Deputy Commissioner of Income-tax, V. SSV Engineers Pvt. Ltd., Pune

ITA 98/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9211 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 19-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP GARG
• Assessee Lawyers: RISHI V LODHA
• Section: 143(3); 133A

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.98/PUN/2015 [ [ / ASSESSMENT YEAR : 2010-11 DY. COMMISSIONER OF INCOME - TAX, CIRCLE 10, PUNE. PRATYAKSHA KAR BHAVAN, DR. AMBEDKAR ROAD, NEAR AKURDI RAILWAY STATION, PUNE 411044. . / APPELLANT V/S S.S.V. ENGINEERS PVT. LTD., E-110, GEN BLOCK MIDC, BHOSARI, PUNE 411026. PAN : AALC7339E. . / RESPONDENT ASSESSEE BY : SHRI RISHI V. LODHA. REVENUE BY : SHRI SANDEEP GARG. / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (A) - V, PUNE DT.28.10.2014 FOR A.Y. 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF INDUSTR I AL CO M PONENTS. ASSESSEE ELECTRONICALLY FILED THE RETURN OF INCOME FOR A . Y . 2010-11 ON 27 .0 9 . 2010 DECLARING TOTA L INCOME OF RS.3,91,60,880/- IT REVISED THE RETURN OF INCOME ON / DATE OF HEARING : 06.04.2017 / DATE OF PRONOUNCEMENT: 05.07.2017 2 19 . 12.2010 DECLARING THE SAME TOTAL I NCOME OF RS.3,91,60,880/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 28 .0 3 . 2013 AND THE TOTAL INCOME WAS DETERM I NED AT RS . 4 , 07 , 35 , 970/-. THEREAFTER AO VIDE ORDER DT.30.09 . 2013 PASSED ORDER U/S 271(1)(C) AND LEV I ED PENALTY OF RS.66,66,710/ - FOR THE FOLLOWING REASON : A SURVEY ACTION U/S 133A WAS CARRIED OUT ON 19.03 . 2010 WHEREIN CERTAIN INCR I MINATING MATER I AL WAS FOUND AND IMPOUNDED . THE ASSESSEE MADE DISCLOSURE OF RS.2 , 64 , 65,879/- ON ACCOUNT OF SHORT CASH AND EXCESS STOCK FOUND DURING THE SURVEY . DUR I NG SCRUTINY PROCEEDINGS IT WAS NOTICED THAT I N SURVEY EXCESS STOCK OF RS 34926813 WAS FOUND BUT ASSESSEE MADE DISCLOSURE OF RS 2 , 00 , 00 , 000 ON L Y . WHEN CONFRONTED, ASSESSEE OFFERED SOME EXPLANATION AND THEREAFTER ADDITION OF RS 6,92,235 ON ACCOUNT OF EXCESS STOCK WAS MADE AND WAS ACCEPTED BY THE ASSESSEE . ADDITION WAS ALSO MADE OF RS 668598 O N ACCOUNT OF UNACCOUNTED INTEREST INCOME WHICH WAS ALSO ACCEPTED BY THE ASSESSEE . ADDIT I ON WAS ALSO MADE ON ACCOUNT OF DISALLOWANCE OF ADVERT I SEMENT EXPENSES OF RS 214265 WHICH WAS ALSO ACCEPTED BY ASSESSEE. AO LEVIED PENALTY U/S 271(1)(C) ON THE AFORESAID ADDITIONS INCLUDING THE AMOUNT OF RS 2 CRORES OF D I SCLOSURE MADE TO STOCK. 3. AGGRIEVED BY THE PENALTY ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 28.10.2014 IN (APPEAL NO.PN/CIT(A)-V/DCIT, CIR.10/359/13-14) GRANTED SUBSTANTIAL RELIEF BY HOLDING AS UNDER : 10. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. THE CONTENTION OF THE ASSESSING OFFICER MAY BE TRUE THAT INCOME ON ACCOUNT OF EXCESS STOCK WAS DECLARED BY THE APPELLANT ONLY BECAUSE OF ACTION U/S. 133A OF INCOME-TAX ACT BY THE DEPARTMENT. THIS CAN BE FURTHER PROVED FROM THE FACT THAT SUCH A HUGE DISCREPANCY IN STOCK IN SIMPLY ASTONISHING. THERE IS SYSTEM IN TALLY SOFTWARE WHICH SHOWS THE STOCK BUT THE APPELLANT HAS DISABLED THE SAME AND HAS MAINTAINED STOCK IN SEPARATE EXCEL SHEET. LOGIC FOR DOING THE THINGS IN THIS WAY IS NOT DIFFICULT TO UNDERSTAND AND THE ONLY MOTIVE COULD BE TO SHOW THE STOCK AS PER ITS CONVENIENCE. BUT THAT IN ITSELF IS NOT SUFFICIENT TO LEVY PENALTY U/S. 271(1)(C) OF INCOME-TAX ACT IN RESPECT OF DISCLOSURE OF RS. 2 CRORES IN THE RETURN OF INCOME. IN THIS CASE, AFTER SURVEY TIME FOR FILING RETURN U/S. 139(1) OF INCOME-TAX ACT WAS AVAILABLE AND THE APPELLANT FILED RETURN OF INCOME SHOWING DISCLOSURE OF RS. 2 CRORES IN THE RETURN OF INCOME. IT MUST BE UNDERSTOOD THAT THE BASIS FOR LEVY OF PENALTY IS RETURN OF INCOME. IF ANY AMOUNT HAS BEEN SHOWN IN THE RETURN OF INCOME, THEN IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FILED INACCURATE PARTICULARS OF INCOME. THERE CANNOT BE ANY CONCEALMENT PRIOR TO FILING OF RETURN OF INCOME. THIS BEING SO, PENALTY U/S.271(1)(C) OF INCOME-TAX ACT CANNOT BE LEVIED IN RESPECT OF EXCESS STOCK OF RS.2,00,00,000/-OFFERED FOR TAXATION IN THE RETURN OF INCOME. THERE IS ALSO MERIT IN THE SUBMISSION OF THE APPELLANT 3 THAT IN THE ASSESSMENT ORDER, PENALTY U/S.271(1)(C) OF INCOME-TAX ACT WAS INITIATED IN RESPECT OF ADDITION OF RS.6,92,235/- ONLY AND NOT IN RESPECT OF ENTIRE AMOUNT OF EXCESS STOCK AT RS.2,06,92,235/-. ACCORDINGLY, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING PENALTY U/S.271(1)(C) OF INCOME-TAX ACT IN RESPECT OF EXCESS STOCK FOUND DURING SURVEY BUT OFFERED FOR TAXATION IN THE RETURN OF INCOME AMOUNTING TO RS.2,00,00,000/-. AS FAR AS PENALTY U/S. 271(1)(C) OF INCOME-TAX ACT IN RESPECT OF ADDITION OF RS.6,92,235/- IS CONCERNED, THE STAND OF THE ASSESSING OFFICER IS UPHELD AS THE ADDITION WAS MADE DURING THE COURSE OF VERIFICATION OF FACTS/RECONCILIATION OF STOCK STATEMENT AND THE APPELLANT HAD NO OTHER OPTION BUT TO ACCEPT THE ADDITION. THE MERE FACT THAT THE APPELLANT AGREED FOR THE ADDITION DURING THE COURSE OF ASSESSMENT PROCEEDINGS WILL NOT ABSOLVE THE APPELLANT FROM THE PENALTY LIABILITY U/S. 271(1)(C) OF INCOME-TAX ACT. ACCORDINGLY, PENALTY U/S. 271(1)(C) OF INCOME-TAX ACT IS UPHELD IN RESPECT OF ADDITION OF RS.6,92,235/-. THE ASSESSING OFFICER HAD RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. MAK DATA LTD, 87 DTR 172(DEL.). IT IS SEEN THAT THE FACTS IN THE CASE OF MAK DATA WERE DIFFERENT AS IN THAT CASE ADDITION WAS MADE ON THE BASIS OF IMPOUNDED DOCUMENTS DURING SURVEY AFTER FILING OF RETURN OF INCOME WHILE IN THE PRESENT CASE THE AMOUNT OF RS.2 CRORES WAS OFFERED IN THE RETURN OF INCOME. THEREFORE, THE RELIANCE OF THE ASSESSING OFFICER ON THE ABOVE CASE IS MISPLACED. THUS, THE GROUND IS PARTLY ALLOWED. 4. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND : WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) WAS RIGHT IN DELETING THE PENALTY U/S.271 (1)(C) ON THE INCOME OF RS. 2 CRORES COMPUTED ON THE BASIS OF DISCREPANCY FOUND DURING SURVEY IN ACTUAL STOCK AND STOCK MAINTAINED IN THE REGULAR BOOKS OF ACCOUNTS , ONLY BECAUSE THE ASSESSEE DECLARED THE SAME IN HIS RETURN FILED SUBSEQUENT TO SURVEY, DESPITE MANY CASE LAWS HOLDING THE CONTRARY VIEW AND THE EXPLANATION 1 (A) OF SECTION 271 (1)(C) ? 5. BEFORE US, LD DR TOOK US THROUGH THE ORDER OF AO AND SUPPORTED THE ORDER OF AO . LD AR ON THE OTHER HAND SUPPORTED THE ORDER OF LD.CIT(A) AND SUBMITTED THAT REVENUE HAS GRIEVANCE ONLY WITH RESPECT TO THE DELETION OF PENALTY BY LD.CIT(A) ON RS 2 CRORES). HE REITE R ATED THE SUBMISSIONS MADE BE F ORE LD.CIT(A) AND FURTHER RELIED ON THE DECISION OF TRIBUNAL IN THE CASE OF SHRI ANAND SURESH JA I N (ITA NO.353/PN/2015 ORDER DT.13.01 . 2017) AND A L SO PLACED ON RECORD THE COPY OF THE AFORESA I D DECISION . HE THUS SUPPORTED THE ORDER OF CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD . THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) . IT IS AN UNDISPUTED FACT THAT THE UNDISCLOSED 4 INCOME WAS OFFERED PURSUANT TO THE SURVEY ACTION ON ASSESSEE. LD CIT(A) WHILE DELETING THE PENALTY ON RS 2 CRORE HAS NOTED THAT THE AMOUNT WAS DISCLOSED IN THE RETURN OF INCOME FILED BY THE ASSESSEE AND IN SUCH A SITUATION IT CANNOT BE SAID THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FILED INACCURATE PARTICULARS OF INCOME MORE SO WHEN THE BASIS OF LEVY OF PENALTY IS THE RETURN OF INCOME . WE FURTHER FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ANAND SURESH JAIN (SUPRA) AND AFTER RELYING ON THE DECISION OF PUNE TRIBUNAL IN THE CASE OF NANDKKISHORE TULSIDAS KATORE VS. ACIT (ITA NO.2174 TO 2180/PN/2014 ORDER DT. 14 . 12 . 2016) HAS HELD THAT WHEN ASSESSEE HAS OFFERED ADDITIONAL INCOME IN THE RETURN OF INCOME AND WHICH HAS BEEN ACCEPTED BY AO THEN NO PENALTY ON ACCOUNT OF CONCEALMENT OF INCOME U/S 271(1)(C) IS LEVIABLE AND FURTHER THE ADDITIONAL INCOME OFFERED DURING THE COURSE OF SURVEY DOES NOT PARTAKE THE NATURE OF ADDITIONAL INCOME REFERRED TO IN EXPLANATION 5 TO SEC.271(1)(C) OF THE ACT. BEFORE US, REVENUE HAS NOT PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT NOR HAS CONTROVERTED THE FINDINGS OF LD CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED . 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 5 TH JULY, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 5 TH JULY, 2017. YAMINI 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-V, PUNE CIT-V, PUNE. , , / DR, ITAT, A PUNE; [ / GUARD FILE. / BY ORDER , / / TRUE COPY / / //TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE