M/s. Shreenath Sales Agency, RAJKOT-GUJARAT V. The Assistant Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITA 396/RJT/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1280 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Search and seizure; Opportunity of being heard; Question of law
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA. NO: 396/RJT/2012 (ASSESSMENT YEAR: 2005-06) M/S. SHREENATH SALES AGENCY, RADHE KRISHNA, KRISHNA NAGAR, NR. TELEPHONE EXCHANGE, RAJKOT V/S THE A.C.I.T., CENTRAL CIRCLE-1, RAJKOT (APPELLANT) (RESPONDENT) PAN: AAYFS8190F APPELLANT BY : SHRI M.J. RANPURA, C.A. RESPONDENT BY : SHRI YOGESH PANDEY, CIT/ D.R . ( )/ ORDER DATE OF HEARING : 16 -05-201 6 DATE OF PRONOUNCEMENT : 18 -05-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF LD. CIT(A)-IV, AHMEDABAD DATED 19.04.2012 PERTAINING TO A.Y. 2005-06. ITA NO. 396/ RJT/2012 . A.Y.2005-06 2 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSES SMENT ORDER MADE U/S. 153A OF THE ACT ON 17.12.2007. SEARCH AND SEIZ URE ACTION U/S. 132 OF THE ACT, ASSESSEE CARRIED OUT AT THE PREMISE S OF THE ASSESSEE WHICH WAS ON ACCOUNT OF SEARCH CARRIED OUT AT THE P REMISES OF M/S. BALAJI WAFERS PVT. LTD. PURSUANT TO THE SEARCH, THE ASSESSEE WAS ASKED TO FILE ITS RETURN OF INCOME. IT WOULD BE PERTINENT TO MENTION HERE THAT THE ASSESSEE HAS MADE A DISCLOSURE OF RS. 50 LACS O UT OF WHICH 4,50,000/- WAS OFFERED FOR THE YEAR UNDER CONSIDERA TION. THE ASSESSMENT WAS COMPLETED BY FURTHER MAKING AN ADDIT ION OF RS. 23,37,500/- ON ACCOUNT OF PROFIT ON UNACCOUNTED SAL ES. 4. PENAL PROCEEDINGS WERE SEPARATELY INITIATED. 5. DURING THE COURSE OF THE PENAL PROCEEDINGS, IT WAS BROUGHT TO THE NOTICE OF THE A.O THAT AGAINST THE QUANTUM ADDITION , THE ASSESSEE HAS CARRIED THE MATTER BEFORE THE TRIBUNAL AND THE TRIB UNAL VIDE ITA NO. 92/RJT/2010 DATED 12.08.2010 HAD DELETED THE ADDITI ONS MADE. 6. THE A.O ACCEPTED THIS CONTENTION OF THE ASSESSEE BU T HOWEVER WAS OF THE OPINION THAT THE PENALTY IS STILL LEVIABLE ON T HE INCOME DISCLOSED AFTER THE SEARCH AND SEIZURE OPERATION. THE A.O DEC LINED TO GIVE THE BENEFIT OF EXPLANATION 5 TO SECTION 271(1)(C) OF TH E ACT TO THE ASSESSEE AND COMPLETED THE PENAL PROCEEDINGS BY LEV YING PENALTY OF RS. 1,63,000/-. ITA NO. 396/ RJT/2012 . A.Y.2005-06 3 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 8. BEFORE US, THE LD. D.R. SUBMITTED A COPY OF THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF BALAJI WAFERS PVT. LTD. AND STATED THAT SINCE THE HONBLE HIGH COURT HAS ADMITT ED THE QUESTION OF LAW ARISING OUT OF THE ORDER OF THE TRIBUNAL IN THE CASE OF BALAJI WAFERS PVT. LTD., THE IMPUGNED DISPUTE SHOULD BE DECIDED I N LINE WITH THE DECISION OF THE HONBLE HIGH COURT. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT SINCE ON IDENTICAL SET OF FACT S, THE TRIBUNAL HAS CANCELLED THE LEVY OF PENALTY, THE ORDER OF THE TRI BUNAL DESERVE TO BE FOLLOWED. 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW AND WE HAVE CAREFULLY PERUSED THE ORDER OF THE HONBLE HIGH COURT OF GUJARAT IN TAX APPEAL NO. 370 OF 2015 IN THE CASE OF BALAJI WAFERS PVT. LTD. THE HONBLE HIGH CO URT HAS ADMITTED THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW FOR DETE RMINATION:- 2. ADMIT. THE FOLLOWING SUBSTANTIAL QUESTIONS OF LA W ARISE FOR DETERMINATION: '[1] WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES HC-NIC PAGE 1 OF 2 CREATED ON WED SEP 02 01:36:48 1ST 2015 O/TAXAP/370 /2015 ORDER OF THE CASE, THE INCOME TAX APPELLATE TRIBUNAL IS J USTIFIED IN LAW AND ON FACTS IN UPHOLDING THE DECISION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE PENALTY OF RS. 13,69,715/ - LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961FOR THE ASSESS MENT YEAR 2001-02? ITA NO. 396/ RJT/2012 . A.Y.2005-06 4 [2] WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE INCOME TAX APPELLATE TRIBUNAL IS JUSTIFIED IN H OLDING THAT PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 CANNO T BE LEVIED IN RESPECT OF THE ADDITIONS MADE ON ESTIMATE BASIS BY APPLYING GROSS PROFIT RATE? 10. SINCE, THE HONBLE HIGH COURT IS ALREADY SEIZED WIT H THE MATTER. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY , WE RESTORE THIS ISSUE TO THE FILES OF THE A.O. THE A.O IS DIRECTED TO RE- DECIDE THIS ISSUE AFRESH IN LINE WITH THE DECISION OF THE HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF BALAJI WAFERS PVT. LTD. 11. NEEDLESS TO MENTION THAT THE A.O SHALL GIVE A REASO NABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE D ECIDING THE ISSUE AFRESH. APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 18 - 05 - 2016 SD/- SD/- (KUL BHARAT) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,RAJK OT