Deepak Petrochem Ltd.,, Baroda v. The DCIT.,Circle-1(1),, Baroda

ITA 2469/AHD/2013 | 2002-2003
Pronouncement Date: 21-11-2019 | Result: Dismissed

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Appeal Details

RSA Number 246920514 RSA 2013
Assessee PAN AAACD7462L
Bench Ahmedabad
Appeal Number ITA 2469/AHD/2013
Duration Of Justice 6 year(s) 1 month(s) 3 day(s)
Appellant Deepak Petrochem Ltd.,, Baroda
Respondent The DCIT.,Circle-1(1),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2019
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 21-11-2019
Last Hearing Date 12-09-2019
First Hearing Date 12-09-2019
Assessment Year 2002-2003
Appeal Filed On 18-10-2013
Judgment Text
- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI AMARJIT SINGH ACCOUNTANT MEMBER ./ ITA NO.2469/AHD/2013 / ASSTT. YEAR: 2002-03 DEEPAK PETROCHEM LTD. 303 BN CHAMBERS R.C. DUTT ROAD BARODA 390 005. PAN : AAACD 7462 L VS. DCIT CIR.1(1) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : MS.URVASHI SHODHAN AR REVENUE BY : SHRI VINOD TANWANI SR.DR ! / DATE OF HEARING : 12/09/2019 '#$ ! / DATE OF PRONOUNCEMENT: 21/11/2019 %& / O R D E R PER RAJPAL YADAV JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-I BARODA DATED 9.7.2013 PASSED FOR THE AS STT.YEAR 2002-03. 2. THE ASSESSEE HAS TAKEN SIX GROUNDS OF APPEAL BU T ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE VIZ. THE L D.CIT(A) HAS ERRED IN CONFIRMATION THE PENALTY AMOUNTING TO RS.5 2 48 000/- IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE AC T. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 30.10.2002 DECLARING TOTAL LOSS AT ITA NO.2469/AHD/2013 2 RS.29 31 379/-. THE CASE OF THE ASSESSEE WAS SELEC TED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE A CCOUNTS IT REVEALED TO THE AO THAT THE ASSESSEES AUTHORIZED S HARE CAPITAL HAS BEEN INCREASED TO RS.3.00 CRORES AS AGAINST RS. 1.00 CRORE. ON FURTHER SCRUTINY IT REVEALED THAT THE ASSESSEE HAS TAKEN SHARE APPLICATION MONEY FROM 273 APPLICANTS OUT OF THAT FROM 272 PARTIES SHARE APPLICATION MONEY WAS TAKEN IN CASH. THE AO HAS DIRECTED THE ASSESSEE TO FURNISH IDENTITY OF THE CR EDITORS THEIR CREDIT-WORTHINESS AND GENUINENESS OF THE TRANSACTIO N. THE ASSESSEE HAS GIVEN HALF DETAILS. THE AO HAS ISSUED NOTICE UNDER SECTION 133(6)OF THE ACT BUT THEY WERE RETURNED UN -SERVED. HE MADE ADDITION OF RS.1 46 98 600/-. HE DETERMINED T AXABLE INCOME OF THE ASSESSEE AT RS.8 44 667/- VIDE ASSESS MENT ORDER DATED 28.1.2005. THIS FIGURE WAS DETERMINED AFTER SETTING OFF OF BUSINESS LOSS/UNABSORBED DEPRECIATION OF EARLIER YE ARS AT RS.1 13 22 553/-. DISPUTE TRAVELLED TO THE TRIBUNA L AND THE TRIBUNAL HAS CONFIRMED THE ADDITION VIDE ITA NO.739 /AHD/2011 DECIDED ON 2.3.2017. THE LD.AO HAS INITIATED PENAL TY PROCEEDINGS AND ISSUED NOTICE UNDER SECTION 274 R.W. SECTION 27 1(1)(C) OF THE ACT. IN RESPONSE TO THE NOTICE THE ASSESSEE HAS F ILED REPLY ON 15.2.2012. AFTER CONSIDERING THE REPLY OF THE ASSE SSEE THE LD.AO HAS IMPOSED PENALTY OF RS.52 48 000/- FOR FURNISHIN G INACCURATE PARTICULARS OF INCOME. APPEAL TO THE CIT(A) DID NO T BRING ANY RELIEF TO THE ASSESSEE. 4. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING ORDERS OF THE REVENUE AUTHORITIES CONTENDED THAT THE ASSESSEE HAS GIVEN ADDRESS AND DETAILS OF SHARE APPLICANTS. IT WAS FO R THE AO TO VERIFY THOSE DETAILS. HE FAILED TO PROVE THAT EXPL ANATION PUT-FORTH ITA NO.2469/AHD/2013 3 BY THE ASSESSEE THAT IT HAS RECEIVED SHARE APPLICAT ION WAS FALSE. IN SUPPORT OF HER CONTENTIONS HE RELIED UPON THE F OLLOWING DECISIONS: 1. JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN CASE OF N ATIONAL TEXTILES 2 JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN CASE OF J ALARAM OIL MILLS 3 JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN CASE OF AM RUT TUBEWELL CO. 4 ORDER OF HON'BLE IT AT AHMEDABAD IN CASE OF MANISH ORGANICS INDIA LTD. 5 'ORDER OF HON'BLE IT AT AHMEDABAD IN CASE OF BHAGYOD AYA GROUP CO-OP COTTON SALE GINNING & PRESSING SOCIETY LTD. 6 JUDGMENT OF HON'BLE SUPREME COURT IN CASE OF RELIANCE PETROPRODUCTS (P.) LTD. COPIES OF THESE DECISIONS HAVE BEEN PLACED ON RECOR D. 5. THE LD.DR ON OTHER HAND RELIED UPON ORDERS OF R EVENUE AUTHORITIES. HE CONTENDED THAT THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WHAT TO TALK OF PLAUSIBLE EXPLANATION. HENCE IT IS A FIT CASE WHERE WITH THE HELP OF EXPLANATION-1 OF SECTION 271(1)(C) OF THE ACT PENALTY DESERVES TO BE IMPOSED UPON THE AS SESSEE. 6. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GO NE THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE INC OME TAX ACT 1961 HAS DIRECT BEARING ON THE CONTROVERSY. THEREF ORE IT IS PERTINENT TO TAKE NOTE OF THE SECTION. '271. FAILURE TO FURNISH RETURNS COMPLY WITH NOTIC ES CONCEALMENT OF INCOME ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PERSON (A) AND (B)** ** ** ITA NO.2469/AHD/2013 4 (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER )** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D) IN ADDITION TO TAX IF ANY PAYABLE BY HIM A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THE N THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O R SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 7. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY THE ASSESSING OFFICE R OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCE EDINGS BEFORE THEM SHOULD BE SATISFIED THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED THE PEN ALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100% TO 300 % OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS. THE OTHER MOST IMPORTANT FEATURES OF THIS SECTION IS DE EMING PROVISIONS REGARDING CONCEALMENT OF INCOME. THE SEC TION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CON CEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS IN CERT AIN SITUATION ITA NO.2469/AHD/2013 5 EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO S TATUTORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INT O PLAY. THIS DEEMING FICTION BY WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FIRST WHETHER IN RES PECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UND ER THE PROVISIONS OF THE ACT THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND (B) WHERE IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT THE ASSESSEE IS NO T ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME. UNDER FIRST SITUATION THE DEEM ING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED TO GIVE A NY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATIO N OF TOTAL INCOME OR BY ACTION OF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDING TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILU RE OF THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANA TION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANAT ION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT T HAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN THE ABOVE TWO SI TUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING T HE TOTAL INCOME ITA NO.2469/AHD/2013 6 OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C ) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 8. IN THE LIGHT OF THE ABOVE LET US TAKE NOTE OF T HE FINDING RECORDED BY THE TRIBUNAL IN THE QUANTUM PROCEEDING WHICH READS AS UNDER: 13. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO TH E ORDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS TH AT THE ASSESSEE HAD DURING THE YEAR ACCEPTED SHARE APPLICA TION MONEY FROM 273 PARTIES. IT IS ALSO TRUE THAT THE AS SESSEE HAS FURNISHED THE NAMES AND ADDRESSES OF THE PARTIES IN THE LIST FILED BEFORE THE LOWER AUTHORITIES. IT IS EQUALLY T RUE THAT THE NOTICES ISSUED U/S. 133(6) OF THE ACT AND THE SUMMO NS ISSUED BY THE A.O. WERE RETURNED UNSERVED. A PERUSA L OF THE LIST OF THE SHARE APPLICANTS SHOW THAT ONLY THE NAM ES AND THE NAME OF THE VILLAGE ARE GIVEN. IT IS ALSO TRUE THAT THE ASSESSEE HAS RECEIVED CHEQUES FROM THE SAME CHEQUE- BOOK BEARING NO. 00490 200503. IT IS IMPOSSIBLE FOR DIF FERENT SHARE APPLICANTS RESIDING AT DIFFERENT VILLAGES USI NG THE SAME CHEQUE BOOK FOR THE APPLICATION OF SHARES. 14. IT APPEARS THAT THE SHARE APPLICATION MONEY INT RODUCED BY THE ASSESSEE COMPANY IN HIS BOOKS OF ACCOUNTS IS NOTHING BUT THE UNACCOUNTED INCOME OF THE ASSESSEE BROUGHT IN THE BOOKS OF ACCOUNTS IN THE FORM OF SHARE APPLICATION MONEY. 15. OUR VIEW IS FORTIFIED BY THE FACT THAT THE ALLE GED SHARE APPLICANTS WHO ARE AGRICULTURISTS HAVE APPLIED FOR THE SHARES OF AN UNLISTED COMPANY FROM WHICH THEY ARE NOT GOIN G TO DERIVE ANY BENEFIT WHATSOEVER IN FUTURE BY THE APPR ECIATION IN THE MARKET VALUE OF THE SHARES. 16. IN OUR CONSIDERED OPINION IN THE CONTEXT OF TH E PREPONDERANCE OF PROBABILITIES THE IMPUGNED SHARE APPLICATION MONEY IS NOT GENUINE AND THE ASSESSEE H AS GROSSLY FAILED IN DISCHARGING THE INITIAL BURDEN CA ST UPON IT BY THE PROVISIONS OF SECTION 68 OF THE ACT. WE THEREF ORE DECLINE TO INTERFERE WITH THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. ITA NO.2469/AHD/2013 7 17. BEFORE PARTING THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE LD. CIT(A) GIVEN FO R A.Y. 1990- 91. IT IS THE SAY OF THE LD. COUNSEL THAT IN EARLIE R ASSESSMENT YEAR ALSO ADDITIONS WERE MADE U/S. 68 OF THE ACT I N RESPECT OF MONEYS RECEIVED FROM SHAREHOLDERS AND THE SAME H AS BEEN DELETED BY THE LD. CIT(A) IN APPEAL NO. CAB/XVI /3/93- 94 VIDE ORDER DATED 10.11.1993. THE LD. COUNSEL STA TED THAT THE REVENUE HAS NOT PREFERRED ANY APPEAL BEFORE THE TRIBUNAL AND THE ORDER OF THE FIRST APPELLATE AUTHORITY HAS ATTAINED FINALITY THEREFORE THE SAME VIEW SHOULD BE TAKEN. WE DO NOT FIND ANY FORCE IN THIS CONTENTION OF THE LD. COUNSE L. FIRSTLY A PERUSAL OF THE ORDER OF THE FIRST APPELLATE AUTHORI TY RELIED UPON BY THE LD. COUNSEL SHOW THAT IN THAT YEAR ON INVESTIGATION IT WAS FOUND THAT THE PERSONS WHO ARE PURPORTED TO HAVE MADE THE INVESTMENT ARE NOT FICTI TIOUS BUT ARE EXISTING AND HAVE GIVEN THE STATEMENTS WHICH TH OUGH CAST DOUBT BUT ALSO ESTABLISH THAT THEY HAD KNOWLED GE ABOUT SOME TRANSACTIONS WITH THE APPELLANT COMPANY. WHERE AS THE FACTS OF THE CASE IN HAND SHOW THAT THE ASSESSEE HA S GROSSLY FAILED TO ESTABLISH THE IDENTITIES OF THE SHARE APP LICANTS. NONE OF THE SHARE APPLICANTS WERE PRODUCED BEFORE THE A. O. NOR ANY NOTICE COULD BE SERVED UPON THEM AS ALL THE NOTICES/SUMMONS RETURNED UNSERVED. SECONDLY IT IS NOT THE CASE OF THE LD. COUNSEL THAT THE SHARE APPLICANTS F OR THE YEAR UNDER CONSIDERATION ARE THE SAME SHAREHOLDERS WHICH APPLIED IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE A PPEAL STANDS DISMISSED. 9. THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION. IT HAS JUST SUBMITTED THAT IT HAS RECEIVED SHARE APPLICATION MO NEY FROM 272 PARTIES. IT HAS GIVEN THEIR NAMES. BUT THE ADDRES SES GIVEN BY THE ASSESSEE WERE FOUND TO BE INCORRECT BECAUSE NOTICES WERE RETURNED. APART FROM THAT THE ASSESSEE HAS NOT GIV EN ANY DETAILS. MONIES HAVE BEEN TAKEN IN CASH AND NOT THROUGH BANK ING CHANNEL. THEREFORE NEITHER IT HAS PROVED THE GENUINENESS OF THE TRANSACTION NOR CREDIT-WORTHINESS OF THE ALLEGED AP PLICANTS; RATHER TO SAY THEIR IDENTITIES ALSO DOUBTFUL. IN SUCH CIR CUMSTANCES IT HAS TO BE CONSTRUED THAT THE EXPLANATION OFFERED BY THE ASSESSEE HAS BEEN PROVED AS FALSE BY THE AO. THE LD.COUNSEL FOR THE ASSESSEE ITA NO.2469/AHD/2013 8 HAS RELIED UPON ABOVE SIX JUDGMENTS. OUT OF THAT I N THE FIRST TWO IN THE CASE OF NATIONAL TEXTILES (SUPRA) AND JALARA M OIL MILLS ASSESSMENT YEAR INVOLVED IS 1971-72 AND 1974-75. EXPLANATION- 1 TO SECTION 271(1)(C) OF THE ACT HAS BEEN APPENDED I N THE PRESENT FORM W.E.F. 1-4-1976. THEREFORE THESE JUD GMENTS ARE OF NO HELP TO THE ASSESSEE. AS FAR AS THE LAST JUDG MENT OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS P.LTD. IS CONCERNED IN THAT CASE THE ASSESSEE HAS MADE SOME CLAIM WHICH WAS FOUND TO BE NOT ADMISSIBLE AS PER THE POSITION OF LAW. THE ASSESSEE HAS NOT WITHHELD INFORMATION. HONBLE SUP REME COURT WAS OF THE VIEW THAT UNLESS SOME CLAIM IS MADE HOW THE ASSESSEE WOULD EXPLAIN HIS CASE BEFORE TAX AUTHORITIES. IN THE PRESENT CASE NO SUCH FACTS ARE THERE. THE ASSESSEE HAS NOT MADE ANY CLAIM ADMISSIBLE IN LAW WHICH HAS BEEN DISALLOWED ON ACC OUNT OF DIFFERENCE OF OPINION BETWEEN HIM AND THE TAX AUTHO RITIES. SIMILARLY AS FAR AS THE FACTS OF OTHER THREE DECIS IONS ARE CONCERNED THEY ARE QUITE DISTINGUISHABLE WITH THE FACTS IN THE PRESENT CASE. THEREFORE WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A) AND THE APPEAL OF THE ASSESSEE IS DIS MISSED. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE COURT ON 21 ST NOVEMBER 2019. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 21/11/2019