Shri Surendrakumar Rasiklal Choksi, Nadiad v. The Income tax Officer,Ward-4,, Nadiad

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI N.S.SAINI ACCOUNTANT MEMBER DATE OF HEARING: 20.05.10 DRAFTED ON:20.05.10 ITA NO.649/AHD/2008 ASSESSMENT YEAR : 2002-2003 SURENDRAKUMAR RASIKLAL CHOKSI CHOKSI BAZAR NADIAD VS. INCOME TAX OFFICER WARD-4 NADIAD. PAN/GIR NO. : AAAHC5726K (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI P.B. DOSHI RESPONDENT BY: SMT. NEETA SHAH SR. D.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)- IV BARODA DATED 5.12.2007 ON THE SOLE GROUND THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN LAW AN D IN FACTS IN CONFIRMING THE PENALTY UNDER SECTION 271(1 )(C) OF RS.5 52 463/- FOR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME ON 17.10.2002 DECLARING INCOME OF RS.1 78 660/-. THE ASSESSMENT WAS COMPLETED UNDER S ECTION 143(3) OF THE ACT ON 28.03.2005 AT AN INCOME OF RS.15 53 928/- BY MAKING VARIOUS ADDITIONS WHICH IN CLUDED THE FOLLOWING ADDITIONS:- - 2 - 1. UNDER VALUATION OF CLOSING STOCK RS. 4 76 561 /- 2. ADDITION OF EXCESS STOCK RS.14 00 000/- 3. CASH DIFFERENCE RS. 18 543/- 4. EXCESS INTEREST PAID RS. 9 506/- WHICH WERE CONFIRMED IN APPEAL BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THEREAFTER T HE LEARNED ASSESSING OFFICER ISSUED NOTICE UNDER SECTI ON 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PART ICULARS OF INCOME AND LEVIED PENALTY OF RS.5 52 463/- BEING 10 0% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE WHICH WAS CONFIRMED IN APPEAL BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 3. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE FILED COPY OF ORDER OF THE TRIBUNAL PASSED IN QUANT UM APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2002-03 IN ITA NO.1167/AHD/2006 DATED 30.04.2010. HE POINTED OUT FROM THE SAID ORDER THAT ADDITION WITH REGARD TO UNDER V ALUATION OF CLOSING STOCK WAS DELETED BY THE TRIBUNAL. AS REGAR DS THE ADDITION OF RS.14 00 000/- FOR EXCESS STOCK FOUND D URING THE SURVEY HE SUBMITTED THAT THE ASSESSEE MADE DISCLOS URE OF THE SAME BEFORE THE SURVEY PARTY AS HAVING BEEN ACQ UIRED OUT OF UNDISCLOSED SOURCES AND PROMISED TO PAY TAX ON T HE SAME. THE SAME WAS DISCLOSED AS INCOME IN THE PROFIT & LO SS ACCOUNT BY THE ASSESSEE AND NET PROFIT WAS SHOWN AT RS.1 48 019/-. IN THE ASSESSMENT THE LEARNED ASSES SING OFFICER OBSERVING THAT THE ASSESSEE COULD NOT EXPLA IN THE SOURCE FROM WHICH THE EXCESS STOCK WAS ACQUIRED MAD E ADDITION UNDER SECTION 69 OF THE ACT AS INCOME FROM OTHER - 3 - SOURCES WITHOUT ALLOWING DEDUCTION OF EXPENSES INCU RRED BY THE ASSESSEE DURING THE YEAR FOR THE BUSINESS OF TH E ASSESSEE. IN APPEAL THE TRIBUNAL ALSO CONFIRMED THE ACTION O F THE LEARNED ASSESSING OFFICER OBSERVING THAT ADDITION M ADE UNDER SECTION 69 TO THE INCOME OF THE ASSESSEE CANN OT BE ASSESSED UNDER THE HEAD PROFIT & GAIN OF BUSINESS OR PROFESSION AND DISMISSED THE GROUND OF APPEAL OF TH E ASSESSEE. AS REGARDS THE ADDITION OF RS.18 543/- O N ACCOUNT OF CASH DIFFERENCE THE SUBMISSION OF THE LEARNED A UTHORISED REPRESENTATIVE OF THE ASSESSEE WAS THAT THE TRIBUNA L HAS RESTORED THIS ISSUE TO THE FILE OF THE LEARNED ASSE SSING OFFICER WITH THE DIRECTION TO EXAMINE THE CASH BOOK AND ASC ERTAIN THE ACTUAL CASH BALANCE AS PER BOOKS OF ACCOUNT ON 19.02.2002 THE DATE OF SURVEY AND THEREAFTER PASS APPROPRIATE ORDER IN ACCORDANCE WITH LAW AND IN CAS E THE CLAIM OF THE ASSESSEE THAT THE ACTUAL CASH BALANCE ON 19.02.2002 WAS RS.2 42 856/- AND NOT RS.2 29 687/- AS CLAIMED BEFORE THE TRIBUNAL THEN ADDITION SHOULD BE RESTRICTED TO RS.5 374/-. AS REGARDS THE ADDITION O F RS.9 506/- ON ACCOUNT OF EXCESS INTEREST PAID THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THIS GROUND OF APPEAL. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND SUPPORTED THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE PENALTY OF RS.5 52 463/- WAS LEVIED UNDER SECTION 271(1)(C) OF THE ACT IN - 4 - RESPECT OF THE FOLLOWING ADDITIONS MADE IN THE ORIG INAL ASSESSMENT. 1. UNDER VALUATION OF CLOSING STOCK RS. 4 76 561 /- 2. ADDITION OF EXCESS STOCK RS.14 00 000/- 3. CASH DIFFERENCE RS. 18 543/- 4. EXCESS INTEREST PAID RS. 9 506/- 6. WE FIND FROM THE ORDER OF THE TRIBUNAL DATED 30.04.2010 PASSED IN ITA NO.1167/AHD/2006 IN THE QUANTUM APPEAL THAT THE ADDITION OF RS.4 76 561/- O N ACCOUNT OF UNDER VALUATION OF CLOSING STOCK WAS DEL ETED. THUS THE PENALTY IN RESPECT OF THE AFORESAID AMOUN T CANNOT SURVIVE. WE THEREFORE DIRECT THE LEARNED ASSESSIN G OFFICER TO DELETE THE PENALTY LEVIED IN RESPECT OF AFORESAID A MOUNT OF RS.4 76 561/-. 7. IN RESPECT OF EXCESS INTEREST OF RS.9 506/- THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS CONFIR MED FOR LACK OF PROSECUTION BY THE ASSESSEE AS THE LEARNED AUTHO RISED REPRESENTATIVE OF THE ASSESSEE HAS NOT PRESSED THIS ISSUE. 8. IN RESPECT OF ADDITION OF RS.18 543/- WE FIND F ROM THE ORDER OF THE TRIBUNAL THAT ADDITION TO THE EXTENT O F RS.5 374/- WAS CONFIRMED BY THE TRIBUNAL AND THE BA LANCE ADDITION OF RS.13 169/- WAS RESTORED TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR FRESH ADJUDICATION. W E THEREFORE KEEPING IN VIEW THE SUBMISSION OF THE LE ARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE CONFIRM T HE LEVY OF PENALTY IN RESPECT OF ADDITION OF RS.5 374/- AND RE STORE THE PENALTY IN RELATION TO THE AMOUNT OF RS.13 169/- BA CK TO THE - 5 - FILE OF THE LEARNED ASSESSING OFFICER FOR ADJUDICAT ION AFRESH IN LIGHT OF THE FINDING IN THE ORDER PASSED IN PURSUAN CE TO THE TRIBUNALS ORDER IN THE QUANTUM APPEAL. 9. IN RESPECT OF ADDITION OF RS.14 00 000/- WE FIND THAT THE UNDISPUTED FACTS OF THE CASE ARE THAT INCOME OF RS.14 00 000/- WAS CREDITED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT IN THE RETURN OF INCOME FILED BY IT. T HE ADDITION WAS MADE IN ASSESSMENT ON THE GROUND THAT EXPENDITU RE CLAIMED IN RESPECT OF SUCH INCOME IS NOT PERMISSIBL E. WE FIND THAT NO MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT ANY BOGUS OR FALSE EXPENDITURE WAS CLAIMED BY THE ASSES SEE. THE ADDITION WAS MADE ON A LEGAL GROUND ONLY AND NO MIS TAKE IN THE PRIMARY FACTS FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME WAS FOUND. MERELY THE CLAIM OF THE ASSESSEE THAT SUCH INCOME SHOULD BE ASSESSED AS BUSINESS INCOME W AS NOT ACCEPTED AND THE SAME CANNOT LEAD TO IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE THEREFORE D ELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) IN RESPECT O F RS.14 00 000/-. 10. THUS THIS APPEAL OF THE ASSESSEE IS PARTLY ALL OWED AS ABOVE. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 21 ST DAY OF MAY 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT ME MBER AHMEDABAD; ON THIS 21 ST DAY OF MAY 2010 PARAS - 6 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS) GANDHINAGAR AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 20.05.2010 ---------------- -- 2. DRAFT PLACED BEFORE AUTHORITY 21.05.2010 ---- -------------- 3. DRAFT PROPOSED & PLACED 21.05.2010 ----------- ------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 21.05.2010 ---------- -------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 21.05.2010 -------- ---------- 6. KEPT FOR PRONOUNCEMENT ON 21.05.2010 --------- --------- 7. FILE SENT TO THE BENCH CLERK 21.05.2010 ------ ------------ 8. DATE ON WHICH FILE GOES TO THE ---------------- ------------------ 9. DATE OF DISPATCH OF ORDER ---------------- --- ---------------