Shri Jignesh Rajendra Shah, Ahmedabad V. The ACIT(OSD), Ahmedabad

ITA 264/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1435 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-04-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 31-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: J P SHAH
• Keywords: Depreciation; Sham transactions; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER SHRI JIGNESH RAJENDRA SHAH, PROP, MADHURAJ ENTERPRISE, 641/8, ERANDA HALL, KAPASIA BAZAR, AHMEDABAD - 380002 PAN: AEAPS1080A (APPELLANT) VS THE ACIT, AHMEDABAD WARD: 2(1),AHMEDABAD (RESPONDENT) REVENUE BY : S H RI NAR ENDRA SINGH , SR. D . R. ASSESSEE BY: S H RI J.P. SHAH , A.R. DATE OF HEARING : 08 - 04 - 2 016 DATE OF PRONOUNCEMENT : 10 - 06 - 2 016 / ORDER P ER : S. S. GODARA , JU DICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2003 - 04 , AR IS ES FROM ORDER OF THE CIT(A) - 6, AHMEDABAD DATED 02 - 12 - 2011 IN APPEAL NO. CIT(A) - VI/DCIT.CR.2/05/09 - 10 , AFFIRMING ASSESSING OFFICER S ACTION IMPOSING PENALTY OF RS. 75,795/ - IN ORDER DATED 27 - 0 3 - 2009, IN PROCEEDINGS I T A NO . 264 / A HD/20 12 A SSESSMENT YEAR 200 3 - 04 I.T.A NO. 264 /AHD/20 12 A.Y. 2003 - 04 PAGE NO SHRI JIGNESH RAJENDRA SHAH VS. ACIT 2 UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. WE COME TO RELEVANT FACTS FIRST. THE ASSESSEE IS A DEALER OF INDUSTRIAL OXYGEN AND ARGON GASES. HE FILED RETURN ON 27 - 11 - 2003 STAT ING INCOME OF RS. 2,84 ,600/ - . THE SAME WAS PROCESSED. THIS FOLLOWED A REVISED RETURN DATED 23 - 02 - 2004 ADMITTING INCOME OF RS. 3,34,760/ - . THIS WAS ALSO PROCESSED. THE ASSESSING OFFICER TOOK UP SCRUTINY. HE NOTICED ASSESSEE S DEPRECIATION CLAIM OF RS. 3,07,235/ - ON 160 CYLI NDERS PURCHASED FROM M/S. MEET OXYGEN AND ASHOK AIR PRODUCT P VT. LTD. THE ASSESSEE FILED ZEROX COPIES OF BILLS ALONG WITH RELEVANT ACCOUNTS AND OTHER NECESSARY DETAILS. THE ASSESSING OFFICER SOUGHT TO VERIFY PURCHASES. BOTH THE ABOVE SAID CYLINDER SUPPL YING ENTITIES APPEARED. THEY CONFIRMED TO HAVE SOLD THE CYLINDERS I N QUESTION TO ASSESSEE - PROPRIETA RY CONCERN M/S. MADHURAJ ENTERPRISE . HOWEVER, THE SAME HAD BEEN ISSUED ON RENTAL BASIS TO VARIOUS PARTIES. THE ASSESSING OFFICER APPLIED SECTION 43(1) EXP LANATION 3 OF THE ACT SINCE THE ASSESSEE COULD NOT SUBMIT THE DETAILS OF CYLINDERS PURCHASES AND YEAR OF MAKE ETC. HE FOUND THAT ASSESSEE S SIGNATURE AND DELIVERY DETAILS VIS - - VIS THOSE WITH THE PAYEES DID NOT TALLY. HE CAME ACROSS A JV ENTRY QUA PAYMEN T OF RS. 2.11 LACS. THE ASSESSING OFFICER ACCORDINGLY FORMED OPINION THAT ALL THIS POINTED OUT TOWARDS ASSESSEE S ACTION IN AVOIDING TAX OF RS. 1,09 , 488/ - AS WELL AS ITS SUPPLIERS BEHEST IN NOT PAYING ANY TAX AT ALL. ALL THIS RESULTED IN DISALLOWANCE OF THE IMPUGNED DEPRECIATION CLAIM OF RS. 2,40,620/ - IN ASSESSMENT ORDER. THE ASSESSING OFFICER ALSO I.T.A NO. 264 /AHD/20 12 A.Y. 2003 - 04 PAGE NO SHRI JIGNESH RAJENDRA SHAH VS. ACIT 3 INITIATED THE IMPUGNED PENALTY PROCEEDINGS ALLEGING CONCEALMENT AND FURNISHING OF INACCURATE PARTICULAR S OF INCOME IN ASSESSMENT ORDER DATED 29 - 03 - 2006. TH E CIT(A) AFFIRMED ASSES SING OFFICER S ACTION MAKING TH E ABOVE STATED DISALLOWANCE IN HIS ORDER DATED 03 - 01 - 2008. THE ASSESSEE FILE D APPEAL ITA 1439/AHD/2008 BEFO RE THE TRIBUNAL. A CO - ORDINATE BENCH IN ITS OR DER DATED 29 - 12 - 2010 UPHELD THE DISALLOWANCE IN QUESTION BY PLACING RELIANCE ON TRIBUNAL S FINDINGS IN ASSESSMENT YEAR 2001 - 02 ON THE VERY ISSUE. HOWEVER, IT REMITTED ASSESSEE S CLAIM OF HIRE CHARGES DEDUCTION BACK TO THE ASSESSING OFFICER. THE ASSESSEE PREFERRED TAX APPEAL NO. 629 OF 2011. HON BLE JURISDICTIONAL HIGH COURT ADMITTED THE SAME AND ORDERED ITS HEARING ALONG WITH TAX APPEAL NO. 1908/2008 ALREADY PENDING AS ADMITTED AS RELEVANT TO ASSESSMENT YEAR 2001 - 02. THERE IS NO DISPUTE THAT THESE TAX CASES ARE YET TO BE DECIDED. 3. THE ASSESSING OFFICER RESUMED WITH THE IMPUGNED PENALTY IN THE MEAN TIME. THE ASSESSEE PLEADED IN THE CONSEQUENTIAL PLEADING THAT ITS PAYEE HAD ALREADY CONFIRMED CYLINDER PURCHASES IN QUESTION. THIS DISALLOWANCE AS MADE IN QUANTUM PROCEEDING S WAS A DEBATABLE ISSUE AN D ITS TRIBUNAL APPEAL WAS ALREADY PENDING. THE ASSESSING OFFICER IN PENALTY ORDER DATED 27 - 03 - 2009 REJECTED ALL THIS EXPLANATION INTER ALIA ON THE GROUND THAT THE IMPUGNED PENALTY COULD NOT BE KEPT IN ABEYANCE MERELY BECAUSE OF PENDENCY OF QUANTUM CASE, T HE DEPRECIATION CLAIM IN QUESTION WAS BASED ON SHAM PURCHASES OF CYLINDERS AND HELD THE ASSESSEE TO HAVE CONCEALED HIS INCOME AS WELL AS FURNISHED IN ACCURATE PARTICULARS OF INCOME. HE ACCORDINGLY I.T.A NO. 264 /AHD/20 12 A.Y. 2003 - 04 PAGE NO SHRI JIGNESH RAJENDRA SHAH VS. ACIT 4 I MPOSED THE IMPUGNED PENALTY OF RS. 75,795/ - . THE CIT(A ) CONFIRMS THE SAME LEAVING THE ASSESSEE AGGRIEVED. 4. LEARNED AUTHORIZED R EPRESENTATIVE APPEARING AT ASSESSEE S BEHEST REITERATE S HIS STAND AS ADOPTED BEFORE THE LOWER AUTHORITIES. HIS CASE IS THAT QUANTUM AND PENALTY PROCEEDINGS ARE SEPARATE AND EA CH AND EVERY DISALLOWANCE IN THE FORMER DOES NOT NECESSARILY RESULT LEVY OF PENALTY IN LATTER PROCEEDINGS AS SETTLED BY HON BLE APEX COURT IN CIT VS. RELIANCE PETRO - PRODUCTS 322 ITR 158. HE TERMS THE QUANTUM DISALLOWANCE IS A HIGHLY DEBATABLE ISSUE ON FAC TS. THE REVENUE STRONGLY SUPPORT S THE IMPUGNED PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED IN THE LOWER APPELLATE PROCEEDINGS. 5. HEAR D BOTH SIDES. WE HAVE ALREADY NARRATED THE RELEVANT FACTS PERTAINING TO THE IMPUGNED PENALTY ISSUE. THER E IS NO DISPUTE THA T THE ASSESSEE HAS ALREADY LOST HIS QUANTUM DISALLOWANCE ISSUE RIGHT UP TO THE TRIBUNAL. HIS TAX APPEAL IS PENDING BEFORE THE HON BLE JURISDICTIONAL HIGH COURT TO BE HEARD ALONG WITH THAT PERTAINING TO ASSESSMENT YEAR 2001 - 02 RAISING TH E VERY SUBSTANTIAL QUEST IO N OF LAW. IT HAS COME ON RECORD THAT THIS TRIBUNAL HAS APPLIED RATIO OF THE CO - ORDINATE BENCH DECISION IN THE EARLIER ASSESSMENT YEAR ON THE VERY ISSUE WITHOUT POINTING OUT ANY DISTINCTION ON FACTS. THE ASSESSEE FAILS TO REBUT TH IS FACTUAL POSITION SO AS TO CONTROVERT THE QUANTUM FINDINGS HOLDING CYLINDER PURCHASES TO SHAM TRANSACTIONS . WE FURTHER FIND THAT ANOTHER CO - ORDINATE BENCH DECISION IN ITA 1426/AHD/2008 DECIDED ON 28 - 09 - 2012 HAS AFFIRMED AN IDENTICAL PENALTY IN ASSESSMEN T YEAR I.T.A NO. 264 /AHD/20 12 A.Y. 2003 - 04 PAGE NO SHRI JIGNESH RAJENDRA SHAH VS. ACIT 5 2001 - 02. IT IS EVIDENT THAT ASSESSEE S TAX APPEAL 188/2013 STANDS ADMITTED ON 01 - 04 - 2013 TO BE HEARD WITH THE QUANTUM CASES (SUPRA). LEARNED COUNSEL FAILS TO PLACE ON RECORD ANY RELEVANT EVIDENCE SO AS TO PRIME FACIE POINT OUT G ENUINE NESS ELEMEN T IN THE CYLINDER PURCHASE TRANSACTION IN QUESTION . HE TAKES US TO TRIBUNAL S PENALTY ORDER QUOTING FAMOUS ENGLISH PLAY MER CHANT OF VENICE AND ITS CHARACTERS SHYLOCK, PORTIA AND ANTONIO. WE ARE OF THE VIEW THAT ONCE THE CO - ORDINATE BENCH HAS CONFIRMED I DENTICAL PENALTY ON SIMILAR CYLINDER PURCHASE TRANSACTION , IT IS NOT A FIT CASE FOR US TO ADOPT A DIFFERENT APPROACH IN THE IMPUGNED ASSESSMENT YEAR. WE QUO TE JUDICIAL CONSISTENCY TO UPHOLD THE IMPUGNED AS WELL IN THE ASSESSMENT YEAR IN QUESTION. WE REJE CT ASSESSEE S SOLITARY SUBSTANTIVE GROUND ACCORDINGLY . THE CIT(A) S ORDER UNDER CHALLENGE IS CONFIRMED. 6. THIS ASSESSEE S APPEAL IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 10 - 06 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 10 /06 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T.A NO. 264 /AHD/20 12 A.Y. 2003 - 04 PAGE NO SHRI JIGNESH RAJENDRA SHAH VS. ACIT 6 BY ORDER/ , / ,