Precision Pipes & Profiles Co. Ltd., New Delhi V. DCIT, New Delhi

ITA 5580/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7165 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 14-09-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 17-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS PARANITA TRIPATHI
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F, NEW DELHI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A. NO.5580/DEL/2013 (ASSESSMENT YEAR 2003-04) PRECISION PIPES & PROFILES CO. LTD., VS. DCIT, 54, OKHLA INDUSTRIAL ESTATE, CEN.CIR-3, PHASE III, NEW DELHI-110 054 NEW DELHI GIR / PAN :AAACP5144P (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI VED JAIN, ADV., SHRI ASHISH CHADHA, ADV. RESPONDENT BY :MRS. PARANITA TRIPATHI, CIT DR DATE OF HEARING: 15.09.2016 DATE OF PRONOUNCEMENT: 19.09.2016 ORDER PER BEENA A. PILLAI, JM: THE PRESENT PENALTY APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 06.06.2013 PASSED BY L D. CIT(A) IV, NEW DELHI FOR THE ASSESSMENT YEAR 2003-0 4 ON THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] CONFIRMING THE PENALTY UNDER SECTION 271 (1 )(C) LEVIED BY THE AO IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW I N CONFIRMING THE PENALTY OF RS.55,655/- UNDER SECTION 271 (1 )(C) ON ACCOUNT OF DISALLOWANCE OF DIESEL EXPENSES. 2 I.T.A.NO.5580./DEL/2013 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW I N REJECTING THE CONTENTION OF THE ASSESSEE THAT THERE IS NEITHER CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW I N REJECTING THE CONTENTION OF THE ASSESSEE THAT MERE REJECTION OF CLAIM OF AN EXPENSE DOES NOT LEAD TO LEVYING PENALTY. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW I N CONFIRMING THE PENALTY UNDER SECTION 271 (1 )(C) OF THE ACT IGNORING THE FACT THAT THE CIT(A) HIMSELF HAS G IVEN PARTIAL RELIEF TO THE ASSESSEE ON THE SAME ISSUE. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING PVC PROFILES USED IN AUTOMOBILES, REFRIGERATION AND OTHER WHITE GOOD INDUSTRY. IT FI LED ITS RETURN OF INCOME ON 19.11.2003 DECLARING TOTAL INCO ME OF RS.7,10,42,560/- AND THE SAME WAS PROCESSED U/S 143 (1) AND ASSESSMENT WAS CARRIED OUT U/S 143(3) OF THE AC T. THE ASSESSING OFFICER COMPLETED ASSESSMENT AT AN IN COME OF RS,7,40,52,000/- AFTER MAKING DISALLOWANCE ON AC COUNT OF PURCHASE OF DIESEL. 2.2 AGGRIEVED BY THE ORDER OF LD. A.O., ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). BEFORE LD. CIT (A), ASSESSEE GAVE DETAILED EXPLANATION INCLUDING ADDITI ONAL EVIDENCE U/S 46A. LD. CIT(A) CALLED FOR REMAND REP ORT AND AFTER CONSIDERING THE SUBMISSIONS IN THE REMAND REP ORT AND THAT MADE BY THE ASSESSEE, VARIOUS ADDITIONS WE RE 3 I.T.A.NO.5580./DEL/2013 DELETED EXCEPT RESTRICTING THE DISALLOWANCE AMOUNTI NG TO RS.1,51,438/- ON ACCOUNT OF UNEXPLAINED DIESEL EXPE NSES. IT HAS BEEN SUBMITTED BY THE LD. A.R. THAT CONSIDER ING THE SMALLNESS OF THE AMOUNT INVOLVED, THE ASSESSEE DID NOT FILE APPEAL BEFORE THIS TRIBUNAL AGAINST THIS DISALLOWAN CE. 2.3 LD. A.O. INITIATED PENALTY PROCEEDINGS U/S 271( 1)(C) OF THE ACT AND LEVIED PENALTY AMOUNTING TO RS.55,65 5/- ON THE ADDITION OF RS.1,51,438/- SUSTAINED BY LD. CIT( A). AGGRIEVED BY THE PENALTY ORDER PASSED BY LD. A.O., THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). LD. C IT(A) UPHELD THE PENALTY LEVIED BY LD. A.O. AND RELIED UP ON THE ORDER OF APPELLATE AUTHORITY IN THE QUANTUM PROCEED INGS. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS I N APPEAL BEFORE US NOW. 3. LD. A.R. SUBMITTED THAT ASSESSEE HAD INCURRED AN AMOUNT OF RS.12,15,647/- FOR PURCHASE OF DIESEL IN CASH FROM M/S. CHAUDHARY AUTOMOBILES AND M/S. JAI SAI MOTORS. HE SUBMITTED THAT IT WAS ON THE BASIS OF DOCUMENTS FILED DURING THE QUANTUM PROCEEDINGS OBTAINED FROM THESE PARTIES ALONG WITH CONFIRMATION THAT ADDITION WAS REDUCED BY LD. CIT(A). HE REFERRED TO THE FINDINGS OF LD. CIT(A) IN QUANTUM PROCEEDINGS WHICH IS PLACED AT PAGE 39 OF THE PAPER BOOK WHICH READS AS UNDER: I HAVE CONSIDERED THE SUBMISSION MADE BY THE ASSESSEE AS WELL AS MADE BY THE AO AND ALSO PERUSED THE MATERIAL ON RECORD. ON GOING THROUGH TH E SAME I NOTICE THAT THERE IS NO ADVERSE OBSERVATION OR FINDING BY THE A.O SO FAR AS ACCOUNTS OF THIS YEAR ARE 4 I.T.A.NO.5580./DEL/2013 CONCERNED EXCEPT THE FACT IN THE ASSESSMENT ORDER T HAT THE ASSESSEE COULD NOT PRODUCE FOR THE CASH PURCHASES TO THE EXTENT OF RS.1,51,438/- THOUGH THE ASSESSEE HAS FIRED THE CERTIFICATES AND EVIDENCES I N SUPPORT THEREOF. THE AO HAS SIMPLY RELIED UPON THE OBSERVATION MADE IN THE EARLIER YEARS ASSESSMENT ORDER. EACH YEAR IS AN INDEPENDENT YEAR AND THIS ISSUE IS AN ISSUE OF FACTS NOT OF LAW. AS SUCH THE A.O WAS NOT JUSTIFIED IN APPLYING THIS REASONING FOR DISALLOWING THE EXPENDITURE. I AM IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE THAT THERE IS NO RESTRICTION IN LAW FOR MAKING PURCHASES IN CASH EXC EPT AS RESTRICTED BY SECTION 40A(3). IT IS NOT THE CASE OF THE AO THAT THESE CASH PURCHASES ARE HIT BY THE PROVISI ON OF SECTION 40A(3). THE ASSESSEE IS MAINTAINING REGU LAR BOOKS OF ACCOUNTS AND NO DISCREPANCIES HAVE BEEN POINTED OUT IN THESE BOOKS OF ACCOUNTS WHICH ARE DU LY AUDITED AND CERTIFIED. THE ASSESSEE HAS PLACED SUFFICIENT DETAILS IN THE PAPER BOOK IN SUPPORT OF ITS CONTENTION THAT ALL THESE PURCHASES ARE GENUINE. T HE A.O. COULD NOT POINT OUT ANY MISTAKE EITHER IN THE ASSESSMENT ORDER OR IN THE REMAND REPORT IN RESPECT OF THESE EVIDENCES AND THE CONTENTION OF THE ASSESSEE. THE FACT THAT M/S. CHAUDHARY AUTOMOBILES IS KNOWN TO THE ASSESSEE CANNOT BE A GROUND THAT THE PURCHASES MADE FROM THEM IN CASH ARE NOT GENUINE. THE AO HAS FAILED TO BRING ANY MATERIAL TO NEGATE T HE CLAIM OF THE ASSESSEE. IN VIEW OF THESE FACTS THE A O WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE CLAIM O F RS.12,15,,647/- BEING THE COST OF THE DIESEL PURCHA SED BY THE ASSESSEE IN CASH. HOWEVER, I AM IN AGREEMEN T WITH THE AO SO FAR AS DISALLOWANCE OF RS.1,51,438/- IS CONCERNED. THEREFORE, THE DISALLOWANCE MADE BY T HE AO IS RESTRICTED TO RS.L,51,148/- THE ASSESSEE GETS A RELIEF OF RS.10,64,209/-. ACCORDINGLY, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 3.1 HE SUBMITTED THAT LD. CIT(A) WAS SATISFIED WITH THE REPLY AND THE EVIDENCES SUBMITTED BY THE ASSESSEE A ND HAS ALSO OB SERVED THAT THE ASSESSEE IS MAINTAINING ITS 5 I.T.A.NO.5580./DEL/2013 REGULAR BOOKS OF ACCOUNT AND THAT THE LD. A.O. HAS NOT MADE ANY ADVERSE OBSERVATION IN RESPECT OF THE SAME . HE SUBMITTED THAT THE DISALLOWANCE WAS RESTRICTED T O RS.1,51,438/- ONLY FOR THE REASON THAT THE BILLS FO R CASH PURCHASE TO THIS EXTENT COULD NOT BE PRODUCED BY TH E ASSESSEE. HE SUBMITTED THAT INITIATION OF PENALTY O N THIS AMOUNT CONFIRMED BY THE LD. CIT(A) IS UNJUSTIFIED A S THE ASSESSEE ITSELF HAS NOT CONCEALED ANY INCOME OR FIL ED INACCURATE PARTICULARS OF INCOME. HE PLACED HIS RE LIANCE UPON VARIOUS JUDGEMENTS AND OF HON'BLE JURISDICTION AL HIGH COURT AS WELL AS THE COORDINATE BENCHES OF THI S TRIBUNAL WHEREIN IT HAS BEEN HELD THAT MERE REJECTI ON OF A CLAIM FOR WANT OF EVINCE WOULD NOT AMOUNT TO LEVY O F PENALTY U/S 271(1)(C) OF THE ACT. 4. ON THE CONTRARY, LD. D.R. RELIED UPON PAR 4.3 OF LD. CIT(A)S ORDER. ASSESSEE EMPHASIZED THAT SINCE THE ADDITION TO AN EXTENT OF RS.1,51,438/- HAS BEEN CON FIRMED BY LD. CIT(A) AGAINST WHICH THE ASSESSEE HAS NOT PR EFERRED ANY APPEAL BEFORE THIS TRIBUNAL, PENALTY LEVIED BY LD. A.O. HAS TO BE UPHELD. 5. WE HAVE PERUSED THE RELEVANT MATERIAL PLACED ON RECORD AS WELL AS THE ARGUMENTS ADVANCED BY BOTH TH E PARTIES. ON GOING THROUGH THE SAME, WE AGREE WITH THE CONTENTION RAISED BY LD. A.R. THAT THERE IS NO ADVE RSE OBSERVATION OR FINDING BY LD. A.O. SO FAR AS ON ACC OUNT FOR THE YEAR UNDER CONSIDERATION IS CONCERNED, EXCEPT F OR THE FACT THAT ASSESSEE COULD NOT PRODUCE BILLS FOR CASH PURCHASES TO AN EXTENT OF RS.1,51,438/-. IN THE PA PER 6 I.T.A.NO.5580./DEL/2013 BOOK FILED BEFORE US, ASSESSEE HAS PRODUCED CONFIRM ATION AND CERTIFICATE FROM THE PARTIES WHO HAD SOLD DIESE L TO ASSESSEE. NEITHER FROM THE ASSESSMENT ORDER NOR FR OM THE REMAND REPORT, IT CAN BE DISCERNED THAT THE ASSESSE E HAS FURNISHED INACCURATE PARTICULARS OF INCOME. 6. THE FACT THAT M/S. CHAUDHARY AUTOMOBILES IS KNOW N TO THE ASSESSEE, CANNOT BE A GROUND THAT THE PURCHA SES MADE BY THEM IN CASH ARE NOT GENUINE. THE ASSESSIN G OFFICER HAS FAILED TO BRING ANY MATERIAL TO NEGATE THE CLAIM OF THE ASSESSEE. IT IS ALSO NOT THE CASE OF LD. A. O. THAT THESE CASH PURCHASES ARE HIT BY THE PROVISIONS OF S ECTION 40A(3) OF THE ACT. MERELY BECAUSE CERTAIN EXPENSES THAT HAVE BEEN CLAIMED BY THE ASSESSEE, ARE NOT SUPPORTE D BY THE DOCUMENTARY EVIDENCE TO THE SATISFACTION OF THE AUTHORITIES BELOW, IT CANNOT BE SAID THAT THE REVEN UE HAS PROVED SUCH EXPENSE CLAIMED BY THE ASSESSEE TO BE N ON GENUINE. WE ARE, THEREFORE, OF THE CONSIDERED OPIN ION THAT THE PENALTY NEEDS TO BE DELETED. ACCORDINGLY, GROU NDS RAISED BY THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH SEP., 2016. SD./- SD./- (R. S. SYAL) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 2016 SP. 7 I.T.A.NO.5580./DEL/2013 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 19/9/2016 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 19/9 SR. PS/PS 7 FILE SENT TO BENCH CLERK 19/9 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER