Luha Jewellery, CHENNAI V. ITO, CHENNAI

ITA 918/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8136 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 11-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! ' . # , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NOS.918 TO 923/MDS/2016 ( / ASSESSMENT YEARS: 2006-07 TO 2011-12) M/S. LUHA JEWELLERY, 62/2, USMAN ROAD, T.NAGAR, CHENNAI-600 017. VS THE INCOME TAX OFFICER, BUSINESS WARD-I(3), CHENNAI. PAN: AABFL6018N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.A.ABDUL RAHIM, C.A /RESPONDENT BY : MR. SHIVA SRINIVAS, CIT /DATE OF HEARING : 27 TH OCTOBER, 2016 /DATE OF PRONOUNCEMENT : 6 TH JANUARY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE SIX APPEALS ARE FILED BY THE ASSESSEE AGGRI EVED BY THE COMMON ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX,(APPEALS)-2, CHENNAI DATED 21.01.2016 F OR THE ASSESSMENT YEARS 2006-07 TO 2011-12 IN ITA NOS.112 , 113, 114, 115, 116 & 117/CIT(A)-2/2014-15 PASSED UNDER S ECTION 271(1)(C) R.W.S.250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL ELABORATE GROUND S IN ITS APPEAL, HOWEVER, THE CRUX OF THE ISSUE IS AS FO LLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD LEVIED MINIMUM PENALTY OF ` 10,54,130/-, ` 10,14,800/-, 2 ITA NOS.918 TO 923/MDS/2016 ` 6,97,940/-, ` 8,21,790/-, ` 7,93,920/- AND ` 12,56,340/- FOR THE ASSESSMENT YEARS 2006-07 TO 2011-12 RESPECTIVELY TOWARDS FURNISHING OF INACCURATE PARTICULARS REGARDING TURNOVER AND THEREFORE CONCEALING THE INCOME WITHIN THE MEANING AND PROVISIONS OF SECTION 271(1)(C) OF THE ACT . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE RETAIL BUSINESS OF GOLD, SILVER & DI AMOND JEWELLERY FILED ITS RETURNS OF INCOME FOR THE RELEV ANT ASSESSMENT YEARS. THERE WAS A SURVEY CONDUCTED IN T HE BUSINESS PREMISES OF THE ASSESSEE ON 25.07.2012. DU RING THE COURSE OF SURVEY IT WAS FOUND THAT THE ACCOUNTA NT OF THE ASSESSEE FIRM HAD MAINTAINED TWO SETS OF BOOKS AND THEREFORE THE CORRECT INCOME COULD NOT BE ASCERTAIN ED WITH RESPECT TO THE INCOME DECLARED IN THE RETURN OF INC OME. FURTHER, THE STOCK RECORDS OF THE ASSESSEE WERE INC OMPLETE. HENCE, IN ORDER TO AVOID PROTRACTED LITIGATION AND TO BUY PEACE WITH THE REVENUE AUTHORITIES, THE ASSESSEE HAD COME FORWARD OFFERING 10% OF ITS TURNOVER AS ITS UNDISCLOSED INC OME, OTHER THAN PROFIT ARISING ON PURCHASE AND SALE OF OLD GOL D. THEREAFTER THE ASSESSMENT WAS COMPLETED ACCEPTING T HE REVISED RETURN FILED BY THE ASSESSEE OFFERING THE A DDITIONAL 3 ITA NOS.918 TO 923/MDS/2016 INCOME. SUBSEQUENTLY, THE LEARNED ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. IN THE PENALTY PROCEEDINGS, THE LEARNED ASSESSING OFFICER RELYING ON THE DECISIONS OF THE HONBLE SUPREME COURT IN THE C ASE M/S. MAK DATA (P) LTD. VS. CIT REPORTED IN 38 TAXMANN.CO M 448 (SC) AND UNION OF INDIA VS. DHARMENDRA TEXTILE PROC ESSORS REPORTED IN 13 SCC 369 LEVIED MINIMUM PENALTY ON TH E ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 271( 1)(C) OF THE ACT FOR ALL THE SIX RELEVANT ASSESSMENT YEARS. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER ACCEPTING HIS VIEW BY OBSERVING AS UNDER:- 6. TO CONCLUDE NOT ONLY HAS THE ASSESSEE FAILED TO MAKE A VOLUNTARY DISCLOSURE OF ITS INCOME, BUT ALSO THE EXPLANATION FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING THE PENALTY PROCEEDINGS W AS FOUND TO BE NOT BONAFIDE. HENCE THERE IS NO ALTERNA TIVE BUT TO CONCLUDE THAT THE PROVISIONS OF SECTION 271( 1)(C) AND EXPLANATION 1 THERETO ARE ATTRACTED IN THE CASE OF THE APPELLANT. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE MANAGING PARTNER OF THE FIRM HAD ACCEPTED THE PROPOSAL OF THE REVENUE TO TREAT 10% OF ITS TUR NOVER AS 4 ITA NOS.918 TO 923/MDS/2016 UNDISCLOSED INCOME OF THE ASSESSEE BECAUSE THE ASSE SSEE HAD MAINTAINED TWO SETS OF BOOKS AND THE STOCK RECO RDS WERE INCOMPLETE. HE FURTHER ARGUED BY STATING THAT THE MANAGING PARTNER OF THE FIRM HAD AGREED TO THE PROPOSAL OF T HE REVENUE BECAUSE THEY HAD ASSURED THAT NO PENAL ACTION WILL BE TAKEN AGAINST THE ASSESSEE. THEREFORE, IN ORDER TO BUY P EACE WITH THE DEPARTMENT, THE MANAGING PARTNER OF THE FIRM HA D AGREED FOR THE ADDITION AND FILED REVISED RETURN AND PAID TAX BY BORROWING FUNDS. HE FURTHER ARGUED BY STATING THAT THERE WAS NO CONCEALMENT OF INCOME ON THE PART OF THE ASSESSE E AND THE REVENUE HAD ALSO NOT UNEARTHED ANY UNDISCLOSED INCOME. HE THEREFORE PLEADED THAT THE PENALTY LEVIE D BY THE LEARNED ASSESSING OFFICER WHICH WAS CONFIRMED BY TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MAY BE DELETED. THE LEARNED AUTHORIZED REPRESENTATIVE FURT HER RELIED IN THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE CIT VS. SAS PHARMACEUTICALS REPORTED IN 335 ITR 259 WHEREIN IT WAS HELD AS FOLLOWS:- CIT VS SAS PHARMACEUTICALS (335 ITR 259)- WHERE THE DELHI HIGH COURT HAD HELD THAT NO DOUBT, THE DISCREPANCIES WERE FOUND DURING THE SURVEY. THIS HAS YIELDED INCOME FROM THE ASSESSEE IN THE FORM OF AMOUNT SURRENDERED BY THE ASSESSEE. PRESENTLY, WE 5 ITA NOS.918 TO 923/MDS/2016 ARE NOT CONCERNED WITH THE ASSESSMENT OF INCOME, BUT THE MOOT QUESTION IS TO WHETHER THIS WOULD ATTR ACT PENALTY UPON THE ASSESSEE UNDER THE PROVISIONS OF SECTION 271(1)(C)OF THE ACT. OBVIOUSLY, NO PENALTY CAN BE IMPOSED UNLESS THE CONDITIONS STIPULATED IN THE SAID PROVISIONS ARE DULY AND UNAMBIGUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING SURVEY, MAY BE, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAID SURVEY. HOWEVER, THERE CANNOT BE ANY PENALTY ONLY ON SURMISES, CONJECTURES AND POSSIBILITIES. SECTION 271(1)(C) OF THE ACT HAS TO BE CONSTRUED STRICTLY. UNLESS IT IS FOUND THAT THER E IS ACTUALLY A CONCEALMENT OR NON-DISCLOSURE OF THE PARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED. THERE IS NO SUCH CONCEALMENT OR NON- DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN THE INCOME TAX RETURN AND OFFERED THE SURRENDERED AMOUNT FOR THE PURPOSES OF TAX.' 6. FURTHER RELIANCE WAS PLACED IN THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE CIT VS. RELIANCE PETROPRODUCTS REPORTED IN 322 ITR 159 WHEREIN IT WA S HELD AS FOLLOWS:- THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEN D UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH T HE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS AR E FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT, OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND, ARGUED IN SUPPORT OF THE ORDERS OF THE REVENU E AND REQUESTED FOR CONFIRMING THE SAME. 6 ITA NOS.918 TO 923/MDS/2016 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE MATERIALS ON RECORD. FROM THE FACT S O F THE CASE, IT IS EVIDENT THAT NO INDISCRIMINATING MATERIALS WE RE FOUND DURING THE COURSE OF SURVEY OTHER THAN INCOMPLETE S TOCK REGISTER AND TWO SETS OF BOOKS OF ACCOUNTS. THE REV ENUE HAS ALSO NOT MADE ANY FINDING AS TO WHICH SET OF BOOK I S CORRECT AND WHICH SET OF BOOK IS WRONG COMPARING WITH THE R ETURN OF INCOME FILED BY THE ASSESSEE AND THE REASONS REGARD ING THE SAME. INSTEAD, THEY HAD PUT PRESSURE ON THE ASSESSE E TO ACCEPT ADDITIONAL INCOME AS UNDISCLOSED INCOME AND CONVINCED THE ASSESSEE TO DECLARE 10% OF ITS TURNOV ER AS SUCH INCOME. THE ASSESSEE IN ORDER TO AVOID PROTRAC TED LITIGATION AGREED FOR THE SAME BY FILING REVISED RE TURN AND PROMPTLY PAID THE ADDITIONAL TAX. IN THIS SITUATION , WE ARE OF THE VIEW THAT THE ASSESSEE DOES NOT DESERVE TO BE L EVIED PENALTY BECAUSE THE CONCEALMENT OF INCOME IS NOT ESTABLISHED AND THE ADDITIONS ARE MADE ON THE BASIS OF MERE SURMISES AND CONJECTURES. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE FURTHER VI EW THAT THE CASE LAWS RELIED UPON BY THE LEARNED AUTHORIZED 7 ITA NOS.918 TO 923/MDS/2016 REPRESENTATIVE CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE. FOR THE ABOVE SAID REASONS, WE HEREBY DIRECT THE LE ARNED ASSESSING OFFICER TO DELETE THE PENALTY LEVIED INVO KING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT FOR ALL THE RELEVANT SIX ASSESSMENT YEARS. 9. IN THE RESULT, ALL THE SIX APPEALS OF THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 6 TH JANUARY, 2017 SD/- SD/- ( ! ' . # ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATE: 06.01.2017 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF