VINAYAK INDUSTRIES LTD., Jaipur V. ACIT, Alwar

ITA 517/JPR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5013 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 1994-1995
• Appeal Filed On: 17-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Keywords: Opportunity of being heard
• Section: 40A(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 517/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 1994-95 M/S. VINAYAK INDUSTRIES LTD. G-282, INDUSTRIAL AREA BHIWADI CUKE VS. THE ACIT CIRCLE- 2 ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AACCV 2329 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MANISH AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI R.A. VERMA, ADDL. CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14/10/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 18 /10/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), ALWAR DATED 30-05-2014 FOR THE ASSESSMENT YEAR 19 94-95 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE LEVY OF PENALTY U/S 271(1)(C ) OF THE I.T. ACT, 1961 ARB ITRARILY. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN COMPUTING THE AMOUNT OF TAX SOUGHT TO BE EVADED FOR THE ITA NO. 517/JP/2014 M/S. VINAYAK INDUSTRIES LTD. VS. ACIT , CIRCLE- 2, ALWAR . 2 PURPOSE OF LEVYING PENALTY U/S 271(1)( C) BY UNREAS ONABLY ENHANCING THE AMOUNT ON WHICH THE PENALTY WAS TO BE LEVIED. 1.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN FAILIN G TO CONSIDER THAT THE AO HAD WRONGFULLY ADOPTED THE PROFIT AS PER THE ANNUAL REPORT AT RS. 54,76,804/- INSTEAD OF RS. 40,22,920/- DECLARED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT AND THEREFORE, NO PENALTY WAS LEVIABLE ON ACCOUNT OF THIS ADDITION AND THE PENALTY LEVIED U/S 271(1)( C) DESERVES TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE LEVY OF PENALTY U/S 271(1)( C) ON ACCOUNT OF ADDITION OF RS. 1,57, 000/- MADE U/S 40A(3) OF I.T. ACT WITHOUT CONSIDERING THE SUBM ISSION MADE AND HARDSHIP WITH THE ASSESSEE APPELLANT, HENC E THE ADDITION SO MADE DESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE PENAL TY U/S 271(1)( C) ON ACCOUNT OF ADDITION OF RS. 6,19,685/ - CLAIMED ON ACCOUNT OF SALES COMMISSION WHEN IN FACT THE SA ID EXPENSE IS RELATED TO THE YEAR UNDER CONSIDERATION AND HAS NOT BEEN CLAIMED BY THE ASSESSEE IN ANY OF THE ASSESSME NT YEARS AND THUS WAS CLEARLY ALLOWABLE, HENCE, THE PENALTY LEVIED ON THIS COUNT DESERVES TO BE DELETED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C ) ON THE LUMP SUM DISALLOWANCE OF RS. 3,00,000/- MADE BY THE AO WITHOUT POINTING OUT ANY HEAD OUT OF WHICH THE SAME HAS BEEN MADE AND AS SIMPLY CONCLUDED BY OBSERVING THAT THE ASSESSEE HAS CLAIME D VARIOUS EXPENSES IN THE PROFIT AND LOSS ACCOUNT AND HAS RA ISED THE SHARE CAPITAL, THE DISALLOWANCE BEING BASED ON NO A DVERSE MATERIAL ON RECORD DOES NOT WARRANT/ AUTHORIZE ANY LEVY OF PENALTY ON THIS ACCOUNT. THEREFORE, PENALTY SO LEVI ED ON THIS ACCOUNT DESERVES TO BE DELETED. ITA NO. 517/JP/2014 M/S. VINAYAK INDUSTRIES LTD. VS. ACIT , CIRCLE- 2, ALWAR . 3 WITHOUT PREJUDICE TO ABOVE AND IN THE ALTERNATIVE 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN NOT PROPE RLY CONSIDERING THE FACT THAT NO PROPER INQUIRIES WERE MADE TO FIND OUT ACTUAL STATE WHETHER THE BOOKS OF ACCOUNT OF THE APPELLANT WERE LYING IN THE BUSINESS PREMISES WHICH WAS SEIZED BY RIICO, THUS T HERE WAS NO MALAFIDE INTENTION OF APPELLANT FOR NON-FURNISHING THE DETAILS, THUS THE PENALTY SO LEVIED U/S 271(1)( C) DESERVES TO BE DELETED. 2.1 AT THE OUTSET OF THE HEARING, THE LD. AR OF THE ASSESSEE PRAYED THAT QUANTUM APPEAL OF THE ASSESSEE IN ITA NO. 434/JP/20 14 FOR THE ASSESSMENT YEAR 1994-95 VIDE ORDER DATED 13-10-2016 HAD BEEN RESTORED BACK BY THE HON'BLE BENCH TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH RELATING TO GROUND NO. 1 AND 1.1 RAISED BY THE ASS ESSEE BY PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THEREFORE, THE CONSEQUENTIAL PENALTY U/S 271(1)(C ) OF THE ACT ALS O DESERVES TO BE RESTORED BACK TO THE FILE OF THE AO. 2.2 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW. 2.3 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. I FIND MERIT IN THE ARGUMENTS OF THE LD. AR OF THE ASSESSEE AS THE ISSUE OF QUANTUM HAD ALREADY BEEN R ESTORED BACK TO THE FILE OF THE AO BY THIS BENCH VIDE ITS ORDER DATED 13-10 -2016 (SUPRA). HENCE, THE ISSUES RAISED BY THE ASSESSEE AS TO CONFIRMING THE PENALTY U/S 271(1) ITA NO. 517/JP/2014 M/S. VINAYAK INDUSTRIES LTD. VS. ACIT , CIRCLE- 2, ALWAR . 4 BY THE LD. CIT(A) ARE ALSO RESTORED BACK TO THE FIL E OF THE AO TO BE DECIDED DE NOVO AS PER LAW. THUS THE APPEAL OF T HE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 18 /10/ 2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18 /10/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. VINAYAK INDUSTRIES LTD. , BHIW ADI 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 2, ALWAR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 517/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR