M/s. Shreeji Gas Agency, Bhavnagar V. The ACIT.,Circle-2, Bhavnagar

ITA 1518/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9130 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-09-2009
• Assessment Year: 1992-1993
• Appeal Filed On: 13-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH SENIOR
• Assessee Lawyers: MANISH K KAJI
• Section: 271(1)(c)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI P K BANSAL AND MAHAVIR SINGH) ITA NO.1518/AHD/2009 (ASSESSMENT YEAR: 1992-93) M/S SHREEJI GAS AGENCY, BHAVNAGAR RAJKOT ROAD, SIHOR PAN: AABPPP 4735 C V/S THE ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-2, BHAVNAGAR [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI MANISH K KAJI RESPONDENT BY:- SMT. NEETA SHAH, SENIOR DR O R D E R PER P K BANSAL (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A) DATED 27 TH FEBRUARY, 2009 BY WHICH THE CIT(A) HAS CONFIRMED TH E LEVY OF PENALTY BY THE AO U/S 271(1)(C) OF THE INCOME-TAX A CT, 1961 [THE ACT FOR SHORT]. 2 AT THE OUTSET, THE LEARNED AR REFERRED TO THE PE NALTY ORDER PASSED U/S 271(1)(C) OF THE ACT AND POINTED O UT THAT THE AO HAS LEVIED THE PENALTY U/S 271(1)(C) ON THE GROUND THAT THE FIRM HAS CONCEALED ITS INCOME BY FURNISHING IN ACCURATE PARTICULARS AND CONCEALED HIS INCOME BY NOT SHOWING THE DISCLOS ED INCOME IN RETURN OF INCOME. THIS ISSUE IS DIRECTLY COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF NEW SORATHIA 2 ENGINEERING CO. V CIT (2006) 282 ITR 642 (GUJ), IN WHICH THE HONBLE HIGH COURT HAS CLEARLY HELD THAT IT IS INCU MBENT UPON THE AO TO STATE WHETHER PENALTY HAS BEEN LEVIED FOR CON CEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR WHETHER AN Y INACCURATE PARTICULARS OF INCOME HAD BEEN FURNISHED BY THE ASS ESSEE. THE AO IN THIS CASE HAS NOT CLEARLY LAID DOWN WHAT DEFE CT HAS BEEN COMMITTED BY THE ASSESSEE. THEREFORE, PENALTY MUST BE DELETED. 3 THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE AUTHORITIES BELOW AND CONTENDED THAT SINCE T HE ADDITION HAS BEEN SUSTAINED IN VIEW OF EXPLANATION 1 TO SECTION 271(1)(C), IT IS DEEMED THAT THE ASSESSEE HAS SUBMITTED INACCURATE P ARTICULARS OF INCOME. THE AO HAS RIGHTLY LEVIED THE PENALTY. 4 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. WE HAVE GONE TH ROUGH THE ORDER OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. V CIT (2006) 282 ITR 642 ( GUJ) . WE FIND THAT IN THIS CASE THE HONBLE HIGH COURT HAS H ELD AS UNDER:- IT IS INCUMBENT UPON THE ASSESSING OFFICER TO STAT E WHETHER PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF I NCOME HAD BEEN FURNISHED BY THE ASSESSEE. WHERE THE TRIBUNAL FAILS TO TAKE INTO CONSIDERATION AND DEAL WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT IT WOULD CONSTITUTE AN ERROR IN LAW WHICH GOES TO THE VERY BASIS OF THE CONTROVE RSY INVOLVED. AN ADDITION OF RS.61,000 WAS MADE TO THE INCOME OF THE ASSESSEE IN THE ASSESSMENT YEAR 1981-82. PENALTY WAS IMPOSED. T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONE R (APPEALS) WHO 3 UPHELD THE PENALTY BY OBSERVING . . . THEREFORE, R S.61,000 CLEARLY IS INCOME WHICH IS CONCEALED OR IN WHICH INACCURATE PA RTICULARS OF INCOME HAVE BEEN FURNISHED. THE ASSESSEE, THEREFOR E, FILED SECOND APPEAL BEFORE THE TRIBUNAL BUT DID NOT SUCCEED. ONE OF THE CONTENTIONS RAISED BEFORE THE TRIBUNAL WAS BASED ON A DECISION OF THE COURT IN THE CASE OF CIT V. MANU ENGINEERING WORKS [1980] 122 IT R 306 (GUJ). IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE PE NALTY COULD NOT BE SUSTAINED IN THE ABSENCE OF A CLEAR-CUT FINDING BY THE ASSESSING OFFICER. THE TRIBUNAL DID NOT DEAL WITH THE CONTENT ION AND UPHELD THE ORDER OF PENALTY. ON A REFERENCE: HELD, THAT THE PENALTY ORDER AND THE ORDER OF THE C OMMISSIONER (APPEALS) SHOWED THAT NO CLEAR-CUT FINDING HAD BEEN REACHED. THE TRIBUNAL HAD FAILED TO APPRECIATE THIS LEGAL ISSUE. THE RATIO IN CIT V. MANU ENGINEERING WORKS [1980] 122 ITR 306 (GUJ) WAS APPLICABLE AND THE ORDER OF PENALTY COULD NOT BE UPHELD BY THE TRIBUNAL. THE ORDER WAS INVALID. CIT V MANU ENGINEERING WORKS (1980) 122 ITR 306 (GU J) FOLLOWED. A M SHAH AND CO. V CIT (1999) 238 ITR 415 (GUJ) AND CIT V VINAYCHAND HARILAL (1979) 120 ITR 752 (GUJ) REFER RED TO. WE NOTED FROM THE ASSESSMENT ORDER THAT THE AO IN T HIS CASE HAS NOT CLEARLY LAID DOWN WHETHER THE ASSESSEE HAS CONC EALED THE PARTICULARS OF INCOME OR WHETHER THE ASSESSEE HAS F URNISHED INACCURATE PARTICULARS OF HIS INCOME. THE AO HAS LE VIED THE PENALTY BY OBSERVING THAT I AM THEREFORE SATISFIED TO BELIEVE THAT THE FIRM HAS CONCEALED ITS INCOME BY FURNISHING IN ACCURATE PARTICULARS AND CONCEALED HIS INCOME BY NOT SHOWING THE DISCLOSED INCOME IN RETURN OF INCOME . THE HONBLE HIGH COURT IN THE AFORESAID DECISION HAS CLEARLY LAID DOWN THAT THE A O IS BOUND TO STATE WHETHER THE PENALTY IS LEVIED FOR CONCEALMENT OF PARTICULARS 4 OF INCOME OR WHETHER IT HAS BEEN LEVIED FOR FILING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THUS, IN OUR VIEW, THE AFORESAID DECISION IS DULY APPLICABLE TO THE FACTS OF THE CASE. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E HONBLE HIGH COURT, WE DELETE THE PENALTY LEVIED U/S 271(1) (C) OF THE ACT. 5 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 17-09-2 009 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (P K BANSAL) ACCOUNTANT MEMBER DATE : 17-09-2009 COPY OF THE ORDER FORWARDED TO : 1. M/S SHREEJI GAS AGENCY, BHAVNAGAR RAJKOT ROAD, S IHOR 2. THE ACIT, CIRCLE-2, BHAVNAGAR 3. CIT CONCERNED 4. CIT(A)-XX, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABA