Asstt.CIT Cir.-2, Jalgaon V. M/s. Sudarshan Paper and Products, Jalgaon

ITA 996/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3121 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 19-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE SR
• Keywords: Business income; Revised return
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER & SHRI G.S.PANNU ACCOUNTANT MEMBER ITA NO.996/PN/09 (A.Y. 2006-07) THE ASSTT.CIT, CIRCLE-2, JALGAON APPELLANT VS. M/S. SUDARSHAN PAPER AND PRODUCTS, RESPONDENT GUT NO.308/1, AT POST- SUNASGAON, TAL. BHUSWAL, DIST. JALGAON PAN AARFS8342N APPELLANT BY : SHRI. ABHAY DAMLE, SR. AR RESPONDENT BY : SHRI. NONE ORDER PER G.S.PANNU, AM THIS APPEAL OF THE REVENUE PERTAINING TO ASSESSMENT YEAR 2006- 07 IS DIRECTED AGAINST THE ORDER OF THE CIT (A) DA TED 09-06-2009, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY T HE ASSESSING OFFICER DATED 21/11/2008 U/S. 271(1)(C) OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL THE SOLITARY GRIEVANCE OF THE REV ENUE IS AGAINST THE ACTION OF THE CIT(A) IN DELETING THE PENALTY I MPOSED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE ACT, AMOUN TING TO RS.2,50,000/-. 3. AT THE TIME OF HEARING, MR. ABHAY DAMLE APPEARED ON BEHALF OF THE REVENUE WHILE NONE APPEARED ON BEHALF OF THE RE SPONDENT- ASSESSEE IN SPITE ISSUANCE OF NOTICE FOR HEARING. ACCORDINGLY IN TERMS OF RULE 25 OF APPELLATE TRIBUNAL RULES, 1963 THE AP PEAL IS BEING DISPOSED OFF AFTER HEARING THE APPELLANT ON MERITS AND EXPARTE QUA THE RESPONDENT- ASSESSEE. ITA NO.996/PN/09 (A.Y. 2006-07) M/S. SUDARSHAN PAPER AND PRODUCTS, . 1998 2 4. IN BRIEF, THE FACTS RELEVANT TO THE DISPUTE CAN BE SUMMARIZED AS FOLLOWS. THE RESPONDENT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE MANUFACTURE OF PAPER PRODUCTS OUT OF WASTE PAPER. IT FILED A RETURN OF INCOME ON 31/10/2006 DECLARING TOTAL INCOME OF RS.3 3,340/-. A SURVEY ACTION U/S. 133A OF THE ACT WAS UNDERTAKEN BY THE R EVENUE ON 13/02/2007, WHEREIN ASSESSEE MADE A VOLUNTARY DISCL OSURE OF RS.6,36,800/- AND RS.19,500/- ON ACCOUNT OF DISCRE PANCIES IN PURCHASE OF WASTE PAPER AND MACHINERY RESPECTIVELY, TOTALING TO RS.6,56,300/-, THEREBY DECLARING ADDITIONAL INCOME DURING THE SUR VEY. ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 22/08/2008 DETERMINING TOTAL INCOME AT RS.8,90,630/-. SUBSEQU ENTLY, THE ASSESSING OFFICER VIDE ORDER DATED 21/11/2008 HAS HELD THE ASSESSEE GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCO ME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT WITH RESPECT TO ADD ITIONAL INCOME OF RS.6,56,300/- DISCLOSED DURING THE SURVEY. ACCORDI NGLY, PENALTY U/S. 271(1)(C) AMOUNTING TO RS.2,50,000/- WAS IMPOSED. 5. IN APPEAL BEFORE THE CIT(A), ASSESSEE CONTENDED THAT THERE WAS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME AND THAT THE ADDITIONAL INCOME WAS DISCLOSED WITH THE C ONDITION THAT NO PENALTY U/S. 271(1)(C) WOULD BE LEVIED. RELIANCE W AS PLACED ON THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF CIT VS. CAFCO SHIPPING CO. (2008) 174 TAXAMAN 406 (MAD.) AN D ALSO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F SURESH CHANDRA MITTAL, 251 ITR 9 (SC). 6. THE CIT(A) HAS SINCE DELETED THE PENALTY FOR THE REASON THAT THERE WAS NO MATERIAL TO JUSTIFY THE IMPOSITION OF PENALTY PARTICULARLY ITA NO.996/PN/09 (A.Y. 2006-07) M/S. SUDARSHAN PAPER AND PRODUCTS, . 1998 3 WHEN THE ASSESSEE DISCLOSED THE INCOME ONLY TO PURC HASE THE PEACE OF MIND SUBJECT TO NON LEVY OF PENALTY. AS PER THE CIT(A) THERE IS NO INVESTIGATION DONE BY THE ASSESSING OFFICER TO REVE AL SUPPRESSION OF INCOME OR MATERIAL FOR THE PURPOSE OF LEVYING PENALTY U/S 271(1)(C) OF THE ACT. THE AFORESAID DELETION OF PENALTY BY THE CIT(A) IS IN APPEAL BEFORE US. 7. BEFORE US LEARNED D.R. APPEARING FOR REVENUE VEH EMENTLY ARGUED THAT THE ORIGINAL RETURN OF INCOME FILED CON TAINED INACCURATE PARTICULARS OF INCOME BECAUSE THE REVISED RETURN HA S BEEN FILED TO DECLARE ADDITIONAL INCOME ONLY AFTER THE SURVEY ACT ION U/S 133A OF THE ACT. AS PER THE LEARNED D.R., IF THE SURVEY ACTION HAD NOT BEEN UNDERTAKEN, SURRENDERED INCOME WOULD HAVE ESCAPED A SSESSMENT , THEREFORE, FILING OF THE REVISED RETURN INCORPORAT ING THE IMPUGNED INCOME, DOES NOT MITIGATE THE RIGORS OF SECTION 271(1)(C) OF THE ACT. IN THIS CONNECTION RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF WESTERN AU TOMOBILES (INDIA) VS. CIT, 112 ITR 1048 (BOM.) . 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED D.R. AND ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. FACTUALLY SPEAKING, IN THIS CASE THE ADDITIONAL INCOME OFFERED DURING T HE COURSE OF SURVEY HAS BEEN ASSESSED AS SUCH IN THE SUBSEQUENT ASSESSM ENT FINALIZED U/S. 143(3) OF THE ACT ON 22/08/2008. UNDOUBTEDLY, THE ADDITIONAL INCOME OF RS.6,56,300/- DECLARED DURING THE SURVEY HAS BE EN MADE A PART OF THE REVISED RETURN FILED ON 19/02/2007. MERE DECLARATION OF A HIGHER INCOME IN THE REVISED RETURN AFTER THE SURVEY CANNO T BE TAKEN AS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. IN T HE CASE OF SURESH ITA NO.996/PN/09 (A.Y. 2006-07) M/S. SUDARSHAN PAPER AND PRODUCTS, . 1998 4 CHANDRA MITTAL (SUPRA) THE HONBLE SUPREME COURT WA S DEALING WITH A SOMEWHAT SIMILAR SITUATION. IN THAT CASE, THE ASSE SSEE HAD ORIGINALLY FILED A RETURN SHOWING MEAGRE INCOME. AFTER AN AC TION U/S. 132(1) OF THE ACT, A NOTICE U/S. 148 FOR REASSESSMENT WAS S ERVED, AND THE ASSESSEE FILED A REVISED RETURN SHOWING HIGHER INCO ME. EVENTUALLY, ASSESSMENT WAS FINALIZED AND THE RETURNED INCOME WA S ACCEPTED AS SUCH. IN PENALTY PROCEEDINGS ASSESSEE CLAIMED THAT HE HAD OFFERED HIGHER INCOME TO BUY PEACE OF MIND AND AVOID LITIGATION. THE TRIBUNAL HELD THAT THE DEPARTMENT HAD NOT DISCHARGED ITS BURDEN OF PROVING CONCEALMENT AND HAD SIMPLY RESTED ITS CONCLUSION ON THE ACT OF VOLUNTARY SURRENDER BY THE ASSESSEE IN GOOD FAITH AND, THERE FORE, THE PENALTY COULD NOT BE LEVIED. THE AFORESAID WAS A FFIRMED BY THE HONBLE SUPREME COURT. IN THE PRESENT CASE ALSO, A PERUSAL OF ASSESSMENT ORDER REVEALS THAT THE ADDITION IN QUEST ION HAS BEEN MADE MERELY ON THE STRENGTH OF VOLUNTARY SURRENDER MADE BY THE ASSESSEE DURING THE SURVEY AND EVEN IN THE PENALTY PROCEEDIN GS, WE FIND NO MATERIAL TO SHOW THAT THE BURDEN CAST ON THE REVENU E IN TERMS OF SECTION 271(1)(C) TO PROVE CONCEALMENT HAS BEEN DIS CHARGED. IN THIS CONTEXT, IN OUR VIEW, THE CIT(A) WAS JUSTIFIED IN D ELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF RS.2,50,000/-. ACCORDINGLY, THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED. BEFORE PARTING, WE MAY REFER TO THE RELIANCE PLACED BY THE LD. DR ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF WESTERN AUTOMOBILES (INDIA) (SUPRA). IN THE CASE BEFORE THE HONBLE HIGH COURT, THE ASSESSEE HAD ADMITTED CERTAIN HUNDI LOAN S TO BE HIS BUSINESS INCOME, AND THEREFORE IT WAS INFERRED THAT THE BURDEN CAST ON THE REVENUE U/S 271(1)(C) STOOD DISCHARGED. IN THE SAID CASE, THE ADDITION WAS MADE IN THE ASSESSMENT AS ASSESSEES C ONCEALED INCOME FROM BUSINESS. ACCORDINGLY, THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ITA NO.996/PN/09 (A.Y. 2006-07) M/S. SUDARSHAN PAPER AND PRODUCTS, . 1998 5 WAS UPHELD. FACTUALLY, IN THE PRESENT CASE, THE PO SITION STANDS ON A DIFFERENT FOOTING. IN THE PRESENT CASE, THE ADDITIO NAL INCOME HAS BEEN DECLARED IN THE SURVEY ON ACCOUNT OF CERTAIN DISCRE PANCIES IN THE PURCHASES EFFECTED BY THE ASSESSEE. THE ASSESSEE EX PLAINED BEFORE THE CIT(A) THAT IT HAS TO PURCHASE MAJOR RAW MATERIAL ( I.E. WASTE PAPER) FROM HAWKERS, UNREGISTERED DEALERS, ETC. AND IN SUC H A LINE OF ACTIVITY THERE IS NO PRACTICE OF BILLS AND VOUCHERS, ETC. IT WAS ONLY THE INCAPACITY TO PRODUCE SUCH BILLS, ETC. WHICH LEAD T HE ASSESSEE TO DECLARE ADDITIONAL INCOME DURING THE SURVEY. ON THE AFORESAID BASIS, IT WAS CONTENDED BY THE ASSESSEE THAT THERE WAS NO CON CEALMENT OF INCOME. IN OUR CONSIDERED OPINION THE FACTUAL MATRI X LEADING TO THE DECLARATION OF ADDITIONAL INCOME DURING THE SURVEY DOES NOT SHOW THAT ANY CONCEALED INCOME HAS BEEN ADMITTED BY THE ASSES SEE. A MERE INCAPACITY TO SUBSTANTIATE AN EXPENSE AND OFFERING ADDITIONAL INCOME THEREOF, HAVING REGARD TO THE ASSESSEES NATURE OF BUSINESS, CANNOT BE SEEN AS ADMISSION OF A CONCEALED INCOME OR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. THUS, THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF WESTERN AUTOMOBILES (INDIA) (SUPRA) CANNOT BE AP PLIED TO THE FACTS OF THE PRESENT CASE. IN THE RESULT, THE ORDER OF TH E CIT(A) IS UPHELD. 9. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED ON 30 TH NOVEMBER, 2010. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S .PANNU) JUDICIAL MEMBER AC COUNTANT MEMBER PUNE DATED THE 30 TH NOVEMBER , 2010 ASHWINI ITA NO.996/PN/09 (A.Y. 2006-07) M/S. SUDARSHAN PAPER AND PRODUCTS, . 1998 6 TRUE COPY COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ASSTT.CIT, CIR.2, JALGAON 3. CIT(A)-II, PUNE 4. CIT- II, PUNE , 5. D.R. ITAT A BENCH 6. GUARD FILE BY ORDER ASSTT. REGISTRAR I.T.A.T PUNE