Priyadarshini Thread Limited,, Hyderabad v. ACIT, Circle-2(3), Hyderabad

ITA 912/HYD/2012 | 1998-1999
Pronouncement Date: 26-11-2014 | Result: Allowed

Appeal Details

RSA Number 91222514 RSA 2012
Assessee PAN AABCP2287L
Bench Hyderabad
Appeal Number ITA 912/HYD/2012
Duration Of Justice 2 year(s) 5 month(s) 19 day(s)
Appellant Priyadarshini Thread Limited,, Hyderabad
Respondent ACIT, Circle-2(3), Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 26-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 26-11-2014
Date Of Final Hearing 14-07-2014
Next Hearing Date 14-07-2014
Assessment Year 1998-1999
Appeal Filed On 07-06-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER I.T.A. NO. 912/HYD/2012 ASSESSMENT YEAR 1998-99 M/S. PRIYADARSHINI THREADS LTD. HYDERABAD PAN: AABCP2287L VS. THE ASST. CIT CIRCLE-2(3) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI S. RAMA RAO RESPONDENT BY: SHRI RAJAT MITRA DATE OF HEARING: 14.10.2014 DATE OF PRONOUNCEMENT: 26.11.2014 O R D E R PER ASHA VIJAYARAGHAVAN JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-V HYDERABAD DATED 26.03.2012 FOR THE ASSESS MENT YEAR 1998-99. 2 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HEREI N IS A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED AND I S CARRYING ON BUSINESS IN COTTON GINNING. FOR THE ASSESSMENT YEAR 1998-99 I T FILED ITS RETURN OF INCOME ON 30-11-1998 ADMITTING A LOSS OF RS. 1 98 47 830. DURING THE PREVIOUS YEAR RELEVANT FOR THE ASSESSMENT YEAR 1998-99 THE COMPA NY RECEIVED SHARE APPLICATION MONEY OF RS. 1 12 50 000. THE ASSESSIN G OFFICER CONVERTED THE CASE TO SCRUTINY AND REQUIRED THE PETITIONER TO FIL E THE DETAILS. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) ON 24-0 2-2001 AND REDUCED THE LOSS TO RS. 79 02 479/- BY TREATING RS. 1 12 50 000 AS THE INCOME OF THE ASSESSEE. THE CIT(A) CONFIRMED ORDER OF THE ASSESS ING OFFICER IN THE QUANTUM APPEAL. THE TRIBUNAL SET ASIDE THE ISSUE TO THE FI LE OF THE AO. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS U/S. 271 (1)(C) OF THE ACT. I.T .A. NO. 912/HYD/2012 M/S. PRIYADARSHINI THREADS LTD. ======================= 2 3 IN THE FIRST ROUND OF APPEAL FILED BEFORE THE CIT(A ) AGAINST THE ORDER OF THE ASSESSING OFFICER IMPOSING PENALTY U/S. 271( 1)(C) THE CIT(A) IN ITA NO. 250/DCIT-16(3) DATED 30.8.2006 HAS NOT CONDONED THE DELAY IN FILING THE APPEAL AND HAS DISMISSED THE APPEAL. ON FURTHER A PPEAL TO THE TRIBUNAL THE TRIBUNAL HAS VIDE ORDER DATED ITA NO. 1100/HYD/ 2006 DATED 21.4.2008 SET ASIDE THE ORDER OF THE CIT(A) AND RESTORED THE MATTER TO THE FILE OF THE CIT(A). ON 26.3.2012 THE CIT(A) DECIDED THE RESTOR ED APPEAL IN ITA NO. 034/DC-16(3) HOLDING AS FOLLOWS: '4. THE FACTS ARE THAT THE APPELLANT INTRODUCED RS. 1 12 50 000/- IN THE BOOKS AS FRESH SHARE APPLICATI ON MONEY. DURING ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PR OCEEDINGS AND ALSO APPEAL PROCEEDINGS THE APPELLANT FAILED T O FURNISH ANY INFORMATION PERTAINING TO SHARE APPLICATION MON EY. THE APPELLANT FAILED TO IDENTIFY THE SHAREHOLDERS TO P ROVE THE GENUINENESS OF TRANSACTIONS OR THE CREDITWORTHINESS OF THE SHAREHOLDERS. ON THESE FACTS THE ASSESSMENT WAS MA DE ADDING THE ENTIRE AFOREMENTIONED AMOUNT. A MINIMUM PENALTY OF RS. 41 80 872 WAS IMPOSED UNDER SECTION 271(1)(C) OF THE ACT ON THE ABOVE FACTS. 4.2 THE FACTS REMAIN THE SAME EVEN TODAY AND THE APPELLANT HAS NOT BEEN ABLE TO PROVE ANY OF THE AFO RE- MENTIONED INGREDIENTS. THEREFORE I FIND IT TO BE A FIT CASE TO CONFIRM THE PENALTY IMPOSED BY THE ASSESSING OFFICE R.' 4 THUS THE CIT(A) CONFIRMED THE PENALTY OF RS. 41 80 872. AGGRIEVED THE ASSESSEE PREFERRED THE PRESENT APPEAL BEFORE US . 5 DURING THE COURSE OF HEARING BEFORE THIS TRIBUNAL THE ASSESSEE FILED A PAPER BOOK CONTAINING ANNUAL REPORTS CASH FLOW STA TEMENTS ETC. THE PAPER BOOK ALSO CONTAINED COPIES OF THE APPLICATIONS MADE BY THE SHAREHOLDERS FOR ALLOTMENT OF SHARES AND COPIES OF LETTERS OF CONFIR MATIONS FROM THE INVESTORS OF SHARE CAPITAL. THE ASSESSEE WAS ASKED IN THE BEN CH WHETHER THE APPLICATIONS AND THE LETTERS OF CONFIRMATION WERE F ILED BEFORE THE LOWER AUTHORITIES. THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT DURING THE PERIOD THERE WAS A CHANGE IN THE MANAGEMENT OF THE COMPANY. THE DETAILS ARE AS UNDER: I.T .A. NO. 912/HYD/2012 M/S. PRIYADARSHINI THREADS LTD. ======================= 3 NAME OF THE OUTGOING DIRECTOR DATE OF RELIEF NAME OF THE INCOMING DIRECTOR DATE OF JOINING G.B.K. REDDY 22.10.2012 N. SURYANARAYANA RAJU 20.10.2012 B. VENKATARATNAM 22.10.2012 SMT. M. RAMANAMMA 30.01 .2012 E. MANOJ KUMAR REDDY 22.10.2012 SMT. K. SANDYA 30.01.2012 6 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT APPEAL IS FILED AFTER THE NEW MANAGEMENT TOOK OVER THE AFFAIRS OF THE COMPANY. IT WAS SUBMITTED THAT THE APPLICATIONS FOR ALLOTMENT OF SHARES AND THE LETTERS OF CONFIRMATION WERE AVAILABLE ON RECOR D HANDED OVER BY THE OLD MANAGEMENT. THE BOARD OF DIRECTORS WERE OF THE VIE W THAT ALL THE PAPERS WERE ALREADY FILED BEFORE THE LOWER AUTHORITIES. T HE COMPANY VERIFIED THE RECORDS AND FOUND THAT NO ACKNOWLEDGEMENTS FOR FILI NG THE SAID INFORMATION BEFORE THE ASSESSING OFFICER OR BEFORE THE APPELLAT E AUTHORITY ARE AVAILABLE ON RECORD. THEREFORE THE COUNSEL SUBMITTED THAT TH E ASSESSEE IS NOT ABLE TO STATE THE AUTHORITY BEFORE WHOM THE SAID PAPERS WER E FILED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SAID THE DO CUMENTS WERE FILED THOUGH THERE IS NO ACKNOWLEDGEMENT. THE LEARNED CO UNSEL FOR THE ASSESSEE REQUESTED THAT THE TRIBUNAL MAY KINDLY ADMIT THE SA ID DOCUMENTS MENTIONED AT SL. NOS. 6 AND 8 OF THE PAPERS BOOK AS ADDITIONAL EVIDENCE AND PASS APPROPRIATE ORDERS. 