M/s Jamadar Travels, Bharuch V. The Dy.CIT.,Bharuch Circle, Bharuch

ITA 2326/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50874 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-09-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 31-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K PATEL
• Section: 143(3); 14A

Judgement Text

, , . .. . . .. . , , , , . .. .!' !' !' !' !' !' !' !' , # # # # $ $ $ $ IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SHR I A.MOHAN ALANKAMONY, A.M.) . ITA NO. 2326/AHD./2009 : ' %&- 2001-2002 M/S. JAMADAR TRAVELS, BHARUCH VS- DCIT, BHARUCH CIRCLE, BHARUCH (PAN : AABFJ 9426G) ()* /APPELLANT) ( +,)* /RESPONDENT ) )* - . / APPELLANT BY : SHRI MEHUL K. PATEL +,)* - . / RESPONDENT BY : SHRI SAMIR TEKRIWAL, SR.D.R. /'0 - 1# / DATE OF HEARING : 21/09/2011 2!% - 1# / DATE OF PRONOUNCEMENT : 25/10/2011 / ORDER PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 21-01-2009 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV, AHM EDABAD CONFIRMING THE PENALTY OF RS.2,98,290/- LEVIED BY THE AO UNDER SEC TION 271(1)(C) OF THE I.T. ACT, 1961 FOR THE ASSESSMENT YEAR 2001-2002. 2. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF TRANSPORT ON COMMISSION BASIS. FOR THE ASSESSMENT Y EAR UNDER APPEAL, IT FILED THE RETURN OF INCOME SHOWING TAXABLE INCOME AT RS.1,56, 740/-, WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE I.T.ACT, ACCEPTING THE RETURNED INCOME. SUBSEQUENTLY, NOTICE UNDER SECTION 143(2) WAS ISSUED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THERE WERE DISCREPANCIES IN GR OSS RECEIPTS BETWEEN BOOKS OF ACCOUNTS OF THE ASSESSEE AND TDS CERTIFICATE ISSUED BY THE COMPANY, THE DETAILS OF WHICH ARE AS UNDER: ITA NO. 2326-AHD-09 2 SR.NO. NAME OF THE COMPANY RECEIPTS AS RECEIPTS AS PER TDS PER BOOKS OF CERT. ACCOUNTS DIFFERENCE IN RECEIPTS. 1 GUJARAT GUARDIAN LTD. 4,291,794 3,310,409 981,385 2 R.P.G LIFE SCIENCE LTD. 1,470,006 1,469,725 725 3 GLAXO (I) LTD. 309,244 260,244 49,000 4 SHREERAM ALKALIES & CHEMICALS LTD. 1,220,356 1,102,779 117,577 5 SWIL LTD. 2,428,780 2,216,285 212,495 TOTAL 9,720,180 8,358,998 1,361,182 2.1 ON THE BASIS OF ABOVE FACTS, THE AO ASKED THE A SSESSEE TO SHOW CAUSE AS TO WHY THE RECEIPTS OF RS. 13,61,182/- SHOULD NOT BE TREATED AS UNEXPLAINED/U NDISCLOSED INCOME VIDE ORDER SHEET DATED 20.02.2004. TO THIS QUERY, N O REPLY WAS FURNISHED TILL THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 20.02 .2004. HE ACCORDINGLY MADE THE ADDITION OF RS. 13,61,182/- BY TREATING THE ENTIRE RECEIPTS OF RS. 13,61,182/- AS INCOME OF THE ASSESSEE AS ALL THE EXPENSES HAVE ALREADY BEEN DEBITED TO THE PROFIT & LOSS A/C. AND ALSO INITIATED THE PENALTY PROCEEDINGS UNDER SECTIO N 271(1)(C). AGAINST THE AFORESAID ORDER, AN APPEAL WAS PREFERRED AND THE LD. CIT(A)-I V, BARODA, VIDE HIS ORDER DATED 18.03.2004 CONFIRMED THE ADDITION OF RS.7,60,934/- OUT OF ADDITION OF RS.13,61,182/- MADE BY THE AO ON ACCOUNT OF UNDER-STATEMENT OF CON TRACT RECEIPTS. 2.2 IN REPLY TO SHOW CAUSE NOTICE ISSUED BEFORE LEV YING PENALTY UNDER SECTION 271(1)(C), THE ASSESSEE, VIDE REPLY DATED 20.03.200 7, MADE THE FOLLOWING SUBMISSIONS: ' OUR RECEIPT IS BY PROVIDING SERVICES TO THE CUSTOME RS & FOR OUR CUSTOMERS THE PAYMENT IF EXPENDITURE. MOREOVER WE A RE FOLLOWING MERCANTILE SYSTEMS & CUSTOMERS MAY FOLLOW OTHER METHOD ALSO. T HE CUSTOMERS OF CORPORATE SECTOR DEDUCT TDS ON THE BASIS OF PAYMENT ONLY & NOT ON RECEIPT OF OUR BILL. HENCE THIS IS DIFFERENCE DUE TO DIFFERENT ACCOUNTING METHOD. WE HAVE PRODUCED ALL BOOKS OF ACCOUNTS & VOUCHERS E TC, DURING ASSESSMENT PROCEEDINGS. THE LEARNED INCOME TAX OFFI CER HAS NOT FIND ANY MISTAKES IN THE BOOKS. HENCE IT IS PRIMARY OUR BOOK S RESULT MUST BE ACCEPTED. ITA NO. 2326-AHD-09 3 THE REAL ACCOUNTING METHOD STARTS FROM RISING OF IN VOICE & NOT FROM THE RECEIPT BECAUSE RECEIPT OF AMOUNT COMES AFTER PERIOD. WE HAVE TO ALSO PREFERRED APPEAL TO TRIBUNAL. CONSIDERING THE ABOVE FACTS, WE REQUEST YOU TO DROP PENALTY PROCEEDINGS OR KEEP IN ABEYANCE THE PENALTY PROCEED INGS. 2.3 AFTER CONSIDERING THE AFORESAID SUBMISSIONS, TH E AO, VIDE ORDER DATED 30.03.2007, LEVIED THE PENALTY OF RS.2,93,290/- WHI CH IS 100% OF TAX SOUGHT TO BE EVADED IN RESPECT OF UNDER-STATEMENT OF CONTRACT RE CEIPTS TO THE EXTENT OF RS. 13,61,182/-. IN THE PENALTY ORDER, THE AO OBSERVED THAT THE ASSESSEE MADE AN ATTEMPT TO UNDERSTATE THE CONTRACT RECEIPTS, THEREBY TRYING TO MINIMIZE THE ACTUAL PROFIT EARNED BY IT. THE AO ALSO STATED THAT THE ADDITION OF RS.7 ,60,934/- IS DEEMED TO REPRESENT CONCEALED INCOME, IN VIEW OF EXPLANATION 1 TO SECTI ON 271(1)(C) OF THE I.T. ACT, 1961 INSERTED W.E.F. 10.09.1986, WHICH PROVIDES THAT WHE RE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME, ANY PERSON FAIL S TO OFFER AN EXPLANATION, OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE OR WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE A ND THAT ALL THE FACTS RELATING THERETO AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED, THEN THE AMOUNT ADDED OR DISALLOWED SHALL BE DEEMED TO REPRE SENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. FOR THE PURP OSE, THE AO RELIED ON THE FOLLOWING DECISIONS: (1) B.A. BALSUBRAMANIAM AND BROTHERS CO. VS. C1T (1 999) 236 ITR 977, 978 (SC). & (2) CIT VS. MUSSADILAL RAM BHAROSE (1987) 165 ITR 2 4, 20 (SC), (3) CIT VS. K.R. SADYAPPAN (1990) 185 ITR 49 (SC), AND (4) CIT (ADDL.) VS. JEEVAN LAL SHAH (1994) 205 ITR 244 (SC). 3. AGAINST THE ORDER DATED 30.03.2007 OF THE AO LEV YING THE PENALTY OF RS.2,98,290/- UNDER SECTION 271(1)(C), THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE MADE A DETAILED SUBMISSION WHICH ARE REPRODUCED BY THE LD. CIT(A) IN THE IMPUGNED ORDER IN PARA 2.0. THE SUMS AND SUBSTANCES OF THE SUBMISSIONS ARE THAT THE ASSESSEE FIRM IS MAINTAINING BOOKS OF ITA NO. 2326-AHD-09 4 ACCOUNTS ON MERCANTILE SYSTEM AND THE CLIENT PROBAB LY ENTERED THE BOOK TRANSACTION ON CASH BASIS. HENCE, THEY DEDUCTED TDS AT THE TIME OF PAYMENT WHEREAS THE FIRM ENTERS THE INCOME AS AND WHEN THE FIRM RAISES THE BILLS. S O, ADDITION MADE BY THE LD. AO IS NOT PROPER AND IT IS NOT THE INCOME OF THE FIRM. IT WAS ALSO CONTENDED THAT THE INCOME MUST BE COMPUTED AS PER SYSTEM OF ACCOUNTING REGULA RLY FOLLOWED BY THE ASSESSEE, BUT IT CANNOT BE SAID THAT THE CREDIT FOR THE TAX DEDUC TED AT SOURCE IS TO BE ALLOWED AS PER ANY SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. HENCE, THE BOOKS OF ACCOUNTS ARE ALSO NOT REJECTED BY THE AO AND AGAIN TDS IS DEDUCT ED BY THE CUSTOMER WHICH CANNOT BE THE PROFIT. AFTER CONSIDERING THESE SUBMISSIONS, IN THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY OF RS.2,98,290/- LEVIE D BY THE AO UNDER SECTION 271(1)(C) FOR THE DETAILED REASONS GIVEN IN PARA 3. 0, WHICH READS AS UNDER: 3.0 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LEARNED COUNSEL AS WELL GONE THROUGH THE RECORDS. ON PERUSAL OF PENALT Y ORDER, IT HAS BEEN NOTICED THAT THERE WERE DISCREPANCIES IN THE GROSS RECEIPTS AS PER BOOK OF ACCOUNTS AND GROSS RECEIPTS WORKED OUT ON THE BASIS OF TDS CERTIFICATES ISSUED BY VARIOUS COMPANIES. ADMITTEDLY, THE APPELLANT IS FOLLOWING T HE MERCANTILE SYSTEM OF ACCOUNTING. THE APPELLANT FAILED TO EXPLAIN THE REA SONS FOR DISCLOSING LESS RECEIPT THAN MENTIONED IN THE TDS CERTIFICATES. EVE N DURING APPELLATE STAGE, LEARNED COUNSEL HAD GONE INTO THE PHILOSOPHY TDS PR OVISIONS INSTEAD OF EXPLAINING ABOUT THE DIFFERENCE IN GROSS RECEIPTS. HENCE, EVEN NOW, AT THE APPELLATE STAGE, THE APPELLANT HAS FAILED TO EXPLAI N THE DIFFERENCE IN GROSS RECEIPTS WORKED DOWN ON THE BASIS OF TDS CERTIFICAT ES. THE UNDERSTATEMENT OF RECEIPTS WAS ALSO CONFIRMED BY THE CIT(APPEALS)-IV, BARODA IN THE QUANTUM APPEAL. HENCE, IT IS EVIDENT THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS WITH THE INTENTION TO SHOW LESSER CONTR ACT RECEIPTS WITH THE OBJECTIVE TO. PAY LESS TAX, WHICH PROVE, THE MENS REA ON THE PART OF THE APPELLANT. HENCE, THE CONTENTIONS OF LEARNED COUNSEL CANNOT BE ACCEDE D TO, WHICH ARE HEREBY REJECTED. THE CASES RELIED UPON BY LEARNED COUNSEL ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE FACTS OF THE PRESEN T CASE ARE DIFFERENT FROM THE FACTS OF THE CASES RELIED UPON BY LEARNED COUNSEL. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY IMPOSED IS HEREBY CONFIRMED AND THE APPEAL IS DISMISSED. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE ASSESSEE, SHRI MEHUL K. PATEL APPEARED AND REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). TO A QUERY FROM ITA NO. 2326-AHD-09 5 THE BENCH THAT WHETHER THE ASSESSEE HAS FURNISHED A NY FURTHER RECONCILIATION, THE COUNSEL OF THE ASSESSEE EXPRESSED HIS INABILITY TO PROVIDE THE SAME IMMEDIATELY. HOWEVER, HE SUBMITTED THAT THERE IS NO LEVEL DEFAUL T. THEREFORE, PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. 6. ON THE OTHER HAND, SHRI SAMIR TEKRIWAL, SR.D.R., APPEARING ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). THE LD. D.R. ALSO PRODUCED A COPY OF THE DECISION DATED 21.01.2010 OF THE ITAT, D BENCH, AHMEDABAD IN ITA NO.1643/AHD/2005 WHEREIN IN QUANTU M APPEAL, THE TRIBUNAL CONFIRMED THE ADDITION OF RS.7,60,934/- ON THE GROU ND THAT THE ASSESSEE ADMITTED BEFORE THE LD. CIT(A) THAT NO FURTHER RECONCILIATIO N COULD BE FILED EXPLAINING THE UNDER-STATEMENT OF GROSS RECEIPT TO THE EXTENT OF R S.7,60,934/-. THE LD. D.R. ALSO RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN ITA NO.792 OF 2011 IN THE CASE OF PSB INDUSTRIES INDIA PVT. LTD. VS- CIT WHEREIN PEN ALTY UNDER SECTION 271(1)(C) WAS CONFIRMED ON ACCOUNT OF UNDER-STATEMENT OF ANNUAL L ETTING VALUE. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE ITAT, B BENCH, AHME DABAD IN THE CASE OF GUJARAT STATE FINANCIAL SERVICES VS- ACIT AND VICE VERSA I N ITA NOS. 2078 & 2526/AHD/2006 FOR THE ASSESSMENT YEAR 2001-02 WHERE IN THE PENALTY UNDER SECTION 271(1)(C) IS CONFIRMED IN RESPECT OF ESTIMATED DISA LLOWANCE UNDER SECTION 14A OF THE I.T. ACT, 1961. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS DECISION OF THE LD. CI T(A) AND THE TRIBUNAL IN QUANTUM APPEAL, WHEREBY THE ADDITION OF RS.7,60,934/-, ON W HICH PENALTY IN QUESTION IS LEVIED UNDER SECTION 271(1)(C), WAS CONFIRMED. IT IS PERT INENT TO NOTE THAT NEITHER IN THE QUANTUM PROCEEDINGS NOR IN THE PENALTY PROCEEDINGS, THE ASSESSEE HAS FURNISHED THE RECONCILIATION FOR THE UNDER-STATEMENT OF GROSS PRO FIT TO THE EXTENT OF RS.7,60,934/-. THE ITAT, IN THE QUANTUM APPEAL, IN ORDER DATED 21. 01.2010 ( SUPRA ) HAS CONFIRMED THE ADDITION OF RS.7,60,934/-. IN THESE CIRCUMSTANC ES, WE ARE CONVINCED THAT EXPLANATION OF THE ASSESSEE WAS NOT BONA FIDE . EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT WOULD BE FULLY APPLICABLE AND THE AO WAS JU STIFIED IN IMPOSING THE PENALTY ITA NO. 2326-AHD-09 6 WHICH HAS BEEN RIGHTLY CONFIRMED BY THE LD. CIT(A). WE, THEREFORE, DECLINE TO INTERFERE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 3 - 2!% 4' & 25 / 10 /2011 ! 5 - 60 7 THIS ORDER PRONOUNCED IN COURT ON 25/10/2011. SD/- SD/- (A.MOHAN ALANKAMONY) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25/10/2011 - -- - +18 +18 +18 +18 98%1& 98%1& 98%1& 98%1&- -- - 1. )* 2. +,)* 3. 1 /= 4. /=- - 5. 8@6 +1' , , 7 6. 6B C3 , D/ F , 7 TALUKDAR/ SR. P.S.