M/s. Sanjivani Medical Agency, Anand V. The Income tax Officer, Ward-1, Anand

ITA 2772/AHD/2011

• Counselvise Citation: 277220514 RSA 2011
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2002-2003
• Appeal Filed On: 09-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: S N DIVETIA
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. K. GARO DIA, AM) ITA NO.2772/AHD/2011 A. Y.: 2002-03 M/S. SANJIVANI MEDICAL AGENCY, NEAR BANK OF BARODA, STATION ROAD, ANAND 288 001 PAN NO. AAGSF 8094 L VS THE INCOME TAX OFFICER, WARD -1, ANAND (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. N. DIVETIA, AR RESPONDENT BY SHRI B. L. YADAV, SR. DR DATE OF HEARING: 10-01-2012 DATE OF PRONOUNCEMENT: 13-01-2012 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV , BARODA DATED 04 TH AUGUST, 2011, FOR ASSESSMENT YEAR 2002-03, CHALLENG ING THE LEVY OF PENALTY U/S 271 (1) (C) OF THE IT ACT. 2. BRIEFLY, THE FACTS AS NOTED IN THE IMPUGNED ORD ER ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF WHOLESALE TR ADING OF PHARMACEUTICAL PRODUCTS OF LEADING PHARMACEUTICAL C OMPANIES. SURVEY ACTION U/S 133A OF THE IT ACT WAS CARRIED OU T ON 25-02-2002 AT THE BUSINESS PREMISES BY THE INCOME TAX AUTHORIT IES. DURING THE COURSE OF SURVEY, PHYSICAL STOCK OF RS.40,89,704/- WAS FOUND WHEREAS THE STOCK AS PER THE BOOKS ON THE DATE OF S URVEY WAS ITA NO.2772/AHD/2011 M/S. SANJIVANI MEDICAL AGENCY VS ITOWARD-1 ANAND 2 WORKED OUT TO RS.12,01,521/-. THUS, DISCREPANCY IN THE STOCK TO THE TUNE OF RS.28,88,183/- WAS NOTICED BY THE SURVEY TE AM. MOREOVER, DURING THE COURSE OF SURVEY ACTION ANOTHER STATEMEN T CONTAINING THE STOCK POSITION AS ON 31-03-2001 WAS FOUND WHICH WAS INVENTORIZED AS PER ANNEXURE B AND ACCORDING TO THE SAME CLOSING STOCK AS ON 31- 03-2001 WAS SHOWN AT RS.43,49,392/-. IT WAS STATED BY THE ASSESSEE THAT THE STATEMENT SHOWING POSITION OF THE STOCK OF RS.43,49,392/- WAS SUBMITTED TO THE BANK FOR OBTAINING HYPOTHECATI ON LOAN FACILITY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE VA SO CO-OPERATIVE BANK LTD., ANAND HAS FURNISHED COPIES OF FEW PERIOD ICAL STOCK STATEMENT SUBMITTED TO THE BANK BY THE ASSESSEE. ON COMPARISON, IT WAS NOTICED BY THE AO THAT CLOSING STOCK AS DISCLOS ED TO THE BANK DIFFERED WITH THE CLOSING STOCK AS SHOWN IN THE BOO KS IN RESPECT OF VALUE. AS PER THE AO, DETAILS FURNISHED TO THE BANK WERE NOT AD HOC ON IMAGINARY FIGURES BUT WAS SPECIFIC STOCK AVAILAB LE WITH DESCRIPTION OF COMPANY WISE STOCK IN AMOUNT AND WAS DULY CERTIF IED BY THE ASSESSEE. AS PER THE AO MONTHLY STOCK STATEMENT SUB MITTED TO THE BANK IN THE MONTH OF MARCH, 2001 THE CLOSING STOCK WAS SHOWN AT RS.43,49,392/-. THEREFORE, THE ASSESSEE HAD SAME CLOSING STOCK BALANCE AND OPENING BALANCE AS ON 01-04-2001. WHEREAS AS PE R THE BOOKS THE ASSESSEE HAD SHOWN OPENING STOCK OF RS.16,69,96 8/-. THE AO, THEREFORE, NOTICED THAT THE ASSESSEE SUPPRESSED THE CLOSING STOCK OF THE EARLIER YEAR BY RS.56,79,424/-. IT IS ALSO NOTE D THAT DIFFERENCE IN THE STOCK WAS WORKED OUT AFTER BRINGING ALL MATERIA L EVIDENCES ON RECORD AND THE ASSESSEE IS NOT JUSTIFIED IN SUBMITT ING INFLATED FIGURES TO THE BANK. THE AO ACCORDINGLY REJECTED THE BOOK R ESULTS AND THE ADDITION OF RS.26,79,424/- WAS MADE ON ACCOUNT OF D IFFERENCE IN ITA NO.2772/AHD/2011 M/S. SANJIVANI MEDICAL AGENCY VS ITOWARD-1 ANAND 3 STOCK. THE ASSESSEE PREFERRED APPEAL BEFORE THE LEA RNED CIT(A) WHO HAS MAINTAINED ADDITION OF RS.24,63,410/- OUT OF AD DITION MADE BY THE AO. THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUN AL WHO VIDE ORDER DATED 06-01-2010 IN ITA NO.228/AHD/2006 SUSTA INED THE ADDITION OF RS.5,00,000/-. PENALTY PROCEEDINGS WERE ACCORDINGLY INITIATED AND LEVIED AGAINST THE ASSESSEE WHICH HAV E BEEN CONFIRMED BY THE LEARNED CIT(A) ALSO. 3. THE LEARNED COUNSEL FOR THE ASSESSEE FILED COPY OF THE ORDER OF THE TRIBUNAL DATED 06-01-2010 THROUGH WHICH APPEAL OF THE ASSESSEE WAS DECIDED ON MERITS AND REFERRED TO PARA 7 OF THE ORDER WHICH READS AS UNDER: 7. NOW REGARDING THE EXACT QUANTIFICATION OF STOCK DIFFERENCE, THE LOWER AUTHORITIES HAVE NOT ACTUALLY VERIFIED THE STOCK POSITION ON THE DATE OF SURVEY W ITH REFERENCE TO THE EXPLANATIONS AND RECONCILIATIONS ATTEMPTED BY THE ASSESSEE FIRM. THEREFORE, WE ARE O F THE CONSIDERED VIEW THAT THE AMOUNT OF ADDITIONS SUSTAINED BY THE CIT(A) AT RS.24,64,410/- IS APPARENTLY EXCESSIVE. AS THIS IS NOT A CASE OF EXAC T FIGURES AND SHARP PARTICULARS, IT IS NOT POSSIBLE T O WORK OUT THE ACCURATE AMOUNT OF STOCK VARIATION EXISTED AT THE TIME OF SURVEY. WE FIND THAT NEITHER THE AMOUNT ADMITTED BY THE ASSESSEE FIRM IN ITS SUBMISSIONS NOR THE ADDITION SUSTAINED BY THE CIT(A ) EXHIBITS THE CORRECT STATE OF AFFAIRS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIX THE VALUE OF STOC K DIFFERENCE AT A LUMPSUM AMOUNT OF RS.5,00,000/-. IN OUR OPINION, THIS ADDITION OF RS.5,00,000/- WILL ME ET THE ENDS OF JUSTICE. THE ADDITION SUSTAINED BY THE CIT(A) IS MODIFIED TO THE ABOVE EXTENT. ITA NO.2772/AHD/2011 M/S. SANJIVANI MEDICAL AGENCY VS ITOWARD-1 ANAND 4 THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO T HE FINDINGS OF THE TRIBUNAL SUBMITTED THAT IT IS NOT A FIT CASE TO PRO VE CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS. SMALL A DDITION IS MAINTAINED MERELY ON ESTIMATE BASIS; THEREFORE, PENALTY IS NOT JUSTIFIED IN THE MATTER. HE HAS RELIED UPON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS SANGRUR VANASPATI MILLS LTD., [308 ITR (STATUTE) 18] IN WHICH THE HONBLE SUPREME COURT DISMISSED THE SPECIAL LEAVE PETITION WHICH WAS FILED AGAINST THE ORDER OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN WHICH IT WAS HELD THAT PROVISIONS OF SECTION 271 (1) (C) OF THE ACT ARE N OT ATTRACTED WHERE INCOME OF THE ASSESSEE IS ASSESSED ON ESTIMAT E BASIS AND ADDITIONS ARE MADE THEREIN. 4. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ULTIMATELY PAR T ADDITION IS SUSTAINED BY THE TRIBUNAL; THEREFORE, PENALTY WAS R IGHTLY IMPOSED IN THE MATTER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE TRIBUNAL MAIN TAINED PART ADDITION ON THE MATTER IN ISSUE. BUT, THERE IS SPECIFIC FIND ING OF FACT THAT IT IS NOT POSSIBLE TO WORK OUT ACCURATE AMOUNT OF STOCK V ARIATION EXISTED AT THE TIME OF SURVEY. IT WAS ALSO FOUND THAT THERE WAS NO ADMISSION MADE BY THE ASSESSEE. THE TRIBUNAL IN THE INTEREST OF JU STICE SUSTAINED LUMP SUM ADDITION. ON THE FACE OF THE FINDINGS OF T HE TRIBUNAL IN QUANTUM APPEAL NOTED ABOVE, IT IS CLEAR THAT THE AS SESSEE HAS NOT CONCEALED PARTICULARS OF INCOME AS WELL AS HAS NOT FURNISHED ITA NO.2772/AHD/2011 M/S. SANJIVANI MEDICAL AGENCY VS ITOWARD-1 ANAND 5 INACCURATE PARTICULARS OF INCOME. THE PENALTY IS LE VIED FOR DIFFERENCE IN THE STOCK FOUND DURING THE COURSE OF SURVEY AND THE FINDING OF THE SURVEY PARTY IS CLEARLY DEMOLISHED BY THE FINDINGS OF THE TRIBUNAL BECAUSE NO ACCURATE AMOUNT/STOCK VARIATION WAS FOUN D EXISTED AT THE TIME OF SURVEY. ONCE, THE WORKING MADE BY THE SURVE Y PARTY WAS NOT FOUND RELIABLE BY THE TRIBUNAL, WE ARE OF THE VIEW THAT NO PENALTY IS LEVIABLE IN THE MATTER. FURTHER, IT IS NOT A CASE T HAT ASSESSEE FAILED TO OFFER ANY EXPLANATION OR THAT EXPLANATION MADE BY T HE ASSESSEE WAS FOUND TO BE FALSE. THE EXPLANATION GIVEN BY THE ASS ESSEE WAS FOUND TO BE BONA FIDE. THEREFORE, WE ARE OF THE VIEW THAT PENALTY SHOULD NOT BE LEVIED AGAINST THE ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC) HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1) (C) O F THE INCOME-TAX ACT, 1961, SUGGEST THAT IN ORDER TO BE C OVERED BY IT, THERE HAS TO BE CONCEALMENT OF PARTICULARS O F THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 2 71(1) (C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WH ERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPO SE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVO KED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT C LAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. TH ERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE O NLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICU LARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO B E INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT P ENALTY, THE ITA NO.2772/AHD/2011 M/S. SANJIVANI MEDICAL AGENCY VS ITOWARD-1 ANAND 6 DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERR ONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1) ( C ). A MERE MAKING O F A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNO T AMOUNT TO FURNISHING INACCURATE PARTICULARS. DECISI ON OF THE GUJARAT HIGH COURT AFFIRMED. CONSIDERING THE ABOVE DISCUSSIONS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD