M/s Yera Ceramics,, Morbi v. The Income Tax Officer, Ward-5(3),, Morbi

CO 29/RJT/2010 | 2000-2001
Pronouncement Date: 10-12-2010 | Result: Allowed

Appeal Details

RSA Number 2924923 RSA 2010
Assessee PAN AAAFY1602N
Bench Rajkot
Appeal Number CO 29/RJT/2010
Duration Of Justice 5 month(s) 12 day(s)
Appellant M/s Yera Ceramics,, Morbi
Respondent The Income Tax Officer, Ward-5(3),, Morbi
Appeal Type Cross Objection
Pronouncement Date 10-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 10-12-2010
Assessment Year 2000-2001
Appeal Filed On 28-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI D.T. GARASIA (JM) I.T.A. NO.892/RJT/2010 (ASSESSMENT YEAR 2000-01) ITO WD.5(3) VS M/S YERA CERAMICS RAJKOT A/1 UMIYA APARTMENT KAYAJI PLOT-MORBI PAN : AAAFY1602N (APPELLANT) (RESPONDENT) C.O. NO.29/RJT/2010 (ARISING OUT OF I.T.A. NO.892/RJT/2010) (ASSESSMENT YEAR 2000-01) M/S YEAR CERAMICS VS ITO WD.5(3) KAYAJI PLOT MORBI RAJKOT (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI JAI RAJ KUMAR ASSESSEE BY : SHRI KT HEMAM O R D E R GARASIA : THIS ARE APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AND ARE DIRECTED AGAINST THE ORDER OF THE LD.CIT(A )-IV RAJKOT DATED 02-02-2010 FOR THE ASSESSMENT YEAR 2000-01 WHEREBY THE LD.CIT( A) CANCELLED THE PENALTY OF RS. 9 20 300 IMPOSED U/S 271(1)(C) OF THE ACT. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING OF WALL GLAZED TILES. DURING THE SURVEY ACTION CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 27-01-2000 A STOCK DIFFERENCE OF RS. 7 18 514 WAS FOUND. IN THE STATEMENT RECORDED U/S 131(6) THE PARTNER OF THE A SSESSEE SHRI CHANDRAKANT P PATEL HAS DECLARED AN AMOUNT OF RS.23 90 402 ON ACC OUNT OF THE FOLLOWING: 1. STOCK DIFFERENCE BETWEEN THE STOCK AS PER BOOK AND THAT FOUND PHYSICALLY AND INVENTORIES AS PER ANNEXURE- S.(AS ADMITTED BY THE PARTNER ITA NO.892/RJT/2010 2 SHRI CHANDRAKANT P PATEL IN REPLY OF QUESTION NO.15 IN HIS STATEMENT RECORDED ON 27/01/2000 DURING THE COURSE OF SURVEY PROCEEDINGS). RS. 7 18 514 2. UNRECORDED INVESTMENT IN FURNITURE AND FIXTURES (AS ADMITTED BY THE PARTNER SHRI CHANDRAKANT P PATEL IN REPLY OF QUESTION NO.11 IN HIS STATEMENT RECORDED ON 27/01/2000 DURING THE COURSE OF SURVEY PROCEEDINGS) RS. 1 00 000 3. UNACCOUNTED EXPENSES IN RESPECT OF CONSTRUCTION OF FACTORY SHED (AS ADMITTED BY THE PARTNER SHRI CHANDRAKANT P PATEL IN REPLY OF QUESTION NO.11 IN HIS STATEMENT RECORDED ON 27/01/2000 DURING THE COURSE OF SURVEY PROCEEDINGS) RS. 4 91 888 4 PURCHASE OF MACHINERY NOT RECORDED IN THE BOOKS OF ACCOUNT (AS ADMITTED BY THE PARTNER SHRI CHANDRAKANT P PATEL IN REPLY OF QUESTION NO.11 IN HIS STATEMENT RECORDED ON 27/01/2000 DURING THE COURSE OF SURVEY PROCEEDINGS) RS.10 80 000 TOTAL RS.23 90 402 2.1 THE ASSESSEE HOWEVER FILED A NIL INCOME IN TH E RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION WITH A NOTE STATING TH AT APPROPRIATE ENTRY OF THE DISCLOSURE DURING THE SURVEY HAS BEEN MADE IN CONFO RMITY WITH THE DISCLOSURE IN HIS AUDITED REPORT ATTACHED WITH THE RETURN OF INCO ME FILED BY THE ASSESSEE ON 31/10/2000. THE ASSESSING OFFICER HOWEVER FINALI ZED THE ASSESSEE BY DETERMINING TOTAL INCOME AT RS.23 71 800. WHILE DO ING SO HE HAS DENIED THE SET OFF OF UNABSORBED BUSINESS LOSS / DEPRECIATION OF E ARLIER YEARS AGAINST THE INCOME DETERMINED BY HOLDING THAT THE DECLARATION MADE AT THE TIME OF SURVEY WAS THE INCOME FROM OTHER SOURCES. THE APPEAL FILED BY THE ASSESSEE WAS ALLOWED BY THE CIT(A) WHICH WAS CONFIRMED BY THE TRIBUNAL. TH E ASSESSING OFFICER LEVIED THE IMPUGNED PENALTY BY HOLDING THAT THE CIT(A) HAS HEL D THAT THE ASSESSEE EVEN DURING THE SURVEY IS NOT FOUND TO BE DOING ANYTHING EXCEPT CARRYING ON BUSINESS OF GLAZED TILES. EVEN IF UNACCOUNTED INCOME IT MUS T BELONG TO THIS BUSINESS AND PROPOSED TO BE SUPPRESSED BY MANIPULATION. FROM T HIS OBSERVATION THE ITA NO.892/RJT/2010 3 ASSESSING OFFICER INFERRED THAT EVEN THE CIT(A) AS WELL AS THE ITAT DID NOT DISPUTE THE FACT THAT THE INCOME ASSESSED BY THE AO WAS THE UNRECORDED INCOME DECLARED DURING THE SURVEY WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. IN VIEW OF THIS THE ASSESSING OFFICER H3ELD THAT THE A SSESSEE HAS CONCEALED INCOME ASSESSABLE TO TAX AND ALSO FURNISHED INACCURATE PAR TICULARS OF INCOME. THEREFORE PENALTY OF RS. 9 20 300 U/S 271(1)(C) OF THE ACT WAS IMPOSED ON THE ASSESSEE. ON APPEAL THE LD.CIT(A) CANCELLED THE P ENALTY AS HE FOUND THAT THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE FAL SE AND THAT THE EXPLANATION FILED BY THE ASSESSEE WAS BONA FIDE. 2. BE THAT AS IT MAY BE IN THE CROSS OBJECTION TH E ASSESSEE HAS TAKEN A LEGAL GROUND THAT THE PENALTY ORDER HAS BEEN PASSED AFTER THE PERIOD OF LIMITATION PRESCRIBED IN SECTION 275(1)(A) OF THE ACT AND THER EFORE THE PENALTY ORDER IS BAD IN LAW. WE FIND THAT THE ASSESSMENT ORDER U/S 143( 3) FOR THE IMPUGNED ASSESSMENT YEAR WAS PASSED ON 27-02-2003 COPY OF W HICH IS PLACED AT PAGES 54 TO 61 OF THE PAPER BOOK AGAINST WHICH THE ASSESS EE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) HAS ALLOWED THE APPEAL OF THE A SSESSEE ON 25-08-2004 COPY OF WHICH IS PLACED AT PAGES 62 TO 68 OF THE PAPER B OOK. SUBSEQUENTLY THE DEPARTMENT HAS FILED APPEAL AGAINST THE ORDER OF CI T(A) IN THE ITAT ON 25-08- 2004 AND THE ASSESSEE FILED CROSS OBJECTION. THE T RIBUNAL UPHELD THE ORDER OF THE CIT(A) VIDE ORDER DATED 31-07-2007 COPY OF WHIC H IS PLACED AT PAPER BOOK PAGES 69-74 OF THE PAPER BOOK. THE DEPARTMENT FILE D APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL WHICH WAS DISMISSED BY THE HIGH COURT ON 16-07-2008 THE COPY OF WHICH IS PLACED AT PAGES 75 TO 77 OF THE PAPER BOOK. WITH THE HELP OF THESE CHRONOLOGY OF EVENTS THE LD.AR SUBMITTED THAT THE IMPUGNED PENALTY ORDER DATED 20-01-2009 AS THE SAME WAS PASSED BEYOND A PERIOD OF SIX MONTHS PRESCRIBED IN SECTION 275(1)(A ). THE LEARNED DEPARTMENTAL REPRESENTATIVE OPPOSED THE CONTENTIONS OF THE LD.AR . 3. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE P ARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT TH E DEPARTMENT HA FILED APPEAL ITA NO.892/RJT/2010 4 AGAINST THE ORDER OF CIT(A) CANCELING THE PENALTY I MPOSED U/S 271(1)(C) OF THE ACT AND THE ASSESSEE HAS FILED THE CROSS OBJECTION. IN THE CROSS OBJECTION THE ASSESSEE HAS TAKEN A LEGAL POINT THAT THE PENALTY IS BARRED BY LIMITATION OF TIME. THEREFORE WE ARE DISCUSSING THIS CROSS OBJECTION F IRST BEFORE GOING TO THE MERIT OF THE CASE. THE PROVISIONS OF SECTION 275(1)(A) ALON GWITH THE PROVISO READ AS BELOW: 275.(1) NO ORDER IMPOSING A PENALTY UNDER THIS CHA PTER SHALL BE PASSED (A) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHE R ORDER IS THE SUBJECT MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTION 246 [OR SECTION 246A] OR AN APPEAL TO THE APPELLATE TRIBUNAL UNDER SECTION 253 AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS IN THE COURSE OF WHICH ACTIO N FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED ARE COMPL ETED OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) OR AS THE CASE MAY BE THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OR C OMMISSIONER WHICHEVER PERIOD EXPIRES LATER: [PROVIDED THAT IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTH ER ORDER IS THE SUBJECT-MATTER OF AN APPEAL TO THE COM MISSIONER (APPEALS) UNDER SECTION 246 OR SECTION 246A AND TH E COMMISSIONER (APPEALS) PASSES THE ORDER ON OR AFTER THE 1 ST DAY OF JUNE 2003 DISPOSING OF SUCH APPEAL AN ORDER IMPOS ING PENALTY SHALL BE PASSED BEFORE THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS IN THE COURSE OF WHICH ACTION FOR IMPO SITION OF PENALTY HAS BEEN INITIATED ARE COMPLETED OR WITHIN ONE YE AR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE COM MISSIONER (APPEALS) IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER WHICHEVER IS LATER;] 4. FROM A PLAIN READING OF THE SECTION WE UNDERSTAN D THAT THE IMPUGNED PENALTY ORDER HAD TO BE PASSED WITHIN SIX MONTHS FR OM THE DATE OF RECEIPT OF THE ORDER OF THE TRIBUNAL BY THE COMMISSIONER OF INCOME -TAX. INA THE INSTANT CASE THE TRIBUNAL DECIDED THE QUANTUM APPEAL ON 31-07-20 07 AGAINST WHICH THE DEPARTMENT PREFERRED APPEAL IN THE HIGH COURT. THE HONBLE HIGH COURT PASSED ORDER ON 16-07-2008. THESE FACTS ARE BORNE ON RECO RD. HOWEVER WE ARE NOT GIVEN TO UNDERSTAND WHEN DID THE COMMISSIONER OF IN COME-TAX RECEIVED THE ITA NO.892/RJT/2010 5 ORDER OF THE TRIBUNAL AGAINST THE QUANTUM APPEAL. SINCE THE HONBLE HIGH COURT PASSED THE ORDER ON 16-07-2008 WE CAN CONCLUSIVELY PRESUME THAT THE ORDER OF THE TRIBUNAL DATED 31-07-2007 WAS RECEIVED BY THE C OMMISSIONER OF INCOME-TAX WITHIN THE MONTH FROM THE DATE OF ORDER OF THE TRIB UNAL I.E. ON OR BEFORE 31-08- 2007. THEREFORE BY APPLYING THE PROVISIONS OF SEC TION 275(1)(A) PRIME FACIE IT APPEARS TO US THAT THE PENALTY ORDER DATED 20-01-20 09 IS BARRED BY LIMITATION AND THEREFORE IS VOID AB INITO. THEREFORE WE HOLD THA T THE IMPUGNED PENALTY ORDER DATED 31-07-2007 PASSED BY THE ASSESSING OFFICER HA S NO LEG TO STAND. AS A RESULT THE APPEAL FILED BY THE REVENUE BECOME INFR UCTUOUS AS WE HAVE DECIDED THE LEGAL ISSUE RAISED IN THE CROSS OBJECTION. 5. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED AS INFRUCTUOUS AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10-12-2010 SD/- SD/- (A.L. GEHLOT) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 10 TH DECEMBER 2010 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-IV RAJKOT 4. THE CIT-III RAJKOT 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT