Asstt. Commissioner of Income Tax-6, Kanpur V. M/s. Vision Research & Management Pvt.Ltd., Kanpur

ITA 422/LKW/2012

• Counselvise Citation: 42223714 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 27-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: B P YADAV

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.422/LKW/2012 ASSESSMENT YEAR:2008 - 09 A.C.I.T. - 6, KANPUR. VS. M/S VISION RESEARCH & MANAGEMENT PVT. LTD., 20, CHANKUYAPURI NEW PAC LINE, KANPUR. PAN:AABCV 6877C (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ALOK MITRA, D.R. RESPONDENT BY SHRI B. P. YADAV, ADVOCATE DATE OF HEARING 20/05/2014 DATE OF PRONOUNCEMENT 1 3 /06/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT (A) - I, KANPUR DATED 16/04/2012 FOR ASSESSMENT YEAR 2008 - 2009. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.35,00,000/ - U/S 271(1)(C) ON THE GROUND THAT THE EXPENSES WERE NOT VERIFIABLE IN ABSENCE OF BILLS AND VOUCHERS AND BOOKS WERE REJECTED DURING COURSE OF PROCEEDINGS AND THE SAME WAS ACCEPTED BY THE ASSESSEE IN THE LIGHT OF HON'BLE ITAT DECISION IN ASSESSEES OWN CASE FOR A.Y. 2006 - 07 WHICH CLEARLY I NDICATES THAT THE ASSESSEE FILES INACCURATE PARTICULARS OF INCOME. 2. THAT THE ORDER OF LEARNED CIT(A) KANPUR BEING ERRONEOUS I N LAW AND ON FACTS DESERVES TO BE VACATED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 2 3. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL OR TAKE ADDITIONAL GROUND DURING THE PENDENCY OF THIS APPEAL. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE PENALTY ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF NARESH CHAND AGARWAL VS. CIT AS REPORTED IN [2014] 9 8 DTR (ALL) 280. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THE PRESENT CASE, THE ISSUE WAS DECIDED BY CIT(A) AS PER VARIOUS PARAS ON PAGE 7 TO 9 OF HIS O RDER. THESE PARAS ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 5. DECISION THE FINDING GIVEN BY THE A.O. IN THIS REGARD IN THE QUANTUM PROCEEDINGS HAS ALREADY BEEN REPRODUCED ABOVE. ON PERUSAL OF THE SAID ORDER, I FIND THAT THE A.O. HAS MADE THE SAID DISALLOWANCE BASED ON THE FINDING GIVEN BY THE LD. CIT(A) IN A.Y. 2006 - 07. THIS FINDING OF THE LD. CIT(A) WAS NOT A LEGAL FINDING, BUT A FINDING OF FACT FOR THAT PARTICULAR YEAR. MERE ACCEPTANCE OF ADDITION BY THE ASSESSEE FOR THE YEAR DOES NOT PROVE THAT THERE WAS ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN ANY CASE, THE STANDARD OF EVIDENCE REQ UIRED FOR ADDITION IN QUANTUM PROCEEDINGS AND FOR LEVYING OF PENALTY U/S 271(1)(C) IS DIFFERENT. FOR LEVYING PENALTY U/S 271(1)(C), A POSITIVE EVIDENCE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IS REQUIRED. BECAUSE OF THIS REASON, IT IS NOT UNCOMMON TO FIND THAT THE A.OS. DO MAKE FURTHER ENQUIRIES DURING THE COURSE OF PENALTY PROCEEDINGS. IN THIS CASE, NO FURTHER ENQUIRY HAS BEEN MADE BY THE A.O. HE HAS SIMPLY RELIED ON THE FINDINGS GIVEN IN THE ASST. O RDER. THERE IS N O POSITIVE MATERIAL ON RECORD TO INDICATE THAT THE SAID EXPENDITURE CLAIMED BY THE ASSESSEE WAS BOGUS AND/OR THE ASSESSEE HAD CONCEALED ITS INCOME OR HAD FURNISHED INACCURATE PARTICULAR OF THE INCOME. THE ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED AND ALL THE EXPENSES INCURRED BY THE ASSESSEE WERE DULY RECORDED IN ITS BOOKS AND WERE BROADLY VERIFIABLE. IT WAS THE 3 CASE OF THE ASSESSEE THAT ALL BILLS AND VOUCHERS EXCEPT THOSE RELATING TO THE SATEL LITE CENTRES WERE AVAILABLE. THESE SATELLITE CENTRES, IN ABSENCE OF ANY REGULAR STAFF, SENT STATEMENT OF EXPENDITURE. BUT THE FACT REMAINED THAT SINCE THE TRAINING BEING IMPARTED IN THESE CENTRES WAS ON STIPULATED NORMS, SIMILAR KIND OF EXPENDITURE WA S EXPECTED TO BE INCURRED AS WAS INCURRED AT OTHER SUCH INFIRMITY OF NON - PRODUCTION OF BILLS AND VOUCHERS COULD GIVE RISE TO DISALLOWANCES IN QUANTUM PROCEEDINGS, BUT IN ABSENCE OF ANY POSITIVE FINDING GIVEN BY THE A.O. IN THIS REGARD, S UCH INFIRMITY WOULD NOT BE SUFFICIENT FOR LEVY OF PENALTY U/S 271(1)(C) . IT IS A TRITE LAW THAT EVERY ADDITION DOES NOT WARRANT LEVY OF PENALTY. REFER TO THE DECISIONS OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS MATA PRASAD {(2005) 278 ITR 3 54}, JUMABHAI PREMCHAND (HUF) (243 ITR 812), CIT VS TRADERS AND TRADERS (244 ITR 367 (MAD)}, CIT VS BHARTESH SHAH [(2010) 323 ITR 358 (DELHI)] 4.2 THE A.R'S RELIANCE ON THE QUOTED CASE LAWS IS RELEVANT AND REFLECTS THE JUDICIAL OPINION ON THIS SUBJECT. REFERENCE IS ALSO MADE TO THE DECISION OF THE HON'BLE P&H HIGH COURT IN THE CASE OF CIT VS AJAIB SINGH & CO. [(2002) 253 ITR 630] WHEREIN IT WAS HELD THAT THE ESTIMATED ADDITION COULD NOT GIVE RISE TO PENALTY U/S 271(1)(C) OF THE ACT. IN THE CASE OF DABW ALI TRANSPORT COMPANY VS AC1T [(2010) 3 ITR (TRIB) 785 (CHD)], IT WAS HELD THAT THE MERE FACT THAT AN ADDITION WAS MADE WITH REFERENCE TO THAT PART OF EXPENDITURE CLAIMED AS LABOUR CHARGES AND FOR ALLEGEDLY INCOMPLETE RECORDS (IN NOT HAVING PARTICULARS OF DRIVERS AND WORKMEN IN RESPECT OF SERVICES RENDERED BY THEM), THERE WAS NO SCOPE OF LEVY OF PENALTY U/S 271(1){C) OF THE ACT. I UNDERSTAND THAT IT IS NOT THE LAW THAT PENALTY U/S 271(1)(C) CANNOT BE IMPOSED IN ALL CIRCUMSTANCES WHEREVER THE INCOM E IS ASSESSED ON ESTIMATE BASIS. IN A CASE WHERE AFTER A DETAILED INVESTIGATION AND ENQUIRIES MADE BY THE A.O., THE ASSESSEE IS CONFRONTED WITH THE EVIDENCE AND MATERIAL, AND THE ASSESSES FAILS TO DISLODGE THE FACTUAL POSITION ON THE BASIS OF WHICH ADDITIONS ARE MADE, PENALTY CAN DEFINITELY BE IMPOSED. BUT IN A CASE LIKE THE PRESENT CASE, THE ADDITION HAS BEEN MADE PURELY ON ESTIMATE WITHOUT REFERENCES TO ANY CLINCHING EVIDENCE/MATERIAL BEING ON RECORD, LEVY OF PENALTY IS NOT SUSTAINABLE ON FIGURE S WHICH ARE MERELY BASED ON GUESS WORK OR ESTIMATE. 4.3 DISCUSSION REGARDING EXPLANATION TO SEC, 271(1)(C): THE DEPARTMENT IS NOT BOUND TO PROVE ANY MALAFIDENESS OR MENS REA ON THE PART OF THE ASSESSEE BUT A CLAIM MADE BY THE ASSESSEE 4 UNDER BONA - FIDE BELI EF AND IMPRESSION, BUT DISALLOWED BY THE A.O, SHALL NOT BE SUBJECT TO ANY PENALTY IN CASE THE ASSESSEE HAS BEEN ABLE TO PROVE AND ESTABLISH THAT THE CLAIM OF DEDUCTION WAS MADE BONA - FIDE. IN THE INSTANT CASE, IT IS CLEAR THAT THE ASSESSEE'S CLAIM WAS PARTL Y DISALLOWED FOR WANT OF EVIDENCE LIKE ORIGINAL BILLS AND VOUCHERS BUT IT WAS NOT THE CASE WHERE THE CLAIM OF THE ASSESSEE WAS FOUND TO BE FALSE AND MALA - FIDE ONE AS SUCH CLAIM OF EXPENDITURE WAS (MADE BY THE ASSESSEE) BASED ON THE BILLS AND VOUCHERS AND I N SOME CASES, ON THE BASIS OF ACCOUNT STATEMENTS SUBMITTED BY THE DISTANT SATELLITE TRAINING UNITS. IN THE LIGHT OF THE DISCUSSION MADE ABOVE, THE ASSESSEE HAS BEEN ABLE TO DISCHARGE ITS BURDEN EVEN UNDER THE EXPLANATION - 1 TO SEC. 271(1)(C). THEREFORE, THE PENALTY [LEVIED U/S SEC. 271(1)(C)] CANNOT BE SUSTAINED EVEN UNDER THE EXPLANATION - 1 TO SEC. 271(1)(C). 4.4 IN VIEW OF THE AFORESAID DECISION, I AM OF THE CONSIDERED VIEW THAT THERE WAS NO MATERIAL ON RECORD TO SUGGEST THAT THERE WAS ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. THE ADDITION HAD BEEN MADE ONLY ON ESTIMATE BASIS AND THERE IS NO FINDING BY THE A.O. THAT ANY SUCH EXPENDITURE WAS FOUND TO BE BOGUS OR FALSE. ACCORDINGLY, IT IS NOT A FIT CASE FOR LEVY OF PENALTY. PENALTY I S, THEREFORE, DELETED. 4.1 FROM THE ABOVE PARAS OF THE ORDER OF LEARNED CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY CIT(A) THAT NO POSITIVE MATERIAL IS BROUGHT BY THE ASSESSING OFFICER ON RECORD TO INDICATE THAT THE SAID EXPENDITURE CLAIMED BY THE A SSESSEE WAS BOGUS AND/OR THE ASSESSEE HAD CONCEALED ITS INCOME OR HAD FURNISHED INACCURATE PARTICULAR OF THE INCOME. THESE FINDINGS OF THE CIT(A) COULD NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE. WE ALSO FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE PENALTY ORDER THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED DETAILS OF VARIOUS EXPENSES BUT WAS UNABLE TO FURNISH COMPLETE VOUCHERS IN RESPECT OF EXPENSES CLAIMED. IT IS ALSO NOTED B Y THE ASSESSING OFFICER IN THE PENALTY ORDER THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED BY THE ASSESSING OFFICER U/S 145(3) OF THE ACT AND THE ASSESSING OFFICER ESTIMATED THE INCOME BY ALLOWING EXPENSES ON ESTIMATE BASIS. UNDER THESE FACTS, T HE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT CITED BY LEARNED A.R. OF THE ASSESSEE IS SQUARELY APPLICABLE . IN THAT 5 CASE ALSO, THE INCOME WAS ASSESSED BY THE ASSESSING OFFICER BY APPLYING THE NET PROFIT RATE OF 8% AND IT WAS HELD BY HON'BLE HIGH COURT THAT WHEN THE ADDITION IS MADE ON ESTIMATE BASIS, NO PENALTY U/S 271(1)(C) CAN BE IMPOSED. IN THE PRESENT CASE ALSO, THE DISALLOWANCE IS MADE ON ESTIMATE BASIS AND RESPECTFULLY FOLLOWING THIS JUDGMENT, WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO INFIR MI TY IN THE ORDER OF CIT(A) AND THEREFORE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 /06/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR