Smt Asha devi Lath, V. The I T O,

ITA 418/IND/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2969 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-04-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 08-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: S S DESHPANDE
• Section: 271(1)(c)

Judgement Text

1 THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER ITA NO. 418/IND/2008 A.Y. 2001-02 SMT. ASHA DEVI LATH BURHANPUR PAN AVSPL 4447-P APPELLANT VS INCOME TAX OFFICER, BURHANPUR RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE RESPONDENT BY SMT. APARNA KARAN, SR. DR O R D E R PER GUPTA V.K., ACCOUNTANT MEMBER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COMETAX (APPEALS) DATED 30 TH MAY, 2008 FOR THE ASSESSMENT YEAR 2001- 02. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PER USED THE MATERIAL ON RECORD. 2 3. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFI CER UNDER SECTION 271(1) OF THE ACT. 4. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF TRADING IN POWER LOOM CLOTH. DURIN G THE YEAR, UNDER CONSIDERATION, THE ASSESSING OFFICER FOUND TH AT THERE WERE SUNDRY CREDITORS TO THE TUNE OF RS.38,09,125/- IN THE BALANCE SHEET OF THE ASSESSEE. THE ASSESSING OFFIC ER REQUIRED THE ASSESSEE TO PROVE THE GENUINENESS THER EOF AND ALSO CONDUCTED INQUIRES THROUGH INSPECTOR, WHICH RE VEALED THAT SOME OF THE CREDITORS WERE NOT EXISTING AT THE GIVE N ADDRESSES AND SOME OF THE CREDITORS DENIED THAT THERE WAS ANY OUTSTANDING BALANCE. THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEA LS). THE ACTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) RESULTED INTO THE FOLLOWING POSITION :- --------------------------------------------------- -------------------------------- RELATED PARA IN ADDITION IN MADE DELETED BY AMOU NT OF ASSTT.ORDER BY A.O. CIT(A) ADDITION SUSTAINED PARA 8(A) 11,92,103 11,92,103 0 PARA 8(B) 15,22,888 3,40,832 11,82,056 3 PARA 8(C) 6,52,468 6,22,935 29,533 PARA 8(D) 48,538 41,730 6,808 21,97,600 12,18,397 THE TRIBUNAL CONFIRMED THE ACTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THEREAFTER, T HE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271( 1) OF THE ACT FOR THE REASON THAT THE ASSESSEE FAILED TO GIVE ANY SATISFACTORY EXPLANATION AND IT WAS A CASE OF FURNI SHING OF INACCURATE PARTICULARS OF INCOME, AND COMPUTED THE SAME AT RS. 3,65,519/-. 5. ON APPEAL BY THE ASSESSEE, THE LEARNED COMMISSIO NER OF INCOMETAX (APPEALS) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER REJECTING THE FACTUAL CONTENTIONS OF THE ASSESSEE AS REGARDS THE NATURE OF TRANSACTIONS IN T HE CASE OF THESE SMALL WEAVERS AS WELL AS RELYING UPON VARIOUS JUDICIAL DECISIONS FOR THE VIEW THAT THE ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENESS OF TRADE CREDITORS APPEARING IN HER BOOKS, HENCE, THE ASSESSEE HAD FURNISHED INACCURATE PARTIC ULARS OF INCOME AND COMPUTED THE SAME AT RS.3,65,519/-. ON APPEAL BY THE ASSESSEE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALSO CONFIRMED THE ACTION OF THE ASSESSIN G OFFICER 4 REJECTING THE FACTUAL CONTENTIONS OF THE ASSESSEE A S REGARDS THE NATURE OF TRANSACTIONS OF THESE SMALL WEAVERS A S WELL AS RELYING UPON VARIOUS JUDICIAL DECISIONS FOR THE VIE W THAT THE ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENESS OF TRADE CREDITORS APPEARING IN HER BOOKS, HENCE, THE ASSESS EE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AS PER E XPLANATION (I)(B) OF SECTION 271(1)(C) OF THE ACT. 6. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. 7. DURING THE COURSE OF HEARING, THE LEARNED COUNSE L FOR THE ASSESSEE NARRATED THE SAME FACTS. HOWEVER, ON ENQU IRY FROM THE BENCH AS REGARDS THE ULTIMATE SETTLEMENT OF THE SE ACCOUNTS, THE LEARNED COUNSEL FOR THE ASSESSEE SOUG HT ADJOURNMENT AND ON THIS DATE OF HEARING SUBMITTED C OPIES OF ACCOUNTS WHICH REVEALED THAT THESE OUTSTANDING BALA NCES HAD BEEN PAID IN THE SUBSEQUENT YEARS THAT TOO MOSTLY T HROUGH CHEQUES AND IN CASE OF SMALL AMOUNTS REMAINING OUTS TANDING, THE ASSESSEE HAD HERSELF OFFERED THE SAME AS HER IN COME BY CREDITING THE SAME TO THE PROFIT AND LOSS ACCOUNT. THE LEARNED COUNSEL FOR THE ASSESSEE THEREAFTER REFERRED TO THE ORDER OF THE TRIBUNAL AS WELL AS THE ORDERS OF THE REVENUE AUTHO RITIES IN THE COURSE OF PENALTY PROCEEDINGS AND SUBMITTED THAT TH E FACT THAT 5 THE ASSESSEE WAS DEALING WITH SMALL WEAVERS AND IN THE LINE OF TRADE OF THE ASSESSEE, SUCH ILLITERATE PERSONS GENE RALLY DID NOT MAINTAIN ANY ACCOUNT NOR THEY WERE WILLING TO COME- FORWARD TO COOPERATE WITH THE ASSESSEE TO ENABLE THE ASSESSEE TO DISCHARGE HER OBLIGATION, HENCE, THE FACT THAT SMAL L WEAVERS WERE NOT FOUND AT THE GIVEN ADDRESSES IN A SMALL PL ACE LIKE BURHANPUR WAS NOT CORRECT BECAUSE THE REAL FACT WAS THAT SUCH SMALL WEAVERS, IN SPITE OF REMAINING PRESENT THERE, DID NOT DISCLOSE THEIR IDENTITY IN THE COURSE OF ENQUIRY. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT BUR HANPUR BEING A SMALL PLACE, THE ADDRESS OF SUCH PERSONS IN THE FORM OF LOCALITY OF SUCH PERSONS WAS SUFFICIENT, HENCE, IT COULD NOT BE SAID THAT THE ASSESSEE COULD NOT GIVE COMPLETE A ND CORRECT ADDRESS OF THESE PERSONS. IT WAS STRONGLY ARGUED B Y THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSMEN T PROCEEDINGS AND PENALTY PROCEEDINGS WERE INDEPENDEN T OF EACH OTHER AND THE MERE FACT THAT THE ADDITION HAS BEEN MADE AND NOT FURTHER AGITATED BY THE ASSESSEE, THE SAME WOULD NOT BY ITSELF BE SUFFICIENT TO JUSTIFY THE LEVY OF PENA LTY. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE PURCHASES AND S ALES HAD BEEN ACCEPTED AS SHOWN BY THE ASSESSEE, HENCE, THIS FACT 6 ALSO SHOWED THAT THERE WAS NO DEFECT IN THE BOOKS O F ACCOUNT MAINTAINED BY THE ASSESSEE. 8. ON THE OTHER HAND, THE LEARNED SENIOR DEPARTMENT AL REPRESENTATIVE CONTENDED THAT THE FACT OF PAYMENT T O SUCH CREDITORS THROUGH CHEQUE WAS NOT BEFORE THE REVENUE AUTHORITIES, HENCE, IT COULD NOT BE TAKEN INTO CONS IDERATION. THEREAFTER, SHE PLACED STRONG RELIANCE ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). 9. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED THAT THE ASSESSEE IS DEALING IN TRADING OF GREY CLOTH PURCHASED FROM THE SMALL WEAVERS EITHER AS SUCH OR AFTER PROCESSING. THE TRADE CREDITORS ARE SUCH SMA LL WEAVERS WHO ARE GENERALLY ILLITERATE AND DO NOT MAINTAIN AN Y BOOKS OF ACCOUNT. WE FURTHER FIND THAT BURHANPUR IS A SMALL CITY AND THE ADDRESS BY THE NAME OF THE STREET OF RESIDENCE OF S UCH PERSONS MAY BE SUFFICIENT, HENCE, IT CANNOT BE SAID THAT SUCH PERSONS WERE NON-EXSTENT. WE ARE FURTHER OF THE VI EW THAT SUCH PERSONS DO NOT KEEP THE BOOKS OF ACCOUNT GENER ALLY AND THEY GENERALLY AVOID THE TAXING AUTHORITIES. WE FU RTHER FIND THAT THE PURCHASES AND SALES, AS RECORDED BY THE ASSESSE E, HAVE 7 NOT BEEN DISTURBED. IT IS ALSO A SETTLED JUDICIAL PRINCIPLE THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DIFFERENT AND DIFFERENT CONSIDERATIONS PREVAIL IN B OTH THESE PROCEEDINGS. HENCE, MERELY BECAUSE THE ADDITION HA S BEEN MADE, THE SAME CANNOT BE SUFFICIENT TO LEVY THE PEN ALTY UNDER SECTION 271(1) OF THE ACT . WE FURTHER FIND THAT IN THE PENALTY ORDER THE ASSESSING OFFICER HAS OBSERVED THAT IN TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD BEEN GIVEN SUFFICIENT OPPORTUNITY, HENCE, IT COULD BE PRESUMED THAT THE ASSESSEE HAD TO SAY NOTHING FURTHER AND, THEREFORE, NO SATISFACTORY EXPLANATION WAS OFFERED BY THE ASSESSE E. IN OUR VIEW, THIS IS NOT A JUST APPROACH IN THE COURSE OF PENALTY PROCEEDINGS. WE ALSO FIND THAT AS PER THE DIRECTIO NS GIVEN BY THE BENCH, THE ASSESSEE SUBMITTED DETAILS OF PAYMEN TS MADE TO THESE CREDITORS IN THE SUBSEQUENT YEARS AND AS P ER THESE DETAILS, IT EMERGES THAT IN MOST OF THE CASES, THE PAYMENTS HAVE BEEN MADE TO SUCH WEAVERS MOSTLY, HENCE, THE I DENTITY OF SUCH SMALL WEAVERS GETS ESTABLISHED AND ACCEPTAN CE OF SUCH PAYMENT BY THEM ALSO JUSTIFIES THE CLAIM OF TH E ASSESSEE. THUS, IN OUR OPINION, IRRESPECTIVE OF THE ADDITION MADE AND ACCEPTED BY THE ASSESSEE, IN VIEW OF THE ABOVE FACT S, THIS 8 CASE IS NOT FIT FOR IMPOSITION OF PENALTY UNDER SEC TION 271(1) OF THE ACT. THE SAME IS, THEREFORE, CANCELLED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL, 2010 SD SD (JOGINDER SINGH) (V.K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER APRIL 28 ,2010 COPY TO APPELLANT, RESPONDENT, CIT, CIT(A), DR, GUA RD FILE *DN/