Sri Kamal Pandey, Hyderabad V. ITO, Ward-9(1), Hyderabad

ITA 1538/HYD/2013

• Counselvise Citation: 153822514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 20-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: K A SAI PRASAD; K VISHWANATHAM
• Keywords: Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1538/HYD/2013 ASSESSMENT YEAR: 2005-06 SRI KAMAL PANDEY, MALAKPET, HYDERABAD [PAN: ADFPP 4148 N] VS THE INCOME TAX OFFICER , WARD-9(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A.SAI PRASAD & SHRI K.VISHWANATHAM FOR REVENUE : SHRI RAJAT MITRA, DR DATE OF HEARING : 0 8 - 12 - 201 4 DATE OF PRONOUNCEMENT : 16 - 01 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-18, MUMBAI HAVI NG CONCURRENT JURISDICTION WITH CIT(A)-VI, HYDERABAD D ATED 05-09-2013, IS ON THE ISSUE OF LEVY OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT (ACT). I.T.A. NO. 1538 /HYD/13 SRI KAMAL PANDEY :- 2 -: 2. BRIEFLY STATED, ASSESSEE AN INDIVIDUAL IS IN THE BUSINESS OF UNDERTAKING LABOUR CONTRACTS. ASSESSEE FILED RETUR N OF INCOME DECLARING TOTAL INCOME OF RS.4,83,380/-. ASSESSMEN T WAS COMPLETED U/S.143(3) DETERMINING TOTAL INCOME OF RS.7,09,130/ - INTER ALIA MAKING AN ADDITION OF RS.2,25,800/- AS A DISALLOWAN CE OF VARIOUS EXPENDITURE UNDER WAGES ACCOUNT. THIS DISALLOWANCE MADE BY ASSESSING OFFICER WAS ACCEPTED BY ASSESSEE. ASSESS ING OFFICER INITIATED PROCEEDINGS U/S.271(1)(C). DURING THE PR OCEEDINGS, ASSESSEE WAS ASKED TO SUBMIT THE BOOKS OF ACCOUNTS AGAIN TO JUSTIFY THE ASSESSEE'S SUBMISSION THAT THERE ARE GENUINE OMISSI ONS WHICH WERE OFFERED AS INCOME DURING THE ASSESSMENT. ASSESSING OFFICER NOTED THAT ASSESSEE HAS TRIED TO MANIPULATE ENTRIES SO AS TO SHOW THAT EXPENDITURE WAS CLAIMED GENUINELY. HE WAS OF THE O PINION THAT THERE ARE DISCREPANCIES, INTERPOLATION AND OVER-WRITINGS DONE BY THE ASSESSEE AFTER THE ASSESSMENT WAS COMPLETED SO AS T O AVOID THE PENALTIES. ACCORDINGLY,AO CAME TO THE CONCLUSION T HAT ASSESSEE HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS OF IN COME AND LEVIED PENALTY OF RS.1,95,000/-. 3. BEFORE THE LD.CIT(A) IT WAS THE SUBMISSION THAT THE WAGE REGISTER WAS PREPARED AND MAINTAINED BY STAFF INCHA RGE OF RESPECTIVE LOCATIONS AND ASSESSEE HAS SUPPLIED LABOUR TO SIXTE EN INDUSTRIES, SOME OF WHICH WERE SITUATED OUTSIDE THE STATE ALSO. ASSESSEE BEING I.T.A. NO. 1538 /HYD/13 SRI KAMAL PANDEY :- 3 -: PROPRIETOR HAD TO NECESSARILY DEPEND UPON SOME INCH ARGE PERSON WHO WILL MAINTAIN THE RECORDS AT A PARTICULAR CENTRE. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAS NOT VERIFIED THE BOOKS OF ACCOUNTS AND IT WAS PRACTICALLY UNABLE TO VERIFY EACH AND EVERY REG ISTER OWING TO THE GEOGRAPHICAL DISTANCES OF OPERATIONAL UNITS. ASSES SEE ALSO EXPLAINED VARIOUS ADDITIONS MADE BY AO TO SUBMIT THAT THESE A RE GENUINE MISTAKES WHICH DOES NOT CALL FOR PENALTY U/S.271(1 )(C). IT WAS FURTHER SUBMITTED THAT ASSESSEE HAS NO INTENTION OF EITHER MANIPULATING THE REGISTERS OR INTERPOLATING THE REG ISTERS THAT TOO AFTER ASSESSMENT HAD BEEN COMPLETED, AGREEING FOR THE ADD ITIONS AS PROPOSED BY THE ASSESSING OFFICER. IN VIEW OF THIS , IT WAS SUBMITTED THAT THERE IS NO NEED TO LEVY PENALTY U/S.271(1)(C) . THE LD.CIT(A), HOWEVER, DID NOT AGREE WITH THE SAME. WHILE NOTING THAT THERE ARE SPECIFIC DISCREPANCIES AS DISCUSSED IN THE ORDER, H OWEVER, CAME TO THE CONCLUSION THAT ASSESSEE HAS WILLFULLY ADMITTED TO TAMPER WITH THE BOOKS OF ACCOUNTS TO AVOID PAYMENT OF TAX. ACC ORDINGLY, HE CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER. 4. IT WAS THE SUBMISSION OF THE LD.COUNSEL THAT THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE CIT(A) WITH REFERE NCE TO TAMPERING OF BOOKS ARE NOT WARRANTED. IT WAS SUBMITTED THAT ASS ESSING OFFICER EXAMINED THE BOOKS AT THE TIME OF SCRUTINY, FOUND O UT CERTAIN DISCREPANCIES WHICH THE ASSESSEE ACCEPTED DUE TO HI S INABILITY TO I.T.A. NO. 1538 /HYD/13 SRI KAMAL PANDEY :- 4 -: VERIFY EACH AND EVERY ENTRY IN THE BOOKS OF ACCOUNT S. LD. COUNSEL EXPLAINED THE NATURE OF ADDITIONS MADE IN THE ASSES SMENT TO SUBMIT THAT THESE ARE GENUINE MISTAKES HAPPENED IN THE COU RSE OF BUSINESS AND SINCE ASSESSEE HAS ACCEPTED THOSE DISCREPANCIES , THERE IS NO NEED TO LEVY ANY PENALTY. LD. DR HOWEVER, RELIED O N THE ORDERS OF THE ASSESSING OFFICER AND CIT(A) TO SUBMIT THAT ASSESSE E DELIBERATELY TAMPERED TO THE BOOKS OF ACCOUNTS IN THE COURSE OF PENALTY PROCEEDINGS AND THEREFORE LEVY OF PENALTY IS WARRAN TED. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE ORDERS OF AUTHORITIES AND PAPER BOOK PLACED ON RECO RD BY THE ASSESSEE. THERE IS NO DISPUTE WITH REFERENCE TO TH E FACT THAT ASSESSEE IS AN INDIVIDUAL AND HE SUPPLIES LABOUR TO VARIOUS INDUSTRIES LOCATED AT SIXTEEN PLACES. THERE IS ALSO NO DISPUTE THAT A SSESSEE HAS UNITS OUTSIDE THE STATE ALSO. AS SEEN FROM THE ASSESSMEN T ORDER, THE ASSESSING OFFICER MADE ADDITIONS BY OBSERVING AS FO LLOWS: THE ASSESSEE'S BUSINESS IS SUPPLYING OF MAN POWER ON CONTRACT BASIS FOR GETTING THE BRAND NAME OF THE COMPANIES PRINTED ON GUNNY BAGS ALONG WITH THE DATE OF PRODUCTION FOR CEMENT COMPANIES. IN RESPONSE TO NOTICES OF HEARING, SRI R.R.MITTAL, A.R. AND THE ASSESSEE APPE ARED FROM TIME TO TIME. THEY PRODUCED BOOKS OF ACCOUNT AND BILLS AND VOUCHE RS FOR THE EXPENDITURE CLAIMED. ON VERIFICATION OF THE SAME IT IS FOUND T HAT AGAINST THE PAYMENTS OF WAGES TO THE LABOURERS IN RESPECT OF THE CEMENT COM PANIES FOR THE MONTH OF FEBRUARY, 2005 AND MARCH, 2005, THE ASSESSEE DEBITE D THE AMOUNT UNDER WAGES ACCOUNT IN EXCESS OF THE ACTUAL SHOWN IN THE ACQUITTANCE REGISTERS AS UNDER: I.T.A. NO. 1538 /HYD/13 SRI KAMAL PANDEY :- 5 -: MONTH ACTUALS AS PER REGISTER DEBITED UNDER WAGES A/C DIFFERENCE PRIYA NON- PROVIDENT FUND 2/05 136400 146400 10000 -DO- 3/05 201500 221500 20000 RAIN INDUSTRIES, U-I WITH P.F. 3/05 179391 199391 20000 PRIYA UNIT-II WITHOUT P.F. 3/05 157042 175042 18000 PRIYADARSHINI KOLHAPUR 3/05 97600 117600 20000 TOTAL: 88000 IN RESPECT OF THE COMPANY, CHINTAMANI PLASTICS, AUR ANGABAD, THE WAGES PAYMENTS MADE FOR THE MONTH OF JANUARY TO MAR CH, 2005 TO THE TUNE OF RS.56,900/-, RS.56,900/- AND RS.24,000/- WERE NO T PROVED WITH EVIDENCE AND HENCE THE SAME ARE DISALLOWED FOR WHICH BOTH TH E ASSESSEE AS WELL AS SRI R.R.MITTAL, AR OF THE ASSESSEE AGREED FOR THE A DDITION. AS CAN BE SEEN FROM THE ABOVE, ASSESSEE DID PRODUCE THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS AS MAINTAINED BY HIM. ADMITTEDLY ASSESSING OFFICER FOUND THAT THERE ARE CERTAIN ADDI TIONAL AMOUNTS WHICH ARE DEBITED IN SOME MONTHS AND THE DIFFERENCE ON THAT WAS ARRIVED AN AMOUNT OF RS.88,000/-. FURTHER, HE ALSO FOUND OUT THAT ASSESSEE DID NOT FURNISH THE VOUCHERS NOR PROVIDED EVIDENCE, FOR THE PAYMENTS MADE IN THE MONTH OF JANUARY TO MARCH, 200 5 TOTALLING TO RS.1,37,800/-. NOWHERE THERE IS AN ALLEGATION IN T HE ASSESSMENT ORDER THAT ASSESSEE HAS MANIPULATED OR TAMPERED WIT H THE RECORDS. WE ARE UNABLE TO UNDERSTAND THE NEED FOR ASSESSEE T O TAMPER THE REGISTERS AFTER ADDITION HAS BEEN MADE IN THE ASSES SMENT. THE SO CALLED DISCREPANCIES THAT WERE NOTICED BY THE ASSES SING OFFICER IN THE PENALTY ORDER WERE NOT FIGURING IN THE ASSESSMENT O RDER AT ALL. SINCE THERE IS NO NEED FOR THE ASSESSEE TO MAKE ANY CHANG ES IN THE REGISTERS, WE ARE UNABLE TO UNDERSTAND HOW, EVEN IF SUBSEQUENTLY TAMPERED WITH THE REGISTERS, WOULD ATTRACT PENALTY ON AN AMOUNT MADE AS AGREED ADDITION IN THE ASSESSMENT ORDER. AT THE TIME OF I.T.A. NO. 1538 /HYD/13 SRI KAMAL PANDEY :- 6 -: ASSESSMENT ORDER THE BOOKS AS MAINTAINED BY ASSESSE E WERE PRODUCED AND THEY WERE EXAMINED AND THEN ONLY AGREE D ADDITION HAS BEEN MADE. SINCE THE ADDITION IS ON AGREED BASIS, WE ARE OF THE OPINION THAT NO PENALTY IS WARRANTED. EVEN IF ONE WERE TO CONSIDER THAT THIS IS NOT AN AGREED ADDITION BUT IT IS SUPPR ESSION BY WAY OF CLAIM OF BOGUS EXPENDITURE, THE SAME IS NOT SUPPORT ED BY RECORD. IN FACT AS SEEN FROM THE ORDER OF THE ASSESSING OFFICE R, HE DID FIND OUT THE DIFFERENCE BETWEEN THE FIGURES OF WAGES SHOWN I N THE ACQUAINTANCE REGISTERS WHICH HAS COME TO RS.88,000/ -. THIS COULD BE A GENUINE DISCREPANCY OF POSTING THE ENTRIES, HO WEVER, HE HAS NOT EXAMINED WHETHER THERE WAS ANY MANIPULATION BY THE ASSESSEE EITHER IN THE CASH BOOK OR IN OTHER REGISTERS SO AS TO SIP HON OFF FUNDS FROM THE BUSINESS UNIT. IT WAS THE ASSESSEE'S EXPLANATI ON THAT WAGES IN RESPECT OF JANUARY, FEBRUARY AND MARCH IN THE CASE OF CHINTAMANI PLASTICS, AURANGABAD WERE GENUINELY CLAIMED. SINCE THE PLACE WAS OUTSIDE THE STATE, HE COULD NOT FURNISH THE VOUCHER S DURING THE ASSESSMENT, SO, THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS.1,37,800/- FOR NON-PRODUCTION OF VOUCHERS/EVIDEN CE OF HAVING SPENT THE AMOUNT. IT WAS THE CONTENTION OF THE ASS ESSEE THAT ASSESSEE HAS RECEIVED AMOUNTS FROM THE SAID COMPANY TOWARDS LABOUR PAYMENT FOR THESE THREE MONTHS AND WITHOUT L ABOUR BEING PROVIDED THERE CANNOT BE ANY RECEIPTS FROM THE SAID COMPANY. THIS EXPLANATION OF THE ASSESSEE WAS NOT COUNTERED BY AN Y ENQUIRY. WE ARE OF THE OPINION THAT JUST BECAUSE CERTAIN EXPEND ITURE CLAIMED IS NOT SUPPORTED IN THE COURSE OF ASSESSMENT PROCEEDIN GS, IT WILL NOT LEAD AUTOMATICALLY TO CONCEALMENT OF INCOME. CONSI DERING THE ORDER OF THE ASSESSING OFFICER, WE ARE OF THE OPINION THA T SOME DISALLOWANCES MADE OUT OF THE CLAIMS MADE BY THE AS SESSEE, WITHOUT PROVING THEM TO BE NON-GENUINE, PENALTY U/S.271(1)( C) CANNOT BE LEVIED. THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF I.T.A. NO. 1538 /HYD/13 SRI KAMAL PANDEY :- 7 -: INACCURATE PARTICULARS TO THAT EXTENT. THEREFORE, WE CANCEL THE PENALTY AND ALLOW THE ASSESSEE'S GROUNDS. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16 TH JANUARY, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH JANUARY, 2015. TNMM COPY TO : 1. S RI KAMAL PANDEY, 16 - 11 - 16/202, SRIPURAM COLONY, MALAKPET, HYDERABAD . C/O. CH.PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1, ASHOK NAGAR, HYDERABAD-500 020. 2. THE INCOME TAX OFFICER, WARD-9(1), HYDERABAD 3. CIT(A)-18, MUMBAI 4. CIT(A)-VI, HYDERABAD 5. CIT-5/6, HYDERABAD 6. D.R. ITAT, HYDERABAD.