Shri Dharmesh M. Patel, Ahmedabad V. The Income Tax Officer,Ward-4(2)(2), Old Ward- 9(2), Ahmedabad

ITA 3580/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9246 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-03-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 21-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L SHARMA
• Assessee Lawyers: A C SHAH
• Section: 40A(3); 143(3); 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA. NOS: 3579 & 3580AHD/2015 (ASSESSMENT YEARS: 1999-2000 & 2001-02) DHARMESH M. PATEL, PROP.ALPA TRANSPORT, 1, JAWAHARKUNJ SOCIETY, SHANTINAGAR, OLD WADAJ, AHMEDABAD-380013 V/S INCOME TAX OFFICER, WARD- 7 (2), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AIFPP 5556R APPELLANT BY : SHRI A. C. SHAH, AR RESPONDENT BY : SHRI B. L. SHARMA, SR. D.R. ( )/ ORDER DATE OF HEARING :08 -03-2016 DATE OF PRONOUNCEMENT : 09 -03-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 3579 & 3580/AHD/2015 ARE APPEALS BY THE AS SESSEE PREFERRED AGAINST TWO SEPARATE ORDERS OF THE LD. CI T(A)-10, ITA NOS. 357 9 & 3580/AHD/2015 . A.YS. 1999- 2000 & 2001-02 2 AHMEDABAD DATED 03.11.2015 PERTAINING TO A.Y. 1999- 2000 & 2001- 02. 2. SINCE THE ISSUES ARE COMMON IN BOTH THESE APPEALS. THESE WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. ITA NO. 3579/AHD/2015 FOR A.Y. 1999-2000 3. THE SOLE GRIEVANCE OF THE ASSESSEE RELATES TO THE L EVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 4. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 29.12.2009 MADE U/S. 143(3) R.W.S. 254 OF THE ACT. 5. IN THIS CASE, THE ORIGINAL ASSESSMENT WAS COMPLETED ON 31.12.2002 ON A TOTAL INCOME OF RS. 42,65,778/-. THIS ASSESSMENT ORDER WAS SET ASIDE BY THE COMMISSIONER VIDE ORDER DATED 27.02.2004 MAD E U/S. 263 OF THE ACT. 6. PURSUANT TO THE DIRECTIONS OF THE COMMISSIONER, A F RESH ASSESSMENT WAS MADE VIDE ORDER DATED 24.02.2005 ON A TOTAL INC OME OF RS. 69,06,052/-. ASSESSEE CARRIED THE MATTER BEFORE THE FIRST APPELLATE AUTHORITY BUT WITH ANY SUCCESS. WHEN THE ORDER OF T HE FIRST APPELLATE AUTHORITY WAS CHALLENGED BEFORE THE TRIBUNAL, THE T RIBUNAL DEEMED IT TO BE A GOOD CASE FOR SET ASIDE AND ACCORDINGLY THE CASE WAS SET ASIDE WITH CERTAIN DIRECTIONS. ITA NOS. 357 9 & 3580/AHD/2015 . A.YS. 1999- 2000 & 2001-02 3 7. PURSUANT TO THE DIRECTIONS OF THE TRIBUNAL, ONCE AG AIN, THE ASSESSMENT PROCEEDINGS WAS STARTED AND THE ASSESSMENT WAS COMP LETED BY COMPUTING THE TOTAL INCOME OF THE ASSESSEE AS UNDER :- 16. SUBJECT TO THE ABOVE REMARKS, TOTAL INCOME OF T HE ASSESSEE IS COMPUTED AS UNDER:- LOSS AS PER P. L A/C. RS. 91,94,157/- ADD: DISALLOWANCE/ADDITION 1. UNACCOUNTED RECEIPTS OF M/S. B. PAEL & CO. 1,68,000 2. UNACCOUNTED RECEPTS OF RIDDHI SIDDHI CONSTN. 3,00,034 3. UNACCOUNTED RECEIPTS OF M/S. M. PATEL AND CO. 1,96,840 4. DIFFERENT IN THE BALANCE SHEET 8,39,290 5. DISALLOWANCE U/S. 40A(3) 1,66,515 6. DISCREPANCY IN LOAN ACCOUNT 7,97,600 7. CASH CREDIT U/S. 68 43,78,000 8. UNACCOUNTED EXPENSES 5,36,703 9. DISALLOWANCE OF EXPENSES 1,45,835 10 OUT OF REPAIR EXPENSES 2,99,198 11 INCOME-TAX TAX 62,989 12 DONATION 25,000 RS. 79,16,004 LOSS RS. 12,78,153 8. THE IMPUGNED ADDITIONS/DISALLOWANCES WERE CONFIRMED BY THE FIRST APPELLATE AUTHORITY AND ACCORDINGLY THE A.O INITIAT ED PENALTY PROCEEDING U/S. 271(1)(C) OF THE ACT. A FRESH OPPO RTUNITY WAS GIVEN TO ITA NOS. 357 9 & 3580/AHD/2015 . A.YS. 1999- 2000 & 2001-02 4 THE ASSESSEE TO SHOW CAUSE WHY PENALTY SHOULD NOT B E LEVIED U/S. 271(1)(C) OF THE ACT. REPLY OF THE ASSESSEE READS A S UNDER:- 1. AS PER THE ASSESSMENT ORDER THE INCOME ASSESSE D AFTER MAKING VARIOUS ADDITIONS IS LOSS OF RS. 12,78,153/-. THUS THERE IS NO CONCEALME NT OF ANY INCOME OR LOSS OF REVENUE. WE RELY ON THE DECISION OF HONOURABLE GUJARAT HIGH COURT IN CASE OF CIT VS. AVON FLOURS PVT. LTD. (313 ITR 400) WHEREIN IT WAS DECID ED THAT NO PENALTY CAN LEVIED WHERE FINALLY INCOME IS ASSESSED AT LOSS. COPY ENCLOSED. 2. THE PENALTY NOTICE HAS BEEN INITIATED FOR ADDITI ON IN RESPECT OF CASH CREDIT U/S. 68 OF INCOME TAX ACT IN RESPECT OF LOANS TAKEN FROM VARIO US PERSONS. SINCE MORE THAN 12 YEARS WERE PASSED AND THEREFORE IT WAS NOT POSSIBLE TO TR ACE THESE PERSON I COULD NOT PRODUCE THE CONFIRMATIONS FROM THESE PARTIES. 9. THE EXPLANATION PUT FORTH BY THE ASSESSEE W AS NOT ACCEPTED BY THE A.O WHO PROCEEDED BY LEVYING PENALTY U/S. 271(1 )(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND COM PUTED THE PENALTY OF RS. 17,91,490/-. ASSESSEE CARRIED THE MATTER BEF ORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. THE LD. CIT(A) CONFIRMED T HE LEVY OF PENALTY SOLELY BECAUSE THE QUANTUM ADDITIONS HAVE BEEN CONF IRMED BY THE FIRST APPELLATE AUTHORITY. AGGRIEVED BY THIS, THE A SSESSEE IS BEFORE US. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY CHALLENGED THE LEVY OF PENALTY STATING THAT NEITHER IN THE ASSESSMENT ORDER NOR IN THE PENALTY ORDER, THE A.O HAS GIVEN ANY REASON FOR INITIATING PENALTY U/S. 271(1)(C) OF THE ACT. IT IS THE SAY OF THE LD. COUNSEL THAT MERE LY BECAUSE CERTAIN ADDITIONS/DISALLOWANCES HAVE BEEN CONFIRMED IN THE QUANTUM APPEAL WOULD NOT IPSO FACTO GAVE POWERS TO THE A.O TO LEVY PENALTY U/S. 271(1)(C) OF THE ACT. 10. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE REVENUE AUTHORITIES. ITA NOS. 357 9 & 3580/AHD/2015 . A.YS. 1999- 2000 & 2001-02 5 11. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. PARA 8 OF THE PENALTY ORDER NEED S A SPECIAL MENTION HERE AND WHICH READS AS UNDER:- PENALTY PROCEEDINGS U/S. 274 R.W.S. 271(1)(C) OF T HE ACT WAS INITIATED IN RESPECT OF ABOVE POINTS AND NOTICE U/S. 271(1)(C) WAS ISSUED ON 29.12.2009. 12. A REFERENCE TO ABOVE POINTS REFERS TO THE FIRST SEVEN PARAGRAPHS OF THE PENALTY ORDER. IN EACH OF THESE P ARA, THE A.O HAS SIMPLY DISCUSSED THE DISALLOWANCES/ADDITIONS MADE I N THE ASSESSMENT ORDER AND CONFIRMED BY THE LD. CIT(A). THERE IS NO REFERENCE WHATSOEVER WHETHER THE ASSESSEE HAS CONCEALED THE I NCOME OR HAS FILED INACCURATE PARTICULARS OF INCOME. A PERUSAL O F THE ASSESSMENT ORDER SHOWS THAT THIS ISSUE IS SILENT IN THE ASSESS MENT ORDER ALSO. 13. MAJOR ADDITION OF RS. 43.78 LACS IS IN RESPECT OF C ASH CREDIT U/S. 68 OF THE ACT. THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF JALARAM OIL MILLS 253 ITR 192 HAS HELD THAT WHERE EXPLANATION REGARDING CREDITS NOT ACCEPTED BY REVENUE, ADDITIONS TO INCOM E U/S. 68, NOT SUFFICIENT FOR LEVY OF PENALTY, NO EVIDENCE ADDUCED BY REVENUE TO PROVE CONCEALMENT OF INCOME- PENALTY NOT TO BE IMPOSED . A SIMILAR VIEW WAS TAKEN BY THE HONBLE HIGH COURT OF GUJARAT IN T HE CASE OF NATIONAL TEXTILES 249 ITR 125. 14. THE CO-ORDINATE BENCH OF THE TRIBUNAL CHENNAI IN TH E CASE OF GEM GRANITES 120 TTJ 992 HAS HELD THAT MERELY BECAUSE THE ADDITION IS CONFIRMED DOES NOT IPSO FACTO ATTRACT THE PENALT Y PROVISION. IN THE PENALTY PROCEEDING, THE WHOLE MATTER HAS TO BE SEEN IN A DIFFERENT PERSPECTIVE IRRESPECTIVE OF THE FACT THAT THE ADDIT ION HAS BEEN CONFIRMED BY THE HIGHER AUTHORITIES . ITA NOS. 357 9 & 3580/AHD/2015 . A.YS. 1999- 2000 & 2001-02 6 15. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE P ETRO PRODUCTS PVT. LTD. 322 ITR 158 HAS HELD THAT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURN ISHING INACCURATE PARTICULARS. 16. RESPECTFULLY FOLLOWING THE AFOREMENTIONED DECISIONS , IN OUR CONSIDERED OPINION, NO CASE OF FILING INACCURATE PA RTICULARS OF INCOME HAS BEEN MADE BY THE A.O. WE THEREFORE SET ASIDE TH E ORDER OF THE LD. CIT(A) AND DIRECT THE A.O TO DELETE THE PENALTY LEV IED U/S. 271(1)(C) OF THE ACT. ITA NO. 3580/AHD/2015 FOR A.Y. 20 01-02 17. AS MENTIONED ELSEWHERE, THE FACTS ARE IDENTICAL WIT H THE FACTS OF ITA NO. 3579/AHD/2015, FOR OUR DETAILED DISCUSSION THEREIN, THE A.O IS DIRECTED TO DELETE THE PENALTY LEVIED U/S. 271(1)(C )OF THE ACT. 18. IN THE RESULT, BOTH THESE APPEALS OF ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON 09 - 03 - 2016 SD/- SD/- (KUL BHARAT) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: -