The ACIT, Circle-3, JAMNAGAR V. M/s. B. Devchand & Sons Shipping Pvt. Ltd., JAMNAGAR

ITA 27/RJT/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72554 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 30-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE DR IEI
• Assessee Lawyers: PRASHANT MAHARISHI CA I D
• Keywords: Income from undisclosed sources; Deemed to accrue or arise in india; Revised return
• Section: 143(3); 133A; 115JB; 27; 28

Judgement Text

D , , IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT . . R A . . A A BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTAVA AM ITA NO S . 27 & 28 /RJT/201 3 I I / ASSESSMENT YEAR 200 6 - 07 & 2007 - 08 THE ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 3, JAMNAGAR ( / APPELLANT) M/S. B DEVCHAND & SONS SHIPPING PVT LTD., 103 - 104, KANCHANJUNGHA APARTMENT, OPP. CRICKET GROUND, JAMNAGAR PAN : AAACB 8736 F SA / RESPONDENT 0 I / REVENUE BY SHRI VILAS V SHINDE, DR IEI / ASSESSEE BY SHRI PRASHANT MAHARISHI, CA I D / DATE OF HEARING 02. 0 8. 2013 I D / DATE OF PRONOUNCEMENT 14 . 0 8 . 2013 / ORDER . . , R A / T. K. SHARMA, J. M. : TH ESE TWO APPEAL S FILED BY THE REVENUE ARE AGAINST THE COMMON ORDER DATED 16.11.2012 OF CIT (A) - JAMNAGAR CANCELLING THE PENALTY OF RS. 3,36,600/ - & RS. 20,19,600/ - LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME - TAX ACT FOR THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 RESPECTIVELY. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY RUNNING BUSINESS AS A CLEARING & FORWARDING AGENT , SHIPPING & CUSTOM HOUSE AGENT. I N THIS CASE , A SURVEY U/S 133A OF THE I.T. ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 19.09.2006. DURING THE COURSE OF SURVEY, A LOOSE PAPER INDICATING SALE OF MISCELLANEOUS ITEMS OF RS.70,00,000/ - WA S FOUND. THE ASSESSEE DISCLOSED THE AMOUNT OF RS.70,00,000/ - AS UNACCOUNTED INCOME WHICH IS OVER AND ABOVE THE REGULAR INCOME OF THE ASSESSEE FOR TWO ASSESSMENT YEARS AS UNDER: - A ) RS.10,00,000/ - AS INCOME EARNED DURING THE AY 2006 - 07 B ) RS.60,00,000/ - AS INCO ME EARNED DURING THE AY 2007 - 08 27 - RJT - 2013 B DEVCHAND & SONS SHIPPING PVT LTD 2 THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) ON 12.12.2008 FOR THE ASSESSING YEAR 2006 - 07, WHEREIN HE DETERMINED TOTAL LOSS FROM BUSINESS AND PROFESSION AT RS. NIL , DEEMED IN COME U/S. 69B AT RS.10,00,000/ - AN D TOTAL INCOME FOR RS.34,19,788/ - FOR THE PURPOSE OF 115JB OF THE I.T. ACT FOR THE A SSESSMENT YEAR 2006 - 07. SUBSEQUENTLY, ON 27.03.2013 THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE INCOME - TAX ACT ON THE INCOME ASSESSED FOR THE ASSESSMENT YEAR 2006 - 07 AT RS.3,36,600/ - . SIMILARLY, FOR THE ASSESSMENT YEAR 2007 - 08, THE ASSESSING OFFICER FRAMED ASSESSMENT U/S 143(3) ON 24.12.2009 , DETERMINING TOTAL LOSS FROM BUSINESS AND PROFESSION AT RS. NIL AND DEEMED INCOME U/S. 69B AT RS. 6 0,00,000/ - AND BOOK P ROFIT U/S 115JB AT RS.65,40,338/ - . ON THE INCOME ASSESSED FOR THE ASSESSMENT YEAR 2007 - 08 , THE ASSESSING OFFICER ON 26.03.2012 LEVIED PENALTY OF RS. 20,19,600/ - U/S 271(1)(C) OF THE INCOME - TAX ACT . AGGRIEVED WITH AFORESAID PENALTY ORDERS, THE ASSESSEE PREF ERRED APPEAL BEFORE THE LD CIT(A) AND THE LD CIT(A) , IN THE IMPUGNED COMMON ORDER DATED 16.11.2012 , CANCELLED THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME - TAX ACT, FOR BOTH THE ASSESSMENT YEARS I.E. 2006 - 07 & 2007 - 08 FOR THE DETA ILED REASONS GIVEN IN PARAGRAPH NOS. 6 TO 6.7 OF THE IMPUGNED ORDER. THE MAIN REASON GIVEN BY THE LD CIT(A) IN CANCELLING THE PENALTY IS THAT THE SURVEY U/S 133A WAS CARRIED OUT ON 19.09.2006 AND SUBSEQUENTLY THE ASSESSEE DECLARED RS.70,00,000/ - ON THE BA SIS OF LOOSE PAPER INVENTORIED AS PAGE NO. 169 OF ANNEXURE - II INDICATING SOME MISCELLANEOUS ITEMS. ON THIS BASIS, THE ASSESSEE DECLARED RS.10,00,000 AS INCOME FOR THE ASSESSMENT YEAR 2006 - 07 AND BALANCE RS.60,00,000/ - AS INCOME FOR THE ASSESSMENT YEAR 200 7 - 08. BOTH THE RETURNS OF INCOME WERE FILED SUBSEQUENT TO THE DATE OF SURVEY. NO REVISED RETURNS WERE FILED. IT IS ALSO SEEN FROM THE SUBMISSION OF THE ASSESSEE THAT IT HAS SHOWN THE INCOME DISCLOSED DURING THE COURSE OF SURVEY IN THE BOOKS OF ACCOUNTS AFT ER THE SURVEY AND THE SAME HAS ALSO BEEN INCLUDED IN THE RETURN OF INCOME FOR BOTH THE ASSESSMENT YEARS. FOR THE CANCELLATION OF PENALTY, THE LD CIT(A) HAS RELIED UPON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN CIT VS. SAS PHARMACEUTICALS (335 ITR 259 ) AND TOOK A VIEW THAT IN THE INSTANT CASE THE ASSESSING OFFICER 27 - RJT - 2013 B DEVCHAND & SONS SHIPPING PVT LTD 3 LEVIED THE PENALTY ON INCOME WHICH WAS DISCLOSED DURING THE COURSE OF SURVEY. DATE OF SURVEY WAS ON 19.09.2006 AND AFTER THAT THE INCOME WAS SHOWN IN ITS BOOKS OF ACCOUNT AND ACCORDINGLY OFFE RED THE SAME FOR THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08. HE FURTHER RELIED UPON THE FOLLOWING DECISIONS: - I ) CIT VS. NATIONAL TEXTILE (249 ITR 125) II ) CIT VS. RELIANCE PETRO PRODUCTS (P) LTD (2010) 322 ITR 158 (SC) III ) CIT VS. SUBHASH TRADING CO. (1996) 221 ITR ( GUJ) IV ) NAVJIVAN OIL MILLS VS. CIT (2001) 252 ITR 417 (GUJ) V ) CIT VS. SANGRUR VANASPATI MILLS LTD (SLP ITR 303 ITR ST. P - 18 (SC)) VI ) SMT BHANUBEN CHIMANLAL MALAVIA VS. ITO (2006) 100 TTJ (RJT.) 337 VII ) CIT VS. JALARAM OIL MILLS (2001) 174 CTR (GUJ.) 426 FINALLY, IN PARAGRAPH 6.7 OF THE IMPUGNED ORDER, LD CIT(A) RELIED UPON THE DECISION OF HONBLE ITAT, RAJKOT (SMC) BENCH IN THE CASE OF M/S. EKTA JEWELERS IN IT (SS) A NO. 2/RJT/2006 DATED 07.07.2006, BY RELYING ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILE CO. (249 ITR 125) AND CANCELLED THE PENALTY FOR BOTH THE ASSESSMENT YEARS. THE REASON GIVEN BY LD CIT(A) FOR CANCELLING THE PENALTY IS CONTAINED IN PARAGRAPH S 6.7 & 6.8 O F THE IMPUGNED ORDER WHICH READ AS UNDER: - 6.7 THE HON. ITA T, RAJKOT (SMC) BENCH IN THE CASE OF M/S. EKTA JEWELERS, RAJKOT, IN IT (SS) A NO. 2/RJT/2006, DATED 7.7.2006, BY RELYING ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILE CO. (249 ITR 125), HAS HELD THAT PENALTY U/S 271(1)(C ) IS NOT CHARGEABLE WHEN THE EXPLANATIONS OF THE ASSESSEE ARE DISBELIEVED BUT NOT DISAPPROVED. 6.8. IN THE INSTANT CASE, THE EXPLANATIONS FURNISHED BY THE APPELLANT THAT AS THE APPELLANT HAS OFFERED INCOME IN THE RETURN OF INCOME AND DEFAULTS IF ANY OF F URNISHING INACCURATE PARTICULARS OR CONCEALMENT IS TO BE SEEN AT THE TIME OF FILING OF RETURN OF INCOME ONLY IS ACCEPTABLE. FURTHER AS THE APPELLANT HAS FURNISHED THE CORRECT RETURN OF INCOME INCLUDING THE AMOUNT OF INCOME DISCLOSED IN THE SURVEY BY RECORD ING THE SAME IN THE BOOKS OF ACCOUNTS AND SUCH INCOME IS ACCEPTED BY AO WITHOUT ANY RESERVATION AND SUCH RETURN OF INCOME HAS BEEN FILED FOR BOTH THE YEARS BEFORE THE DUE DATES OF FILING OF RETURN OF INCOME, THE SUBMISSION OF APPELLANT THAT THERE IS NO CON CEALMENT OF INCOME IS FOUND TO BE CORRECT. CONTENTION OF AO THAT BUT FOR SURVEY THIS INCOME WOULD NOT HAVE BEEN UNEARTHED AND THEREFORE PENALTY IS LEVIABLE IS DEVOID OF ANY MERIT AS PENALTY CANNOT BE LEVIED ON ASSUMPTIONS AND PRESUMPTIONS. APPELLANTS SUBM ISSION ALSO GETS SUPPORT FROM THE DECISION OF HONOURABLE DELHI HIGH COURT ;IN CASE CIT V SAS PHARMACEUTICAL 335 ITR 259 (DELHI). THEREFORE, IN MY VIEW NO PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS CAN BE LEVIED CONSIDERING TH E FACTS AND RELEVANT JUDICIAL DECISIONS ON THIS ISSUE. THEREFORE I DIRECT THE ASSESSING OFFICER TO DELETE PENALTY OF RS.3,36,600/ - FOR AY 2006 - 07 & RS.20,19,600/ - FOR AY 2007 - 08 LEVIED BY HIM U/S 271(1)(C). THEREFORE, GROUNDS OF APPEAL ARE ALLOWED FOR BOT H THE YEARS. 27 - RJT - 2013 B DEVCHAND & SONS SHIPPING PVT LTD 4 3. AGGRIEVED BY THE ORDER OF LD C IT (A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF REVENUE , SHRI VILAS V SHINDE, DR APPEARED AND SUPPORTED THE PENALTY LEVIED BY THE ASSESSING OFFICER U/ S 271(1)(C) OF THE INCOME - TAX ACT. HE CONTENDED THAT AT THE TIME OF SURVEY CONCEALMENT OF INCOME WAS DETECTED AND THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE TO DISCL OSE THE INCOME FOUND RECORDED FOR BOTH THE ASSESSMENT YEARS AMOUNTING TO RS.70,00,0 00/ - . HE FURTHER CONTENTED THAT THE INCOME SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SURVEY CARRIED OUT AT THE ASSESSEES PREMISES U/S 133A WOULD HAVE REMAINED UNDETECTED HAD THERE BEEN NO SURVEY ACTION AND THIS CLEARLY REVEALS THE ASSESSEES INTENT ION TO HID E THE TRUE PARTICULARS OF ITS INCOME. 5. AS AGAINST THIS, SHRI PRASHANT MAHARISHI, CA APPEARED ON BEHALF OF ASSESSEE, VEHEMENTLY SUPPORTED THE ORDER OF LD CIT(A). HE POINTED OUT THAT AFTER SURVEY THE ASSESSEE FILED ITS FIRST R ETURN OF INCOME AND NOT A REVISED RETURN. THE BASIS OF LEVYING PENALTY U/S 271(1)(C) IS THE ORIGINAL RETURN OF INCOME . HE SUBMITTED THAT, I N THE ORIGINAL RETURN OF INCOME FOR BOTH THE ASSESSMENT YEARS THE ASSESSEE HAS DECLARED INCOME WHICH WAS DETECTED AT THE TIME OF SUR VEY AND THAT INCOME WAS DULY RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. IN THESE CONSPICUOUS FACTS, THE LD CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME - TAX ACT ; THEREFORE THE VIEW TAKEN BY THE LD CIT (A) BE UPHELD. 6. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOT E THAT SURV EY U/S 133A WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 19.09.2006 AND R ETURN OF INC OME FOR THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 WERE FILED ON 29.12.2006 AND 29.10.2007 RESPECTIVELY. THIS CLEARLY INDICATES THAT B OTH THE RETURNS OF INCOME WERE FILED AFTER THE DATE OF SURVEY AND THE INCOME DISCLOSED DURING THE COURSE OF SURVEY WAS SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS AND OFFERED THE 27 - RJT - 2013 B DEVCHAND & SONS SHIPPING PVT LTD 5 SAME IN ITS RETURN OF INCOME I.E. INCOME OF RS.10,00,000/ - AND RS.17,00,000/ - FOR ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 RESPECTIVELY. IT IS WELL SETTLED LAW THAT ON E HAS TO LOOK AT THE ORIGINAL RETUR N FOR LEVYING PENALTY U/S 271(1)(C) OF THE ACT . IN THE ORIGINAL RETURN S FILED BY THE ASSESSEE FOR BOTH THE ASSESSMENT YEAR S , IT ESTABLISHES THAT THERE WAS NEITHER CONCEALMENT OF INCOME NOR FURNISHING INACCURATE PARTICULARS OF INCOME AS THE ASSESSEE HAS DUL Y DECLARED THE INCOME ALLEGED TO BE DETECTED AT THE TIME OF SURVEY. WE ARE, THEREFORE, INCLINED TO UPHELD THE ORDER OF LD CIT(A) IN CANCELLING THE PENALTY U/S 271(1)(C) OF THE INCOME - TAX ACT FOR BOTH THE ASSESSMENT YEARS. 7. IN THE RESULT, BOTH THE APPE ALS OF THE REVENUE ARE DISMISSED. THIS O RDER PRONOUNCED IN O PEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - ( . . 0 D. K. SRIVASTAVA ) ( D . . I / T. K. SHARMA) / ACCOUNTANT MEMBER 0 / JUDICIAL MEMBER / ORDER DATE 14 . 0 8 . 2013. /RAJKOT *BT 4 RJO NO / COPY OF ORDER FORWARDED TO: - 1 . / APPELLANT - ACIT, CIRCLE - 3, JAMNAGAR 2 . SA / RESPONDENT - M/S. B DEVCHAND & SONS SHIPPING PVT LTD., 103 - 104, KANCHANJUNGHA APARTMENT, OPP. CRICKET GROUND, JAMNAGAR 3 . , / CONC ERNED CIT , JAMNAGAR 4 . - / CIT (A) - JAMNAGAR 5 . S, , D , , / DR, ITAT, RAJKOT 6 . I / GUARD FILE / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT