Gayatri Construction Co., V. The Deputy Commissioner of Income Tax, Patan Circle, Patan

ITA 3152/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2425 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 30-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR ANUPAMA SINALA
• Assessee Lawyers: NANDLAL THAKKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ) ITA. NO: 3152/AHD/2016 (ASSESSMENT YEAR: 2004-05) GAYATRI CONSTRUCTION CO. C/O RAMJIBHAI & CO, HIGHWAY ROAD, KHERALU- 382825 V/S THE DEPUTY COMMISSIONER OF INCOME-TAX, PATNA CIRCLE, PATAN (APPELLANT) (RESPONDENT) PAN: AABFG5422D APPELLANT BY : SHRI NANDLAL THAKKAR, AR RESPONDENT BY :DR. ANUPAMA SINALA, SR. D.R. ( )/ ORDER DATE OF HEARING : 29 -06-201 8 DATE OF PRONOUNCEMENT : 31-08-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 16.05.2016 PERTAINING TO A.Y. 2004-05 THAT THE ITA NO. 3152 /AHD/2016 . A.Y. 2004-05 2 LD. CIT(A) FOR CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT OF RS. 2,53,493/-. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE SEE FIRM HAS CLAIMED LABOUR CHARGES OF RS. 3,53,770/- F OR REPAIRING OF VEHICLES FOR PAYMENT MADE TO INSAT AUTO ELECTRICALS OF VISNAGAR. THE PAYMENTS WERE MADE IN SMALL AMOUNTS BETWEEN RS. 10,000/- AND RS. 20,00 0/-. THE ASSESSEE PRODUCED SELF MADE VOUCHERS IN SUPPORT OF THE SAME. TO VERIFY THE GENUINENESS OF CLAIM OF THE ASSE4SSEE, SUMMONS WAS ISSUED TO TH E PAYEE ON THE ADDRESS GIVEN BY THE ASSESSEE. THE SAID PARTY- INSAT AUTO E LECTRICLAS IN RESPONSE TO THE SAID SUMMONS INFORMED THAT THEY HAVE NOT MADE ANY B USINESS TRANSACTIONS WITH THE ASSESSEE. IT WAS ALSO INFORMED THAT THEY D O NOT KNOW THE ASSESSEE. THEREAFTER, A COPY OF THE SAID LETTER WAS PROVIDED TO THE ASSESSEE AND THE ASSESSEE WAS REQUESTED TO SHOW CAUSE AS TO WHY THE SAID PAYMENT SHOULD NOT BE DISALLOWED. THE ASSESSEE ON 14.12.2006 PRODUCED ONE SHRI DAHYABHAI ALIAS RAMESHBHAI GHEMARBHAI CHAUDHARY WHO CLAIMED THAT HE WAS PROPRIETOR OF INSAT ELECTRIC AT VISNAGAR. THE STATEMENT OF SHRI D AHYABHAI WAS RECORDED AND IN HIS STATEMENT SHRI DAHYABHAI CLAIMED THAT HE HAS SPECIALIZED KNOWLEDGE REGARDING AUTO ELECTRIC AND THEREFORE, STARTED REPA IRING WORK RELATING TO AUTO ELECTRIC. HE HOWEVER FAILED TO PRODUCE ANY DOCUMENT ARY EVIDENCE IN SUPPORT OF THE SAME. 3. FURTHER, IN HIS STATEMENT HE WAS REQUESTED TO NAME IMPORTANT PARTS OF THE VEHICLES, IN RESPONSE TO WHICH HE NAMED ONLY TWO, I .E. BATTERY AND DYNAMO. HE WAS ASKED TO EXPLAIN DYNAMO AND ALTERNATE BUT HE WA S NOT ABLE TO EXPLAIN ITS FUNCTIONING. AFTER, MAKING FURTHER ENQUIRY THE PAYM ENT OF RS. 3,53,770/- CLAIMED TO HAVE BEEN MADE TO INSAT AUTO ELECTRICALS , WAS ADDED TO THE TOTAL ITA NO. 3152 /AHD/2016 . A.Y. 2004-05 3 INCOME AS THE ASSESSEE'S INCOME FROM UNDISCLOSED SO URCES. PENALTY PROCEEDINGS U/S-271(L)(C) ON THIS ISSUED WAS INITIATED SEPARATE LY. 4. FURTHER, DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE CLAIMED RS. 4,55,031/- ON ACCOUNT OF LABOUR CHARGES FOR REPAIRING OF VEHICLES MADE TO MAYUR AUTO GARAGE, VISNAGAR. THE PAYMENTS W ERE SHOWN AS MADE IN CASH AND IN SMALL AMOUNTS BETWEEN RS. 10,000/- AND RS. 20,000/-. TO VERIFY THE GENUINENESS SUMMONS WAS ISSUED TO THIS PARTY AN D SENT BY POST AT THE ADDRESS GIVEN BY THE ASSESSEE . IN RESPONSE TO THE SAME, SHRI MAIYUDDIN S. SAIYED, FILED A LETTER DATED 17.10.06 INFORMING THA T HIS FATHER IS THE OWNER OF THE SAID GARAGE AND SINCE HE IS SICK, HE MAY BE ALLOWED TIME FOR AT LEAST 15 DAYS. THE ADJOURNMENT WAS GIVEN AND NEXT DATE WAS FIXED O N 7.11.06. AGAIN ON THE SAID DATE THE SON OF THE OWNER ATTENDED AND REQUEST ED TO RECORD HIS STATEMENT. SINCE, RECORDING OF THE STATEMENT OF THE SON WAS NO T LAWFUL, HE WAS ASKED TO PRODUCE HIS FATHER ON 14.11.06. ON THE SAID DATE NO ONE ATTENDED. THE ASSESSEE ALSO FAILED TO PRODUCE THE OWNER OF THE GARAGE ON T HE SAID DATE EVEN IF HE WAS ASKED TO DO SO. LATER, ON 18.12.06 THE OWNER ATTEND ED AND HIS STATEMENT WAS RECORDED ON OATH. HE WAS ASKED TO CONFIRM THE PAYME NTS SHOWN IN HIS LETTER DATED 7.12.06. IN RESPONSE TO THAT HE REPLIED THAT HIS SIGNATURE WAS TAKEN ON THE SAID LETTER BY THE ASSESSEE HURRIEDLY AND HE DID NO T KNOW WHAT WAS WRITTEN ON THE SAID LETTER. HE FURTHER STATED THAT HE HAS RECE IVED ONLY RS.1.5 LAKH OR SO FROM THE ASSESSEE AND NOT RS.4,55,031/- AS CLAIMED BY THE ASSESSEE. IN VIEW OF THE ABOVE, RS.3,53,031/- BEING RS.4,55,031-1,02,000 / WAS ADDED TO THE ASSESSEE'S INCOME. PENALTY PROCEEDINGS U/S 271(L)(C ) WERE INITIATED SEPARATELY FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. ITA NO. 3152 /AHD/2016 . A.Y. 2004-05 4 5. IT IS NOTEWORTHY TO MENTION HERE THAT AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND THEREAFTER BEFORE THE HONBLE ITAT AND BOTH THE APPELLATE AUTHORITIES UPH ELD THE ORDER OF THE A.O. THEREBY CONFIRMING THE STAND TAKEN BY THE A.O. 6. AS IS CLEAR FROM THE FACTS NARRATED ABOVE, IT IS CR YSTAL CLEAR THAT THE ASSESSEE HAS WILLFULLY CONCEALED HIS INCOME BY FURNISHING INACCU RATE PARTICULARS OF INCOME AND THE SAME WOULD NOT HAVE BEEN DETECTED HAD THE C ASE OF THE ASSESSEE WAS NOT SELECTED FOR SCRUTINY. FURTHER, DURING THE COUR SE OF ASSESSMENT PROCEEDINGS AS WELL AS DURING THE PENALTY PROCEEDINGS THE ASSES SEE WAS GIVEN AMPLE OPPORTUNITIES TO GIVE EVIDENCE TO SUBMIT HIS REPLY IN SUPPORT OF THE SAME BUT HE FAILED TO DO SO. FURTHER, BOTH THE APPELLATE AUT HORITIES HAVE UPHELD THE ORDER OF THE AO AND IN VIEW OF THE FACTS MENTIONED ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS WRONGFULLY CLAIMED EXPENSES THAT WERE NOT GENUI NE TO INFLATE EXPENSES AND LOWER DOWN HIS PROFIT. THEREFORE, IT IS CLEAR THAT THE ASSESSEE HAS WILLFULLY COMMITTED THE DEFAULT WITHIN THE PURVIEW OF SECTION 271(L)(C) FOR WHICH PENALTY IS LEVIABLE. 7. THEREAFTER, ASSESSEE PREFERRED FIRST STATUTORY APPE AL BEFORE THE LD. CIT(A) AND MADE DETAILED CONTENTION BEFORE THE LD. CIT(A) BUT TO NO AVAIL. THEREAFTER, IN QUANTUM PROCEEDING, CO-ORDINATE BENCH OF ITAT CONFI RMED THE ADDITION MADE BY THE LOWER AUTHORITIES. 8. WE HAVE GONE THROUGH THE RELEVANT RECORD IN THE IMP UGNED ORDER. SO FAR PENALTY ON ACCOUNT OF DISALLOWED PAID FOR LABOUR CH ARGES OF RS. 3,53,770/- FOR REPAIRING OF VEHICLES TO INSAT AUTO ELECTRICS. LD. A.R. SHRI M.K. PATEL MADE HIS STATEMENT THAT HE DOES NOT WANT TO PRESS PENALTY ON AMOUNT OF RS. 3,53,770/-. ITA NO. 3152 /AHD/2016 . A.Y. 2004-05 5 9. NOW ONLY EFFECTIVE GROUND IS REMAINED FOR OUR CONSI DERATION PENALTY ON ACCOUNT OF DISALLOWED PAID FOR LABOUR CHARGES OF RS . 3,53,031/- FOR PAID REPAIRING OF VEHICLES TO MAYUR AUTO GARAGE IS CONCE RNED, IN THIS CONNECTION, ONE MAYURDIN SAIYAD WHO IS PROPRIETOR OF MAYUR AUTO GARAGE WAS CALLED AND STATEMENT WAS RECORDED BUT HE COULD NOT GIVE DETAIL S OF VEHICLES WHICH WERE REPAIRED BY HIM AND HE WAS ALSO FAILED TO GIVE THE DETAILS THAT KIND OF REPAIR WAS DONE BY HIM. 10. SO FAR QUANTUM ADDITION OF RS. 4,55,031/- TOWARDS L ABOUR CHARGES FOR REPAIRS OF VEHICLES IS CONCERNED, WE FIND THAT WHILE THE ADDIT ION MAY BE JUSTIFIED ON THE BASED OF PREPONDERANCE OF THE PROBABILITIES, THE PE NALTY COULD NOT BE JUSTIFIED IN THE ABSENCE OF VISIBLE CULPABILITY OF THE REPAIR CLAIMED BY THE APPELLANT CANNOT BE OUT RIGHTLY DISALLOWED FOR THE PURPOSES O F WEING JUSTIFICATIONS IN THE CONTEXT OF SECTION 271(1)(C) . THEREFORE, WE DIRECT A.O. TO DELETE THE PENALTY ON THE QUANTUM ADDITION OF RS. 4,55,031/- TOWARDS LABO UR CHARGES. 11. LD. A.R. HAS BEEN FAILED TO DEMONSTRATE BEFORE US T HAT PENALTY PROCEEDINGS ARE NOT SUSTAINABLE IN THE EYES OF LAW AND HE COULD NOT GIVE ANY PROPER JUSTIFICATION AND PLAUSIBLE EXPLANATION WITH REGARD TO PAYMENT OF RS. 3,53,031/-. IN THE ABSENCE OF ANY CLINCHING EVIDENCE IN SUPPORT OF THE ASSESSEE, WE CONFIRM THE PENALTY ON RS. 3,53,031/-. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 31 - 08- 2018 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 31/08/2018