M/s Santosh Associates., Belgaum V. Income Tax Officer, Ward-1, Gokak., Gokak

ITA 308/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93554 (ITAT-PANAJI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-07-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 05-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BALAKRISHNA
• Assessee Lawyers: NONEWRITTEN SUBMISSION
• Keywords: Bonafide belief; Wrong claim
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN , HONBLE JUDICIAL MEMBER ITA NO. 307 /PNJ/201 4 (ASST. YEAR : 200 2 - 0 3 ) M/S. AMARNATH ASSOCIATES, LAXMI NIVAS, FALLS ROAD, GOKAK, DIST. BELGAUM. VS. ITO , WARD - 1, GOKAK. PAN NO. AAAAA 4155 D (APPELLANT) (RESPONDENT) ITA NO. 308/PNJ/2014 (ASST. YEAR : 200 2 - 0 3 ) M/S. SANTOSH ASSOCIATES, LAXMI NIVAS, FALLS ROAD, GOKAK, DIST. BELGAUM. VS. ITO, WARD - 1, GOKAK. PAN NO. AA BAS 3007 K (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE(WRITTEN SUBMISSION) DEPARTMENT BY : SHRI B. BALAKRISHNA - D.R. DATE OF HEARING : 0 8 / 0 7 /2015 . DATE OF PRONOUNCEMENT : 08 / 0 7 /201 5 . O R D E R 2 ITA NO. 307 & 308 /PNJ/2014 PER N.S. SAINI : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) , BELGAUM DATED 21/07/2014 . 2. IN BOTH THESE APPEALS, COMMON ISSUE IS INVOLVED AND BOTH THE PARTIES SUBMITTED THAT THE ARGUMENTS MADE IN THE CASE OF M/S.AMARNATH ASSOCIATES MAY BE TAKEN AS THE ARGUMENTS MADE IN THE CASE OF M/S. SANTOSH ASSOCIATES AS WELL AS THE FACTS ARE IDENTICAL IN BOTH THE CASES. 3. THE SOLE GROUND OF APPEAL TAKEN IN BOTH THESE APPEALS IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY U/S. 271(1)(C) OF THE I NCOME TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS THE 'ACT', FOR SHORT ] OF RS. 4,13,245/ - IN THE CASE OF M /S.AMARNATH ASSOCIATES AND RS. 7,13,592/ - IN THE CASE OF M/S.SANTOSH ASSOCIATES . 4 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD . IN THE INSTANT CASE, PENALTY U/S. 271(1)(C) OF THE ACT OF RS. 4,13,245/ - IN THE CASE OF M/S.AMARNATH ASSOCIATES AND RS. 7,13,592/ - IN THE CASE OF M/S.SANTOSH 3 ITA NO. 307 & 308 /PNJ/2014 ASSOCIATES WAS LEVIED BY THE ASSESSING OFFICER ON THE GROUND THAT THE INCOME AND EXPENDITURE ACCOUNT FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME FOR THE YEAR ENDED 31/03/20 02 , THE ASSESSEE HAD CLAIMED THE ENTIRE NET INCOME OF RS. 19,49,910/ - IN THE CASE OF M/S.AMARNATH ASSOCIATES AND RS. 35,21,920/ - IN THE CASE OF M/S.SANTOSH ASSOCIATES FROM SALE OF JA GGERY AND OTHER AGRICULTURE PRODUCE AS AGRICULTUR AL INCOME EXEMPT TAX U/S. 10(1) OF THE ACT. 5. ON APPEAL , THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING THAT IF THE ASSESSING OFFICER HAD NOT APPLIED HIS MIND ON THE ISSUE OF WRONG CLAIM OF BU SINESS INCOME FROM SALE OF JIGGERY AS AGRICULTURAL INCOME, THE CONCEALMENT ON THE PART OF THE ASSESSEE WOULD NOT HAVE BEEN DETECTED AND THE ASSESSEE WOULD HAVE GOT AWAY WITH THE CONCEALMENT OF INCOME. 6. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE M/S. AMARNATH ASSOCIATES HOLDS 13.33 ACRES OF AGRICULTURAL LAND IN GOKAK TALUKA BELGAUM D ISTRICT AND THAT M/S. SANTOSH ASSOCIATES HOLDS 32 ACRES AND 30 GUNTAS OF AGRICULTURAL LAND IN GOKAK TALUKA BELGAUM DISTRICT . DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CULTIVATED SUGAR CA N E, SOYA BEANS AND VEGETABLES ON THE SAID LAND . THE CONTENTION OF THE 4 ITA NO. 307 & 308 /PNJ/2014 ASSESSEE IS THAT IT HAD PROCESSED THE CULTIVATION OF SUGAR CROP INTO JIGGERY DUE TO NON - AVAILABILITY OF MARKET FOR SUGAR CA N E AND FROM THE SAID PROCESS M/S. AMARNATH ASSOCIATES GENERATED THE INCOME FROM SALE OF JA GGERY OF RS. 24,43,765/ - AND DECLARED THE TOTAL AGRICULTURE INCOME OF RS. 19,49,910/ - AFTER CLAIMING NECESSARY EXPENDITURE. SIMILARLY, THE ASSESSEE M/S. SANTOSH ASSOCIATES FROM THE SAID PROCESS GENERATED THE INCOME FROM SALE OF JAGGERY OF RS. 45,04,000/ - AND DECLARED THE TOTAL AGRICULTURE INCOME OF RS. 35,21,920/ - AFTER CLAIMING NECESSARY EXPENDITURE. T HE ASSESSEE RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) HAS SUBMITTED THAT A MERE MAKING OF THE CLAIM , WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE . S UCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PARTICULARS. THEREFORE , IT IS THE CONTENTION OF THE ASSESSEE THAT LEVY OF PENALTY WAS NOT JUSTIFIED AND SHOULD BE DELETED . 7. ON THE OTHER HAND , LEARNED DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 8. WE FIND THAT IT IS NOT IN DISPUTE THAT FROM THE COPY OF STATEMENT OF ACCOUNTS FILED BY THE ASSESSEE WITH THE RETURN OF INCOME FOR THE 5 ITA NO. 307 & 308 /PNJ/2014 A.Y. 2002 - 03 , THE ASSESSING OFFICER CAME TO KNOW THAT THE ASSESSEE HAS SHOWN RECEIPT OF RS. 45,04,000/ - FROM SALE OF JAGGERY AND JAGGERY PREPARATION EXPENSES OF RS. 8,12,000/ - IN THE CASE OF SANTOSH ASSOCIATES AND RECEIPT OF RS. 24,43,765/ - FROM SALE OF JAGGERY AND JA GGERY PREPARATION EXPENSES OF RS. 3,90,290/ - IN THE CASE OF M/S. SANTOSH ASSOCIATES AND NET INCOME WAS SHOWN AT RS. 35,21,920/ - BY M/S. SANTOSH ASSOCIATES AND AT RS. 19,49,910/ - BY M/S. AMARNATH ASSOCIATES WHICH WAS CLAIMED AS AGRICULTUR E INCOME EXEMPT FROM TAX UNDER THE PROVISIONS OF SEC. 10 (1) OF THE ACT. THUS, ON THE ABOVE STATED FACTS IT CANNOT BE SAID THAT THE ASSESSEE HAD EITHER CONCEALED THE PARTICULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HAS HELD AS UNDER: - A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 8.1 . IN THE INSTANT CASE , THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT AS IT HAS GROWN SUGAR CANE AND AFTER THAT CONVERT ING INTO JAGGERY SOLD THE SAME IN THE MARKET. THE SALE PROCEEDS WAS AGRICULTURE INCOME AND NOT LIABLE TO TAX AND ACCORDINGLY , HAD CLAIMED THE SAME IN THE RETURN 6 ITA NO. 307 & 308 /PNJ/2014 OF INCOME. THEREFORE, IN VIEW OF THE ABOVE QUOTED DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUC TS PVT. LTD. (SUPRA) , WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS NOT ASS ESSA BLE TO LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. WE, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE LEVY OF PENALTY OF RS. 4,13,245/ - IN THE CASE OF M/S. AMARNATH ASSOCIATES AND RS. 7,13,592/ - IN THE CASE OF M/S. SANTOSH ASSOCIATES AND THE GROUNDS OF APPEAL OF ASSESSEE IN BOTH THE CASES IS ALLOWED. 9. I N THE RESULT, APPEAL S OF THE ASSESSEES ARE ALLOWED. ( ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY, THE 08 T H DAY OF JULY , 201 5 AT GOA ). S D / - S D / - ( GEORGE MATHAN ) ( N.S.SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 0 8 T H JU LY , 201 5 . VR/ - COPY TO: 1 . THE APPELLANT A) M/S. AMARNATH ASSOCIATES B) M/S. SANTOSH ASSOCIATES 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER 7 ITA NO. 307 & 308 /PNJ/2014 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 0 8 .0 7 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 08 .07 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 08 /07 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 08 /0 7 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 08 /07 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 08 /0 7 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 0 9 /07 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER