M/S SINGHAL INDUSTRIES, Jaipur V. ACIT, BHARATPUR

ITA 806/JPR/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5320 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 15-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH MANGAL JCIT DR DHK
• Keywords: Depreciation; Income from undisclosed sources; Loose papers; Initiation of penalty proceedings
• Section: 80IB

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 806/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2000-01 M/S. SINGHAL INDUSTRIES A-103, OLD INDUSTRIAL AREA BHARATPUR CUKE VS. THE ACIT CIRCLE- BHARATPUR BHARATPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAEFS 5122 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY :SHRI MAHENDRA GARGIEYA, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY: SHRI KAILASH MANGAL, JCIT -DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/04/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13/05/2016 VKNS'K@ ORDER PER T.R. MEENA, AM:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), ALWAR DATED 16-08-2012 PERTAINING TO ASSE SSMENT YEAR 2000-01 WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LD. CIT( A) HAS ERRED IN IMPOSING THE PENALTY OF RS. 3,03,189/- U/S 271(1)(C ) OF THE ACT. 2.1 BRIEF FACTS IN THIS CASE ARE THAT SCRUTINY ASSE SSMENT WAS COMPLETED ON 5-03-2003. VARIOUS ADDITIONS WERE MADE BY THE AO AND RETURN OF INCOME FILED AT RS. 5,94,575/- WAS ASSESSED AT RS. 1,95,29,635/-. THE ITA NO. 806/JP/2012 M/S. SINGHAL INDUSTRIES VS. ACIT, CIRCLE-, BHARATPU R . 2 ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT (A) AS WELL AS ITAT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT WITHOUT MENTI ONING ANY PARTICULAR ITEM WHETHER IT IS FOR THE CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE AO BEFORE IMPOSING THE P ENALTY GAVE REASONABLE OPPORTUNITY BEING HEARD TO THE ASSESSEE. THE AO HELD THAT SATISFACTION IS INHERENT IN THE OBSERVATION MADE BY THE AO IN THE ASSESSMENT ORDER. THE AO HAS PASSED THE SPEAKING OR DER THEREBY DISCUSSING EACH AND EVERY ISSUE AND AFTER DISCUSSIO N HAS DRAWN LOGICAL CONCLUSION. THE DISCUSSION AND DRAWING LOGICAL CONC LUSION IMPLIES FULL SATISFACTION OF THE ASSESSING AUTHORITY AS REGARDS THE CONCEALMENT OF PARTICULARS OF INCOME AND INITIATION OF PENALTY PRO CEEDINGS WHICH WERE INITIATED AFTER TAKING AN OBJECTIVE VIEW OF THE FAC T AND CIRCUMSTANCES LEADING TO THE ADDITION. THEREFORE, THE CONTENTION RAISED BY THE ASSESSEE BEFORE HIM WAS FOUND UNTENABLE. THE ASSESSEE ALSO S UBMITTED BEFORE THE AO RELYING ON VARIOUS DECISIONS ON SATISFACTION WHI CH WERE ALSO NOT FOUND APPLICABLE IN CASE OF THE ASSESSEE. THE ITAT CONFIRMED THE APPLYING THE PROVISIONS OF SECTION 145(3) OF THE AC T AND SUSTAINING THE FOLLOWING ADDITIONS. ITA NO. 806/JP/2012 M/S. SINGHAL INDUSTRIES VS. ACIT, CIRCLE-, BHARATPU R . 3 I. ADDITION MADE ON A/C OF DISCREPANCY IN THE STOCK OF OIL SEED AND KHAN RS. 6,80,080 II. ADDITION MADE ON A/C OF NOTINGS IN THE PERSONAL DIARY OF SHRI SATISH KUMAR SINGHAL RS. 3 5,29,024 III. DISALLOWANCE OF DEDUCTION U/S 80IB RS. 1,9 8,191 IV. DISALLOWANCE MADE OUT OF CASH EXP.& DEPRECIATION RS. 17,936 V. DISALLOWANCE MADE OUT OF TELEPHONE EXP. RS. 5,710 VI. ADDITION MADE ON A/C OF LOOSE PAPERS L-8 PAGE NO. 150 RS. 25,000 VII ADDITIONS MADE ON A/C OF LOOSE PAPERS L-9 PAGE NO. 129 RS. 96,861 TOTAL RS. 45,52,802 THE TELESCOPING BENEFIT OF UNRECORDED EXPENDITURE A GAINST UNACCOUNTED INCOME SUSTAINED / SET ASIDE HAD ALSO BEEN CONSIDER ED AT RS. 12,30,593/-. AS PER THE AO, THE TOTAL ADDITION CONFIRMED BY ITAT AT RS. 45,52,802/- WAS EXCLUDING SET ASIDE ADDITIONS AND TELESCOPING B ENEFIT. THUS NET CONCEALED INCOME HAS BEEN CALCULATED BY THE AO AT R S. 51,47,377/- WHICH HAS BEEN CONSIDERED FOR THE PURPOSE OF IMPOSI TION OF PENALTY U/S 271(1)(C ) OF THE ACT. THE ASSESSEE HAD DELIBERATEL Y CONCEALED THE INCOME WHICH HAS BEEN CONFIRMED BY THE APPELLATE AUTHORITY . THEREFORE, HE ITA NO. 806/JP/2012 M/S. SINGHAL INDUSTRIES VS. ACIT, CIRCLE-, BHARATPU R . 4 IMPOSED PENALTY AT RS. 17,52,828/- WHICH IS 100% OF TAX SOUGHT TO BE EVADED ON CONCEALED INCOME. 2.2 BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASS ESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO PARTIALLY ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT THE AO PASSED PENALTY OR DER WITHIN 06 MONTHS FROM THE RECEIPT OF ORDER OF ITAT. THEREFORE, THE O RDER PASSED U/S 271(1)(C ) OF THE ACT IS WITHIN TIME. HE FURTHER HE LD THAT FINAL INCOME IS ASSESSED AT RS. 8,11,148/-. THIS ADDITION, EXCEPT F OR THE AMOUNT OF RS. 5,710/- BEING DISALLOWANCE OUT OF TELEPHONE EXP ENSES AND OF RS. 17,936/- BEING DISALLOWANCE OUT OF CAR DEPRECIA TION AND EXPENSES ARE ON ACCOUNT OF ADDITIONS BASED ON INQUIRY AND MATER IAL EVIDENCE REGARDING CONCEALMENT OF INCOME COLLECTED IN THE COURSE OF SU RVEY U/S 133(A)(1) OF THE ACT AT THE BUSINESS PREMISES OF THE ASSESSEE. F INALLY, HE CONSIDERED FOLLOWING ADDITIONS FOR ADJUDICATING PENALTY PROCEE DINGS. DISCREPANCY IN THE STOCK OF OIL SEED AND KHAL RS. 680080 ADDITION OF NOTINGS IN PERSONAL DIARY RS. 1078 1 ADDITION IN RESPECT OF LOOSE PAPERS L-8 PAGE NO.150 RS. 25000 ADDITIONS MADE ON ACCOUNT OF LOOSE PAPERS L-9 PAGE NO 129 RS. 96861 ADDITION IN RESPECT OF PACKING MATERIAL RS. 95 323 RS. 908045 LESS: TELESCOPING BENEFIT RS. 120543 RS. 787502 ITA NO. 806/JP/2012 M/S. SINGHAL INDUSTRIES VS. ACIT, CIRCLE-, BHARATPU R . 5 THE EXPLANATIONS OFFERED BY THE ASSESSEE WERE NOT S UBSTANTIATED AND NOT FOUND TO BE BONAFIDE THAT IT WAS THE ADDITION BAS ED ON THE ENTRIES IN THE DOCUMENTS FOUND IN THE COURSE OF SURVEY AND THE DIS CREPANCIES IN THE STOCK OF OIL SEED AND KHAL HAS BEEN FINALLY SUSTAIN ED AND PENALTY HAS BEEN LEVIED. THE ASSESSEE HAD NOT DISCLOSED ALL THE FACT S MATERIAL TO THE COMPUTATION OF TOTAL INCOME. ACCORDINGLY AS PER EXP LANATION 1 TO SECTION 271(1) OF THE ACT, THE PENALTY IMPOSED BY THE AO I S JUSTIFIED. FINALLY, HE CONFIRMED THE PENALTY AT RS. 3,03,189/- ON ADDIT ION OF RS. 7,87,502/-. 2.3 NOW THE ASSESSEE IS BEFORE US. 2.4 THE LD. AR OF THE ASSESSEE SUBMITTED THAT THERE WAS A SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE ON 23-02-2000. TH E ASSESSEE FILED THE RETURN ON 25-10-2000 AT RS. 5,94,575/-. HUGE ADDITI ONS WERE MADE BY THE AO. FINALLY THE LD. CIT(A) CONFIRMED THE PENALTY ON ADDITIONS. DISCREPANCIES WERE FOUND IN THE STOCK DURING THE CO URSE OF SURVEY AND SOME CRYPTIC ENTRIES IN THE PAPERS WERE ALSO FOUND. THE LD. AR OF THE ASSESSEE ARGUED THAT THERE IS NO SATISFACTION RECOR DED BY THE AO IN THE ASSESSMENT ORDER WHETHER PENALTY PROCEEDINGS WERE C ONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. VARIOUS HON'BLE HIGH COURTS AS WELL AS ITAT HAS HELD THAT THE AO HA D TO BE SPECIFIC ON RECORDING SATISFACTION AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS U/S ITA NO. 806/JP/2012 M/S. SINGHAL INDUSTRIES VS. ACIT, CIRCLE-, BHARATPU R . 6 271(1)(C ) OF THE ACT. HE ALSO CHALLENGED THAT THE PENALTY PROCEEDINGS ALSO GOT TIME BARRED BUT LATER ON HE HAS NOT PRESSE D. IT IS A TECHNICAL GROUND. ON MERIT, IT IS ARGUED THAT AT THE TIME OF SURVEY, EXCESS STOCK CALCULATED BY THE SURVEY TEAM WAS AT RS. 6,80,080/- . IT IS FOUND THAT THERE WAS A SHORTAGE IN OIL SEED ABOUT 35,360 KG WHEREAS OIL AND KHAL HAS BEEN CALCULATED AT EXCESS BY SURVEY TEAM. IT IS CLAIMED DURING THE SURVEY IN THE STATEMENT BY PARTNER THAT RUNNING PLANT HAD TO BE C LOSED TO VERIFY UNDER-PROCESS GOODS. IT IS FURTHER ARGUED THAT THES E OIL SEEDS WERE PUT TO USE FOR EXTRACTION OF OIL. THEREFORE, AS PER ASSESS EE'S BOOK, THE QUANTITY OF SEEDS WAS LESS THAN PHYSICALLY FOUND. IT PROVES T HAT THIS QUANTITY HAS BEEN PUT TO USE IN MANUFACTURING PROCESS. THE OIL S EEDS HAVE BEEN CONVERTED BY MANUFACTURING PROCESS AS OIL AND KHAL. THUS THE TOTAL WEIGHT OF OIL AND KHAL ON THE DATE OF SURVEY WAS AT 22926 KG. THERE WAS BURNING LOSS ALSO. THEREFORE, THERE WAS NO EXCESS STOCK FOU ND DURING THE COURSE OF SURVEY AS SUCH BUT DUE TO INCOMPLETE ENTRIES IN THE BOOKS OF ACCOUNT, IT HAD NOT BEEN MADE AT THE TIME OF SURVEY. THEREFORE, THIS DIFFERENCE WAS NOT FOUND TO BE RECONCILABLE TO THE AO AS WELL AS L D. CIT(A). THE ASSESSEE ALSO ARGUED AT THE TIME OF SURVEY, AT THE TIME OF ASSESSMENT AND EVEN AT APPELLATE PROCEEDINGS THAT STOCK WAS TAKEN BY THE SURVEY TEAM WHEN THE PLANT WAS RUNNING. HE FURTHER ARGUED THAT THERE WAS NO EVIDENCE ITA NO. 806/JP/2012 M/S. SINGHAL INDUSTRIES VS. ACIT, CIRCLE-, BHARATPU R . 7 FOUND DURING THE COURSE OF SURVEY THAT THE ASSESSEE HAS SOLD OUT OIL SEEDS OUTSIDE THE BOOKS OF ACCOUNT. THE ASSESSEE'S MANUFA CTURING ACTIVITY IS GOVERNED BY VARIOUS OTHER ACTS ALSO I.E. VAT. FOOD & SUPPLIES ACT, FOOD & ADULTERATION ACT ETC. THEREFORE, THERE IS NO CHANCE TO CONCEAL THE PARTICULARS OF INCOME OR QUANTITY DISCLOSED BY THE ASSESSEE. OTHER REMAINING ADDITIONS WAS ON THE BASIS OF THE JOTTING S IN THE PERSONAL DIARY, IN THE LOOSE PAPERS AND ALSO DIFFERENCE IN THE PACK ING MATERIAL, IT IS SUBMITTED THAT THESE ADDITIONS WERE MADE ON VARIOUS DOCUMENTS FOUND DURING THE COURSE OF SURVEY BUT THESE WERE THE CAL CULATIONS MADE BY THE ASSESSEE FOR VARIOUS PURPOSES. THEY MAY BE USEFUL F OR QUANTUM ADDITION BUT NOT FOR IMPOSITION OF PENALTY U/S 271(1)(C ) OF THE ACT. THE REVENUE HAS TO PROVE BEYOND DOUBT CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, THE LD . AR OF THE ASSESSEE REQUESTED TO DELETE THE PENALTY. HE FURTHER RELIED ON FOLLOWING DECISIONS. (I) CIT VS. SMT. GEETA DEVI (2002) 75 TTJ 362 (DEL.) (II) ITO VS. BOMBAYWALA READYMADE STORES, 271 ITR 1 ITAT PART 1 (T M) (III) ITO VS. SHREE BALAJI INDUSTRIES(1991) 40 TTJ 222 (PUNE) (IV) ITO VS. DR ANAND CHHABRA (2007) 107 TTJ 831 (JD) (V) K.L. KATHURIA VS. ITO (1981) 11 TTJ 85 (DEL.) ITA NO. 806/JP/2012 M/S. SINGHAL INDUSTRIES VS. ACIT, CIRCLE-, BHARATPU R . 8 2.5 THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF TH E LD. CIT(A). 2.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS UNDISPUTED FACT THAT DUR ING THE COURSE OF SURVEY THE PLANT WAS RUNNING. THERE WAS SHORTAGE IN THE OI L SEEDS A/C WHEREAS EXCESS STOCK CALCULATION WAS UNDER THE HEAD OIL AND KHAL BUT IT IS A FACT THAT THE ASSESSEE HAS SHOWN TURNOVER MORE THAN RS. 11.00 CRORES DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, IT IS BUT NATURAL THAT TO THIS EXTENT THIS QUANTITY MIGHT HAVE PUT TO USE IN THE PLANT FOR MANUFACTURING PROCESS WHICH HAS BEEN CLAIMED BY THE PARTNER OF THE ASSESSEE DURING THE COURSE OF SURVEY PROCEEDINGS IN HIS STATEMENT. IT HAS NOT BEEN CONTROVERTED BY THE LOWER AUTHORITIES AS W ELL AS THE LD. DR. THE REMAINING ADDITIONS WERE BASED ON THE JOTTINGS FOUN D IN THE LOOSE PAPERS DURING THE COURSE OF SURVEY PROCEEDINGS WHICH CANNO T BE CONSIDERED CONCLUSIVE FOR IMPOSITION OF PENALTY U/S 271(1) OF THE ACT. AS SUCH, THE AO HAS NOT RECORDED SATISFACTION IN LEGAL SENSE IN THE ASSESSMENT ORDER AND EVEN IN THE PENALTY PROCEEDINGS. HE HAS NOT CON CLUDED THAT PENALTY WAS IMPOSED FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME IN HIS ORDER. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE DELETE THE PENALTY CO NFIRMED BY THE LD. CIT(A). THUS THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 806/JP/2012 M/S. SINGHAL INDUSTRIES VS. ACIT, CIRCLE-, BHARATPU R . 9 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 /05/ 2016. SD/- SD/- DQY HKKJR VH-VKJ-EHUK (KUL BHARAT) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13/5/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. SINGHAL INDUSTRIES, BHARATPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT , CIRCLE- BHARATPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.806/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR