M/s Hindustan Crushers & Fetilizers Co., Agra V. I.T.O.-1(2), Agra

ITA 286/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0466 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 10 month(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 26-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Keywords: Application of stay; Wrong claim; Set aside
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 286/AGRA/2012 ASSTT. YEAR : 2003-04 M/S. HINDUSTAN CRUSHERS & FERTILIZERS CO., VS. INCOME-TAX OFFICER, 38/5, NAGAR KANTI COLONY, IDGAH, AGRA. 1(2), AGRA . (PAN : AAAFH 7900A) (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 29.01.2013 DATE OF PRONOUNCEMENT OF ORDER : 29.01.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-I, AGRA DATED 15.02.2012 FOR THE ASSESSMENT YEAR 2003- 04, CHALLENGING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE IT ACT. 2. IN THIS CASE THE ASSESSMENT ORDER WAS PASSED U/S . 143(3) DATED 27.03.2006 DETERMINING THE ASSESSED INCOME AT RS.8,44,780/- AS AGAINST THE RETURNED LOSS OF RS.2,12,606/-. IN THE ASSESSMENT ORDER, ONE MAJOR A DDITION OF RS.10,05,032/- WAS MADE. THIS ADDITION WAS MADE ON ACCOUNT OF NON VERI FICATION OF 25 SUNDRY CREDITORS. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, DULY SWORN AFFIDAVITS ITA NO. 286/AGRA/2012 2 MADE BEFORE THE PUBLIC NOTARY PERTAINING TO 25 CRED ITORS INCLUDING ONE FIRM, M/S. EVEREST MANURE, KANPUR WERE PRODUCED BEFORE THE AO IN CONFIRMATION OF SUNDRY CREDIT BALANCES SHOWN IN THEIR NAMES. LIST OF THESE SUNDRY CREDITORS ARE PROVIDED ON PAGE NO. 4 & 5 OF THE ASSESSMENT ORDER FOR AY 20 03-04 DATED 27.03.2006. ALL THESE SUNDRY CREDITORS ARE INDIVIDUAL PERSONS EXCEP T ONE FIRM, M/S. EVEREST MANURE, KANPUR. ON MAKING VERIFICATION OF THESE SUN DRY CREDITORS ON THE ADDRESSES GIVEN BY THE ASSESSEE, THESE SUNDRY CREDITORS COULD NOT BE TRACED ON THEIR ADDRESSES. THE AO DID NOT ACCEPT THE SWORN AFFIDAVITS FILED BY THE ASSESSEE AND INSISTED ON THEIR PHYSICAL ATTENDANCE. DUE TO INABILITY OF THE ASSESSEE TO PRODUCE THESE SUNDRY CREDITORS FOR EXAMINATION, THE AO MADE ADDITION OF RS.10,05,032/- U/S. 68 ON ACCOUNT OF THESE 25 SUNDRY CREDITORS AS COMPUTED ON PAGE NO. 4 & 5 OF THE ASSESSMENT ORDER. THIS ADDITION WAS CONFIRMED BY TH E CIT(A) HOLDING THAT THE AFFIDAVITS ITSELF SHOWED THAT THE CREDITORS WERE AV AILABLE SO THAT THEY OUGHT TO HAVE BEEN PRODUCED BEFORE THE AO FOR THE PURPOSE OF VERI FICATION. ON FILING APPEAL TO HONBLE AGRA BENCH OF TRIBUNAL AGAINST THE DECISION OF CIT(A), THE HONBLE TRIBUNAL PASSED ORDER DATED 31.07.2008 HOLDING THAT NO EVIDENTIARY VALUE CAN BE PLACED ON THE AFFIDAVITS IN ABSENCE OF THE REVENUE BEING NOT ALLOWED TO CROSS EXAMINE THE DEPONENTS WITH REGARD TO THE AVERMENTS MADE IN THE AFFIDAVIT AND FURTHER HELD THAT THEY DO NOT FIND MUCH MERIT IN TH E ASSESSEES CASE WITH REGARD TO THE ADDITION IN RESPECT OF THE CREDIT APPEARING IN ASSESSEES BOOKS IN THE NAME OF 24 CREDITORS, AGGREGATING TO RS.8,14,374/- AS LISTED O N PAGE 4 & 5 OF ASSESSMENT ORDER, ITA NO. 286/AGRA/2012 3 AFFIDAVITS IN RESPECT OF WHICH STOOD ADDUCED BY THE ASSESSEE, I.E., EXCLUDING RS.1,90,658/- OUTSTANDING IN THE NAME OF ONE M/S. E VEREST MANURE, KANPUR, THE 25 TH CREDITOR, WHOSE CASE BEING A FIRM IS DIFFERENT FRO M THAT OF OTHERS, SO THAT THE SAME HAS BEEN DEALT BY THE HONBLE TRIBUNAL SEPARAT ELY. WITH REGARD TO THE CREDIT BALANCE SHOWN IN THE NAME OF M/S. EVEREST MANURE, K ANPUR, IT WAS SET ASIDE BACK TO THE FILE OF THE AO FOR A PROPER VERIFICATION OF THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE OWED THE IMPUGNED BALANCE TO THIS FIRM FOR THE ACCOUNTING YEAR 2002-03 FOR WHICH A CONFIRMATION CERTIFICATE DATED 17.01.20 06 WAS ALSO PLACED. THE MATTER RELATING TO THE VERIFICATION OF CREDIT BALANCE OF R S.1,90,658/- IN THE NAME OF M/S. EVEREST MANURE, KANPUR WAS SET ASIDE TO THE FILE OF THE AO FOR VERIFICATION BECAUSE IN VIEW OF THE HONBLE TRIBUNAL, THE SAID PROPRIETA RY CONCERN WOULD ALSO PRESUMABLY BE AN ASSESSEE UNDER THE ACT, AND HENCE, THE AO WAS DIRECTED TO ADJUDICATE BY PASSING SPEAKING ORDER AFTER ALLOWING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 2.1 AFTER ADDITION HAS BEEN CONFIRMED BY THE LD. CI T(A), THE AO PROCEEDED TO PASS PENALTY ORDER U/S. 271(1)(C) OF THE ACT BY ISS UING SHOW CAUSE NOTICE. THE ASSESSEE INSTEAD OF CONTESTING THE PENALTY ON MERIT , REQUESTED THE AO TO KEEP THE PENALTY PROCEEDINGS PENDING TILL THE DECISION OF TH E TRIBUNAL. THE AO CONSIDERING THE LIMITATION TO PASS THE PENALTY ORDER, PASSED TH E PENALTY ORDER BECAUSE IT HAS BEEN ESTABLISHED ON RECORD THAT THE SUNDRY CREDITOR S ARE NOT GENUINE AND ITA NO. 286/AGRA/2012 4 ACCORDINGLY LEVIED THE PENALTY VIDE SEPARATE ORDER. THE PENALTY ORDER WAS CHALLENGED BEFORE THE LD. CIT(A) AND WRITTEN SUBMIS SIONS OF THE ASSESSEE IS INCORPORATED IN THE APPELLATE ORDER. THE LD. CIT(A) NOTED THAT THE MAIN GRIEVANCE OF THE ASSESSEE HAD BEEN THAT THE PENALTY HAS BEEN IMPOSED WITHOUT HEARING THE ASSESSEE. THEREFORE, THE AO WAS DIRECTED TO MAKE FU RTHER ENQUIRY INTO THE MATTER AND THE AO AT THE APPELLATE STAGE DIRECTED THE ASSE SSEE TO PRODUCE THE SUNDRY CREDITORS BUT INSTEAD OF COMPLYING WITH THE REQUIRE MENTS OF THE AO, THE ASSESSEE FILED REPLY AT THE DAK COUNTER AND THE AO IN THE RE MAND REPORT REPORTED THAT THE CLAIM OF THE ASSESSEE IS WRONG THAT THE CREDITORS W ERE PRODUCED BEFORE HIM FOR EXAMINATION BUT THE SAME ARE NOT EXAMINED BY THE AO . THE AO REPORTED THAT THE ASSESSEE HAS NOT PRODUCED ANY CREDITOR BEFORE HIM I N THE REMAND PROCEEDINGS, THEREFORE, NONE OF THEM COULD BE EXAMINED. THE LD. CIT(A) IN VIEW OF THE CLAIM OF ASSESSEE THAT THEY WERE PRODUCED BEFORE THE AO AGAI N DIRECTED THE AO TO GIVE FRESH OPPORTUNITY TO THE ASSESSEE AND THE AO ISSUED FURTHER NOTICE TO THE ASSESSEE, BUT THE ASSESSEE DID NOT PRODUCE ANY OF THE CREDITO RS AT THE REMAND PROCEEDINGS AND AGAIN REITERATED THE SAME FACTS IN THE REPLY. THE A O, THEREFORE, REPORTED THAT THE PENALTY HAS BEEN RIGHTLY IMPOSED AGAINST THE ASSESS EE. THE LD. CIT(A) AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE FOUND THAT AT THE ASSESSMENT STAGE AS WELL AS IN THE REMAND PROCEEDINGS, THE ASSESSEE HAS FAILED TO PROVE GENUINE CREDITS IN RESPECT OF 24 CREDITORS AND THE ASSESSEE FAILED TO AVAIL OF ANY OPPORTUNITY AND SIMILAR ADDITION HAS BEEN CONFIRMED BY THE TRIBUNAL IN RESPECT OF 24 CREDITORS TO ITA NO. 286/AGRA/2012 5 THE EXTENT OF RS.8,14,374/-. THE LD. CIT(A) ALSO NO TED THAT EVEN AFTER GIVING OPPORTUNITY AT THE REMAND PROCEEDINGS, THE ASSESSEE DID NOT PRODUCE ANY OF THE CREDITORS BEFORE THE AO, THEREFORE, PROPER OPPORTUN ITY HAS BEEN GRANTED TO THE ASSESSEE AND SINCE THE ADDITION HAS BEEN CONFIRMED BY THE TRIBUNAL IN RESPECT OF 24 CREDITORS, THEREFORE, THE PENALTY SHALL HAVE TO BE CONFIRMED ON THE AMOUNT OF RS.8,14,374/-. HOWEVER, AS REGARDS THE BALANCE AMOU NT OF RS.1,90,658/- IN RESPECT OF M/S. EVEREST MANURE, KANPUR, SINCE THE MATTER WA S RESTORED TO THE AO, THEREFORE, THE LD. CIT(A) DIRECTED THAT THE DECISIO N WITH REGARD TO LEVY OF PENALTY SHALL BE TAKEN UP THEREAFTER. THE APPEAL OF THE ASS ESSEE IS, ACCORDINGLY, PARTLY ALLOWED. 3. THE APPEAL OF THE ASSESSEE WAS FIXED FOR HEARING INITIALLY ON 17.10.2012 AND ON THAT DATE, THE APPEAL WAS ADJOURNED ON THE REQUE ST OF COUNSEL OF THE ASSESSEE BECAUSE THE REQUIRED DETAILS COULD NOT BE PREPARED AND THE APPEAL WAS ADJOURNED TO 03.12.2012 AND ON THAT DATE, DUE TO NON-FUNCTIONING OF BENCH, THE APPEAL WAS ADJOURNED TO 07.01.2013. THE LD. COUNSEL FOR THE AS SESSEE AGAIN MADE SAME REQUEST FOR ADJOURNMENT BECAUSE REQUIRED DETAILS COULD NOT BE PREPARED AND SOUGHT ADJOURNMENT. THE TRIBUNAL REJECTED THE REQUEST FOR ADJOURNMENT BECAUSE THE REASON FOR ADJOURNMENT WAS NOT SUFFICIENT. HOWEVER, IN THE INTEREST OF JUSTICE LAST OPPORTUNITY WAS GRANTED TO THE ASSESSEE TO ARGUE TH E APPEAL AND THE APPEAL WAS ADJOURNED TO 29.01.2013. ON 29.01.2013 AT THE TIME OF HEARING OF APPEAL NONE ITA NO. 286/AGRA/2012 6 APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE AND A REQUEST IS FURNISHED FOR ADJOURNMENT ON THE REASONS THAT REVISION IN APPEAL AGAINST THE ASSESSMENT ORDER IS PENDING BEFORE THE HIGH COURT. SINCE THE LAST OPPOR TUNITY WAS ALREADY GRANTED TO THE ASSESSEE AND NONE APPEARED ON THE DATE OF HEARI NG, THEREFORE, THE REQUEST FOR ADJOURNMENT WAS REJECTED AND THE APPEAL IS DECIDED IN ABSENCE OF THE ASSESSEE. 4. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORI TIES BELOW. 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND PER USED THE FINDINGS OF THE AUTHORITIES BELOW. IN THIS CASE, THE LD. CIT(A) CON FIRMED THE PENALTY IN RESPECT OF 24 CREDITORS AGGREGATING TO RS.8,14,374/- BECAUSE T HE ASSESSEE FAILED TO PROVE GENUINE CREDITS IN ACCORDANCE WITH LAW. THE ADDITI ON HAS BEEN CONFIRMED BY THE TRIBUNAL. THE ASSESSEE AT THE PENALTY STAGE DID NOT AVAIL TO THE HEARING OF PENALTY MATTER AND DID NOT SUBMIT ANYTHING BEFORE THE AO TO CHALLENGE THE PROPOSED ACTION OF THE AO FOR LEVY OF PENALTY. AT THE APPELLATE STA GE, THE LD. CIT(A) GAVE FURTHER DIRECTION TO THE AO TO GIVE FRESH OPPORTUNITY TO TH E ASSESSEE, BUT THE ASSESSEE DID NOT AVAIL THE FRESH OPPORTUNITY GRANTED BY THE AO A T THE APPELLATE STAGE. ACCORDING TO THE AO, THE ASSESSEE WAS DIRECTED TO PRODUCE THE CREDITORS FOR EXAMINATION BEFORE HIM IN THE REMAND PROCEEDINGS, BUT THE ASSES SEE AGAIN DID NOT PRODUCE ANY OF THE CREDITORS BEFORE THE AO. THE AO REPORTED THA T THE ASSESSEE MADE A WRONG CLAIM TO HAVE PRODUCED CREDITORS AT THE REMAND PROC EEDINGS, WHICH WERE NOT ITA NO. 286/AGRA/2012 7 EXAMINED BY THE AO. THE AO FURTHER REPORTED THAT TH E ASSESSEE INSTEAD OF COMPLYING WITH THE NOTICE FILED THE REPLY AT THE DA K COUNTER ONLY. IT WOULD SHOW THAT THE ASSESSEE HAS NO EXPLANATION WHATSOEVER AGA INST LEVY OF PENALTY AND DID NOT COOPERATE AT THE PENALTY STAGE OR AT THE APPELLATE STAGE BEFORE THE LD. CIT(A). EXPLANATION-I TO SECTION 271 (1)(C) OF THE IT ACT R EADS AS UNDER : [EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFICER OR THE [COMMISSION ER (APPEALS)][OR THE COMMISSIONER] TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA F IDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN R ESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THE HONBLE DELHI HIGH COURT ON IDENTICAL FACTS IN THE CASE OF CIT VS HARPARSHAD AND COMPANY LTD. 328 ITR 53 HELD AS UNDER: HELD, THAT THE REASONS GIVEN BY THE TRIBUNAL FOR Q UASHING THE PENALTY PROCEEDINGS WERE IRRELEVANT, NOT GERMANE TO THE ISSUE AND THE TRIBUNAL HAD LOST SIGHT OF ASPECTS WHICH HAD BEEN C ONCLUSIVELY ESTABLISHED IN THE QUANTUM PROCEEDINGS. THE TRIBUNA L HAD FAILED TO TAKE NOTE OF THE FACT THAT PART OF THE CLAIM AS COM MISSION WAS ALLOWED TO THE ASSESSEE NOT BECAUSE R HAD RENDERED ANY SERV ICES BUT BECAUSE J HAD RENDERED SERVICES FOR WHICH IT WAS PAID 1 PER C ENT OF THE COMMISSION BY R OUT OF THE 3 PER CENT RECEIVED BY H ER. AS FAR AS ITA NO. 286/AGRA/2012 8 COMMISSION TO R WAS CONCERNED, IT WAS ACCEPTED BY T HE TRIBUNAL IN THE QUANTUM PROCEEDINGS THAT SHE DID NOT RENDER ANY SERVICES AT ALL. THE ASSESSEE HAD FAILED TO OFFER ANY EXPLANATION IN RESPECT OF THE ADDITION OF RS.1,83,078 AND IT COULD BE DEEMED TO H AVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS THEREOF, BY VIRTUE OF THIS EXPLANATION. THE TRIBUNAL WAS NOT JU STIFIED IN DELETING THE PENALTY IMPOSED BY THE INCOME-TAX OFFICER UNDER SECTION 271 (1) (C) OF THE ACT. THE FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RE LEVANT AND HAVE PROBATIVE VALUE. WHERE THE ASSESSEE PRODUCES N O FRESH EVIDENCE OR PRESENTS ANY ADDITIONAL OR FRESH CIRCUMSTANCES I N PENALTY PROCEEDINGS, HE WOULD BE DEEMED TO HAVE FAILED TO D ISCHARGE THE ONUS PLACED ON HIM AND THE LEVY OF PENALTY COULD BE JUST IFIED. EVEN IF THERE IS NO CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS, BUT ON THE BASIS THEREOF TH E CLAIM WHICH IS MADE IS EX FACIE BOGUS, IT MAY STILL ATTRACT PENALT Y PROVISION. THE EXPLANATION APPENDED TO SECTION 271 (1) (C ) OF THE ACT ENTIRELY INDICATE THE ELEMENT OF STRICT LIABILITY O N THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WH ILE FILING RETURN. THE OBJECT BEHIND ENACTMENT OF SECTION 271 (1) (C) READ WITH THE EXPLANATIONS INDICATE THAT THE SECTION HAS BEEN ENA CTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THA T PROVISION IS A CIVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSE NTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MA TER OF PROSECUTION UNDER SECTION 276C OF THE ACT. 5.1 CONSIDERING THE FACTS OF THE CASE, WE ARE OF TH E VIEW THAT THE EXPLANATION-I TO SECTION 271(1)(C) OF THE ACT IS CLEARLY ATTRACTED I N THE CASE OF ASSESSEE FOR THE PURPOSE OF LEVY OF PENALTY. THE ASSESSEE COULD NOT SUBSTANTIATE ITS PLEA AT THE PENALTY STAGE AS WELL AS AT THE APPELLATE STAGE. TH E FACT REMAINED THAT THE ASSESSEE FAILED TO PROVE GENUINE CREDITS IN THE MATTER. THER EFORE, IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL EVEN BEFORE US, IT IS DIFFICUL T TO BELIEVE THAT THE ASSESSEE HAS ITA NO. 286/AGRA/2012 9 ANY EXPLANATION, WHATSOEVER, TO EXPLAIN 24 CREDITOR S IN THE MATTER. THE ASSESSEE ALONG WITH THE ADJOURNMENT APPLICATION FILED A COPY OF ORDER OF ITAT, AHMEDABAD BENCH IN THE STAY APPLICATION NO. 62 OF 2012 WHICH HAS NO RELEVANCE, WHATSOEVER, WITH THE LEVY OF PENALTY AND THE SAME ALSO COULD NO T BE GIVEN PREFERENCE IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT REFERRED T O ABOVE. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE APPEAL OF T HE ASSESSEE HAS NO MERIT. THE SAME IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY