M/s Dolphin Milk Products Pvt Ltd., Visakhapatnam v. The ACIT, Circle-3(1), Visakhapatnam

ITA 408/VIZ/2009 | 2003-2004
Pronouncement Date: 25-01-2011 | Result: Allowed

Appeal Details

RSA Number 40825314 RSA 2009
Assessee PAN AAACD6023D
Bench Visakhapatnam
Appeal Number ITA 408/VIZ/2009
Duration Of Justice 1 year(s) 5 month(s) 12 day(s)
Appellant M/s Dolphin Milk Products Pvt Ltd., Visakhapatnam
Respondent The ACIT, Circle-3(1), Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 25-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 25-01-2011
Date Of Final Hearing 05-01-2011
Next Hearing Date 05-01-2011
Assessment Year 2003-2004
Appeal Filed On 12-08-2009
Judgment Text
ITA NO408/VIZAG/2009 DOLPHIN MILK PRODUCTS PVT. LTD. VISAKHAPATNAM PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 408 /VIZAG/20 09 ASSESSMENT YEAR: 2003 - 04 M/S DOLPHIN MILK PRO DUCTS PVT. LTD. VISAKHAPATNAM VS. ACIT CIRCLE - 3(1) VISAKHAPATNAM (APPELLANT) PAN NO: AAACD 6023 D (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI D.S. SUNDER SINGH SR.AR ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19.06.2009 PASSED BY LEARNED CIT(A) VISAKHAPATNAM AND IT RELATES TO THE ASSESSMENT YEAR 2003-04. 2. THE PENALTY OF RS.3 77 264/- LEVIED UNDER SECTIO N 271(1)(C) OF THE ACT HAVING BEEN CONFIRMED BY THE LEARNED CIT ( A) THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE IS IN THE BUSINESS OF DEALING IN THE DAIRY MILK PRO DUCTS. THE DEPARTMENT CARRIED OUT SURVEY OPERATIONS UNDER SECT ION 133A OF THE ACT ON 27.10.2004 IN THE BUSINESS PREMISES OF THE A SSESSEE. HENCE THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04 WAS TAKEN UP FOR SCRUTINY. THE ASSESSING OF FICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT BY A DDING INTER ALIA A CLAIM OF 10.26 LAKHS PROCUREMENT BONUS EXPENSES . THE FACTS WHICH LEAD TO THE DISALLOWANCE OF PROCUREMENT BONUS EXPENDITURE OF ITA NO408/VIZAG/2009 DOLPHIN MILK PRODUCTS PVT. LTD. VISAKHAPATNAM PAGE 2 OF 5 RS.10.26 LAKHS ARE STATED IN BRIEF. DURING THE COU RSE OF SURVEY THE OFFICIALS NOTICED THAT VOUCHERS RELATING TO THE SAI D CLAIM DID NOT CONTAIN THE SIGNATURES OF THE PAYEES. THE ASSESSEE FILED VOUCHERS DULY SIGNED BY THE PAYEES DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. HOWEVER THE ASSESSING OFFICER DID NOT ACCEPT THE SA ME ON THE GROUND THAT THE VOUCHERS WHICH WERE FOUND DURING THE COURS E OF SURVEY CONDUCTED ON 27.10.2004 I.E. MUCH AFTER THE CLOSUR E OF THE FINANCIAL YEAR 2002-03 DID NOT CONTAIN THE SIGNATURES. THE SA ID ADDITION WAS CONFIRMED BY THE TRIBUNAL. THERE AFTER THE ASSESSI NG OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH W AS CONFIRMED BY LEARNED CIT(A). HENCE THE ASSESSEE IS IN APPEAL BEF ORE US. 4. THE LEARNED AUTHORISED REPRESENTATIVE BY PLACIN G RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF CIT VS. RELIANCE PETRO PRODUCTS (2010) (322 ITR 158) SUBMI TTED THAT THE PENALTY CANNOT BE LEVIED FOR MERE DISALLOWANCE OF E XPENSES THAT WERE DULY CLAIMED BY THE ASSESSEE. THE LEARNED AUTHORISE D REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD. (2010) (322 ITR 158 (S.C). HE FURTHER SUBMITTED THAT ON IDENTICAL FACTS THE ITAT AHMEDAB AD BENCH HAS DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IN THE CASE OF SAURABH BANSAL VS. ITO (2010) 41 SOT 157 (A HD) BY PLACING RELIANCE ON THE DECISION OF RELIANCE PETRO PRODUCTS (SUPRA). 5. HOWEVER THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY PLACED RELIANCE ON THE ORDER OF THE LEARNED CIT (A) AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE EXPENDITURE CLAIM AND HENCE THE TRIBUNAL ALSO CONFIRMED THE DIS ALLOWANCE. SINCE THE DISALLOWANCE WAS CONFIRMED BY THE ITAT THE LEA RNED CIT(A) ALSO CONFIRMED THE PENALTY. ITA NO408/VIZAG/2009 DOLPHIN MILK PRODUCTS PVT. LTD. VISAKHAPATNAM PAGE 3 OF 5 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN LEVIED ON THE DISALLOWANCE OF PROCUREMENT BONUS EXPENDITURE CLAIM ED BY THE ASSESSEE. THE SAID DISALLOWANCE HAS BEEN MADE IN VI EW OF DEFECTS NOTICED IN RELEVANT VOUCHERS FOUND DURING THE COURS ER OF SURVEY I.E. NON-AVAILABILITY OF SIGNATURE OF PAYEES OF SAID PRO CUREMENT BONUS AMOUNT. THOUGH THE ASSESSEE FILED VOUCHERS DULY SI GNED BY THE PAYEES THE REVENUE DID NOT ACCEPT THE SAME. THE T RIBUNAL HAS ALSO CONFIRMED THE SAID ADDITION BY HOLDING THAT THE ASS ESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE CLAIM. DURING THE PEN ALTY PROCEEDINGS THE ASSESSEE HAS OFFERED EXPLANATIONS A) THAT THE PAPERS FOUND DURING THE COURSE OF SURVE Y WERE NOT FINAL PAPERS B) THAT THE CORRECT DOCUMENTS COULD NOT BE IMMEDIAT ELY TRACED AT THE TIME OF SURVEY C) THAT THE SAME WAS FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. D) THAT NO PERSON WOULD ACKNOWLEDGE THE RECEIPT OF MONEY WITH OUT ACTUALLY RECEIVING THE SAME. E) THAT THE VOUCHERS SO SUBMITTED DURING THE ASSES SMENT PROCEEDINGS WERE REJECTED AS THE SAME WERE NOT CONS IDERED PROPER. HOWEVER THE ASSESSING OFFICER WAS NOT SATISFIED WIT H THE SAID EXPLANATIONS AND HENCE LEVIED THE PENALTY. 7. THE LEARNED A.R HAS PLACED RELIANCE ON THE D ECISION OF AHMEDABAD ITAT IN THE CASE OF SAURABH BANSAL (SUPR A). IN THAT CASE THE ASSESSEE THEREIN CLAIMED PAYMENT OF BROKE RAGE EXPENDITURE OF RS.40 154/-. THE SAID CLAIM WAS DISALLOWED FOR THE REASON THAT THE GENUINENESS OF THE SAID CLAIM WAS NOT ESTABLISHED. THE TRIBUNAL ALSO ITA NO408/VIZAG/2009 DOLPHIN MILK PRODUCTS PVT. LTD. VISAKHAPATNAM PAGE 4 OF 5 CONFIRMED THE SAID ADDITION. THE TRIBUNAL CANCELLE D THE PENALTY LEVIED ON THE SAID DISALLOWANCE WITH THE FOLLOWING OBSERVA TIONS: 19. HOWEVER IN OUR CONSIDERED VIEW PENALTY WOULD NOT BE LEVIABLE IN RESPECT OF ADDITION OF RS.40 154 BEI NG BROKERAGE EXPENDITURE IN RESPECT OF WHICH IT WAS HE LD THAT GENUINENESS OF THE EXPENDITURE IS NOT ESTABLISHED A ND THAT THEY ARE NOT FULLY VERIFIABLE PAYMENTS WERE M ADE IN CASH AND WERE SUPPORTED BY SELF-MADE VOUCHERS AND THERE WAS NO EVIDENCE OF SERVICES RENDERED. THE CLA IM IS CLEARLY UNSUSTAINABLE AND THEREFORE ADDITION WAS CONFIRMED BY THE TRIBUNAL BUT FOR MAKING UNSUSTAINA BLE CLAIM PENALTY CANNOT BE LEVIED AS HELD BY HON'BLE SUPREME COURT IN CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 230 CTR (SC) 320 2010) 36 DTR (SC) 449: (2010) 322 ITR 158 (SC) AS UNDER: 20. FOLLOWING THE DECISION OF HON'BLE APEX COURT A S ABOVE WE CANCEL THE PENALTY IN RESPECT OF ALLEGED BOGUS EXPENSES. IN THE RESULT WE CONFIRM THE PENALTY ONLY IN RESPECT OF BOGUS GIFTS. THE AO WILL CALCULATE THE MINIMUM PENALTY LEVIABLE IN RESPECT OF ADDITION ON ACCOUNT OF BOGUS GIFTS ONLY. PENALTY IN RESPECT OF OTHER TWO ADDITIONS IS CANCELLED. 8. IN THE INSTANT CASE THE EXPENDITURE CLAIM O F THE ASSESSEE WAS DISALLOWED FOR THE REASON THAT THE VOUCHERS FOUND D URING THE COURSE OF SURVEY DID NOT CONTAIN THE SIGNATURES OF RECIPIE NTS OF THE BONUS. THE VOUCHERS FILED BY THE ASSESSEE DURING THE COURS E OF ASSESSMENT PROCEEDINGS WERE NOT BELIEVED. THOUGH THE ASSESSEE COULD NOT PROVE THE SAID CLAIM TO BE GENUINE YET NO MATERIAL WAS F OUND TO SHOW THAT THE SAID CLAIM WAS A BOGUS ONE. DURING THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE HAS OFFERED ITS EXPLANATI ONS IN THIS REGARD BY PRESENTING THE FULL FACTS THAT WERE AVAILABLE BE FORE IT. THE SAID EXPLANATIONS HAVE NOT BEEN FOUND TO BE FALSE. HEN CE BY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F RELIANCE PETRO PRODUCTS LTD (SUPRA) AND SAURABH BANSAL (SUPRA) WE ARE OF THE VIEW THAT THE PENALTY UNDER SECTION 271(1)(C) OF TH E ACT IS NOT LEVIABLE ON THE FACTS OF THE INSTANT CASE. ACCORDINGLY WE S ET ASIDE THE ORDER OF ITA NO408/VIZAG/2009 DOLPHIN MILK PRODUCTS PVT. LTD. VISAKHAPATNAM PAGE 5 OF 5 LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT M EMBER PVV/SPS VISAKHAPATNAM DATE: 25-01-2011 COPY TO 1 M/S. DOLPHIN MILK PRODUCTS PRIVATE LIMITED D.NO.50 - 119 - 33/3 HIG 25 SEETHAMMADHARA NORTH EXTENSION VISAKHAPATNA M 530 013 2 THE ACIT CIRCLE-3(1) VISAKHAPATNAM 3 4. THE CIT 1 VISAKHAPATNAM THE CIT(A)-1 VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM