M/s. Abhishek Exim Pvt.Ltd., Surat V. The Dy.CIT.,Circle-1, Surat

ITA 1799/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1637 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHM EDABAD , (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) ( , !'# $ , ! %& ) ITA NO. 1799/AHD/2011 (ASSESSM ENT YEAR: 2007-08) M/S. ABHISHEK EXIM (P) LTD. ABHISHEK HOUSE, OPP. JIVAN BHARTI SCHOOL, NANPURA, SURAT VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, SURAT PAN NO. AADCA7202N (APPELLANT) (RESPONDENT) APPELLANT BY : NONE (WRITTEN SUBMISSION) RESPONDENT BY : SHRI KEYUR PATEL, SR. D.R. DATE OF HEARING : 08-04 -2016 DATE OF PRONOUNCEMENT : 03-05-2016 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF CIT(A)-I, SURAT, DATED 27.06.2011 FOR THE ASSESSMENT YEAR 2007-08 . 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 3. THE ASSESSEE IS A COMPANY STATED TO BE ENGAGED I N THE BUSINESS OF PURCHASE, IMPORT, MANUFACTURING, SALES AND EXPORT OF DIAMOND, PRECIOUS STONE, TEXTILE GOODS, READYMADE GARMENTS, GENERATION AND DISTRIBUTION OF POWER BY WINDMILL. THE ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 23.10.2007 DECLARING TOTAL INCOME AT RS.18,95,670/-. THE CAS E WAS SELECTED FOR SCRUTINY AND ITA NO.1799/AHD/11 A.Y. 07-08 (M/S. ABHISHEK EXIM (P) LTD. VS. DC IT) 2 THEREAFTER, THE ASSESSMENT WAS FRAMED U/S.143(3) OF THE ACT VIDE ORDER DATED 30.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT R S.95,19,965/- INTER ALIA BY MAKING ADDITIONS OF RS.36,88,350/- ON ACCOUNT OF UN VERIFIABLE PURCHASES AND RS.39,35,948/- ON ACCOUNT OF CASH PAYMENT TO WORKER S. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFO RE THE LD. CIT(A), WHO VIDE ORDER DATED 04.02.2010 ON THE ISSUE OF ADDITION ON ACCOU NT OF UNVERIFIABLE PURCHASES, RESTRICTED THE ADDITION TO RS.7,37,670/- AND ON TH E ISSUE OF CASH PAYMENT TO WORKERS, UPHELD THE ADDITION MADE BY A.O. ON THE AFORESAID ADDITIONS THAT WERE CONFIRMED BY THE LD. CIT(A), A.O. VIDE ORDER DATED17.03.2011 HELD THAT ASSESSEE HAD COMMITTED DEFAULT BY FURNISHING INACCURATE PARTICUL ARS OF INCOME AND THEREBY CONCEALED THE INCOME AND THE ASSESSEE WAS THEREFOR E LIABLE FOR PENALTY U/S.271(1)(C) OF THE ACT. HE ACCORDINGLY LEVIED PENALTY OF RS.15 ,73,140/-. AGGRIEVED BY THE PENALTY ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 27.06.2011 (IN APPEAL NO. CAS-I/97/11-1 2) CONFIRMED THE PENALTY LEVIED BY A.O. BY HOLDING AS UNDER: 6. DECISION THE ARGUMENTS OF AO AS WELL AS APPELLANT HAVE BEEN CONSIDERED. THE STRONG REASONING GIVEN BY AO PROVES THAT HE HAS MADE OUT A SOUND CASE FOR IMPOSITION OF PENALTY. THE ASSESSING OFFICER, BY PROPER ANALYSIS OF EVIDEN CE, HAS PROVED THAT IN RESPECT OF BOTH THE ADDITIONS, THE ASSESSEE IS HIT BY THE MISCHIEF OF SECTION 271(1)(C). THE APPELLANT HAS NOT BEEN ABLE TO POINT OUT ANY LOOPHOLE IN THE ORDER OF THE AO. THE APPELLANT HAS FAILED TO LEAD ANY EVIDENCE/ARGUMENT WHICH WOULD CALL FOR INTERFER ENCE IN AO'S ORDER. HAVING REGARD TO THE DISCUSSION IN PRECEDING PARAG RAPHS, THE ORDER IMPOSING PENALTY IS CONFIRMED. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING THE PENALTY ORDER OF RS.15,73,140/- U/S.271(1)(C) OF THE ACT. 4.1 ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF ASSESSEE, HOWEVER, ON BEHALF OF ASSESSEE, LD.AR HAD FILED WRITTEN SUBMIS SIONS WHEREBY INTER ALIA IT WAS ITA NO.1799/AHD/11 A.Y. 07-08 (M/S. ABHISHEK EXIM (P) LTD. VS. DC IT) 3 SUBMITTED THAT AGAINST THE ORDER OF LD. CIT(A), REV ENUE AND ASSESSEE HAD PREFERRED THE APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 29.09.2015 HAD DELETED THE PART OF DISALLOWANCE OF WAGES AND SUSTA INED THE DISALLOWANCE ONLY TO THE EXTENT OF RS.5 LACS AS AGAINST THE DISALLOWANCE OF RS.39,35,948/- MADE BY AO. WITH RESPECT TO ADDITION ON ACCOUNT OF PURCHASES, I T WAS SUBMITTED THAT THE ADDITION HAS BEEN MADE ON LUMP SUM BASIS AND IN SUCH A SITUA TION, NO PENALTY OF CONCEALMENT OF INCOME IS LEVIABLE MORE SO WHEN THE ASSESSMENT A ND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE. HE FURTHER PLACED RELIANCE ON THE DECISION OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) 1A ND THE DECISION IN THE CASE OF UNION OF INDIA VS. RAJASTHAN SPINNING & WEAVING MIL LS (2009) 224 CTR (SC) 1. IT WAS FURTHER SUBMITTED THAT IN THE CASE OF SISTER-CO NCERN OF THE ASSESSEE AND ON IDENTICAL FACTS AND CIRCUMSTANCES, THE HONBLE ITAT VIDE ORDER DATED 07.02.2014 IN THE CASE OF DCIT VS. ABHISHEK EXPORT IN ITA NOS. 150/AHD/2013 & 2609/AHD/2010 FOR A.Y. 2004-05 AND 2005-06 HAD DELETED THE PENALTY. THE COPY OF THE AFORESAID ORDER WAS ALSO PLACED ON RECORD. IT WAS THEREFORE SUBMITTED THAT PENALTY BE DELETED. ON THE OTHER HAND, LD. D.R. S UPPORTED THE ORDERS OF A.O. AND LD. CIT(A). 5. WE HAVE HEARD LD. D.R. AND PERUSED THE WRITTEN S UBMISSION AND MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESP ECT TO LEVY OF PENALTY U/S.271(1)(C) OF THE ACT ON THE DISALLOWANCE ON WAGES AND ADDIT ION ON ACCOUNT OF PURCHASES. WE FIND THAT THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF ASSESSEES SISTER- CONCERN AND ON IDENTICAL FACTS, IN THE CASE OF (DCI T VS. ABHISHEK EXPORT (SUPRA) ORDER DATED 07.02.2014) HAD DELETED THE LEVY OF PEN ALTY U/S.271(1)(C) OF THE ACT BY HOLDING AS UNDER: 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY AND PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE DECISIONS CITED AT BAR. WE FIND THAT IT IS A CASE OF CERTAIN DISALLOWANCE MADE OUT OF THE 'WAGES TO WORKERS' ON ACCOUNT OF CA SH PAYMENTS MADE TO THE WORKERS AND SOME DEFECTS IN THE MAINTENANCE OF SUPPORTING VOUCH ERS. WE FIND THAT THE PLEA OF THE ITA NO.1799/AHD/11 A.Y. 07-08 (M/S. ABHISHEK EXIM (P) LTD. VS. DC IT) 4 DEPARTMENT THAT THERE WAS A DISCREPANCY IN THE MENT ION OF VOUCHER NUMBER IS DEVOID OF ANY MERIT, AS THE VOUCHER NUMBER IN THE CASH BOOK WAS G ENERATED BY THE COMPUTER AND THAT COULD NOT TALLY WITH THE ACTUAL VOUCHER NUMBER FOUN D IN THE VOUCHER ITSELF IN THE BULK OF VOUCHERS PRODUCED BY THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS FILED AN EXPLANATION WITH REGARD TO THE PAYMENTS MADE TO THE WORKERS AND THE EXPLANATION OF THE ASSESSEE COULD NOT BE SAID TO BE NOT BONA FIDE. THE ASSESSEE HAS SHOWN BETTER TRADING RESULT DURING THE RELEVANT PERIOD AS COMPARED TO THE EARLIER YEARS IN THE GARMENTS SALES. THE DISALLOWANCE AT FLAT RATE OF 20% OUT OF THE EXPENDITURE CLAIMED BY THE ASSESSEE UNDER THE HEAD 'WAGES TO WORKERS' WAS MADE DUE TO CASH PAYMENTS MADE TO THE WORKERS AND CERTAIN DEFECTS IN THE SUPPORTING VOUCHERS MAINTAINED BY THE ASSESSEE. THE SE FACTS OF THE CASE MAY JUSTIFY A CERTAIN AMOUNT OF DISALLOWANCE OUT OF THE EXPENDITU RE OF WAGES CLAIMED BY THE ASSESSEE, BUT ARE NOT SUFFICIENT TO JUSTIFY IMPOSITION OF PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT. WE FIND THAT IN THE ABSENCE OF COMPLETE AND CONVINCING CORROBORATIVE EVIDENCE, THE REVENUE MAY JUSTIFIABLY DISALLOW CERTAIN PART OF THE EXPENS ES CLAIMED BY THE ASSESSEE, BUT IN THE MATTER OF PENALTY PROCEEDINGS, THE ONUS LIES HEAVIL Y ON THE REVENUE TO PROVE THAT THE ASSESSEE HAD CONCEALED ITS INCOME OR HAS FILED INAC CURATE PARTICULARS OF ITS INCOME. IN THIS CASE, THE REVENUE HAS FAILED TO PROVE THAT THE CLAI M OF THE EXPENSES UNDER THE HEAD 'WAGES TO WORKERS' WERE NON-GENUINE OR WERE INFLATED BY TH E ASSESSEE. MERELY BECAUSE CERTAIN EXPENSES HAVE BEEN CLAIMED BY THE ASSESSEE TO HAVE INCURRED IN CASH AND WERE NOT SUPPORTED BY DOCUMENTARY EVIDENCE TO THE SATISFACTI ON OF THE REVENUE AUTHORITIES, IT COULD NOT BE SAID THAT THE REVENUE HAS PROVED THAT THE EX PENSES CLAIMED WERE INFLATED OR NON- GENUINE. IT IS WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITION MADE IN THE ASSESSMENT CASE OF THE ASSESSEE IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTI CULARS OF INCOME AND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDING ON THE PREPONDERANCE OF PROBABILITIES, BUT NO PENALTY COUL D BE IMPOSED UNDER SECTION 271(1)(C) OF THE ACT ON THE PREPONDERANCE OF PROBABILITIES AND R EVENUE HAS TO PROVE THAT THE CLAIM OF THE EXPENSES BY THE ASSESSEE WAS NOT GENUINE OR WAS INFLATED TO REDUCE ITS TAX LIABILITY. NO SUCH MATERIAL HAS BEEN PRODUCED BY THE AO TO SUGGES T THAT THE ASSESSEE HAS INFACT INFLATED ITS EXPENSES OR NON-GENUINE EXPENSES WERE CLAIMED U NDER THE HEAD 'WAGES TO WORKERS'. THE DECISIONS RELIED UPON BY THE REVENUE ARE DISTIN GUISHABLE SINCE IN THESE CASES SOME CORROBORATIVE EVIDENCE TO SUPPORT THE CHARGE OF CON CEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME WAS PRODUCED. THE DECISION OF THE HON'BLE APEX COURT IN CIT VS. RELIANCE PETRO PRODUCTS P. LTD., (SUPRA) IS APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. IN THESE FACTS OF THE CASE, WE HOLD THAT IT IS NOT A FIT CASE TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WHICH WAS RIGHTLY CAN CELLED BY THE CIT(A) AND THE GROUNDS OF THE APPEAL OF THE REVENUE BEING WITHOUT ANY MERIT A RE DISMISSED. 5.1. FURTHER, IT IS SETTLED LAW THAT PENALTY PROC EEDINGS AND ASSESSMENT PROCEEDINGS ARE TWO INDEPENDENT PROCEEDINGS AND THE PENALTY OR DER CANNOT BE SOLELY BASED ON THE REASONS GIVEN IN THE ORIGINAL ORDER OF ASSESSME NT. FURTHER MERELY BECAUSE ADDITIONS HAVE CONFIRMED IN APPEAL OR NO APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ADDITIONS MADE, IT CANNOT BE THE SOLE GROUND FOR CO MING TO THE CONCLUSION THAT ASSESSEE HAS CONCEALED ANY INCOME. CONSIDERING THE AFORESAID FACTS AND RELYING ON ITA NO.1799/AHD/11 A.Y. 07-08 (M/S. ABHISHEK EXIM (P) LTD. VS. DC IT) 5 THE AFORESAID DECISION AT THE COORDINATE BENCH, AN D IN THE ABSENCE OF ANY CONTRARY BINDING DECISION PLACED BY REVENUE, WE ARE OF THE V IEW THAT IN THE PRESENT CASE NO CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT HAS BEEN MADE OUT. WE THUS DIRECT THE DELETION OF PENALTY U/S. 271(1)(C) OF THE ACT. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON - 04 - 201 6. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED /04/2016 S K SINHA ORDER PRONOUNCED ON 03/05/2016 SD/- S D/- SKY AC (JM) (AM) COPY OF THE ORDER FORWARDED 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.REGIST RAR ITAT,AHMEDABAD 1.DATE OF DICTATION 08.04.2016 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E OTHER MEMBER 13-04-2016 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER \