IAC, Agra V. M/s Mathura Prasad Sri Prakash, Kannauj

ITA 2500/AGR/1982

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2511 (ITAT-AGRA)
• Duration Of Justice: 28 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-01-2011
• Assessment Year: misc
• Appeal Filed On: 18-06-1982
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Onus to prove; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 2500/DEL./1982 ASSTT. YEAR : 1975-76 INCOME-TAX OFFICER VS. M/S. MATHURA PRASAD SHRI PRAKASH, WARD 1, KANNAUJ. MAKRAND NAGAR, KANNAUJ. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI VINOD KUMAR, JR. D.R. FOR RESPONDENT : SHRI RAJENDRA SHARMA, ADVOCATE ORDER PER H.S. SIDHU, J.M. : THE DEPARTMENT HAS FILED THE PRESENT APPEAL AGAINS T THE ORDER DATED 25.03.1982 OF LEARNED CIT(A), AGRA ON THE FOLLOWING GROUNDS : 1. THE COMMISSIONER OF INCOME-TAX (APPEALS)HAS ERR ED IN LAW AND ON FACTS IN DELETING THE PENALTY IMPOSED UN DER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 AMOUNTING TO RS.15,00,000/-. 2. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS) BEING ERRONEOUS IN LAW AND ON FACTS BE SET ASIDE AN D PENALTY OF THE IAC (ASSTT.), BE RESTORED. 2. THE BRIEF FACTS RELEVANT TO THE ISSUE IN DISPUT E ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DISTILLATION OF SANDAL W OOD OIL AND ALSO RUNS A PETROL PUMP AT KANNAUJ. THE ASSESSEE FILED ITS ORIGINAL RE TURN OF INCOME ON 31.01.1976 SHOWING A NET LOSS OF ` 11,47,970/-. THEREAFTER IT FILED REVISED RETURN SHO WING LOSS 2 OF ` 8,90,720/- . THE ASSESSING OFFICER COMPLETED THE AS SESSMENT U/S. 143(3)/144B OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) DETECTING CONCEALMENT IN THE SANDAL WOOD ACCOUNT AT ` 14,75,888/-. THE ASSESSING OFFICER ISSUED NOTICE DATED 15.05.1978 UNDER SECTION 274 RE AD WITH SECTION 271(1)(C) OF THE ACT FIXING THE CASE FOR 17.06.1978. IN RESPONSE TO THE SAME, THE ASSESSEE FILED ITS REPLY DATED 14.06.1978 BEFORE THE INCOME-TAX OFFICE R, STATING THAT THE ASSESSEE HAD SHOWN THE TRADING LOSS WHICH IS ON ACCOUNT OF THE R ESULT OF DIFFERENCE OF OPINION AND INTERPRETATION AND, THUS, THE ASSESSEE CANNOT B E CHARGED FOR CONCEALMENT. ON THE TRANSFER OF THE ITO, THE NEW INCUMBENT AGAIN IS SUED SHOW CAUSE NOTICE DATED 07.07.1980 FIXING THE CASE FOR 22.07.1980, WHICH WA S SERVED ON THE ASSESSEE ON 17.07.1980 BUT NONE APPEARED ON BEHALF OF THE ASSES SEE NOR FILED ANY WRITTEN REPLY. THE ASSESSING OFFICER, THEREFORE, PRESUMED THAT THE ASSESSEE HAS NOTHING TO SAY EXCEPT WHATEVER IT HAS BEEN GIVEN IN WRITING ON 17. 06.1978 AND TREATING THE SAME AS A FINAL REPLY HE CONCLUDED ON THE ISSUE IN DISPU TE. THE INSPECTING A.C.I.T. (ASSESSMENT) AGRA STATED THAT THE ASSESSEE HAD CLAI MED A LOSS OF ` 14,80,888/- IN SANDAL WOOD ACCOUNT AS IT HAD PARTICIPATED IN GOVER NMENT AUCTION HELD BY DIVISIONAL FOREST OFFICER, TRIPATTUR, TAMILNADU ON 03.07.1974 AND ITS BID FOR 40 TONS OF SANDAL WOOD FOR ` 23,43,900/- WAS ACCEPTED BY THE ASSESSEE. THE SALES TAX PERTAINING TO THE ABOVE AUCTION WAS WORKED OUT AT ` 1,17,195/- WHICH RESULTED THE COST OF 40 TONNES OF SANDAL WOOD AMOUNTED TO ` 24,61,095/-. THE CLAIM OF THE ASSESSEE WAS THAT WITH THE FALL OF THE HAMMER, THE OWNERSHIP OF THE GOODS PASSED TO 3 THE ASSESSEE AND WHETHER DELIVERY WAS TAKEN OR NOT, THE ABOVE 40 TONNES SANDALWOOD FORMED PAT OF STOCK IN TRADE AND, THEREF ORE, THE ASSESSEE WAS ENTITLED FOR ADJUSTMENT FOR FALL IN THE MARKET PRICE OF SAND AL WOOD WHICH SHOULD BE ALLOWED AS DEDUCTION IN WORKING OUT THE TAXABLE INCOME. THU S, THE ASSESSEE CLAIMED THAT ON ACCOUNT OF FALL IN THE MARKET PRICE OF SANDAL WOOD, THERE WAS LOSS OF ` 14,80,888/- IN RESPECT OF 40 TONNES OF SANDALWOOD PURCHASED IN AUCTION SALE ON 03.07.1974. IN THE PRESENT CASE, THE ASSESSEE DID NOT PAY THE PURC HASE PRICE AND THUS, CLAUSE 9 OF THE TERM OF AUCTION SALES WAS VIOLATED. DELIVERY WA S ALSO NOT TAKEN BY THE ASSESSEE AND THE DISTRICT FOREST OFFICER, TIRUPATTUR RESERVE D THE RIGHT OF DISPOSAL OF GOODS IN AUCTION, IF THE PAYMENT WAS NOT MADE IN THE MANNER LAID DOWN IN CLAUSE-9 OF THE TERMS OF AUCTION SALE. UNDER SECTION 25(1) OF THE S ALE OF GOODS ACT, THE PROPERTY IN GOODS DOES NOT PASS TO THE BUYER, IF THE SELLER HAS RESERVED THE RIGHT OF DISPOSAL OF GOODS UNTIL CERTAIN CONDITIONS ARE FULFILLED. THUS, THE CONDITION REGARDING PAYMENT OF PURCHASE PRICE WAS NOT FULFILLED AND, THEREFORE, THE PROPERTY IN THE GOODS WAS NOT PASSED TO THE ASSESSEE. IT IS ALSO MADE CLEAR THAT DUE TO NON-PAYMENT OF PURCHASE PRICE, THE OWNERSHIP OF 40 TONNES OF SANDALWOOD NEV ER PASSED TO THE ASSESSEE AND THE SAME WAS RESOLD BY THE DISTRICT FOREST OFFICER, TRIPUTTUR U/S. 25(1)/54 OF THE SALE OF GOODS ACT, AND THE WOOD WAS RE-AUCTIONED AN D SOLD BY THE DISTRICT FOREST OFFICER NEXT YEAR NOT AS PROPERTY OF THE ASSESSEE B UT AS THE PROPERTY OF THE FOREST DEPARTMENT. MOREOVER, THE DISTRICT FOREST OFFICER W AS NOT CLAIMING PAYMENT OF PURCHASE PRICE FROM THE ASSESSEE AND THE ONLY ACTIO N WHICH MAY BE TAKEN AGAINST 4 THE ASSESSEE BY THE DISTRICT FOREST OFFICER IS CIVI L SUIT FOR PAYMENT OF DAMAGES ON ACCOUNT BREACH OF CONTRACT AND FINALLY HELD THAT TH E ASSESSEE NEVER BECAME THE OWNER OF 40 TONNES OF SANDALWOOD IN QUESTION. SINCE THE ASSESSEE FIRM DID NOT BECOME OWNER OF 40 TONNES OF SANDAL WOOD AT ANY STA GE, QUESTION OF CONSIDERING ANY LOSS ARISING DUE TO FALL IN MARKET PRICE OF SAN DALWOOD DOES NOT ARISE. THESE FINDINGS GIVEN IN THE ASSESSMENT HAVE BEEN UPHELD B Y LEARNED CIT(A) IN APPEAL FILED BY THE ASSESSEE AND BY THE INCOME-TAX APPELLA TE TRIBUNAL. THEREFORE, KEEPING IN VIEW OF THE AFORESAID DISCUSSION, THE INSPECTING A.C.I.T. (ASSTT.), AGRA HELD THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS O F HIS INCOME AND IS COVERED BY THE EXPLANATION OF CLAUSE- III OF SECTION 271(1)(C) , AS IT STOOD BEFORE 01.04.1976. HE FURTHER HELD THAT THE TOTAL RETURNED INCOME OF T HE ASSESSEE IS LESS THAN 80% OF THE TOTAL INCOME AS ASSESSED UNDER SECTION 143. THU S, THE BURDEN OF PROOF IS ON THE ASSESSEE TO PROVE THAT THE FAILURE OF RETURNING COR RECT INCOME DID NOT ARISE OUT OF ANY FRAUD OR GROSS OR WILLFUL NEGLECT AND HE HELD T HAT THE CASE IS FULLY COVERED UNDER THE SAID EXPLANATION WITH THE SUPPORT OF VARI OUS DECISIONS OF HONBLE HIGH COURTS AND FINALLY HELD THAT THE ASSESSEE COMMITTED DEFAULT U/S. 271(1)(C) OF THE ACT. HE, THEREFORE, LEVIED MINIMUM PENALTY OF ` 15,00,000/- IN THE CASE OF PRESENT ASSESSEE VIDE ORDER DATED 18.03.1981. 3. AGGRIEVED BY THE SAME, THE ASSESSEE FILED AN AP PEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY WHO VIDE IMPUGNED ORDER DATED 2 5.03.1982 ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE DID NO T CLAIM THE LOSS MALAFIDELY OR 5 MISCHIEVIOUSLY, WHICH WAS A BONAFIDE DIFFERENCE OF OPINION. THEREFORE, IT CANNOT BE AN ACT OF CONCEALMENT AND HE DELETED THE PENALTY IN DISPUTE BY ACCEPTING THE APPEAL OF THE ASSESSEE BY THE IMPUGNED ORDER. NOW, THE DEPARTMENT HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 25. 03.1992. 4. AT THE TIME OF HEARING, THE LEARNED DR RELIED UP ON THE ORDER PASSED BY THE INSPECTING A.C.I.T. (ASSTT.), AGRA DATED 18.03.1981 AND STATED THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS WRONGLY DELETED THE PENALTY IN DISPUTE WITHOUT APPRECIATING THE FACTS ON RECORD AS WELL AS THE LAW. HE REQUESTE D THAT THE APPEAL FILED BY THE DEPARTMENT BE ACCEPTED BY CANCELING THE IMPUGNED OR DER. 5. ON THE CONTRARY, THE LEARNED COUNSEL FOR THE ASS ESSEE RELIED UPON THE ORDER PASSED BY THE FIRST APPELLATE AUTHORITY AND STATED THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS PASSED THE IMPUGNED ORDER DELETING TH E PENALTY IN DISPUTE AFTER DISCUSSING ELABORATELY THE FACTS AND THE LAW. THERE FORE, THE SAME DESERVES TO BE UPHELD. HE FURTHER STATED THAT THE ASSESSEE HAS DIS CLOSED ALL THE PARTICULARS OF ITS INCOME AND CLAIMED THE LOSS IN DISPUTE AND HAS NOT CONCEALED ANY PARTICULARS OF INCOME. HE HAS ALSO NOT FILED ANY INACCURATE PARTIC ULARS OF HIS INCOME. THEREFORE, THE PENALTY HAS BEEN LEVIED ON THE DIFFERENCE OF OP INION BETWEEN THE REVENUE AUTHORITIES WHICH HAS RIGHTLY BEEN CANCELLED BY THE FIRST APPELLATE AUTHORITY. HE REQUESTED THAT THE APPEAL FILED BY THE DEPARTMENT M AY BE DISMISSED. 6 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT MATERIAL ON RECORD AND WE ARE OF THE VIEW THAT THE LEARNED FIRST APPEL LATE AUTHORITY HAS PASSED A WELL REASONED ORDER AFTER DISCUSSING THE FACTS AND CIRCU MSTANCES AND THE LAW. THIS IS ALSO AN ADMITTED FACT THAT THE REASON FOR LEVYING P ENALTY IN DISPUTE IS A CLAIM OF LOSS IN THE VALUATION OF SANDALWOOD AMOUNT DUE TO FALL I N THE MARKET PRICE AMOUNTING TO ` 14,75,888/-. THE ASSESSEE HAS PURCHASED SANDALWOOD IN AUCTION BUT DID NOT TAKE DELIVERY AND DID NOT PAY THE REQUISITE AMOUNT IN TI ME DUE TO WHICH THE ASSESSEE COULD NOT GET THE DELIVERY AND THE SANDALWOOD WAS S OLD AGAIN BY THE FOREST DEPARTMENT. THE ASSESSEE HAD CLAIMED THE LOSS IN TH E COURSE OF ASSESSMENT PROCEEDINGS, WHICH WAS NOT ALLOWED BY THE REVENUE A UTHORITIES, BUT KEEPING IN VIEW OF THE RECORD, THE REVENUE AUTHORITY HAS NOT E STABLISHED ANY MALAFIDE ON THE PART OF THE ASSESSEE. FURTHER, THE REVENUE AUTHORIT Y ALSO DID NOT ESTABLISH THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOM E OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN ABSENCE OF THE SAME, THE PENAL ACTION U/S. 271(1)(C) OF THE ACT IS NOT POSSIBLE IN THE PRESENT CASE. THE LD. COUNSEL FOR THE ASSESSEE ALSO CITED DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD., (2010) 322 ITR 158 (SC) AND OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BACARDI MARTINI INDIA LTD. ( 2007) 288 ITR 585 (DEL.) AND STATED THAT IN ORDER TO ATTRACT THE PROVISIONS OF S ECTION 271(1)(C) OF THE ACT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INC OME OF ASSESSEE OR THE ASSESSEE 7 MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS I NCOME. IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED DEDUCTION OF LOSS IN ITS RETUR N OF INCOME. IT, THEREFORE, CANNOT BE HELD THAT THE ASSESSEE IS GUILTY OF FURNISHING I NACCURATE PARTICULARS OF ITS INCOME. HE ALSO STATED THAT MAKING AN INCORRECT CLAIM IN LA W CANNOT TANTAMOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE ALSO, THE ASSESSEE HAS CLAIMED DEDUCTION ON ACCOUNT OF LOSS WHICH HAS NOT BEEN ACCEPTED BY THE REVENUE AUTHORITY AND THEREFORE, THE PENALTY PROCEE DINGS U/S. 271(1)(C) ARE NOT SUSTAINABLE IN THE EYE OF LAW. KEEPING IN VIEW OF T HE DECISION RENDERED BY THE HONBLE SUPREME COURT (SUPRA), WE ARE OF THE CONSID ERED OPINION THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY CANCELLED THE PENALTY IN DISPUTE BY HOLDING THAT THE ASSESSEE DID NOT CLAIM THE LOSS MALAFIDELY OR M ISCHIEVIOUSLY AND WAS A BONA FIDE DIFFERENCE OF OPINION. WE FULLY AGREE WITH THE REASONS MENTIONED BY THE LEARNED FIRST APPELLATE AUTHORITY IN THE IMPUGNED O RDER AND WE UPHOLD THE IMPUGNED ORDER BY DISMISSING THE APPEAL BY THE REVE NUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH FEBRUARY, 2011. SD/- SD/- (P.K. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH FEBRUARY, 2011 *AKS/- 8 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY