Mydeen Packagings, Tiruvarur V. ITO, Pondicherry

ITA 1462/CHNY/2015

• Counselvise Citation: 146221714 RSA 2015
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 17-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 16-06-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH JCITD R
• Assessee Lawyers: A S SRIRAMAN
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NOS.1461 TO 1468 /MDS./2015 ( ASSESSMENT YEARS :2004-05,2004-05, 2005-06,2005-06, 2006-07,2006-07 & 2008-09, 2008-09) M/S.MYDEEN PACKAGINGS , NO.22,ANWARIA STREET, KOOTHANALLUR, THIRUVARUR 614 101. VS. THE INCOME TAX OFFICER, WARD I(2), PUDUCHERRY. PAN AAGFM 9123 N ( / APPELLANT ) ( / RESPONDENT ) ! ' # / APPELLANT BY : MR.A.S.SRIRAMAN,ADVOCATE $% ! ' # / RESPONDENT BY : MR.A.V.SREEKANTH,JCIT, D.R & ' ' () / DATE OF HEARING : 17.08.2015 *+ ' () /DATE OF PRONOUNCEMENT : 28.08.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED EIGHT APPEALS OUT OF WHICH FOUR APPEALS RELATE TO QUANTUM APPEALS AND THE OTHER FOUR PENALT Y APPEALS. THE ASSESSEE IS IN APPEAL BEFORE US AGGRIEVED BY THE SE PARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), PU DUCHERRY WITH ITA NO.1461 TO 1468 /MDS/2015 2 RESPECT TO QUANTUM ADDITION IN IT APPEAL NO.354/CI T(A)-PDY/13-14, IN IT APPEAL NO.353/CIT(A)-PDY/13-14, IN IT APPEAL NO.352/CIT(A)- PDY/13-14, IN IT APPEAL NO.351/CIT(A)-PDY/13-14 V IDE ORDER DATED 25.03.2015 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT AND WITH RESPECT TO PENALTY IN IT APPEAL NO.442/CIT(A)- 15/13-14, IN IT APPEAL NO.443/CIT(A)-15/13-14, IN IT APPEAL NO.444/ CIT(A)-15/13- 14, IN IT APPEAL NO.445/CIT(A)-15/13-14 VIDE ORDER DATED 25.03.2015 PASSED UNDER SECTION 271(1)(C) R.W.S. 250 OF THE IN COME TAX ACT,1961 FOR ASSESSMENT YEARS 2004-05 TO 2008-09 RE SPECTIVELY. SINCE THE QUANTUM APPEALS AND THE PENALTY APPEALS A RE ALL ON IDENTICAL FACTS AND INTERLINKED, THEY ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. GROUNDS OF APPEALS. 2.1 QUANTUM APPEALS IN ITA NOS.1461,1463,1465 & 1467/MD S./15 IN ALL THESE ABOVE QUANTUM APPEALS, THE ASSESSEE HAS RAISED SEVERAL GROUNDS, HOWEVER THE CRUX OF THE ISSUE IS T HAT THE ASSESSEE IS AGGRIEVED BY THE ORDERS OF THE LD. CIT (A) FOR H AVING CONFIRMED THE ORDER OF LD. ASSESSING OFFICER WHO HAD INVOKED THE PROVISIONS OF SECTION 44AF OF THE ACT AND NOT DEDUCTED THE INTERE ST ON FIXED CAPITAL WHILE FRAMING THE ASSESSMENT ORDER. ITA NO.1461 TO 1468 /MDS/2015 3 PENALTY APPEAL IN ITA NO.1462,1464,1466 & 1468/MDS. /15 2.2 THE ASSESSEE HAS RAISED THREE GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGR IEVED BY THE ORDER OF THE LD. CIT (A) FOR HAVING CONFIRMED THE ORDER OF LD. ASSESSING OFFICER FOR LEVYING PENALTY U/S.271(1)(C) OF THE A CT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A FIRM, ENGAGED IN THE BUSINESS OF MANUFACTURING PRINTED PO LYTHENE POUCHES, FILED ITS RETURN OF INCOME BELATEDLY AS FOLLOW:- SL. NO. ASSESSMENT YEAR DATE OF FILING RETURN OF INCOME TURNOVER DECLARED IN THE RETURN OF INCOME ( ` ) TURNOVER REVISED AT THE TIME OF HEARING TOTAL INCOME DECLARED( ` ) REMARK 1 2004-05 26.03.2009 28,27,956 29,09,999 (-) 3,500/- FILED BEYOND THE TIME LIMIT SPECIFIED U/S.139(4) OF THE ACT. THE RETURN WAS LODGED. 2 2005-06 26.03.2009 32,03,700 32,03,700 7,247/- FILED BEYOND THE TIME LIMIT SPECIFIED U/S139(4) OF THE ACT. THE RETURN WAS LODGED. 3 2006-07 26.03.2009 26,53,510 30,73,077 5,591/- FILED BEYOND THE TIME LIMIT SPECIFIED U/S.139(4) OF THE ACT. THE RETURN WAS LODGED. 4 2008-09 26.03.2009 27,72,623 19,67,307 5,089/- FILED BEYOND THE TIME LIMIT SPECIFIED U/S.139(4) OF THE ACT. THE RETURN WAS LODGED. ITA NO.1461 TO 1468 /MDS/2015 4 THE LD. ASSESSING OFFICER OBSERVED THAT THE ASSESSE E FIRM HAD NOT FURNISHED THE AUDIT REPORT U/S.44AB OF THE ACT FOR ALL THE ASSESSMENT YEARS. FURTHER, THE ASSESSEE DID NOT PRODUCE THE B OOKS OF ACCOUNTS, SALES INVOICE AND OTHER DETAILS REQUIRED BY THE LD. ASSESSING OFFICER. THEREFORE, THE LD. ASSESSING OFFICER INVOKING THE P ROVISIONS OF SECTION 44AF OF THE ACT COMPUTED THE INCOME OF THE ASSESSEE AT 5% OF THE TURNOVER AS FOLLOWS:- SL. NO. A.Y TURNOVER ( ` ) INCOME COMPUTED BY A.O AT 5%OF TURNOVER ( ` ) 1 2004-05 29,09,999 1,45,500/- 2 2005-06 32,03,700 1,60,185 3 2006-07 30,73,077 1,53,644 4 2008-09 27,72,623 1,38,631 3.1 ON APPEAL THE LD. CIT (A) UPHELD THE ORDER OF THE LD. ASSESSING OFFICER. THE RELEVANT PARA OF THE DECISIO N OF THE LD. CIT (A) IS REPRODUCED HEREIN BELOW FOR REFERENCE:- 5.2 ALL THE GROUNDS OF APPEAL FILED ARE FOR THE D ISALLOWANCE OF CLAIM OF INTEREST ON CAPITAL. I HAVE PERUSED THE ORDER OF T HE ASSESSMENT PASSED BY ITA NO.1461 TO 1468 /MDS/2015 5 THE LD. ASSESSING OFFICER. I FIND THAT THE ASSESSI NG OFFICER HAD COMPUTED THE INCOME OF THE FIRM U/S.44AF OF THE IT ACT @ 5% OF THE TOTAL TURNOVER AS THE APPELLANT FAILED TO MAINTAIN BOOKS OF ACCOUNTS IN RESPECT OF THE BUSINESS ACTIVITY. THE GROUND OF THE APPELLANT WAS THAT INT EREST ON CAPITAL SHOULD BE ALLOWABLE AS DEDUCTION. NO CLAIM WAS MADE BEFORE T HE ASSESSING OFFICER IN THIS ISSUE. THE PROVISO TO SECTION 44AF(2) PRESCRIB ES FOR ALLOWABILITY OF INTEREST PAID TO ITS PARTNERS IF THE INTEREST IS AC TUALLY PAID TO THE PARTNERS. IN THE INSTANCE CASE, NO EVIDENCE IS AVAILABLE AS TO W HETHER INTEREST WAS ACTUALLY PAID TO THE PARTNERS. HENCE, THE GROUNDS O F APPEAL FILED BY THE APPELLANT ARE REJECTED. 4. AFTER EXAMINING THE ISSUE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. ASSESSING OFFICER AND THE LD. CIT (A) BECAUSE THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS AND H AS NOT PRODUCED VOUCHERS, INVOICES ETC. TO CLAIM DEDUCTION S. IN THESE CIRCUMSTANCES, THE REVENUE HAS NO OTHER OPTION BUT TO INVOKE THE PROVISIONS OF SECTION 44AF OF THE ACT. HOWEVER, WE FIND THAT THE LD. ASSESSING OFFICER HAS NOT HEEDED TO THE REQUEST OF THE ASSESSEE TO WHILE INVOKING THE PROVISIONS OF SECTION.44AF OF TH E ACT WITH RESPECT TO ITS ACTUAL TURNOVER. IT APPEARS THAT THE LD. ASS ESSING OFFICER HAD ITA NO.1461 TO 1468 /MDS/2015 6 COMPUTED 5% OF THE TURNOVER DECLARED IN THE RETURN OF INCOME OR ADMITTED BY THE ASSESSEE WHICHEVER IS HIGHER. ON TH IS ISSUE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE CONSIDERED VIEW THAT, THE LD. ASSESSING OFFICER SHO ULD HAVE COMPUTED 5% OF THE TURNOVER ON THE ACTUAL TURNOVER ADMITTED BY THE ASSESSEE IRRESPECTIVE OF THE AMOUNT DECLARED IN THE RETURN OF INCOME BECAUSE THE CLAIM OF THE ASSESSEE APPEARS TO BE GEN UINE. THEREFORE, WE HEREBY DIRECT THE LD. ASSESSING OFFICER TO COMPU TE 5% OF THE TURNOVER AS ADMITTED BY THE ASSESSEE AND NOT AS DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME . FURTHER, WE FIND THAT THE ASSESSEE HAS CLAIMED INTEREST PAID TO ITS PARTNERS AS ALLOWABLE DEDUCTIO N IN ACCORDANCE WITH SECTION 44AF(2) OF THE ACT. THE LD. CIT (A) HAS NOT EXAMINED THIS ISSUE IN DETAIL BUT BRUSHED ASIDE THE CLAIM OF THE ASSESSEE BY STATING THAT NO EVIDENCE IS AVAILABLE BEFORE HIM TO ESTABLI SH THAT THE INTEREST HAS BEEN ACTUALLY PAID TO THE PARTNERS. ON THIS IS SUE, WE ARE OF THE CONSIDERED VIEW THAT ONE MORE OPPORTUNITY SHOULD BE PROVIDED TO THE ASSESSEE TO FURNISH THE EVIDENCE IN REGARD TO THE P AYMENT OF THE INTEREST TO ITS PARTNERS AND ACCORDINGLY WE REMIT THE MATTER BACK TO THE FILE OF THE LD. ASSESSING OFFICER TO EXAMINE THE SC OPE OF THE APPLICABILITY OF ITA NO.1461 TO 1468 /MDS/2015 7 SECTION 44AF(2) OF THE ACT AND TO PASS APPROPRIATE ORDER AS PER MERIT AND LAW. 5. PENALTY APPEALS U/S.271(1)(C) OF THE ACT IN ITA NO. 1462,1464,1466 & 1468/MDS./15 IN ALL THE ABOVE STATED CASES, THE LD. ASSESSING OFFICER HAD LEVIED PENALTY U/S.271(1)(C) OF THE ACT FOR CONCEAL MENT OF INCOME AND FURNISHING INACCURATE PARTICULARS. THE LD. CIT (A) ALSO CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER. HOWEVER, WE ARE OF THE VIEW THAT THE ASSESSEE WILL NOT BE LIABLE TO PENALTY U/S.271( 1)(C) OF THE ACT BECAUSE THE ASSESSEE HAD VOLUNTARILY FILED THE RETU RN OF INCOME THOUGH BEYOND THE TIME LIMIT PRESCRIBED U/S.139(4) OF THE ACT. ONLY DUE TO THE FILING OF THE RETURN OF INCOME BY THE AS SESSEE THE REVENUE BECAME AWARE OF THE ASSESSEES CASE AND SPRUNG INTO ACTION TO ASSESS THE INCOME OF THE ASSESSEE INVOKING VARIOUS PROVISIONS UNDER THE ACT. FROM THE FACTS AND CIRCUMSTANCE OF THE CA SE WE ARE ALSO OF THE VIEW THAT ADVERSE INFERENCE NEED NOT TO BE DRAW N ON THE BONA FIDE ACT OF THE ASSESSEE FOR FILING THE RETURN OF I NCOME THOUGHT BEYOND THE TIME PRESCRIBED U/S.139(4) OF THE ACT, WHEN NO OTHER ADVERSE FACTS EMERGE. FURTHER WE ARE OF THE CONSIDERED VIEW THAT THIS IS NOT A ITA NO.1461 TO 1468 /MDS/2015 8 CASE WHERE THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IN THESE SITUATIO N, WE HEREBY DIRECT THE LD.A.O TO DELETE THE PENALTY LEVIED BY HIM WHIC H WAS FURTHER CONFIRMED THE LD. CIT (A). 6. IN THE RESULT, THE QUANTUM APPEALS OF ASSESSEE A RE PARTLY ALLOWED AND THE PENALTY APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 28 TH AUGUST, 2015 AT CHENNAI. SD/- SD/- ( . . . ) ( N.R.S.GANESAN ) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 28 TH AUGUST, 2015. K S SUNDARAM. ' $(,- . -+( /COPY TO: 1. ! /APPELLANT 2. $% ! /RESPONDENT 3. & /( () /CIT(A) 4. & /( /CIT 5. -2 $(34 /DR 6. 56 7' /GF