The ITO, Ward-3(1), JAMNAGAR V. M/s. Bansri Sales Agency,

ITA 568/RJT/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4358 (ITAT-RAJKOT)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-02-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 19-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M M SINGH
• Assessee Lawyers: DM RINDANI
• Keywords: Difference of opinion
• Section: 133A

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBULAL : RAJKOT BENCH : RAJKOT . . , . . , BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTA VA, AM ITA NO. 568/RJT/2012 / ASSESSMENT YEAR 200 8 - 0 9 INCOME - TAX OFFICER, V. M/S. BANSRI SALES AGENCY, WARD - 3 (1) , CENTRAL BANK ROAD, JAMNAGAR JAMJODHPUR, DIST.: JAMNAGAR PAN: AADFB 8822A DATE OF HEARING : 22 - 0 3 - 201 3 DATE OF PRONOUNCEMENT : 1 6 - 0 4 - 201 3 REVENUE BY: SHRI M.M. SINGH, DR ASSESSEE BY: SHRI D. M. RINDANI, CA / ORDER . . / D. K. SRIVASTAVA : T HE APPEAL FILED BY THE REVE NUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A), JAMNAGAR ON 13.08.2012, ON THE FOLLOWING GROUNDS: - 1. THE CIT (A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.4,21,110/ - U/S 271 (1) (C) OF THE IT ACT. 2. THE CIT(A) FAILED TO APPRECI ATE THAT THOUGH THE ASSESSEE CONSISTENTLY CONTENDED THAT THE EXCESS STOCK AND CASH FOUND DURING THE SURVEY WAS INCORPORATED IN THE AUDITED ACCOUNTS FILED WITH THE RETURN OF INCOME, IT WAS NEVER EXPLAINED AND PROVED AS TO HOW AND IN WHAT MANNER THE SAME WAS INCORPORATED IN THE BOOKS OF THE ASSESSEE AND AS SUCH, THE ASSESSEE DID NOT DISCLOSE ITS INCOME TRULY AND FULLY BEFORE THE AO. 3. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE CIT(A) OUGHT TO HAVE UPH ELD THE ORDER PASSED BY THE AO. 4. THAT THE REVENUE CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY GROUNDS OF APPEAL. 2. THE ASSESSEE IS A FIRM. IT IS ENGAGED IN THE BUSINESS OF CONSUMABLE ITEMS PAN, BIDI, ETC. IT FILED ITS RETURN OF INCOME ON 13.09.2008 RETURNING ITS TOTAL INCOME AT RS.1,44,11 5/ - . PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT A SURVEY OPERATION U/S 133A (1) WAS CARRIED OUT BY THE R EVENUE OFFICERS ON 11.02.2008 AT THE BUSINESS PREMISES OF THE ASSESSEE D URING WHICH PHYSICAL STOCK DETECTED AT THE TIME OF SEARCH WAS FOUND IN EXCESS O F STOCK RECORDED IN THE BOOKS TO THE EXTENT OF RS.13,45,862/ - . SIMILARLY, PHYSICAL CASH FOUND AT THE TIME OF SURVEY WAS RS.1,47,095/ - AS AGAINST RS.1, 30,128/ - RECORDED IN THE BOOKS. THE DIFFERENCE IN STOCK WAS TREATED AS 2 ITA 568/RJT/2012 UNACCOUNTED SALES AND TAXED ACCOR DINGLY IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON 15.10.2010. E XCESS CASH WAS ALSO TAXED AS UN RECORDED CASH IN THE SAID ASSESSMENT ORDER. PROCEEDINGS FOR LEVY OF PENALTY WERE INITIATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR CO NCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME WITH REGARD TO THE AFORESAID TWO ADDITIONS. AFTER HEARING THE ASSESSEE, THE ASSESSING OFFICER INVOKED E XPLANATION - 1 TO SECTION 271(1)(C) AND LEVIED PENALTY WITH REFERENCE T O THE AFORESAID TWO ITEMS OF INCOME. 3. ON APPEAL, THE LD CIT (A) HAS CANCELLED THE IMPUGNED PENALTY WITH THE FOLLOWING OBSERVATIONS: - 6.2 IN THE INSTANCE CASE, ON PERUSAL OF FACTS, I FIND THAT APPELLANT HAD ALREADY INCORPORATED THE EXCESS STOCK AS WEL L AS CASH IN THE BOOKS OF ACCOUNT. HOWEVER THERE WAS DIFFERENCE AS TO ACCOUNTING TREATMENT GIVEN BY THE APPELLANT. AS THE APPELLANT HAD ALREADY CONSIDERED THE STOCK AS WELL AS CASH IN THE BOOKS OF ACCOUNT, THERE WAS NO ANY FRAUD OR GROSS OR WILLFUL NEGLE CT ON THE PART OF THE APPELLANT. I AM OF THE VIEW THAT THE PENALTY PROCEEDINGS ARE MUCH DIFFERENT THAN ASSESSMENT PROCEEDINGS. IN PENALTY PROCEEDINGS, THE FACTS AND CIRCUMSTANCE SHOULD BE CONSIDERED FRESH FROM A DIFFERENT ANGLE AND FOR THAT FINDINGS ARRI VED IN THE ASSESSMENT PROCEEDINGS WILL NOT BE ENOUGH. ON APPRAISAL OF FACTS AND CIRCUMSTANCES, THERE SHOULD BE FOUND A CONSCIOUS AND WILLFUL WITHHOLDING OF REVENUE. BY NO STRETCH OF IMAGINATION, MERE FAILURE OF THE ASSESSEE CAN BE EQUATED WITH SUCH CONSCI OUS AND WILL DEFAULT. 6.3 ON PERUSAL OF RECORDS AS WELL AS SUBMISSION MADE BY THE APPELLANT, I AM OF THE VIEW THAT THE ADDITION IS ON THE MATTER OF DIFFERENCE OF OPINION REGARDING ACCOUNTING TREATMENT FOR RECORDING STOCK AND CASH IN THE BOOKS OF ACCOUNTS . THE APPELLANT HAD ALREADY DISCLOSED THE STOCK AS WELL AS CASH IN THE BOOKS OF ACCOUNT AND THEREFORE, THE EXPLANATION 1 TO SECTION 271 WILL NOT APPLY TO THE APPELLANT. THE CONCEALMENT MUST BE DELIBERATE AND THERE BEING NO PROOF OF SUCH DELIBERATE CONCEA LMENT, THE IMPOSITION OF PENALTY WAS NOT WARRANTED. THERE WAS NO DELIBERATE INTENTION ON THE PART OF THE APPELLANT ALSO TO FURNISH INACCURATE PARTICULARS OF INCOME. THIS VIEW ALSO FOUNDS SUPPORT FROM THE FOLLOWING DECISIONS: A. CIT VS. SUBHASH TRADING CO. (1996) 221 ITR 110 (GUJ) B. NAVJIVAN OIL MILLS VS. CIT (2001) 252 ITR 417 (GUJ) C. CIT VS. SANGRUR VANASPATI MILLS LTD. (SLP ITR 303 ITR ST.P - 18 (SC) D. KANBAY SOFTWARE VS. DCIT, ITAT PUNE BENCH ITA NO.300PN/07 E. SMT. BHANUBEN CHIMANLAL MALAVIA VS . ITO (2006) 100 TTJ (RJT) 337 F. CIT VS. JALARAM OIL MILL (2001) 171 CTR (GUJ.) 426 3 ITA 568/RJT/2012 G. HON BLE ITAT RAJKOT BENCH IN CASE OF ITO VS. M/S. CENTRAL SALES CORPORATION, DHORAJI IN ITA NO.1499/RJT/2005 H. CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 322 ITR 158 (SC) I. CIT VS. BETA NEPTHOL LTD. (2005) 272 ITR 323 (M.P.) THE EXPLANATION OF THE APPELLANT IS NOT FOUND TO BE FALSE AND SAME IS FOUND BONAFIDE. AS SUCH NO PENALTY IS LEVIABLE ON THE ABOVE AMOUNT OF ADDITION. 6.4 THE HON. ITAT, RAJKOT (SMC) BENC H IN THE CASE OF M/S. EKTA JEWELLERS, RAJKOT, IN IT (SS)A NO.2/RJT/2006, DATED 7/7/2006, BY RELYING ON THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILE CO. (249 ITR 125), HAS HELD THAT PENALTY U/S 271 (1) (C) IS NOT CHARGEABLE WHEN THE EXPLANATIONS OF THE ASSESSEE ARE DISBELIEVED BUT NOT DISPROVED. IN THE INSTANT CASE, THE EXPLANATION FURNISHED BY THE APPELLANT IS NOT TOTALLY DISPROVING. IN VIEW OF THE ABOVE FACTS, THE PENALTY OF RS.4,21,110 LEVIED BY THE AO U/S 271(1)(C) DOE S NOT HOLD GOOD AND SAME IS ORDERED TO BE CANCELLED. 4. IN SUPPORT OF APPEAL, THE LD DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER S OF ASSESSMENT AND PENALTY PASSED BY THE ASSESSING OFFICER. IN REPLY, THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUPPORTED THE ORDER PASSED BY THE CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED THEIR SUBMISSIONS. IT IS STATED IN THE APPELLATE ORDER PASSED BY THE CIT(A) THAT THE ASSESSEE HAD ALREADY INCORPORATED EXCESS STOCK AS A LSO CASH IN ITS BOOKS OF AC COUNTS. ACCORDING TO HIM, IT WAS MERELY A QUESTION OF TREATMENT OF THE AFORESAID TWO ITEMS IN THE ASSESSMENT ORDER AND NOT A CASE WHERE THE ASSESSEE COULD BE SAID TO HAVE CONCEALED THE PARTICULARS OF ITS INCOME OR FURNISH ED INACCURATE PARTICULARS OF INCOM E. THE FINDING OF FACT RECORDED BY THE CIT (A) HAS NOT BEEN REBUTTED BY THE LD DEPARTMENTAL REPRESENTATIVE. IN THIS VIEW OF THE MATTER, THE ORDER PASSED BY THE LD CIT(A) IS CONFIRMED. A PPEAL FILED BY THE REVENUE IS DISMISSED. 1 6 .04 . 2013 ORDER PRONOUNCED ON 16 .04 . 201 3 SD/ - SD/ - ( . . / T. K. SHARMA) ( . . / D. K. SRIVASTAVA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER RAJKOT: 16 . 0 4.2013 BT 4 ITA 568/RJT/2012 / COPY OF ORDER FORWARDED TO: - 1. / APPELLANT - . THE ITO, WARD NO - 3(1) , JAMNAGAR 2. / RESPONDENT - M/S. BANSRI SALES AGENCY, CENTRAL BANK ROAD, JAMNAGAR 3. / CONCERNED CIT 4. - / CIT (A) , JAMNAGAR 5. , , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY, ITAT, RAJKOT