RACHANA CONSTRUCTION CO., Ahmedabad V. THE ACIT, Patan

ITA 761/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9506 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Retraction; Revised return
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO.761/AHD/2014 (ASSESSMENT YEAR:2009-10) M/S. RACHANA CONSTRUCTION CO. C/O. MUKESH M. PATEL & CO., 3-4, VITHALBHAI BHAVAN, NR. S. P. COLONY RAILWAY CROSSING, AHMEDABAD - 13 APPELLANT VS. ACIT, PATAN CIRCLE, PATAN RESPONDENT PAN: AACFR0292F /BY ASSESSEE : SHRI MUKESH M. PATEL, A.R. /BY REVENUE : SHRI JAMES KURIAN, SR. D.R. /DATE OF HEARING : 09.01.2017 /DATE OF PRONOUNCEMENT : 12.01.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 ARISES AGAINST CIT(A), GANDHINAGARS ORDER DATED 02.12.2013, IN AP PEAL NO. CIT(A)/GNR/44/2012-13, CONFIRMING ASSESSING OFFICER S ACTION IMPOSING ITA NO. 761/AHD/4 (M/S. RACHANA CONSTRUCTION CO. VS , ACIT) A.Y. 2009-10 - 2 - PENALTY OF RS.44,54,540/- IN PROCEEDINGS UNDER SECT ION 271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. WE COME TO BASIC FACTS FIRST. THE ASSESSEE FIRM IS ENGAGED IN CIVIL CONSTRUCTION BUSINESS. IT FILED ITS RETURN ON 29.0 9.2009 STATING INCOME OF RS.39,26,960/-. THIS FOLLOWED DEPARTMENTS SURVEY ACTION CONDUCTED AT ITS PREMISES ON 07.10.2009. THE ASSESSEES PARTNER SHR I MAHENDRA T. PATEL DEPOSED IN COURSE THEREOF THAT ITS RELEVANT BOOKS O F ACCOUNT WERE AT ANKLESHWAR OFFICE AND NOT AT PATAN. THE ASSESSEES ACCOUNTANT SHRI BHARAT K. PATEL ALSO STATED IN THE SAME TUNE. THE SURVEY TEAM AT THIS STAGE SEEMS TO HAVE POINTED OUT THAT A COMPARISON OF ASSESSEES AU DIT REPORTS FOR ASSESSMENT YEAR 2008-09 AND 2009-10 INDICATED CONTRACT EXPENSE S OF THE LATTER ASSESSMENT YEAR TO BE MUCH MORE THAN THOSE PERTAINI NG TO THE FORMER ASSESSMENT YEAR. IT SOUGHT NECESSARY EXPENDITURE V OUCHERS. THE ASSESSEES ABOVE STATED PARTNER THEN OFFERED ADDITIONAL INCOME OF RS.1.30 CRORES ALLEGEDLY TO BUY PEACE AND PROTECTED LITIGATION SIN CE THE RELEVANT BOOKS OF ACCOUNTS WERE NOT AVAILABLE AT THAT STAGE. 3. THE INSTANT CASE FILE INDICATES THAT THE ASSESSE E THEREAFTER REVISED ITS RETURN ON 15.10.2010 INCLUDING THE ABOVE ADDITIONAL INCOME OF RS.1.3CRORES ALLEGEDLY REPRESENTING MISCELLANEOUS LABOUR EXPENSE S, FILE WORK, STONE BLASTING, CONCRETE WORK EXPENSES, CENT. STEEL WORKS , CINKING WORK EXPENSES OF RS.25, 15, 30, 20,18 AND 20(ALL FIGURES IN LACS IN PRECISE ROUND FIGURES). THE ASSESSING OFFICER COMPLETED A REGULAR ASSESSMEN T ON 20.12.2011 ACCEPTING THE ABOVE REVISED RETURN EXCEPT THE FACT THAT HE MADE CERTAIN DISALLOWANCES/ADDITIONS NOT FORMING SUBJECT MATTER OF THE INSTANT APPEAL. HE ASSESSED ASSESSEES TOTAL INCOME AS RS.1,70,32,430/ -. HE WOULD INITIATE THE IMPUGNED PENALTY PROCEEDINGS AS WELL U/S.271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS/CONCEALMENT OF INCOME. ITA NO. 761/AHD/4 (M/S. RACHANA CONSTRUCTION CO. VS , ACIT) A.Y. 2009-10 - 3 - 4. WE COME TO THE IMPUGNED PENALTY PROCEEDINGS. TH E ASSESSEE FILED ITS REPLY ON 27.01.2012. IT FIRST OF ALL REITERATED TH E FACT OF HAVING DISCLOSED ADDITION INCOME IN ORDER TO BUY PEACE AND TO AVOID PROTECTED LITIGATION. IT PLEADED THAT ITS ABOVE DECLARATION WAS IN ABSENCE O F RELEVANT BOOKS OF ACCOUNTS AS THE SAME WERE AT ANKLESHWAR (SUPRA). T HE ASSESSEE FURTHER STATED THAT ALTHOUGH THE IMPUGNED ASSESSMENT YEAR HAD SEEN INCREASED EXPENDITURE, THERE WAS A CORRESPONDING TREND IN ITS RETURNED INC OME AS WELL FROM RS.3.38 CRORES TO RS.3.87CRORES WHEREAS IN SUCCEEDING ASSES SMENT YEAR 2010-11, THE EXPENDITURE AS WELL AS INCOME HAD SEEN A DOWNWARD T REND TO THE EXTENT OF 24% AND 14% RESPECTIVELY. THE ASSESSING OFFICER RE JECTED ALL THIS IN PENALTY ORDER DATED 28.06.2012. HE HEAVILY RELIED UPON SUR VEY STATEMENTS DISCLOSURE OF ADDITIONAL INCOME OF RS.1.3 CRORES TO CONCLUDE T HAT THE ASSESSEE HAD IN FACT DELIBERATELY FURNISHED INACCURATE PARTICULARS OF IN COME. THE ASSESSING OFFICER THUS LEVIED THE IMPUGNED PENALTY OF RS.44,5 4,540/-. THE CIT(A) CONCURS WITH THE SAME IN THE LOWER APPELLATE ORDER UNDER CHALLENGE. 5. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUS ED. THE ASSESSEE STRONGLY ARGUES THAT RIGHT FROM SURVEY DISCLOSURE T ILL DATE, THE REVENUE AUTHORITIES HAD NOT COLLECTED EVEN A SINGLE PIECE O F EVIDENCE TO ARRIVE AT ANY CONCLUSION OR INFLATION OF THE ABOVE HEADS OF EXPEN DITURE. IT CITES BOARDS CIRCULAR DATED 10.03.2003 THAT SUCH ADMISSIONS MADE IN COURSE OF SEARCH, SURVEY OR SEIZURE DO NOT HAVE ANY EVIDENTIARY VALUE . RELIANCE IS FURTHER PLACED ON HONBLE APEX COURTS DECISION IN CIT VS. S. KADER KHAN SONS (2013) 352 ITR 480 UPHOLDING MADRAS HIGH COURTS DE CISION IN THE VERY CASE (2008) 300 ITR 157 (MADRAS). 6. THE REVENUE STRONGLY SUPPORTS THE IMPUGNED PENAL TY AS IMPOSED IN BOTH THE LOWER PROCEEDINGS. IT HIGHLIGHTS THE FACT THAT THE ASSESSEE NEVER ITA NO. 761/AHD/4 (M/S. RACHANA CONSTRUCTION CO. VS , ACIT) A.Y. 2009-10 - 4 - REGISTERED ANY RETRACTION AS IT HAS ALREADY PAID TH E TAXES SO FAR AS THE IMPUGNED ADDITIONAL INCOME OF RS.1.3 CRORES IS CONC ERNED. 7. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATIONS TO R IVAL SUBMISSIONS. THERE CAN HARDLY BE ANY DISPUTE THAT QUANTUM AND PE NALTY ARE TWO DISTINCT AND INDEPENDENT PROCEEDINGS WHEREIN EACH AND EVERY DISALLOWANCE OR ADDITION DOES NOT NECESSARILY RESULT IN PENAL ACTIO N UNDER THE PROVISIONS OF THE ACT. IT HAS ALREADY COME ON RECORD THAT THE IMPUGN ED ADDITIONAL INCOME IS IN FACT ON ACCOUNT OF ALLEGED INFLATION OF VARIOUS HEA DS OF EXPENSES IN ASSESSEES CONSTRUCTION ACTIVITY. THE DEPARTMENT HAS VERY MUC H SEEN ASSESSEES BOOKS IN THE COURSE OF ASSESSMENT COMPLETED AFTER ITS DIS CLOSURE IN QUESTION. IT HOWEVER DOES NOT EVEN REFER TO A SINGLE EVIDENCE TO SUPPORT ITS PRIMA FACIE OPINION OF INFLATION OF EXPENSES. SOMETHING FURTHE R SURPRISES US IS THAT ALL THE ABOVE HEADS OF INFLATED EXPENSES INVOLVE PRECISE RO UND FIGURES WHICH HAVE NOWHERE BEEN TALLIED WITH THE ACTUAL ONES IN BOOKS OF ACCOUNTS. THE REVENUE STRONGLY RESTS ITS CASE ON ASSESSEES PARTNERS SURV EY DISCLOSURE OF RS.1.3CRORES AND PAYMENT OF TAXES THEREUPON. IT HOWEVER FAILS T O REBUT BOARDS CIRCULAR ITSELF DATED 10.03.2003 THAT NO SIGNIFICANCE IS ATT ACHED TO SUCH SURVEY STATEMENT IN ABSENCE OF ANY CORRESPONDING EVIDENCE BEING COLLECTED. WE REPEAT THAT THE SAME IS NOT THE CASE HERE. 8. SHRI KURIEN INVITES OUR ATTENTION TO HONBLE AP EX COURTS DECISION IN MAK DATA PVT. LTD. VS. CIT (2013) 358 ITR 593 (SC). WE FIND FACTS OF THE SAID CASE TO BE ALTOGETHER DIFFERENT THEN THOSE IN THE INSTANT FILE. THE SAID ASSESSEE HAD DECLARED UNDISCLOSED INCOME AFTER ITS DETECTION WHEREAS THE SURVEY AUTHORITIES IN THE PRESENT CASE HAVE MERELY COMPARED CONSTRUCTION EXPENSES OF THE IMPUGNED ASSESSMENT YEAR FOUND TO B E MORE THAN THOSE IN PRECEDING ASSESSMENT YEAR WITHOUT ANY PRIMA FACIE I NDICATION OR EVIDENCE OF ANY INFLATION ATTEMPT. WE THUS OBSERVE THAT THE AB OVE QUANTUM ADDITION ITSELF ITA NO. 761/AHD/4 (M/S. RACHANA CONSTRUCTION CO. VS , ACIT) A.Y. 2009-10 - 5 - IS NOT ENTIRELY FREE FROM DOUBT. HOWEVER, THE FACT REMAIN THAT WE ARE ONLY DEALING WITH CONSEQUENTIAL PENALTY PROCEEDINGS. WE ACCORDINGLY DELETE SECTION 271(1)(C) PENALTY IN QUESTION OF RS.44,54,5 40/-. 9. THE ASSESSEES APPEAL IS ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 12 TH DAY OF JANUARY, 2017.] SD/- SD/- ( PRAMOD KUMAR ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 12/01/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0