NIEMLA SYNTHETICS P. LTD, MUMBAI V. ITO 4(3)(1), MUMBAI

ITA 758/MUM/2011

• Counselvise Citation: 75819914 RSA 2011
• Duration Of Justice: 2 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 27-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 27-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: N M PORWAL
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G , MUMBAI BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 758/M/11 ASSESSMENT YEAR: 2005 - 06 M/S. NIEMLA SYNTHETICS P. LTD. 83, AHUJA HOUSE, VITHALWADI, KALB ADEVI, MUMBAI 400 002 PAN: AAACN3594M VS. INCOME TAX OFFICER, 4(3)(1), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI N.M. PORWAL REVENUE BY : SHRI R.K. SAHU DATE OF HEARING : 27.11. 13 DATE OF PRONOUNCEMENT : 13.12.13 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE CONFIRMATION OF PENALTY OF RS.2,56,148/ - BY THE CIT(A) WHICH WAS LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. DURING THE YEAR UNDER CONSIDERATION A SURVEY ACTION UNDER SECTION 133A OF THE INCOME TAX ACT WAS CONDUCTED ON THE ASSESSEE ON 24.11.04 I N THE GROUP CASES OF THE ASSESSEE . D URING THE COURSE OF SURVEY, ADDITIONAL UNDISCLOSED INCOME OF RS.7,00,000/ - WAS DECLARED IN THE CASE OF THE ASSESSEE COMPANY BY ONE OF THE DIRECTORS OF THE COMPANY IN THE STATEMENT RECORDED UNDER SECTION 133A. DURING THE ASSESSMENT PROCEEDINGS , THE AO OBSERVED THAT IN THE RETURN OF INCOME FILED FOR ASSESSMENT YE AR 2005 - 06 THE ASSESSEE INSTEAD OF DECLARING ITA NO .758/M/11 M/S. NIEMLA SYNTHETICS P. LTD. 2 UNDISCLOSED INCOME OF RS.7,00,000/ - OVER AND ABOVE ITS REGULAR INCOME FROM SALE AND PURCHASE, DECLARED THIS INCOME BY DEBITING THE SAID AMOUNT TO PURCHASE ACCOUNT AND CREDITING THE SAME TO PROFIT & LOSS ACCOUNT AND THUS NULLIFYING THE EFFECT OF UNDISCLOSED INCOME DECLARED DURING THE SURVEY PROCEEDINGS. HOWEVER, THE AO DID NOT AGREE WITH THE SAME AND OBSERVED THAT THE ASSESSEE HAD MADE THE CLAIM AS AN AFTERTHOUGHT AND HAS THUS MANIPULATED THE ACCOUNT. THE AO THU S MADE ADDITION OF RS.7,00,000/ - TO THE TOTAL BUSINESS OF THE ASSESSEE TREATING THE SAID AMOUNT AS EXCESS PURCHASES AND HELD THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND HENCE INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT AND LEVIED THE IMPUGNED PENALTY. IN FIRST APPEAL RELATING TO ADDITIONS MADE BY AO IN THE ASSESSMENT PROCEEDINGS, THE CIT(A) CONFIRMED THE ADDITIONS SO MADE. HOWEVER, IN THE SECOND APPEAL , THE ITAT VIDE ORDER DATED 25.03.10 PASSED IN I TA NO.7128/M/08 DELETED THE ADDITION MADE BY THE AO OBSERVING THAT THE ASSESSEE HAD CORRECTLY FOLLOWED THE PROCEDURE AND METHOD OF ACCOUNTING. IT WAS FURTHER OBSERVED THAT THE ASSESSEE HAD HONOURED THE DECLARATION MADE BY ITS DIRECTOR IN HIS STATEMENT UND ER SECTION 133A AND THAT FURTHER AN ADDITION OF RS.7,00,000/ - MADE BY THE AO WAS NOT WARRANTED. THUS THE ADDITION SO MADE BY THE AO WAS ORDERED TO BE DELETED BY THE ITAT. 3. THE IMPUGNED PENALTY HA D BEEN LEVIED BY THE AO AND FURTHER CONFIRMED BY THE CI T(A) ON THE BASIS OF THE SEPARATE ADDITION S MADE BY THE AO WHICH HA VE BEEN DELETED BY THE ITAT. SINCE THE VERY BASIS FOR WHICH THE ADDITION WAS MADE HAS CEASED TO EXIST , HENCE THE CONSEQUENTIAL PENALTY CANNOT SUSTAIN. AFTER THE DELETION OF THE ADDITIONS MADE BY THE AO , THE CONSEQUENTIAL PENALTY PROCEEDINGS THUS BECOME INFRUCTUOUS. ACCORDINGLY THE ORDER OF THE CIT(A) ITA NO .758/M/11 M/S. NIEMLA SYNTHETICS P. LTD. 3 CONFIRMING THE PENALTY IS HEREBY SET ASIDE AND THE IMPUGNED PENALTY IS HEREBY ORDERED TO BE DELETED. ORDER PRONOUNCED IN THE OPEN COUR T ON 13.12 .2013. SD/ - SD/ - (P.M. JAGTAP) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 13.12.13 * KISHORE COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.