The ACIT, Circle-2(1), Baroda V. M/s. Gandevikar Gems & Jewellers, Baroda

ITA 2037/AHD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2003 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-12-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 27-09-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER ITA NO.2037/AHD/2006 ASSESSMENT YEAR:2002-03 DRAFTED: 15.12.09 ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE- 2(1), 2 ND FLOOR, AAYAKAR BHAVAN, RACE COURSE, BARODA V/S. M/S. GANDEVIKAR GEMS & JEWELLERS, 14, PANORAMA COMPLEX, R.C. DUTT ROAD, ALKAPURI, BARODA-7 PAN NO.AADFG0569R (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI C.K. MISHRA, SR. DR RESPONDENT BY:- SHRI MILIN MEHTA, AR DATE OF ORDER RESERVED: 14/12/2009 O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX(APPEALS)-II, BARODA IN APPEAL NO.CAB/II- 207/05-06 DATED 21-07-2006. THE PENALTY UNDER DISPUTED WAS LEVIED BY THE ACIT, CIRCLE-2, BARODA U/S.271(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDER DATED 30-09-2005. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICE R U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.8 LAKH. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO PERUSED THE CASE RECORDS INCLUDING THE PENALTY ORDER. THE BRIEF FACTS LEADING TO THE ISSU E ARE THAT A SURVEY OPERATION WAS CARRIED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 01-02-2002 AND DURING THE ITA NO.2037/AHD/2006 A.Y. 2002-03 ACIT CIR-2(1) BARODA V. M/S. GANDEVIKAR GEMS & JEWELLE RS PAG E 2 COURSE OF SURVEY CERTAIN DISCREPANCY WAS NOTICED AN D ON ACCOUNT OF THIS DISCREPANCY, THE ASSESSEE DECLARED ADDITIONAL INCOM E OF RS.14,03,322/- IN THE ASSESSMENT YEAR 2002-03. THE ASSESSEE FILED ITS RE TURN OF INCOME ON 31-10-2002 AND DECLARED THE ADDITIONAL INCOME IN ITS RETURN OF INCOME WHICH WAS FILED POST- SURVEY OPERATION. THE ASSESSING OFFICER HAS COMPLET ED THE ASSESSMENT AND INITIATED PENALTY PROCEEDINGS IN RESPECT OF THIS DISCLOSURE A MOUNT DECLARED DURING THE COURSE OF SURVEY AND INCLUDED IN THE RETURN OF INCOME FILE D FOR THE RELEVANT ASSESSMENT YEAR. THE AO ISSUED SHOW CAUSE NOTICE AS TO WHY PENALTY U /S.271(1) SHOULD NOT BE LEVIED. THE ASSESSEE REPLIED THAT THE ASSESSEE-FIRM DISCLOSED AN AMOUNT OF RS.14,03,322/- DURING THE COURSE OF SURVEY UNDER PR ESSURE, HOWEVER, TO CO-OPERATE WITH THE DEPARTMENT AND TO BUY PEACE OF MIND THE AS SESSEE-FIRM HAS ALREADY APPROPRIATE TAX ON THE SAID AMOUNT AND THERE WAS N O INTENTION TO HIDE THE INCOME AND TO TAKE UNDUE BENEFIT ON THE SAME, AS THE FINAN CIAL YEAR 2001-02 IN PROGRESS AND FINAL ACCOUNT WAS NOT PREPARED, HENCE, THE ASSE SSEE COULD NOT ABLE TO RECONCILE THE NECESSARY WITHDRAWALS FOR INVESTMENT IN RESIDEN TIAL HOUSE PROPERTY ETC. THE ASSESSEE-FIRM HAD CO-OPERATED WITH THE DEPARTMENT A T THE TIME OF SURVEY PROCEEDINGS AS WELL AS AT THE TIME OF ASSESSMENT PR OCEEDINGS AND STATED THAT THE PENALTY PROCEEDINGS BE DROPPED BUT THE AO HAS NOT C ONSIDERED THE REPLY OF THE ASSESSEE AS REASONABLE AND AO LEVIED THE PENALTY U/ S.271(1) OF THE ACT. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND EXACTLY ON SIMILAR FACTS, HE DELETED THE PENALTY BY GIVING FOL LOWING FINDING IN PARA-2.3 OF HIS APPELLATE ORDER:- 2.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. C OUNSEL AND FACTS OF THE CASE. SINCE THE DISCLOSURE OF RS.14,03,322 LACS MAD E DURING SURVEY HAS BEEN SHOWN IN THE ORIGINAL RETURN ITSELF HENCE HERE CANNOT BE ANY QUESTION OF CONCEALMENT OF PARTICULARS OF INCOME SO FAR AS THE ORIGINAL RETURN OF INCOME IS CONCERNED. THE CHARGE OF PENALTY EITHER FOR THE CON CEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME CAN BE ESTABLISHED ONLY WITH RESPECT TO THE RETURN OF INCOME FILED BY THE APPELLANT. THE CONTENTION OF THE APPELLATE THAT THE DEEMING PROVISIONS AS CON TAINED IN EXPLANATION 5 TO SECTION 271(1)(C) ARE APPLICABLE TO SEARCH CASES ON LY IS FOUND TO CARRY WEIGHT. IN VIEW OF THE DISCUSSIONS GIVEN ABOVE, IT CANNOT B E HELD THAT ON THE DATE WHEN THE ORIGINAL RETURN WAS FILED BY THE APPELLATE ON 31.10.2002 THERE WAS EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURN ISHING OF INACCURATE PARTICULARS OF INCOME. UNDER THESE FACTS AND CIRCUM STANCES OF THE CASE, THE PENALTY IMPOSED BY THE ASSESSING OFFICER CANNOT BE SUSTAINED AND HENCE PENALTY OF RS.8,00,000/- IMPOSED BY THE ASSESSING O FFICER IS DELETED. ITA NO.2037/AHD/2006 A.Y. 2002-03 ACIT CIR-2(1) BARODA V. M/S. GANDEVIKAR GEMS & JEWELLE RS PAG E 3 5. WE FIND FROM THE ABOVE THAT THE ASSESSEE HAS MAD E DISCLOSURE OF RS.14,03,32/- ON THE DATE OF SURVEY, I.E. ON 01-02- 2002 FOR THE ASSESSMENT YEAR 2002-03 I.E. YEAR ENDING 31-03-02 THAT MEANS THE AS SESSEE HAS NOT FILED THE RETURN OF INCOME AND HE HAS MADE WITHDRAWAL FROM THE BOOKS OF ACCOUNT BUT THE ASSESSEE COULD NOT RECONCILE DURING THE COURSE OF SURVEY AND ACCORDINGLY, ASSESSEE-FIRM MADE DISCLOSURE IN THE RETURN OF INCOME AND EVEN DURING THE COURSE OF SURVEY ON THE SPOT. WE FIND FROM THE EXPLANATION SUBMITTED BY THE ASSES SEE BEFORE THE LOWER AUTHORITIES THAT THIS DISCLOSURE WAS MADE TO BUY PIECE OF MIND AND ALSO TO CO-OPERATE WITH THE DEPARTMENT THE ASSESSEE ALSO PAID ADVANCE TAX. WE F IND THAT THE EXPLANATION OF THE ASSESSEE IS REASONABLE AND THERE IS NO MALA FIDE IN THE EXPLANATION OF THE ASSESSEE. EVEN THE ASSESSEE HAS DECLARED COMPLETE PARTICULARS OF INCOME IN ITS ORIGINAL RETURN FILED ON 31-10-200. THIS IS NEITHER A CASE OF CONC EALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) TO THE DELETING THE PENALTY. THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23/12/2009 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 23/12/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD