S J Abhilash , Tumkur V. Assistant Commissioner of Income Tax Circle-1 , Tumkur

ITA 2393/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6202 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-07-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 16-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: S KRISHNA SWAMY
• Keywords: Principle of natural justice; Additional evidence
• Section: 271(1)(c); 143(3); 142(1); 250; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA. NO. 239 3 /BANG/2018 (ASSESSMENT YEAR: 201 4 - 15 ) SHRI S.J. ABHILASH, BHAVANI RICE INDUSTRIES, NH - 4,SIRA ROAD, RANGAPURA, TUMKUR - 572 102 PAN: AHAPA 0731F VS. ASST. COMMISSIONER OF INCOME TAX , CIRCLE 1, TUMKUR. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S. KRISHNASWAMY, C.A. REVENUE BY: DR. P. V. PRADEEP KUMAR, ADDL. CIT (D.R) DATE OF HEARING : 09.07 .2019 DATE OF PRONOUNCEMENT : 07 .0 8 .2019 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 7, BANGALORE PASSED UNDER SECTION 271(1)(C) AND 250 OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPE AL : 2 ITA NO.2393/BANG/2018 3 ITA NO.2393/BANG/2018 4 ITA NO.2393/BANG/2018 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING A R ICE MILL AND FILED THE RETURN OF INCOME ON 27.09.2014 WITH TOTAL INCOME OF RS.19,41,490. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 143(2) & 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE. THE MAIN BUSINESS OF THE ASSESSEE IS RICE MILLING AND PROCURE PADDY FROM VARIOUS LOCATIONS AND PROCESS IT TO PRODUCE RICE. DURING THE COURSE OF AS SESSMENT PROC EEDINGS THE ASSESSEE SUBMITTED B OOKS OF ACCOUNTS AND COPY OF VAT RETURN S WHEREAS THE ASSESSING OFFICER ON PERUSAL OF THE RECORDS, FOUND THAT THE ASSESSEE COULD NOT FURNISH THE CONFIRMATION IN REGARD TO SUNDRY CREDITOR OF RS.1,62,654 FROM S UKHJIKA INDUSTRIES, H YDERABAD. HENCE A P P L I E D THE PROVISIONS OF SECTION 68 OF THE ACT AND MADE ADDITION RS.1,62,654 . T HE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS PAID SALARY TO THE WIFE AND THERE ARE NO PROOFS WERE FILED WITH REQUEST TO CONTRIBUTION TO THE BUSINESS OF THE ASSESSEE. HENCE THE ASSESSING OFFICER IS OF THE OPINION THAT THE SALARY PAID TO THE ASSESSEE'S WIFE RS. 2 5 ITA NO.2393/BANG/2018 LACS IS NOT ALLOWED UNDER SECTION 40A (2) (B) OF THE ACT A N D ASSESSED TOTAL INCOME OF RS.23.04,150 UNDER SECTION 143(3) OF THE ACT DT.14.10 .2016. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND ISSUED NOTICE. T HE ASSESSEE FILED DETAILS AND REPLY IN THE PENALTY PROCEEDINGS AND RELIED ON THE JUDICIAL DECISIONS. THE ASSESSEE'S CONTENTION WAS THAT TO BUY PEACE WITH THE DE PARTMENT, HE HAS NOT CHALLENGED THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT AND FURTHER THE CONFIRMATION OF CREDITOR WAS NOT AVAILABLE DUE TO LAPSE OF TIME A N D ASSESSEE WAS IN THE PROCESS OF GETTING THE CONFIRMATION. WHEREAS T HE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION S OF THE ASSESSEE AND WAS OF THE OPINION THAT THE ASSESSEE HAS PROVIDED INACCURATE PARTICULARS AND LEVIED A PENALTY OF RS.1,10,000 BASED ON THE ADDITIONS IN THE ASSESSMENT ORDER AND PASSED ORDER UNDER SECTION 271(1)(C) OF T HE ACT DT.28.04.2017. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE FILED AN APPEAL WITH THE LEARNED CIT(APPEALS). THE LEARNED CIT(APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE FINDINGS OF THE ASSESSING OFFICER HAS REJECTED THE ADDITI ONAL EVIDENCE FILED BY THE ASSESSEE BEING CONFIRMATION LETTER FROM THE CREDITOR UNDER RULE 46A OF THE I.T. RULES WITH THE OBSERVATION THAT THE ASSESSEE HAS FAILED TO PRODUCE THE DOCUMENTS BEFORE THE ASSESSING OFFICER AND HENCE REJECTED THE ADDITIONAL EVID ENCE AND CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER AND DISMISSED THE ASSESSEE'S APPEAL. 6 ITA NO.2393/BANG/2018 AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEALS), THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. 4. ON THE ISSUE OF LEVY OF PENALTY, THE LEARNED AUTHORISED REPRESENTATIVE HAS RELIED ON THE JUDICIAL DECISIONS AND SUBMITTED PAPER BOOK AND FILED WRITTEN SUBMISSIONS. THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE ASSESSEE IS NOT TO APPEAL AGAINST THE ASSESSMENT ORDER UNDER SECTION 14 3(3) OF THE ACT WITH BONA FIDE BELIEF AND TO OBTAIN PEACE FROM THE INCOME TAX DEPARTMENT WHEREAS THE ASSESSING OFFICER HAS LEVIED PENALTY WITHOUT CONSIDERING THE FACTS AND THE JUDICIAL DECISIONS RELIED ON BY THE ASSESSEE. THE LD. AR FURTHER EMPHASIZED TH AT THE ASSESSEE PRODUCED ADDITIONAL EVIDENCE BEFORE THE LEARNED CIT(APPEALS) BEING CONFIRMATION OF THE CREDITOR WHICH COULD NOT BE FILED IN THE C OURSE OF ASSESSMENT PROCEEDINGS . HOWEVER T HE LEARNED CIT(APPEALS) HAS REJECTED THE ADDITIONAL EVIDENCE SUBMITT ED BY THE ASSESSEE. 5. IN RESPECT OF SECOND DISPUTED ISSUE O N SUSTAINING THE PENALTY ON DUE TO ADDITION OF SALARY PAID TO THE ASSESSEE'S WIFE. THE LD. ARS CONTENTION IS THAT THE ASSESSEE HAS VOLUNTARILY ACCEPTED THE ADDITION AND EXPLAINED THE AS SESSEE'S WIFES CONTRIBUTION TO THE BUSINESS, AND THESE FACTS ARE ACCEPTED BY THE REVENUE IN THE EARLIER ASSESSMENT YEARS. HENCE LD. AR PRAYED FOR ADMISSION OF THE ADDITIONAL EVIDENCE AND ALLOW THE ASSESSEE'S APPEAL. CONTRA, THE LEARNED DEPARTMENTAL REP RESENTATIVE SUPPORTED THE ORDER OF CIT(APPEALS) AND SUBMITTED THAT THE 7 ITA NO.2393/BANG/2018 ASSESSEE IS IN AGRICULTURE BUSINESS AND HAVING AGRICULTURE INCOME AND HAS TO FOLLOW THE DUE PROCESS OF MAINTAINING THE BOOKS OF ACCOUNTS. SUCH INCOME AND N O EVIDENCE WAS FILED BEFORE T HE LOWER AUTHORITIES AND PRAYED FOR DISMISSAL OF THE ASSESSEE'S APPEAL. 6. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. PRIME FACIE, THE CONTENTION OF THE LD. AR THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT SUST AINABLE AS THE ASSESSEE HAS NOT CONTESTED THE QUANTUM I.E. ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT TO BUY PEACE WITH THE DEPARTMENT WHEREAS THE CIT(APPEALS) HAS OVERLOOKED THE EVIDENCE PRODUCED BEFORE IN THE APPELLATE PROCEEDINGS AND CONFIRMED THE PENALTY ORDER OF ASSESSING OFFICER. ON THIS ISSUE, WE FIND THE CIT(APPEALS) HAS REJECTED THE ADDITIONAL EVIDENCE UNDER RULE 46A OF THE IT RULES. WE ARE OF THE OPINION THAT THE ASSESSEE SHALL NOT GAIN ANY BENEFIT BY DELAYING THE LITIGATION AND SUPPORT OU R VIEW ON THE PRINCIPLE OF NATURAL JUSTICE, AND ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. ON THE SECOND DISPUTED ISSUE WITH RESPECT TO THE ADDITION MADE BY ASSESSING OFFICER IN DUE TO UNREASONABLE SALARY PAID T O THE ASSESSEE'S WIFE UNDER SECTI ON 40A(2)(B) OF THE ACT , WE ARE OF THE OPINION THAT IN THE PENALTY PROCEEDINGS, THE ASSESSING AUTHORITY SHALL DEAL THE ISSUES INDEPENDENTLY AND ANY ADDITION IN THE QUANTUM PROCEEDINGS CANNOT BE A GATEWAY FOR LEVYING THE PENALTY. THEREFORE CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, WE RESTORE THE 8 ITA NO.2393/BANG/2018 DISPUTED ISSUES TO THE FILE OF CIT (APPEALS) TO ADJUDICATE AFRESH CONSIDERING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND ALLOW THE GROUNDS OF THE ASSESSEE FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 T H AUG. , 2019. S D / - S D / - (A.K. GARODIA) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBE R JUDICIAL MEMBER DATED: 0 7 .0 8 . 2019. *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE