Shri Bhadresh Jashwantlal Shah, Ahmedabad V. The Dy.CIT.,Circle-11, Ahmedabad

ITA 964/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80546 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: P B PARMAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.964/AHD/2011 ( / ASSESSMENT YEAR : 2007-08) MR.BHADRESH JASHWANTLAL SHAH 6, OPP. LATI BAZAR GITA MANDIR ROAD LATI BAZAR, AHMEDABAD / VS. THE DCIT CIRCLE-11 AHMEDABAD ./ ./ PAN/GIR NO. : AINPS 8863 L ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI P.B. PARMAR, AR $% #'& / RESPONDENT BY : SHRI M.K. SINGH, SR.DR ()'* / DATE OF HEARING 12/11/2014 +,-.'* / DATE OF PRONOUNCEMENT 28/11/2014 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XVI, AHMEDAB AD (CIT(A) IN SHORT) DATED 17/02/2011 PERTAINING TO ASSESSMEN T YEAR (AY) 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS): XVI, AHMEDABAD [HEREINAFTER REFERRED TO AS CIT(A)] HAS G ROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY U/S.271( 1)(C) OF THE ACT ON ADDITION OF RS.84,000/-, BEING SALARY PAYMENT MA DE TO MR.JASHWANTLAL N.SHAH. (I) WITHOUT ASCERTAINING THE FACTS EITHER FROM THE REC IPIENT OR FROM THE APPELLANT; ITA NO.964 /AHD /2011 MR. BHADRESH JASHWANTLAL SHAH VS. DCIT ASST.YEAR 2007-08 - 2 - (II) MERELY BY DRAWING INFERENCES FROM THE STATEMENT OF JUNIOR EMPLOYEE MS.RAGINI THAKKAR, WHOSE STATEMENT WAS REC ORDED TO ASCERTAIN THE GENUINENESS OF SALARY PAID TO HER AND (III) WITHOUT EVEN ASKING A SINGLE QUESTION ABOUT THE EMP LOYMENT OF MR.JASHWANTLAL N.SHAH AND SERVICES RENDERED BY T HE SAID MR.JASHWANTLAL N.SHAH. 2. THE LD.CIT(A) HAS GROSSLY ERRED IN LAW IN THROWING OVERBOARD THE RATIO LAID DOWN BY THE APEX COURT IN THE CASE OF CI T V RELIANCE PETROPRODUCTS PVT.LTD. (322 ITR 158). 3. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, WITHDRAW, CHANGE, SUBSTITUTE, MODIFY ANY OF THE GROUNDS AS AN D WHEN THE OCCASION MAY ARISE. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 29.12.2009, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE CERTAIN DISALLOWANCES INCLUDING THE SALARY PAID TO SHRI JASHWANTLAL NANDLAL SHAH AMOUNTING TO RS.84,000/-. THE AO ALSO INITIATED PENALTY PROCEEDINGS. SUBSEQUENTLY, A PENALTY ORDER U/S.271 (1)(C) WAS PASSED ON 31/05/2010 ON THE DISALLOWANCE OF RS.2,40,652/-. A GAINST THIS, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, PARTLY ALLOWED THE APP EAL. 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ADDITION OF RS.84,000/- ON WHICH PENALTY HAS BEEN LEVIED WAS SU STAINED ON THE BASIS THAT AN EMPLOYEE OF THE ASSESSEE HAD MADE STATEMENT . HE SUBMITTED THAT MS.RAGINI THAKKAR IS ONLY A DISPATCH CLERK AND WAS NOT AWARE OF THE DAY- TO-DAY AFFAIRS OF THE ASSESSEE. HE SUBMITTED THAT SHRI JASHWANTLAL NANDLAL SHAH IS THE FATHER OF THE ASSESSEE AND HE H AS BEEN ASSISTING HIM ITA NO.964 /AHD /2011 MR. BHADRESH JASHWANTLAL SHAH VS. DCIT ASST.YEAR 2007-08 - 3 - IN HIS BUSINESS. HE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LD.CIT(A). HE SUBMITTED THAT THE AUTHORITIES BELOW DID NOT GRANT OPPORTUNITY OF CROSS-EXAMINAITON OF MS.RAGINI THAKK AR. 3.1. ON THE OTHER HAND, LD.SR.DR SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE GROSSLY FAILE D TO SUPPORT THE EXPENDITURE WITH EVIDENCE. HE SUBMITTED THAT IN QU ANTUM PROCEEDINGS THIS ADDITION WAS SUSTAINED TILL THE STAGE OF THIS TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS SETTLED POSITION OF LAW THAT THE QUANTUM PROC EEDINGS AND THE PENALTY PROCEEDINGS ARE TWO SEPARATE AND INDEPENDENT PROCEE DINGS. UNDER THE FACTS OF THE PRESENT CASE, THERE IS NO CONCEALMENT BY THE ASSESSEE AS THE ASSESSEE IN FORM 3-CD REPORTED THAT THE PAYMENT OF SALARY TO THE PERSONS SPECIFIED U/S.40A(2)(B) OF THE ACT. IT IS THE CONT ENTION OF THE ASSESSEE THAT RS.84,000/-, RS.60,000/- & RS.48,000/- WERE PA ID TO SHRI JASHWANTLAL NANDLAL SHAH FOR SALARY OFFICE, OFFICE RENT AND GODOWN RENT RESPECTIVELY. IT IS THE CONTENTION OF THE ASSESSEE THAT SHRI JASHWANTLAL N.SHAH IS REGULARLY ATTENDING THE OFFICE AND TAKES CARE OF ALL OFFICE ROUTINE WORK AND OFFICE STAFF AND HE IS ALSO AN INC OME-TAX PAYER AND THESE INCOME ARE REFLECTED IN HIS RETURN OF INCOME. TH E AO MADE ADDITION ON THE BASIS THAT A STATEMENT U/S.131 OF THE ACT WAS R ECORDED OF MS.RAGINI THAKKAR. IN HER STATEMENT SHE HAS NOT MENTIONED NA ME OF SHRI JASHWANTLAL N.SHAH. HENCE, THE ADDITION HAS BEEN S USTAINED ON THE BASIS OF THE STATEMENT OF AN ANOTHER EMPLOYEE OF THE ASSE SSEE. THE ASSESSEE ITA NO.964 /AHD /2011 MR. BHADRESH JASHWANTLAL SHAH VS. DCIT ASST.YEAR 2007-08 - 4 - HAS REFLECTED THE PAYMENT OF SALARY AND BONUS MADE TO SHRI JASHWANTLAL N.SHAH IN THE BOOKS OF ACCOUNTS DULY RECORDED BY TH E AUDITOR OF THE ASSESSEE WHICH IS ENCLOSED AT PAGE NO.65 OF THE PA PER-BOOK. THE AO HAS NOT EXAMINED SHRI JASHWANTLAL N.SHAH IN RESPECT OF THE SALARY RECEIVED BY HIM COUPLED WITH FACT THAT SHRI JASHWAN TLAL N.SHAH IS AN INCOME-TAX PAYER. UNDER THESE PECULIAR FACTS, WE A RE OF THE CONSIDERED VIEW THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN SUSTAI NING THE PENALTY. THEREFORE, WE HEREBY DIRECT THE AO TO DELETE THE PE NALTY. THUS, GROUND OF THE ASSESSEES APPEAL IS ALLOWED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/11/2014 2*..,(.../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-XVI, AHMEDABAD 5. 7(8$45 , *45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<) / GUARD FILE. ! / BY ORDER, %7$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD