The ACIT, Circle-5, Surat V. Shri Vasantlal Amrutlal Doriwala, Surat

ITA 2406/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9193 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-02-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI R. P. TOLANI, JM & SHRI MANISH BORAD, AM. ITA NO. 2406/AHD/2013 ASST. YEAR: 2006-07 ACIT, CIR-5, SURAT. VS. SHRI VASANTLAL AMRATLAL DORIWALA, 8-HAJOON CHAMBERS, ZAMPA BAAZAR, SURAT. APPELLANT RESPONDENT PAN ACCPD 6390C APPELLANT BY SHRI K. MADHUSUDAN, SR.DR RESPONDENT BY WRITTEN SUBMISSION, (NONE) DATE OF HEARING: 21/2/2017 DATE OF PRONOUNCEMENT: 23/02/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF REVENUE FOR ASST. YEAR 2006-07 IS D IRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A)-1, SURAT, DATED 22.07.2013 ARISING OUT OF THE ORDER U/S 271(1 )(C) OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT) FRAMED ON 25.02.20 13 BY ACIT, CIRCLE- 5, SURAT. REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN CANCELLING THE PENALTY OF RS . 13,08,563/- LEVIED U/S.271(I)(C) OF THE ACT IN RESPECT OF ADDIT ION MADE ON ACCOUNT OF SUPPRESSED SALE RECEIPTS OF RS.38,33,830/-. ITA NO. 2406/AHD/2013 ASST. YEAR 2006-07 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT TH AT THE ASSESSEE'S CASE FALLS UNDER THE PURVIEW OF DEEMED CONCEALMENT UNDER EXPLANATION-I TO SECTION 271(L)(C) OF THE ACT AS HE COULD NOT SUBSTANTIATE HIS CLAIM ALONG WITH DOCUMENTARY EVIDE NCES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A), SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD.CIT(A), SURAT MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER' S BE RESTORED. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN YA RN. RETURN OF INCOME FOR ASST. YEAR 2006-07 WAS FILED ON 26.12.20 06 DECLARING TOTAL INCOME AT RS.7,58,050/-. CASE WAS SELECTED FOR SCRU TINY ASSESSMENT AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 11.7 .2007. ASSESSMENT ORDER WAS PASSED ON 24.11.2008 AFTER MAK ING ADDITION ON ACCOUNT OF SUPPRESSION OF SALES RECEIPTS OF RS.3 8,33,830/- AND DISALLOWANCE OF INTEREST EXPENDITURE OF RS.5,17,177 /- AND INCOME WAS ASSESSED AT RS.51,09,060/-. AGGRIEVED, ASSESSEE PRE FERRED APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX(A) AGAINST TH E IMPUGNED ADDITIONS AND PARTLY SUCCEEDED. ADDITION MADE ON AC COUNT OF DISALLOWANCE OF INTEREST EXPENSES AT RS.5,17,177/- WAS DELETED. CONSEQUENT THERETO PENALTY U/S 271(1)(C) OF THE ACT WERE INITIATED ON THE CONCEALED INCOME FOR SUPPRESSION OF SALES RECEI PTS OF RS.38,33,830/- AND PENALTY @ 100% OF TAX SOUGHT TO BE EVADED WAS IMPOSED U/S 271(1)(C) OF THE ACT AT RS.13,08,563/-. AGGRIEVED ASSESSEE FILED APPEAL BEFORE LD. COMMISSIONER OF IN COME TAX(A) AGAINST THE PENALTY IMPOSED U/S 271(1)(C) OF THE AC T AT RS.13,08,563/- AND SUCCEEDED IN FULL AS LD. COMMISSIONER OF INCOME TAX(A) HELD IN ITA NO. 2406/AHD/2013 ASST. YEAR 2006-07 3 VIEW OF EXPLANATION -1 TO SECTION 271(1)(C) OF THE ACT THAT GROSS PROFIT ADDITION DOES NOT FALL IN THE DEFINITION OF DEEMED CONCEALMENT. 3. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 4. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D SUPPORTING THE ORDER OF LD. ASSESSING OFFICER. 5. ON THE OTHER HAND ON BEHALF OF ASSESSEE WRITTEN SUBMISSIONS WERE FILED WHEREIN IT HAS BEEN SUBMITTED THAT THE Q UANTUM ADDITION OF RS.38,33,830/- ON ACCOUNT OF SUPPRESSION OF SALES R ECEIPTS STANDS DELETED BY THE TRIBUNALS ORDER DATED 14.08.2013 IN ITA NO.776/AHD/2010 AND THEREFORE, PENALTY U/S 271(1)(C ) IS REQUIRED TO BE DELETED IN CONSEQUENCE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. SOLITARY GRIEVANCE OF THE REVENUE IS CHALLENGING TH E ORDER OF LD. COMMISSIONER OF INCOME TAX(A) DELETING PENALTY OF R S.13,08,563/- IMPOSED U/S 271(1)(C) OF THE ACT BY LD. ASSESSING O FFICER ON THE ADDITION OF RS.38,33,830/- MADE ON ACCOUNT OF SUPPR ESSION OF SALES RECEIPTS. WE FURTHER OBSERVE THAT IN THE WRITTEN SU BMISSIONS LD. AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THE IM PUGNED ADDITION OF RS.38,33,830/- HAS BEEN DELETED BY THE CO-ORDINA TE BENCH VIDE ITS ORDER DATED 14.08.2013 IN ITA NO.776/AHD/2010 WHERE IN CO-ORDINATE BENCH HAS OBSERVED AS FOLLOWS :- ITA NO. 2406/AHD/2013 ASST. YEAR 2006-07 4 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIN D THAT THE ASSESSING OFFICER HAD MADE THE ADDITION ON THE GROUND THAT THERE WAS A DIFFERENCE IN SALE-PRICE FOR THE SAME MATERIAL. THE AO IN HIS ORDER HAS OBSERVED THAT IN ORDER TO VERIF Y THE MODUS OPERAND! ADOPTED BY OTHER TRADERS, THE BILLS WERE THOROUGHLY CHECKED AND VERI FIED AND AFTER IN-DEPTH VERIFICATION OF THE LIST SO PREPARED, HE CAME TO THE CONCLUSION THAT TH E ASSESSEE ALSO ADOPTED THE MODUS OPERANDI OF GENERATION OF BLACK MONEY OR UNACCOUNTE D INCOME. THE CONTENTION OF THE ID. COUNSEL FOR THE ASSESSEE IS THAT THE ENTIRE FINDING IS BASED ON CONJECTURES & SURMISES. THE AO HAS NOT BROUGHT ANYTHING ON RECORD THAT THE AMOUNT RELATING TO SO-CALLED SUPPRESSED SALES WAS RECEIVED BY THE ASSESSEE FROM THE CONCERNED PAR TIES. SO FAR AS THE DECISION OF SELLING ANY MATERIAL AT A DIFFERENT RATE OR AT A UNIFORM RATE I S CONCERNED, THE SAME REMAINS WITH THE BUSINESS MAN EXCEPT IN THE CIRCUMSTANCES WHERE THE PRICES ARE REGULATED BY THE COMPETENT AUTHORITY. IN THE PRESENT CASE, NOTHING IS BROUGHT ON RECORD THAT SALE-PRICE WAS REGULATED BY ANY LAW. THEREFORE, THE ASSESSEE WAS WITHIN THE RIG HTS TO SELL HIS MATERIAL IN ACCORDANCE WITH HIS OWN WISH. IF THE REVENUE FEELS THAT THE SALE PR ICE IS DECLARED BY THE ASSESSEE IS NOT CORRECT, THEN THE REVENUE SHOULD PLACE ON RECORD AS TO HOW THE SALE-PRICE AS DECLARED BY THE ASSESSEE IS NOT CORRECT AND IF THERE IS ANY DIFFERE NCE IN THE SALE-PRICE AS DECLARED BY THE ASSESSEE AND THE SALE PRICE ACTUALLY RECEIVED BY TH E ASSESSEE, THE REVENUE IS REQUIRED TO DEMONSTRATE THAT THE DIFFERENCE IN SALE-PRICE DECLA RED BY THE ASSESSEE AND THE PRICE CLAIMED BY THE REVENUE BEING THE ACTUAL WAS RECEIVED BY THE ASSESSEE BY WAY OF UNDECLARED ROUTE. IN THE ABSENCE OF THE MATERIAL SUGGESTING THAT THE MON EY WAS ACTUALLY RECEIVED BY THE ASSESSEE AS A SALE-PRICE HIGHER THAN THE PRICE DECLARED BY T HE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE IS NOT JUSTIFIED TO MAKE ANY ADDIT ION MERELY ON THE BASIS THAT THE ASSESSEE HAS SOLD THE SAME MATERIAL AT DIFFERENT RATES TO DI FFERENT PARTIES OR THE SAME PARTY IN A SINGLE DAY OR WITHIN A SHORTEST SPAN OF TIME. HENCE, WE FI ND THERE IS MERIT IN THE CONTENTION OF THE ID. COUNSEL FOR THE ASSESSEE THAT A BUSINESS MAN CAN HA VE THE RIGHT TO DECIDE THE SALE-PRICE ON HIS MATERIAL. THE REVENUE HAS NO ROLE OR AUTHORITY TO D ECIDE THE SALE-PRICE. IN THE LIGHT OF ABOVE DISCUSSION, THE GROUND RAISED BY THE ASSESSEE IS AL LOWED. ACCORDINGLY, THE AO IS HEREBY DIRECTED TO DELETE THE ADDITION OF RS.38,33,830/- M ADE ON ACCOUNT OF SUPPRESSION OF SALE RECEIPTS. 7. ON PERUSAL OF THE FINDINGS OF THE TRIBUNAL DELET ING THE QUANTUM ADDITION ADJUDICATING QUANTUM ADDITION WE FIND THAT THE IMPUGNED ADDITION OF RS.38,33,830/- MADE ON ACCOUNT OF SUPPR ESSION OF SALES RECEIPTS ON WHICH THE IMPUGNED PENALTY U/S 271(1)(C ) OF THE ACT HAS BEEN DELETED, STANDS DELETED. IT IS WELL EVIDENT TH AT PENALTY U/S 271(1)(C) OF THE ACT IS IMPOSED IF AN ASSESSEE MAKE S CONCEALMENT OF INCOME OR FURNISHES INACCURATE PARTICULARS OF INCOM E AND IF IT IS FOUND SO THEN PENALTY IS IMPOSED ON THE CONCEALED INCOME WHICH MEANS THAT BASIS OF IMPOSING PENALTY IS THE QUANTUM ADDIT ION. IN THE GIVEN ITA NO. 2406/AHD/2013 ASST. YEAR 2006-07 5 FACTS, QUANTUM ADDITION OF RS.38,33,830/- HAS ITSEL F BEEN DELETED BY THE CO-ORDINATE BENCH AND, THEREFORE, DUE TO THE CO NSEQUENT EFFECT PENALTY U/S 271(1)(C) OF THE ACT CANNOT STAND FOR. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. COMMIS SIONER OF INCOME TAX(A) DELETING THE PENALTY U/S 271(1)(C) OF THE AC T. WE UPHOLD THE SAME. 8. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD FEBRUARY, 2017 SD/- SD/- (R.P. TOLANI) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 23/02/2017 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 2406/AHD/2013 ASST. YEAR 2006-07 6 1. DATE OF DICTATION: 21/02/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 23/02/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 23/2/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: