M/s. Shiv Construction Co., Baroda V. The ACIT., Circle-5, Baroda

ITA 1890/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9883 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-11-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 03-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., , BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NOS.1890 & 1891/AHD/2013 ( / ASSESSMENT YEARS : 2005-06 & 2006-07) M/S.SHIV CONSTRUCTION CO. 3, SONALI SOCIETY WATER TANK ROAD KARELIBAUG BARODA 390 018 / VS. THE ASSTT.CIT CIR-6 BARODA $ ./ ./ PAN/GIR NO. : AAKFS 6031 P ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : SHRI M.K. PATEL, AR ($'*) / RESPONDENT BY : SHRI K. MADHUSUDAN, SR.DR +,*- / DATE OF HEARING 30/11/2016 ./0*- / DATE OF PRONOUNCEMENT 30/11/2016 / O R D E R PER PRADIP KUMAR KEDIA, AM: PRESENT TWO CAPTIONED APPEALS ARE DIRECTED AT THE INSTANCE OF ASSESSEE AGAINST SEPARATE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, BARODA [CIT(A) IN SHORT] IDENTICALLY D ATED 02/04/2013 PASSED FOR ASSESSMENT YEARS (AYS) 2005-06 & 2006-07 . ITA NOS.1890 & 1891/AHD/ 2013 M/S.SHIV CONSTRUCTION CO. VS. ACIT ASST.YEARS 2005-06 & 2006-07 - 2 - 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.6,60,660/- AND RS.6,32,515 /- IMPOSED BY THE ASSESSING OFFICER (AO) UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') IN ASST T.YEARS 2005-06 AND 2006-07 RESPECTIVELY. 3. WITH THE ASSISTANCE OF LD.AR, WE NOTE THAT IN TH E AY 2005-06 THE AO COMPUTED THE INCOME OF THE ASSESSEE AT RS.2,25,8 9,470/- AGAINSTI THE RETURNED INCOME OF RS.1,07,783/-. THE CIT(A) GRANT ED PARTIAL RELIEF FOR THE QUANTUM PROCEEDINGS. THE AO IMPOSED PENALTY OF RS.6,60,660/- ON THE ADDITIONS/ DISALLOWANCES SUSTAINED BY THE CIT(A ). THE CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE AO. 3.1. LIKEWISE, IN THE ASSTT.YEAR 2006-07, THE AO CO MPUTED THE INCOME OF THE ASSESSEE AT RS.2,29,68,780/- AGAINST THE RET URNED INCOME OF RS.88,09,472/-. THE CIT(A) GRANTED PARTIAL RELIEF THE QUANTUM PROCEEDINGS. THE AO IMPOSED PENALTY OF RS.6,32,515 /- ON THE ADDITIONS/DISALLOWANCES SUSTAINED BY THE CIT(A). T HE CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE AO. 4. IN THE COURSE OF HEARING, IT WAS BROUGHT TO OUR NOTICE THAT THE ADDITIONS WERE CHALLENGED BY THE ASSESSEE BEFORE TH E TRIBUNAL IN ITA NOS.2778/AHD/2019 & 333/AHD/2010 FOR AYS 2005-06 & 2006-07 APPEALS OF THE ASSESSEE HAVE BEEN DECIDED VIDE ORDE R DATED 28/08/2014 ITA NOS.1890 & 1891/AHD/ 2013 M/S.SHIV CONSTRUCTION CO. VS. ACIT ASST.YEARS 2005-06 & 2006-07 - 3 - AND 07/08/2015. THE TRIBUNAL HAS SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR RE-ADJUDICATION. THE FINDING OF THE TRIBUNA L IN THE ASSTT.YEAR 2005-06 READS AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT BOTH THE AUTHORITIES BELOW HAV E TREATED THE RECEIPTS PAID TO THE OTHER SEVEN PERSONS AS THE PAY MENTS MADE UNDER THE SUB-CONTRACT. IF THE PAYMENT HAS BEEN MA DE UNDER THE SUB-CONTRACT, THE ASSESSEE WAS REQUIRED TO DEDUCT T HE TAX. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS TH AT EVEN IF IT IS ASSUMED THAT THE PAYMENTS HAVE BEN MADE UNDER SUB-C ONTRACT, THEN ALSO THE AO HAS TO GIVE A CLEAR FINDING AS TO HOW AND UNDER WHAT PROVISIONS OF LAW THE ASSESSEE IS REQUIRED TO DEDUCT THE TAX. IT IS ALSO CONTENDED THAT IN VIEW OF THE AMENDMENT IN SECTION 201 OF THE ACT AND ALSO IN THE LIGHT OF THE JUDGEMENT O F HONBLE APEX COURT RENDERED IN THE CASE OF HINDUSTAN COCA COLA B EVERAGE PVT.LTD. VS. CIT REPORTED AT (2007) 293 ITR 226(SC) , IF THE RECIPIENT HAS DISCLOSED THE CONTRACT RECEIPTS IN HI S RETURN OF INCOME AND TAX HAS BEEN PAID ON SUCH RECEIPTS UNDER SUCH CIRCUMSTANCES, NO DISALLOWANCE IS CALLED FOR. AFTE R CONSIDERING THE TOTALITY OF THE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE BE RESTORED TO THE FILE OF THE AO TO VERIFY W HETHER THE RECIPIENTS OF THE PAYMENTS HAVE DECLARED THE RECEIP TS IN THEIR RETURNS OF INCOME AND PAID TAX THEREON. IN CASE, T HEY HAVE DECLARED AND TAX HAS BEEN PAID, THE ISSUE MAY BE DE CIDED IN THE LIGHT OF THE JUDGEMENT OF THE HONBLE APEX COURT RE NDERED IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE PVT.LTD. (SUPR A) AND AMENDMENT IN SECTION 201 OF THE ACT. ACCORDINGLY, THE ISSUE IS HEREBY RESTORED TO THE FILE OF AO FOR DECISION AFRE SH IN THE LIGHT OF THE OBSERVATION MADE HEREINABOVE. NEEDLESS TO SAY THAT THE ASSESSEE MAY BE GIVEN SUFFICIENT OPPORTUNITY TO FUR NISH REQUISITE ITA NOS.1890 & 1891/AHD/ 2013 M/S.SHIV CONSTRUCTION CO. VS. ACIT ASST.YEARS 2005-06 & 2006-07 - 4 - DETAILS. THUS, THIS GROUND OF REVENUES APPEAL IS A LLOWED FOR STATISTICAL PURPOSES. 5. SIMILARLY, IN THE ASSTT.YEAR 2006-07 IN ITA NO.3 33/AHD/2010, THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE AO. ON THE STRENGTH OF THIS ORDER, IT HAS BEEN CONTENDED BY THE ASSESSEE THAT S INCE ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL AND THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE AO FOR RE-ADJUDICATION, PENALTY IMPOSED UNDER S ECTION 271(1)(C) OF THE ACT CANNOT SURVIVE. THE LD.DR, ON THE OTHER HA ND, RELIED ON THE ORDERS OF THE LD.CIT(A). 6. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE FIND THAT SUB-CLAUSE (III) OF SECTION 271(1)(C) PROVIDES MECH ANISM FOR QUANTIFICATION OF PENALTY. IT CONTEMPLATES THAT TH E ASSESSEE WOULD BE DIRECTED TO PAY A SUM IN ADDITION TO TAXES, IF ANY, PAYABLE HIM, WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, THE QUANTIFICATION OF THE PENALTY IS DEPENDENT UPON THE ADDITIONS MADE TO THE INCOME OF THE ASSESSEE. UPTO AND UNTIL THE ISSUE R EGARDING DETERMINATION OF THE TAXABLE INCOME IS FINALIZED, PENALTY UNDER S ECTION 271(1)(C) OF THE ACT CANNOT BE IMPOSED UPON THE ASSESSEE. CONSEQUE NT UPON THE ORDER OF ITAT, THE DETERMINATION OF TAXABLE INCOME OF THE AS SESSEE ITSELF IS IN ITA NOS.1890 & 1891/AHD/ 2013 M/S.SHIV CONSTRUCTION CO. VS. ACIT ASST.YEARS 2005-06 & 2006-07 - 5 - SUBJUDICE BEFORE THE AO. AFTER ADJUDICATION OF T HE ISSUES OF QUANTUM ON MERITS, IT WILL BE OPEN TO THE AO TO EXERCISE TH E DISCRETION TO INITIATE PENALTY PROCEEDINGS IF HE SO CONSIDERS IT EXPEDIENT . THUS, THE ASSESSING OFFICER WILL BE AT LIBERTY TO PROCEED UNDER SECTION 271(1)(C) IN ACCORDANCE WITH LAW. IN VIEW OF THE AFORESAID OBSE RVATIONS, WE ALLOW BOTH CAPTIONED APPEALS OF THE ASSESSEE AND DELETE P ENALTY CONFIRMED BY THE CIT(A). 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30 /11/2016 SD/- SD/- (..) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 30/ 11 /2016 4..+,.+../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567- 8- / CONCERNED CIT 4. 8- ( ) / THE CIT(A)-V, BARODA 5. 9:-+67 , 670 , 5 / DR, ITAT, AHMEDABAD 6. <, / GUARD FILE. / BY ORDER, (9-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD OF DICTATION ..30.11.16 (DICTATION-PAD PAGES ATTACHED AT THE END OF THIS APPEAL-FILE)