ITO, Ward 4(5), Pune v. M/s. Rathod Trading Company,, Pune

ITA 514/PUN/2013 | 2007-2008
Pronouncement Date: 28-04-2014 | Result: Dismissed

Appeal Details

RSA Number 51424514 RSA 2013
Assessee PAN AABFR7743L
Bench Pune
Appeal Number ITA 514/PUN/2013
Duration Of Justice 1 year(s) 2 month(s) 9 day(s)
Appellant ITO, Ward 4(5), Pune
Respondent M/s. Rathod Trading Company,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 28-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-04-2014
Assessment Year 2007-2008
Appeal Filed On 18-02-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO.514/PN/2013 (A.Y: 2007-08) ITO WARD 4(5) PUNE APPELLANT VS. M/S. RATHOD TRADING COMPANY 229 SOLAPUR BAZAR PUNE - 411001 PAN: AABFR7743L RESPONDENT APPELLANT BY : SHRI P.L.PA THADE RESPONDENT BY : SHRI RAT NYYA G.WAYALCHETTI DATE OF HEARING: 04.04.2014 DATE OF ORDER : 28.04.2014 ORDER PER SHAILENDRA KUMAR YADAV J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II [IN SHOR T CIT(A)] PUNE DATED 25.10.2012 FOR A.Y. 2007-08 ON THE FOLLOWING GROUNDS. 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN ALLOWING THE ASSESSEE'S APPEAL DELETING TH E PENALTY LEVIED U/S.271(1)(C) OF THE INCOME-TAX ACT 1961. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN DELETING THE PENALTY EVEN THOUGH IT WAS A MATTER OF RECORD THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE HIS CL AIM WITH RESPECT TO 'ADVANCE FROM DEBTORS' BEFORE THE ASSESS ING OFFICER AND EVEN BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN NOT APPRECIATING THAT THE ASSESSEE OFFERED AN EX PLANATION WHICH HE WAS NOT ABLE TO SUBSTANTIATE AND THUS FAIL ED TO 2 PROVE THAT SUCH EXPLANATION WAS BONAFIDE AND THAT A LL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. 4. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND A NY OR ALL THE GROUNDS OF APPEAL. 2. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS O F TRADING IN LABORATORY CHEMICALS AND GLASSWARE DIAGNOSTIC KITS AND LIFE SAVING MEDICINES. THE ASSESSEE DECLARED TOTAL INCO ME OF 9 49 440/- AND THE SAME HAS BEEN ASSESSED U/S.143(3 ) DETERMINING TOTAL INCOME OF 93 49 800/-. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER SOUGH T CONFIRMATION WITH REGARD TO ADVANCE SHOWN AS 68 26 388/- WHICH APPEARED AS CREDIT IN THE BALANCE SHEET AS AD VANCE FROM CREDITORS AND AS THE ASSESSEE COULD NOT FURNISH THE REQUISITE CONFIRMATION THE ASSESSING OFFICER TREATED THE CRE DITS AS UNEXPLAINED U/S. 68 AND ADDED THE SAME TO THE TOTAL INCOME OF ASSESSEE. THE ASSESSEE HOWEVER OBJECTED TO THE T ERM UNEXPLAINED AND HAS CONTENDED BEFORE ASSESSING OFFI CER THAT AMOUNT SHOWN AS ADVANCE FROM CREDITORS WAS BY WAY O F ELECTRONIC CLEARING SYSTEM IN BANK ACCOUNT. THE AS SESSEE FURTHER EXPLAINED THAT THE AFORESAID AMOUNTS WERE RECEIVED FROM GOVERNMENT AGENCIES I.E. ARMED FORCES MEDICAL RESEA RCH COMMITTEE (AFMRC) AND COMMAND HOSPITAL PUNE FOR MO RE THAN 16 YEARS FOR SUPPLY FOR CHEMICALS AND GLASSWARE. I T WAS ALSO EXPLAINED THAT THE PROCUREMENT OF LABORATORY CHEMIC ALS AND OTHER RELATED GOODS WERE EXCLUSIVELY FOR PARTICULAR RESEARCH WORK APPROVED BY (AFMRC) AND THE PROCEDURE LAID DOWN FOR PROCUREMENT AND PURCHASES WAS TO BE STRICTLY FOLLOW ED AS PER CONTRACT WITH (AFMRC) AND RESEARCH WORK WAS STRICTL Y CONFIDENTIAL. THE ASSESSEE EXPLAINED THAT THE BUDG ET APPROVED FOR PROCUREMENT OF MATERIAL AND RATE CONTRACT WERE SIGNED BY THE CONTRACTORS AND SUPPLIERS OF (AFMRC) AND THAT THE B UDGETARY 3 AMOUNTS SANCTIONED HAD TO BE EXHAUSTED BEFORE THE E ND OF FINANCIAL YEAR LEST THE SAME LAPSED. THE ASSESSEE A LSO EXPLAINED THAT THE PROFORMA INVOICE FOR THE SAME WAS RAISED A ND THE AMOUNTS RECEIVED IN ADVANCE AND THE GOODS WERE SUPP LIED IN THE SUBSEQUENT YEAR AND THE ACTUAL SALES RECORDED IN TH E BOOKS OF ACCOUNT OF THE SUBSEQUENT YEAR. THE ASSESSEE HAD AL SO SUBMITTED THAT THE AMOUNT THUS PAID BY THE AFMRC UNDER VARIOU S PROJECTS WERE SHOWN AS 'ADVANCE FROM SUNDRY DEBTORS' AND THE SAME METHOD WAS REPEATED EVERY YEAR AS WAS EVIDENT FROM THE BALANCE- SHEET OF THE FIRM FOR THE PAST YEARS ONLY THE AMOU NT OF ADVANCE RECEIVED CHARGED YEAR AFTER YEAR ON THE BASIS OF TH E BUDGETARY FUNDS SANCTIONED FOR A PARTICULAR YEAR. IT WAS EMPH ASIZED BY THE ASSESSEE THAT THE ADVANCES RECEIVED WERE REFLECTED IN THE BANK ACCOUNT AND THE AMOUNTS WERE TOTALLY RECEIVED FROM THE GOVT. AUTHORITIES AND BY WAY OF CHEQUE PAYMENT AND THERE FORE THE SAME COULD NOT BE TREATED AS UNEXPLAINED. THE ASSES SEE ONLY SHOWED ITS RELUCTANCE TO OBTAIN THE INFORMATION THI NKING IT WOULD AMOUNT TO BREACH OF TRUST AND THE YEARLY RELATION W ITH THE CUSTOMERS. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND HELD THAT THE LIABI LITY WAS NOT PROVED BY THE ASSESSEE HENCE ADDED THE ENTIRE AMOUN T OF 68 26 388/-. THE ASSESSING OFFICER ALSO INITIATED P ENALTY PROCEEDINGS U/S 271(1)(C) FOR CONCEALMENT OF INCOME . 3. DURING THE PENALTY PROCEEDINGS THE ASSESSEE AGA IN MADE THE SUBMISSION BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS WITH RESPECT TO THE ACCOUNTI NG PROCEDURE FOLLOWED FOR SEVERAL YEARS AND STATED THAT THERE WA S NO CONCEALMENT OF ANY AMOUNT AND THAT THE SAID AMOUNTS WERE RECEIVED BY WAY OF ECS AND WERE REFLECTED IN THE BO OKS OF ACCOUNT. THE ASSESSING OFFICER HOWEVER DID NOT AC CEPT THE ASSESSEE'S EXPLANATION AND THE SAME WAS FOUND TO BE NOT SATISFACTORY AND THUS THE ASSESSING OFFICER IN VIEW OF 4 EXPLANATION-1 TO SECTION 271(1)(C) AFTER HAVING BEE N SATISFIED THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF IN COME AND CONCEALED THE INCOME LEVIED PENALTY ~ 100% AMOUNTIN G TO 22 98 000/-. THE MATTER WAS CARRIED BEFORE FIRST A PPELLATE AUTHORITY WHEREIN THE VARIOUS CONTENTIONS WERE RAI SED ON BEHALF OF ASSESSEE AND HAVING CONSIDERED THE SAME THE CIT (A) HAD GRANTED THE RELIEF TO THE ASSESSEE BY DELETING THE PENALTY IN QUESTION. THE SAME HAS BEEN OPPOSED BEFORE US ON B EHALF OF REVENUE INTER ALIA SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY EVEN IF IT WAS A MATTER OF REC ORD THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE ITS CLAIM WITH RESPECT TO ADVANCES FROM DEBTORS BEFORE ASSESSING OFFICER AND EVEN BEFORE CIT(A). SO THE ORDER OF CIT(A) BE SET ASIDE AND T HAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND THE LEARNE D AUTHORIZED REPRESENTATIVE HAS SUPPORTED THE ORDER OF CIT(A). 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD WE FIND THAT THE ASSESSING OFFICER HAD LEVI ED PENALTY U/S.271(1)(C) AMOUNTING TO 22 98 000/-. THE SAME HAS BEEN DELETED BY CIT(A). THE STAND OF THE ASSESSEE HAS B EEN THAT THE CONFIRMATION LETTER FROM THE SUNDRY CREDITORS WAS S UBMITTED BEFORE THE ASSESSING OFFICER HOWEVER THE CONFIRMA TION WITH RESPECT TO 'ADVANCES FROM DEBTORS' FROM THE AFMRC I .E. THE ARMED FORCE MEDICAL RESEARCH COMMITTEE COULD NOT BE SUBMITTED AND THE ASSESSING OFFICER ADDED THE AMOUN T OF 68 26 388/- AS UNEXPLAINED CREDIT U/S.68 AND NO APP EAL WAS PREFERRED BY ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED. THE ASSESSEE FURTHER STATED THAT THE METHOD OF ACCOUNTI NG FOLLOWED CONSISTENTLY WAS EXPLAINED TO THE ASSESSING OFFICER AND A NOTE ON THE METHOD OF BUSINESS WAS ALSO SUBMITTED BEFORE TH E ASSESSING OFFICER. THE ASSESSEE HAD SUBMITTED THAT THE ENTIRE AMOUNT WAS RECEIVED BY WAY OF ECS OR BY CHEQUE THROUGH BANKING CHANNELS AND THE SAME WAS SHOWN AS ADVANCES FROM DEBTORS AND 5 SUBSEQUENTLY AFTER THE SUPPLY WAS MADE A BILL RAISE D IN THE SUBSEQUENT YEAR. IN THIS BACKGROUND THE STAND OF ASSESSEE HAS BEEN THAT THE ENTIRE MODE OF CONDUCTING THE BUSINES S WAS EXPLAINED EXCEPT THAT A CONFIRMATION COULD NOT BE F URNISHED ON ACCOUNT OF BUSINESS EXIGENCIES AND REASONS OF WHICH WERE SUBMITTED. THE ASSESSING OFFICER HAS NOT MADE ANY E NQUIRIES FROM THE AFMRC AND HELD THE SAID AMOUNT TO BE UNEXP LAINED INCOME U/S 68 THOUGH THE ASSESSING OFFICER DID NOT HAVE ANY EVIDENCE IN HIS POSSESSION TO ESTABLISH THAT THE SA ID AMOUNT WAS INCOME OF THE ASSESSEE. IT WAS ALSO THE STAND OF AS SESSEE THAT THE ASSESSING OFFICER IGNORED THE FACTUAL EXPLANATION W HICH WAS SUPPORTED BY THE SALES BILLS OF THE SUBSEQUENT YEAR . THE ASSESSEE HAS STATED THAT ASSESSING OFFICER THOUGH HELD THE E XPLANATION TO BE UNSATISFACTORY BUT THE SAME COULD NOT BE SAID TO BE NOT BONAFIDE. THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF ADVANCE TO THE DEBTORS WHOSE CONFIRMATION COULD NOT BE FURNISHED BY ASSESSEE BEFORE ASSESSING OFFICER HAS NOT BEEN SUBJECTED TO ANY VERIFICATION AND ENQUIRY BY THE CO NCERNED ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS THO UGH THE ENTIRE FACTS THE MODUS OPERANDI AND THE BOOKS OF A CCOUNTS WERE FURNISHED BEFORE HIM. THE ASSESSING OFFICER DID NO T EXAMINE THE BANK STATEMENT OF ASSESSEE WHERE THE ADVANCES WER E SAID TO HAVE BEEN DEPOSITED BY WAY OF ECS OR BY CHEQUE. TH ERE IS NOTHING ON RECORD TO SUGGEST THAT GROSS OR WILLFUL NEGLECT OR FRAUD. THE EXPLANATION ITSELF IS THAT PENALTY SHOULD BE EX IGIBLE ONLY WHERE NO EXPLANATION WAS OFFERED OR HE OFFERS AN EX PLANATION WHICH IS FOUND TO BE FALSE. THE ASSESSEE HAS OFFER ED THE EXPLANATION IN THIS CASE. HE HAS PLACED ALL FACTS AND MATERIAL REGARDING ADDITION EVEN IF HE FAILED TO SUBSTANTIAT E HIS EXPLANATION WHICH IS BONAFIDE PENALTY U/S.271(1)(C ) OF THE ACT SHOULD NOT BE LEVIED. THERE IS NOTHING ON RECORD T O SUGGEST THAT THE ASSESSEES CLAIM WAS MALAFIDE ONE. IT IS NOT A CASE THAT NO EXPLANATION WAS OFFERED OR WHERE EXPLANATION OFFERE D WAS FOUND 6 TO BE FALSE. THE ASSESSEE HAS PLACED ALL DETAILS T O PROVE HIS BONAFIDE WITH REGARD TO ITS CLAIM. WE FIND THAT TH E ASSESSEE HAS GIVEN BONAFIDE EXPLANATION WITH REGARD TO ADDITION IN QUESTION. IN VIEW OF ABOVE THE CIT(A) WAS JUSTIFIED IN DELET ING THE PENALTY IN QUESTION FOR THE REASONS THEREIN. WE UPHOLD THE SAME. 5. IN THE RESULT APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 28 TH OF APRIL 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: 28 TH APRIL 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-II PUNE 4) THE CIT-II PUNE 5) THE DR A BENCH I.T.A.T. PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY I.T.A.T. PUNE