Advance Synthetics Mills, Ahmedabad V. The Dy.CIT.,Circle-11, Ahmedabad

ITA 836/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6911 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-10-2014
• Assessment Year: 1996-1997
• Appeal Filed On: 16-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KULSHRESTHA
• Keywords: Income from undisclosed sources; Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI, ACCOUNTANT MEMBER. ITA.NO.836/AHD/2011 (ASSESSMENT YEAR:1996-97) ADVANCE SYNTHETIC MILLS, 36, KOTHARI MARKET, DIWAN BALLUBHAI ROAD, KANKARIA, AHMEDABAD. APPELLANT VS. THE DY.COMMISSIONER OF INCOME TAX, CIRCLE -11, AHMEDABAD. RESPONDENT PAN: AAGFA6266L /BY APPELLANT :SHRI GAURAV NAHTA, A.R. /BY RESPONDENT : SHRI B. KULSHRESTHA, SR.D.R. !'# /DATE OF HEARING : 21.10.2014 $%& !'# /DATE OF PRONOUNCEMENT : 29.10.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XVI, AHMEDA BAD, DATED 25.01.2011 FOR A.Y. 1996-97 ON THE FOLLOWING GROUND S: 1. THE LD. CIT APPEALS III AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN PASSING APPELLATE ORDER DATED I.T.A. NO. 836/AHD/2011 A.Y. 1996-97 (ADVANCE SYNTHETIC MILLS VS. DCIT) PAGE 2 25/01/2011 FOR THE A.Y. 1996-97 IN THE CASE OF APPELLANT BY CONFIRMING THE PENALTY U/S 271(1)(C) AMOUNTING TO RS.60724/-. 2. THE LD. CIT APPEALS OUGHT TO HAVE APPRECIATED TH AT UNDER THE FACTS OF THE APPELLANT, NO PENALTY IS LEV IABLE AS THE AMOUNT ADDED DO NOT REPRESENT ANY UNACCOUNTED INCOME. THE CIT APPEALS FAILED TO APPRECIATE THAT THERE WAS NO SINGLE EVIDENCE TO CON FIRM ANY UNDISCLOSED INCOME AND FURTHER ASSESSMENT AND PENALTY IS ALTOGETHER DIFFERENT AND THEREFORE NO PE NALTY U/S 271(1)(C) IS LEVIABLE. IT BE SO HELD NOW. 2. ASSESSING OFFICER AMONG OTHER MADE ADDITION BY W AY OF DISALLOWANCE OF RS.1,51,811/- ON ACCOUNT OF BOGUS P ACKING AND PROCESSING EXPENSES. THE CIT(A) DELETED DISALLOWAN CE BUT THE ITAT RESTORED THE MATTER BACK TO THE FILE OF THE AS SESSING OFFICER. ASSESSING OFFICER MADE SIMILAR DISALLOWANCE AGAIN W HILE PASSING THE ORDER U/S. 143(3) R.W.S. 254 INTER ALIA ASSESSI NG OFFICER STATED THAT THESE PACKING AND PROCESSING CHARGES HAVE BEEN DEBITED IN THE NAME OF TWO PERSONS PANKAJ PATEL AND UPENDRA PA TEL. HE OBSERVED THAT THESE TRANSACTIONS WERE BOGUS. THESE PERSONS DID NOT GIVE ANY CONFIRMATION LETTER TO THE ASSESSEE SO MADE ADDITION. MATTER WAS CARRIED BEFORE THE CIT(A), WHEREIN SAME WAS DISMISSED AS WITHDRAWN. 2.1 CONSEQUENTLY, ASSESSING OFFICER LEVIED PENALTY UNDER THE PROVISION OF SECTION 271(1)(C). THE STAND OF ASSES SEE HAS BEEN THAT BOTH THE PARTIES HAD GIVEN THE BILLS AND THE P AYMENT WAS MADE BY CHEQUES AND TDS THEREON HAS BEEN DEDUCTED. MOREOVER, ASSESSEE WAS NOT OFFERED CROSS EXAMINATIO N OF THE SAID PARTIES. APPEAL WAS WITHDRAWN BEFORE CIT(A) BECAUS E ASSESSEE HAD HUGE LOSS AND THERE WAS NO TAX EFFECT AS FAR AS QUANTUM I.T.A. NO. 836/AHD/2011 A.Y. 1996-97 (ADVANCE SYNTHETIC MILLS VS. DCIT) PAGE 3 ADDITION IS CONCERNED. ASSESSING OFFICER DID NOT A CCEPT THIS EXPLANATION AND STATED THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME BY FILING BOGUS EXPENSES AND THEREFORE CONCEALED THE INCOME. PENALTY WAS CONFIRMED BY CIT (A). 2.2 BEFORE US, LD. A.R. POINTED OUT THAT PAYMENTS W ERE MADE BY CHEQUES AND TDS THEREON WAS DEDUCTED WHICH IS A MAT TER OF RECORD. THE PENALTY IS NOT AUTOMATIC ON THE BASIS O F QUANTUM ADDITION. SO, IN VIEW OF THIS, PENALTY SHOULD BE D ELETED. MOREOVER, LD. A.R. RELIED ON THE FACT THAT CIT(A) I N FIRST ROUND GRANTED RELIEF TO THE ASSESSEE ON THIS GROUND, SO, PENALTY IN QUESTION BE DELETED. ON THE OTHER HAND, LD. D.R. S UPPORTED THE ORDERS OF AUTHORITIES BELOW. 2.3. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT IN THIS CASE ASSESSMENT FOR YE AR UNDER CONSIDERATION I.E. 1996-97 WAS FINALIZED ON 31.03.1 993, WHEREIN ADDITION OF RS.1,51,811/- WAS MADE ON ACCOUNT OF BO GUS PACKING AND PROCESSING EXPENSES. AS STATED ABOVE, ASSESSEE GOT RELIEF IN FIRST ROUND BEFORE CIT (A) BUT MATTER WAS RESTORED TO ASSESSING OFFICER BY ITAT. THIS ADDITION WAS MADE AGAIN AND MATTER WAS CARRIED BEFORE CIT BUT BECAUSE OF HUGE LOSSES, ASSE SSEE CLAIMED TO HAVE NOT CONTESTED THE MATTER ON MERIT AND APPEA L WAS DISMISSED AS WITHDRAWN. NOW, THE QUESTION BEFORE U S WITH REGARDS TO LEVY OF PENALTY OF RS.60,724/- ON ACCOUN T OF DISALLOWANCE OF RS.1,51,811/- UNDER THE PROVISION O F SECTION 271(1)(C). AS STATED ABOVE, THE CONFIRMATION OF PA RTIES WERE GIVEN AND THE BILLS HAVE BEEN RAISED BY THE PARTIES FOR T HE WORK DONE. THE AMOUNT HAS BEEN PAID BY CHEQUES AND TDS THEREON HAS BEEN I.T.A. NO. 836/AHD/2011 A.Y. 1996-97 (ADVANCE SYNTHETIC MILLS VS. DCIT) PAGE 4 DEDUCTED, WHICH IS NOT IN DISPUTE. IT IS SETTLED L EGAL POSITION THAT PENALTY IS NOT AUTOMATIC ON THE BASIS OF QUANTUM AD DITIONS. IN THIS CASE, IT CANNOT BE INFERRED THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME IRRESPECTIVE OF CO NFIRMATION OF QUANTUM ADDITION BECAUSE ASSESSEE HAD MADE PAYMENT BY CHEQUES AND TDS THEREON HAS BEEN DEDUCTED. WITHOUT PREJUDICE TO QUANTUM ADDITION, ASSESSING OFFICER WAS NOT JUST IFIED IN LEVING PENALTY OF RS. 60,724/- UNDER THE PROVISION OF SECT ION 271(1)(C) AND SAME IS DIRECTED TO BE DELETED. 3. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF OCTOBER, 2014. SD/- SD/- (N. S. SAINI) (SHAILENDR A KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R TRUE COPY S.K.SINHA ' ' ' ' !( !( !( !( )(&! )(&! )(&! )(&! / COPY OF ORDER FORWARDED TO:- 1. ,- / REVENUE 2. / ASSESSEE 3. 00! 1 / CONCERNED CIT 4. 1- / CIT (A) 5. (56 !, , / DR, ITAT, AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER / ' , =/ 0, , ?