The DCIT, (Central), Bhopal V. SHRI DILIP SURYAVANSHI, Bhopal

ITA 576/IND/2014

• Counselvise Citation: 57622714 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 08-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Assessment record; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO.576/IND/2014 A.Y. : 2007-08 DY. CIT (CENTRAL) VS SHRI DILIP SURYAVANSHI, PROP.DILIP CONSTRUCTIONS, BHOPAL BHOPAL APPELLANT RESPONDENT PAN NO. : ANRPS2215H APPELLANT BY SHRI R. A. VERMA, DR RESPONDENT BY SHRI HITESH CHIMNANI, C. A. DATE OF HEARING : 2 3 .09.2015 DATE OF PRONOUNCEMENT : 02.11. 2015 DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 2 2 O R D E R PER GARASIA, J.M. THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY TH E ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A), UJJAIN, DATED 28.03.2014 FOR THE ASSESSMENT YEAR 2004-05. 2. THE BRIEF FACTS OF THE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND INFRASTRUCTURE DEVELOPMENT RUN IN THE NAME AND STYLE OF M/S. DILIP BUILDERS. RETURN HAS BEEN FILED ON 03.10.2007 DECLARING INCOME OF RS.4,09,04,860/-. ASSESSMENT ORDER U/S 143(3) OF THE IT ACT HAS BEEN PASSED ON 17.11.2009 COMPUTING ASSESSEES INCOME AT RS.7,43,2 1,181/- BY MAKING ADDITION OF RS. 3,34,16,321/- FOR UNEXPLAINED SUNDRY CREDITORS IN RESPECT OF LABOR EXPENSES. ON APPEAL, THE THEN CLT(A)-I, BHOPAL, VIDE ORDER DTD. 23.01.2012 IN APP EAL NO. CIT(A)-I/BPL/IT-153/09-10 HAS CONFIRMED THE ADDITIO N TO THE EXTENT OF RS.67,64,515/- AND HAS ALLOWED RELIEF OF RS.2,66,51,806/- TO THE ASSESSEE. ON FURTHER APPEA L BY BOTH DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 3 3 THE DEPTT AND THE ASSESSEE, HON'BLE ITAT, INDORE HA S UPHELD THE ORDER OF CIT(A)-I, BHOPAL DISMISSING THE APPEAL OF THE REVENUE AS WELL AS OF THE ASSESSEE VIDE ORDER DTD 2 4.07.2013 IN ITA NO.178 AND 186/IND/2012. ACCORDINGLY, A.O. H AS INITIATED THE PENALTY PROCEEDINGS U/S 271(L)(C) OF THE IT ACT. REPLY FURNISHED BY THE ASSESSEE HAS NOT BEEN ACCEPT ED BY THE A.O. WHO, VIDE IMPUGNED ORDER UNDER APPEAL, HAS IMP OSED PENALTY OF RS.24,00,000/- ON CONFIRMED AMOUNT OF RS . 67,64,515/-. 3. THE MATTER CARRIED TO THE LD. CIT(A). THE LD. CIT(A ) HAS ALLOWED THE APPEAL BY OBSERVING AS UNDER :- 3.2. APPELLANT'S SUBMISSIONS ALONG WITH PENALTY ORDER HAVE BEEN CONSIDERED CAREFULLY. ASSESSMENT RECORDS ALONG WITH ASSESSMENT AND APPEAL ORDERS PASSED IN CASE OF THE APPELLANT HAVE ALSO BEEN PERUSED. A.O. HAS LEVIED THE IMPUGNED PENALTY SOLEL Y ON THE GROUND THAT ADDITION OF RS. 67,64,515/-, OUT OF TOTAL OF RS.3,34, 16,321/- MADE DURING ASSESSMENT PROCEEDINGS, HAS BEEN CONFIRMED BY TWO APPELLATE DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 4 4 AUTHORITIES PROVING THAT LABOR EXPENSES CLAIMED BY THE APPELLANT ARE BOGUS. THUS ACCORDING TO THE AO, THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF H IS INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF T HE INCOME-TAX ACT, 1961, ATTRACTING PENALTY OF RS.24,00,000/- (MINIMUM @100 BEING RS.22,99,258/-) ON THIS INCOME OF RS.67,64,515/-. IT IS SEEN THAT THE APPELLANT HAS DECLARED CONTRACTUAL RECEIPTS OF RS.42,39,74,895/- DURING THE YEAR ON WHICH NET PROFIT OF RS.4,07,65,715/-, WHICH COMES TO 9.5, HAS BEEN SHOWN. AS PER HIS BALANCE SHEET AS ON 31.03.2007, THE APPELLANT HAS SHOWN SUNDRY CREDITORS OF RS.42,39,74,895/- CONSISTING OF RS. 1,08,73,334.53 AS TRADE CREDITORS AND RS.3,34,16,321. 90 AS CREDITORS FOR EXPENSES AS PER SCHEDULE-E OF THE BALANCE SHEET. TH E APPELLANT HAS CLAIMED LABOR CHARGES OF RS.15,28,09,997/- AS PER HIS P&L A/C IN ADDITION TO SITE EXPENSES, CARTAGE AND TRANSPORTATION, LABOR WELFARE EXPENSES. THE ENTIRE SUNDRY CREDITORS OF THESE LABO R DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 5 5 EXPENSES TO THE TUNE OF RS.3,34, 16,321/- HAVE BEEN DISALLOWED BY THE A.O. CLAIMING THEM TO BE BOGUS EXPENSES FOR WANT OF COMPLETE CONFIRMATIONS IN RESP ECT OF THEM THOUGH THE APPELLANT HAS GIVEN COMPLETE PAR TY- WISE, SITE-WISE DETAILS ALONG WITH LAST AVAILABLE P OSTAL ADDRESS FOR THEM. COMPLETE BILLS AND VOUCHERS IN RESPECT OF THESE 876 OUTSTANDING CREDITORS HAVE ALS O BEEN PRODUCED BEFORE THE A.O. IN RESPECT OF WHICH N O ADVERSE COMMENT HAS BEEN MADE BY THE A.O. EITHER IN RECORDS OR IN THE ASSESSMENT ORDER. THE APPELLANT H AS ALSO PRODUCED FEW CREDITORS FOR EXAMINATION BEFORE THE A.O. AND DURING APPEAL PROCEEDINGS. AFTER CAREFUL CONSIDERATION OF THE ENTIRE MATERIAL ON RECORD, THE THEN CIT(A)-I, BHOPAL HAS CATEGORICALLY STATED, IN HIS O RDER DTD. 23.01.2012 PASSED IN APPEAL NO. CIT(A)- I/BPL/IT-L53/09-10, THAT THE FACT AND CIRCUMSTANC ES DISCUSSED AND THE FINDINGS OF THE ENQUIRY CONDUCTED DURING APPEAL PROCEEDINGS WILL SUGGEST THAT SUCH EXPENDITURE ON ACCOUNT OF OUTSTANDING CREDITORS CAN NOT DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 6 6 BE TREATED AS BOGUS.' HOWEVER, KEEPING IN VIEW APPELLANT'S PAST HISTORY, SUBMISSIONS MADE DURING ASSESSMENT AND APPEAL, TRADING RESULTS DECLARED BY THE APPELLANT, RATIO OF LABOR PAYMENT WITH TURNOVER AND BY PLACING RELIANCE ON VARIOUS CASE LAWS, NET PROFI T @ 10% ON CONTRACT RECEIPTS BEEN APPLIED BY THE CIT(A )-L, BHOPAL RESULTING INTO ASSESSED INCOME OF RS. 4,23,97,489/-. ACCORDINGLY, ADDITION OF RS.67,64,51 5/- BEEN CONFIRMED WHILE RELIEF OF RS.2,66,51,806/- BEE N GRANTED TO THE APPELLANT. THIS ORDER OF CIT(A)-I, B HOPAL HAS ALSO BEEN UPHELD BY HON'BLE ITAT, INDORE VIDE ORDER DTD 24.07.2013 PASSED IN ITA NO.178/IND/2012 AND ITA NO.186/IND/2012 DISMISSING BOTH DEPTT'S AS WELL AS APPELLANT'S APPEAL. THUS, THERE HAS BEEN NO ADVERSE FINDING AT ANY STAGE OF THE PROCEEDINGS PROVING THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME OR HAS CONCEALED HIS INCO ME AS PER RETURN FILED BY HIM FOR THE YEAR UNDER CONSIDERATION. DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 7 7 3.3 IT MAY BE NOTED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DIFFERENT, DISTINCT AND SEPARATE. FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS ARE GERMANE AND RELEVANT BUT IT DOES NOT FOLLOW THAT EVERY ADDITION/DISALLOWANCE JUSTIFIES A ND COMPULSORILY MANDATES IMPOSITION OF PENALTY U/S 271(1)(C). THE SUBJECT MATTER OR THE CORE ISSUE IN THE QUANTUM FOR ASSESSMENT PROCEEDINGS IS COMPUTATION OF CORRECT INCOME AS PER THE RELEVANT PROVISIONS OF THE INCOME TAX ACT AND THE SUBJECT MATTER OF THE PENALT Y PROCEEDINGS IS THE CONDUCT OF THE ASSESSEE I.E. CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WHICH HAS RESULTED IN ADDITIONS IN THE ASSESSMENT PROCEEDINGS. THOUGH MENS-REA IS NOT REQUIRED OR NECESSARY TO IMPOSE PENALTY FOR CONCEALMENT U/S 271(1)(C) BUT WHERE THE ASSESSEE HA S MADE A BONA-FIDE CLAIM OF DEDUCTION, THE CLAIM COUL D NOT BE SAID TO BE FALSE MAKING IT LIABLE FOR PENALT Y U/S 27J(J)(C). THE PENALTY U/S 271(J)(C) IS IMPOSED WHE N DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 8 8 AN ASSESSEE CONCEALS HIS INCOME OR FURNISHES INACCURATE PARTICULARS OF INCOME. BUT WHERE AN ASSESSEE MAKES A BONA FIDE CLAIM OF ANY DEDUCTION O R EXPENDITURE THEN EVEN IF SUCH CLAIM IS DISALLOWED, IT DOES NOT MAKE SUCH CLAIM LIABLE FOR PENALTY U/S 271(1)(C). LEVY OF PENALTY IS NOT AN AUTOMATIC CONSEQUENCE WHEN A DISALLOWANCE IS MADE IN THE ASSESSMENT ORDER. MERELY MAKING A CLAIM OR DEDUCTIO N WHICH IS HELD AS NOT SUSTAINABLE UNDER LAW DOES NOT LEAD TO IMPOSITION OF PENALTY WHEN THE ASSESSEE HAD FURNISHED FULL DETAILS IN THE RETURN ITSELF AND THE CLAIM WAS REASONABLE, PLAUSIBLE OR DEBATABLE. 3.4 THE EXPRESSIONS 'HAS CONCEALED THE PARTICULARS OF INCOME' AND 'HAS FURNISHED INACCURATE PARTICULARS OF INCOME' HAVE NOT BEEN DEFINED EITHER IN SECTION 271(1)(C) OR ELSEWHERE IN THE ACT. THESE TWO CIRCUMSTANCES ARE NOT IDENTICAL IN DETAILS ALTHOUGH THEY MAY LEAVE THE DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 9 9 SAME EFFECT NAMELY KEEPING OFF CERTAIN PORTION OF INCOME. THE FORMER IS DIRECT AND THE LATTER MAY BE INDIRECT IN ITS EXECUTION. THE WORD 'CONCEAL' IS DERIVED FROM THE LATIN WORD 'CONCOLARE' WHICH IMPLIES 'TO HIDE'. WEBSTER NEW INTERNATIONAL DICTIONARY EQUATES ITS MEANING TO HIDE OR WITHDRAW FROM OBSERVATION; TO COVER OR KEEP FROM SIGHT; TO PREVENT THE DISCOVERY OF; TO WITHHOLD KNOWLEDGE OF. THE OFFENCE OF CONCEALMENT IS, THUS, THE DIRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF INCOME TAX AUTHORITIES. EXPLANATION TO SECTION 271(1)(C) STIPULATES THAT IN THE CASE OF DIFFERENCE BETWEEN THE RETURNED AND ASSESSED INCOME, THE BURDEN OF PROOF IS ON THE TAX PAYER TO SHOW THAT IT HAS NOT CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IT HAS BEEN CLARIFIED IN THE CASE OF MUSADDI LAL RAMBHAROSE DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 10 10 (1987) 165 ITR PAGE 14(SC) THAT TO ESCAPE PENALTY, DIFFERENCE IN RETURNED INCOME AND ASSESSED INCOME SHOULD NOT ARISE DUE TO ANY GROSS OR WILLFUL NEGLIGENCE OR ON ACCOUNT OF FRAUD. AS LONG AS AN ASSESSEE GIVES AN EXPLANATION AND GIVES ALL DOCUMENTS WITHOUT WITHHOLDING ANY INFORMATION, THE ASSESSEE'S EXPLANATION, UNLESS FALSE, WILL DESERVE ACCEPTANCE FOR NON LEVY OF PENALTY WHETHER, OTHERWISE, ACCEPTABLE FOR ASSESSMENT OR NOT. IT IS NOT THAT EVERY ADDITION WARRANTS PENALTY. A READING OF SECTION 271 (1) (C) AND THE EXPLANATION THERETO MANIFESTLY MAKES IT CLEAR THAT EVERY ADDITION OF INCOME BY THE A.O. WILL NOT AUTOMATICALLY ATTRACT LEVY OF PENALTY. THE ORDER IMPOSING PENALTY IS QUASI-CRIMINAL IN NATURE AND THE BURDEN LIES ON THE AO TO ESTABLISH THAT THE APPELLANT HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 11 11 THEREOF. IT IS PERTINENT TO NOTE THAT THRUST OF LEV Y IS UPON THE PARTICULARS OF INCOME WHICH ARE EITHER CONCEALED OR FURNISHED INACCURATELY BY THE ASSESSEE. THE EXPRESSION 'PARTICULARS' REFERS TO THE FACTS, DETAILS, SPECIFIC OR THE INFORMATION ABOUT SOMEONE OR SOMETHING HON'BLE SUPREME COURT IN THE DECISION OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. (20 I 0) 322 ITR 158 (SC) HAS LAID DOWN AS UNDER: : 'A GLANCE AT THE PROVISIONS OF SECTION 271 (1)(C) O F THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' U SED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF T HE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETUR N IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE C ANNOT DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 12 12 BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS . IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENA LTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETUR N FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS AR E FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDIN G TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). ' DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 13 13 3.5 IN THE APPELLANT'S CASE, THESE IS NO FINDING O N RECORD THAT ANY DETAILS, CONFIRMATIONS, BILLS/VOUCHERS, STATEMENTS OF VARIOUS CREDITORS PRODUCED HAS BEEN FOUND BOGUS OR INCORRECT OR FALSE AT ANY STAGE OF THE PROCEEDINGS. THEREFORE, THERE I S NO QUESTION OF LEVYING PENALTY U/S 271(1)(C) OF THE IT ACT. KEEPING IN VIEW ABOVE AND FACTS OF THE CASE, PENALTY IMPOSED ON THE APPELLANT U/S 271(1)(C) OF T HE IT ACT AT RS.24,00,000/- IS NOT FOUND SUSTAINABLE AND, ACCORDINGLY, CANCELLED. 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT(A) HAS RELIED UPON THE DEC ISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETROPRODUCTS, 332 ITR 158 ( S. C. ). WE FIND THAT THE ISSUE IN CONTROVERSY IS COVERED BY THE ABOVE DECISION. WE DE LETE THE PENALTY. DY.CIT VS. SHRI DILIP SURYANSHI, BHOPAL, I.T.A.NO. 576/IND/2014 A.Y.2007-08 14 14 5. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 2 ND NOVEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED :2 ND NOVEMBER, 2015. CPU* 612