DCIT, BIKANER V. M/s. Mahaveer Tiles Factory, BIKANER

ITA 233/JODH/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9441 (ITAT-JODHPUR)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 15-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: U C JAIN
• Keywords: Bonafide belief; Initiation of penalty proceedings; Revised return
• Section: 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI S.V. MEHROTRA, A.M. AND SHRI V. DURGA R AO, J.M. ITA NO. 233/JU/2010 ASSESSMENT YEAR: 2006-07 DY. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 1, BIKANER. VS. M/S MAHAVEER TILES FACTORY, RESPONDENT NEAR GATTANI SCHOOL, NOKHA, BIKANER. (PAN AAKFM4790M)) APPELLANT BY : MR. AMIT NIGAM RESPONDENT BY : MR. U.C. JAIN . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), BIKANER, PASSED ON 25/01/2010 FOR THE ASSES SMENT YEAR 2006- 07. 2. THE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS AGAINST THE ACTION OF THE CIT(A) IN DELETING THE PENALTY OF RS. 6,76,938/- LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 3. IN THE PENALTY ORDER, THE AO STATED THAT THE ASS ESSEE HAD FILED ITS RETURN OF INCOME ON 29/08/.2006 DECLARING AN IN COME OF RS. 1,532/-. A SURVEY WAS CARRIED OUT U/S 133A AT THE B USINESS PREMISES OF THE ASSESSEE ON 21/03/2007. AFTER THE SURVEY THE ASSESSEE FILED REVISED RETURN ON 09/05/07 DECLARING AN INCOME OF R S. 10,05,550/-. ON APPEAL, THE CIT(A) DELETED ADDITION OF RS. 3,33, 246/- AND ITA NO. 233/JU/2010 M/S MAHAVIR TILES FACTORY 2 CONFIRMED THE AMOUNT OF RS. 10,05,557/-. THEREAFTER , THE AO WAS OF THE VIEW THAT THE ASSESSEE FILED THE REVISED RETURN ONLY AFTER THE CONDUCT OF SURVEY AND THE REVISED RETURN WAS FILED ON THE BASIS OF DUPLICATE BOOKS OF ACCOUNTS WHICH ONLY PROVED CONCE ALMENT. THE AO, THEREFORE, INITIATED PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT AND LEVIED PENALTY OF RS. 6,76,938/- ON THE GROUND THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME AND FURNISH ED INACCURATE PARTICULARS OF INCOME AND PLACING RELIANCE ON THE D ECISION OF HONBLE ITAT, DELHI IN THE CASE OF SHIR AMAR CHAND VS. ITO, 121 TAXATION 9. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E CIT(A). 4. BEFORE THE CIT(A), THE AR OF THE ASSESSEE CONTEN DED THAT THE ASSERTION OF THE AO THAT THE SURRENDER WAS NOT VOLU NTARY IN NATURE IS NOT CORRECT BECAUSE THE RETURNS WERE REVISED IN THE SPIRIT OF SURRENDER AND BEFORE THE ISSUANCE OF ANY NOTICE U/S 148 OF TH E ACT. HE FURTHER CONTENDED THAT ASSERTION OF THE AO THAT SURRENDER W AS ON THE BASIS OF DUPLICATE BOOKS OF ACCOUNT WAS ALSO NOT CORRECT BEC AUSE THE IMPOUNDED RECORDS WERE NOT THE REGULAR BOOKS OF ACC OUNT AND WERE NOT CAPABLE OF GIVING TRUE FIGURE OF PROFIT INASMUC H AS THE LEDGER ACCOUNTS WERE NOT BALANCED AND GOODS ACCOUNTS DID N OT BEAR THE OPENING AND CLOSING BALANCES. THE AR OF THE ASSESSE E FURTHER ARGUED THAT THE CASE LAWS RELIED UPON BY THE AO WERE DISTI NGUISHABLE ON FACTS AND ALSO ON THE GROUND THAT THE ASSESSEE HAD SURREN DERED THE ADDITIONAL INCOME FOR TAXATION VOLUNTARILY ONLY TO BUY MENTAL PEACE, TO AVOID LITIGATION AND UNDER THE BONAFIDE BELIEF THAT THE SURRENDER WOULD NOT LEAD TO INITIATION OF PENALTY PROCEEDINGS . HE POINTED OUT THAT THE AO HAD NOT BROUGHT ON RECORD TO SHOW THAT THE BELIEF OF THE ASSESSEE WAS NOT BONAFIDE. AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE, THE CIT(A) DELETED THE PENALTY LEVIED BY THE AO BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUB MISSIONS MADE. IT IS TRITE LAW THAT PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS. THE HONBLE ITAT, JODHP UR IN THE CASE OF M/S MAHIYA BROS (ITA NO. 43/JU/2008 FOR AY 2004-05 DATED 28/05/08), IT WAS HELD THAT IT IS AN ESTABLISHED PRINCIPLE ITA NO. 233/JU/2010 M/S MAHAVIR TILES FACTORY 3 THAT WHILE LEVYING PENALTY U/S 271(1)(C), THE AO HA S TO MAKE OUT ON RECORD THE NECESSARY MATERIAL TO SHOW, APART FRO M THE FINDINGS AND MATERIAL MADE OUT FROM THE ASSESSMENT PROCEEDINGS, THAT THE ASSESSEE HAS INITIALLY FURNIS HED INACCURATE PARTICULARS OF INCOME OR CONCEALED INCOME IN ORDER TO AVOID PAYMENT OF TAX. THIS IS SINE QUA FOR LEVY OF PENALT Y AGAINST THE ASSESSEE THIS POSITION IS SQUARELY APPLICABLE IN THE INSTAN T CASE. MERE RELIANCE ON ASSESSMENT PROCEEDINGS & ASSESSMEN T ORDER WITHOUT ANY FINDING OR MATERIAL ON RECORD THAT THE APPELLANT HAD CONCEALED THE INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME CANNOT JUSTIFY THE IMPOSITION OF PENALTY. TH E PENALTY ORDER ONLY SHOWS THAT THE PENALTY WAS LEVIED ON THE BASIS OF APPELLANT HAVING SURRENDERED FOR TAXATION THE SUM OF RS. 10,0 5,550/- TO BUY PEACE OF MIND AND TO AVOID LITIGATION AND UNDER THE BONAFIDE BELIEF THAT NO PENALTY WOULD BE LEVIED ON THE BASIS OF SUCH SURRENDER. THERE WAS NO FINDING THAT THE BONAFIDE E XPLANATION OF THE APPELLANT WAS INCORRECT. IT IS ONLY ON THE BASI S OF SURRENDER IN THE REVISED RETURN THAT THE PENALTY WAS IMPOSED. TH ERE IS NOTHING IN THE PENALTY ORDER TO SUGGEST THAT ANY INDEPENDEN T ENQUIRY WAS MADE TO REBUT THE CLAIM OF THE APPELLANT. HIS NON-S ATISFACTION WITH THE CLAIM OF THE APPELLANT CAN POSSIBLY LEAD T O THE ADDITION OF THE CLAIM BUT CANNOT LEAD TO THE CONCLUSION THAT THERE WAS CONCEALMENT OF INCOME OR INACCURATE PARTICULARS WER E FILED. THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS . RAJIV GARG & OTHERS (224 CTR 321) HAD HELD THAT ASSESSEE HAVING SURRENDERED ADDITIONAL INCOME ALONG WITH AN EXPLANA TION IN THE REVISED RETURN FILED IN PURSUANCE OF NOTICE UNDER S ECTION 148, AND THE ASSESSING AUTHORITY HAVING NOT TAKEN, ANY O BJECTION THAT THE ASSESSEES EXPLANATION WAS NOT BONAFIDE, P ENALTY U/S 271(1)(C) IS NOT LEVIABLE. THE HONBLE SURPEME COURT IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL (251 ITR 9) HAD HE LD THAT THOUGH THE ASSESSEE SURRENDERED ADDITIONAL INCOME BY WAY OF REVISED RETURNS AFTER PERSISTENT QUERIES BY AO ONCE THE REVISED RETURNS HAVE BEEN REGULARIZED BY REVENUE THE EXPLAN ATION OF THE ASSESSEE THAT HE HAS DECLARED ADDITIONAL INCOME TO BUY PEACE AND TO COME OUT OF VEXED LITIGATION COULD BE TREATE D AS BONA FIDE AND PENALTY ORDER U/S 271(1)(C) WAS NOT LEVIABLE. IN THE INSTANT CASE, THE APPELLANT HAD FILED THE REVISED RETURN ON 06.05.2007 OFFERING ADDITIONAL INCOME FOR TAXATION PROVIDED NO PENAL ACTION WAS TAKEN WHEREAS NOTICE U/S 148 WAS ISSUED ONLY ON 23/10/2008. THE AO HAVING REGULARIZED THE REVISED R ETURN AND ACCEPTING THE DECLARATION IN THE REVISED RETURN THE EXPLANATION OF THE ASSESSEE HAD TO BE TREATED AS BONAFIDE. IN VIEW OF THE FOREGOING, THE PENALTY LEVIED IS CANCELLED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE ITAT. ITA NO. 233/JU/2010 M/S MAHAVIR TILES FACTORY 4 6. BEFORE US, THE LEARNED DR BESIDES RELYING UPON T HE ORDER OF THE AO SUBMITTED THAT THE ASSESSEE HAS FILED THE REVISE D RETURN ONLY AFTER THE CONDUCT OF SURVEY, THEREFORE, THE AO HAS RIGHTL Y LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSE E HAS CONCEALED ITS PARTICULARS OF INCOME AND FURNISHED INACCURATE PART ICULARS OF INCOME. HE CONTENDED THAT THE CIT(A) ERRED IN DELETING PENA LTY WITHOUT EXAMINING THE FACTS ON RECORD. 7. ON THE OTHER HAND, THE LEARNED AR HAS RELIED UPO N THE ORDER OF THE CIT(A) AND SUBMITTED THAT SALES WERE ESTIMATED BY THE AO AND ON THE BASIS OF THE SAME ADDITION WAS MADE, THEREFORE, NO PENALTY CAN BE MADE ON THE BASIS OF ESTIMATION. THE ASSESSEE IS IN THE MARBLE BUSINESS, IN THIS LINE OF BUSINESS, TWO BOOKS ARE N ECESSARILY BEING MAINTAINED BECAUSE, SOME TIMES, MISTRY FIRST APPROA CHES THE ASSESSEE AND SUBSEQUENTLY BILL HAS TO BE GIVEN IN THE NAME O F THE OWNER. THE ASSESSEE SURRENDERED THE AMOUNT VOLUNTARILY TO BUY PEACE BEFORE INITIATION OF PROCEEDINGS U/S 148 OF THE ACT. AND, THEREFORE, THERE IS NO PENALTY CAN BE IMPOSED. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. THE AO LEVIED PENALTY ON THE GR OUND THAT THE ASSESSEE FILED REVISED RETURN OF INCOME ONLY AFTER THE CONDUCT OF SURVEY AND THE SAME WAS FILED ON THE BASIS OF DUPLI CATE BOOKS OF ACCOUNTS WHICH ONLY PROVED CONCEALMENT. THE SUBMISS ION OF THE ASSESSEE WAS THAT THE ASSESSEE HAD SURRENDERED THE ADDITIONAL INCOME FOR TAXATION VOLUNTARILY TO BUY MENTAL PEACE, TO AV OID LITIGATION AND UNDER THE BONAFIDE BELIEF THAT THE SURRENDER WOULD NOT LEAD TO INITIATION OF PENALTY PROCEEDINGS. THE CIT(A) HELD THAT PENALTY ORDER ONLY SHOWS THAT THE PENALTY WAS LEVIED ON THE BASIS OF THE ASSESSEE HAVING SURRENDERED FOR TAXATION THE SUM OF RS. 10,0 5,550/-, BUT, THERE IS NO FINDING IN THE PENALTY ORDER TO SUGGEST THAT ANY INDEPENDENT ENQUIRY WAS MADE TO REBUT THE CLAIM OF THE ASSESSEE. THE CIT(A) FURTHER HELD THAT THE ASSESSEE HAD FILED THE REVISED RETURN ON ITA NO. 233/JU/2010 M/S MAHAVIR TILES FACTORY 5 06/05/07 OFFERING ADDITIONAL INCOME FOR TAXATION PR OVIDED NO PENAL ACTION WAS TAKEN WHEREAS NOTICE U/S 148 WAS ISSUED ONLY ON 23/10/08. THE CIT(A) GAVE A CATEGORICAL FINDING THA T AO HAVING REGULARIZED THE REVISED RETURN AND ACCEPTING THE DE CLARATION IN THE REVISED RETURN THE EXPLANATION OF THE ASSESSEE HAD TO BE TREATED AS BONAFIDE. WE FIND THAT BEFORE DELETING THE PENALTY, THE CIT(A) ANALYZED THE ISSUE WITH VARIOUS CASE LAWS AND FOUND THAT THE CASE OF THE ASSESSEE IS NOT A FIT CASE FOR LEVYING PENALTY U/S 271(1)(C). IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTERFERE IN THE OR DER OF THE CIT(A). ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE IN THIS REGARD. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED ON 22 ND MARCH, 2011. SD/- SD/- (S.V. MEHROTRA) (V. DU RGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 22 ND MARCH, 2011. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., JOD HPUR . BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV ITA NO. 233/JU/2010 M/S MAHAVIR TILES FACTORY 6 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 01/03/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 02/03/11 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER