Sh. Vidya Sagar, Kurukshetra V. ITO, Kurukshetra

ITA 650/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80886 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 07-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Section: 40A(3); 143(3); 148; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACOCUNTANT MEMBER ITA NO. 650/CHD/2014 ASSESSMEN T YEAR 2000-01 VIDYA SAGAR V I.T.O. PROP. FINE BRICKS COMPANY WARD 1, KURUKSHETRA VILLAGE ANTHERI MATHANA KURUKSHETRA AIBPS 2742 N (APPELLANT) (RESPONDENT) APPELLANT BY SHRI AJAY JAIN RESPONDENT BY SHRI J.S. NAGAR DATE OF HEARING 17.9.2014 DATE OF PRONOUNCEMENT 23.9.2014 ORDER PER BHAVNESH SAINI, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), KARNAL DATED 4.11.2013 FOR ASSESSMENT YEAR 2000-01 CHALLENGING THE LEVY OF PENALTY U/S 271(1)(C) OF IT ACT. 2 BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF RUNNING BRICK KILN. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2002-0 3, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS PURCHASED COAL FROM PARTIES LOCATED IN GUWAHATI. THE ASSESSING OFFICER REFERRED THE MA TTER TO THE ASSESSING OFFICER OF GUWAHATI FOR VERIFICATION OF GENUINENESS OF THESE PARTIES. AS PER ENQUIRIES MADE, THE CASE FOR ASSESSMENT YEAR 2 000-01 WAS REOPENED U/S 148 OF IT ACT AND ADDITION OF RS. 1,08 ,355/- WAS MADE U/S 40A(3) @ 20% OF TOTAL PAYMENT MADE IN CASH OF RS. 5 ,41,779/- OF RS. 59,985/- AND AGRICULTURAL INCOME SHOWN AT RS. 84,71 3/-. LATER ON THE ASSESSMENT ORDER DATED 27.2.2006 WAS CANCELLED BY T HE LD. CIT U/S 263 OF IT ACT. CONSEQUENTLY FRESH ASSESSMENT ORDER WA S ISSUED U/S 143(3) ON 16.10.2008 WHEREBY AN AMOUNT OF RS. 1,81,391/- W AS ADDED TOWARDS NON EXISTENT TRADE CREDITORS AND ALL THE CASH PAYME NTS OF RS. 5,41,799/- 2 WAS DISALLOWED LESS 20% OF THE EXPENDITURE ALREADY DISALLOWED AT RS. 1,08,355/- IN EARLIER ASSESSMENT ORDER DATED 27.2.2 006. ALL THE ADDITIONS WERE CONFIRMED BY THE LD. CIT(A) VIDE ORDER DATED 1 7.6.2009. FURTHER THE ITAT VIDE ITS ORDER DATED 20.8.2010 IN ITA NO. 858/CHD/2009 FOR ASSESSMENT YEAR 2000-01 FOLLOWING THE ORDER IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2003-04 IN ITA NO. 917/CHD/200 9 DATED 19.11.2009 SET ASIDE THE ORDER TO THE FILE OF THE ASSESSING OF FICER IN ORDER TO ALLOW ADEQUATE OPPORTUNITY TO THE ASSESSEE. HOWEVER, WHI LE SETTING ASIDE THE ORDER THE ISSUE OF ADDITION OF RS. 1,81,391/- WAS R ESTORED FOR LIMITED PURPOSES OF QUALIFYING THE CORRECT AMOUNT OF THE PU RCHASES MADE FROM THESE PARTIES FOR WHICH THE ASSESSEE CLAIMED AN AMO UNT OF RS. 1,56,,591/- ONLY I.E. M/S EASTERN MINING & ALLIED RS. 77,375, M/S NORTH EAST COAL MINING RS. 19,266 AND M/S ROYAL TRADERS RS. 59,950 TOTALING TO RS. 1,56,591/-. THE PENALTY WAS LEVIED AT AN AMOUNT OF RS. 1,56,591/- ON NON EXISTENT PARTIES. THE ASSESSEE D ID NOT FIELD APPEAL AGAINST THE AFORESAID ADDITION. THE ASSESSING OFFI CER VIDE SEPARATE ORDER LEVIED PENALTY U/S 271(1)(C) OF IT ACT. 3 THE ASSESSEE CHALLENGED THE PENALTY BEFORE THE LD . CIT(A) IN WHICH IT WAS BRIEFLY EXPLAINED THAT ORIGINAL ASSESS MENT ORDER WAS SET ASIDE U/S 263 OF IT ACT ON THE BASIS OF GIVING FIN DING IN ASSESSMENT YEAR 2002-03 TREATING THE PARTIES TO BE NON EXISTENT. TH E ASSESSING OFFICER MERELY PLACED RELIANCE ON THE VERIFICATION REPORT O F ASSESSMENT ORDER FOR ASSESSMENT YEAR 2002-03. THE MATTER WAS ALSO REST ORED TO THE FILE OF ASSESSING OFFICER BY THE TRIBUNAL. THE ASSESSEE FI LED CHALLANS OF PURCHASES ISSUED BY SALES TAX AUTHORITIES OF HARYAN A AND ASSAM. THE ASSESSEE PRODUCED SUFFICIENT EVIDENCE TO PROVE THE GENUINENESS OF THE PURCHASES AND ALL ENTRIES OF PURCHASES ARE RECORDED IN THE BOOKS OF ACCOUNT AND SUBJECT TO PAYMENT OF FREIGHT ALSO. DE TAIL OF WHICH ARE NOTED AT PAGE 4 TO 6 OF THE IMPUGNED ORDER. IT WAS EXPLA INED THAT MERE DISALLOWANCE OF THE PURCHASES IS NOT ENOUGH TO LEVY THE PENALTY. THE ASSESSEE PRODUCED DOCUMENTARY EVIDENCE BEFORE THE A SSESSING OFFICER TO PROVE ITS CASE. THE ASSESSEE RELIED UPON THE OR DER OF ITAT, CHANDIGARH BENCHES IN THE CASE OF ISHWAR PARKASH V ITO, ITA NO. 85 & 3 86/CHD/2011 ORDER DATED 30.9.2011 IN WHICH IT WAS H ELD THAT ON MERE REJECTION OF EXPLANATION OF THE ASSESSEE, NO PENALT Y IS LEVIABLE. 4 THE LD. CIT(A) HOWEVER, DID NOT ACCEPT THE CONTEN TION OF THE ASSESSEE AND CONFIRMED THE LEVY OF PENALTY AND DISM ISSED THE APPEAL OF THE ASSESSEE. 5 WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE FINDINGS OF AUTHORITIES BELOW. IT IS WELL SETTLED LAW THAT LEVY OF PENALTY IN EACH AND EVERY CASE IS NOT AUTOMATIC. IT IS DISCRETIONARY IN NATURE AND CAN BE LEVIED CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOT IN DISPUTE THAT THE ASSESSEE PRODU CED CHALLANS ISSUED BY SALES TAX AUTHORITIES OF HARYANA AND ASSAM TO PROVE THAT THE PURCHASES MADE FROM THESE PARTIES WERE GENUINE. THUS THE ASS ESSEE OFFERED EXPLANATION BEFORE THE AUTHORITIES BELOW, THEREFORE ON MERE REJECTION OF THE EXPLANATION OF THE ASSESSEE WOULD NOT PROVE THA T THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. FURTHER THE ADDITION WAS BASED ON THE FIND INGS OF THE ASSESSING OFFICER IN ASSESSMENT YEAR 2002-03 THAT THE PURCHA SES ARE NOT GENUINE. NO INDEPENDENT ENQUIRY HAS BEEN CONDUCTED IN ASSESS MENT YEAR UNDER APPEAL. THE DETAILS OF PURCHASES HAS BEEN SUPPORTE D BY PAYMENT OF FREIGHT AS NOTED IN THE IMPUGNED ORDER WOULD SUPPOR T THE CASE OF THE ASSESSEE THAT THE ASSESSEE MADE PURCHASES THOUGH TH E SAME PURCHASES WERE NOT ACCEPTABLE TO THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT REST OF THE PURCHASES HAVE BEEN ACCEPTED IN ASSESSMENT ORDER. THE CASE HAS TRAVELED TO SEVERAL STAGES OF MAKING ASSESSMENT, SET ASIDE U/S 263 OF IT ACT, APPEAL BEF ORE THE LD. CIT(A) AND BEFORE THE TRIBUNAL IN WHICH DIFFERENCE IN THE AMOU NT OF PURCHASES WAS ALSO FOUND. THESE FACTS WOULD CLEARLY REVEAL THAT THE ASSESSEE DISCLOSED THE PURCHASES IN THE BOOKS OF ACCOUNT SUPPORTED BY PAYMENT OF FREIGHT AND HAS DISCLOSED ALL THE FACTS BEFORE THE AUTHORI TIES BELOW. THEREFORE ON MERE REJECTION OF THE EXPLANATION OF THE ASSESSE E PARTICULARLY WHEN NO INDEPENDENT ENQUIRY HAVE BEEN CONDUCTED IN ASSESSME NT YEAR UNDER APPEAL WHICH IS EARLIER TO ASSESSMENT YEAR 2002-03 FOR WHICH VERIFICATION OF THE PURCHASES WAS MADE, WOULD PROVE THAT IT WOUL D NOT BE A FIT CASE 4 FOR LEVY OF PENALTY U/S 271(1)(C) OF IT ACT. CONSI DERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT LEVY OF PENALTY IS WHOLLY NOT WARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6 WE ACCORDINGLY SET ASIDE THE ORDERS OF AUTHORIT IES BELOW AND CANCEL LEVY OF PENALTY. 7 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.9.2014 SD/- SD/- (T.R. SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23.9.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR