Ronak Buildwel Pvt. Ltd., Ahmedabad V. ITO, Ward-1(2), Ahmedabad

ITA 207/SRT/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2484 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-01-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 30-09-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; TDS
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 207/SRT/2020 (AY 2012-13) (Hearing in Virtual Court) Ronak Buildwell Pvt.Ltd., B-1003/1004, Empire Business Hub, Opp. Shakti Farm, Science City Road, Sola, Ahmedabad-380060 PAN : AADCR 4871Q Vs Income Tax Officer, Ward-1(2), 2 nd Floor, Harikunj Building, Above Bank of Baroda, Station Road, Bharuch-392001 Appellant / assessee Respondent / Revenue Assessee by Shri Hiren R Vepari, CA Revenue by Shri Abhishek Gautam,Sr-DR Date of hearing 20.01.2022 Date of pronouncement 09.02.2022 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of ld. Commissioner of Income tax (Appeals)-3, Vadodara [‘CIT(A)’ for short] dated 17.08.2020 for assessment year (AY) 2012-13. The assessee has raised the following grounds of appeal:- “(1)The learned CIT(A) was not justified in confirming penalty u/s 271(1)(c) on the addition of Rs.8,09,653 on extraneous considerations, and particularly without appreciating that the penalty proceedings are independent proceedings. (2)The learned CIT(A) was not justified in confirming penalty u/s 271(1)(c) on addition of Rs.25,000 in the matter of reconciliation of accounts amongst the appellant and the vendor. (3) On the facts and circumstances of the case, penalty is required to be deleted.” 2. Brief facts in the case of assessee, the assessment was finalized under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 29.09.2015. The Assessing Officer while passing the assessment order besides ITA No.207/SRT/2020 (A.Y.12-13) Ronak Buildwell Pvt. Ltd. 2 other additions made addition on account of unaccounted receipt of Rs.8,09,653/- and addition on account of unaccounted purchases of Rs. 25,000/- .No appeal was filed against such additions of unaccounted receipt of Rs.8,09,353/- in quantum assessment, though the assessee challenged the other additions. The Assessing Officer at the time of passing the assessment order initiated penalty u/s 271(1)(c) of the Act. The assessee was served with the notice u/s 271C r.w.s.274 of the Act on 27.03.2015. In response to show cause notice assessee filed reply dated 13.04.2015 and 14.09.2015 respectively. The assessee in its reply on the addition of unaccounted receipt of Rs.8,09,353/- contended that due to inadvertent the assessee had not shown the receipt as in income of the year under consideration. However, when it was pointed out to the assessee regarding unaccounted receipt, assessee immediately in he agreed for inclusion thereof as a part of its income and as such no penalty is levieable. On the addition of unaccounted purchase of Rs.25,000/- from M.D &Sons from whom the assessee has shown purchased, the assessee contended that they have shown in their account the sale of Rs.13,31,120/- while the assessee has shown total purchase of Rs.13,06,120/- which was less by Rs.25,000/-. The assessee explained that they have settled the account with party after discussion with them and shown and purchase of Rs.13,31,120/-. The said party has shown receivable of Rs.25,000/- from assessee, however, no amount is payable by ITA No.207/SRT/2020 (A.Y.12-13) Ronak Buildwell Pvt. Ltd. 3 assessee to them. Thus, no penalty is levieable on this addition as well. The Assessing Officer has not accepted the reply of assessee by taking view that confirmation was received by the party that there was total purchase of Rs.13,48,577/- and after considering the discount the amount payable comes to Rs.13,31,120/-, whereas the assessee has shown purchased from this party of Rs.13,06,120/-.Hence, assessee made unaccounted purchases of Rs.25,000/-.the reply of the assessee was not accepted by assessing officer. The Assessing Officer levied penalty on both the addition @ 100% of tax sought to be evaded. 3. On appeal before Ld. CIT(A) the assessee filed detailed written submission vide submission dated 21.05.2019. On the addition of unaccounted receipt of Rs.8,09,653/-, the assessee submitted his similar submissions as made before assessing officer that it had inadvertently not shown Rs.8,09,653/- is income. It was also stated that as a matter of fact, the income of Rs.8,09,653/- was accounted by assessee in AY 2014-15. To substantiate the fact that this receipt income was shown and accounted during AY 2014-15, the assessee furnished copy of ledger of Insecticides (India) Ltd. payee of the amount. Copy of ledger of contract income of Rs.8.78 crores for financial year 2013-14, that includes Rs.8,09,650/-. Copy of ledger of supply of material of Rs.1,62,750/- for financial year 2013-14 and copy of extract of audited profit and loss account for ITA No.207/SRT/2020 (A.Y.12-13) Ronak Buildwell Pvt. Ltd. 4 the year ending on 31.03.2014 showing total income of Rs.8,79,66,675/- (Rs.8,78,03,925 + Rs.1,62,750). 4. The assessee also prayed that additional documents furnished by assessee may be treated as additional evidence and submits that the same income has been assessed twice. Therefore, there cannot be any room for levy of penalty. On the addition of Rs.25,000/- on account of unaccounted purchased, the assessee submitted that penalty cannot be levied in the matter of reconciliation of account as unsettled account by the assessee with the parties were settled with no amount further remaining payable. It would be outrageous to levy penalty in the matter of reconciliation of account and simply based on the information supplied by third party. As a matter of fact, the assessee had accounted purchases less by Rs.25,000/- causing benefit to the revenue, despite the fact that the assessee has been hit by addition and penalty. 5. The copy of submissions were forwarded to the Assessing Officer for seeking his remand report. The Assessing Officer furnished his remand report dated 12.02.2020.The contents of remand report is reproduced by Assessing Officer in para-5.1 of his order. On the addition of unaccounted receipt of Rs.8.09 lakh, the Assessing Officer submitted that no appeal against the addition of Rs.8.09 lakh was filed by assessee. Further for AY 2014-15 is completed by making various additions and the assessee has not raised any question of double ITA No.207/SRT/2020 (A.Y.12-13) Ronak Buildwell Pvt. Ltd. 5 addition. On the addition of Rs.25,000/-, the Assessing Officer submitted that the issue of addition was not pressed before Ld. CIT(A) in first appellate proceedings. On the remand report, the assessee filed its reply / rejoinder. The assessee in its rejoinder submitted that the Assessing Officer has not disputed that Rs.8.09 lakh has been shown in the assessee in subsequent year. The Assessing Officer has not raised objection against the addition of additional evidence on the addition of unaccounted purchase of Rs.25,000/-. The assessee stated that just the addition in the quantum was confirmed, the penalty is not automatic. The Ld. CIT(A) after considering the submission of assessee, remand report of Assessing Officer and the rejoinder / reply by assessee confirmed the order of penalty on both the additions. The ld. CIT(A) held that assessee should have contested the addition by filing appeal in quantum assessment, if the contention of assessee is that the said amount is accounted in AY 2014-15, no issue of double taxation during the course of AY 2014-15 was raised. The assessee claimed the Tax Deducted at Source (‘TDS’ for short) for the year under consideration. On the penalty addition of Rs.25,000/-, the Ld. CIT(A) held that assessee has not filed any cogent evidence to establish its claim and in quantum appeal, the assessee failed to take up the ground with valid explanation. Further, aggrieved, the assessee has filed present appeal before this Tribunal. ITA No.207/SRT/2020 (A.Y.12-13) Ronak Buildwell Pvt. Ltd. 6 6. We have heard the submissions of Ld. Authorized Representative (AR) for the assessee and the Ld. Senior Departmental Representative (Sr.DR) for the Revenue and have gone through the orders of authorities below. The Ld. AR of the assessee submits that assessee is a contractor for industrial construction sites, the Assessing Officer levied penalty on two additions (i) addition on account of Rs.8.09 lakh against corresponding TDS reflected in Form Nos.26AS and (ii) on addition on account of purchase of Rs.25,000/-. On the additions of the ld AR for the assessee submits that immediately coming to know about the difference of Rs. 8.09 lakhs, the assessee instantly offered this amount for taxation. As a matter of fact, the income of Rs.8,09,653/- was accounted by assessee in AY 2014-15. Thus, this receipt has been taxed twice as the same was offered in AY 2014-15, as well as in the year under consideration and that again the assessee should not be saddled with penalty under section 271(1)(c). On the addition of Rs. 25,000/- the Ld. AR for the assessee submits that penalty cannot be levied in the matter of reconciliation of account as unsettled account by the assessee with the parties were settled with no amount further remaining payable and that it would be outrageous to levy penalty in the matter of reconciliation of account and simply based on the information supplied by third party. The Ld. AR for the assessee prayed to allow the grounds of appeal raised by the assessee. ITA No.207/SRT/2020 (A.Y.12-13) Ronak Buildwell Pvt. Ltd. 7 7. On the other hand the ld Sr DR for the revenue supported the order of lower authorities. On the penalty on addition of Rs. 8.09 lakhs, the ld Sr DR for the revenue submits that the assessee offered the said income when it was pointed out by the AO. The assessee has not contested the addition in filing appeal in quantum assessment. Further, on the additions of Rs. 25,000/-, the ld Sr DR for the revenue submits that this addition was conformed in appeal as the assessee failed to substantiate its claim by cogent evidence. The ld Sr DR for the revenue prayed for dismissal of the appeal. 8. We have considered the rival submissions of the parties and have gone through the order of the lower authorities. The AO levied the penalty on the addition of Rs. 8.09 lakh by taking view that there was difference in the receipt shown by the assessee and the payment/ receipt shown in Form-26AS on account of receipt from Insecticide India Limited. The ld CIT(A) upheld the action of AO by taking view that no appeal was filed by the assessee against such addition. We find that the assessee has no occasion to file appeal, when the assessee himself offered the difference of receipt during the assessment. Before us, the ld AR for the assessee vehemently submitted that the receipt of Rs. 8.09 lakhs has been taxed twice as the same was offered in AY 2014-15, as well as in the year under consideration and that again the assessee should not be saddled with penalty under section 271(1)(c). We find that the assessee made similar ITA No.207/SRT/2020 (A.Y.12-13) Ronak Buildwell Pvt. Ltd. 8 submission to the ld CIT(A). On the submissions of the assessee, the ld CIT(A) called remand report from the assessee. The AO furnished his remand report vide his report dated 12.02.2020. The AO in his remand report submitted that the assessee has not entered bill number in the ledger account of Insecticide India Ltd in the books for AY 2014-15, and that the assessee not raised the issue of double taxation in AY 2014-15. Further, no appeal in quantum assessment is filed by the assessee in AY 2012-13. As we have already held that the assessee has no cause of action to file against the addition which was offered by them during the assessment. From the remand report of AO, we find that there is no express denial of AO that the same receipt is not considered and offered for taxation in AY 2014-15. Considering the facts that when the assessee has inadvertently not included the said receipt and has already included in AY 2014-15, and has already been taxed twice, therefore, in peculiar facts of the case, the assessee cannot be treated as not guilty of penal action under section 271(1)(c). 9. So far as penalty on addition of Rs. 25,000/ is concerned, the Ld. AR for the assessee vehementlythe assessee submitted that penalty cannot be levied in the matter of reconciliation of account which were settled with no amount further remaining payable by the assessee and that it is outrageous to levy penalty in the matter of reconciliation of account and simply based on the information ITA No.207/SRT/2020 (A.Y.12-13) Ronak Buildwell Pvt. Ltd. 9 supplied by third party. We find merit in the submissions of the Ld. AR of the assessee that the addition in assessment was based only due to the difference of reconciliation. We further noted that the assessee had not claimed deduction of such expenses, thus, mere addition of such amount will not attract the penalty under section 271(1)(c). Hence, the A.O. is directed to delete the entire penalty. Thus, the grounds of appeal raised by the assessee are allowed. 10. In the result, the appeal of the assessee is allowed. Order pronounced in open court on 09/02/2022 and result was also placed on the notice Board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 09/02/2022 Dkp. Out Sourcing P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Assistant Registrar, ITAT, Surat