M/s. Bhagabati Store, Bhubaneswar V. ITO, Ward-2(1), Bhubaneswar

ITA 260/CTK/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7546 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 08-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUVENDU DUTTA
• Assessee Lawyers: SANTOSH DASH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 260 /CTK/2016 ASSESSMENT YEAR : 2009 - 2010 M/S. BHAGABATI STORE, PLOT NO.1026, DELTA COLONY, UNIT - 8, BHUBANESWAR. VS. ITO, 2(1), BHUBANESWAR PAN/GIR NO. AABFB 3200 G (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI SANTOSH DASH, AR REVENUE BY : SHRI SUVENDU DUTTA , DR DATE OF HEARING : 30 /11 / 2016 DATE OF PRONOUNCEMENT : 30 /11 / 2016 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF CIT(A) - 2, BHUBANESWAR , DATED 3.3.2016 , FOR THE ASSESSMENT YEAR 2009 - 2010 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT OF RS.30,950/ - . 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, A SURVEY ACTION U/S.133 A W AS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 2 ITA NO. 260/CTK/2016 ASSESSMENT YEAR :2009 - 2010 27.6.2008, PHYSICAL INVENTORY OF STOCK OF GROCERY ITEMS WERE TAKEN AND IT WAS FOUND THAT STOCK ON THE DATE OF SURVEY WAS VALUED AT RS.66,84,103/ - AND THE VALUE OF THE STOCK IN THE BOOKS OF ACCOUNT ON THE DATE OF SURVEY WAS RS.79,84,542/ - . THUS, THERE WAS LESS STOCK OF RS.13, 00,439/ - AND IN ABSENCE OF ANY PLAUSIBLE REPLY TO JUSTIFY THE DIFFERENCE, THIS DIFFERENCE AMOUNT OF RS.13,00,439/ - WAS TREATED AS UNACCOUNTED SALE OF THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICER LEVIED PENALTY U/S.271(1)(C) OF THE ACT FOR CONCEALMENT O F INCOME OF RS.1,53,218/ - BEING 100% OF TAX SOUGHT TO BE EVADED. 4. ON APPEAL, LD CIT(A) REDUCED THE SAME TO RS.30,950/ - . 5. BEFORE ME, IT IS SUBMITTED BY LD A.R. OF THE ASSESSEE THAT THE DIFFERENCE IN STOCK WAS FOUND ON 27.6.2008 ON THE DATE OF SURVEY. HE SUBMITTED THAT SOME OF THE DETAILS WERE NOT ENTERED IN THE BOOKS OF ACCOUNT AND, THEREFORE, THERE WAS DIFFERENCE IN STOCK. THE SAME WAS DULY ENTERED AND INCLUDED IN THE RETURN OF INCOME, WHICH WAS FILED AFTER THE CLOSE OF THE ACCOUNTING YEAR ON 31.3.20 09. IT WAS ARGUED THAT HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAS PHARMACEUTICALS IN ITA NO.1058 OF 2009 ORDER DATED APRIL 08, 2011 HAS HELD THAT THOUGH IT IS POSSIBLE THAT BUT FOR DETECTION IN THE SURVEY, THE ASSESSEE MIGHT NOT HAVE OFFERED THE INCOME, PENALTY U/S.271(1) (C) CAN ONLY BE LEVIED IF IN THE COURSE OF PROCEEDINGS, THE ASSESSING OFFICER IS SATISFIED THAT THERE IS CONCEALMENT OR FURNISHING OF 3 ITA NO. 260/CTK/2016 ASSESSMENT YEAR :2009 - 2010 INACCURATE PARTICULARS. THE WORDS IN THE COURSE OF PROCEEDINGS MEAN THE ASSESSMENT PRO CEEDINGS BECAUSE THERE IS NO QUESTION OF THE SATISFACTION OF THE ASSESSING OFFICER IN SURVEY PROCEEDINGS. FURTHER, THE QUESTION WHETHER THERE IS CONCEALMENT OR INACCURATE PARTICULARS HAS TO BE DETERMINED WITH REFERENCE TO THE RETURN OF INCOME. AS THE ASSESSEE HAD OFFERED THE DETECTED INCOME IN THE RETURN, THERE WAS NEITHER CONCEALMENT NOR THE FURNISHING OF INACCURATE PARTICULARS. 6. IT WAS FURTHER SUBMITTED THAT MOREOVER INVENTORY OF STOCK DURING SURVEY CAN NEVER BE SCIENTIFIC AND ACCURATE. THERE INV OLVE SOME DEGREE OF ESTIMATION. HE ALSO SUBMITTED THAT IN THIS CASE TH E DISCREPANCY WAS DUE TO THE FACT THAT SOME ITEM OF STOCK WAS INCLUDED TWICE IN THE INVENTORY. 7. I FIND THAT HONBLE DELHI HIGH COURT IN THE CASE OF SAS PHARMACEUTICALS (SUPRA) HAS HEL D AS UNDER: 16. NO DOUBT, THE DISCREPANCIES WERE FOUND DURING THE SURVEY. THIS HAS YIELDED INCOME FROM THE ASSESSEE IN THE FORM OF AMOUNT SURRENDERED BY THE ASSESSEE. PRESENTLY, WE ARE NOT CONCERNED WITH THE ASSESSMENT OF INCOME, BUT THE MOOT QUESTION IS TO WHETHER THIS WOULD ATTRACT PENALTY UPON THE ASSESSEE UNDER THE PROVISION S OF SECTION 271(1) (C) OF THE ACT. OBVIOUSLY, NO PENALTY CAN BE IMPOSED UNLESS THE CONDITIONS STIPULATED IN THE SAID PROVISIONS ARE DULY AND UNAMBIGUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING SURVEY, MAY BE, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAID SURVEY. HOWEVER, THERE CANNOT BE ANY PENALTY ONLY ON SURMISES, CONJECTURES AND POSSIBILITIES. SECTION 271 (1) (C) OF THE ACT HAS TO BE CONSTRUED STRICTLY. UNLESS IT IS FOUND T HAT THERE IS ACTUALLY A CONCEALMENT OR NON - DISCLOSURE OF THE PARTICULARS OF INCOME, PENALTY CANNOT BE 4 ITA NO. 260/CTK/2016 ASSESSMENT YEAR :2009 - 2010 IMPOSED. THERE IS NO SUCH CONCEALMENT OR NON - DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN THE INCOME TAX RETURN AND OFFERED THE SURRENDERE D AMOUNT FOR THE PURPOSES OF TAX. 17. WE, THUS, ANSWER THE QUESTIONS AS FORMULATED ABOVE I N F A V O U R O F T H E A S S E S S E E A N D A G A I N S T T H E R E V E N U E F I N D I N G N O F A U L T W I T H T H E D E C I S I O N O F T H E C I T ( A ) A S W E L L A S T H E T R I B U N A L . A S A R E S U L T , T H I S APPEAL I S D I S M I S S E D . 8. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE PENALTY IS LEVIED ON THE GROUND THAT THE STOCK OF GROCERY FOUND AT THE TIME OF SURVEY AND THAT SHOWN IN THE BO OKS OF ACCOUNT WAS LOWER. THEREFORE, THE DIFFERENCE OF RS.13,00,439/ - WAS TREATED AS UNEXPLAINED SALES OF THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE YEAR ENDING 31.3.2009, THE SALES BILLS WHICH WERE NOT RECORDED ON THE DATE OF SURVEY WERE DULY INCORPORATED IN THE RETURN OF INCOME BY THE ASSESSEE. THEREFORE, THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SAS PHARMACEUTICALS(SUPRA) SQUARELY APPLIES TO THE FACTS OF THE ASSESSEES CASE. I, THER EFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE PENALTY OF RS.30,950/ - LEVIED U/S.271(1)(C) OF THE ACT AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 9 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCE D IN THE OPE N COURT ON 30 / 11 /2016 IN THE PRESENCE OF PARTIES. S D / - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 30 /11 /2016 5 ITA NO. 260/CTK/2016 ASSESSMENT YEAR :2009 - 2010 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : BHAGABATI STORE, PLOT NO.1026, DELTA COLONY, UNIT - 8, BHUBANESWAR. 2. THE RESPONDENT. ITO 2(2), BHUBANESWAR. 3. THE CIT(A) - 2, BHUBANESWAR 4. CIT , BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//