The DCIT, Circle-2, Surat V. M/s. Amir Traders, Surat

ITA 3218/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63212 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.C. GUPTA-VICE PRESIDENT (AZ) AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.3218/AHD/2010 ( / / / / ASSESSMENT YEAR : 2005-06) DY.CIT CIRCLE-2 SURAT 395 001 / VS. M/S.AMIR TRADERS OPP.SURAT PAPER MILLS UDHNA MAIN ROAD UDHNA, SURAT ! '# ./$% ./ PAN/GIR NO. : AAGFA 3878 G ( !& / // / APPELLANT ) .. ( '(!& / RESPONDENT ) !& ) ' / APPELLANT BY : SHRI T.SANKAR, SR.D.R. '(!& * ) ' / RESPONDENT BY : SHRI TUSHAR HEMANI, A.R. +, * -# / / / / DATE OF HEARING : 29.11.12 ./ * -# / DATE OF PRONOUNCEMENT : 14.12.2012 '0 / O R D E R PER SHRI ANIL CHATURVEDI, AM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT (A)-LL, AHMEDABAD DATED 20.09.2010 FOR THE ASSESSMENT YEAR 2005-06. 2. BRIEF FACTS ARE THAT THE ASSESSEE IS A FIRM ENGA GED IN THE BUSINESS OF TRADING OF IRON AND IRON SCRAP AND ALSO HAS INCOME FROM WEIGHBRIDGE. ASSESSEE FILED HIS RETURN OF INCOME ON 31-10-2005 D ECLARING TOTAL INCOME OF RS.11,98,650/- AND THEREAFTER THE ASSESSMENT WAS FINALIZED ON 24/11/2007 U/S.143(3) OF THE ACT AND THE TOTAL INCO ME WAS DETERMINED AT RS.2,70,90,880/- AFTER MAKING VARIOUS ADDITIONS. AG AINST THE ORDER OF AO ASSESSEE PREFERRED APPEAL BEFORE CIT(A). CIT(A) CON FIRMED THE ITA NO.3218/AHD /2010 DCIT VS. M/S.AMIR TRADERS ASST.YEAR - 2005-06 - 2 - ADDITIONS MADE ON ACCOUNT NET GAIN OF PURCHASES (RS .1,11,922/-), TRANSPORTATION CHARGES U/S 40A(IA) (RS.7,32,181/-) AND DISALLOWANCE OUT OF SALARY KHARAJAT AND WAGE EXPENSES (RS.5,28,083/-). ON THE AFORESAID ADDITIONS, AO VIDE ORDER DATED 30.6.2009 LEVIED PEN ALTY OF RS.5,02,118/- U/S 271(L)(C). 3. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, VIDE ORDER DATED 20.9.2010 DELETED THE PENALTY BY HOLDING AS U NDER: 5. DECISION 5.1. I HAVE DULY CONSIDERED THE SUBMISSION OF THE A PPELLANT AND THE PENALTY ORDER AND FIND THAT THE PENALTY HAS BEE N LEVIED BY HOLDING THAT THE ADDITIONS/DISALLOWANCES HAVE BEEN MADE ON A SOUND FOOTING, ON ACCOUNT OF FAILURE ON THE PART OF THE APPELLANT TO FURNISH THE DETAILS/EXPLANATIONS. THE ASSESSING OF FICER HAS, HOWEVER, NOT ESTABLISHED AS TO HOW THE AMOUNT OF ADDITION/DISALLOWANCE SUSTAINED BY THE CIT(A) ARE I N THE NATURE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. IN RESPECT OF PENALTY LEVIED ON ALLEGED PR OFIT OF ` 1,11,922/- SUSTAINED BY THE CIT(A), I FIND THAT THE CORRESPONDING ADDITION MADE ON ACCOUNT OF UNACCOUNTED PURCHASES H AD BEEN DELETED BY THE CIT(A). THEREFORE, AS FAR AS THE PU RCHASES ARE CONCERNED, THE SAME HAS BEEN FOUND GENUINE. THE FA CTS SHOW THAT ON THE DATE OF SURVEY CONDUCTED BY THE SALES-TAX AU THORITY, SALES RELATED TO THE ABOVE PURCHASES WERE NOT RECORDED. THE APPELLANTS CONTENTION IS THAT THE SALES-TAX AUTHORITIES HAD CO ME ACROSS THE CHALLANS, PROVISIONAL BILLS OF ` 3,41,335/- FOR WHICH THE FINAL SALES BILL WAS YET TO BE PREPARED AFTER GETTING CONFIRMAT ION FROM THE BUYERS. AS FAR AS THIS SUBMISSION OF THE APPELLANT IS CONCERNED, THE SAME DOES NOT HOLD ANY MERIT, BECAUSE THE SALES-TAX AUTHORITY HAS COMPLETED THE ASSESSMENT BY TAKING THE ABOVE SALES ACCOUNT WHICH HAD NOT BEEN RECORDED IN THE BOOKS OF A/C. THE QUE STION NOW ARISING IS AS TO WHETHER UNDER THE INCOME-TAX ACT, THE PROFIT ON THE UNRECORDED SALES DETERMINED BY THE SALES-TAX AUTHOR ITY HAS TO BE CONSIDERED AS CONCEALMENT. I FIND THAT THE ASSESSI NG OFFICER HAS ITA NO.3218/AHD /2010 DCIT VS. M/S.AMIR TRADERS ASST.YEAR - 2005-06 - 3 - NOT DISPUTED THE FACT THAT THERE WERE PROVISIONAL B ILLS OF SALES OF THE ABOVE UNRECORDED PURCHASES FOUND DURING THE COU RSE OF SURVEY AND THE ADDITION MADE BY THE SALES-TAX AUTHORITY IS ONLY ON THE BASIS THAT THE SALES TO THE ABOVE EXTENT WAS NOT RE CORDED, BUT AS TO WHY THE SAME HAD NOT BEEN RECORDED HAS NOT BEEN CON SIDERED BY THE ASSESSING OFFICER. THE CIT(A) HAS DELETED THE ADDITION MADE OF THE UNRECORDED PURCHASES OF THE CORRESPONDING UN RECORDED SALES OF ` 3,41,335/- ON THE GROUND THAT ONCE THE STOCK IS REC ORDED IN THE BOOKS OF ACCOUNTS, AS AT THE END OF THE FINA NCIAL YEAR, IT SHOULD NOT BE SAID THAT SUCH STOCK HAS REMAINED UNA CCOUNTED FOR INCOME-TAX PURPOSE. THE ADDITION SUSTAINED BY THE CIT(A), THEREFORE, HAS BEEN ONLY ON THE BASIS THAT THOUGH PUCCA SALES BILLS HAVE NOT BEEN PREPARED AND ENTERED INTO THE B OOKS, UPTO THE END OF THE FINANCIAL YEAR, THE SALES-TAX AUTHORITY HAS TAKEN THE SAME AS SALES FOR THE ACCOUNTING YEAR 2004-05. I, THEREFORE, HOLD THAT AS FAR AS CONCEALMENT IS CONCERNED, THE ASSESS ING OFFICER HAS NOT ESTABLISHED AS TO HOW THE ABOVE AMOUNT IS CONCE ALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. I, THEREFORE, HOLD THAT PENALTY IS NOT EXIGIBLE ON THE AMOUNT OF ` 1,11,922/-. 5.2. THE OTHER AMOUNT ON WHICH PENALTY HAS BEEN LEV IED RELATES TO ADDITION SUSTAINED U/S.40(A)(IA) OF THE ACT. AS THIS ADDITION HAS BEEN MADE ONLY BY FICTION OF LAW THAT NO ALLOWANCE FOR THESE EXPENSES ALLOWABLE WHICH ARE SUBJECT TO TDS PROVISI ONS, AND THE SAME WILL BE ALLOWABLE AS AND WHEN THE TDS AMOUNT I S PAID. THEREFORE, THIS AMOUNT CANNOT BE TAKEN AS CONCEALME NT OR FURNISHING OF INACCURATE PARTICULARS. I, THEREFORE , DELETE THE PENALTY LEVIED ON THIS ACCOUNT. 5.3. AS REGARDS, DISALLOWANCE OF ` 1,77,400/- OUT OF SALARY, THE ASSESSING OFFICER HAS NOT ESTABLISHED THAT IT IS CO NCEALED INCOME. THE DISALLOWANCE HAS BEEN MADE ONLY BECAUSE OF DISC REPANCY NOTICED IN THE BOOKS OF A/C. VIS--VIS THE PROFIT & LOSS ACCOUNT A/C. ENTRY. I, THEREFORE, HOLD THAT THE ASSESSING OFFIC ER HAS NOT ESTABLISHED CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THIS REGARD AND DELETE THE PENALTY LEVIED ON THE ABOVE AMOUNT. ITA NO.3218/AHD /2010 DCIT VS. M/S.AMIR TRADERS ASST.YEAR - 2005-06 - 4 - 4. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS N OW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUND: [1] ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) BY THE A.O., IN SPITE OF THE FACT THAT TH E QUANTUM ADDITION WAS CONFIRMED BY THE LD.CIT(A) AND THE ASS ESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. 5. BEFORE US, THE LD. D.R. SUBMITTED THAT DESPIT E VARIOUS OPPORTUNITIES PROVIDED TO ASSESSEE BY THE AO DURING THE COURSE OF ASSESSMENT AND PENALTY PROCEEDINGS, ASSESSEE DID NOT EXPLAIN THE U NRECORDED SALES AS DETECTED BY THE SALES TAX AUTHORITIES NOR DID IT FU RNISH SUPPORTING EVIDENCE TO SUBSTANTIATE THE CLAIM. HE FURTHER SUBM ITTED THAT ONCE IT WAS FOUND BY SALES TAX AUTHORITIES THAT THE SALES WERE UNRECORDED IT MEANS THAT TO THAT EXTENT THE SALES WERE NOT RECORDED IN THE B OOKS OF ACCOUNTS AND THEREFORE THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS. WITH RESPECT TO THE EXCESS CLAIM OF SALARY EXPENSES, THE LD.D.R. SUBMITTED THAT RS.1,77,400/- WAS EXCESS CLAIMED ON ACCOUNT OF SALA RY AND ACCORDINGLY THE ASSESSEE HAS NOT CLAIMED THE CORRECT EXPENSES. WITH RESPECT TO THE EXPENSES ON ACCOUNT OF WAGES AND KHARAJAT EXPENSES, HE SUBMITTED THAT THE ASSESSEE HAD INCURRED THE EXPENSES IN CASH AND ASSESSEE HAD NOT FURNISHED ANY SUPPORTING EVIDENCE. HE THUS SUPPORTE D THE ORDER OF THE AO AND URGED THAT THE PENALTY HAS BEEN RIGHTLY LEVI ED BY AO AND THE ORDER OF THE AO BE UPHELD. 6. ON THE OTHER HAND THE LD. A.R SUBMITTED THAT THE AO HAS NOT ESTABLISHED AS TO HOW THE ADDITIONS MADE BY HIM WER E IN THE NATURE OF CONCEALMENT OF INCOME OR WAS A CASE OF FURNISHING OF INACCURATE ITA NO.3218/AHD /2010 DCIT VS. M/S.AMIR TRADERS ASST.YEAR - 2005-06 - 5 - PARTICULARS OF INCOME. HE FURTHER SUBMITTED THAT CI T(A) IN THE QUANTUM PROCEEDINGS HAD DELETED THE ADDITION IN RESPECT OF ALLEGED UNACCOUNTED PURCHASE OF RS.12,87,102/- ON THE BASIS OF WHICH TH E ADDITION OF RS.1,11,922/- HAS BEEN ESTIMATED. HE FURTHER SUBMIT TED THAT THERE HAS BEEN NEITHER ANY CONCEALMENT OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. WITH RESPECT TO THE ADDITION MADE U/S 40A(IA), HE SUBMITTED THAT NON DEDUCTION OF TDS DOES NOT IMPLY ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME SO AS TO WARRANT LEVY OF PENALTY. WITH RESPECT TO ADDITION ON ACCOUN T OF SALARY HE SUBMITTED THAT THE GENUINENESS OF THE EXPENSES HAS NOT BEEN DOUBTED BY THE AO. FURTHER THE ADDITION HAS BEEN MADE ON ESTIM ATE BASIS AND THEREFORE NO PENALTY CAN BE LEVIED ON ADDITION MADE ON ESTIMATION. HE THUS SUPPORTED THE ORDER CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. THE FACTUAL MATRIX OF THE CASE IS THAT WHIL E FINALIZING THE ASSESSMENT U/S 143(3) AO MADE VARIOUS ADDITIONS TO THE EXTENT OF RS.2.50 CRORES. THE ADDITIONS WERE SUBSTANTIALLY DE LETED BY CIT(A) AND THE ADDITIONS WERE CONFIRMED ONLY TO THE EXTENT OF RS 13.71 LACS. IT IS ON THE AFORESAID ADDITIONS THAT WERE CONFIRMED BY CIT( A), AO LEVIED PENALTY U/S.271(1)(C). CIT(A) WHILE DELETING THE PENALTY HAS INTER ALIA GIVEN FINDING THAT THE AO COULD NOT ESTABLISH AS TO HOW THE AMOUNTS OF ADDITIONS/DISALLOWANCES SUSTAINED BY CIT(A) WERE IN THE NATURE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. HE HAS FURTHER HELD THAT DISALLOWANCE MADE ON ADHOC BASIS DOES NOT ESTABLISH THE FURNISHING OF INACCURATE PARTICULARS OF INCOME MORE SO WHEN ITA NO.3218/AHD /2010 DCIT VS. M/S.AMIR TRADERS ASST.YEAR - 2005-06 - 6 - THE GENUINENESS OF EXPENSES IS DOUBTED. BEFORE US, THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FI NDINGS OF CIT(A). IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO I NTERFERE WITH THE ORDER OF CIT(A) AND THUS UPHOLD HIS ORDER AND THUS THE GR OUND OF REVENUE IS DISMISSED. 8. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. SD/- SD/- ( G.C. GUPTA ) ( ANIL CHATURVEDI ) VICE PRESIDENT (AZ) ACCO UNTANT MEMBER AHMEDABAD; DATED 14/ 12 /2012 1.., .../ T.C. NAIR, SR. PS '0 * '-2 3'2- '0 * '-2 3'2- '0 * '-2 3'2- '0 * '-2 3'2-/ COPY OF THE ORDER FORWARDED TO : 1. !& / THE APPELLANT 2. '(!& / THE RESPONDENT. 3. - +4 / CONCERNED CIT 4. +4() / THE CIT(A)-II, SURAT 5. 278 '- , , / DR, ITAT, AHMEDABAD 6. 8 9, / GUARD FILE. '0+ '0+ '0+ '0+ / BY ORDER, (2- '- //TRUE COPY// : :: :/ // / $ $ $ $ ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DIRECT DICTATION ON COMPUTER DATED 30.11.1 2 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.11.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S14.12.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.12.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER