M/s. National Transport Co., Baroda V. The Income tax Officer, Ward-2(4), Baroda

ITA 1902/AHD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0232 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-10-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 28-08-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: G A MEHTA
• Keywords: Revised return
• Section: 271(1)(c); 143(3); 133A; 64; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING: 21.10.2009 DRAFTED ON: 21.10. 2009 ITA NO.1902/AHD/2006 ASSESSMENT YEAR : 2001-2002 NATIONAL TRANSPORT, G-19, FATEHSAGAR COMPLEX, FATEHGUNJ, BARODA. VS. INCOME TAX OFFICER, WARD 2(4), BARODA. PAN/GIR NO. : AABFN3260C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI G.A.MEHTA, A.R. RESPONDENT BY: SHRI C.K. MISHRA SR. D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD.CIT(APPEALS)-II, BARODA, DATED 04.07.2006 ON THE SOLE GROUND THAT THE LD. CIT(APPEALS) HAS ERRED AND ON FACTS IN CONFIRMING T HE PENALTY OF RS.2,50,000/- UNDER SECTION 271(1)(C) OF INCOME TAX ACT, 1961 LEV IED FOR THE ALLEGED CONCEALMENT AND/OR FURNISHING OF INACCURATE PARTICU LARS OF INCOME IN RESPECT OF THE ADDITIONAL INCOME DISCLOSED AS A RESULT OF SURV EY. 2. THE BRIEF FACTS ARE THAT SURVEY UNDER SECTION 13 3A WAS CARRIED OUT ON 11.01.2002 AND STATEMENT OF SHRI D.K. TINTOIYA, THE MANAGING PARTNER OF THE ASSESSEE FIRM WAS RECORDED, WHO MADE A DISCLOSURE O F RS.15 LACS AND STATED THAT THE SAME HAD BEEN EARNED AS UNDISCLOSED INCOME IN R ESPECT OF THE FOLLOWING THREE ASSESSMENT YEARS: AY AMOUNT 2000-2001 RS. 3,00,000/- 2001-2002 RS. 6,00,000/- 2002-2003 RS. 6,00,000/- RS.15,00,000/- ITA NO.1902/AHD /2006 M/S. NATIONAL TRANSPORT ASST.YEAR -2001-02 - 2 - A REVISED RETURN WAS FILED ON 04.02.2002 DECLARING A TOTAL INCOME OF RS.6,66,448/- WHICH INCLUDED THE DISCLOSURE OF RS.6 LACS FOR THIS ASSESSMENT YEAR. ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 26 .03.2004 AT A TOTAL INCOME OF RS.7,57,470/-. IN RESPONSE TO THE PENALTY NOTICE, IT WAS CONTENDED BY THE ASSESSEE THAT NO PENALTY SHOULD BE LEVIED BECAU SE IT HAD CO-OPERATED WITH THE DEPARTMENT BY PAYING TAXES ON THE DISCLOSURE MA DE DURING SURVEY. THE CONTENTION OF THE ASSESSEE WAS NEGATED BY THE LEARN ED ASSESSING OFFICER ON THE GROUND THAT THE REVISED RETURN HAD BEEN FILED AFTER DETECTION OF THE UNDISCLOSED INCOME BY THE DEPARTMENT DURING THE COURSE OF SURVE Y AND HENCE SO FAR AS THE ORIGINAL RETURN IS CONCERNED, THE ASSESSEE HAS CONC EALED THE PARTICULARS OF INCOME AND HENCE PENALTY OF RS.2,50,000/- WAS IMPOS ED BY INVOKING EXPLANATION 1 BELOW SECTION 271(1). 3. IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) THE ASSESSEE SUBMITTED THAT THE REVISED RETURN WAS FILE D TO AVOID LONG DRAWN LITIGATION AND ALSO TO MAINTAIN PEACE OF MIND. IT I S ALSO CONTENDED THAT THE ASSESSEE HAS OFFERED THE AMOUNT VOLUNTARILY AND THI S FACT ITSELF WOULD NOT PER SE LEAD TO CHARGE OF CONCEALMENT. RELIANCE HAS BEEN PL ACED BY THE LD. COUNSEL ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F SIR SHADILAL SUGAR & GENERAL MILLS LTD., VS. CIT 64 CIT 199. IT IS FURTH ER CONTENDED BY LD. COUNSEL THAT FOR ESTABLISHING CONCEALMENT IN A CASE, IT IS NECES SARY THAT A RETURN OF INCOME IS FILED AND THAT INCOME CONCEALED IS OMITTED FROM BEI NG INCLUDED IN THE INCOME RETURNED. IT IS FURTHER CONTENDED THAT THE AUTHORIT IES IMPOSING PENALTY ARE REQUIRED TO DISCHARGE THE BURDEN WHICH LAY UPON THE M AND IN THIS CONNECTION THE LD. COUNSEL HAS RELIED UPON THE DECISION OF HON 'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BARODA TIN WORKS 221 ITR 661. IT IS ALSO CONTENDED BY THE LD. COUNSEL THAT THE BENEFIT AVAILABLE UNDER EXPLANATIO N 5 OF SECTION 271(1)(C) SHOULD ALSO BE EXTENDED TO A CASE OF SURVEY UNDER S ECTION 133A. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT T HE STATEMENT OF THE MAIN ITA NO.1902/AHD /2006 M/S. NATIONAL TRANSPORT ASST.YEAR -2001-02 - 3 - PARTNER OF THE APPELLANT FIRM RECORDED UNDER SECTIO N 131 ON 11.01.2002 DURING THE COURSE OF SURVEY IN REPLY TO QUESTION NO.17, HE CATEGORICALLY STATED THAT THE UNDISCLOSED PROFIT OF RS.15 LACS WAS EARNED BY THE APPELLANT FIRM BY INFLATING THE EXPENSES SUCH AS REPAIR EXPENSES, SALARY EXPENSES, LABOUR EXPENSES AND SOME OTHER EXPENSES. FURTHER, IN REPLY TO QUESTION NO.21 , HE STATED THAT THE AFORESAID PROFIT OF RS.15 LACS WAS INVESTED IN THE TRUCKS. IN REPLY TO QUESTION 22, IT WAS SUBMITTED THAT THE BREAK UP OF UNDISCLOSED PROFIT O F RS.15 LACS WAS RS.6 LACS FOR ASSESSMENT YEAR 2002-2003, RS.6 LACS FOR ASSESSMENT YEAR 2001-2002 AND RS.3 LACS ASSESSMENT YEAR 2000-2001. THE STATEMENT WAS CONCLUDED BY AFFIRMING THAT IT WAS BEING GIVEN WITHOUT ANY COERCION IN A P ERFECT STATE OF MIND AND OF HIS OWN VOLITION. THUS, THE SUBSTANCE OF WHAT WAS STAT ED BY THE PARTNER OF THE APPELLANT FIRM IS THAT TRUE PROFITS WAS SUPPRESSED FOR THE THREE ASSESSMENT YEAR VIZ. ASSESSMENT YEARS 2000-01, 2001-02 AND 2002-03 BY ADOPTING THE MODUS OPERANDI OF CLAIMING INFLATED EXPENSES. THEREFORE, THE CONCEALMENT OF INCOME BY WAY OF INFLATION OF EXPENSES WAS DISCOVERED IN A SURVEY PROCEEDINGS AND THE STATEMENT MADE BY THE APPELLANTS MAIN PARTNER. IN T HESE CIRCUMSTANCES, A FILING OF A REVISED RETURN OF INCOME COULD NOT BE SAID TO BE CORRECTING ANY BONAFIDE ERROR IN THE DISCLOSURE OF PARTICULARS OF INCOME SH OWN IN THE ORIGINAL RETURN OF INCOME. THE CONTENTION OF THE ASSESSEE THAT REVISED RETURN WAS FILED VOLUNTARILY IS NOT CORRECT AS IT WAS FILED AFTER THE SURVEY UND ERTAKEN BY THE DEPARTMENT. EVEN OTHERWISE, ASSUMING THAT REVISED RETURN WAS NO T FILED UNDER THE COMPULSION OF SURVEY OPERATION YET THE SAME WOULD N OT BY ITSELF LEAD TO THAT THERE WAS NO INTENTION OF THE ASSESSEE TO CONCEAL H IS INCOME WHEN HE FILED THE ORIGINAL RETURN OF INCOME. THEREFORE, MERELY FILING OF A REVISED RETURN DOES NOT EXONERATE THE ASSESSEE. FURTHER, A CONSISTENT OPINI ON HAS BEEN EXPRESSED IN VARIOUS JUDICIAL DECISION THAT THE BLAMES-WORTHINES S ATTACHED TO THE ASSESSEE WITH REFERENCE TO THE ORIGINAL RETURN CANNOT BE AVO IDED BY FILING A FRESH RETURN AFTER CONCEALMENT WAS DETECTED BY THE LEARNED ASSES SING OFFICER. IT IS BUT FOR THE SURVEY THAT IN THE PRESENT CASE, REVISED RETURN WOULD NOT HAVE BEEN FILED BY THE ASSESSEE, THEREFORE, THIS DOES NOT ABSOLVE THE ASSESSEE FROM PENAL ACTION. ITA NO.1902/AHD /2006 M/S. NATIONAL TRANSPORT ASST.YEAR -2001-02 - 4 - FURTHER, THE ASSESSEE CONTENDED THAT THE BENEFIT AV AILABLE UNDER EXPLANATION 5 OF SECTION 271(1)(C) SHOULD BE EXTENDED TO A CASE O F SURVEY UNDER SECTION 133A IS NOT TENABLE. THE TWO PROVISIONS ARE DISTINCT A ND SEPARATE AND IS NOT PERMISSIBLE TO PRESS INTO SERVICE EXPLANATION 5 TO SECTION 271(1)(C) WHILE DEALING WITH THE CASE OF SURVEY UNDER SECTION 133A SINCE TH E SAID EXPLANATION IS APPLICABLE IN PROCEEDINGS UNDER SECTION 132. HENCE, HE CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFICER IN LEVYING THE PENALT Y OF RS.2,50,000/- FOR CONCEALMENT OF INCOME. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUPP ORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 6. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE HAS RELIED ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHAIA ENGINEERING CO. VS. COMMISSIONER OF INCOME TAX [2006] ITR 642 ( GUJ.) AND SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS HELD THAT THE ASS ESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND HAS FURNISHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS.6 LACS, THEREFORE, THE SAID ORDER OF P ENALTY PASSED BY THE LEARNED ASSESSING OFFICER IS LIABLE TO BE CANCELLED. 7. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE FURTHER SUBMITTED THAT IN THE ASSESSMENT YEAR 2002-03 PENAL TY OF RS.2,50,000/- WAS IMPOSED UNDER SECTION 271(1)(C) OF THE ACT ON INCOM E OF RS.6 LACS DISCLOSED IN SURVEY UNDER SECTION 133A CARRIED OUT ON 11.01.200 1. THE SAID PENALTY WAS DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) VIDE ORDER DATD 18.07.2006 IN APPEAL NO. CAB/II-221/05-06 OBSERVING THAT THE ORIGINAL RETURN HAD BEEN FILED SUBSEQUENT TO THE DATE OF THE SURVEY , THEREFORE, THERE WAS NO CONCEALMENT OF INCOME IN THE RETURN OF INCOME FILED BY THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ITA NO.1902/AHD /2006 M/S. NATIONAL TRANSPORT ASST.YEAR -2001-02 - 5 - ASSESSEE IS ENGAGED IN TRANSPORTING BUSINESS. DURIN G THE COURSE OF SURVEY CARRIED OUT UNDER SECTION 133A ON 11.01.2002, THE ASSESSEE FIRM DISCLOSED UNDISCLOSED INCOME OF RS.15,00,000/-. THE BREAK UP OF SUCH INCOME WAS RS.3 LACS IN ASSESSMENT YEAR 2000-01, RS.6 LACS IN ASSES SMENT YEAR 2001-02 AND RS. 6 LACS IN ASSESSMENT YEAR 2002-03. THE ASSESSEE SUBMI TTED THAT THE UNDISCLOSED INCOME WAS EARNED IN THE ABOVE STATED ASSESSMENT YE ARS BY INFLATING THE EXPENSES AND SUCH UNEXPLAINED INCOME EARNED WAS INV ESTED IN TRUCKS. THE ASSESSEE FILED REVISED RETURN OF INCOME IN WHICH TH E UNDISCLOSED INCOME ADMITTED OF RS.6 LACS WAS SHOWN AND TAX PAY THEREON . THE LEARNED ASSESSING OFFICER THEREAFTER, LEVIED PENALTY OF RS.2,50,000/- UNDER SECTION 271(1)(C) OF THE ACT. THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) CONFIRMED THE SAID LEVY OF PENALTY. 9 THE ASSESSEE CHALLENGED THE VALIDITY OF THE AFORE SAID LEVY OF PENALTY MAINLY ON TWO GROUNDS. FIRSTLY LEVY OF PENALTY WAS BAD IN LAW AND SECONDLY THE UNDISCLOSED INCOME WAS DECLARED VOLUNTARILY IN THE REVISED RETURN FILED BY THE ASSESSEE AND THE TAXES WERE PAID ON THE SAME. WE F IND THAT PENALTY UNDER SECTION 271(1)(C) WAS IMPOSED BY THE ASSESSING OFFI CER BY OBSERVING AS UNDER: HAVING REGARD TO THE ABOVE FACTS AND CIRCUMSTANCE S OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THIS IS A FIT CASE FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, AS THE ASSESSEE HAS CONCEALE D THE PARTICULARS OF INCOME FOR WHICH PENALTY IS LEVIABLE UNDER SECTION 271(1)( C) READ WITH EXPLANATION 1 OF THE ACT AND HAS FURNISHED INACCURATE PARTICULARS OF INCOME, TO THE EXTENT OF RS.6,00,000/-. FROM A READING OF THE ABOVE ORDER SHOWS THAT THE LE ARNED ASSESSING OFFICER HAS NOT RECORDED A CLEAR FINDING TO THE EFFECT THAT WHE THER THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR HE WAS GUILTY OF FURNIS HING OF INACCURATE PARTICULARS OF INCOME. THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. COMMISSIONER OF INCOME TAX (200 6) 282 ITR 642 (GUJ) HAS HELD AS UNDER: ITA NO.1902/AHD /2006 M/S. NATIONAL TRANSPORT ASST.YEAR -2001-02 - 6 - 11. IN THE CASE OF CIT VS. MANU ENGINEERING WORKS ( SUPRA) THIS IS WHAT IS LAID DOWN BY THIS COURT AT PAGE NO. 310 OF THE REPORTS : '.. WE FIND FROM THE ORDER OF THE IAC, IN THE PENALTY PROCEEDINGS, THAT IS, TH E FINAL CONCLUSION AS EXPRESSED IN PARA 4 OF THE ORDER : 'I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HA D FURNISHED INACCURATE PARTICULARS OF SUCH INCOME'. NOW, THE LANGUAGE OF ' AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCO ME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME H AD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR-CUT FINDING WAS REACHED BY THE IAC AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS L IABLE TO BE STRUCK DOWN.' THE PENALTY ORDER AND THE ORDER OF CIT(A) SHOW THAT NO CLEAR-CUT FINDING HAS BEEN REACHED. THE TRIBUNAL HAS FAILED TO APPRECIATE THIS LEGAL ISSUE. APPLYING THE RATIO TO THE FACTS OF THE CASE IT IS APPARENT THAT THE OR DER OF PENALTY CANNOT BE SUSTAINED AND THE TRIBUNAL COULD NOT HAVE SUSTAINED THE SAME. THE TRIBUNAL HAVING FAILED TO TAKE INTO CONSIDERATION AND DEAL W ITH THE DECISION OF THE JURISDICTIONAL HIGH COURT IT WOULD CONSTITUTE AN ER ROR IN LAW WHICH GOES TO THE VERY BASIS OF THE CONTROVERSY INVOLVED AND HENCE, T HE IMPUGNED ORDER OF THE TRIBUNAL CANNOT BE UPHELD. 10. IN VIEW OF THE ABOVE DECISION OF THE JURISDICTI ONAL HIGH COURT, IN OUR CONSIDERED OPINION, LEVY OF PENALTY IN THE INSTANT CASE WAS BAD IN LAW AND THEREFORE, UNSUSTAINABLE AS BECAUSE THE LEARNED ASS ESSING OFFICER HAS NOT RECORDED A CLEAR FINDING TO THE EFFECT THAT WHETHER ASSESSEE HAD CONCEALED THE INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF I NCOME IN THE INSTANT CASE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 21 / 10 /2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 21 /10/2009 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT C ONCERNED 4. THE LD.CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD