The ITO, Ward-5(3), Ahmedabad V. Raj Fab Pvt. Ltd., Ahmedabad

ITA 1489/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8725 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-03-2010
• Assessment Year: 1991-1992
• Appeal Filed On: 13-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: K I THAKKARAR
• Keywords: Gross profit estimation; Depreciation; Unabsorbed depreciation; Set aside
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' [BEFORE SHRI MAHAVIR SINGH,JM AND SHRI A N PAHUJA,A M) ITA NO.1489/AHD/2007 (ASSESSMENT YEAR:-1991-92) THE INCOME-TAX OFFICER, WARD-5(3), AHMEDABAD V/S RAJ FAB PRIVATE LTD., SHANTI CHAMBER, OPP. DINESH HALL, NAVRANGPURAM, AHMEDABAD [PAN:AAACR9212N] [APPELLANT] [RESPONDENT] REVENUE BY :- SMT. NEETA SHAH, DR ASSESSEE BY:- SHRI K I THAKKAR,AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST AN ORDER DATED 16-02-2007 OF THE LD. CIT(APPEALS)-XI, AHMEDABAD [THE CIT(A)] FOR ASSESSMENT YEAR (AY) 1991-92, CANCELL ING THE PENALTY OF RS.7,37,243/- LEVIED BY THE ASSESSING OFFICER U/ S 271(1)(C) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS TH E ACT] ON THE GROUND OF CONCEALMENT OF INCOME AND FURNISHING INAC CURATE PARTICULARS THEREOF. 2 FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT THE ASSESSMENT IN THIS CASE WAS FINALISED U/S 143(3) OF THE ACT O N 28-03-1994, DETERMINING TOTAL INCOME OF RS.6,93,730/-, AFTER SE TTING OFF OF UNABSORBED DEPRECIATION FOR THE AY 1989-90, IN PUR SUANCE TO RETURN DECLARING INCOME OF RS.5,87,112/- FILED ON 30.12.19 91.INTER ALIA, FOLLOWING ADDITIONS/DISALLOWANCES WERE MADE: 1. SERVICE MAINTENANCE CHARGES RS. 7,200/- 2 OUT OF MOTOR-CAR EXPENSES RS. 4,000/- 3. OUT OF STAFF WELFARE EXPENSES RS. 3,000/- 4 ADDITION ON THE GROUND OF GROSS PROFIT ESTIMATION RS.12,68,162/- ----------------- RS.12,82,162/- ITA NO.1489/AHD/2007 2 2 CONSEQUENTLY, PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE ALSO INITIATED FOR FURNISHING INACCURATE PARTICULAR S OF INCOME. ON APPEAL, THE LEARNED CIT(A) UPHELD THESE ADDITIONS/D ISALLOWANCES VIDE HIS ORDER DATED 09-07-1998 AND THUS, DISMISSE D THE APPEAL OF THE ASSESSEE-COMPANY. ON FURTHER APPEAL THE ITAT, AHMEDABAD. BENCH-C VIDE THEIR ORDER DATED 03-06-2005 IN ITA NO .1936/AHD/1998 FOR THE AY 1991-92 DISMISSED THE APPEAL OF THE ASSE SSEE-COMPANY. THEREAFTER, IN RESPONSE TO A SHOWCAUSE NOTICE BEFOR E LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, NONE APPEARED BEFORE TH E AO NOR ANY REPLY WAS FILED. IN THESE CIRCUMSTANCES, THE ASSESS ING OFFICER[AO IN SHORT] IMPOSED MINIMUM PENALTY OF RS.7,37,243/- @ 1 00% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED ON THE AFORESAID AMOUNT OF RS. 12,82,162/-.BY REASON OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS THEREOF. 3. ON APPEAL, THE LD. CIT(A) CANCELLED THE PENALT Y ON THE GROUND THAT THE ASSESSEE ITSELF FILED NECESSARY DETAILS / PARTICULARS ON THE BASIS OF WHICH DISALLOWANCES AND ESTIMATED ADDITIONS HAD BE EN MADE BY THE AO AND THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE TO WITHHOLD ANY INFORMATION REGARDING EXPENSES AND GROSS PROFIT RATE, RELYING,I NTER ALIA, ON THE DECISION IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA 83 ITR 26 (SC) AND CERTAIN OBSERVATIONS OF THE HON'BLE HIGH COURT OF PUNJAB & HARYANA IN A DECISION, HOLDING THAT DISALLOWANCE OF EXPENSES PER SE DOES NOT MEAN THAT THE ASSESSEE HAD FURNISHED INCORRECT PARTICULARS OF ITS INCOME . 4 THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST TH E AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED DR SUPPORTE D THE ORDER OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE C ONTENDED THAT THE AFORESAID ORDER DATED 03-06-2005 OF THE ITAT I N ITA NO.1936/AHD/ 1998 FOR THE AY 1991-92 IN THE CASE O F THE ASSESSEE, HAD BEEN SUBSEQUENTLY RECALLED AND THE TRIBUNAL VID E THEIR ANOTHER ORDER DATED 28-11-2008 DELETED THE TRADING ADDITI ON OF ITA NO.1489/AHD/2007 3 3 RS.12,68,162/- AND THE REMAINING DISALLOWANCES WERE NOT PRESSED BY THE ASSESSEE. IN THESE CIRCUMSTANCES, THE LD. AR SU PPORTED THE IMPUGNED ORDER OF THE LD. CIT(A) . 5 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH T HE FACTS OF THE CASE AS ALSO THE DECISION DATED 28.11.2008 OF T HE TRIBUNAL IN QUANTUM APPEAL. WE FIND THAT THE TRIBUNAL IN THEI R AFORESAID ORDER DATED 3.6.2005 HAD DISMISSED THE APPEAL OF THE ASS ESSEE FOR NON- PROSECUTION. SUBSEQUENTLY , THE SAID ORDER WAS RECA LLED VIDE ORDER DATED 17.10.2008 IN MA NO.47/AHD./2007. THEREAFTER, VIDE THEIR ORDER DATED 28.11.2008 IN ITA NO. 1936/AHD/1998 , T HE TRIBUNAL DELETED THE TRADING ADDITION OF RS.12,68,162/- AND REMAINING D ISALLOWANCES WERE NOT PRESSED ON BEHALF OF THE ASSESSEE. IN THES E CIRCUMSTANCES, PENALTY LEVIED BY THE AO ON THE SAID AMOUNT OF RS.1 2,68,162/- DOES NOT SURVIVE. WHERE AN ORDER OF ASSESSMENT OR REASSESS MENT ON THE BASIS OF WHICH PENALTY HAS BEEN LEVIED ON THE ASSESSEE, HAS ITSELF BEEN SET ASIDE , THE PENALTY CANNOT STAND BY ITSELF . HONBLE DELHI HIGH COURT I N THE CASE OF CIT VS. R.DALMIA,(1992)107 TAXATION 107, HELD THAT NO PENAL TY SURVIVES AFTER DELETION OF ADDITIONS, FORMING THE BASIS FOR THE LEVY OF PENALT Y. SINCE THE VERY BASIS UPON WHICH THE PENALTY HAS BEEN IMPOSED DOES NOT EXIST, WE HAVE NO ALTERNATIVE BUT TO UPHOLD THE DECISION OF THE LD. CIT(A) ON THA T SCORE ALONE . AS REGARDS PENALTY IN RELATION TO DISALLOWANCE OF THE FOLLOW ING EXPENDITURE:- I) SERVICE MAINTENANCE CHARGES RS. 7,200/- II) OUT OF MOTOR-CAR EXPENSES RS. 4,000/- III). OUT OF STAFF WELFARE EXPENSES RS. 3,00 0/- UPHELD BY THE ITAT,IT IS WELL SETTLED THAT MERE DI SALLOWANCE OF EXPENSES DOES NOT IMPLY FURNISHING INACCURATE PARTICULARS OF SUCH INC OME. WHEN A DISALLOWANCE IS MADE MERELY ON AN ESTIMATE BASIS, THE PENALTY CANNO T AUTOMATICALLY BE IMPOSED . IT IS WELL SETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT AND AS HELD BY HON'BLE SUPREM E COURT IN THE CASE OF ANANTHRAMAN VEERASINGHAIAH & CO. VS. CIT - 123 ITR 457; THE FINDING IN THE ASSESSMENT PROCEEDINGS CANNOT BE REGARDED AS CONCLU SIVE FOR THE PURPOSES OF ITA NO.1489/AHD/2007 4 4 THE PENALTY PROCEEDINGS. IT IS, THEREFORE, NECESSAR Y TO REAPPRECIATE AND RECONSIDER THE MATTER SO AS TO FIND OUT AS TO WHETH ER THE ADDITION MADE IN THE QUANTUM PROCEEDINGS ACTUALLY REPRESENTS THE CONCEAL MENT ON THE PART OF THE ASSESSEE AS ENVISAGED IN SEC. 271(1 )(C) OF THE ACT AND WHETHER IT IS A FIT CASE TO IMPOSE THE PENALTY BY INVOKING THE SAID PROVISIONS. IT IS ALSO WELL SETTLED THAT THE CRITERION AND YARDSTICKS FOR THE PURPOSE OF IMPOSIN G PENALTY U/S 271(1)(C) OF THE ACT ARE DIFFERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING THE ADDITIONS. WHEN THE ASSESSEE HAS MADE A PARTICULAR CLAIM IN THE RET URN OF INCOME AND HAS ALSO FURNISHED ALL THE MATERIAL FACTS RELEVANT THERETO, THE DISALLOWANCE OF SUCH CLAIM CANNOT AUTOMATICALLY LEAD TO THE CONCLUSION THAT TH ERE WAS CONCEALMENT OF PARTICULARS OF HIS INCOME BY THE ASSESSEE OR FURNIS HING OF INACCURATE PARTICULARS THEREOF . WHAT IS TO BE SEEN IS WHETHER THE SAID CL AIM MADE BY THE ASSESSEE WAS BONA-FIDE AND WHETHER ALL THE MATERIAL FACTS RELEVA NT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED, THE ASSESSEE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY U/S 271(L)(C) OF THE ACT. A MERE REJECTION OF THE CLAIM OF THE ASSESSEE BY RELYING ON DIFFERENT INTERPRETATIONS DOES NOT AMOUN T TO CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME BY THE ASSESSEE. HON'BLE PUNJAB & HARYANA HIGH COURT IN TH E CASE OF CIT VS. AJAIB SINGH & CO. (2001) 170 CTR (P&H) 489 : (2002) 253 ITR 630 (P&H) HAVE OBSERVED THAT MERELY BECAUSE CERTAIN EXPENSES CLAI MED BY THE ASSESSEE ARE DISALLOWED BY AN AUTHORITY, IT CANNOT MEAN THAT PAR TICULARS FURNISHED BY THE ASSESSEE WERE WRONG. IT WAS HELD THAT MERE DISALLOWANCE OF EXPENSES PER SE CANNOT MEAN THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. IN THE CASE UNDER CONSIDERATION, AS POINTED OUT BY THE LD. CIT(A), THE ASSESSEE HAD GIVEN ALL THE PARTICULARS OF INCOME AND HAD DISCLOS ED ALL FACTS TO THE AO. IN SUCH CIRCUMSTANCES, HONBLE DELHI HIGH COURT HELD IN TH E CASE OF COMMISSIONER OF INCOME-TAX.VS BACARDI MARTINI INDIA LIMITED.,288 IT R 585(DEL) THAT NO PENALTY WAS LEVIABLE. RECENTLY, HONBLE APEX COURT IN CIT VS. RELIANCE PETRO PRODUCTS, ARISING OUT OF SLP (C) NO.27161 OF 2008, VIDE THEIR ORDER DATED 17.3.2010 HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EX PENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT. IN V IEW OF THE FOREGOING, WE HAVE NO ITA NO.1489/AHD/2007 5 5 HESITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT (A). THUS, GROUND NO. 1 IN THE APPEAL IS DISMISSED. 6. GROUND NOS. 2 & 3 IN THE APPEAL BEING G ENERAL IN NATURE, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMI SSED. 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 31-03-2 010 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 31-03-2010 COPY OF THE ORDER FORWARDED TO : 1. RAJ FAB PRIVATE LTD., SHANTI CHAMBER, OPP. DINES H HALL, NAVRANGPURAM, AHMEDABAD 2. THE ITO, WARD-5(3), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XI, AHMEDABAD 5. THE DR, ITAT,D BENCH AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD