ACIT, New Delhi V. M/s HRM Export Pvt. Ltd., Delhi

ITA 4322/DEL/2012

• Counselvise Citation: 432220114 RSA 2012
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI H.S. SIDHU, JM ITA NO.4322/DEL/2012 ASSESSMENT YEAR : 2006-07 ACIT, CIRCLE 12(1), NEW DELHI. VS. H RM EXPORT PVT. LTD., 2256-A, GALI RAGHUNANDAN, NAYA BAZAR, DELHI. PAN : AABCH5053J ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : NONE DEPARTMENT BY : S HRI SATPAL SINGH, SR. DR ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) ON 18.05.2012 DELETING THE PE NALTY OF ` 3,71,057/- IMPOSED BY THE AO U/S 271(1)(C) OF THE I NCOME-TAX ACT, 1961 IN RELATION TO THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF MILLING OF PADDY INTO RI CE AND ALSO ITA NO.4322/DEL/2012 2 TRADING OF PADDY. CERTAIN PURCHASE TRANSACTIONS OF PADDY ETC. WERE MADE. THE AO HAS RECORDED IN THE ASSESSMENT OR DER THAT THE ASSESSEE COULD NOT PRODUCE EVIDENCE IN SUPPORT OF PURCHASE OF PADDY TO THE TUNE OF ` 4 LAC MADE ON 19.01.06 AN D THAT OF BARDANA TO THE TUNE OF ` 2,19,900/-MADE ON 17.3. 06. THE ASSESSEE CLAIMED THAT THESE BILLS WERE MISPLACED AN D, HENCE, COULD NOT BE PRODUCED. IN THE ABSENCE OF ANY EVIDEN CE TO SUBSTANTIATE THE PURCHASE BILLS UNDER THESE CIRCUMS TANCES, THE ASSESSEE OFFERED TO SURRENDER A SUM OF ` 6,19,900/- . THE AO DID NOT ACCEPT THE ASSESSEES OFFER FOR SURRENDER. HE TREATED THESE AMOUNTS AS BOGUS PURCHASES AND MADE ADDITION FOR ` 6,19,900/-. DURING THE COURSE OF APPELLATE PROCEEDINGS, IT WAS STATED ON BEHALF OF THE ASSESSEE THAT THE AVERMENTS IN THE AS SESSMENT ORDER ABOUT THE ASSESSEE NOT MAINTAINING STOCK REGI STER AND THE PURCHASE OF PADDY ON 19.01.2006 WERE INCORRECT. IT WAS CLAIMED THAT THE SURRENDER WAS MADE SIMPLY TO BUY PEACE AS THE PRINCIPAL OFFICER OF THE COMPANY WAS NOT MEDICALLY FIT DURING THAT PERIOD. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM TH E ASSESSING OFFICER ON THE ASSESSEES CONTENTIONS THAT THE MENT ION OF DATES IN RESPECT OF PURCHASE OF BARDANA AND PADDY BY THE AO IN THE ITA NO.4322/DEL/2012 3 ASSESSMENT ORDER ON ONE DATE EACH, WAS INCORRECT AN D, FURTHER, THE SURRENDER WAS MADE IN ORDER TO BUY PEACE OF MIN D WHICH WAS STRICTLY SUBJECT TO NON-IMPOSITION OF PENALTY. THE LD. CIT(A)S LETTER DATED 17.01.12 SENT TO THE AO FOR REMAND REPORT REM AINED UNRESPONDED. THIS WAS FOLLOWED BY A REMINDER ISSUE D ON 16.2.12, AGAIN REQUESTING THE AO TO SEND THE REPORT. THE PO SITION REMAINED THE SAME AS THE AO DID NOT RESPOND TO THE CIT(A)S LETTER. EVENTUALLY, THE LD. CIT(A) DECIDED THE ISS UE ON MERITS BY CONSIDERING THE ASSESSEES SUBMISSIONS, LANGUAGE OF SURRENDER LETTER AND DETAILS OF PURCHASE BILLS OF PADDY AND P ACKING MATERIAL (BARDANA). HE GOT CONVINCED WITH THE ASSESSEES SU BMISSION AND ORDERED FOR THE DELETION OF PENALTY ON THIS SCORE. THE SECOND ADDITION WHICH CONSTITUTED THE FOUNDATION FOR THE I MPOSITION OF INSTANT PENALTY IS A DISALLOWANCE OF COMMISSION OF ` 4,82,467/- WHICH WAS DEBITED TO THE PROFIT & LOSS ACCOUNT. IN THE ABSENCE OF THE ASSESSEE FURNISHING ANY JUSTIFICATION FOR THE P AYMENT OF COMMISSION AND ALSO ANY AGREEMENT FOR THE PAYMENT O F SUCH COMMISSION, THE AO MADE THE ADDITION AND IMPOSED PE NALTY THEREON. THE LD. CIT(A) DELETED THE PENALTY ON THI S SCORE ALSO ON THE SUBMISSION OF DETAILS OF COMMISSION PAID TO VAR IOUS PERSONS TO ITA NO.4322/DEL/2012 4 WHOM SUCH PAYMENTS WERE MADE BY CHEQUE, AFTER DUE D EDUCTION OF TAX AT SOURCE. THE REVENUE IS AGGRIEVED AGAINST THE DELETION OF PENALTY. 3. WE HAVE HEARD THE LD. DR AND HAVE PERUSED THE RE LEVANT MATERIAL ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSEE DESPITE NOTICE. WE ARE, THEREFORE, PROCEE DING TO DISPOSE OF THIS APPEAL EX PARTE QUA THE ASSESSEE. IN SO FAR AS THE FIRST COMPONENT OF THE PENALTY IS CONCERNED, WE FIN D THAT THE ASSESSEE MADE OUT A CASE BEFORE THE AUTHORITIES BEL OW THAT IT DID MAKE PURCHASE OF PADDY AND BARDANA ON DIFFERENT DAT ES, BUT, THE BILLS WERE MISPLACED. THE ASSESSEE AGREED TO THE A DDITION BY MEANS OF A CONDITIONAL SURRENDER FOR NON-IMPOSITION OF ANY PENALTY. THOUGH THE AO DID NOT EXPRESSLY ACCEPT TH E ASSESSEES OFFER FOR SURRENDER, BUT, HE MADE NO EFFORTS TO EST ABLISH THAT THE PURCHASES OF PADDY AND BARDANA WERE BOGUS. IF WE V IEW THE ASSESSEES SURRENDER SUBJECT TO NO PENALTY AND THEN CONSIDER THE IMPOSITION OF PENALTY, OBVIOUSLY IT CANNOT BE UPHEL D BECAUSE THE ASSESSEE AGREED TO SURRENDER THE AMOUNT ONLY SUBJEC T TO THE CONDITION OF NON-IMPOSITION OF PENALTY. IF WE GO B Y THE AOS VERSION THAT HE DID NOT ACCEPT THE ASSESSEES OFFER FOR SURRENDER, ITA NO.4322/DEL/2012 5 IN THAT CASE ALSO, AT THE MOST, THE PURCHASES OF PA DDY AND BARDANA REMAINED UNPROVED AND WERE NEVER DISPROVED BY THE AO. THE AO MADE NO EFFORT TO BRING ON RECORD THAT THE P URCHASES REFLECTED IN THE ACCOUNTS TO THIS EXTENT WERE BOGUS . WE ARE REMINDED OF A CELEBRATED JUDGMENT OF THE HONBLE SU PREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. [(2010) 32 2 ITR 158 (SC)] IN WHICH THEIR LORDSHIPS HAVE HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT ATTRACT PENALTY IN THIS SECTION. ANOTHER FACTOR, W HICH NEEDS TO BE ACCENTUATED IS THAT DESPITE REPEATED LETTERS WRITTE N BY THE LD. CIT(A) TO THE AO FOR SUBMISSION OF REMAND REPORT ON THE ASSESSEES CONTENTIONS RAISED BEFORE HIM, THE AO DI D NOT CHOOSE TO SEND REPORT OR ADVERSELY COMMENT UPON THE ASSESS EES CONTENTIONS WHICH IMPLIEDLY PROVES THE CORRECTNESS OF SUCH SUBMISSIONS. UNDER THE GIVEN CIRCUMSTANCES AND RESP ECTFULLY FOLLOWING THE ABOVE REFERRED JUDGMENT OF THE HONBL E SUPREME COURT, WE ARE OF THE CONSIDERED OPINION THAT THIS I S NOT A FIT CASE FOR IMPOSITION OF PENALTY. THE VIEW TAKEN BY THE LD . CIT(A) IN DELETING THE PENALTY ON THIS SCORE IS UNIMPEACHABLE AND IS THUS UPHELD. ITA NO.4322/DEL/2012 6 4. AS REGARDS THE OTHER ITEM OF DISALLOWANCE OF COM MISSION AMOUNTING TO ` 4,82,467/-, IT CAN BE SEEN THAT THE ASSESSEE MADE PAYMENTS BY MEANS OF BANKING CHANNEL, AFTER DEDUCTI NG TAX AT SOURCE. THE DETAILS OF SUCH COMMISSION PAYMENTS WE RE MADE AVAILABLE TO THE LD. CIT(A). THE LD. DR FAILED TO CONTROVERT THIS FACTUAL POSITION RECORDED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. WHEN THE REQUISITE INFORMATION ABOUT THE RECIPIENTS OF COMMISSION IS AVAILABLE AND THE ASSESSEE DEDUCTED TAX AT SOURCE ON SUCH COMMISSION PAYMENTS MADE THROUGH BANKING CH ANNEL, WE FAIL TO COMPREHEND AS TO HOW PENALTY CAN BE SUST AINED ON THIS COUNT. THE MERE FACT THAT THE DISALLOWANCE WAS ACCE PTED BY THE ASSESSEE IN QUANTUM PROCEEDINGS CANNOT BE A CASE FO R AUTOMATIC IMPOSITION OF PENALTY. BOTH THE ASSESSMENT AND PENA LTY PROCEEDINGS ARE DISTINCT. IF THE ASSESSEE SUCCEEDS IN PROVING THE GENUINENESS OF THE PAYMENTS IN THE PENALTY PROCEEDI NGS DESPITE MAKING A SURRENDER IN QUANTUM PROCEEDINGS, AS HAS B EEN DONE IN THE EXTANT CASE, THE PENALTY CANNOT BE LEVIED. IN V IEW OF THE FOREGOING DISCUSSION, WE ARE OF THE CONSIDERED OPIN ION THAT THERE CAN BE NO QUESTION OF IMPOSITION OF PENALTY U/S 271 (1)(C) UNDER ITA NO.4322/DEL/2012 7 THE CIRCUMSTANCES AS ARE INSTANTLY PREVAILING. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER. 5. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.08.201 4. SD/- SD/- [ H.S. SIDHU ] [ R.S. SYAL ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 14 TH AUGUST, 2014. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.