Jyoti Ltd., Baroda V. The Dy.CIT., Circle-1(2), Baroda

ITA 2009/AHD/2010

• Counselvise Citation: 200920514 RSA 2010
• Duration Of Justice: 5 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-09-2015
• Assessment Year: 1996-1997
• Appeal Filed On: 09-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G C DAXINI
• Assessee Lawyers: J P SHAH
• Keywords: Principle of natural justice; Accommodation entries
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER JYOTI LIMITED, NANUBHAI AMIN MARG, INDUSTRIAL AREA, BARODA PAN: AAACJ4909N (APPELLANT) VS DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1(2), BARODA (RESPONDENT) REVENUE BY : S H RI G.C. DAXINI , SR. D . R. ASSESSEE BY: S H RI J.P. SHAH , A.R. DATE OF HEARING : 29 - 09 - 2015 & 01 - 10 - 2 015 DATE OF PRONOUNCEMENT : 21 - 10 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THE S E TWO ASSESSEE S APPEAL S FOR A.Y. 1996 - 97, ARISE FROM ORDER OF THE CIT(A) - IV, BARODA DATED 28 - 03 - 2010 IN APPEAL NO S . CAB/IV - 345/09 - 10 & CAB/IV - 331 /09 - 10, IN PROCEEDINGS UNDER SECTION I T A NO S . 2008 & 2009 / A HD/20 10 A SSESSMENT YEAR 1996 - 97 I.T.A NO S . 2008 & 2009 /AHD /2010 A.Y. 1996 - 97 PAGE NO JYOTI LIMITED VS. DCIT 2 143(3) & 271(1) (C) RESPECTIVELY OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. A PERUSAL OF THESE CASE FILES REVEALS THAT THE FORMER CASE CHALLENGES DISALLOWANCE OF COMMISSION PAYMENT OF RS. 3.12 LACS PAID TO M/S ZENITH ENGINEERING AND ELECTRONIC, CALCUTTA (AS IT T HEN WAS). THE LATTER CASE ASSAIL S CORRECTNESS OF SECTION 271(1)(C) PENALTY OF RS. 8,67,000/ - IMPOSED BY BOTH THE LOWER AUTHORITIES. 3. WE COME TO QUANTUM CASE FIRST. THE ASSESSEE COMPANY MANUFACTURES ELECTRICAL EQUIPMENTS, GENERATORS, MOTORS, TRANSFORMERS AN D SWITCHGEARS. IT UNDERTAKE S MASSIVE TURNKEY PROJECTS. ITS CLIENTS INCLUDE CENTRAL AND STATE GOVERNMENTS, PSUS, VARIOUS BOARDS AND CORPORATIONS, PVT. COMPANIES AND OVERSEAS CUSTOMERS. 4. THE ASSESSEE FILED ITS RETURN ON 13 - 11 - 11996 ADMITTING INCOME OF RS. 50,88,238/ - . THE ASSESSING OFFICER COMPLETED A REGULAR ASSESSMENT ON 30 - 03 - 1999 INTER ALIA DISALLOWING/ADDING COMMISSION EXPENDITURE OF RS. 21,59,477/ - OUT OF THAT CLAIMED OF RS. 93, 01,377/ - . THE ASSESSEE S TOTAL STOOD ASSESSED AS RS. 1,23,63,520/ - IN VIEW OF VARIOUS OTHER DISALLOWANCES /ADDITIONS. THE ASSESSING O FFICER INITIATED SECTION 271(1)(C) PENALTY PROCEEDINGS ALLEGING CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME QUA THE ABOVE STATED COMMISSION DISALLOWANCE . THE CIT(A) IN ORDER DATED 20 - 04 - 2001 CONFIRMED THIS COMMISSION DISALLOWANCE TO THE TUNE OF RS. 15,72,557/ - . THE ASSESSEE DOES NOT SEEM TO HAVE PREFER RED ANY I.T.A NO S . 2008 & 2009 /AHD /2010 A.Y. 1996 - 97 PAGE NO JYOTI LIMITED VS. DCIT 3 APPEAL. THE REVENUE IN FACT FILED ITA 1941/AHD/2001 ON VARIOUS OTHER ISSUES NOT SUBJECT MATTER OF THE INSTANT LIS. 5. WE PROCEED FURTHER IN FACTS OF THE CASE. THE DEPARTMENT CARRIED OUT A SEARCH/SEIZURE OPERATION ON 12 - 03 - 1999 AT THE RESIDENTIAL PREMISES OF ONE SHRI BAHADUR SINGH KATHOTIA AT CALCUTTA. IT FOUND THIS GENTLEMAN TO HAVE FLOATED VARIOUS COMPANIES FACILITATING A CCOMMOD ATION ENTRIES. ONE OF THEM HAPPENED TO BE M/S. ZENITH ENGINEERING AND ELECTRICALS. M/S KATHOTIA DEPOSED IN HIS STATEMENT THAT THE IMPUGNED COMMISSION PAYMENT OF RS. 3.12 LACS HAD BEEN RECEIVED FROM ASSESSEE VIA BANK DRAFT AND RETURNED THE SAME IN CASH. THIS MADE THE ASSESSING OFFICER TO ISSUE SECTION 148 NOTICE REOPENING THE ABOVE STATED REGULAR ASSESSMENT AFTER FORMING REASONS TO BELIEVE THAT ASSESSEE S INCOME SUBJECT MATTER OF THE COMMISSION PAYMENT IN QUESTION PAID TO M/S ZENITH HAD ESCAPED ASS ESSMENT. THE ASSESSEE REITERATED THE INCOME ALREADY RETURNED IN ITS REPLY DATED 17 - 04 - 2003. IT PLEADED IN REASSESSMENT TO HAVE PAID THE SUM IN QUESTION OF RS. 3,12 LACS TO M/S ZENITH IN FY 1995 - 96 ACCOMPANIED BY DEMAND DRAFT EVIDENCE FOR THE SAKE OF CONF IRMATION. IT CLAIMED THAT ITS RELATIONS WITH THE PAYEES HAD BECOME STRAINED. THE ASSESSING OFFICER FRAMED REASSESSMENT REITERATING HIS REASONS OF REOPENING BASED ON MR. KATHODIA S STATEMENT AND DISALLOWED THE IMPUGNED SUM OF RS. 3.12 LACS. 6. THE CIT(A) CONFIRMS ASSESSING OFFICER S ACTION. I.T.A NO S . 2008 & 2009 /AHD /2010 A.Y. 1996 - 97 PAGE NO JYOTI LIMITED VS. DCIT 4 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE CASE FILE. IT TRANSPIRES THAT THE ASSESSEE FILED AN ADDITIONAL GROUND CHALLENGING VALIDITY OF THE IMPUGNED REOPENING ON 07 - 01 - 2013. NO ARGUMENT IS ADDRESSED IN THE COURSE OF HEARING. TH IS PLEA IS ACC O RDI NGLY REJECTED . 8 . WE COME TO THE MERITS OF THE CASE NOW. THE ASSESSEE ALLEGES VIOLATION OF PRINCIPLE OF NATURAL JUSTICE FOR WANT OF OPPORTUNITY TO CROSS EXAMINE SHRI KATHODIA. IT ARGUES THAT ALL THE COMMISSION PAY MENTS MADE TO M/S ZENITH IS THROUGH DEMAND DRAFT. SHRI KATHODIA HIMSELF HAD ADMITTED TO HAVE RECEIVED THESE PAYMENTS BUT CLAIM THAT THE SAME SHOULD RETURN IN CASH BEING IN THE NATURE OF SHAME TRANSACTION. THE ASSESSEE REFERS TO ITS PAPER BOOK. PAGE 9 IS M/S ZENITH S LET T ER DATED 26 - 04 - 1995 SEEKING DD PAYMENT OF RS. 1,97,000/ - TOWARDS ORC FOR SUPPLY OF SEVEN PUMP SETS AND OTHER ITEMS. PAGE 8 OF THE PAPER BOOK IS ASSSESSEE S BANK DD RECEIPT OF RS. 1,978,295/ - THIS IS FOLLOWING BY BANK DEBIT VOUCHER DATED 28 - 04 - 1995. WE PROCEED FURTHER AND FIND THAT M/S. ZENITH BROUGHT ANOTHER LET T ER SEEKING PAYMENT OF RS. 1,15 , 000/ - . BANK DD RECEIPT IN THIS REGARD IS DATED 07 - 06 - 1995 FOLLOWED BY DEBIT VO U CHER DATED 13 - 06 - 1995. PAGE 13 OF THE PAPER BOOK SHOWS M/S ZENITH AGREEING FOR SERVICE CHARGES @ 3% INSTEAD OF 4%. ALL THIS OVERWHELMING EVIDENCE FORMS PART OF PAPER BOOK PERTAINING TO PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR. THE REVENUE DOES NOT HAVE ANY OTHER MATERIAL EXCEPT THAT OF M/S KATHODIA S STAT EMENT ADMITTING TO HAVE RECEIVED THE ABOVE STATED BANK DRAFT BUT HAVING RETURN ED THE SAME IN CASH . WE ARE OF THE VIEW IN THESE PECULIAR FACTS THAT THIS ORAL ASSERTION OF I.T.A NO S . 2008 & 2009 /AHD /2010 A.Y. 1996 - 97 PAGE NO JYOTI LIMITED VS. DCIT 5 CASH AMOUNTING BEING RETURNED IS NOT SUPPORTED BY ANY EVIDENCE ON RECORD WHATSOEVER. THEREFORE, WE ACCEPT ASSESSEE S ARGUMENTS IN VIEW OF THE ABOVE STATED RELEVANT SUPPORTIVE EVIDENCE AND DELETE THE IMPUGNED COMMISSION DISALLOWANCE OF RS. 3.12 LACS MADE BY THE ASSESSING OFFICER AND SUSTAINED IN THE LOWER APPELLATE PROCEEDINGS. ASSESSEE S APPEAL ITA 2008/AHD/2010 IS ALLOWED. 9 . NOW , WE COME TO ASSESSEE S APPEAL ITA 2009/AHD/2010. BOTH THE LOWER AUTHORITIES HAVE IMPOSED THE IMPUGNED PENALTY OF RS. 8,67,000/ - ARISING FROM COMMISSION PAYMENT DISALLOWANCES OF RS. 18,84,557/ - . THIS DISALLO WANCE COMPRISES OF RS. 15,72,5557/ - AS CONFIRMED BY THE CIT(A) IN ORDER DATED 20 - 04 - 2001 AND RS. 3.12 LACS AS DISCUSSED/DECIDED IN ITA 2008/AHD/2010 HEREINABOVE. THE ASSESSING OFFICER IMPOSED THE IMPUGNED PENALTY QUOTING CHRONOLOGY OF EVENTS BASED ON CAL CUTTA SEARCH EXERCISE (SUPRA). HE INFERRED THAT THE ABOVE STATED COMMISSION DISALLOWANCE COULD HAVE BEEN RE - ROUTED BACK TO ASSESSEE AS IN CASE OF M/S ZENITH. HE OBSERVED IN PENALTY ORDER DATED 21 - 03 - 2007 THAT BONAFIDE OF THESE COMMISSION PAYMENTS HAD NO T BEEN ESTABL ISHED. HE ACCORDINGLY TREATED FACTS OF THIS CASE CONCEALMENT OF PARTICULARS OF INCOME AND INVOKED THE IMPUGNED SECTION 271(1)(C) PENALTY. THE CIT(A) AFFIRMS THE SAME BY DISCUSSING THE RELEVANT FACTS AS IN CASE OF M/S. ZENITH. 10 . WE HAVE HE ARD RIVAL CONTENTIONS. RELEVANT RECORDS PERUSED. COMING TO BOTH THE LOWER AUTHORITIES VIEW BASED ON THE CHRONOLOGY OF I.T.A NO S . 2008 & 2009 /AHD /2010 A.Y. 1996 - 97 PAGE NO JYOTI LIMITED VS. DCIT 6 EVENT RELATING TO M/S ZENITH S COMMISSION PAYMENT, WE REFER TO OUR FINDINGS IN ABOVE STATED QUANTUM APPEAL DELETING THE CORRESPONDING D ISALLOWANCE. WE ACCORDINGLY OBSERVE THAT THE SAID REASON DOES NOT SURVIVE ANY MORE. REST OF THE FINDINGS ARE MERELY BASED ON INFERENCE THAT THE ASSESSEE COULD HAVE RE - ROUTED THESE COMMISSION PAYMENTS BY WAY OF ACCOMMODATION ENTRIES. WE ARE OF THE VIEW I N THESE FACTS THAT ONCE WE HAVE DELETED THE ABOVE STATED QUA NTUM ADDITION, THIS REASON ALSO DOES NOT HOLD GROUND. THERE IS NO OTHER INDEPENDENT FINDING IN PENALTY ORDER THAT THE ASSESSEE S HAS CONCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME IN CLA IMING THE IMPUGNED COMMISSION PAYMENT DISALLOWED AMOUNTING TO RS. 15,72,557/ - OUT OF RS. 93, 01,377/ - (SUPRA). WE ACCORDINGLY ACCEPT ASSESSE E S ARGUMENTS RELYING UPON THE CASE LAW OF CIT VS. RELIANCE PETRO - PRODUCTS 322 ITR 158 (SC) HOLDING THAT QUANTUM AND PENALTY PROCEEDINGS ARE SEPARATE AND EACH AND EVERY DISALLOWANCE/ ADDITION DOSES NOT LEAD AUTOMATIC IMPOSITION OF PENALTY. THE REVENUE S ARGUMENT SUPPORTING THE IMPUGNED PENALTY ARE ACCORDINGLY REJECTED. ITA 2009/AHD/2010 IS ACCEPTED. 11. BOTH T HESE ASSE SSEE S APPEALS ARE ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 21 - 10 - 2015 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 21 /10 /2015 AK I.T.A NO S . 2008 & 2009 /AHD /2010 A.Y. 1996 - 97 PAGE NO JYOTI LIMITED VS. DCIT 7 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,