Rameshwar Lalchand Bhutada, Ahmednagar V. Income-tax Officer ,

ITA 2604/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7439 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 16-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Difference of opinion
• Section: 143(3); 27

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.2604/PUN/2016 / ASSESSMENT YEAR : 2007-08 RAMESHWAR LALCHAND BHUTADA, DHARANGAN ROAD, KOPERGAON, AHMEDNAGAR. PAN : AAUPB0863A. . / APPELLANT V/S INCOME TAX OFFICER, WARD 1, AHMEDNAGAR. . / RESPONDENT ASSESSEE BY : SMT. DEEPA KHARE REVENUE BY : SHRI VIVEK AGGARWAL. / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL OF THE ASSESSEE IS EMANATING OUT OF THE ORDE R OF COMMISSIONER OF INCOME TAX (A) 2, PUNE DATED 10.06.2016 FO R THE ASSESSMENT YEAR 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN TH E BUSINESS OF CIVIL CONSTRUCTION MAINLY GOVERNMENT CONTRACTS. ASSESS EE FILED ITS / DATE OF HEARING : 12.07.2017 / DATE OF PRONOUNCEMENT: 22.09.2017 2 RETURN OF INCOME FOR A.Y. 2007-08 ON 31.10.2007 DECLARING T OTAL INCOME AT RS.5,41,866/-. THE CASE WAS SELECTED FOR SCRU TINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.23.09.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS.11 ,58,766/- INTER-ALIA BY MAKING ADDITION OF RS.6,16,900/- OF LABOUR CHARGE S, AS ACCORDING TO THE AO ASSESSEE COULD NOT GIVE SATISFACTORY EXPLANATION ABOUT THOSE PAYMENTS. ON THE AFORESAID DISALLOWANCE OF EX PENSES, AO VIDE ORDER DT.17.03.2015 PASSED U/S 271(1)(C) OF THE ACT AN D LEVIED PENALTY OF RS.2,19,200/- AS HE WAS OF THE VIEW THAT THE CLA IM OF LABOUR CHARGES MADE BY THE ASSESSEE WAS FALSE AND CONCOCTED. AGGRIEVED BY THE PENALTY ORDER OF AO, ASSESSEE CARRIED THE MATTER BE FORE LD.CIT(A) WHO VIDE ORDER DT.10.06.2016 (IN APPEAL NO.PN/CIT(A)-2/ITO WD- 1/AN/85/2015-16/769) UPHELD THE LEVY OF PENALTY BY HOLDIN G AS UNDER : 5.4 I HAVE EXAMINED THE FACTS OF THE CASE AND ARGUMENTS TAKEN ON BEHALF OF THE APPELLANT. I AM UNABLE TO AGREE WITH THE CONTENTION TAKEN ON BEHALF 'OF THE APPELLANT. AS PER THE FACTS NARRATED ABOVE IT CAN BE CLEARLY SEEN THAT THE APPELLANT FAILED TO FI LE THE DETAILS OF UNPAID LIABILITIES ON ACCOUNT OF LABOUR CHARGES AS REFLECTED IN THE BALANCE SHEET UNDER THE HEAD 'CURRENT LIABILITIES A ND PROVISIONS'. THE APPELLANT FAILED TO DISCHARGE HIS ONUS WITH REGARD TO GENUINENESS AS BECAUSE IN SPITE OF SPECIFIC REQUISITION BY THE ASSESSING OFFICER, HE WAS UNABLE TO FILE THE DETAILS OF PERSONS OR LAB OUR CONTRACTORS TO WHOM PAYMENTS WERE DUE. THE CLAIM THAT IT WAS PAID IN THE NEXT YEAR IS OF NO RELEVANCE AS BECAUSE THE PAYMENT WAS SHOWN TO BE MADE BY SELF-MADE VOUCHERS AND AGAIN DETAILS OF PAY EES ARE NOT FILED. IT WAS SELF SERVING EVIDENCE CREATED FOR HIS OWN PURPOSE WHICH IS NOT BACKED BY ANY INDEPENDENT EVIDENCE. THEREFOR E THE APPELLANT IS CLEARLY LIABLE FOR FURNISHING OF INACCURATE PART ICULARS OF INCOME WITH REGARD TO CLAIM OF UNPAID LABOUR CHARGES OF RS . 6,16,900/-. THE DISALLOWANCE MADE WAS SUBSEQUENTLY CONFIRMED BY THE FIRST APPELLATE AUTHORITY AND THE DECISION OF CIT(A) WAS ACCEPTED BY HIM. HON'BLE CALCUTTA HIGH COURT IN THE CASE OF A CHAND PYARELAL VS. IAC (194 ITR 511) HAS HELD THAT CONCEALMENT PENALTY CAN BE LEVIED IN THE CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5.4.1 THE APPELLANT HAS FURTHER ARGUED THAT THE ADD ITION CONFIRMED BY THE CIT(A) WAS ACCEPTED BY HIM MAINLY TO AVOID PROT RACTED LITIGATION AND TO BUY PEACE OF MIND. THE ARGUMENT THAT DISCLOS URE WAS MADE TO BUY PEACE AND AVOID LITIGATION IS ALSO NOT ACCEPTABLE IN VIEW OF NUMBER OF DECISIONS ON THIS ISSUE. WHERE THE ASSESS EE HIMSELF VOLUNTARILY CONCEDES THAT A PARTICULAR ITEM OF INCO ME HAD BEEN CONCEALED BY HIM AND SURRENDERS SUCH INCOME FOR THE PURPOSE O F ASSESSMENT, THERE IS NOTHING LEFT FOR THE DEPARTMEN T TO PROVE THE 3 FACTUM OF IT BEING ASSESSEE'S INCOME AND ALSO THE F ACTUM OF IT HAVING BEEN CONCEALED BY HIM. IN SUCH CASES, SUCH C ONCESSION BY THE ASSESSEE MAY AFFORD SOUND FOUNDATION FOR THE IM POSITION OF PENALTY. THIS PROPOSITION HAS BEEN LAID BY THE HON BLE DELHI HIGH COURT IN THE CASE OF DURGA TIMBER WORKS VS. CIT (79 ITR 63) AND ALSO BY HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF BANARAS CHEMICAL FACTORY VS. CIT (108 ITR 96) (ALL). 5.4.2 IN THE CASE OF CIT VS. K.P SAMPATH REDDY (197 ITR 2 32)(KAR.) HON'BLE KARNATAKA HIGH COURT UPHELD THE ORDER OF TH E ASSESSING OFFICER IN LEVYING PENALTY U/S 271(1)(C). IN THAT C ASE ALSO ADDITIONAL INCOME' WAS DETECTED DURING THE COURSE OF SURVEY WH ICH WAS ADMITTED BY THE ASSESSEE. THE ASSESSING OFFICER THE REAFTER LEVIED CONCEALMENT PENALTY WHICH WAS DELETED BY THE ITAT. ON AN APPEAL, HON'BLE HIGH COURT HELD THAT THE APPELLATE TRIBUNAL COMPLETELY IGNORED THE ASSESSMENT ORDER WHICH WAS NOT BASED ON ANY CONCESSION BY THE ASSESSEE. CONCEALMENT OF INCOME I N THE RETURN FILED BY THE ASSESSEE WAS A GLARING FACT, IN THE IN STANT CASE. IT WAS NOT POSSIBLE TO INFER ANY AGREEMENT BY THE REVENUE, EITHER IN CLEAR TERMS OR BY NECESSARY IMPLICATION, TO ACT ON THE BA SIS OF THE ASSESSEE'S LETTER. THEREFORE, ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS NOT RIGHT IN LAW IN CANC ELLING THE PENALTY UNDER SECTION 271(1)(C ) FOR THE ASSESSMENT YEAR 19 76-77 . 5.4.3 HONBLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. VS. CIT (358 ITR 593) (SC) HAS CLEARLY HELD THAT 'VOLUN TARILY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS U/S 271(1)(C). THE ASSESSING OFFICER SH OULD NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESSEE VIZ. VOLUN TARY DISCLOSURE, BUY PEACE, AVOID LITIGATION AND AMICABLE SETTLEMENT ETE. TO EXPLAIN AWAY ITS CONDUCT.' HON'BLE APEX COURT HAS FURTHER H ELD THAT THE PROVISION OF SEE. 271( L)(C) DOES NOT RECOGNIZE ANY SUCH PLEA ON THE PART OF THE ASSESSEE. IT WAS FURTHER HELD THAT ASSE SSEE HAS ONLY STATED THAT HE HAD SURRENDERED THE ADDITIONAL SUM W ITH A VIEW TO AVOID LITIGATION, BUY PEACE AND TO CHANNELIZE THE E NERGY AND RESOURCES TOWARDS PRODUCTIVE WORK AND TO MAKE AMICA BLE SETTLEMENT WITH THE INCOME TAX DEPARTMENT. STATUTE DOES NOT RECOGNIZE THOSE TYPES OF DEFENCES UNDER THE EXPLANATION 1 TO SECTION 271(1)(C). IT IS TRITE LAW THAT THE VOLUNTA RY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE MISCHIEF OF PENAL PRO CEEDINGS UNDER SECTION 271(1)(C). THE LAW DOES NOT PROVIDE THAT WH EN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOM E, HE HAS TO BE ABSOLVED FROM PENALTY. THE SURRENDER OF INCOME IN T HIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE ASSESSING OFFICER IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITU ATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. TH E SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE F ILED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSE E TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURREND ERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CO NSEQUENTLY, IT IS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYM ENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INC OME FILED BY IT FROM YEAR TO YEAR. THE ASSESSING OFFICER HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PRO CEEDINGS UNDER SECTION 271, READ WITH SECTION 274. THE ASSESSING O FFICER HAS TO SATISFY WHETHER THE PENALTY PROCEEDINGS BE INITIATE D OR NOT DURING 4 THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE AS SESSING OFFICER IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PAR TICULAR MANNER OR REDUCE IN INTO WRITING. IN VIEW OF ABOVE, IMPUGNED PENALTY ORDER PASSED BY THE HIGH COURT DESERVED TO BE CONFIRMED . 5.4.4 IN THE LIGHT OF THE AFORESAID DISCUSSION ON T HE FACTS, PROVISION OF SEC. 271(1)(C) AND DECISIONS CITED, I HOLD THAT THE APPELLANT WAS CLEARLY LIABLE FOR FURNISHING OF INACCURATE PARTICU LARS OF INCOME WITH REGARD TO UNPAID LIABILITY ON ACCOUNT OF LABOUR CHA RGES. I THEREFORE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE ASSESSING OFFICER IN LEVYING PENALTY U/S 271(1)(C) OF RS.2,19 ,200/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. ACCORDINGLY, THE OR DER OF THE ASSESSING OFFICER IS CONFIRMED. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN A PPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1.THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY U/S. 271(1) (C) OF THE INCOME TAX ACT OF RS. 2,19,2 00/- IN RESPECT OF DISALLOWANCE OF LABOUR CHARGES OF RS. 6,16,900/-. 2. THE LEARNED CIT ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE NOTICE FOR LEVY OF PENALTY WAS DEFECTIVE IN AS MUCH AS NO SPECIFIC CHARGE TOWARDS EITHER CONCEALING THE PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WAS MADE OUT IN TH E NOTICE. 3. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT CLAIM OF LABOUR PAYMENTS WAS SUPPORTED BY VOUCHERS W HICH WERE NOT ACCEPTED ONLY BECAUSE PAYMENTS WERE OUTSTANDING. TH E SIMILAR VOUCHERS HAVE BEEN ACCEPTED FOR LABOUR PAYMENTS WHICH WERE M ADE DURING THE YEAR. THE AUTHORITIES THEREFORE HAVE BEEN INCONSIST ENT WHILE ACCEPTING THE VOUCHERS FOR IMPUGNED PAYMENTS. 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETH ER. 4. BEFORE US, LD.A.R. SUBMITTED THAT ASSESSEE IS AN INDIVIDUA L ENGAGED IN BUSINESS OF CIVIL CONSTRUCTION. DURING THE YEAR ASSESSEE HAD INCURRED EXPENSES ON LABOUR CHARGES OF RS.27,60,404/- AND OF WHICH RS.6,16,900/- WAS OUTSTANDING AT THE YEAR END AND WAS PAID BY THE ASSESSEE IN SUBSEQUENT YEAR. SHE SUBMITTED THAT A O ACCEPTED ALL THE PAYMENTS EXCEPT FOR THE AMOUNT WHICH WAS OUTSTAND ING AND PAYABLE AT THE YEAR END MAINLY FOR THE REASON THAT THE PAYMENT IN SUBSEQUENT YEAR WAS THROUGH SELF DRAWN VOUCHERS AND N OT SUPPORTED BY EVIDENCE. ON THE AFORESAID ADDITION, AO LEVIED PENALTY OF 5 CONCEALMENT OF INCOME U/S 271(1)(C) OF THE ACT. SHE SUBMITTE D THAT ALL THE MATERIAL FACTS WERE DISCLOSED BEFORE AO AND THE ADDITIO N IS ON ACCOUNT OF DIFFERENCE IN OPINION AND NO MATERIAL WAS CONCEALE D BY ASSESSEE. SHE FURTHER SUBMITTED THAT PENALTY AND THE A SSESSMENT PROCEEDINGS ARE DISTINCT AND SEPARATE AND IT IS NOT NECE SSARY THAT FOR EVERY QUANTUM ADDITION MADE, PENALTY HAS NECESSARILY T O BE LEVIED. SHE THEREFORE SUBMITTED THAT PENALTY LEVIED BY THE AO B E DELETED. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF AO AND LD. CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO THE LEVYING OF PENALTY U/S 271(1)(C) OF THE ACT. 6. BEFORE US, LD. AR HAS SUBMITTED ALL THE NECESSARY DETA ILS SUBMITTED BEFORE THE AO AND IT IS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOM E. IT IS SETTLED LAW THAT PARAMETERS OF JUDGING THE DECISION FOR TH E ADDITION MADE IN THE ASSESSMENT IS DIFFERENT FROM THE PENALTY IMPO SED ON ACCOUNT OF INCOME AND THAT CERTAIN DISALLOWANCES / ADDITIO N COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDINGS ON THE PR EPONDERANCE OF THE PROBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S 27 1(1)(C) OF THE ACT ON THE PREPONDERANCE OF THE PROBABILITIES AND T HE REVENUE HAS TO PROVE THAT THE CLAIM MADE BY THE ASSESSEE WAS NOT GENUINE. FURTHER TO LEVY PENALTY, IT HAS TO BE SHOWN THAT THE A SSESSEE HAS VOLUNTARILY FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED T HE PARTICULARS OF INCOME. IT IS ALSO A SETTLED LAW THAT THE PE NALTY PROCEEDINGS ARE ENTIRELY DISTINCT FROM THE ASSESSMENT PR OCEEDINGS AND HOWSOEVER AND GOOD THE FINDINGS OF THE ASSESSMENT MAY B E, THEY ARE NOT CONCLUSIVE AS FAR AS PENALTY PROCEEDINGS ARE CONCER NED. IN THE 6 PRESENT CASE, NO MATERIAL HAS BEEN PLACED BY REVENUE TO PROVE THAT THE CLAIM MADE BY ASSESSEE WAS NOT GENUINE OR BOGUS. C ONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE ARE OF THE VIEW TH AT IN THE PRESENT CASE NO PENALTY U/S 271(1)(C) IS LEVIABLE. WE THEREFO RE DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT . THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON THE 22 ND DAY OF SEPTEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 22 ND SEPTEMBER, 2017. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5 6. CIT(A)-2, PUNE. PRL.CIT-1, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.