Shri Rudabhai Ganeshbhai Prajapati, Ahmedabad v. The Income tax Officer, Ward-1,, Anand

ITA 3213/AHD/2008 | 1997-1998
Pronouncement Date: 15-07-2011 | Result: Allowed

Appeal Details

RSA Number 321320514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 3213/AHD/2008
Duration Of Justice 2 year(s) 10 month(s) 2 day(s)
Appellant Shri Rudabhai Ganeshbhai Prajapati, Ahmedabad
Respondent The Income tax Officer, Ward-1,, Anand
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 15-07-2011
Date Of Final Hearing 28-06-2011
Next Hearing Date 28-06-2011
Assessment Year 1997-1998
Appeal Filed On 12-09-2008
Judgment Text
` IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI D.K. TYAGI HONBLE JUDICIAL MEMBER AND SHRI A.N.PHAUJA HONBLE ACCOUNTANT MEMBER ITA NO.3213/AHD/2008 ASSESSMENT YEAR:1997-98 DATE OF HEARING:28.6.11 DRAFTED:11.7.11 RUDABHAI GANESHBHAI PRAJAPATI PROP. M/S. BHAGWATI HARDWARE MART STATION ROAD ANAND PAN NO.ADRPP7167R V/S. INCOME TAX OFFICER WARD-1 ANAND (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI U.S.BHATI AR RESPONDENT BY:- SHRI M.R.CHAUDHRY DR O R D E R PER D.K. TYAGI JUDICIAL MEMBER:- THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF COM MISSIONER OF INCOME- TAX(APPEALS)-I BARODA DATED 13-05-2008 FOR THE ASS ESSMENT YEAR 1997-98. 2. THE ASSESSEES APPEAL HAS BEEN FILED LATE BY 27 DAYS AND THE CONDONATION PETITION IS ON RECORD. AFTER HEARING BOTH THE PARTI ES THE DELAY WAS CONDONED AND APPEAL WAS ADMITTED FOR HEARING. 3. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- 1.0 THE LEARNED COMMISSIONER OF INCOME (APPEALS) E RRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY ORDER PASSED BY THE A.O U /S.271(1) OF THE ACT IN WHICH THE A.O HAD LEVIED A PENALTY OF RS.1 01 045/- . 2.0 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN CONFIRMING THE PENALTY ORDER OF THE A.O WITHOUT TAKING INTO CO NSIDERATION OF EVIDENCE AND AN AFFIDAVIT SUBMITTED DURING THE COURSE OF HEARING BEFORE THE LD. A.O. ITA NO.3213/AHD/2008 A.Y. 1997-98 RUDABHAI G PRAJAPATI V. ITO WD-1 ANAND PAGE 2 3.0 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE THE PENALTY MAY BE CANCELLED THIS BEING A CASE OF DOUBLE TAXATION OF THE SAME INCOME. 4. THE BRIEF FACTS OF THE CASE ARE THAT WHILE VERIF YING THE SALES REGISTER WITH THE BILL BOOKS ON ACCOUNT OF SALES IT WAS NOTICED BY A SSESSING OFFICER THAT CREDIT SALES AMOUNTING TO RS.2 68 150/- MENTIONED IN BILL BOOK C ONTAINING BILLS NO.A-1 TO A-50 MADE TO SARDAR PATEL UNIVERSITY GUJARAT KRUSHI UNI VERSITY AND CHAROTAR VIDYA MANDAL WERE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOU NTS OF THE ASSESSEE. THE ASSESSEE WAS CONFRONTED WITH THESE DISCREPANCIES. I N RESPONSE TO THE ASSESSEE ADMITTED THAT CREDIT SALES AMOUNTING TO RS.2 68 150 /- SHOWN IN BILL NOS. A-1 TO A-50 REMAINED TO BE RECORDED IN THE SALES REGISTER FOR T HE REASON OF HIS BUSY SCHEDULE. THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO MAK E ONLY PARTIAL ADDITION IN THIS RESPECT AND ALSO TO GRANT EXEMPTION FROM PENALTY PR OCEEDINGS. THE ASSESSING OFFICER HOWEVER MADE THE ADDITION OF RS.2 68 150/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED SALES. THIS ACTIO N OF THE ASSESSING OFFICER WAS CONFIRMED BY LD. CIT(APPEALS) AS WELL AS BY HONBLE ITAT. 5. THE ASSESSING OFFICER LEVIED PENALTY U/S.271(1) OF THE INCOME-TAX ACT 1961 @ 200% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESS EE. THIS PENALTY WAS CONFIRMED BY LD. CIT(APPEALS). BEFORE HONBLE ITAT ASSESSEE TOOK THE PLEA THAT AN OPPORTUNITY SHOULD BE PROVIDED TO THE ASSESSEE TO S HOW THAT SALES IN QUESTION WERE SHOWN IN THE BOOKS OF ACCOUNT FOR THE ASSESSMENT YE AR 1998-99. THEREFORE THE MATTER WAS RESTORED BACK TO THE FILE OF ASSESSING O FFICER FOR FRESH ADJUDICATION AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. ACCORDINGLY ASSESSING OFFICER PROVIDED THE OPPO RTUNITY TO THE ASSESSEE AND CONCLUDED THAT EVASION OF INCOME TO THE EXTENT OF R S.2 68 150/- WAS UNEARTHED ONLY DUE TO THE DILIGENT AND INDUSTRIOUS EFFORTS OF THE AO. HAD IT NOT BEEN FOR THE AO WHO DETECTED THIS INCOME THE ASSESSEE MAY NOT HAVE DEC LARED THIS INCOME. HE THEREFORE LEVIED PENALTY @ 100% OF TAX SOUGHT TO BE EVADED. B EFORE LD CIT(APPEALS) THE ASSESSEE REITERATED THE FACT THAT ASSESSEE HAD SUO MOTO BROUGHT TO TAX THE INCOME WHICH HAD NOT BEEN DECLARED BY HIM INADVERTENTLY. H OWEVER LD. CIT(APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING A S UNDER:- ITA NO.3213/AHD/2008 A.Y. 1997-98 RUDABHAI G PRAJAPATI V. ITO WD-1 ANAND PAGE 3 I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZ ED REPRESENTATIVE AND THE ORDERS PASSED BY THE VARIOUS AUTHORITIES. THE FIRST NOTICE WHICH WAS ISSUED TO THE APPELLANT SELECTING THE CASE FOR SCRUTINY WAS O N 22.9.1998. THE SAME WAS SERVED TO THE ASSESSEE ON 25.9.1998. THE RETURN OF INCOME FOR A.Y. 1998-99 WHEREIN THE ASSESSEE IS CLAIMING TO HAVE INCLUDED THIS AMOUNT WAS FILED WITH THE INCOME TAX DEPARTMENT ON 15.2.1999 I.E. ALMOST 4 MONTHS AFTER THE NOTICE FOR THE PREVIOUS YEAR WAS SERVED. THE APPEAL S PLEA THAT HE HAD INCLUDED THIS INCOME VOLUNTARILY IN THE FOLLOWING Y EAR DOES NOT HOLD TRUE. SECONDLY THE CONSTANTLY CHANGING STANDS OF THE APP ELLANT ALSO CASTS DOUBT ON HIS BONAFIDES. INITIALLY THE ASSESSEE AGREED THAT THE INCOME WAS NOT INCLUDED BY MISTAKE. BEFORE THE I.T.A.T. IN THE QUANTUM APPE AL THE APPELLANT HAD CLAIMED THAT THESE AMOUNTS WERE LYING IN THE CLOSIN G STOCK OF THE APPELLANT. THE HONBLE I.T.A.T DID NOT CONSIDER IT FIT TO ACCE PT THIS SUBMISSIONS. IN THE PENALTY PROCEEDINGS THE APPELLANT CHANGED HIS STAN D ONCE AGAIN AND HELD THAT ALL THE ENTRIES WERE MADE IN THE BOOKS OF ACCO UNTS PRIOR TO HIS HAVING RECEIVED A SCRUTINY NOTICE FOR THE CURRENT ASSESSME NT YEAR. THIS CLAIM IS ALSO NOT BORNE OUT SINCE THE RETURN FOR THE FOLLOWING YE AR WAS FILED AFTER THE ISSUE OF NOTICE FOR THE A.Y. 1997-98. THE CLAIM OF THE APPEL LANT THAT ALL THE BILLS WERE ENTERED IN THE SALES REGISTER AND HAVE BEEN SUPPLIE D TO THE SALES TAX DEPARTMENT WAS ALSO FOUND WANTING WHEN VERIFIED BY THE ASSESSING OFFICER AS HAS BEEN NOTED BY MY PREDECESSOR. IN VIEW OF THE AB OVE FACTS AND OBSERVATIONS I AGREE WITH THE ASSESSING OFFICERS CONCLUSION THAT THE CLAIM OF MISTAKE ON THE PART OF THE APPELLANT WAS NOT A BONA FIDE ONE. THE PENALTY OF RS.1 01 945/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) IS THEREFORE CONFIRMED. 7. FURTHER AGGRIEVED THE ASSESSEE IS IN APPEAL BEF ORE US. 8. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE REITERATED THE SAME SUBMISSION AS MADE BEFORE THE LOWER AUTHORITIES THA T SALES OF RS.2 68 150/- MADE TO SARDAR PATEL UNIVERSITY GUJARAT KRUSHI UNIVERSITY AND CHAROTAR VIDYA MANDAL WERE SUO MOTO SHOWN BY HIM DURING THE ASSESSMENT YEAR 19 98-99 AS SOON AS THIS MISTAKE WAS BROUGHT TO HIS NOTICE BY HIS ACCOUNTANT . IN SUPPORT OF ITS SUBMISSION HE PLACED RELIANCE ON THE AFFIDAVIT OF HIS ACCOUNTANT MR. RAMBHAI DHULABHAI VALAND AND ALSO ON THE COPIES OF SALES TAX RETURN FILED IN THE SALES TAX DEPARTMENT. HE ALSO TOOK US TO THE COPY OF ORDER-SHEET FOR THE ASSESSME NT ORDER 1997-98 TO SHOW THAT INCOME-TAX RETURN WAS FILED BY HIM WELL BEFORE THE ASSESSING OFFICER RAISED THE QUERY ABOUT THE SALES DURING THE ASSESSMENT PROCEED INGS FOR THE A.Y 1997-98. THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 1998-99 W AS FILED ON 15-02-1999 WHILE THE QUERY WAS RAISED BY THE AO ON 24-02-2000. THUS IT CANNOT BE SAID THAT ONLY AFTER DETECTION BY THE AO THE ASSESSEE HAS SHOWN TH IS INCOME IN THE NEXT YEAR. LEARNED COUNSEL FOR THE ASSESSEE FURTHER STATED THA T SALES TAX RETURN FOR THE FINANCIAL ITA NO.3213/AHD/2008 A.Y. 1997-98 RUDABHAI G PRAJAPATI V. ITO WD-1 ANAND PAGE 4 YEAR 1997-98 SHOWING SALES OF RS.2 68 150/- WAS FIL ED ON 12-02-1998 WELL BEFORE THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY ON 22-09- 1998. ALL THESE FACTS CLEARLY SHOW THAT THERE WAS A BONA FIDE MISTAKE ON THE PART OF THE ASSESSEE FOR NOT SHOWING SALES OF RS.2 68 150/- DURING THE YEAR UNDER APPEAL AND THEREFORE IT SHOULD NOT BE TREATED AS CONCEALMENT OF INCOME AND NO PENALTY IS LEVIABLE U/S. 271(1)(C) OF THE ACT. 9. LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF LOWER AUTHORITIES. 10. HEARD BOTH THE PARTIES AND PERUSED THE RECORD WE FIND THAT ASSESSING OFFICER HAS IMPOSED PENALTY OF RS.1 01 945/- U/S. 271(1)(C) OF THE ACT ON THE GROUND THAT ASSESSEE HAS NOT SHOWN THE SALES OF RS.2 68 150/- I N HIS BOOKS OF ACCOUNT. DURING THE PENALTY PROCEEDINGS THE ASSESSEES CONTENTION HAS BEEN THAT THESE SALES WERE SHOWN BY THE ASSESSEE VOLUNTARILY DURING THE NEXT F INANCIAL YEAR. HOWEVER THIS EXPLANATION WAS NOT ACCEPTABLE TO ASSESSING OFFICER AND LD. CIT(APPEALS) ALSO DID NOT ACCEPT THIS EXPLANATION AS THE RETURN OF INCOME FOR AY 1998-99 WAS FILED BY THE ASSESSEE ON 15-02-1999 WHILE NOTICE FOR SCRUTINY F OR A.Y 1997-98 WAS SERVED ON ASSESSEE ON 25-09-1998. THEREFORE HE WAS OF THE VIE W THAT ASSESSEE DID NOT DISCLOSE THIS INCOME VOLUNTARILY IN THE FOLLOWING Y EAR. BEFORE US THE CONTENTION OF THE ASSESSEE HAS BEEN THAT AS SOON AS THIS MISTAKE WAS NOTICED BY THE ASSESSEE HE IMMEDIATELY SHOWED THESE SALES IN THE SALES TAX RET URN FOR THE QUARTER ENDING ON 31 ST DECEMBER 1997 AND THIS SALES TAX RETURN WAS FILED O N 12-02-1998. THIS CONTENTION OF THE ASSESSEE IS SUPPORTED BY AFFIDAVIT OF HIS ACCOU NTANT IN THE PAPER BOOK AT PAGE- 42 WHICH READS AS UNDER:- AFFIDAVIT I RAMBHEI DHUIABHAI VALAND S/O SHRI DHULABHAI A. VALAND AGED BLY.ERJ ITUDJE'D'UPTO X 1 ' STANDARD RESIDING AT 12 SURYANAGAR COLONY B/H G.E.B; ANAND OCCUPAT ION ACCOUNTS WRITING FOR MERCHANTS HEREBY SOLEMNLY AFFIRM ON OATH AS UNDER :- 1. THAT I HAVE BEEN WRITING ACCOUNTS OF SHRI RUDABHAI GANESHBHAI PRAJAPA TI PROP OF M/S BHAGWATI HARDWARE MART SUBHASH ROAD ANAND FOR ABOUT TWENTY YEARS. NO OTHER ACCOUNTANT HAS BEEN EMPLOYED BY SHRI RUDABHAI DURING THE LAST TWENT Y YEARS. I USED TO ATTEND HIS WORK ONCE A MONTH. 2. THAT THE ABOVE NAMED FIRM HAVE BEEN SUPPLYING GOODS ON ANNUAL RATE CONTRACT BASIS TO SARDAR PATEL UNIVERSITY CBARUTAR VIDYA MANDAL & GUJARAT KR USHI UNIVERSITY FOR LAST ALMOST 10 YEARS. ITA NO.3213/AHD/2008 A.Y. 1997-98 RUDABHAI G PRAJAPATI V. ITO WD-1 ANAND PAGE 5 3. THAT DURING THE COURSE OF DEALINGS WITH THESE INSTITUTIONS THE FIRM HAD BEEN ASKED TO PROVIDE THEM COPIES OF BILLS FOR SUPPLIES IN DUPLICATE. FOR SOME TIME WE USED TO SUPPLY THEM ADDITIONAL COPIES BY GETTING COPIES OF ZEROX OF ORIGIN AL BILLS. HOWEVER FROM THE FINANCIAL YEAR 199G 97 M/S BHAGAWATI HARDWARE MART GOT PRINTED SPE CIAL BILL BOOKS CONTAINING THREE LENV 1 '- OF ONE BILL FOR THE PURPOSE OF THESE INSTITUTIONS A FACT WHICH 1 WAS NOT INITIALLY AWARE OF BUT I CAME TO KNOW ABOUT THIS AFTER DEEPAWALI 1997. 4. THAT ACCORDINGLY A SEPARATE BILL BOOK OF THREE LEAVES WAS BROUGHT INTO USE FORM APRIL 1996 BY THE PERSON WHO USED LO PREPARE BILLS FOR THE SALES EFFECTE D TO THE ABOVE THREE INSTITUTIONS. 5. THAT AS USUAL I POSTED IN THE SALES REGISTER THE SA LES SHOWN IN THE REGULAR BILL BOOKS BUT THE SEPARATE BILL BOOK STARTED FOR THESE INSTITUTIONS RE MAINED TO BE CONSIDERED FOR THE REASON MENTIONED ABOVE. 'AT THE; END OF THE YEAR IT WAS NOT POSSIBLE TO TAKE PHYSICAL STOCK OF THE GOODS AS IN THE PAST YEARS THE CLOSING STOCK FIGURE W AS SHOWN ON ESTIMATE BASIS IN ORDER TO OBTAIN G.P. @11% ON THE TURNOVER AS PER BOOKS. ON TH AT BASIS I CLOSED THE BOOKS OF ACCOUNTS AND PREPARED THE FINAL ACCOUNTS INCLUDING TRADING ACCO UNT PROFIT & LOSS ACCOUNT AND BALANCE SHEET TO BE SUBMITTED ALONG WITH THE INCOME TAX RETURN. . ' 6. THAT THE ACCOUNTS FOR THE FINANCIAL YEAR 1996-97 W ERE FINALIZED UY DTEPWALI 1997 BUT THE SALES EFFECTED TO THE ABOVE INSTITUTIONS REMAINED TO BE CONSIDERED IN THE FINAL ACCOUNTS FOR THE YEAR ENDED ON 31''' MARCH 1997 FOR THE ABOVE REASON. 7. THAT THIS MISTAKE CAME TO MY NOTICE AFTER DEEPAWALI AND IMMEDIATELY THEREAFTER I ENTERED ALL THOSE SALES IN THE SALES REGISTER FOR THE FINANC IAL YEAR 1997-98. HOWEVER THOSE SALES WERE INCLUDED BY ME IN THE FIGURES SUPPLIED TO THE S ALES TAX. PRACTITIONER FOR THE SALES TAX RETURN FOR THE QUARTER ENDING ON 31 ST DECEMBER 1997. THIS FACT I DID NOT BRING TO THE NOTICE OF EITHER SHRI RUDABHAI OR HIS SON SHRI BHAVANBHAI. 8. THAT I HAVE ATTENDED THE INCOME TAX PROCEEDINGS IN THE CASE OF SHRI RUDABHAI PROP. OF M/S BHAGWATI HARDWARE MART ON 24 LH FEBRUARY 2000 IN THE COMPANY OF HIS INCOME TAX PRACTITIONER AND SHRI BHAVANBHAI RUDABHAI. ON THAT DAY BOOKS OF ACCOUNT AND ALL (LIE BILL BOOKS ETC. WERE PRODUCED. THE A.O. ASKED FOR FURTHER INFORMATION TO BE PRODUCED ON 10 I!| MARCH 2000. WHEN WE ATTENDED WITH THE INFORMATION CALLED FOR F HAD SPECIFICALLY POINTED OUT TO THE A.O. THAT THE SALES TO THE INSTITUTIONS HAD REMAINED TO BE INCLUDED IN THE SALES FOR THE FINANCIAL YEAR 199G-97. I HAD ALSO PRODUCED THE SAL ES REGISTERED FOR THE FINANCIAL YEAR 1997- 98. I HAD ALSO PRODUCED THE SALES REGISTER FOR THE FINANCIAL YEAR 1997-98 IN SUPPOR T OF MY ABOVE EXPLANATION. THE ABOVE FACTS IN AFFIDAVIT ARE AFFIRMED -IN CONNECTION WITH THE INCOME TAX APPELLATE PROCEEDINGS IN THE CASE OF SHRI RUDABHAI G. PRAJAPATI PROP OF M/S BHAGWA TI HARDWARE MART ANAND. THE ABOVE FACTS ARE TRUE AND CORRECT AS PER MY KNOWLEDGE AND BELI EF. SIGNED AND VERIFIED ON 17'' NOVEMBER 2005 AT ANAND. THE FACT THAT THESE SALES WERE SHOWN BY THE ASSESSE E IN THE SALES TAX RETURN FOR THE QUARTER ENDING ON 31 ST DECEMBER 1997 WAS NOT DISPUTED BY THE REVENUE. IT SHOWS THAT ASSESSEE SHOWED THESE SALES DURING NEXT FINANC IAL YEAR WELL BEFORE THE CASE FOR THE A.Y 1997-98 WAS SELECTED FOR SCRUTINY ON 22-09- 1998 FOR WHICH NOTICE WAS ITA NO.3213/AHD/2008 A.Y. 1997-98 RUDABHAI G PRAJAPATI V. ITO WD-1 ANAND PAGE 6 SERVED ON 25-09-1998. WE FURTHER FIND WHILE GOING T HROUGH THE COPY OF ORDER-SHEET FILED BY THE ASSESSEE DURING THE APPELLATE PROCEEDI NGS WHICH IS AVAILABLE AT PAGES 14-18 OF THE PAPER BOOK THAT FIRST QUERY REGARDING THE SALES WAS RAISED BY THE ASSESSING OFFICER ONLY ON 24-02-2000 WHICH IS MUCH AFTER THE DATE OF FILING OF RETURN FOR THE A.Y 1998-99 WHICH WAS FILED ON 15-02-1999. IN VIEW OF THESE FACTS IT CANNOT BE SAID THAT EXPLANATION OFFERED BY THE ASSESSEE FO R NOT SHOWING SALES OF RS.2 68 150/- DURING THE YEAR UNDER APPEAL WAS NOT BONA FIDE. THEREFORE NO PENALTY U/S. 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME CAN BE LEVIED IN THIS CASE. THE PENALTY IMPOSED BY ASSESSING OFFICER AND SUSTAINED BY LD. CIT(APPEALS) IS HEREBY DELETED. 11. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 15/07/2011 SD/- SD/- (A.N.PHAUJA) (D.K. TYAG I) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD DATED : 15/07/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-I BARODA 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD