The ACIT, Circle-4, Baroda V. M/s. Rinki Petrochem Pvt.Ltd., Baroda

ITA 314/AHD/2009

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89414 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-03-2015
• Assessment Year: 1988-1989
• Appeal Filed On: 30-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: J P SHAH
• Keywords: Bogus purchase; Question of law; Reasonable cause

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 00 , ! ' #$, % & BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ ITA NO. 314/AHD/2009 % ) *)/ ASSESSMENT YEAR: 1988-89 DCIT, CIR.4 BARODA. VS M/S.RINKI PETROCHEM P. LTD. 67, RACE COURSE CIRCLE BARODA. +, / (APPELLANT) -. +, / (RESPONDENT) REVENUE BY : SMT.SONIA KUMAR, SR.DR ASSESSEE(S) BY : SHRI J.P. SHAH, AR / DATE OF HEARING : 05/05/2015 / DATE OF PRONOUNCEMENT: 13/05/2015 // O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER O F INCOME-TAX (APPEALS)-III, BARODA DATED 4.11.2008. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE I S THAT THE CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY UNDE R SECTION 271(1)(C) OF THE ACT ON BOGUS PURCHASE AMOUNTING TO RS.28,09, 012/- AND PROFIT FROM UNACCOUNTED SALES OF RS.36,67,950/-. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT OF R S.41,21,992/- WAS LEVIED BY THE AO. THE SAID PENALTY ON APPEAL WAS D ELETED BY THE CIT(A) ON THE GROUND THAT THE ADDITION IN RESPECT OF THE P ENALTY WAS IMPOSED, INVOLVED SUBSTANTIAL QUESTION OF LAW, AND THEREFORE , DEBATABLE. ITA NO.314/AHD/2009 2 4. WE FIND THAT IN THE INSTANT CASE, THE AO LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT AS UNDER: 10. IN VIEW OF THE ABOVE FACTS OF THE CASE, I AM S ATISFIED THAT THE ASSESSEE COMPANY HAS WILLFULLY, KNOWINGLY AND W ITHOUT REASONABLE CAUSE CONCEALED AND FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIMING BOGUS AND EXCESSIVE EXPENSES AND NOT RECORDING THE SALES IN THE BOOKS OF ACCOUNTS AS DIS CUSSED ABOVE AND HAD EVADED THE TAX LIABILITY THEREON. THUS, TH E EXPLANATION (1|) OF SECTION 271 OF THE IT ACT IS CLEARLY APPLIC ABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE INCOME OF RS.71,37,650/-, FOR WHICH IT IS LIABLE FOR PENALTY U/S.271(1)(C) OF THE ACT. 5. THE AR OF THE ASSESSEE POINTED OUT FROM THE ABOV E PENALTY ORDER THAT THE AO HAS NOT ARRIVED AT A FINAL CONCLUSION A S TO WHETHER THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR THE ASSESSEE WAS GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCO ME ON WHICH THE PENALTY WAS LEVIED BY IT. HE PLACED RELIANCE ON TH E DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NEW SORAT HIA ENGINEERING CO. VS. CIT, 282 ITR 642 (GUJ), AND THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF JYOTI LTD. VS. ACIT , IN ITA NO.930/AHD/2008 AND 931/AHD/2008 FOR THE ASTT.YEARS 1996-97 AND 1997-98, ORDER DATED 31.8.2012, TO SUBMIT THAT ON T HE ABOVE FACTS, THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT I S NOT MAINTAINABLE. 6. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN THE JYOTI LTD. (SUPRA) AFTER FOLLOWING THE DECISION OF THE HO NBLE GUJARAT HIGH COURT HAS HELD AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CONTENTION OF THE LD. AR I S THAT THE AUTHORITIES BELOW HAVE NOT GIVEN A CLEAR FINDING WH ETHER THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FUR NISHED INACCURATE PARTICULARS OF INCOME. WE FIND THAT THE ASSESSING OFFICER HAS HELD AS UNDER:- IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT THE A SSESSEE CONCEALED INCOME/FURNISHED INACCURATE PARTICULARS O F ITA NO.314/AHD/2009 3 INCOME. IT, THEREFORE, CONSIDER IT A FIT CASE FOR L EVY OF PENALTY U/S. 271(1)(C)(C). FURTHER THE LD. CIT(A) HAS DECIDED THIS ISSUE AS UN DER:- I HAVE CONSIDERED THE FACTS OF THE CASE, THE REASO NING OF THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY AUTHORIZED REPRESENTATIVE. THE CONTENTION OF THE LE ARNED A.R. CANNOT BE ACCEPTED FOR THE FOLLOWING REASONS. THE BURDEN OF PROVING A PARTICULAR IS FOR THE BUSINESS PURPOSE IS ON THE ASSESSEE AS IS HELD BY SEVERAL CASE SUCH AS CULCUTTA AGENCY LTD 19 ITR 191(SC) AND IMPERIAL CHEMICAL INDUSTRIES (INDIA) (P) LTD 74 ITR 17 (SC). IN THE P RESENT AO HAS MADE SUSTAINED ENQUIRY AND FOUND THAT THE PARTY DOES NOT EXIST IN THE CLAIMED PLACE. THE ASSESSEE HAS NO T BEEN ABLE TO PROVE THE EXISTENCE OF THE PARTY. THIS FIND ING IS VERY VITAL. FINDINGS IN THE ASSESSMENT PROCEEDINGS CONST ITUTE GOOD EVIDENCE OF CONCEALMENT. (SOMNATH MILLS 214 IT R (GUJ). THE ASSESSEE HAS FILED PARTICULARS OF AN EXP ENDITURE WHICH CANNOT PROVED. TO THIS EXTENT THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS WITHIN THE MEANING OF SECTION 271(1)(C). IN THE CASE OF VIDYA GOURI NATWA RLAL 238 ITR 91 (GUJ) IT HAS BEEN HELD THAT MERE DISCLOSURE DOES NOT SAVE THE ASSESSEE FROM PENALTY. IF WHAT IS NOT ALLO WABLE IS CLAIMED AS EXPENDITURE IT AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS. IN THE PRESENT CASE THE INC URRING OF EXPENDITURE ITSELF IS NOT PROVED. HENCE THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY IS JUSTIFIABLE AND IS UPHELD. 7. FROM THE AFORESAID ORDERS OF THE AUTHORITIES BEL OW IT IS EVIDENT THAT THERE IS NO CLEAR CUT FINDING WHETHER THE ASSE SSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF SUCH INCOME. THE LD. AR FOR THE ASSESSEE HAS PLA CED RELIANCE ON THE DECISION OF THE CASE OF GANAPATI BHAI M. MIS TRY FURNISHERS PVT LTD VS. ACIT IN ITA NO. 505/AHD/2009 WHEREIN IT HAS BEEN HELD THAT IN PENALTY PROCEEDINGS, THE AO HAD NOT GI VEN ANY CLEAR CUT FINDING AS TO WHETHER ASSESSEE HAS FURNISHED IN ACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF I NCOME AND FOLLOWING THE JUDGMENT OF HONBLE HIGH COURT RENDER ED IN THE CASE OF NEW SORATHIA ENGINEERING CO. (SUPRA) AND IN THE CASE OF MANU ENGINEERING WORKS (SUPRA) THE PENALTY WAS CANCELLED . 8. IN THE CASE IN HAND ALSO, THE ASSESSING OFFICER, IN THE PE NALTY ORDER HAS NOT GIVEN A CLEAR CUT FINDING, AS TO WHETHER THE AS SESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME. IN THIS CASE ALSO, THE ASSESSING OFFICER AS WELL AS THE LD CIT(A) HAS TAKEN BOTH THE ITEMS IN LEVYING THE PENA LTY. THEREFORE, ITA NO.314/AHD/2009 4 RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE GUJR AT HIGH COURT RENDERED IN THE CASE OF NEW SORATHIA ENGINEERING VS . CIT AND CIT VS. MANU ENGINEERING (SUPRA) AND ALSO DECISION OF T HE HONBLE CO- ORDINATE BENCHES RENDERED IN THE CASE OF GANAPATI B HAI M. MISTRY FURNISHERS PVT. LTD VS. ACIT IN ITA NO.505/AHD/2009 AND IN THE CASE OF KRISHNA DEVELOPERS VS. ITO IN THE ITA NO. 4 447,4448 AND 4449/AHD/2007, THE APPEAL OF THE ASSESSEE IS ALLOWE D AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY . 7. DR COULD NOT GIVE ANY GOOD REASON, AS TO WHY IN VIEW OF THE ABOVE DECISION, THE ORDER OF THE CIT(A) DELETING TH E PENALTY SHOULD NOT BE CONFIRMED. WE, THEREFORE, FOLLOWING THE ABOVE D ECISION, CONFIRM THE ORDER OF THE CIT(A) FOR THE ABOVE MENTIONED REASONS , AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY THE 13 TH MAY, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 13/05/2015