M/s. Gulmohar Embroideries Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(3), Surat

ITA 313/AHD/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6151 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-04-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 02-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL
• Keywords: Unexplained investment; Business income; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO.313/AHD/2012 (ASSESSMENT YEAR:2005-06) M/S. GULMOHAR EMBROIDERIES PVT. LTD., PLOT NO. A-1/14, HAUZIWALA INDUSTRIAL ESTATE, SACHIN UDYOG NAGAR, SACHIN, SURAT 394230 APPELLANT VS. THE INCOME TAX OFFICER, WARD 1(3), SURAT R ESPONDENT PAN: AACCG1630R /BY ASSESSEE : WRITTEN SUBMISSION /BY REVENUE : SHRI S. L. CHANDEL, SR. D.R. /DATE OF HEARING : 25.04.2017 /DATE OF PRONOUNCEMENT : 26.04.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2005-06 ARISES AGAINST THE CIT(A)-I, SURATS ORDER DATED 18.11.2011, IN APPEAL NO. CAS-I/113/2011-12, AFFIRMING ASSESSING OFFICERS ACTION IMPOSING PENAL TY OF RS.2,38,520/- IN ITA NO. 313/AHD/2012 (M/S. GULMOHAR EMBROIDERIES PV T. LTD. VS. ITO) A.Y. 2005-06 - 2 - ORDER DATED 23.03.2010, IN PROCEEDINGS U/S.271(1)(C ) OF THE INCOME TAX ACT, 1961, IN SHORT THE ACT. CASE CALLED TWICE. NONE APPEARS AT ASSESSEES BEHE ST. THIS CASE FILE INDICATES THAT THE ASSESSEE HAS PLACED ON RECORD WR ITTEN SUBMISSIONS. WE THEREFORE TAKE UP THE INSTANT APPEAL FOR ADJUDICATI ON ON MERITS. 2. IT EMERGES FROM THE CASE RECORDS THAT THE IMPUGN ED PENALTY PERTAINS TO TWO ADDITIONS OF UNEXPLAINED INVESTMENT IN LAND OF RS.6,57,595/- AND INTEREST INCOME ON FDRS OF RS.23,888/-; RESPECTIVELY. THE A SSESSING OFFICER HAS MADE THE FORMER ADDITION TO THE TUNE OF RS.10,72,20 0/- AFTER MAKING A REFERENCE TO THE DVO, BARODA U/S.142A OF THE ACT. THE SAID VALUATION REPORT VALUED THE ASSESSEES LAND SOLD TO BE OF RS.18,03,0 00/- INSTEAD OF THAT EARLIER DECLARED IN THE SALE DEED DATED 25.06.2004 AMOUNTIN G TO RS.7,30,800/-. THE CIT(A) REDUCED THIS FORMER QUANTUM ADDITION FROM RS .10,72,200/- TO RS.6,57,595/- IN QUANTUM LOWER APPELLATE ORDER DATE D 28.11.2008. THE REVENUE AS WELL AS ASSESSEE PREFERRED ITA NO.300/AH D/2009 AND CROSS OBJECTION NO. 56/AHD/2009 BEFORE THIS TRIBUNAL WHER EIN A CO-ORDINATE BENCH FIND NO MERIT IN ITS ORDER DATED 28.12.2012. WE C OME TO LATTER QUANTUM ADDITION OF INTEREST INCOME OF FDR OF RS.23,888/-. THE ASSESSEES CASE THEREIN WAS THAT THE SAID FDRS ACCRUED INTEREST OF RS.14,858/- WITH SUTEX CO- OPERATIVE BANK AND RS.9030/- WITH KARUR VYSYA BANK; RESPECTIVELY DESERVED TO BE TREATED AS ITS BUSINESS INCOME INSTEAD OF INC OME FROM OTHER SOURCES SINCE THE SAME WERE MADE UNDER THE EPCG SCHEME FOR IMPORT OF MACHINERIES. AND ALSO THAT THIS INTEREST INCOME WA S TO BE ADJUSTED AGAINST PRE-OPERATIVE EXPENSES WHICH WAS PENDING FOR ALLOCA TION HEAD. THE ASSESSING OFFICER AS WELL AS CIT(A) REJECTED THE SA ME IN THEIR RESPECTIVE QUANTUM ORDERS. THE ASSESSEE DID NOT RAISE ANY GRI EVANCE IN ITS ABOVESTATED CROSS OBJECTION. QUANTUM PROCEEDINGS ACCORDINGLY A TTAINED FINALITY. ITA NO. 313/AHD/2012 (M/S. GULMOHAR EMBROIDERIES PV T. LTD. VS. ITO) A.Y. 2005-06 - 3 - 3. WE NOW COME TO THE IMPUGNED PENALTY PROCEEDINGS. THE ASSESSING OFFICER OBSERVED IN HIS PENALTY ORDER DATED 23.03.2 010 THAT THE ABOVE TWO ADDITIONS OF UNEXPLAINED INVESTMENT AND INTEREST IN COME ON FDRS MADE IN COURSE OF QUANTUM PROCEEDINGS AMOUNTED TO AN INSTAN CE OF FURNISHING OF INACCURATE PARTICULARS AS WELL AS CONCEALMENT OF IN COME. HE THUS IMPOSED THE IMPUGNED PENALTY OF RS.238520/- AS AFFIRMED IN LOWER APPELLATE ORDER. 4. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E STRONGLY SUPPORTING THE IMPUGNED PENALTY AS IMPOSED IN BOTH THE LOWER PROCEEDINGS. ASSESSEES WRITTEN SUBMISSIONS FORMING PART OF THE CASE FILE ALSO STAND PERUSED. WE NOTICE AT THE OUTSET THAT THE LD. CIT( A)S ORDER AFFIRMING THE PENALTY IN QUESTION IS VERY MUCH A NON SPEAKING ONE WITHOUT DISCUSSING THE ISSUE INVOLVED AT ALL. WE OBSERVE ON MERITS IN THE LIGHT OF ABOVE NARRATED FACTS THAT THERE IS NO EVIDENCE AT ALL SUGGESTING T HE ASSESSEE WHO HAVE ACTUALLY MADE THE IMPUGNED INVESTMENT RESULTING IN QUANTUM A DDITION OF RS.6,57,595/- (SUPRA). IT IS RATHER A CASE WHEREIN THE ASSESSING OFFICER INVOKED HIS REFERENCE POWER U/S.142A OF THE ACT. T HE DVO THEREAFTER DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY SO LD TO BE MORE THAN THAT STATED IN THE SALE DEED TO THE EXTENT OF RS.10,72,2 00/-. WE SOUGHT TO KNOW FROM LEARNED DEPARTMENTAL REPRESENTATIVE ABOUT ANY FACTUAL EVIDENCE EVEN REMOTELY INDICATING SUCH AN AMOUNT TO HAVE BEEN ACT UALLY PAID. HE FAILED TO REFER TO ANY DOCUMENT IN THE CASE FILE IN THIS CONT EXT. EVEN COMING TO LATTER ISSUE OF INTEREST INCOME ON FDRS, THE ASSESSEE HAD KEPT THE ALLOCATION HAD THEREOF AS PENDING WHEREIN IT HAD CLAIMED THE SAME TO BE BUSINESS INCOME ON THE GROUND THAT IT HAD INVESTED IN ABOVE FIX DEPOSI TS UNDER THE EPCG SCHEME (SUPRA). IT IS THEREFORE APPARENT THAT THE ABOVE T WO QUANTUM ADDITIONS ARE NEITHER FURNISHING OF INACCURATE PARTICULARS OF INC OME NOR CONCEALMENT OF INCOME SO AS TO ATTRACT THE IMPUGNED PENAL PROVISIO N U/S.271(1)(C) OF THE ACT. ITA NO. 313/AHD/2012 (M/S. GULMOHAR EMBROIDERIES PV T. LTD. VS. ITO) A.Y. 2005-06 - 4 - THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO DE LETE A PENALTY IN QUESTION OF RS.2,38,520/-. 5. THE ASSESSEE SUCCEEDS IN ITS INSTANT APPEAL. [PRONOUNCED IN THE OPEN COURT ON THIS THE 26 TH DAY OF APRIL, 2017.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIA L MEMBER AHMEDABAD: DATED 26/04/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0