Shri Praksh S.Vyas, Baroda V. The Income tax Officer,Ward-2(2), Baroda

ITA 2147/AHD/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9869 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-09-2010
• Assessment Year: misc
• Appeal Filed On: 21-05-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHELLY JINDAL
• Keywords: Depreciation; Reasonable cause; Difference of opinion; Revised return
• Section: 273B; 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH C CC C BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI MUKUL SHRAWAT MUKUL SHRAWAT MUKUL SHRAWAT MUKUL SHRAWAT, , , , JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI SHRI SHRI SHRI N.S.SAINI N.S.SAINI N.S.SAINI N.S.SAINI, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING 23-9-10: DRAFTED ON: 23-9-10 ITA NO. 2147 /AHD/ 2007 ASSESSMENT YEAR :1984-85 SHRI PRAKAS H S. VYAS, C/O. PARAS SERVICE STATION, MAKARPURA, BARODA. VS. INCOME TAX OFFICER, WARD 2(2), AAYAKAR BHAVAN, NEAR RACE COURSE CIRCLE, BARODA. PAN/GIR NO. : AAZPV7918B (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : MS. URVASHI SHODHAN RESPONDENT BY : MR. SHE L LY JINDAL, CIT(D.R.) O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, BA RODA DATED 16-3-2007. 2. THE SOLE GROUND OF APPEAL OF THE ASSESSEE READS AS UNDER:- LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW AND ON FACTS IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 273(1)(B) OF THE ACT IN THE SUM OF `.70,123 /- WHICH IS WHOLLY UNJUSTIFIABLE IN LAW AND ON FACTS AND AS SUC H THE APPELLANT COULD NOT BE CHARGED WITH ANY GUILT OF NO T FURNISHING TRUE STATEMENT OF ADVANCE TAX PAYABLE. THE LEVY OF PENALTY BEING WITHOUT ANY MERITS AND JUSTIFICATION REQUIRES TO BE QUASHED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE , A SEARCH OPERATION WAS CARRIED OUT ON THE ASSESSEE UNDER SEC TION 132 OF THE ACT ON 29-11-1988 DURING WHICH CERTAIN INCRIMINATIN G DOCUMENTS - 2 - WERE FOUND AND SEIZED. THE ASSESSMENT UNDER SECTIO N 143(3) R.W.S.147 WAS COMPLETED ON 31-3-1994 AT AN INCOME O F `.13,78,046/- IN PLACE OF RETURNED INCOME OF `.25,150/-. THE ADDI TION WAS CONFIRMED IN APPEAL BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND THE TRIBUNAL. 3. THEREAFTER, THE LEARNED ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 273(1)(B) OF THE ACT OF `.70,123/- ON THE G ROUND THAT THE ASSESSEE FAILED TO FURNISH TRUE STATEMENT OF ADVANC E TAX AS PER CLAUSE (A) OF SECTION 209A(I) OF THE INCOME TAX ACT . 4. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) THE ASSESSEE CONTENDED THAT ADDITIONS WER E MADE ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED F ROM THE BANK LOCKER AND RESIDENCE OF THE ASSESSEE. IT WAS ALSO C ONTENDED THAT THE ASSESSEE COULD NOT ANTICIPATE THAT ADDITION WOULD B E MADE AT THE TIME OF ASSESSMENT. IT WAS FURTHER CONTENDED THAT DISPARITY BETWEEN THE RETURNED INCOME AND ASSESSED INCOME SHOULD NOT GIVE RISE TO THE INFERENCE THAT INCOME DISCLOSED BY THE ASSESSEE WHO WAS LIABLE TO ADVANCE TAX WAS UNTRUE. IT WAS ALSO CONTENDED THAT INCOME WAS HONESTLY DISCLOSED BY THE ASSESSEE WHO SUBSEQUENTLY TURNED OUT TO BE INCORRECT DUE TO DIFFERENCE OF OPINION BETWEEN T HE ASSESSEE AND THE DEPARTMENT. THE INFERENCE SHOULD NOT BE DRAWN T HAT INCOME ORIGINALLY DISCLOSED WAS NOT AN HONEST ONE. IT WAS CONTENDED THAT THE DEFECT IS TECHNICAL IN NATURE AND THEREFORE, NO PEN ALTY SHOULD BE LEVIED. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE PENALTY SINCE THE ASSESSEE WAS NOT ABLE TO ESTA BLISH THAT THERE WAS ANY REASONABLE CAUSE FOR NOT FILING THE TRUE ST ATEMENT OF ADVANCE TAX. 6. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE FILED BEFORE US COPY OF THE ORDER OF THIS BENCH OF THE TR IBUNAL IN THE CASE OF GUJARAT MACHINERY MANUFACTURERS LTD. VS. ITO (19 82) 41 ITD 509 (AHD) AND SUBMITTED THAT THE CASE OF THE ASSESSEE W AS SQUARELY - 3 - COVERED BY THE SAID DECISION OF THE TRIBUNAL. FOLL OWING THE SAME THE PENALTY LEVIED SHOULD BE DELETED. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTE D THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS). 8. WE FIND THAT THE TRIBUNAL IN THE CASE OF GUJARAT MACHINERY MANUFACTURERS PVT LTD., (SUPRA) HELD AS UNDER :- THE PROVISIONS OF S. 273(1) (B) AS IT EXISTED PR IOR TO ITS AMENDMENT BY THE TAXATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT, 1986 W.E.F. 10TH SEP T., 1986 PROVIDED THAT WHERE ANY ASSESSEE HAS WITHOUT REASON ABLE CAUSE FAILED TO FURNISH A STATEMENT OF ADVANCE TAX PAYABLE BY HIM IN ACCORDANCE WITH S. 209A (1) (A), HE MAY BE L IABLE FOR PENALTY UNDER THE SAID PROVISION. THE WORDS WITHOU T REASONABLE CAUSE HAVE BEEN OMITTED BY THE AFORESAI D AMENDMENT MADE W.E.F. 10 TH SEPTEMBER, 1986. AT THE SAME TIME IT HAS BEEN PROVIDED BY A NEW S. 273B PROVIDIN G THAT NO PENALTY SHALL BE IMPOSABLE FOR SUCH A DEFAULT IF TH E ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. THE SCOPE AND MEANING OF THESE AMENDMENTS HAVE BEEN EXPLAINED IN THE BOARD'S CIRCULAR NO. 469 DATED 23 RD SEPTEMBER, 1986, PUBLISHED IN (1987) 59 CTR (ST) 9 : (1986) 162 ITR (ST) 21. IN PARA 12.4(B) OF THE SAID CIRCUL AR, APPEARING AT PAGE 17 OF CTR & 37 OF ITR, IT HAS BEEN MENTIONE D THAT UNDER THE EXISTING PROVISIONS PENALTY IS LEVIABLE I F THE ABOVE DEFAULTS ARE COMMITTED WITHOUT REASONABLE CAUSE. BY OMITTING THE WORDS 'WITHOUT REASONABLE CAUSE' FROM THESE PRO VISIONS, IT HAS BEEN PROVIDED THAT THE DEFAULT BY ITSELF WILL A TTRACT PENALTY UNLESS THE ASSESSEE PROVES THAT THERE WAS REASONABL E CAUSE FOR THE SAID FAILURE. IT HAS BEEN SPECIFICALLY MENT IONED THAT BY THESE AMENDMENTS, THE ONUS OF PROVING THE EXISTENCE OF REASONABLE CAUSE FOR DEFAULTS REFERRED TO IN THESE PROVISIONS HAS BEEN CAST ON THE TAXPAYER. IT IS THUS APPARENT THAT PRIOR TO THE AFORESAID AMENDMENT MADE W.E.F. 10TH SEPTEMBER, 1986, THE BURDEN LAY ON THE REVENUE TO PROVE THAT SUCH A DEFAULT WAS COMMITTED WITHOUT REASONABLE CAUSE. IT IS ALSO WELL SETTLED LAW THAT FOR THE PURPOSE OF DETERMINING THE APPLICA BILITY OF THE PROVISIONS RELATING TO SUBMISSION OF STATEMENT OF A DVANCE TAX/ESTIMATE OF ADVANCE TAX PAYABLE BY THE ASSESSEE , THE ESTIMATE OF CURRENT INCOME HAS TO BE CONSIDERED ON THE BASIS OF ASSESSEE'S OWN BONA FIDE ESTIMATE OF ITS CURRENT INCOME AT THE CONTEMPORARY PERIOD WHEN SUCH STATEMENT OR ESTI MATE OF ADVANCE TAX WAS REQUIRED TO BE FILED. THEREFORE, FO R DECIDING THE QUESTION OF LEVIABILITY OR OTHERWISE OF PENALTY IN THE PRESENT CASE, WE WILL HAVE TO VISUALIZE THE FACTS A ND CIRCUMSTANCES AS IT EXISTED IN THE MONTH OF JUNE, 1 981 WHEN THE ASSESSEE WAS REQUIRED TO SUBMIT THE STATEMENT O F ADVANCE TAX. BEFORE WE UNDERTAKE THIS EXERCISE IT WILL BE W ORTHWHILE TO MENTION THAT THE ITO HAS NOT POINTED OUT IN THE PEN ALTY ORDER - 4 - NOR THE LEARNED SR. DEPARTMENTAL REPRESENTATIVE OR THE REPRESENTATIVE OF THE ASSESSEE WERE ABLE TO SAY AS TO WHAT WAS THE TOTAL ASSESSED INCOME OF THE LATEST PREVIOU S YEAR OR WHAT WAS THE INCOME ON THE BASIS OF WHICH TAX HAD B EEN PAID BY THE ASSESSEE UNDER S. 140A IF IT EXCEEDS THE TOT AL INCOME OF THE LATEST PREVIOUS YEAR. THE ASSESSEE IS LIABLE TO FURNISH STATEMENT OF ADVANCE TAX ON THE BASIS OF SUCH FIGUR ES. THE LEARNED COUNSEL CONTENDED THAT ASSUMING THAT THE AP PELLANT WAS LIABLE TO FURNISH STATEMENT OF ADVANCE TAX, SIN CE THERE WAS A REASONABLE CAUSE FOR ENTERTAINING A BONA FIDE BELIEF THAT ITS INCOME WOULD BE NIL OR A NEGATIVE FIGURE, NO PE NALTY WOULD BE LEVIABLE IN THE PRESENT CASE. WITH THIS ADMISSIO N ON THE PART OF THE ASSESSEE LET US CONSIDER THE STATE OF A FFAIRS AS IT EXISTED ON 15TH JUNE, 1981. 5.1 THE BELIEF OF THE ASSESSEE THAT IT WOULD BE ENT ITLED TO CARRY FORWARD OF UNABSORBED LOSSES AND DEPRECIATION IN VI EW OF THE AMALGAMATION SCHEME UNDER S. 72A FROM ASST. YR. 198 1-82 AND ONWARDS CANNOT BE SAID TO BE NOT A BONA FIDE BE LIEF. SUCH A BELIEF IS PROVED BY THE FACT THAT IN THE RETURN O F INCOME SUBMITTED FOR ASST. YR. 1980-81 AND 2ND JULY, 1980 THE ASSESSEE DID NOT CLAIM BENEFIT OF ANY AMOUNT OF CAR RY FORWARD OF LOSS OF EIMC AS PER S. 72A AND IT CLAIMED THE BE NEFIT OF CARRY FORWARD OF SUCH LOSS UNDER S. 72A ONLY IN ASST. YRS . 1981-82 AND 1982-83. THE MATTER RELATING TO ELIGIBILITY OF THE ASSESSEE UNDER S. 72A FOR CLAIMING SUCH CARRY FORWARD OF LOS SES PURSUANT TO THE AMALGAMATION SCHEME WAS FINALISED O N 3RD SEPT., 1982 I.E., MUCH AFTER THE DUE DATE OF 15TH J UNE, 1981. SOMETIME AFTER RECEIVING THE DECLARATION UNDER S. 7 2A THE ASSESSEE SUBMITTED REVISED RETURN FOR ASST. YRS. 19 80-81 AND 1981-82 AND ALSO SUBMITTED A REVISED COMPUTATION OF TOTAL INCOME FOR ASST. YR. 1982-83 ALONG WITH FORWARDING LETTER DATED 1 ST JANUARY, 1983. IN SIMILAR MANNER THE BELIEF FORME D BY THE ASSESSEE THAT IN RELATION TO ITS CLAIM FOR GRANT OF DEDUCTION IN RESPECT OF ROYALTY CANNOT BE SAID TO BE NOT BONA FI DE. THE CLAIM FOR SUCH DEDUCTION WAS GRANTED IN ASST. YRS. 1976-77 TO 1978-79. FOR THE FIRST TIME SUCH A CLAIM WAS REJECT ED IN ASST. YR. 1979-80 VIDE ASSESSMENT ORDER DATED 19TH SEPTEM BER, 1983. THIS ALSO WAS MUCH AFTER THE DUE DATE OF 15TH JUNE, 1981. SUCH A BONA FIDE BELIEF FORMED BY THE ASSESSE E THAT ITS INCOME WOULD BE NIL OR A NEGATIVE FIGURE IS ALSO CO RROBORATED BY THE ORIGINAL RETURNS OF INCOME SUBMITTED FOR ASS T. YRS. 1981- 82 AND 1982-83 SHOWING SUBSTANTIAL AMOUNT OF LOSS I N THE SAID RETURNS. THE INTEREST LEVIED UNDER S. 215 IN THE CA SE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS CANCE LLED BY THE CIT(A). THE CONTENTION OF THE LEARNED COUNSEL T HAT THE SAID FINDING GIVEN BY THE CIT(A) HAS BEEN ACCEPTED BY TH E DEPARTMENT AS THEY HAVE NOT PREFERRED ANY APPEAL AG AINST SUCH DELETION OF INTEREST UNDER S. 215 HAS NOT BEEN CONTROVERTED OR DISPUTED BY THE SR. DEPARTMENTAL REPRESENTATIVE. SUCH DELETION OF INTEREST UNDER S. 215 AND ITS ACCEPTANCE BY THE DEPARTMENT SUPPORTS THE ASSESSEE' S - 5 - CONTENTION THAT THE DISALLOWANCES AND ADDITIONS MAD E AFTER SUBMISSION OF THE ORIGINAL RETURN OF INCOME EITHER BY THE ASSESSEE ITSELF IN THE REVISED RETURN OR IN THE ASS ESSMENT PROCEEDINGS COULD NOT HAVE ANTICIPATED BY THE ASSES SEE AT THE TIME WHEN IT WAS REQUIRED TO SUBMIT ITS STATEMENT O F ADVANCE TAX ON 15TH JUNE, 1981. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT P ENALTY UNDER S. 273(1) (B) CANNOT BE SUSTAINED. 9. IN THE INSTANT CASE WE FIND THAT NO MATERIAL WAS BROUGHT BEFORE US BY THE ASSESSEE TO SHOW THAT ANY INTEREST UNDER SECTION 215 LEVIED BY THE LEARNED ASSESSING OFFICER WAS DEL ETED IN APPEAL. FURTHER, THE ASSESSEE ALSO COULD NOT EXPLAIN WHAT W ERE THE INCOME WHICH WERE ASSESSED FOR THE ASSESSMENT YEAR UNDER C ONSIDERATION WHICH COULD NOT HAVE BEEN ANTICIPATED BY HIM BEFORE THE DUE DATE OF FURNISHING OF STATEMENT UNDER SECTION 209A(I). THE ASSESSEES CONTENTION THAT THE STATEMENT FILED UNDER SECTION 2 09A (I) SHOWING ESTIMATED INCOME AT `.25,150/- WAS AN HONEST ESTIMA TE IS WITHOUT ANY FACTUAL FOUNDATION. THE ASSESSEE HAS NOT BROUGH T ANY MATERIAL BEFORE US TO SUBSTANTIATE HIS CLAIM THAT THE INCOME WHICH WAS ULTIMATELY ASSESSED AFTER SEARCH PROCEEDINGS COULD NOT HAVE BEEN REASONABLY ESTIMATED BY HIM AT THE DUE TIME OF FILI NG OF STATEMENT UNDER SECTION 209A(I). IN ABSENCE OF ANY SUCH MATER IAL WE FIND THAT THE CASE OF THE ASSESSEE IS DISTINGUISHABLE ON FACT S FROM THE CASE OF GUJARAT MACHINERY MANUFACTURERS PVT. LTD.,(SUPRA) A ND WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. THEREFORE, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30 TH DAY OF SEPTEMBER, 2010. SD/- SD/- (MUKUL SHRAWAT ) ( N.S. SAINI ) JUDICIAL MEMBER AC COUNTANT MEMBER AHMEDABAD: ON THIS 30 TH DAY OF SEPTEMBER, 2010 COMPILED AND COMPARED BY: PATKI - 6 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II,BARODA. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS . DRAFT DICTATED ON 23-9-2010 ---------------- --- 2. DRAFT PLACED BEFORE AUTHORITY 24-9-2010 ------ ------------- 3. DRAFT PROPOSED & PLACED 27-9-2010 ------------ ------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 27-9-2010 ----------- -------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 30-9-2010 --------- ----------- 6. KEPT FOR PRONOUNCEMENT ON 30-9-2010 ---------- ---------- 7. FILE SENT TO THE BENCH CLERK 30-9-2010 ------- ------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- ---- -----------------