Shubhlaxmi Dyetex Pvt.Ltd., Surat V. The Income tax Officer,Ward-4(2), Surat

ITA 2087/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9723 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-08-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 30-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MAHAVIR SINGH, JUDICIAL MEMBER) ITA.NO.2087/AHD/2008 [ASSTT. YEAR : 2003-2004] SHUBHLAXMI DYETEX PVT. LTD. 401, JEEVANDEEP COMPLEX OPP: J.K.TOWER RING ROAD, SURAT. VS. ITO, WARD-4(2) SURAT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI BANDISH SOPARKAR REVENUE BY : SHRI R.K.DHANESTA O R D E R G.D. AGARWAL, VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I , SURAT DATED 31.3.2008 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER P ASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE ONLY GROUND IN THIS APPEAL OF THE ASSESSEE R EADS AS UNDER: 1) THE LD.CIT(A) HAS ERRED BY DISALLOWING THE APPEA L OF THE APPELLANT. ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND ALSO RELYING ON THE CORRECT INTERPRETATION OF L AW, THE LEVY OF PENALTY OUGHT TO HAVE BEEN DELETED IN OUR CASE. HE NCE, I HUMBLY REQUEST YOUR HONOUR ONCE AGAIN TO DELETE THE PENALTY AMOUNTING TO RS.72,716/- LEVIED U/S.271(1) OF THE A CT BY THE AO VIDE AN ORDER OF PENALTY DATED 16-11-2006 AND OBLIG E. 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT THE AO LEVIED PENALTY SIMPLY ON THE BASIS OF F INDING IN THE ASSESSMENT ORDER WHICH WAS IN TURN BASED UPON THE FINDINGS OF THE SALES-TAX AUTHORITIES. THAT THERE WAS NO INDEPENDENT FINDING IN THE PENALT Y ORDER OR IN THE ASSESSMENT ORDER WITH REGARD TO THE SALE OF SCRAP OUTSIDE THE BOOKS. HE THEREFORE SUBMITTED ITA.NO.2087/AHD/2008 -2- THAT ON THE ABOVE MENTIONED FACTS NO PENALTY UNDER SECTION 271(1)(C) CAN BE LEVIED. HE ALSO EXPLAINED THAT DESPITE THE ABOVE A DDITION, THE ASSESSED INCOME WAS NIL AND THEREFORE THE ASSESSEE DID NOT CONTEST THE ADDITION OF RS.1,95,865/- MADE BY THE AO. HOWEVER, THAT DOES N OT PROVE ANY CONCEALMENT OF INCOME BY THE ASSESSEE. HE ALSO SUBMITTED THAT WHEN THE INCOME RETURNED AS WELL AS ASSESSED BOTH WAS NIL. EXPLANATION-4 TO SECTION 271(1)(C) WOULD NOT BE APPLICABLE. HE THEREFORE SUBMITTED THAT THE PEN ALTY LEVIED UNDER SECTION 271(1)(C) MAY BE CANCELLED. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. HE HAS STATED THAT THE CIT(A) A FTER CONSIDERING THE FACTS OF THE CASE AS WELL AS DECISION OF THE HONBLE JURISDI CTIONAL HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT, 249 ITR 125 (GUJ) CON FIRMED THE PENALTY. WITH REGARD TO THE LEVY OF PENALTY IN THE CASE WHERE THE ASSESSED INCOME WAS NIL, HE RELIED UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF JCIT VS. SAHELI LEASING & INDUSTRIES LTD., 323 ITR 170 (SC). 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE AO MADE THE ADDITION OF RS.1,95,865/- WITH THE FOLLOWING FINDINGS IN THE AS SESSMENT ORDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE ARGUMENTS PUT FORTH BY THE ASSESSEE. THE ADDITION OF TAXABLE SALE S OF RS.1,95,865/-, MADE BY THE ASST. SALES TAX OFFICER IS NOT ON THE B ASIS OF ANY STANDARD GUIDELINE OR SET FORMULA. NEITHER DOES THE ASSESSME NT ORDER SPEAK OF SUCH STANDARD GUIDELINE OR SET FORMULA NOR DOES THE DAMAN AND DIU SALES TAX ACT, 1964 PROVIDE FOR SUCH ADDITION. THE ASSESSEE HAS NOT BEEN ABLE TO ENLIGHTEN THE UNDERSIGNED AS TO WHAT T HE ALLEGED STANDARD GUIDELINE OR SET FORMULA IS IN THE SAID SALES TAX A SSESSMENT ORDER, THE SALES TAX AUTHORITY HAD EVEN IMPOSED A PENALTY OF R S.1,500/- FOR NOT DISCLOSING THE SAID TAXABLE SALES. ALL THIS HAS BEE N FULLY ACCEPTED BY THE ASSESSEE AND THE TAX THEREON, ALONG WITH THE PENALT Y HAS BEEN PAID BY THE ASSESSEE WITHOUT CONTESTING THE SAME IN APPEAL. THE ASSESSEE ITSELF HAS CLEARLY AND CONFIDENTLY EXPRESSED IN UNEQUIVOCAL TE RMS THAT EVEN IF IT WOULD HAVE GONE IN APPEAL, IT WOULD NOT HAVE BROUGH T OUT ANY MEANINGFUL RESULT. FURTHER, THE SALES TAX ASSESSMEN T ORDER IS PRODUCED ITA.NO.2087/AHD/2008 -3- BY THE ASSESSEE ITSELF AS EVIDENCE. AS SUCH, IT IS THE ONUS OF THE ASSESSEE TO PROVE THAT THIS EVIDENCE IS WRONG. THE ASSESSEE HAS FAILED TO PROVE THE SAME AS WRONG. ACCORDINGLY, IN VIEW OF THE FACTS OF THE CASE, THE ACCEPTANCE OF SALES TAX ASSESSMENT ORDER BY THE ASS ESSEE, THE INABILITY OF THE ASSESSEE TO PROVE THE SAME AS WRONG AND ITS FAILURE TO EXPLAIN THE SET FORMULA/STANDARD GUIDELINES, THE ABOVE ARGUMENT OF THE ASSESSEE IS NOT ACCEPTED. ACCORDINGLY, THIS AMOUNT OF RS.1,95,8 65/-, BEING UNDISCLOSED SCRAP SALES, IS ADDED TO THE TOTAL INCO ME OF THE ASSESSEE AND TAXED. SINCE THE ASSESSEE HAS CONCEALED THE PARTICU LARS OF THE SAID INCOME OF RS.1,95,865/-, PENALTY PROCEEDINGS U/S.27 1(1)(C) R.W.S 274 OF THE ACT IS INITIATED SEPARATELY ON THIS POINT. THE ASSESSEE ACCEPTED THE ABOVE FINDING OF THE AO A S NO APPEAL WAS FILED AGAINST THE ABOVE ASSESSMENT ORDER. THAT THE AO HA S CLEARLY RECORDED THE FINDING THAT THE SALES TAX AUTHORITIES HAVE MADE TH E ADDITION OF RS.1,95,865/- FOR SALE OF SCRAP OUTSIDE BOOKS. THE ASSESSEE HAD ACCEPTED THE ABOVE ORDER OF THE SALES-TAX AUTHORITIES. BASED UPON THE FINDINGS OF THE SALES-TAX AUTHORITIES, THE AO MADE THE ADDITION OF RS.1,95,865/- BEING UND ISCLOSED SCRAPE SALES. THE ASSESSEE ACCEPTED THE SAME ALSO. IT IS TRUE THAT THE FINDINGS IN THE ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE SO FAR AS PENALTY PR OCEEDINGS ARE CONCERNED AND THE ASSESSEE IS AT LIBERTY TO PRODUCE THE FRESH EVI DENCE IN SUPPORT OF ITS CLAIM DURING PENALTY PROCEEDINGS. HOWEVER, WE FIND THAT IN RESPONSE TO THE PENALTY NOTICE ON THE FIRST DATE OF HEARING THE ASSESSEE DI D NOT APPEAR. IN RESPONSE TO THE SECOND NOTICE ALSO THE ONLY EXPLANATION GIVEN W AS THAT THERE WAS NO CONCRETE OR COGENT EVIDENCE FOUND BY THE AO WITH RE GARD TO SCRAP SALES. THAT WHEN THE FINDINGS OF THE SCRAP SALES OUTSIDE THE BO OKS WAS MADE BY TWO DIFFERENT AUTHORITIES AND THE ASSESSEE HAD ACCEPTED THE ORDER OF BOTH THE AUTHORITIES THEREFORE NOW IN THE PENALTY PROCEEDING S BURDEN WAS UPON THE ASSESSEE TO SHOW HOW THE FINDINGS GIVEN BY THOSE AU THORITIES WAS WRONG. IN VIEW OF THE ABOVE, WE HOLD THAT IN THE ABSENCE OF A NY SATISFACTORY EXPLANATION FURNISHED BY THE ASSESSEE DURING THE PENALTY PROCEE DINGS, THE AO WAS FULLY JUSTIFIED IN RELYING UPON THE FINDING GIVEN IN THE ASSESSMENT ORDER. 6. WITH REGARD TO THE LEVY OF PENALTY UNDER SECTION 271(1)(C), IN A CASE WHERE THE ASSESSED INCOME IS NIL, WE FIND THIS ISSU E IS COVERED IN FAVOUR OF THE ITA.NO.2087/AHD/2008 -4- REVENUE BY THE DECISION OF THE HONBLE APEX COURT I N THE CASE OF SAHELI LEASING & INDUSTRIES LTD. (SUPRA) WHEREIN THEIR LOR DSHIPS HELD AS UNDER: THE PURPOSE BEHIND SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, WAS TO PENALIZE THE ASSESSEE FOR (A) CONCEALING PAR TICULARS OF INCOME, AND/OR (B) FURNISHING INACCURATE PARTICULARS OF SUC H INCOME. WHETHER THE INCOME RETURNED WAS A PROFIT OR A LOSS WAS REAL LY OF NO CONSEQUENCE. THEREFORE, EVEN IF NO TAX WAS PAYABLE, PENALTY WAS STILL LEVIABLE. EVEN PRIOR TO THE AMENDMENT OF 1976 WHEN EXPLANATION 4(A ) WAS ADDED, IT COULD NOT BE READ TO MEAN THAT IF NO TAX WAS PAYABL E BY THE ASSESSEE ON THE BASIS OF HIS FILING THE RETURN DISCLOSING A LOS S, THE ASSESSEE WAS NOT LIABLE TO PAY PENALTY EVEN IF THE ASSESSEE HAD CONC EALED AND/OR FURNISHED INACCURATE PARTICULARS. BY CHANGING THE EXPRESSION ANY BY IF ANY, PARLIAMENT THOUGHT IT FIT TO CLARIFY THE POSITION. THIS WAS NOT A SUBSTANTATIVE AMENDMENT CREATING IMPOSITION OF PENA LTY FOR THE FIRST TIME. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE AB OVE DECISION OF THE HONBLE APEX COURT, WE UPHOLD THE ORDER OF THE PENALTY LEVI ED UNDER SECTION 271(1)(C) OF THE ACT. 7. IN THE RESULT, THE ASSSESSEES APPEAL IS DISMIS SED. ORDER PRONOUNCED IN OPEN COURT ON 17 TH SEPTEMBER, 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 17-09-2010 COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) ITA.NO.2087/AHD/2008 -5- 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD