Shri Ashok J. Patel, Vadodara V. The ACIT, Circle-5, Baroda

ITA 3039/AHD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9828 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-10-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 30-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL R SHAH WITH MS KINJAL
• Keywords: Initiation of penalty proceedings
• Section: 43B; 143(3); 260A; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER A ND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI ASHOK J. PATEL, M/S. ASHOK TRAVELS, BEHIND JUBILEE BAUG, RAOPURA, BARODA PAN: AEMPP9161P (APPELLANT) VS THE ACIT, CIRCLE - 5, BARODA (RESPONDENT) REVENUE BY : S H RI PARSOON KABRA , SR. D . R. ASSESSEE BY: S H RI ANIL R. SHAH WITH MS KINJAL , A.R. DATE OF HEARING : 26 - 10 - 2 016 DATE OF PRONOUNCEMENT : 20 - 12 - 2 016 / ORDER P ER : AMAR JIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2006 - 07 , AR IS ES FROM ORDER OF THE CIT(A) - 3, VADODARA DATED 01 - 08 - 2015 IN APPEAL NO. CAB - 3/39/2014 - 15 , IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 3039 / A HD/20 15 A SSESSMENT YEAR 200 6 - 07 I.T.A NO. 3039 /AHD/20 15 A.Y. 2006 - 07 PAGE NO SHRI ASHOK J. PATEL VS. ACIT 2 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: - (1) THE LEARNED C.IT (A) ERRED THE CLAIMED EXEMPTED AS PER SERVICE - TAX OF THE APPELLANT THAT THE ORDER BY THE LEARNED A.O IS BAD IN LAW AS PER SAID ORDER HAS BEEN PASSING ORDER BY THE LEARNED APPE AL WHO IS HAS ORDER DATED ON 30 - 11 - 2009 WITHOUT PASSED APPELLANT EFFECT ORDER U/S 250 OF INCOME TAX ACT. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPELLANT SUBMITS THAT THE PENALTY ORDER U/S 271(1)(C) OF INCOME TAX ACT DATED ON 31 - 3 - 2011 BY THE A.C.I .T CIRCLE - 5 BARODA BAD IN LAW AND CANCELLED. (2) THE LEARNED C.IT (A) HAS ERRED IN CONFORMING PENALTY ORDER U/S 271(1)(C) OF THE INCOME TAX ACT OF RS. 1,13,430/ - FOR A.YR. 2006 - 07. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THAT PENALTY U/S 43 - B ON TRADIN G RECEIPT IS NOT APPLICABLE IN RESPECT OF EXEMPTED U/S 65 SUB SECTION 27 OF SERVICE - TAX IS NOT LIABLE FOR SERVICE AND SERVICE - TAX IS NOT LIABLE TO THE GOVT. AUTHORITY. THE LEARNED C.IT IS LEVIED PENALTY 'CONCEALED THE PARTICULARS OF ITS INCOME AND FURNISHE D INACCURATE PARTICULARS IS NOT JUSTIFIED'. (3) THE LEARNED C.IT (A) HAS WRONGLY CONCLUDE THAT PENALTY IS LEVIABLE FOR SERVICE - TAX PAYABLE ON WITHOUT DECIDING FOR EXEMPTED U/S 65 SUB SECTION 27 OF SERVICE - TAX ACT AND THE LIABILITY FOR THE TRADING RECEIPT S FOR EXEMPTED AMOUNT U/S 43 - B OF THE INCOME TAX ACT HAS NOT ACCRUED ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT SUBMITS THAT CONCLUSION LEARNED BY THE C.IT (A) IS ERRONEOUS. 4) THE C IT(A) WRONGLY CONCLUDE THAT RAISING A LEGAL PLEA WOULD NOT MAKE THE FALSE ONE WHEN THE FACTS ARE FULLY DISCLOSED IN THE ACCOUNTS MERE REJECTION CLAIM DOES NOT THAT THE FURNISHED INACCURATE INCOME WAS DISALLOWED THE CLAIMED AND IS FALSE BY THE APPELLANT. THE PENALTY US 271(1)(C) OF INCOME TAX ACT WAS ATTRACTED. THE PENALTY LEVIED U/S 271(1)(C) MAY KINDLY BE DELETED. (5) THE C.IT (A)'S WRONGLY CONCLUDED THAT THE APPELLANT MAKING A CLAIM HAS FURNISHED ALL MATERIALS FACTS AND EVIDENCE FOR CLAIM PRODUCED IN THE PROCEEDING. THE DISALLOWANCE HIS CLAIM CANNOT AUTOMATICALLY LEAD T O VIEW OF CONCEALMENT OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME TAXABLE FOR PENALTY U/S 271(1)(C) OF INCOME TAX ACT. THE APPELLANT THE PENALTY LEVIED U/S 271(1)(C) MAY KINDLY BE CANCELLED. I.T.A NO. 3039 /AHD/20 15 A.Y. 2006 - 07 PAGE NO SHRI ASHOK J. PATEL VS. ACIT 3 (6) THE CIT(A) WRONGLY CONCLUDED THAT WITHOUT CONSID ERING FACTS AND LAW IS NOT ALLOWED EXEMPTION FOR SERVICE TAX. THE LEARNED HAS NOT RECORDED SATISFACTION OF CONCEALMENT AS REQUIRED UNDER LAW AND RECORD COPY AS REQUIRED UNDER LAW AND RECORD COPY THEREOF IS NOT SUPPLIED RESULTING INTO LEVY OF PENALTY AS BAD - IN - LAW AND VOID. (7) THE CIT(A) WRONGLY CONCLUDED THAT ALL PARTICULARS NECESSARY WERE ON RECORD AND ALL INFORMATION WAS RECORDED AND ALL INFORMATION WAS FILED BEFORE ASSESSMENT PROCEEDINGS BEFORE AC1T CIRCLE - 5, BARODA AND ALSO GIVEN TO LEARNED C1T(A) - V, BARODA IN PAPER BOOK AND NOR ACCEPTANCE OF EXPLANATION OF THE APPELLANT IS NOT LIABLE TO PENALTY U/S. 271(1 )(C) OF THE ITACT,1961. 3. ALL THE ABOVE STATED GROUNDS OF APPEAL PERTAIN TO THE COMMON ISSUE OF LEVYING OF PENALTY U/S 271(1)(C) OF THE ACT , THE REFO RE, WE DECIDE THESE GROUNDS TOGETHER AS UNDER: - 4. THE FACT OF THE CASE IS THAT IN THIS CASE THE RETURN OF INCOME DECLARING INCOME OF RS. 13 , 23 , 260/ - WAS FILED ON 30 TH DECEMBER, 2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSI NG O FFICER NOTICED THAT ASSESSEE COLLECTED SERVICE TAX WORTH OF RS. 2 0, 21 , 750/ - OUT OF WHICH HE HAD PAID ONLY RS. 17 , 08 , 150/ - AGAINST THE LIABILITY. THE BALANCE AMOUNT OF RS. 3 , 12 , 959/ - WAS ADDED BACK TO THE INCOME OF THE ASSESSEE BY THE ASSESSING O FFICER STATIN G THAT THIS AMOUNT WAS STATUTORY DUE TO BE PAID BY DUE DATE OF FILING OF RETURN U/S. 43B . LD. COMMISSIONER OF INCOME TAX(A) HAS ALSO CONFIRM ED THIS ADDITION. I.T.A NO. 3039 /AHD/20 15 A.Y. 2006 - 07 PAGE NO SHRI ASHOK J. PATEL VS. ACIT 4 4.1 ON THE SECOND ISSUE , T HE ASSESSING O FFICER STATED THAT ASSESSEE HAS MADE FOLLOWING ADVANCE S TO THE RELATED PARTIES WITHOUT CHARGING ANY INTEREST : - (I). DILIP J. PATEL RS. 16,68,543/ - (II). R.R. MIRCHANDANI RS. 50,000/ - (III). VINODBHAI PATEL RS. 1,50,000/ - -------------------- TOTAL RS. 18,68,543/ - -------------- ------- IN THIS CONNECTION T HE ASSESSEE EXPLAINED TO THE ASSESSING OFFICER THAT SHRI DILIP J PATEL WAS HAVING CURRENT ACCOUNT BALANCE OF RS.25,69,842 AND DEBIT BALANCE OF PETROL PUMP ACCOUNT RS.823754/ AND FURTHER LOAN OF RS.16,68,544 WAS TAKEN FROM HDFC BANK FOR PURCHASE OF TWO TRUCKS. THE ASSESSING O FFICER STATED THAT THE PAYMEN T WAS MADE IN CARTING OF DILIP J. PATEL WHICH WAS NOT THE EXPENSES OF THE ASSESSEE. ACCORDINGLY, INTEREST DISALLOWANCES @ 12% O N RS. 18,68,543/ - WAS MADE AT RS . 2 ,24,2 25 AND ADD ED TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. COMMISSIONER OF INCOME TAX(A) HAS RESTRICTED THIS DISALLOWANC E TO RS. 24,000/ - STATING THAT THE LOAN AMOUNT RAISED FROM THE HDFC BY SHRI DILIP J PATEL CANNOT BE TREATED AS THE INTEREST FREE ADVANCE FROM THE ASSESSEE AGAINST THE CREDIT BALANCE IN THE CURRENT ACCOUNT. 4.2 T HE ASSESSING O FFICER HAS INITIATED PENALTY PROCEEDINGS ON INCOME OF RS.3,36,959(RS.312959+RS.24000) STATING THAT THE I.T.A NO. 3039 /AHD/20 15 A.Y. 2006 - 07 PAGE NO SHRI ASHOK J. PATEL VS. ACIT 5 ASSESSEE HAS FURNISHED INACCURATE PARTICULAR PARTICULARS OF INCO ME. T HEREAFTER THE ASSESSING OFFICER HAD LEVIED PENALTY OF RS. 1 , 13 , 430/ - U/S 271(1)(C) OF THE ACT. 5 . AGGRIEVED AG AINST THE PENALTY ORDER OF THE ASSESSING O FFICER, THE ASSESSEE HAS PREFERRED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) . THE LD. COM MISSIONER OF INCOME TAX(A) HAS SUSTAINED THE PENAL TY OF RS. 1 , 13 , 430/ - STATING AS UNDER: - 5. I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSIONS OF THE APPELLANT AND THE AO'S OBSERVATIONS. THE APPELLANT HAS FILED HIS GROUNDS OF APPEAL ALONG WITH FORM NO . 35 AND WHICH ARE REPRODUCED IN INITIAL PARAGRAPH OF THIS APPEAL ORDER, THE APPELLANT HAS FILED HIS GROUNDS OF APPEAL BOTH ON LEGAL AND FACTUAL GROUNDS AND ALL THE GROUNDS OF APPEAL ARE DEALT WITH TOGETHER AS UNDER: 5.1 THE APPELLANT AS PER GROUND OF APPE AL NO. 4 (I.E.. THE GROUND OF APPEAL NO. 4 WHICH IS ON LEGALITY OF THE ORDER) HAS STATED THAT THE AO HAS NOT 'RECORDED SATISFACTION OF CONCEALMENT' WHICH IS REQUIRED UNDER THE LAW AND IF THE SATISFACTION IS RECORDED, THE COPY THEREOF IS NOT SUPPLIED TO HIM AND THEREFORE THE LEVY OF PENALTY IS BAD IN LAW AND IS VOID. WITH REGARD TO THIS GROUND OF APPEAL, THE SUBMISSION OF THE APPELLANT AS REPRODUCED IN EARLIER PARAGRAPHS OF THIS APPEAL ORDER IS NOT FOUND TO BE TENABLE. THE AO IN THE PENALTY ORDER HAS MENTION ED THAT IN THE ASSESSMENT ORDER U/S 143(3) OF THE IT ACT IT HAS BEEN CLEARLY MENTIONED THAT THE PENALTY NOTICE IS ISSUED U/S 27I(L)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME THEREBY CONCEALING THE TAXABLE INCOME. AS PER THE AO THE PENALTY NOTIC E WAS SERVED ON THE APPELLANT. THE AO HAS PLACED THE RELIANCE ON THE CASE OF M. SAJJALRAJ NABAR & ORS VS. CIT (MAD) 23 ITR 230 AND NAINUMAL MET CHAND VS CIT (ALL) 294 ITR 185 AS PER WHICH MENTIONING THE WORDS 'PENALTY PROCEEDINGS INITIATED SEPARATELY' IN A SSESSMENT ORDER IS SUFFICIENT FOR INVOKING PENALTY ACTION. IN MY OPINION, THE AO HAS RECORDED HIS SATISFACTION IN THE ASSESSMENT ORDER U/S 143(3) FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1 )(C) BY MENTIONING THAT THE PENALTY NOTICES ISSUED U/S 271(1 )(C ) FOR FURNISHING OF INACCURATE PARTICULARS AND THEREBY CONCEALMENT OF TAXABLE INCOME. THE PENALTY NOTICE HAS BEEN SERVED ON THE APPELLANT. SO FAR AS SPECIFYING THE CHARGE FOR LEVY OF PENALTY IS I.T.A NO. 3039 /AHD/20 15 A.Y. 2006 - 07 PAGE NO SHRI ASHOK J. PATEL VS. ACIT 6 CONCERNED, IN THE ASSESSMENT ORDER THE A.O. HAS MENTIONED THAT THE PENALTY NOTICE IS ISSUED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALMENT OF PARTICULARS OF INCOME. THUS THE A.O. HAS MENTIONED IN THE ASSESSMENT ORDER 'FURNISHING OF INACCURATE PARTICULARS OF INCOME'. WHAT THE AO MEANS THAT BY FURNISHING INACCURATE PARTICULARS OF INCOME, THAT TRUE QUANTUM OF INCOME HAS NOT BEEN SHOWN OR HAS BEEN 'CONCEALED' BY THE APPELLANT AND THE QUANTUM OF INCOME CONCEALED IS THE INCOME IN RESPECT OF WHICH TAX WAS SOUGHT TO BE EVADED. THERE IS A DIFFERENCE BETWEEN 'CONCEALMENT OF INCOME' AND 'CONCEALMENT OF PARTICULARS OF INCOME'. THE FORMER IS A GENERAL EXPRESSION AND REFERS TO THE FAILURE TO RETURNING THE CORRECT INCOME AND THE LATER IS THE SPECIFIC C HARGE MENTIONED IN SECTION 271(1 )(C) AND REFERS TO THE, FAILURE TO PRODUCE FACTUAL MATERIAL ON T HE BASIS OF WHICH THE ASSESSING OFFICER CAN COMPUTE CORRECT INCOME. CONSIDERING ALL THESE FACTS, THE TECHNICAL GROUNDS AS RAISED BY THE APPELLANT ARE HEREBY REJECTED. THUS, THE GROUND OF APPEAL NO. 4 OF THE APPELLAN T IS DISMISSED. 5.2 AS PER GROUND OF APPEAL NO. 5 (I.E. GROUND OF APPEAL NO, 5 WHICH IS RAISED BY THE APPELLANT ON LEGALITY OF ORDER), THE SHOW - CAUSE NOTICE ISSUED BY THE AO ALONG WITH THE ASSESSMENT ORDER IS VAGUE, CAPABLE OF TWO VIEWS, NOT CERTAIN AS TO THE NATURE OF OFFENCE IF ANY AND SINCE SHOW CAUSE NOTICE GOES TO THE ROOT OF LEVY OF PENALTY, THE PENALTY LEVIED IS BAD IN LAW AND VOID. THE SUBMISSION OF THE APPELLANT ON THIS PARTICULAR GROUND OF APPEAL AS REPRODUCED IN EARLIER PARAGRAPHS OF THIS APPEAL ORDER IS NOT FOUND TO BE TENABLE AS THE SAME IS OF GENERAL NATURE AND NOT SPECIFIC. THE APPELLANT HAS NOT SPECIFICALLY EXPLAINED AS TO WHY THE SHOW CAUSE NOTICE ISSUED BY THE AO ALONG WITH THE ASSESSMENT ORDER IS VAGUE AND CAPABLE OF TWO VIEWS. THE APPELLA NT HAS NOT POINTED OUT ANY SPECIFIC MISTAKE IN THE SHOW CAUSE NOTICE WHICH COULD SUPPORT HIS ABOVE GROUND OF APPEAL. CONSIDERING THIS FACT, THE ABOVE PLEA OF THE APPELLANT IS REJECTED. 5.3 NOW CONNING TO THE MERITS OF THE CASE, THE APPELLANT AS PER GROUND OF APPEAL NO. 3 HAS STATED THAT THE AO HAS ERRED BOTH IN LAW AND IN FACTS IN LEVYING PEN ALTY OF RS. 1,13,430/ - U/S 271(1 )(C) OF THE ACT. IN THIS REGARD, THE FINDINGS OF THE AO AS GIVEN IN THE ASSESSMENT ORDER AS WELL AS SUBMISSION OF THE APPELLANT AS REPRO DUCED IN EARLIER PARAGRAPHS OF THIS APPEAL ORDER HAVE BEEN CONSIDERED. THE AO IN THE ASSESSMENT ORDER HAS MENTIONED THAT THE APPELLANT HAD COLLECTED SERVICE TAX WORTH RS. 20,21,750/ - . AS PER THE AO, HOWEVER THE APPELLANT PAID ONLY 17,08,150/ - AGAINST THE LI ABILITY AND THEREFORE AS PER SECTION 43B THE AMOUNT ONLY TO THE EXTENT OF RS. 17,08,ISO/ - WAS ALLOWABLE AND THE REMAINING AMOUNT OF RS. 3,36,959/ - WAS I.T.A NO. 3039 /AHD/20 15 A.Y. 2006 - 07 PAGE NO SHRI ASHOK J. PATEL VS. ACIT 7 REQUIRED TO BE ADDED BACK TO THE TOTAL INCOME OF THE APPELLANT. AS PER THE AO, THE APPELLANT HAD NOT ADDE D BACK THIS DIFFERENCE OF AMOUNT OF SERVICE TAX I.E. THE DIFFERENCE BETWEEN SERVICE TAX COLLECTED; AND SERVICE TAX DEPOSITED TO GOVERNMENT ACCOUNTS. AS PER THE AO THE APPELLANT SHOULD HAVE SHOWN THIS DIFFERENCE AMOUNT OF RS. 3,36,959/ - AS HIS INCOME FOR TH E YEAR UNDER CONSIDERATION. AS PER THE AO THE ARGUMENT OF THE APPELLANT THAT SERVICE TAX IS NOT A PART OF TRADING ACCOUNT BUT IS PART OF P&L ACCOUNT WAS NOT TENABLE BECAUSE SECTION 145A TALKS ABOUT METHOD OF ACCOUNTING IN CERTAIN CASES. IN VIEW OF THESE FA CTS, THE AO HAS LEVIED THE PENALTY OF RS. 1,13,4307 - BEING 100% OF THE TAX SOUGHT TO BE EVADED ON INCOME OF RS. 3,36,959/ - FOR FILING OF INACCURATE PARTICULARS OF INCOME. WHILE LEVYING THE PENALTY THE AO HAS RELIED UPON DECISION OF HON'BLE HIGH COURT OF BO MBAY IN THE CASE OF CIT VS BASSEIN METALS PVT. LTD., 263 ITR 518. IN MY OPINION, THE AO HAS CORRECTLY LEVIED THE PENALTY OF RS. 1,13,430/ - U/S 271(L)(C) OF THE IT ACT. THE SUBMISSION OF THE APPELLANT ON THIS ISSUE IS NOT FOUND TO BE TENABLE. THE FACT IS TH AT THE APPELLANT HAD COLLECTED TOTAL SERVICE TAX OF RS. 20,21,750/ - AND OUT OF WHICH HE HAD PAID ONLY AN AMOUNT OF RS. 17,08,15Q/ - AND THUS THE REMAINING AMOUNT OF RS. 3,36,959/ - WAS STILT LYING WITH THE APPELLANT. THIS AMOUNT WAS NOT CREDITED BY THE APPEL LANT TO THE PROFIT & LOSS ACCOUNT. THE PROVISIONS OF SECTION 271(L)(C) OF THE IT ACT ARE ATTRACTED IN THE CASE OF APPELLANT IN CASE IF HE HAD COLLECTED SERVICE TAX AND HAS FAILED TO PAY THE SAME TO THE GOVERNMENT ACCOUNT AND SUCH AMOUNT OF SERVICE TAX HAS ALSO NOT BEEN CREDITED TO THE P&.L ACCOUNT. IN MY OPINION, THE AO HAS CORRECTLY RELIED UPON DECISION OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS BASSEIN METALS PVT. LTD., 263 ITR 518. THE RELEVANT PART OF DECISION OF HON'BLE HIGH COURT OF BOMBAY IS REPRODUCED HEREUNDER FOR REFERENCE: '2. ASSESSES IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS TO MANUFACTURE OF NON - FERROUS ALLOYS. DURING THE' COURSE OF A SSESSMENT, THE ASSESSING OFFICER NOTICED THAT AN AMOUNT OF RS. 9,90,953 WAS COLLECTED BY THE ASSESSEE. HOWEVER, IT WAS NOT CREDITED TO P&L A/C. IN REPLY TO A QUERY, THE ASSESSEE SUBMITTED THAT IT HAD MAINTAINED A SEPARATE ACCOUNT FOR SALES - TAX COLLECTED AND THEREFORE, RS. 9,90,953 WAS NOT CREDITED TO P&L A/C. IT WAS FURTHER ARGUED BY THE ASSES SEE THAT BY MAINTAINING SEPARATE ACCOUNT FBR SALES - TAX COLLECTED THE P&L A/C WAS NOT AFFECTED. THIS ARGUMENT OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER WHO MADE AN ADDITION OF RS. 9,90,953. BASED ON THIS ADDITION, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C), CONSEQUENTLY, THE ASSESSING OFFICER LEVIED THE MINIMUM PENALTY OF I.T.A NO. 3039 /AHD/20 15 A.Y. 2006 - 07 PAGE NO SHRI ASHOK J. PATEL VS. ACIT 8 RS. 5,69,796. WHEN THE MATTER CAME BEFORE THE TRIBUNAL, IT TOOK THE VIEW THAT IN THE CASE OF ALLIED MOTORS (P.) LTD. V. CIT [19971224 ITR 677 1 ( SC), ONE OF THE ISSUES WAS WHETHER SALES TAX COLLECTED DURING A PARTICULAR ACCOUNTING PERIOD WOULD BE A TRADING RECEIPT EVEN THOUGH THE ASSESSEE MAINTAINS A SEPARATE ACCOUNT FOR THE SAME WITHOUT CREDITING THE SAME TO P&L A/C. THE TRIBUNAL TOOK THE VIEW THA T THIS WAS A DISPUTED POINT AND IN THE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSEE HAD CONCEALED THE INCOME OR HAD FURNISHED INACCURATE PARTICULARS. CONSEQUENTLY, THE PENALTY WAS SET ASIDE. BEING AGGRIEVED THE DEPARTMENT HAS FILED THIS APPEAL UNDER SECTION 260A OF THE INCOME - TAX ACT ARGUMENTS 3. MR. R.V. DESAI, LEARNED SENIOR COUNSEL APPEARING ON BEHALF OF THE DEPARTMENT CONTENDED THAT THE JUDGMENT OF THE SUPREME COURT IN ALLIED MOTORS (P.) LTD. 'S CASE (SUPRA) HAD NO APPLICATION TO THE FACTS OF THI S CASE. SECONDLY, HE CONTENDED THAT IN THIS CASE, SECTION 43B OF THE INCOME - TAX ACT, WHICH WAS THE SUBJECT - MATTER OF THE JUDGMENT IN ALLIED MOTORS (P.) LTD. 'S CASE (SUPRA) DID NOT APPLY TO THE FACTS OF THIS CASE AS IN THIS CASE, THE ASSESSEE HAD CONCEALED THE TRADING RECEIPT AND IT WAS NOT A CASE OF DISALLOWANCE UNDER SECTION 43B, BUT IT WAS A CASE OF CONCEALMENT OF TRADING RECEIPT. AS STATED ABOVE, NONE APPEARED FOR THE ASSESSEE THOUGH SERVED. FINDINGS 4. WE FIND MERIT IN THIS APPEAL. FIRSTLY, SECTION 43B OF T HE INCOME - TAX ACT DEALS WITH DISALLOWANCE. THAT SECTION HAS NO APPLICATION TO THE PRESENT CASE. IN THE PRESENT CASE THE ASSESSEE, HAVING COLLECTED SALES - TAX, FAILED TO PAY THE SAME. SECONDLY, IN THE CASE OF ALLIED MOTORS (P.) LTD. (SUPRA), THE FACTS W ERE AS FOLLOWS. FOR THE ASSESSMENT YEAR 1984 - 85, THE ASSESSEE FILED THE RETURN, DECLARING AN INCOME OF RS. 1.91 LAKHS. THE I TO DISALLOWED DEDUCTION OF RS. 5.78 LAKHS, WHICH WAS ON ACCOUNT OF SALES - TAX COLLECTED BY THE ASSESSEE FOR THE LAST QUARTER OF THE R ELEVANT ACCOUNTING YEAR ENDING 30TH JUNE, 1983. THE AMOUNT WAS PAYABLE WITHIN 30 DAYS FROM END OF THE QUARTER. THE DEDUCTION CLAIMED BY THE ASSESSES WAS DISALLOWED UNDER SECTION 43B, WHICH WAS INSERTED IN THE STATUTE W.E.F. 1ST APRIL, 1984. THE ASSESSEE FI LED AN APPEAL TO THE CIT(A) AGAINST THE DISALLOWANCE. THAT APPEAL WAS DISMISSED. THE TRIBUNAL ALSO DISMISSED THE APPEAL FOLLOWING THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF SANGHI MOTORS V. UNION OF INDIA [1991] 187JTR 703 2 AND ESCORTS LTD. V. UNI ON OF INDIA [19911 189 ITR 81 1 . IT WAS I.T.A NO. 3039 /AHD/20 15 A.Y. 2006 - 07 PAGE NO SHRI ASHOK J. PATEL VS. ACIT 9 HELD BY THE SUPREME COURT THAT IN VIEW OF THE PROVISO TO SECTION 43B OF THE INCOME - TAX ACT, AND SUM PAYABLE BY WAY OF TAX OR DUTY, ETC., LIABILITY FOR WHICH WAS INCURRED IN THE PREVIOUS YEAR, WAS ALLOWABLE AS DEDUCTIO N IF IT WAS ACTUALLY PAID BY THE DUE DATE OF FILING THE RETURNS UNDER SECTION 139(1) OF THE INCOME - TAX ACT THE SUPREME COURT FOUND, ON FACTS, THAT THE ASSESSEE HAD ACTUALLY PAID THE TAX COLLECTED BEFORE THE DUE DATE OF FURNISHING THE RETURNS UNDER SECTION 139(1) OF THE INCOME - TAX ACT THIS FACT IS VERY IMPORTANT IN THE PRESENT CASE, THE SAID PROVISO TO SECTION 43B IS NOT APPLICABLE AS THE ASSESSEE HAS NOT PAID THE TAX BEFORE THE DUE DATE. IN THE CIRCUMSTANCES, THE JUDGMENT OF THE SUPREME COURT IN ALLIED MOTO RS (P.) LTD. 'S CASE (SUPRA) HAS NO APPLICATION. IN THE PRESENT CASE, THE ASSESSEE HAD CONCEALED THE TRADING RECEIPT . THERE WAS NO QUESTION OF DISALLOWANCE. THERE WAS NO QUESTION OF APPLICABILITY OF SECTION 43B. ON FACTS SECTION 271(1)(C) WAS APPLICABLE. 5. ACCORDINGLY, WE ANSWER THE FOLLOWING QUESTION: QUESTION : 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN DELETING THE PENALTY OF RS. 5,69,798 LEVIED UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT, 1961, BY THE ASSESSING OFFIC ER AND SUSTAINED BY THE CIT(A) I N RESPECT OF AN AMOUNT OF SALES - TAX OF RS. 9,90,953 COLLECTED BY THE ASSESSEE BUT NOT CREDITED TO THE P&L A/C AS THE ASSESSEE HAD MAINTAINED A SEPARATE ACCOUNTING FOR SALES - TAX COLLECTED AND THUS CONCEALE D THE PARTICULARS OF ITS INCOME AND FURNISHED INACCURATE PARTICULARS ?,' ANSWER 6. FOR THE REASONS GIVEN HEREINABOVE, WE ANSWER THE ABOVE QUESTION IN THE NEGATIVE, I.E., IN FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSEE. 7. ACCORDINGLY THE APPEAL IS ALLOWED. NO ORDER AS TO COSTS.' 5.4 IN VIEW OF THE FACTS AS DISCUSSED IN PRECEDING PARAGRAPHS AND ALSO IN VIEW OF THE ABOVE DECISION OF HON'BLE BOMBAY HIGH COURT AS GIVEN IN THE CASE OF CIT VS BASSEIN METALS PVT. LTD. THE PENALTY OF RS. 1,13,430/ - AS LEVI ED BY THE AO U/S 271(1)(C) IS HEREBY CONFIRMED. THUS, THE GROUNDS OF APPEAL OF THE APPELLANT ARE DISMISSED. I.T.A NO. 3039 /AHD/20 15 A.Y. 2006 - 07 PAGE NO SHRI ASHOK J. PATEL VS. ACIT 10 6 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LEARNED COUNSEL CONTENDED THAT THE LD . COMMISSIONER OF INCOME TAX(A) HAS ERRED IN CONFIRM ING THE PENALTY U/S. 271(1)(C) .HE FURTHER CONTENDED THAT THE ASSESSEE HAD FULLY DISCLOSED ALL THE FACTS IN THE ACCOUNTS . THE ASSESSING OFFICER HAD LEVIED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME MERELY BY R EJECTING THE CLAIM OF THE ASSESSEE. HE FURTHER CONTENDED THAT DISALLOWANCE OF CLAIM CANNOT AUTOMATICALLY LEAD TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME. 6.1 ON THE OTHER HAND , THE LD. DR RELIED ON THE ORDER OF THE LD.CIT (A ). 7. WE HAVE HEARD BOTH THE SIDES AND THE PERUSED THE MATERIAL ON RECORD CAREFULLY. WE FIND THAT ASSESSING OFFICER HAS QUESTIONED THE ASSESSEE REGARDING THE SERVICE TAX LIABILITY REFLECTED IN THE BALANCE SHEET. IN THIS CONNECTION THE ASSESEE HAD EXPLAINE D THAT THE TOTAL SERVICE TAX CREDITED WAS RS.20,21,750 AGAINST WHICH THE AMOUNT OF RS.17,08,150 WAS PAID. HE FURTHER EXPLAINED THAT THE BALANCE UNPAID AMOUNT OF RS.3,04,834 CONSISTED OF RS.2,35,437 EXEM P TED U/S 65 SUB - SECTION 27 OF SERVICE TAX AND THE REMAINING AMOUNT OF RS.69,397WAS PAYABLE BY THE GAS AUTHORI T Y OF INDIA . WE NOTICED THAT THE ASSESSEE HAD EXPLAINED HIS CLAIM AND THE NATURE OF THESE TRANSACTION WITH SUPPORTING DETAILS. WE ALSO OBSERVED THAT ALL THE FACTS WERE FULLY DISCLOSED AND APPAREN TLY THERE WAS NO CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. WE FIND I.T.A NO. 3039 /AHD/20 15 A.Y. 2006 - 07 PAGE NO SHRI ASHOK J. PATEL VS. ACIT 11 THAT IN THIS CASE ASSESSEE HA D DISCLOSED ALL THE PARTICULARS OF SERVICE TAX PAID/ PAYABLE AND DETAILED OF LOAN TRANSACTIONS CARRIED WITH RELATED PARTIES . THE ASSESSING OFFICER HAD FAILED TO SUBSTANTIATE HIS FINDINGS WITH SUPPORTING MATERIAL AND EVIDENCES TO PROVE THAT T HERE WAS CONCEALMENT OF PARTICULAR OF INCOME IN THE CASE OF ASSESSEE. 7.1 IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE CONSIDERED THAT LD. COM MISSIONER OF INCOME TAX(A) IS NOT JUSTIFIED IN SUSTAI NING THE PENALTY LEVIED BY THE ASSESSING O FFICER , THEREFORE, WE A LLOW THE APPEAL OF THE ASSESSEE. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 20 - 12 - 201 6 SD/ - SD/ - ( S.S. G ODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 20 /12 /2016 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,