The ITO, Ward 2(4), RAJKOT-GUJARAT V. M/s Deepak Vegetable Oil Industries, JUNAGADH

ITA 774/RJT/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7328 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-09-2011
• Assessment Year: 1995-1996
• Appeal Filed On: 10-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KRISHNA PRABHAKAR
• Assessee Lawyers: DM RINDANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA (JM) AND SHRI A. L. GEHL OT AM). ITA NO. 774/RJT/2010 (ASSESSMENT YEAR 1995-96) THE I.T.O., VS. M/S. DEEPAK VEGE TABLE OIL INDUSTRIES, WARD-2(4), RAJKOT. MANAVADAR, JUNAGADH . PAN:AAACD7571J. (APPELLANT) (RESPONDENT) C.O. NO.27/RJT/2010. (ARISING OUT OF ITA 774/RJT/2010) (ASSESSMENT YEAR 1995-96) M/S. DEEPAK VEGETABLE OIL INDUSTRIES, VS. THE I.T .O., MANAVADAR, JUNAGADH. WARD NO.-2,(4),RAJKOT. PAN:AAACD7571J (APPELLANT) (RESPONDENT) ITA NO. 773/RJT/2010 (ASSESSMENT YEAR 1994-95) THE I.T.O., VS. M/S. DEEPAK VEGE TABLE OIL INDUSTRIES, WARD-2(4), RAJKOT. MANAVADAR, JUNAGADH . PAN:AAACD7571J. (APPELLANT) (RESPONDENT) C.O. NO.26/RJT/2010. (ARISING OUT OF ITA 773/RJT/2010) (ASSESSMENT YEAR 1994-95) M/S. DEEPAK VEGETABLE OIL INDUSTRIES, VS. THE I.T .O., MANAVADAR, JUNAGADH. WARD NO.-2,(4),RAJKOT. PAN:AAACD7571J (APPELLANT) (RESPONDENT) ITA 74,773 & C O 27,26-RJT-2010. A.YS.. 1995-96 & 1994-95.. 2 REVENUE BY : SHRI KRISHNA PRABHAKAR, D. R. ASSESSEE BY : SHRI D. M. RINDANI. DATE OF HEARING : 02-12-2011. DATE OF PRONOUNCEMENT : -12-2011. O R D E R. PER BENCH : THESE APPEALS FILED BY THE REVENUE AND C.OS. FILE D BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOM E TAX (APPEALS)-III, RAJKOT DATED 31-12-2009 FOR ASSESSMENT YEARS 1995-96 AND 1 994-95 RESPECTIVELY. 2. THE GROUND RAISED BY THE REVENUE IN ITS APPEAL I S IN RESPECT OF LEVY OF PENALTY U/S.271(1)(C) RS.5,86,774/- FOR A.Y.1995-96 AND RS.4,11,064/- FOR A.Y. 1994-95. 3. IN THE C.OS., THE ASSESSEE RAISED THE GROUND THA T THE CIT(A) DID NOT DECIDE THE PENALTY UNDER SECTION 271(1)(C) ON MERIT . 4. SINCE FACTS OF BOTH APPEALS AND C.OS. ARE BASED ON IDENTICAL SET OF FACTS, THEREFORE, FOR THE SAKE OF CONVENIENCE, BOTH APPEAL S AND C.OS. ARE DECIDED BY THIS COMMON ORDER. 5. THE BRIEF FACTS OF THEE CASE ARE THAT THE ASSESS EECOMPANY IS ENGAGED IN BUSINESS OF SOLVENT EXTRACTION AND OIL REFINING. DU RING THE ASSESSMENT PROCEEDINGS, ON VERIFICATION OF PURCHASES, THE AO F OUND THAT SOME OF THE PURCHASES WERE NOT PURCHASED FROM GENUINE PARTIES A ND THE ASSESSEE MIGHT HAVE PURCHASED FROM OTHER PERSONS FOR WHICH BILLS W ERE OBTAINED FROM THOSE TWO PARTIES. THE AO RELIED UPON AN ORDER OF ITAT IN TH E CASE OF VIJAY PROTEINS LTD. VS. ACIT 58 ITD 428, AHMEDABAD AND ASSESSED TOTAL I NCOME AT RS.43,17,397/- AS AGAINST THE LOSS OF RS.15,39,349/- DECLARED BY T HEE ASSESSEE. THE ASSESSEE CHALLENGED THE ORDER OF AO BEFORE THE CIT(). THE C IT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE RESTRICTING THE ADDITION DIR ECTING THE AO TO VERIFY THE SAVINGS MADE BY THE ASSESSEE-COMPANY ON ACCOUNT OF PURCHASES MADE FROM M/S. KRISHNA TRADERS, JABALPUR. WHILE GIVING THE E FFECT OF THE ORDER OF THE CIT(A), ITA 74,773 & C O 27,26-RJT-2010. A.YS.. 1995-96 & 1994-95.. 3 THE AO HAS ASCERTAINED THE SAVINGS ON ACCOUNT OF CS T, PURCHASE TAX AND PRICE DIFFERENCE OF COTTON SEED OIL AGGREGATING AMOUNT OF RS.12,75,595/-. THE REVENUE PREFERRED APPEAL BEFORE THE ITAT. THE ITAT VIDE A COMMON ORDER IN ITA NOS.327 & 328/RJT/2000 DATED 11-02-2009 AND CONFIRM ED THE ORDER OF THE CIT(A). THE AO ISSUED A SHOW CAUSE NOTICE FOR LEVY OF PENAL TY U/S.271(1)(C) OF THE ACT WHICH WAS SERVED TO THE ASSESSEE ON 27-08-2009. TH E AO AFTER CONSIDERING ASSESSEES SUBMISSION, WAS OF THE VIEW THAT THE ASS ESSEE HAS CONCEALED THE INCOME TO THE EXTENT OF RS.12,75,596/-. THEREFORE, THE CASE OF THE ASSESSEE IS A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE A CT. THE AO LEVIED MINIMUM PENALTY BEING 100% OF THE AMOUNT OF TAX SOUGHT TO B E EVADED IN BOTH THE YEARS. 6. THE CIT(A) ALLOWED THE APPEALS OF THE ASSESSEE O N THE GROUND THAT AS PROVISO TO SEC.275(1)(A) IS APPLICABLE TO THE CASE OF THE ASSESSEE. THE ORDER OF CIT(A) IS DATED 13-02-2006 WHICH WAS ISSUED TO THE CCIT BEFORE 31-03-2006. THEREFORE, THE TIME LIMIT FOR LEVY OF PENALTY IS ON E YEAR FROM THE END OF THE FINANCIAL YEA IN WHICH THE ORDER OF CIT(A) WAS RECE IVED BY CCIT. THE ORDER ISSUED RECEIVED TO THE CCIT BEFORE 31-03-2006. THE REFORE, THE IMPOSITION OF PENALTY WAS AVAILABLE UP TO 31-03-2006. HOWEVER, T HE PENALTY ORDER WAS PASSED BY THE AO ON 13-10-2009. THE CIT(A) IN SUPPORT OF HIS FINDING RELIED UPON VARIOUS DECISIONS OF ITAT INCLUDING ITAT AMRITSAR B ENCH IN THE CASE OF TARLOCHAN SINGH & SONS VS. ITO 114 TTJ 82 AMRITSAR. THE CIT( A) FURTHER HELD THAT SEC.275(1A) GIVES TIME LIMITATION TO REVISE SUCH PE NALTY ORDER WHICH HAS BEEN PASSED BEFORE THE ORDER OF THE VARIOUS APPELLATE AU THORITIES ARE RECEIVED AND SUBSEQUENT ON ACCOUNT OF REVISION OF THE ORDER, SUB SEQUENT EFFECT IS TO BE GIVEN AND THERE, THE LIMITATION OF SIX MONTHS HAS BEEN PR ESCRIBED FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE APPELLATE AUTHORITY OR HIGH COURT IS RECEIVED BY THE DEPARTMENT. THE CIT(A) HELD THAT THE PENALTY O RDER DATED 13-10-2009 PASSED BY THE AO IS BARRED BY THE LIMITATION IN ACC ORDANCE WITH THE PROVISO TO SEC.275(1)(A) OF THE ACT. THEE CIT(A) ACCORDINGLY, QUASHED THE PENALTY ORDER. 7. THE LD. D.R. RELIED UPON THE ORDER OF AO AND SUB MITTED THAT TH ORDER OF CIT(A) IS NOT IN ACCORDANCE WITH THE JUDGMENT OF MA DRAS HIGH COURT IN THE CASE ITA 74,773 & C O 27,26-RJT-2010. A.YS.. 1995-96 & 1994-95.. 4 OF RAYALA CORPORATION (P) LTD. VS. UNION OF INDIA 288 ITR 452 (MAD). THE LD. A.R. ON THE OTHER HAND, SUBMITTED THAT THE AO HAS L EVIED THE PENALTY CONSIDERING THE QUANTUM ORDER DATED 13-02-2006 OF THE CIT(A) WI THOUT CONSIDERING THE ORDER OF ITAT DATED 11-02-2009. HE FURTHER SUBMITTED THA T THE CIT(A) HAS NOT DECIDED THE ISSUE ON MERIT. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE E PARTIES, RECORD PERUSED. WE FIND THAT THE CIT(A) HAS DECIDED THE I SSUE ONLY ON LEGAL BASIS AND HAS NOT DECIDED ON MERIT. IT HAS ALSO BEEN NOTICED THAT THE CIT(A) HAS DECIDED THE LEGAL ISSUE WITHOUT CONSIDERING THE JUDGMENT OF MADRAS HIGH COURT IN THE CASE OF RAYALA CORPORATION (P) LTD. VS. UNION OF IN DIA. THERE IS A DEVELOPMENT ON THE ISSUE BY VARIOUS JUDGMENTS AND LATEST DECISI ONS ON THE ISSUE ARE ALSO REQUIRED TO BE CONSIDERED IN THE LIGHT OF THE FACTS OF THE CASE OF ASSESSEE. SINCE THE ISSUE IS REQUIRED TO BE EXAMINED IN THE LIGHT O F LATEST AVAILABLE DECISIONS ON THE ISSUE INCLUDING THE JUDGMENT OF MADRAS HIGH COU RT IN THE CASE OF RAYALA CORPORATION (P) LTD. VS. UNION OF INDIA AND THE JUD GMENT OF SUPRERME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LT D. 322 ITR 158(SC), AN ISSUE IS ALSO REQUIRED TO BE DECIDED ON MERIT. WE THEREF ORE, FIND APPROPRIATE TO SEND BACK THIS MATTER TO THE FILE OF AO AS THE AO POSSES SES THE RELEVANT RECORDS WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDA NCE WITH LAW AFTER CONSIDERING LATEST JUDGMENTS AVAILABLE ON THE ISSUE AND AFTER P ROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, BOTH REVENUES APPEALS AND C.OS. OF THE ASSSSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15-12-2011 . SD/- SD/- ( T. K. SHARMA ), ( A. L. GEHLOT ), JUDICIAL MEMBER. ACCOUNTANT MEMBER. RAJKOT. DATED: 15 -12-2011. NVA/ ITA 74,773 & C O 27,26-RJT-2010. A.YS.. 1995-96 & 1994-95.. 5 COPY TO:- 1.THE .I.T.O.,WARD-2(4), RAJKOT. 2.M/S.DEEPAK VEGETABLE OIL INDUSTRIES, MANAVADAR, J UNAGADH.. 3.THE C.I.T.(A)-II, RAJKOT. 4.THE C.I.T., RAJKOT. 5.THE D.R., ITAT, RAJKOT. TRUE COPY. BY ORDER, ASSTT. REGISTRAR, ITAT,RAJKOT.