Rasranjan Food Products Pvt. Ltd., Ahmedabad V. The ACIT, Circle-5, Ahmedabad

ITA 3432/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7920 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1995-1996
• Appeal Filed On: 22-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GYAN PIPARA
• Keywords: Opportunity of being heard; Bonafide mistake

Judgement Text

, *,* *,**,* *,* IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T.A. NO.3432/AHD/2014 ( / ASSESSMENT YEAR : 1995-96) RASRANJAN FOOD PRODUCTS PVT. LTD. RASRANJAN COMPLEX, NR. VIJAY CHAR RASTA, AHMEDABAD 380 009 VS. THE ACIT, CIRCLE 5, PRATYAKSH KAR BHAVAN, NR. POLYTECHNIC, AMBAWADI, AHMEDABAD 380 015 ! PAN/GIR NO. : AABCR 8986 Q ( ' / APPELLANT ) .. ( #' RESPONDENT ) '$ APPELLANT BY : SHRI GYAN PIPARA, A.R. #'%$ / RESPONDENT BY : SHRI JAYANT JHAVERI, SR. D.R & ' (%) * / DATE OF HEARING 29/11/2017 +,-. %) * / DATE OF PRONOUNCEMENT 22/12/2017 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE FOR CONFIRMING THE PENALTY OF RS.7,20,562/- LEVIED BY THE AO U/S. 271(1)(C) AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XI, AHMEDABAD, VIDE APPEAL ITA NO.3432/AHD /2014 RASRANJAN FOOD PRODUCTS PVT. LTD VS. ACIT ASST.YEAR 1995-96 - 2 - NO.CIT(A)-XI/84/ACIT.CIR-5/2013-14 DATED 09/10/2014 FOR THE ASSESSMENT YEAR (AY) 1995-96, ASSESSEE HAS TAKEN FO LLOWING GROUND: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS.7,20,562/- LEVIED BY THE AO U/S.271(L )(C) OF THE ACT WHILE IGNORING THE ELABORATE SUBMISSIONS FILED BEFO RE HIM. IN VIEW OF THE ELABORATE FACTS AND SUBMISSIONS FILED COUPLED W ITH LEGAL POSITION, THE APPELLANT'S CASE DOES NOT FALL WITHIN THE SCOPE AND AMBIT OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT . ACCORDINGLY, THE IMPUGNED PENALTY OF RS.7,20,562/- REQUIRES TO BE QU ASHED/CANCELLED. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING AND CONSIDERING THE FACT THAT THE NATU RE OF ADDITIONS MADE SINCE THE ADDITIONS ON WHICH THE IMPUGNED PENA LTY HAS BEEN LEVIED BEING BASED COMPLETELY ON ESTIMATES AND/OR B ONAFIDE MISTAKE AND CONSIDERING THE FACT THAT THE APPELLANT HAVING FURNISHED COMPLETE PARTICULARS AND DETAILS IN RESPECT OF THE ADDITIONS MADE NO PENALTY IS WARRANTED ON SUCH ESTIMATED ADDITIONS AS HELD BY VARIOUS COURTS OF LAW INCLUDING THE JURISDICTIONAL COURT. A CCORDINGLY, THE IMPUGNED PENALTY OF RS.7,20,562/- REQUIRES TO BE DE LETED. 3. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT SINCE THE FINAL ASSESSED INCOME ON GIVING EFFECT TO ITAT'S OR DER BEING RS. NIL, THERE COULD NOT BE ANY MENS REA OR MOTIVE OR CONTUM ACIOUS CONDUCT IN CONCEALING THE PARTICULARS OF INCOME OR FURNISHI NG INACCURATE PARTICULARS OF INCOME AS ALLEGED BY THE AO AND EVEN IF SUCH CONCEALMENT WAS ASSUMED TO EXIST, SUCH ALLEGED CONC EALMENT WOULD NOT LEAD TO ANY EVASION OF TAX. ACCORDINGLY, NO PEN ALTY WAS WARRANTED. 4. THE LEARNED CIT(A) HAS FURTHER ERRED IN NOT APPRECI ATING THE FACT THAT MERE REJECTION OF THE CLAIM MADE WHICH IS OTHE RWISE NOT SUSTAINABLE IN LAW OR REJECTION OF PLAUSIBLE EXPLAN ATION FURNISHED BY THE ASSESSEE DOES NOT WARRANT PENALTY U/S. 271(L)(C ) OF THE ACT AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CI T VS. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC) APART FROM VARIOUS OTHER COURTS OF LAW. ITA NO.3432/AHD /2014 RASRANJAN FOOD PRODUCTS PVT. LTD VS. ACIT ASST.YEAR 1995-96 - 3 - THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MO DIFY OR DELETE ANY OF THE ABOVE GROUNDS AS WELL AS TO SUBMIT ADDIT IONAL GROUNDS AT THE TIME OF HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE IN THIS CASE, PENALTY U/S.271(1)(C) AMOUNTING OF RS.7,20,562/- WAS IMPOSE D BY THE AO VIDE ORDER DATED 26.03.2007. AGGRIEVED BY THIS ORDER, TH E ASSESSEE PREFERRED AN APPEAL TO CIT(A). THE LD. CIT(A) CANCELLED THE P ENALTY IN HIS ORDER. THEREAFTER, THE REVENUE FILED AN APPEAL TO THE ITAT AND THE HON'BLE ITAT DISMISSED THE APPEAL OF REVENUE. AGAINST THIS ORDER THE REVENUE PREFERRED AN APPEAL TO THE HON'BLE HIGH COURT. THE HON'BLE HIGH COURT OF GUJARAT IN THE JUDGMENT DATED 10.08.2010 IN TAX APPEAL NO.577 OF 2009 HAS CONFIRMED THE PENALTY U/S.271(1)(C). THE ASSESSEE COMPANY HAS FILED MISC. CIVIL APPLICAT ION AGAINST THE HON'BLE HIGH COURT OF GUJARAT'S ORDER. IN THE REVISED ORDER DATED 05.08.2011 OF THE HON'BLE HIGH COURT OF GUJARAT RES TORED BACK THE ISSUE OF PENALTY U/S.271(1)(C) TO THE HON'BLE ITAT, THE H ON'BLE ITAT VIDE ORDER DATED 09.02.2012 SET-ASIDE THE ISSUE TO THE F ILE OF THE AO WITH THE DIRECTION TO DECIDE THE ISSUE ON MERITS IN ACCORDAN CE WITH LAW AND AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE TO PRESENT THE CASE. ITA NO.3432/AHD /2014 RASRANJAN FOOD PRODUCTS PVT. LTD VS. ACIT ASST.YEAR 1995-96 - 4 - 2.1 IN ORDER TO FINALIZE PENDING PENALTY PROCEEDING S, AFTER RECEIPT OF ITAT'S ORDER, A FRESH OPPORTUNITY OF BEING HEARD WA S GIVEN BY THIS OFFICE LETTER DATED 08.03.2013, WHICH WAS DULY SERVED UPON THE ASSESSEE, REQUESTING THE ASSESSEE TO FILE REPLY IN THE MATTER . IN RESPONSE TO THE LETTERS, THE ASSESSEE FILED ITS WRITTEN SUBMISSION ON 21.03.2013. IN THE SUBMISSION FILED, IT WAS CONTENDED BY THE ASSESSEE THAT THE PENALTY PROPOSED TO BE LEVIED U/S.271(1)(C) OF THE ACT IS N OT IN ACCORDANCE WITHIN THE PROVISIONS OF LAW AS THE ASSESSEE COMPANY NEITH ER CONCEALED THE PARTICULARS OF INCOME NOR FURNISHED INACCURATE PART ICULARS OF INCOME. THE DETAILED REPLY OF THE ASSESSEE ALSO PLACE THE RELIA NCE ON THE FOLLOWING DECISIONS WHICH ARE SUPPORTED THAT NO PENALTIES LEV IABLE IN CASE OF ESTIMATED ADDITION. THE DECISIONS QUOTED BY THE ASS ESSEE ARE RE-PRODUCED AS UNDER:- A) CIT VS. MAHENDRA SINGH KHEDIA (2012) 252 CTR 4 53 (RAJ.) B) CIT VS. AERO TRADERS PVT. LTD (2010) 322 ITR 3 16 (DELHI) C) PARAMOUNT RADIO SERVICES VS. ITD (1990) 36TTJ 46 4 (AHD.) D) JUMABHAI PREMCHAND (HUF) VS. CIT (2000) 243 ITR 812 (GUJ.) E) HARYNA DELHI TPT. COMMISSION AGENCY VS. ASSTT. ( 2001) 79 ITD 145 (AGRA) F) SUDESH KHANNA VS. ASSTT. CIT (2005) 98 TTJ 106 ( AHD.) THE REPLY OF THE ASSESSEE HAS BEEN GONE THROUGH VIS -A-VIS FACTS ON RECORDS OF THE CASE OF THE ASSESSEE. FURTHER, ON AN ALYSIS OF THE FACTS OF THE CASE, IT BECOMES CLEAR THAT IT IS A CASE OF INTENTI ONAL CONCEALMENT OF FACTS AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. ITA NO.3432/AHD /2014 RASRANJAN FOOD PRODUCTS PVT. LTD VS. ACIT ASST.YEAR 1995-96 - 5 - 2.2 HENCE, PENALTY U/S.271(1)(C) OF RS.7,20,562/- W AS IMPOSED. 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ORDER OF TH E ASST. COMMISSIONER OF INCOME TAX . 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. IN THIS CASE, PENALTY HAS BEEN LEVIED BEING BASED COMP LETELY ON ESTIMATES AND/OR BONAFIDE MISTAKE AND CONSIDERING THE FACT TH AT THE APPELLANT HAVING FURNISHED COMPLETE PARTICULARS AND DETAILS I N RESPECT OF THE ADDITIONS MADE. APPELLANT RELIED ON DECISION OF THE HONBLE SUPREME COURT IN THE MATTER OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC) , WHICH IS REPRODUCED AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICU LARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTI ON 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INF ORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. I N ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRE TCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISH ING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE ITA NO.3432/AHD /2014 RASRANJAN FOOD PRODUCTS PVT. LTD VS. ACIT ASST.YEAR 1995-96 - 6 - THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INC OME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNO T AMOUNT TO FURNISHING INACCURATE PARTICULARS. 4.1 IT IS ALSO CITED IN THE JUDGMENT OF ALLAHABAD H IGH COURT IN THE MATTER OF BANARAS TEXTORIUM VS. CIT 169 ITR 782 , IN THIS CASE IT IS HELD THAT AS UNDER: THE EXPLANATION TO SECTION 271(1)(C) OF THE IT ACT , 1961 DOES NOT CONFER ANY DISCRETION ON THE CONCERNED AUTHORITY TO INVOKE IT OR NOT. IT AUTOMATICALLY APPLIES TO CASES WHERE THE INCOME RET URNED IS LESS THAN EIGHTY PER CENT OF THE ASSESSEE INCOME. THE CONSEQU ENCES FOLLOW AS A MATTER OF LAW. WHERE THE EXPLANATION APPLIES, THREE LEGAL PRESUMPTION IMMEDIATELY ARISE VIZ., (I) THE AMOUNT OF ASSESSED INCOME IN THE CORRECT INCOME AND IT IS, IN FACT, THE INCOME OF ASSESSEE H IMSELF, (II) THAT THE FAILURE OF THE ASSESSEE TO RETURN THE CORRECT INCOM E WAS DUE TO FRAUD, OR (III) THAT FAILURE OF THE ASSESSEE TO RETURN THE CO RRECT INCOME ASSESSED WAS DUE TO GROSS OR WILLFUL NEGLECT ON HIS PART. TH E PRESUMPTIONS RAISED BY THE EXPLANATION ARE NOT CONCLUSIVE PRESUMPTIONS. THEY ARE NOT REBUTTABLE PRESUMPTIONS. IF AN ASSESSEE COMES WITHI N THE MISCHIEF OF THE EXPLANATION, IN ORDER TO GET OUT OF IT, HE MUST PRO VE THAT THE FAILURE TO RETURN THE CORRECT INCOME WAS NOT DUE TO ANY OF THE FACTOR, NAMELY, FRAUD OR GROSS OR WILLFUL NEGLECT ON HIS PART. ONCE THAT INITIAL BURDEN IS DISCHARGED, THE ASSESSEE WOULD BE OUT OF THE MISCHI EF OF THE EXPLANATION UNTIL AND UNLESS THE REVENUE IS ABLE TO ESTABLISH A FRESH THAT THE ASSESSEE, IN FACT, HAD CONCEALED HIS INCOME OR PART ICULARS THEREOF. ITA NO.3432/AHD /2014 RASRANJAN FOOD PRODUCTS PVT. LTD VS. ACIT ASST.YEAR 1995-96 - 7 - 5. AS IN THE PAST ALSO THE PROOF OF SUCH SALE WAS N OT SUPPORTED BY ANY EVIDENCE. IN SIMILAR CIRCUMSTANCES, THE BOOKS OF AC COUNT IN THE EARLIER YEAR WAS REJECTED AND ESTIMATED THE INCOME. REJECTI NG THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE ASSESSING OFFICER ADOP TED THE RATE OF 40% AS AGAINST 25.77% DECLARED BY THE ASSESSEE IN THE RETU RN OF INCOME AND MADE ADDITION OF RS.19,09,757/- TO THE INCOME OF TH E ASSESSEE. THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING TH E BOOKS OF ACCOUNT OF APPLYING THE GROSS PROFIT AS IT WAS BASED ON SURMIS E AND CONJUNCTURE. 6. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS, WE DELETE THE PENALTY IN THIS MATTER. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 22 / 12 /201 7 SD/- SD/- IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRAMOD KUMAR) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/12/2017 PRITI YADAV, SR.PS ITA NO.3432/AHD /2014 RASRANJAN FOOD PRODUCTS PVT. LTD VS. ACIT ASST.YEAR 1995-96 - 8 - !'# $#! COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) 45 / THE CIT(A)-XI, AHMEDABAD. 5. 67 8)'12 *12. 0 / DR, ITAT, AHMEDABAD 6. 8 9: ( GUARD FILE. % & / BY ORDER, # 6)) //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD