M/s. Devi Durga Construction, Ahmedabad V. The ACIT.,Cent.Circle-1(2), Ahmedabad

ITSSA 180/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0941 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-07-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 24-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANKARLAL MEENA
• Keywords: Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD , BEFORE SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER , AND SHRI KUL BHARAT , JUDICIAL MEMBER . IT (SS) A. NO. 1 8 0 /AHD/201 1 (ASSESSMEN T YEAR:200 4 - 0 5 ) M/S. DEVI DURGA CONSTRUCTION C/O. L.G. THAKKAR, 1 ST FLOOR, KASHMIRA CHAMERS, B/H. OLD HIGH COURT, NAVRANGPURA, AHMEDABAD APPELLANT VS. THE ASSTT. COMM. OF INCOME TAX CENTRAL CIRCLE - 1 (2), AHMEDABAD .. RESPONDENT [ PAN: AADFD7243D ] / BY ASSESSEE : SHRI ASEEM L. THAKKAR, A.R. / BY REVENUE :SHRI SHANKARLAL MEENA, CIT. D.R. / DATE OF HEARING : 1 6 .0 7 .2015 / DATE OF PRONOUNCEMENT : 21 .08.2015 O R D E R PER PRAMOD KUMAR , A . M.: BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 03.12.2010, IN THE MATTER OF ASSESSMENT UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FO R THE ASSESSMENT YEAR 2004 - 05 ON THE FOLLOWING GROUND: IT (SS) A NO. 1 8 0 /AHD/20 1 1 ( M/S. DEVI DURGA CONSTRUCTION VS. AC IT) A.Y. 200 4 - 0 5 - 2 - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 @ 100% OF THE TAX SOUGHT TO BE EVADED ON THE CONCEALED INCOME DETERMINED ONLY ON ESTIMATE BASIS AS PER THE APPELLATE ORDER DTD. 02.12.2010 PASSED IN RESPECT OF QUANTUM APPEALS. HE OUGHT TO HAVE DELETED THE PENALTY LEVIED U/S.271(1) OF THE INCOME TAX ACT, 1961 ON THE ESTIMATED INCOME/ADDITIONS DETERMINED/MADE. 2. THE APPEAL IS TIME BARRED BY 2 DAYS BUT THE ASSESSEE HAS MOVED A CONDONATION PETITION. HAVING PERUSED THE PETITION DULY SUPPORTED BY AN AFFIDAVIT. LEARNED DR VERY GRACIOUSLY DID NOT OPPOSE THE PETITION MUCH, BEYOND STATING THAT IT IS A CALL TO BE TAKEN B Y US ON MERITS. WE CONDONE THE DELAY AS IT HAS BEEN REASONABLY EXPLAINED ON THE FACTS OF THIS CASE. HAVING HEARD THE RIVAL CONTENTIONS ON THE SAME, WE ARE INCLINED TO CONDONE THE DELAY AND PROCEED TO TAKE UP APPEAL FOR DISPOSAL ON MERITS. DELAY CONDONED . 3. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAS RECEIVED RS.20,25,09,754/ - FOR LEVELLING OF LAND, FROM CERTAIN ENTITIES BUT NO WORK WAS ACTUALLY CARRIED OUT BY THE ASSESSEE E. THESE ENTRIES WERE STATED TO BE ACCOMMODATION ENTRIES. THE STAND OF THE ASSESSEE WAS THAT HE HAD RECEIVED ONLY 1.5% COMMISSION FOR THESE ENTRIES AND NO WORK WAS ACTUALLY CARRIED OUT. THE ASSESSING OFFICER, HOWEVER, DISALLOWED ENTIRE SUM AS INCOME AS NO WORK WAS CARRIED OUT AND ALSO ADDED RS.30,00,000/ - AS COMMISSION INCOME. IN APPEAL, CIT(A) CONFIRMED THE ADDITION FOR COMMISSION ON THE ESTIMATE BASIS @ 5% WHEN THE MATTER TRAVELLED IN APPEAL BEFORE THE TRIBUNAL, ADDITION WAS RESTRICTED TO 2.5%. IN TH E MEANTIME, HOWEVER, PENALTY UNDER SECTION 271(1)(C) WAS IMPOSED BY THE ASSESSING OFFICER WHICH WAS QUANTIFIED AT RS.7,19,32,874/ - . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE PENALTY MAINLY ON THE GROUND THAT TH E APPELLANT WAS ABETTING IN THE IT (SS) A NO. 1 8 0 /AHD/20 1 1 ( M/S. DEVI DURGA CONSTRUCTION VS. AC IT) A.Y. 200 4 - 0 5 - 3 - TAX EVASION. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LE GAL POSITION. 5. WE HAVE NOTED THAT THE ADDITION SUSTAINED BY THE TRIBUNAL, IN RESPECT OF THE IMPUGNED TRANSACTIONS, IS RESTRICTED TO 2.5% OF THE VALUE OF THE FILLED AMOUNT CLEARLY, THEREFORE, EVEN IF PENALTY IS LEVIED @100% OF TAX SOUGHT TO HAVE BEEN EVA DED, AS HAS BEEN DONE BY THE AUTHORITIES BELOW, THE QUANTUM OF PENALTY, CANNOT EXCEED TAX LEVIABLE ON 2.5% OF THE TOTAL CONTRACT RECEIPTS. IN THE PRESENT CASE, HOWEVER, PENALTY IS LEVIED IN RESPECT OF ENTIRE CONTRACT RECEIPTS. THAT APART, EVEN OTHERWISE, THE MATTER REGARDING LEVY OF PENALTY IN THE IDENTICAL SET OF FACTS IN THE CASE OF THIS VERY ASSESSEE HAS BEEN REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER, ORDER DATED 11 TH JULY 2014, BY OBSERVING AS FOLLOWS: 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE M ATERIAL ON RECORD. WE FIND THAT CIT(A) HAS HELD THAT FOR LEVY OF PENALTY IT SHOULD BE FOUND THAT ALL THE CONDITIONS OF SECTION 271(1)(C) MUST EXIST BEFORE L EVY OF PENALTY AND THAT IT IS FOR THE REVENUE TO ESTABLISH THAT SUCH CO NDITIONS EXIST. WE FIND THAT THERE IS NO SUCH FINDING RECORDED BY CIT(A) IN THE IMPUGNED ORDER PASSED BY HIM THAT ALL THE CONDITIONS FOR LEVY OF PENALTY WERE FULFILLED BEFORE LEVY OF PENALTY IN THIS CASE AND THAT REVENUE HAS ESTABLISHED THAT SUCH CONDITION S EXIST. WE FIND THAT THE ONLY FINDING RECORDED BY CIT(A) FOR CONFIRMING THE PENALTY IN THIS CASE WAS THAT ASSESSEE WAS ABATING IN TAX EVASION. THE ACT OF ABATEMENT IN TAX EVASION FOR SOME OTHER PERSON COULD NOT BE MADE THE BASIS FOR LEVY OF PENALTY U/S. 2 71(1)(C) ON THE ASSESSEE. WE FURTHER FIND THAT CIT(A) HAS PASSED A CRYPTIC ORDER. ON THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE IMPUGNED ORDER COULD NOT BE SUSTAINED. HOWEVER IN THE INTEREST OF JUSTICE TO BOTH THE PARTIES, WE CONSIDER THAT IT SHA LL BE APPROPRIATE TO RESTORE THE ISSUE OF PENALTY U/S. 271(1)(C) TO THE FILE OF A.O TO PASS A DE NOVO ORDER IN NOVO ORDER IN ACCORDANCE WITH LAW NOVO ORDER IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND A.O SHALL RECORD A CLEAR FINDING ON THE ISSUE THAT THE CONDITIONS FOR LEVY OF PENALTY U/S. 271(1)(C) EXISTS AND PROVED IN THIS CASE. WE DIRECT ACCORDINGLY. 6. WE SEE NO REASONS TO TAKE ANY OTHER NEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH . RESPECTFULLY FOLLOWING THE IT (SS) A NO. 1 8 0 /AHD/20 1 1 ( M/S. DEVI DURGA CONSTRUCTION VS. AC IT) A.Y. 200 4 - 0 5 - 4 - COORDINATE BENCH, WE REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION DE NOVO IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND THE VIEWS EXPRESSED BY THE COORDINATE BENCH. THE MATTER THUS STANDS RESTORED TO TH E FILE OF THE ASSESSING OFFICER AS SUCH. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 21 ST DAY OF AUGUST, 2015. SD/ - SD/ - ( KUL BHARAT ) ( PRAMOD KU MAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 21 /08/2015 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO: - 1. / REVENUE 2. / ASSESSEE 3. / CONCERNED CIT 4. - / CIT (A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. BY ORDER/ , / ,