The ACIT, Circle-4, Ahmedabad V. Standard Tea Processing Co.Ltd., Ahmedabad

ITSSA 258/AHD/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 3062 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 02-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 17-09-2012
• Assessment Year: misc
• Appeal Filed On: 18-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Assessee Lawyers: J P SHAH
• Keywords: Business income; Block assessment

Judgement Text

IT(SS ) A NO.258/A/2012 . BLOCK PERIOD 1-4-88 TO 29-7- 98 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. (SS) A. NO.258/AHD/2012 (BLOCK PERIOD 1- 4-88 TO 29-7-1998) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, NAVJIVAN TRUST BUILDING OFF ASHRAM ROAD, AHMEDABAD. (APPELLANT) VS. STANDARD TEA PROCESSING COMPANY LTD.,. (NOW MERGED WITH GUJARAT TEA PROCESSORS & PACKERS LTD., WAGH BAKRI HOUSE, OPP. PARIMAL GARDEN, AMBAWADI, AHMEDABAD. (RESPONDENT) PAN: AADCS 0859F APPELLANT BY : SHRI D.K. SINGH RESPONDENT BY : SHRI J.P. SHAH ( )/ ORDER DATE OF HEARING : 17- 09- 2012 DATE OF PRONOUNCEMENT : 2-11-2012 PER: SHRI ANIL CHATURVEDI, A.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT (A)- VIII, AHMEDABAD DATED 21-2-2012 AGAINST THE PENALTY ORDER PASSED U/S. IT(SS ) A NO.258/A/2012 . BLOCK PERIOD 1-4-88 TO 29-7- 98 . 2 158BFA READ WITH SECTION 271 (1)(1)(C ) OF THE ACT LEVYING PENALTY OF RS.3,21,676/-. 2. IN THIS CASE A SEARCH U/S. 132(1) OF THE ACT HA D TAKEN PLACE ON 29-7- 1998. CONSEQUENT TO THE SEARCH, BLOCK ASSESSMENT OR DER FOR THE BLOCK PERIOD 1-4-1988 TO 29-7-1998 WAS PASSED ON 29-9-200 0 AND THE UNDISCLOSED INCOME WAS DETERMINED AT RS.20,74,95,20 0/-. ONE OF THE MAJOR ADDITION WAS OF RS.1,36,21,468/- ON ACCOUNT O F UNACCOUNTED SALE OF SCRAP. THE AFORESAID ADDITION MADE BY THE A.O. WAS CONFIRMED ONLY TO THE EXTENT OF RS.5,36,127/- BY CIT (A) AND THE REMAININ G ADDITION WAS DELETED. ITAT UPHELD THE DECISION OF CIT (A). 3. DURING THE COURSE OF PENALTY PROCEEDINGS THE ASS ESSEE SUBMITTED THAT OUT OF THE TOTAL ADDITION TO THE TUNE OF RS.20 CRORES ONLY ADDITION OF RS.5,36,127/- ON ACCOUNT OF SALE SCRAP HAS BEEN SUS TAINED IN THE APPEAL. THE ASSESSEE SUBMITTED THAT THERE WAS NO CONSCIOUS ATTEMPT ON THE PART OF THE ASSESSEE TO CONCEAL ANY INCOME. IT WAS FURTHER SUBMITTED THAT THE ADDITION ON ACCOUNT OF SALE OF EMPTY CHEST AS SCRAP HAS BEEN SUSTAINED ON ESTIMATED BASIS BY CIT (A). THE ASSESSEE THUS SUBMI TTED THAT THE PENALTY BE DELETED. THE A.O. DID NOT AGREE WITH THE CONTENT IONS OF THE ASSESSEE. HE HELD THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME AND THEREFORE, THE ASSESSEE WAS LIABLE FOR PENALTY U/S. 158BFA R.W.S.271. HE ACCORDINGLY VIDE ORDER DATED 26-2-2010 LEVIED PENAL TY OF RS.3,21,676/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE THE CIT (A). IT(SS ) A NO.258/A/2012 . BLOCK PERIOD 1-4-88 TO 29-7- 98 . 3 4. BEFORE CIT (A), ASSESSEE SUBMITTED THAT ALL THE SCRAP SOLD ARE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AND SHOWN IN THE ACCOUNTS UNDER THE HEAD BUSINESS INCOME. IT WAS SUBMITTED THAT N O INCRIMINATING DOCUMENTS WERE FOUND WHICH COULD DEMONSTRATE OR IND ICATE REALIZATION OF SALE WHICH HAS REMAINED UNACCOUNTED. IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF SEARCH AT FACTORY AND RESIDENTIAL PRE MISES NEITHER UNACCOUNTED CASH NOR ANY BILLS RAISED FOR SALE OF S CRAP WAS FOUND NON UNACCOUNTED BOOKS WERE FOUND. ASSESSEE FURTHER SUBM ITTED THAT IT IS ENGAGED IN THE MANUFACTURING OF TEA AND PURCHASE AN D SALE OF TEA IS MAJOR BUSINESS ACTIVITIES AND NO DISCREPANCY HAS BEEN NOT ICED IN INWARD AND OUTWARD REGISTER OR ANY ALLEGATION HAS BEEN MADE WI TH RESPECT TO SALE OF TEA. IT THUS CLEARLY ESTABLISHES THE BONAFIDE OF TH E ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE ADDITION MADE ON ESTIMATED BASIS CANNOT THE GROUND FOR LEVY OF PENALTY. ASSESSEE FURTHER SUBMITTED THAT TH E DISALLOWANCE CONFIRMED IN APPEAL DO NOT JUSTIFY THE CONCEALMENT OF PENALTY . THE ASSESSEE ALSO RELIED ON THE DECISION IN THE CASE OF RELIANCE PE TROPRODUCTS LTD., (322 ITR 158). CIT (A) AFTER CONSIDERING THE SUBMISSIONS MAD E BY THE ASSESSEE DELETED THE PENALTY BY HOLDING AS UNDER:- 3. I HAVE GONE THROUGH THE ASSESSMENT ORDER, THE O RDER OF THE CIT (A) , THE ORDER OF THE ITAT AHMEDABAD BENCH AND THE REPLY OF THE APPELLANT. THE APPELLANT HAS SUBMITTED THAT IT IS E NGAGED IN MANUFACTURE OF TEA AND THEREFORE, PURCHASE AND SALE OF TEA IS MAJOR BUSINESS ACTIVITIES AND NO DISCREPANCY HAS BEEN NOT ICED IN INWARD AND OUTWARD REGISTER NOR IS ANY ALLEGATION MADE IN THIS REGARD. THIS CLEARLY ESTABLISH THE BONA FIDE OF THE APPELLANT AN D ADDITION MADE AND IT(SS ) A NO.258/A/2012 . BLOCK PERIOD 1-4-88 TO 29-7- 98 . 4 CONFIRMED BY THE CIT (A) ON THE ESTIMATED BASIS CAN NOT BE THE GROUND FOR LEVY OF CONCEALMENT PENALTY IN THE ABSEN CE OF ANY DOCUMENT WHICH PROVES SALE OF SCRAP OUT OF BOOKS. THE APPELLANT HAS FURTHER SUBMITTED THAT IT IS NOT OUT OF PLACE TO MENTION THAT THE A.O. HAS MADE THE ADDITION IN BLOC K ASSESSMENT EXCEEDING RS.20 CRORES [RS.20,74,95,200/-] OUT OF W HICH FINALLY ADDITION ON ESTIMATE BASIS IN RESPECT OF SALE OF SC RAP IS CONFIRMED TO THE EXTENT OF RS.5,36,127/- WHICH WORKS OUT TO ABOU T 0.25% OF THE ADDITIONS MADE IN THE BLOCK ASSESSMENT AND THEREFOR E, EVEN ON THE GROUND THAT ELIGIBLE ADDITION IS CONFIRMED THAT TOO ON AN ESTIMATE BASIS IS NEGLIGIBLE AND ON THAT GROUND ALSO THERE I S NO JUSTIFICATION IN LEVYING CONCEALMENT PENALTY. IN VIEW OF RECENT DEC ISION OF SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT S LTD., REPORTED ION322 ITR, THE PENALTY IS NOT TO BE LEVIED ON DISP UTED POINT OR WHERE THERE IS MORE THAN ONE OPINION ON THE SAME ISSUE. AFTER A CAREFUL LOOK AT THE ORDER OF THE CIT (A), I T SEEMS THAT HE HAS CONFIRMED THE SMALL PORTION OF ADDITION TO THE EXTE NT OF RS.5,36,127/- ON ESTIMATE BASIS. IN THE PARA NO.25 OF ORDER OF TH E ITAT DATED 31-7- 2009 IT IS STATED THAT WE FIND THAT THE CIT (A) HA S REASONABLY MADE ESTIMATES AND CONFIRMED THE ADDITION TO THE EXTENT OF RS.5,36,127/- AND DELETED THE BALANCE ADDITION OF RS.1,30,85,342/ -.WE FIND NO INFIRMITY IN THE ORDER OF CIT (A) AND ACCORDINGLY, BOTH THE APPEALS ON THIS ISSUE ARE DISMISSED. IN VIEW OF THE ABOVE FAC TS AND DISCUSSION, IT IS CLEAR THAT ADDITION TO THE EXTENT OF RS.5,36,127 /- HAS BEEN IT(SS ) A NO.258/A/2012 . BLOCK PERIOD 1-4-88 TO 29-7- 98 . 5 CONFIRMED ON ESTIMATE BASIS BY THE CIT (A) AND THE ITAT. THE A.O. HAS LEVIED THE PENALTY OF RS.3,21,676/- U/S. 271(1) (C) OF THE ACT ON THE SAME ADDITION WHICH HAS BEEN CONFIRMED ON ESTIMATE BASIS. ON THE BASIS OF THE ABOVE DISCUSSION, AND THE JUDICIAL DEC ISIONS (SUPRA), THE PENALTY LEVIED BY THE A.O. DOES NOT DESERVE TO SURV IVE. HENCE, THE A.O IS DIRECTED TO DELETE THE PENALTY LEVIED OF RS. 3,21,676/- U/S.271(1)(C) OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE CIT (A), REVENUE I S NOW IN APPEAL BEFORE US. 6. BEFORE US, THE LD. D.R. SUBMITTED THAT THE SALE OF SCRAP WAS NOT DISCLOSED BY THE ASSESSEE AT ALL. THIS FACT EMERGED DURING THE COURSE OF SEARCH PROCEEDINGS. HE THEREFORE URGED THAT THE ORD ER OF A.O. BE UPHELD. HE THUS, SUPPORTED THE ORDER OF THE A.O. 7. ON THE OTHER HAND, LD. A.R. SUBMITTED THAT NO DI SCREPANCY WAS NOTICED IN THE PURCHASE AND SALE OF TEA WHICH WAS M AJOR BUSINESS OF THE ASSESSEE. THE ADDITIONS MADE AND CONFIRMED BY THE C IT (A) WAS ON ESTIMATED BASIS AND CANNOT BE THE GROUND FOR LEVY O F PENALTY. LD. A.R. FURTHER SUBMITTED THAT THE A.O. LEVIED PENALTY MAIN LY ON THE GROUND THAT CIT (A) HAS CONFIRMED THE ADDITION. HE URGED THAT CONFI RMATION OF QUANTUM ADDITION IN APPEAL DO NOT JUSTIFY FOR LEVY OF PENAL TY. ASSESSEE PLACED RELIANCE ON THE DECISION OF GUJARAT HIGH COURT IN T HE CASE OF SARABHAI CHEMICALS PVT. LTD. REPORTED AT 257 ITR 355 AND IN THE CASE OF RELIANCE PETROPRODUCTS LTD.,. 322 ITR-158. IT(SS ) A NO.258/A/2012 . BLOCK PERIOD 1-4-88 TO 29-7- 98 . 6 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT A.O. HAD MADE ADDITION IN THE COURSE OF ASSESSMENT PROCEEDINGS AMOUNTING TO RS.20 CRORE ON WHICH ADDITION ON ESTIMATE BASIS IN RESPECT OF SALE OF SCRAP WAS CONF IRMED ONLY TO THE EXTENT OF RS.5,36,127/- WHICH WORKS OUT TO 0.25% ON THE TO TAL ADDITION MADE IN THE BLOCK ASSESSMENT. THE ASSESSEE IS ENGAGED IN THE MA NUFACTURE AND SALE OF TEA AND NO DISCREPANCY WAS NOTICED IN RESPECT OF RECEIPT AND DISPATCH OF TEA. WE FIND THAT THE ADDITION WAS CONFIRMED ON EST IMATED BASIS BY CIT (A) AND ITAT. 9. IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS ( SUPRA), THE HONBLE APEX COURT HAS HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLI ED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C ). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTI CULARS. 10. WE ARE OF THE VIEW THAT CONSIDERING THE TOTALIT Y OF FACTS AND MORE SO IN THE PRESENT CASE, SINCE THE ADDITION HAS BEEN MADE ON ESTIMATED BASIS, FURTHER THE ADDITION WORKS OUT TO 0.25% OF THE TOTA L ADDITION MADE, NO DISCREPANCY HAS BEEN NOTICED WITH RESPECT TO RECEIP T AND DISPATCH OF TEA NO PENALTY SHOULD HAVE BEEN LEVIED. THE LD. D.R. HA S NOT BEEN IN A IT(SS ) A NO.258/A/2012 . BLOCK PERIOD 1-4-88 TO 29-7- 98 . 7 POSITION TO CONTROVERT THE FINDINGS OF CIT (A). IN VIEW OF THESE FACTS WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT (A) AND THEREFORE, UPHOLD THE ORDER OF CIT (A). 11. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON 2- 11- 2012. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDA BAD IT(SS ) A NO.258/A/2012 . BLOCK PERIOD 1-4-88 TO 29-7- 98 . 8 1.DATE OF DICTATION 17 - 9 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 30 / 10/ 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 31 -10 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER