Shyam Steel Pvt. Ltd., Ahmedabad V. The ACIT, Circle-1, Bhavnagar

ITA 1921/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9142 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 20-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: B R POPAT
• Keywords: Question of law; Bad and doubtful debts; Difference of opinion
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 1921/AHD/2016 (ASSESSMENT YEAR: 2012-13) SHYAM STEEL PVT. LTD. 2264/B, SHYAM, TALAJA ROAD, HILL DRIVE, BHAVNAGAR-364001 V/S ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, BHAVNAGAR (APPELLANT) (RESPONDENT) PAN: AADCS 0002L APPELLANT BY : SHRI B. R. POPAT, A.R. RESPONDENT BY : SHRI S. K. DEV, SR. D.R. ( )/ ORDER DATE OF HEARING : 22 -09-201 8 DATE OF PRONOUNCEMENT : 17 -12-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-6, AHMEDABAD DATED 24.06.2016 PERTAINING TO A.Y. 2012- 13 AND FOLLOWING GROUND HAS BEEN TAKEN: ITA NO. 1921 /AHD/2016 . A.Y. 2012-1 3 2 1. CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN L EVYING PENALTY OF RS. 3,09,000/- UNDER SECTION 271(1)(C) OF THE ACT. 2. IN THIS CASE THE ASSESSEE FILED RETURN OF INCOME FOR AY 2012-13 ON 31.8.2012 DECLARING TOTAL INCOME OF RS.52,78,970/-. THE ASSES SMENT U/S 143(3) OF THE I.T. ACT WAS FINALIZED ON 30.03.2015 DETERMINING THE TOT AL INCOME OF RS. 62,78,70/- BY MAKING FOLLOWING ADDITIONS/DISALLOWANCES. 3. DISALLOWANCES OF BAD DEBTS OF RS. 10,00,000: ON PER USAL OF LEDGER ACCOUNT OF BINANI CEMENT LIMITED FROM THE BOOKS, OF ACCOUNTS O F THE ASSESSEE, IT WAS NOTICED THAT THE ASSESSEE HAS DEBITED RS. 1,07,68,6 76/- FOR SALES ACCOUNTS AS EVIDENCED BY LEDGER ACCOUNTS OF BINANI CEMENT LTD F OR F.Y. 2007-08 TO 2011- 12. HERE, IT IS PERTINENT TO MENTION THAT THE ASSES SEE HAD FINANCIAL AS WELL BUSINESS RELATED TRANSACTION WITH BINANI CEMENTS UP TO OCTOBER 2008 AND AT THE END OF OCTOBER, 2008 THE ASSESSEE HAD TO RECEIVE AN AMOUNT OF RS.97,68,676/- AGAINST THE SALES MADE. INSTEAD OF DOING RECOVERY O F OUTSTANDING DUES OF RS.97,68,676/- , THE ASSESSEE HAD MADE PAYMENT OF R S.10,00,000/- TO BINANI CEMENTS LTD. ON 23.09.2009 THOUGH THERE WAS NO SALE S TRANSACTIONS THEREWITH DURING THE F.Y.2009-10. IT IS A BIG QUESTION THAT W HEN ASSESSEE HAS TO RECOVER SOME HUGE AMOUNT AGAINST SALES AND ASSESSEE, INSTEA D OF DOING RECOVERY, HAS PAID SUCH A HUGE AMOUNT OF RS.10,00,000/- WITHOUT A NY PURPOSE. IN SUCH A WAY, THE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST UPON IT FOR PAYMENT OF SUCH A HUGE AMOUNT OF RS.10,00,000/-. ACCORDINGLY, AN AM OUNT OF RS.10,00,000/- WAS DISALLOWED OUT OF TOTAL BAD DEBTS WRITTEN OFF R S.1,07,68,676/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 1921 /AHD/2016 . A.Y. 2012-1 3 3 4. PENALTY PROCEEDINGS U/S 271(L)(C) OF THE ACT WERE I NITIATED FOR CONCEALMENT OF INCOME/FURNISHING INACCURATE PARTICULARS OF INCOME. NOTICE DTD.30.3.2015 AND 5.8.2015 WAS DULY SERVED UPON THE ASSESSEE SO AS TO SHOW CAUSE AS TO WHY PENALTY U/S 271(L)(C) OF THE I T ACT SHOULD NOT BE IMPOSED UPON HIM . THE ASSESSEE FILED HIS REPLY ON 7.9.2015 CITING CERTAIN JUDGMENTS. 5. THE REPLY OF THE ASSESSEE WAS DULY CONSIDERED BUT F OUND NOT ACCEPTABLE BECAUSE THE FACTS OF THE CASES CITED ARE NOT IDENTI CAL TO THE FACTS OF THE INSTANT CASE. HENCE IT IS CLEAR THAT THE INTENTION OF THE A SSESSEE WAS TO FURNISH INACCURATE PARTICULARS OF INCOME. 6. THEREFORE I AM SATISFIED THAT THE ASSESSEE HAS FURN ISHED INACCURATE PARTICULARS OF INCOME TO THE TUNE OF RS.10,00,000/- AND HENCE IS L IABLE FOR PENALTY U/S 271(L)(C) OF THE I.T.ACT. 7. MINIMUM PENALTY FOR TAX SOUGHT TO BE EVADED ON CONC EALED INCOME OF RS. 10,00,000/-AT 100% COMES TO RS. 3,09,000/- AND MAXI MUM PENALTY @300% COMES TO RS. 9,27,000/-. I CONSIDER IT REASONABLE T O IMPOSE A PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED WHICH COMES TO RS.3, 09,000/-. ACCORDINGLY PENALTY OF RS. 3,09,000/- IS IMPOSED ON THE ASSESSE E U/S. 271(L)(C) OF THE IT ACT. 8. AFTER IMPOSING THE PENALTY , ASSESSEE PREFERRED FI RST STATUTORY APPEAL BEFORE THE LD. CIT(A) BUT TO NO AVAIL. 9. NOW APPELLANT IS BEFORE US. ITA NO. 1921 /AHD/2016 . A.Y. 2012-1 3 4 10. APPELLANT CONTENTION IS THAT COMPANY SUPPLIED TO DG SET TO THE M/S. BINANI CEMENT CO. LTD BUT SAME WERE NOT FOUND FIT BY THE B INANI CEMENT COMPANY AND COMPANY DID NOT PAYMENT OF RS. 1,07,68,676/- AN D APPELLANT MADE ALL THE POSSIBLE EFFORTS TO RECOVER THE MONEY BUT TO NO AVA IL. 11. AND THEREAFTER APPELLANT WRITE OFF THE ENTIRE OUTST ANDING BALANCE OF RS. 1,07,68,676/- BUT AS PER THE REVENUE SAME WAS NOT A LLOWABLE AND MADE THE ADDITION AND PENALTY WAS IMPOSED AND CONFIRMED BY T HE LOWER AUTHORITIES. IN THE CASE OF CIT VS. SAMBHAV MEDIA LTD. [2013] 33 T AXMANN.COM 97 (GUJ.) WHEREIN IT IS HELD: SECTION 271(1)(C), READ WITH SECTION 36(1)(VII), O F THE INCOME-TAX ACT, 1961 - PENALTY - FOR CONCEALMENT OF INCOME [BONA FIDE CLAI M, DISALLOWANCE OF] -ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271(1)(C) UPO N ASSESSEE ON ACCOUNT OF DISALLOWANCE OF BAD DEBT - TRIBUNAL DELETED PENALTY HOLDING THAT IT WAS A CASE OF DIFFERENCE OF OPINION ON ALLOWABILITY OF CERTAIN DE DUCTIONS AND IN ABSENCE OF ANY MATERIAL TO INDICATE ANY DISHONEST ATTEMPT ON PART OF ASSESSEE TO CONCEAL INCOME, NO PENALTY COULD BE IMPOSED - WHETHER TRIBUNAL WAS JUS TIFIED IN DELETING PENALTY - HELD, YES [PARA 4] [IN FAVOUR OF ASSESSEE] 12. AND IN THE CASE OF CIT VS. KEVIN PROCESS TECHNOLOGI ES (P.) LTD. [2013] 40 TAXMANN.COM 249 (GUJ.) WHEREIN IT IS HELD: SECTION 271(1)(C), READ WITH SECTIONS 36(1)(VII) A ND 37(1), OF THE INCOME-TAX ACT, 1961-PENALTY- FOR CONCEALMENT OF INCOME [DISALLOWAN CE OF CLAIM, EFFECT OF] - IN COURSE OF ASSESSMENT, ASSESSING OFFICER MADE DISALLOWANCE ON ACCOUNT OF BAD DEBTS AND PRIOR PERIOD EXPENSES -COMMISSIONER (APPEALS) AS WELL AS TRIBUNAL CONFIRMED SAID ADDITION -THEREUPON, ASSESSING OFFICER PASSED A PEN ALTY ORDER UNDER SECTION 271(1 )(C) - TRIBUNAL FINDING THAT THERE WAS NEITHER ANY OCCASION OF FURNISHING INACCURATE ITA NO. 1921 /AHD/2016 . A.Y. 2012-1 3 5 PARTICULARS NOR THERE WAS ANY CONCEALMENT ON PART O F ASSESSEE, SET ASIDE PENALTY ORDER HOLDING THAT MERELY BECAUSE CERTAIN CLAIMS WERE MAD E AND THOSE CLAIMS WERE DISALLOWED, THAT WOULD NOT IPSO FACTO LEAD TO LEVY OF PENALTY - WHETHER ON FACTS, NO SUBSTANTIAL QUESTION OF LAW AROSE FROM TRIBUNAL'S O RDER - HELD, YES [IN FAVOUR OF ASSESSEE] 13. SINCE THE APPELLANTS CASE IS SQUARELY COVERED BY T HE AFORESAID JUDGMENTS, WE ALLOW THE APPEAL OF THE ASSESSEE. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED ORDER PRONOUNCED IN OPEN COURT ON 17 - 12- 2018 SD/- SD/- (PRAMOD KUMAR) (MAHAVIR PRASAD) VICE PRESIDENT TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 17 /12/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 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.REGISTRAR ITAT,AHME DABAD