The DCIT(OSD)Circlw-8, Ahmedabad V. M/s. Shree Pramukh Industries (P) Ltd., Ahmedabad

ITA 2554/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0506 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-11-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 07-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Assessee Lawyers: VIJAY RANJAN
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING: 10.11.2009 DRAFTED ON: 10.11. 2009 ITA NO. 2554/AHD/2009 ASSESSMENT YEAR : 2004-2005 D.C.I.T. (O.S.D.) CIRCLE-8, AHMEDABAD. VS. SHRI PRAMUKH INDUSTRIES (P) LTD., 505, 507, GIDC ESTATE, VATVA, AHMEDABAD. PAN/GIR NO. : AADCS 8776 K (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI M.C.PANDIT SR. D.R. RESPONDENT BY: SHRI VIJAY RANJAN O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(APPEALS)-XIV, AHMEDABAD, DATED 18.06.2009 IN APPEAL NO.CIT(A)XIV/AC(OSD)CIR.8/55/2009-10. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE I S THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN DELETI NG THE PENALTY OF RS.6,45,750/- LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 3. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS DELETED THE PENALTY BY OBSERVING TO QUOTE AS UNDER:- 3. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE A.R. CAREFULLY. THE APPELLATE HAD TAKEN UNSECUR ED LOAN OF RS.18 LAKHS FROM KP ENTERPRISES DURING THE YEAR UNDER CON SIDERATION AND THE SAME WAS REPAID DURING THE YEAR. THE SAME WAS SHOWN IN THE TAX AUDIT REPORT IN ANNEXURES 13 AND 14 FILED ALONG WIT H THE RETURN OF INCOME. BEFORE THE LEARNED ASSESSING OFFICER THE AP PELLANT HAS ITA NO.2554/AHD/ 2009 M/S.SHREE PRAMUKH INDUSTRIES(P) LTD. ASST.YEAR -2004-05 - 2 - SUBMITTED ACCOUNT COPY OF THE CREDITOR K P ENTERPRI SES, A COPY OF WHICH HAS BEEN FILED BEFORE ME AS ANNEXURE B SHOWIN G THAT THE AMOUNTS WERE RECEIVED FROM K.P. ENTERPRISES BY CHEQ UES IN MAY 2003 AND ALSO REPAYMENTS WERE MADE IN OCTOBER 2003. IT H AS BEEN STATED BY THE A.R. THAT THE FUNDS TAKEN FROM K.P. ENTERPRI SE WERE UTILISED TO PAY TO THE SUPPLIERS OF GOODS. THE LOAN AMOUNTS HAV E BEEN RECEIVED BY CHEQUE AND HAVE BEEN REPAID BY CHEQUES. THIS FAC T WAS MENTIONED IN THE STATEMENT OF FACTS FILED BEFORE THE CIT(A) I N QUANTUM APPEAL PROCEEDINGS. HOWEVER AS THE APPELLANT COULD NOT OBT AIN CONFIRMATION LETTER FROM THE PARTY ADDITION WAS MADE U/S.68 OF T HE INCOME TAX ACT, AND ALSO IN APPEAL THE ADDITION WAS CONFIRMED. THE APPELLANT HAS DISCLOSED FULL FACTS REGARDING THE CREDIT BUT IT CO ULD NOT OBTAIN CONFIRMATION LETTER. THE APPELLANT HAS MADE A BONAF IDE CLAIM THAT IT WAS A GENUINE CASH CREDIT, BUT THE APPELLANT COULD NOT FURNISH EVIDENCE IN FORM OF CONFIRMATION LETTER. FURTHER ME RELY BECAUSE THE ADDITION STOOD CONFIRMED AT THE FIRST APPELLATE STA GE, THERE IS NO JUSTIFICATION IN HOLDING THAT THERE IS CONCEALMENT OF INCOME AND/OR FILING OF INACCURATE PARTICULARS OF INCOME. FURTHER AS THE APPELLANT HAS HUGE ACCUMULATED LOSSES, IT CAN NOT BE SAID THAT TH E APPELLANT HAD ANY INTENTION TO CONCEAL INCOME OR FURNISH INACCURATE P ARTICULARS OF INCOME AND THEREBY HAD INTENTION TO DEFRAUD THE REV ENUE. FURTHER, THE PENALTY PROCEEDINGS ARE ENTIRELY DIFFERENT FROM THE ASSESSMENT PROCEEDINGS AND NO PENALTY CAN BE LEVIED, UNLESS IT IS ESTABLISHED THAT THERE IS CLEAR CUT FURNISHING OF INACCURATE PARTICU LARS OF INCOME. IN VIEW OF THE ABOVE FACTS AND CASE LAWS, I HOLD THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT AND SO I D IRECT THE PENALTY TO BE DELETED. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE LEARNED ASSESSING OFFICER. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSE SSEE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BY SUBMITTING THAT ORDER OF THE LEARNED ASSESSING OFFI CER LEVYING PENALTY WAS BAD IN LAW IN VIEW OF THE DECISION OF THE HON'BLE HI GH COURT OF GUJARAT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. COMMISSIONE R OF INCOME TAX (2006) 282 ITR 642 (GUJ) AS THE LEARNED ASSESSING OFFICER HAS NOT RECORDED A CLEAR ITA NO.2554/AHD/ 2009 M/S.SHREE PRAMUKH INDUSTRIES(P) LTD. ASST.YEAR -2004-05 - 3 - FINDING TO THE EFFECT THAT WHETHER THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR HE WAS GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON REC ORD. THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BY SUBMITTING THAT ORDER OF THE LEARNED ASSESSING O FFICER LEVYING PENALTY WAS BAD IN LAW. WE FIND THAT PENALTY UNDER SECTION 271( 1)(C) WAS IMPOSED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: 6. THEREFORE, I AM SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME AND/OR FURNISHED INACCURA TE PARTICULARS OF ITS INCOME AND FOR THIS DEFAULT, PENALTY U/S.271(1)(C) READ WITH EXPLANATION (1) IS LEVIED. FROM A READING OF THE ABOVE ORDER SHOWS THAT THE LEA RNED ASSESSING OFFICER HAS NOT RECORDED A CLEAR FINDING TO THE EFFECT THAT WHETHER THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR HE WAS GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HON'BLE HIGH COURT OF GU JARAT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. COMMISSIONER OF INCOME TAX (2006) 282 ITR 642 (GUJ) HAS HELD AS UNDER: 11. IN THE CASE OF CIT VS. MANU ENGINEERING WORKS ( SUPRA) THIS IS WHAT IS LAID DOWN BY THIS COURT AT PAGE NO. 310 OF THE R EPORTS : '.. WE FIND FROM THE ORDER OF THE IAC, IN THE PENALTY PROCEEDIN GS, THAT IS, THE FINAL CONCLUSION AS EXPRESSED IN PARA 4 OF THE ORDER : 'I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME'. NOW, THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSU ING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CA SE OR A QUASI CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCO ME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF S UCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR-CUT F INDING WAS REACHED BY THE IAC AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY ITA NO.2554/AHD/ 2009 M/S.SHREE PRAMUKH INDUSTRIES(P) LTD. ASST.YEAR -2004-05 - 4 - THE IAC WAS LIABLE TO BE STRUCK DOWN.' THE PENALTY ORDER AND THE ORDER OF CIT(A) SHOW THAT NO CLEAR-CUT FINDING HAS BEEN R EACHED. THE TRIBUNAL HAS FAILED TO APPRECIATE THIS LEGAL ISSUE. APPLYING THE RATIO TO THE FACTS OF THE CASE IT IS APPARENT THAT THE ORDER OF PENALTY CANNOT BE SUSTAINED AND THE TRIBUNAL COULD NOT HAVE SUSTAINED THE SAME. THE TRIBUNAL HAVING FAILED TO TAKE INTO CONSIDERATION A ND DEAL WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT IT WOULD CONSTITUTE AN ERROR IN LAW WHICH GOES TO THE VERY BASIS OF THE CONTROVERSY INVOLVED AND HENCE, THE IMPUGNED ORDER OF THE TRIBUNAL CANNOT BE UPHELD. 7. IN VIEW OF THE ABOVE DECISION OF THE JURISDICTIONA L HIGH COURT, IN OUR CONSIDERED OPINION, LEVY OF PENALTY IN THE INSTANT CASE WAS BAD IN LAW AND THEREFORE, UNSUSTAINABLE AS BECAUSE THE LEARNED ASS ESSING OFFICER HAS NOT RECORDED A CLEAR FINDING TO THE EFFECT THAT WHETHER ASSESSEE HAD CONCEALED THE INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME IN THE INSTANT CASE. WE THEREFORE, CONFIRM THE ORDER OF THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) IN DELETING THE LEVY OF PENALTY OF RS.6,45,750/- AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE COURT AT THE CONCLUSION OF THE HEARING IN THE PRESENCE OF THE PARTIES ON 10/11/2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 10/11/2009 PREPARED AND COMPARED BY : PARAS ITA NO.2554/AHD/ 2009 M/S.SHREE PRAMUKH INDUSTRIES(P) LTD. ASST.YEAR -2004-05 - 5 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XIV, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD