M/S. SUNDIA TRADING & INVST. CO. PVT. LTD, MUMBAI V. THE ITO WD 8(3)(2), MUMBAI

ITA 5648/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1289 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 15-12-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 29-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Assessee Lawyers: P K PARIDA ANIL MISHRA
• Keywords: Business income
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH: MUMBAI BEFORE SHRI R S SYAL, ACCOUNTANT MEMBER AND SHRI V D RAO, JUDICIAL MEMBER ITA NO 5648/MUM/2007 (ASSESSMENT YEAR: 2001-02) M/S SUNDIA TRADING & INVST CO PVT LTD, 67 A, VITHAL NAGAR SOCIETY, 12TH ROAD, NS, JVPD, JUHU, VILE PARLE (W), MUMBAI -400 049 PAN: AABCS 1441 F VS INCOME TAX OFFICER -8(3)(2), MUMBAI APPELLANT RESPONDENT APPELLANT BY: MR P K PARIDA / ANIL MISHRA RESPONDENT BY: MR D SONGATE ORDER PER R S SYAL, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R OF THE CIT (A) DT. 12.6.2007 IN RELATION TO THE ASSESSMENT YEAR 2001-0 2 UPHOLDING THE PENALTY OF RS 4,29,738/- IMPOSED BY THE ASSESSING OFFICER U /S 271(1)(C) OF THE ACT. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED THE RETURN DECLARING LOSS OF RS 9,35,730/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED FROM THE TRADING ACCOUNT FILED BY THE ASSESSEE THAT THE SALES WERE TO THE TUNE OF RS 5,23,113/- WHEREAS SALES RETURNS WERE SHOWN AT RS 11,22,495/-. PURCHASES WE RE FOUND TO BE NOMINAL WORTH RS 1,426/-. ON BEING CALLED UPON TO EXPLAIN THE REASONS AS TO HOW SO ITAS 5648/MUM/2007 M/S SUNDIA TRADING & INVST CO PVT LTD 2 MUCH SALE RETURNS WORTH RS 11.22 LAKHS WERE SHOWN D ESPITE TOTAL SALES OF RS 5.23 LAKHS IN THIS YEAR, THE ASSESSEE STATED THAT T HE IN THE PRECEDING YEAR, THE SALES WAS MADE FOR SUM OF RS 18,93,901/- TO THE RET AIL MEDICAL STORES AND GENERAL PROVISION STORES AT MUMBAI. SINCE THERE WA S NO AWARENESS ABOUT THE NEEM SOAP MANUFACTURED BY THE ASSESSEE IN GENERAL P UBLIC, THE GOODS WERE RETURNED BY THE VENDORS IN THIS YEAR WORTH RS 11,21 ,495/-. THE ASSESSEE FILED DETAILS IN SUPPORT OF ITS CLAIM. NOT CONVINCED, TH E ASSESSING OFFICER MADE AN ADDITION OF RS 10,86,569/- BY ACCEPTING THE GENUINE NESS OF SALE RETURN BY M/S AURORA TRADERS WORTH RS 3,5,926./- OUT OF THE TOTAL SALES RETURNS AMOUNTING TO RS 11.22 LAKHS. FURTHER ADDITION TOTALLING TO RS 4 9,206/- WAS MADE BY WAY OF CERTAIN DISALLOWANCES FROM EXPENSES UNDER THE HEAD STAFF WELFARE EXPENSES, TELEPHONE CHARGES, TRAVELLING CHARGES AND TESTING C HARGES. THE LEARNED CIT (A) RESTRICTED THE ADDITION ON ACCOUNT OF SALES RET URNS TO RS 67,512/-. IN FURTHER APPEAL THE TRIBUNAL, BY WAY OF EX-PARTE ORD ER QUA THE ASSESSEE, RESTORED THE ASSESSMENT ORDER ON THIS POINT. THERE AFTER THE ASSESSING OFFICER IMPOSED PENALTY U/S 271(1)(C) WITH REFERENCE TO THE ALLEGED SUPPRESSED SALES REFLECTED BY WAY OF SALE RETURN AMOUNTING TO RS 10. 86 LAKHS AND DISALLOWANCE OF EXPENSES AMOUNTING TO RS 49,056/- TOTALLING RS 4 ,29,738/-, BEING 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED. NO RELIEF W AS ALLOWED IN THE FIRST APPEAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE PRIMARY CONTENTION RAISED ON BEHALF OF THE REVENUE IS THAT THE CONFIRMATION OF ADDITIONS BY THE TRIBUNAL SHOULD BE CONSIDERED AS CLEAR CUT CASE FOR THE IMPOSITION OF THE PENALTY U/S 271(1)(C ). WE ARE UNABLE TO ACCEPT THIS CONTENTION. IT IS A SETTLED LEGAL POSITION THA T BOTH THE ASSESSMENT AND PENALTY PROCEEDINGS ARE SEPARATE FROM EACH OTHER. MERELY BECAUSE AN ITAS 5648/MUM/2007 M/S SUNDIA TRADING & INVST CO PVT LTD 3 ADDITION HAS BEEN SUSTAINED IN QUANTUM PROCEEDINGS BY THE TRIBUNAL WOULD NOT SHUT THE DOORS FOR THE ASSESSEE TO MAKE-UP A CA SE THAT THERE WAS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MISCHIEF U/S 271(1)(C) OF THE ACT. ADVERTING TO TH E FACTS OF THE INSTANT CASE, IT IS SEEN THAT THE ASSESSEE DEBITED A SUM OF RS 11.22 LAKHS IN ITS TRADING ACCOUNT BY CLAIMING IT TO BE SALES RETURN, WHICH PO SITION HAS NOT BEEN ACCEPTED IN QUANTUM PROCEEDINGS. PAGE 5 ONWARDS OF THE PAPER-BOOK ARE THE COPIES OF DEBIT/CREDIT NOTES ISSUED BY THE ASSESSEE S BUYERS/ASSESSEE HIMSELF TOWARDS THE GOODS RETURNED. NOT ONLY THESE NOTES H AVE BEEN PLACED ON RECORD BUT WE FIND FROM PAGE 33 OF THE PAPER BOOK, WHICH IS COPY OF SALE-TAX RETURN, THAT THE FACTUM OF SALES RETURN AT RS 11,22 ,495/- ALSO FINDS DUE MENTION THEREIN. THIS EVIDENCE SHOWS THAT THE PART IES RETURNED THE GOODS TO THE ASSESSEE IN THIS YEAR, WHICH FACT WAS REFLECTED IN THE RETURN OF SALES-TAX. THE TRIBUNAL, BY WAY OF EX-PARTE ORDER, UPHELD THE ADDITION FOR THE INSUFFICIENCY OF EVIDENCE IN SUPPORT OF THE SALES R ETURN. SINCE THE ASSESSEE HAS FILED RELEVANT DETAILS ESTABLISHING THE GENUINENESS OF ITS CLAIM OF SALES RETURN, WE FIND THAT NO PENALTY CAN BE IMPOSED ON THIS COUN T. 4. THE OTHER AMOUNT, WHICH HAS BEEN CONS IDERED BY THE ASSESSING OFFICER FOR THE IMPOSITION OF THE PENALTY IS RS 49, 056/- REPRESENTING ADDITIONS MADE OUT OF CERTAIN EXPENSES WITHOUT GIVING ANY REA SON AS TO THE INTRODUCTION OF BOGUS EXPENSES. THESE DISALLOWANCES HAVE BEEN M ADE IN ROUTINE FOR WANT OF CERTAIN EVIDENCE ETC. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS PVT LTD (2010) 322 ITR 158 (SC) HAS HELD THAT A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT ATTRACT PENALTY UNDER THIS SECTION. IN OUR CONSIDERED OPIN ION, THIS BINDING PRECEDENT FULLY GOVERNS THE PENALTY IMPOSED TOWARDS THE DISAL LOWANCE OF EXPENSES U/S ITAS 5648/MUM/2007 M/S SUNDIA TRADING & INVST CO PVT LTD 4 37(1) IN THE PRESENT CASE. WE, THEREFORE, ORDER FO R THE DELETION OF THIS PENALTY. 5. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 25TH DAY OF JUNE 2010. SD/- (V D RAO) JUDICIAL MEMBER SD/- (R S SYAL) ACCOUNTANT MEMBER MUMBAI, DATE: 25TH JUNE 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -XXIX, MUMBAI. 4) THE CIT-8, MUMBAI. 5) THE D.R. E BENCH, ITAT, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T., MUMBAI ITAS 5648/MUM/2007 M/S SUNDIA TRADING & INVST CO PVT LTD 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 22.05.2010 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 22.05.2010 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER *