Ram Food Product Pvt. Ltd., Jalgaon V. Asst. Comm. of Income-tax, Jalgaon

ITA 2/PUN/2012

• Counselvise Citation: 224514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 02-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Initiation of penalty proceedings; Revised return
• Section: 143(3); 139(5); 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI .G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO. 02/PN/2012 : (ASSTT. YEAR : 2007-08) RAM FOOD PRODUCTS PVT. LTD. GAT NO. 17/2 N.H.NO. 6, AT & POST VARAD TAL. DHARANGAON DIST. JALGAON PAN AABCR 5207 L ... APPELL ANT V. ASSTT. CIT CIR. 2 JALGAON RESPONDENT APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY : SHRI ACHAL SHARMA DATE OF HEARING : 16-04-2013 DATE OF PRONOUNCEMENT : 29-5-2013 ORDER PER R.S. PADVEKAR, JM IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED IMPUG NED ORDER OF THE LD. CIT(A)-II NASIK DATED 24-11-2011 FOR THE A.Y. 2007- 08, IN WHICH PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT HAS BEEN CONFIRMED. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS. 1. ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY LEVIED U /S 271(1)(C) OF RS. 6,96,128/-, EVEN THOUGH, APPELLANT HAS FURNISHED TH E REVISED RETURN VOLUNTARILY AND WHICH WAS ACCEPTED BY THE ASSESSING OFFICER WITHOUT POINTING OUT A SINGLE INACCURACY AND WITHOUT MAKING ANY FURTHER ADDITIONS IN THE ASSESSMENT AND HENCE PENALTY MAY P LEASE BE DELETED. 2. ON THE FACTS IN THE PREVAILING CIRCUMSTANCES OF THE CASE AND LAW, THE PENALTY LEVIED IS BAD IN LAW FOR THE FOLLOWING REAS ONS THAT: (A) AS NO SATISFACTION HAS BEEN RECORDED AT THE TIM E OF INITIATION AND LEVY OF PENALTY; (B) AND NO CLEAR CUT FINDING IS RECORDED BY THE LD. ASSESSING OFFICER THAT AS TO WHETHER THERE WAS A CONCEALMENT OF INCOM E BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF S UCH INCOME HAD BEEN FURNISHED BY HIM AND HENCE PENALTY ORDER IS BA D IN LAW AND THEREFORE SAME MAY BE ANNULLED. 2. THE FACTS REVEAL FROM THE RECORD ARE AS UNDER. THE ASSESSEE COMPANY CARRIES ON THE BUSINESS IN THE TRADE NAME OF RAM FO OD PRODUCTS PVT. LTD., AND IS IN THE PRODUCTION OF GROUNDNUT OIL, COTTON SEED OIL, O IL CAKE APART FROM RUNNING A GINNING AND PRESSING OF COTTON FACTORY UNDER THE TRADE NAME OF RAMJI GINNING & PRESSING. ITA . NO. 02//PN/2012 RAM FOOD PRODUCTS A.Y. 2007-08 PAGE OF 5 2 THE ASSESSEE FILED ITS ORIGINAL E-RETURN OF INCOME FOR THE A.Y. 2007-08 ON 29-10- 2007 DECLARING A TOTAL INCOME AT RS. 5,87,654/-. T HERE WERE SOME INQUIRIES BY THE DDIT (INV) AND ASSESSEE FILED A REVISED RETURN OF I NCOME ON 25-2-2009 DECLARING A TOTAL INCOME AT RS. 25,91,870/-. IT APPEARS THAT T HE ADIT (INV.II) NASIK HAD RECORDED A STATEMENT OF THE ASSESSEES DIRECTOR SHRI AVINASH S. KABRA ON 11-2-2009. IN THE SAID STATEMENT THE DIRECTOR WAS CONFRONTED OF GENUI NENESS OF COTTON PURCHASES. AFTER CONFRONTATION OF THE DIRECTOR, THE ASSESSEE D ISCLOSED ADDITIONAL INCOME OF RS. 20,04,184/-- IN THE A.Y. 2007-08 AND ACCORDINGLY FI LED A REVISED RETURN OF INCOME AND ALSO PAID THE TAXES THEREON. SUBSEQUENTLY, THE ASS ESSING OFFICER ISSUED NOTICE U/S 148 OF THE ACT ON 24-8-2009 TO REGULARIZE THE RETUR N FILED BY THE ASSESSEE AND FINALIZED THE ASSESSMENT U/S 143(3) ON 22-12-2010 A CCEPTING THE TOTAL INCOME AS DECLARED BY THE ASSESSEE IN THE REVISED RETURN AT R S. 25,91,870/-. THE A.O INITIATED PENALTY PROCEEDINGS AND LEVIED THE PENALTY OF RS. 6 ,96,128/- ON THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE. THE A.O HAS GIVEN THE DETAILS IN THE ASSESSMENT ORDER IN RESPECT OF TRANSACTIONS CARRIED OUT BY THE ASSESSEE-COMPANY WHICH WERE OTHERWISE NOT REFLECTED IN THE BOOKS OF ACCOUNT FOR THE A.Y. 2007-08. THE FACT REMAINS THAT THE ASSESSEE OFFERED ADDITIONAL INCOME ONLY AFTER INVESTIGATION WAS CARRIED OUT IN RESPECT OF TRANSACTIONS OF SELLING C OTTON TO VARIOUS PARTIES. THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSIN G OFFICER BY GIVING THE FOLLOWING REASONS. 6. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, PENALTY ORDER AND THE DETAILED SUBMISSIONS OF THE APPELLANT. THE APP ELLANT FILED E-RETURN FOR A.Y.2007-08 ON 29/10/2007 SHOWING TOTAL INC OME OF RS. 5,87,654/-. THE APPELLANT COMPANY IS RUNNING A GINNING AND COTT ON-PRESSING UNIT. DURING THE COURSE OF INVESTIGATION BY THE DDIT(INV) , NASIK, IT WAS FOUND THAT THE APPELLANT HAD DEPOSITED RS. 2,59,83,058/- FROM 01/03/2007 TO 31/03/2007. THESE DEPOSITS WERE STATED TO BE THE SA LE PROCEEDS OF COTTON BALES. DURING THE ABOVE REFERRED PERIOD THE APPELLA NT COMPANY HAD WITHDRAWN RS. 3,89,67,970/- FROM THE C.C. ACCOUNT A ND UTILIZED RS. 2,26,80,000/- INTERALIA FOR PURCHASE OF COTTON FR OM AGRICULTURIST. DDIT RECORDED STATEMENT OF THE DIRECTOR SHRI AVINASH S.K ABRA U/S 131 OF THE ACT ON 11/02/2009. DURING THE COURSE OF RECORDING OF THE S TATEMENT HE WAS CONFRONTED WITH GENUINENESS OF THE PURCHASE OF COTT ON. HE WAS SPECIFICALLY ASKED TO PROVIDE COMPLETE POSTAL ADDRE SSES OF THE PERSONS FROM WHOM COTTON WAS SHOWN TO HAVE BEEN PURCHASED. THE DIRECTOR COULD NOT FURNISH THE DETAILS NOR HE WAS IN A POSIT ION TO PRODUCE RECEIPTS IN REGARD TO THE SAID PURCHASE OF COTTON. HE IN TURN DISCLOSED RS. 20,04,189/- AS COMPANY'S ADDITIONAL INCOME FOR A.Y. 2007-08 AN D REVISED RETURN ON 25/02/2009 SHOWING INTERALIA RS. 20.Q4.189/- AS A DDITIONAL INCOME OF THE COMPANY FOR A.Y. 2007-08 AND PAID TAXES THEREON. THE AO FINALIZED THE ITA . NO. 02//PN/2012 RAM FOOD PRODUCTS A.Y. 2007-08 PAGE OF 5 3 ASSESSMENT AT RS. 25.91.870/-WHICH INCLUDED THE ADD ITIONAL INCOME OF RS. 20,04,189/- AND INITIATED PENALTY U/S 271(L)(C). AO LEVIED PENALTY OF RS. 6.96.128/- U/S 271(L)(C) FOR FURNISHING INACCURAT E PARTICULARS OF INCOME AND THEREBY CONCEALING ITS INCOME VIDE PENALTY ORDER DT . 01/04/2010. 7. THE APPELLANT'S CONTENTION THAT DDIT HAD PROMISE D NOT TO LEVY PENALTY OR IT HAD REVISED ITS RETURN OF INCOME VOLU NTARILY OR THAT DEPARTMENT HAS FAILED TO DETECT ANY CONCEALMENT OR THAT AO HAS NOT RECORDED SATISFACTION NOTE IN THE ASSESSMENT ORDER IN REGARD TO INITIATION OF PENALTY U/S 271(L)(C) ARE DEVOID OF ANY MERIT. I FIND THE S ATISFACTION NOTE OF THE AO FOR INITIATING PENALTY U/S 271(L)(C) IN HIS ASSESSMENT ORDER DT. 22/12/2009. APPELLANT HAS FAILED TO PRODUCE ANY NOTING OF THE DD IT IN REGARD TO NON- INITIATION OF PENALTY PROCEEDINGS. APPELLANT'S CONT ENTION THAT IT REVISED RETURN VOLUNTARILY IS FAR FROM TRUTH. THE RETURN WA S REVISED 025/02/2009 PURSUANT TO RECORDING OF THE STATEMENT OF THE DIREC TOR BY DDIT ON 11/02/2009 U/S 131 OF THE ACT. SINCE THE APPELLANT COMPANY COUL D NOT ESTABLISH THE GENUINENESS OF PURCHASES OF COTTON, IT WAS LEFT WIT H NO OPTION BUT TO OFFER PURCHASES WORTH RS. 20,04,189/- AS ITS UNDISCLOSED INCOME FOR A.Y. 2007- 08. IN VIEW OF THE ABOVE APPELLANT'S GROUNDS/ SUBMI SSIONS ARE NOT TENABLE AND HENCE REJECTED. SIMILARLY APPELLANT'S RELIANCE ON V ARIOUS COURT CASES IN REGARD TO THE ABOVE POINTS SEEMS TO BE MISPLACED 4 THE FA CTS IN THE APPELLANT'S CASE CLEARLY ESTABLISH FURNISHING OF INACCURATE PAR TICULARS OF INCOME BY THE APPELLANT IN ITS ORIGINAL RETURN FILED ON 29/10/200 7. THE APPELLANT FILED INACCURATE PARTICULARS OF INCOME INTENTIONALLY WITH A MALAFIDE INTENTION OF EVADING TAX. FACTS OF THE CASE HAVE PROVED BEYOND A REASONABLE DOUBT THAT THE APPELLANT DID NOT DISCLOSE TRUE PARTICULARS OF ITS INCOME WITH AN INTENTION OF CONCEALING THE INCOME FROM THE DEPARTMENT. THE APPE LLANT FURNISHED INACCURATE PARTICULARS IN REGARD TO PURCHASES. IN F ACT BOGUS PURCHASES WERE SHOWN TO BRING DOWN THE TAXABLE PROFIT OF THE COMPA NY. 8. THE APPELLANT HAS FAILED TO ESTABLISH THAT DISCL OSURE OF ADDITIONAL INCOME IN THE REVISED RETURN FILED ON 25/02/2009 WA S VOLUNTARY AND IN GOOD FAITH TO BUY PEACE WITH THE DEPARTMENT. ON THE OTHE R HAND, THE APPELLANT FILED THE REVISED RETURN ONLY AFTER THE CONCEALMENT BY WA Y OF BOGUS PURCHASES WAS DETECTED BY THE DDIT AND HE CONFRONTED THE APPELLAN T WITH THE SAME. THERE WAS A GAP OF ALMOST 16 MONTHS BETWEEN THE DATE OF F ILING THE ORIGINAL RETURN (29/10/2007) AND THE DATE OF FILING THE REVISED RET URN (25/02/2009). ON SIMILAR FACTS AND CIRCUMSTANCES, THE HON'BLE ITAT KOLKATA I N THE CASE OF DCIT VS. SUSHMA DEVI AGARWAL (ITA NO. 876/KOL/2008) HAS HELD THAT AO HAD RIGHTLY LEVIED PENALTY U/S 271(L)(C) FOR CONCEALMENT OF INC OME. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED V IEW THAT FILING OF THE REVISED RETURN ON 25/02/2009 WAS AN OUTCOME OF THE ENQUIRIES MADE BY THE DDIT. THE CONCEALMENT OF INCOME BY FURNISHING INACC URATE PARTICULARS OF INCOME (BOGUS PURCHASES) IS APPARENT FROM THE RECOR D AND THERE IS NO REASON WHY THE PENALTY U/S 271(L)(C) SHOULD NOT BE LEVIED FOR CONCEALMENT OF INCOME. THIS IS A CASE OF CONCEALMENT BEING DELIBERATE AND FURNISHING OF INACCURATE PARTICULARS BEING WILLFUL AND INTENTIONAL. AO WAS J USTIFIED IN LEVYING THE PENALTY U/S 271(L)(C). THE ADDITION IS CONFIRMED. 3. THE ASSESSEE IS IN APPEAL BEFORE US. THE ARGUME NT OF THE LD. COUNSEL IS THAT THE ASSESSEE FILED A REVISED RETURN U/S 139(5) OF T HE ACT WHICH WAS ACCEPTED BY THE A.O. HE FURTHER SUBMITS THAT EVEN IF THERE WAS INV ESTIGATION BUT BEFORE ISSUANCE OF NOTICE U/S 148 THE ASSESSEE FILED A REVISED RETURN. HE PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI ASHOK S. SHAW VS. DY. CIT IN ITA NO. 28/PN/2011 FOR A.Y. 2005-06 DATED 27 -4-2012. ITA . NO. 02//PN/2012 RAM FOOD PRODUCTS A.Y. 2007-08 PAGE OF 5 4 4. WE HAVE ALSO HEARD THE LD. DR. AS PER THE FACTS ON RECORD WE FIND THAT ONLY AFTER INVESTIGATION WAS CARRIED OUT AND ASSESSEES STATEMENT WAS RECORDED ON 12-2- 2009, THE ASSESSEE CAME FORWARD AND FILED REVISED R ETURN. THE FURTHER ARGUMENT OF THE LD. COUNSEL IS THAT THERE WAS NO NECESSITY TO M AKE ASSESSMENT BY ISSUANCE OF NOTICE U/S 148 AS ASSESSMENT COULD HAVE BEEN COMPLE TED U/S 143(3) OF THE ACT. IN OUR OPINION, THE SAID ARGUMENT SHOULD HAVE BEEN TAK EN IN THE QUANTUM PROCEEDINGS AND ONCE THE QUANTUM IS FINALIZED, WE TO HAVE TO EX AMINE THE QUANTUM IN THE TOUCHSTONE OF THE PROVISIONS OF SEC. 271(1)(C) OF T HE ACT. AS PER THE FACT ON RECORD ASSESSEE CAME FORWARD TO DISCLOSE THE INCOME ONLY A FTER INVESTIGATION BY THE INCOME-TAX DEPARTMENT AND FILING OF THE REVISED RET URN U/S 139(5) OF THE ACT CANNOT BE SAID TO BE MERELY A MISTAKE ON THE PART OF THE A SSESSEE FOR NOT OFFERING THE ADDITIONAL INCOME OF RS. 20,04,184/-. 5. SO FAR AS THE DECISION IN THE CASE OF SHRI ASHOK S. SHAW (SUPRA) IS CONCERNED, THE SAID DECISION IS RENDERED IN DIFFERE NT SET OF FACTS AS THE PENALTY WAS DELETED BY MAKING CATEGORICAL OBSERVATION THAT THE CASE OF THE ASSESSEE STANDS ON AN EVEN BETTER FOOTING INASMUCH AS IN THE PRESENT C ASE, THE ASSESSEE FILED A REVISED RETURN OF INCOME SUO MOTU WITHIN THE PERIOD ALLOWED BY SEC. 139(5) OF THE ACT AND SECONDLY, IN THE PRESENT CASE THERE IS NO MATERIAL TO SAY THAT ANY INTIMATION WAS GIVEN BY THE INVESTIGATION WIN OF THE DEPARTMENT TO THE ASSESSING OFFICER THAT ASSESSEE HAD BOOKED ANY NON-GENUINE LONG TERM CAPIT AL GAIN ON THE STATED SHARES. WE FAIL TO UNDERSTAND HOW THIS CASE HELPS THE ASSES SEE AS ADMITTEDLY IN THE CASE OF THE ASSESSEE HE OFFERED THE ADDITIONAL INCOME AFTER CONFRONTATION BY THE INVESTIGATION WING AND RECORDING THE STATEMENT OF T HE DIRECTOR U/S 131 WHO ADMITTED AND OFFERED UNRECORDED INCOME AND ONLY AS A RESULT OF CONFRONTATION AND INVESTIGATION ONLY, THE ASSESSEE CAME FORWARD TO OF FER THE INCOME. IN OUR OPINION THIS IS A FIT CASE WHERE THE A.O HAS CORRECTLY LEVI ED THE PENALTY U/S 271(1)(C) OF THE ACT AS SUBSEQUENT DECLARATION OF INCOME IN THIS CAS E COMES UNDER CONSCIOUS CONCEALMENT. WE ACCORDINGLY FIND NO REASON TO INTE RFERE WITH THE ORDER OF THE LD. CIT(A) AND SAME IS CONFIRMED. ITA . NO. 02//PN/2012 RAM FOOD PRODUCTS A.Y. 2007-08 PAGE OF 5 5 6. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY 2013 SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 30 TH MAY 2013 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT II NASIK 4. THE CIT(A)- NASIK 4. THE D.R. B BENCH, PUNE 5. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE