M/s. Chempho Chem Industries, Baroda V. The Income tax Officer,Ward-5(1), Baroda

ITA 2612/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2342 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-01-2011
• Assessment Year: 1995-1996
• Appeal Filed On: 17-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KAUR
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.2612/AHD/2008 ASSESSMENT YEAR :1995-96 DATE OF HEARING:3.1.11 DRAFTED:5.1.11 M/S. CHEMPHO CHEM INDUSTRIES, D-1, PATEL INDUSTRIAL ESTATE, YAMUNA MILL ROAD, BARODA PAN NO.AAEFM1871F V/S . INCOME TAX OFFICER, WARD-5(1), BARODA, AAYKAR BHAVAN, RACE COURSE, BARODA (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SMT URVASHI SHODHAN, AR RESPONDENT BY:- SMT SUMIT KAUR, DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-V, BARODA IN APPEAL NO.CAB/(A) -V/1-6/06-07DATED 22-05- 2008. THE ASSESSMENT WAS FRAMED BY ACIT, CENTRAL CI RCLE-1, BARODA, U/S143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) VIDE HIS ORDER DATED 31-12-1997 FOR ASSESSMENT YEAR 1995-96. THE PENALTY UNDER DISPUTE WAS LEVIED BY ASSESSING OFFICER U/S 271(1)(C) OF THE ACT VIDE ORD ER DATED 30-06-2006. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN CONFIRMING THE PENALTY LEVIED BY ASSESSING OFFICER ON ADVANCES RECEIVED FROM CUSTOMERS. FOR THIS, ASSESSEE HAS RAISED THE FOLLOW ING TWO EFFECTIVE GROUNDS :- 1. THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT THE APPELLANT FIRM HAD CONCEALED ITS INCOME IN RESPECT OF THE ADVANCES AMO UNTING TO RS.3,86,959/- BEING ADVANCE RECEIVED FROM CUSTOMERS. ITA NO.2612/AHD/2008 A.Y. 1995-96 M/S. CHEMPHO CHEM INDS. V. ITO WD-5(1), BRD PAGE 2 2. THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT T HE APPELLANT FIRM HAD CONCEALED THE PARTICULARS OF INCOME AND FURTHER ERR ED IN HOLDING THAT PENALTY OF RS.1,55,000/- WAS LEVIABLE IN RESPECT OF THE SAID A DDITION. 3. AT THE OUTSET, WE FIND THAT LD. COUNSEL FOR THE ASSESSEE, SMT. URVASHI SODHAN MADE SUBMISSION THAT THESE ADVANCES OF RS.3,86,959/ - ADDED BY ASSESSING OFFICER, ON WHICH PENALTY IS LEVIED, THESE ADVANCES RECEIVED FROM VARIOUS PARTIES WERE REGULAR SALE TRANSACTIONS ENTERED INTO BY ASSESSEE WITH THESE PARTIES. ACCORDING TO ASSESSEE THESE WERE REGULAR BUSINESS TRANSACTIONS A GAINST WHICH SALES WERE EFFECTED EITHER DURING THE YEAR UNDER REFERENCE OR IN THE SUCCEEDING YEAR. THE LD. COUNSEL OF THE ASSESSEE STATED THAT THE BOOKS OF AC COUNT WERE SEIZED AND ARE IN CUSTODY OF THE DEPARTMENT AND THEREFORE FULL DETAIL S ARE AVAILABLE WITH THE DEPARTMENT ABOUT THESE CREDITS AND DEBITS IN THE BO OKS OF ACCOUNT. THIS PLEA WAS RAISED BY ASSESSEE BEFORE ASSESSING OFFICER AS WELL AS BEFORE CIT(A). WE FIND THAT CIT(A) HAS TOTALLY RELIED ON APPELLATE ORDER OF ITA T IN QUANTUM AND CONFIRMED THE PENALTY VIDE PARA-6 AS UNDER:- 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND PER USED THE ORDER OF THE APPELLATE AUTHORITIES INCLUDING THE ORDER OF HONORA BLE ITAT. IN PARA 5.7 OF THE ITATS ORDER, THE HONORABLE ITAT HAS EXAMINED THE B ASIS OF ADDITION MADE BY THE AO. THE HONORABLE ITAT FOUND THAT THE AO DID NO T ACCEPT THE APPELLANTS CLAIM THAT THESE ADVANCES WERE GENUINE TRADE ADVANC ES ADJUSTABLE IN SUBSEQUENT YEARS AS NO CONFIRMATIONS IN THEIR RESPE CT COULD BE PROVIDED BY THE APPELLANT. FURTHER, THE AO HAS FOUND THAT THERE HAS BEEN ACCUMULATION IN THE AID PORTFOLIO OVER THE PAST THREE YEARS WITH TH E TOTAL GROWING TO RS.22,02,878/-. THE HONORABLE ITAT AGREED HAT IT WA S QUESTIONABLE IF THE CUSTOMER WOULD CONTINUE TO EXTEND ADVANCES WITHOUT RECEIVING THE GOODS. THE AO INFERRED THAT THIS IS A PART OF APPELLANTS UNACCOUNTED SALES. THE HONORALE ITAT CONCLUDED IN PARA 5.7 OF THE ORDER TH AT THIS FINDING, WE OBSERVE, APART FROM COGENT HAS NOT BEEN SERIOUSLY CONTESTED BY THE ASSESSEE. IN FACT IT HAS FAILED TO ADDRESS THE BASIC QUESTION AS TO WHY SOME BODY WOULD CONTINUE TO PROVIDE FUNDS YEAR AFTER YEA OR PERIOD AFTER PER IOD WITHOUT OBTAINING THE GOODS FOR THE PURPOSE FOR WHICH THE SAME WERE GIVEN . IN THE LIGHT OF THIS OBSERVATION BY THE ULTIMATE FACT FINDING AUTHORITY, THERE IS CLEAR EVIDENCE THAT THE APPELLANT CONCEALED THE PARTICULARS OF INCOME. THEREFORE, THE ACTION OF THE AO IS JUSTIFIED AND UPHELD. THIS GROUND OF APPEAL IS DISMISSED. 4. WE FIND FROM THE ABOVE FACTS THAT NON OF THE AU THORITIES BELOW HAS CONSIDERED THE FACT THAT THESE ADVANCES RECEIVED FROM VARIOUS PARTIES WERE REGULAR SALE TRANSACTIONS ENTERED INTO BY ASSESSEE WITH THESE PA RTIES AND THESE WERE REGULAR BUSINESS TRANSACTIONS AGAINST WHICH SALES WERE EFFE CTED EITHER DURING THE YEAR UNDER REFERENCE OR IN THE SUCCEEDING YEAR. EVEN THE BOOKS OF ACCOUNT WERE SEIZED AND ARE ITA NO.2612/AHD/2008 A.Y. 1995-96 M/S. CHEMPHO CHEM INDS. V. ITO WD-5(1), BRD PAGE 3 IN CUSTODY OF THE DEPARTMENT AND THEREFORE FULL DET AILS ARE AVAILABLE WITH THE DEPARTMENT ABOUT THESE CREDITS AND DEBITS IN THE BO OKS OF ACCOUNT AND THIS PLEA WAS RAISED BY ASSESSEE BEFORE ASSESSING OFFICER AS WELL AS BEFORE CIT(A). NOW, FROM THE ABOVE, WE ARE OF THE VIEW THAT THIS ISSUE NEEDS RE- EXAMINATION BY AUTHORITIES BELOW THAT, WHETHER THESE ARE REGULAR SALES TRANSACTIONS ENTERED INTO BY ASSESSEE IN ITS BOOKS OF ACCOUNT OR NOT AND DECIDE THE QUESTION OF LEVY OF PENALTY. ACCORDINGLY, THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED FOR STATISTIC AL PURPOSES. 4. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 13/01/2011 SD/- SD/- (D.C.AGRAWAL) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 13/01/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-V, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD