Income tax Officer, Jammu V. Sh. Ajay Kapoor, Jammu

ITA 459/ASR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5706 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 03-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.L. KARWA, VICE PRESIDENT AND SH. MEHAR SINGH, ACCOUNTANT MEMBER I.T.A. NO.459(ASR)/2010 ASSESSMENT YEAR:2005-06 PAN :AEMPK6852Q THE INCOME-TAX OFFICER, VS. SH. AJAY KAPOOR, WARD 1(1), JAMMU. 210-C, SAINIK COLONY, JAMMU. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. TARSEM LAL, DR ASSESSEE BY:SH. R.K. GUPTA, CA ORDER PER MEHAR SINGH, AM, THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A), JAMMU, DATED 05.09.2008, PASSED UNDER SECTI ON 250(6) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO IN SH ORT THE ACT), PERTAINING TO ASSESSMENT YEAR 2005-06. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY U/S 271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE AMOUNT ON WH ICH PENALTY WAS IMPOSED HAS BEEN ADDED AFTER INVOKING THE PROVI SIONS OF SECTION 145(3) OF THE ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) WAS NOT JUSTIFIED IN NOT CONSIDERING THE FACT THAT THE ADDITION MADE WAS AGREED ADDITION. 2 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT THERE ARE VARIOUS JUD ICIAL PRONOUNCEMENTS WHERE IT HAS BEEN HELD THAT WHERE TH ERE IS SURRENDER BY THE ASSESSEE, PENALTY U/S 271(1)(C) CA N BE LEVIED. A FEW JUDGMENT IN FAVOUR OF THE REVENUE ARE AS UNDER : I) ZOOM LEASING & FINANCE CO. LTD. VS. CIT (1992) 6 4 TAXMAN 387 (DEL.) II) CIT VS. RAKESH SURI (2010) 41 DTR (ALL) 175 3. THE ONLY ISSUED RAISED BY THE REVENUE IN THESE G ROUNDS OF APPEAL IS THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING T HE PENALTY U/S 271(1)(C) WHEN THE AMOUNT ON WHICH PENALTY WAS IMPOSED HAD BE EN ADDED AFTER INVOKING THE PROVISIONS OF SECTION 145(3). BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR. D URING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED BOOKS OF ACCOUNT S ALONGWITH BILLS AND VOUCHERS. HOWEVER, THE ASSESSEE AGREED THAT DUE EXA CTION AND DIGGING WORK CARRIED OUT FOR CONTRACTS IN KASHMIR VALLEY COMPLE TE VOUCHERS OF SUCH WORK COULD NOT BE PRODUCED. SINCE THE AO WAS NOT SA TISFIED ABOUT THE CORRECTNESS AND COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. FURTHER, IN ORDER TO AVOID LITIGATION AND TO BUY PEACE OF MIND, THE ASSESSEE AGREED FOR A DISALLOWANCE @ 10% OF THE EXPENSES AMOUNTING TO RS.61,35,540/-. THE AO, A FTER MAKING ADDITION OF RS.6,13,544/- INITIATED PENALTY PROCEEDINGS UNDER S ECTION 271(1)(C) AND FINALLY IMPOSED THE REFERRING TO CONCEALMENT OF PE NALTY U/S 271(1)(C) OF THE ACT: EQUIVALENT OF 100% OF TAX SOUGHT TO EVADED WHI CH WORKS OUT TO RS.2,06,522/-. ON APPEAL, THE LD. CIT(A), DELETED T HE PENALTY IMPOSED BY THE ASSESSING OFFICER. NOW, THE REVENUE IS AGGRIEVE D BY THE ORDER OF THE LD. CIT(A) AND IS IN APPEAL BEFORE THIS BENCH. 3 4. THE LD. DR, RELIED ON THE ORDER OF THE ASSESS ING OFFICER. HE FURTHER CONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CANCELLING THE PENALTY AS THE ADDITION WAS MADE ON AGREED BASIS. 5. THE LD. COUNSEL FOR THE ASSESSEE, SH. R.K. GUPT A, STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A) AND REITERATED THE SUBM ISSIONS MADE BEFORE HIM. HE SUBMITTED THAT AT NO STAGE, THE A.O. HAS EVEN ES TABLISHED THAT THE ASSESSEE HAS FRAUDULENTLY OR WILLFULLY OR NEGLIGENT LY CONCEALED THE INCOME OR HAS FILED INACCURATE PARTICULARS OF INCOME. HE ALSO PLACED RELIANCE ON THE FOLLOWING CASE LAWS, IN SUPPORT OF HIS CASE: I) NEW SORATHIA ENGINEERING CO. VS. CIT (2006) 282 ITR 642 (GUJ). II) CIT VS. MANU ENGINEERING WORKS (1980) 122 ITR 3 06 (GUJ) III) CIT VS. S.I.PARIPUSHPAM (2001) 249 ITR 550 (MAD.) IV) SIR SHADILAL SUGAR & GENL. MILLS LTD. VS. CIT (1987 ) 168 ITR 705 (SC). V) C.I.T. VS. CAFCO SYNDICATE SHIPPING CO. (2007) 294 ITR 134 (MAD.) VI) ZOOM LEASING & FINANCE CO. LTD. VS. CIT (1992) 64 T AXMAN 387 (DEL) VII) CIT VS. RAKESH SURI (2010) 233 CTR (ALL) 84. 6. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE R IVAL SUBMISSIONS, FACT SITUATION OF THE CASE AND THE RELEVANT MATERIAL PLA CED ON RECORD, INCLUDING THE CASE LAWS RELIED UPON BY THE LD. COUNSEL FOR TH E ASSESSEE. WE HAVE ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. A CAREFUL PERUSAL OF THE ORDER OF THE CIT(A) REVEALS THAT AFTER APPRECIATION OF THE FACT SITUATION OF THE CASE, HE DELETED THE PENAL TY LEVIED BY THE AO. NEEDLESS TO SAY THAT THE IMPUGNED APPELL ATE ORDER IS WELL 4 REASONED AND BASED ON THE COGENT AND CREDIBLE MATER IAL AND FACTS OF THE CASE. HOWEVER, IT WOULD PERTINENT TO REPRODUCE RELEVANT PART OF THE FINDGS OF THE CIT(A), FOR THE PURPOSE OF PROPER APPRECIATION OF THE SAME: THE PLAIN READING OF THE ASSESSMENT ORDER MAKES IT CLEAR THAT THE REASON FOR THE AGREED DISALLOWANCE IS THAT THE EXPE NSES WERE NOT SUPPORTED BY PROPER BILLS AND VOUCHERS AGAINST ALL ENTRIES. NO SPECIFIC DEFECT HAS BEEN POINTED OUT. THE ASSESSEE HAS AGREE D TO THE SAID DISALLOWANCE BUT AVERRED THAT THE WORK WAS UNDERTAK EN IN KASHMIR VALLEY BEING A DISTURBED AREA, PROPER VOUCHERS COUL D NOT BE COLLECTED AND MAINTAINED. THE PENALTY ORDER HAS NOT TAKEN ANY NOTE OF THE SAME. NEITHER THE A.O. HAS COMMENTED ON THE APPLICABILITY OR OTHERWISE OF THE DECISION OF THE APEX COURT IN CASE OF M/S. SHAD I LAL SUGAR MILLS, REPORTED AT 168 ITR 705 AS THE CLAIM OF THE ASSESSE E THAT THE AGREEMENT FOR DISALLOWANCE WAS TO BUY PEACE OF MIND . NO DISCUSSION IS REQUIRED ON APPLICABILITY OF SECTION 145(3) OF T HE INCOME-TAX ACT, AS APPLIED BY A.O. IN HIS ORDER U/S 143930 OF THE ACT, AS THE SAME HAS BECOME FINAL AND ACCEPTED BY THE ASSESSEE. EVEN OTH ERWISE, THE MUTE QUESTION IS WHETHER THE LEVY OF PENALTY U/S 271(1)( C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES JUSTIFIED? AFTER CAREFULLY CONSIDERING THE FACTS OF THE CASE, I AM INCLINED TO HOLD THAT THE LEVY OF PENALTY IS MADE BY THE A.O . JUST BECAUSE A DISALLOWANCE WAS MADE. NEITHER THE EXPLANATION OF A SSESSEE WAS FOUND TO BE FALSE NOR MALAFIDE. NOR IT WAS THE CASE OF THE A.O. THAT NO SUCH EXPENSES AS CLAIMED WHERE MADE. THE CASE LAWS CITED BY THE APPELLANTS REPRESENTATIVE FULLY SUPPORTS HIS CASE. IN FACT THE RATIO OF THE CASE OF CIT VS. CAFCO SYNDICATE SHIPPING CO. 29 4 ITR 134 (MAD) AS ABOVE SQUARELY COVERS THE CASE OF THE ASSESSEE. THERE WAS NEITHER ANY CONCEALMENT OF FACTS NOR FURNISHING OF ANY INAC CURATE PARTICULARS AS NOTHING HAS BEEN BROUGHT ON RECORDS BY THE A.O. REGARDING SATISFACTION OF THE A.O. FOR INITIATING T HE PENALTY AS CHALLENGED BY THE ASSESSEE, THE SAME HAS BEEN TAKEN CARE OF THE RETROSPECTIVE AMENDMENT WITH EFFECT FROM 1989-90 IN THE RELEVANT SECTION AND NOT RELEVANT THEN THE PENALTY IS TO BE DELETED ON MERITS ALONE. IN VIEW OF THE ABOVE, THE PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, LEVIED IS DELETED. 5 6.1. IN THE LIGHT OF ABOVE DISCUSSIONS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A), AS T HE SAME ARE BASED ON PROPER APPRECIATION OF THE LEGAL AND FACTUAL POSITI ON OF THE CASE. HENCE, THE ORDER OF THE CIT(A), IN DELETING THE PENALTY UNDER SECTION 271(1)(C) IS UPHELD. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 23RD JUNE, 2011. SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 23RD JUNE, 2011 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE: SH. AJAY KAPOOR, 20-C, SAINIK COLONY, JAMMU. 2. THE ITO WARD 1(1), JAMMU. 3. THE CIT(A), JAMMU. 4. THE CIT, JMMU. 5. THE SR DR, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.