Shri Prakash S.Vyas, Baroda V. The Income tax Officer,Ward-2(2), Baroda

ITA 2789/AHD/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8925 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-09-2009
• Assessment Year: misc
• Appeal Filed On: 06-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: URVASHI SHODHAN A R
• Keywords: Loose papers; Document seized; Question of law; Documents seized; Set aside
• Section: 271(1)(c); 148; 6; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: AHMEDABAD BEN CHES D BENCH: AHMEDABAD (BEFORE S/SHRI R.V. EASWAR, VP AND A N PAHUJA, AM) ITA NO. 2789 AND 2790/AHD/2008 A Y: 1982-83 AND 1983-84 SHRI PRAKASH S. VYAS, C/O. PARAS SERVICE STATION, OPP. NOVINO BATTERIES, MAKARPURA, BARODA, [PAN: AAZPV 7918 B] VS THE INCOME TAX OFFICER, WARD NO. 2(2),AAYAKAR BHAVAN, RACE COURSE,BARODA APPELLANT RESPONDENT ASSESSEE BY MS. URVASHI SHODHAN,AR REVENUE BY SHRI C. K. MISHRA, DR ORDER A N PAHUJA: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST A COMMON ORDER DATED 18-06-2008 OF THE LEAR NED CIT(A)-II, BARODA UPHOLDING THE PENALTY OF RS.2.40 LACS FOR THE AY 19 82-83 AND RS.6.10 LACS FOR THE AY 1983-84 LEVIED U/S 271 (1) (C) OF THE INCOME TAX ACT 1961(HEREINAFTER REFERRED TO AS THE ACT). 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT ASSESSMENT IN THESE TWO YEARS WERE REOPENED U/S 147(A) OF THE ACT ON 19-3-1 993 WITH THE ISSUE OF NOTICE U/S 148 OF THE ACT. IN RESPONSE, THE ASSESSEE FILED RETURNS DECLARING INCOME OF RS. 17,820/- IN AY 1982-83 AND RS. 10,817/- IN AY 1 983-84 ON 30-6-1993. IN THIS CASE, RESIDENTIAL PREMISES OF THE ASSESSEE WAS SEAR CHED U/S 132 OF THE ACT ON 29-11-1988 ALONG WITH OFFICE PREMISES OF M/S. PARAS SERVICE STATION, WHEREIN THE ASSESSEE WAS A PARTNER. THE ASSESSEE IS STATED TO B E RUNNING TWO PETROL PUMPS ONE AT MAKARPURA AND ANOTHER AT N. H. NO.8, VARNAMA VILLAGE. DURING THE COURSE OF SEARCH IT WAS NOTICED THAT THE ASSESSEE WAS ALSO RUNNING A PETROL PUMP- MINAL SERVICE STATION IN THE NAME OF SHRI PRADEEP S. SHAH , STATED TO BE A BENAMI CONCERN OF THE ASSESSEE. IT WAS ALSO NOTICED DURING THE SEARCH THAT THE ASSESSEE WAS SELLING PETROL AND DIESEL AFTER MIXING KEROSENE AND CHEAPER PRODUCTS TO EARN EXTRA PROFITS, WHICH WAS NOT DISCLOSED IN THE REGUL AR BOOKS OF ACCOUNT. ON ITA NO.2789 AND 2790/AHD/2008 PRAKASH S. VYAS 2 SEARCHING ONE LOCKER IN THE NAME OF THE ASSESSEE AN D HIS WIFE WITH ANDHRA BANK , THREE LOOSE PAPERS WERE SEIZED. PAGE 1, 2 AND 3 O F THE SAID LOOSE PAPERS REFLECTED UNREGISTERED PARTNERSHIP WITH SHRI PRADEE P S SHAH WHICH REVEALED AS UNDER: MINAL SERVICE STATION TOTAL SHARE IS 75% & 25% SHARE IS OURS AND REST SHARE IS OF FAMILY MEMBER. 2.1DURING THE COURSE OF SEARCH AT THE RESIDENCE OF THE ASSESSEE, CERTAIN LOOSE PAPERS WERE SEIZED AS PER LOOSE PAPER FILE B-6. PA GE 128 OF THE SAID FILE REVEALED UNDISCLOSED INCOME OF MINAL SERVICE STATIO N FOR THE PERIOD 1-8-1981 TO 31-8-1983, AMOUNTING TO RS.19,27,730/-. DURING THE SEARCH AND EVEN DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE DENIED OWNERSH IP OF THESE DOCUMENTS. HOWEVER, THE AO WAS OF THE OPINION THAT IN VIEW OF PROVISIONS OF SECTION 132 (4A) OF THE ACT, THE TRANSACTIONS RECORDED IN THESE SEIZ ED DOCUMENTS REVEALED UNACCOUNTED CONCEALED INCOME OF THE ASSESSEE. ON TH E BASIS OF OF AFORESAID LOOSE PAPER- PAGE 128 AND FINDINGS OF THE AO IN THE CASE OF SHRI PRADEEP S. SHAH IN THE AY 1989-90, THE AO CONCLUDED THAT UNEX PLAINED INCOME OF MINAL SERVICE STATION HAS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE, SHRI PRADEEP S. SHAH BEING ONLY A NAME LENDER. THE AO, ACCORDIN GLY, ADDED 75% OF THE INCOME IN THE CASE OF THE ASSESSEE, RESULTING IN AD DITION OF RS.3,81,862/- IN AY 1982-83 AND RS.5,72,793/- IN AY 1983-84 BESIDES, A N AMOUNT OF RS. 50,728/- IN THE AY 1982-83 AND RS.76,992/- IN AY 1983-84 ON AC COUNT OF UNDISCLOSED INCOME REVEALED FROM THE LOOSE PAPER PAGE 128 WAS A LSO ADDED. INTER ALIA, PENALTY PROCEEDINGS U/S 271 (1) (C ) OF THE ACT WAS ALSO INITIATED. 2.2. ON APPEAL, THE LEARNED CIT(A) VIDE ORDER DATED 2-9-1994 SET ASIDE THE ORDER OF THE AO WITH THE DIRECTIONS TO MAKE FURTHER ENQUIRIES. ACCORDINGLY, FRESH ASSESSMENT ORDERS WERE PASSED ON 28-2-1997 WITH THE ADDITION OF RS.3,85,546/- +7,360/- IN THE AY 1982-83 AND RS. 5,72,793/- + 76,992/- IN THE AY 1983-84. ON APPEAL, THE LEARNED CIT(A) UPHELD THE FINDINGS O F THE AO VIDE ORDER DATED 19- 2-1998. ITA NO.2789 AND 2790/AHD/2008 PRAKASH S. VYAS 3 2.3. ON FURTHER APPEAL, THE ITAT VIDE THEIR ORDER D ATED 23-11-2007 IN ITA NOS. 1076, 1077 AND 1089/AHD/1998 UPHELD THE FINDINGS O F THE LD. CIT(A) ON THE AFORESAID ADDITIONS ON ACCOUNT OF INCOME FROM MINAL SERVICE STATION, HOLDING AS UNDER: 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS A VAILABLE ON RECORD. WE FIND THAT IN THE SEIZED DOCUMENTS MARKED ANNEXUR E B-6 PAGE 128 AND PAGE NOS. 1,2 AND 3 SEIZED FROM THE LOCKER OF A NDHRA BANK IN THE NAME OF THE ASSESSEE AND HIS WIFE SMT. PRITIBEN THA T IT HAS BEEN STATED THEREIN THAT INCOME OF RS.19,27,730/-WAS EAR NED FOR THE PERIOD 1-8-1981 TO 31-8-1983. IT IS FURTHER STATED IN THE SAID SEIZED DOCUMENTS THAT 75% SHARES IS OURS AND 25% SHARE OF OTHER FAMILY MEMBERS. ON THE BASIS OF THE ABOVE SEIZED DOCUMENT S THE A O HAS ADDED RS.19,27,730/- IN THE ASSESSMENT YEAR 1982-83 RS.3,85,546/-, IN THE ASSESSMENT YEAR 1983-84 RS.9,25,310 AND IN T HE ASSESSMENT YEAR 1984-85 RS.3,85,546/- IN THE HANDS OF THE ASSE SSEE WHICH WAS CONFIRMED BY THE LEARNED CIT(A). THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT AS THE REGISTRATION TO THE FIRM M/S. MINAL SERVICE STATION WAS GRANTED BY THE A O THE INCOME EVIDENCED BY THE SEIZED DOCUMENTS SHOULD NOT BE ASSESSED IN THE HANDS OF TH E ASSESSEE. WE FIND THAT THE INCOME WHICH WAS ASSESSED ON PROTECTI VE BASIS IN THE HANDS OF THE PARTNERSHIP FIRM M/S. MINAL SERVICE ST ATION ON THE BASIS OF THE SEIZED DOCUMENTS WERE DELETED BY THE LEARNED CIT(A)-III, BARODA VIDE HIS ORDER DATED 18-7-1995 IN APPEAL NO. CAB-III/81-82- 83/95-96. THUS, MERELY BECAUSE THE PARTNERSHIP FIRM M/S. MINAL SERVICE STATION WAS GRANTED REGISTRATION IT CANNOT BE SAID THAT THE INCOME EARNED BY THE ASSESSEE CANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. IT IS OBSERVED THAT THE ASSESSEE COU LD NOT EXPLAIN THE REASON FOR WHICH THE SEIZED DOCUMENTS WERE FOUND FR OM HIS POSSESSION. THE ASSESSEE ALSO HAS NOT PROVIDED THE NAME OF THE OTHER BENEFICIARIES OF THE SAID INCOME. IN ABSENCE OF THE SAME, IN OUR CONSIDERED OPINION THE LEARNED CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION IN THE HANDS OF THE ASSESSEE OF THE ENTIRE INCOME REFLECTED BY THE SEIZED DOCUMENTS FOUND IN THE POSSESSION OF THE ASSESSEE. FINDING NO GOOD REASONS TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) WE REJECT THESE GROUNDS OF APPEALS. 2.4 MEANWHILE AFTER RECEIPT OF THE ORDER DATED 17.10.2005 OF THE ITAT, IN RESPONSE TO A SHOW CAUSE NOTICE DATED 6-7-2006 BEFO RE LEVY OF PENALTY U/S 271 (1) ( C ) OF THE ACT, THE ASSESSEE SUBMITTED THEIR WRITTEN REPLY VIDE LETTER DATED 17- ITA NO.2789 AND 2790/AHD/2008 PRAKASH S. VYAS 4 7-2006 CONTENDING THAT M/S. MINAL SERVICE STATION WAS FORMED ON 28-6-1977 AS PARTNERSHIP CONCERN WITH THE FOLLOWING PARTNERS: SHRI PRADEEPKUMAR S. SHAH 40% SHRI KAMLESHBHAI M. SHAH 40% SHRI MANUBHAI MOTIBHAI PATEL 20% ON 6-9-1977, IOC ENTERED INTO AN AGREEMENT WITH SHR I PRADEEP S. SHAH FOR AND ON BEHALF OF MINAL SERVICE STATION FOR OPENING A RE TAIL OUTLET AT RANOLI, N. H. NO.8, BARODA. SUBSEQUENTLY, VIDE PARTNERSHIP DEED DATED 2 0-11-1979 FOLLOWING PARTNERS WERE ADMITTED TO THE PARTNERSHIP FIRM: 01. SHAH PRADIPKUMAR SHANTILAL 10% 02. SHAH KAMLESHKUMAR MANILAL 20% 03. MANUBHAI MOTIBHAI PATEL 20% 04. KAPOORCHAND KANTILAL DAYANI 25% 05. SHRI MOTILAL LEHERCHAND SHAH, HUF 15% 06. SHRI PRAKSSHCHANDRA DEVSIBHAI SHAH, HUF 10% THEREAFTER, THE PARTNERSHIP WAS DISSOLVED AND SHRI PRADEEP S. SHAH TOOK OVER THE CHARGE AS PROPRIETOR. IT WAS FURTHER CONTENDED THAT 75% OF THE INCOME OF MINAL SERVICE STATION AS REVEALED FROM THE LOOSE PA PERS WAS ADDED IN HIS HAND AND THE REMAINING 25% WAS ADDED IN THE HANDS OF PRA DEEP S. SHAH. IN THE CASE OF PRADEEP S. SHAH THE ITAT VIDE ORDER DATED 26-10- 2005 HELD AS UNDER: BUT THE A. O. DID NOT ACCEPT SUCH SUBMISSIONS AND ADDITION WAS MADE BY TAKING THE ASSESSEE BEING OWNER OF 25 PERCE NT AND CONCERN MSS BEING A UNREGISTERED FIRM. WE FIND THAT THERE W AS NO MATERIAL WITH THE A. O. TO CONSIDER THE SAID MSS OF BEING UNREGISTERE D PARTNERSHIP CONCERN AND THIS CONCLUSION OF A. O. WAS MERELY BASED ON TH E SEIZED PAPER WHICH DID NOT RELATE TO THE YEARS UNDER CONSIDERATION, WI THOUT PLACING ANY MATERIAL ON RECORD TO PROVE POSITIVELY THAT WHAT WA S APPARENT WAS NOT REAL. THE LAW IS WELL SETTLED THAT ONUS IS ON A PARTY WHO IS ALLEGING THAT WHAT IS APPARENT IS NOT REAL AND SUCH ONUS HAS TO BE DISCHA RGED BY WAY OF A POSITIVE EVIDENCE TO INDICATE THAT WHAT IS APPARENT IS NOT REAL. THERE IS A COMPLETE ABSENCE OF SUCH POSITIVE MATERIAL TO HOLD THAT ASSESSEES PROPERTY CONCERN MSS WAS UNREGISTERED FIRM. NO HELP CAN BE TAKEN FROM THE SEIZED DOCUMENT TO HOLD SO BECAUSE THE SAID PAP ER WAS NOT FOUND FROM THE POSSESSION OF THE ASSESSEE AND IT DOES NOT RELATE TO THE YEARS UNDER CONSIDERATION. AS AGAINST THIS, RIGHT FROM T HE BEGINNING ACCORDING TO ITA NO.2789 AND 2790/AHD/2008 PRAKASH S. VYAS 5 THE STATEMENT OF THE ASSESSEE, THE SAID MSS IS HIS PROPRIETARY CONCERN. IN VIEW OF THESE FACTS AND ALSO IN VIEW OF ABSENCE OF ANY MATERIAL PLACED ON RECORD BY THE REVENUE TO SUPPORT ITS CONCLUSIONS, W E ARE OF THE OPINION THAT THE LEARNED CIT(A) HAS RIGHTLY DECIDED THAT NO ADDITION COULD BE MADE IN THE HANDS OF ASSESSEE MERELY ON THE BASIS OF ABO VE MENTIONED SEIZED DOCUMENTS. THERE BEING NO INFIRMITY IN THE ORDER OF THE CIT(A), WE UPHOLD HIS ORDERS FOR ALL THE YEARS UNDER CONSIDERATION AN D THE DEPARTMENT APPEALS ARE DISMISSED. 2.5. IN THE LIGHT OF THE AFORESAID FINDINGS OF THE ITAT IN THE CASE OF SHRI PRADEEP S SHAH, THE ASSESSEE CONTENDED THAT NO ADD ITION CAN BE MADE ON THE BASIS OF SAME LOOSE PAPERS AND THUS, PENALTY COULD NOT BE IMPOSED. HOWEVER, THE AO REJECTED THE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT DURING THE SEARCH, THE ASSESSEE TRIED TO SNATCH THE SEIZED PAP ERS AND TEAR AWAY THE SAME. THOUGH THE ASSESSEE IN THE APPELLATE PROCEEDINGS DE NIED OWNERSHIP OF THE SEIZED DOCUMENTS, HOWEVER, THE ASSESSEE ADMITTED HI S SHARE IN M/S. PARAS SERVICE STATION ON THE BASIS OF SAME SEIZED DOCUMEN TS BESIDES OWNERSHIP IN TWO TRUCKS. IN THESE CIRCUMSTANCES, WHEN A PART OF THE PAPER WAS ADMITTED BY THE ASSESSEE, THE REST CAN NOT BE DISOWNED, THE AO OPIN ED. THE AO FURTHER HELD THAT THE LOOSE PAPER IN QUESTION PERTAINING TO THE BUSIN ESS AFFAIRS OF THE ASSESSEE AND CONTENTS OF THE ENTRIES MADE THEREIN WERE IN HIS KN OWLEDGE. CONSIDERING THE FINDINGS OF THE ITAT IN THE ASSESSEES OWN CASE IN QUANTUM APPEAL, THE AO ACCORDINGLY IMPOSED PENALTY OF RS.2,40,000/- IN AY 1982-83 AND RS.6,10,000/- IN AY 1983-84, HAVING RECOURSE TO EXPLANATION I TO SEC TION 271(1) (C ) OF THE ACT, THE ONUS BEING ON THE ASSESSEE THAT THERE WAS NO CO NCEALMENT, HAVING NOT BEEN DISCHARGED. 3. ON APPEAL, THE LD. CIT(A) UPHELD THE LEVY O F PENALTY ON THE GROUND THAT THE EXPLANATION SUBMITTED BY THE ASSESSEE THAT INCOME A DDED ON THE BASIS OF AFORESAID SEIZED DOCUMENTS DOES NOT BELONG TO HIM, IS NOT SUBSTANTIATED BY ANY MATERIAL OR EVIDENCE AND THEREFORE, EXPLANATION 1 T O SEC. 271(1)(C) OF THE ACT IS APPLICABLE. ITA NO.2789 AND 2790/AHD/2008 PRAKASH S. VYAS 6 4. THE ASSESSEE IS NOW IN APPEAL AGAINST THE AFORES AID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON BEHALF OF THE ASS ESSEE WHILE CARRYING US THROUGH THE IMPUGNED ORDERS INVITED OUR ATTENTION T O PAGE 55 OF THE PAPER BOOK AND CONTENDED THAT ITAT HAVE UPHELD THE FINDINGS OF THE LOWER AUTHORITIES VIDE THEIR ORDER DATED 23-11-2007 AND ON FURTHER APPEAL, THE HONBLE HIGH COURT HAVE ADMITTED THREE QUESTIONS VIDE THEIR ORDER DATED 8- 7-2009 IN TAX APPEAL NOS. 1082 TO 1084 OF 2008. INVITING OUR ATTENTION TO A D ECISION DATED 26-6-2009 OF THE ITAT IN ITA NO.1971/AHD/2007 IN THE CASE OF NIRMA L IMITED FOR THE AY 1998-99, THE LEARNED AR VEHEMENTLY ARGUED THAT THE ISSUE AS TO WHETHER OR NOT, THE INCOME REFLECTED IN THE SEIZED DOCUMENT PAGE 128 OF FILE B-6 BELONGED TO THE ASSESSEE BEING DEBATABLE, NO PENALTY COULD BE LEVIE D. THE LEARNED AR FURTHER REFERRED TO US THE DECISION DATED 11-7-2008 OF THE ITAT IN ASSESSEES OWN CASE FOR AY 1988-89 AND 1989-90 HOLDING THAT MINAL SERVI CE STATION IS OWNED BY PRADEEP S. SHAH. TO A QUERY BY THE BENCH, THE LEARN ED AR OF THE ASSESSEE DID NOT REPLY AS TO HOW THE DECISION FOR SUBSEQUENT YEA RS IS APPLICABLE TO THE FACTS OBTAINING IN THE YEARS UNDER CONSIDERATION. THE LE ARNED AR FURTHER SUBMITTED THAT THE ASSESSEE HAD ALL ALONG TAKEN THE PLEA THAT THE SEIZED DOCUMENT WAS NOT IN HIS HANDWRITING. SINCE THE ASSESSEE HAD GIVEN T HE EXPLANATION AND THE ISSUE IS DISPUTED, NO PENALTY COULD BE LEVIED. IN THIS CO NNECTION, THE LEARNED AR RELIED UPON THE DECISION IN THE CASE OF SARABHAI CHEMICAL S PVT. LTD. VS CIT (2002) 257 ITR 355 (GUJ), AND BADRIDAS KESHAVPRASAD,79 ITD 26 (AHD). ON THE OTHER HAND, THE LEARNED DR WHILE CARRYING US THROUGH THE IMPUGNED ORDERS SUBMITTED THAT ADDITION HAS BEEN MADE ON THE BASIS OF SAME DO CUMENTS, A PART OF WHICH HAS BEEN ADMITTED BY THE ASSESSEE. ONCE, A PART OF THE PAPER HAD BEEN ADMITTED, THE OTHER PART COULD NOT BE DENIED, THE L EARNED DR ARGUED. ACCORDINGLY, HE PLEADED THAT THE LEARNED CIT(A) WAS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY U/S 271(1) (C) OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE ISSUE AS TO WHETHER THE INCOME RE FLECTED ON PAGE 128 OF SEIZED LOOSE PAPERS FILE B-6 BELONGED TO THE ASSESSEE OR T O PRADEEP S SHAH OR PARTLY TO ITA NO.2789 AND 2790/AHD/2008 PRAKASH S. VYAS 7 BOTH, IS DISPUTED BEFORE THE HONBLE HIGH COURT . T HE ITAT, VIDE THEIR ORDER DATED 26.10.2005 IN THE CASE OF SHRI PRADEEP S SHAH UPHEL D THE FINDINGS OF THE LD. CIT(A) THAT NO ADDITION COULD BE MADE IN THE HANDS OF ASSESSEE (SHRI PRADEEP S SHAH) MERELY ON THE BASIS OF ABOVE MENTIONED SEIZED DOCUMENTS . ON THE OTHER HAND THE LD.AR ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE DISPUT E AS TO WHETHER OR NOT THE INCOME FROM MINAL SERVICE STATIO N CAN BE ASSESSED IN THE HANDS OF THE ASSESSEE IS PENDING BEFORE THE HONBLE GUJARAT HIGH COURT. IN SUPPORT , SHE PRODUCED A COPY OF ORDER DATED 8.7.20 09 IN TAX APPEAL NOS. 1082 TO1084 OF 2009, WHEREIN HONBLE HIGH COURT HAVE ADM ITTED THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW : 1 . WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE INCOME TAX APPELLATE TRIBUNAL HAS ERRED IN LAW IN CONFIRMING T HE ADDITION OF SHARE OF PROFIT OF MINAL SERVICE STATION IN THE HANDS OF THE APPELLANT WITHOUT THERE BEING ANY MATERIAL INDICATING THE INVOLVEMENT OF T HE APPELLANT IN THE AFFAIRS OF THE SAID MINAL SERVICE STATION ? 2. WHETHER, THE DOCUMENTS FOUND DURING THE SEARCH A ND NOT IN THE HANDWRITING OF THE APPELLANT CAN BE TREATED AS DUM B DOCUMENT AND COGNIZANCE THEROF CAN BE TAKEN WHILE DETERMING THE INCOME OF THE APPELLANT? 3.WHETHER IN THE FACTS AND UNDER CIRCUMSTANCES OF T HE CASE, THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL IS PERVERSE? 5.1 OUR ATTENTION WAS BROUGHT TO A DECISION DATE D 26.6.2009 IN THE CASE OF NIRMA LTD. IN ITA NO. 1971/AHD./2007 FOR THE AY 199 8-99, WHEREIN RELYING UPON A DECISION DATED 20.3.2009 IN ITAT IN ITA NO.1972/AHD ./2007 IN THE CASE OF THE SAME ASSESSEE FOR THE AY 2000-01, THE TRIBUNAL CANC ELLED THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT,INTER ALIA, ON THE GROUND THAT THE ISSUE WAS DEBATABLE IN VIEW OF THE FACT THAT A SUBSTANTIAL QUESTION OF LAW HAD BEEN ADMITTED BY THE HONBLE HIGH COURT. IN THE CASE UNDER CONSIDERATION, WE ARE OF THE OPINION THAT IN VIEW OF FINDINGS OF THE ITAT IN THEIR ORDER DATED 26.10.200 5 IN THE CASE OF SHRI PRADEEP S SHAH AND NOW WHEN THE HONBLE HIGH COURT HAVE ADMIT TED EVEN A QUESTION RELATING TO PERVERSITY OF THE ORDER DATED 23-11-200 7 IN ITA NOS. 1076, 1077 AND 1089/AHD/1998 OF THE ITAT, THE ISSUE AS TO WHETHER INCOME FROM MINAL SERVICE STATION CAN BE ASSESSED IN THE HANDS OF THE ASSESS EE, BECOMES DEBATABLE. ITA NO.2789 AND 2790/AHD/2008 PRAKASH S. VYAS 8 WHEN TWO VIEWS, ARE POSSIBLE, NO PENALTY CAN BE IMP OSED IS A PRINCIPLE THAT HAS BEEN ENUNCIATED IN THE DECISION IN THE CASE OF CI T V. P.K. NARAYANAN [1999] 238 ITR 905 (KER) AND CIT VS. HMA UDYOG P. LTD., 211 CTR 543 ( DEL). A PLEA OR CLAIM WHICH IS HELD BY THE HON'BLE HIGH COURT TO GIVE RISE TO A SUBSTANTIAL QUESTION OF LAW, CANNOT BE TREATED TO BE FRIVOLOUS OR MALA FIDE AS TO ATTRACT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX A CT. 5.2 IN VIEW OF AFORESAID DECISIONS AND CONSIDE RING THE FACTS AND CIRCUMSTANCES OF THE CASE, ESPECIALLY WHEN SUBSTANT IAL QUESTIONS OF LAW HAVE BEEN ADMITTED BY THE HONBLE JURISDICTIONAL HIGH CO URT, THE ISSUES BECOME DEBATEABLE AND IT IS DIFFICULT TO HOLD THAT IT WA S A CASE OF CONCEALMENT OF INCOME. IN THESE CIRCUMSTANCES, WE ARE NOT INCLINED TO ACCE PT THE FINDINGS OF THE LD. CIT(A), UPHOLDING THE LEVY OF PENALTY. THEREFORE, W E HAVE NO HESITATION IN VACATING HIS FINDINGS AND CANCEL THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT FOR THESE TWO ASSESSMENT YEARS . THUS, GROUND NOS.1 & 2 IN THESE APPEALS ARE ALLOWED. 6. NO ADDITIONAL GROUND HAS BEEN RAISED BY THE TA XPAYER IN TERMS OF RESIDUARY GROUND NO. 3 THEREFORE, THIS GROUND IS DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25 .9 .2009. SD/- SD/- (R.V.EASWAR) VICE PRESIDENT (A.N.PAHUJA) ACCOUNTANT MEMBER AHMEDABAD, DATED:25.9.2009 LAKSHMIKANT/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE 2. THE INCOME TAX OFFICER, WARD NO. 2(2),AAYAKAR BH AVAN, RACE COURSE, BARODA 3. CIT(A) II,BARODA 4. THE CIT CONCERNED ITA NO.2789 AND 2790/AHD/2008 PRAKASH S. VYAS 9 5. THE D.R. ITAT, AHMEDABAD, 6. GUARD FILE BY ORDER DR / AR, ITAT, AHMEDABAD