M/s. M.M. Patel & Co.,, Anand v. The ACIT., Circle-3,, Baroda

ITA 2416/AHD/2007 | 2000-2001
Pronouncement Date: 27-04-2010 | Result: Allowed

Appeal Details

RSA Number 241620514 RSA 2007
Assessee PAN AAEFM0531C
Bench Ahmedabad
Appeal Number ITA 2416/AHD/2007
Duration Of Justice 2 year(s) 10 month(s) 23 day(s)
Appellant M/s. M.M. Patel & Co.,, Anand
Respondent The ACIT., Circle-3,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 27-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 27-04-2010
Date Of Final Hearing 27-04-2010
Next Hearing Date 27-04-2010
Assessment Year 2000-2001
Appeal Filed On 04-06-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING: 27.04.2010 DRAFTED ON: 27.04. 2010 ITA NO.2416/AHD/2007 & 2417/AHD/2007 ASSESSMENT YEAR : 2000-2001 & 2001-2002 M/S. M.M.PATEL & CO. BORSAD. C/O. KIRAN PATEL & CO. CHARTERED ACCOUNTANTS SHREE RAM NIVAS OPP. BANK OF BARODA STATION ROAD ANAND. VS. INCOME TAX OFFICER WARD-3(4) PETLAD. PAN/GIR NO. : AAEFM 0531 C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI A.L.THAKKAR A.R. RESPONDENT BY: SHRI C.K.MISHRA D.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAIN ST THE CONSOLIDATED ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS)-I BARODA DATED 13.04.2007 PASSED IN ASSESSMENT YEAR 2000-01 AND 20 01-02. 2. THE SOLE ISSUE INVOLVED IN BOTH THE APPEALS IS THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN CONFIR MING THE PENALTY OF RS.6 64 706/- IN ASSESSMENT YEAR 2000-01 AND RS. 6 50 000/- IN ASSESSMENT YEAR 2001-02 LEVIED BY ITO UNDER SECTION 271(1)(C) OF TH E ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELL ANT WAS CARRYING ON BUSINESS OF ROAD CONSTRUCTION ON CONTRACT BASIS. TH E ASSESSING OFFICER REQUIRED THE APPELLANT TO FURNISH COMPLETE DETAILS OF MATERIAL P URCHASE QUANTITATIVE TALLY AND - 2 - VARIOUS EXPENSES. THE APPELLANT ADMITTEDLY DID NOT MAINTAIN ANY STOCK REGISTER. IT WAS FURTHER OBSERVED THAT THE APPELLANT DID NOT MAINTAI N ANY RECORD OF THE CONSUMPTION OF MATERIALS ISSUED AND USED ON A DAY TO DAY BASIS. FR OM THIS HE OBSERVED THAT THE CONSUMPTION OF RAW MATERIAL AND THE CLOSING STOCK W ERE NOT VERIFIABLE. THE ASSESSING OFFICER SPECIFICALLY ASKED THE APPELLANT TO FURNISH DETAILS REGARDING DATE-WISE FREIGHT EXPENSES GIVING TRUCK NUMBER NAME OF THE TRANSPOR TER DATE OF MATERIAL TRANSPORTED DISTANCE TRAVELED AND TRANSPORTATION CHARGES PAID. HE ALSO REQUIRED THE APPELLANT TO FURNISH DETAILS OF HIS OWN TRUCKS USED GIVING TRUC K NUMBER WITH SPECIFIC WORK DONE PLACE AND DISTANCE TRAVELED AND QUANTITY OF DIESEL CONSUMED. THE APPELLANT FAILED TO FURNISH THE DETAILS IN RESPECT OF THE USE OF OWN TR UCKS GOODS RECEIPT DELIVERY CHALLANS OR TRUCK RECEIPTS. THE ASSESSING OFFICER O BSERVED THAT IN THE ABSENCE OF THE DETAILS FOR THE DAY TO DAY ISSUE AND USE OF CONSUMP TION OF VARIOUS MATERIAL IT WAS NOT POSSIBLE TO WORK OUT THE DAY TO DAY CLOSING BALANCE S AND THEREFORE THE CLOSING STOCK OF THE RAW MATERIALS OF METAL GREET KAPACHI KAPA CHA DUST AND DAMMAR. UNDER THE CIRCUMSTANCES HE REJECTED THE BOOKS OF ACCOUNTS U/ S. 145(3) OF THE ACT. HE ALSO ESTIMATED THE NET PROFIT @8% OF THE TOTAL RECEIPTS AND MADE AN ADDITION OF RS. 17 26 508/- AND RS. 15 95 0537- RESPECTIVELY. HE RE LIED UPON THE DECISION OF THE PATNA HIGH COURT IN THE CASE OF RAMCHANDRA SINGH RAMNIKLA L V. CIT 42 ITR 780. HE ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(L)(C) IN BOT H THE YEARS. THE APPELLANT WENT IN APPEAL. IT IS NOTED THAT THE CIT(A) HAS CONFIRMED T HE ADDITION. UNDER THE CIRCUMSTANCES THE ASSESSING OFFICER LEVIED THE PEN ALTY AFTER GIVING A SHOW CAUSE NOTICE. THE APPELLANT ARGUED THAT SINCE THE ADDITIO N HAD BEEN MADE ON ACCOUNT OF GROSS PROFIT NO PENALTY BECAME LEVIABLE. IT RELIED UPON THE DECISION IN THE CASE OF CIT V. SUBHASH TRADING CO. 221 ITR 110. THE APPELLANT ALSO INFORMED THE ASSESSING OFFICER THAT IT HAD FILED APPEAL BEFORE THE HON'BLE ITAT AND THEREFORE THE PENALTY PROCEEDINGS KEPT IN ABEYANCE. HOWEVER THE ASSESSIN G OFFICER REITERATED THE DEFICIENCY AND DEFECTS NOTED AT THE TIME OF ASSESSM ENT AND HIGHLIGHTED THE FACT THAT THE ADDITION HAD BEEN CONFIRMED BY THE CIT(A) AFTER THE BOOK RESULTS HAD BEEN REJECTED U/S. 145(3) OF THE ACT. CONSEQUENTLY HE L EVIED THE PENALTY OF RS. 6 64 706/- & RS. 6 50 000/- IN A.Y. 2000-01 & A.Y. 2001-02 RES PECTIVELY. - 3 - 4. IN APPEAL THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) OBSERVED THAT THE APPELLANT HAS NOT DENIED THAT THE DAY TO DAY STOCK REGISTER HAS NOT BEEN MAINTAINED. IT HAS NOT DENIED EITHER THAT THE DETAILS OF ISSUE AND USE OF VARIOUS RAW MATERIALS WERE NOT RECORDED SO THAT THE DAY TO DAY CONSUMPTION AND CLOSING BALANCES COULD NOT BE CORRECTLY ARRIVED AT. IT HAS ALSO NOT DENIED THAT THE GOODS RECEIPT REGISTER FOR FREIGHT EXPENSES AND TRANSPORTATION EX PENSES WAS NOT MAINTAINED. THE ASSESSING OFFICER ASKED FOR CERTAIN OTHER DETAILS I N ORDER TO WORK OUT THE CORRECTNESS OF THE EXPENDITURE ON PETROL AND DIESEL BUT THESE W ERE ALSO NOT FURNISHED LIKE THE TRUCK NUMBER THE DISTANCE TRAVELED AND THE TRANSPORTATIO N CHARGES PAID NAME OF THE TRANSPORTER ETC. FURTHER MAJORITY OF FREIGHT EXPEN SES WERE INCURRED IN CASH FOR WHICH SELF VOUCHERS WERE MAINTAINED WHICH WERE NOT SUBJEC T TO ANY OBJECTIVE VERIFICATION. FURTHER THE APPELLANT DID NOT KEEP RECORD OF THE W ORK DONE SEPARATELY FOR PAVING OF THE ROADS AND THE NORMAL FAYING OF THE ROADS. IN VI EW OF ALL THESE DEFECTS THE ASSESSING OFFICER HAD REJECTED THE BOOKS OF ACCOUNT S. FOR THESE VERY REASONS THE CIT(A) HAD CONFIRMED THE ADDITION MADE BY THE ASSES SING OFFICER. IT IS SEEN THAT THE ASSESSING OFFICER HAS CLEARLY CHALLENGED THE CORREC TNESS OF AUTHENTICITY OF THE ACCOUNTS INCLUDING VARIOUS EXPENSES CLAIMED BY THE APPELLANT. NO SATISFACTORY EXPLANATION HAS BEEN PUT FORWARD BY THE APPELLANT E XCEPT THAT THE BOOKS OF ACCOUNTS ARE AUDITED. HOWEVER IT IS IGNORED THAT FOR LEGITI MATE AND GOOD REASONS THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNTS AND THIS FACT HAS BEEN FURTHER CONFIRMED BY THE CIT(A). THE ASSESSING OFFICER HAS STRONGLY PLAC ED RELIANCE ON THE PATNA HIGH COURT DECISION IN THE CASE OF RAMCHANDRA SINGH RAMN IKLAL (SUPRA). IT IS CLEAR FROM ALL THESE FACTS THAT THE APPELLANT HAS FAILED TO OFFER ANY SATISFACTORY EXPLANATION IN THIS REGARD AND HAS THUS FAILED TO CORROBORATE AND JUSTI FY THE CORRECTNESS OF THE PARTICULARS FURNISHED BY IT. ON THE OTHER HAND THE ASSESSING O FFICER HAS WORKED TO SHOW THAT THE RESULTS ARRIVED AT BY THE APPELLANT ON THE BASIS OF THE PARTICULARS OF INCOME FURNISHED BY IT WHICH HAVE BEEN FOUND TO BE NOT CORRECT ARE N OT RELIABLE. UNDER THE CIRCUMSTANCES IT IS HELD THAT THE APPELLANT HAS FU RNISHED INACCURATE PARTICULARS OF INCOME AND HAD WITHHELD FURNISHING OF CORRECT PARTI CULARS OF INCOME AND HAD ALSO FAILED TO OFFER ANY SATISFACTORY EXPLANATION ABOUT THE CLAIM OF INCOME MADE BY IT. MOREOVER THE FACTS OF VARIOUS CASE LAWS RELIED UPO N BY THE APPELLANT ARE DIFFERENT. AS - 4 - A RESULT THE ORDERS PASSED BY THE ASSESSING OFFICE R LEVYING THE PENALTY IN TWO YEARS OF RS. 6 64 706/- AND RS. 6 50 000/- RESPECTIVELY ARE CONFIRMED. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE FILED COPY OF ORDER PASSED BY THE TRIBUNAL IN THE QUANTUM APPEAL FOR ASSESSMENT YEAR 2000-2001 IN ITA NO.4432/AHD/2003 ORDER DATED 31.08.2007 AND IN ASSESSMENT YEAR 2001- 2002 IN ITA NO.1976/AHD/2005 ORDER DATED 8.08.2008 AND SUBMITTED THAT THE TRIBUNAL IN THESE APPEALS HAS RESTORED THE MATTER B ACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR COMPUTING INCOME AS PER LAW I N LIGHT OF THE OBSERVATIONS MADE IN THE SAID ORDERS. THEREFORE THE PRESENT APPEALS OF THE ASSESSEE WHICH ARE AGAINST LEVY OF PENALTY ON THE VERY ADDITION WHICH HAS BEEN RESTORED BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR READJUDICATION SHOULD ALSO BE RESTORED BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR DECIDING THE S AME AFRESH IN LIGHT OF THE DECISION OF THE ISSUES IN READJUDICATION BY THE LEARNED ASSE SSING OFFICER. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT HAVE ANY OBJECTION TO THE ABOVE SUBMISSION OF THE LEARNED AUTHORISED R EPRESENTATIVE OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. AT THE TIME OF THE HEARING THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE F ILED COPY OF ORDERS OF THE TRIBUNAL IN QUANTUM APPEAL OF THE ASSESSEE IN ASSES SMENT YEAR 2000-2001 IN ITA NO.4432/AHD/2003 ORDER DATED 31.08.2007 AND IN ASS ESSMENT YEAR 2001-2002 IN ITA NO.1976/AHD/2005 AND SUBMITTED THAT THE TRIBUN AL HAS RESTORED THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR RE DECIDING THE ISSUE AFRESH AS PER THE OBSERVATIONS MADE BY THE TRIBUNAL IN THE QUANTUM AP PEAL OF THE ASSESSEE. THEREFORE THE PRESENT APPEALS OF THE ASSESSEE AGAINST THE PEN ALTY LEVIED SHOULD ALSO BE RESTORED BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER F OR FRESH ADJUDICATION IN THE LIGHT OF THE DECISION TAKEN ON READJUDICATION OF THE ISSUE A FRESH. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAD NO OBJECTION TO THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE WE - 5 - ARE OF THE CONSIDERED VIEW THAT AS THE ISSUE ON WHI CH PENALTY WAS LEVIED HAS BEEN RESTORED BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR READJUDICATION THEREFORE THE ISSUE OF PENALTY SHOULD ALSO BE SET ASIDE TO TH E FILE OF THE LEARNED ASSESSING OFFICER FOR DECIDING THE ISSUE OF PENALTY IN THE LI GHT OF THE DECISION TAKEN ON READJUDICATION OF THE ISSUE OF ADDITION TO THE INCO ME OF THE ASSESSEE. WE ORDER ACCORDINGLY. THUS THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON 27 TH DAY OF APRIL 2010. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 27 TH DAY OF APRIL 2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-I B ARODA 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 27.04.2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 27.04.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 27.04.2010 ---------- --------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 27.04.2010 --------- ---------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 28.04.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- -- ------------------ 7. FILE SENT TO THE BENCH CLERK 28.04.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- - --------------------