Assistant Commissioner of Income-tax, Bangalore V. M/s Sree Shanmugam Modern Rice Mills Pvt Ltd, Bangarpet

ITA 1783/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7326 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 17-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: PRATHISHA
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B, BANGALORE BEFORE SHRI A.K.GARODIA, AM & SHRI GEORGE GEORGE K, JM ITA NO.1783/BANG/2016 : ASST.YEAR 2012-2013 ASST.COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 1(1) BANGALORE. M/S.SREE SHANMUGAM MODERN RICE MILLS PVT.LTD. DESIHALLI, KGF ROAD BANGARPET 563 114. PAN : AACCS6537M. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SMT.PADMAMEENAKSHI, JCIT RESPONDENT BY : SHRI PRATHISHA, ADVOCATE DATE OF HEARING : 31.10.2017 DATE OF PRONOUNCEMENT : 03.11.2017 O R D E R PER GEORGE GEORGE K, JM THIS APPEAL AT THE INSTANCE OF THE REVENUE IS DIRE CTED AGAINST THE CIT(A)S ORDER DATED 29 TH JULY, 2016. THE RELEVANT ASSESSMENT YEAR IS 2012-2013. 2. THE GROUND RAISED BY THE REVENUE READS AS FOLLOW :- 1. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE, THE LD.CIT(A) ERRED IN DELETING THE PENALTY L EVIED UNDER SECTION 271AAA OF THE ACT BY ASSESSING OFFICER? 2. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HA S ADMITTED THE UNDISCLOSED INCOME THE STATEMENT RECOR DED U/S 132(4) OF THE ACT AND FILED ITS RETURN OF INCOME AND PAID NECESSARY TAXES, HENCE NO PENALTY IS LEVIABLE? 3. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FACT TH AT THE ITA NO.1783/BANG/2016. M/S.SREE SHANMUGAM MODERN RICE MILLS PVT.LTD. 2 ASSESSEE FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED DESPITE THE FACT THA T SECTION 271AAA(1)(II) EMPHASIZES THAT THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED SHOULD BE SUBSTANTIATED? 3. THE BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS:- 3.1 THERE WAS A SEARCH PROCEEDINGS U/S 132 OF THE A CT IN THE PREMISES OF THE ASSESSEE ON 20.12.2011. IN THE COURSE OF SEARCH PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE WAS HAVING CASH TO THE TUNE OF RS.1,46,82,040. ON VERIF ICATION OF THE BOOKS OF ACCOUNT IT WAS NOTICED THAT THE ASSESS EE WAS HAVING ONLY CASH BALANCE OF RS.26,82,040 AND THE MA NAGING DIRECTOR OF THE ASSESSEE-COMPANY WAS UNABLE TO RECO NCILE THE DIFFERENCE BETWEEN THE ACTUAL CASH FOUND AND THE FI GURES RECORDED IN THE BOOKS OF ACCOUNT. ACCORDINGLY, THE MANAGING DIRECTOR OFFERED UNACCOUNTED CASH OF RS.1,20,00,000 TO BE BROUGHT TO TAX FOR THE ASSESSMENT YEAR 2012-2013 IN THE HANDS OF THE ASSESSEE-COMPANY. SIMILARLY THERE WAS DISCREPANCY IN THE EXPENDITURE AMOUNTING TO RS.5,40 ,599 CLAIMED BY THE ASSESSEE, WHICH WAS NOT SUPPORTED BY PROPER VOUCHERS / BILLS. SINCE THE ASSESSEE WAS NOT ABLE T O SUBSTANTIATE THE CLAIM OF EXPENSES INCURRED, THE MA NAGING DIRECTOR OFFERED THE EXPENSES CLAIMED AT RS.5,04,59 9 TO TAX FOR ASSESSMENT YEAR 2012-2013. ACCORDINGLY, THE AMO UNT OF RS.1,25,40,599 WAS BROUGHT TO TAX FOR THE ASSESSMEN T CONCLUDED FOR THE ASSESSMENT YEAR 2012-2013. ITA NO.1783/BANG/2016. M/S.SREE SHANMUGAM MODERN RICE MILLS PVT.LTD. 3 3.2 THEREAFTER NOTICE WAS ISSUED FOR IMPOSITION OF PENALTY U/S 271AAA OF THE ACT. THE ASSESSEE IN THE COURSE O F PENALTY PROCEEDINGS FILED OBJECTION AND THAT SUBMITTED THE UNDISCLOSED INCOME WAS OFFERED FOR TAXES AND INTERE ST WAS DULY PAID. HOWEVER, THE ASSESSING OFFICER IMPOSED P ENALTY U/S 271AAA OF THE ACT AMOUNTING TO RS.12,54,060 STA TING THAT THE ASSESSEE WAS UNABLE TO SPECIFY THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. FURTHER IT WAS STATED BY THE A.O. WHILE IMPOSING PENALTY, THE MANAGING DIREC TOR OF THE ASSESSEE WAS UNABLE TO SUBSTANTIATE THE EXPENSES WH ICH WAS OFFERED FOR TAXATION. 3.3 AGGRIEVED BY THE ORDER OF IMPOSITION OF PENALTY U/S 271AAA OF THE ACT, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. 3.4 THE CIT(A), AFTER CONSIDERING THE JUDICIAL PRON OUNCEMENT ON THE SUBJECT, HELD THAT PENALTY CANNOT BE IMPOSED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND ALLOWED TH E APPEAL OF THE ASSESSEE. 3.5 AGGRIEVED BY THE ORDER OF THE CIT(A), THE DEPAR TMENT HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 3.6 THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE GROUND RAISED AND SUPPORTED THE ORDER OF THE ASSESS ING OFFICER IMPOSING PENALTY U/S 271AAA OF THE ACT. ITA NO.1783/BANG/2016. M/S.SREE SHANMUGAM MODERN RICE MILLS PVT.LTD. 4 3.7 THE LEARNED AR, ON THE OTHER HAND, REITERATED T HE SUBMISSION MADE BEFORE THE INCOME-TAX AUTHORITIES A ND RELIED ON THE CONCLUSIONS / FINDINGS OF THE CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY IN THIS CASE, THE AS SESSEE HAD DISCLOSED THE CONCEALED INCOME WHILE GIVING THE STA TEMENT U/S 132(4) OF THE ACT IN THE COURSE OF SEARCH. THE ASSESSEE ALSO DULY PAID THE TAXES AND INTEREST THEREON. THE CIT(A) WHILE ALLOWING THE APPEAL OF THE ASSESSEE HAD HELD THAT T HE MONEY BELONGED TO THE GROUP CONCERN AND SOME FRIENDS LIVI NG NEAR THE FACTORY, WHO HAD ENTRUSTED THE SAME TO THE MANA GING DIRECTOR OF THE ASSESSEE-COMPANY. SINCE THE MANAGIN G DIRECTOR WAS UNABLE TO EXPLAIN / PROVE IT, THE SAME WAS OFFERED TO TAXATION. THE CIT(A) HAS HELD THAT THE A SSESSING OFFICER WAS UNABLE TO PROVE THE EXPLANATION OFFERED BY THE ASSESSEE AS WRONG. THE FINDING OF THE CIT(A) READS AS FOLLOW:- THE APPELLANT HAS STATED THAT THE MONEY WAS BELONG ING TO THE GROUP CONCERN AND SOME FRIENDS LIVING NEAR T HE FACTORY WHO WERE KEEPING WITH MR.R.N.SHANMUGHAM AND HE OFFERED AS UNDISCLOSED INCOME AS HE FOUND THAT I T WILL BE DIFFICULT FOR HIM TO PROVE IT. THE EXPLANATION O F THE APPELLANT HAS NOT BEEN FOUND TO BE WRONG BY THE ASSESSING OFFICER. NO EVIDENCE HAS BEEN FOUND WHICH WILL SUGGEST THAT THE APPELLANT WAS EARNING UNDISCLOSED INCOME IN THE FORM OF SOME UNACCOUNTED TRANSACTIONS RECORDED OUTSIDE THE BOOKS. THE APPELLANT HAS ADMIT TED IN HIS SWORN STATEMENT ABOUT THIS UNDISCLOSED INCOME, HAS FILED THE RETURN OF INCOME SHOWING THE SAME AS HIS INCOME & HAS PAID THE NECESSARY TAXES ON THIS. FROM THE CA SE LAWS MENTIONED ABOVE, IT IS CLEAR THAT ON SIMILAR F ACTS OF THE CASE, PENALTY U/S 271AAA HAS BEEN CANCELLED. ITA NO.1783/BANG/2016. M/S.SREE SHANMUGAM MODERN RICE MILLS PVT.LTD. 5 THEREFORE, HUMBLY FOLLOWING THE CASE LAWS AS CITED SUPRA, THE PENALTY U/S 271AAA IS CANCELLED. 4.1 THE ABOVE FINDING OF THE CIT(A) HAS NOT BEEN DI SPELLED BY THE REVENUE BY PLACING ANY CONTRADICTORY MATERIAL B EFORE US. HENCE, WE UPHOLD THE ORDER OF THE CIT(A) AS CORRECT AND IN ACCORDANCE WITH LAW. IT IS ORDERED ACCORDINGLY. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 03 RD DAY OF NOVEMBER , 2017. SD/- SD/- (A.K.GARODIA) (GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE ; DATED : 03 RD NOVEMBER, 2017. DEVDAS* COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER, (ASSTT. REGISTRAR) ITAT, BANGALORE 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, BENGALURU. 4. CIT(A)-15, BENGALURU 5. DR, ITAT, BANGALORE 6. GUARD FILE.