Sri Mallikarjuna Par Boiled Modern rice&G.N.Oil Mills, Hyderabad v. ITO, Nalgonda

ITA 118/HYD/2004 | 1999-2000
Pronouncement Date: 08-01-2010 | Result: Allowed

Appeal Details

RSA Number 11822514 RSA 2004
Assessee PAN AAFFS9673B
Bench Hyderabad
Appeal Number ITA 118/HYD/2004
Duration Of Justice 5 year(s) 10 month(s) 28 day(s)
Appellant Sri Mallikarjuna Par Boiled Modern rice&G.N.Oil Mills, Hyderabad
Respondent ITO, Nalgonda
Appeal Type Income Tax Appeal
Pronouncement Date 08-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 08-01-2010
Date Of Final Hearing 24-12-2009
Next Hearing Date 24-12-2009
Assessment Year 1999-2000
Appeal Filed On 10-02-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.116/HYD/2004 : ASSTT. YEAR 19 97-1998 ITA NO.117/HYD/2004 ITA NO.118/HYD/2004 M/S MALLIKARJUNA PAR BOILED MODERN RICE & GN OIL MILLS NALGONDA DISTRICT (PAN AAFFS 9673 B) 1998-1999 1999-2000 ITO WARD NO.1 NALGONDA (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI S. RAMA RAO RESPONDENT BY : SHRI K.V.N. CHARYA DR O R D E R PER: CHANDRA POOJARI ACCOUNTANT MEMBER: THESE THREE APPEALS PREFERRED BY THE ASSESSEE ARE DIRECTE D AGAINST THE COMMON ORDER PASSED BY THE CIT(A) -VI HYDE RABAD DATED 23.1.2004 AND PERTAINS TO THE ASSESSMENT YEARS 1997-98 1998-99 & 1999-2000. THE COMMON ISSUE IN ALL THE THREE APPEALS ARE THAT THE CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED U/S 271 (1) ( C ) OF THE INCOME TAX ACT. SINCE COMMON ISSUES ARE INVOLVED THEY A RE CLUBBED TOGETHER HEARD TOGETHER AND DISPOSED OF BY THE COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM OWNS A RICE AND OIL MILL SITUATED AT M RIYALGUDA 2 NALGONDA DISTRICT. THE MILL WAS LEASED OUT TO MS MAHASH AKTHI RICE CORPORATION FOR A PERIOD OF TWO YEARS. THE LEASE R ENTAL PER ANNUM ACCORDING TO THE ASSESSEE WAS RS.108 000 WHEREAS AS PER THE AGREEMENT OF LEASE THE LEASE RENTAL PER ANNUM WAS RS.8 25 000. THE AGREEMENT FOR LEASE WAS FOUND IN THE PREMISES OF THE LE SSEE NAMELY M/S MAHASHAKTHI RICE CORPORATION AT THE TIME OF SEARCH I N ITS CASE U/S 132. MEANWHILE THE ASSESSEE FIRM DID NOT ACCEPT THE THA T IT IS RECEIVED RS.8 25 000 FROM M/S MRC. HOWEVER IN RESPONSE TO A NOT ICE U/S 148 ISSUED ON 12.3.2001 THE ASSESSEE FILED REVISED RETURN ADM ITTING RS.8 25 000 AS LEASE RENTAL RECEIVED. THE ASSESSING OFFICER ACCEPTED THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 148 AND ON COMPLETION OF THE ASSESSMENT THE ASSESSING OFFICER ISSUED PENALTY NOTICES AND OBTAINED THE REPLY FROM THE ASSESSEE. THE ASSESSEE EXPLAIN ED BEFORE THE ASSESSING OFFICER THAT THE ADDITIONAL INCOME WAS OFFE RED ONLY TO PURCHASE PEACE WITH THE DEPARTMENT THOUGH IT HAD NOT ACTUALLY RECEIVED THE SAID AMOUNT. NOT SATISFIED WITH THE EXPLANATION G IVEN BY THE ASSESSEE THE ASSESSING OFFICER LEVIED PENALTY OF RS.97 604 F OR ASSESSMENT YEAR 1997-98 RS.1 72 520 FOR THE ASSESSMENT YEA R 1998- 99 AND RS.2 45 789 FOR THE ASSESSMENT YEAR 1999-2000 RESP ECTIVELY. 3. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS BEEN CARRYING ON THE BUSINESS IN RICE AND GROUND NUT OIL MILL UPTO 30.11.1996 THEREAFTER THE MILL WAS LEASED OUT TO M/S MAHASAKHTHI RICE CORPORATION FOR A PERIOD OF 8 MONTHS FROM 1-4-1998 TO 3 30.11.1998 AND RECEIVED AN AMOUNT OF RS.72 000/- AND FILED RETURN OF INCOME ON 17.1.2000 DECLARING INCOME AT RS.1 68 660. HE SUBMITTED THAT THE FIRST AGREEMENT WAS ENTERED WITH THE LESSEE FO R A LEASE OF RS.8 25 000 PER ANNUM INCLUDING ALL EXPENSES MAINTEN ANCE AND REPAIRS WHICH SHALL BE BORNE BY THE LESSEE. THE SECOND AGREEMENT WAS EXECUTED WITH THE LESSEE FOR THE SAME PERIOD FOR A LEASE AMOUNT OF RS.108 000 PER ANNUM EXCLUDING MAINTENANCE AND REPAI RS WHICH SHALL BE BORNE BY THE LESSEE. BUT THESE LEASE AGREEMENTS WERE WITH THE LESSEE AND THEY HAVE NOT RETURNED THE FIRST AGREEMENT TO THE ASSESSEE AND THE DEPARTMENT HAS FOUND THE FIRST LEASE AGREEMENT FROM THE LESSEE. HE SUBMITTED THAT TO AVOID ANY FURTHER LITIGAT ION THE ASSESSEE OFFERED THE ADDITIONAL INCOME BY WAY OF REVISED RETUR N AS PER THE FIRST AGREEMENT WHICH SHOWS THE LEASE AMOUNT AT RS.8 25 000. HE SUBMITTED THAT THE ASSESSEE HAVE NO INTENTION TO CONCEAL A NY PARTICULARS OF INCOME AND THE ASSESSEE HAS BEEN ASSESSED TO TAX FOR THE L AST 20 YEARS AND HAVE NOT MADE ANY CONCEALMENT OF INCOME OR F URNISHED INACCURATE PARTICULARS OF INCOME. FURTHER HE RELIED ON THE FOLLOWING JUDGMENTS: 1. CIT VS. BACARDI MARTINI INDIA LTD. (288 ITR 585) (DEL HI HC) 2. CIT VS. SURESH CHANDRA MITTAL (251 ITR 9) (SC) 3. K. DEEDAR AHMED VS. ITO (97 ITD 240) (HYD.) 4. JAINARAYAN MOOLCHAND AGRAWAL VS. ACIT (109 ITD 275) (JAB) (SMC) 4 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBM ITTED THAT THE LEASE AGREEMENT SHOWING HIGHER LEASE RENT WAS FOUND IN THE PREMISES OF M/S MAHASAKHTI RICE CORPORATION WHICH IS THE LESSEE. IN THE BOOKS OF ACCOUNTS OF M/S MRC PAYMENT OF HIGHER LEASE RENT WAS RECOR DED WHEREAS THE SAME HAS NOT BEEN RECORDED IN THE BOOKS OF T HE ASSESSEE. ONLY WHEN A NOTICE U/S 148 WAS ISSUED THE ASSESSEE ADMITT ED THE ADDITIONAL INCOME AS MENTIONED BY HIM IN THE STATEMEN T OF FACTS ITSELF WHICH IS NOT VOLUNTARY ACTION. THE ITO ALSO NOTED THA T THE ASSESSEE IS ENTITLED TO RECEIVE MORE LEASE RENTALS IS KNOWN TO THE ASSESSEE WHEN IT ENTERED INTO THE LEASE AGREEMENT DATED 20.11.1996. THEREFORE THE ASSESSEE HAS WILLFULLY UNDERSTATED THE LEASE AMOUNT IN THE ORIGINAL RETURN FILED ON 17.1.2000 FOR THE ASSESSMENT YEAR 1997 -98. REVISED RETURN WAS FILED ON 19.3.2001 ASSUMING TO BE VOLUNTAR ILY FILED BEFORE SERVICE OF NOTICE U/S 148. THEREFORE THE REVISED RETU RN FILED WAS NOT TREATED AS VOLUNTARY RETURN FILED IN GOOD FAITH AND THAT TOO THE REVISED RETURN HAS NOT BEEN FILED WITHIN THE TIME LIMITED PR ESCRIBED U/S 139 (5) OF THE ACT. HE SUBMITTED THAT THE ASSESSING OFFICER IN THE PENALTY ORDER NOTED THAT THE ASSESSEE CONCEALED THE RENTAL INCOME FOR A PERIOD OF MORE THAN FIVE YEARS I.E. FROM 20.11.1996 (DATE OF THE LEASE AGREEMENT) TO 19.3.2001. ACTION U/S 148 WAS INITIATED WHEN THE L EASE AGREEMENT WAS TRACED OUT WHILE COMPLETING THE BLOCK ASSESSMENT IN THE CASE OF MAHASAKTHI RICE CORPORATION BY THE ASSESSING OFFICER WHO COMPLETED THE ASSESSMENT IN THAT CASE TO THE ITO HAVING JURISDICTION OVER THIS CASE. 5 BUT FOR THIS VITAL INFORMATION THE ASSESSEE COULD NOT H AVE FILED THE REVISED RETURN. HE RELIED UPON THE DECISION OF HIGH COU RT IN THE CASE OF ITO VS. DHARAMCHAND SURANA 216 ITR 678 WHEREIN IT WAS HELD THAT THE ASSESSEE PREPARED A FALSE DOCUMENT CONCEALING REAL INCOME AN D PRODUCED THEM BEFORE THE COMMERCIAL TAX AUTHORITIES. THESE DOCUMENTS WERE SEIZED BY THE INCOME TAX AUTHORITIES. T HE ASSESSEE FILED A RETURN OF INCOME AFTER 4 YEARS SHOWING CORRECT INCOME. THE HIGH COURT HELD THAT THE RETURN WAS NOT VOLUNTARY AND THE ASSESSEE WAS LIABLE TO PROSECUTION U/S 276C. 6. HE FURTHER SUBMITTED THAT THE IMPUGNED LEASE AGRE EMENTS WERE NOT PRODUCED BEFORE THE CIT(A) AND THE ISSUE MAY BE SET ASIDE TO THE CIT(A) FOR FRESH CONSIDERATION. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE THE PENALTY WAS LEVIED ON THE REASON THAT THERE WAS ONE LEASE AGREEMENT SHOWING THE RENT AT RS.8 25 00 0 PER ANNUM AND THE OTHER LEASE AGREEMENT SHOWING RENT AT RS.108 000 PER ANNUM AND ONLY AFTER UNEARTHING THE FIRST LEASE AGREEMENT T HE ASSESSEE HAS FILED REVISED RETURN DECLARING HIGHER INCOME. NOW TH E CONTENTIONS OF THE ASSESSEE'S COUNSEL IS THAT AS PER THE FIRST LEASE AGREEMENT THE RENT IS HIGHER ON THE REASON THAT THE ASSESSEE HAS TO BARE ALL EX PENSES RELATING TO MAINTENANCE AND REPAIRS AS SUCH THE RENT IS HIGHER . FURTHER AS PER THE SECOND AGREEMENT THE RENT IS LOWER AT RS.108 000 P ER ANNUM SINCE THE MAINTENANCE AND REPAIR CHARGES ARE TO BE BORNE BY THE LESSEE. 6 THESE EXPLANATIONS ARE TO BE CONSIDERED BY THE CIT(A) AFTER EXAMINING THE LEASE AGREEMENTS AND AS ARGUED BY THE DR THESE LE ASE AGREEMENTS WERE NOT AT ALL PRODUCED BEFORE THE CIT(A) AND IT IS REQUIRED TO BE EXAMINED BEFORE CONFIRMING LEVY OF PENALTY U/S 271 (1 ) ( C) . 8. IN VIEW OF THIS WE ARE INCLINED TO SET ASIDE TH E ISSUE TO THE FILE OF CIT(A) TO EXAMINE THE VERACITY OF THE EXPLAN ATIONS OFFERED BY THE ASSESSEE WITH REFERENCE TO THE LEASE AGREEMENTS. HENCE THE ISSUE IS SET ASIDE TO THE FILE OF CIT(A) FOR FRESH CONSIDERATION . 9. IN THE RESULT ALL THE THREE APPEALS OF THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON : 8.1.2010 SD/- SD/- (G.C. GUPTA) (CHANDRA POOJARI) VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 8 TH JANUARY 2010. COPY FORWARDED TO: 1. SHRI S. RAMA RAO ADVOCATE 103 INDIRADEVI NILAY AM 3-6- 542/4 ST. NO.7 HIMAYATNAGAR HYDERABAD-29. 2. ITO WARD NO.1 NALGONDA 3. CIT(A)-VI HYDERABAD. 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP 7