ITO, CHENNAI V. M/s. Om Automobiles, CHENNAI

ITA 948/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61099 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-04-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 11-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYARAGAVAN
• Assessee Lawyers: S SHRIDHAR
• Keywords: Reopening of assessment; Unexplained cash credit; Revised return
• Section: 143(3); 148; 132

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NOS. 948, 949, 950, 951 AND 952/MDS/2010 ASSESSMENT YEARS: 1999-2000, 2000-01, 01-02, 03-04 AND 05-06 THE INCOME TAX OFFICER , BUSINESS WARD II(1), 3 RD FLOOR, NEW BLOCK, AAYAKAR BHAWAN, 121, M.G. ROAD, CHENNAI -34. VS. M/S. OM AUTOMOBILES, 114, LUZ CHURCH ROAD, MYLAPORE, CHENNAI 4. [PAN: AAAFO9763E] (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI JAYARAGAVAN, JCIT RESPONDENT BY : SHRI S. SHRIDHAR, ADVOCATE DATE OF HEARING : 30.04.2012 DATE OF PRONOUNCEMENT : 16.05.2012 ORDER PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER THESE FIVE APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST DIFFERENT ORDERS OF THE CIT(A) VI, CHENNAI ALL DATED 25.02.20 10 IN ITA NO. 49/08-09 FOR THE ASSESSMENT YEAR 1999-2000, ITA NO. 50/08-09 FOR THE ASSESSMENT YEAR 2000-01, ITA NO. 51/08-09 FOR THE ASSESSMENT Y EAR 2001-02, ITA NO. 33/08-09 FOR THE ASSESSMENT YEAR 2003-04 AND ITA NO . 19/008-09 FOR THE ASSESSMENT YEAR 2005-06. SHRI JAYARAGAVAN, JICT REP RESENTED ON BEHALF OF THE REVENUE AND SHRI S. SRIDHAR, ADVOCATE REPRESENT ED ON BEHALF OF THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 2 ASSESSEE. 2. THE ONLY COMMON ISSUE IN THE GROUNDS OF APPEALS OF THE REVENUE FOR ALL THESE FIVE YEARS IS THAT THE COMMISSIONER OF IN COME TAX (APPEALS) ERRED IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1) (C) OF THE ACT. 3. THE BRIEF FACTS IN THESE CASES ARE THAT THE ASS ESSEE IS A DEALER OF MAHENDRA & MAHENDRA DEALING IN TRACTORS AND TRACTOR S PARTS HAVING ITS SHOW ROOM AND SALES OFFICE AT URAPAKKAM, CHENNAI. WHILE COMPLETING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2003-04, THE ASS ESSING OFFICER CAME TO KNOW THAT THERE IS ESCAPEMENT OF INCOME IN ASSES SEES CASE. CONSEQUENT TO THE ASSESSMENT MADE FOR THE ASSESSMENT YEAR 2003 -04, THE ASSESSMENTS FOR THE ASSESSMENT YEARS 1999-2000, 2000-01 AND 200 1-02 WERE REOPENED BY ISSUE OF NOTICE UNDER SECTION 148. IN RESPONSE T O THE NOTICE UNDER SECTION 148, THE ASSESSEE FILED RETURNS OF INCOME FOR THE A SSESSMENT YEARS 1999- 2000, 2000-01 AND 2001-02 DECLARING INCOME AT ` .16,70,009/-, ` .12,42,707/- AND ` .10,04,404/- RESPECTIVELY. ON APPEAL, THE COMMISSIO NER OF INCOME TAX (APPEALS) GAVE PARTIAL RELIEF TO THE ASSESSEE AND I N CONSEQUENT TO THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE AS SESSING OFFICER PASSED CONSEQUENTIAL ORDER DETERMINING THE INCOME AT ` .15,17,844/-, ` .15,47,718/- AND ` .9,32,815/- FOR THE ASSESSMENT YEARS 1999-2000, 200 0-01 AND 2001-02 RESPECTIVELY. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 3 4. THE ASSESSING OFFICER WHILE COMPLETING THE ASS ESSMENTS, MADE ADDITIONS TOWARDS UNEXPLAINED ADVANCES FROM CUSTOME RS, UNEXPLAINED SOURCE FOR PURCHASES AND INCENTIVES RECEIVED FROM M /S. MAHENDRA & MAHENDRA FOR THE ASSESSMENT YEAR 2003-04. THE ASSES SMENT WAS COMPLETED UNDER SECTION 143(3) DETERMINING THE INCO ME AT ` .77,95,818/- AS AGAINST INCOME RETURNED AT ` .36,610/-. WHILE PASSING CONSEQUENTIAL ORDER GIVING EFFECT TO THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS), THE TOTAL INCOME WAS DETERMINED AT ` .21,45,789/-. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF T HE ACT, MADE CERTAIN ADDITIONS ON ESTIMATED UNACCOUNTED SALES, ESTIMATED PROFIT ON GROSS RECEIPTS AND INCENTIVES RECEIVED FROM MAHENDRA & MAHENDRA. 5. THE ASSESSING OFFICER PASSED ORDERS UNDER SECTI ON 271(1)(C) FOR ALL THESE FOUR ASSESSMENT YEARS I.E., 1999-2000, 2000-0 1, 2001-02 AND 2003- 04 LEVYING PENALTY ON THE ADDITIONS SUSTAINED BY TH E COMMISSIONER OF INCOME TAX (APPEALS). ON APPEAL AGAINST THE PENALTY ORDERS, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PE NALTY ON WHICH THE REVENUE FILED APPEALS BEFORE US. 6. THE COUNSEL FOR THE REVENUE SUBMITTED THAT THE A SSESSMENT FOR THE ASSESSMENT YEAR 2003-04 WAS COMPLETED MAKING ADDITI ONS TOWARDS UNACCOUNTED SALES AND CONSEQUENTLY, THE ASSESSMENTS WERE REOPENED FOR THE ASSESSMENT YEARS 1999-2000, 2000-01 AND 2001-02 BY ISSUE OF NOTICE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 4 UNDER SECTION 148 AS THE ASSESSING OFFICER WAS OF T HE VIEW THAT INCOME HAD ESCAPED ASSESSMENT FOR THESE ASSESSMENT YEARS. THE COUNSEL FOR THE REVENUE SUBMITTED THAT IN RESPONSE TO 148 NOTICES, THE ASSESSEE HAS NOT FILED THE RETURNS IN TIME. THE RETURNS WERE FILED J UST 2 DAYS BEFORE COMPLETION OF ASSESSMENT. THE COUNSEL FOR THE REVENUE SUBMITTE D THAT THE RETURNS WERE FILED ONLY IN RESPONSE TO THE NOTICES ISSUED UNDER SECTION 148 AND THEREFORE RETURNS FILED CANNOT BE CONSIDERED AS VOLUNTARY RET URNS FILED BY THE ASSESSEE. THE COUNSEL SUBMITTED THAT THE COMMISSION ER OF INCOME TAX (APPEALS) IS NOT CORRECT IN CONSIDERING THE REVISED RETURN FILED BY THE ASSESSEE AS VOLUNTARY RETURNS AND THERE IS NO CONCE ALMENT OF INCOME BY THE ASSESSEE. THE COUNSEL FURTHER SUBMITTED THAT THE AS SESSEE HAS NOT FURNISHED FULL PARTICULARS OF INCOME IN THE ORIGINA L RETURN FILED AND WHATEVER INCOME SHOWN IN THE REVISED RETURN WAS ONLY IN RESP ONSE TO THE SHOW CAUSE NOTICE ISSUED DURING THE COURSE OF ASSESSMENT BY TH E ASSESSING OFFICER. THEREFORE, THERE IS NO VOLUNTARY DISCLOSURE OF INCO ME BY THE ASSESSEE. THE COUNSEL FOR THE REVENUE SUPPORTED THE ORDER OF THE ASSESSING OFFICER IN LEVYING PENALTY UNDER SECTION 271(1)(C) . 7. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN RESPONSE TO NOTICE ISSUED UNDER SECTION 148, THE ASSESSEE FILED REVISE D RETURNS OFFERING HIGHER INCOME TO TAX VOLUNTARILY BY THE ASSESSEE. THE COUN SEL SUBMITTED THAT THE ADDITIONS WERE MADE ONLY BASED ON THE REVISED RETUR NS AND THE INFORMATION I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 5 SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS AND THEREFORE, THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS ESTIMATED PROFIT ON GROSS RECEIPTS AND PROFITS ON ALLEGED UNACCOUNTED SALES. THE ASSES SING OFFICER ALSO MADE ADDITIONS TOWARDS ADVANCES RECEIVED FROM CUSTOMERS AND INCENTIVES RECEIVED FROM MAHENDRA & MAHENDRA, WHICH WERE REDUC ED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE COUNSEL F OR THE ASSESSEE STRONGLY RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND SUBMITTED THAT THE PENALTY MAY BE DELETED AND O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SUSTAIN ED. 8. WE HAVE HEAD BOTH SIDES, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IT APPEARS THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED DETA ILS BEFORE THE ASSESSING OFFICER, WHICH INCLUDES COPIES OF SALES I NVOICES, CASH BOOK, LEDGER, STATEMENTS FROM MAHENDRA & MAHENDRA ALONG W ITH AN EXPLANATION STATING THAT DUE TO MISTAKE OF THE ACCOUNTANT, THE PURCHASES AND SALES OF THE TRACTORS AND ACCESSORIES WERE WRONGLY MIXED UP WITH THE ADVANCE FROM CUSTOMERS ACCOUNT AND THEREFORE RESULTED IN DISCLOS URE TOWARDS UNEXPLAINED SOURCE TOWARDS PURCHASES AND UNEXPLAINED ADVANCE FR OM CUSTOMERS. 9. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS ), THE ASSESSEE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 6 SUBMITTED THAT DUE TO SHORTAGE OF TIME AND NON-AVAI LABILITY OF PROPER DETAILS FOR FINDING OUT THE ACTUAL NATURE OF DISCREPANCIES AS PER THE DIRECTIONS OF THE ASSESSING OFFICER, THE REVISED RETURN HAS BEEN PREP ARED AND FILED BASED ON THE DATAS AND RECORDS ON HAND WITHOUT PROPERLY LOOK ING INTO ALL OTHER MATTERS COMPREHENSIVELY. THE COMMISSIONER OF INCOME TAX (AP PEALS) CONSIDERING ALL ASPECTS OF THE MATTER AND THE CASE LAW RELIED O N BY THE ASSESSEE, DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C). THE COM MISSIONER OF INCOME TAX (APPEALS) ALSO TAKEN NOTE OF THE FACT THAT CERTAIN ADDITIONS WERE MADE BASED ON ESTIMATION OF INCOME AND PENALTY CANNOT BE LEVIE D ON SUCH A SITUATION WHERE ADDITIONS MADE ON ESTIMATE BASIS. 10. THE GRIEVANCE OF THE DEPARTMENT IN THE GROUNDS OF APPEAL IS THAT THE ASSESSEE FILED REVISED RETURNS SUBSEQUENT TO ISSUE OF NOTICE UNDER SECTION 148 AND THE INCOME WAS NOT VOLUNTARILY RETURNED AS CLAIMED BY THE ASSESSEE. ON AN IDENTICAL CASE OF THE ASSESSEE, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL [251 I TR 009], WHILE AFFIRMING THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COU RT IN THE CASE OF CIT V. SURESH CHANDRA MITTAL [241 ITR 124] HELD THAT PENAL TY CANNOT BE LEVIED WHEN THE ASSESSEE FILED REVISED RETURN SHOWING HIGH ER INCOME AFTER SEARCH AND NOTICE FOR REOPENING OF ASSESSMENT WERE ISSUED. THE RELEVANT HEAD- NOTE AND THE GIST OF THE CASE ARE REPORTED AS UNDER : PENALTY COPNCEALMENT OF INCOME ASSESSEE INTIALLY FILING RETURNS WITH MEAGRE INCOME FILING I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 7 REVISED RETURNS SHOWING HIGHER INCOME AFTER SEARCH AND NOTICE FOR REOPENING ASSESSMENT, TO PURCHASE PEASE AND AVOID LITIGATION APPELLATE TRIBUNAL HOLDING THAT BURDEN OF PROVING CONCEALMENT NOT DISCHARGED AND PENALTY CANNOT BE LEVIED PROPER INCOME-TAX ACT, 1961, SS. 132, 271. THE ASSESSEE HAD ORIGINALLY FILED RETURNS SHOWING M EAGRE INCOME. WHEN, AFTER ACTION UNDER SECTION 132 OF THE INCOME- TAX ACT, 1961, A NOTICE UNDER SECTION 148 WAS SERVED ON HIM, HE FILE D REVISED RETURNS SHOWING HIGHER INCOME. EVENTUALLY, ASSESSMENT ORDER S WERE PASSED AND THE RETURNS SUBMITTED REGUARLISED UNDER SECTION, 14 8. IN PENALTY PROCEEDINGS UNDER SECTION 271, THE ASSESSEE CLAIMED THAT HE HAD OFFERED ADDITIONAL INCOME TO BUY PEACE OF MIND AND AVOID LITIGATION. PENALTY ORDERS WERE PASSED AND THE COMMISSIONER (AP PEALS) CONFIRMED THE ORDERS. BUT THE APPELLATE TRIBUNAL HELD THAT TH E DEPARTMENT HAD NOT DISCHARGED ITS BURDEN OF PROVING CONCEALMENT AND HA D SIMPLY RESTED ITS CONCLUSION ON THE ACT OF VOLUNTARY SURRENDER DONE B Y THE ASSESSEE IN GOOD FAITH, AND THAT PENALTY COULD NOT BE LEVIED. O N A REFERENCE, THE HIGH COURT HELD THAT NO PENALTY COULD BE LEVIED FOR CONCEALMENT (SEE [200] 241 ITR 124]. THE DEPARTMENT PREFERRED APPEAL S TO THE SUPREME COURT. THE SUPREME COURT DISMISSED THE APPEALS HOLD ING THAT NO INTERFERENCE WITH THE ORDER OF THE HIGH COURT WAS C ALLED FOR. 11. THEREFORE, IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE IN THE CASE OF TH E ASSESSEE FOR THESE ASSESSMENT YEARS. THEREFORE, WE SUSTAIN THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE GROUNDS OF APPEAL OF T HE REVENUE ARE DISMISSED. 12. IN THE RESULT, THE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEARS 1999-2000, 2000-01, 2001-02 AND 2003-04 ARE DISMISS ED. I.T.A. NO. 952/MDS/2010 : ASSESSMENT YEAR 2005-06 I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 8 13. THE ONLY ISSUE IN THE GROUNDS OF APPEAL OF THE REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOW ING THE CLAIM OF TELESCOPING TO THE EXTENT OF ` .11,10,033/-. 14. THE ASSESSING OFFICER WHILE COMPLETING THE ASS ESSMENT MADE VARIOUS ADDITIONS TOWARDS ADVANCES FROM CUSTOMERS, INCENTIV ES RECEIVED FROM MAHENDRA & MAHENDRA, UNEXPLAINED PURCHASES, ETC. 15. THE ASSESSEE FILED AN APPEAL BEFORE THE COMMIS SIONER OF INCOME TAX (APPEALS) ON THESE ADDITIONS AND THE COMMISSIONER O F INCOME TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO RECOMPU TE THE INCOME OF THE ASSESSEE FOLLOWING THE DECISION MADE BY HIS PREDECE SSOR IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02 IN ITA NO. 10/ 07-08 DATED 21.11.2007. AGAINST THIS ORDER, THE REVENUE IS IN A PPEAL BEFORE US. 16. THE COUNSEL FOR THE REVENUE SUBMITTED THAT INC ENTIVE FROM MAHENDRA & MAHENDRA WAS CREDITED BY WAY OF ADJUSTMENT IN THE BOOKS AND NOT BY WAY OF CASH AND THEREFORE NO TELESCOPING IS REQUIRED. T HUS, HE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN DIRECTING THE ASSESSING OFFICER TO TELESCOPING. 17. THE COUNSEL FOR THE ASSESSEE RELIED ON THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS). I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 9 18. WE HAVE HEARD BOTH SIDES, PERUSED THE ORDERS O F LOWER AUTHORITIES. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONSID ERED THIS ISSUE IN PARA 5.1 AND 5.2 AND HELD AS UNDER: 5.1 REGARDING ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF ` .15,15,773/-, THE ASSESSEE'S AR HAS NOT SUBMITTED A NY DETAILS FOR THIS YEAR BUT HE REQUESTED THAT THE AMOUNT ADDED TOWARDS PROFIT ON UNACCOUNTED PURCHASES AMOUNTING TO ` .2,46,737/- AND INCENTIVE RECEIVED OF ` .8,63,296/- MAY KINDLY DIRECTED TO BE TELESCOPED AG AINST THE UNEXPLAINED CASH CREDIT OF ` .15,15,773/SINCE ALL THE ADDITIONS WILL RESULT IN ACCRUAL OF CASH. IN THIS CONNECTION, THE AR ALSO FURNISHED COPY OF THE ORDER OF MY PREDECESSOR IN THE ASSESSEE'S OW N CASE FOR THE ASSESSMENT YEAR 2001-02 VIDE ITA NO.L0/07-0B DATED 21.11.2007. 5.2 I HAVE GONE THROUGH THE FACTS OF THE CASE, SUB MISSIONS OF THE APPELLANT, THE ORDER OF THE ASSESSING OFFICER A ND THE ORDER OF MY PREDECESSOR. BY FOLLOWING THE DECISION MADE BY M Y PREDECESSOR, THE ASSESSING OFFICER IS DIRECTED TO R ECOMPUTE THE INCOME OF THE APPELLANT AS UNDER:- TOTAL INCOME DETERMINED BY THE AO ` .33,45,886/- LESS: TELESCOPING OF INCENTIVE RECEIVED OFFERED AS INCOME IN THE CURRENT YEAR ` .8,63,296 TELESCOPING OF UNACCOUNTED PURCHASES ` .2,46,737 ----------- ` . 11,10,033/- TOTAL INCOME TO BE ADOPTED ` .22,35,853/- THUS, THE APPEAL OF THE APPELLANT SUCCEEDS PARTLY. 19. AS COULD BE SEEN FROM THE ABOVE, THE COMMISSIO NER OF INCOME TAX (APPEALS) FOLLOWED HIS PREDECESSORS ORDER, WHEREIN AN IDENTICAL SITUATION AROSE FOR THE ASSESSMENT YEAR 2001-02. THEREFORE, W E SEE NO REASON TO INTERFERE WITH THE DIRECTION GIVEN BY THE COMMISSIO NER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEAR 2005-06. THEREFOR E, WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. . . . 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 948 TO 952/M/10 10 20. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 16 TH OF MAY, 2012 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 16.05.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.