Lucky Dyeing Mills Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(4), Surat

ITA 2679/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89479 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 25-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Depreciation
• Section: 69C; 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI G.D. AGRAWAL , VICE PRESIDENT AND SHR I RAJPAL YADAV, JUDICIAL MEMBER LUCKY DYEING MILLS PVT. LTD, PLOT NO. 1 TO 9, OPP. BRC, UDHNA, SURAT PAN: AAACL4047R (APPELLANT) VS INCOME TAX OFFICER, WARD:1 (4), SURAT (RESPONDENT) ASSESSEE BY: SHRI RAJESH M. UPADHYAY , A .R. REVENUE BY: S H RI B.L. YADAV, SR. D.R. DATE OF HEARING : 14 - 05 - 2 015 DATE OF PRONOUNCEMENT : 22 - 05 - 2 015 / ORDER P ER : RAJPAL YADAV , JUDICIAL MEMBER : - THE ASSESSE E IS IN APPEAL AGAINST THE ORDER OF LD. CIT(A) - I DATED 2 3 TH JUNE, 2010 PA SSED FOR ASSESSMENT YEAR 2005 - 06 . 2. THE GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY IMPOSED U/S. 271(1)(C) OF THE INCOME TAX ACT. I T A NO . 2679 / A HD/20 11 A SSESSMENT YEAR 200 5 - 06 I.T.A NO. 2 679 /AHD / 2011 A.Y. 2005 - 06 PAGE NO LUCKY DYEING MILLS PVT. LTD VS. ITO 2 3. BRIEF F ACTS OF TH E CASE ARE THAT ASSESSEE HAS FI L E D ITS RETURN OF INCOME ON 3 0 ST OCTOBER, 2005 DECLARING NIL INCOME. AN ASSESSMENT ORDER HAS BEEN PASSED U/S. 143(3) ON 28 - 12 - 2007. LD. ASSE SSING OFFICER HAS MADE ADDITIONS OF RS . 10,0 0,3 2 5/ - WHICH ULTIMATELY SET OFF AGAINST THE UN - ABSORBED DEPRECIATION. THE ADDITION S MADE BY THE ASSESSING OFFICER ARE AS UNDER: - PARTICULARS OF ADDITIONS/DISALLOWANCE MADE IN THE ASSESSMENT ORDER: AMOUNT A . UNDERSTATEMENT OF GROSS PROFIT :RS.5,96,063/ - B . UN - EXPLAINED EXPE NDITURE U/S. 69C OF THE ACT :RS. 3,40,403/ - C . OUT OF BOOKS PURCHASES RS. 63,859/ - ------------------- TOTAL OF ADDITION/DISALLOWANCE MADE IN THE ASSESSMENT RS.10,00,325/ - O RDER ON WHICH PENALTY PROCEEDINGS U/S. 271(1) (C) OF THE ACT WERE INITIATED. 4. THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S. 271(1)(C) . LD. ASSESSING OFFICER HAS OBSERVED THAT ADDTIOIN OF RS. 63 ,859/ - W AS DELETED BY THE CIT(A), THEREFORE HE EXCLUDED THIS ADDITION WHILE COMPUTING THE PENALTY. ACCORDINGLY, HE IMPOSED A PENALTY OF R S. 3,27,763/ - WHICH IS EQUIVALENT TO TAX SOUGHT TO BE EVADED BY THE ASSESSEE ON THE ADDITIONS OF R S. 9,36,466/ - (I.E. RS. 5,96,063/ - + RS.3,40,403/ - ) . 5. APPEAL TO THE CIT(A) DID INTO BRING ANY RELIEF TO THE ASSESSEE. 6. LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET PLACED ON RECORD COPY OF THE TRIBUNAL S ORDER PASSED IN ITA NO. 248/AHD/2009 AND CONTENDED THAT T HE ADDIT ION AT SERIAL A HAS BEEN DELETED BY THE ITAT AND THE ADDITION OF R S. 3,40,403/ - HAS BEEN SET ASIDE TO THE ASSESSING OFFICER FOR RE - ADJUDICATION . THEREFORE, BO TH THE AMOUNTS DO NOT SURVIVE FOR VISIT ING I.T.A NO. 2 679 /AHD / 2011 A.Y. 2005 - 06 PAGE NO LUCKY DYEING MILLS PVT. LTD VS. ITO 3 THE ASSESSEE WITH A PENALTY. LD. DR WAS UNABLE TO CON TROVER T THE CON TEN TIONS OF LEARNED COUNSEL FOR THE ASSESSEE. 7 . S ECTION 271(1)(C) OF THE ACT HAS A DIRECT BEARING ON THE CONTROVERSY AND, THEREFORE, IT IS SALUTARY UPON US TO TAKE NOTE OF THE RELEVANT PROVISIONS OF SECTION 271(1)(C) ALONG WITH EXPLANA TION 1 WHICH READ AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT IN THE OF COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERS ON (A) AND (B)** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICU LARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALT Y. (I)AND (INCOME - TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLAUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1 - WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR I.T.A NO. 2 679 /AHD / 2011 A.Y. 2005 - 06 PAGE NO LUCKY DYEING MILLS PVT. LTD VS. ITO 4 (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT A DDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OR SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB - SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 8 . A BARE PERUSAL OF SUB - CLAUSE III WOULD INDICATE THAT PENALTY WILL BE COMPUTED ON THE ADDITIONS MADE REPRESENTING THE TAXES SOUGHT TO BE EVADED . ONCE ADDITIONS WERE DELETED BY HIGHER APPELLATE AUTHORITY, THERE CANNOT BE ANY COMPUTATION OF PENALTY. IN OTHER WORDS, THERE ARE NO AMOUNTS FOR WHICH ASSESSEE CAN BE CHARGED THAT IT HAS EVADED THE TAXES ON THOSE AMOUNTS. THEREFORE , NO PENALTY IS IMPOSABLE UPON THE ASSESSEE. SINCE ONE OF THE ISSUES HAS BEEN REMITTED TO THE ASSESSING OFFICER FOR ADJUDICATION, IT IS FOR THE ASSESSING O FFICER TO INITIATE OR NOT TO INITIATE THE PENALTY U/S. 271(1)(C) ON THAT ISSUE AFTER CONCLUSION OF THAT ISSUE. AT THIS STAGE, NO PENALTY IS IMPOSABLE. 9 . IN VIEW OF THE ABOVE, DISCUSSION, WE ALLOW THE APPEAL OF THE ASSESSEE AND QUASH THE PENALTY ORDER. ORDER PRO NO UNCED IN THE OPEN COURT ON 22 - 05 - 2015 SD/ - SD/ - ( G.D. AGRAWAL ) ( RAJPAL YADAV ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD : DATED 22 /05 /2015 AK I.T.A NO. 2 679 /AHD / 2011 A.Y. 2005 - 06 PAGE NO LUCKY DYEING MILLS PVT. LTD VS. ITO 5 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,