Shri Manish C. Rupareliya, Ahmedabad V. The Income Tax Officer, Ward-3(3), Ahmedabad

ITA 3203/AHD/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9337 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 02-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANTOSH KARNANI
• Assessee Lawyers: TUSHEER HAMANI
• Section: 271(1)(c); 2

Judgement Text

ITA 3203/AHD/2016 AY: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO. 3203/AHD/2016 AY: 2009-10 SHRI MANISH C RUPARELIYA, C-202, VRAJ VIHAR, OPP. TEJDHARA BUNGALOWS, B/H RAHUL TOWER, SATELLITE, AHMEDABAD. (PAN: ABNPR2763D) VS INCOME TAX OFFICER, WARD 3(3), A-503, B WING, PRATYAKSH KAR BHAWAN, NR. PANJRAPOLE, AMBAWADI, AHMEDABAD. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI TUSHEER HAMANI, AR RESPONDENT BY: SHRI SANTOSH KARNANI, SR. DR DATE OF HEARING : 28.06.2019 DATE OF PRONOUNCEMENT: 01.10.2019 ORDER PER SUDHANSHU SRIVASTAVA, J.M.: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 09/09/2016 PASSED BY THE LD. COMMISSION ER OF INCOME TAX (APPEALS) 3, AHMEDABAD {CIT (APPEALS)} FOR ASSESSMENT YEAR 2009 10 WHEREIN, VIDE THE IMPUGNED ORDER, HE HAS CONFIRMED THE PENALTY OF RS. 4,74,805/- IMPOSED UNDER ITA 3203/AHD/2016 AY: 2009-10 2 SECTION 271 (1) (C) OF THE INCOME TAX ACT, 1961 (HE REINAFTER CALLED THE ACT). 2.0 THE BRIEF FACTS OF THE CASE ARE THAT IN THIS C ASE THE RETURN OF INCOME WAS FILED AT AN INCOME OF RS. 5,02 ,528/-. AFTER INITIALLY PROCESSING THE RETURN UNDER SECTION 143 ( 1) OF THE ACT, THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY THROU GH CASS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTED THAT THE ASSESSEE HAD SHOWN CREDITORS OF RS. 1,07,94,642/-. NOTICES UNDER SECTION 133 (6) OF THE ACT WERE ISSUED TO VERIFY THE GENUINENESS OF THE SAME ON TES T CHECK BASIS AT THE ADDRESSES PROVIDED BY THE ASSESSEE. ONE OF T HE CREDITORS, NAMELY, M/S SIMPLEX INDUSTRIES WAS NOT TRACEABLE AT THE ADDRESS PROVIDED BY THE ASSESSEE. THE INSPECTOR OF INCOME T AX ALSO, IN HIS REPORT, INFORMED THAT THIS CREDITOR DID NOT EXI ST AT THE GIVEN ADDRESS. THE ASSESSING OFFICER DIRECTED THE ASSESSE E TO PRODUCE THE CREDITOR BEFORE HIM FOR VERIFICATION. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THE SAID PARTY. THE ASSESSING OFF ICER TREATED THIS CREDITOR AS NOT GENUINE AND THE CREDIT AMOUNT APPEARING AGAINST THIS PARTY TO THE TUNE OF RS. 13,80,000/- W AS TREATED AS INCOME OF THE ASSESSEE. ITA 3203/AHD/2016 AY: 2009-10 3 2.1 THE ASSESSEES APPEAL BEFORE THE LD. CIT (APPE ALS) WAS DISMISSED. ON FURTHER APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL, THE TRIBUNAL IN ITA NO. 1983/AHD/2014, VI DE ORDER DATED 17/10/2017, HELD THAT INSTEAD OF THE TOTAL DI SALLOWANCE OF THE AMOUNT OF CREDIT STANDING AGAINST THE NAME OF T HE SAID PARTY, A MARGIN OF 25% ON GOODS OF RS. 13,80,000/- SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE MEANING THEREBY THAT AN ADDITION OF RS. 3,45,000/- WOULD MEET THE ENDS OF JUSTICE. 2.2 SUBSEQUENTLY, THE ASSESSING OFFICER POSED A PE NALTY OF RS. 4,74,805/- UNDER SECTION 271 (1) (C) OF THE ACT WHICH WAS UPHELD BY THE LD. CIT (APPEALS). 2.3 NOW THE ASSESSEE IS BEFORE THE TRIBUNAL CHALL ENGING THE CONFIRMATION OF THE PENALTY BY THE LD. FIRST AP PELLATE AUTHORITY. 3.0 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED TH AT THE PENALTY HAD BEEN IMPOSED ON ADDITION WHICH WAS PART LY CONFIRMED ONLY ON THE BASIS OF ESTIMATION. IT WAS S UBMITTED THAT NO PENALTY WAS IMPOSABLE ON AN ADDITION WHICH WAS E STIMATED. IT WAS SUBMITTED THAT ALTHOUGH THE ASSESSING OFFICER H AD DOUBTED THE CREDITORS GENUINENESS, THE PURCHASES AND SALES HAD BEEN ACCEPTED AND NO ADVERSE INFERENCE HAD BEEN DRAWN IN THIS ITA 3203/AHD/2016 AY: 2009-10 4 REGARD. IT WAS FURTHER SUBMITTED THAT THE RELEVANT DETAILS RELATING TO THE SAID CREDITOR WERE DULY FURNISHED BEFORE THE LOWER AUTHORITIES AND IT WAS BEYOND THE CONTROL OF THE AS SESSEE THAT THE CREDITOR WAS NOT FOUND AT THE ADDRESS PROVIDED. IT WAS PRAYED THAT THE PENALTY IMPOSED SHOULD BE DELETED. 4.0 IN RESPONSE, THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE FACT OF THE MATTE R REMAINED THAT THE QUANTUM ADDITION HAD BEEN CONFIRMED TO THE EXTENT OF 25% AND THE TRIBUNAL HAD ALSO NOTED IN THE ORDER CO NFIRMING THE QUANTUM ADDITION THAT THE ADDITION WAS BEING CONFIR MED DUE TO THE CLANDESTINE ACTIVITY OF THE ASSESSEE. IT WAS SU BMITTED THAT IT WAS A CASE FIT FOR IMPOSITION OF PENALTY AND, THERE FORE, THE SAME SHOULD BE UPHELD. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. IT IS UNDISPUTED TH AT THE SAID CREDITOR I.E. M/S SIMPLEX INDUSTRIES WAS NOT FOUND AT THE ADDRESS PROVIDED BY THE ASSESSEE AND EVEN WHEN THE INSPECTO R OF INCOME TAX WAS DEPUTED TO VERIFY THE EXISTENCE OF THE SAID PARTY, NO SUCH PARTY WAS FOUND AT THE ADDRESS PROVIDED BY THE ASSE SSEE. THE ASSESSEE WAS REQUIRED TO PRODUCE THE PARTY FOR VERI FICATION BEFORE THE ASSESSING OFFICER AND THE ASSESSEE FAILED TO DO SO. NOT ONLY ITA 3203/AHD/2016 AY: 2009-10 5 THIS, THE ASSESSEE ALSO COULD NOT PROVIDE THE NEW A DDRESS, IF ANY, OF THIS PARTY. THE ASSESSEE ONLY PROVIDED A COPY OF THE LEDGER ACCOUNT OF THE PARTY TO THE ASSESSING OFFICER TO DI SCHARGE HIS ONUS. IT APPEARS RATHER STRANGE AND UNBELIEVABLE TH AT THE ASSESSEE WOULD NOT BE HAVING THE ADDRESS OF ONE OF ITS SUNDRY CREDITORS. THE CO-ORDINATE BENCH OF THE TRIBUNAL, W HILE CONFIRMING THE QUANTUM ADDITION TO THE TUNE OF 25%, ALSO NOTED THAT THE ADDITION WAS CALLED FOR IN VIEW OF THE CLA NDESTINE ACTIVITIES OF THE ASSESSEE. WE ARE OF THE CONSIDERE D OPINION THAT ALTHOUGH PENALTY U/S 271(1)(C) OF THE ACT IS USUALL Y NOT IMPOSABLE IN A CASE WHERE ADDITION IS MADE/SUSTAINED ON AN ES TIMATE, SUCH JUDICIAL PRECEDENT IS TO BE APPLIED ONLY WHERE THE ASSESSEE COMES CLEAN AND PROVES HIS BONA FIDE . UNFORTUNATELY, IN THE PRESENT CASE, THE ASSESSEE HAS FAILED MISERABLY IN DISCHARG ING THE ONUS CAST ON HIM TO ESTABLISH THE GENUINENESS OF THE CRE DITOR AND GOING BY THE SEQUENCE OF EVENTS AND FACTS OF THE CA SE, THE BONA FIDE OF THE ASSESSEE ARE ALSO UNDER DOUBT. IN SUCH A SI TUATION, IT IS OUR CONSIDERED OPINION THAT THE IMPUGNED PENALTY HAS BEEN RIGHTLY IMPOSED BY THE ASSESSING OFFICER. HOWEVER, SINCE THE QUANTUM ADDITION HAS BEEN SCALED DOWN TO THE TUNE O F 25% OF THE ORIGINAL ADDITION, THE RESULTANT PENALTY WOULD ALSO HAVE TO BE ITA 3203/AHD/2016 AY: 2009-10 6 RECOMPUTED. ACCORDINGLY, WHILE CONFIRMING THE IMPOS ITION OF PENALTY, WE RESTORE THE RE-COMPUTATION OF PENALTY T O THE FILE OF THE ASSESSING OFFICER. 6.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESSE E STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (AMARJIT SINGH) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 01 ST OCTOBER, 2019 *DRAGON* COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER ASSTT. REGISTRAR ITAT, NEW DELHI TRUE COPY