Shri Rajeshkumar Valjibhai Parmar, Palanpur V. The Income tax Officer,Ward-1, Palanpur

ITA 2627/AHD/2010

• Counselvise Citation: 262720514 RSA 2010
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-09-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 06-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: MANISH J SHAH A R
• Keywords: Principle of natural justice; Assessment record
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD , , , , BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND .., ! '# '# '# '# SHRI T.R. MEENA, ACCOUNTANT MEMBER $%.. , &' ( & ! ) & ! ) & ! ) & ! ) ITA NO. 2627/AHD/2010 ASSESSMENT YEAR :2006-07 RAJESHKUMAR VALJIBHAI PARMAR 110, HIMMAT VIHAR COMPLEX, CITYLIGHT ROAD, PALANPUR-385001 V/S . SHRI M. J. RANA INCOME TAX OFFICER, WARD-1, PALANPUR PAN NO. A GWPP5965G (APPELLANT) .. (RESPONDENT) *+ , - & BY APPELLANT SHRI MANISH J. SHAH, A.R. ./*+ , - & /BY RESPONDENT SHRI P. L. KUREEL, SR. D.R. 0 , 1%' /DATE OF HEARING 17.09.2013 234 , 1% ' /DATE OF PRONOUNCEMENT 22.11.2013 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE CIT(A)-XV, AHMEDABAD, ORDER DATED 25 TH JUNE 2010 FOR A.Y. 2006-07. THE SOLE GROUND OF APPEAL IS AGAINST CONFIRMING THE PENALTY OF RS.2,21 ,272/-. THE ASSESSEE ALSO RAISED ADDITIONAL GROUND WHICH IS REPRODUCED AS UND ER: THE PENALTY IS BAD IN LAW BECAUSE THE ASSESSING OF FICERS PENALTY ORDER DOES NOT SPECIFICALLY STATE WHETHER T HE SAME IS IMPOSED FOR CONCEALING PARTICULARS OF INCOME OR FOR FURNISH ING INACCURATE PARTICULARS OF SUCH INCOME AS HELD BY HONBLE GUJAR AT HIGH COURT IN NEW SAROTHIA ENGINEERING CO. VS. CIT (2006) 282 I TR 642. ITA NO. 2627/AHD/2010 A.Y. 06-07 PAGE 2 2. IN THIS CASE ORDER U/S.143(3) WAS PASSED BY THE A.O. ON 28.12.2008 AND FOLLOWING ADDITIONS WERE MADE: S.NO. DETAILS IN RESPECT OF WHICH ADDITION IS MADE AMOUNT OF ADDITION IN RS. 1 IN RESPECT OF HOTEL EXPENSES 48,971/- 2 IN RESPECT OF STATIONARY EXPENSES 1,18,105/ - 3 IN RESPECT OF MEETING EXPENSES 6,59,383/- 4 IN RESPECT OF DIESEL EXPENSES 38,403/- 5 IN RESPECT OF VEHICLE EXPENSES 8,769/- PENALTY PROCEEDING U/S. 271(1)(C) WAS INITIATED FOR FURNISHING INACCURATE PARTICULARS INCOME. THERE WAS CONCEALED INCOME OF RS.8,73,630/-. THE QUANTUM ADDITION WAS CHALLENGED BY THE APPELLANT FO R ADDITION UNDER THE HEAD STATIONARY EXPENSES WHICH WAS CONFIRMED ON GROUND THAT SUMMONS WERE ISSUED TO THE SUPPLIER BUT THEY DID NOT COMPLY. TH E ADDITION UNDER THE HEAD MEETING EXPENSES WERE ALSO CONFIRMED BY THE LD. C IT(A) ON THE GROUND THAT A.O. WAS ASKED TO PRODUCE THE PARTIES BEFORE HIM BU T ASSESSEE DID NOT PRODUCE THE PERSON CONCERN. THE A.O. ALSO ISSUED N OTICE U/S. 131 TO THE PARTIES BUT REMAINED UNCOMPLY. THE ADDITION UNDER THE HEAD VEHICLE EXPENSES ALSO ADMITTED BY THE ASSESSEE FOR PERSONA L PURPOSE. THEREFORE, ADDITION OF RS.4,384/- WAS CONFIRMED BY THE CIT(A). THE A.O. BEFORE IMPOSING PENALTY U/S.271(1)(C) GAVE REASONABLE OPPO RTUNITY OF BEING HEARD ON 08.03.2010 BUT NO COMPLIANCE WAS MADE BY THE ASSESS EE. HE DID NOT ATTEND THE PROCEEDING AND ALSO HAD NOT SOUGHT ANY ADJOURNM ENT. THEREFORE, THE A.O. IMPOSED PENALTY ON THE BASIS OF INFORMATION AV AILABLE ON RECORD AT RS.2,21,272/-. ITA NO. 2627/AHD/2010 A.Y. 06-07 PAGE 3 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD CONFIRMED THE PENA LTY BY OBSERVING AS UNDER: 6. IN VIEW OF THE ABOVE DISCUSSION I UPHOLD PENALT Y IMPOSED U/S.271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME WITH RESPECT TO RS. 6,01,168 (RS.1,18,105 AND RS.5,83,06 3) AT 100% OF TAX SOUGHT TO BE EVADED. FOR THIS RELIANCE IS PLACE D ON THE DECISION IN THE CASE OF RAJ KUMAR CHAURASIA V. CIT (ALL.) 28 8 ITR 32 WHEREIN IT WAS HELD WHILE CONFIRMING IMPOSITION OF PENALTY THAT EXPLANATION OF ASSESSEE WAS FOUND FALSE TO WARRANT ADDITIONS TO IN COME, THAT NO NEW EVIDENCE WAS FURNISHED IN PENALTY PROCEEDINGS AND FINDING IN QUANTUM PROCEEDINGS WAS RELEVANT. IN ALL HUMILITY IT IS STATED THAT HON'BLE SUPREME C OURT DECISION CITED BY THE ID. AR IN THE CASE OF RELIANCE PETRO PRODUCT S PVT.LTD. 322 ITR 158 IS NOT APPLICABLE BECAUSE THIS IS NOT A CAS E OF SIMPLE DISALLOWANCE AND NEITHER THE CASE OF SECTION 14A WH ICH WAS UNDER CONSIDERATION IN THAT CASE, HERE FIELD INQUIRIES WE RE MADE BY THE AO ON THE ADDRESSES GIVEN IN THE BILLS PRODUCED BY THE APPELLANT AND THE BILLS WERE FOUND BOGUS. REPEATED OPPORTUNITIES GIVEN TO THE ASSESSEE TO PRODUCE THESE PARTIES WERE NOT AVAILED OF AND NEITHER THESE PARTIES WERE EVER PRODUCED BEFORE THE DEPARTM ENT AT ANY STAGE. THEREFORE 271 (1 )(C) PENALTY WITH RESPECT T O AN AMOUNT OF RS. 6,01,168 IS CONFIRMED. NO PENALTY IS OF COURSE LEVIABLE ON ESTIMATE DISALL OWANCES OUT OF VEHICLE AND DIESEL EXPENSES FOR WHICH 322 ITR 158 C ITED BY THE LD. AR IS RELIED UPON. THE AO IS DIRECTED TO COMPUTE A CCORDINGLY. 4. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE APPELLANT ARGUED THAT ASSESSEE LOST IN QUANTUM BUT ADDITIONS WERE MA DE BY THE A.O. ARE DEBATABLE. THE ASSESSEE HAS FURNISHED ALL PARTICUL ARS OF EXPENSES WITH ITA NO. 2627/AHD/2010 A.Y. 06-07 PAGE 4 EXPLANATION AND EVIDENCE AT THE TIME OF APPEAL AND NO CROSS EXAMINATION TO THE APPELLANT WAS ALLOWED BY THE REVENUE. THE EXPE NSES WERE INCURRED EARNING OF INCOME. THE A.O. SHOULD HAVE CONSIDERED ONLY THE REAL INCOME EARNED BY THE APPELLANT. AFTER DISALLOWANCE THE NE T PROFIT RATIO WORKED OUT @ 43.79% WHICH IS NOT POSSIBLE IN ANY LINE OF BUSINES S. THE SIMILAR ADDITIONS WERE MADE IN A.Y. 07-08 BY THE A.O. BUT NO PENALTY PROCEEDING HAD BEEN INITIATED BY HIM. HE FURTHER RELIED IN CASE OF CIT VS. RELIANCE PETRO PRODUCTS PRIVATE LTD. 322 ITR 158 (SC), WHEREIN IT WAS HELD THAT ON THE BASIS OF MERE DISALLOWANCE OF A CLAIM MADE BY THE ASSESSEE IN RET URN OF INCOME, IT CANNOT BE SAID THE ASSESSEE WAS GUILTY OF CONCEALMENT OR F ILING INACCURATE PARTICULARS U/S.271(1)(C) AS ALL INFORMATION WAS AVAILABLE IN T HE RETURN. HE FURTHER RELIED UPON ITAT, AHMADABAD B BENCH DECISION IN CASE OF RAJESHKUMAR VALJIBHAI PARMAR VS. ITO IN ITA NO. 2433 & 2434/AHD/2009, WHEREIN IT WAS HELD THAT CROSS EXAMINATION HAS NOT PROVIDED TO THE APPELLANT . THE MATTER REQUIRED TO BE SET ASIDE. HE FURTHER RELIED IN CASE OF MOTI LAL PADAMPAT UDYOG LTD. VS. CIT [2007] 293 ITR 565 (ALL), WHEREIN IT WAS HELD THAT THE ASSESSEE SHOULD BE ALLOWED OPPORTUNITY TO REBUT EVIDENCE GATHERED BY T HE REVENUE TO FOLLOW THE PRINCIPLE OF NATURAL JUSTICE. HE FURTHER RELIED IN CASE OF NEW SAROTHIA ENGINEERING CO. VS. CIT (2006) 282 ITR 642, WHEREIN HONBLE GUJARAT HIGH COURT HAD DELETED THE PENALTY ON THE GROUND THAT A. O. WAS NOT SPECIFIC WHETHER THE PENALTY IMPOSED FOR CONCEALING OF PARTI CULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THUS, HE REQUESTED TO DELETE THE PENALTY. AT THE OUTSET, LD. SR. D.R. RELIED UPON T HE ORDER OF THE CIT(A) AND ARGUED THAT THE ORDER OF THE CIT(A) MAY BE CONFIRME D. ITA NO. 2627/AHD/2010 A.Y. 06-07 PAGE 5 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE A.O. IMPOSED PENALTY ON THE ADDITION M ADE ON ACCOUNT OF STATIONARY EXPENSES, MEETING EXPENSES, DIESEL AND V EHICLES EXPENSES. IT IS TRUE THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE THES E PARTIES AND EVEN IN RESPONSE TO NOTICE U/S. 131, THE SUMMONS REMAINED U NCOMPLIED BY THE PARTIES. BUT WITHOUT INCURRING ANY EXPENDITURE THE BUSINESS CANNOT BE RUN. THE EXPENSES CLAIMED BY THE APPELLANT ARE NOT EXTRA ORDINARY BUT PERTAINED TO COMMISSION AGENTS BUSINESS WHICH MEANS THEY WERE IN CURRED FOR RUNNING THE BUSINESS. THESE FINDINGS OF CIT(A) ARE SUFFICIENT TO CONFIRM THE QUANTUM ADDITION BUT FOR IMPOSING PENALTY U/S.271(1)(C), TH E REVENUE HAS TO PROVE MUCH MORE THAT. THE EXPLANATION FILED BY THE ASSES SEE IS BONAFIDE. THERE IS NO EVIDENCE ON RECORD THAT THESE EXPENSES CLAIMED B Y THE APPELLANT ARE FALSE. THE SUMMONS ISSUED U/S.131 WERE SERVED ON THESE PAR TIES BUT THEY DID NOT RESPOND WHICH MEANS THE PARTIES ARE GENUINE BUT HAD NOT CORPORATED WITH THE APPELLANT AS WELL AS DEPARTMENT. THE APPELLANT ALS O RAISED ADDITIONAL GROUNDS BY RELYING UPON THE ORDER OF THE HONBLE GUJARAT HI GH COURT IN CASE OF NEW SAROTHIA ENGINEERING CO. VS. CIT (SUPRA), AND ARGUED THAT THERE IS NO CLEAR CUT FINDING WHETHER PENALTY U/S. 271(1)(C) WAS IMPOSED EITHER ON CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. BUT IT IS CLEAR FROM THE ASSESSMENT RECORD THAT PENALTY WA S INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING INC OME WHICH IS POSSIBLE AND VARIOUS HIGH COURTS HAVE HELD THAT PENALTY U/S.271( 1)(C) MAY BE INITIATED FOR FURNISHING INACCURATE PARTICULARS AS WELL AS CONCEA LMENT OF INCOME. FURNISHING ITA NO. 2627/AHD/2010 A.Y. 06-07 PAGE 6 INACCURATE PARTICULARS OF INCOME WHICH ALSO RESULTE D IN CONCEALMENT OF INCOME. THEREFORE, ON BOTH THE GROUNDS PENALTY U/S .271(1)(C) CAN BE INITIATED. BUT WE HOLD ABOVE THAT PENALTY U/S.271(1)(C) ON THI S ADDITION CANNOT BE IMPOSED AS ASSESSEES EXPLANATION WAS NOT FOUND FAL SE. THUS, WE REVERSE THE ORDER OF THE CIT(A). ACCORDINGLY, WE ALLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. THIS ORDER PRONOUNCED IN OPEN COURT ON 22.11.2013 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA &5 &5 &5 &5 , ,, , .16 .16 .16 .16 7&641 7&641 7&641 7&641 / COPY OF ORDER FORWARDED TO:- 1. *+ / APPELLANT 2. ./*+ / RESPONDENT 3. ## 1 ; / CONCERNED CIT 4. ;- / CIT (A) 5. 6? .1 , , / DR, ITAT, AHMEDABAD 6. A BC / GUARD FILE. BY ORDER/ &5 &, / # , )