M/s Overseas Trading & Shipping Pvt. Ltd., GANDHIDHAM V. The Assistant Commissioner of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 623/RJT/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62785 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-03-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 22-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JM SAHAY
• Assessee Lawyers: VIMAL DESAI
• Keywords: Corroborative evidences

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . .. . . .. . , , , , . .. . . .. . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. SRIVAST AVA, AM ITA NO. 623/RJT/2010 / ASSESSMENT YEAR:2003-04 M/S. OVERSEAS TRADING & SHIPPING PVT. LTD. DBZ-S-140, WARD-12A, GANDHIDHAM. PAN : AAACO4310N. ( */ APPELLANT) VS. THE ASSTT. C.I.T., CIRCLE GANDHIDHAM. +,*/ RESPONDENT -. / ASSESSEE BY SHRI VIMAL DESAI, C.A. . / REVENUE BY SHRI. J. M. SAHAY, D.R. . / DATE OF HEARING 12-03-2012 . / DATE OF PRONOUNCEMENT 30 - 04-2012 / / / / ORDER . .. . . . . . , , , , / T. K. SHARMA, J. M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 10-12-2009 OF CIT (A)-I I, RAJKOT CONFIRMING THE PENALTY OF RS.1,05,730/- LEVIED BY AO U/S.271(1)(C) OF THE I.T. ACT, 1961 FOR THE ASSESSMENT YEAR 2003-04. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY ENGAGED IN THE IMPORTING SELLING OF SULPHAR, SKO, FURNACE OIL, COA L ETC. AT GANDHIDHAM. FOR THE ASSESSMENT UNDER APPEAL, THE AO FRAMED THE ASSESSME NT U/S.143(3) ON 28-03- 2006 AT TOTAL INCOME OF RS.1,00,67,820/-.AS AGAINST DECLARED INCOME OF RS.85,36,670/-. IN THE ASSESSMENT ORDER, THE AO INT ER ALIA MADE ADDITION OF RS.2,87,694/- ON ACCOUNT OF INFLATED LIABILITY OF A DVANCE RECEIVED FROM M/S. YASH INTERNATIONAL. THIS ADDITION WAS MADE ON THE GROUN D THAT THERE IS AN APPARENT DIFFERENCE IN AN AMOUNT OF RS.11,00,000/- AS DEBTOR (M/S. YASH INTERNATIONAL). ITA NO 623/RJT/2010 2 SUBSEQUENTLY, IN RESPECT OF THIS ADDITION, AO LEVIE D THE PENALTY OF RS.1,05,730/- BEING 100% OF TAX TO BE EVADED. 3. ON APPEAL BEFORE LD. CIT(A), ASSESSEE CONTENDED THAT PENALTY LEVIED IS NOT JUSTIFIED IN VIEW OF THE FOLLOWING:- THERE WAS A VIOLATION OF PRINCIPLE OF NATURAL JUST ICE AS THE APPELLANT WAS NOT PROVIDED THE EVIDENCE ON THE BASIS OF WHICH THE ADDITION WAS MADE TO REBUT/CROSS EXAMINE. THIS VIOLATION CONTINUED EVEN IN PENALTY PROCEEDINGS. WHEN IT WAS BEYOND CONTROL OF THE APPELLANT TO OBTA IN CONTRA ACCOUNT, IT WAS INCUMBENT ON THE PART OF THE A.O. TO PROVIDE TH E SAME IN THE INTEREST OF JUSTICE. THERE WAS EQUAL POSSIBILITY THAT ERROR/MISSTATEMENT WOULD HAVE BEEN THERE IN THE BOOKS OF YASH INTERNATIONAL. THUS, PENALTY WAS LEVIED WITHOUT CONCLUSIVELY ESTABLISHING THE DEFAULT ON THE PART OF THE APPELLANT. THE APPELLANT EXPLAINED THAT ADVANCES FROM YASH INT ERNATIONAL WERE SUBSEQUENTLY SQUARED UP BY SALES TO THEM. THUS, INC OME WAS OFFERED FOR TAX BEFORE EVEN QUESTIONING BY THE A.O. MERE CONFIRMATION OF ADDITION WAS NOT SUFFICIENT FO R LEVY OF PENALTY AS ASSESSMENT AND PENALTY ARE TWO DIFFERENT PROCEEDING S. IN THE PENALTY PROCEEDINGS, THE A.O. OUGHT TO HAVE RECONCILED THE DIFFERENCE OF ALLOWED THE APPELLANT COPY OF CONTRA ACCOUNT TO ENABLE IT T O RECONCILE THE DIFFERENCE. ESPECIALLY, WHEN THE APPELLANT REQUESTE D FOR THE SAME. 4. AFTER CONSIDERING THE AFORESAID SUBMISSION, IN T HE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY AO U/S.271( 1)(C) CONCLUDING AS UNDER:- (CB) IT IS NOT THE CASE WHERE PENALTY WAS LEVIED ON SOME ESTIMATED ADDITION. HERE, THE A.O. FOUND A GLARING DIFFERENC E BETWEEN THE APPELLANTS AND OTHER PARTYS CONTRA ACCOUNTS. THE APPELLANT WAS NOT ABLE TO RECONCILE THE DIFFERENCE FOR SOME REASON. THE C IT(A) ALSO WHILE PASSING THE SUBSTANTIVE APPELLATE ORDER, VERIFIED T HIS ASPECT AND CONFIRMED THE ADDITION MADE BY THE A.O. IN THE ASSESSMENT. T HE APPELLANTS CONTENTION THAT THE OUTSTANDING BALANCE WAS ALSO AD JUSTED AGAINST SALES WAS ALSO NOT PROVED BY THE APPELLANT BEFORE ME. IT WAS ONLY A MERE STATEMENT WITHOUT ANY SUPPORTING EVIDENCES. ULTIMA TELY, I AM NOT SATISFIED WITH THE EXPLANATION OF THE APPELLANT. THE EXPLANAT ION 1 TO SECTION 271(1)(C) IS VERY CLEAR, WHICH SAYS THAT WHEN A PER SON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE, A ND FAIL TO PROVE THAT SUCH EXPLANATION IS BONA FIDE, THE AMOUNT SHOULD BE ADDE D IN COMPUTING THE ITA NO 623/RJT/2010 3 TOTAL INCOME OF SUCH PERSON FOR THE PURPOSE OF 271( 1)(C).S WITH THIS ARGUMENT, I CONFIRM THE PENALTY LEVIED BY THE A.O. 5. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE ASSESSEE, SHRI VIMAL DESAI, CA APPEARED AND FILED A PAPER-BOOK CONTAININ G 36 PAGES. IT INTER ALIA INCLUDE THE DETAILS OF ACCOUNT OF DEBTOR NAMELY, M/ S. YASH INTERNATIONAL FOR THE ASSESSMENT YEAR 2003-04 AND FOR THE ASSESSMENT YEAR 2004-05. THE COUNSEL OF THE ASSESSEE ALSO DREW OUR ATTENTION TO LETTER DATE D 21-04-2008 ADDRESSED TO AO REQUESTING FOR PROVING THE CONTRA ACCOUNT FROM BOOK S OF ACCOUNT OF M/S. YASH INTERNATIONAL. IT WAS FURTHER CONTENDED THAT FROM THE PERUSAL OF DETAILED ACCOUNT OF DEBTORS, M/S. YASH INTERNATIONAL FOR THE SUBSEQU ENT YEAR I.E. ASSESSMENT YEAR 2004-05 (PAGE 13 OF THE PAPER BOOKS), IT IS CLEAR T HAT AS ON 31 ST MARCH,2004 THE CLOSING BALANCE WAS ONLY RS.66.656/-. THIS CLEARLY ROVES THAT OUTSTANDING BALANCE WAS ADJUSTED AGAINST THE SALE WAS MADE. 7. THE COUNSEL OF THE ASSESSEE ALSO RELIED ON THE D ECISION OF ITAT, AHMEDABAD BENCH D (TM) IN THE CASE OF DHIRAJLAL M AGANLA SHAH VS. IT), SURAT REPORTED IN125 ITD 313 FOR THE PROPOSITION THAT PEN ALTY PROCEEDINGS ARE SEPARATE AND DIFFERENT FROM ASSESSMENT PROCEEDINGS AND ASSES SEE IS ENTITLED TO RENDER FRESH EXPLANATION. HE SUBMITTED THAT RATIO OF THIS DECISION IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEE.S CASE. FINALLY, COU NSEL OF THE ASSESSEE SUBMITTED THAT IN ASSESSMENT PROCEEDINGS, PENALTY PROCEEDINGS CAN BE SUSTAINED ON PREPONDERANCE OF PROBABILITY WHEREAS FOR THE PURPOS E OF LEVY OF PENALTY, POSITIVE EVIDENCES ARE REQUIRED. THE ASSESSEE IN THIS CASE REPEATEDLY ASKED THE AO TO SUPPLY THE CONTRA ACCOUNT SO THAT ASSESSEE MAY EXPL AIN THE DIFFERENCE BUT IT WAS NEVER MADE AVAILABLE. IN PENALTY PROCEEDINGS, THE ASSESSEE HAS EXPLAINED THAT ADVANCES FROM M/S. YASH INTERNATIONAL WERE SUBSEQUE NTLY SQUARED UP BY SALES TO THEM. THUS, INCOME WAS OFFERED FOR TAX BEFORE E VEN QUESTIONED BY AO. HE ACCORDINGLY CONTENDED THAT PENALTY CONFIRMED BY LD. CIT(A) U/S.271(1)(C) BE CANCELLED. ITA NO 623/RJT/2010 4 8. SHRI J. M. SAHAY, D.R. APPEARED FOR THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OR LD. CIT(A). HE POINTED OUT THAT ADDIT ION MADE BY AO IS CONFIRMED BY LD. CIT(A). THE ORDER OF LD. CIT(A) HAS ATTAINED F INALITY AS NO APPEAL AGAINST THE SAID ORDER HAS BEEN PREFERRED BY THE ASSESSEE. THE REFORE, EXPLANATION-1 TO SECTION 271(1)(C) IS ATTRACTED. THE ASSESSEE IS NO T ABLE TO SUBSTANTIATE ITS EXPLANATION. THEREFORE, PENALTY IS RIGHTLY LEVIED AND CONFIRMED BY LD. CIT(A) IN THE IMPUGNED ORDER. 9. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDER OF AUTHORITIES BELOW. THE PROVISION OF SEC.271(1) SUG GESTS THAT IN ORDER TO COVER, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF INCOM E. SECONDLY, THE ASSESSEE SHOULD HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. PRESENT IS NOT THE CASE OF CONCEALMENT OF INCOME. THERE WAS SOME DIFF ERENCE IN ACCOUNT OF DEBTOR NAMELY, M/S. YASH INTERNATIONAL. THE COY OF CONTRA ACCOUNTS WHICH WAS OBTAINED BY AO FROM THE ASSESSEE WAS NEVER MADE AVAILABLE TO THE ASSESSEE DESPITE REPEATEDLY ASKED HIM. EVEN IN PENALTY PROCEEDINGS A LSO, IT WAS NOT AVAILABLE. DUE TO DISPUTE WITH THE PARTY, THE ASSESSEE COULD N OT RECONCILE THE SAID ACCOUNTS WITH THE SAID PARTY. IN THESE CIRCUMSTANCES, WE AR E OF THE VIEW THAT THE ADDITION CAN BE MADE BUT PENALTY U/S.271(1)(C) OF THE ACT ON SUCH ADDITION CANNOT BE MADE. THE RATIO OF DECISION OF ITAT AHMEDABAD BENC H D (TM) IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. WE THEREFORE, CANCEL THE PENALTY OF RS.1,05,730/- LEVIED BY AO U/S.271(1(C). 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE D ATE MENTIONED HEREINABOVE. SD/- SD/- ( .. / D. K. SRIVASTAVA) ( .. / T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER 3/ ORDER DATE 30-04-2012. /RAJKOT ITA NO 623/RJT/2010 5 . .. . +4 +4 +4 [phone] / COPY OF ORDER FORWARDED TO:- 1. * / APPELLANT-M/S. OVERSEAS TRADING & SHIPPING P.LTD .,GANDHIDHAM. . 2. +,* / RESPONDENT-THE ASSTT. CIT., CIRCLE GANDHIDHAM. 3. : / CONCERNED CIT RAJKOT-I, RAJKOT. 4. :- / CIT (A)-II, RAJKOT. 5. 4 +, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , ASSTT. REGISTRAR , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.