The ITO, Ward 4(1), Ahmedabad v. Gujarat State Investments Ltd., Ahmedabad

ITA 3245/AHD/2010 | 1990-1991
Pronouncement Date: 04-11-2011 | Result: Dismissed

Appeal Details

RSA Number 324520514 RSA 2010
Assessee PAN AABCG4649M
Bench Ahmedabad
Appeal Number ITA 3245/AHD/2010
Duration Of Justice 10 month(s) 27 day(s)
Appellant The ITO, Ward 4(1), Ahmedabad
Respondent Gujarat State Investments Ltd., Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 04-11-2011
Date Of Final Hearing 16-09-2011
Next Hearing Date 16-09-2011
Assessment Year 1990-1991
Appeal Filed On 07-12-2010
Judgment Text
ITA NO.3245/AHD/2010 ASSESSMENT YEAR 1990-91. 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD ( BEFORE SHRI BHAVNESH SAI NI & SHRI A. MOHAN ALANKAMONY) I.T .A. NO. 3245/AHD/2010 (ASSESSMENT YEAR : 199 0 - 91 ) INCOME TAX OFFICER WARD 4(1) NAVJIVAN TRUST BUILDING OFF. ASHRAM ROAD AHMEDABAD. (APPELLANT) VS. GUJARAT STATE INVESTMENTS LIMITED 6 TH FLOOR H. K. HOUSE ASHRAM ROAD AHMEDABAD .. (RESPONDENT) PAN: AABCG 4649 M APPELLANT BY : SHRI Y. C. SURTI RESPONDENT BY : SHRI M. G. PATEL. DATE OF HEARING : 16-9-2011 DATE OF PRONOUNCEMENT : 04-11-2011 ( (( ( )/ )/)/ )/ ORDER PER: SHRI A. MOHAN ALANKAMONY A.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE LD. CIT (A)-XX AHMEDABAD BEARING NO. CIT (A)-XX/80/10-11 DATED 30- 9-2010 FOR THE ASSESSMENT YEAR 1990-91 PASSED U/S. 271(1)(C) OF THE ACT. 2. THE REVENUE HAS RAISED THREE ELABORATE GROUNDS. HO WEVER THE CRUX OF THE ISSUE IS THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FA CTS IN DELETING THE PENALTY OF RS. 8 03 097/- LEVIED BY THE A O. U/S. 271(1)(C) OF THE ACT. 3. THE ASSESSEE IS A WHOLLY OWNED COMPANY OF THE ST ATE GOVERNMENT OF GUJARAT ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES AND DEBENTURES FILED ITS RETURN OF INCOME ON 31-12-1990 DECLARING NIL INCOME. HOWEVER THE ASSESSEE HAD PAID THE DUE TAX U/S. 115JB OF THE ACT. THE CASE WAS TAKEN UP FO R SCRUTINY AND ASSESSMENT U/S.143 (3) WAS COMPLETED BY THE A.O. WHEREIN AN AMOUNT OF RS.16 06 194/- WAS DISALLOWED ON ACCOUNT OF LOSS IN VALUE OF SECURITIES. THE ASSESSE E HAD VALUED THE INVESTMENT OF ITA NO.3245/AHD/2010 ASSESSMENT YEAR 1990-91. 2 CERTAIN NCDS HELD BY IT AT MARKET PRICE LESS BROKER AGE CHARGES PAYABLE ON SALE OF THE DEBENTURES AS PER THE AUDIT OBJECTION RAISED BY TH E C & AG. ON THIS QUANTUM ADDITION THE ASSESSEE WENT ON APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ADDITION MADE BY THE AO. ON A FURTHER APPEAL BEFORE THE ITAT THE T RIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE. THEREAFTER THE REVENUE PREFERRED AN APPE AL BEFORE THE HONBLE GUJARAT HIGH COURT WHEREIN THE REVENUES APPEAL WAS ALLOWED IN I TS FAVOUR. IN THE PENALTY PROCEEDINGS THE LD. AO LEVIED THE PENALTY OF RS.16 06 194/- CITING THE FOLLOWING THE REASONS:- (1) THE ASSESSEE HAD FURNISHED INCORRECT PARTICULAR S OF INCOME. (2) THE HONBLE GUJARAT HIGH COURT HAD CONFIRMED TH E ADDITION MADE BY THE AO REVERSING THE ORDER OF THE TRIBUNAL. (3) THE ISSUES INVOLVED ARE NOT DEBATABLE OR DISPUT ABLE. (4) THE ADDITIONS WERE MADE AT THE TIME OF THE SCRU TINY ASSESSMENT U/S.143(3) OF THE ACT. (5) RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS & OTHERS (2008) 306 ITR 277 AND IN THE C ASE OF CIT VS. GOLD COIN HEALTH FOOD PVT. LTD. (2008) 304 ITR 308 WHEREIN IT WAS HELD THAT THERE IS NO NEED TO PROVE MENS-REA. (6) THE COMMENT OF THE C & A.G. AUDIT WAS FOR DIFFERE NT PURPOSE AND THE SAME NEED NOT BE TAKEN INTO ACCOUNT FOR TAXING PURPOSE. THE ASSESSEE HAS UNDULY TAKEN ADVANTAGE OF C & AG REPORT WITHOUT FOLLOWING THE PROVISIONS OF THE I.T. ACT AND FILED THE RETURN OF INCO ME OFFERING LESS TAX THAN PRESCRIBED UNDER THE ACT. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CI T (A). THE LD. CIT (A) AFTER PERUSING THE CASE CAME TO FOLLOWING CONCLUSION. IT IS SEEN THAT THE CHANGE IN VALUATION OF THE NONCONVE RTIBLE DEBENTURES WAS MADE AS PER THE DIRECTIONS OF COMPTROLLER AND AUDITOR GENERAL OF INDIA WHO POINTED OUT DURING THE COURSE O F AUDIT THAT THE VALUE OF NONCONVERTIBLE DEBENTURES SHOULD BE NET OF TH E BROKERAGE OR DISCOUNT PAYABLE ON SALE. IT IS ALSO SEEN THAT IN THE ANN UAL REPORT FOR ITA NO.3245/AHD/2010 ASSESSMENT YEAR 1990-91. 3 FINANCIAL YEAR 1989-90 RELEVANT TO ASSESSMENT YEAR 199 0-91 AT PAGE 17 OF THE ANNUAL REPORT IT HAS CLEARLY BEEN MENTIONED THAT THE AMOUNT HAVE BEEN REVISED IN VIEW OF THE DRAFT COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA. THUS ALL THE FACTS HAV E BEEN DISCLOSED IN THE ACCOUNTS OF THE APPELLANT. THERE IS NO QUESTION OF A NY CONCEALMENT OF INCOME. THE ADDITION MADE ON DIFFERENCE IN THE VAL UATION COULD BE MADE. HOWEVER NO PENALTY WAS LEVIABLE SINCE ALL MATER IAL FACTS ARE AVAILABLE IN THE RECORDS. RELIANCE IN THIS REGARD IS PLA CED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN 322 ITR 158 (SC ). IT IS ALSO SEEN THAT THE ISSUE WAS CLEARLY DEBATABLE BECAUSE THE ITAT IN THIS CASE HAS HELD THAT NO ADDITION WAS NECESSARY WHEREAS THE HONBLE G UJARAT HIGH COURT HELD THAT THE ADDITION MADE BY THE AO WAS JUSTI FIED. THE ISSUE BEING DEBATABLE THERE WAS NO QUESTION OF LEVY OF P ENALTY UNDER SECTION 271(1) OF THE I. T. ACT 1961. IN VIEW OF THE ABOVE THE AO WAS NOT JUSTIFIED IN LE VYING PENALTY UNDER SECTION 271(1) OF THE I.T. ACT 1961.THE SAME IS H ENCE DELETED. 5. THE LD. D.R. PLACED RELIANCE ON THE ORDER ON THE ORDER OF THE LD. AO AND STRONGLY ARGUED THAT THE ORDER OF THE LD. AO MAY BE SUSTAINE D. 6. THE LD. A.R. SUBMITTED BEFORE US THAT THE ASSESS EE WAS UNDER BONAFIED BELIEF THAT THE ACCOUNTS OF THE COMPANY HAS TO BE GIVEN EF FECT TO AS PER THE C & AG AUDIT OBSERVATION AND ALSO IT HAS A BEARING ON DETERMININ G THE CORRECT INCOME OF THE ASSESSEE THEREBY AFFECTING THE COMPUTATION OF TAX. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE WITH THIS BELIEF HAD VALUED THE NCDS A S SUGGESTED BY THE C & AG OF INDIA WHICH IS ALSO IN ACCORDANCE WITH THE GUIDELINES ISS UED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. THE LD. A.R. SUBMITTED THAT THOUGH ADDITION IN THIS REGARD HAS BEEN SUSTAINED THIS CASE IS NOT A FIT CASE FOR THE PURPOSE OF IMPOSING PENALTY U/S. 271(1)(C) OF THE ACT SINCE THE ASSESSEE HAD NOT FUR NISHED ANY INCORRECT PARTICULARS IN ORDER TO ESCAPE TAX. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. IT IS EVIDENT FROM THE FACTS OF THE CASE THAT THE ASSESSE E HAS COMPUTED ITS INCOME AS PER THE DIRECTIONS OF C & AG OF INDIA. IT WAS THE BONA-FIDE BELIEF OF THE ASSESSEE THAT THE ITA NO.3245/AHD/2010 ASSESSMENT YEAR 1990-91. 4 VALUATION OF THE SECURITIES HAD BEEN RIGHTLY DONE A S PER AS-13 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. FURTHER THE ASSESS EE HAD SUBMITTED THE AUDITED ACCOUNTS AUDIT REPORT AND OTHER RELEVANT STATEMENT S IN SUPPORT OF THE VALUATION. THE ASSESSEE HAD ALSO PLACED ON RECORD ALL THE INFORMAT ION AND EXPLANATIONS NECESSARY FOR VERIFICATION OF VALUATION OF SECURITIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. UNDER THESE CIRCUMSTANCES WE DO NOT FIND THAT THE ASSESSEE HAD FURNISHED ANY INCORRECT PARTICULARS AND CONCEALED THE INCOME IN O RDER TO ATTRACT SECTION 271(1) (C) OF THE ACT. THE LD. CIT (A) HAS DULY ANALYSED THE CASE AND PLACING RELIANCE FROM THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS. R ELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN 328 ITR 158 (SUPRA) HAS DELETED THE PEN ALTY LEVIED BY THE LD. AO WITH A FINDING THAT THE ISSUE IS DEBATABLE. CONSIDERING TH E FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT THE ORDER OF THE LD. CIT A (A) DOES NOT REQUIRE INTERFERENCE AT THIS STAGE. IT IS ORDERED ACCORDINGLY. IN THE RESU LT APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 4 11 - 2011. SD/- SD/- (BHAVNESH SAINI) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER. AHMEDABAD. DATED: 4 - 11 - 2011. S.A.PATKI. ITA NO.3245/AHD/2010 ASSESSMENT YEAR 1990-91. 5 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-XX AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD. 1.DATE OF DICTATION 1 - 11 -2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 1 /11 / 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 3 -11 -2011. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 4 - 11 -2011 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 4 -11 -2011 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 4 -11 -2011. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..