Shako Flexipack Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-8(3), Ahmedabad

ITA 750/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57264 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 10-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: BHUPEN KOTHARI
• Keywords: Bonafide mistake
• Section: 143(3)

Judgement Text

ITA 750/AHD/10 ASSESSMENT YEAR 2005-06. 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI A.M.) I.T.A. NO. 750/AHD/2010 (ASSESSMENT YEAR: 2005-06) SHAKO FLEXIPACK PVT. LTD., A-132 POPULAR PLAZA, SOMESHWAR COMPLEX, SATELLITE, AHMEDABAD. (APPELLANT) VS. THE INCOME TAX OFFICER, WARD 8(3), PRATYAKSHA BHAVAN, NR,.PANJARA POLE, AMBAWADI, AHMEDABAD. (RESPONDENT) PAN :AADCS 9281R APPELLANT BY : SHRI BHUPEN KOTHARI. RESPONDENT BY : SHRI RAHUL KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING :6-3-2012. DATE OF PRONOUNCEMENT :16-3-12 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF LD. CIT (A)-XIV, AHMEDABAD VIDE APPEAL NO. CIT (A)-XIV/WD.8(3)/19/09 -10 DATED 11-1-2010 FOR THE ASSESSMENT YEAR 2005-06 FOR LEVYING OF PENALTY AMOUNTING TO RS.2,78,426/- U/S. 271(1) (C) OF THE I.T. ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED ITS RETURN OF INCOME ON 31- 10-2005 DECLARING TAXABLE INCOME OF RS.4,32,050/-. IN THE ASSESSMENT U/S. 143(3) OF THE ACT THAT WAS FINALIZED ON 23-10-2007 THE TOT AL INCOME WAS DETERMINED AT RS.14,35,370/- BY MAKING THE FOLLOWING ADDITIONS :- ITA 750/AHD/10 ASSESSMENT YEAR 2005-06. 2 SR. NO. DETAILS IN RESPECT OF WHICH ADDITION IS MAD E AMOUNT OF ADDITION IN RS. 1. IN RESPECT OF INCOME TAX EXPENSES. 5,17,756 2. IN RESPECT OF SALES TAX PENALTY & PF PENALTY 4,809 3. IN RESPECT OF SALES PROMOTION 2, 03,803 4. IN RESPECT OF BAD DEBT 41,118 5. IN RESPECT OF OTHER EXPENSES 1,55 ,695 6. IN RESPECT OF TELEPHONE EXPENSES 80,142 TOTAL 10,03,323 3. AGAINST THESE ADDITIONS THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT (A) AND THE LD. CIT (A) OUT OF THE ABOVE AD DITIONS, DELETED THE ADDITIONS AT SR.NO.5 AND 6 AND RS. 6233/- OUT OF SALES PROMO TION, TOTALING TO RS.2,42,070/- AND CONFIRMED THE BALANCE AMOUNT OF RS.7,61,253/-. AGAINST THE ADDITIONS CONFIRMED BY THE LD. CIT (A), THE ASSESSING OFFICER INITIATED PENAL PROCEEDINGS. THE ASSESSEE CONTENDED BEFORE THE ASSESSING OFFICER THAT IT HAD NOT DISALLOWED THE EXPENSES DUE TO INADVERTENT MISTAKE AND ALSO THAT I T WAS A MERE OMISSION OR NEGLIGENCE. IT WAS FURTHER CONTENDED THAT IT WAS NE ITHER A CONCEALMENT OF INCOME NOR WAS A CASE OF FURNISHING OF INACCURATE PARTICUL ARS. HE FURTHER STATED THAT THE MISTAKE WAS COMMITTED BY ITS TAX CONSULTANT. 4. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSE E DID NOT FURNISH CORRECT PARTICULARS OF INCOME. HE OBSERVED THAT THE EXPLANA TION OFFERED BY ASSESSEE WAS WITHOUT ANY BASIS OR FOUNDATION AND THEREFORE CANNO T BE CONSIDERED AS BONAFIDE AND ACCORDINGLY CANNOT BE ACCEPTED. HE THEREFORE, C ONCLUDED THAT IT WAS A FIT CASE OF PENALTY U/S. 271(1)(C) AND ACCORDINGLY LEVIED P ENALTY OF RS.2,78,426/-. ITA 750/AHD/10 ASSESSMENT YEAR 2005-06. 3 5. AGAINST THE LEVY OF PENALTY, THE ASSESSEE CARRIE D THE MATTER BEFORE THE CIT (A). BEFORE CIT (A), THE ASSESSEE MADE WRITTEN SUBM ISSIONS CONTENDING THAT THE MISTAKE WAS INADVERTENT AND NOT ON ACCOUNT OF GROSS NEGLIGENCE OR WILLFUL DEFAULT. IT ALSO RELIED ON THE FOLLOWING DECISIONS:- 1. ACIT VS. VIP IND. LTD. (ITA NO.4524/MUM/2006 DT ,. 30-3-2009) 2. CIT VS. ORIENTAL POWER CABLE LTD., (2009) 211 T AXMAN 111 3. CIT VS. AJAIBSINGH & CO. 253 ITR 630. 6. LD. CIT (A) DID NOT AGREE WITH THE CONTENTIONS O F THE ASSESSEE AND ACCORDINGLY CONFIRMED THE PENALTY LEVIED US/.271(1) (C) VIDE ORDER DATED 11-1-2010. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR IN ITS WRITTEN SUBMISSION BEFORE US HAS STATED THAT THE TOTAL INCO ME WAS COMPUTED ON THE BASIS OF BOOKS OF ACCOUNTS AND AUDIT REPORT. THE AUDIT WORK WAS CARRIED OUT BY ANOTHER CHARTERED ACCOUNTANT WHO HAD NOT MADE ANY REMARK IN THE AUDIT REPORT FOR DISALLOWANCE OF THE ITEM. THE EMPLOYEES OF THE CHAR TERED ACCOUNTANT, DUE TO HEAVY PRESSURE OF WORK AT THE RELEVANT TIME AND DUE TO OVERSIGHT, THE ITEMS LEFT TO BE DISALLOWED WHILE PREPARING COMPUTATION OF TOTAL INCOME. IN THIS REGARD HE ALSO FILED THE SWORN NOTARIZED AFFIDAVIT OF SHRI CHINTAN P.SHAH, (THE EMPLOYEE OF THE CA) TO THAT EFFECT. IT WAS FURTHER CONTENDED THAT T HE MISTAKE WAS A BONAFIDE MISTAKE WITH NO MALAFIDE INTENTION. IT WAS FURTHER CONTENDED THAT WHEN THE MISTAKE OF NOT DISALLOWING CAME TO ITS NOTICE, A LETTER OFF ERING THE SAME FOR TAX WAS FURNISHED TO THE ASSESSING OFFICER DURING THE COURS E OF ASSESSMENT PROCEEDINGS AND BEFORE THE ASSESSMENT WAS FINALIZED. RELIANCE WAS P LACED ON THE FOLLOWING DECISIONS:- (1) CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 IT R 158 WHERE IT WAS HELD THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINAB LE IN LAW, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ITA 750/AHD/10 ASSESSMENT YEAR 2005-06. 4 ASSESSEE. SUCH CLAIM MADE IN THE RETURN CAN NOT AMO UNT TO THE INACCURATE PARTICULARS. (2) MILES CABLE INDUSTRIES VS. CIT 261 ITR 675 (GU J.) WHERE IT WAS HELD THAT THE TRIBUNAL RIGHTLY HELD THAT THERE WAS NO PENALTY SINCE ASSESSEE BEFORE LEVYING PENALTY HAS ADMITTED THE MISTAKE. IT WAS THUS STATED BY THE LD. A.R. THAT THE APPELLA NT HAS NEITHER CONCEALED THE INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCO ME. THE ASSESSEE ACTED BONAFIDELY AND THERE WAS NO MALAFIDE INTENTION AND NO CONSCIOUS CONCEALMENT AND NO GUILTY MIND. 8. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE CONCEALED THE PARTICULA RS OF INCOME AND AS SUCH THE PENALTY WAS RIGHTLY LEVIED BY THE ASSESSING OFFICER . THE LD. DR FURTHER STATED THAT THE ONUS OF MISTAKE CANNOT BE SHIFTED ON THE SHOULD ERS OF CHARTERED ACCOUNTANT. HE RELIED ON THE DECISION OF ZOOM COMMUNICATION P. LTD., (2010) 327 ITR 510 (DELHI). 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE O RDERS OF THE LOWER AUTHORITIES AND HAVE GONE THROUGH SUBMISSIONS AND RELEVANT DECI SIONS RELIED UPON BY BOTH THE SIDES. IN THE PRESENT CASE, THE MISTAKE IN QUESTIO N OCCURRED ON THE PART OF THE CHARTERED ACCOUNTANT WHO PREPARED AND FILE THE INCO ME TAX RETURN ON THE BASIS OF AUDIT CARRIED OUT BY ANOTHER CHARTERED ACCOUNTANT. DEEMING FICTION UNDER EXPLANATION 1 TO SECTION 271(1) (C) PROVIDES THAT A PENALTY CAN ONLY BE IMPOSED (A) WHEN THERE IS NO EXPLANATION BY THE ASSESSEE (B) WH EN THE EXPLANATION GIVEN BY THE ASSESSEE IS FALSE AND (C) WHEN THE ASSESSEE PROVIDE S AN EXPLANATION WHICH HE ASSESSEE FAILS TO SUBSTANTIATE AND HE FAILS TO PROV E THAT THE EXPLANATION WAS BONAFIDE ITA 750/AHD/10 ASSESSMENT YEAR 2005-06. 5 AND THAT ALL THE FACTS NECESSARY FOR THE SAME AND M ATERIAL FOR COMPUTATION OF INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. 10. IN THE INSTANT CASE, THE EXPLANATION GIVEN BY T HE ASSESSEE HAS NOT BEEN FOUND TO BE FALSE AND THEREFORE, IT DOES NOT AMOUNT TO FU RNISHING OF INFORMATION THAT IS NOT BONAFIDE. 11. FOR ALL THESE REASONS AND IN THE LIGHT OF THE S ETTLED LEGAL POSITION, IT IS NOT A FIT CASE FOR CONFIRMATION OF IMPUGNED PENALTY. WE T HEREFORE, UPHOLD THE GRIEVANCE OF THE ASSESSEE AND CANCEL THE IMPUGNED PENALTY. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 3 - 20 12. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-XIV,AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA 750/AHD/10 ASSESSMENT YEAR 2005-06. 6 1.DATE OF DICTATION 6 - 3 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 12 / 3 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 16 - 3 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 16 - 3 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 16 - 3 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16 - 3 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..