The ACIT, Circle-8, Ahmedabad V. Sundek India Ltd., Ahmedabad

ITA 3452/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0304 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-09-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 09-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV AGARWAL
• Assessee Lawyers: M M PATEL
• Section: 271(1)(c); 191; 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI R.V.EASWAR, VICE PRESIDENT AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 22/09/2009 DRAFTED ON: 1 4/10/2009 ITA NO.3452/AHD/2007 ASSESSMENT YEAR : 2002-03 THE ACIT CIRCLE-8 AHMEDABAD VS. SUNDEK INDIA LTD. 203-204, LALITA COMPLEX RASALA MARG NAVRANGPURA, AHMEDABAD PAN/GIR NO. : AACCS 0897 A (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI RAJEEV AGARWAL, DR RESPONDENT BY: SHRI M.M. PATEL, AR O R D E R PER D.C.AGRAWAL , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-XIV, AHMEDABAD DATED 23/05/20 07 PASSED FOR ASSESSMENT YEAR 2002-03, WHEREIN THE LEARNED CIT(A PPEALS) HAS CANCELLED THE PENALTY OF RS.3,65,655/- LEVIED U/S.2 71(1)(C) OF THE I.T. ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE-COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF DEC ORATIVE LAMINATES. DURING THE ASSESSMENT YEAR 2002-03, THE ASSESSING OFFICER PROPOSED THE ADDITION OF RS.1,95,49,674/- AS TRADING ADDITIONS. THE LEARNED ITA NO .3452/AHD/2007 ACIT VS. SUNDEK INDIA LTD. ASST.YEAR 2002-03 - 2 - CIT(APPEALS) SUSTAINED AN ADDITION OF RS.31,81,206/ - AND DELETED THE BALANCE. ON THIS ADDITION, THE ASSESSING OFFICER L EVIED PENALTY OF RS.3,65,655/-. IN RESPONSE TO SHOW-CAUSE NOTICE, THE ASSESSEE-COMPANY SUBMITTED A REPLY DATED 20/03/2006, WHEREIN IT WAS SUBMITTED THAT PENALTY CANNOT BE LEVIED ON REJECTION OF THE BOOKS. THE AS SESSING OFFICER HELD THAT PROVISIONS OF EXPLANATION-1 TO SECTION 271(1)( C) OF THE I.T. ACT, 1961 ARE APPLICABLE AND, THEREFORE, PENALTY IS LEVIABLE. 3. THE LEARNED CIT(APPEALS) CANCELLED THE PENALTY O N THE GROUND THAT ADDITION SUSTAINED IN A CASE OF GROSS PROFIT ESTIMA TION CANNOT BE MADE THE BASIS OF LEVY OF PENALTY. HE REFERRED TO FOLLOWING JUDGEMENTS:- SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. NATIONAL TEXTILES VS. CIT 249 ITR 125 (GUJ.) 2. CIT VS. JALARAM OIL MILL 253 ITR 192 (GUJ) 3. ITO VS. C.CHHOTALAL TEXTILES PVT.LTD. 95 TTJ 436 (MUM) 4. JCIT VS. XL (INDIA) LTD. 94 TJ 513 (ASR.) 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THERE ARE PLETHORA JUDGEMENTS WHICH HOLD THAT WHERE ADDITIONS TO INCOM E ARE BASED ON ESTIMATE AND THERE IS NO EVIDENCE OF ANY CONCEALMEN T OF INCOME, PENALTY ITA NO .3452/AHD/2007 ACIT VS. SUNDEK INDIA LTD. ASST.YEAR 2002-03 - 3 - U/S.271(1)(C) CANNOT BE LEVIED. WE MAY FURTHER REF ER TO THE FOLLOWING DECISIONS:- SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. CIT VS. SANGSOOR VANASPATI MILLS LTD. (2008) 303 ITR 53 (P&H) 2. CIT VS. VALIMBHAI H.PATAEL (2006) 280 ITR 487 (GUJ.) 3. CIT VS. SMT.M.MENNAKSHI KUTTY (2002) 258 ITR 494 (MAD.) 4. CIT VS. RAHMAT KHAN BIRBAL KHAN BADRUDDIN AND PARTY (1999) 240 ITR 778 (RAJ.) 5. CIT VS. RAWAL SINGH (2002) 254 ITR 191 (P&H) 5. REGARDING EXPLANATION-1 TO SECTION 271(1)(C) OF THE I.T. ACT, 1961 ON WHICH THE ASSESSING OFFICER RELIED, WE FIND THAT THE ASSESSEE HAS FURNISHED THE EXPLANATION WHICH HAS NOT BEEN FOUND FALSE. THEREFORE, EXPLANATION-1(A) CANNOT BE INVOKED. IN INVOKING TH E CLAUSE(B) OF EXPLANATION-1 TO SECTION 271(1)(C), THE ASSESSING O FFICER HAS TO GIVE A FINDING THAT THE ASSESSEE IS NOT ABLE TO SUBSTANTIA TE HIS EXPLANATION FURNISHED BY HIM, HIS EXPLANATION IS NOT BONA FIDE AND FURTHER THAT ALL THE FACTS RELATING TO THE EXPLANATION AND COMPUTATION O F TOTAL INCOME ARE NOT DISCLOSED BY HIM. ALL THE THREE INGREDIENTS ARE REQUIRED TO BE SATISFIED AND PROVED TO EXIST CUMULATIVELY FOR INVOKING CLAU SE(B). IT MEANS THAT THE ASSESSING OFFICER HAS TO NECESSARILY SHOW AS TO WHAT FACTS THE ASSESSEE ITA NO .3452/AHD/2007 ACIT VS. SUNDEK INDIA LTD. ASST.YEAR 2002-03 - 4 - HAS NOT DISCLOSED WHICH WERE RELEVANT FOR COMPUTATI ON OF INCOME, HOW THE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT SUBSTA NTIATED AND IS NOT BONA FIDE. NO SUCH FINDING IS APPEARING FROM THE PENALT Y ORDER AND, THEREFORE, HIS PENALTY ORDER CANNOT BE SUSTAINED. WE ACCORDI NGLY CONFIRM THE ORDER OF THE LEARNED CIT(APPEALS) AND APPEAL FILED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 16/10/2009. SD/- SD/- ( R.V. EASWAR ) ( D.C.AGRAWAL ) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD; DATED 16 / 10 /2009 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESP ONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT(A PPEALS)-XIV, AHMEDABAD 5. THE DR, AHMEDABAD BENCH.6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD