SHRI GIRRAJ MEHTA, Kishangarh V. ITO, Kishangarh

ITA 530/JPR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99420 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK
• Assessee Lawyers: UJJVAL SHARMA

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 IH-DS-CALY] YS[KK LNL; DS LE{K BEFORE: SHRI P.K. BANSAL, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 530/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08. SHRI GIRIRAJ MEHTA, PROP. M/S. OSWAL UDYOG, G-444, IV PHASE, INDUSTRIAL AREA, MADANGANJ-KISHANGARH. CUKE VS. THE INCOME TAX OFFICER, KISHANGARH. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABBPM 5961 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI UJJVAL SHARMA, C.A. JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA, ADDL. CIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 5/11/2015 VKNS'K@ ORDER PER P.K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A) DATED 21.03.2012 SUSTAINING THE PENALTY AMOUNTING TO RS. 1,75,332/- LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE IT ACT. 2. I NOTED IN THIS CASE THAT THE AO MADE THE ADDITI ON AMOUNTING TO RS. 4,76,537/- UNDER SECTION 41(1)(A) IN RESPECT OF M/S. DEE JAY S TEELS. NO DISALLOWANCE IN RESPECT TO THE EXPENSES OUT OF WHICH THIS CREDIT AS ARISEN HAS BEEN MADE. WHEN THE ADDITION WAS SUSTAINED, THE AO CONSEQUENTLY ISSUED SHOW CAUSE NO TICE TO THE ASSESSEE AS TO WHY THE 2 ITA NO. 530/JP/2012 A.Y. 2007-08. SHRI GIRIRAJ MEHTA VS. ITO KISHANGARH. PENALTY SHOULD NOT BE IMPOSED AND ULTIMATELY LEVIED THE PENALTY ON THE ASSESSEE UNDER SECTION 271(1)(C) AMOUNTING TO RS. 1,75,332/- BEING 100% OF THE TAX SOUGHT TO BE EVADED FOR CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF THE INCOME. WHEN THE ASSESSEE WENT IN APPEAL BEFORE LD. CIT (A), THE LD. CIT (A) ALSO CONFIRMED THE LEVY OF PENALTY WITHOUT POINTING OUT WHETHER THE PENALTY IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS BY OBSERVING AS UNDER :- 4.6. THE RELIANCE PLACED BY APPELLANT ON DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS IS ALS O OF NO HELP, BECAUSE FACTS OF HIS CASE ARE DIFFERENT. THIS IS NOT A CASE WHERE APPELLANT MADE AN INCORRECT CLAIM FOR EXPENDITURE. THE FACT REGARDING BOGUS LIABILITY IN THE NAME OF M/S. DEE JAY STEELS WAS WELL WITHIN THE KNO WLEDGE OF APPELLANT, STILL THE LIABILITY WAS SHOWN IN HIS BOOKS. KEEPING IN VIEW ALL THESE FACTS, I HOLD THAT LEVY OF PENALTY U/S 271(1)(C) IS JUSTIFIE D IN THIS CASE. PENALTY OF RS. 1,75,332/- IS CONFIRMED. GROUND NO. 1 OF THE AP PEAL IS THUS DISMISSED. 3. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME. IN MY OPINION, LEVY OF PENALTY IS NOT AUTOMATIC. ONCE THE ADDITION IS MADE, DOES NOT MEAN THAT THE PENALTY SHALL STAND AUTOMATICALLY LEVIED. THE FACT S OF THIS CASE ARE VERY PECULIAR IN THE SENSE THAT THE AO EVEN THOUGH MADE THE ADDITION UND ER SECTION 41(1)(A) IN RESPECT OF THE LIABILITIES STANDING AGAINST THE PURCHASES BUT ALLOWED THE EXPENSES INCURRED BY THE ASSESSEE ON THE PURCHASES. THIS IS NOT A CASE WHER E THE PURCHASES HAVE BEEN DISALLOWED. ADDITION UNDER SECTION 41(1)(A) CAN BE MADE ONLY IF THE INGREDIENT OF SECTION 41(1)(A) ARE FULFILLED. THE ADDITION UNDER SECTION 41(1)(A) CAN BE MADE IF THERE IS A REMISSION OR CESSATION OF LIABILITY. THE ONUS IS ON THE REVENUE TO PROVE THAT THE LIABILITY HAS BEEN REMITTED OR CEASED DURING THE YE AR. SURRENDER OF THE LIABILITY BY THE ASSESSEE CANNOT BE SAID THAT THE LIABILITY HAS REMI TTED OR CEASED DURING THE IMPUGNED 3 ITA NO. 530/JP/2012 A.Y. 2007-08. SHRI GIRIRAJ MEHTA VS. ITO KISHANGARH. ASSESSMENT YEAR. THERE MAY BE NUMBER OF REASONS FO R THE SURRENDER BEING MADE BY THE ASSESSEE AS IN THIS CASE I NOTED THAT THE AO HA S ASKED THE ASSESSEE TO PRODUCE THE RELEVANT PARTIES BUT THE ASSESSEE COULD NOT PRODUCE THOSE PARTIES. THE PROVISIONS OF SECTION 271(1)(C) PROVIDES FOR THE IMPOSITION OF T HE PENALTY IF THE AO IS SATISFIED DURING THE COURSE OF THE ASSESSMENT THAT ASSESSEE HAD CONC EALED THE PARTICULARS OF THE INCOME OR FURNISHED THE INACCURATE PARTICULARS OF THE INCO ME. IN VIEW OF PROVISIONS OF SECTION 271(1)(C), IT IS ESSENTIAL THAT THERE MUST BE SPECI FIC CHARGE BEING BROUGHT OUT BY THE AO. UNTIL AND UNLESS A SPECIFIC CHARGE IS BEING BRO UGHT OUT, PENALTY UNDER SECTION 271(1)(C) CANNOT BE IMPOSED. IN THIS CASE I NOTED T HAT THE AO HAS NOT BROUGHT OUT ANY SPECIFIC CHARGE WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FILED THE INACCURATE PARTICULARS OF THE INCOME. BOTH THE CHARGES OF CONCEALMENT OF PARTICULARS OF INCOME OR FILING OF INACCURATE PARTICULARS OF IN COME ARE DIFFERENT. IN THE CASE OF CONCEALMENT OF PARTICULARS OF INCOME, EXPLANATION-1 IS APPLICABLE AND PRIMARY ONUS LIES ON THE ASSESSEE AS DUE TO EXPLANATION-1 THERE IS DEE MED CONCEALMENT OF PARTICULARS OF INCOME. IN THE CASE OF FURNISHING OF INACCURATE PA RTICULARS OF INCOME, EXPLANATION-1 IS NOT APPLICABLE. THEREFORE, THE ONUS LIES ON THE REV ENUE TO PROVE THAT THE PARTICULARS FILED BY THE ASSESSEE ARE INACCURATE. MY AFORESAID VIEW IS DULY SUPPORTED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. CIT, 282 ITR 643 (GUJ.) IN WHICH THE HONBLE HI GH COURT DID NOT UPHELD THE ORDER OF LEVYING THE PENALTY WHERE THE SPECIFIC CHARGE FOR L EVYING THE PENALTY HAS NOT BEEN BROUGHT ON RECORD. THE SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MANU ENGINEERING WORKS, 122 I TR 306 (GUJ.). THERE CANNOT BE 4 ITA NO. 530/JP/2012 A.Y. 2007-08. SHRI GIRIRAJ MEHTA VS. ITO KISHANGARH. BOTH THE CHARGES TOGETHER AS HAS BEEN DONE IN THIS CASE. ONCE THE AO IS ACCEPTING AND ALLOWING EXPENSES CLAIMED BY THE ASSESSEE, THE LIAB ILITY ARISING OUT OF THOSE EXPENSES, IN MY VIEW CANNOT BE BOGUS LIABILITY SO AS TO MAKE THE ASSESSEE LIABLE FOR THE PENALTY FOR CONCEALING THE PARTICULARS OF INCOME. I, THEREF ORE, SET ASIDE THE ORDER OF LD. CIT (A) AND DELETE THE PENALTY UNDER SECTION 271(1)(C) OF T HE IT ACT. 4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5/11/2015. SD/- IH-DS-CALY ( P.K. BANSAL ) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 5/11/ 2015 DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI GIRIRAJ MEHTA, MANDANGANJ-KISHA NGARH. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO KISHANGARH. 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. 530/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR