Shri Govindbhai N. Patel, Baroda v. The ACIT.,Circle-5,, Baroda

ITA 228/AHD/2009 | 2001-2002
Pronouncement Date: 18-03-2011 | Result: Allowed

Appeal Details

RSA Number 22820514 RSA 2009
Assessee PAN AEKPP4193P
Bench Ahmedabad
Appeal Number ITA 228/AHD/2009
Duration Of Justice 2 year(s) 1 month(s) 26 day(s)
Appellant Shri Govindbhai N. Patel, Baroda
Respondent The ACIT.,Circle-5,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 18-03-2011
Date Of Final Hearing 10-03-2011
Next Hearing Date 10-03-2011
Assessment Year 2001-2002
Appeal Filed On 23-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : SMC BENCH : AHMEDABAD (BEFORE HONBLE SHR I T.K. SHARMA J.M .) I.T.A. NO. 228/AHD./2009 ASSESSMENT YEAR : 2001-2002 GOVINDBHAI N. PATEL BARODA -VS- A.C.I.T. CIRCLE-5 BARODA (PAN : AEKPP 4193P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.M.MEHTA A.R. RESPONDENT BY : SHRI VIMALENDU VERMA D .R. O R D E R THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 26.11.2008 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-V BAR ODA CONFIRMING THE PENALTY OF RS.3 20 000/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE I.T. ACT 1961 FOR THE ASSESSMENT YEAR 2001-2002. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSING OFFICER LEVIED A PENALTY OF RS.3 24 000/- UNDER SECTION 271(1)(C) FOR THE REASON THAT THE ASS ESSEE WHO RECEIVED THE SUBSIDY OF RS.10 LAKHS FROM GOVERNMENT OF GUJARAT HAS NOT OFFERED THE SAM E FOR TAXATION IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2001-02. THE ASSESSING OFFI CER MADE THE ADDITION OF RS.10 LAKHS IN THE ORDER PASSED ON 06.12.2004. THIS ADDITION WAS CONFI RMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND THEREAFTER THE ASSESSING OF FICER LEVIED PENALTY OF RS.3 24 000/-. 3. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) IT WAS CONTENDED THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR TH E ASSESSMENT YEAR UNDER APPEAL ALONG WITH THE AUDITED ACCOUNTS OF G.N.FILMS THE ASSESSEE BEING THE PROPRIETOR OF THE SAID G.N.FILMS. THE ASSESSING OFFICER PROCESSED THE SAID RETURN UNDER S ECTION 143(1)(A) OF THE I.T.ACT 1961 ACCEPTING THE RETURN INCOME DECLARING LOSS OF RS.8 62 387/-. 2 ITA NO. 228-AHD-2009 3.1 AFTER FILING OF RETURN VOLUNTARILY ON 31.10.01 THERE WAS A SEARCH ON 11.02.02 AND ALL THE BOOKS OF ACCOUNTS AND OTHER RECORDS WERE SEIZED AND THEREAFTER THE BLOCK ASSESSMENT PROCEEDINGS WERE STARTED. IN THE COURSE OF BLOCK AS SESSMENT PROCEEDINGS THE D.C.I.T. ISSUED A SHOW-CAUSE NOTICE ON 10.02.2004 AND IN PARA 7 OF TH E SAID SHOW CAUSE NOTICE HE RAISED THE SPECIFIC QUERY AS UNDER: 7. WHILE GOING THROUGH YOUR CAPITAL ACCOUNT IN F.Y. 2000-01 IT IS SEEN THAT YOU HAVE RECEIVED RS.5 LACS AS SUBSIDY FROM GUJARAT GOVERNM ENT ON 06.07.2000 FOR FILM DESH JOYA PARDESH JOYA AND ANOTHER RS.5 LACS ON 24.02. 2001 FOR FILM GAM MA PIYARA GAM MA SASARU. THIS AMOUNT HAS NOT BEEN TAKEN INTO YO UR TRADING ACCOUNT BUT HAS DIRECTLY BEEN CREDITED INTO CAPITAL ACCOUNT. THIS SUBSIDY O F RS.10 LACS IS IN THE NATURE OF REVENUE SUBSIDY AND THUS IT IS PROPOSED TO BE ADDED TO Y OUR TRADING RECEIPTS OF A.Y. 2001-02. 3.2 IN REPLY TO THE AFORESAID SHOW-CAUSE NOTICE TH E ASSESSEE VIDE LETTER DATED 19.02.2004 GAVE HIS EXPLANATION TO THE EFFECT THAT SUBSIDY OF RS.10 LAKHS RECEIVED FROM GOVERNMENT OF GUJARAT IS A CAPITAL RECEIPT AND HAS BEEN RIGHTLY C REDITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE. 3.4 ON THE BASIS OF ABOVE THE ASSESSING OFFICER RE OPENED THE ASSESSMENT AND ISSUED A NOTICE UNDER SECTION 148 ON 11.03.2004. THEREAFTER THE AS SESSING OFFICER FINALIZED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 OF THE I .T. ACT WHEREIN THE RECEIPT OF RS.10 LAKHS AS SUBSIDY FROM THE GOVERNMENT OF GUJARAT WAS ADDED TO THE INCOME OF THE ASSESSEE AND PENALTY PROCEEDINGS WERE INITIATED UNDER SECTION 271(1)(C) OF THE ACT. 3.5 ON APPEAL IN THE IMPUGNED ORDER THE LEARNED C OMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE PENALTY OF RS.3 24 000/- LEVIED BY TH E ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE I.T.ACT. 1961. 4. AGGRIEVED WITH THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE THE TRIBUNAL ON B EHALF OF THE ASSESSEE SHRI P.M. MEHTA APPEARED AND CONTENDED THAT THE ASSESSEE HAS SUO MOTO FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL ON 31.10.2001 WHEREIN THIS AMOUNT OF RS.10 LACS RECEIVED AS SUBSIDY WAS CREDITED BY THE ASSESSEE IN HIS CAPITAL ACCOUNT. THE ACCOUNTS WERE DULY AUDITED AND WERE ATTACHED WITH THE RETURN OF INCOME. 3 ITA NO. 228-AHD-2009 5.1 DURING THE COURSE OF SEARCH AND SEIZURE PROCEED INGS INITIATED AGAINST THE ASSESSEE ON 11.02.2002 ALL THE BOOKS OF ACCOUNTS WERE SEIZED B Y THE DEPARTMENT AND BLOCK ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE. TH E A.O. WHILE FINALIZING THE BLOCK ASSESSMENT PROCEEDINGS HAS MADE A SPECIFIC REFERENCE TO THE S AID AMOUNT OF RS.10 LAKHS RECEIVED AS SUBSIDY FROM THE GOVERNMENT OF GUJARAT AND ISSUED A SHOW CA USE NOTICE AS TO WHY THE SAME SHOULD NOT BE TREATED AS REVENUE RECEIPT. BEFORE THE LEARNED C OMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE CONTENDED VIDE REPLY DATED 19.04.2004 TH AT SUBSIDY OF RS.10 LAKHS RECEIVED FROM GOVERNMENT OF GUJARAT WAS A CAPITAL RECEIPT AND HE THEREFORE DID NOT MAKE ANY ADDITION ON ACCOUNT OF THE SAME WHILE FINALIZING THE BLOCK ASS ESSMENT ORDER. 5.2 IT WAS ALSO CONTENDED THAT IN THE RETURN OF INC OME FILED BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 148 THE ASSESSEE HAD AGAIN MA DE A DISCLOSURE OF THE SAID AMOUNT OF RS.10 LAKHS CREDITED TO ITS CAPITAL ACCOUNT VIDE NOTE NO. 3 FORMING PART OF THE RETURN OF INCOME. THE SAID NOTE NO.3 IS ON THE BASIS OF THESE FACTS. THE COUNS EL OF THE ASSESSEE CONTENDED THAT ALL THE PARTICULARS REGARDING SUBSIDY OF RS.10 LAKHS RECEIV ED BY THE ASSESSEE FROM GOVERNMENT OF GUJARAT WERE AVAILABLE ON RECORD OF THE DEPARTMENT. THE ASSESSEE WAS OF THE BONA FIDE BELIEF THAT IT IS A CAPITAL RECEIPT AND HENCE NOT LIABLE TO TAX AND FOR THIS REASON THIS WAS NOT OFFERED TO TAX IN THE RETURN OF INCOME. THE ASSESSEE HAD BONAFIDELY A CTED IN CREDITING THE SAID AMOUNT TO THE CAPITAL ACCOUNT AND THE SAID ACT OF THE ASSESSEE IS SUPPORTED WITH THE FOLLOWING JUDICIAL PRONOUNCEMENTS: A) SADICHHITRA V. CIT REPORTED IN 189 ITR 774 (BO M. HIGH COURT) DECISION DATED 23.8.90 B) CIT-VS- PRASAD ART PICTURES PVT. LTD. REPORTED IN 257 ITR 699 MADRAS HIGH COURT DECISION DATED 12-07-2001 WHEREIN THE HON'BLE MADRAS HIGH COURT BY RELYING UPON THE HON'BLE SUPREME COURTS DECISION IN THE C ASE OF SAHANI STEEL AND PRESS WORKS LTD. V. CIT 228 ITR 253 (S.C.) DECIDED THAT T HE SUBSIDY RECEIVED BY THE ASSESSEE FOR THE PRODUCTION OF FEATURE FILMS FROM THE STAT E GOVERNMENT WAS TO BE TREATED AS CAPITAL RECEIPT AND NOT TAXABLE IN THE HANDS OF THE R ECIPIENT. 5.3 TO SUM UP IT WAS CONTENDED THAT IN VIEW OF THE ABOVE FACTS PENALTY OF RS.3 24 000/- LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY TH E LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER BE CANCELLED. 4 ITA NO. 228-AHD-2009 6. ON THE OTHER HAND SHRI VIMALENDU VERMA D.R. A PPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED COMMI SSIONER OF INCOME TAX(APPEALS). HE POINTED OUT IT WAS THE DUTY OF THE ASSESSEE TO DISC LOSE RS.10 LAKHS IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICED UNDER SECTION 148 AND SINCE THIS WAS NOT DONE THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. THEREFORE PENALTY OF RS.3 24 000/- LEVIED BY THE ASSESSING OFFICER IS RI GHTLY UPHELD BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 7. HAVING HEARD BOTH THE SIDES I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT COMPLETE PARTIC ULARS REGARDING SUBSIDY OF RS.10 LAKHS RECEIVED FROM GOVERNMENT OF GUJARAT WERE AVAILABLE ON RECORD OF THE DEPARTMENT. THIS SUM RECEIVED AS SUBSIDY WAS RIGHTLY CREDITED TO THE CAPITAL ACCOUNT IN VIEW OF THE JUDICIAL DECISIONS PREVAILING AT THAT TIME. TO SUP UP I FIND CONSIDERABLE FORCE IN THE SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE THAT THE ASSESSEE HAD BONAFIDELY ACTED IN CREDITING THE SAID AMOUNT TO THE CAPITAL ACCOUNT AND THE SAID ACT OF THE ASSESSEE IS SUPPORTED WITH THE AFORESAID JUDICIAL DECISIONS ( SUPRA ) AS CITED BY THE LD. COUNSEL OF THE ASSESSEE. I AM THEREFORE OF THE VIEW THAT THIS IS NOT A FIT CASE TO LEVY T HE PENALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT AND THE SAME IS THEREFORE CANCELLED. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8.03.2011. SD/- (T.K. SHARMA) JUDICIAL MEMBER DATED : 18/03/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED 4) CIT CONCERNED 5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR ITAT AHMEDABAD TALUKDAR/SR.P.S. 5 ITA NO. 228-AHD-2009