M/s. Balkrishna Dyeing & Printing Mills, Surat V. The Income tax Officer,Ward-2(2), Surat

ITA 1658/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76692 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 17-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 1658 /AHD/2011 (ASSESSMENT YEAR: 2005-06) M/S. BALKRISHNA DYEING AND PRINTING MILLS G-1, 165, SHREE RAM INDUSTRIAL SOCT., UDHNA MAGDALLA ROAD, SURAT. V/S THE I.T.O, WARD2(2), SURAT. (APPELLANT) (RESPONDENT) PAN: AACFB 5858R APPELLANT BY : SHRI S.N. DIVETIA A.R. RESPONDENT BY : SHRI K.C. MATHEWS, SR. D.R. ( )/ ORDER DATE OF HEARING : 23-04-201 4 DATE OF PRONOUNCEMENT : 09 -05-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-II, SURAT DATED 31.03.2011 FOR A.Y. 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A FIRM STATED TO BE ENGAGED IN THE BUSI NESS OF DYEING AND PRINTING OF FABRIC CLOTH ON JOB CHARGE BASIS. ASSES SEE FILED ITS RETURN OF INCOME FOR A.Y. 05-06 ON 24.10.2005 DECLARING NIL I NCOME. THE CASE ITA NO 1658/AHD/2011 . A.Y. 200 5- 06. 2 WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 21.12.2007 AND THE TOTAL INCOME WAS DETERMINED AT RS. 50,22,980/- AFTER SETTING OFF OF UNABSORBED BUSINESS LOSS OF EARLIER YEARS AMOUNTING TO RS. 35,78,004/-. THE ORDER OF A.O WAS CONFIRMED BY CIT(A) VIDE ORDER DATED 29.10.2008. WH ILE FRAMING THE ASSESSMENT UNDER SECTION 143(3) A.O MADE ADDITION O F RS. 65,89,082/- ON ACCOUNT OF SUPPRESSION OF JOB CHARGES AND RS. 48 ,40,134/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE. ON THE AFORESAID ADDIT IONS MADE, A.O VIDE ORDER DATED 23.03.2010 LEVIED PENALTY OF RS. 41,82, 237/- U/S. 271(1)(C) OF THE ACT. AGGRIEVED BY THE PENALTY ORDER PASSED BY A.O., ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO VIDE ORDER DATED 31.03.2011 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAI SED THE FOLLOWING GROUNDS:- (1) THAT, THE PENALTY ORDER MADE BY THE ID. ASSESSING O FFICER AND UPHELD BY THE LD. C.I.T.(A) IS BAD IN LAW, AGAINST THE FACTS, ILLEGAL, WITHOUT JURISDI CTION, AND NEEDS TO BE QUASHED. (2) THAT, BOTH THE A.O. AND C.I.T.(A) ERRED IN LEVYING PENALTY OF RS.41,82,237/- U/S. 271(L)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS. THAT, TH E PENALTY ORDER WAS MADE WITHOUT CONSIDERING THE REPLIES AND SUBMISSIONS OF THE APPELLANT, AGAIN ST THE FACTS AS WELL AS LAW OF THE CASE. THUS, PENALTY NEEDS TO BE DELETED LOCK STOCK AND BARREL. (3) THAT, BOTH THE A.O. AS WELL AS C.I.T.(A) ERRED BY T REATING LABOUR CHARGES OF RS.48,40,134/- AS UNEXPLAINED EXPENSES AND ALSO LEVIED PENALTY FOR FU RNISHING INACCURATE PARTICULARS. THE PENALTY WAS LEVIED ONLY ON ADVERSE PRESUMPTIONS, ARBITRARY AND AGAINST THE EVIDENCES ADDUCED BY THE APPELLANT. THEREFORE, THE PENALTY NEEDS TO BE VACAT ED. (4) THAT THE PENALTY LEVIED BY THE A.O. AND CONFIRMED B Y THE C.I.T.(A) FOR SUPPRESSED JOB CHARGES INCOME OF RS.65,89,082/- WERE ONLY ON THE BASIS OF SURMISES, PROBABILITIES AND ADVERSE PRESUMPTIONS AS AGAINST THE MATERIALS ON RECORDS TO PROVE THE ACT OF FURNISHING INACCURATE PARTICULARS. THEREFORE, THE PENALTY ORDER NEEDS TO BE QUASHED AND PENALTY NEEDS TO BE REMITTED. (5) THAT, THE A.O. HAS ALSO ERRED IN CALCULATING T AX DEMAND OF RS.41,82,237/- VIDE PENALTY ORDER AND THE C.I.T.(A) ALSO ERRED BY CONFIRMING THE WORK ING OF TAX DEMAND OF THE A.O. WHICH IS AGAINST PROVISIONS OF EXPLANATION 4 OF SEC.271(L)(C ) OF THE ACT AND THUS, THE TAX DEMAND NEEDS TO BE CORRECTED AS PER THE PROVISIONS OF EXPLANATION 4 OF SEC.271(L)(C) OF THE INCOME TAX ACT, 1961. 4. THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS, THE ONLY EFFECTIVE GROUND IS WITH RESPECT TO LEVY OF PENALTY U/S. 271( 1)(C) OF THE ACT. THE LD. A.R. SUBMITTED THAT AGAINST THE QUANTUM ADDITIO N MADE BY THE A.O ITA NO 1658/AHD/2011 . A.Y. 200 5- 06. 3 HONBLE TRIBUNAL VIDE ORDER DATED 28.12.2012 HAS SU BSTANTIALLY REDUCED THE ESTIMATION AND HAS CONFIRMED THE ADDITION ON ES TIMATED BASIS. HE THEREFORE SUBMITTED THAT SINCE THE ADDITION HAS BEE N CONFIRMED ON THE BASIS OF ESTIMATE BASIS, NO PENALTY IS LEVIABLE. H E FURTHER SUBMITTED THAT THE A.O HAD LEVIED THE PENALTY ON THE TOTAL AMOUNT DISALLOWED BY HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT THE DISALLOWANCE MADE AT THE END OF A.O HAS BEEN SUBSTANTIALLY REDUCED BY THE ORDER OF TRIBUNAL AND THEREFORE ALSO PENALTY COULD NOT BE LEVIED ON T HE DISALLOWANCE MADE ORIGINALLY BY A.O. 5. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND FURTHER SUBMITTED THAT THE PRESENT CASE IS NOT A SIMPLE EST IMATION OF PROFIT BUT WAS ON ACCOUNT OF NON PRODUCTION OF BOOKS BEFORE A. O. AND CIT(A) AND THEREBY THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME AND THE RETURN HAD REMAINED UNEXPLAINED. HE THEREFORE SUBM ITTED THAT A.O WAS FULLY JUSTIFIED IN LEVYING PENALTY AND THUS SUPPORT ED THE ORDER OF A.O. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, WE FIND THAT DURING THE COURSE OF ASSESSMENT, THE ADDITION WAS MADE BY THE A.O OF RS. 65,89,082/- AND RS. 48,40,134/- ON ACCOUNT OF SUPPRESSION OF JOB CHARGES AND UNEXPLAIN ED EXPENDITURE RESPECTIVELY. ON THE AFORESAID ADDITION PENALTY WA S LEVIED BY A.O. WE FURTHER FIND THAT THE CO-ORDINATE BENCH OF TRIBUNAL VIDE ORDER DATED 28.12.2012 CONFIRMED THE ADDITION TO THE EXTENT OF RS. 13 LAC AND RS. 10 LAC ON ACCOUNT OF SUPPRESSION OF JOB CHARGES AND UN EXPLAINED EXPENDITURE RESPECTIVELY AND THUS THE ADDITION MADE BY A.O. HAS BEEN REDUCED ON ACCOUNT OF THE ORDER OF CO-ORDINATE BENCH OF TRIBUN AL AND THEREBY THE ITA NO 1658/AHD/2011 . A.Y. 200 5- 06. 4 ADDITION TO THE EXTENT UPHELD BY THE TRIBUNAL HAS A TTAINED FINALITY. IN THE PRESENT CASE, SINCE THE PENALTY IS ON THE ORIGINAL DISALLOWANCE MADE BY A.O. WE ARE THEREFORE OF THE VIEW THAT THE LEVY OF PENALTY ON THE SUCH AMOUNT CANNOT BE SUSTAINED. WE THEREFORE REMIT THE MATTER OF LEVY OF PENALTY BACK TO THE FILE OF A.O. FOR HIM TO DECIDE THE ISSUE OF LEVY OF PENALTY AFRESH AS PER LAW ON THE ADDITIONS FINALLY UPHELD AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 09 - 05 - 2014. SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,A HMEDABAD