Khemchand Kangumal Tharwani, Navsari V. The Dy.CIT.,Navsari Circle, Valsad

ITA 2562/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89416 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 14-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Section: 143(3)

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 00 , ! ' #$, % & BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ ITA NO. 2562/AHD/2011 % ) *)/ ASSESSMENT YEAR: 2005-2006 K H E MCHAND KANGUMAL THARWANI PROP: M/S.K.K. BISCUIT BAKERY 154-155, GIDC, KAPILPORE NAVSARI 396 443. VS DCIT, NAVSARI NAVSARI. +, / (APPELLANT) -. +, / (RESPONDENT) ASSESSEE(S) BY : NONE REVENUE BY : SMT.SONIA KUMAR, SR.DR / DATE OF HEARING : 06/05/2015 / DATE OF PRONOUNCEMENT: 13/05/2015 // O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), VALSAD DATED 22.7.2011. 2. SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS T HAT THE CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT OF RS.2,04,300/- BEING THE AMOUNT OF ADDITION M ADE ON ACCOUNT OF G.P. ESTIMATE SUSTAINED BY THE ITAT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF BAKERY PRODUCTS AND RE SALE OF PRODUCTS OF COMPANIES LIKE PARLE PRODUCTS LTD., BRITANNIA (INDI A) LTD., NESTLE INDIA LTD., ETC. WHILE COMPLETING ASSESSMENT UNDER SECT ION 143(3) OF THE ACT, THE AO MADE ADDITION OF RS.9,45,733/- AS GROSS PROFIT ON ADDITIONAL ITA NO.2562/AHD/2011 2 ESTIMATED SALES OF RS.75,27,645/-. THIS WAS CONFIR MED IN APPEAL BY THE CIT(A). 4. ON FURTHER APPEAL TO THE TRIBUNAL, THE ADDITION MADE ON ACCOUNT OF ADDITIONAL SALES WAS REDUCED FROM RS.75,27,645/- TO RS.10,00,000/-. THIS RESULTED IN REDUCTION OF GP ADDITION FROM RS.9 ,45,733/- TO RS.2,04,300/-. THE AO LEVIED PENALTY UNDER SECTION 271(1) OF THE ACT ON GP ADDITION OF RS.9,45,733/- OF RS.3,18,333/- BE ING 100% OF TAX SOUGHT TO BE EVADED ON THE GROUND OF CONCEALMENT IN COME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE. 5. ON APPEAL, THE CIT(A) OBSERVED THAT THE TRIBUNAL IN ITA NO.2976/AHD/2008 DATED 19.10.2008 REDUCED THE ESTIM ATED SALES FROM RS.75,27,645/- TO RS.10,00,000/-. AS RESULT OF THI S, THE GP ADDITION AS REDUCED FROM RS.9,45,733/- TO RS.2,04,3000/-. HE T HEREFORE DIRECTED THE AO TO REDUCE THE PENALTY ACCORDINGLY. 6. NOTICE OF HEARING WAS SENT TO THE RESPONDENT-ASS ESSEE. ONE SHRI KHEMCHAND KANGUMAL THARWANI HAS FILED ADJOURNMENT P ETITION FOR ADJOURNMENT OF HEARING ON THE GROUND THAT DETAILS A RE STILL UNDER COMPILATION AND PREPARATION. THE REASON FOR SEEKIN G ADJOURNMENT WAS NOT FOUND TO BE A PLAUSIBLE ONE BY THE BENCH, AND T HEREFORE, THE ADJOURNMENT PETITION WAS REJECTED. 7. THEREAFTER, THE APPEAL WAS HEARD EXPARTE QUA THE ASSESSEE AND DISPOSED OF ON THE BASIS OF THE SUBMISSIONS OF THE DR AND MATERIAL AVAILABLE ON RECORD. 8. THE DR SUPPORTED THE ORDER OF THE AO. 9. AFTER CONSIDERATION THE SUBMISSION OF THE DR, WE FIND THAT IN THE INSTANT CASE, THE AO LEVIED PENALTY OF RS.3,18,333/ - ON GP ADDITION OF RS.9,45,733/- ESTIMATED ON ESTIMATED ADDITIONAL SAL ES OF RS.75,27,645/-. ON APPEAL, THE TRIBUNAL REDUCED TH E ADDITIONAL ITA NO.2562/AHD/2011 3 ESTIMATED SALES TO RS.10.00 LAKHS AND ACCORDINGLY, THE GP ADDITION WAS REDUCED TO RS.2,04,300/-. THEREFORE, THE CIT(A) CO NFIRMED THE PENALTY, BUT ASKED THE AO TO LEVY PENALTY ON THE REDUCED ADD ITION OF RS.2,04,300/- AFTER THE ORDER OF THE TRIBUNAL. WE FIND THAT IN THE PENALTY ORDER, WHILE LEVYING THE PENALTY, THE AO HA S HELD AS UNDER: 5. CONSIDERING THE FACTS NARRATED ABOVE AND CIRCUM STANCES OF THE CASE, THE EXPLANATION PUT FORTH BY THE ASSESSEE IS NOT ACCEPTABLE. IT CAN EASILY BE CONCLUDED THAT THE AS SESSEE HAS CONCEALED AND FURNISHED INACCURATE PARTICULARS OF I NCOME AND FOR THIS DEFAULT FOR WHICH THE ASSESSEE IS LIABLE FOR P ENALTY U/S.271(1)(C). 10. WE FIND THAT CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF JYOTI LTD. VS. ACIT, IN ITA NO.930/AHD/2008 AND 931/AHD/2 008 FOR THE ASTT.YEARS 1996-97 AND 1997-98 VIDE ORDER DATED 31. 8.2012, AFTER FOLLOWING THE DECISION OF THE HON LE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. CIT, 282 ITR 642 ( GUJ) AND ALSO THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MANU ENGINEERING WORKS, 122 ITR 306 (GUJ) HAS HELD AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CONTENTION OF THE LD. AR I S THAT THE AUTHORITIES BELOW HAVE NOT GIVEN A CLEAR FINDING WH ETHER THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FUR NISHED INACCURATE PARTICULARS OF INCOME. WE FIND THAT THE ASSESSING OFFICER HAS HELD AS UNDER:- IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT THE A SSESSEE CONCEALED INCOME/FURNISHED INACCURATE PARTICULARS O F INCOME. IT, THEREFORE, CONSIDER IT A FIT CASE FOR L EVY OF PENALTY U/S. 271(1)(C)(C). FURTHER THE LD. CIT(A) HAS DECIDED THIS ISSUE AS UN DER:- I HAVE CONSIDERED THE FACTS OF THE CASE, THE REASO NING OF THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY AUTHORIZED REPRESENTATIVE. THE CONTENTION OF THE LE ARNED A.R. CANNOT BE ACCEPTED FOR THE FOLLOWING REASONS. THE BURDEN OF PROVING A PARTICULAR IS FOR THE BUSINESS PURPOSE IS ON THE ASSESSEE AS IS HELD BY SEVERAL CASE SUCH AS CULCUTTA ITA NO.2562/AHD/2011 4 AGENCY LTD 19 ITR 191(SC) AND IMPERIAL CHEMICAL INDUSTRIES (INDIA) (P) LTD 74 ITR 17 (SC). IN THE P RESENT AO HAS MADE SUSTAINED ENQUIRY AND FOUND THAT THE PARTY DOES NOT EXIST IN THE CLAIMED PLACE. THE ASSESSEE HAS NO T BEEN ABLE TO PROVE THE EXISTENCE OF THE PARTY. THIS FIND ING IS VERY VITAL. FINDINGS IN THE ASSESSMENT PROCEEDINGS CONST ITUTE GOOD EVIDENCE OF CONCEALMENT. (SOMNATH MILLS 214 IT R (GUJ). THE ASSESSEE HAS FILED PARTICULARS OF AN EXP ENDITURE WHICH CANNOT PROVED. TO THIS EXTENT THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS WITHIN THE MEANING OF SECTION 271(1)(C). IN THE CASE OF VIDYA GOURI NATWA RLAL 238 ITR 91 (GUJ) IT HAS BEEN HELD THAT MERE DISCLOSURE DOES NOT SAVE THE ASSESSEE FROM PENALTY. IF WHAT IS NOT ALLO WABLE IS CLAIMED AS EXPENDITURE IT AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS. IN THE PRESENT CASE THE INC URRING OF EXPENDITURE ITSELF IS NOT PROVED. HENCE THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY IS JUSTIFIABLE AND IS UPHELD. 7. FROM THE AFORESAID ORDERS OF THE AUTHORITIES BEL OW IT IS EVIDENT THAT THERE IS NO CLEAR CUT FINDING WHETHER THE ASSE SSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF SUCH INCOME. THE LD. AR FOR THE ASSESSEE HAS PLA CED RELIANCE ON THE DECISION OF THE CASE OF GANAPATI BHAI M. MIS TRY FURNISHERS PVT LTD VS. ACIT IN ITA NO. 505/AHD/2009 WHEREIN IT HAS BEEN HELD THAT IN PENALTY PROCEEDINGS, THE AO HAD NOT GI VEN ANY CLEAR CUT FINDING AS TO WHETHER ASSESSEE HAS FURNISHED IN ACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF I NCOME AND FOLLOWING THE JUDGMENT OF HONBLE HIGH COURT RENDER ED IN THE CASE OF NEW SORATHIA ENGINEERING CO. (SUPRA) AND IN THE CASE OF MANU ENGINEERING WORKS (SUPRA) THE PENALTY WAS CANCELLED . 8. IN THE CASE IN HAND ALSO, THE ASSESSING OFFICER, IN THE PE NALTY ORDER HAS NOT GIVEN A CLEAR CUT FINDING, AS TO WHETHER THE AS SESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME. IN THIS CASE ALSO, THE ASSESSING OFFICER AS WELL AS THE LD CIT(A) HAS TAKEN BOTH THE ITEMS IN LEVYING THE PENA LTY. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE GUJR AT HIGH COURT RENDERED IN THE CASE OF NEW SORATHIA ENGINEERING VS . CIT AND CIT VS. MANU ENGINEERING (SUPRA) AND ALSO DECISION OF T HE HONBLE CO- ORDINATE BENCHES RENDERED IN THE CASE OF GANAPATI B HAI M. MISTRY FURNISHERS PVT. LTD VS. ACIT IN ITA NO.505/AHD/2009 AND IN THE CASE OF KRISHNA DEVELOPERS VS. ITO IN THE ITA NO. 4 447,4448 AND 4449/AHD/2007, THE APPEAL OF THE ASSESSEE IS ALLOWE D AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY . ITA NO.2562/AHD/2011 5 11. WE, THEREFORE, FOLLOWING THE ABOVE CITED DECISI ON, SET ASIDE THE ORDER OF THE CIT(A), AND DELETE THE LEVY OF PENALTY ON ADDITION OF RS.2,04,300/-. ACCORDINGLY, THE GROUND OF APPEAL O F THE ASSESSEE IS ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY THE 13 TH MAY, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER