M/s. Jaihind Spinning Mills Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1575/CHNY/2008

• Counselvise Citation: 157521714 RSA 2008
• Duration Of Justice: 7 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 12-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 23-07-2008
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: A S SRIRAMAN

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.NO.1575/MDS/2008 / ASSESSMENT YEAR : 2004-05 M/S JAIHIND SPINNING MILLS LTD 235, MINT STREET CHENNAI 600 003 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE II(3) CHENNAI [PAN AAACJ 1789 Q] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI A.S. SRIRAMAN, ADVOCATE /RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT / DATE OF HEARING : 13 - 08 - 2015 ! / DATE OF PRONOUNCEMENT : 04 - 09 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, CHE NNAI, DATED 17.6.2008 AND PERTAINS TO ASSESSMENT YEAR 2004-05 . 2. SHRI A.S. SRIRAMAN, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE ASSESSING OFFICER LEVIED PENALTY U/S 271 (1)(C) OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER MADE AN ADDITION OF ITA NO. 1575/08 :- 2 -: ` 63,01,737/- TOWARDS INCREASE IN SHARE APPLICATION MONEY, CREDITORS ACCOUNT OVERSTATED, REPAYMENT OF LOANS NOT PROVED, AND GENUINENESS OF LOANS NOT PROVED. HOWEVER, ON APPEAL BY THE AS SESSEE, THE CIT(A) CONFIRMED PENALTY ONLY IN RESPECT OF SHARE APPLICAT ION MONEY TO THE EXTENT OF ` 20,15,000/- AND CREDIT TO THE EXTENT OF ` 2,50,000/-. REFERRING TO THE DECISION OF THIS TRIBUNAL IN ASSE SSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 IN I.T.A.NO. 1009/MDS/2008 DATED 7.8.2009, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS PR OVIDED ALL DETAILS WITH REGARD TO THE SHARE APPLICANTS AND THE INVESTM ENTS MADE, THEREFORE, THAT WOULD NOT LEAD TO PENALTY FOR CONCE ALMENT OF INCOME. ACCORDINGLY, THIS TRIBUNAL DELETED THE PENALTY LEVI ED U/S 271(1)(C) OF THE ACT ON IDENTICAL SET OF FACTS. THEREFORE, ACCO RDING TO THE LD. COUNSEL, PENALTY CANNOT BE LEVIED WHEN THE DETAILS OF THE SHARE APPLICANTS AND THE INVESTMENTS MADE ARE AVAILABLE B EFORE THE ASSESSING OFFICER. 3. THE LD. COUNSEL HAS ALSO PLACED HIS RELIANCE ON TH E JUDGMENT OF THE MADRAS HIGH COURT IN CIT VS M/S GEM GRANITE S (KARNATAKA) IN TAX CASE (APPEAL) NO. 504 OF 2009 DATED 12.11.2013, THE COPY OF WHICH IS FILED BY THE ASSESSEE. THE LD. COUNSEL S UBMITTED THAT A MERE ADDITION IN THE ASSESSMENT PROCEEDINGS WOULD NOT AU TOMATICALLY LEAD TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE REFORE, MERELY ITA NO. 1575/08 :- 3 -: BECAUSE AN ADDITION WAS MADE IN THE ASSESSMENT PRO CEEDINGS WITH REGARD TO SHARE APPLICATION MONEY, NO PENALTY COULD BE LEVIED. 4. ON THE CONTRARY, SHRI A.V. SREEKANTH, LD. DEPARTMEN TAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF ` 20,15,000/- SINCE THE PERSONS SAID TO HAVE INVESTED IN THE SHARE APPLICATION MONEY WERE FOUND TO BE NOT IN EXISTENCE . THE ASSESSEE ITSELF OFFERED THE SAME FOR TAXATION. THEREFORE, T HE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION. THE LD. DR PLACED HIS RELI ANCE ON THE JUDGMENT OF THE MADRAS HIGH COURT IN CIT VS KRISHNA & CO. [1979] 120 ITR 144 AND SUBMITTED THAT MERELY BECAUSE THE ASSE SSEE AGREED FOR THE ADDITION IN THE ASSESSMENT PROCEEDINGS, THAT CA NNOT BE A REASON FOR NOT LEVYING THE PENALTY. THE LD. DR HAS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF THE CHATTISGARH HIGH COURT IN CIT V S AGRAWAL ROUND ROLLING MILLS LTD [2013] 85 CCH 510 AND THE JUDGMEN T OF THE MADRAS HIGH COURT IN H.V. VEUGOPAL CHETTIAR VS CIT, 153 IT R 376. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THE CIT(A) HAS RESTRICTED THE PENALTY ONLY IN RESPECT OF SHARE APPLICATION MONEY TO THE EXTENT OF ` 20,15,000/- AND ANOTHER CREDIT OF ` 2,50,000/-. THE CONTENTION OF THE REVENUE IS THAT THE ASSESSEE OFF ERED THE SAME FOR TAXATION IN THE ABSENCE OF ANY MATERIAL TO SUPPORT THE CLAIM OF THE ITA NO. 1575/08 :- 4 -: ASSESSEE. THE FACT REMAINS THAT THE ASSESSEE MADE AN ATTEMPT TO PROVE THE GENUINENESS OF THE SHARE APPLICATION MONE Y. HOWEVER, THE PERSONS WHO INVESTED THE SAME ARE NOT COMING FORWAR D TO OFFER ANY PROOF BEFORE THE DEPARTMENT. THEREFORE, THE ASSES SEE HAS NO OTHER WAY EXCEPT TO OFFER THE SAME FOR TAXATION. PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND DISTINCT ON E. THE ASSESSING OFFICER HAS TO REAPPRECIATE THE MATERIAL ON RECORD IN THE PENALTY PROCEEDINGS. MERELY BECAUSE THE ADDITION WAS CONFI RMED IN THE ASSESSMENT PROCEEDINGS, IT DOES NOT AUTOMATICALLY L EAD TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE CIT(A) HAS CONFIRMED THE PENALTY ONLY ON THE GROUND THAT HE CONFIRMED THE QU ANTUM ADDITION IN THE APPELLATE PROCEEDINGS. THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT THE MATTER NEEDS TO BE REAPPRECIATED BY THE CI T(A) ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. AS FOUND BY T HE MADRAS HIGH COURT IN M/S GEM GRANITES (KARNATAKA) (SUPRA), LEVY OF PENALTY IS NOT AUTOMATIC MERELY BECAUSE AN ADDITION WAS CONFIRMED IN THE ASSESSMENT PROCEEDINGS. THEREFORE, THE CIT(A) HA S TO INDEPENDENTLY EXAMINE THE MATERIAL AVAILABLE ON RECORD AND FIND O UT WHETHER THE ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED ANY INACCURATE PARTICULARS OF INCOME. SINCE THE CIT(A) HAS NOT TA KEN ANY PAIN TO EXAMINE THE SAME ON THE BASIS OF MATERIAL ON RECORD , THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY ITA NO. 1575/08 :- 5 -: THE CIT(A). ACCORDINGLY, THE ORDER OF THE LOWER A UTHORITIES ARE SET ASIDE AND THE LEVY OF PENALTY AS CONFIRMED BY THE C IT(A) IS REMITTED BACK TO HIS FILE. THE CIT(A) SHALL RE-EXAMINE THE SAME AFRESH ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND THEREAFTE R DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPOR TUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH OF SEPTEMBER, 2015, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 4 TH SEPTEMBER, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF