DY. C.I.T., WARDHA CIRCLE, Wardha V. M/S BLUE DIAMOND TRANSPORT, Yavatmal

ITA 508/NAG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3122 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 08-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Non compliance; Revised return
• Section: 143(3); 133A; 139(5)

Judgement Text

1 ITA NO. 508/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO.508/NAG/2014 ASSESSMENT YEAR : 2007 - 08. DY. COMMISSIONER OF INCOME - TAX, M/S BLUE DIAMOND TRANSPORT, WARDHA CIRCLE, WARDHA. VS. YAVATMAL. PAN AACFB7138G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D. RAVI KUMAR. . RESPONDENT : SHRI P.M. GANDHI. DATE OF HEARING : 31 - 12 - 2015. DATE OF PRONOUNCEME NT : 25 TH FEBRUARY, 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 30 - 09 - 2014 AND THE ONLY GROUND RAISED BY THE REVENUE IS AN UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) - I, NAGPUR HAS ERRED IN DELETING THE PENALTY U/S 271(1)(C) OF RS.13,71,981/ - WITHOUT VERIFYING THE MANIPULATED VERSION OF ASSESSEE AND ALSO WITHOUT CONSIDERING THAT THE ADDITION IN INCOME WAS BASE D ON BOOKS & DOCUMENTS FOUND IN SURVEY WHICH WAS NOT DISCLOSED IN ORIGINAL RETURN. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 143(3) DATED 31 - 12 - 2009 AND THE PENALTY ORDER U/S 271(1)(C) DATED 21 - 05 - 2010 WERE THAT THE ASSESSEE FIRM IS A TRANSPORTER AND SUBJECTED TO A SURVEY ACTION U/S 133A ON 02 - 03 - 2009. ORIGINALLY A RETURN WAS FILED ON 07 - 12 - 2007 DECLARING AN INCOME OF RS.4,97,064/ - . CONSEQUENT UPON THE SURVEY A REVISED RETURN WAS 2 ITA NO. 508/NAG/2014 FILED DECLARING AN INCOME OF RS.39,97,064/ - . THE REVISED RETURN WAS FILED ON 26 - 03 - 2009, AS STATED BEFORE US. IT HAS ALSO BEEN INFORMED THAT DURING THE COURSE OF SURVEY AN INCOME OF RS.35 LAKHS WAS OFFERED. 2.1 THERE WAS AN ADDITION OF RS.5,76,000/ - ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF I.T. AC T. OUR ATTENTION WAS DRAWN THAT ON THIS AMOUNT PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED. AS FAR AS THE INCOME DISCLOSED AS PER THE REVISED RETURN WAS CONCERNED, WE HAVE BEEN INFORMED THAT THE AMOUNT DISCLOSED AS PER THE REVISED RETURN WAS ACCEPTED AS SUCH WITHOUT ANY ADDITION. 3. WHILE LEVYING THE PENALTY U/S 271(1)(C) THE AO HAS REPRODUCED THE PORTION OF THE STATEMENT RECORDED TO DEMONSTRATE THAT THE SURVEY PARTY HAD FOUND EXCESS EXPENDITURE WHICH WAS INCURRED OUT OF THE UNACCOUNTED INCOME. THE EXCESS EXPENDITURE WAS ALLEGED TO BE OF RS.34,79,487/ - DUE TO WHICH AN ADDITIONAL INCOME OF RS.35 LAKHS WAS OFFERED, WHICH ACCORDING TO THE AO WAS THE CONCEALED INCOME. ALTHOUGH FEW CASE LAWS WERE REFERRED FROM THE SIDE OF THE ASSESSEE, NAMELY, SURESHCHANDRA MITTAL 251 ITR 09 (SC) BUT THE AO WAS NOT CONVINCED. IN HIS OPINION, THE RETURN WAS NOT REVISED VOLUNTARILY. AN OMISSION ON THE PART OF THE ASSESSEE WAS DISCOVERED DURING THE COURSE OF SURVEY WHICH HAD PROMPTED TO FILE THE REVISED RETURN. ACCORDING TO THE AO THE ASSESSEE HAD , IN TOTAL , CONCEALED THE INCOME OF RS.40,76,000/ - OVER WHI CH HE HAS LEVIED A PENALTY OF RS.13,71,981/ - . 4. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(APPEALS) HAS OPINED IN RESPECT OF THE INCOME OFFERED OF RS.35 LAKHS AS UNDER : THE RATION DECIDENDI EMBEDDED IN THE ABOVE DECI SION OF THE HONBLE APEX COURT IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT APPELLATE. IT IS UNDISPUTED THAT THOUGH THE INCRIMINATING MATERIAL WAS IMPOUNDED IN THE CASE OF THE APPELLANT DURING THE COURSE OF SURVEY ACTION, HOWEVER THE ASSESSMENT HAS BEEN COMPLETED SOLELY ON THE BASIS OF 3 ITA NO. 508/NAG/2014 THE DECLARATION MADE BY THE APPELLANT AT RS.35 LAKHS, WHICH WAS OFFERED FOR TAXATION AND ACCEPTED BY THE LD. AO, WITHOUT COMMENTING ON THE MERITS OF SUCH DISCLOSURE. FURTHER THAT PRIMA - FACIE NO ATTEMPT HAS BEEN MADE BY THE LD. AO TO LINK THE ADDITIONAL INCOME DECLARED WITH THAT OF THE IMPOUNDING MATERIAL WITH AN INTENT TO MAKE OUT A CASE OF CONCEALMENT OF INCOME AGAINST THE APPELLANT. THAT HAVING NOT BEEN DONE, THERE EXIST PRIMA - FACIE NO CASE FOR LEVY OF PENALTY U/S 2 71(1)(C) OF THE ACT; MORE PARTICULARLY WHEN THE REVISED RETURN OF INCOME FILED BY THE APPELLANT IN GOOD FAITH WITHIN THE TIME, INCLUDING THEREIN THE ADDITIONAL INCOME OF RS. 35 LAKHS, HAS BEEN ACCEPTED. THEREFORE, THE LEVY OF PENALTY IS NOT JUSTIFIED. 4.1 FURTHER IN RESPECT OF DISALLOWANCE MADE U/S 40 (A)(IA) THE PENALTY WAS DELETED AFTER ASSIGNING THE FOLLOWING REASONS: SO FAR AS THE PENALTY IN RESPECT OF THE ADDITION OF RS.5,76,000/ - , BEING DISALLOWANCE U/S 40(A)(IA) OF THE ACT IS CONCERNED, I FIND SUB STANTIAL FORCE IN THE CONTENTION OF THE AR THAT SECTION 40(A)(IA) PROVIDES AN OPTION TO THE APPELLANT TO CLAIM THE DEDUCTION IN THE YEAR IN WHICH THE TDS IS ACTUALLY MADE AND THE SAME IS PAID TO THE GOVERNMENT ACCOUNT, THEREFORE, FURTHER LEVY OF PENALTY OV ER AND ABOVE THE DISALLOWANCE CAUSES DOUBLE HARDSHIP TO THE APPELLANT. THOUGH IT IS A TECHNICAL ERROR ON THE PART OF THE APPELLANT TO CLAIM THE EXPENDITURE ON WHICH NO TDS HAS BEEN MADE U/S 194I IN THE YEAR UNDER CONSIDERATION FOR WHICH THE APPELLANT HAS A LREADY BEEN PENALISED BY RENDERING ITSELF LIABLE TO THE DISALLOWANCE OF RS.5,76,000/ - ADDED TO THE TOTAL INCOME AS ACCEPTED BY THE APPELLANT. IT, HOWEVER, IS SIGNIFICANT TO MENTION THAT NO CONCEALMENT AS SUCH IS EMANATING FROM THE CLAIM OF THE APPELLANT IN SO FAR AS THE APPELLANT HAS MADE A CLAIM IN ITS RETURN OF INCOME FILED ITSELF, WHICH IS REASONABLE OF ITS BONAFIDE ACT, LEAVING THEREBY A VERY LEAST SCOPE OF HIDING ANYTHING ON THE FACE OF THE FACTS WHICH ARE APPARENT FROM THE RETURN OF INCOME. IT, THERE FORE, TO MY OPINION, DOES NOT CONSTITUTE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, HENCE NOT LIABLE TO PENAL ACTION. 5. FROM THE SIDE OF THE REVENUE LEARNED D.R. MR. D. RAVI KUMAR APPEARED AND PLEADED THAT AT THE TIME OF SURVEY IT WAS FOUND THAT THE HIRE CHARGES WERE 4 ITA NO. 508/NAG/2014 PAID TO THE PARTNERS AND TAX WAS NOT DEDUCTED ON PAYMENT OF TRUCK HIRE CHARGES, THEREFORE, THE ASSESSEE HAD OFFERED THE IMPUGNED ADDITIONAL INCOME. ON THE PART OF THE ASSESSEE IT WAS NOT A VOLUNTARY DISCLOSURE. IN SUPPORT OF THIS ARGUMENT, LEARNED D.R. HAS PLACED RELIANCE ON THE DECISION OF SAJJANRAJ NAHRA VS. CIT 155 TAXMAN 536 (MAD) WHEREIN THE HONBLE COURT HAS OPINED THAT MERE ACCEPTANCE OF REVISED RETURN DECLARING ADDITIONAL INCOME ITSELF COULD NOT BE A BAR FOR LEVYING CONCEALMENT PENALTY. IT WAS HELD THAT THE ASSESSEE HAD NOT ACTED IN A BONAFIDE MANNER AND THE OFFERING OF ADDITIONAL INCOME WAS NOT A HONEST FILING OF RETURN. LEARNED D.R. HAS, THEREFORE, CONCLUDED T HAT IN THE PRESENT CASE AS WELL THE IMPUGNED AMOUNT WAS OFFERED WHEN THE CONCEALMENT WAS DETECTED, HENCE PENALTY SHOULD BE CONFIRMED. 6. ON THE OTHER HAND, FROM THE SIDE OF THE RESPONDENT ASSESSEE, LEARNED A.R. MR. P.M. GANDHI APPEARED AND PLEADED THAT IN THE ASSESSMENT ORDER THERE WAS NO MENTION OF ANY INCRIMINATING MATERIAL FOUND AT THE TIME OF SURVEY U/S 133A. THE SURVEY WAS CONDUCTED ON 2 ND MARCH, 2009 AND THE REVISED RETURN WAS FILED ON 26 - 03 - 2009. THE ASSESSEE IS A TRANSPORTER AND THE ONLY DEFECT WHIC H WAS FOUND AT THE TIME OF SURVEY WAS NON DEDUCTION OF TDS ON PAYMENT OF TRUCK HIRE CHARGES. THERE WAS NO DETECTION OF CONCEALED INCOME. EVEN THEN THE ASSESSEE HAD OFFERED AN ADDITION AL INCOME OF RS.35 LAKHS WHICH WAS DULY DISCLOSED IN THE REVISED RETURN A ND THE TAX HAD ALSO BEEN PAID. ON THOSE FACTS HE HAS PLACED RELIANCE ON CIT VS. SAS PHARMA PHARMACEUTICAL 335 ITR 259 (DEL.) WHEREIN IT WAS HELD THAT SURRENDER WAS MADE DURING THE COURSE OF SURVEY BUT THERE WAS NO SATISFACTION RECORDED TO INITIATE PENALTY PROCEEDINGS. IT WAS FURTHER HELD THAT THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN THE INCOME - TAX RETURN, HENCE THAT WAS NOT A CASE OF NON DISCLOSURE OF THE SURRENDERED AMOUNT OVER WHICH TAX WAS PAID. THE HONBLE COURT HAS HELD THAT THE PENALTY WAS NOT LEVIABLE. 7. IN THE LIGHT OF THE ABOVE FACTUAL AS WELL AS LEGAL BACKGROUND WE HAVE PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE CASE LAWS CITED . AS FAR AS 5 ITA NO. 508/NAG/2014 THE ASSESSMENT ORDER IN QUESTION IS CONCERNED IT IS APPARENT THAT THERE WAS NO MENTION OF A NY INCRIMINATING MATERIAL FOUND OR DETECTED AT THE TIME OF SURVEY. WE HAVE ALSO NOTED T HAT THERE WAS NO MENTION THAT ANY CONCEALED INCOME WAS UNEARTHED. THE AO HAS MERELY MADE A DISCUSSION ABOUT NON COMPLIANCE OF TDS PROVISIONS. TO COVER UP THE SAID DISCREPANCY IT WAS EXPLAINED THAT AN ADDITIONAL INCOME OF RS.35 LAKHS WAS OFFERED. DURING THE PENALTY PROCEEDINGS THE ASSESSEE HAS REFERRED A DECISION OF HONBLE SUPREME COURT PRONOUNCED IN THE CASE OF SURESHCHANDRA MITTAL 251 ITR 9 (SC). HOWEVER, THE AO W AS NOT CONVINCED AND HELD THAT THE REVISED RETURN COULD NOT ABSOLVE THE ASSESSEE FROM THE CLUTCHES OF PENALTY. AS AGAINST THAT, THE FIRST APPELLATE AUTHORITY HAS PLACED RELIANCE ON SUDERSHAN SILK & SAREES 300 ITR 205 (SC) FOR THE LEGAL PROPOSITION THAT THE REVISED RETURN WAS FILED DISCLOSING THE INCOME WHICH WAS FOUND AT THE TIME OF SEARCH AND THE DISCLOSURE OF THE ASSESSEE COULD BE HELD AS MADE IN GOOD FAITH AND MERE DISCLOSURE WAS NOT A SUFFICIENT REASON TO LEVY THE PENALTY BUT FROM THE SIDE OF THE REVENU E SOME STRONGER EVIDENCE WAS SURELY REQUIRED. 7.1 APART FROM THE ABOVE DECISION WE HAVE NOTED THAT IN THE CASE OF SURESH C HANDRA BANSAL 329 ITR 330 (CAL.) THE OBSERVATION WAS MADE THAT LEVY OF PENALTY SHOULD NOT BE ONLY BASED UPON THE INCOME OFFERED AND BE FORE LEVY OF PENALTY A DETAILED DISCUSSION OF INCRIMINATING DOCUMENTS WAS REQUIRED TO BE MADE TO JUSTIFY THE ACTION. FURTHER, IN THE CASE OF SUDERSHAN SILK & SAREES 300 ITR 205 (SC) SEARCH WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE AND APART FROM CASH A ND JEWELLERY CERTAIN INCRIMINATING DOCUMENTS EVIDENCING THE CONCEALMENT OF INCOME WAS UNEARTHED. IN ORDER TO AVOID DEFECTS AND LITIGATION THE ASSESSEE CAME FORWARD WITH AN OFFER OF ADDITIONAL INCOME AND FILED REVISED RETURN. A PENALTY U/S 271(1)(C) WAS LE VIED WHICH WAS CHALLENGED. ON APPEAL, LEARNED CIT(APPEALS) HELD THAT THE ASSESSEE OFFERED THE AMOUNT FOR THE PURPOSE OF PURCHASING PEACE AND THERE WAS NO PROOF OF ANY CONCEALMENT, HENCE PENALTY WAS DELETED. THE TRIBUNAL HAD UPHELD THE FINDINGS OF LEARNED C IT(APPEALS). IT 6 ITA NO. 508/NAG/2014 WAS FURTHER HELD THAT IN VIEW OF THE DEPOSITION GIVEN U/S 132(4) FOLLOWED BY COOPERATING ATTITUDE OF THE ASSESSEE IN PAYING THE TAX, NO PENALTY WOULD BE LEVIABLE. THERE WAS AN OBSERVATION THAT THE IMPUGNED INCRIMINATING MATERIAL WAS NOT USE D BY THE DEPARTMENT IN MAKING THE ASSESSMENT. WHEN THE MATTER WAS IN REFERENCE BEFORE THE HONBLE HIGH COURT, THE SAME WAS ANSWERED IN FAVOUR OF THE DEPARTMENT. REVERSING THE ORDER OF HONBLE HIGH COURT, HONBLE SUPREME COURT HAS HELD THAT THE TRIBUNAL BE ING A FINAL COURT FOR FACTS, HENCE THE DECISION OF THE TRIBUNAL ON FACTS OUGHT TO HAVE BEEN AFFIRMED. IT WAS HELD THAT THERE WAS NO PERVERSITY IN THE ORDER OF THE TRIBUNAL. HENCE THE DELETION OF PENALTY WAS CONFIRMED. WE HAVE ALSO EXAMINED THE DECISION OF HONBLE ALLAHABAD HIGH COURT PRONOUNCED IN THE CASE OF CHEAP CYCLE STORES 281 ITR 166 (ALL) WHEREIN A RETURN WAS REVISED U/S 139(5) AND SINCE THERE WAS NO ELEMENT OF CONCEALMENT OF INCOME, THE HONBLE COURT HAS HELD THAT PENALTY COULD NOT BE IMPOSED. FINA LLY, WE PLACE RELIANCE ON THE DECISION OF SURESH C HANDRA MITTAL 251 ITR 9 PRONOUNCED BY THE HONBLE SUPREME COURT WHEREIN IT WAS HELD THAT THE DEPARTMENT HAD NOT DISCHARGED ITS BURDEN OF PROVING CONCEALMENT AND HAD SIMPLY RESTED ITS CONCLUSION ON THE ACT O F VOLUNTARY SURRENDER DONE BY THE ASSESSEE IN GOOD FAITH. THE DELETION OF PENALTY WAS NOT INTERFERED. 8. WE, THEREFORE, HOLD THAT UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) WAS JUSTIFIED IN DELETING THE PENALTY. THE DELETION IS HEREBY CONFIRMED AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7 ITA NO. 508/NAG/2014 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRODUCED IN THE OPEN COURT ON THIS 25 TH DAY OF FEBRUARY, 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, D ATED: 25 TH FEBRUARY, 2016. COPY FORWARDED TO : M/S BLUE DIAMOND TRANSPORT LAL BAHADUR SHASTRI MARKET, YAVATMAL. 1. D .C.I.T., WARDHA CIRCLE, WARDHA. 2. COMMISSIONER OF INCOME - TAX - ,NAGPUR. 3. CIT(APPEALS) - I, NAGPUR. 4. D.R., ITAT, NAGPUR. 5. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.