The ACIT Circle - 1, Nellore V. Shri B. Girijapathi Reddy & Co., Nellore

ITA 47/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59206 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-06-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: SHAIK JEELANI BASHA
• Keywords: Search and seizure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER. ITA NO.47/HYD/2011 : ASSESSMENT YEAR 2007-08 ASSTT. COMMISSIONER OF INCOME- TAX, CIRCLE-1, NELLORE. V/S. M/S. B.GIRIJAPATHI REDDY & CO., NELLORE. ( PAN- AABFG 9906 A ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.DIWAKAR PRASAD RESPONDENT BY : SHRI SHAIK JEELANI BASHA DATE OF HEARING 1 6 . 1.2012 DATE OF PRONOUNCEMENT 25.1.2012 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS), GUNTUR DATED 1 .9.2010, CANCELLING THE PENALTIES OF RS.37,55,460 UNDER S.271(1)(C) AND RS.26,10,000 UNDER S.271AAA OF THE INCOME-TAX ACT, LEVIED BY THE ASSES SING OFFICER, FOR THE ASSESSMENT YEAR 2007-08. 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E, WHO DERIVED INCOME FROM EXECUTION OF CONTRACT WORKS FILED ITS E -RETURN OF INCOME ON 30.9.2008, DECLARING A TOTAL INCOME OF RS.16,29,05, 560. SEARCH AND SEIZURE OPERATIONS U/S. 132 OF THE ACT WERE CONDUCTED ON 23 .1.2008 IN THE BUSINESS PREMISES OF THE ASSESSEE AND RESIDENTIAL PREMISES O F ITS PARTNERS, SHRI B.GIRIJAPATHI REDDY AND SHRI B.UMAPATHI REDDY AND S HRI I.SUDHAKAR REDDY. IN RESPONSE TO NOTICE ISSUED UNDER S.153A O F THE ACT, ASSESSEE HAS FILED ITS RETURN OF INCOME ON 17.6.2009, ADMITTING A TOTAL INCOME OF ITA NO.47/HYD/2011 M/S. B.GIRIJAPATHI REDDY & CO., NELLORE. 2 RS.16,29,05,560, AS WAS ADMITTED SUBSEQUENT TO THE DATE OF SEARCH. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER S. 143(3) OF THE ACT, MAKING AN ADDITION OF RS.1,10,48,719 ON ACCOUNT OF NON-CREDIT OF SERVICE TAX COLLECTED FORM THE SUB-CONTRACTORS TO THE P&L A CCOUNT AND NOT GIVING CREDIT TO THE TDS CLAIM OF RS.3,59,860. WHILE DOIN G SO, THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS, AND AFT ER CONSIDERING THE OBJECTIONS OF THE ASSESSEE IN RESPONSE TO THE PENAL TY NOTICE, THE ASSESSING OFFICER LEVIED A PENALTY OF RS.26,10,000 UNDER S.27 1AAA OF THE ACT; AND A FURTHER PENALTY OF RS.37,55,460 UNDER S.271(1)(C) O F THE ACT, VIDE COMMON ORDER DATED 28.5.2010. 3. AGGRIEVED BY THE PENALTIES THUS LEVIED BY THE A SSESSING OFFICER, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), WHO CA NCELLED BOTH THE PENALTIES. HENCE, REVENUE IS IN APPEAL BEFORE US. 4. WE HEARD BOTH THE PARTIES. INSOFAR AS THE PEN ALTY IMPOSED BY THE ASSESSING OFFICER UNDER S.271AAA OF THE ACT IS CONCERNED, THE CIT(A) HAS CANCELLED THE SAME ON THE GROUND THAT THE ASSES SING OFFICER CANNOT IMPOSE TWO PENALTIES BY ONE ORDER. WE ARE IN AGREE MENT WITH THE VIEW TAKEN BY THE CIT(A) IN THIS BEHALF. EACH PENALTY MA NDATES INITIATION OF SEPARATE PROCEEDINGS BY ISSUANCE OF SEPARATE SHOW-C AUSE NOTICES, POINTING OUT THE RELEVANT LAPSE ON THE PART OF THE ASSESSEE WARRANTING LEVY OF PENALTY PROPOSED, AND PASSING OF INDEPENDENT ORDERS CONSIDE RING EXPLANATION OF THE ASSESSEE IN RELATION TO EACH OF THE SHOW-CAUSE NOTI CES. IN THE CIRCUMSTANCES, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A) ON THIS ASPECT, WHICH IS ACCORDINGLY UPHELD. 5. EVEN WITH REGARD TO PENALTY OF RS.37,55,400 IMP OSED BY THE ASSESSING OFFICER UNDER S.271(1)(C) OF THE ACT BY T HE ASSESSING OFFICER IN RELATION TO THE SERVICE TAX COLLECTED FROM SUB-CONT RACTORS, OF RS.1,10,40,719, BUT NOT TAKING IT THROUGH THE PROF IT AND LOSS ACCOUNT, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A), WHO C ANCELLED THE PENALTY LEVIED. ITA NO.47/HYD/2011 M/S. B.GIRIJAPATHI REDDY & CO., NELLORE. 3 IT MAY BE TRUE THAT THE ASSESSEE HAS NOT ROUTED THE SERVICE TAX COLLECTED FROM THE CONTRACTORS THROUGH THE PROFIT & LOSS ACCO UNT. BUT, THE ASSESSEE ROUTED THE SAME THROUGH A SEPARATE ACCOUNT, MAINTAI NED FOR THAT PURPOSE BY THE ASSESSEE IN ITS BOOKS. THE ADDITION MADE BY THE ASSESSING OFFICER, ON ACCOUNT OF THE ASSESSEE NOT CREDITING THE SERVICE T AX COLLECTED TO THE PROFIT AND LOSS ACCOUNT, IN THE QUANTUM PROCEEDINGS MAY BE JUSTIFIED AND MIGHT HAVE BEEN UPHELD BY THE APPELLATE AUTHORITIES AS WE LL. HOWEVER, THAT FINDING IN THE QUANTUM PROCEEDINGS DOES NOT AUTOMAT ICALLY LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS CONCEALED PARTICUL ARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF BECAUSE TH E ASSESSEE HAS DISCLOSED THE DETAILS OF SERVICE TAX COLLECTED IN ITS BOOKS O F ACCOUNT, THOUGH ROUTING THE SAME THROUGH A DIFFERENT ACCOUNT, AND NOT THROU GH PROFIT & LOSS ACCOUNT, AND AS SUCH THERE WAS NO SUPPRESSION OF TH E FACTUM OF COLLECTION OF SERVICE TAX BY THE ASSESSEE. IN THE CIRCUMSTANCES, IT IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER S.271(1)(C) OF THE ACT, AND C ONSEQUENTLY, THE CIT(A) IN OUR OPINION, WAS JUSTIFIED IN CANCELLING THE PEN ALTY LEVIED BY THE CIT(A) UNDER S.271(1)(C) AS WELL. WE ACCORDINGLY UPHOLD T HE ORDER OF THE CIT(A) ON THIS ASPECT AS WELL, AND REJECT THE GROUNDS OF T HE REVENUE IN THIS APPEAL. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 25.1.2012 SD/- SD/- (ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DATED 25TH JANUARY, 2012 COPY FORWARDED TO: 1. M/S. B.GIRIJAPATHI REDDY & CO., 1602 - 380/B, SRINIVAS AGRAHARAM, NELLORE. 2. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1, NELL ORE. 3. COMMISSIONER OF INCOME - TAX(APPEALS) , GUNTUR. 4. COMMISSIONER OF INCOME - TAX, GUNTUR 5. THE D.R., ITAT, HYDERABAD. B.V.S