SWASTIK UDYOG, Jaipur V. ITO, TONK

ITA 74/JPR/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2193 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 23-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Keywords: Initiation of penalty proceedings
• Section: 145

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 HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 74/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 M/S. SWASTIK UDYOG F-72, 73, INDUSTRIAL AREA, NEWAI DISTT.TONK CUKE VS. THE ITO WARD - TONK TONK LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAJFS 8181 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MAHENDRA GARGIEYA AND SHRI DEVANG GARGIEYA, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL CIT-. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/03/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 03/04/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) DATED 13-10-2016 FOR THE ASSESSMENT YEAR 2009-10 RA ISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. THE IMPUGNED PENALTY ORDER U/S 271(1) OF THE ACT DATED 27-06-2012 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. ITA NO. 74/JP/2017 M/S. SWASTIK UDYOG, VS. ITO, WARD- TONK . 2 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE PENALTY U/S 271 (1)(C) OF THE ACT OF RS. 88,269/-. THE PENALTY SO IMPOSED BY THE AO AND CONFIRMED BY THE LD. CIT(A) BEING TOTALLY CONTR ARY TO THE PROVISIONS OF LAW AND FACTS MAY KINDLY BE DELETED I N FULL. 3. THE APPELLANT PRAYS YOUR HONOUR INDULGENCES TO ADD, AMEND OR ALTER OF OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. 2.1 IT IS FURTHER NOTED THAT THE LD. AR OF THE ASSE SSEE FILED FOLLOWING MODIFIED GROUNDS OF APPEAL WITH THE PRAYER TO ADMIT THE SAME IN PLACE OF PRESENT GROUNDS OF APPEAL. 1. THE IMPUGNED PENALTY ORDER U/S 271(1) OF THE ACT DATED 27-06-2012 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE PENALTY U/S 271 (1)(C) OF THE ACT OF RS. 88,269/-. THE PENALTY SO IMPOSED BY THE AO AND CONFIRMED BY THE LD. CIT(A) BEING TOTALLY CONTR ARY TO THE PROVISIONS OF LAW AND FACTS MAY KINDLY BE DELETED I N FULL. 3. THE APPELLANT PRAYS YOUR HONOUR INDULGENCES TO ADD, AMEND OR ALTER OF OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. 4. THAT THE SHOW CAUSE NOTICE ISSUED U/S 274 R/W 271(1) OF THE ACT IS QUITE VAGUE AND DID NOT AT AL L SPECIFY WHICH LIMB OF SECTION 271(1) OF THE ACT. THE PENAL TY PROCEEDINGS HAD BEEN INITIATED I.E. WHETHER FOR CON CEALMENT PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE IMPUGNED PENALTY BASED ON SUCH A NOT ICE ITA NO. 74/JP/2017 M/S. SWASTIK UDYOG, VS. ITO, WARD- TONK . 3 BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS K INDLY BE QUASHED. 2.2 AS PER ITAT RULE 11, THE ASSESSEE IS NOT ENTITL ED EXCEPT BY LEAVE OF THE TRIBUNAL, URGE OR BE HEARD IN SUPPORT OF ANY GR OUND WHICH IS NOT SAID IN THE MEMO OF APPEAL. THE MODIFIED GROUND AS CLAIM ED BY THE ASSESSEE IS NOT A MODIFICATION OF THE GROUND BUT IT APPEARS AS A NEW GROUND WHICH HAS BEEN TAKEN IN THE FORM OF GROUND NO. 4. THE ITAT RU LE 11 IS MENTIONED AS UNDER:- 11. THE APPELLANT SHALL NOT, EXCEPT BY LEAVE OF T HE TRIBUNAL, URGE OR BE HEARD IN SUPPORT OF ANY GROUND NET SET FORTH IN THE MEMORANDUM OF APPEAL, BUT THE TRIBUNAL , IN DECIDING THE APPEAL, SHALL NOT BE CONFINED TO THE G ROUNDS SET FORTH IN THE MEMORANDUM OF APPEAL OR TAKEN BY LEAVE OF THE TRIBUNAL UNDER THIS RULE: PROVIDED THAT THE TRIBUNAL SHALL NOT REST ITS DECIS ION ON ANY OTHER GROUND UNLESS THE PARTY WHO MAY BE AFFECT ED THEREBY HAS HAD A SUFFICIENT OPPORTUNITY OF BEING H EARD ON THAT GROUND. 2.3 AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS AVAILABLE ON RECORD, THE APPLICATION FOR MODIFIED GROUND IS N OT ENTERTAINED. IT IS FURTHER NOTED THAT SUCH GROUND NO. 4 WAS NOT TAKEN UP BY THE ASSESSEE BEFORE THE LD. CIT(A). HENCE, IT IS DISMISSED. ITA NO. 74/JP/2017 M/S. SWASTIK UDYOG, VS. ITO, WARD- TONK . 4 3.1 NOW THE APPEAL OF THE ASSESSEE IS BEING DECIDED AS TAKEN IN ORIGINAL FORM NO.36 BY THE ASSESSEE AS UNDER:- 1. THE IMPUGNED PENALTY ORDER U/S 271(1) OF THE ACT DATED 27-06-2012 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE PENALTY U/S 271 (1)(C) OF THE ACT OF RS. 88,269/-. THE PENALTY SO IMPOSED BY THE AO AND CONFIRMED BY THE LD. CIT(A) BEING TOTALLY CONTR ARY TO THE PROVISIONS OF LAW AND FACTS MAY KINDLY BE DELETED I N FULL. 3. THE APPELLANT PRAYS YOUR HONOUR INDULGENCES TO ADD, AMEND OR ALTER OF OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. 4.1 THE GROUND NO. 1 & 3 OF THE ASSESSEE IS GENERA L IN NATURE WHICH NEED NO ADJUDICATION. 5.1 APROPOS GROUND NO. 2 OF THE ASSESSEE, BRIEF FAC TS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLAR ING AN INCOME OF RS. 5,02,080/- ON 23-09-2009 AND ASSESSMENT U/S 145 (3) WAS COMPLETED ON 2-12-2011 AT AN INCOME OF RS. 7,87,740/- AFTER M AKING VARIOUS ADDITIONS WHICH INCLUDES ADDITION ON ACCOUNT OF LO W YIELD FROM OIL SEED AT RS. 2,80,237/-, DISALLOWANCE OF DONATION OF RS. 5,000/- AND DISALLOWANCE OF SALES TAX DEMAND OF RS. 420/-. DURI NG THE COURSE OF ITA NO. 74/JP/2017 M/S. SWASTIK UDYOG, VS. ITO, WARD- TONK . 5 ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASS ESSEE FIRM DERIVES INCOME FROM MANUFACTURING AND TRADING OF EDIBLE OIL S. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS NOT MAINTAINED THE BO OKS OF ACCOUNT PROPERLY AND VERIFICATION OF GROSS PROFIT WAS NOT P OSSIBLE ON THE BASIS OF BOOKS OF ACCOUNT PRODUCED THUS THE AO NOTED SEVERAL DEFECTS IN MAINTENANCE OF BOOKS OF ACCOUNT LIKE YIELD OF OIL C OULD NOT BE VERIFIED FROM THE STOCK REGISTER / AND PRODUCTION REGISTER. THE AO ALSO NOTED THAT THE ASSESSEE DID NOT PRODUCE THE LAB REPORTS TO JUS TIFY THE LOWER YIELD FROM OIL SEEDS PROCESSED BY THE ASSESSEE. THE AO THUS RE JECTED THE BOOKS OF ACCOUNT AFTER CONSIDERING THE REPLY FILED BY THE AS SESSEE AND MADE ADDITIONS OF RS. 2,85,657/- . THE AO FURTHER OBSERV ED THAT THE ASSESSEE FIRM HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THUS THE AO HELD THAT IT IS A FIT CASE FOR INITIATION OF PENALTY U/S 271(1) R.W.S. 274 OF THE ACT. 5.2 IN PENALTY PROCEEDINGS, THE AO VIDE HIS ORDER D ATED 27-06-12 IMPOSED THE PENALTY OF RS. 88,269/- BY OBSERVING AS UNDER:- IT IS THEREFORE, HELD THAT THE ASSESSEE HAS DELIB ERATELY AND WILLFULLY FURNISHED INACCURATE PARTICULARS OF I TS INCOME AND HAS TRIED TO REDUCE INCOME BY RS. 2,85,657/- . IN ACCOR DANCE WITH EXPLANATION 4 TO SECTION 271, THE TAX SOUGHT TO BE EVADED ON THIS INCOME COMES TO RS. 88,269/-. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, A PENALTY OF RS. 88,269/ - @ 100% OF THE ITA NO. 74/JP/2017 M/S. SWASTIK UDYOG, VS. ITO, WARD- TONK . 6 TAX SOUGHT TO BE EVADED IS HEREBY LEVIED WHICH IS C ALCULATED AS UNDER:- 1. INCOME SOUGHT TO BE EVADED RS. 2,85,657/- 2. THE TAX SOUGHT TO BE EVADED ON THIS INCOME RS . 88,269/- 3. MINIMUM PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED RS. 88,269/- 4. MAXIMUM PENALTY @ 300% OF THE TAX SOUGHT TO BE EVADED RS. 2,64,807/- 5. PENALTY IMPOSED RS. 88,269/- 5.3 IN FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED T HE PENALTY BY OBSERVING AS UNDER:- 5.2.12. IN THE PRESENT CASE, IN ASSESSMENT PROCEEDINGS, THE AO REJECTED THE TRADING RESULTS DE CLARED BY THE AO APPELLANT AND ESTIMATED THE GROSS PROFIT. BE FORE ME, DURING APPELLATE PROCEEDINGS, IT HAS BEEN PLEADED B Y THE A.R. THAT NO PENALTY CAN BE LEVIED FOR MERE ESTIMATION A ND ON ISSUE WHICH ARE DEBATABLE. PERUSAL OF PENALTY ORDER U/S 271(1) DATED 27- 06-2012, REVEALS THAT DURING APPELLATE PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD NOT MAINTAINED PROPER B OOKS OF ACCOUNT ON THE BASIS OF WHICH GROSS PROFIT COULD BE DETERMINED. MOREOVER, THE ASSESSEE WAS NOT ALE TO SUBSTANTIATE THE LOW OIL YIELD THROUGH SUBSTANTIAL EVIDENCE. IN VIEW OF THE SAME, THE AO REJECTED THE BOOKS OF ACCO UNT AND PROCEEDED TO DETERMINE THE PROFITS U/S 145 OF THE A CT. I THUS, FIND THE ACTION OF AO, IN DETERMINATION OF CORRECT PROFIT, AS JUSTIFIED. THE PRESENT CASE IS NOT JUST OF MERE EST IMATION, WITHOUT RATIONAL BASIS WHICH WAS ALLEGED BY THE APP ELLANT BEFORE ME. THE CASE THEREFORE, CLEARLY OF SUPPRESSI ON OF MATERIAL FACTS RESULTING IN CONCEALMENT OF TRUE PRO FITS. 5.2.13 THE OFFENCE OF CONCEALMENT IS A DIRECT ATTE MPT TO HIDE AN ITEM OR A PORTION THEREOF FROM THE KNOWL EDGE OF INCOME TAX AUTHORITIES. THERE IS A STRICT LIABILITY ON THE ASSESSEE AGAINST CONCEALMENT OF PARTICULARS OF INCO ME OR FOR GIVING INACCURATE PARTICULARS OF INCOME, WHILE FILI NG THE RETURN. THE DUTY IS ENJOINED UPON A PERSON TO MAKE A CORRECT AND COMPLETE DISCLOSURE OF HIS OR HER INCOME AND IT IS ONLY ITA NO. 74/JP/2017 M/S. SWASTIK UDYOG, VS. ITO, WARD- TONK . 7 WHEN HE/ SHE FAILS IN HIS / HER DUTY BY NOT DISCLOS ING HIS/HER INCOME OR PART THEREOF, THAT HE/ SHE CONCEALS THE P ARTICULARS OF HIS/HER INCOME. SIMILARLY, THEREFORE, IF THE DIS CLOSURE MADE OF PARTICULARS OF INCOME IS INCORRECT, THEN A LSO HE/ SHE COMMITS BREACH OF HIS / HER DUTY. IN AJAY JAIN VS. ACIT (2012) 34 CCH 006 DEL TRIB., IT HAS BEEN HELD THAT A VERY HEAVY ONUS IS PLACED ON THE ASSESSEE TO EXPLAIN THE DIFFERENCE BETWEEN THE ASSESSED INCOME AND RETURNED INCOME. 6. IN VIEW OF THE ABOVE DISCUSSION, THE APPEAL IS DISMISSED. THE AO IS DIRECTED TO TAKE CONSEQUENTIAL ACTION AT THE TIME OF GIVING EFFECT TO THIS ORDER ACCORDINGLY . 5.4 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE PRAYED FOR DELETION OF PENALTY OF RS. 88,269/- SUSTAINED BY TH E LD. CIT(A) U/S 271(1)(C) OF THE ACT FOR WHICH THE LD. AR OF THE AS SESSEE FILED THE WRITTEN SUBMISSION AND THE SAME HAS BEEN TAKEN INTO CONSIDE RATION. 5.5 ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 5.6 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE ASSESSMEN T ORDER THAT THE ASSESSEE FIRM DERIVES INCOME FROM MANUFACTURING AND TRADING OF EDIBLE OIL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICE D THAT THE ASSESSEE HAD NOT MAINTAINED BOOKS OF ACCOUNT OF PROPERLY AND IT WAS NOT POSSIBLE FOR THE AO TO VERIFY THE GROSS PROFIT OF THE ASSESS EE FROM THE BOOKS OF ITA NO. 74/JP/2017 M/S. SWASTIK UDYOG, VS. ITO, WARD- TONK . 8 ACCOUNT PRODUCED BY THE ASSESSEE AND THUS HE OBSERV ED THAT THERE WAS SEVERAL DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCO UNT. THE AO OBSERVED THAT YIELD OF OIL COULD NOT BE VERIFIED ON THE BASI S OF DETAILS MAINTAINED IN STOCK REGISTER / PRODUCTION REGISTER AND THE ASSESS EE FIRM COULD NOT PRODUCE THE LAB REPORTS TO JUSTIFY THE LOWER YIELD FROM OIL SEEDS PROCESSED BY THE ASSESSEE FIRM. THUS THE AO REJECTED THE BOOK RESULTS OF THE ASSESSEE TAKING INTO CONSIDERATION THE REPLY FILED BY THE ASSESSEE AND MADE AN ADDITION OF RS. 2,80,237/- . THE AO FURTHER DISALLOWED DONATION EXPENSES OF RS. 5,000/- AND SALES TAX DEMAND OF RS. 420/-. CONCLUSIVELY, THE AO MADE AN ADDITION OF RS. 2,85,657/- WITH THE OBSERVATION THAT THE ASSESSEE HAS DELIBERATELY AND WILLFULLY FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND TRIED TO REDUCE INCOME BY RS. 2,85,6 57/-. THUS IT IS A FIT CASE FOR INITIATION OF PENALTY PROCEEDINGS U/S 271( 1) OF THE ACT R.W.S. 274 OF THE ACT. IN PENALTY PROCEEDINGS, THE AO VIDE HIS ORDER DATED 27- 06-2012 IMPOSED THE PENALTY OF RS. 88,269/- TAKING INTO CONSIDERATION THE REPLY OF THE ASSESSEE AS WELL AS THE ASSESSMENT ORD ER. IN FIRST APPEAL, THE LD. CIT(A) CONFIRMED THE PENALTY OF RS. 88,269/-. I N APPELLATE PROCEEDINGS, IT IS NOTED THAT THE ASSESSEE HAD NOT MAINTAINED PROPERLY BOOKS OF ACCOUNT AND THUS THE AO COULD NOT DETERMIN E THE EXACT GROSS PROFIT. IT IS ALSO NOTED THAT THE ASSESSEE COULD NO T PRODUCE THE REASON FOR ITA NO. 74/JP/2017 M/S. SWASTIK UDYOG, VS. ITO, WARD- TONK . 9 LOW OIL YIELD. IN VIEW OF THESE FACTS, THE AO HAD N O ALTERNATIVE EXCEPT TO REJECT THE BOOKS OF ACCOUNT U/S 145 OF THE ACT WHIC H ALSO INDICATE THAT THE ASSESSEE HAS TRIED TO SUPPRESS THE MATERIAL FACTS F ROM THE AO BY NOT PRODUCING THE PROPER BOOKS OF ACCOUNT AS WELL AS TH E REASON FOR LOW OIL YIELD. HENCE, IN SUCH A SITUATION THE LOWER AUTHORI TIES HAVE CONFIRMED THE IMPOSITION OF PENALTY OF RS. 88,269/- U/S 271(1)(C) OF THE ACT. THE LD. CIT(A) IN HIS ORDER HAS TAKEN REFERENCE OF DECISION OF ITAT DELHI BENCH IN THE ASSESSEE OF AJAY JAIN VS. ACIT (2012) 34 CC H 006 WHEREIN IT IS HELD THAT A VERY HEAVY ONUS IS PLACED ON THE ASSESS EE TO EXPLAIN THE DIFFERENCE BETWEEN THE ASSESSED INCOME AND RETURNED INCOME. IN THIS CASE, THE ASSESSEE HAD NOT MAINTAINED THE PROPER BOOKS OF ACCOUNT AND GROSS PROFIT OF THE ASSESSEE FIRM COULD NOT BE DEDUCED BY THE AO AND THUS HE REJECTED THE BOOKS OF ACCOUNT U/S 145 OF THE ACT. F URTHER, THE ASSESSEE HAS NOT BEEN ABLE TO JUSTIFY THE REASONS FOR LOW YIELD OF OIL SEEDS PROCESSED BY IT. TAKING INTO CONSIDERATIONS OF THE ORDERS OF LOW ER AUTHORITIES AS WELL AS THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, I FIN D NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY SU STAINED THE PENALTY OF RS. 88,269/- U/S 271(1)(C) RW 274 OF THE ACT. THUS THE APPEAL OF THE ASSESSEE DISMISSED. ITA NO. 74/JP/2017 M/S. SWASTIK UDYOG, VS. ITO, WARD- TONK . 10 6.0 IN THE RESULT, THE APPEALS OF THE ASSESSEE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 03 -04-2017. SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03 /04/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. SWASTIK UDYOG, TONK 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- TONK 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.74/JP/-2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR