M/s. Parvati Gems, Surat V. The ACIT, Range-9, Surat

ITA 2372/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9259 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-11-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 23-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJDEEP SINGH SRDR
• Keywords: Bonafide belief; Additional evidence; Set aside
• Section: 92E

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.2372/AHD/2008 ASSESSMENT YEAR:2004-05 DATE OF HEARING:1.11.10 DRAFTED:1.11.10 M/S. PARVATI GEMS, 31- 32, HIRANAGAR SOCIETY, ASHWANIKUMAR ROAD, SURAT PAN NO.AAFFP2965C V/S . ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-9, SURAT (APPELLANT) .. (RESPONDENT) APPELLANT BY :- WRITTEN SUBMISSIONS RESPONDENT BY:- SHRI RAJDEEP SINGH, SR-DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-V, SURAT IN APPEAL NO.CAS/V /133/2007-08 DATED 17- 03-2008. THE ASSESSMENT WAS FRAMED BY ACIT, CIRCLE- 9, SURAT U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDER DATED 28-12-2006 FOR THE ASSESSMENT YEAR 2004-05. T HE PENALTY UNDER DISPUTE WAS LEVIED BY ACIC, CIRCLE-9, SURAT U/S.271 BA OF THE ACT VIDE HIS ORDER DATED 15-10-2007. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING LEVY OF PENALTY BY THE ASSESSING OFFICER U/S.271BA OF THE ACT. ITA NO.2372/AHD/2008 A.Y. 2004-05 M/S. PARVATI GEMS V. ACIT, CIR-9 SRT PAGE 2 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF IMPORT AND EXPORT OF DIAMONDS. THE RETURN OF INCOME WAS FILED ON 30-10-2004 FOR AS SESSMENT YEAR 2004-05. THE ASSESSMENT WAS FRAMED U/S.143(3) OF THE ACT ON 28-12-2006 DETERMINING THE TOTAL INCOME AT RS.24,79,030/- BY THE ASSESSING OFFICER AND ALSO INITIATED PENALTY PROCEEDINGS U/S.274 R.W.S 271BA OF THE ACT FOR NON-FURNISHING OF FORM 3CEB. THE ASSESSEE IS AN EXPORTER OF DIAMOND AND AS POINTED OUT BY ASSESSING OFFICER THAT HOW THE TRANSACTION BETWEEN THE ASSESSEE AND BHARGAV GEMS CO. LTD. OF THAILAND ARE ASSOCIATED CO NCERNS. THE AO STATED THAT SHRI NILESH PATEL WHO IS RELATIVE OF THE PARTN ERS OF PARVATI GEMS HOLDS 26% SHARES IN BHARGAV GEMS CO. LTD. BUT ACCORDING T O ASSESSEE THERE IS ON BASIS FOR THIS FINDING. THE AO NOTED ON PAGE-3 OF THE PENALTY ORDER THAT SHRI NILESH PATEL HAS 26% OF SHARE AND ALSO VOTING POWER BUT ACCORDING TO ASSESSEE, SHRI NILESH PATEL HAS LESS THAN 26% OF SH ARE AS PER REPLY OF THE ASSESSEE DATED 15-11-2007. THE CIT(A) ALSO CONFIRME D THE PENALTY BY STATING THAT THE ASSESSEE HAS NOT GIVEN THE DETAILS AND ALS O STATED THAT THE ASSESSEE HAS EFFECTED ALMOST 90% OF ITS SALE TO BHARGAV GEMS CO. LTD. THOUGH THERE IS NO SUCH DATA THEREIN. THE ASSESSEE BEFORE US FILED WRITTEN SUBMISSIONS STATING AS UNDER:- THE PARTICULARS OF SALES ARE WITH THE DEPARTMENT, ACCORDING TO WHICH OUT OF THE TOTAL EXPORTS OF RS.7,49,81,568/- SALES TO BHARGAV GEMS IS RS.3,75,81,331/- I.E. 63.47% AND IS LESS THAN 90% ( P.1-3). THAILAND AUTHORITIES WERE RELUCTANT TO PART WITH THE PARTICU LARS OF SHAREHOLDING OF BHARGAV GEMS CO. LTD. HOWEVER, THE ASSESSEE HAS BEE N ABLE TO OBTAIN AND ENCLOSE COPY THEREOF IN THAI AND TRANSLATED IN ENGLISH WHICH SHOW THAT SHRI NILESH PATEL HAD ONLY 3.5% SHARE (P.4-6). THIS IS ADDITIONAL EVIDENCE AS IT WAS NOT AVAILABLE WITH ASSESSEE EARL IER. IT IS URGED THAT FOR PASSING APPROPRIATE ORDER THIS MAY BE ADMITTED AND CONSIDERED. FROM THE ABOVE IT WOULD BE OBVIOUS THAT BOTH THE AS SESSING OFFICER WHILE LEVYING PENALTY AND THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) WHILE CONFIRMING THE PENALTY HAVE BASED T HEIR FINDINGS ON PRESUMPTION VIZ. THAT SHRI NILESH PATEL HAD 26% SHA RE IN BHARGAV GEMS CO. LTD. FOR WHICH ASSERTION THERE WAS NO BASIS AND THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) STATING THAT ALMOST 90% OF SALES IS TO BHARGAV GEMS CO. LTD. WHICH TOO IS NOT CORRECT. ITA NO.2372/AHD/2008 A.Y. 2004-05 M/S. PARVATI GEMS V. ACIT, CIR-9 SRT PAGE 3 IN THE CIRCUMSTANCES THE APPLICABILITY OF SECTION 9 2A, 92B, 82E AND 271BA DOS NOT ARISE AND THERE WAS NO NEED TO FILE A NY REPORT IN PRESCRIBED FORM AS LAID DOWN BY SECTION 92E OF THE ACT. HENCE, THE ASSESSEE NOT HAVING COMMITTED ANY DEFAULT, PENALTY IS NOT LEVIABLE. IN ANY CASE ON THE BASIS OF THE ABOVE FACTUAL POSITION , THE ASSESSEE HAD BONAFIDE BELIEF THAT TH9E ABOVE PROVISIONS SO FAR A S RELATING TO FURNISHING OF AUDIT REPORT, DID NOT APPLY AND, THEREFORE, THE LEVY OF PENALTY WAS NOT JUSTIFIED. ASSESSEE ALSO RELIES ON LETTER TO CIT(A) OF 11-02-08 (P.7-8) 4. AT THE OUTSET, THE LD. SR-DR STATED THAT ABOUT T HE SHAREHOLDING OF SHRI NILESH PATEL THE ASSESSEE HAS FIELD ADDITIONAL EVID ENCE, WHEREIN IT IS CLAIMED THAT SHRI NILESH PATEL HAD ONLY 3.5% SHARE AND NOT 26%, HENCE, THIS ISSUE CAN BE REMITTED BACK TO THE FILE OF CIT(A) FOR EXAMINAT ION OF THE SAME. 5. WE FIND THAT THERE IS DISPUTE REGARDING SHAREHOL DING OF SHRI NILESH PATEL IN THE CONCERN BHARGAV GEMS CO. LTD., IT IS THE CLA IM OF THE ASSESSEE THAT SHRI NILESH PATEL HAD ONLY 3.5% SHARES AS AGAINST THE FI NDINGS OF THE LOWER AUTHORITIES THAT HE HAS 26% SHARE OR MORE. AFTER GO ING THROUGH THE FACTS OF THE CASE, WE FIND THAT THIS FACT IS NOT CLEAR THAT WHAT IS EXACT PERCENTAGE OF SHARES HELD BY SHRI NILESH PATEL IN BHARGAV GEMS CO. LTD? EVEN OTHERWISE THE CIT(A) HAS NOT PASSED A SPEAKING ORDER, ACCORDINGLY THIS ISSUE OF THE ASSESSEES APPEAL IS SET ASIDE TO THE FILE OF CIT(A ) TO FIND OUT EXACT SHAREHOLDING OF SHRI NILESH PATEL IN BHARGAV GEMS C O. LTD. AND ACCORDINGLY DECIDE THE ISSUE. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 30/11/2010 SD/- SD/- (D.C.AGRAWAL) (MAHAVIR SIN GH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 30/11/2010 *DKP COPY OF THE ORDER FORWARDED TO :- ITA NO.2372/AHD/2008 A.Y. 2004-05 M/S. PARVATI GEMS V. ACIT, CIR-9 SRT PAGE 4 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-V, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD