NEPC Agro Foods Limited, CHENNAI V. Addl. CIT, CHENNAI

ITA 1609/CHNY/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5380 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-01-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 30-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMB ER AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.A.NO.1609/MDS/2013 ASSESSMENT YEAR : 2003-04 M/S NEPC AGRO FOODS LTD. NO.35, WALLAJAH ROAD CHENNAI 600 002 VS THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY RANGE IV CHENNAI [PAN AAACN 1569 L ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 16-01-2014 DATE OF PRONOUNCEMENT : 20-01-2014 O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2003-04, IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME- TAX (APPEALS)-II COIMBATORE, DATED 25.6.2013, PASSE D IN APPEAL NO.86/10-11, CONFIRMING PENALTY IMPOSED UNDER SECTI ON 271E OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). I.T.A.NO. 1609/13 :- 2 -: 2. IN THE COURSE OF HEARING, ASSESSEE ARGUES THAT THE CIT(A) OUGHT TO HAVE DELETED THE IMPUGNED PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271E OF THE ACT. IT IS CONTENDED THAT THE ORDER PASSED BY THE CIT(A) DOES NOT SPECIFICALLY DEAL WITH THE ARGU MENTS ADVANCED AND ALSO TOTALLY NON-SPEAKING ONE. ACCORDINGLY, ACCEPT ANCE OF APPEAL IS PRAYED FOR. 3. THE REVENUE SUPPORTS THE ORDER PASSED BY THE CIT(A) AFFIRMING THE IMPUGNED PENALTY AND PRAYS FOR CONFI RMATION THEREOF. 4. THE ASSESSEE IS A COMPANY. IT PRODUCES TEA, COF FEE, PHARMACEUTICALS, MINERALS AND OTHER AGRICULTURAL PR ODUCTS. ON 1.12.2003 IT HAD FILED ITS RETURN. THE ASSESSING OFFICER FRAMED REGULAR ASSESSMENT ON 23.3.2006. IN COURSE THERE OF, HE NOTICED THE ASSESSEE TO HAVE REPAID LOANS IN CASH. IN ASSESSIN G OFFICERS VIEW, THIS ATTRACTED SECTION 269T R.W.S 271E OF THE ACT I.E PE NALTY FOR HAVING REPAID THE IMPUGNED LOANS OTHER THAN BY THE PRESCRI BED MODE OF CROSSED CHEQUE ETC. IN RESPONSE, THE ASSESSEE PLEA DED THAT THE TRANSACTIONS IN QUESTION WERE IN THE NATURE OF TRAD E ADVANCES AND NOT LOANS. IT EXPLAINED BEFORE THE ASSESSING OFFICER T HAT IT HAD TO RESORT TO THE PAYMENTS IN QUESTION THROUGH ITS ASSOCIATE CONC ERN NAMELY, NEPC INDIA LTD. BECAUSE ITS BANK ACCOUNT HAD BEEN ATTACH ED FOR HAVING I.T.A.NO. 1609/13 :- 3 -: VIOLATED PROVISIONS OF PROVIDENT FUND ACT. WE NOT ICE FROM THE PENALTY ORDER DATED 26.2.2007 THAT THE AFORESAID PLEAS COUL D NOT IMPRESS UPON THE ASSESSING OFFICER. HE WAS OF THE VIEW THAT BY ROUTING THE PAYMENTS THROUGH THE ASSOCIATE CONCERN DUE TO ATTAC HMENT OF ITS BANK ACCOUNT, THE ASSESSEE COULD NOT TAKE IT AS A REASO NABLE CAUSE. THE ASSESSING OFFICER TURNED DOWN THE ASSESSEES PLEA OF HAVING ONLY ONE BANK ACCOUNT EXCEPT THE ONE ATTACHED BY THE PROVIDE NT FUND AUTHORITIES. COMING TO THE ASSESSEES SUBMISSION THAT BUYERS HAD INSISTED ON CASH PAYMENTS, HE OBSERVED IN THE PENAL TY ORDER THAT THERE WAS NO CORROBORATING EVIDENCE FORTHCOMING. IN THE END, THE ASSESSING OFFICER HELD THAT THE IMPUGNED TRANSACTIONS OF ` 19,34,670/- WERE UNSECURED LOANS AND NOT TRADE TRANSACTIONS AS CONTE NDED BY THE ASSESSEE. IN THIS MANNER, IMPUGNED PENALTY OF ` 19,34,670/- STOOD IMPOSED IN ASSESSEES CASE FOR HAVING VIOLATED SEC TION 269T OF THE ACT. 5. IN LOWER APPELLATE PROCEEDINGS, THE ASSESSEE CHALL ENGED THE PENALTY ON VALIDITY OF NOTICE AS WELL AS ON MERITS. WE FIND THAT THE CIT(A) HAS REJECTED THE ARGUMENTS AS UNDER: I.T.A.NO. 1609/13 :- 4 -: 6.0 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AN D THE MATERIALS AVAILABLE ON RECORD. THE CASE WAS POSTED FOR HEARING ON 15 TH FEBRUARY 2013 AND THE ASSESSEE SOUGHT ADJOURNMENT . THEN THE CASE WAS POSTED FOR HEARING ON 6 TH MARCH 2013 AND 30 TH APRIL 2013. THE ASSESSEE DID NOT APPEAR ON THESE DATES NOR ANY REQUEST FOR ADJOURNMENT HAS BEEN FILED. IN VIEW OF THE NON-CO- OPERATION OF THE ASSESSEE I AM COMPELLED TO DISPOS E OF THE CASE ON THE BASIS OF THE MATERIALS AVAILABLE ON RECORD. 6.1 THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS STATED THAT THE ASSESSEE HAS REPAID THE FOLLOWING LOANS AS PER DETAILS GIVEN AS UNDER: I) SHRI SHIVAGURUNATHAN ` 3,00,000/- II)NEPC INDIA LIMITED ` 9,59,670/- III) EPS & SONS ` 25,000/- IV) TYRE SALE & SERVICE CORPN. ` 2,50,000/- V) NEPC TEXTILE ` 4,00,000/- 6.2 ON A PERUSAL OF THE ASSESSMENT ORDER IT IS EVI DENT THAT THE FOLLOWING REASONS QUOTED BY THE ASSESSING OFFICER C OULD NOT BE DENIED BY THE ASSESSEE. THE ASSESSEE HIMSELF HAS CLASSIFIED THIS TRANSA CTION AS A LOAN IN THE FINANCIAL STATEMENT SUBMITTED ALONGWITH THE RETURN OF INCOME. THE ASSESSEES AUDITOR HAS CERTIFIED IN THE AUDIT ORS REPORT FILED ALONGWITH THE RETURN OF INCOME U/S 44AB OF IT ACT AS UNSECURED LOAN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN THE ISSUE WAS DISCUSSED WITH THE ASSESSEE, THE ASSESSEE NEV ER SAID THAT THESE TRANSACTIONS WERE TRADE ADVANCES. 6.3 FURTHER, THE ADDITIONAL COMMISSIONER IN PARA 4.7 IN (A), (B), (C), (D) AND (E) HAVE CLEARLY BROUGHT OUT THE REASO NS FOR NOT ACCEPTING THE PLEA OF THE ASSESSEE. I AM IN AGREEM ENT WITH THE ADDITIONAL COMMISSIONER ON THE REASONS CITED BY HIM . THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE CANNOT OVERCOME T HE DEFICIENCIES POINTED OUT IN THE PENALTY ORDER. FUR THER THE ASSESSEES WRITTEN SUBMISSION WERE NOT SUPPORTED BY ANY EVIDENCE SINCE THE ASSESSEE HAS NOT APPEARED AT TH E APPELLATE STAGE DESPITE SEVERAL OPPORTUNITIES WERE GIVEN TO H IM AS MENTIONED EARLIER. I.T.A.NO. 1609/13 :- 5 -: 6.4 THEREFORE, I HOLD THAT IT IS A CLEAR VIOLATION OF SECTION 269T AND THEREFORE, THE PENALTY U/S 271E LEVIED TO THE EXTE NT OF ` 19,34,670/- IS CONFIRMED IN THE HANDS OF THE ASSES SEE AND THE APPEAL IS DISMISSED. THEREFORE, THE ASSESSEE IS IN APPEAL. 6. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE FIL E. FIRST OF ALL, IT IS EVIDENT TO US THAT THE ASSESSEES AP PEAL HAS BEEN DECIDED BY THE CIT(A) IN ABSENTIA I.E IN THE ABSENCE OF AUT HORIZED REPRESENTATIVE. EVEN IF WE UPHOLD THE ORDER OF THE CIT(A) TO THIS EXTENT, IT TRANSPIRES THAT HE HAS GONE MERELY ON TH E FINDINGS CONTAINED IN THE ASSESSMENT ORDER IN PARA 6.2. IN OUR VIEW, PENALTY AND ASSESSMENT PROCEEDINGS STAND ON AN ALTOGETHER DIFFE RENT FOOTINGS I.E IN CASE OF ASSESSMENT AN ADDITION CAN BE MADE BUT IN P ENALTY CASE, AN ASSESSEE CAN ALWAYS PROVE ITS ACT AND CONDUCT SO AS TO CONTEST THE PENALTY PROPOSED. UNDISPUTEDLY, THE CIT(A) NOWHER E TAKES INTO CONSIDERATION THE EXPLANATION OFFERED BY THE ASSES SEE VIS--VIS THE FINDINGS EXCEPT CASUALLY A REFERENCE IN PARA 6.3 OF HIS ORDER. IN OUR CONSIDERED OPINION, IT WAS INCUMBENT UPON THE CIT(A ) EVEN IN THE EX- PARTE PROCEEDINGS TO HAVE CONSIDERED THE ASSESSEE S EXPLANATION ON MERITS AS WELL AS VALIDITY OF THE PENALTY PROCEEDIN GS IN THE LIGHT OF EXPLANATION OFFERED AND FINDINGS CONTAINED IN THE P ENALTY ORDER. SINCE I.T.A.NO. 1609/13 :- 6 -: THE SAME IS NOT DONE, WE DEEM IT APPROPRIATE TO RES TORE THE APPEAL BACK TO THE CIT(A). ACCORDINGLY, THE CIT(A) SHALL NOW TAKE UP THE MATTER IN ACCORDANCE WITH LAW AND DECIDE THE SAME A FRESH AFTER ADEQUATELY HEARING THE ASSESSEE. 7. THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 20 TH OF JANUARY, 2014, AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (S. S. GODARA) JUDICIAL MEMBER DATED: 20 TH JANUARY, 2014 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR