Pro-Arc Welding & Cutting Systems Pvt. Ltd, Pune V. Assistant Commissioner of Income tax, Pune

ITA 553/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4326 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-03-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 08-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Set aside
• Section: 271(1)(c); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R. S. SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.553/PUN/2017 / ASSESSMENT YEAR : 2010-11 PRO-ARC WELDING & CUTTING SYSTEMS PVT. LTD, GAT NO. 246, CHIMBALI, TALUKA: KHED, PUNE-412501 PAN : AAECP1289M .... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-10, PUNE. / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE, AR REVENUE BY : SHRI SUDHENDU DAS, DR / DATE OF HEARING : 11.03.2019 / DATE OF PRONOUNCEMENT : 12.03.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE LD. CIT(APPEAL)-6, PUNE DATED 30.11.2016 FOR THE ASS ESSMENT YEAR 2010-11 AS PER THE GROUNDS OF APPEAL ON RECORD. 2. ON PERUSAL OF THE GROUNDS OF APPEAL FILED BY THE ASSESS EE, IT IS NOTED THAT THE ASSESSEE HAS PREFERRED MULTIPLE GROUNDS OF APPEAL BEFORE US, HOWEVER AT THE TIME OF HEARING, THE LD. AR OF TH E ASSESSEE SUBMITTED THAT ALL THE GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO THE 2 ITA NO. 553/PUN/2017 A.Y.2010-11 LEVY AND CONFIRMATION OF PENALTY U/S 271(1)(C) OF THE ACT AND WHETHER UNDER THE FACTS AND CIRCUMSTANCES SUCH PENALTY IS JUSTIFIABLE. 3. THE RELEVANT FACTS ARE THAT DURING THE COURSE OF SCR UTINY PROCEEDINGS, AS PER INFORMATION COLLECTED FROM THE OFFICIAL WEB- SITE OF SALES TAX DEPARTMENT, MAHARASHTRA, OFFICIAL COMMUNICATION REC EIVED FROM THE SALES TAX DEPARTMENT FOR VERIFICATION OF THE ACCOM MODATION BILLS TAKEN FROM THE HAWALA PARTIES FOR INFLATING THE EXPENSE S IN THE FORM OF PURCHASES AND COMMISSION PAYMENT MADE TO VARIOUS PARTIES, INFORMATION U/S 133(6) OF THE I.T. ACT 1961 WAS SOUGHT FROM 20 PARTIES INCLUDING HAWALA PARTIES BY ISSUE OF LETTER ON 11.02.13. 4. IN RESPONSE TO THE ABOVE, ALL THE PARTIES COMPLIED EXC EPT M/S PRAYASH STEELAGE (PURCHASES OF RS. 9,11,975/-) AND VATIKA T RADING CORPORATION (PURCHASES OF RS. 6,43,477/-). SINCE NO CONFIRMAT ION WAS RECEIVED FROM THESE PARTIES, THE ASSESSEE OFFERED BEFO RE THE REVENUE AUTHORITIES THAT THE TRANSACTIONS FROM M/S PRAY ASH STEELAGE AND VATIKA TRADING CORPORATION BE ADDED TO THE INCOME O F THE ASSESSEE WHILE FRAMING ASSESSMENT. THIS STATEMENT WAS TAK EN AS CONFESSIONAL STATEMENT BY THE AO AND THE AO COUPLED WITH THE FACT THAT THESE PARTIES NAME APPEARED IN THE NAME OF THE LIST OF HAWALA TRANSACTION PARTIES NOT ONLY DISALLOWED THE AMOUNT, BUT A LSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 5. THE LD.A.R. AT THE TIME OF HEARING VEHEMENTLY ARGUED THAT FROM THE TOTAL LIST OF 20 PARTIES, ONLY 2 HAVE NOT GIVEN THEIR CONFIRMATION AT THE TIME OF ASSESSMENT. HOWEVER, LD.A.R. FILED ADDITIONAL EVIDENC E BEFORE US WITH RESPECT TO M/S PRAYASH STEELAGE AND VAT IKA TRADING CORPORATION REGARDING THE PURCHASES MADE FROM THEM. LD .A.R. 3 ITA NO. 553/PUN/2017 A.Y.2010-11 FURTHER SUBMITTED THAT OUT OF THE 20 PARTIES, ONLY TWO P ARTIES HAVE NOT GIVEN THEIR CONFIRMATION DURING THAT TIME, HOWEVER NOW THEY HAVE PLACED THEIR CONFIRMATION AND THIS CANNOT BE TERMED TO B E AN ACT WARRANTING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AS THERE IS NO CONCEALMENT OF INCOME OR FURNISHING ANY INACCURATE PART ICULARS OF INCOME. LD.A.R. FURTHER SUBMITTED THAT THEIR STATEMENT TO THE AO REGARDING ADDING THE AMOUNT WITH REGARD TO THOSE TWO P ARTIES WAS AN OFFER FOR TAXATION AND IT WAS NOT A CONFESSIONAL STATEMENT. 6. THE LD. DR, PER CONTRA, PLACED RELIANCE ON THE ORDERS O F SUB- ORDINATE AUTHORITIES. 7. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIV AL CONTENTIONS AND HAVE GIVEN CONSIDERABLE THOUGHT ON THE RELEVANT DOCUMENTS PLACED BEFORE US. FROM THE FACTS ON RECORD, W E FIND THAT THE SOLE BASIS FOR INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT APPEARING FROM THE AOS ORDER THAT M/S PRAYASH STEELAG E AND VATIKA TRADING CORPORATION HAVE NOT GIVEN THEIR CONFIRMATION WITH REGARD TO THE PURCHASES TRANSACTION MADE FROM THEM BY THE ASSES SEE AT THE TIME OF ASSESSMENT AND ALSO THAT THEIR NAMES APPEAR IN T HE HAWALA LIST ISSUED BY THE SALES TAX DEPARTMENT, MAHARASHTRA. 8. THE HON'BLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (IN SLP(C) NO. 27161 OF 2008) HAD OBSERVED THAT PENALTY PR OCEDURE IS A SPECIFIC PROCEDURE AND IT HAS TO BE RECORDED FOR WHICH REASON, THE PENALTY U/S 271(1)(C) OF THE ACT IS LEVIED, WHETHER IT IS FOR CONCEALMENT OR FOR FURNISHING INACCURATE PARTICULARS OF INC OME. THEREFORE ALL OMISSIONS DO NOT CALL FOR IMPOSITION OF PENALTY U /S 271(1)(C) OF THE ACT. IN THE INSTANT CASE, OUT OF 20 PARTIES , ONLY TWO 4 ITA NO. 553/PUN/2017 A.Y.2010-11 PARTIES HAVE NOT GIVEN THEIR CONFIRMATION DURING THE ASSES SMENT STAGE, BUT DURING THE TIME OF HEARING, LD.A.R. OF THE ASSESSE E FILED ADDITIONAL EVIDENCE REGARDING THE CONFIRMATION OF THESE PART IES. FURTHER MORE, AT THE TIME OF ASSESSMENT, THE ASSESSEE H IMSELF HAS OFFERED FOR TAXATION THE AMOUNT INVOLVED IN THE TRANSACTION WITH THE SAID TWO PARTIES. THEREFORE, THERE IS NO CONCEALMENT OF INCO ME NOR FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE AND PENALTY U/S 271(1)(C) OF THE ACT IS NOT WARRANTED. 9. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF LD. CI T(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 12 TH MARCH, 2019. SD/- SD/- R. S. SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL ME MBER / PUNE; / DATED : 12 TH MARCH, 2019. DKS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEAL)-1, NASHIK. 4. THE PR. CIT-1, NASHIK. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE.