M/s. Kaypee Tex Spin Pvt.Ltd., Surat V. The ACIT.,Circle-1, Surat

ITA 1989/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80277 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 10-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Income from undisclosed sources; Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, J UDICIAL MEMBER KAYBEE TEX SPIN PVT. LTD, 2 ND FLOOR, VISHWAKARMA CHAMBERS, MAJURAGATE, SURAT PAN: AABCK0017H (APPELLANT) VS DY. CIT CIRCLE-1 (RESPONDENT) REVENUE BY: SRI V.K. SINGH, D.R. ASSESSEE BY: WRITTEN SUBMISSION DATE OF HEARING : 11-08-2014 DATE OF PRONOUNCEMENT : 22-08-20 14 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- I SURAT DATED 08-06-2011. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY WHOSE ORIGINAL ASSESSMENT WAS COMPLETED ON 22-12-2006 AND THE TOTAL INCOME WAS DETERMINED A T RS. NIL. ITA NO. 1989/AHD/2011 ASSESSMENT YEAR 2004-05 I.T.A NO. 1989/AHD/2011 A.Y. 2004-05 PAGE NO KAYBEE TEX SPIN PVT. LTD VS. DCIT 2 SUBSEQUENTLY, THE CASE WAS REOPENED AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 147 VIDE ORDER DATED 24-1 2-2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 51,49,073/- BY DISALLO WING THE CLAIM OF BAD DEBTS OF RS. 58,31,435/- AND ADDITION ON ACCOUNT OF UNACCOUNTED INCOME OF RS. 9,28,000/-. ON THE AFORESAID ADDITIONS MADE , AO VIDE PENALTY ORDER DATED 17-03-2011 LEVIED PENALTY AT RS. 24,24,609/- U/S. 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIE D THE MATTER BEFORE LD. CIT(A). LD. CIT(A) VIDE ORDER DATED 08-06-2011 DIS MISSED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE I S NOW IN APPEAL BEFORE US. 5. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED, BUT HOWE VER, ASSESSEE HAD FILED WRITTEN SUBMISSIONS WHEREIN IT WAS STATED THA T THE DISALLOWANCES OF BAD DEBTS OF RS. 58,31,435/- WAS DELETED BY HONBLE TRIBUNAL-AHMEDABAD IN APPEAL NO. 1186/AHD/2010 VIDE ORDER DATED 26-02- 2014. THE COPY OF THE AFORESAID ORDER WAS PLACED ON RECORD. WITH RES PECT TO ADDITION OF RS. 9,28,000/- IT WAS SUBMITTED THAT ON THE BASIS OF TH E SUBMISSION OF MANOJ O. GOEL, DIRECTOR OF THE ASSESSEE WHICH WAS RECORDED B EFORE THE CENTRAL EXCISE AUTHORITIES, IT WAS STATED THAT ASSESSEE HAD REMOVED YARN WEIGHING 14,500 KG. IN THE WRITTEN SUBMISSIONS IT IS SUBMIT TED THAT THE SUBMISSION MADE BY THE DIRECTOR WAS RETRACTED ON ACCOUNT OF TH E FACT THAT THE REMOVAL OF GOODS WAS OTHERWISE CREDITED IN THE BOOKS OF ACC OUNTS BY WAY OF SALE OF GREY FABRICS. IT WAS FURTHER SUBMITTED THAT ASSESS EE HAD SOLD RAW MATERIALS IN THE LOCAL MARKET WITHOUT COVER OF ANY PROPER DOC UMENTS AND TO ADJUST SUCH ILLICIT REMOVAL THEY HAD PREPARED THE DOCUMENT S SHOWING THE CLEARANCE OF GOODS TO M/S. AL-AMIN EXPORTS AND M/S SUNSHINE OVERSEAS. I.T.A NO. 1989/AHD/2011 A.Y. 2004-05 PAGE NO KAYBEE TEX SPIN PVT. LTD VS. DCIT 3 THE SALE OF GOODS TO THE AFORESAID PARTIES WERE REC ORDED IN THE BOOKS OF ACCOUNTS AND THE INCOME WAS DULY REFLECTED IN THE B OOKS OF ACCOUNTS AND WAS ALSO OFFERED FOR TAX. IT WAS THEREFORE SUBMITT ED THAT THE BREACH ON ACCOUNT OF PROVISIONS OF CENTRAL EXCISE AND CUSTOMS ACT HAS NOT RESULTED INTO CONCEALMENT OF INCOME. IT WAS THEREFORE SUBMI TTED THAT THE PENALTY LEVIED U/S. 271(1)(C) BE DELETED. BEFORE US LD. D. R. RELIED ON THE ORDER OF AO AND LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT WHILE FRAMING TH E ASSESSMENT U/S. 143(3) R.W.S.147, OF THE ACT, AO HAD MADE TWO DISALLOWANCE S NAMELY, FIRST ON ACCOUNT OF BAD DEBTS OF RS. 58,31,435/- AND SECOND OF RS. 9,28,000/- ON ACCOUNT OF UNACCOUNTED INCOME. THE QUANTUM ADDITION MADE ON ACCOUNT OF BAD DEBTS WAS DELETED BY THE CO-ORDINATE BENCH O F TRIBUNAL VIDE ORDER DATED 26-02-2014 IN ITA NO. 1186/AHD/2010(SUPRA). S INCE THE QUANTUM ADDITION ITSELF HAS BEEN DELETED, PENALTY U/S. 271( 1)(C) ON THE AFORESAID ADDITION DOES NOT SURVIVE. WITH RESPECT TO ADDITION OF RS. 9,28,000/- IT IS ASSESSEES SUBMISSION THAT THE ILLICIT REMOVAL OF R AW MATERIAL IN LOCAL MARKET WAS COVERED UP BY SHOWING SALES TO TWO PARTI ES AND THE SALES WERE REFLECTED IN THE BOOKS OF ACCOUNTS AND THE TAXES ON THE SAME HAS ALSO BEEN PAID BY THE ASSESSEE. THE AFORESAID SUBMISSIO N OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US. IT IS ALSO SETTLED LAW THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE AND HOWEVER RELEVANT AND GOOD THE FINDINGS IN ASSESSMENT PROCEEDINGS MAY BE, THEY CANNOT BE CONCLUSIVE SO FA R AS PENALTY PROCEEDINGS ARE CONCERNED. FURTHER IT IS NOT NECES SARY THAT ON EVERY ADDITION MADE IN QUANTUM NECESSARILY CALLS FOR LEVY OF PENALTY. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT NO PEN ALTY U/S. 271(1)(C) CAN BE I.T.A NO. 1989/AHD/2011 A.Y. 2004-05 PAGE NO KAYBEE TEX SPIN PVT. LTD VS. DCIT 4 LEVIED IN THE PRESENT CASE. THUS WE DIRECT THE DEL ETION OF PENALTY. IN THE RESULT, PENALTY IS DIRECTED TO BE DELETED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 22/08/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,