M/s. Becharbhai Dahyabhai Patel & Co., Dist.Anand V. The ACIT.,Anand Circle, Anand

ITA 818/AHD/2009

• Counselvise Citation: 81820514 RSA 2009
• Duration Of Justice: 2 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 28-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 13-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANURAG SHARMA
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI G. C. GUPTA, HONBLE VICE PRESIDENT AND SHRI B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 817 & 818/ AHD/2009 (ASSESSMENT YEAR 2005-06) M/S. BECHARBHAI DAHYABHAI PATEL & CO., NEAR PAYAL CINEMA, VALSAD, DISTT. ANAND VS. ACIT, ANAND CIRCLE, ANAND PAN/GIR NO. : AACFB9912C (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI MUKUND BAKSHI, AR RESPONDENT BY: SHRI ANURAG SHARMA, SR. DR DATE OF HEARING: 28.12.2011 DATE OF PRONOUNCEMENT: 30.12.2011 O R D E R PER SHRI B.P.JAIN, AM:- THESE TWO APPEALS OF THE ASSESSEE ARISE OUT OF TWO DIFFERENT ORDERS OF LD. CIT(A)-IV, BARODA DATED 24.12.2008 IN QUANTU M APPEAL AND DATED 29.12.2008 IN THE PENALTY APPEAL EACH FOR THE ASSES SMENT YEAR 2005-06. FIRST OF ALL, WE TAKE UP THE QUANTUM APPEAL OF THE ASSESSEE AND THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL IN THE SAID APPEAL: THE LD. CIT(A) IV, BARODA HAS ERRED IN FACTS AND I N LAW IN CONFIRMING THE ACTION OF THE A.O. IN DISALLOWING TH E EXPENDITURE OF RS.25 LACS IN THE PURCHASE OF LDO HOLDING THE SAME AS UNPROVED. THE DISALLOWANCE BEING ERRONEOUS IN LAW AND IN FAC TS IS PRAYED TO BE ALLOWED AS CLAIMED. I.T.A.NO. 817,818 /AHD/2009 2 2. THE BRIEF FACTS OF THE CASE ARE THAT LDO EXPENSE S DEBITED IN THIS YEAR WERE RS.28,11,600/- AS AGAINST RS.2,40,600/- S HOWN IN THE PRECEDING YEAR, WHICH WERE NOT COMMENSURATE WITH THE RISE IN CONTRACT RECEIPTS. LDO PURCHASES SHOWN FROM M/S. A. K. ENTERPRISES AND M/S, DIAMOND TRADING CO. DURING THIS YEAR WERE CLAIMED AT RS.12, 20,000/- AND RS. 12,80,0007-. ASSESSING OFFICER MADE ENQUIRES U/S. 1 33(6) FROM M/S. A. K. ENTERPRISES AND M/S. DIAMOND TRADING CO. BOTH SI TUATED AT AHMEDABAD WHICH WERE CLAIMED TO HAVE SUPPLIED LDO T O THE APPELLANT AND NAMES AND ADDRESSES OF WHOM WERE OBTAINED FROM THE DOCUMENTS/BILLS FOUND DURING SURVEY U/S.133A AT APP ELLANT'S PREMISES ON 3.2.2006. THE ENQUIRY LETTERS U/S.133(6) TO THESE P ARTIES WERE RETURNED BY POSTAL AUTHORITIES WITH REMARK! 'NOT KNOWN' IN THE CASE OF M/S. A. K. ENTERPRISES AND 'CLOSED AT THE TIME OF DELIVERY' IN THE CASE OF M/S. DIAMOND TRADING CO. SHOW CAUSE NOTICE WAS ISSUED BY THE ASSESSING OFFICER TO THE APPELLANT BUT NO COMPLIANCE WAS RECE IVED. THE ASSESSING OFFICER THEREFORE, HELD THAT THE APPELLANT HAD FAIL ED TO FURNISH DETAILS IN RESPECT OF LDO EXPENSES DEBITED OF RS.23,11,600/- A ND HAD ALSO FAILED TO PROVIDE ANY JUSTIFICATION REGARDING SHARP RISE IN T HIS EXPENDITURE DURING THE YEAR. BESIDES, THE ENQUIRY LETTERS ISSUED TO TH E PARTIES, HAD REMAINED UN-SERVED. OPPORTUNITY GIVEN TO THE APPELLANT TO PR ODUCE THE PARTIES WAS NOT AVAILED OF AND THE PARTIES WERE NOT PRODUCED. A SSESSING OFFICER THEREFORE, HELD THAT THE PURCHASE TRANSACTION WAS N OT GENUINE AND MADE ADDITION OF RS.25,00,000/- TO ASSESSEES INCOME ON ACCOUNT OF UNPROVED PURCHASE OF LDO. THE LD. CIT(A) CONFIRMED THE ACTI ON OF THE A.O. 3. BEFORE US, IT WAS ARGUED THAT THOUGH THE PARTIES WERE NOT FOUND AT THE GIVEN ADDRESS BUT THE GENUINENESS OF THE CLAIM OF THE ASSESSEE CANNOT BE DOUBTED. THE ENTIRE EXPENSES HAVE BEEN INCURRED FOR THE PURPOSE OF I.T.A.NO. 817,818 /AHD/2009 3 BUSINESS. THE PURCHASES HAVE BEEN MADE AND HAVE BE EN REGISTERED WITH SALE TAX AUTHORITIES. THE SAID PARTIES MIGHT HAVE WOUND UP THEIR BUSINESS OR MIGHT HAVE SHIFTED THEIR OFFICE PREMISE S DUE TO WHICH PURCHASE MADE BY THEM CANNOT BE CONFIRMED. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ENQ UIRY LETTERS SENT BY THE A.O. TO BOTH THE PARTIES WAS RETURNED UNSERVED BY THE POSTAL AUTHORITIES ON THREE OCCASIONS. THE ASSESSEE HAD MADE NO ATTEM PT TO TRACE THE SAID PARTIES. THOUGH THE ONUS OF ESTABLISHING THE GENUI NENESS OF THE PURCHASE FROM THESE TWO PARTIES LIES ON THE ASSESSEE BUT AT THE SAME TIME, PURCHASES HAVE BEEN MADE THROUGH BANKING CHANNEL CANNOT BE DE NIED. THOUGH THE ACTUAL PURCHASES HAD BEEN MADE BY THE ASSESSEE EITH ER FROM THE SAID PARTIES OR FROM ANY OTHER PARTIES, IS NOT ON RECORD AND, THEREFORE THE PURCHASES APPEAR TO HAVE BEEN ENHANCED BY THE ASSES SEE IN THE ABSENCE OF ANY COGENT EXPLANATION ON RECORD. THEREFORE IT WIL L BE IN THE FITNESS OF JUSTICE IF THE PURCHASES IN DISPUTE ARE DISALLOWED @ 20% AND ACCORDINGLY, THE A.O. IS DIRECTED TO ALLOW THE CLAIM OF THE ASSE SSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED IN THE TERMS INDICATED HEREINABOVE. 6. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN I. T.A.NO. 818/AHD/2009:- THE BRIEF FACTS OF THE CASE ARE THA T THE A.O. LEVIED THE PENALTY ON THE ADDITION OF RS.25 LACS MADE IN THE Q UANTUM ASSESSMENT. 7. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S AND PERUSED THE FACTS OF THE CASE. THE ISSUE IN QUANTUM APPEAL HAS BEEN DECIDED BY US HEREINABOVE IN ASSESSEES APPEAL IN I.T.A.NO.817/AH D/2009, WHERE THE I.T.A.NO. 817,818 /AHD/2009 4 INCOME HAS BEEN ESTIMATED. IT IS SETTLED PRINCIPLE OF LAW THAT NO PENALTY U/S 271(1)(C) CAN BE LEVIED ON ESTIMATION BASIS. I N THE PRESENT CASE, THE ASSESSEES EXPLANATION HAS NOT BEEN ACCEPTED BY THE AUTHORITIES BELOW. NOTHING HAS BEEN BROUGHT ON RECORD BY THE DEPARTMEN T THAT HE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS IN RESPECT OF THE SOURCE AND THE DEPARTMENT HAS NOT DISPUTED THE AMOUNT WAS A REVENUE RECEIPT. THEREF ORE, NO PENALTY CAN BE LEVIED. THE A.O. IS DIRECTED TO CANCEL THE PENALTY AND ACCORDINGLY THE ORDER OF LD. CIT(A) IS REVERSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I.T .A.NO. 818/AHD/2009 IS ALLOWED. 9. IN THE COMBINED RESULT, THE APPEAL OF THE ASSESS EE IN I.T.A.NO. 817/AHD/2009 IS PARTLY ALLOWED AND IN I.T.A.NO. 818 /AHD/2009 STANDS ALLOWED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (G.C. GUPTA) (B.P.JAIN) VICE PRESIDENT ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) BY ORDER 5. THE DR, AHMEDABAD 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO. 817,818 /AHD/2009 5 1. DATE OF DICTATION 29/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER30/12OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.30/12 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 30/12 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.30/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30/12/2011 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. ..