The ACIT, Circle-1, Bhavnagar V. Lion Tapes Pvt.Ltd., Bhavnagar

ITA 776/AHD/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6439 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 09-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER DATE OF HEARING : 19/5/2011 DRAFTED ON: 2 7/5/2011 ITA NO.776/AHD/2009 ASSESSMENT YEAR : 2003-04 THE ACIT CIRCLE-1 BHAVNAGAR VS. LION TAPES PVT.LTD. 283-B, GIDC CHITRA BHAVNAGAR PAN/GIR NO. : AACL 3629 B ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SRI C.K. MISHRA, SR.D.R. RESPONDENT BY: SHRI JAIMIN GANDHI FOR SHRI TUSHAR HEMANI O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-XX, AHMEDABA D DATED 14/11/2008 PASSED FOR ASSESSMENT YEAR 2003-04. SE VERAL GROUNDS HAVE BEEN RAISED, HOWEVER, THE ONLY GRIEVANCE IS IN RES PECT OF DELETION OF PENALTY OF RS.11,18,740/- LEVIED U/S.271(1)(C) OF T HE I.T.ACT. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S. 271(1)(C) OF THE I.T. ACT, 1961 DATED 31/03/2008 AND THE ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T.ACT, 1961 DATED 28/03/2006 WERE THAT THE ASSESSEE-COMPANY IS IN THE BUSINESS OF MANUFACTURING OF NARROW FABRIC TAPES AND DISCLOSED INCOME AS PER INC OME-TAX RETURN AT RS.7,14,890/-, HOWEVER ASSESSMENT WAS COMPLETED ON THE ASSESSED ITA NO .776/AHD/2009 ACIT VS. LION TAPES LTD. ASST.YEAR 2003-04 - 2 - INCOME OF RS.23,45,590/-. AS PER THE ASSESSMENT ORDER, THREE ADDITIONS HAVE BEEN MADE WHICH WERE CASH CREDIT U/S.68 OF RS. 10,62,000/-, INTEREST DISALLOWANCE U/S.37 OF RS.1,20,704/- AND REMUNERATI ON TO DIRECTOR DISALLOWANCE OF RS.4,48,000/-. WHEN THE MATTER WA S CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE DISALLOWANCE U/S.68 WAS SUSTAINED UPTO RS.9,62,000/- AND A RELIEF OF RS.1 LAC WAS GRANTED. IN RESPECT OF THE INTEREST DISALLOWANCE, PART RELIEF WAS GRANTED OF R S.8,625/- I.E. INTEREST PAID TO TWO PERSONS AND THE REMUNERATION TO DIRECTO R WAS CONFIRMED. THEREAFTER, PENALTY PROCEEDINGS WERE INITIATED AND ON THE AMOUNT WHICH REMAINED SUSTAINED AFTER THE APPEAL EFFECT WAS CONS IDERED FOR THE LEVY OF PENALTY. AGAINST THE LEVY OF PENALTY, ASSESSEE PR EFERRED AN APPEAL AND THE LEARNED CIT(APPEALS) HAS DISCUSSED THE FACTUAL AS WELL AS LEGAL ASPECTS AT LENGTH AND DELETED THE PENALTY VIDE FOLL OWING PARAGRAPH: 3. I HAVE CAREFULLY CONSIDERED THE GROUND FOR LEVY ING THE PENALTY AS ALSO THE SUBMISSIONS OF THE LEARNED AUTH ORISED REPRESENTATIVE OF THE APPELLANT. I AM OF THE VIEW THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE A CT. I FIND THAT ALL THE MATERIAL FACTS HAVE BEEN DISCLOSED BY THE APPEL LANT. THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) ONLY BY NOT ACCEPTING THE EXPLANATION OF THE APPELLANT BUT IT HAS NOT BEEN PROVED TO BE FALSE OR DISPROVED . THE ADDITION MADE IN THE QUANTUM PROCEEDINGS DOES NOT BY ITSELF JUSTIFY THE LEVY OF PENALTY. PENALTY ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME CAN BE IMPOSED ONLY IF THERE IS A CONSCIOUS AND DELIBERATE ATTEMPT ON THE PART O F THE ASSESSEE, WHICH ON FACTS OF THE CASE IS NOT SEEN IN THIS CASE . IN CASE OF CREDITORS, THE PRIMARY BURDEN OF FILING NAME, ADDRE SS, CONFIRMATION, BANK DETAILS, PRODUCTION OF DEPOSITOR S IN SOME CASES FOR PERSONAL EXAMINATION BY THE ASSESSING OFFICER F ILING AFFIDAVIT IN SOME CASES HAS CLEARLY BEEN DISCHARGED. THE ONLY R EASON WHY THE ADDITIONS HAVE BEEN CONFIRMED IS THE FAILURE OF THE APPELLANT IN PROVING THE SOURCE OF THE DEPOSITORS, WHICH IN ANY CASE DOES NOT ITA NO .776/AHD/2009 ACIT VS. LION TAPES LTD. ASST.YEAR 2003-04 - 3 - ATTRACT THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT AS THE PENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS. AS PRONOUNCE D BY DIFFERENT JUDICIAL AUTHORITIES, PENALTY U/S.271(1)(C) OF THE ACT CAN BE LEVIED ONLY IN CASE OF SPECIFIC AND CONSCIOUS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS DETECTED BY THE DEPARTMENT I N THIS CASE, ALL THE MATERIAL FACTS WERE DULY DISCLOSED IN THE RETUR N OF INCOME OR DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. I N SO FAR AS DISALLOWANCE OF REMUNERATION IS CONCERNED, IT IS NO T THE FIRST YEAR OF SUCH CLAIM AND IN THE PAST SUCH REMUNERATION WAS CLAIMED AND DISALLOWED AND APPEALS TO THAT EFFECT ARE PENDING B EFORE THE ITAT. IN ANY CASE, LADY DIRECTORS APPEARED BEFORE THE ASS ESSING OFFICER IN A.Y. 2002-03 AND CONFIRMED HAVING RECEIVED THE REMU NERATION AND PROVIDED SERVICES. SUCH EXPLANATION WAS NOT ACCEPT ED BY THE ASSESSING OFFICER. BUT THE SAME WAS NOT FOUND TO B E FALSE OR UNSUBSTANTIATED. UNDER THE CIRCUMSTANCES, I HOLD THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER IS NOT AT ALL JUSTI FIED AND THE SAME IS HEREBY DIRECTED TO BE DELETED. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE OR DERS OF THE AUTHORITIES BELOW. WE HAVE ALSO PERUSED THE ORDER OF THE ITAT A BENCH AHMEDABAD BEARING ITA NO.2636/AHD/2007 FOR AS SESSMENT YEAR 2003-04 DATED 21/05/2010 TITLED AS M/S.LION TAPES P VT.LTD. VS. ACIT AND NOTICED THAT A DETAILED DISCUSSION WAS MADE IN RESPECT OF EACH CASH CREDIT AND CORRESPONDING DISALLOWANCE OF INTEREST. HOWEVER, EVEN AFTER THE DETAILED DISCUSSION AND THE EVIDENCES PLACED ON RECORD IN SUPPORT OF THE IMPUGNED CASH CREDITS, IT WAS DEEMED FIT TO RES TORE THIS ISSUE BACK TO THE STAGE OF LEARNED CIT(APPEALS) FOR A FRESH ADJUD ICATION AS IS EVIDENT FROM PARAGRAPH NO.6; REPRODUCED BELOW:- 6. WE FIND THAT THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) HAS UPHELD THE ADDITION ONLY ON THE BASIS OF THE FINDINGS GIVEN BY THE LEARNED ASSESSING OFFICER IN HIS REPOR T DATED 27.10.2006. FROM THE MATERIAL AVAILABLE BEFORE US, IT IS NOT CLEAR THAT WHETHER ANY OPPORTUNITY OF HEARING WAS ALLOWED TO THE ITA NO .776/AHD/2009 ACIT VS. LION TAPES LTD. ASST.YEAR 2003-04 - 4 - ASSESSEE OR NOT BY THE LEARNED ASSESSING OFFICER BE FORE FINALIZING THE REMAND REPORT. WE OBSERVE FROM THE CIT(A)S OR DER THAT COPY OF THE REMAND REPORT WAS FORWARDED TO THE ASSESSEE BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) VIDE HIS LETTE R DATED 6.11.2006 AND ASKING THE ASSESSEE TO SUBMIT HIS COM MENTS BY 13.11.2006. THUS, WE FIND THAT TIME OF EVEN LESS T HAN 7 DAYS WAS ALLOWED TO THE ASSESSEE BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR MAKING SUBMISSIONS IN RESPECT OF THE REMAND REPORT WHICH INVOLVED AS MANY AS 10 PARTIES AND THE TRANSACTIONS WERE FOR THE FINANCIAL YEAR 2002-03 I.E. MORE THAN 3 YEARS EARLIER. IN OUR CONSIDERED OPINION, THE ABOVE TIME ALLOWED B Y THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON FACTS OF TH E CASE CANNOT BE CONSIDERED AS REASONABLE AND SUFFICIENT. WE THE REFORE, ARE OF THE VIEW THAT IS SHALL BE IN THE INTEREST OF THE JU STICE TO RESTORE THE ISSUES UNDER CONSIDERATION BACK TO THE FILE OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR ADJUDICATI ON AFRESH AS PER LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY OF HE ARING TO BOTH THE PARTIES. WE ORDER ACCORDINGLY. THUS, THE APPEAL O F THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 4. SINCE THE ADJUDICATION ON QUANTUM ADDITION IS YE T TO BE FINALIZED DUE TO RESTORATION OF ISSUE BY THE TRIBUNAL BACK TO THE FILE OF THE FIRST APPELLATE AUTHORITY, THEREFORE, AT PRESENT THE QUES TION OF CONCEALMENT PENALTY DO NOT SURVIVE. RESULTANTLY, THERE IS NO FORCE IN THE GROUND OF THE REVENUE, HENCE, REJECTED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 31/ 5 /2011. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED / /2011 ITA NO .776/AHD/2009 ACIT VS. LION TAPES LTD. ASST.YEAR 2003-04 - 5 - T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XX, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION..27.5.2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.5.2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 31.5.2011 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.5.2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER