Assistant Commissioner of Income-tax, V. M/s. Jayalaxmi Casting & Alloys Pvt. Ltd., Aurangabad

ITA 1590/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7252 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1590/PUN/2015 / ASSESSMENT YEAR : 2009-10 ACIT, CIRCLE-1, AURANGABAD . /APPELLANT VS. M/S. JAILAXMI CASTING & ALLOYS PVT. LTD., GUT NO.75, FAROLA VILLAGE, PAITHAN ROAD, AURANGABAD PAN : AABCJ4567F . / RESPONDENT / APPELLANT BY : SHRI AJAY MODI / RESPONDENT BY : NONE DATE OF HEARING : 25.10.2017 / DATE OF PRONOUNCEMENT: 31.10.2017 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-I, AURANGABAD, DATED 25-09-2015 FOR THE A.Y. 2009-10. THE APPEAL RELATES TO THE PENALTY U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.11 ,25,247/-. THE SAID PENALTY IS RELATABLE TO THE ADHOC ADDITIONS MADE BY THE AO IN THE ASSESSMENT U/S.143(3) R.W.S.144 OF THE ACT. THIS IS A CASE CONNECTED TO THE OTHER CASES WHERE THERE IS ALLEGATION OF CLANDESTINE REMOVAL OF GOODS FROM PRE MISES WITH THE INTENSION TO EVADE EXCISE DUTY AND INCOME TAX. AS SUCH, NO CLEA R CUT EVASION OF INCOME TAX OR EXCISE DUTY WAS DETECTED IN THIS CASE PER SE. 2. THERE IS NONE TO REPRESENT THE CASE OF THE ASSES SEE DESPITE THE NOTICES TO THE RESPONDENT. HOWEVER, CONSIDERING THE SMALLNESS OF THE TAX AS WELL AS THE PARTLY COVERED NATURE OF THE ISSUES, WE ARE OF THE OPINION THAT, WITH THE HELP OF ITA NO. 1590/PUN/2015 M/S. JAILAXMI CASTING & ALLOYS PVT. LTD., 2 LD. DR FOR THE REVENUE AND THE MATERIAL AVAILABLE O N RECORD, THE APPEAL CAN BE ADJUDICATED. 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSES SEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF M.S. BILLETS AN D ROLLED PRODUCTS. ASSESSEE COMPANY FILED THE ORIGINAL RETURN OF INCOME ON 29-0 9-2009 DECLARING TOTAL INCOME OF RS.3,95,52,401/- U/S.115JB OF THE ACT. APART FR OM THE ADMISSION OF THE UNACCOUNTED PRODUCTION AND THE CLANDESTINE BUSINESS TRANSACTIONS, AO ARRIVED AT THE UNACCOUNTED PRODUCTION BASED ON THE ELECTRICITY CONSUMPTION. AO ESTIMATED THE UNRECORDED PRODUCTION AND MADE ADDITION OF RS.2 ,26,27,192/-. THE DISCUSSION GIVEN AT PARA 6 AND 6.1 OF THE ASSESSMEN T ORDER ARE RELEVANT. THE ESTIMATION BASED ADDITION MADE BY THE AO INCLUDES T HAT PORTION OF THE INCOME OF RS.36,41,578/- OFFERED BY THE ASSESSEE. GROUND BAR RING THIS SEGMENT OF INCOME IS RELEVANT. REST OF THE ESTIMATED ADDITION WAS DE LETED BY THE CIT(A). THE SAME IS IN TUNE WITH THE FINDING OF THE TRIBUNAL VIDE IT A NO.1525/PUN/2012 DATED 15- 07-2015 ON THE QUANTUM APPEAL. CONSEQUENTLY, THE A PPEAL OF THE ASSESSEE ON THE PENALTY ORDER OF THE AO WAS ALSO DISCUSSED BY T HE CIT(A) HOLDING THAT THE PENALTY IS NOT EXIGIBLE IN CASES OF ESTIMATED ADDIT IONS. 4. CIT(A) IGNORED THE FACT THAT THE SAID ESTIMATION OF RS.2,26,27,192/-, THERE IS A PORTION OF RS.36,41,578/- WHICH WAS OFFERED BY THE ASSESSEE ON THE INCOME RELATABLE TO THE UNREPORTED SALE/PRODUCTION. (REF. GROUND NO.4 OF THIS APPEAL OF THE ASSESSEE FOR THE YEAR). 5. AGGRIEVED WITH THE ORDER OF CIT(A) THE REVENUE I S IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A), AURANGABAD HAS ERRED IN DELETING THE PENALTY OF RS. 11,25,247/- IMPOSED U/S 271 (L)(C) OF THE ACT . 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), AURANGABAD HAS ERRED IN NOT FOLLOWING HIS OWN ORDER S WHEREIN HE HAS CONFIRMED THE FACT OF SUPPRESSED PRODUCTION IN THE ORDER OF QUANTUM APPEAL OF THE ASSESSEE FOR AY UNDER CONSIDERATION. ITA NO. 1590/PUN/2015 M/S. JAILAXMI CASTING & ALLOYS PVT. LTD., 3 3. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), AURANGABAD HAS ERRED IN NOT FOLLOWING HIS O WN ORDERS WHEREIN HE HAD ESTIMATED THE PROFIT @ 4% OF THE ESTIMATED SALE VAL UE OF SUPPRESSED PRODUCTION WHICH WAS NOTHING BUT CONCEALED INCOME. UNDER SUCH CIRCUMSTANCES, HE SHOULD HAVE CONFIRMED THE PENALTY 4. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD . CIT(A) , AURANGABAD SHOULD HAVE CONFIRMED THE PENALTY AT LEA ST TO THE EXTENT OF RS. 36,41,578/-, T HE INCOME OFFERED BY THE ASSESSEE DURING T HE ASSESSMENT PROCEEDINGS WHICH WAS NOTHING BUT CONCEA LED INCOME. 5. ON THE FACTS & IN THE CIRCUMSTANCES OF TH E CASE, THE ORDER OF THE LD. CIT(A), AURANGABAD BE QUASHED AND THAT THE ORDER OF THE AO BE RESTORED. 6. THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE ITS CASE AS THE OCCASION MAY DEMAND. 6. LD. DR FOR THE REVENUE EXPLAINED THE FACTS AND R ELIED HEAVILY ON THE ORDER OF THE AO AND THE ARGUMENTATIVE GROUNDS RAISED BY T HE REVENUE IN THIS APPEAL. WITHOUT PREJUDICE TO THE GROUND NO.1 OF THIS APPEAL , LD. DR SUBMITTED THAT THE ADDITION CONFIRMED BY THE CIT(A), I.E. RS.36,41,578 /- ATTRACTS THE PENALTY U/S.271(1)(C) OF THE ACT. REFERRING TO THE ORDER O F CIT(A), LD. DR HIGHLIGHTED THE OBVIOUS ABSENCE OF ADJUDICATION ON THIS PART OF THE SEGMENT OF PENALTY RELATABLE TO THE CONFIRMED ADDITION OF RS.36,41,578/-. LD. D R SUBMITTED FOR REMANDING THIS PART OF THE GROUND NO.4 FOR WANT OF SPEAKING O RDER FROM THE CIT(A). 7. WE HEARD THE LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE GONE THROUGH THE ELABORATE DISC USSION GIVEN BY THE CIT(A) WHILE DELETING THE PENALTY LEVIED BY THE AO (PARA N OS. 5 TO 5.2 ARE RELEVANT). HOWEVER, FOR THE SAKE OF COMPLETENESS, WE PROCEED T O EXTRACT OPERATIONAL PARA 5.2 OF THE CIT(A) ORDER AND THE SAME READS AS UNDER : 5.2 . . . . . . . .IF THE TAX PAYABLE UNDER THE NO RMAL PROVISIONS IS HIGHER, SUCH AMOUNT IS THE TOTAL INCOME OF THE ASSESSEE, OTHERWI SE, THE BOOK PROFITS ARE DEEMED AS THE TOTAL INCOME OF THE ASSESSEE IN TERMS OF SECTION 115JB OF THE ACT. WHERE THE INCOME COMPUTED IN ACCORDANCE WITH THE NO RMAL PROCEDURE IS LESS THAN THE INCOME DETERMINED BY LEGAL FICTION, NAMELY , THE BOOK PROFITS UNDER SECTION1 15JB OF THE ACT AND THE INCOME OF THE ASSE SSEE IS ASSESSED UNDER SECTION 115JB AND NOT UNDER THE NORMAL PROVISIONS, THE TAX IS PAID ON THE INCOME ASSESSED UNDER SECTION 115JB OF THE ACT. CONCEALME NT OF INCOME WOULD HAVE NO ITA NO. 1590/PUN/2015 M/S. JAILAXMI CASTING & ALLOYS PVT. LTD., 4 ROLE TO PLAY AND WOULD NOT LEAD TO TAX EVASION. TH EREFORE, PENALTY CANNOT BE IMPOSED ON THE BASIS OF DISALLWOANCES OR ADDITIONS MADE UNDER THE REGULAR PROVISIONS. IN THE PRESENT CASE, EVEN AFTER THE PA RTIAL ADDITION HAD BEEN CONFIRMED BY THE CIT(A), THE FIGURES OF TAX PAYABLE HAD NOT CHANGED AS PER THE TAX PAYABLE BY WAY OF MAT WAS STILL HIGHER. HENCE TAKING COGNIZANCE OF THE ABOVE DECISION, PENALTY U/S.271(1)(C) WAS NOT LEVIA BLE. ACCORDINGLY, I DIRECT THE AO TO CANCEL THE ORDER LEVYING PENALTY OF RS.11,25, 247/- U/S.271(1)(C) OF THE I.T. ACT. 8. FROM THE ABOVE FINDING, IT IS EVIDENT THAT THE C IT(A) GRANTED RELIEF AND DELETED THE PENALTY CONSIDERING THE FACT THAT ENTIR E ADDITION WAS DELETED BY THE TRIBUNAL IN THE QUANTUM APPEAL (SUPRA). IN THE PRO CESS, THERE IS NO ADJUDICATION BY HIM ON THE CONFIRMED ADDITION OF RS.36,41,578/-. HE IS ALSO UNDER THE WRONG PRESUMPTION THAT THE ENTIRE ADDITION MADE BASED ON THE ESTIMATIONS STAND DELETED. IT IS ALSO RELEVANT TO MENTION THAT TAX P AID UNDER THE MAT PROVISIONS DO NOT ATTRACT PENALTY AGAIN IN VIEW OF THE DEEMED PRO FITS IN VIEW OF JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAL WA SONS INVEST LTD. 327 ITR 543. HOWEVER, THE ORDER OF CIT(A), DOES NOT CONTAI N THE ADJUDICATION ON THE AMOUNT OF ADDITION, DULY OFFERED BY THE ASSESSEE DU RING THE ASSESSMENT PROCEEDINGS. THEREFORE, WE CONFIRM THE DELETION OF PENALTY RELATABLE TO THE ADDITION DELETED BY THE CIT(A)/ITAT AND REMAND THE SEGMENT OF PORTION RELATABLE TO THE SUM OF RS.36,41,578/- TO THE FILE OF THE CIT(A) FOR WANT OF A SPEAKING ORDER. CIT(A) IS DIRECTED TO PASS A SPEAK ING ORDER ON THIS PART OF THE GROUND NO.4 AFTER GRANTING REASONABLE OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF OCTOBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 31 ST OCTOBER, 2017. ITA NO. 1590/PUN/2015 M/S. JAILAXMI CASTING & ALLOYS PVT. LTD., 5 / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A)-I, AURANGABAD CIT I, AURANGABAD , , A BENCH PUNE; / GUARD FILE.