7 THE LEARNED COUNSEL SUBMITTED THAT PENALTY PROCEEDI NGS ARE SEPARATE FROM ASSESSMENT PROCEEDINGS AND THE BENCH SHOULD CONSIDER THE ADDITIONAL EVIDENCE PRODUCED WHILE DECIDING THE APP EAL PREFERRED AGAINST THE ORDER LEVYING PENALTY. 8 THE LEARNED COUNSEL FURTHER SUBMITTED THAT BOTH CIT (A) AND ASSESSING OFFICER IS ERRONEOUS IN LAW AND ON THE FACTS OF THE CASE. THE ASSESSEE PRIYADARSHINI THREAD LIMITED HAS FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1998-99 ON 30-11-1998 DECLARING A L OSS OF RS. 1 98 47 830/-. ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) OF I NCOME TAX ACT 1961 MAKING THE ADDITIONS OF RS. 1 12 50 000/- AS UNEXPL AINED CREDIT UNDER SECTION 68 OF INCOME TAX ACT 1961. THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF INCOME TAX ACT 1961 WERE INITIATED. AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX APPEALS- V THE ASSESSEE FILED THE APPEA L WITH THE TRIBUNAL WHO I.T .A. NO. 912/HYD/2012 M/S. PRIYADARSHINI THREADS LTD. ======================= 4 VIDE THEIR ORDER IN ITA NO. 1100/HYD/06 SET ASIDE T HE IMPUGNED ORDER OF THE CIT(A) AND RESTORED THE MATTER TO THE FILE OF CIT (APPEALS). THE CIT(A) RECONFIRMED THAT THE PENALTY IS TO BE IMPOSED UNDER PENALTY PROCEEDINGS INITIATED U/S. 271(1)(C) OF THE ACT. THE ASSESSEE H AS RELIED UPON THE FOLLOWING CASE LAWS WHICH MAY BE CONSIDERED IN FAVOUR OF THE ASSESSEE. (A) HINDUSTAN STEEL LTD. VS. STATE OF ORISSA 83 ITR 26 (SC) (B) K.C. BUILDERS VS. ACIT 265 ITR 0562 (SC) (C) MOHAMMED ABRAHIM AZIMULLA VS. CIT 131 ITR 0680 (AL L) (D) CIT VS. K.R. CHINNI KRISHNA CHETTY 246 ITR 0121 (E) CIT VS SANTHOSH FINANCIERS 247 ITR 0742 9 THE LEARNED COUNSEL FURTHER SUBMITTED THAT PENALTY WILL NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETH ER SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATT ER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSI DERATION OF ALL THE RELEVANT CIRCUMSTANCES. HE FURTHER SUBMITTED THAT WHEN THER E IS NO DEMAND OF TAX FOR THE ASSESSMENT YEAR 1998-99 THE PENALTY CANNOT BE IMPOSED AS IT IS ONLY LAWFUL TO DO SO AS ORIGINAL TAX DEMAND IS NOT THERE DUE TO LOSSES AND THE ASSESSEE HAS NOT CONCEALED ANY INCOME AND HENCE THE PENALTY LEVYING DOES NOT ARISE. ACCORDINGLY THE LEARNED COUNSEL SUBMIT TED THAT IN VIEW OF THE CLARIFICATIONS AND EXPLANATIONS GIVEN ABOVE THE PEN ALTY LEVIED BY THE ASSESSING OFFICER AMOUNTING TO RS. 41 80 872/- MAY BE DELETED AND THE REVISED ORDER MAY BE DIRECTED TO BE PASSED AT THE E ARLIEST. 10 THE LEARNED DR POINTED OUT THAT THE ASSESSEE HAD NO T SUBMITTED ADDITIONAL EVIDENCE BEFORE THE TRIBUNAL IN THE FIRS T ROUND OF APPEAL AND HAS PLEADED FOR SUBMITTING THE SAME ONLY IN THE SECOND ROUND BEFORE THE TRIBUNAL. 11 WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT THE C IT(A) HAD DISMISSED THE APPEAL WITHOUT GIVING ANY FINDING ABO UT THE CONDONATION OF DELAY FOR WHICH THE ITAT HAD SPECIFICALLY REMITTED THE ISSUE BACK TO THE CIT(A) TO TAKE A DECISION ON THE SAME. FURTHER THE CIT(A) HAD COMMENTED ABOUT THE NON-PRODUCTION OF ANY DOCUMENT AS EVIDENC E BY THE ASSESSEE AND NON-COOPERATION OF THE ASSESSEE'S COUNSEL IN ATTEND ING HEARINGS BEFORE HIM. 12 THE LEARNED COUNSEL HAS NOW PRODUCED ADDITIONAL EVI DENCE BEING (1) COPIES OF APPLICATIONS MADE BY THE SHAREHOLDERS FOR ALLOTMENT OF SHARES AND I.T .A. NO. 912/HYD/2012 M/S. PRIYADARSHINI THREADS LTD. ======================= 5 (2) COPIES OF LETTERS OF CONFIRMATION BY THE INVEST ORS TO THE SHARE CAPITAL ON PAGES 21 TO 28 AND PAGES 30 TO 37 OF THE PAPER BOOK -I RESPECTIVELY PLACED BY THE ASSESSEE. WE ADMIT THE ADDITIONAL EVIDENCE. 13 WE ARE OF THE OPINION THAT THE PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS AND HENCE THE ADDITIONA L EVIDENCE PRODUCED BY THE ASSESSEE HAS TO BE CONSIDERED BY THE REVENUE AUTHORITIES. 14 ALSO WE FIND THAT THESE DOCUMENTS GO TO THE VERY RO OT OF THE MATTER AND ARE NECESSARY FOR THE PURPOSE OF DECIDING THE A PPEAL. HENCE WE REMIT THE ISSUE BACK TO THE FILE OF THE AO TO CONSIDER TH E ADDITIONAL EVIDENCE SUBMITTED BEFORE US AND DECIDE THE MATTER DE NOVO IN ACCORDANCE WITH LAW. 15 THE ISSUE OF CONDONATION OF DELAY HAS NOT BEEN SPEC IFICALLY ADDRESSED BY THE CIT(A) IN HIS ORDER. HOWEVER THE CIT(A) SH ALL BE DEEMED TO HAVE CONSIDERED THIS ISSUE AND HE PROCEEDED TO DISMISS T HE APPEAL OF THE ASSESSEE ON THE GROUNDS OF NON-PRODUCTION OF EVIDENCE AND NO N-COOPERATION BY THE ASSESSEE. HENCE THE MATTER IS REMITTED TO THE AO F OR FRESH CONSIDERATION AS TO WHETHER PENALTY CAN BE LEVIED U/S. 271(1)(C) OF THE ACT IN THIS CASE. 16 IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER 2014. SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD DATED THE 26 TH NOVEMBER 2014 TPRAO COPY FORWARDED TO: 1. M/S. PRIYADARSHINI THREADS LTD. C/O. M/S. M.M. RED DY & CO. CHARTERED ACCOUNTANTS G-8 AMRUTHA VILLE APTS. RAJBHAVAN RO AD SOMAJIGUDA HYDERABAD-500 082. 2. THE ASST. CIT CIRCLE - 2(3) HYDERABAD. 3. THE CIT(A) - V HYDERABAD. 4. THE CIT - IV HYDERABAD. 5. THE DR B BENCH ITAT HYDERABAD