M/s Krishnaiah motors Pvt. Ltd, Secunderabad V. ACIT, Hyderabad

ITA 75/HYD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53804 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 19-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO. 75/HYD/2009 ASSESSMENT YEAR 2005-06 M/S KRISHNAIAH MOTORS P LTD., SECUNDERABAD (PAN AAACK 8473C) VS THE ACIT, CIRCLE 2(1), HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI A. SRINIVAS RESPONDENT BY : SHRI T. DIWAKAR PRASAD DATE OF HEARING : 29.11.2011 DATE OF PRONOUNCEMENT : 7.12.2011 ORDER PER BENCH: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) III, HYDERABAD DAT ED 4.11.2008 AND IT PERTAINS TO THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1. THE ASSESSING OFFICER IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ASSESSING OFFICER OUGHT NOT TO HAVE LEVIED T HE PENALTY U/S 271(1)(C) OF THE IT ACT, 1961 AMOUNTING TO RS.11,90,308. 3. THE CIT(A) OUGHT NOT TO HAVE CONFIRMED THE PENAL TY AS LEVIED BY THE ASSESSING OFFICER. ITA NO.75/HYD/2009 M/S KRISHNAIAH MOTORS P LTD., SBAD. 2 3. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND A N AUTHORISED DEALER OF MARUTI UYDOG LTD. THE ASSESS EE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR IN DISPUTE I.E. FOR THE ASSESSMENT YEAR 2005-06 ON 1.11.2005 ADMITTING A TO TAL INCOME OF RS.3,38,522/- AFTER SETTING OFF BROUGHT FORWARD LOSSES. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON TOTAL INCOME AT RS.50,71,557/- BY MAKING THE VARIOUS ADDITIONS INCL UDING THE ADDITION IN DISPUTE ON WHICH THE ASSESSING OFFICER HAS LEVIED THE PENALTY. THE ADDITIONS MADE BY THE ASSESSING OFFIC ER HAVE BEEN ACCEPTED BY THE ASSESSEE BECAUSE THE ASSESSEE HAS N OT FILED ANY APPEAL. 4. THE ASSESSING OFFICER INITIATED PENALTY PROCEED INGS BY ISSUING NOTICE. THE ASSESSEE HAS FILED ITS REPLY D ATED 27.6.2008 STATING THAT THE ADDITION OF INCOME WERE MADE DUE T O NON RECONCILIATION OF RECORDS AND THERE WAS NO WILFUL O R INTENTIONALLY FURNISHING OF INACCURATE PARTICULARS OF INCOME. BU T THE SAME HAS NOT BEEN ACCEPTED BY THE ASSESSING OFFICER AND HE LEVIED MINIMUM PENALTY OF RS.11,90,308/- VIDE ORDER DATED 30.6.2008 PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 5. AGGRIEVED BY THE SAME, THE ASSESSEE FILED AN AP PEAL BEFORE THE CIT(A). THE CIT(A) VIDE THE IMPUGNED ORDER UP HELD THE ORDER OF ASSESSING OFFICER DATED 30.6.2008, DISMISS ED THE APPEAL OF THE ASSESSEE. 6. NOW CHALLENGING THE ORDER PASSED BY THE CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE STATING TH AT THERE WAS NO WILFUL OR INTENTIONALLY FURNISHING OF INACCU RATE PARTICULARS OF INCOME. HE STATED THAT IN FACT M/S M ARUTI UDYOG ITA NO.75/HYD/2009 M/S KRISHNAIAH MOTORS P LTD., SBAD. 3 LTD., WHO IS THE PRINCIPAL SUPPLIER OF THE VEHICLES , WOULD CLOSELY MONITOR PURCHASES AND SALES OF THE ASSESSEE COMPANY . AS SUCH THERE IS NOT A LITTLE SCOPE FOR INDULGING IN ANY SO RT OF MANIPULATION IN THE RESPECTIVE ACCOUNT, AND THE ASS ESSEE COMPANY CANNOT SUPPRESS ANY SALE/STOCK. AS REGARD TO THE ADDITION ON ACCOUNT OF SALE OF VEHICLE WHICH ARE NO T REFLECTED IN THE ACCOUNTS, AN AMOUNT OF RS.30,55,459/- WAS PUREL Y DUE TO NON RECONCILIATION OF RECORDS. IN RESPECT OF ADDIT ION OF RS.19,73,376/- ON ACCOUNT OF PURCHASE, THERE IS NO SCOPE FOR SUPPRESSION OF PURCHASES OF ANY VEHICLE AND ALL PUR CHASES ARE ACCOUNTED FOR. HE STATED THAT TO AVOID LITIGATION AND TO COOPERATE WITH THE DEPARTMENT THE ASSESSEE HAS NOT FILED ANY APPEAL AND ACCEPTED THE ADDITION MADE BY THE ASSESSING OFFICER AND PAID THE TAXES THEREON. HE FURTHER STATED THAT THE ASSESSIN G OFFICER HAS MADE THE ADDITION IN DISPUTE BECAUSE OF THE ACCOUNT ING ERROR OF THE ASSESSEE. IN FACT, ALL THE TRANSACTIONS WERE R EFLECTED IN THE BOOKS OF ACCOUNT EITHER DURING THE YEAR OR IN THE S UBSEQUENT YEARS. THEREFORE, THERE WAS NO MALA FIDE INTENTION IN FURNISHING THE INACCURATE PARTICULARS OF INCOME. IN SUPPORT O F HIS CONTENTION HE RELIED ON THE FOLLOWING JUDGEMENTS: 1. CIT VS. SURESH CHANDRA MITTAL (251 ITR 9) (SC) 2. CIT VS. PUNJAB KESARI HOSIERY FACTORY (304 ITR 247 ) (P&H). HE PLEADED THAT THE PENALTY IN DISPUTE MAY BE DELET ED BY ACCEPTING THE REQUEST MADE BY THE ASSESSEE. 8. ON THE CONTRARY, THE LEARNED DEPARTMENTAL REPRE SENTATIVE RELIED ON THE ORDER PASSED BY THE REVENUE AUTHORITI ES. HE STATED THAT THE ADDITION MADE BY THE ASSESSING OFFICER HAS BEEN ACCEPTED BY THE ASSESSEE BECAUSE ASSESSEE HAS NOT F ILED ANY APPEAL AGAINST THE ASSESSMENT COMPLETED BY THE ASSE SSING ITA NO.75/HYD/2009 M/S KRISHNAIAH MOTORS P LTD., SBAD. 4 OFFICER. FURTHER, THE LEARNED DEPARTMENTAL REPRESE NTATIVE STATED THAT THE ASSESSING OFFICER ASKED THE ASSESSEE TO FU RNISH COMPLETE DETAIL OF OPENING STOCK, PURCHASE AND SALE OF CARS AND AFTER VERIFYING THE SAME THE ASSESSING OFFICER NOTICED TH AT IN RESPECT OF ONE VEHICLE SOLD ON 10.12.2004 BUT NEITHER INCLUDED IN THE SALE ACCOUNT NOR IN THE CLOSING STOCK. IN RESPECT OF OT HER 10 VEHICLES MENTIONED IN THE ASSESSMENT ORDER AT PAGE 2, THE VA LUE OF THE SAME WERE ALSO NOT INCLUDED IN THE CLOSING STOCK DA TED 31.3.2005. THE ASSESSING OFFICER ASKED THE ASSESSE E TO EXPLAIN AS TO WHY THE ABOVE MENTIONED 11 VEHICLES SHOULD NO T BE ADDED TO THE INCOME OF RETURN OF THE ASSESSEE. THE ASSES SEE HAS NOT FILED PLAUSIBLE EXPLANATION WITH DOCUMENTARY EVIDEN CE AND THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKIN G ADDITION IN DISPUTE. HE STATED THAT THE ASSESSING OFFICER H AS LEVIED THE PENALTY ON THE BASIS OF NON INCLUSION OF THE SALE O F VEHICLE IN THE ACCOUNTS WHICH IS PURELY CONCEALING OF PARTICULAR O F INCOME AND FURNISHING INACCURATE PARTICULARS OF SUCH INCOME TO THE EXTENT OF THE ADDITION MADE DURING SCRUTINY OF ASSESSMENT DAT ED 26.12.2007. THEREFORE, PENALTY IN DISPUTE DESERVE S TO BE UPHELD BY DISMISSING THE APPEAL FILED BY THE ASSESS EE. IN SUPPORT OF HIS ARGUMENT AND UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE DEPARTMENTAL REPRESENTATIVE CITE D BY PLACING RELIANCE ON THE FOLLOWING CASE LAW: 1. DCIT VS. CIRAG METAL ROLLING MILLS LTD. (305 ITR 29) (MP) 2. SANDEEP KUMAR GARG & CO. VS. ITO (298 ITR 106) (P& H) 3. CIT VS. C. ANANTHAN CHETTIAR (273 ITR 401) (MADRAS HC) 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE CASE LAW CITED BY BOTH THE PARTIES. IT IS ADMITTED FACT THA T THE ASSESSEE ITA NO.75/HYD/2009 M/S KRISHNAIAH MOTORS P LTD., SBAD. 5 HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT Y EAR IN DISPUTE ON 1.11.2005 ADMITTING TOTAL INCOME AT RS.49,21,683 /- AND THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143( 3) OF THE ACT ON 26.12.2007 WHILE MAKING ADDITION OF RS.30,55,495 /- ON ACCOUNT OF SUPPRESSED CLOSING STOCK IN RESPECT OF 1 1 VEHICLES WHICH THE ASSESSEE HAS NEITHER INCLUDED IN THE SALE ACCOUNT NOR IN THE LIST OF CLOSING STOCK. THE ASSESSING OFFICE R ADDED THE RETURN OF INCOME OF THE ASSESSEE. SECONDLY, RS.1,9 7,337/- AS UNACCOUNTED PURCHASES. THE ASSESSING OFFICER ALSO ADDED AS UNEXPLAINED INVESTMENT TOWARDS ONE VEHICLE AND MADE AN ADDITION IN THE ASSESSMENT ORDER DATED 26.12.2007. THE ASSESSEES CONTENTION IS THAT IN RESPECT OF ADDITIO N MADE ON ACCOUNT OF SALE OF VEHICLES NOT REFLECTED IN THE AC COUNTS WAS PURELY DUE TO NON-RECONCILIATION OF RECORDS AND DUE TO ACCOUNTING ERROR. IT IS ALSO ADMITTED THAT THE VEHI CLES THE PARTICULARS OF WHICH MENTIONED IN THE PENALTY ORDER AT PAGE NO.2 WAS SOLD AFTER 31.3.2005 I.E., AFTER THE END OF REL EVANT YEAR AND THE SAME WERE NOT INCLUDED VALUE OF CLOSING STOCK A S ON 31.3.2005. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE VALUE OF 11 VEHICLES SHOULD NOT BE ADDED BACK TO TH E INCOME RETURN. IN RESPONSE TO THE SAME, THE ASSESSEE INFO RMED THAT AT PRESENT THE COMPANY IS NOT IN A POSITION TO RECONCI LE. THE ASSESSING OFFICER TREATED THE SAME AS UNACCOUNTED S ALE IN RESPECT OF 10 VEHICLES AND THE VALUE OF THE SAME TR EATED AS SUPPRESSED CLOSING STOCK AND THE SAME WAS ADDED TO THE INCOME RETURN AND THE ASSESSEE HAS ACCEPTED THE SAME AND C HOSEN NOT TO FILE ANY APPEAL. AS MENTIONED BY THE ASSESSING OFFICER IN THE PENALTY ORDER AT PAGES 3-5, THE ASSESSEE HAS FAILED TO SATISFY THE ASSESSING OFFICER BY NON PRODUCTION OF THE SUPPORTI NG DOCUMENTS/RECORDS TO ITS CLAIM MADE IN THE RETURN O F INCOME FILED BY THE ASSESSEE. KEEPING IN VIEW OF THE ORDE RS PASSED BY THE REVENUE AUTHORITIES AS WELL AS THE CITATIONS QU OTED BY BOTH ITA NO.75/HYD/2009 M/S KRISHNAIAH MOTORS P LTD., SBAD. 6 THE PARTIES, WE ARE OF THE VIEW THAT THE ADDITION I N DISPUTE HAVE BEEN MADE DUE TO DESCRIPENCIES FOUND IN THE BOOKS O F ACCOUNTS OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDING. THE VEHICLES SOLD IN THE SUBSEQUENT YEAR WERE NOT REFLECTED IN T HE CLOSING STOCK OF THE ASSESSMENT YEAR 2005-06. THUS, THERE WAS A SUPPRESSION OF CLOSING STOCK OF RS.25,50,835/- AND ONE VEHICLE SOLD FOR RS.5,04,660/- ON 3.12.2004 WERE ALSO NEITH ER SHOWN IN THE SALE NOR IN THE CLOSING STOCK AND THE SAME HAS BEEN TREATED AS UNACCOUNTED SALE. THE PURCHASE OF ANOTHER VEHIC LE VALUED AT RS.1,97,376/- SOLD ON 16.4.2004 WERE ALSO NOT REFLE CTED IN THE ACCOUNTS AND THE SAME WAS ALSO TREATED AS UNACCOUNT ED PURCHASE. ON ACCOUNT OF THE AFORESAID DESCRIPENCIE S FOUND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE ASSESSIN G OFFICER HAS RIGHTLY LEVIED THE PENALTY IN DISPUTE AND THE CIT(A ) HAS ALSO RIGHTLY UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER. THE ASSESSEE HAS FAILED TO EXPLAIN EVEN BEFORE US ANY P LAUSIBLE EXPLANATION REGARDING DESCRIPENCIES WHICH WERE FOUN D IN THE BOOKS OF ACCOUNTS BY THE ASSESSING OFFICER. THEREF ORE, THE ARGUMENTS ADVANCED BY THE LEARNED DR SUPPORTED BY T HE DECISIONS RELIED ON BY HIM ARE HAVING FORCE. WE AC CEPT THE SAME BY DISMISSING THE APPEAL FILED BY THE ASSESSEE AND UPHOLDING THE IMPUGNED ORDER. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON: 7.12.2011 SD/- SD/- (CHANDRA POOJARI) ( (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED THE 7 TH DECEMBER, 2011 ITA NO.75/HYD/2009 M/S KRISHNAIAH MOTORS P LTD., SBAD. 7 COPY FORWARDED TO: 1. M/S KRISHNAIAH MOTORS P LTD., A-1, MOTI VALLY, TIRUMALGHERRY, SECUNDERABAD. 2. THE ACIT, CIRCLE 2(1), HYDERABAD 3. THE CIT(A)- III, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/