M/s. Arihant Steels, Jalna V. Deputy Commissioner of Income-tax,

ITA 357/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0590 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 26-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: V L JAIN
• Keywords: Search and seizure; Revised return
• Section: 143(3); 133A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 357/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2008-09 M/S. ARIHANT STEELS, C-47, ADDITIONAL M.I.D.C., JALNA 431203 PAN : AAEFA0483F ....... / APPELLANT ' / V/S. DCIT, CENTRAL CIRCLE-1(2), PUNE / RESPONDENT ASSESSEE BY : SHRI V.L. JAIN REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 23-08-2016 / DATE OF PRONOUNCEMENT : 21-10-2016 * / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL, PUNE DATED 1 7-12-2013 FOR THE ASSESSMENT YEAR 2008-09 AGAINST CONFIRMING OF LEVY OF PENALTY 2 ITA NO. 357/PN/2014, A.Y. 2008-09 LEVIED U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF M S BARS FROM MS SCRAP AND INGOTS. THE ASSESSEE FILED ITS ORIGINAL RETUR N OF INCOME ON 23-09-2008 DECLARING TOTAL INCOME OF ` 13,420/-. SURVEY ACTION U/S. 133A OF THE ACT WAS CONDUCTED ON 08-05-2009 AT THE B USINESS PREMISES OF THE ASSESSEE. SEARCH ACTION U/S. 132 OF THE ACT WAS CAR RIED OUT IN THE CASE OF SHRI RAJESH B. SONI, ONE OF THE PARTNE RS IN THE ASSESSEE FIRM ON 09-05-2009. THE STATEMENT OF SHRI RAJE SH B. SONI WAS RECORDED DURING SURVEY, WHEREIN HE ADMITTED THAT TH ERE WAS UNACCOUNTED SALE OF STEEL BARS TO THE TUNE OF ` 55.78 LAKHS DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, HE OFFERED ` 56,50,000/- AS ADDITIONAL INCOME. IN RESPONSE TO NOTICE U/S. 153C, THE AS SESSEE FILED ITS RETURN OF INCOME ON 14-10-2010 DECLARING TOTAL INCOME OF ` 56,63,420/-. THE ASSESSING OFFICER ACCEPTED THE INCOME RET URNED BY THE ASSESSEE VIDE ASSESSMENT ORDER DATED 20-12-2011 PASSED U/S. 143(3) R.W.S. 153C OF THE ACT. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) FOR CONCEALMENT OF INCOME AND FURNIS HING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER VIDE ORDER DATED 28-06-2012 LEVIED PENALTY OF ` 19,20,435/-. AGGRIEVED BY THE ORDER LEVYING PENALTY U/S. 271(1)(C), THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDER CONFIRMED THE LEVY OF PENALTY. NOW, THE ASSESSEE IS IN SECOND APPEA L BEFORE THE 3 ITA NO. 357/PN/2014, A.Y. 2008-09 TRIBUNAL ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 3. SHRI V.L. JAIN APPEARING ON BEHALF OF THE ASSESSEE SUBMIT TED THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER REFERRED TO THE SURVEY ACTION WHERE DOCUMENTS FOUND AND IMPOUNDED WERE IN RELA TION TO CLANDESTINE REMOVAL OF GOODS TO THE TUNE OF ` 55.78 LACS. FURTHER, THE ASSESSMENT ORDER REFERS TO THE STATEMENT OF SHRI RAJES H B. SONI RECORDED DURING SURVEY ADMITTING ADDITIONAL INCOME. THE S TATEMENT OF SHRI RAJESH B. SONI WAS RECORDED ON 20-06-2009 DURING T HE COURSE OF SURVEY ACTION U/S. 132 OF THE ACT. SHRI RAJESH B. SONI A DMITTED TO THE UNACCOUNTED SALES IN RESPONSE TO Q. NO. 7 IN THE SAID STATEMENT. IN THE PENALTY ORDER THE ASSESSING OFFICER HAS REFERRED TO THE S TATEMENT OF SHRI RAJESH B. SONI RECORDED DURING SURVEY I.E. ON 08-05-2009. THERE IS NO DECLARATION OF ANY INCOME IN ANY STATEMENT PURPORTEDLY R ECORDED DURING SURVEY. 3.1 THE LD. AR SUBMITTED THAT THE PENALTY IS INITIATED FOR BO TH CHARGES I.E. FILING OF INACCURATE PARTICULARS AND CONCEALMENT O F INCOME. THE ASSESSING OFFICER WAS HIMSELF NOT CLEAR, WHETHER THE PEN ALTY IS TO BE LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEALM ENT OF INCOME. THE ASSESSING OFFICER WHILE CONCLUDING THE PENALTY O RDER HAS LEVIED PENALTY FOR CONCEALMENT OF INCOME ALONE. THE REASON FOR INITIATING PENALTY AND THE ULTIMATE ORDER FOR LEVYING PENALTY ARE NOT FOR THE SAME REASON. THEREFORE, THE PENALTY ORDER IS LIABLE TO BE SET ASIDE ON THIS GROUND ALONE. IN SUPPORT OF HIS SUBMISSIONS, THE LD . AR PLACED 4 ITA NO. 357/PN/2014, A.Y. 2008-09 RELIANCE ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. CIT REPORTED AS 282 ITR 642 (GUJ.). 3.2 THE LD. AR FURTHER SUBMITTED THAT THE ASSESSING OFFICER IN PARA 4 OF THE PENALTY ORDER HAS REFERRED TO THE PENALTY OF ` 7.5 LACS LEVIED UNDER THE PROVISIONS OF EXCISE ACT ON ACCOUNT OF CLANDESTINE REM OVAL OF GOODS WORTH ` 55.78 LAKHS FROM THE FACTORY. THE COMMISSIONER OF INCOME TAX (APPEALS) IN FIRST APPEAL HAS REITERATED THE FINDINGS OF ASSESS ING OFFICER. THE OBSERVATION OF THE COMMISSIONER OF INCOME TAX (APPEALS ) THAT EVIDENCE OF REMOVAL OF STOCK WAS FOUND IN THE COURSE OF SU RVEY IS INCORRECT. NO INCRIMINATING MATERIAL WAS FOUND DURING THE C OURSE OF SURVEY TO SHOW CLANDESTINE REMOVAL OF GOODS FROM THE PR EMISES. THE ASSERTIONS OF THE ASSESSEE HAVE BEEN RECORDED BY THE ASSESSING OFFICER IN THE PENALTY ORDER BUT THE SAME HAVE NOT BEEN REBUT TED BY THE DEPARTMENT. THE TAX AUDIT REPORT IN FORM 3CD CLEARLY R EFERS TO THE MAINTENANCE OF EXCISE REGISTERS AND PROVIDES QUANTITATIVE DETAILS OF INVENTORY. THEREFORE, THERE IS NO EVIDENCE FOR SUCH REMOVAL OF GOODS. 3.3 THE LD. AR CONTENDED THAT PENALTY CANNOT BE LEVIED M ERELY WHEN THE ASSESSEE OFFERS SOME INCOME WHICH IS NOT BACKED BY A NY MATERIAL. TO SUPPORT OF HIS CONTENTION, THE LD. AR PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DILIP OAK VS. ACIT REPORTED AS 138 TTJ (PUNE) 559. THERE IS NO CHALLENGE TO THE QUANTITATIVE DATA PROVIDED IN THE TAX AUDIT REPORT IMPLYIN G THAT THE ASSESSING OFFICER HAS NO ISSUE WITH THE REPORTED SALES. ME RE DECLARATION OF HIGHER INCOME WITHOUT SPECIFIC FINDING OF DISCREPA NCIES CANNOT RESULT IN PENALTY. TO SUPPORT THIS ARGUMENTS TH E LD. AR PLACED 5 ITA NO. 357/PN/2014, A.Y. 2008-09 RELIANCE ON THE DECISION OF ILLUMINATION INDIA VS. ACIT REPORT ED AS 100 TTJ 426 (PUNE). 3.4 THE LD. AR FURTHER SUBMITTED THAT ADDITION ON MERE AD MISSION WITHOUT ACTUAL DISCOVERY OF CONCEALMENT AND WITHOUT CORRO BORATIVE MATERIAL CANNOT LEAD TO PENALTY. TO BUTTRESS THIS CONTEN TION THE LD. AR PLACED RELIANCE ON THE DECISION RENDERED IN THE CASE OF CI T VS. M. PACHAMUTHU REPORTED AS 214 ITR 524 (MAD) AND IN THE C ASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY REPORTED AS 92 DTR 111. 3.5 THE LD. AR FINALLY SUBMITTED THAT THE ASSESSING OFFICER A CCEPTED THE ADDITIONAL INCOME OFFERED IN THE REVISED RETURN WITHOUT POINTING OUT ANY DEFECT IN THE ACCOUNTS. NO ADDITION WHATSOEVER WAS MADE BY THE ASSESSING OFFICER IN THE INCOME RETURNED BY THE ASSESSEE. UNDER SUCH CIRCUMSTANCES NO PENALTY CAN BE LEVIED. THE LD. AR PLACED RELIANCE ON THE DECISION OF VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF SVC PROJECTS (P) LTD. VS. JCIT REPORTED AS 58 DTR 433 T O REINFORCE HIS ARGUMENT. 4. ON THE OTHER HAND SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONE R OF INCOME TAX (APPEALS) IN CONFIRMING THE LEVY OF PENALTY AND PRAYED FO R DISMISSING THE APPEAL FILED BY THE ASSESSEE. THE LD. DR SUBM ITTED THAT THE ASSESSEE DECLARED ADDITIONAL INCOME ONLY AFTER SURVEY /SEARCH PROCEEDINGS. HAD THERE BEEN NO SURVEY/SEARCH ACTION T HE ADDITIONAL INCOME DECLARED BY THE ASSESSEE WOULD HAVE ESCAPED ASS ESSMENT. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE HAD PAID PENA LTY UNDER 6 ITA NO. 357/PN/2014, A.Y. 2008-09 EXCISE ACT FOR CLANDESTINE REMOVAL OF GOODS. MOREOVER, IN THE STATEMEN T RECORDED U/S. 132 SHRI RAJESH B. SONI ADMITTED THE FACT T HAT SALE TO THE TUNE OF ` 56.50 LACS IS NOT RECORDED IN THE REGULAR BOOKS OF ACCOU NT AND IS UNACCOUNTED SALE OF FINISHED GOODS. THE LD. DR PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF MAK DATA (P.) LTD. VS. COMMISSIONER OF INCOME TAX REPORTED AS 358 ITR 593 (SC). 5. THE LD. AR REBUTTING THE SUBMISSIONS MADE ON BEHALF OF TH E DEPARTMENT CONTENDED THAT THE RATIO LAID DOWN IN THE CA SE OF MAK DATA (P.) LTD. VS. COMMISSIONER OF INCOME TAX (SUPRA) CANNOT BE AP PLIED IN THE PRESENT CASE AS THE FACTS ARE DISTINGUISHABLE. IN TH E SAID CASE THE ASSESSING OFFICER HAD CONFRONTED THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WITH THE MATERIAL IMPOUNDED DURING THE COURSE OF SURVEY. THUS, THE ASSESSEE SURRENDERED ADDIT IONAL INCOME IN THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE PRESENT CASE NO INCRIMINATING MATERIAL WAS FOUND. THE ASSESSING OFFICER ACCEPT ED TRADING ACCOUNTS AND QUANTITATIVE RECORDS AS MAINTAINED BY THE ASSESSEE. THE ASSESSING OFFICER WHILE MAKING ASSESSMENT HA S NOT POINTED ANY DEFECT IN THE BOOKS MAINTAINED BY THE ASSESS EE. MERE ADMISSION OF INCOME WITHOUT POINTING CONCEALMENT OF INCOME CA NNOT LEAD TO PENALTY. THE LD. AR POINTED THAT THE ASSESSMENT WAS MADE ON REVISED RETURN AND NOT THE ORIGINAL RETURN. HENCE, NO PE NALTY SHOULD BE LEVIED. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE PENALTY HAS BEEN LEVIED ON THE BASIS OF DISCLOSURE MADE B Y ONE OF THE 7 ITA NO. 357/PN/2014, A.Y. 2008-09 PARTNERS OF THE ASSESSEE FIRM IN HIS STATEMENT RECORDED U/S. 132(4) OF THE ACT ON 20-06-2009. ADMITTEDLY, THE ASSESSEE IN ORIG INAL RETURN OF INCOME HAD DECLARED INCOME OF ` 13,420/-. SURVEY U/S. 133A WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 08-05-2009. THEREAFTER, SEARCH U/S. 132 WAS CARRIED OUT IN THE CASE OF SHRI RAJESH B. SONI ONE OF THE PARTNERS OF THE ASSESSEE FIRM ON 09-05 -2009. STATEMENT OF SHRI RAJESH B. SONI WAS RECORDED U/S. 132(4) OF THE ACT ON 20-06-2009, WHEREIN HE ADMITTED UNACCOUNTED SALE OF ` 56,50,000/-. NOTICE U/S. 153C OF THE ACT WAS ISSUED TO THE ASSESSEE . IN RESPONSE TO THE SAID NOTICE THE ASSESSEE FILED RETURN OF INCOME DECLARIN G TOTAL INCOME OF ` 56,63,420/- WHICH WAS ACCEPTED BY THE ASSESSING OFFICER VIDE ORDER DATED 20-12-2011. PENALTY PROCEEDINGS WERE INITIATED U/S. 271(1)(C) OF THE ACT. 7. DURING THE PENALTY PROCEEDINGS THE ASSESSEE POINTED T HAT NO INCRIMINATING DOCUMENT WAS RECOVERED FROM THE PREMISES O F THE ASSESSEE WHICH COULD INDICATE THAT THE ASSESSEE HAS CLAN DESTINELY REMOVED THE GOODS. THE EXCISE AUTHORITIES DURING THE CO URSE OF SEARCH AND SEIZURE ACTION IN THE CASE OF SHRI ANIL DUTTABHAHU LING ADA, A BROKER/TRADER AT JALNA SEIZED ONE PEN DRIVE. ON EXTRA CTION OF DATA FROM PEN DRIVE NAME OF VARIOUS PARTIES INCLUDING THAT OF THE ASS ESSEE WHO HAD INDULGED IN CLANDESTINE CLEARANCE OF GOODS WAS FOUND. O N THE BASIS OF THE SAID INFORMATION THE ASSESSEE PURPORTEDLY P AID ` 7.15 LACS AS EXCISE DUTY. 8. DURING THE COURSE OF SURVEY STATEMENT OF ASSESSEE W AS RECORDED ON 08-05-2009. IN THE SAID STATEMENT THERE WAS NO SU CH DISCLOSURE OF 8 ITA NO. 357/PN/2014, A.Y. 2008-09 THE ASSESSEE AS NO QUESTION WAS ASKED ON THIS ISSUE. IT WAS ONLY AFTER THE SEARCH PROCEEDINGS CARRIED OUT AT THE PREMISES OF S HRI RAJESH B. SONI THAT THE REVENUE AUTHORITIES CAME TO KNOW ABOUT T HE PAYMENT OF EXCISE DUTY FOR CLANDESTINE REMOVAL OF GOODS. THE LD. AR H AS POINTED THAT THE ORDER OF ASSESSING AUTHORITY UNDER CENTRAL EXC ISE, CUSTOMS AND SERVICE TAX (IN SHORT CESTAT) VIDE WHICH EXCISE DUTY WAS IMPOSED IN THE CASE OF SHRI ANIL DUTTABHAHU LINGADA AND OTHERS HA S BEEN SET ASIDE BY THE FIRST APPELLATE AUTHORITY UNDER CESTAT ON 2 1-07-2010. A COPY OF THE SAME IS PLACED AT PAGES 91 TO 97 OF THE PAP ER BOOK. EXCEPT FOR THE FACT THAT THE ASSESSEE HAS PAID EXCISE DUTY TO THE TUNE OF ` 7.15 LACS, NO OTHER INCRIMINATING DOCUMENT WAS FOUND DURING SEAR CH OR SURVEY ACTION WHICH WOULD INDICATE UNACCOUNTED SALE OF GOO DS. UNDISPUTEDLY, THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE NOT BEEN REJECTED BY THE ASSESSING OFFICER. THE DEPARTMENT HAS A CCEPTED THE TRADING ACCOUNT AND THE SALES AS DISCLOSED IN THE BOOKS. 9. IT IS A WELL SETTLED LAW THAT PENALTY CANNOT BE LEVIED M ERELY WHEN THE ASSESSEE HAD OFFERED SOME INCOME TO TAX WHICH IS NO T BACKED BY ANY MATERIAL OR CORROBORATIVE EVIDENCE. IN THE PRESENT CASE, THE ONLY MATERIAL AVAILABLE WITH THE DOCUMENT WAS PAYMENT OF EXCISE DUTY OF ` 7.15 LACS PAID BY THE ASSESSEE FOR PURPORTED CLANDESTINE REMOVAL OF GOODS. THE BASIS ON WHICH EXCISE DUTY WAS RECOVERED FRO M THE ASSESSEE I.E. THE ORDER OF THE ASSESSING OFFICER UNDER THE EXCISE ACT IN THE CASE OF SHRI ANIL DUTTABHAHU LINGADA AND OTHERS HAS ALREADY BE EN SET ASIDE BY THE FIRST APPELLATE AUTHORITY UNDER CESTAT. ONCE THE SUBSTRATUM FOR MAKING ADDITION IS ERODED, NO PENALTY CAN BE LEVIED ON S UCH ADDITION. APART FROM THE PAYMENT OF EXCISE DUTY BY ASSE SSEE, THERE IS 9 ITA NO. 357/PN/2014, A.Y. 2008-09 NO OTHER EVIDENCE TO SHOW THAT THE ASSESSEE HAS INDULG ED IN UNACCOUNTED SALE OF GOODS. 10. IN OUR CONSIDERED VIEW IT IS NOT A FIT CASE FOR LEVY O F PENALTY U/S. 271(1)(C) OF THE ACT. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE PENALTY IS DELETED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 21 ST DAY OF OCTOBER, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 21 ST OCTOBER, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-CENTRAL, PUNE 4. ' / THE CIT, CENTRAL, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE