SAINY HEAVY ELECT & ENGG. CO. P. LTD, MUMBAI V. ITO WD 10(2)(4), MUMBAI

ITA 8488/MUM/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2689 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-11-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 06-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI SANJAY ARORA (AM) AND SHRI RAM LAL NEGI (J M) ITA NO 8488/MUM/2010 ASSESSMENT YEAR: 2004-05 SAINY HEAVY ELECT & ENGG. CO. PVT. LTD., 14-B, KURLA INDUSTRIAL ESTATE, N.S.S.ROAD, NARAYAN NAGAR, GHATKOPAR (W), MUMBAI- 400 086. PAN:- AAACS5654B VS. THE ITO, RANGE 10(2)(4), AAYAKAR BHAVAN, MUMBAI- 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. HARI S. RAHEJA RESPONDENT BY : SHRI. RAVINDER SINDHU DATE OF HEARING: 2 4/05 / 2016 DATE OF PRONOUNCEMENT: 04/10/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST ORDER DATED 30/09/2010 PASSED BY THE LD. CIT(APPEALS)-22 MUMBAI FOR THE ASST. YEAR 2004-05, WHEREBY THE LD. CIT(A) DISMISSED THE APPEA L FILED BY THE ASSESSEE AGAINST PENALTY ORDER PASSED BY THE A.O U/S 271(1)( C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED ITS RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 8,74,870/- . SINCE THE ASSESSEE HAD DEBITED RS. 47,94,870/- AND RS. 1,14,91,974/-ON ACC OUNT OF LABOUR CHARGES T O AND PURCHASE OF RAW MATERIALS, THE AO VERIFIED THE GENUINENESS OF THE PAYMENTS AND COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT DETERMINING THE 2 ITA NO 8488/MUM/2010 ASSESSMENT YEAR: 2004-05 TOTAL INCOME OF THE ASSESSEE AT RS. 62,30,470/-. AG GRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT( A. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE PRODUCES ADDITI ONAL EVIDENCE TO JUSTIFY CONTENTION. IN ORDER TO AFFORD FAIR OPPORTUNITY TO THE ASSESSEE COMPANY, THE LD. CIT(A) FORWARDED ADDITIONAL EVIDENCE TO THE A.O FO R FURTHER VERIFICATION. DURING REMAND PROCEEDINGS, PAYMENTS OF LABOUR CHARGES TO T WO PARTIES WERE FOUND TO BE GENUINE. THE ASSESSE, HOWEVER, FAILED TO SUBSTAN TIATE TRANSACTIONS WITH THE REMAINING SIX PARTIES. ACCORDINGLY, THE DISALLOWANC E WAS CALCULATED AT RS. 44,74,720/-. IN QUANTUM APPEAL THE DISALLOWANCE WAS CONFIRMED BY THE LD. CIT(A) AND THE ITAT. CONSEQUENTLY, THE A.O PASSED PENALTY ORDER U/S 271(1)(C) OF THE ACT IN RESPECT OF THE INCOME ESCAPING THE AS SESSMENT TO THE TUNE OF RS. 44,74,702/-. THE PENALTY ORDER WAS FURTHER CHALLENG ED BEFORE THE LD. CIT(A). THE LD. CIT(A) FOLLOWING THE LAW LAID DOWN BY THE H ONBLE SUPREME COURT IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSOR (2 008) 306 ITR 277 CONFIRMED THE PENALTY OF RS. 15,66,146/- IMPOSED BY THE A.O. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE SAID IMPUGNED ORDER ON THE FOLLOWING EFFECTIVE GROUND OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) OF RS. 15,66,146/- ON THE GROUND/S AS CONTAINED IN THE APPELLATE ORDER OR OTHERWISE. 3. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE (A R) SUBMITTED THAT THE DURING ASSESSMENT PROCEEDINGS ONE SH. SANTOSH BALRAM TAWDE FROM CONFIRMED THAT HE RECEIVED RS. 78,990/- OUT OF RS. 3,09,930/- PAID TO SUPER ELECTRICAL ENGINEERING. ADDRESS AND WHEREABOUTS IN RESPECT OF PAYMENT MADE TO INDUSTRIAL MACHINERY. THE ASSESSEE HAS PROVED THE G ENUINENESS OF TRANSACTION WITH SAGAR TRADING CO., NAINA STEEL PVT. LTD., AMBE SHWAR TRADING CO. AND SHEETAL ENTERPRISES BY PRODUCING BANK CERTIFICATE, LEDGER ACCOUNT AND COPIES OF PURCHASE BILLS ALONG WITH DELIVERY CHALLAN AND I N SOME OF THE CASES PAN AND CONFIRMATION OF THE PARTIES. SINCE, THE ASSESSEE HA S DISCHARGED ITS BURDEN, QUESTION OF CONCEALMENT OF INCOME OR FURNISHING OF INCORRECT FACTS DOES NOT ARISE. UNDER THESE CIRCUMSTANCES, PENALTY CANNOT BE LEVIED ON THE ASSESSEE. 3 ITA NO 8488/MUM/2010 ASSESSMENT YEAR: 2004-05 THE LD. AR PLACING RELIANCE ON THE DECISION RENDERE D BY THE ITAT PUNE BENCH IN DY. CIT VS. MAHADIK BROS [2003] 84 ITD 19 (PUNE ), SUBMITTED THAT IN THE ABSENCE OF FOR IMPOSING PENALTY U/S 271(1)(C) THERE SHOULD BE AN ELEMENT OF DISHONESTY ON THE PART OF THE ASSESSEE WHICH IS NOT THERE IN THE PRESENT CASE. FURTHER PLACING RELIANCE ON THE CASES LAXMI JEWELLE RY VS. CIT 171 ITR 649(AP), ITO VS. AMBICA AGENCIES 50 ITD 31 AND CIT VS. J.K. SYNTHETICS LTD.218 ITR 267 (DEL) SUBMITTED THAT THE FINDINGS OF ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE FOR IMPOSING PENALTY U/S 271(1)(C) OF TH E ACT. AND THE ASSESSEE MAY ESTABLISH ITS CASE DURING PENALTY PROCEEDINGS ALSO. 4. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENT ATIVE (DR) RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW AND TH E ITAT, SUBMITTED SINCE THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS IN QUESTION DURING ASSESSMENT PROCEEDINGS OR EVEN DURING THE AP PELLATE PROCEEDINGS, THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED ON THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE DOCUMENTS PLACED ON RECORD. THE ASSESSEE-COMPANY IS IN THE BUSINESS OF REWINDIN G AND REPAIRS OF ELECTRICAL MOTORS, WAS UNABLE TO JUSTIFY ITS CLAIM FOR EXPENSES (TO THE TUNE OF RS.53,55,602/-) ON THE PURCHASE OF RAW MATERIALS AN D LABOUR CHARGES, OSTENSIBLY SOURCED FROM EIGHT PARTIES. THE MATTER I N QUANTUM PROCEEDINGS STANDS SETTLED BY THE ORDER BY THE TRIBUNAL CONFIRM ING THE DISALLOWANCE TO THE EXTENT OF RS.44,74,702/-, I.E., IN RESPECT OF SIX P ARTIES. THE REDUCTION IN THE AMOUNT WAS IN THE REMAND PROCEEDINGS DIRECTED BY TH E FIRST APPELLATE AUTHORITY ADMITTING THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE BEFORE HIM. NO IMPROVEMENT IN ITS CASE BY THE ASSESSEE WAS OBSERV ED BY THE REVENUE IN THE PENALTY PROCEEDINGS, WHICH STOOD INITIATED ALONG WI TH, SO THAT THE PENALTY CAME TO BE LEVIED FINALLY ON THE SAID ADDITIONAL INCOME OF RS.44.75 LACS. THE FINDINGS BY THE LD. CIT(A) CONFIRMING THE LEVY OF PENALTY AR E RELEVANT; HE ON AN 4 ITA NO 8488/MUM/2010 ASSESSMENT YEAR: 2004-05 EXAMINATION OF THE FACTS OF THE CASE CONFIRMING THE TRANSACTIONS AS BOGUS , SO THAT THE SAME ARE REPRODUCED AS UNDER: 5. I HAVE GONE THROUGH THE PENALTY ORDER PERUSED T HE SUBMISSIONS MADE AND ALSO DISCUSSED THE CASE WITH A R OF THE APPELLANT. IN THIS CASE PENALTY U/S 271(1)(C) HAS B EEN IMPOSED SINCE THE PARTIES FROM WHOM PURCHASES ARE MADE OR T O WHOM LABOUR CHARGES ARE PAID WERE FOUND NOT TO BE GENUIN E. THE ISSUE TRAVELLED UPTO THE LEVEL OF HONBLE ITAT. THE ITAT MUMBAI VIDE THEIR ORDER DATED 06/08/2010 HAVE UPHELD THE FINDIN GS OF THE A.O THAT THE PARTIES WERE NOT GENUINE AND SUSTAINED THE ADDITION. THE ITAT IS THE HIGHEST FACT FINDING AUTHORITY AND ITS DECISION ON FACTS IS FINAL. IT HAS BEEN OBSERVED BY HONBLE ITAT THAT IN THE CASE OF LABOUR CHARGES PAID TO SUPER ELECTRICALS, IT WAS NO T CLEAR FROM RECORD, AS TO HOW THE ASSESSEE HAD PAID THIS AMOUNT WITHOUT THE SAME NOT BEING SHOWN BY SHRI SANTOSH TAWADE (WHO CL AIMED TO BE FROM SUPER ELECTRICAL ENGINEERING WHEN APPEARED BEFORE A.O.). THE ASSESSEE IN ITS BOOKS HAD SHOWN THE SAID AMOUNT AS OUTSTANDING, NO MACHINERY AND OTHER ASSETS WERE HEL D BY SUPER ELECTRICALS AS PER BALANCE SHEET, NO RECORD OF WAGE S AND LABOUR CHARGES PAID WAS PRODUCED BY ASSESSEE ETC. ACCORDIN GLY THE ITAT HELD THAT THE PARTY WAS NOT GENUINE. IN CASE OF IND USTRIAL MACHINERY THE HONBLE ITAT OBSERVED THAT THE FIRM C ONSTITUTED OF ALL THE FAMILY MEMBERS OF THE ASSESSEE AND IT DID N OT SHOW THE LABOUR CHARGES RECEIVABLE FROM THE ASSESSEE AS INCO ME AND ALSO IT DID NOT SHOW LABOUR CHARGES PAYABLE TO THE LABOURER S AS EXPENSES. ACCORDINGLY IT WAS HELD THAT THESE WERE M ERE ENTRIES IN THE BOOKS WHICH WERE FAKE. THUS THE LABOUR CHARGES CLAIMED TO BE PAID TO THESE PARTIES WERE HELD BY ITAT AS NOT GENU INE. WHILE DEALING WITH THE PAYMENTS OF PURCHASES, HONBLE ITA T IN THE CASE OF SAGAR TRADING CO. OBSERVED THAT THE ASSESSEE FAI LED TO PRODUCE RELEVANT RECORDS AND EVIDENCE TO PROVE THE GENUINEN ESS OF TRANSACTION AND EVEN COULD NOT FURNISH CONFIRMATION FROM THE SAID PARTY AND HENCE IT WAS NOT GENUINE. IN CASE OF NAINA STEEL THE HONBLE ITAT HAVE OBSERVED THAT THE PAN CARD GI VEN BY THE ASSESSEE IN SUPPORT OF ITS EXISTENCE WAS FOUND FAKE SINCE THIS NUMBER BELONGS TO A PERSON BEING A SALARIED EMPLOYE E HAVING A DIFFERENT ADDRESS. IN THE CASE OF AMESHWAR TRADING CO. HONBLE ITAT OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE R ECORDS AND THE PARTY WAS NOT FOUND AT THE PLACE AND HENCE ITS EXIS TENCE WAS NOT GENUINE. IN THE CASE OF SHEETAL ENTERPRISES THE HO NBLE ITAT OBSERVED THAT THE SUMMONS ISSUED WERE RETURN UNSER VED, A.O. HAD MADE PERSONAL ENQUIRY AND NOTED THAT THE SAID P ARTY WAS NOT EXISTING ADDRESS, THE ASSESSEE FAILED TO PRODUCE AN Y EVIDENCE FOR TRANSPORTATION OF GOODS AND EVEN PAN CARD NUMBER. A CCORDINGLY IT WAS HELD THAT THE PARTY WAS NOT GENUINE. IN VIEW OF THESE FACTS, 5 ITA NO 8488/MUM/2010 ASSESSMENT YEAR: 2004-05 THE ADDITIONS MADE WAS CONFIRMED BY ITAT. THUS ON F ACTS THERE IS NO DISPUTE THAT THERE IS AN ATTEMPT ON THE PART OF APPELLANT TO CLAIM THE EXPENDITURE WHICH IS NOT GENUINE. THE APP ELLANT CLAIMS THAT THE EXPLANATIONS GIVEN WERE VERIFIED. HOWEVER ON THE FACTS IT MAY BE NOTED THAT EVEN PAN CARD GIVEN BY THE APPELL ANT WERE FOUND BOGUS, DELIBERATE ATTEMPT TO GET THE RETURN O F INCOME FILED BY SHRI SANTOSH B. TAWDE IN KALYAN, TO MAKE THE TRA NSACTION GENUINE HAS BEEN MADE, LABOUR CHARGES ARE BEING PAI D BUT THERE IS NO MACHINE OR ANY OTHER ASSETS IN THE BALANCE SH EET TO DO THE JOB AND MERE BOOK ENTRIES ARE BEING MADE TO SETTLED THE ACCOUNTS RELATING TO THE ACCOUNTS OF THE FAMILY MEMBERS. ALL THESE INDICATE THAT THERE IS AN ATTEMPT ON THE PART OF APPELLANT T O DELIBERATELY CLAIM EXPENSES WHICH/ACTUALLY ARE NOT THERE AND HEN CE THE CASE LAWS RELIED UPON THE APPELLANT ARE NOT RELEVANT FOR THE FACTS OF THE APPELLANTS CASE. IN VIEW OF THIS, I AM OF THE CONSI DERED OPINION THAT THE A.O HAS RIGHTLY IMPOSED PENALTY U/S 271(1) (C) WHICH IS UPHELD. RELIANCE IN THIS REGARD IS PLACE ON THE DEC ISION ON THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCE SSORS (2008) 306 ITR 277, WHEREIN HONBLE SUPREME COURT IN THEIR ORDER DATED 29/09/2008 HAVE HELD THAT THE OBJECT BEHIND ENACTIN G SECTION 271(1)(C) READ WITH EXPLANATION INDICATES THAT THE SAID SECTION HAS BEEN ENACTED TO PROVIDE A REMEDY FOR LOSS OF RE VENUE. PENALTY U/S 271(1)(C) IS A CIVIL LIABILITY. WILLFUL CONCE ALMENT IS NO ESSENTIAL INGREDIENT FOR ATTRACTING A CIVIL LIABILI TY AS IN THE MATTER OF PROSECUTION U/S 276C. IF RECORD BEFORE A.O CAN S USTAIN THAT THERE WAS CONCEALMENT THAT WOULD BE SUFFICIENT TO S USTAIN THE PENALTY. IN VIEW OF THIS JUDGEMENT OF HONBLE APEX COURT, WHICH IS THE LAW OF THE LAND AS ON DATE AND ALSO ON THE FACT S OF THE CASE PENALTY IMPOSED BY A.O U/S 271(1)(C) IS SUSTAINED. NO INFIRMITY IN THE SAID FINDINGS HAS BEEN BROUGHT TO OUR NOTICE. NO DOUBT, PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDIN GS ARE TWO DIFFERENT AND DISTINCT PROCEEDINGS, AND THE STANDARD OF PROOF REQ UIRED IN PENALTY PROCEEDINGS IS HIGHER THAN THAT REQUIRED IN THE ASSESSMENT PROC EEDING. THE ONUS, HOWEVER, TO PROVE THE TRANSACTIONS IT CLAIMS TO HAVE ENTERED INTO, AND ITS CLAIMS PER ITS RETURN OF INCOME, IS ON THE ASSESSEE. THE ASSESSEE, WHOSE CONDUCT HAS BEEN ALL THROUGH ELUSIVE, HAS ABYSMALLY FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS, DESPITE BEING ALLOWED SUFFICIENT OPPO RTUNITY FOR THE SAME. WE, THEREFORE, FIND NO REASON FOR INTERFERENCE AND, ACC ORDINGLY, DECLINE IT. WE DECIDE ACCORDINGLY, UPHOLDING THE IMPUGNED ORDER. 6 ITA NO 8488/MUM/2010 ASSESSMENT YEAR: 2004-05 6. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH OCTOBER, 2016 SD/- SD/- ( SANJAY ARORA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:04/10/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA