Selva Gold Covering P Ltd., CHENNAI V. DCIT, Coimbatore

ITA 3262/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7402 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 01-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Bogus purchase; Accommodation entries; Revised return
• Section: 40A(3); 133A; 139(5)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !.. # $%, ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.3262/MDS/2016 + ,+ / ASSESSMENT YEAR : 2012-13 M/S SELVA GOLD COVERING PVT. LTD., C/O SHRI S. SRIDHAR, SH. A.S. SRIRAMAN, ADVOCATE , NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI - 600 020. PAN : AADCS 0688 Q V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2, COIMBATORE. (.// APPELLANT) (01.// RESPONDENT) ./ 2 3 / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE 01./ 2 3 / RESPONDENT BY : SHRI SUPRIYO PAL, JCIT # 2 4' / DATE OF HEARING : 21.02.2017 56, 2 4' / DATE OF PRONOUNCEMENT : 29.03.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -1, COIMBA TORE, DATED 30.09.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13 CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER S ECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 I.T.A. NO.3262/MDS/16 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THERE WAS A SURVEY IN THE PREMISES OF THE ASSE SSEE ON 06.08.2013. THE ASSESSEE VOLUNTARILY FILED REVISED RETURN DECLARING A TOTAL INCOME OF ` 15,93,50,630/- AND THE SAME WAS ACCEPTED BY THE ASSESSING OFFICER WITHOUT ANY FURTHER ADDITION EXCEPT A SMALL DISALLOWANCE OF ` 5,43,708/- UNDER SECTION 40A(2)(A) OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. REFERRING TO T HE JUDGMENT OF DELHI HIGH COURT IN CIT V. SAS PHARMACEUTICALS IN I TA NO.1058 OF 2009 DATED 08.04.2011, THE LD.COUNSEL SUBMITTED THA T SECTION 271(1)(C) OF THE ACT IS PENAL IN NATURE, THEREFORE, UNLESS THE CASE OF THE ASSESSEE FALLS WITHIN FOUR CORNERS OF SECTION 2 71(1)(C) OF THE ACT, THERE CANNOT BE ANY LEVY OF PENALTY. 3. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE DELHI HIGH COURT IN SAS PHARMACEUTICALS (SUPRA), AF TER REFERRING TO SECTION 271(1)(C) OF THE ACT, FOUND THAT PENALTY UN DER SECTION 271(1)(C) OF THE ACT CAN BE IMPOSED IN THE COURSE O F ANY PROCEEDING UNDER THE PROVISIONS OF INCOME-TAX ACT. THE DELHI HIGH COURT AFTER INTERPRETING THE WORD ANY PROCEEDING UNDER THE INC OME-TAX ACT HAS OBSERVED THAT THE SATISFACTION SHALL BE OF THE ASSESSING OFFICER 3 I.T.A. NO.3262/MDS/16 OR OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHO LEVIES THE PENALTY. WHEN THERE WAS A SURVEY CONDUCTED BY A TE AM OF OFFICER, THE QUESTION OF SATISFACTION OF ASSESSING OFFICER O R COMMISSIONER OF INCOME TAX (APPEALS) OR COMMISSIONER DOES NOT ARISE . ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER HAS NOT R ECORDED ANY SATISFACTION DURING THE SURVEY OPERATION OR DURING ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER WAS NOT SATISFI ED THAT THE ASSESSEE HAS CONCEALED ANY PART OF INCOME OR FURNIS HED ANY INACCURATE PARTICULARS OF ITS INCOME. THEREFORE, I N THE LIGHT OF THE JUDGMENT OF DELHI HIGH COURT, IT IS OBVIOUS THAT TH E ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE DELHI HIGH COURT FURTHER OBSERVED THAT THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF S UCH INCOME HAS TO BE IN THE RETURN FILED BY THE ASSESSEE. IN THIS CA SE, ACCORDING TO THE LD. COUNSEL, THE RETURN FILED BY THE ASSESSEE UNDER SECTION 139(5) OF THE ACT, WAS VERY MUCH ACCEPTED BY THE ASSESSING OFFICER WITHOUT MAKING ANY FURTHER ADDITION. EVEN FOR DISA LLOWANCE MADE UNDER SECTION 40A(3) OF THE ACT, THE PARTICULARS AR E VERY MUCH 4 I.T.A. NO.3262/MDS/16 AVAILABLE ON RECORD. MERELY BECAUSE THE ASSESSING OFFICER DISALLOWED UNDER SECTION 40A(3) OF THE ACT IN VIEW OF THE STATUTORY PROVISION, IT CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OR CONCEALED ANY PART OF ITS INCOME. THEREFORE, ACCORDING TO THE LD. COUNSEL, IT IS NOT A CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 5. THE LD.COUNSEL FOR THE ASSESSEE ALSO PLACED HIS RELIANCE ON THE DECISION OF THIS BENCH OF TRIBUNAL IN VBC JEWEL LERS V. ACIT IN I.T.A. NOS.2255 & 2256/MDS/2015 DATED 22.08.2016 AN D SUBMITTED THAT ON IDENTICAL SET OF FACTS, THIS TRIBUNAL DELET ED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 6. ON THE CONTRARY, SHRI SUPRIYO PAL, THE LD. DEPAR TMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT IT CO-OPERATED WITH THE ASSE SSING OFFICER FOR COMPLETION OF ASSESSMENT. THE ASSESSEE HAS ALSO CL AIMED BEFORE THE ASSESSING OFFICER THAT THE UNDISCLOSED INCOME A DMITTED DURING THE SURVEY OPERATION WAS OFFERED FOR TAXATION BY ME ANS OF REVISED RETURN FILED UNDER SECTION 139(5) OF THE ACT. ACCO RDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND BOGUS PURCHASE TH ROUGH ACCOMMODATION BILLS AND SUPPRESSION OF SALES WERE A LSO FOUND 5 I.T.A. NO.3262/MDS/16 DURING THE SURVEY OPERATION AND THE ASSESSEE ALSO A DMITTED THE SAME AND FILED THE REVISED RETURN. SINCE THE ASSES SEE ADMITTED IN THE REVISED RETURN THE UNDISCLOSED INCOME FOUND DUR ING THE COURSE OF SURVEY OPERATION, THE ASSESSING OFFICER FOUND TH AT THE ASSESSEE HAS WILLFULLY FURNISHED INACCURATE PARTICULARS OF I NCOME. ACCORDING TO THE LD. D.R., THE ASSESSEE CONSTANTLY EVADED THE PAYMENT OF TAXES. SINCE THE ASSESSEE WAS ADOPTING A SET PATTE RN OF ACCOMMODATION BOGUS PURCHASE IN ITS ACCOUNTS AND SU PPRESSED SALES, ACCORDING TO THE LD. D.R., THE ASSESSING OFF ICER HAS RIGHTLY LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT W HICH WAS ALSO CONFIRMED BY THE CIT(APPEALS). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF GOLD COVERING AND FANCY ITEMS. THERE WAS A SURVEY IN THE PREMISES OF THE ASSESSEE UNDER SECTION 133A OF THE ACT ON 06.08.2013 AND THE ASSESSEE FILED THE REVISED RETURN UNDER SECTION 139(5) OF THE ACT DECLARING TOTAL INC OME OF ` 15,93,50,630/-. DURING THE COURSE OF SURVEY OPERAT ION, IT APPEARS THE REVENUE AUTHORITIES FOUND THAT THE ASSESSEE-COM PANY DID NOT ACCOUNT FOR A PART OF ITS BUSINESS TURNOVER. THE R EVENUE AUTHORITIES 6 I.T.A. NO.3262/MDS/16 HAVE ALSO FOUND THAT THE ASSESSEE GENERATED UNACCOU NTED INCOME BY WAY OF SUPPRESSION OF SALES AND ALSO INFLATED PU RCHASES THROUGH ACCOMMODATION ENTRIES. THEREFORE, THE SURVEY TEAM FOUND THAT THE ASSESSEE HAS CONCEALED ITS INCOME. ACCORDINGLY, PE NALTY WAS LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE FAC T REMAINS THAT THE ASSESSEE FILED REVISED RETURN VOLUNTARILY UNDER SEC TION 139(5) OF THE ACT. THE RETURN FILED BY THE ASSESSEE WAS PROCESSE D AND THE SAME WAS ACCEPTED BY MAKING A DISALLOWANCE OF ` 5,43,708/- UNDER SECTION 40A(2)(A) OF THE ACT. 8. THE QUESTION NOW ARISES FOR CONSIDERATION IS WHE N THE SURVEY TEAM FOUND THAT THERE WAS SUPPRESSION OF SALES, AND THE ASSESSEE HAS FILED REVISED RETURN UNDER SECTION 139(5) OF TH E ACT, WHETHER THERE WAS CONCEALMENT OF INCOME OR THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THIS MATTER WAS EXAMINED BY THE DELHI HIGH COURT IN SAS PHARMACEUTICALS (SUP RA). IN FACT, THE DELHI HIGH COURT HAS HELD AS FOLLOWS AT PARAGRA PHS 13, 14 & 15 OF ITS ORDER:- 13. IT IS NOT THE CASE OF FURNISHING INACCURATE PART ICULAR OF INCOME, AS IN THE INCOME-TAX RETURN, PARTICULARS OF INCOME HAVE BEEN DULY FURNISHED AND THE SURRENDERED AMOUNT OF INCOME WAS DULY REFLECTED IN THE INCOME-TAX RETURN. THE QUESTION IS WHETHER THE PARTICULARS OF INCOME WERE 7 I.T.A. NO.3262/MDS/16 CONCEALED BY THE ASSESSEE OR NOT. IT WOULD DEPEND UPON THE ISSUE AS TO WHETHER THIS CONCEALMENT HAS REFERENCE TO THE INCOME-TAX RETURN FILED BY THE ASSESSEE, VIZ. WHETHE R CONCEALMENT IS TO BE FOUND IN THE INCOME-TAX RETURN. 14. WE MAY, FIRST OF ALL, REJECT THE CONTENTION OF THE LEARNED COUNSEL FOR THE REVENUE RELYING UPON THE EXP RESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT O CCURRING IN SUB-SECTION (1) OF SECTION 271 OF THE ACT AND CONTEND ING THAT EVEN DURING SURVEY WHEN IT WAS FOUND THAT THE ASSESSEE HAD CONCEALED THE PARTICULAR OF HIS INCOME, IT WOUL D AMOUNT CONCEALMENT IN THE COURSE OF ANY PROCEEDINGS. TH E WORDS IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT A RE PREFACED BY THE SATISFACTION OF THE A.O. OR THE COMMISSIONER OF INCOME TAX (APPEALS). WHEN THE SURV EY IS CONDUCTED BY A SURVEY TEAM, THE QUESTION OF SATISFA CTION OF A.O. OR THE COMMISSIONER (APPEALS) OR THE COMMISSIO NER DOES NOT ARISE. WE HAVE TO KEEP IN MIND THAT IT IS THE A.O. WHO INITIATED THE PENALTY PROCEEDINGS AND DIRECTED THE PAYMENT OF PENALTY. HE HAD NOT RECORDED ANY SATISF ACTION DURING THE COURSE OF SURVEY. DECISION TO INITIATE PENALTY PROCEEDINGS WAS TAKEN WHILE MAKING ASSESSMENT ORDER . IT IS, THUS, OBVIOUS THAT THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT CANNOT HAVE THE REFEREN CE TO SURVEY PROCEEDINGS, IN THIS CASE. 15. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PART ICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME BY THE ASSESSEE HAS TO BE IN THE INCOME-TAX RETURN F ILED BY IT. THERE IS SUFFICIENT INDICATION OF THIS IN THE JUDGMENT OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TA X, DELHI-I VS. MOHAN DAS HASSA NAND 141 ITR 203 AND IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), THE SUPRE ME COURT HAS CLINCHED THIS ASPECT, VIZ., THE ASSESSEE CAN FU RNISH THE PARTICULARS OF INCOME IN HIS RETURN AND EVERYTHING WOULD DEPEND UPON THE INCOME-TAX RETURN FILED BY THE ASSES SEE. THIS VIEW GETS SUPPORTED BY EXPLANATION 4 AS WELL AS 5 AND 5A OF SECTION 271 OF THE ACT AS CONTENDED BY THE LEARN ED COUNSEL FOR THE RESPONDENT. 8 I.T.A. NO.3262/MDS/16 7. THIS TRIBUNAL ALSO HAD AN OCCASION TO EXAMINE AN IDENTICAL SET OF FACTS IN VBC JEWELLERS (SUPRA). AFTER CONSI DERING ANOTHER ORDER OF DIVISION BENCH OF THIS TRIBUNAL IN ACIT V. RAM THANGA NAGAI MALIGAI IN I.T.A. NO.2183/MDS/2014 DATED 10.0 6.2015, THIS TRIBUNAL FOUND THAT THE CONCEALMENT OF INCOME START ED ONLY AFTER FILING OF RETURN OF INCOME. WHEN THE ASSESSEE HAS FILED REVISED RETURN UNDER SECTION 139(5) OF THE ACT AND THE SAME WAS ACCEPTED BY THE ASSESSING OFFICER, THIS TRIBUNAL FOUND THAT THERE CANNOT BE ANY LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 8. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS FIL ED REVISED RETURN OF INCOME UNDER SECTION 139(5) OF THE ACT VO LUNTARILY DISCLOSING ALL THE INCOME EARNED DURING THE YEAR UN DER CONSIDERATION. OTHER THAN THE STATUTORY DISALLOWAN CE OF ` 5,43,708/- UNDER SECTION 40A(2)(A) OF THE ACT, THE ENTIRE INCO ME DISCLOSED BY THE ASSESSEE WAS ACCEPTED WITHOUT ANY FURTHER ADDIT ION. WHEN THE ASSESSEE HAS FILED REVISED RETURN WITHIN THE STATUT ORY PERIOD, UNDER SECTION 139(5) OF THE ACT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEA LED ANY PART OF INCOME OR FURNISHED ANY INACCURATE PARTICULARS OF I NCOME. THE STATUTORY PROVISION ALLOWS THE ASSESSEE TO FILE REV ISED RETURN 9 I.T.A. NO.3262/MDS/16 WHENEVER THERE WAS OMISSION TO DISCLOSE THE INCOME WHICH IS OTHERWISE TAXABLE UNDER THE INCOME-TAX ACT. IN THI S CASE, AFTER THE SURVEY OPERATION, THE ASSESSEE FOUND THERE WAS OMIS SION TO DISCLOSE THE INCOME OTHERWISE TAXABLE UNDER THE INC OME-TAX ACT AND ACCORDINGLY FILED REVISED RETURN WITHIN THE STA TUTORY PERIOD AND OFFERED THE SAME FOR TAXATION. THEREFORE, THIS TRI BUNAL IS OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE FOR LE VY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 9. FURTHERMORE, AS FOUND BY DELHI HIGH COURT IN SAS PHARMACEUTICALS (SUPRA), THE SURVEY TEAM FOUND THAT THE ASSESSEE HAS NOT DISCLOSED ITS INCOME BY SUPPRESSING THE SAL ES TURNOVER AND ALSO BOOKING INFLATED PURCHASES. THE DELHI HIGH CO URT FOUND THAT SATISFACTION OF SURVEY TEAM CANNOT BE CONSTRUED AS PROCEEDING UNDER THE INCOME-TAX ACT. ONLY THE ASSESSING OFFIC ER OR COMMISSIONER OR COMMISSIONER OF INCOME TAX (APPEALS ) CAN INITIATE PENALTY PROCEEDING IN THE COURSE OF ANY PR OCEEDING PENDING BEFORE THEM. WHEN THE SURVEY TEAM FOUND THAT THE A SSESSEE HAS INFLATED THE PURCHASES AND SUPPRESSED THE SALES TUR NOVER, IT CANNOT BE SAID THAT ANY PROCEEDING WAS PENDING BEFORE THE ASSESSING OFFICER OR COMMISSIONER OR COMMISSIONER OF INCOME T AX (APPEALS). 10 I.T.A. NO.3262/MDS/16 IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. ACCORDINGLY , THIS TRIBUNAL IS UNABLE TO CONFIRM THE ORDER OF THE CIT(APPEALS). H ENCE, THE ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE PENALTY LEVIED BY THE ASSESSING OFFICER AS CONFIRMED BY THE CIT(APPEA LS) IS DELETED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 29 TH MARCH, 2017 AT CHENNAI. SD/- SD/- ( ! . . # $% ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 8 /DATED, THE 29 TH MARCH, 2017. KRI. 2 04$9 :9,4 /COPY TO: 1. ./ /APPELLANT 2. 01./ /RESPONDENT 3. # ;4 () /CIT(A)-1, COIMBATORE 4. PRINCIPAL CIT-1, COIMBATORE 5. 9< 04 /DR 6. !+ = /GF.