Shri Nathuram ShriNarayan, Itarsi V. The3 ACIT, Bhopal

ITA 282/IND/2010

• Counselvise Citation: 28222714 RSA 2010
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 10-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Search and seizure; Wrong claim; Retraction
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.282/IND/2010 A.Y. 2003-04 NATHURAM SHRINARAYAN, 9 TH LINE, ITARSI PAN AACFN 6525 F APPELLANT VS ACIT-1(1), BHOPAL RESPONDENT APPELLANT BY : SHRI ANIL KHABYA, CA RESPONDENT BY : SHRI PRADEEP KUMAR MITRA, SR. DR O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS APPEAL IS BY THE ASSESSEES AGAINST THE ORDER O F THE LEARNED CIT(A)-I, BHOPAL, DATED 8.3.2010 WITH REGARD TO CON FIRMING THE PENALTY OF 1,20,000/- IMPOSED U/S 271(1)(C) OF THE I.T. ACT. 2. DURING HEARING OF THE APPEAL, WE HAVE HEARD SHRI ANIL KHABYA, LD. COUNSEL FOR THE ASSESSEE AND SHRI PRADE EP KUMAR MITRA, LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE. THE CRU X OF ARGUMENTS ON 2 BEHALF OF THE ASSESSEE IS THAT THE LD. CIT(A) SUSTA INED THE PENALTY WITHOUT DELIBERATING UPON THE FACTS AS THE TWO PERS ONS, THOUGH, WHOSE ADDITION WAS CONFIRMED BY THE TRIBUNAL ON QUANTUM A PPEAL, RETRACTED FROM THE STATEMENT RECORDED ON 24.10.2002. OUR ATTE NTION WAS INVITED TO QUESTION NO. 8 & 9 OF THE STATEMENT, WHEREIN IT WAS SPECIFICALLY DENIED BY THESE TWO PERSONS THAT THEY NEVER SOLD OR UNDERTOOK ANY COMMERCIAL TRANSACTION WITH M/S. NATHURAM SHRINARAYAN AGRAWAL OR M/S. SANWARIA AGRO INDUSTRIES. IT WAS CONTENDED THAT THESE TWO PE RSONS WERE NOT AWARE ABOUT SHRINATH WAREHOUSE AND INDIRECT QUESTIO N WAS ASKED FROM THESE PERSONS. IT WAS SUBMITTED THAT THE ASSESSEE N EITHER FURNISHED INACCURATE PARTICULARS NOR CONCEALED ITS INCOME. ON THE OTHER HAND, THE LD. SR. DR CONTENDED THAT THE QUANTUM APPEAL HAS AL READY BEEN UPHELD BY THE TRIBUNAL AND IN THE STATEMENTS RECORDED BY T HE DEPARTMENT THE CONCERNED TWO PERSONS SPECIFICALLY TENDERED IN THEI R STATEMENTS THAT THEY NEVER KEPT THE FOOD GRAINS IN THE WAREHOUSE OF THE ASSESSEE, THEREFORE, WRONG PARTICULARS WERE FURNISHED BY THE ASSESSEE, CONSEQUENTLY, CONCEALED ITS INCOME. ON A QUERY FROM THE BENCH ABOUT THE RETRACTION OF THE STATEMENT, IT WAS EMPHATICALL Y ARGUED BY THE LD. SR. DR THAT THE STATEMENT WAS RETRACTED AFTER THE GAP O F TWO YEARS I.E. ON 25.11.2004. OUR ATTENTION WAS INVITED TO PAGES 6 & 8 OF THE ASSESSMENT ORDER. 3 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSESSEE FIRM IS E NGAGED IN THE BUSINESS OF TRADING OF FOOD GRAINS AND WAREHOUSING IN ITS UN IT KNOWN AS SHRINATH WAREHOUSING CORPORATION. THE ASSESSEE DECLARED INCO ME OF RS.8,53,920/- IN ITS RETURN FILED ON 28.11.2003. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE GODOWN PREMISES OF THE ASSESSEE AT KHEDA, ITARSI ON 23 & 24.10.2002 AND 1.11.2002. CER TAIN GOODS WERE STORED AT THE GODOWN OF THE ASSESSEE WHICH WERE CLA IMED TO BE BELONGING FROM VARIOUS PERSONS. THE ASSESSEE WAS AS KED TO PRODUCE THE PERSONS WHO CLAIMED TO HAVE STORED THEIR GOODS IN THE WAREHOUSE OF THE ASSESSEE. IN THE RECORD, IT WAS SHOWN THAT 63 & 91.8 BAGS OF GRAM WERE KEPT BY SHRI RAMSWAROOP MALVIYA. HOWEVER, SHRI MALVIYA IN HIS STATEMENT DATED 24.2.2002 DENIED HAVING KEPT GRAM O R ANY OTHER FOOD GRAIN AT THE WAREHOUSE OWNED BY THE ASSESSEE. SIMIL ARLY, SHRI PRAMOD SINGH SOLANKI IN ITS STATEMENT OF EVEN DATE CATEGOR ICALLY DENIED OF KEEPING ANY FOOD GRAIN WITH THE ASSESSEE. THE TOTAL VALUE OF FOOD GRAINS OF THESE TWO PERSONS WAS RS.2,80,500/- (RS.94,500/- OF SHRI RAMSWAROOP MALVIYA AND RS.1,86,000/- OF SHRI PRAMOD SINGH SOLANKI). AS PER THE REVENUE, THERE WAS NON-COMPLIANCE BY OTH ER PARTIES, THEREFORE, THE ASSESSING OFFICER HELD THAT THE ASSE SSEE WAS KEEPING FOOD GRAINS IN BENAMI NAMES. THE ASSESSMENT WAS COM PLETED U/S 4 143(3) ON 20.3.2006 WHEREIN APART FROM OTHER DISALL OWANCES/ADDITIONS, AN ADDITION OF RS.80,04,831/- WAS MADE ON ACCOUNT O F UNACCOUNTED STOCK OF FOOD GRAINS IN BENAMI NAMES IN THE WAREHOU SE OF THE ASSESSEE. VIDE ORDER DATED 9.7.2007, THE LD. CIT(A) GAVE PART IAL RELIEF TO THE ASSESSEE AND CONFIRMED ADDITION OF RS.2,80,500/- OF THE AFORESAID TWO PERSONS. ON FURTHER APPEAL, THE ORDER OF THE LD. CI T(A) WAS AFFIRMED BY THE TRIBUNAL. THE ASSESSING OFFICER ISSUED SHOW-CAU SE NOTICE TO THE ASSESSEE AND ULTIMATELY, IMPOSED PENALTY OF RS.1,20 ,000/- U/S 271(1)(C) OF THE ACT, WHICH WAS CONFIRMED BY THE LD. CIT(A) A ND THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. NOW, QUESTION ARISES WHETHER THE LD. CIT(A) IS JUSTIFIED IN CONFIRMING THE PENALTY ORDER. BEFORE COMING TO ANY CONCLUSION, IT IS AN ADMITTED FACT THAT FOR IMPOSING PENALTY U/S 271(1)( C) OF THE ACT, THE TWIN CONDITIONS HAVE TO BE SATISFIED THAT THERE SHOULD B E CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF S UCH INCOME. UNDER THE AFOREMENTIONED FACTS, THE ASSESSEE DELIBERATELY SHO WED THE STORAGE OF FOOD GRAINS IN THE NAMES OF OTHER PERSONS WHO LATER -ON SPECIFICALLY TENDERED BEFORE THE DEPARTMENT THAT NO FOOD GRAIN W AS STORED BY THEM IN THE WAREHOUSE OF THE ASSESSEE, THEREFORE, THE ASSES SEE CONCEALED ITS INCOME BY FURNISHING INACCURATE PARTICULARS AND IN THE ABSENCE OF SEARCH AND SEIZURE OPERATION BY THE DEPARTMENT, THERE WAS EVERY POSSIBILITY THAT THE ASSESSEE WOULD HAVE REMAINED SCOT FREE. THE EXP RESSION HAS 5 CONCEALED THE PARTICULARS OF INCOME AND HAS FURNI SHED INACCURATE PARTICULARS OF INCOME HAVE NOT BEEN DEFINED EITHER IN SEC. 271(1)(C) OR ELSEWHERE IN THE ACT. ONE THING IS CERTAIN THAT THE SE TWO CONDITIONS ARE NOT IDENTICAL IN DETAILS ALTHOUGH THEY MAY LEAD TO THE SAME EFFECT, NAMELY, KEEPING OFF A CERTAIN PORTION OF THE INCOME . THE FORMER IS DIRECT AND THE LATER MAY BE INDIRECT IN ITS EXECUTION. THE WORD CONCEAL IS DERIVED FROM THE LATIN WORD CONCOLARE WHICH IMPLI ES TO HIDE. THE OFFENCE OF CONCEALMENT IS THUS A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCO ME-TAX AUTHORITIES. IN FURNISHING ITS RETURN OF INCOME, AN ASSESSEE IS REQ UIRED TO FURNISH PARTICULARS AND ACCOUNTS ON WHICH SUCH RETURNED INC OME HAS BEEN ARRIVED AT. ANY INACCURACY MADE IN SUCH BOOKS OF AC COUNTS OR OTHERWISE WHICH RESULTS IN KEEPING OFF OR HIDING A PORTION OF ITS INCOME OR FURNISHING INACCURATE PARTICULARS OF ITS INCOME CLEARLY ATTRAC TS THE PROVISIONS OF SEC. 271(1)(C). THE QUANTUM ADDITION OF THESE PERSONS WA S EVEN AFFIRMED UP TO TRIBUNAL LEVEL AND NO FURTHER APPEAL WAS PREFERR ED BY THE ASSESSEE MEANING THEREBY THE ORDER HAS ATTAINED FINALITY. WH EREVER THE ADDITION WAS FOUND TO BE NOT JUSTIFIED WAS DELETED EITHER BY THE LD. CIT(A) OR BY THE TRIBUNAL. THE TERM BOOKS OF ACCOUNTS REFERRED TO IN SUB-CLAUSE (1) OF EXPLANATION 5 TO SEC. 271(1)(C) MEANS BOOKS OF A CCOUNTS WHICH HAVE BEEN MAINTAINED FOR DETERMINING ANY SOURCE OF INCOM E. THE TERM SOURCE OF INCOME AS UNDERSTOOD IN THE I.T. ACT IS TO IDENTIFIED OR TO 6 CLASSIFIED INCOME SO AS TO DETERMINE UNDER WHICH HE AD, OUT OF VARIOUS HEADS OF INCOME, REFERRED TO IN SEC. 14 OF THE ACT, FOR PURPOSES OF COMPUTATION OF TOTAL INCOME FOR CHARGING INCOME-TAX THEREON. SINCE THE ASSESSEE KNOWINGLY AND DELIBERATELY FURNISHED INACC URATE PARTICULARS IN ITS RECORD BY MAKING A FALSE CLAIM THAT TWO PERSONS NAMELY, SHRI PRAMOD SINGH SOLANKI AND RAMSWAROOP MALVIYA, STORED THEIR FOOD GRAINS IN THE WAREHOUSE OF THE ASSESSEE AND LATER-ON THEY DENIED IN THEIR STATEMENTS FOR SUCH STORAGE, THEREFORE, THE ASSESSEE IS COMMIT TED A DEFAULT UNDER THE PROVISIONS OF SEC. 271(1)(C). AS FAR AS THE CON TENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THEY FILED THEIR RETR ACTION IN THE FORM OF AFFIDAVIT, IS CONCERNED, WE ARE NOT AGREEING WITH T HE SAME BECAUSE THE STATEMENT WAS RECORDED ON 24.10.2002 AND RETRACTION WAS FILED ON 25.11.2004 I.E. AFTER A GAP OF MORE THAN TWO YEARS, IN OUR VIEW, IS CLEARLY AN AFTERTHOUGHT, THEREFORE, MAY NOT HELP THE ASSESS EE. IT IS NOT THE CASE THAT RETRACTION WAS FILED AT THE EARLIEST I.E. WITH IN A REASONABLE PERIOD AFTER RECORDING OF THE STATEMENT ON 24.10.2002. AS PER THE DECISION FROM HONBLE APEX COURT IN UNION OF INDIA VS. DHARMENDRA TEXTILES AND PROCESSORS (2008) 166 TAXMAN 65 (SC), PENALTY U/S 2 71(1)(C) IS A CIVIL LIABILITY AND IN THE CASE OF DILIP N. SHROFF VS. JC IT (291 ITR 519), IT WAS HELD THAT THE DECISION IN DHARMENDRA TEXTILES REQUI RES RECONSIDERATION AS EXPLANATION ADDED TO SEC. 271(1)(C) IN THEIR ENT IRETY ALSO INDICATE ELEMENT OF STRICT LIABILITY ON ASSESSEE FOR CONCEAL MENT OR FOR GIVING 7 INACCURATE PARTICULARS WHILE FILING RETURNS. WE ARE AWARE THAT QUANTUM AND PENALTY PROCEEDINGS ARE ALTOGETHER DIFFERENT PR OCEEDINGS AND FINDING IN THE ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE. H OWEVER, IT IS A GOOD EVIDENCE BECAUSE BEFORE PENALTY IS IMPOSED, THE ENT IRETY OF CIRCUMSTANCES MUST REASONABLY POINT TO THE CONCLUSI ON THAT THE DISPUTED AMOUNT REPRESENTED INCOME AND THE ASSESSEE HAS CONC EALED THE PARTICULARS OF SUCH INCOME OR DELIBERATELY FURNISHE D INACCURATE PARTICULARS. ANY CONCEALMENT OR INACCURACY IN PARTI CULARS OF INCOME IN THE RETURN OCCURRING AT ANY STAGE UP TO AN INCLUSIV E OF ULTIMATE STAGE OF WORKING OUT OF TOTAL INCOME WOULD ATTRACT PENALTY P ROVISIONS U/S 271(1)(C). IT IS NOT THE CASE THAT IT WAS A BONA FI DE MISTAKE UNDER WHICH THE SHELTER OF THE DECISION FROM HONBLE APEX COURT IN CASE OF SKYLINE AUTO PRODUCTS LTD. (271 ITR 335) CAN BE EXTENDED, T HEREFORE, KEEPING IN VIEW THE FACTS NARRATED ABOVE AND ESPECIALLY THE FA CT THAT THE CLAIM OF STORAGE OF FOOD GRAINS BY TWO FARMERS WAS FOUND TO BE FALSE, THEREFORE, THE CASE OF THE ASSESSEE FALL WITHIN EXPLANATION 1 TO SEC. 271(1)(C) AS THE EXPLANATION OFFERED BY THE ASSESSEE WAS FOUND T O BE FALSE AND UNSUBSTANTIATED, THEREFORE, THE AMOUNT ADDED OR DIS ALLOWED BY THE ASSESSING OFFICER IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE AS A RESULT THEREOF, FOR THE PURPOSES OF CLAUSE (C) OF T HE IMPUGNED SECTION IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH THE INACCURATE 8 PARTICULARS, SO FURNISHED, CONSEQUENTLY, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. CIT(A). THE SAME IS AFF IRMED. FINALLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY, 2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5.5.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE !VYAS!