M/s. Selvakumar Textiles, CHENNAI V. ITO, Erode

ITA 1466/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61106 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-04-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 26-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR SIBENDU MOHARANA IRS
• Assessee Lawyers: S SRIDHAR
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.1466(MDS)/2011 ASSESSMENT YEAR : 1998-99 M/S.SELVAKUMAR TEXTILES, 11A, MARAIMALAI ADIGAL ST., PUNJAI PULIAMPATTI, ERODE-638 459. PAN AGFS9826E. VS. THE INCOME-TAX OFFICER, WARD II(1), ERODE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.SRIDHAR, ADVOCATE RESPONDENT BY : DR.SIBENDU MOHARANA, IRS, CI T DATE OF HEARING : 30 TH APRIL, 2012 DATE OF PRONOUNCEMENT : 07 TH MAY, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 1998-99. THIS APPEAL IS FILED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-I AT COIMBATORE, DATED 23-5-2011. THE APPEAL ARISES OUT OF THE - - ITA NO.1466 OF 2011 2 ORDER IMPOSING PENALTY UNDER SECTION 271(1)(C) OF T HE INCOME-TAX ACT,1961. 2. THE ASSESSEE-FIRM HAD RETURNED AN INCOME OF ` 60,890/- FOR THE IMPUGNED ASSESSMENT YEAR 1998-99 UNDER APPEAL. THERE WAS A SURVEY CARRIED OUT AT THE BUSI NESS PREMISES OF THE ASSESSEE UNDER SECTION 133A OF THE ACT. IN THE COURSE OF SURVEY, A CASE OF EXCESS STOCK WAS MADE O UT. IN THE LIGHT OF THAT SURVEY, THE ASSESSEE HAD OFFERED AN A DDITIONAL INCOME OF ` 2,50,000/-, PARTICULARLY WITH REFERENCE TO THE EXC ESS STOCK. IT IS AFTER RECKONING THE ABOVE STATED ADDI TIONAL INCOME OF ` 2,50,000/- THAT THE ASSESSEE HAD RETURNED AN INCOM E OF ` 60,890/-. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD WORKE D OUT THE TAXABLE INCOME AFTER CLAIMING A DEDUCTION OF ` 18,07,880/- AS SALES RETURNS. THE ASSESSING OFFICER NOTICED DISCR EPANCIES IN THE SALES RETURNS VIS--VIS THE BALANCES OF DEBTOR S AND CREDITORS. IN THE LIGHT OF THE DISCREPANCIES, THE ASSESSING OF FICER VERIFIED THE CASE OF SALES RETURNS WITH THE BUYERS AND FOUND THAT THE ACCOUNTS PROVIDED BY THE ASSESSEE WERE NOT TALLYING . THE - - ITA NO.1466 OF 2011 3 ASSESSING OFFICER ALSO OBSERVED THAT IN THE COURSE OF SURVEY, WHEN THE STOCK WAS ASCERTAINED, THE ASSESSEE HAD NO T MENTIONED THE CASE OF SALES RETURNS AND IT WAS NOT TAKEN INTO CONSIDERATION. HE FURTHER OBSERVED THAT IF THE SAL ES RETURNS WERE CONSIDERED AT THE TIME OF SURVEY, THEN INSTEAD OF E XCESS STOCK, THERE WOULD BE DEFICIT STOCK THROUGHOUT THE PREVIOU S YEAR EXCEPT FOR THE TWO MONTHS OF APRIL AND MAY, 1997. IN THE LIGHT OF THE ABOVE ADVERSE FINDINGS, THE ASSESSING OFFICER CONCL UDED THAT THE SALES RETURNS CLAIMED BY THE ASSESSEE WERE NOT BONA FIDE. 4. THE ASSESSING OFFICER ALSO FOUND THAT THESE MAT TERS HAVE BEEN MORE OR LESS AGREED BY THE PARTNER OF THE FIRM IN HIS STATEMENT FURNISHED ON OATH. HE FOUND THAT THE REC ORDS HAVE BEEN MANIPULATED BY THE ASSESSEE. 5. IN THE LIGHT OF THE ABOVE DEVELOPMENTS, THE ASSESSEE, IN THE COURSE OF THE ASSESSMENT PROCEEDIN GS, AGREED FOR AN ADDITION OF ` 17,50,000/- TO THE RETURNED INCOME. THE ASSESSING OFFICER MADE THAT ADDITION AND COMPLETED THE ASSESSMENT AFTER DETERMINING A TOTAL INCOME OF ` 18,10,890/-. 6. PENALTY HAS BEEN LEVIED IN THE LIGHT OF THE ABO VE ADDITION OF ` 17,50,000/-. THE COMMISSIONER OF INCOME- - - ITA NO.1466 OF 2011 4 TAX(APPEALS) UPHELD THE FINDINGS OF THE ASSESSING O FFICER IN THIS REGARD. HE AGREED WITH THE ASSESSING AUTHORITY THA T THE ASSESSEE IS IN THE HABIT OF ADJUSTMENT ENTRIES IN T HE BOOKS OF ACCOUNTS ACCORDING TO THE CIRCUMSTANCES. HE AGREED WITH THE ASSESSING AUTHORITY THAT ON EXAMINING THE DETAILS F URNISHED BY THE BUYERS, THEY HAVE NOT ACCOUNTED FOR THESE RETUR NS AND THUS THE ASSESSEE WAS IN FACT FURNISHING INACCURATE PART ICULARS BY PASSING BOGUS ENTRIES IN THE BOOKS OF ACCOUNTS TO S UIT ITS CONVENIENCE. HE ACCORDINGLY UPHELD THE PENALTY OF ` 6,12,500/-. 7. IT IS AGAINST THE ABOVE THAT THE ASSESSEE HAS C OME IN SECOND APPEAL BEFORE US. EARLIER, THE VERY SAME APPEAL WAS HEARD BY THE INCOME-TAX APPELLATE TRIBUNAL, A-BENCH , CHENNAI AND THE ORDER WAS DELIVERED ON 2-2-2009 IN ITA NO.887(MDS)/2007 AND CO NO.56(MDS)/2007 . THE TRIBU NAL SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A PPEALS) FOR FRESH CONSIDERATION ESPECIALLY IN VIEW OF THE JUDGM ENT OF THE HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS AND OTHERS, 306 ITR 2 77. THE COMMISSIONER OF INCOME-TAX(APPEALS) RE-EXAMINED THE CASE AS DIRECTED BY THE TRIBUNAL AND HAS CONFIRMED THE PENA LTY AFTER - - ITA NO.1466 OF 2011 5 DISCUSSING THE FACTS AND CIRCUMSTANCES OF THE CASE IN A DETAILED MANNER. 8. AT THE TIME OF SURVEY, THE ASSESSEE HAS NOT MAD E OUT ANY CLAIM FOR SALES RETURNS. AT THE TIME OF SU RVEY, EXCESS STOCK WAS FOUND OUT BY THE OFFICERS. IT IS IN THAT CONTEXT THAT THE ASSESSEE HAD OFFERED AN ADDITIONAL INCOME OF ` 2,50,000/-. BUT THIS ADDITIONAL INCOME WAS SHADOWED BY THE CLAIM OF SALES RETURNS MADE BY THE ASSESSEE IN ITS BOOKS OF ACCOUN T. WHEN THE ASSESSING AUTHORITY SCRUTINIZED THE CLAIM OF THE AS SESSEE IN RESPECT OF SALES RETURNS, IT HAS COME TO LIGHT THAT THE ASSESSEE WAS NOT IN A POSITION TO EXPLAIN THE VERACITY OF TH E CLAIM MADE BY THE ASSESSEE. THE ASSESSING OFFICER HAS VERIFIED T HE CLAIM WITH THE ACCOUNTS OF THE BUYERS AS WELL. THERE IS NO CO MPATIBILITY BETWEEN WHAT IS STATED BY THE ASSESSEE AND WHAT IS STATED BY THE BUYERS. 9. IN FACT, WHENEVER THERE IS SALES RETURN, THE AS SESSEE SHOULD EITHER PAY BACK THE MONEY OR THE CREDIT SHOU LD BE ADJUSTED IN SUBSEQUENT SALES. THE ASSESSEE HAS NOT FURNISHED ANY SUCH DETAILS OF PAYMENTS OF CASH TO THE BUYERS OR THE DETAILS OF SUBSEQUENT ADJUSTMENTS. WHEN THIS IS THE POSITI ON, IT IS VERY - - ITA NO.1466 OF 2011 6 DIFFICULT FOR US TO TAKE A VIEW DIFFERENT FROM THE VIEW CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(APPEALS). WE FIND T HAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS, WHIC H HAS RESULTED IN UNDERSTATEMENT OF INCOME AT THE FIRST I NSTANCE. THE ADDITION OF ` 17,50,000/- WAS AGREED TO BY THE ASSESSEE ONLY WHEN THE ASSESSING OFFICER HAS ALREADY MADE OUT A C ASE OF CONCEALMENT AGAINST THE ASSESSEE. 10. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIE D ON A RECENT ORDER OF THE TRIBUNAL, B-BENCH, CHENNAI, P ASSED IN THE CASES OF DR. JOHN ARTHUR AND MRS. JOYCE JOHN IN ITA NOS.1683 & 1684(MDS)/2011 AND NOS.1685 & 1686(MDS)/2011, ON 22-3-2012. WE FIND THAT THE SAID ORDER OF THE TRIB UNAL IS NOT APPLICABLE TO THE PRESENT CASE, AS THE CRUCIAL FACT S ARE DIFFERENT. IN THOSE CASES, THE ASSESSEES HAD ADMITTED INCOME I N THE COURSE OF SURVEY AND THE ASSESSEES HAD REVISED THE RETURNS AND ADDITIONAL INCOMES HAD BEEN OFFERED AND TAXES WERE PAID. IN THE PRESENT CASE, THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE AT THE TIME OF SURVEY WAS SHADOWED BY THE CLAIM OF SAL ES RETURNS MADE BY THE ASSESSEE. THE GENUINENESS OF THE SALES RETURNS WAS NOT PROVED BY THE ASSESSEE. THIS IS THE CRUCIA L DIFFERENCE IN - - ITA NO.1466 OF 2011 7 THE PRESENT CASE. THEREFORE, THE ORDER RELIED ON B Y THE LEARNED COUNSEL FOR THE ASSESSEE, IS NOT APPLICABLE TO THE PRESENT CASE. 11. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED B Y SECTION 271(1)(C) OF THE ACT. THEREFORE, IT IS TO BE SEEN THAT PENALTY HAS BEEN RIGHTFULLY LEVIED. 12. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 7 TH OF MAY, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 7 TH MAY, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.