M/s. Ishwar Arts, Surat V. The Income Tax Officer,Ward-2(2), Baroda

ITA 2057/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8457 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-09-2017
• Assessment Year: 1996-1997
• Appeal Filed On: 08-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.2057/AHD/2014 ( / ASSESSMENT YEAR : 1996-97) M/S.ISHWAR ARTS 12, PANORAMA COMPLEX R.C. DUTT ROAD BARODA 390 005 / VS. THE INCOME TAX OFFICER WRD-2(2) BARODA # ./ ./ PAN/GIR NO. : AAEFM 1875 B ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI M.K. PATEL, AR '#& )( / RESPONDENT BY : SHRI RAJDEEP SINGH, SR.DR *+ ), / DATE OF HEARING 07/09/2017 -./0 ), / DATE OF PRONOUNCEMENT 12/ 09 /2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE ASSESSEE IN THE CAPTIONED APPEAL HAS CHALLENG ED THE ACTION OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, BARODA [CIT(A) IN SHORT] DATED 06/03/2014 FOR THE ASSESSMENT YEAR (AY) 1996-97IN CONFIRMING THE PENALTY OF RS.2,19,840/- ON ESTIMATED ADDITIONS MADE IN THE COURSE OF ASSESSMENT. ITA NO.2057/AHD /2014 M/S.ISHWAR ARTS VS. ITO ASST.YEAR 1996-97 - 2 - 2. THE LD.AR FOR THE ASSESSEE MR. M.K.PATEL SUBM ITTED THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING AND SALE OF HO USEHOLD PLASTIC ARTICLES IN THE BRAND NAME OF MILTON. THE ASSESS EE FILED RETURN OF INCOME AT LOSS OF RS.10,20,310/- FOR THE AY 1996-97 . THE AFORESAID RETURN OF INCOME WAS SUBJECTED TO SCRUTINY ASSESSME NT. THE ASSESSING OFFICER (AO) INTER ALIA REJECTED CLAIM OF EXPENSES OF THE ASSESSEE TOWARDS CONTRACTOR HIRE CHARGES RS.2,56,685/-, FORE IGN TRANSPORT INWARD RS.1,96,904/- AND VEHICLE EXPENSES RS.96,000/- AGGR EGATING TO RS.4,59,589/-. THE LD.AR SUBMITTED THAT THE PENALT Y HAS BEEN IMPOSED ON THE AFORESAID ADDITION MADE BY THE AO WHICH HAS BEEN CONFIRMED BY THE CIT(A) ALSO. THE ASSESSEE HAS IMPUGNED THE AFO RESAID ACTION OF THE REVENUE. THE LD.AR SUBMITTED THAT THE DISALLOWANC E IS PRIMARILY TOWARDS TRANSPORTATION EXPENSES PAID TO ONE SHRI PR AKASH R.PATEL WHO WHILE STATING BEFORE THE AO AND HE HAS NOT DONE ANY TRANSPORTATION BUSINESS HAS ADMITTED THE RECEIPT OF PAYMENT. THE LD.AR STATED THAT NO MOTIVE OF MALAFIDE IN INTRODUCTION OF EXPENSES CAN BE ATTRIBUTED TO THE ASSESSEE IN VIEW OF THE FACT THAT ASSESSEE HAS SUFF ERED HUGE LOSSES AND THEREFORE WAS UNLIKELY TO GAIN ANY TAX ADVANTAGE FO R DOING SO, AS ALLEGED. THE LD.AR THEREAFTER SUBMITTED THAT SIMILAR PAYMENT S WERE MADE BY ANOTHER CONCERN NAMELY PANORAMA PLASTICS TO THE SAM E TRANSPORTER IN WHOSE HANDS THE TRANSPORTATION EXPENSES HAVE BEEN A DMITTED. THE LD.AR THUS SUBMITTED THAT IN THE CIRCUMSTANCES, THE ASSESSEE SHOULD NOT ITA NO.2057/AHD /2014 M/S.ISHWAR ARTS VS. ITO ASST.YEAR 1996-97 - 3 - BE SADDLED WITH UNFAVOURABLE TREATMENT IN SO FAR AS PENALTY UNDER S.271(1)(C) IS CONCERNED. 3. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE PART OF THE TRANSPORTATION EXPENSES AS NOTED ABOVE HAS BEEN DIS ALLOWED BY THE REVENUE AUTHORITIES AND PENALTY HAS BEEN IMPOSED TH EREON WHICH IS BEING AGITATED IN THE PRESENT APPEAL. ON PERUSAL O F THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT DOUBTFUL CIRCUMSTAN CES DO EXIST ABOUT THE BONAFIDES OF CLAIM OF EXPENDITURE. HOWEVER, IN THE SAME VAIN WE NOTICE THAT ASSESSEE HAS FILED LOSS RETURN. THUS, IT CAN BE POSSIBLY GIVE INFERENCE OF LACK OF ILL MOTIVE FOR ALLEGED UNCORROBORATED CL AIM OF TRANSPORT EXPENDITURE. AS POINTED OUT ON BEHALF OF THE ASSES SEE, SIMILAR EXPENSES INCURRED AND PAID TO THE SAME PARTY BY OTHER ASSOCI ATE-CONCERN WHICH HAS BEEN ACCEPTED. THUS, BENEFIT OF DOUBT CAN POSSIBLY BE GIVEN TO THE ASSESSEE IN THE PECULIAR FACTS AND MORE SO HAVING R EGARD TO THE SMALLNESS OF THE AMOUNT INVOLVED. 5. NEEDLESS TO SAY, PENALTY PROCEEDINGS ARE INDEP ENDENT AND DISTINCT PROCEEDINGS VIS-A-VIS ASSESSMENT PROCEEDINGS. THE FACTS ARE THEREFORE ITA NO.2057/AHD /2014 M/S.ISHWAR ARTS VS. ITO ASST.YEAR 1996-97 - 4 - REQUIRED TO BE WEIGHED FROM THE PERSPECTIVE OF PENA LTY PROCEEDINGS. THE REASONS CANVASSED ON BEHALF OF THE ASSESSEE FOR NON -IMPOSITION OF PENALTY APPEARS SOMEWHAT PLAUSIBLE. UNDER THESE CIRCUMSTAN CES, WE REVERSE THE ORDER OF THE CIT(A) AND GRANT RELIEF TO THE ASSESSE E FROM IMPOSITION OF PENALTY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 12 / 09 /2017 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 12 / 09 /2017 4..*,.*../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-II, BARODA 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. / BY ORDER, '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD