Asst. Commissioner of Income tax Cir. 1(1), Panaji V. M/s. Rani constructrion Pvt. Ltd., Panaji

ITA 177/PAN/2013

• Counselvise Citation: 17724114 RSA 2013
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 04-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANJUL BARTHAKUR
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 177/PNJ/2013 (ASSESSMENT YEAR-2003-04) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1), PANAJI-GOA. (APPELLANT) VS. M/S. RANI CONSTRUCTION PVT. LTD., 407, SHIV TOWERS, 4 TH FLOOR, PATTO PLAZA, PANAJI-GOA, 403 001. PAN:AAACR9056N (RESPONDENT) APPELLANT BY : SHRI BANJUL BARTHAKUR RESPONDENT BY : NONE DATE OF HEARING : 19/9/2013 DATE OF ORDER : 13/12/2013 O R D E R PER: D.T. GARASIA THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) ORDER DATED 21.05.2013 FOR THE ASSESSMENT YEAR 2003-04. 2. THE FOLLOWING GROUNDS ARE RAISED IN THIS APPEAL WHICH READ AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEAL), PANAJIS ORDER IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LD. CIT(A) HAS ERRED TO APPRECIATE THAT THE AC HAS PROVIDED SUFFICIENT OPPORTUNITIES TO THE ASSESSEE TO PROVE THE CREDITORS, AND THEN ONLY TREATED THE CREDITORS AS UNDISCLOSED INCOME RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF B.A. BALASUBRAMANIAM& BROS. CO. VS. CIT 236 ITR 977 WHEREIN IT IS HELD THAT IT IS FOR THE ASSESSEE TO DISCHARGE THE ONUS OF PROVING THE GENUINENESS OF THE CREDITORS. 3. THE ID. CIT(A) ERRED TO NOTE THAT THE SUNDRY CREDITORS WHICH WERE UNPROVED AND DISALLOWED WERE NOT PERTAINING TO LABOURERS, SINCE THE LIST INCLUDES FIRMS 2. ITA NO. 177/PNJ/2013, (A.Y- 2003-04) ACIT VS. M/S. RANI CONSTRUCTION PVT. LTD. ETC. FURTHER IT MAY BE NOTED THAT, NONE OF THE LABOURER WILL WAIT FOR SUCH A LONG TIME FOR PAYMENT THAT TOO SUCH A BIG AMOUNT. 4. THE LD. CIT(A) IS ERRED TO NOTE THAT DURING PENALTY PROCEEDINGS, THE AC FURTHER ALLOWED OPPORTUNITY TO THE ASSESSEE TO PROVE THE CREDITORS AND AS AGAINST THIS, ASSESSEE COULD SUBMIT EVIDENCE TO THE EXTENT OF RS. 5,17,815/- ONLY AND THE FACT THAT PENALTY WAS LEVIED FOR THE BALANCE UNPROVED CREDITORS ONLY, THIS CLEARLY INDICATES THAT ASSESSEE HAS EXHAUSTED ALL THE OPPORTUNITIES AND HENCE THE BALANCE PURPORTED CREDITORS IS NOTHING BUT CONCEALMENT. ACCORDINGLY, THE AC HAS RIGHTLY LEVIED THE PENALTY U/S. 271(1)(C). 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: 3.1. THE ASSESSEE COMPANY IS ENGAGED IN CONSTRUCTION OF ROADS, DAMS, AND CANNELS ETC. DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSING OFFICER HAS VERIFIED SUNDRY CREDITORS. IN THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER HAS ISSUED VARIOUS LETTERS TO VARIOUS PARTIES CALLING FOR CONFIRMATION AND OTHER DETAILS IN RESPECT OF CREDITORS. SOME OF THE LETTERS RETURNED BACK BY THE POSTAL AUTHORITIES. THE ASSESSEE WAS GIVEN SHOW CAUSE NOTICE IN REPLY TO SHOW CAUSE NOTICE ASSESSEE ADMITTED THAT THE AMOUNT OF RS. 30,35,868/- TO BE ADDED BACK UNDER SECTION 41(1) OF THE INCOME TAX ACT. AS THE SAID PARTY HAVE BEEN CLAIMED PAYMENT FROM THE ASSESSEE, THE ASSESSING OFFICER HAS INITIATE THE PENALTY PROCEEDING. THE ASSESSEE WAS GIVE SHOW CAUSE NOTICE, IN REPLY TO SHOW CAUSE NOTICE THE ASSESSEE EXPLAIN AND RECONCILE THE PAYMENT OF RS. 5,17,815/- THEREFORE AMOUNT OF RS. 25,18,053/- WAS THE AMOUNT AS CONSIDERED THE INCOME. ON THIS AMOUNT PENALTY OF RS. 9,25,383/- HAS BEEN LEVIED BY ASSESSING OFFICER. 4. THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER: I HAVE GONE THROUGH THE PENALTY ORDER, WRITTEN SUBMISSION OF THE APPELLANT AND ORAL ARGUMENTS OF THE LEARNED COUNSEL. THE APPELLANT IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF ROADS, DAMS ETC. IN VARIOUS PARTS OF THE COUNTRY. THIS BUSINESS IS A LABOUR INTENSIVE BUSINESS AND MOST OF THE CREDITORS RELATE TO THE SAME. THERE IS ALSO NO DOUBT ABOUT THE FACT THAT IN THIS LINE OF BUSINESS, THERE IS HIGH TURNOVER OF LABOURERS AND IT IS INDEED DIFFICULT TO OBTAIN CONFIRMATION LETTERS FROM THESE LABOURERS AFTER A 3. ITA NO. 177/PNJ/2013, (A.Y- 2003-04) ACIT VS. M/S. RANI CONSTRUCTION PVT. LTD. LAPSE OF COUPLE OF YEARS. THE A.O. HAS NOT REJECTED THE BOOKS OF ACCOUNTS OF THE APPELLANT AND HAS NOT DOUBTED THE GENUINENESS OF THESE CREDITORS. HE MADE THE DISALLOWANCE U/S. 41(1) MEANING THAT THE LIABILITY TO PAY HAS CEASED TO EXIST. THE APPELLANT, ON HIS PART, IN ORDER TO CO- OPERATE WITH THE DEPARTMENT AND BUY PEACE OF MIND, VOLUNTARILY AGREED FOR THIS ADDITION AND PAID THE TAXES. DURING THE COURSE OF PENAL PROCEEDINGS, THE A.O. HIMSELF REACHED A CONCLUSION THAT A PART OF THE TOTAL DISALLOWANCE (RS. 5 LAKHS) STOOD EXPLAINED SUBSEQUENTLY AND HE DID NOT LEVY PENALTY ON THAT AMOUNT. THEREFORE, APPRECIATING THE FACTS OF THIS CASE IN TOTALITY, I AM OF THE OPINION THAT THIS IS NOT A CASE WHERE ANY INCOME HAS BEEN CONCEALED OR ANY INACCURATE PARTICULARS WERE FILED. THE A.O. IS DIRECTED NOT TO LEVY PENALTY U/S. 271(1)(C) IN THIS CASE. THE APPEAL IS ALLOWED ACCORDINGLY. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE. HAVING HEARD LEARNED DR, WE HAVE DECIDED THE MATTER ON THE BASIS OF SUBMISSION MADE BY THE DR AND CONSIDERING THE SUBMISSION WHICH WAS MADE BEFORE CIT(A). 6. HAVING HEARD LEARNED AR WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS LEVIED THE PENALTY THAT IN THIS CASE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNT SUCH AS CASH BOOKS, LEDGERS, BANK STATEMENT AND SUPPORTING VOUCHERS OF EACH OF THE PROJECTS. THE ASSESSING OFFICER HAS SENT LETTER TO THE TO THE CREDITORS CALLING UP ON THEM TO CONFIRM THE BALANCES DUE TO THEM BY THE ASSESSEE OR NOT. THE ASSESSING OFFICER ADDED 30,35,868/- AS DISCLOSED INCOME AND THEREAFTER, ASSESSING OFFICER HAS LEVIED THE PENALTY ON THE AMOUNT OF RS. 25,18,053.00 . ON THE GROUND THAT ASSESSEE HAS RECONCILE THE PAYMENT TO THE CREDITOR TO THE EXTENT OF RS.5,17,815/-. WE FIND THAT IN THE ASSESSMENT ORDER AO HAS MADE THE ADDITION ON AMOUNT OF RS.30,35,868/- WHEREAS THE PENALTY HAS BEEN LEVIED FOR AMOUNT OF RS. 25,18,053/-. WE FIND THAT ASSESSEE HAS AGREED TO PAY THE TAX ON THE AMOUNT OF RS.30,35,868/- TO AVOID LITIGATION TO INCOME TAX DEPARTMENT. WE FIND THAT ASSESSEE IS ENGAGED IN BUSINESS OF CONSTRUCTION OF ROADS, DAMS AND CANNEL IN VARIOUS PARTS OF THE COUNTRY. THIS BUSINESS IS A LABOUR INTENSIVE BUSINESS AND MOST OF THE CREDITORS RELATES TO THE SAME. THERE IS ALSO NO DOUBT ABOUT THE GENUINENESS OF THE CREDITORS, THEREFORE, WE ARE OF THE 4. ITA NO. 177/PNJ/2013, (A.Y- 2003-04) ACIT VS. M/S. RANI CONSTRUCTION PVT. LTD. VIEW THAT CIT(A) IS JUSTIFIED IN DELETING THE PENALTY AND OUR INTERFERENCE IS NOT REQUIRED. 7. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.12.2013. SD/- SD/- ( P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 13.12.2013 P.S.- *PK* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER PRIVATE SECRETARY, ITAT, PANAJI, GOA