE APPEARED B EFORE THE ASSESSING OFFICER ON 04.07.2006 AND 07.12.2006 AND EXPLAINED THE SOURCE OF INVESTMENT BY PARTNER IN THE ABOVE FIRM. THE EXPLAN ATION GIVEN BY THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .14 1414 1456 & 1457 56 & 1457 56 & 1457 56 & 1457/M/ /M/ /M/ /M/1 11 14 44 4 3 ASSESSEES REPRESENTATIVE WAS NOT ACCEPTED AS SHE H AS NO SOURCE TO INVEST IN THE FIRM. THE ASSESSEE HAS OFFERED AN AMOUNT OF .50,000/- AS ADDITIONAL INCOME OF THE FIRM FOR THE ASSESSMENT YEAR. THEREAF TER, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT TREATING .50,000/- AS ADDITIONAL INCOME OF THE FIRM AND ADDED TO THE INCOME OF THE ASSESSEE . THEREAFTER, THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. IN RESPONSE TO THE ASSESSING OFFICER, W ITH REGARD TO INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSEE FIRM FILED REPLY ON 26.11.2009 STATING THAT THE CAPITAL INTRODUCED BY THE MINOR S. GAYATHIRI IN THE ABOVE FIRM REPRESENTS GIFT RECEIVE D FROM HER FATHER AND THE SAME HAD BEEN FOUND UNACCEPTABLE IN THE ASSESSMENT. THEREFORE, THE ASSESSEE HAS OFFERED THE SAME AS ADDITIONAL INCOME. HE HAS ALSO SUBMITTED THAT MERE REJECTION OF BONAFIDE EXPLANATION OFFERED BY THE ASSESSEE, WHICH WAS FOUND UNACCEPTABLE BY THE ASSESSING OFFICER, CA NNOT BE THE BASIS FOR CONCLUSION OF FURNISHING INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION GIVEN BY THE ASSESSEE FOR THE REASON THAT THE ASSESSEE HAS F AILED TO EXPLAIN THE SOURCE EITHER DURING THE COURSE OF SURVEY PROCEEDIN GS OR DURING THE ASSESSMENT PROCEEDINGS. BUT FOR SURVEY PROCEEDINGS DONE BY THE DEPARTMENT, THE ABOVE FACTS WOULD NOT COME TO LIGHT . EVEN AFTER THE SURVEY, THE ASSESSEE HAS KNOWINGLY AND WANTONLY FURNISHED T HE INACCURATE PARTICULARS WITH RESPECT TO THE CREDIT FOR THE SUM OF .50,000/- AND THEREBY I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .14 1414 1456 & 1457 56 & 1457 56 & 1457 56 & 1457/M/ /M/ /M/ /M/1 11 14 44 4 4 CONCEALED THE INCOME OF THE FIRM ATLEAST TO THE EXT ENT OF .50,000/-. ACCORDINGLY, THE ASSESSING OFFICER LEVIED PENALTY O F .19,600/- UNDER SECTION 271(1)(C) OF THE ACT. 4. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE O RDER PASSED BY THE ASSESSING OFFICER. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THE COU RSE OF SURVEY, THE SURVEY TEAM FOUND THAT A SUM OF .50,000/- WAS INTRODUCED AS CAPITAL IN THE NAME OF MISS. S. GAYATHIRI, AS A MINOR PARTNER. THE ASSESSE E HAS EXPLAINED BEFORE THE ASSESSING OFFICER THE SOURCE OF THE INVESTMENT BY MINOR PARTNER. HOWEVER, THE ASSESSING OFFICER, IN THE ASSESSMENT O RDER, WITHOUT GIVING ANY REASON, REJECTED THE EXPLANATION GIVEN BY THE ASSES SEE. DURING THE COURSE OF PENALTY PROCEEDINGS, IT WAS EXPLAINED THAT THE MINO R PARTNER MISS. S. GAYATHIRI HAS RECEIVED GIFT FROM HER FATHER AND THE SAME WAS SHOWN AS CAPITAL INTRODUCED IN THE FIRM. THE ASSESSING OFFIC ER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT UNLE SS THE SURVEY IS CONDUCTED, THESE FACTS WILL NOT COME INTO LIGHT. AC CORDINGLY, THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED. IT I S NOT THE CASE OF THE ASSESSING OFFICER THAT THE EXPLANATION GIVEN BY THE ASSESSEE WAS EITHER I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .14 1414 1456 & 1457 56 & 1457 56 & 1457 56 & 1457/M/ /M/ /M/ /M/1 11 14 44 4 5 FALSE OR NOT BONAFIDE. THE ASSESSING OFFICER SIMPLY REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE AND LEVIED THE PENALTY DURI NG PENALTY PROCEEDINGS. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE PENAL TY LEVIED BY THE ASSESSING OFFICER. AFTER CAREFUL CONSIDERATION OF T HE ASSESSMENT ORDER, PENALTY ORDER AND CIT(APPEALS)S ORDER, WE FIND THA T THE ASSESSEE NEITHER CONCEALED THE INCOME NOR FURNISHED INACCURATE PARTI CULARS. APART FROM THAT THE ASSESSEE HAS GIVEN PROPER EXPLANATION FOR INTRO DUCING THE CAPITAL IN THE NAME OF MINOR MISS. GAYATHIRI. 7. THE HONBLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 HAS HELD THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE I N THE RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE IS NO QUE STION OF INVITING PENALTY UNDER SECTION 271(1)(C) ACT. A MERE MAKING OF A CLA IM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING OF INACCURATE PA RTICULARS. RESPECTFULLY BY FOLLOWING THE ABOVE DECISION OF THE HONBLE SUPREME COURT, WE FIND THAT IT IS NOT A FIT CASE TO LEVY PENALTY UNDER SECTION 271(1) (C) OF THE ACT AND ACCORDINGLY, THE PENALTY LEVIED BY THE ASSESSING OF FICER STANDS DELETED. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .14 1414 1456 & 1457 56 & 1457 56 & 1457 56 & 1457/M/ /M/ /M/ /M/1 11 14 44 4 6 I.T.A. NO. 1457/MDS/2014 [A.Y. 2003-04] 8. BASED ON THE ENQUIRY MADE UNDER SECTION 131(1A) OF THE ACT, IN THE CASE OF M/S. SRI GAYATHIRI TIMBER AND HARDWARES IN I.T.A.NO.1456/MDS/2014 FOR THE ASSESSMENT YEAR 2001-02, THE ASSESSMENT WAS COMPLETED AND THE ASSESSING OFFICER HAS FOUND A DIFFERENCE OF .1,15,303/- IN THE TRIAL BALANCE PREPARED BY THE ASSESSEE FIRM ON THE BASIS OF ROUGH CHITTA BOOK FOR THE PERIOD FROM 01.04.2002 TO 31.03.2003. WHEN ASKED AB OUT THE DIFFERENCE, IT WAS SUBMITTED THAT THE EXPENSES INCURRED TOWARDS CO MMISSION PAYMENT, DRAWINGS, BUSINESS PAYMENTS AND ALSO THE CLOSING CA SH BALANCE WERE NOT RECORDED IN THE CHITTA BOOK AND HENCE, THERE WAS A DIFFERENCE IN THE TRIAL BALANCE. THE EXPLANATION OFFERED BY THE ASSESSEE FI RM WAS NOT ACCEPTED BY THE ASSESSING OFFICER FOR THE REASON THAT THE EXPEN SES TOWARDS COMMISSION AND OTHER GENERAL EXPENSES RELATING TO THE BUSINESS HAVE BEEN SHOWN IN THE TRIAL BALANCE FILED BY THE ASSESSEES REPRESENTATIV E FOR THE ABOVE PERIOD. THEREFORE, THE ASSESSING OFFICER TREATED THE DIFFER ENCE AMOUNT OF .1,15,303/- AS ADDITIONAL INCOME OF THE FIRM AND AD DED TO THE INCOME OF THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICER INITIAT ED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. IN THE COURSE O F PENALTY PROCEEDINGS, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HA S FAILED TO EXPLAIN THE DIFFERENCES PROPERLY EITHER DURING THE COURSE OF SU RVEY PROCEEDINGS OR IN THE ASSESSMENT PROCEEDINGS AND ADDITION WAS MADE TO THE TUNE OF .1,15,303/-. THE ASSESSEE FIRM IN ITS REPLY DATED 26.11.2009 STA TED THAT MERE REJECTION OF I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .14 1414 1456 & 1457 56 & 1457 56 & 1457 56 & 1457/M/ /M/ /M/ /M/1 11 14 44 4 7 ITS BONAFIDE EXPLANATIONS OFFERED AND FOUND CANNOT BE THE BASIS FOR CONCLUSION OF FURNISHING INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. HOWEVER, THE ASSESSING OFFICER OBSERVED THAT BUT FO R SURVEY PROCEEDINGS DONE BY THE DEPARTMENT, THE ABOVE FACTS WOULD NOT C OME TO LIGHT. THEREFORE, THE ASSESSING OFFICER LEVIED PENALTY OF .42,373/- UNDER SECTION 271(1)(C) OF THE ACT. 9. ON APPEAL, THE LD. CIT(APPEALS), CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 10. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL S ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ADDITI ON MADE IN THIS CASE WAS ON ACCOUNT OF DIFFERENCES IN THE TRIAL BALANCE. IT WAS SUBMITTED THAT SOME OF THE EXPENSES TOWARDS COMMISSION PAYMENT, DRAWINGS, BUSINESS PAYMENTS, ETC. WERE NOT RECORDED IN THE CHITTA BOOK AND THERE FORE, THERE WAS A DIFFERENCE OF THE ABOVE AMOUNT. HOWEVER, THE ASSESS ING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE FOR THE RE ASON THAT BECAUSE OF THE SURVEY PROCEEDINGS, THESE FACTS WOULD NOT COME INTO LIGHT. THEREFORE, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE HAS CO NCEALED THE INCOME AND PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVI ED. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE PENALTY LEVIED BY THE AS SESSING OFFICER. AFTER CAREFUL CONSIDERATION OF ORDERS OF AUTHORITIES BELO W, WE FIND THAT THE ADDITION WAS MADE ON ACCOUNT OF DIFFERENCE FOUND IN THE TRIA L BALANCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WHEN THE ASSESSEE WAS ASKED TO I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .14 1414 1456 & 1457 56 & 1457 56 & 1457 56 & 1457/M/ /M/ /M/ /M/1 11 14 44 4 8 EXPLAIN THE DIFFERENCE, IT WAS CLEARLY EXPLAINED BE FORE THE ASSESSING OFFICER THAT SOME OF THE EXPENSES TOWARDS COMMISSION PAYMEN T, DRAWINGS, BUSINESS PAYMENTS, ETC. WERE NOT RECORDED IN THE CH ITTA BOOK AND, THERE WAS A DIFFERENCE OF THE ABOVE AMOUNT. THE EXPLANATION G IVEN BY THE ASSESSEE WAS SIMPLY REJECTED BY THE ASSESSING OFFICER WITHOU T GIVING ANY PROPER REASON AND PENALTY UNDER SECTION 271(1)(C) OF THE A CT WAS LEVIED, WHICH WAS CONFIRMED BY THE LD. CIT(APPEALS). IT IS NOT THE CA SE OF THE ASSESSING OFFICER THAT THE EXPLANATION GIVEN BY THE ASSESSEE WAS EITH ER FALSE OR NOT BONAFIDE. IN OUR OPINION, THE ASSESSEE NEITHER CONCEALED THE INCOME NOR FURNISHED INACCURATE PARTICULARS AND APART FROM THAT THE ASSE SSEE HAS GIVEN PROPER EXPLANATION FOR THE DIFFERENCE IN THE TRIAL BALANCE . 11. THE HONBLE SUPREME COURT IN THE CASE OF CIT V . RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HAS HELD THAT WHER E THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN THE RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE IS NO QUESTION OF INVI TING PENALTY UNDER SECTION 271(1)(C) ACT. A MERE MAKING OF A CLAIM, WHICH IS N OT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. RESPECTFULLY BY FOLLOWING THE ABOVE DECISION OF THE HONBLE SUPREME COURT, WE FIND THAT IT IS NOT A FIT CASE TO LEVY I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .14 1414 1456 & 1457 56 & 1457 56 & 1457 56 & 1457/M/ /M/ /M/ /M/1 11 14 44 4 9 PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ACCO RDINGLY, THE PENALTY LEVIED BY THE ASSESSING OFFICER STANDS DELETED. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E ARE ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 30 TH OF OCTOBER, 2014 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 30.10.2014 VM/- - ) ''+./ 0/$+ /COPY TO: 1. %& / APPELLANT, 2. '(%& / RESPONDENT, 3. 1 ( ) /CIT(A), 4. 1 /CIT, 5. /2 ''+' /DR & 6. 3! 4 /GF.