Chamaria Fashion Ltd,, Ahmedabad v. The Income tax Officer,Ward-1(3),, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL SHRAWAT JUDICIAL MEMBER AND SHRI D.C. AGRAWAL ACCOUNTANT MEMBER DATE OF HEARING : 21/04/2010 DRAFTED ON: 23/04/ 2010 ITA NO.667/AHD/2009 ASSESSMENT YEAR : 2001-02 CHAMARIA FASHIONS PVT.LTD. PLOT NO.177/B SHAHWADI OCTROI NAKA NAROL AHMEDABAD VS. THE INCOME TAX OFFICER WARD-1(3) AHMEDABAD PAN/GIR NO. : AAACC 7744C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI S.K. KABRA RESPONDENT BY: SHRI M.C. PANDIT SR. DR O R D E R PER SHRI MUKUL SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS)-VI AHME DABAD DATED 24/11/2008. THE APPELLANT IS AGGRIEVED BY THE CO NFIRMATION OF PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT 1961. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT 1961 DATED 13 /03/2007 WERE THAT DURING THE COURSE OF ASSESSMENT IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE STOCK AMOUNTI NG TO RS.11 02 135/- IN THE BOOKS OF ACCOUNT THAN THE ACTUAL STOCK WHICH WAS DISCLOSED BEFORE THE BANK AUTHORITIES. THE SAID DIFFERENCE WAS T HEREFORE TAXED AS ITA NO .667/AHD/2009 M/S.CHAMARIA FASHIONS PVT.LTD. VS. ITO ASST.YEAR - 2001-02 - 2 - UNEXPLAINED INVESTMENT BY INVOKING THE PROVISIONS O F SECTION 69C OF THE I.T. ACT 1961 IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER HAS DISCUSSED THE REASONS ON THE BASIS OF WHICH THE FI RST APPELLATE AUTHORITY HAS CONFIRMED THE SAID ADDITION. THE ASSESSING OFF ICER HAS THEREFORE HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF INCOME AND EVADED THE TAX LIABILITY. WITH THE RESULT A PENA LTY U/S.271(1)(C) OF THE I.T.ACT 1961 OF RS.4 60 797/- WAS IMPOSED. THE SA ID ACTION OF THE ASSESSING OFFICER WAS CHALLENGED BEFORE THE FIRST A PPELLATE AUTHORITY. 3. ON PERUSAL OF THE ORDER OF THE LEARNED CIT(APPEA LS) WE HAVE NOTICED THAT THE MAJOR PORTION OF THE IMPUGNED ORDE R WAS DEDICATED TOWARDS THE DISCUSSION OF VARIOUS LEGAL PROVISIONS ON THE SUBJECT OF CONCEALMENT OF INCOME. AS FAR AS THE FACTS ARE CON CERNED THE OBSERVATION OF LEARNED CIT(APPEALS) WAS THAT THE AP PELLANT HAD UNDERSTATED THE STOCK IN ITS RETURN OF INCOME THAN THE ACTUAL STOCK DISCLOSED BEFORE THE BANK AUTHORITIES. HE HAS ALS O MENTIONED THAT THERE WAS NO DENIAL OF THE FACT THAT THE APPELLANT WAS TH E LEGAL OWNER OF THE IMPUGNED HYPOTHECATED STOCK. HE HAS THEREFORE C ONCLUDED THAT SINCE THE STATEMENTS WHICH WERE FURNISHED BEFORE THE BANK AUTHORITIES WERE DULY SIGNED AND VERIFIED BY THIS APPELLANT THEREFO RE IT WAS AN ATTEMPT TO FURNISH THE INACCURATE PARTICULARS OF ITS INCOME WH ILE FILING THE INCOME- TAX RETURN. THE ACTION OF THE ASSESSING OFFICER W AS CONFIRMED BY THE CONCLUDING PARAGRAPH AS REPRODUCED BELOW: KEEPING IN VIEW THE AFORESAID FACTS; CIRCUMSTANCES ; AND VARIOUS JUDICIAL PRONOUNCEMENTS IT IS ABUNDANTLY CLEAR THA T THE ADDITION IN QUESTION IS NOT AN ESTIMATE BASIS AND THE APPELLANT HAS CLEARLY CONCEALED THE PARTICULARS OF INCOME/FURNISHED INACC URATE ITA NO .667/AHD/2009 M/S.CHAMARIA FASHIONS PVT.LTD. VS. ITO ASST.YEAR - 2001-02 - 3 - PARTICULARS OF INCOME. THE FACTS AND CIRCUMSTANCES SPONTANEOUSLY LEAD TO THE LOGICAL CONCLUSION THAT THE AMOUNT IN Q UESTION IS NOTHING BUT APPELLANTS INCOME. FURTHER THE FACT S AND CIRCUMSTANCES SHOW BEYOND ANY DOUBT THAT THERE WA S ANIMUS I.E. CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACC URATE PARTICULARS ON THE PART OF THE APPELLANT. IN THE GIVEN FACTS AND CIRCUMSTANCES THE ASSESSING OFFICER HAS RIGHTLY IM POSED PENALTY @ 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED WHI CH IS WORKED OUT TO RS.4 60 797/-. WITH THE RESULT THE ACTION OF THE ASSESSING OFFICER IS CONFIRMED ON THIS GROUND. HENCE THE AP PEAL IS DISMISSED ON THIS GROUND. 4. WITH THIS BRIEF BACK-GROUND WE HAVE HEARD BOTH THE SIDES. OUR ATTENTION WAS DRAWN TO THE DECISION OF RESPECTED CO -ORDINATE BENCH D AHMEDABAD IN ASSESSEES OWN CASE BEARING ITA NO.167 0/AHD/2005 FOR ASSESSMENT YEAR 2001-02 DATED 01/09/2005 THROUGH WHICH THE ISSUE OF THE QUANTUM ADDITION WAS DECIDED IN FAVOUR OF THE REVENUE. HOWEVER IT IS WORTH TO MENTION PARAGRAPH NO.4 WHEREIN THE RESPECTED CO-ORDINATE BENCH HAS MENTIONED THAT ON EXAMINATION OF THE STAT EMENT OF STOCK FURNISHED BEFORE THE BANK AUTHORITIES IT WAS NOTI CED BY THE ASSESSING OFFICER THAT IN THOSE MONTHLY STATEMENTS THERE WAS A DIFFERENCE OF STOCK. THE ASSESSING OFFICER HAS PROCEEDED TO TAX THE PEAK DIFFERENCE FROM THE MONTH OF FEBRUARY-2001 WHICH WAS CALCULATED AT RS.1 1 02 135/-. WE HAVE ALSO NOTICED THAT THE TRIBUNAL HAS REPRODUCED SUBMISSIONS OF THE ASSESSEE IN A SUMMARIZED MANNER WHICH WERE PLACED B EFORE THE LEARNED CIT(APPEALS) WHILE AGITATING THE QUANTUM ADDITION; AS FOLLOWS:- THE SUBMISSIONS OF ASSESSEE BEFORE CIT(A) CAN BE S UMMARIZED AS BELOW:- (I) THERE IS NO SUPPRESSION OF SALES FOUND OUT BY THEN LD.ITO. (II) THERE IS NO INFLATION OF EXPENSES FOUND OUT BY THEN LD.ITO (III) THERE IS NO INFLATION OF PURCHASES FOUND OUT BY THE N LD.ITO. ITA NO .667/AHD/2009 M/S.CHAMARIA FASHIONS PVT.LTD. VS. ITO ASST.YEAR - 2001-02 - 4 - (IV) METHOD OF ACCOUNTING HAS BEEN FULLY ACCEPTED. (V) THERE IS NO DISCREPANCY IN RECORDS RELEVANT TO BOOK S. THERE IS NO REJECTION OF SUCH BOOKS. (VI) THERE IS NO COGENT MATERIALS WITH THEN LD.ITO TO PR OVE THAT EXCESS STOCK DECLARED TO BANK JUST FOR SECURING HIG HER LOAN FACILITY HAS ACTUALLY BEEN OWNED BY AN ASSESSEE. (VII) DIRECTORS/BANKERS/SUPPLIERS OF JOB WORKS MATERIALS (WHOSE STOCK HAS BEEN INCLUDED IN BANK STATEMENT FURNISHED TO BANK THOUGH STOCK DOES NOT BELONG TO ASSESSEE AS EXPLAIN ED DURING ASSESSMENT STAGE) HAVE NOT BEEN EXAMINED AT ALL BY THEN LD. ITO. 4.1. THE TRIBUNAL HAS THEREFORE COMMENTED THAT TH OUGH THE SUBMISSION OF MONTHLY STATEMENTS WERE IN A WAY AN A DMISSION ON THE PART OF THE DECLARANT BUT IT WAS NOT DECISIVE OF THE MA TTER UNLESS THE IMPUGNED ADMISSION IS CERTAIN AND DEFINITE WITHOUT ANY AMBIG UITY. MOREOVER IT HAS ALSO BEEN NOTED BY THE TRIBUNAL THAT BEING THE ASSESSEE WAS THE OWNER OF THE STOCK AND NO SATISFACTORY EXPLANATION ABOUT THE STATEMENTS BEFORE THE BANK WERE FURNISHED THEREFORE THE ASSESSING OFFICER WAS JUSTIFIED IN TREATING THE UNEXPLAINED DIFFERENCE IN STOCK AS UNE XPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE. OUR ATTENTION HAS ALSO BEEN DRAWN ON THE FACT THAT THE ASSESSING OFFICER HAS PROCEEDED ON AN ESTI MATE TO DETERMINE THE QUANTUM OF THE ADDITION. IN THE LIGHT OF THE SAID FACTUAL BACKGROUND AND CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE SINCE WE ARE PRESENTLY CONCERNED WITH THE CONCEALMENT PENALTY T HEREFORE WE HAVE TO SEE THE REASONS ON THE BASIS OF WHICH IT WAS HELD BY THE ASSESSING OFFICER THAT WHETHER THERE WAS A DELIBERATE AND C ONSCIOUS ATTEMPT ON THE PART OF THE ASSESSEE TO CONCEAL THE PARTICULARS OF INCOME. IN THIS REGARD WE CAN PLACE RELIANCE ON THE DECISION OF ITAT DELHI E BENCH IN THE CASE OF K.L.KATHURIA VS. ITO (1981) 11 TTJ (DEL) 85 WHEREIN AN OBSERVATION WAS MADE THAT THE INCOME TAX AUTHORITIE S IN ORDER TO JUSTIFY ITA NO .667/AHD/2009 M/S.CHAMARIA FASHIONS PVT.LTD. VS. ITO ASST.YEAR - 2001-02 - 5 - THE PENALTY HAVE TO ESTABLISH SOMETHING MORE THAN W HAT THEY HAVE DONE IN THEIR ORDERS OF ASSESSMENT. IT WAS FURTHER OBSERVED THAT THE REVENUE HAS TO PLACE ON RECORD THE ITEMS OF CONCEAL MENT WHICH WERE NOT DISCLOSED BY THE ASSESSEE. ON THE BASIS OF THOSE OBSERVATIONS THE RESPECTED BENCH HAS THEREFORE HELD THAT THE ADDIT ION MADE ON ACCOUNT OF DISCREPANCY IN STOCK THOUGH CONFIRMED BY THE TRIBUN AL HAS TO BE DELETED BECAUSE OF THE REASON THAT NO POSITIVE EVIDENCE OF CONCEALMENT OF THE ITEMS OF THE STOCK WERE PRESENT AND THE PENALTY WAS NOT TO BE LEVIED MERELY ON PRESUMPTION OF ALLEGED CONCEALMENT. AN A NOTHER CASE CAN ALSO BE CITED NAMELY AGARWAL TRADING COMPANY VS. INCOM E TAX OFFICER (1984) 19 TTJ (ALL) 439 WHEREIN THE OBSERVATION WA S THAT FOR LEVY OF PENALTY IT SHOULD BE PLACED ON RECORD THAT THE ASSE SSEE WAS FOUND HAVING MADE THE INVESTMENT IN THE IMPUGNED EXTRA STOCK. THE BURDEN IS ON THE REVENUE TO PLACE ON RECORD THAT THE INVESTMENT WAS MADE BY THE ASSESSEE AND THAT INVESTMENT WAS NOT DISCLOSED WHILE FILING THE RETURN OF INCOME. IN THE SAID DECISION AS WELL THE ASSESSEE WAS FOU ND PLACED MORE STOCK WITH THE BANK HOWEVER WHEN DECIDING THE QUESTION OF LEVY OF CONCEALMENT PENALTY THE TRIBUNAL HAS HELD THAT IT W AS NOT A FIT CASE FOR LEVY OF CONCEALMENT PENALTY AND DELETED THE SAME. 5. IN THE LIGHT OF ABOVE DISCUSSION AND FEW CASE LA WS CITED (SUPRA) WE MAY LIKE TO MENTION THAT THE ISSUE CAN BE SAID T O BE COVERED BY A LATEST DECISION OF HON'BLE SUPREME COURT REPORTED A T (2010) 322 ITR 158 (SC) IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. FOR THE PROPOSITION THAT WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. THE HON'BLE APEX COURT HAS FURTHER OBSERVED THAT ITA NO .667/AHD/2009 M/S.CHAMARIA FASHIONS PVT.LTD. VS. ITO ASST.YEAR - 2001-02 - 6 - IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVISION CAN NOT BE INVOKED. SINCE THIS IS THE CASE OF ADDITION ON ACCOUNT OF DIFFEREN CE IN THE STOCK FOUND HYPOTHECATED WITH THE BANK AND QUANTUM ADDITION WAS MADE ON PEAK VALUE WHICH WAS DETERMINED ON AN ESTIMATE THEREFOR E WE ARE OF THE VIEW THAT THIS IS NOT A FIT CASE FOR LEVY OF CONCEALMENT OF PENALTY AND FOR THIS VIEW WE PLACE RELIANCE ON SEVERAL DECISIONS CITED HEREINABOVE. THE VIEW TAKEN BY THE LEARNED CIT(APPEALS) IS HEREBY RE VERSED AND PENALTY IS ACCORDINGLY DELETED. 6. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 30/04/2010. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30 / 04 /2010 T.C. NAIR SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VI AHMEDABAD 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD