ACIT, Pondicherry V. Ram Thanga Nagai Maligai, Pondicherry

ITA 2183/CHNY/2014

• Counselvise Citation: 218321714 RSA 2014
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 01-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 26-08-2014
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 27

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2183 /MDS./2014 ( !' #' / ASSESSMENT YEAR :2008-09) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-I, D.P.THOTTAM, MUTHIALPET, PUDUCHERRY 605 003. VS. M/S.RAM THANGA NAGAI MALIGAI , 225, J N STREET, PONDICHERRY 605 001. PAN AAJFR 6550 R ( / APPELLANT ) ( / RESPONDENT ) $% & ' / APPELLANT BY : MR.N.MADHAVAN, JCIT D.R ()$% & ' / RESPONDENT BY : MR.R.VIJAYARAGHAVAN,ADVOCATE * + & ,- / DATE OF HEARING : 01.06.2015 .# & ,- /DATE OF PRONOUNCEMENT : 10.06.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-VI, CHENN AI DATED 30.03.2014 IN ITA NO.384/13-14 PASSED UNDER SEC.27 1(1)(C) READ WITH SECTION SEC. 250 OF THE ACT. ITA NO.2183 /MDS/2014 M/S.RAM THANGA NAGAI MALIGAI 2 2. THE REVENUE HAS RAISED FOUR ELABORATE GROUNDS I N ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE REVENUE I S AGGRIEVED BY THE ORDER OF THE LD. CIT (A), WHO HAD DELETED THE PENAL TY LEVIED FOR ` 9,62,094/- UNDER SEC. 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A FIRM, ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF JE WELLERY, FILED ITS RETURN OF INCOME ON 30.09.2008 ADMITTING ITS INCOM E AS ` 74,55,303/- PURSUANT TO SURVEY CONDUCTED U/S.133A IN THE BUSINE SS PREMISES OF THE ASSESSEE ON 28.02.2008. DURING THE COURSE OF SU RVEY, IT WAS FOUND THAT THE ASSESSEE HAD EXCESS STOCK OF 549/657 GMS OF GOLD, 2,75,223.140 GMS OF SILVER AND 5.430 CARATS OF DIAM OND AND THE ASSESSEE FIRM HAD AGREED TO OFFER THE SAME AS EXCES S STOCK VALUED AT ` 5,03,00,072/- THEREAFTER, THE ASSESSMENT WAS COMPLE TED U/S.143(3) OF THE ACT ON 29.12.2010 ASSESSING THE A DMITTED INCOME AMOUNTING TO ` 74,55,303/- WHICH INCLUDED THE EXCESS STOCK FOUND A T THE TIME OF SURVEY AMOUNTING TO ` 5,03,00,072/-. THE GIST OF THE ORDER IS REPRODUCED HEREIN BELOW:- ITA NO.2183 /MDS/2014 M/S.RAM THANGA NAGAI MALIGAI 3 DURING THE COURSE OF SURVEY ON 28.02.2008, INVENTO RY OF STOCK WAS TAKEN. THE EXCESS STOCK OF 549/657 GMS OF GOLD, 2,75,223.1 40 GMS OF SILVER AND 5.430 CARATS OF DIAMOND WERE DETECTED. AT THE TIME OF SURVEY, THE ASSESSEE FIRM HAD AGREED TO OFFER THE EXCESS STOCK FOR ASSESSMENT. ACCORDINGLY, THE ASSESSEE FIRM HAS OFFERED THE VALU E FOR THE DIFFERENCE IN STOCK FOR ASSESSMENT IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2008-09 AND PAID THE TAXES THEREON. 4. THE LD. ASSESSING OFFICER WHILE PASSING THE ORD ER INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) OF THE ACT . SUBSEQUENTLY THE LD.A.O IN THE PENALTY PROCEEDINGS LEVIED PENALT Y FOR ` 9,62,094/- BY OBSERVING AS UNDER:- IN RESPONSE TO THE NOTICE ISSUED, THE ASSESSEE HAS FILED A REPLY, DATED 26.01.2011AND 09.06.2011 REQUESTING TO DROP THE PEN ALTY PROCEEDINGS, SINCE, THE ASSESSING OFFICER DID NOT MAKE ANY ADDIT IONS, THERE IS NO CONCEALMENT OF INCOME AND HE HAS CO-OPERATED WITH T HE DEPARTMENT BY AGREEING THE ADDITIONS MADE AND PAID THE TAXES DUE. THE REASONS EXPLAINED BY THE ASSESSEE THROUGH THE LETTER COULD NOT BE CONSIDERED AND THE STATEMENT THAT THE ASSESSEE DID NOT CONCEAL INC OME IS NOT ACCEPTABLE, DUE TO THE FACT THAT THE INTENTION OF THE ASSESSEE TO EVADE TAX, CAME TO LIGHT DUE TO CONDUCT OF SURVEY U/S.133A OF THE INCO ME TAX ACT BY THE DEPARTMENT. THE TOTAL VALUE OF THE DIFFERENCE IN STOCK OFFERE D FOR ASSESSMENT IS RS.5,03,00,072/-. AS THE NET PROFIT ADMITTED BY THE ASSESSEE IS 6.19% AS ITA NO.2183 /MDS/2014 M/S.RAM THANGA NAGAI MALIGAI 4 PER AUDIT REPORT FILED IN FORM 3CD, CONCEALED INCOM E OF THE ASSESSEE IS CALCULATED AT RS.31,13,574/-. HENCE, THE TAX TO BE EVADED INCLUDING EDUCATION CESS WORKS OUT TO RS.9,62,094/-. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF T HE CASE , I HOLD THAT THIS IS A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961. ACCORDINGLY PENALTY OF RS.9,62,094/- (RUPEES NINE LAKHS SIXTY TWO THOUSAND AND NINETY FOUR ONLY) IS LEVIED U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 IN THE CASE OF THE ASSESSEE FO R THE ASSESSMENT YEAR 2008-09. 5. ON APPEAL, THE LD. CIT (A) DELETED THE PENALTY CITING VARIOUS DECISIONS OF THE HONBLE HIGH COURTS AND TRIBUNAL A ND THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREIN BELOW:- 5 . 3 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR OF THE APPELLANT AND ALSO THE FINDINGS OF THE ASSESSING OFFICER IN THE O RDER OF PENALTY AND ORDER OF ASSESSMENT CAREFULLY. THE APPELLANT IS A REGULA R INCOME TAX PAYER. THE SCRUTINY ASSESSMENT ORDER PASSED ON 29.12.2010 BY T HE ASSESSING OFFICER SHOWS THAT THE RETURNED INCOME WAS ACCEPTED BY THE ASSESSING OFFICER. NO POSITIVE CONCEALMENT OF INCOME WAS DETECTED BY T HE ASSESSING OFFICER WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE DEPARTMENT ARRIVED AT THE FIGURE OF THE INCOME OF THE APPELLAN T DURING THE A.Y UNDER CONSIDERATION ON THE BASIS OF THE ENTRIES RECORDED IN THE BOOKS OF ACCOUNTS. FURTHER, THE EXPLANATION 3 TO SECTION 27 1(1)(C) APPLIES ONLY IN RESPECT OF THE CASES WHEREIN THE RETURN WAS FILED A FTER THE EXPIRY OF THE ITA NO.2183 /MDS/2014 M/S.RAM THANGA NAGAI MALIGAI 5 TIME LIMIT AS PER SECTION.153 OF THE IT ACT. EVEN T HE APPELLANTS CASE IS NOT COVERED UNDER EXPLANATION 3 TO SECTION 271(1)(C) OF THE INCOME TAX ACT. THE CONCEALMENT STARTS ONLY AFTER THE RETURN OF INC OME WAS FILED OR AFTER THE DUE DATE OF FILING BELATED RETURN EXPIRED AND T HE DEPARTMENT DETECTED MATERIAL FACT AFTER THE HAPPENING OF ANY OF THE EVE NTS AS DISCUSSED ABOVE. THE RATIO FO THE DECISION RELIED UPON BY THE A.R OF THE APPELLANT IS FULLY APPLICABLE TO THE FACTS OF THE CASE. HONBLE ITAT A HMEDABAD C BENCH IN THE CASE OF DCIT VS. DR.SATISH B GUPTA REPORTED IN (2011) 135 ITR 0611 HELD THAT THE DUTY TO DISCLOSE THE PARTICULARS OF I NCOME ARISES AT THE TIME WHEN THE ASSESSEE FURNISHED THE RETURN OF INCOME U/ S.139 OF THE IT ACT AND IF IN FILING HIS RETURN HE CONCEALS THE PARTICU LARS OF INCOME OR FURNISHES INACCURATE PARTICULARS IN THE RETURN OF INCOME. IN THE CASE OF PATNA GUINEA HOUSE & OTHERS VS. LD. CIT (2000) 161 CTR (PAT 536) ; (2000) 243 ITR 274(PAT) IT IS HELD THAT THERE IS NO CASE FOR LEVY OF PENALTY IF INCOME IS DISCLOSED IN THE RETURN OF INCOME BUT ASSESSEE HAS REFUSED TO DISCLOSE THE SOURCE OF INCOME. IN CIT VS. S K G ARTHANARISWAMY CHETTIAR (1980) 19 CTR (MAD.) 240; (1980) 136 ITR 145(MAD.) HONBLE MA DRAS HIGH COURT HELD THAT PENALTY CAN BE IMPOSED WITH REFERENCE TO THE CONCEALMENT DONE IN THE ORIGINAL RETURN FILED U/S.139. IT IS HELD BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SMT.GOVINDA DEVI VS. CIT (200 8) 200 CTR (ALL) 189 THAT NO PENALTY IS LEVIABLE IF THE IMPUGNED AMOUNT IS DISCLOSED IN THE RETURN OF INCOME. HONBLE DELHI HIGH COURT IN THE CASE OF LD. CIT VS. SAS ITA NO.2183 /MDS/2014 M/S.RAM THANGA NAGAI MALIGAI 6 PHARMACEUTICALS REPORTED IN 335 ITR 0259 HELD THAT NO PENALTY IS LEVIABLE IF THE ASSESSEE DISCLOSES THE PARTICULARS OF INCOME AND SURRENDERING THE ENTIRE INCOME IN THE RETURN DUTY FILED. HONBLE ITA T CHENNAI B BENCH IN THE CASE OF RMP INFOTECH P LTD REPORTED IN (2011) 0 12 ITR (TRIB) 0581 HELD THAT PENALTY IS NOT LEVIABLE IN A CASE WHERE N O CLEAR FINDING IN THE PENALTY ORDER WHETHER ADDITION ON ACCOUNT OF CONCEA LMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME EVEN IN THE CASE OF OFFER OF ADDITIONAL INCOME ON ACCOUNT OF OMISSIONS/MISTAKES AND MISSING VOUCHERS DURING THE SURVEY ACTION. RESPECTFULLY FOLLOWING TH E RATIO OF THE DECISIONS OF VARIOUS HIGH COURTS (SURPA) AND ITAT (SUPRA), I AM OF THE CONSIDERED VIEW THAT NO PENALTY IS LEVIABLE SECTION 271(1)(C) OF T HE INCOME TAX ACT ON THE FACTS OF THE CASE. HENCE ASSESSING OFFICER IS DIREC TED TO DELETE THE PENALTY LEVIED OF RS.9,62,094/-. 6. LD. A.R. SUBMITTED BEFORE US THAT THE ASSESSEE HAD NOT CONCEALED ITS INCOME IN THE RETURN OF INCOME FILED BEFORE THE REVENUE. THE DISCREPANCIES FOUND AT THE TIME OF SU RVEY WAS RECTIFIED AND CONSIDERED WHILE ARRIVING AT THE INCOME FOR THE RELEVANT ASSESSMENT YEAR AND THE SAME WAS INCLUDED IN THE RE TURN OF INCOME. IT WAS THEREFORE SUBMITTED THAT THE ASSESSEE HAD NO T FURNISHED INACCURATE PARTICULARS OR CONCEALED ANY INCOME IN T HE RETURN OF ITA NO.2183 /MDS/2014 M/S.RAM THANGA NAGAI MALIGAI 7 INCOME FILED BEFORE THE REVENUE. HENCE IT WAS PRAYE D THAT THE PENALTY LEVIED BY THE REVENUE MAY BE DELETED. LD. D.R ON THE OTHER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE LD. ASS ESSING OFFICER. 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF T HE CASE, IT IS APPARENT THAT THE ASSESSEE HAS NOT CONCEALED ITS IN COME OR FURNISHED INACCURATE PARTICULARS IN THE RETURN OF INCOME FILE D BEFORE THE REVENUE. THE EXCESS STOCK FOUND AT THE TIME OF SEAR CH WAS TAKEN INTO ACCOUNT FOR ARRIVING AT THE INCOME OF THE ASSE SSEE DURING THE RELEVANT ASSESSMENT YEAR AS OBSERVED BY LD. ASSESSI NG OFFICER IN HIS ASSESSMENT ORDER. THE LD. CIT (A) ALSO OBSERVED IN HIS ORDER THAT THE APPELLANTS CASE DO NOT FALL UNDER EXPLANATION (3) TO SECTION-271(1)(C) OF THE INCOME TAX ACT BECAUSE CONCEALMENT OF INCOME STARTS ONLY AFTER THE RETURN OF INCOME WAS FILED OR SUBSEQUENT TO FILING OF BELATED RETURN OF INCOME WHEN THE DEPARTMENT DETECTS CERTAI N INCOME AS ESCAPED. CONSIDERING THE FACTS OF THE CASE, THE DEC ISIONS CITED BY THE LD. CIT (A) IS ALSO SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE AND THEREFORE, WE DO NOT FIND IT NECESSARY TO INTER FERE WITH HIS ORDER. ITA NO.2183 /MDS/2014 M/S.RAM THANGA NAGAI MALIGAI 8 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED ON 10 TH JUNE, 2015 AT CHENNAI. SD/- SD/- ( . . . ) ( N.R.S.GANESAN ) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 10 TH JUNE, 2015. K S SUNDARAM. & (,/0 1 0#, /COPY TO: 1. $% /APPELLANT 2. ()$% /RESPONDENT 3. * 2, ( ) /CIT(A) 4. * 2, /CIT 5. 05 (,6! /DR 6. 7' 8+ /GF