Halewood Laboratories Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-4(3), Ahmedabad

ITA 1883/AHD/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2168 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 05-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR RAJA RAM SAH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER) ITA NO.1883/AHD/2009 [ASSTT. YEAR : 2005-2006] HALEWOOD LABORATORIES PVT. LTD. 319, GIDC ESTATE PHASE-II, VATVA AHMEDABAD. VS. ITO, WARD-4(3) AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : DR. RAJA RAM SAH O R D E R PER MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER: THIS APPEAL AT THE BEHEST OF THE ASSESSEE, EMANATED FROM THE OR DER OF THE CIT(A) DATED 13.12.2009 IS AGAINST THE CONFIRMATION OF PENALTY O F RS.2,46,1237/- LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . 2. THIS APPEAL IS STATED TO HAVE BEEN FILED BELATED LY BY SEVEN DAYS. A PETITION FOR CONDONATION OF THE DELAY HAS BEEN MOVE D BY THE ASSESSEE. IN THE SAID PETITION, IT WAS STATED THAT THE PERSON RESPON SIBLE TO FILE THE APPEAL BEFORE THE TRIBUNAL WAS OUT OF STATION, THEREFORE, INSIGNI FICANT DELAY OF SEVEN DAYS HAS HAPPENED. CONSIDERING THE TOTALITY OF THE CIRCUMST ANCES, WE HEREBY CONDONE THE DELAY AND PROCEED HEREINBELOW. 3. ON THE DATE OF HEARING NO ONE HAS APPEARED FROM THE SIDE OF THE ASSESSEE, HENCE WE HAVE PROCEED EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DR. 4. THE FACTS IN BRIEF AS EMERGED FROM THE CORRESPON DING PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT DATED 27- 3-2008 AND THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 13-11-2006 WERE THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF PHARMACEUTICAL PRODUCTS. THE PENALTY WAS LEVIED IN RESPECT OF TWO ADDITIONS VIZ. DIFFERENCE IN SALE ACCOUNT DUE TO RECEIPTS ITA NO.1883/AHD/2009 -2- DECLARED AS PER THE TDS NOT ACCOUNTED FOR IN THE BO OKS OF ACCOUNTS. THE OTHER REASON FOR LEVY OF PENALTY IS THE DISALLOWANCE OF I NTEREST UNDER SECTION 40A(2)(B) OF THE ACT. 5. WHEN THE LEVY OF PENALTY WAS CONTESTED BEFORE TH E LEARNED CIT(A) A PART RELIEF WAS GRANTED ONLY IN RESPECT OF DISALLOWANCE OF INTEREST, HOWEVER, THE PENALTY WAS CONFIRMED IN RESPECT OF DIFFERENCE IN T HE SALES RECORDED IN THE BOOKS OF ACCOUNTS. FACTS OF THE CASE HAVE REVEALED THAT THE ASSESSEE HAD DONE SOME MANUFACTURING ACTIVITY ON CONTRACT BASIS FOR I PCA LABORATORIES AND PIOMA INDUSTRIES. IN RESPECT OF JOB WORK EXECUTED FOR PIOMA INDUSTRIES, THE ASSESSEE HAS CREDITED THE INCOME FOR WHICH THE BILL S WERE ISSUED, WHEREAS THE SAID INDUSTRY HAS ISSUED TDS CERTIFICATE IN RESPECT OF TOTAL JOB WORK DONE BY THE ASSESSEE. IT IS WORTHWHILE TO MENTION THAT THE BAL ANCE AMOUNT WHICH WAS THE DIFFERENCE BETWEEN THE SALES RECORDED AS PER THE BO OKS AND THE SALES AS PER THE TDS CERTIFICATE HAS DULY BEEN DISCLOSED BY THE ASSE SSEE IN THE SUBSEQUENT FINANCIAL YEAR. MEANING THEREBY, THE DIFFERENCE OF THE SALES AS RECORDED IN THE TDS CERTIFICATE HAS DULY BEEN RECONCILED BY THE ASS ESSEE. ALL THOSE FACTS AND THE RECONCILED ACCOUNT WERE VERY MUCH BEFORE THE RE VENUE AUTHORITIES AND THE FACTS HAVE ALSO REVEALED THAT THE ASSESSEE HAS OFF ERED THE SAID EXPLANATION EVEN BEFORE THE IMPUGNED DEFICIENCY WAS NOTICED BY THE A O. IN THE LIGHT OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT THE EXPLANATIO N OFFERED BY THE ASSESSEE WAS DULY COVERED BY THE EXCEPTION PRESCRIBED IN EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. WE ARE OF THE VIEW THAT THE ASSESSEE HA S OFFERED AN EXPLANATION WHICH WAS NOT FOUND FALSE BY THE REVENUE AUTHORITIE S. IN THE CASE OF CIT VS. RAHULJEE AND CO., 250 ITR 871 (DEL), HONBLE DELHI HIGH COURT HAS ALSO HELD THAT THE EXPLANATION 1(B) TO SECTION 271(1)(C) OF T HE INCOME-TAX ACT, 1961, PRESCRIBES THAT PENALTY CAN BE IMPOSED ONLY IF (A) ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE EXPLANATION; (B) SUCH EXPLANATION WAS NOT BONA FIDE ; AND (C) ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE NOT BEEN DISCLOSED BY HIM. FOLLOWING T HE ABOVE VERDICT WE HEREBY HOLD THAT THE ASSESSEE IS NEITHER GUILTY OF ANY CONTUMACIOUS CONDUCT NOR ITA NO.1883/AHD/2009 -3- ACTED IN A MANNER TO CONCEAL THE CORRECT INCOME. HENCE, THE PENALTY LEVIED HAS TO BE QUASHED. WE ORDER ACCORDINGLY. THIS GROUN D OF THE ASSESSEE IS ACCORDINGLY ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 4 TH FEBRUARY, 2011. SD/- SD/- (G.D. AGARWAL) VICE-PRESIDENT (MUKUL KR. SHRAWAT) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 04-02-2011 COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD