The ITO, Ward-3(3), Surat V. M/s. M.M. Builders, Surat

ITA 2897/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0578 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 09-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI S.S. GODARA, JM, & SHRI MANISH BORAD , AM. ITA NO.2897/AHD/2013 ASST. YEAR: 2007-08 ITO, WARD 3(3), SURAT. VS. M. M. BUILDERS, PRACHI APARTMENT CITYLIGHT ROAD, ATHWALINES, SURAT. APPELLANT RESPONDENT PAN AAIFM 3360 APPELLANT BY SHRI PRASOON KABRA, SR.DR RESPONDENT BY NONE DATE OF HEARING: 15/9/2016 DATE OF PRONOUNCEMENT: 16/9/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL BY THE REVENUE FOR ASST. YEAR 2007-08 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-IV, SURAT DATED 27. 09.2013 PASSED AGAINST ORDER U/S 271(1)(C) OF THE IT ACT, 1961 (IN SHORT THE ACT), FRAMED ON 12.03.2012 BY ITO WD-3(3), SURAT. REVENUE HAS RAISED FOLLOWING GROUNDS :- (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS NOT JUSTIFIED BY DELETING THE PENALTY LEVIED U/S 271(L)(C), WHILE TH E ADDITION WAS IN THE SAME CASE WAS CONFIRMED BY THE LD.CIT(A) AS THE ASSESSME NT ORDER WAS FINALIZED AFTER MAKING PROPER VERIFICATION, INQUIRIES & COLLE CTION OF RELEVANT EVIDENCES. ITA NO. 2897/AHD/2013 ASST. YEAR 2007-08 2 (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. (3) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) MAY BE SET-SIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTE NT. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A PARTNERSHIP FIRM. RETURN OF INCOME WAS FILED ON 25. 3.2008 DECLARING INCOME AT NIL. ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 30.12.2009 DETERMINING TOTAL INCOME AT RS.47,04,490 /- AFTER MAKING ADDITION OF RS.47,04,490/- ON ACCOUNT OF UNVERIFIED CREDITORS AND SUNDRY CREDITORS TREATED AS CEASED U/S 41(1)(A) OF THE ACT. PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT . THIS ADDITION OF RS.47,04,490/- WAS CONFIRMED BY LD. CIT(A). PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED. AGAINST THE ORDER OF ASSESSING OFFICER PREFERRED APPEAL BEFORE LD. CIT(A) AND THE SAME WAS PARTLY ALLOWED BY LD. CIT(A) BY OBSERVING AS UNDER :- 4. I HAVE GONE THROUGH THE FACTS OF THE CAS E. PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT OF ASSESSMENT PROCEEDINGS AND THOUGH TH E FINDINGS IN THE ASSESSMENT ORDER ARE GOOD MATERIAL FOR LEVY OF PENALTY IT IS N OT CONCLUSIVE. TO LEVY PENALTY IT LIAS TO BE SHOWN THAT THERE WAS CONCEALMENT OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME OR THE DEEMING PROVISION OF EXPLANATION-1 TO SEC. 271(L)(C) WAS APPLICABLE. IT IS SEEN THAT THE. APPELLANT HAS NOT PROVIDED EVEN T HE BASIC DETAILS WITH RESPECT TO THE CREDITORS MENTIONED AT SR. NO.3 TO 10 IN THE TABLE ABOVE. EVEN THE ADDRESS OF THESE PERSONS IS NOT KNOWN TO THE APPELLANT. THE APPELLAN T HAS THEREFORE NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM THAT CREDITORS WERE IN EXIST ENCE AS FAR AS THESE CREDITORS ARE CONCERNED. PENALTY LEVIED TO - THE EXTENT IT - PERTAINS TO THESE CREDITORS, IS CONFIRMED. AS REGARDS THE CREDITOR SMT. INDUMATI KANTILAL PATEL, THE PENALTY WAS LEVIED AS NO CONFIRMATION WAS FILED AND THERE WAS NO RESPONSE TO NOTICE U/S. 133(6). THE APPELLANT HAD HOWEVER GIVEN THE ADDRESS OF THE PERSON AND IT IS THE APPELLANT'S CLAIM THAT THE PERSON IS NOT COOPERATIVE. IN MY OPINION, THOUGH TH E CLAIM HAS NOT BEEN SUBSTANTIATED IT HAS NOT BEEN SHOWN AS FALSE EITHER AND HENCE THE BONA FIDE OF THE EXPLANATION HAS TO BE ACCEPTED IN FAVOUR OF THE APPELLANT. THEREFORE T HE PENALTY LEVIED TO THE EXTENT IT PERTAINS TO THIS CREDITOR IS CANCELLED. AS REGARDS THE CREDITOR SHRI BHIKHUBHAI. BHANJIBHAI PATEL, THE ADDRESS HAD BEEN GIVEN BY THE APPELLANT, NOTICE ISSUED BY ',HE ITA NO. 2897/AHD/2013 ASST. YEAR 2007-08 3 A.O. HAD BEEN SERVED AT THIS ADDRESS AND REPLY OF T HE CREDITOR RECEIVED. THE CREDITOR IN ITS REPLY HAS MENTIONED THAT THERE WAS NO TRANSACTI ON WITH THE APPELLANT IN FY 2006- 07, FY 2007-08 AND FY 2009-10 BUT IT HAS NOT STATED THAT THE BALANCE AS ON 31.03.2007 WAS NIL AS INTERPRETED BY THE A.O. AS AG AINST THIS THE APPELLANT HAS CLAIMED THAT THE TRANSACTION WAS PERTAINING TO FY 2 002-03 WITH REGARD TO SALE AGREEMENT ENTERED WITH THE PARTY BUT NOT EXECUTED DUE TO LEGAL DISPUTE WITH THE ORIGINAL OWNERS. THOUGH, THE FACT THAT AMOUNTS WERE OUTSTAND ING SINCE MANY YEARS PAST AND EVEN IN SUBSEQUENT YEARS MAY BE SUFFICIENT FOR ADDITION IN ASSESSMENT AS IT RAISES DOUBT REGARDING THE EXISTENCE AND CLAIMABILITY OF THE LIA BILITY, IN MY OPINION, IT IS NOT SUFFICIENT FOR LEVY OF PENALTY. THE CREDITOR HAS NOT SPECIFICA LLY STATED THAT THE LIABILITY DOES NOT EXIST AND HENCE THE CLAIM OF THE APPELLANT IS NOT PROVED FALSE. THE ADDITION HAS BEEN MADE ON PREPONDERANCE OF PROBABILITY. THE PENALTY LEVIED, T O THE EXTENT IT PERTAINS TO ADDITION IN RESPECT OF THIS CREDITOR, IS CANCELLED. 3. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 4. LD. DR SUPPORTED THE ORDER OF ASSESSING OFFICER. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER , WRITTEN SUBMISSION HAS BEEN SUBMITTED. THROUGH THIS WRITTEN SUBMISSION ASSESSEE HAS SUBMITTED THAT IN THE QUANTUM APPEAL F OR ASST. YEAR 2007-08 MATTER HAS BEEN SET ASIDE BY THE TRIBUNAL T O THE FILE OF ASSESSING OFFICER VIDE ITS ORDER IN ITA NO.2921/AHD /2010 DATED 21.11.2014. THE ASSESSEE HAS ALSO REQUESTED THAT IN VIEW OF THE ORDER OF THE TRIBUNAL, THE PENALTY APPEAL MAY ALSO BE SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR FRESH CONSIDERATION. 6. WE HAVE HEARD LD. DR GONE THROUGH THE WRITTEN SU BMISSIONS AND PERUSED THE MATERIAL ON RECORD. THROUGH THIS AP PEAL REVENUE IS AGGRIEVED WITH THE ORDER OF LD. CIT(A) DELETING THE PENALTY U/S 271(1)(C) OF THE ACT. WE OBSERVE THAT IN THE QUANTU M APPEAL FOR ASST. YEAR 2007-08, VIDE ITS ORDER IN ITA NO. 2921/AHD/20 10 DATED ITA NO. 2897/AHD/2013 ASST. YEAR 2007-08 4 21.11.2014, THE CO-ORDINATE BENCH HAS SET ASIDE THE MAJOR ISSUE RELATING TO ADDITION OF RS.47,04,490/- U/S 41(1) O F THE ACT, TO THE FILE OF ASSESSING OFFICER, BY OBSERVING AS UNDER :- 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT OUT OF THE TOTAL ADDITION MADE U/S 41(1), THE MAJOR ADDITION IS WITH RESPECT TO BHIKUBHAI PATEL. BEFORE US THE ASSESSEE HAS SUBMITTED THAT TR ANSLATED COPY OF THE REPLY GIVEN BY BHIKUBHAI PATEL TO THE A.O IN RESPONSE TO THE SUBMI SSIONS ISSUED TO HIM U/S. 131. FROM THE REPLY, IT IS SEEN THAT HE HAS STATED THAT HE HA S NOT ENTERED INTO ANY TRANSACTION WITH THE ASSESSEES FIRM IN F.Y. 06- 07,-07-08 & 09-10. ON T HE OTHER HAND IT IS ASSESSEES SUBMISSION THAT THE AMOUNT WAS RECEIVED IN THE YEAR ENDING 31ST MARCH 2004. WE FIND THAT THERE IS NO FINDING EITHER BY CIT(A) OR BY THE A.O. THAT THE ASSESSEE HAD ENTERED INTO TRANSACTION WITH BHIKUBHAI PATEL IN YEAR ENDING 31S T MARCH 2004 AND THE NATURE OF TRANSACTION. WE THEREFORE FEEL THAT THIS FACTUAL AS PECT NEEDS FRESH VERIFICATION AND FOR WHICH WE REMIT THE MATTER BACK TO THE FILE OF A.O S O THAT HE CAN EXAMINE THE CONTENTIONS OF THE ASSESSEE THAT THE AMOUNT WAS PAYABLE SINCE Y EAR ENDING 2004. THE A.O SHALL ALSO MAKE THE NECESSARY ENQUIRIES BY SUMMONING SHRI BHIK UBHAI PATEL AND ALSO AFFORDING OPPORTUNITY OF CROSS-EXAMINATION TO THE ASSESSEE. T HE A.O SHALL THEREAFTER DECIDE THE ISSUE ON THE BASIS OF FACTS AND CIRCUMSTANCES OF TH E CASE AND IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT A.O SHALL GRANT ADEQUATE OPP ORTUNITY OF HEARING TO THE ASSESSEE. WITH RESPECT TO THE OTHER PARTIES, WE FIND THAT NO EVIDENCE EITHER IN THE FORM OF CONFIRMATION LETTER PAN NUMBER, ADDRESSES OR ANY OT HER FORM WAS SUBMITTED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM THAT THE LIABILITY EXISTS. BEFORE US NO MATERIAL HAS BEEN PLACED ON RECORD BY THE ASSESSEE TO DEMONSTRATE THA T IT HAS PAID THE CREDITORS THE AMOUNT IN SUBSEQUENT YEARS NOR THERE IS ANY FINDING ON THE SAME OF A.O OR CIT(A). BEFORE US LD. A.R. HAD ALSO RELIED ON CERTAIN DECISIONS OF HONBL E GUJARAT HIGH COURT BUT WE FIND THAT THERE IS NO FIND OF EITHER A.O OR CIT(A) IN THE LIG HT OF THOSE DECISIONS. WE THEREFORE FEEL THAT IN THE INTEREST OF JUSTICE AND FAIR PLAY, THE ASSESSEE SHOULD BE GRANTED ONE MORE OPPORTUNITY AND ALSO TO DEMONSTRATE THE SUBSEQUENT PAYMENTS. WE THEREFORE REMIT THE ISSUE TO THE FILE OF A.O TO GIVE A FACTUAL FINDING AND TO DECIDE IN THE LIGHT OF THE DECISIONS OF HONBLE GUJARAT HIGH COURT AND IN ACCORDANCE WIT H LAW. NEEDLESS TO STATE THAT A.O SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE, THUS THE GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESU LT, THE APPEAL OF THE ASSESSEE 7. WE ARE, THEREFORE, OF THE VIEW THAT AS THE QUANT UM ISSUE ON WHICH PENALTY U/S 271(1)(C) OF THE ACT HAS BEEN IMP OSED BY ASSESSING OFFICER, HAS BEEN REMITTED BACK TO THE FI LE OF ASSESSING OFFICER FOR GIVING FACTUAL FINDING AND TO DECIDE IN THE LIGHT OF THE JUDGMENT OF HON. GUJARAT HIGH COURT IN THE CASE OF CIT VS. NITIN ITA NO. 2897/AHD/2013 ASST. YEAR 2007-08 5 GARG (2012) 22 TAXMAN.COM 59 (GUJ), IT IS JUSTIFIAB LE TO SEND THE ISSUE IN THIS APPEAL RELATING TO PENALTY U/S 271(1) (C) OF THE ACT, TO THE FILE OF LD. ASSESSING OFFICER TO DECIDE THE ISSUE O F PENALTY U/S 271(1)(C) OF THE ACT, AFRESH AFTER PROVIDING REASON ABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ACCORDINGLY ALLOW THE A PPEAL OF REVENUE FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2016 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 16/9/2016 MAHATA/- 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 ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 2897/AHD/2013 ASST. YEAR 2007-08 6 1. DATE OF DICTATION: 15/09/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 16/09/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 16/9/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: