The ACIT, 1(1), Bhopal V. M/s. S.K.Jain, Bhopal

ITA 376/IND/2010

• Counselvise Citation: 37622714 RSA 2010
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2000-2001
• Appeal Filed On: 11-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR MITRA
• Assessee Lawyers: H P VERMA
• Keywords: Search and seizure
• Section: 143(3); 133A; 153A; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS.375 TO 378/IND/2010 AYS: 1999-00, 2000-01, 2002-03 & 2003-04 ACIT-1(1), BHOPAL ..APPELLANT V/S. M/S. S.K. JAIN, BHOPAL PAN AAOFS 1606 A ..RESPONDENT DEPARTMENT BY : SHRI PRADEEP KUMAR MITRA, SR. DR ASSESSEE BY : S/SHRI H.P. VERMA & ASHISH GOYAL ORDER PER JOGINDER SINGH, JUDICIAL MEMBER THIS BUNCH OF FOUR APPEALS IS BY THE REVENUE FOR T HE ABOVE ASSESSMENT YEARS AGAINST THE DIFFERENT ORDERS DATED 29.3.2010 WHEREIN DELETION OF PENALTY U/S 271(1)(C) HAS BEEN CHALLENGED. AT THE OUTSET, THE LD. COUNSEL FOR ASSESSEES CONTENDED THA T THE TRIBUNAL WHILE DECIDING THE QUANTUM APPEALS VIDE ORDER IN IT A NO.210/IND/2007 & ITA NO.1/IND/2008 ANNULLED THE ASSESSMENTS/DECIDED THE ISSUE IN FAVOUR OF THE ASSE SSEE. IT WAS 2 FURTHER CONTENDED THAT SINCE THE QUANTUM APPEALS HA VE BEEN DECIDED IN FAVOUR OF THE ASSESSEES, THEREFORE, NO P ENALTY SURVIVES. THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE LD. SR. DR. 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS ARE THAT TH E ASSESSEE FIRM WAS IN THE BUSINESS OF CONTRACTOR AND WAS DERIVING INCOME FROM IRRIGATION CONTRACTS. A SEARCH AND SEIZURE OPERATION WAS CARRI ED OUT AT THE RESIDENTIAL PREMISES OF THE PARTNER OF THE FIRM AND SURVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM. CERTAIN DOCUMENTS, BELONGING TO THE FIRM, WER E ALLEGEDLY SEIZED FROM THE RESIDENCE OF THE PARTNER, THEREFORE, NOTIC E U/S 153C R.W.S. 153A WAS ISSUED TO WHICH THE ASSESSEE FILED ITS RE TURN ON 8.7.2005 DECLARING INCOME OF RS.28,73,200/- AS WAS ORIGINALL Y SHOWN IN THE RETURNS FILED U/S 139 OF THE ACT FOR AY 1999-00. TH E ASSESSMENT WAS COMPLETED ON 29.12.2006 U/S 153A R.W.S. 143(3) DETE RMINING THE TAXABLE INCOME AT RS.92,39,390/- MAKING THE ADDITIO N OF RS.18,27,965/- ON ACCOUNT OF SUPPRESSED NET PROFIT, RS.44,10,314/- ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS, RS.1,50 ,000/- ON 3 ACCOUNT OF DISALLOWANCE OF SALARY TO PARTNERS AND R S.77,915/- ON ACCOUNT OF INCOME FROM NETTING ON HIRE OF PLANT AND MACHINERY (TOTAL ADDITION RS.64,66,194/-). THE ASSESSING OFFICER INI TIATED PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT, WHICH WAS, IN VIEW OF THE ORDER OF THE TRIBUNAL, DELETED BY THE LD. CIT(A) AND IS U NDER CHALLENGE BEFORE THE TRIBUNAL BY THE REVENUE. THE TRIBUNAL WH ILE ANNULLING THE QUANTUM APPEALS OBSERVED AS UNDER: 22. HAVING STATED SO, WHEN WE INDEPENDENTLY LOOK AT THE PROVISIONS OF SECTION 153C, IT BECOMES APPARENTLY CLEAR THESE PROVISIONS ARE ATTRACTED ONLY IN A SITUATION WHERE SOME ASSETS OR MATERIAL OR BOOKS OF ACCOUNTS OR OTHER THINGS ARE FOUND WHICH BELONG TO OTHER PERSON AND ONLY IN THAT SITUATION, THE PROCEEDINGS UNDER SECTION 153A CAN BE INITIATED AGAINST SUCH PERSON. THUS, IN SECTION 153C EXISTENCE OF SOME MATERIAL OR DOCUMENTS OR THINGS OR ASSETS IS A PRE-REQUISITE, HENCE, IF THE INTERPRETATION OF PROVISIONS OF SECTION 153A AS MADE BY US HEREIN BEFORE, IS IGNORED, EVEN THEN, IN OUR OPINION, PROCEEDINGS U/S 153C CAN BE INITIATED ONLY IN RESPECT OF SUCH YEAR(S) IN RESPECT OF WHICH THERE IS SOME MATERIAL AND TOTAL INCOME OF SUCH YEAR(S) WOULD BE COMPUTED BY APPLYING THE PROVISIONS OF SECTION 153A IN THE MANNER AS OUTLINED BY US IN PARAGRAPH 22 HEREINBEFORE. THE OTHER REQUIREMENT OF SECTION 153C IS REGARDING THE 4 SATISFACTION TO BE RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON WHICH, AS STATED EARLIER, EXISTS IN THE PRESENT CASE, HENCE, NO FAULT CAN BE ATTRIBUTED ON THE PART OF THE ASSESSING OFFICER IN THIS REGARD. 23. IN VIEW OF ABOVE DISCUSSION, WE ARE OF THE VIEW THAT SINCE THE MATERIAL PERTAINS ONLY TO THE ASSESSMENT YEARS 2004-05 AND 2005-06, ONLY THOSE YEARS ASSESSMENTS COULD BE REOPENED UNDER SECTION 153C OF THE ACT. HENCE, WE QUASH THE ASSESSMENT PROCEEDINGS FOR AYRS. 1999-00 TO 2003-04. CONSEQUENTLY, ASSESSMENT OF SUCH YEARS ARE DECLARED NULL AND VOID. THUS, ADDITIONAL GROUNDS NO.1 AND 3 ARE ALLOWED. 3. IN VIEW OF THE ABOVE, WHEN THE BASIS, ON WHICH, THE PENALTY WAS LEVIED, IS NO MORE IN EXISTENCE, THEREFORE, PENALTY AUTOMATICALLY DESERVES TO BE DELETED. THIS PROPOSITION IS SUPPORT ED BY THE FOLLOWING JUDICIAL PRONOUNCEMENTS: I. K.C. BUILDERS VS. CIT 265 ITR 562 (SC), II. CITY DRY FISH CO. VS. CIT 238 ITR 63 (AP), III. CIT VS. S.P. VIZ CONSTRUCTION CO. 176 ITR 47 ( PAT), IV. CIT VS. AGRAWALLA BROTHERS [1991] 189 ITR 786 ( PAT); V. CIT (ADDL.) VS. BADRI PRASAD KASHI PRASAD [1993] 200 ITR 206 (ALL); VI. CIT VS. BAHRI BROTHERS P. LTD. [1987] 167 ITR 8 80 (PAT); VII. CIT VS. BEDI & CO. P. LTD. [1990] 183 ITR 59 ( KAR); 5 VIII. CIT VS. BENGAL JUTE MILLS CO. LTD. [1988] 174 ITR 402 (CAL); IX. CIT VS. BHAGWAN LTD. [1987] 168 ITR 846 (CAL); X. CIT VS. MADANLAL SOHANLAL [1989] 176 ITR 189 (CA L); XI. CIT VS. ROY DURLABHJI [1995] 211 ITR 470 (RAJ); XII. HIRA LAL HARI LAL BHAGWATI VS. C.B.I. [2003] 2 62 ITR 466 (SC); [2003] 4 JT SC 381; XIII. MOHAMMED (KTMS) VS. UNION OF INDIA [1992] 197 ITR 196 (MAD); XIV. SIR SHADILAL SUGAR AND GENERAL MILLS LTD. VS. CIT [1987] 168 ITR 705 (SC); XV. UTTAM CHAND VS. ITO [1982] 133 ITR 909 (SC); [1 982] 2 SCC 543. AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION AND THE PENALTY WILL NOT AUTOMATICALLY IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY DEFINES OF LAW. CONCEALMENT REFERS TO A DELIBERATE ACT ON THE PART OF THE ASSES SEE. THE EXPRESSION HAS CONCEALED THE PARTICULARS OF INCOME AND HAS FURNISHED INACCURATE PARTICULARS OF INCOME HAVE NOT BEEN DEF INED EITHER IN SEC. 271(1)(C) OR ELSEWHERE IN THE ACT. ONE THING IS CER TAIN THAT THESE TWO CIRCUMSTANCES ARE NOT IDENTICAL IN DETAILS ALTHOUGH THEY MAY LEAD TO THE SAME EFFECT, NAMELY, KEEPING OFF A CERTAIN PORT ION OF INCOME. THE FORMER IS DIRECT AND THE LATER MAY BE INDIRECT IN I TS EXECUTION. THE WORD CONCEAL IS DERIVED FROM LATIN WORD CONCOLAR E WHICH IMPLIES TO HIDE. THE OFFENCE OF CONCEALMENT IS THUS A DIR ECT ATTEMPT TO HIDE 6 AN ITEM OF INCOME OR A PORTION THEREOF FROM THE KNO WLEDGE OF THE INCOME-TAX AUTHORITIES. IN THE IMPUGNED APPEALS, SI NCE THE VERY BASIS OF ADDITIONS IS NO MORE IN EXISTENCE, THEREFORE, TH E PENALTY, SO IMPOSED, AUTOMATICALLY GOES. SINCE THERE WAS NO LIA BILITY TO TAX, NO PENALTY COULD BE LEVIED. FOR IMPOSING PENALTY U/S 2 71(1)(C) OF THE ACT, EITHER THERE SHOULD BE CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. IN THE PRESE NT APPEALS, SINCE THE QUANTUM ASSESSMENTS WERE ANNULLED BY THE TRIBUN AL AND NO CONTRARY DECISION WAS BROUGHT TO OUR NOTICE BY EITH ER SIDE, THEREFORE, PENALTY DOES NOT SURVIVE. WHILE DELIBERATING UPON T HE ISSUE, THE HONBLE APEX COURT IN THE CASE OF K.C. BUILDERS (SU PRA) HELD AS UNDER: WHERE THE ADDITIONS MADE IN THE ASSESSMENT ORDER ON THE BASIS OF WHICH PENALTY FOR CONCEALMENT IS LEVIED, ARE DELETED, THERE REMAINS NO BASIS AT ALL FOR LEVYING PENALTY FOR CONCEALMENT AND, THEREFORE, IN SUCH A CASE NO PENALTY CAN SURVIVE AND THE PENALTY IS LIABLE TO BE CANCELLED. ORDINARILY, PENALTY CANNOT STAND IF THE ASSESSMENT ITSELF IS SET ASIDE. IT WAS FURTHER HELD: REVERSING THE DECISION OF THE HIGH COURT THAT THE FINDING OF THE APPELLATE TRIBUNAL WAS 7 CONCLUSIVE AND THE PROSECUTION COULD NOT BE SUSTAINED SINCE THE PENALTY WAS CANCELLED FOLLOWING THE TRIBUNALS ORDER AND NO OFFENCE SURVIVES UNDER THE I.T. ACT THEREAFTER. QUASHING THE PROSECUTION WAS AUTOMATIC. ALLOWING THE TRIAL TO PROCEED FURTHER WOULD BE AN IDLE AND EMPTY FORMALITY. 4. IN VIEW OF THESE FACTS AND THE JUDICIAL PRONOUNC EMENTS, WE FIND NO INFIRMITY IN THE STAND OF THE LD. CIT(A). THE SA ME IS UPHELD. FINALLY, ALL THESE APPEALS OF THE REVENUE ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 2.6.2011. (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2.6.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE !VYAS!