SH. NAND LAL SOMANI, Jaipur V. ITO, Kishangarh

ITA 669/JPR/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5413 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 08-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA

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. 669/JP/2011 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2007-08 NAND LAL SOMANI, PROP.- M/S DURGA MARBLES, H.NO. 90, IND.AREA, MADANGANJ, KISHANGARH. CUKE VS. INCOME TAX OFFICER, KISHANGARH. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ADQPS 6823 A VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI MANISH AGARWAL (CA). JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 11/01/2016 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 29/02/2016 VKNS'K @ ORDER PER: R.P. TOLANI, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 27/05/2011 PASSED BY THE LEARNED CIT(A), AJMER FOR A.Y. 2007-08. EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LD CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY OF RS. 2,65,978/- LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. ITA 669/JP/2011_ NAND LAL SOMANI VS ITO 2 1.1 THAT THE LD CIT(A) HAS ERRED IN UPHOLDING THE PENALTY LEVIED U/S 271(L)(C) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE INCOME WAS SURRENDERED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING AND THE INCOME WAS OFFERED SUO-MOTTO, TO BUY THE PEACE OF MIND AND TO AVOID PROLONGED LITIGATION. THUS UPHOLDING THE PENALTY SO LEVIED DESERVES TO BE DELETED. 1.2 THAT THE PENALTY U/S 271(L)(C) HAS BEEN IMPOSED AND CONFIRMED BY THE LD. CIT(A) WITHOUT MAKING ANY INDEPENDENT ENQUIRY IN PENALTY PROCEEDINGS AND SIMPLY RELYING UPON THE CONCLUSION DRAWN IN ASSESSMENT ORDER THUS THE PENALTY DESERVES TO BE DELETED. 1.3 THAT THE ASSESSEE HAS VOLUNTARILY SURRENDERED T HE INCOME AND PAID THE DUE TAX THEREON THUS THERE REMAINED NO INCOME ON WHICH TAX SOUGHT TO BE EVADED COULD BE CALCULATED WHICH FACT WAS NOT APPRECIATED BY THE LD. CIT(A). 2. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE I MPUGNED PENALTY WAS LEVIED QUA THE TRADE ADVANCES RECEIVED BY THE AS SESSEE FOR BOOKING OF MARBLE ORDERS TO THE AFORESAID PARTIES. IN TWO CA SES I.E. OF M/S GUPTA MARBLES AND OF M/S RADHA SWAMI MARBLES, THE GOODS AS PER CUSTOMERS CHOICE / PREFERENCE WERE NOT AVAILABLE AND THE TERMS AND RATES COULD NOT BE SETTLED BETWEEN CONCERNED PARTIES. CONSEQUENT LY AMOUNT OF THE ADVANCES WAS RETURNED WITHIN THE YEAR UNDER APPEAL IT SELF. THESE FACTS HAVE NOT BEEN DOUBTED BY THE LD. APROPOS OTHER PART IES THE GOODS WERE ITA 669/JP/2011_ NAND LAL SOMANI VS ITO 3 SOLD TO THEM IN SUBSEQUENT YEAR AND THE COPIES OF B ILLS WERE SUBMITTED BEFORE THE LD. AO DURING THE COURSE OF ASSESSMENT P ROCEEDINGS IN COMPLIANCE OF AOS LETTER DATED 04.11.2009 . COPIES OF LEDGER ACCOUNT OF SUBSEQUENT YEARS WERE ALSO SUBMITTED BY THE ASSESSE E DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS VIDE REPLY FIL ED IN RESPONSE TO LETTER DATED 04.11.2009 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS MADE EVERY POSSIBLE EFFORT TO PROC URE NECESSARY DETAILS AND EVIDENCE IN RESPECT OF SUCH TRADE ADVAN CES HOWEVER, IN SPITE OF BEST EFFORTS THE CONFIRMATIONS COULDNT BE OBTAINED FROM THE ABOVE PARTIES, THE ASSESSMENT WAS GETTING TIME BARRE D. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, TO AMICABLY FINALIZE THE T IME BARRING ASSESSMENT PROCEEDINGS AT REST, WITH A VIEW TO CO-OPE RATE WITH THE DEPARTMENT, ASSESSEE VOLUNTARILY SURRENDERED THE AM OUNT OF RS. 7,80,000/- . THE SURRENDER WAS MADE BY ASSESSEE PROP RIETOR WHO BEING FROM MOFUSIL AREA WOULD HAVE FACED DIFFICULTIES IN C HASING THE PARTIES AND ASSUMED THAT IT WOULD INVITE THE IRE OF LD. AO. THUS TO ACHIEVE PEACE OF MIND, AVOID ANY LITIGATION; WITHOUT IN ANY MANNER ADMITTING THE CONCEALMENT OF ANY INCOME THE ASSESSEE SURRENDE RED THE AMOUNT SUO MOTU. BESIDES THE DIFFICULTIES WERE DISCUSSED WI TH LD. AO WHO ASSURED THAT IF SURRENDERED NO PENALTY PROCEEDINGS WILL BE IMPOSED IN ITA 669/JP/2011_ NAND LAL SOMANI VS ITO 4 THIS BEHALF. IT IS PLEADED THAT IN MANY SIMILAR CAS ES SIMILAR SURRENDERS WERE MADE BY OTHER MARBLE TRADERS OF KISHANGARH, SIM ILAR PENALTIES WERE IMPOSED AND MANY OF SUCH CASES HAVE BEEN DECIDE D BY ITAT JAIPUR BENCH DELETING THE SIMILAR PENALTY. IN THE C ASE OF SMT. DURGA DEVI SOMANI IN ITA NO. 672/JP/2011 ORDER DATED 31/1 0/2014 ON SIMILAR FACTS PENALTY HAS BEEN DELETED BY FOLLOWING OBSERVAT IONS: 2.11 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. WE ARE INCLINED TO DELETE THE PENALTY ON FOLLOWING REASONS:- I. IT CLEARLY EMERGES THAT THE AMOUNTS IN QUESTION WERE CARRIED OVER TRADE CREDITS FROM EARLIER YEAR, CORRESPONDING PURCHASES WERE INCLUDED IN TRADING A/ C THUS LEGALLY SPEAKING IF TRADE CREDITS ARE ADDED AS CESSATION OF LIABILITY, THE RELEVANT ENTRIES EXIST IN BOOKS AND IF THEY ARE HELD AS BOGUS THEN THEY BELONG TO E ARLIER YEARS. BESIDES RELEVANT INFORMATION IS FURNISHED ALONGWITH RETURN OF INCOME. II. THOUGH SURRENDERED IN ASSESSMENT THE ASSESSEE CAN TAKE FRESH PLEAS IN THE PENALTY PROCEEDINGS WHICH B Y SETTLED LAW ARE DISTINCT AND SEPARATE. ASSESSEE CAN MAKE FRESH SUBMISSIONS AND LEAD FRESH EVIDENCE. AO CAN M AKE FRESH INVESTIGATIONS ON THE BASIS OF NEW PLEAS AND MATERIAL. THUS WHEN SURRENDER IS TECHNICALLY REJECT ED AND ASSESSEE GIVES REASONABLE EXPLANATION, PENALTY CAN BE IMPOSED NOT ON THE SOLE BASIS OF ALLEGED REFUSED SURRENDER. AO HAS A DUTY TO CONSIDER THE MATERIAL A ND SUBMISSION OF THE ASSESSEE AND DECIDE WHETHER INCOM E ON THE BASIS OF THESE PLEAS WAS ASSESSABLE IN THE Y EAR IN QUESTION. III. AO HAS HELD THAT THE SURRENDER IS NOT ACCEPTA BLE AND CHOSE TO ADD IT U/S 41(1) OF THE ACT. THUS TECHNICA LLY EVEN THE SURRENDER IS NOT ACCEPTED AND UNILATERAL ITA 669/JP/2011_ NAND LAL SOMANI VS ITO 5 CESSATION OF LIABLE IS ASSUMED IGNORING THE PLEA TH AT IN SUBSEQUENT YEARS TRADING LIABILITY AMOUNTS WERE PAI D. IV. THE MAK DATA JUDGMENT RELIED BY ID DR ALSO HOLD S THAT PENALTY CANNOT BE DELETED MERELY HOLDING THAT ASSES SES VOLUNTARILY SURRENDERED THE INCOME. THERE IS NO SUC H IMMUNITY AND IT IS THE EXPLANATION WHICH SHOULD BE CONSIDERED FOR PENALTY. IN THAT CASE ASSESSEE DID N OT OFFER ANY EXPLANATION EXCEPT A SPECIOUS PLEA OF VOL UNTARY SURRENDER, WHICH ALSO ON FACTS WAS FOUND TO BE NOT VOLUNTARY. THUS IN MAK DATA CASE ALSO HON'BLE SUPRE ME COURT DID NOT DISPENSE WITH THE CONSIDERATION OF EXPLANATION OF THE ASSESSEE AND DETERMINATION OF IMPOSITION ON MERITS. V. THE DETAILS ABOUT TRADING LIABILITIES AND TRANSA CTIONS WERE REFLECTED IN THE ACCOUNTING STATEMENTS WHICH WERE P ART OF THE RETURN OF INCOME. HONBLE SUPREME COURT IN RELIANCE PETRO PRODUCTS CASE (SUPRA) HAS HELD THAT IF THE RELEVANT INFORMATION IS FILED WITH THE RETURN OF IN COME IN THAT CASE ANY VARIATION IN THE CLAIMS OF THE ASSESS EE WILL NOT ENTAIL PENALTY. THIS JUDGMENT ALSO SUPPORTS THE CASE OF THE ASSESSEE, IN VIEW THEREOF ALSO THE PENALTY I N THIS CASE CANNOT BE IMPOSED BY MERELY REFERRING TO THE ALLEGED SURRENDER AND WITHOUT CONSIDERING THE EXPLANATION. VI. ASSUMING WORST AGAINST ASSESSEE, PENALTY PROCEE DINGS BEING SEPARATE AND DISTINCT THE YEAR OF TAXABILITY CAN BE DETERMINED DURING PENALTY PROCEEDINGS. LOOKING FROM THIS ANGLE THE AMOUNT WHICH AT ALL MAY BE CONSIDERE D FOR PENALTY ARE TRANSACTIONS OF THIS YEAR WHICH ARE RS. 2,45,000/- AND RS. 3,58,141/-. THESE ALSO IN OUR VI EW ARE NOT LIABLE FOR PENALTY AS ALL THE RELEVANT PART ICULARS ARE FILED ALONG WITH THE RETURN. THUS, IN CONSIDERATION OF ENTIRETY OF FACTS, CIRCUM STANCES AND CASE LAWS AS RELIED ON BY ASSESSEE, WE ARE OF THE V IEW THAT IT IS NOT A FIT CASE OF IMPOSITION OF PENALTY U/S 271( 1)(C)OF THE ACT. THEREFORE, WE DIRECT TO DELETE THE PENALTY. ITA 669/JP/2011_ NAND LAL SOMANI VS ITO 6 BESIDES IN THE CASES OF ASHISH GUPTA ITA NO. 671/JP /11 VIDE ORDER DATED 17-10-2014 AND SHRI ASHOK KUMAR KAMDAR IN ITA NO. 684/JP/11 SIMILAR PENALTY HAS BEEN DELETED. FURTHER RELIANCE IS PLACED ON HONBLE APEX COURT JUDGMENT IN THE CASE OF EILLY LILLY & CO MPANY REPORTED IN 312 ITR 225 HOLING THAT THE PENALTY U/S 271(L)(C) IS NOT AN AUTOMATIC OR MANDATORY FALLOUT OF THE ADDITION MADE DURING THE A SSESSMENT PROCEEDINGS. MERELY BECAUSE AN ADDITION HAD BEEN MA DE DURING ASSESSMENT PROCEEDINGS DOES NOT IPSO FACT CONSTITUT E DEFAULT OF CONCEALMENT ON PART OF THE ASSESSEE, THEREFORE, THE SAME SHOULD NOT BE LEVIED IN ROUTINE MANNER. IT IS FURTHER PLEADED THA T THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE ARE SIMILAR TO THE CASE OF SMT. DURGA DEVI SOMANI, ASHISH GUPTA AND SHRI ASHOK KUMA R KAMDAR, THEREFORE, PENALTY PROCEEDINGS MAY BE DELETED. FURT HER RELIANCE IS PLACED IS AS UNDER:- (I) 170 TAXMAN 471 CIT VS. ASHOK TAKER (DELHI) (II) 300 ITR 40 V.V. PROJECTS AND INVESTMENTS PVT. L TD. VS. DY. CIT (2008) (AP) (III) 35 DTR 420 ASSTT. CIT VS. INDICA EXPORTS (DEL H) (IV) 127 TT J 599 ACIT VS. MALU ELECTRODES PVT. LTD. (2010) (NAG.) (V) 131 ITR 619 ADDL.COT VS AGGARWAL MISTHAN BHANDAR (RAJ.). ITA 669/JP/2011_ NAND LAL SOMANI VS ITO 7 (VI) 308 ITR 33 (AT) STAR INTERNATIONAL P. LTD. V. A SSISTANT COMMISSIONER OF INCOME-TAX (LUCKNOW) (VII) 251 ITR 9 (SC) COMMISSIONER OF-INCOME-TAX V. S URESH CHANDRA MITTAL (VIII) 265 ITR 329 COMMISSIONER OF INCOME-TAX V. BA DRILAL CHATURBHUJ (RAJ.) 3. THE LD DR RELIED ON THE ORDER OF THE LOWER AUTHORI TIES. 4. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN MY CONSIDE RED VIEW, THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE, THE ASSES SEES CASE IF SIMILAR TO SMT. DURGA DEVI SOMANI TO WHICH THE UNDERSIGNED WA S ALSO A PARTY, THE SAME HAS BEEN FOLLOWED IN THE CASES OF S/SHRI A SHISH GUPTA AND ASHOK KUMAR KAMDAR (SUPRA). FOLOWING THESE JUDGMENT AND HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF EILLY LILLY & COMPANY (SUPRA), PENALTY IMPOSED IS HEREBY DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/02/2016. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:-29 TH FEBRUARY, 2016 *RANJAN ITA 669/JP/2011_ NAND LAL SOMANI VS ITO 8 VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI NAND LAL SOMANI, KISHANGARH. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, KISHANGARH. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDR @ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 669/JP/2011) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR