J.R. Dyeing & Printing Mills Pvt. Ltd., Surat V. The Income tax Officer, Ward-1(3), Surat

ITA 2620/AHD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0371 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-10-2009
• Assessment Year: 1994-1995
• Appeal Filed On: 04-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYANT JHAVERI
• Keywords: Set aside
• 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:13.10.2009 DRAFTED ON: 14.10.2 009 ITA NO.2620/AHD/2006 ASSESSMENT YEAR : 1994-1995 J.R.DYEING & PRINTING MILLS PVT. LTD. Z-1201, SURAT TEXTILE MARKET, RING ROAD, SURAT. VS. INCOME TAX OFFICER, WARD-1(3), SURAT PAN/GIR NO. : AAACJ 5474 G (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI RAMESH MALPANI RESPONDENT BY: SHRI JYANT JHAVERI SR. D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF THE LD.CIT(APPEALS)-I, SURAT, DATED 9.11.2006. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IN ALL TH E GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS NOT JUSTIFYING IN UPHOLDING THE LEVY OF PENALTY OF RS.7,15,004/- UNDER SECTION 271(1)(C) OF THE ACT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, TWO ADDITION OF RS.2,21,400/- AND RS.22,087/- MADE BY THE LEARNE D ASSESSING OFFICER WAS ULTIMATELY SUSTAINED AFTER DECISION OF THE TRIBUNAL . OUT OF THE ABOVE TWO AMOUNTS RS.2,21,400/- WAS DETERMINED ON ACCOUNT OF STOCK DI SCLOSED TO THE BANK BY THE ASSESSEE. DURING THE COURSE OF THE SEARCH IN THE CA SE OF THE ASSESSEE CERTAIN STOCK STATEMENTS SUBMITTED TO THE BANK WERE SEIZED. AS PE R THE SEIZED STOCK STATEMENTS, STOCK POSSESSED BY THE ASSESSEE WAS MORE THAN THE S TOCK DECLARED IN THE REGULAR ITA NO.2620/AHD/2 006 M/S.J.R.DYEING & PRINTING MILLS PVTL LTD. ASST.YEAR -1994-95 - 2 - BOOKS OF ACCOUNT BY THE ASSESSEE. THE LEARNED ASSES SING OFFICER MADE ADDITION OF RS.24,30,324/- ON ACCOUNT OF SUCH DIFFERENCE WHI CH WAS REDUCED TO RS.2,21,400/- BY THE TRIBUNAL ON THE GROUND THAT ON LY PEAK DIFFERENCE IN THE STOCK CAN BE ADDED AND TELESCOPING IS TO BE ALLOWED TO THE ASSESSEE IN RESPECT OF DISCLOSURE OF INCOME OF RS.10 LACS DURING THE COURS E OF THE SEARCH. ON THE ABOVE FACTS THE LEARNED ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) ON THE INCOME OF RS.12,21,400/- WHICH WAS CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). WE FIND THAT THE ADDITION IN THE ASSESSMENT WAS MADE MERELY ON THE BASIS OF STOCK STATEMENT SUBMITTED TO THE BANK. THE CASE OF THE ASSESSEE IS THAT THE STOCK STATEMENT SUBMITTED TO T HE BANK WAS INFLATED FOR AVAILING MORE AMOUNT OF LOAN. WE FIND THAT NO MATER IAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE STOCK STATEMENT SUBMIT TED TO THE BANK BY THE ASSESSEE WAS SACROSANCT AND THE BOOKS OF ACCOUNT MA INTAINED BY THE ASSESSEE WAS FALSE. IN OUR CONSIDERED VIEW, DIFFERENT CONSIDERAT ION APPLY IN A PENALTY PROCEEDING THAN THE CONSIDERATION APPLY IN MAKING O F ASSESSMENT. IN AN ASSESSMENT ADDITION CAN BE MADE EVEN WHEN THE ASSES SEE IS NOT ABLE TO SUBSTANTIATE ITS EXPLANATION BUT FOR LEVY OF PENALT Y, THE REVENUE HAS TO SHOW THAT THE EXPLANATION FURNISHED BY THE ASSESSEE CANNOT BE TREATED AS GENUINE OR THE SAME IS INCORRECT. IN OUR CONSIDERED OPINION, IN TH E INSTANT CASE, THE REVENUE HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT THE EXPL ANATION OF THE ASSESSEE THAT THE STOCK STATEMENT SUBMITTED TO THE BANK WAS INFLA TED FOR AVAILING MORE LOAN WAS FALSE. THEREFORE, IN OUR CONSIDERED OPINION REVENUE WAS NOT JUSTIFIED IN IMPOSING PENALTY IN RESPECT OF THE ABOVE ADDITION. 4. FURTHER, IT IS OBSERVED THAT ADDITION OF RS.22,0 87/- WAS MADE ON ACCOUNT OF UNDER VALUATION OF STOCK OF CHEMICALS. ACCORDING TO THE ASSESSEE, THE SAID STOCK OF CHEMICALS WERE DAMAGED AND DID NOT HAVE AN Y MARKET VALUE AND THEREFORE, THE SAME WAS VALUED AT NIL AND AS THE DE PARTMENT HAS NOT ACCEPTED THE ABOVE FACT AND MADE THE ADDITION ON ACCOUNT OF DIFF ERENCE IN VALUATION ONLY. WE FIND THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE ABOVE EXPLANATION FURNISHED BY THE ASSESSEE WAS FAL SE AND IN FACT THE SAID QUANTITY OF CHEMICAL WAS IN GOOD CONDITION ON THE V ALUATION DATE AND WAS ITA NO.2620/AHD/2 006 M/S.J.R.DYEING & PRINTING MILLS PVTL LTD. ASST.YEAR -1994-95 - 3 - SUBSEQUENTLY CONSUMED BY THE ASSESSEE OR WAS SOLD B Y THE ASSESSEE AT THE VALUE WHICH WAS TAKEN BY THE DEPARTMENT. IN ABSENCE OF AN Y SUCH MATERIAL, IN OUR CONSIDERED VIEW, THE REVENUE WAS NOT JUSTIFIED IN I MPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THE SAID ADDITIO N ALSO. 5. WE THEREFORE, SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND DELETE THE PENALTY OF RS.7,15,004/- LEVIED UNDER SECTION 271(1 )(C) OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF PARTIES ON 13/10/2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 13/10/2009 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-I, SURAT. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD