Satyam Dairy Limited, Ahmedabad V. The Income tax Officer,Ward-8(1), Ahmedabad

ITA 3293/AHD/2004

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0509 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-11-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 11-11-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDEEP GARG SR
• Keywords: Gross profit estimation; Business income; Depreciation; Cost of acquisition; Reasonable cause; Unabsorbed depreciation; Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI H.L. KARWA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING:3.11.2009 DRAFTED ON:3.11.20 09 ITA NO.3293/AHD/2004& ITA NO.762/AHD/2006 ASSESSMENT YEAR : 2001-02, 2001-02 SATYAM DAIRY LIMITED B/2/193, SWI PARK, MADHUVRUND SOCIETY, GHATLODIYA, AHMEDABAD. VS. INCOME TAX OFFICER, WARD-8(1), AHMEDABAD. PAN/GIR NO. : AAFCS 2035 P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI S.N.SOPARKAR SR. ADV. WITH SMT.URVASHI SHODHANI RESPONDENT BY: SHRI SANDEEP GARG SR. A.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST T HE SEPARATE ORDERS OF THE LD.CIT(APPEALS)-XIV, AHMEDABAD, DATED 15.09.200 4 AND 13.02.2006 BY TAKING FOLLOWING GROUNDS ITA NO.3293/AHD/2004 GROUND NO. 1 OF THE APPEAL READS AS UNDER: 1. THE LD. CIT(A) XIV, ABAD IS ERRED TO UP HOLD THE A SSTT. ORDER PASSED BY LEARNED ASSESSING OFFICER FOR ESTIMATION OF 1% NET PROFIT ON SALES WHICH IS RS.882270/- ON TOTAL SALES OF RS.88272025/- AFTE R REJECTION OF BOOK RESULT, WITHOUT CONSIDERING THE FACTS AND EVIDENCES OF THE CASE. THEREFORE, YOUR APPELLANT PRAY TO DELETE THE ADDITI ONS OF ESTIMATION OF NET PROFIT RS.882270/- AFTER CONSIDERING THE FACTS & EVIDENCES OF THE CASE. ITA NO.3293/AHD/2004 & 762 /AHD/2006 M/S.SATYAM DAIRY LTD. ASST.YEAR -2001-02 - 2 - 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS NOTICED THAT THE GROSS PR OFIT RATIO HAS FALLEN DRASTICALLY AS COMPARED TO IMMEDIATELY PRECEDING YE AR. (FROM 10.76% TO 7.70%) AND IN RESPONSE TO THE QUERY, THE ASSESSEE COULD NO T PRODUCE THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS FOR NECESSARY VERIFICATI ON. IT WAS SUBMITTED BY THE ASSESSEE BY FILING AN AFFIDAVIT THAT THE BOOKS OF A CCOUNT WERE BURNT IN A FIRE AT THE FACTORY PREMISES ON 21.11.2002, BUT FAILED TO P RODUCE EVEN A SMALL PART OF THE BURNT BOOKS. BY CITING AN EXAMPLE OF VIMAL DAIR Y LTD., WHICH IS IN THE SAME LINE OF BUSINESS, THE LEARNED ASSESSING OFFICER HAS PROCEEDED TO ESTIMATE THE NET PROFIT OF THE ASSESSEE @ 1% OF TOTAL SALES OF R S.8,82,72,025/- AMOUNTING TO RS.8,82,270/- BY REJECTING THE BOOK RESULTS. 3. IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS), THE ASSESSEE SUBMITTED THAT THE COMPANY STARTED WHOLESA LE BUSINESS, PURCHASE COST INCREASED THERE WAS KEEN MARKET COMPETITION AS NEW DAIRIES STARTED IN THE MARKET, PROJECT IS NOT VIABLE ETC. IT WAS FURTHER S UBMITTED THAT SINCE THE NATURE OF BUSINESS IS TO COLLECT THE MILK FROM FARMERS AND AFTER PROCESSING AND PACKING IT IS SOLD, BUT IN MANY CASES THE MILK BECOMES UNUS ABLE DUE TO CHANGE IN QUALITY OF MILK, WHICH EVEN DO NOT FETCH THE COST P RICE AND AS DAIRIES LIKE AMUL, MOTHER DAIRY HEAVILY MARKET ITS PRODUCT AND NATURAL LY THE PUBLIC PREFER THEIR PRODUCT HENCE THE APPELLANT SOMETIMES IS FORCED TO SELL ITS MILK AT DISCOUNTED PRICE. THE APPELLANT ALSO TAKEN OBJECTION TO THE CO MPARISON OF THE APPELLANT WITH VIMAL DAIRY, AS THE BUSINESS OF VIMAL DAIRY IS ENTIRELY DIFFERENT, I.E. PACKING THE LOOSE MILK IN 500 ML. POUCH AND IN LOOSE CANS, AS ALSO HAVING OTHER PRODUCTIONS AND JOB WORK. THE APPELLANT ALSO SUBMIT TED THE NAMES OF SOME DIARIES WHICH ARE CLOSED DUE TO MARKET COMPETITION. ITA NO.3293/AHD/2004 & 762 /AHD/2006 M/S.SATYAM DAIRY LTD. ASST.YEAR -2001-02 - 3 - 4. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD AS UNDER: 2.3. AFTER CAREFULLY CONSIDERING THE OBSERVATIONS OF THE LEARNED ASSESSING OFFICER AS WELL AS THE SUBMISSION AS ADVA NCED BY THE APPELLANT, I AM OF THE VIEW THAT THE A.O. IS FULLY JUSTIFIED IN REJECTING THE BOOKS OF THE APPELLANT AND ESTIMATING THE NET PROFIT @ 1% . FIRS T OF ALL, THE APPELLANT HAS NOT BEEN ABLE TO PROPERLY EXPLAIN THE REASONS FOR F ALL IN G.P. BY FURNISHING SUPPORTING DOCUMENTS AND IN THE ABSENCE OF WHICH TH E LEARNED ASSESSING OFFICER HAS LEFT WHICH NO ALTERNATIVE THAN TO ESTIM ATE THE PROFIT. THERE IS NO FORCE IN THE ARGUMENTS THAT DUE TO FIRE, THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS COULD NOT BE PRODUCED AND THE LEARNED ASS ESSING OFFICER IS VERY WELL WITHIN HIS RIGHT TO OBSERVE THAT IN CASE THERE WAS FIRE, THE APPELLANT AT LEAST COULD HAVE PRODUCED SOME PARTS OF THE BURNT B OOKS. IT IS FURTHER SEEN THAT THE FIRE HAD TAKEN PLACE AT THE FACTORY PREMIS ES OF THE APPELLANT, BUT THE BOOKS OF ACCOUNT AND OTHER ACCOUNTING DOCUMENTS MUST HAVE NORMALLY BEEN KEPT AT THE OFFICE PREMISES OF THE APPELLANT, WHICH IS SITUATED AT A DIFFERENT BUILDING. IN VIEW OF THE FACT THAT THERE WAS A SHARP FALL IN G.P AND THE APPELLANT HAS FAILED TO PROPERLY EXPLAIN THE RE ASONS FOR SUCH A FALL IN G.P. EXCEPT ITS INABILITY TO PRODUCE THE BOOKS OF ACCOUN T AND OTHER DOCUMENTS DUE TO FIRE AT FACTORY PREMISES, I HOLD THAT THE AD DITION OF RS.8,82,270/- IS FULLY JUSTIFIED AND NO INTERFERENCE WHATSOEVER IS C ALLED FOR. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED THAT THERE WAS FALL IN NET PROFIT AS COMPARED TO THE PRE CEDING YEAR. HE SUBMITTED THAT THE REASONS FOR THE SAME COULD NOT BE EXPLAINE D AND SUBSTANTIATED IN ABSENCE OF BOOKS OF ACCOUNT AND DOCUMENTS WHICH WER E DESTROYED IN FIRE. HOWEVER, THE ESTIMATION OF NET PROFIT AT 1% OF THE TURN OVER MADE BY THE LEARNED ASSESSING OFFICER WAS ON A HIGHER SIDE AND PRAYED THAT A REASONABLE ESTIMATE OF A NET PROFIT SHOULD BE MADE. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTE D THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). ITA NO.3293/AHD/2004 & 762 /AHD/2006 M/S.SATYAM DAIRY LTD. ASST.YEAR -2001-02 - 4 - 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSEE FILED RETURN OF INCOME ON 31.10.2001 DECLA RING TOTAL INCOME AT NIL ALONG WITH THE AUDITED STATEMENT OF ACCOUNTS. THERE WAS A FIRE AT THE FACTORY PREMISES OF THE ASSESSEE 21.11.2002 AND THE BOOKS O F ACCOUNT OF THE ASSESSEE AND RELEVANT VOUCHERS AND DOCUMENTS WERE DESTROYED. THEREFORE, THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT AND VOUCHERS BEFORE THE LEARNED ASSESSING OFFICER. FURTHER THE LEARNED ASSESSING OF FICER OBSERVED THAT THERE WAS FALL IN GROSS PROFIT OF THE ASSESSEE IN THE YEA R FROM 10.76% IN THE IMMEDIATELY PRECEDING YEAR TO 7.70%. HE THEREFORE, ESTIMATED THE NET PROFIT OF THE ASSESSEE AT 1% OF THE TURNOVER AND MADE ADDITIO N OF RS.8.82,270/-. IN APPEAL THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) CONFIRMED THE SAME. WE FIND THAT THE ASSESSEE COULD NOT PRODUCE THE BOO KS OF ACCOUNTS AS THEY WERE DESTROYED IN FIRE. FURTHER, BEFORE THE BOOKS O F ACCOUNTS WERE DESTROYED IN FIRE, THEY WERE AUDITED AND THE AUDITED STATEMEN T OF ACCOUNTS WERE FILED WITH THE DEPARTMENT ALONGWITH THE RETURN OF INCOME ON 31.10.2001 AS EMERGING FROM THE ORDER OF THE LEARNED ASSESSING O FFICER. FURTHER, THERE WAS NO ADVERSE COMMENT MADE BY THE AUDITORS ON THE ACCO UNTS OF THE ASSESSEE. IN ABSENCE OF BOOKS OF ACCOUNTS, THE ASSESSEE WAS NOT IN A POSITION TO EXPLAIN THE FALL IN THE GROSS PROFIT RATIO. THEREFORE, THE LEA RNED ASSESSING OFFICER WAS JUSTIFIED IN ESTIMATING THE NET PROFIT OF THE ASSES SEE. HOWEVER, WE ARE OF THE CONSIDERED OPINION THAT WHILE DOING SO, THE LEARNED ASSESSING OFFICER SHOULD HAVE CONSIDERED THE PAST ACCEPTED NET PROFIT OF 0.5 4% IN THE CASE OF THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR. THE LO WER AUTHORITIES WERE NOT JUSTIFIED IN ESTIMATING THE NET PROFIT OF THE ASSES SEE AT 1% RELYING ON THE NET ITA NO.3293/AHD/2004 & 762 /AHD/2006 M/S.SATYAM DAIRY LTD. ASST.YEAR -2001-02 - 5 - PROFIT SHOWN BY M/S VIMAL DAIRY LTD. WHEN IN THE CA SE OF THE ASSESSEE ITSELF IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2000-01 N ET PROFIT @ 0.54% SHOWN BY THE ASSESSEE WAS ACCEPTED IN THE ASSESSMEN T. WE ARE OF THE VIEW THAT THE NET PROFIT OF THE ASSESSEE FOR THE YEAR SH OULD BE COMPUTED AT 0.54% AS ACCEPTED IN THE IMMEDIATELY PRECEDING YEAR. WE THER EFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT THE LEARNED ASS ESSING OFFICER TO COMPUTE THE NET PROFIT OF THE ASSESSEE AT 0.54% OF THE TURN OVER. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. GROUND NO.2 OF THE APPEAL READS AS UNDER: 2. THE LD. CIT(A) XIV, ABAD HAS ALSO ERRED TO UPHOLD THE ASSTT. ORDER PASSED BY A.O. FOR DISALLOWANCE OF DEPRECIATION ON NEW MAC HINERY PURCHASED WHICH ARE RS.76482/- ON COST RS.301270/- WITHOUT CO NSIDERING THE FACTS & CIRCUMSTANCES OF THE CASE. THEREFORE, YOUR APPEL LANT PRAY TO DELETE THE SAID DISALLOWANCES OF RS.76482/- AFTER CONSIDER ING THE FACTS & CIRCUMSTANCES OF THE CASE. 9. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR, THE LEARNED ASSESSING OFFICER HAS NOTICED THAT THERE WAS ADDITI ON TO FIXED ASSETS AND THE ASSESSEE WAS ASKED TO FURNISH COPY OF BILLS AND CON FIRMATION FROM THE PARTIES FOR THE MACHINERIES PURCHASED. SINCE, THE ASSESSEE HAS FAILED TO FURNISH THE BILLS OF CREAM SEPARATOR PLANT AND OTHER MACHINERIES AMOU NTING TO RS.3,01,270/-, THE DEPRECIATION ON THE ABOVE ASSETS HAS BEEN DISAL LOWED. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT T HE ASSESSEE HAS SUBMITTED DURING THE COURSE OF APPELLANT PROCEEDING S THAT THE BILLS FOR THE SAID MACHINERIES COULD NOT BE PRODUCED DUE TO FIRE IN PR EMISES. HENCE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD THAT THE D ISALLOWANCE MADE IN ITA NO.3293/AHD/2004 & 762 /AHD/2006 M/S.SATYAM DAIRY LTD. ASST.YEAR -2001-02 - 6 - RESPECT DEPRECIATION ON THE NEW ASSETS AMOUNT TO RS .76,482/- IS FULLY JUSTIFIED AND NO INTERFERENCE WHATSOEVER IS CALLED FOR. 10. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE SUBMITTED THAT THE DEPRECIATION WAS DISALLOWED AS THE ASSESSEE COU LD NOT PRODUCE THE BILLS FOR CREAM SEPARATOR PLANT. HE SUBMITTED THAT THE ASSESS EE WAS NOT IN A POSITION TO SUBMIT THE BILLS AND THEREFORE, THE ISSUE MAY BE DE CIDED AGAINST THE ASSESSEE. HENCE, WE DISMISS THIS GROUND OF APPEAL OF THE ASSE SSEE. ITA NO.762/AHD/2006 11. THE SOLE ISSUE INVOLVED IN THIS APPEAL THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS.3,14,108/- LEVIED BY THE LEARNED ASSESSING OFFICER UNDER SECTI ON 271(1)(C) OF THE ACT. 12. THE BRIEF FACTS OF THE CASE ARE THAT PENALTY UN DER SECTION 271(1)(C) WAS LEVIED IN RESPECT OF NET PROFIT OF RS.7,17,724/- AN D ON ACCOUNT OF UNABSORBED DEPRECIATION OF RS.76,482/-. THE ASSESSEE SUBMITTED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THAT THE PENALT Y IS NOT LEVIABLE ON ADDITION MADE ON ESTIMATE BASIS BY APPLYING THE NET PROFIT RATE AFTER REJECTING THE BOOKS OF ACCOUNT. IT WAS ALSO SUBMITTED THAT PE NALTY CANNOT BE LEVIED ON DISALLOWANCE OF DEPRECIATION AS ALL DETAILS WERE FU RNISHED ALONG WITH THE RETURN AND THERE WAS NO INTENTION ON THE PART OF ASSESSEE TO CONCEAL ANY PARTICULARS OF ITS INCOME. 13. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT HE WAS IN AGREEMENT WITH THE VIEW OF THE ASSESSEE IN RESPECT OF LEVYING PENALTY ON DI SALLOWANCE OF DEPRECIATION AND HENCE DIRECTED THE LEARNED ASSESSING OFFICER TO MODIFY THE WORKING OF ITA NO.3293/AHD/2004 & 762 /AHD/2006 M/S.SATYAM DAIRY LTD. ASST.YEAR -2001-02 - 7 - PENALTY. HOWEVER, WITH REGARD TO THE PENALTY IN RES PECT OF ADDITION OF NET PROFIT, THE LEARNED COMMISSIONER OF INCOME TAX(APPE ALS) HELD THAT ACTION OF THE LEARNED ASSESSING OFFICER IN ESTIMATING THE NET PROFIT AFTER REJECTING THE BOOKS OF ACCOUNT WAS JUSTIFIED AND THEREFORE, LEVYI NG SUBSEQUENT PENALTY FOR INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE WA S ALSO JUSTIFIED. 14. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE RELIED ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF NAVJIVAN OIL MILLS VS. COMMISSIONER OF INCOME TAX 252 ITR 417 (GUJ.), AND THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF IN COME TAX VS. B.S.BADVE & ANR. 138 ITR 682 (BOM.) AND SUBMITTED THAT NO PENAL TY CAN BE LEVIED WHERE THE INCOME OF THE ASSESSEE WAS ESTIMATED. THEREFORE, TH E PENALTY SHOULD BE DELETED. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE FACTS OF THE CASE ARE THAT THE LEARNED ASSESSING OFFICER FOUND THAT T HE GROSS PROFIT SHOWN BY THE ASSESSEE DURING THE YEAR WAS LOWER THAT SHOWN IN TH E IMMEDIATELY PRECEDING YEAR. HE THEREFORE, REJECTED THE BOOK RESULT OF THE ASSESSEE AND ESTIMATED NET PROFIT @ 1% OF THE SALES AND MADE ADDITION OF RS.7, 17,724/- TO THE INCOME OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT OF RS.3,14,108/- FOR FILING O F INACCURATE PARTICULARS/CONCEALMENT OF INCOME BY ASSESSEE COMPA NY, WHICH WAS CONFIRMED IN APPEAL BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). WE FIND THAT THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX VS. M/S. MAZDA AGENCY, IN ITA NO.1309/AH D/2008 ORDER DATED ITA NO.3293/AHD/2004 & 762 /AHD/2006 M/S.SATYAM DAIRY LTD. ASST.YEAR -2001-02 - 8 - 19.02.2009 HAS HELD THAT IN A CASE OF SIMPLE ADDITI ON ON ACCOUNT OF LOW GROSS PROFIT NO PENALTY CAN BE LEVIED UNDER SECTION 271(1 )(C) OF THE ACT RELYING ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. SUBHASH TRADING COMPANY (1996) 221 ITR 110(GUJ.) AND ADDL. CIT VS. CAHNDRAVILAS HOTEL (1987) 165 ITR 300(GUJ.). THEREFORE THE PENALTY CAN NOT BE SUSTAINED AS PER LAW. FURTHER WE FIND THAT PENALTY UNDER SECTION 271(1)(C) WAS IMPOSED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: SINCE THE ASSESSEE COMPANY HAS FAILED TO FURNISH A NY REASONABLE CAUSE OR REPLY TO THE FINAL SHOW CAUSE NOTICE ISSUED AFTER RECEIVING THE APPELLATE ORDER, IT IS PRESUMED THAT ASSESSEE HAS NOTHING TO SAY IN THIS MATTER AND THE MATTER IS DECIDED ON MERITS. FOR THE DETAILS AND REASONS GIVEN IN THE ORDER FOR A.Y. 200 1-02 IS FILING OF INACCURATE PARTICULARS/CONCEALMENT OF INCOME BY THE ASSESSEE C OMPANY FOR WHICH PENALTY OF RS.3,14,108/- IS LEVIABLE. FROM A READING OF THE ABOVE ORDER SHOWS THAT THE LE ARNED ASSESSING OFFICER HAS NOT RECORDED A CLEAR FINDING TO THE EFFECT THAT WHETHER THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR HE WAS GUILTY OF FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. THE HON'BLE HIGH COURT OF GUJARAT IN THE CA SE OF NEW SORATHIA ENGINEERING CO. VS. COMMISSIONER OF INCOME TAX (2006) 282 ITR 6 42 (GUJ) HAS HELD AS UNDER: 11. IN THE CASE OF CIT VS. MANU ENGINEERING WORKS ( SUPRA) THIS IS WHAT IS LAID DOWN BY THIS COURT AT PAGE NO. 310 OF THE REPORTS : '.. WE FIND FROM THE ORDER OF THE IAC, IN THE PENALTY PROCEEDINGS, THAT IS, THE FINAL CONCLUS ION AS EXPRESSED IN PARA 4 OF THE ORDER : 'I AM OF THE OPINION THAT IT WILL HAVE TO B E SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME'. NOW, THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI CRI MINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WH ETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PA RTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR-CUT F INDING WAS REACHED BY THE IAC AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED B Y THE IAC WAS LIABLE TO BE STRUCK DOWN.' THE PENALTY ORDER AND THE ORDER OF CIT(A) SH OW THAT NO CLEAR-CUT FINDING HAS BEEN REACHED. THE TRIBUNAL HAS FAILED TO APPRECIATE THIS LEGAL ISSUE. APPLYING THE RATIO TO THE FACTS OF THE CASE IT IS APPARENT THAT THE OR DER OF PENALTY CANNOT BE SUSTAINED AND THE TRIBUNAL COULD NOT HAVE SUSTAINED THE SAME. THE TRIBUNAL HAVING FAILED TO TAKE INTO CONSIDERATION AND DEAL WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT IT ITA NO.3293/AHD/2004 & 762 /AHD/2006 M/S.SATYAM DAIRY LTD. ASST.YEAR -2001-02 - 9 - WOULD CONSTITUTE AN ERROR IN LAW WHICH GOES TO THE VERY BASIS OF THE CONTROVERSY INVOLVED AND HENCE, THE IMPUGNED ORDER OF THE TRIBU NAL CANNOT BE UPHELD. IN VIEW OF THE ABOVE, ALSO THE PENALTY LEVIED CANNO T BE SUSTAINED. WE THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND D ELETE THE LEVY OF PENALTY OF RS.3,14,108/- UNDER SECTION 271(1)(C) OF THE ACT. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.3293/AHD/2004 IS PARTLY ALLOWED AND IN ITA NO.762/AHD/2006 IS ALLOWE D. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 6/11/2009. SD/- SD/- ( H.L. KARWA ) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUN TANT MEMBER AHMEDABAD; DATED 6/11/ 2009 PREPARED AND COMPARED BY : PARAS ITA NO.3293/AHD/2004 & 762 /AHD/2006 M/S.SATYAM DAIRY LTD. ASST.YEAR -2001-02 - 10 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XIV, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD