ACIT, Muzaffarnagar V. M/s. Muzaffarnagar Dist. Co-operative Development Federation, Muzaffarnagar

ITA 6116/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69605 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 12-11-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEEHAR RANJAN
• Keywords: Additional evidence; Procedural lapse

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI) BEFORE SHRI U. B. S. BEDI, JUDICIAL MEMBER AND SHRI J. S. REDDY, ACCOUNTANT MEMBER I.T.A. NO. 6115 & 6116/DEL/2012 (ASSESSMENT YEAR 2006-07 & 2002-03 RESPECTIVELY) ACIT, CIRCLE-1, VS. M/S. MUZAFFARNAGAR DISTT. MUZAFFARNAGAR CO-OP DEV. FEDERATION, ZILA PARISHAD MARKET, MUZAFFARNAGAR. PAN:AAAJM0470E (APPELLANTS) (RESPONDENTS) ASSESSEE BY : NONE DEPARTMENT BY: SHRI NEEHAR RANJAN PANDEY, SR. DR ORDER PER U B S BEDI, JUDICIAL MEMBER: THESE TWO APPEALS ARE DIRECTED AGAINST SEPARATE BU T IDENTICAL ORDERS PASSED BY LD. CIT(A), MUZAFFARNAGAR BOTH DATED 31.0 8.2012 FOR THE ASSESSMENT YEARS 2006-07 & 2002-03 AGAINST THE DELE TION OF PENALTY OF RS.4.30 LACS AND RS.3.79 LACS RESPECTIVELY, IMPOSED BY THE A.O. U/S 271(1)(C) OF THE I. T. ACT, 1961. THESE APPEALS IN VOLVE IDENTICAL FACTS, SIMILAR ISSUE AND WERE HEARD TOGETHER, THEREFORE, A RE BEING DISPOSED OFF BY THIS SINGLE ORDER FOR THE SAKE OF CONVENIENCE. 2. THE A.O. DISALLOWED THE EXEMPTION U/S 80P(2)(A)( IV) AND 80P(2)(E) OF THE I. T. ACT, 1961 CLAIMED BY THE ASSESSEE ON ITS INCOME FROM TRANSPORTATION AND STORAGE OF FERTILIZERS RESPECTIVELY.. FURTHER THE LOSSES CLAIMED BY THE I.T.A. NOS. 6115 & 6116/DEL/2012 2 ASSESSEE FROM ITS PRINTING PRESS DIVISION AS WELL A S FROM CONSUMER STORES DIVISION WERE ALSO DISALLOWED BY THE A.O. ON ACCOUN T OF DISCREPANCY OBSERVED THEREIN, WHICH ACTION WAS CONFIRMED BY THE FIRST APPELLATE AUTHORITY. THE PENALTY PROCEEDINGS WERE ALSO INITI ATED BY THE A.O. ON THE ISSUE OF LOSS CLAIMED BY THE ASSESSEE IN THE SAID D IVISIONS FOR BOTH THE YEARS AND ACCORDINGLY, PENALTY OF RS.4.30 LACS AND RS.3.7 9 LACS WERE IMPOSED U/S 2271(1)(C) FOR THE ASSESSMENT YEARS 2006-07 AND 200 2-03 RESPECTIVELY BY TREATING THE DISALLOWANCE ON LOSSES IN THE TWO DIVI SIONS AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. THE ASSESSEE TOOK UP THE MATTER IN APPEAL AND FI LED SEPARATE APPEALS AND IT WAS MENTIONED IN THE GROUNDS OF APPEALS FOR BOTH THE YEAS THAT THE ASSESSEE HAS NEITHER CONCEALED ANY PARTICULARS NOR HAS FILED ANY INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS MADE WRITT EN SUBMISSIONS BEFORE LD. CIT(A) TO SUPPORT THE CONTENTION RAISED IN THE APPEALS AND BY RELYING UPON VARIOUS CASE LAW MENTIONED IN SUCH WRITTEN SUB MISSIONS. IT WAS FURTHER CONTENDED THAT SIMILAR TYPES OF ACTIONS WERE TAKEN BY THE A.O. FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 AND THE APPEAL S OF THE ASSESSEE WERE ALLOWED SO, IT WAS PLEADED FOR ALLOWING THE APPEALS . THE ASSESSEE HAS ALSO CONTENDED THAT THOUGH THERE MAY BE SOME DEFECT IN A CCOUNTING METHOD THIS YEAR BUT THE STYLE OF WORKING IS THE SAME AS WAS IN THE ASSESSMENT YEAR 2008- 09 IN WHICH DEFECTS WERE REMOVED AND LOSS WAS ALLOW ED EVEN IN THE ASSESSMENT STAGE. IT WAS THUS PLEADED FOR DELETION OF PENALTY IMPOSED U/S 271(1)(C) OF THE ACT FOR BOTH THE YEARS. 4. LD. CIT(A), WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE AFTER INCORPORATING ENTIRE WRITTEN SUBMISSIONS FILE D BY THE ASSESSEE, IN HIS I.T.A. NOS. 6115 & 6116/DEL/2012 3 ORDER, HAS DELETED THE PENALTY BY PASSING SEPARATE ORDERS FOR BOTH THE YEARS AND THE CONCLUSION HAS BEEN DRAWN BY LD. CIT(A) AT PAGES 6 & 7 OF HIS ORDER. AGGRIEVED BY THIS ORDER OF LD. CIT(A), DEPA RTMENT HAS COME UP IN APPEAL AND WHILE RELYING UPON THE ORDER OF THE A.O. FOR BOTH THE YEAS, IT WAS PLEADED FOR SETTING ASIDE THE ORDER OF LD. CIT(A) A ND RESTORING THAT OF THE A.O. 5. DESPITE SENDING NOTICES OF HEARING SUFFICIENTLY IN ADVANCE THE ASSESSEE DID NOT APPEAR NOR ANY ADJOURNMENT REQUEST HAS BEEN RECEIVED, THEREFORE, WE PROCEED TO DECIDE THESE APPEALS EX-PARTE QUA THE AS SESSEE AFTER CONSIDERING THE ARGUMENTS OF LD. D.R. AND MATERIAL ON RECORD. 6. LD. D.R. SUPPORTED THE ORDER OF THE A.O. AND PLE ADED FOR REVERSAL OF THE ORDER OF LD. CIT(A) AND RESTORING THAT OF THE A.O. 7. WE HAVE HEARD LD. D.R., CONSIDERED THE MATERIAL ON RECORD AS WELL AS CASE LAW CITED BY LD. CIT(A) WHILE REPRODUCING THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE LD. CIT(A) AND FIND TH AT LD. CIT(A) HAS DRAWN HIS CONCLUSION TO DELETE THE PENALTY IN IDENTICAL M ANNER FOR BOTH THE YEARS FROM PAGE 6-7 WHICH IS REPRODUCED IN BOTH THE CASES AND WE REPRODUCE THE SAME AS CONTAINED IN APPELLATE ORDER FOR THE ASSESS MENT YEAR 2006-07 AS UNDER: THE FACTS OF THE CASE AS WELL AS THE SUBMISSIONS M ADE BY THE ASSESSEE HAVE BEEN CAREFULLY CONSIDERED. IT IS OBS ERVED THAT THE REJECTION OF CLAIM OF LOSS IN PRINTING PRESS DIVISI ON AND CONSUMER STORE DIVISION WAS DONE B Y THE A.O. AS THE ASSESSE E WAS ADOPTING DEFECTIVE METHOD OF RECORDING ITS TRANSACTIONS. IN THE PRINTING PRESS DIVISION, THE PRINTING PAPER WAS BEING RECEIVED BY THE ASSESSEE EARLIER BUT THE BILL FOR THE SAME WAS BEING RECEIVE D AT A LATER DATE BUT THE ASSESSEE WAS NOT MAINTAINING THE CHALLANS/RAVAN NA/SLIPS SHOWING THE DETAILS OF PAPER SENT PRIOR TO THE DATE OF ISSU E OF THE BILL. IN THE I.T.A. NOS. 6115 & 6116/DEL/2012 4 CONSUMER STORE DIVISION, AS AN ABUNDANT PRECAUTION THE ASSESSEE WAS ISSUING SALE BILL INSTEAD OF STOCK TRANSFER MEMO IN THE NAME OF SENIOR MOST EMPLOYEE/HEAD WHO WAS MADE IN CHARGE OF THAT P ARTICULAR SECTION WHICH WAS SELLING THOSE GOODS AT THE STATED PRICE IN THE SALE BILL/TRANSFER MEMO. BOTH THESE ACTIONS OF THE ASSE SSEE WERE PROCEDURAL LAPSES AND CANNOT BE TREATED AS CONCEALM ENT OF INCOME. IT IS NOT A CASE O GENERATION OF UNDISCLOSED INCOME WH ICH WAS CONCEALED OR OF FURNISHING INACCURATE PARTICULARS OF INCOME. THE A.O.S OBSERVATION THAT INACCURATE PARTICULARS HAVE BEEN F ILED BY THE ASSESSEE IS NOT SUBSTANTIATED AS SUCH PARTICULARS HAVE NOT BEEN QUANTIFIED. ADMITTEDLY THE ASSESSEE WAS VALID GROU ND FOR REJECTING THE BOOKS OF ACCOUNTS RESULTING IN DISALLOWANCE OF LOSS ES IN THOSE DIVISIONS BUT FOR IMPOSING PENALTY U/S 271(1)(C) OF THE ACT, MERE DISALLOWANCE OF LOSS IS NOT SUFFICIENT. THE A.O. H AS THE BURDEN OF PROVING THE EXPLANATION OF THE ASSESSEE WRONG FOR I NVOKING SUCH PENALTY. MOREOVER, IT IS A CASE OF COOPERATIVE SOC IETY DULY REGISTERED UNDER THE CO-OPERATIVE LAWS OF THE STATE GOVT. SEPA RATE AUDIT IS CARRIED OUT BY THE STATE GOVT. OF ALL THE BRANCHES OF THE ASSESSEE. HAD THERE BEEN ANY MANIPULATION IN THE ACCOUNTS OF THE ASSESSEE, A CASE OF EMBEZZLEMENT SHOULD HAVE BEEN FILED AGAINST THE PER SONS RESPONSIBLE FOR SUCH ACTION/OMISSION. NOTHING SORT HAS BEEN DO NE IN THE ASSESSEES CASE. IT CLEARLY SHOWS THAT THE GOVT. A UTHORITIES HAD ACCEPTED SUCH METHOD OF RECORDING THE TRANSACTIONS AS VALID PRACTICE. HOWEVER, THE A.O. FOUND SUCH PRACTICE NOT AS PER SE T PROCEDURES AND HENCE, DISALLOWED THE LOSS BUT THE SAME DOES NOT TA NTAMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS. THERE ARE AMPLE NUMBER OF JUDICIAL PRONOUNCEMENTS HOLDING THAT IN SUCH CIRCUMSTANCES LIKE THE CASE OF THE ASSESSEE, PENALT Y U/S 271(1)(C) OF THE ACT IS NOT ATTRACTED. THE CASE LAWS CITED BY T HE ASSESSEE IN ITS WRITTEN SUBMISSIONS FULLY SUPPORT THE ASSESSEES VI EW POINT. THEREFORE, THE A.O.S ACTION IN IMPOSING PENALTY OF RS.4,30,000/- U/S 271(1)(C) OF THE ACT IS NOT JUSTIFIED. THE PENALTY IS HEREBY DIRECTED TO BE DELETED. GROUNDS OF APPEAL NOS. 1 TO 4 ARE ALLO WED. 8. ON PERUSAL OF THE CONCLUSION AS DRAWN BY LD. CIT (A), AS REPRODUCED ABOVE, WHICH WAS FOLLOWED IN THE ASSESSMENT YEAR 20 02-03, WE ARE I.T.A. NOS. 6115 & 6116/DEL/2012 5 CONVINCED THAT LD. CIT(A) HAS TAKEN A JUST AND APPR OPRIATE VIEW GIVING CONVINCING REASONS TO DELETE THE PENALTY. NO CONTR ARY MATERIAL OR ANY ADDITIONAL EVIDENCE HAS BEEN SUBMITTED BY THE LD. D .R. TO PERSUADE US TO TAKE A DIFFERENT VIEW THAN TAKEN BY LD. CIT(A). AS SUCH, WHILE CONCURRING WITH THE FINDINGS AND CONCLUSION AS DRAWN BY LD. CI T(A), WE UPHOLD THE ORDER OF THE FIRST APPELLATE AUTHORITY FOR BOTH THE YEARS AND DISMISS BOTH THE APPEALS OF THE DEPARTMENT BEING DEVOID OF ANY MERIT . 9. AS A RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND NOV., 2013. SD./- SD./- (J. S. REDDY) (U.B.S.BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 22 ND NOV., 2013. SP. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI AR, ITAT, 5. CIT(ITAT), NEW DELHI NEW DELHI