M/s Sri Venkateswara Traders, Mahcavaram, Guntur V. The Income Tax Officer, Bapatla

ITA 285/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2544 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-12-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 10-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: C KAMESWARA RAO

Judgement Text

ITA NO.285/VIZAG/2010 SRI VENKATESWARA TRADERS, MACHAVARAM PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 285/ VIZAG/20 10 ASSESSMENT YEAR: 1998 - 99 SRI VENKATESWARA TR ADERS MACHAVARAM ITO BAPATLA (APPELLANT) PAN NO: ABNFS 3230J VS. (RESPONDENT) APPELLANT BY: SHRI C. KAMESWARA RAO, CA RESPONDENT BY: SHRI D.S. SUNDER SINGH, DR ORDER PER SHRI B . R . BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIR ECTED AGAINST THE ORDER DATED 22 . 2.2010 PASSED BY LD. CIT(A), GUNTUR AND IT RELATES TO THE ASSESSMENT YEAR 1998 - 99 . THE PENALTY OF RS.1,94,677/ - LEVIED UNDER SECTION 271(1)(C) OF THE ACT, HAVING BEEN CONFIRMED BY LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 2. THE FACTS RELATING TO THE SAID ISSUE ARE STATED IN BRIEF. THE ASSESSEE IS IN THE BUSINESS OF MILLING OF PADDY. THE ASSESSEE DISCLOSED A YIELD OF 55% ON THE PADDY MILLED BY IT. THE ASSESSING OFFICER, HOWEVER, ESTIMATED THE YIELD AT 6 2% AND ACCORDINGLY ADDED A SUM OF RS.5,56,159/ - TOWARDS THE DIFFERENCE IN THE YIELD AND THE ORDER OF THE ASSESSING OFFICER WAS CONFIRMED BY THE ITAT. SUBSEQUENTLY, THE ASSESSING OFFICER LEVIED A PENALTY OF RS.1,94,677/ - UNDER SECTION 271(1)(C) OF THE ACT AND THE SAME WAS CONFIRMED BY LEARNED CIT(A). HENCE THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING THE ORDER OF LEARNED CIT(A) IN CONFIRMING THE PENALTY. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE UNDISPUTED FACT REMAINS THA T THE PENALTY HAS BEEN LEVIED ON THE ADDITION RELATING TO THE DIFFERENCE IN THE YIELD OF PADDY. WHILE THE ASSESSEE HAS ITA NO.285/VIZAG/2010 SRI VENKATESWARA TRADERS, MACHAVARAM PAGE 2 OF 3 SHOWN A YIELD OF 55%, THE ASSESSING OFFICER HAS TAKEN THE YIELD AT 62%. THE LEARNED CIT(A) HAS CONFIRMED THE PENALTY FOR THE SOLE REASO N TH AT THE IMPUGNED ADDITION HAS BEEN CONFIRMED BY THE ITAT AND ALSO WITH THE OBSERVATION THAT THERE IS DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO REDUCE THE YIELD. HOWEVER IT IS NOW SETTLED BY HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTIL E PROCESSORS (306 ITR 277) THAT THERE IS NO REQUIREMENT OF ESTABLISHING MENS REA FOR THE PURPOSE OF LEVYING PENALTY UNDER SECTION 271(1)(C) SINCE IT IS A CIVIL LIABILITY. 4. IT IS A WELL SETTLED PROPOSITION THAT THE FACTS RELATING TO THE ISSUE HAVE TO BE CONSIDERED AFRESH IN PENALTY PROCEEDINGS AND THE ASSESSMENT PROCEEDINGS CANNOT BE TAKEN TO BE CONCLUSIVE, THOUGH A SSISTANCE CAN BE TAKEN FROM IT. T HE FACT REMAINS THAT THE ASSESSEE HAD GIVEN EXPLANATIONS FOR THE LOW YIELD AND THE ASSESSING OFFICER A LSO HAD TO ESTIMATE THE YIELD AT A HIGHER RATE AS HE WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE. THUS THE IMPUGNED ADDITION HAS BEEN MADE ONLY ON ESTIMATED BASIS . THE ASSESSEE OF THE ASSESSEE BEFORE THE ASSESSING OFFICER IN THE PENALTY PROCEE DING WAS THAT IT WAS NOT PROVED THAT THE ENHANCEMENT OF THE YIELD HAS RESULTED IN INCOME AND FURTHER ALL THE RECORDS WERE PRODUCED BEFORE THE ASSESSING OFFICER. WE ARE ALSO OF THE VIEW THAT THE ADDITION MADE ON ESTIMATED BASIS WITH OUT ANY CONCRETE EVIDEN CE FOR THE DEFICIENCY ON THE PART OF THE ASSESSEE WOULD NOT GIVE RISE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY WE SET ASIDE THE ORDER OF LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED PENALTY OF RS.1,94,677/ - LEVI ED UNDER SECTION 271(1)(C) OF THE ACT. 5 . IN THE RESULT , THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28.12.2010. SD/ - SD/ - ( SUNIL KUMAR YADAV ) ( B R BASKARAN ) JUDICIAL MEMBER ACC OUNTANT MEMBER PVV /SPS VISAKHAPATNAM, DATE: 28 TH DECEMBER, 2010. ITA NO.285/VIZAG/2010 SRI VENKATESWARA TRADERS, MACHAVARAM PAGE 3 OF 3 COPY TO 1 SRI VENKATESWARA TRADERS, C/O KVR SUBBARAO, C.A., 8/3, ARUNDEL PET, GUNTUR - 522 002. 2 ITO BAPATLA 3 4. THE CIT VISAKHAPATNAM THE CIT(A), VISAKHAPATNAM 5 THE DR, ITA T, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM