The DCIT, Circle-4, Ahmedabad V. Gujchem Distillers India Ltd., Ahmedabad

ITA 1801/AHD/2011

• Counselvise Citation: 180120514 RSA 2011
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-06-2015
• Assessment Year: 1985-1986
• Appeal Filed On: 14-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ././ ./ ITA NOS. 1801 & 1802/AHD/2011 / ASSESSMENT YEAR: 1985-86 & 1986-87 THE ACIT, CIRCLE-4, AHMEDABAD V/S. GUJCHEM DISTILLERS INDIA LTD 6, NATIIONAL CHAMBER, 2 ND FLOOR, ASHRAM ROAD, AHMEDABAD PAN : AAACG 5586 G / // / (APPELLANT) ! ! ! ! / // / (RESPONDENT) REVENUE BY : SHRI DINESH SINGH, SR. DR. ASSESSEE(S) BY : NONE '# $ %&'/ // / DATE OF HEARING : 03/06/2015 () $ %&' / // / DATE OF PRONOUNCEMENT: 05/06/2015 *+ *+ *+ *+/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST TWO SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- VIII, AHMEDABAD, BOTH DATED 04.04.2011 FOR ASSESSMENT YEARS 1985-86 AND 1986-87. 2. THE ONLY GROUND RAISED IN THESE APPEALS BY THE R EVENUE IS AGAINST THE CANCELLATION OF PENALTY OF RS.3,81,513/- AND RS. 4, 23,806/- FOR ASSESSMENT YEARS 1985-86 AND 1986-87 RESPECTIVELY, LEVIED BY T HE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DERI VES INCOME FROM MANUFACTURING AND SALES OF VARIOUS CHEMICALS. FOR ASSESSMENT YEAR 1985- 86, THE ASSESSEE CLAIMED THE PAYMENT OF COMMISSION TO M/S. SOMNATH ITA NOS.1801 & 1802/AHD/2011 DCIT VS. GUJCHEM DISTILLERS INDIA LIMITED FOR AY 1985-86 & 1986-87 2 CHEMICALS OF RS.6,60,629/-; WHILE IN THE ASSESSMENT YEAR 1986-87 IT HAD CLAIMED PAYMENT OF COMMISSION OF RS.8,07,250/- TO M /S. SOMNATH CHEMICALS. THE ASSESSING OFFICER DISALLOWED THE CO MMISSION IN BOTH THE YEARS WHICH IS SUSTAINED BY THE CIT(A) AS WELL AS I TAT. THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) THERE UPON I.E . RS.3,81,513/- AND 4,23,806/- FOR ASSESSMENT YEARS 1985-86 AND 1986-87 RESPECTIVELY. THE PENALTY LEVIED U/S 271(1)(C) FOR BOTH THESE YEARS A RE DELETED BY THE CIT(A); HENCE THESE APPEALS BY THE REVENUE. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. AFTER CONSIDERING THE FACTS OF THE CASE AND THE ARGUMENTS OF BOTH THE SIDES, WE DO NOT FIND ANY JUSTIFICATION TO TAKE A VIEW DIFFERENT THAN THE VIEW TAKEN BY THE CIT(A). THE ASSESSEE IS PAYING C OMMISSION TO M/S. SOMNATH CHEMICALS SINCE THE PRECEDING MANY YEARS. IN THE EARLIER YEARS, THE COMMISSION PAID TO HIM WAS ALLOWED IN THE ORDER PASSED BY THE REVENUE U/S 143(3). IN THE YEARS UNDER CONSIDERATIO N, THE ASSESSEE COULD NOT PRODUCE THE PARTNERS OF M/S. SOMNATH CHEMICALS BEFO RE THE ASSESSING OFFICER. HOWEVER, THE ASSESSEE POINTED OUT BEFORE THE ASSESSING OFFICER THAT M/S. SOMNATH CHEMICALS HAS STOPPED ITS BUSINESS SIN CE 1987. HE ALSO POINTED OUT THAT ON ENQUIRY MADE BY ASSESSING OFFIC ER DURING ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 1984-85, M/S. SOMNA TH CHEMICALS REPLIED DIRECTLY TO ASSESSING OFFICER THAT THEY WERE SELLIN G THE GOODS ON BEHALF OF THE ASSESSEE ON COMMISSION. ON THAT BASIS, THE COM MISSION PAID TO HIM WAS ALLOWED BY THE ASSESSING OFFICER FOR ASSESSMENT YEA R 1984-85. THE ASSESSEE HAD ALSO FURNISHED THE PAN OF M/S. SOMNATH CHEMICALS. HOWEVER, THE REVENUE AUTHORITIES WERE OF THE OPINIO N THAT IN THE YEARS UNDER CONSIDERATION THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE SERVICES RENDERED BY M/S. SOMNATH CHEMICALS AND THEREFORE, T HE COMMISSION PAID TO IT WAS DISALLOWED. THE DISALLOWANCE WAS SUSTAINE D BY THE CIT(A) AS WELL ITA NOS.1801 & 1802/AHD/2011 DCIT VS. GUJCHEM DISTILLERS INDIA LIMITED FOR AY 1985-86 & 1986-87 3 AS ITAT. HOWEVER, THE PENALTY LEVIED U/S 271(1)(C) IN RESPECT OF SUCH PAYMENT OF COMMISSION HAS BEEN CANCELLED BY THE CIT (A), FOLLOWING THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT V S. RELIANCE PETROPRODUCTS PVT. LTD, REPORTED IN [2010] 322 ITR 158 (SC), WHEREIN THEIR LORDSHIPS HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A ME RE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. 5. THAT THE RATIO OF ABOVE DECISION OF HONBLE APEX COURT WOULD BE SQUARELY APPLICABLE IN THE CASES UNDER APPEAL BEFOR E US. THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN OF INCOME ARE INCORRECT OR ERRONEOUS OR FALSE. THAT MERELY BECAUSE THE CLAI M OF COMMISSION IS DISALLOWED BY THE ASSESSING OFFICER AND UPHELD BY T HE APPELLATE AUTHORITIES WILL NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE. IN VIEW OF T HE ABOVE, IN OUR OPINION, THE CIT(A) RIGHTLY CANCELLED THE PENALTY RELYING UP ON THE DECISION OF HONBLE APEX COURT. WE, THEREFORE, UPHOLD HIS ORDE R AND DISMISS THE APPEALS FILED BY THE REVENUE. 6. IN THE RESULT, THE REVENUES APPEALS ARE DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 5 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 05/06/2015 BIJU T., PS ITA NOS.1801 & 1802/AHD/2011 DCIT VS. GUJCHEM DISTILLERS INDIA LIMITED FOR AY 1985-86 & 1986-87 4 *+ $ %, -*,% *+ $ %, -*,% *+ $ %, -*,% *+ $ %, -*,%/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. % '. / CONCERNED CIT 4. '. ( ) / THE CIT(A) 5. ,12 % , , / DR, ITAT, AHMEDABAD 6. 24 5# / GUARD FILE . *+' *+' *+' *+' / BY ORDER, TRUE COPY 6 66 6/ // / 7 7 7 7 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD