M/S GOVIND RAI, Hoshagabad V. THE ACIT-1(2), Bhopal

ITA 582/IND/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5751 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: AMITA VARSHNEY
• Keywords: Business expenditure; Wrong claim; Agreed addition

Judgement Text

ITA NO. 582/IND/2016 M/S GOVIND RAI 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JM & SHRI O.P. MEENA, AM ITA NO.582/IND/2016 A.Y.2010-11 M/S GOVIND RAI HOSHANGABAD PAN AADFG 3373K ::: APPELLANT VS ACIT 1(2) BHOPAL ::: RESPONDENT APPELLANT BY SMT. AMITA VARSHNEY RESPONDENT BY SHRI MOHD. JAVED DATE OF HEARING 6.9.2016 DATE OF PRONOUNCEMENT 2 8 .9.2016 O R D E R PER SHRI D.T. GARASIA, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-31, NEW DELHI, CAMP BHOPAL , DATED 9.2.2016. ITA NO. 582/IND/2016 M/S GOVIND RAI 2 2. THE ONLY GROUND TAKEN BY THE ASSESSEE IN THIS APPEAL IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONF IRMING THE PENALTY US 271(1)(C) OF THE ACT. 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER RECORDED THAT INDIRECT EXPENSES ARE NOT FULLY SUPPORTED WITH COMPLETE VOUCHERS. THE ASSESSEE HAS DEBITED EXPENSES AS ELECTRICITY EXPENSES, TELEPHONE EXPENSES, LABOUR CHARGE, TRANSPORTATION EXPENSES, SALARY EXPENSES, ETC. THESE EXPENSES ARE NOT FULLY VOUCHED. WHEN THE ASSESSEE WAS CONFRONTED WITH THE SAME, THE ASSESSEE OFFERED AN AMOUNT OF RS. 8 LACS FOR TAXATION ON ACCOUNT OF DISCREPANCY IN THE ACCOUNTS. THEREFORE, THE AMOUNT OF RS. 8 LACS WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AND AFTER GIVING SHOW CAUSE NOTICE THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT. THE MATTER WAS CARRI ED IN ITA NO. 582/IND/2016 M/S GOVIND RAI 3 APPEAL AND THE LEARNED CIT(A) CONFIRMED THE PENALTY. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS INVOLVED IN CIVIL CONS TRUCTION WORK FOR GOVERNMENT DEPARTMENTS. DURING THE COURSE O F ASSESSMENT PROCEEDINGS THE BOOKS OF ACCOUNTS WERE PRODUCED FOR VERIFICATION. THE BILLS, VOUCHERS CONTAI NING RECEIPTS AND TDS WERE CHECKED BY THE ASSESSING OFFIC ER AND THE LUMP SUM ADDITION WAS MADE ON INDIRECT EXPENSES WHICH WERE NOT FULLY SUPPORTED WITH VOUCHERS. THE ASSESSING OFFICER HAS NOT DISPUTED ABOUT THE GENUINEN ESS OF THE EXPENSES NOR THE ASSESSING OFFICER HAS DOUBTE D THAT THE EXPENDITURE BILLS ARE BOGUS, INFLATED OR MISLEADIN G. THESE EXPENSES WERE ACTUALLY INCURRED DURING THE COUR SE OF BUSINESS AND HAVE BEEN CLAIMED AS DEDUCTION WHICH IS FULLY REFLECTED IN THE BOOKS OF ACCOUNTS. ON THE BAS IS OF THE ITA NO. 582/IND/2016 M/S GOVIND RAI 4 TEST CHECK, THE ASSESSING OFFICER HAS NOT POINTED OU T ANY SPECIFIC DEFECT. HE HAS NOT NOTICED ANY BOGUS EXPENDI TURE RECORDED IN THE BOOKS OF ACCOUNTS. THE ELECTRICITY E XPENSES, TELEPHONE EXPENSES, LABOUR CHARGE, TRANSPORTATION EXPENSES, SALARY EXPENSES, ETC. ARE SUPPLIED BY THE TH IRD PARTY. THE ASSESSEE WAS HAVING ROAD CONSTRUCTION REPAIRIN G WORK AT VARIOUS SITES. THEREFORE, PAYMENT WAS MADE ON T HE BASIS OF MUSTER ROLLS AND ATTENDANCE CARD. THE ASSESSIN G OFFICER REPRODUCED FEW BILLS TO PROVE THE GENUINENE SS OF THE EXPENDITURE. THE ASSESSEE HAS PRODUCED ALL THE VOUCHE RS BUT THE ASSESSING OFFICER HAS NOT VERIFIED THEM. ONL Y ON THE BASIS OF TEST CHECK HE ASSUMED THAT THESE ARE NOT VOUCHABLE AND WITHOUT ANY SPECIFIC REASON HE MADE THE LUMP SUM DISALLOWANCE OF EXPENDITURE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE LEVIED IN THE ABSENCE OF ANY MATERIAL ON RECORD TO PROVE THAT THE AMOUNT OF AGREED ITA NO. 582/IND/2016 M/S GOVIND RAI 5 ADDITION WAS THE INCOME OF THE ASSESSEE FOR THE CONCER NED YEAR. THE BURDEN IS ON THE REVENUE TO PROVE THE CONCEALMENT IN CASE OF AGREED ADDITION. THUS, THE PENALT Y COULD NOT LEVIED SIMPLY ON THE BASIS OF AGREED ADDITIO N. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. MODI STONE LTD.; (2011) 15 TAXMANN.COM 112 (DEL) 203 TAXMAN 123 (DEL) RELIED UPON BY THE LEARNED DR, IS ON DIFFERENT ISSUE. THERE WAS NO SURRENDER OF INCOME. T HE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECI SION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CAFCO SYNDICATE SHIPPING CO.; 294 ITR 134. SHE ALSO RELIED UPON THE DECISION OF THE HIGH COURT OF KARNATAK A IN THE CASE OF CIT VS. SLN TRADERS; 243 CTR 407 (KARN), DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY; 359 ITR 565 (KARN) ITA NO. 582/IND/2016 M/S GOVIND RAI 6 AND THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAJIV GARG & OTHERS; 313 ITR 2 56. 5. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF MODI STONE LIMITED (SUPRA) AND SUBMITTED THAT WHEN THE ASSESSEE MADE THE CLAIM OF DEDUCTION, THE ENTIRE AMOUNT WAS DISALLOWED BY THE ASSESSING OFFICER AS NO DETAILS W ERE FURNISHED. THE LEARNED DR SUBMITTED THAT IT IS THE DU TY OF THE ASSESSEE TO PROVE THAT THE CLAIM OF THE ASSESSEE WAS BONAFIDE AND IF THE EXPLANATION IS NOT BONAFIDE, THE PEN ALTY IS TO BE LEVIED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS BORNE OUT FROM RECORD THAT THE PENALTY HAS BEEN IMPOSE D ON THE GROUND THAT SOME OF THE INDIRECT EXPENSES WER E FULLY SUPPORTED WITH COMPLETE VOUCHERS. THE ASSESSEE HAS ITA NO. 582/IND/2016 M/S GOVIND RAI 7 DEBITED ELECTRICITY EXPENSES, TELEPHONE EXPENSES, L ABOUR CHARGE, TRANSPORTATION EXPENSES, SALARY EXPENSES, ETC. THESE EXPENSES ARE NOT FULLY VOUCHED. WHEN IT WAS CONFRONTED TO THE ASSESSEE, THE ASSESSEE OFFERED A SU M OF RS.8 LACS ON ACCOUNT OF DISCREPANCY IN ACCOUNTS. THER EFORE, THE AMOUNT OF RS. 8 LACS WAS ADDED TO THE TOTAL INCOME O F THE ASSESSEE AND PENALTY HAS BEEN IMPOSED. THE QUESTION ARISES WHETHER THE PENALTY CAN BE LEVIED ON ALLEGED AGRE ED ADDITION BY THE ASSESSEE DURING THE COURSE OF ASSESSME NT PROCEEDINGS ? FOR THIS WE HAVE TO GO THROUGH THE ASSESSMENT ORDER AND FROM A PERUSAL WHEREOF IT IS BRONE OUT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS DEBITED EXPENSES AS ELECTRICITY EXPENSES, TELEPHONE EXPENSES, LABOUR CHARGE, TRANSPORTATION EXPENSES, SALARY EXPENSES, ETC. DURING THE COURSE OF ITA NO. 582/IND/2016 M/S GOVIND RAI 8 HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTE D THAT FOR ELECTRICITY EXPENSES AND TELEPHONE EXPENSES, THE PAYMENTS ARE GIVEN BY THE THIRD PARTY. THEREFORE, THE ASSESSEE CANNOT CLAIM ANY BOGUS EXPENSES ON THAT GROUND. THE ONLY GROUND IS THAT THE LABOUR CHARGES, TRANSPORTAT ION CHARGES AND SALARY EXPENSES WHICH MAY NOT BE SUPPORTED WITH COMPLETE VOUCHERS. WE HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER AND FIND THAT NOWHERE THE ASSESSING OFFICER HAS TAKEN PAIN TO VERIFY AS TO WHICH OF THE EXP ENSES WERE NOT VOUCHED. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS MADE SURRENDER OF RS. 8 LACS AGAINST WHICH THE ASSESSING OFFICER HAS NOT BROUGHT ANY EVIDENCE. W E HAVE GONE THROUGH THE ORDER OF THE ASSESSING OFFICER AND THE PENALTY ORDER AND THE CONTENTION OF THE ASSESSEE I S THAT THE ASSESSEE HAS NOT GIVEN ANY INACCURATE PARTICULARS OF ITA NO. 582/IND/2016 M/S GOVIND RAI 9 INCOME AND HE HAS NOT CONCEALED ANY INCOME. ONLY BECAUSE SOME OF THE EXPENSES WERE NOT VOUCHED, THE ASSESSEE AGREED TO THE ADDITION JUST TO AVOID LITIGATION AND TO BUY PEACE OF MIND. THE ASSESSING OFFICER HAS NOT G IVEN ANY FINDING THAT THE ASSESSEE HAS FURNISHED ANY INACCURATE PARTICULARS OF INCOME AND CONCEALED THE INCOME. WE ALSO FIND FROM THE ASSESSMENT ORDER THAT THE PENALTY HAS BE EN LEVIED ON AGREED ADDITION. WE FIND THAT SIMILAR CASE H AS COME UP BEFORE THE HON'BLE MADRAS HIGH COURT IN THE C ASE OF CAFCO SYNDICATE SHIPPING CO. (SUPRA) WHEREIN A SUR VEY WAS CONDUCTED AND IT WAS FOUND THAT SOME OF THE VOUCHER S OF EXPENSES WERE SELF MADE VOUCHERS AND WERE NOT SUPPORTED BY THIRD PARTY AND THE PENALTY HAS BEEN LEVIE D. THE PENALTY WAS DELETED ON THE GROUND THAT THE ASSESSEE HAS RECORDED ALL THE EXPENSES IN BOOKS BUT THERE WAS A ITA NO. 582/IND/2016 M/S GOVIND RAI 10 FAILURE ON THE PART OF THE ASSESSEE TO PRODUCE RELEVANT VOUCHERS. THAT BY ITSELF WOULD NOT AMOUNT TO CONCEALME NT OF INCOME. WE FIND THAT IN THE INSTANT CASE THE ASSESSE E HAS SURRENDERED RS. 8 LACS BECAUSE HE WAS UNABLE TO PRODUCE SOME OF THE VOUCHERS. SIMILARLY WE FIND THAT IN THE CASE OF CIT VS. SLN TRADERS (SUPRA) IT WAS HELD THAT WH ERE THE ADDITION WAS MADE ON UNPROVED CREDITS BUT THE ASSESSEE EXPLAINED THAT THERE WAS NO INTENTION TO AVOID PAYMENT OF TAX WHICH HAS BEEN ACCEPTED BY THE TRIBUNAL , NO PENALTY CAN BE LEVIED. WE FIND THAT IN THIS CASE THE ASSESSEE HAS SURRENDERED THE INCOME OF RS. 8 LACS BECAU SE ALL THE EXPENSES WERE NOT FULLY VOUCHED. THEREFORE, THE ASSESSEE HAS MADE THE SURRENDER ONLY. THEREFORE, IN TH IS CASE THE ASSESSEE HAS SUBMITTED ALL THE EVIDENCE BEFORE THE ASSESSING OFFICER AND THE BOOKS WERE NOT REJECTED BY THE ITA NO. 582/IND/2016 M/S GOVIND RAI 11 ASSESSING OFFICER. THEREFORE, NO PENALTY CAN BE LEVI ED. WE ARE, THEREFORE, OF THE VIEW THAT THE PENALTY CANNOT BE IMPOSED IN THIS CASE. 7. THE LEARNED DR HAS QUOTED THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. MODI STONE LTD. (SUPRA) BUT IT IS NOT ON THE PENALTY MATTER. IT I S ON CLAIMING OF BUSINESS EXPENDITURE BUT NOT ON PENALTY. MOREOVER, THE JUDGMENT CITED BY THE LEARNED DR RELATE S TO WRONG CLAIM OF THE ASSESSEE WHICH IS NOT ALLOWABLE AS P ER LAW. IN THE INSTANT CASE, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COULD NOT PRODUCE SOME OF THE VOUCHERS. NOW HERE IT IS SEEN THAT THE ASSESSEE WAS CONFRONTED WITH THIS DEFECT. THEREFORE, IN THE ABSENCE OF GIVING ANY OPPORTUNITY T O THE ASSESSEE TO PROVE THE SURRENDER, WHICH WAS JUST TO AVO ID LITIGATION AND TO BUY PEACE OF MIND, NO PENALTY CAN BE LEVIED ON THIS AMOUNT. WE, THEREFORE, DELETE THE SAME . ITA NO. 582/IND/2016 M/S GOVIND RAI 12 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN OPEN COURT ON 28 SEPTEMBER, 2016 SD/- SD/- (O.P. MEENA) (D .T. GARASIA) ACCOUNTANTMEMBER JUDICIAL MEMBER SEPTEMBER, 2016 DN/- ITA NO. 582/IND/2016 M/S GOVIND RAI 13 ITA NO. 582/IND/2016 M/S GOVIND RAI 14