M/s Sewak Ice & Cold Storage (P) Ltd., Hathras V. Dy.C.I.T., Circle-3(1), Etah

ITA 29/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0747 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 3 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 24-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Opportunity of being heard; Peak credit; Initiation of penalty proceedings; Non compliance; Set aside
• Section: 271(1)(c); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 29/AGRA/ 2013 ASSESSMENT YEAR 2003-04 M/S. SEWAK ICE & COLD STORAGE (P) LTD. VS. DE PUTY COMMISSIONER OF RAM LILA GROUND, SADABAD. INCOME TAX CIRCLE- 3(1), HATHRAS ETAH. (APPELLANT) (RESPONDENT) (PAN AAHCS 7242 L) APPELLANT BY : SHRI PANKAJ GARGH, ADVOCATE RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 21.03.2013 DATE OF PRONOUNCEMENT : 04.04.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: THE APPEAL BY THE ASSESSEE IS FILED AGAINST THE OR DER OF CIT(A) GHAZIABAD DATED 27.11.2012. 2. THE GROUNDS RAISED IN THE APPEAL IS PERTAINING T O LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 OF RS .35,03.011/-. ITA NO.29/AGRA/2013 A.Y. 2003-04 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE A.O. WH ILE MAKING ASSESSMENT MADE CERTAIN ADDITIONS INCLUDING THE ADD ITION OF RS.35,03,011/- ON ACCOUNT OF UNEXPLAINED DEPOSITS FOUND IN THE BAN K ACCOUNT OF THE ASSESSEE. IN ASSESSMENT ORDER WHILE RECORDING SATIS FACTION, THE A.O. STATED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND FILED INACCURATE PARTICULARS OF INCOME. THE A.O. INITIATED PENALTY P ROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE PREFERRED THE AP PEAL AGAINST THE ADDITION BEFORE CIT(A). THE CIT(A) CONFIRMED THE SAID ADDITI ON OF RS.35,03,011/-. THE ASSESSEE FILED APPEAL BEFORE THE ITAT. THE ITAT , IN ITA NO. 16/AGRA/2006 VIDE ORDER DATED 25.05.2007 SENT BACK THE MATTER RELATED TO THE ADDITION OF RS.35,03,011/- TO EXAMINE ALTERNATE CLA IM OF THE ASSESSEE OBSERVING AS UNDER:- WE HAVE HEARD THE PARTIES AND PERUSED THE ENTIRE M ATERIAL ON RECORD. THE ASSESSING OFFICER HAD REQUISITIONED THE BOOKS OF ACCOUNT ALONGWITH VOUCHERS BY ISSUING NOTICE U/S.14 2(1) OF THE ACT. DESPITE OPPORTUNITY, THE BOOKS OF ACCOUNT WERE NOT PRODUCED BEFORE HIM FOR VERIFICATION OF DEPOSITS MADE IN THE BANK A CCOUNT AND AS SUCH, THE ASSESSING OFFICER HAD TO RESORT TO THE BE ST OF HIS JUDGMENT. SUCH AN ACTION OF THE ASSESSING OFFICER CANNOT BE F AULTED WITH AFTER HE FOUND THAT THERE IS NON COMPLIANCE TO THE STATUT ORY NOTICE ISSUED U/S.142(1) OF THE ACT. IT IS, HOWEVER, NOTICED THAT THE ASSESSEE FILED A WRITTEN SUBMISSION ALONG WITH COPIES OF ACCOUNT, AS APPEARING IN HIS BOOKS OF ACCOUNT IN THE FIRST PROCEEDINGS BEFOR E THE LD. CIT(APPEALS). THE LD. CIT(APPEALS) OBTAINED A REMAN D REPORT AND CONSIDERED THE MATTER ON MERITS OF THE CASE. FROM T HE ENTIRE MATERIAL THAT HAVE BEEN BROUGHT ON RECORD ON THIS I SSUE, WE DO NOT FIND ANY MATERIAL OR EVIDENCE TO INTERFERE WITH THE DECISION REACHED BY THE LD. CIT(APPEALS) IN SUSTAINING THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE BANK ACCOUNT BY WAY O F MAKING DEPOSITS ON DIFFERENT DATES THROUGH DEMAND DRAFTS A GGREGATING TO ITA NO.29/AGRA/2013 A.Y. 2003-04 3 RS.35,03,011/-. THE ASSESSEE HAD MERELY SUPPLIED TH E COPIES OF ACCOUNT AND DID NOT SUPPORT THE CLAIM WITH ANY DOCU MENTARY EVIDENCE OF WHATSOEVER NATURE. EVEN IN THE REMAND P ROCEEDINGS, BOOKS OF ACCOUNT AND OTHER RELEVANT INFORMATION TO SUPPORT HIS CLAIM WERE NOT PRODUCED NOR SUCH EVIDENCE WAS BROUG HT TO THE NOTICE OF LD. CIT(APPEALS) WHEN HE TOOK COMMENTS OF THE APPELLANT ON THE REMAND REPORT SENT BY THE ASSESSING OFFICER. FOR LACK OF EVIDENCE, WE, ARE UNABLE TO INTERFERE WITH THE DECI SION REACHED BY LD. CIT(APPEALS). WE, HOWEVER FIND THAT THE ASSESSE E HAD ALSO MADE AN ALTERNATE CLAIM BEFORE THE LD. CIT(APPEALS) THAT IN CASE, THE ADDITION IS TO BE SUSTAINED, IT IS ONLY THE PEAK AM OUNT THAT CAN BE SUBJECTED TO TAX AS UNEXPLAINED INVESTMENT. THIS PL EA OF THE ASSESSEE, HOWEVER, HAS NOT BEEN EXAMINED BY THE LD. CIT(APPEALS) NOT ANY ORDER THEREON HAS BEEN PASSED. THE ASSESSEE APPEARS TO HAVE AN ARGUABLE CASE ON THIS ACCOUNT. WE, THEREFOR E, CONSIDER IT APPROPRIATE TO REMAND THIS LIMITED ISSUE TO THE LD. CIT(APPEALS) SO THAT HE CAN EXAMINE THIS CLAIM OF THE ASSESSEE AND REACH A CONCLUSION IN ACCORDANCE WITH LAW AFTER AFFORDING T HE PARTIES A REASONABLE AND EFFECTIVE OPPORTUNITY OF BEING HEARD . 4. THE CIT(A) AGAIN CONFIRMED THE ADDITION OF RS.35 ,03,011/- REJECTING THE ASSESSEES CONTENTION IN RESPECT OF APPLICATION OF PEAK THEORY RELYING A JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CAS E OF BHAIYALAL SHYAM BEHARI VS. CIT (2005) 276 ITR 38. 5. THE A.O. LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT OF RS.26,33,328/- BEING AMOUNT OF ADVANCE FROM FARMERS , AND RS.35,03,011/- AMOUNT DEPOSITED IN BANK ACCOUNT. THE ASSESSEE FILE D PENALTY APPEAL BEFORE CIT(A) WHICH HAS BEEN REJECTED BY THE CIT(A) VIDE O RDER DATED 22.10.2012 AS THERE WAS A DELAY IN FILING APPEAL. THE ASSESSEE FILED APPEAL AGAINST THAT ITA NO.29/AGRA/2013 A.Y. 2003-04 4 ORDER OF CIT(A) BEFORE THE ITAT AND ITAT AGRA BENCH VIDE ORDER DATED 22.06.2012 SENT BACK THE MATTER BEFORE CIT(A) DIREC TING TO CONDONE THE DELAY AND REDECIDE THE APPEAL ON MERIT. 6. THE CIT(A) NOTICED THAT THE ADDITION OF RS.26,33 ,328/- MADE BY A.O. AND ON WHICH PENALTY LEVIED BY THE A.O. HAS BEEN DE LETED BY THE ITAT, THEREFORE, SUBSTANTIVE ISSUE FOR DECIDING THE PENAL TY UNDER SECTION 271(1)(C) OF THE ACT WAS IN RESPECT OF ONLY RS.35,03,011/-. T HE CIT(A) FURTHER NOTICED THAT THOSE ADDITION OF RS.35,03,011/- HAS ALSO BEEN CONFIRMED BY THE ITAT. THE CIT(A) WAS OF THE VIEW THAT THIS WAS NOT A CASE OF SIMPLE RECONCILIATION OF EXPENDITURE FOR WANT OF EVIDENCE, RATHER THE ADD ITION OF RS.35,03,011/- IS A DEEMED ADDITION UNDER SECTION 69 OF THE ACT AS IN COME FROM UNDISCLOSED SOURCES AND TO THAT EXTENT THE ASSESSEE IS GUILTY O F FURNISHING INACCURATE PARTICULARS. THE CIT(A) DIRECTED THE A.O. TO RECALC ULATE THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT BEING 100% OF TAX ON R S.35,03,011/-. 7. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FURNISHED THE COPY OF LEDGER ACCOUNT OF FARMERS ALO NG WITH BANK ACCOUNT IN WHICH THE AMOUNT OF DRAFTS HAVE BEEN DEPOSITED. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THOUGH THE ASSESSEE H AS FURNISHED THE COMPLETE DETAILS IN THIS REGARD, HOWEVER, THE ADDIT ION WAS CONFIRMED BY THE ITA NO.29/AGRA/2013 A.Y. 2003-04 5 ITAT. HE SUBMITTED THAT NORMAL MATTERS AND PENALTY MATTERS BOTH ARE SEPARATE PROCEEDINGS. 8. THE LEARNED AUTHORISED REPRESENTATIVE DREW OUR A TTENTION ON PAGE 25 OF ASSESSEES PAPER BOOK WHERE NOTICE FOR IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN ISSUED TO ASSESSEE VI DE NOTICE DATED 26.04.2005. THE LEARNED AUTHORISED REPRESENTATIVE S UBMITTED THAT IN THE NOTICE ISSUED IT WAS MENTIONED THAT THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS OF INCOME, THAT MEANS, THE A.O. INITIAT ED PENALTY PROCEEDING UNDER SECTION 271(1) (C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME WHEREAS THE A.O. LEVIED THE PENALTY INVOKING PROVIS ION OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. 9. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE SATISFACTION FOR LEVY OF PENALTY IN ASSESSMENT ORDER AS WELL AS SHOW CAUSE NOTICE WAS DIFFERENT THAN THE PENALTY LEVIED FINALLY IN PENALT Y ORDER. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT UNDER THES E CIRCUMSTANCES WHEN PENALTY IS LEVIED ON DIFFERENT REASON THEN THE SATI SFACTION RECORDED ON THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS NOT BEEN LEVIED. THE LEARNED AUTHORISED REPRESENTATIVE IN SUPPORT OF HIS CONTENT ION RELIED UPON THE FOLLOWING DECISIONS :- ITA NO.29/AGRA/2013 A.Y. 2003-04 6 1. NEW SORATHIA ENGINEERING CO. VS. COMMISSIONER OF INCOME TAX [2006] 282 ITR 642 (GUJ) . 2. COMMISSIONER OF INCOME-TAX, GUJARAT I VS. LAKHDHIR LAL JI, [2006] 85 ITR 77. 3 ADDL. COMMISSIONER OF INCOME TAX VS. KEJRIWAL IRO N STORES [1987] 168 ITR 715. 10. THE LEARNED D.R. ON THE OTHER HAND RELIED UPON THE ORDER OF CIT(A) 11. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND RECORDS PERUSED. THE CRUX OF THE ISSUE TO BE EXAMINED AND D ECIDED BY US WHETHER THE A.O. CAN LEVIED PENALTY ON DIFFERENT REASON THAN TH E REASON GIVEN IN ASSESSMENT ORDER WHILE RECORDING SATISFACTION AND W HILE ISSUING SHOW CAUSE NOTICE. WE FIND FORCE IN THE SUBMISSION OF THE LEAR NED AUTHORISED REPRESENTATIVE THAT IN ASSESSMENT AS WELL AS IN SHO W CAUSE NOTICE IT WAS STATED THAT THE ASSESSEE HAS CONCEALED AND FURNISHE D INACCURATE PARTICULARS OF INCOME. THE RELEVANT ABSTRACT FROM NOTICE DATED 26. 04.2005 READS AS UNDER:- WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2003-2004 IT APPEARS TO ME THAT YOU HAVE FURNISHED THE INACCURATE PARTICULARS OF YOUR INCOME WITHIN THE MEANING OF SECTION 271(1)(C)OF THE INCOME TAX ACT, 1961. 12. IN PENALTY ORDER THE A.O. HAS LEVIED THE PENALT Y INVOKING PROVISION OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. THE OBSERVATION OF A.O. FROM PAGE 4 IS REPRODUCED AS BE LOW:- ITA NO.29/AGRA/2013 A.Y. 2003-04 7 IN THE REPLY FILED BY THE ASSESSEE, IT IS STATED TH AT NAME AND ADDRESSEES OF THE PARTIES FROM WHOM THE DRAFTS WERE RECEIVED, THE DEPOSITS IN THE BANK A/CS ARE VERIFIA BLE. ASSESSEES EXPLANATION IS NOT CORRECT AS COMPLETE POSTAL ADDRE SS HAD NEVER BEEN PROVIDED BY THE ASSESSEE. EVEN THE RELIANCE OF THE ASSESSEE ON THE DIRECTIONS OF ADDL. CIT U/S 144-A IS NOT COR RECT AS DIRECTIONS U/S 144A BY THE ADDL. CIT HAS NEITHER BE EN FOLLOWED BY THE A.O. NOR ANY WEIGHTAGE HAS BEEN GIVEN IN THE APPELLATE PROCEEDINGS. FROM THE COPIES OF ACCOUNTS FILED BEFO RE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AD VANCES STATED TO BE RECEIVED FROM FARMERS AS WELL AS VARIOUS DEPO SITS FOUND IN THE BANK ACCOUNTS COULD NOT BE PROVED, THEREFORE, E XPLANATION-1 TO SECTION 271(1)(C) OF THE I.T. ACT ARE CLEARLY AT TRACTED IN THIS CASE. 13. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF N EW SORATHIA ENGINEERING CO. VS. COMMISSIONER OF INCOME TAX, [20 06] 282 ITR 642 (GUJ) HELD THAT THE ORDER OF PENALTY MUST CLEARLY S TATE WHETHER IT IS FOR CONCEALMENT OR FOR FURNISHING OF INACCURATE PARTICU LARS. THE HONBLE RAJASHTHAN HIGH COURT IN THE CASE OF A DDL. COMMISSIONER OF INCOME TAX VS. KEJRIWAL IRON STORES , 168 ITR 715 HELD THAT COMMENCEMENT OF PENALTY PROCEEDINGS BY IT O ON A PARTICULAR GROUND, THE IAC CANNOT IMPOSE PENALTY ON DIFFERENT GROUNDS. 14. WE FOLLOW THE ABOVE JUDGMENTS AND IN THE LIGHT OF THE FACT, WE CANCEL THE PENALTY. WE SET ASIDE THE ORDER OF REVEN UE AUTHORITIES AND CANCEL THE DIRECTION OF CIT(A) FOR LEVYING THE PENA LTY BEING 100% OF ITA NO.29/AGRA/2013 A.Y. 2003-04 8 TAX OF RS.35,03,011/-. THE PENALTY LEVIED IN RESPEC T OF RS.35,03,011/- UNDER SECTION 271(1)(C) IS ACCORDINGLY CANCELED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCO UNTANT MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY