M/s Sreenivasa Sree Kaleswari Lorry Service,, Visakhapatnam v. The ITO, Ward-5(2)., Visakhapatnam

ITA 80/VIZ/2007 | 2003-2004
Pronouncement Date: 10-02-2010 | Result: Dismissed

Appeal Details

RSA Number 8025314 RSA 2007
Assessee PAN AATFS3902J
Bench Visakhapatnam
Appeal Number ITA 80/VIZ/2007
Duration Of Justice 2 year(s) 10 month(s) 10 day(s)
Appellant M/s Sreenivasa Sree Kaleswari Lorry Service,, Visakhapatnam
Respondent The ITO, Ward-5(2)., Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 10-02-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 10-02-2010
Assessment Year 2003-2004
Appeal Filed On 30-03-2007
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SRI B.R. BASKARAN ACCOUNTANT MEMBER I.T.A. NO.80/VIZAG/2007 ASSESSMENT YEAR : 2003-04 SREENIVASA SREE KALESWARI LORRY SERVICE VISAKHAPATNAM VS. ITO WARD-5(1) VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AATFS 3902J APPELLANT BY : SHRI I. KAMASASTRY CA RESPONDENT BY : SHRI G.S.S. GOPINATH DR O R D E R PER B..R. BASKARAN ACCOUNTANT MEMBER : 1. THE APPEAL OF THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 27-2-2007 PASSED BY LD CIT(A)_I VISAKHAPATNAM AND IT RELATES TO THE ASSESSMENT YEAR 2003-04. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS U NDER: A. THE INITIATION OF PROCEEDINGS U/S 271(1)(C) BY T HE ITO IS BAD IN LAW HENCE THE ENTIRE PROCEEDINGS ARE VOID AB INITIO AND THE PENALTY LEVIED CANNOT BE SUSTAINED. B. THE CIT(APPEALS) IS NOT CORRECT IN UPHOLDING THE LEVY OF PENALTY BY THE ITO. C. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE APPELLANT PRAYS FOR JUSTICE. 3. THE FACTS RELATING TO THE ISSUE ARE STATED I N BRIEF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO EXAMINED THE CASH BO OK AND NOTICED DEFICIT CASH BALANCES ON THREE DIFFERENT DATES VIZ. ON 17 .6.2002 24.6.2002 AND 26.6.2002. THE PEAK DEFICIT OF RS.4 00 432/- APPEA RED ON 24.6.2002. SIMILARLY THE AO NOTICED THAT THERE WAS A DIFFERENCE OF RS.25 237/- BETWEEN THE CASH 2 BALANCE SHOWN IN THE BALANCE SHEET AND CASH BOOK. WHEN THESE DIFFERENCES WERE CONFRONTED TO THE MANAGING PARTNER OF THE FIRM SRI R.SURYANARAYANA DURING THE COURSE OF RECORDING SWORN STATEMENT ON 22.12.20 05 HE COULD NOT EXPLAIN THE DIFFERENCES AND HENCE OFFERED THE SAME AS INCOME OF THE FIRM. THE AUTHORISED REPRESENTATIVE OF THE FIRM ALSO AGREED FOR THE ADDI TION. ACCORDINGLY THE AO ADDED THE DEFICIT CASH AND THE DIFFERENCE IN CASH TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE COULD NOT WIN IN THE APPEAL PREFERRED BEFORE LD CIT(A). THERE AFTER THE AO LEVIED A MINIMUM PENALTY OF RS.1 67 38 4/- U/S 271(1)(C) OF THE ACT. THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEFORE LD CIT(A). SINCE THE ASSESSEE DID NOT APPEAR BEFORE LD CIT(A) ON SEVERAL OCCASIONS THE LD CIT(A) IN HIS EX-PARTE ORDER CONFIRMED THE LEVY OF PENALT Y. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE FIRST OBJECTION OF LD AR WAS THAT THE IN ITIATION OF PENALTY PROCEEDINGS IS NOT PROPER SINCE THE AO DID NOT STRIKE OFF THE INAP PROPRIATE PORTION IN THE PENALTY NOTICE ISSUED U/S 274 R.W.S. 271 OF THE ACT. HOWEV ER LD DR BROUGHT TO OUR NOTICE THE ORDER DATED 08-02-2008 PASSED BY THIS BE NCH OF THE TRIBUNAL IN THE CASE OF M/S BUSAM VENKATESWARALU & ORS. IN ITA NO.2 28/V/2002 ; WHEREIN SIMILAR ISSUE WAS CONSIDERED BY THIS BENCH. LD DR ALSO PLACED A COPY OF THE SAID ORDER DATED 08-02-2008. ON PERUSAL OF THE SAID ORD ER WE NOTICE THAT THIS BENCH BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPR EME COURT IN THE CASE OF DILIP N SHROFF VS. JCIT (291 ITR 519) HELD THAT THE PENA LTY PROCEEDINGS ARE NOT VITIATED IF THE EXACT REASON FOR INITIATION OF PENA LTY PROCEEDINGS ARE NOT SPECIFIED. THE LD DR ALSO RELIED UPON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF T.A.ABDUL KHADER V CWT (2007) 296 ITR 20 WHEREI N IT WAS HELD THAT NON- STRIKING OFF OF INAPPROPRIATE PORTION WILL NOT INVA LIDATE THE NOTICE. SIMILAR VIEW HAS BEEN EXPRESSED BY HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V CHANDULAL (1985) (152 ITR 238). IN VIEW OF THE FOR EGOING WE DO NOT FIND ANY MERIT IN THIS OBJECTION OF THE ASSESSEE AND ACCORDI NGLY WE REJECT THIS ARGUMENT OF THE LD AR. 5. THE NEXT OBJECTION OF THE LD AR WAS THAT THE AO DID NOT ARRIVE AT THE SATISFACTION NECESSARY FOR INITIATION OF PENALTY PR OCEEDINGS FOR CONCEALMENT OF 3 INCOME. ACCORDING TO LD AR THE LEGAL POSITION REG ARDING SATISFACTION DID NOT GO UNDER CHANGE EVEN AFTER THE INSERTION OF SECTION 27 1(1B) BY FINANCE ACT 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.1989. IN THIS R EGARD THE LD AR RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF MS. MADHUSHREE GUPTA VS. UNION OF INDIA & ANR. REPORTED IN (2009) 317 ITR 1 07. ACCORDING TO LD AR THE SATISFACTION OF THE AO IS NOT DISCERNIBLE FROM THE ASSESSMENT ORDER AND HENCE THE PENALTY PROCEEDING IS LIABLE TO BE QUASHED. 5.1 SECTION 271(1B) INSERTED BY THE FINANCE ACT 2008 READS AS UNDER: WHERE ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUT ING THE TOTAL INCOME OR LOSS OF AN ASSESSEE IN ANY ORDER OF ASSESSMENT O R REASSESSMENT AND THE SAID ORDER CONTAINS A DIRECTION FOR INITIATION OF PENALT Y PROCEEDINGS UNDER CLAUSE (C) OF SUB-SECTION (1) SUCH AN ORDER OF ASSESSMENT OR REA SSESSMENT SHALL BE DEEMED TO CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATION OF THE PENALTY PROCEEDINGS UNDER THE SAID CLAUSE (C). 5.2 HOWEVER LD DR SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF MADHUSHREE GUPTA SUPRA ONLY CONSIDERED THE CON STITUTIONAL VALIDITY OF THE PROVISIONS OF SECTION 271(1B) AND UPHELD THE VALID ITY OF THE SAID SECTION. SUBSEQUENTLY IN THE FOLLOWING CASES THE HONBLE D ELHI HIGH COURT HAS HELD THAT THE ASSESSMENT ORDERS PASSED AFTER 1.4.1989 ARE COV ERED BY THE PROVISIONS OF SECTION 271(1B). (A) CIT V HARIG CRANK SHAFTS LTD. (2009) 177 T AXMANN 31 (DEL) (B) CIT V SOCIETEX (2009) 180 TAXMANN 441 (DEL ) (C) CIT V RAMPUR ENGINEERING CO. LTD & ORS. (2 009) 221 CTR (DEL)(FB) 32 (D) CIT V INDIA CRAFTS & ORS. (2009) 183 TAXMA NN 369 (DEL) 5.3 WE FIND MUCH FORCE IN THE ARGUMENT OF THE L D DR. THE LAW WITH REGARD TO THE SATISFACTION FOR THE INITIATION OF PENALTY HAS UNDERGONE CHANGE AFTER THE INSERTION OF SECTION 271(1B) IN THE STATUTE BOOK. SINCE THERE WAS DIVERGENT VIEW ON THAT POINT THE LEGISLATURE THOUGHT IT FIT TO IN SERT SECTION 271(1B) TO THE STATUTE BOOK. THE HONBLE DELHI COURT HAS UPHELD ITS CONSTI TUTIONAL VALIDITY AND ALSO HELD THAT THE ASSESSMENT ORDERS PASSED AFTER 1.4.1989 AR E CLEARLY HIT BY THE PROVISIONS OF SECTION 271(1B). IN THE INSTANT CASE THE ASSES SMENT ORDER HAS BEEN PASSED ONLY AFTER 1.4.1989. ACCORDINGLY WE REJECT THE AR GUMENT OF THE LD AR ON THIS GROUND ALSO. 4 6. THE LD AR FAIRLY CONCEDED THAT THE ASSESSEE DOES NOT HAVE ANY CASE ON MERITS. THE EXPLANATION TO SECTION 271 PLACES AN O NUS UPON THE ASSESSEE TO FURNISH NECESSARY EXPLANATION TO REBUT THE PRESUMPT ION OF CONCEALMENT. AS NOTICED BY THE LD CIT(A) THE ASSESSEE HAS NOT DIS CHARGED THE BURDEN PLACED UPON HIM BY EXPLANATION TO SECTION 271. HENCE TH E LD CIT(A) CONFIRMED THE LEVY OF PENALTY BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF K.P.MADHUSUDHANAN VS. CIT (251 ITR 99). IN VIEW OF THE FAILURE OF THE ASSESSEE TO SUBMIT ANY EXPLANATION TO REBUT THE PRESUMPTION WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A). ACCORD INGLY WE UPHOLD THE ORDER OF LD CIT(A). 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 10.02.2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM DATE : 10 TH FEBRUARY 2010 A COPY OF THIS ORDER IS FORWARDED TO : 01 SREENIVASA SREE KALESWARI LORRY SERVICE C/O K. AMBIKA PRASAD CHARTERED ACCOUNTANT AMBIKA-ISHA CHARTERED ACCOUN TANTS G-3 SATYA RESIDENCY 30-7-33 DABAGARDENS VISAKHAPATNAM-530 020. 02 ITO WARD-5(2) VISAKHAPATNAM 03 CIT (A)-I VISAKHAPATNAM 04 CIT VISAKHAPATNAM 05 DR ITAT VISAKHAPAATNAM 06 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT VISAKHAPATNAM BENCH