ITO,Wd.-2(3), Jalgaon V. Kailash Gopinath Zawar, Jalgaon

ITA 242/PUN/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76317 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-12-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 11-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Loose papers; Revised return
• Section: 143(3); 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 242 /PN/20 1 0 ASSESSMENT YEAR : 200 1 - 02 INCOME TAX OFFICER, WARD - 2(3), JALG AON VS. SHRI KAILASH GOPINATH ZAWAR, AT. POST PALDHI, TAL. - DHARANGAON, DISTT. - JALGAON (APPELLANT) (RESPONDENT) PAN NO. AABPZ3368H APPELLANT BY: SHRI P.L. PATHADE RESPONDENT BY: SHRI NIKHIL PATHAK DATE OF HEARING : 1 1 - 0 3 - 2014 DATE OF PRONOU NCEMENT : 21 - 03 - 2014 ORDER P ER R.S. PADVEKAR , JM : - IN THIS APPEAL , THE REVENUE HAS CHALLENG ED THE IMPUGNED ORDER OF THE LD. CIT(A) - II , NASHIK DATED 03 - 11 - 2009 F OR THE A.Y. 200 1 - 02. THE LD. CIT(A) HAS DELET ED THE PENALTY LEVIED BY THE ASSESSING OFFICE R U/S. 271(1)(C) OF THE INCOME - TAX ACT. FOR THE A.Y. 2001 - 02, T HE REVENUE HAS TAKEN THE FOLLOWING GROUND S IN THE APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE PENALTY ORDER U/S. 271(1)(C) ON THE GROUND THAT TH E SALE AND PURCHASE OF PETROL AND DIESEL ARE UNDER THE STRICT CONTROL OF THE GOVERNMENT AUTHORITIES AND ALSO INDIAN OIL CORPORATION. THE SALE PROCEEDS OF DIESEL AND PETROL CANNOT BE THE INCOME AND ONLY THE MERGER GROSS PROFIT ON SUCH SALES CAN BE THE INCO ME OF THE ASSESSEE IS SUPPORTED WELL ESTABLISHED PRINCIPLES AND VARIOUS RULING OF HON'BLE COURTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), HAS NOT APPRECIATED THE FACT THAT ASSESSEE HAS DISCLOSED CONCEALED INCOME AFTER THE ENQUIRIES C ONDUCTED BY THE DEPARTMENT AND THE SAME WAS NOT DISCLOSED IN THE ORIGINAL RETURN. 2 ITA NO. 242/PN/2010, SHRI KAILASH GOPINATH ZAWAR, JALGAON 3. ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT ASSESSEE OFFERED THE ADDITIONAL INCOME ONLY WHEN HE WAS CONFRONTED WITH THE EVI DENCES OF CONCEALMENT OF INCOME BY THE DEPARTMENT. THE STATEMENT RECORDED U/S. 131 IS EVIDENT FOR THE SAME. 2. THE BRIEFLY STATED FACTS ARE UNDER. THE ASSESSEE IS A PROPRIETOR OF M/S. ZAWAR AUTOMOBILES, PALDHI, JALGAON. THERE WAS SOME ANONYMOUS COMPLA INT AGAINST THE ASSESSEE AND HENCE, THE ADIT (INV), JALGAON CONDUCTED THE ENQUIRIES AND IT WAS REVEALED THAT THE ASSESSEE HAD UNDERSTATED SALES OF DIESEL TO THE EXTENT OF RS.18,84,637/ - AND SALES OF PETROL TO THE EXTENT OF RS.21,742/ - . AS PER THE INVESTIG ATION MADE BY THE ADIT (INV), JALGAON UNRECORDED SALES AND UNRECORDED DEBTORS W ERE WORKED OUT TO THE EXTENT OF RS.19,55,054/ - . IT APPEARS THAT THE ASSESSEES STATEMENT WAS ALSO RECORDED U/S. 131 OF THE INCOME - TAX ACT BY THE ADIT (INV) ON 19 - 12 - 2007 AND TH E ASSESSEE CAME FORWARD WITH DISCLOSING ADDITIONAL INCOME OF RS.20 LACS. THE ASSESSEE ALSO FILED THE REVISED RETURN ON 30 - 01 - 2008 OFFERING THE ADDITIONAL INCOME DECLARING TO THE EXTENT OF RS. 20 LACS . M E ANTIME THE ASSESSING OFFICER ISSUED THE NOTICE U/S. 148 DATED 29 - 01 - 2008 WHICH WAS SERVED UPON THE ASSESSEE ON 31 - 01 - 2008. THE ASSESSEE FILED THE LETTER IN RESPONSE TO NOTICE RECEIVED U/S. 148 STATING THAT HE HAS ALREADY FILED THE REVISED RETURN ON 30 - 01 - 2008 AND THUS RETURN MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148 . THE ASSESSMENT OF THE ASSESSEE HAS BEEN FINALIZED U/S. 143(3) R.W.S. 147 ON 17 - 11 - 2008 DETERMINING THE RETURN INCOME DECLARED IN THE RETURN FILED ON 30 - 01 - 2008. 2.1. THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDING S U/S. 271(1)(C) OF THE ACT AND LEVIED THE PENALTY OF RS.7 LACS. IN THE PENALTY PROCEEDINGS PASSED U/S. 271(1)(C) DATED 21 - 05 - 2009 , THE ASSESSING OFFICER HAS REFERRED TO THE STATEMENT OF THE ASSESSEE RECORDED U/S. 131 ON 19 - 12 - 2007 . T HE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE CAME FORWARD TO DECLARE THE ADDITIONAL INCOME ONLY AFTER HE WAS 3 ITA NO. 242/PN/2010, SHRI KAILASH GOPINATH ZAWAR, JALGAON CONFRONTED BY THE DEPARTMENT. IT APPEARS THAT THERE WAS SOME PAPER SHEET WITH THE DEPARTMENT ON WHICH THE SALES OF THE DIESEL AND PETROL WERE FOUND RECORDED FO R SOME PERIOD AND ON THE BASIS OF THE SAID PAPER SHEET WHICH SOURCE IS NOT KNOWN , T HE ASSESSEE WAS CONFRONTED AFTER 6 - 7 YEARS IN RESPECT OF THE ALLEGED UNDERSTATEMENT OF SALES OF DIESEL AND PETROL RELATING TO THE F.Y. 2000 - 01 RELEVANT TO THE A.Y. 2001 - 02. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE LD. CIT(A) AND LD. CIT(A) DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER. THE OPERATIVE PART OF THE FINDINGS OF LD. CIT(A) IS AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND PENALT Y ORDER OF THE A.O. AND ALSO THE SUBMISSIONS OF THE APPELLANT. ON PERUSAL OF THE SAME, IT IS NOTICED THAT THE PAPER ON THE BASIS OF WHICH THE APPELLANT HAS OFFERED TO TAX THE ADDITIONAL INCOME OF RS.20 LACS WAS NOT FOUND WITH THE APPELLANT AND THE SAME WAS NOT IN THE HANDWRITING OF THE APPELLANT OR HIS ACCOUNTANT. THE SAID PAPER WAS FILED BY THE COMPLAINANT. THEREFORE, THE SAID PAPER DOES NOT HAVE MUCH EVIDENTIARY VALUE TO CONCLUSIVELY PROVE SUPPRESSION OF SALE OF DIESEL AND PETROL BY THE APPELLANT. SECONDL Y, THE SALES OF DIESEL AND PETROL ARE UNDER THE STRICT CONTROL OF THE GOVERNMENT AUTHORITIES AND ALSO INDIAN OIL CORPORATION. THE CONTENTION OF THE APPELLANT THAT THE SALE PROCEEDS OF DIESEL AND PETROL CANNOT BE THE INCOME OF THE APPELLANT AND ONLY THE ME AGER GROSS PROFIT ON SUCH ALLEGED SUPPRESSED SALES CAN BE THE INCOME OF THE APPELLANT IS SUPPORTED BY WELL - ESTABLISHED PRINCIPLE AND VARIOUS RULINGS OF HON'BLE COURTS. THE APPELLANT HAS NOT CAPITALIZED THE AMOUNT OF ALLEGED INCOME OF RS.20 LACS OFFERED TO TAX IN THE BOOKS OF ACCOUNTS. THE APPELLANT OFFERED THE AMOUNT OF RS.20 LACS AS UNDISCLOSED INCOME BASED ON THE LOOSE SHEET ON CONDITION THAT NO PENALTY SHOULD BE LEVIED. THE OFFER OF THE APPELLANT WAS ACCEPTED DURING THE ASSESSMENT PROCEEDINGS AND THE ASS ESSMENT WAS COMPLETED ACCORDINGLY. THE PENALTY PROCEEDINGS ARE DIFFERENT FROM THE ASSESSMENT PROCEEDINGS. THE CONDITIONS FOR LEVY OF PENALTY U/S. 271(1)(C) HAVE NOT BEEN EXAMINED IN THE INSTANT CASE. THE REASONS STATED BY THE A.O. MAY BE GOOD FOR MAKING AN ADDITION BUT NOT FOR LEVY OF PENALTY. THE APPELLANT FILED AN EXPLANATION REGARDING THESE TRANSACTIONS AND THERE IS NO MATERIAL ON RECORD TO CONSIDER THE SAME AS FALSE OR NOT BONAFIDE. MERE DISBELIEF OF THE EXPLANATION FILED BY 4 ITA NO. 242/PN/2010, SHRI KAILASH GOPINATH ZAWAR, JALGAON THE APPELLANT CANNOT BE A GO OD REASON FOR LEVYING THE PENALTY. THE EXPLANATION GIVEN BY THE APPELLANT APPEARS TO BE NOT MALAFIDE AND IS ACCEPTABLE. IN THIS CONTEXT, THE JUDGEMENT OF THE HON'BLE I.T.A.T., PUNE 'B' BENCH, PUNE, IN THE CASE OF ACIT VS. M/S. POOJA DEVELOPERS, NASHIK IN I TA NO.317/PN/08 DATED 31/07/2009 IS VERY MUCH RELEVANT IN THE PRESENT CASE AND THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: 6. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERUSED THE MATERIAL ON RECORD, WE ARE INCLINED TO UPHOLD THE GRIEVANC E OF THE ASSESSEE, INASMUCH AS, THERE IS NOTHING MORE THAN THE FACT OF ADDITION HAVING BEEN MADE TO THE RETURNED INCOME WHICH COULD BE SEEN TO BE SUPPORTING THE IMPUGNED PENALTY. THE ASSESSEE HAS OFFERED EXPLANATION, I.E. THE PAYMENTS WERE MADE TO LABOURER S WHO WERE ILLITERATE AND THEREFORE, DEPENDENCE ON SELF - MADE VOUCHERS WAS A NECESSITY OF THE CIRCUMSTANCE. IT IS ALSO AN ADMITTED POSITION THAT THE VOUCHERS AND EVIDENCES OF PAYMENTS WERE DULY MAINTAINED BY THE ASSESSEE AND ONE OF THE MAJOR REASONS FOR DIS ALLOWANCE WAS ASSESSING OFFICER'S SUSPICION ON GENUINENESS OF THIS TRANSACTION BECAUSE THE PAYMENTS WERE MADE IN CASH. MERE FACT THAT THE PAYMENTS ARE MADE IN CASH AND PARTICULARLY WHEN THE ASSESSEE IS CIVIL CONTRACTOR WORKING IN REMOTE SITES AND PARTICULA RLY WHEN THE PAYMENTS ARE MADE TO LABOURERS, CANNOT LEAD TO CONCLUSION THAT THE PAYMENTS ARE MADE FOR NON - EXISTENCE LIABILITY AND ARE THUS IN EFFECT SHAM PAYMENTS. A PLAIN LOOK AT THE NATURE OF BUSINESS THAT THE ASSESSEE IS ENGAGED IN AND CIRCUMSTANCES IN WHICH THE PAYMENTS HAVE BEEN MADE, WOULD SHOW THAT THESE PAYMENTS ARE, AT THE MINIMUM, IN TUNE WITH THE GROUND REALITIES AND CANNOT BE REJECTED OUTRIGHT AS BOGUS PAYMENTS. AS FOR THE FACT THAT THE ASSESSEE HAS AGREED FOR THIS ADDITION DOES NOT BY ITSELF IN DICATE THAT THE PAYMENTS WERE ACTUALLY MADE. UNDOUBTEDLY UNDE R EXPLANATION 1 TO SECTION 271(1 )(C) AN ONUS IS CAST ON THE ASSESSEE TO OFFER EXPLANATION, WHICH IS NOT FOUND TO BE FALSE AND TO SUBSTANTIATE THE SAME. HOWEVER, IN THE COURSE OF SUCH EXERCISE THE ASSESSEE IS NOT REQUIRED TO PROVE AND SUBSTANTIATE AN EXPLANATION TO THE HILT. AN EXPLANATION WHICH MEANT THE REASONABLE TEST OF PROBABILITIES WHICH IS SUBSTANTIATE BY THE GROUND REALITIES OF BUSINESS SITUATION AND BONAFIDE OF WHICH ARE NOT REJECT, SATISF ACTORILY 5 ITA NO. 242/PN/2010, SHRI KAILASH GOPINATH ZAWAR, JALGAON DISCHARGES THE BURDEN CAST ON THE ASSESSEE. IN THE PRESENT CASE, THE SAID BURDEN IS DULY CHARGED. IN VIEW OF THESE DISCUSSIONS AS ALSO BEARING IN MIND THE ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE IMPUGNED PENALTY WAS INDEED UNJUSTIFIED AND UNWARRANTED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. CIT(A) IS THEREFORE, OUGHT TO HAVE DELETED THE SAME. WE VACATE THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD AND HOLD THAT THE IMPUGNED PENALTY IS FIT TO BE DELETED. THE ASSESS EE GETS RELIEF ACCORDINGLY. [ E MPHASIS SUPPLIED] IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE CONSIDERED OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C). THE A.O. IS THEREFORE DIRECTED TO CANCEL THE PENALTY LEVIED U/S. 271(1)(C) AM OUNTING TO RS.7,00,000/ - . NOW THE REVENUE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE LD. DR ARGUES THAT THE ASSESSEE CAME FORWARD TO DECLARE THE ADDITIONAL INCOME OF RS.20 LACS ONLY AFTER TH E INVESTIGATION WING OF THE DEPARTMENT CONFRONTED THE ASSESSEE IN RESPECT OF THE CHARGE OF UNDERSTATEMENT OF THE SALES OF DIESEL AND PETROL. HE SUBMITS THAT EVEN IF THE ASSESSEE FILED THE RETURN OF INCOME ON 30 - 01 - 2008 BUT THE SAID RETURN CANNOT BE TREATE D AS REVISED RETURN AS ADMITTEDLY THE SAID RETURN WAS FILED BY THE ASSESSEE AFTER ASSESSEE OFFERED THE ADDITIONAL INCOME OF RS.20 LACS AFTER INVESTIGATION WAS STARTED BY DEPTT. HE SUBMITS THAT THERE WAS NO REASON FOR THE ASSESSE TO OFFER RS.20 LACS AS ADD ITIONAL INCOME UNLESS THE ASSESSEE WAS INVOLVED IN THE MALL PRACTICES. HE PLEADED FOR RESTORING THE ORDER OF THE ASSESSING OFFICER. 4. PER CONTRA, THE LD. COUNSEL VEHEMENTLY ARGUED THAT AT THE FIRST INSTANCE , THE PRESENT CASE IS AFTER 6 - 7 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR 2001 - 02. HE SUBMITS THAT SOME UNSIGNED AND UNPROVED PAPER SHEET WAS SENT TO THE DEPARTMENT WITH ALLEGATION THAT FOR PERIOD MENTIONED THEREIN THE SALES WERE UNDERSTATED BY THE ASSESSEE. 6 ITA NO. 242/PN/2010, SHRI KAILASH GOPINATH ZAWAR, JALGAON HE SUBMITS THAT THE ASSESSEE HAS CLEARLY DENIED THE CONTENTS OF THE LOOSE PAPERS AND ALSO AUTHOR OF THE SAID LOOSE PAPER IN THE SPECIFIC ANSWERS RECORDED DURING THE COURSE OF THE INVESTIGATION. HE REFERRED TO THE COPY OF THE STATEMENT RECORDED U/S. 131 WHICH IS FILED IN THE COMPILATION A ND SUBMITS THAT IN ANSWER TO QUESTION NO. 13 , THE ASSESSEE HAS SPECIFICALLY DENIED HAVING ANY RELEVANCE OF THE LOOSE PAPER SHEET WHICH WAS THE ONLY BASE FOR SUMMONING THE ASSESSEE TO RECORD THE STATEMENT. HE SUBMITS THAT THE SALES OF THE DIESEL AND PETROL ARE UNDER THE SPECIFIC REGULATIONS AND MERELY BECAUSE THE ASSESSEE HAS OFFERED SOME ADDITIONAL INCOME THAT ITSELF MAY NOT BE JUSTIFICATION FOR LEVYING THE PENALTY U/S. 271(1)(C). HE SUBMITS THAT AS PER THE FACTS ON RECORD NOTICE U/S. 148 WAS ISSUED ON 31 - 01 - 2008 AND THE ASSESSEE FILED THE RETURN OF INCOME M IGHT BE INVALID PRIOR TO RECEIPT OF THE SAID NOTICE I.E. NOTICE U/S. 148. HE FURTHER SUBMITS THAT EXCEPT THE STATEMENT OF THE ASSESSEE NOTHING IS ON RECORD TO SUPPORT THE CASE OF THE REVENUE ON CHARGE OF ALLEGED UNDERSTATEMENT OF SALES . HE ARGUES THAT EVEN IF THE ADDITION IS NOT CONTESTED BUT PENALTY PROCEEDINGS WERE INDEPENDENT PROCEEDINGS THE ASSESSEE CAN GIVE JUSTIFICATION FOR OFFERING THE ADDITIONAL INCOME AND ALSO CA N CHALLENGE ON MERIT THAT THERE IS NO CASE FOR THE REVENUE TO LEVY THE PENALTY. HE SUBMITS THAT THERE ARE 10 REASONS TO OFFER THE INCOME EVEN IF THERE IS NO EVIDENCE AGAINST THE ASSESSEE. HE ALSO SUBMITS THAT THE PETROL PUMP AGAINST WHICH THE CHARGES MADE HAS ALREADY BEEN CLOSED DOWN LONG BACK IN THE YEAR 2005. HE SUPPORTED THE ORDER OF THE LD. CIT(A) DELETING THE PENALTY. 5. THE SHORT ISSUE IN CONTROVERSY IS THE INCOME OFFERED BY THE ASSESSEE IN THE STATEMENT RECORDED U/S. 131 BY THE ADIT (INV), JALGAON . O N THE BASIS OF SOME INFORM ATION RECEIVED FROM UNKNOWN SOURCE THAT IS NO MENTION EITHER IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER WHERE FROM THE LOOSE PAPER SHEET WAS RECEIVED BY THE DEPARTMENT ON WHICH CERTAIN FIGURES OF THE UNRECORDED SALES OF DIESEL AND PETROL ARE STATED. 7 ITA NO. 242/PN/2010, SHRI KAILASH GOPINATH ZAWAR, JALGAON T HE COP Y IS FILED BY THE DEPARTMENT IN COMPILATION. WE HAVE PERUSED DOCUMENTARY FIGURES APPEARING IN THE SAID STATEMENT /PAPER SHEET WHICH ARE NOT FOR THE WHOLE YEAR BUT FOR FEW DAYS. WE ALSO FIND THAT IN THE STATEMENT RECORDED U/S. 131 THE ASSESSEE HAS C ATEGORICALLY DENIED THE AUTHORSH IP AND CONTENT S OF THE LOOSE PAPER . T HERE IS NO CORROBORATIVE EVIDENCE TO SUPPORT THE CASE OTHERWISE OF THE DEPARTMENT . I T IS TRUE THAT THE ASSESSEE HAS OFFERED RS.20 LACS D URING THE COURSE OF THE INVESTIGATION . T HE FACT REMAINED THAT HE MIGHT BE OFFERED THE SAME FOR AVOIDING CONFRONTATION WITH THE DEPARTMENT . E XCEPT THE DECLARATION MADE BY THE ASSESSEE N OTHING IS THERE ON RECORD TO SUPPORT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE HAS MADE THE UNDERSTATEMENT OF THE SA LES OF DIESEL AND PETROL . A FTER GIVING OUR ANXIOUS CONSIDERATION IN OUR OPINION THE LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). ACCORDINGLY, GROUNDS TAKEN B Y THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21 - 03 - 201 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER R K /PS PUNE , DATED : 21 ST MARCH, 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II , NASHIK 4 THE CIT - II , NASHIK 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNA L PUNE