SWASTIC PANELS PVT. LTD., Jaipur V. ITO, Jaipur

ITA 594/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99484 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Assessee Lawyers: S L PODDAR
• Keywords: Search and seizure; Principle of natural justice; Opportunity of cross examination; Accommodation entries
• Section: 147

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 594/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2003-04 M/S. SWASTIK PANELS (P) LTD. F-107, RIICO INDUSTRIAL AREA BASSI CUKE VS. THE ITO WARD- 7 (3) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAGCS 6098 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT -DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30/10/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 16 /11/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-III, JAIPUR DATED 05-04-2013 FOR THE ASSESSM ENT YEAR 2003-04 CHALLENGING THE IMPOSITION OF PENALTY AMOUNTING TO RS. 1.70 LACS U/S 271(1) (C) OF THE ACT AND HOLDING THAT THE ASSESSEE HAS DELIBERATELY CONCEALED THE PARTICULARS OF INCOME AND FURNISHED I NACCURATE PARTICULARS OF INCOME WITHOUT GIVING PROPER OPPORTUNITY OF HEAR ING. 2.1 BRIEF FACTS OF THE CASE ARE SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE ACT WAS CARRIED OUT ON 12-04-2005 IN THE CAS E OF B.C. PUROHIT & ITA NO. 594/JP/2013 M/S. SWASTIK PANELS (P) LTD. VS. ITO, WARD- 7(3), JAIPUR . 2 CO. AND ITS ASSOCIATES AT JAIPUR AND KOLKATTA. IT W AS FOUND THAT THE ASSESSEE HAD ALSO RECEIVED BY CHEQUE FROM SHRI RAM NARAYAN SHARMA (RS.2.00 LACS) AND SHRI HOSHIYAR MAL (RS. 2.50 LACS ) WHICH ACCORDING TO THE DEPARTMENT WERE ACCOMMODATION ENTRIES. THE ASSE SSEE'S CASE WAS REOPENED U/S 147 OF THE ACT. IT IS CLAIMED BY THE A SSESSEE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AMOUNT WAS AGR EED TO BE ADDED TO INCOME TO BUY PEACE AND TO AVOID LITIGATION. THEREA FTER, THE AO INITIATED THE PENALTY PROCEEDINGS. DURING THE COURSE WHEREOF, THE ASSESSEE CONTENDED AS UNDER:- (I) SURRENDER WAS MADE IN ORDER TO BUY PEACE AND TO AVOID LITIGATION, ALTHOUGH THE DEPARTMENT HAD NOT S UPPLIED ANY INCRIMINATING MATERIAL OF STATEMENTS OF THE ALL EGED ENTRY PROVIDERS I.E. M/S. B.C.PROHIT & CO. THE ALLEGED P ERSONS SHRI RAM NARAYAN SHARMA AND SHRI HOSHIYAR MAL WERE NEITHER EXAMINED NOR WERE ANY OPPORTUNITY OF CROSS EXAMINATION PROVIDED. (II) THE AO HOWEVER, MERELY RELIED ON SURRENDER AND HELD THAT THERE WAS NO NECESSITY TO PROVIDE ANY FURTHER MATERIAL TO ASSESSEE BY FOLLOWING OBSERVATIONS. 2. VIDE NOTE SHEET DATED 6-1-2008, THE A.R. OF THE ASSESSEE HAS CLEARLY ADMITTED THE FACTS. THU S THE PLEA TAKEN BY THE A.R. NOT TO PROVIDE MATERIAL / PR OOF, IS NOT CORRECT. ITA NO. 594/JP/2013 M/S. SWASTIK PANELS (P) LTD. VS. ITO, WARD- 7(3), JAIPUR . 3 2.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WHERE A SPECIFIC GROUND ABOUT AOS REFUSAL TO GIVE FURTHER OPPORTUNI TY OF HEARING AND INCRIMINATING MATERIAL WAS TAKEN AS UNDER:- 4. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO HAS ERRED IN HOLDING THAT THERE IS NO NEED TO GIVE FURTHER OPPORTUNITY TO PROVE THE CONCEALMENT A FTER ASSESSMENT IN PENALTY PROCEEDINGS. 2.2.1 LD. CIT(A) HELD THAT ONCE THERE IS ADMISSION THEN NO FURTHER INVESTIGATION IS REQUIRED BY FOLLOWING OBSERVATIONS . THE RATIO DECIDENDI OF ALL THE AFORESAID JUDICIAL PRONOUNCEMENT IS THAT ADMISSION OR SURRENDER OF CON CEALED INCOME DOES NOT ABSOLVE THE ASSESSEE FROM THE LIABI LITY OF PENALTY IN RESPECT OF CONCEALMENT OF INCOME MADE I N THE RETURN OF INCOME. SUCH ADMISSION OR SURRENDER ITSEL F AMOUNTED TO ACCEPTANCE OF CONCEALMENT OF INCOME AND THE DEPARTMENT CAN VALIDLY ACT ON THE BASIS OF SUCH ADM ISSION WITHOUT INVESTIGATING THE MATTER ANY FURTHER. THERE IS NO PROVISION IN THE I.T. ACT WHICH PERMITS A COMPROMIS E ASSESSMENT. THERE CAN BE NO AGREEMENT OR ESTOPPEL A GAINST A STATUTE. 2.3 AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 2.4 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT: - (I) IT IS SETTLED LAW THAT PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE AND ASSESSEE IS TO BE FULLY HEARD IN P ENALTY PROCEEDINGS AND ALLOWED THE EVIDENCE ON RECORD QUA INCRIMINATING MATERIAL. ITA NO. 594/JP/2013 M/S. SWASTIK PANELS (P) LTD. VS. ITO, WARD- 7(3), JAIPUR . 4 (II) FROM THE OBSERVATIONS OF THE AO AND LD. CIT(A) , IT IS ABUNDANTLY CLEAR THAT BOTH OF THEM DID NOT PROVIDE THE ASSESSEES REQUISITE INCRIMINATING MATERIAL INCLUDI NG THE STATEMENTS OF THE CONCERNED PERSONS. IN THE ABSENCE OF INCRIMINATING MATERIAL AND ASSESSEE'S REPLY THEREON , IMPOSITION OF PENALTY ON THE ASSESSEE IS BY VIOLATI ON OF PRINCIPLE OF NATURAL JUSTICE WHICH IS UNTENABLE AND THE PENALTY PROCEEDINGS DESERVES TO BE DELETED. (III) THE LD. CIT(A) HAS RELIED ON THE CASE OF CIT VS. MAK DATA LTD. (DEL) IN SUPPORT OF HIS FINDINGS WHICH IS TOTALLY MISPLACED AS IN THIS VERY CASE THE HON'BLE SUPREME COURT HAS LAID DOWN THAT PENALTY CAN BE IMPOSED ON THE AS SESSEE ONLY WHEN THE ASSESSEE'S EXPLANATION U/S 271(1)(C ) IS FOUND TO BE UNSATISFACTORY. THE DIRECTION IS TO THE EFFEC T THAT PENALTY SHOULD BE IMPOSED ONLY AFTER SUPPLYING THE INCRIMINATING MATERIAL AND ALLOWING THE ASSESSEE'S ACCESS TO THE MATERIAL RELEVANT TO THE CASE AND AFTER CONSIDE RING ASSESSEE'S EXPLANATION. DENIAL THEREOF AMOUNTS TO CONTRAVENTION OF DIRECTION OF HON'BLE SUPREME COUR T. THUS THE MAK DATA JUDGMENT (SUPRA) CITED BY THE LD. CIT (A) IN ITS CASE IS NOT APPLICABLE (IV) IT IS CONTENDED THAT PENALTY CANNOT BE IMPOSED MERELY BECAUSE THE ADDITIONS HAVE BEEN SUSTAINED. THE LD. AR OF THE RELIED ON FOLLOWING CASE LAWS:- ITA NO. 594/JP/2013 M/S. SWASTIK PANELS (P) LTD. VS. ITO, WARD- 7(3), JAIPUR . 5 (1.) ACIT VS. ASHOK KUMAR JAIN (ITA NO. 830/JP/2011 DATED 18-10-2012 , 48 TW 127), JAIPUR BENCH WHEREIN IT HAS BEEN HELD AS UNDER:- IN PENALTY PROCEEDINGS THE MATTER MUST BE CONSIDERED AFRESH FROM AN ANGLE DIFFERENT FROM ASSESSMENT . THE AO DID NOT GATHER ANY INCRIMINATIN G MATERIAL DURING THE COURSE OF SURVEY OR DURING POST SURVEY ENQUIRY. BY MERE SURRENDERING THE ADDITIONAL INCOME DOES NOT AMOUNT TO CONCEALED INCOME OR INACCURATE PARTICULARS. THEREFORE, PENALTY IMPOSED BY THE AO OF RS. 50,77,800/- IS DELETED. (2) JAI SHREE SOMANI VS. ACIT, 47 TW 219, ITAT JAIPUR DATED 12-04-2012. (3) CIT VS. CAREERS EDUCATIN AND INFOTECH (P) LTD. (2011) 336 ITR 287 (P&H). (4) SHREE NIRMAL COMMERCIAL LTD. VS. CIT (2008) 218 CTR 581 (MUM.) (5) CIT VS. ASHOK TAKER (2008) 170 TAXMAN 471 (DEL.) 2.5 THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AU THORITIES AND RELIED ON THE JUDGEMENTS REFERRED BY THE LD. CIT(A) IN HIS ORDER. 2.6 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS SETTLED LAW THAT PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE THAN ASSESSMENT PROCEEDINGS AND EVIDEN CE OR PLEA WHICH IS NOT TAKEN IN ASSESSMENT PROCEEDINGS CAN BE TAKEN IN PENALTY PROCEEDINGS. FROM THE OBSERVATIONS OF THE AO AND THE LD. CIT(A) AS REPRODUCED ABOVE, ITA NO. 594/JP/2013 M/S. SWASTIK PANELS (P) LTD. VS. ITO, WARD- 7(3), JAIPUR . 6 IT IS CLEAR THAT THE ASSESSEE ASKED FOR THE INCRIMI NATING MATERIAL WHICH WAS NOT GIVEN ON THE BASIS THAT ONCE ANY ADDITION IS AD MITTED BY THE ASSESSEE THEN THERE IS NO NEED OF FURTHER INVESTIGATION AND PENALTY IS LEVIABLE. THE ORDERS OF LOWER AUTHORITIES IMPLY THAT PENALTY IS A UTOMATIC CONSEQUENT TO ADMISSION OF ANY ADDITION. A CATENA OF JUDGMENTS IN CLUDING HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF MAK DATA (P) LTD. VS. CIT , 358 ITR 593 AND HON'BLE RAJASTHAN HIGH COURT IN THE CA SE OF SHIV LAL TAK VS. CIT, 251 ITR 353 (RAJ.) HAVE HELD THAT PENALTY IS NOT AUTOMATIC ON ADMISSION OF ADDITION. THE ASSESSEE HAS A RIGHT TO ASK FOR INCRIMINATING MATERIAL AND TO FILE ITS REPLY ON PENALTY PROCEEDIN GS BASED THEREON. THUS WITHOUT CONSIDERATION OF CONTENTS OF ASSESSEES REP LY, THE IMPUGNED PENALTY CANNOT BE IMPOSED. THUS, THE PENALTY IN QUE STION HAS BEEN IMPOSED WITHOUT ALLOWING ASSESSEE THE INCRIMINATING EVIDENCE AND BY CONSIDERING THE REPLY PROPERLY, IMPUGNED PENALTY CA NNOT BE SUSTAINED. THE HON'BLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD. VS. CIT (SUPRA) ALSO HELD THAT PENALTY CAN BE IMPOSED ONLY AFTER CONSIDERING THE REPLY FILED BY THE ASSESSEE. IN VIEW OF THE FOREGOI NG, IN MY CONSIDERED VIEW THE PENALTY CANNOT BE SUSTAINED WHICH IS DELET ED. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 594/JP/2013 M/S. SWASTIK PANELS (P) LTD. VS. ITO, WARD- 7(3), JAIPUR . 7 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 16/11/2015 . SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 16/11/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. SWASTIK PANELS (P) LTD. , JAIPU R 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 7 (3), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 594/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR