Hawa Controls, Baroda V. The Income tax Officer, Ward-5(3), Baroda

ITA 2332/AHD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0565 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-01-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 17-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Keywords: Bogus purchase; Opportunity of being heard; Wrong claim
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 2332/AHD/2012 ASSESSMENT YEARS :2001-02 M/S HAWA CONTROLS, 8, GAEKWAD COMPLEX, LEHRIPURA ROAD, BARODA - 390001 V/S . INCOME-TAX OFFICER, WARD 5(3), BARODA PAN NO. A A BFH9468G (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI SAKAR SHARMA, A.R. /BY RESPONDENT SHRI Y.P. VERMA, SR. D.R. /DATE OF HEARING 11.01.2013 /DATE OF PRONOUNCEMENT 28.02.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHI CH HAS EMANATED FROM THE ORDER OF CIT(A)-V, BARODA, DATED 22.08.201 2 FOR A.Y. 2001-02. THE SOLE GROUND OF APPEAL IS AGAINST CONFIRMING PENALTY OF RS.3,16,473/- U/S. 271(1)(C) OF THE IT ACT. 2. THE ASSESSEES CASE WAS SCRUTINIZED U/S. 143(3) OF THE IT ACT. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN VALVES AND FITTINGS. THE LD. A.O. VERIFIED THE PURCHASE FROM THE SUPPLIER. THUS, HE FOUND BOGUS PURCHASES / UNPROVED BOGUS SUNDRY CREDITORS TO THE EXTENT OF RS.8,07,329/-, FOR WHICH PENALTY PROCEEDING IN PARAGRAPH NO. 18 HA S BEEN INITIATED AS UNDER: 18. AS DISCUSSED IN THE BODY OF ORDER THE ASSESSEE HAS MADE BOGUS CLAIM OF EXPENDITURE BY INFLATING THE FIGURES OF EXPENDITURE WHICH WERE NEVER INCURRED BY THE ASSESSEE, THE ASSE SSEE HAS ITA NO. 2332/AHD/12 A.Y. 01-02 PAGE 2 SUPPRESSED ITS PROFIT AND IN TURN CONCEALED HIS TRU E INCOME. IN VIEW OF THIS PENALTY PROCEEDINGS U/S. 271(1)(C) ARE BEIN G INITIATED ON ALL THE ADDITIONS MADE PARA 3 TO 14 ALSO. THE A.O. GAVE REASONABLE OPPORTUNITY OF BEING HEARD BEFORE IMPOSING THE PENALTY, BUT THE ASSESSEE DID NOT APPEAR AND ALSO H AD NOT FILED ANY EXPLANATION BEFORE THE A.O. THUS, HE IMPOSED THE M INIMUM PENALTY OF RS.3,16,473/- ON CONCEALING INCOME OF RS. 8,07,329/ -. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD ALSO CONFIRMED THE PENALTY BY FOLLOWING THE HONBLE GUJARAT HIGH COURT DECISION IN CASE OF A.M. SHAH & CO. V. COMMISSIONER OF INCOME-TAX, [2000] 108 TAXMAN 137 ( GUJ.) AND HONBLE CALCUTTA HIGH COURT DECISION IN CASE OF RAHMAT DEVELOPMENT AND ENGINEERING CORPORATION 130 ITR 602 AND HELD THAT BOTH THE HIGH COURTS HAVE ACKNOWLEDGED THE FACT THAT THERE CAN BE AND THERE O FTEN ARE SITUATIONS WHERE THERE IS AN OVERLAP OF DEFAULTS AND BOTH CHARGES SU BSIST TOGETHER. THERE ARE SITUATIONS OF COMPOSITE DEFAULT WHERE BOTH THE CHAR GES OF FILING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF PARTICUL ARS OF INCOME COEXIST, AS IS THE SITUATION IN THE CASE UNDER CONSIDERATION. THE APPELLANT HAD RECORDED PURCHASES IN ITS BOOKS OF ACCOUNT IN THE NAME OF PA RTIES WHICH ARE NON EXISTENT AND THUS PARTICULARS OF PURCHASES ARE WRON G TO THAT EXTENT. IT HAS BEEN ACCEPTED BY VARIOUS APPELLATE AUTHORITIES THAT CASH PURCHASES WOULD HAVE RESULTED INTO UNRECORDED GAINS, THEREFORE, PAR TICULARS OF INCOME ARE ALSO INCORRECT TO THAT EXTENT. SINCE THE FACT OF CASH P URCHASE WAS SUPPRESSED, PENALTY IS ALSO LEVIABLE IN RESPECT OF 20% DISALLOW ANCE TOWARDS THIS END. IN VIEW OF THESE FACTS, HE CONFIRMED THE ACTION OF THE A.O. HE FURTHER HELD THAT ITA NO. 2332/AHD/12 A.Y. 01-02 PAGE 3 WHEN ADDITION IS MADE ON ESTIMATE BASIS, LEVY OF PE NALTY HAS BEEN CONFIRMED IN THE FOLLOWING CASES: ADDITIONAL CIT VS CHANDRAKANTHA AND ANOTHER (MP) 20 5 ITR 607 ADDITIONAL CIT VS LAKSHMI INDUSTRIES AND COLD STORA GE CO. LTD. (ALL) 146 ITR 492 SUSHIL KUMAR SHARAD KUMAR VS CIT(ALL) 232 ITR 588 CIT VS MD. WARASAT HUSSAIN (PATNA) 171 ITR 405 A M SHAH & CO. VS CIT (GUJ) 238 ITR 415 CIT VS KRISHNASWAMY AND SONS (MAD) 219 ITR 157 CIT VS SWARUP COLD STORAGE & GENERAL MILLS (ALL) 13 6 ITR 435 CIT VS CHANDRA VILAS HOTEL (GUJ) 291 ITR 202 4. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE APPELLANT CONTENDED THAT THE LD. A.O. HAS NOT INITIATED PENAL TY PROCEEDING SPECIFICALLY THAT WHETHER PENALTY IS INITIATED FOR CONCEALMENT O F INCOME OR FOR FURNISHING INACCURATE PARTICULARS. HE FURTHER RELIED IN ASSES SEES OWN CASE IN ITA NO. 1532/AHD/2010 FOR A.Y. 02-03 BY CO-ORDINATE B BENCH, AHMADABAD, WHEREIN THE PENALTY WAS CACELLED ON THE GROUND THAT NO SPEC IFIC FINDING HAD BEING GIVEN BY THE A.O. AT THE TIME OF INITIATING PENALTY BY HIM. HE FURTHER RELIED IN CASE OF 211 ITR 35 (ORISSA HIGH COURT) & 291 ITR 51 9 AND ARGUED THAT THE PENALTY CONFIRMED BY THE CIT(A) IS NOT JUSTIFIED. THEREFORE, HE REQUESTED TO DELETE THE PENALTY. HOWEVER, FROM THE SIDE OF THE REVENUE, LD. D.R. RELIED ON THE ORDERS OF THE CIT(A) & A.O. AND ARGUED THAT WHA TEVER CASE LAWS REFERRED BY THE APPELLANT IS NOT SQUARELY APPLICABLE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. AS DISCUSSED ABOVE, THE A.O. HAS INITIATED PENALTY U/S. 271(1)(C) FOR CONCEALMENT OF INCOME. HOWEVER, AT THE TIME OF IMP OSITION, THE LD. A.O. OBSERVED THAT THE APPELLANT NOT ONLY CONCEALED THE INCOME BUT ALSO FURNISHED ITA NO. 2332/AHD/12 A.Y. 01-02 PAGE 4 INACCURATE PARTICULARS OF INCOME. THE CASE LAWS CI TED BY THE APPELLANT ARE NOT APPLICABLE BECAUSE IN THE ASSESSEES OWN CASE FOR A .Y. 02-03, THE LD. A.O. INITIATED PENALTY PROCEEDING FOR CONCEALING ITS INC OME AND / OR IT HAD FURNISHED INACCURATE PARTICULARS OF INCOME. HONBLE GUJARAT HIGH COURT HAD INTERPRETED THAT AND / OR MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI CRIMINAL CA SE. THUS, THE CO-ORDINATE B BENCH IN A.Y. 02-03 HAS DELETED THE PENALTY. T HE YEAR UNDER CONSIDERATION, THERE IS NO SUCH FINDING GIVEN BY TH E A.O. AT THE TIME OF INITIATING PENALTY PROCEEDING AS WELL AS IMPOSING P ENALTY. THE ADDITIONS IN THIS CASE OF THE ASSESSEE HAD BEEN CONFIRMED BECAUSE THE APPELLANT COULD NOT PROVE THE GENUINENESS OF PURCHASERS AND CREDITORS I N ITS BOOK OF ACCOUNTS. THUS, WE HAVE CONSIDERED VIEW THAT THE CIT(A) WAS R IGHT IN CONFIRMING THE PENALTY ORDER. ACCORDINGLY, THE ASSESSEES APPEAL IS DISMISSED. 7. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 28.02.2013 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;