Income Tax Appellate Tribunal - Mumbai
Orient Press Ltd. vs Joint Commissioner Of Income Tax on 30 June, 2005
Equivalent citations: (2006)99TTJ(MUM)1091
ORDER
Pramod Kumar, A.M.
1. These two appeals pertain to the same assessee, contain common grievances against imposition of penalties under Section 271(1)(c) of the IT Act for the respective assessment years, and were heard together. As a matter of convenience, therefore, both of these appeals are being disposed of by way of this consolidated order.
2. To adjudicate on the assessee's grievances in this appeal, only a minimal reference to the undisputed facts of the case is required. The assessee is engaged in the business of publishing pre-share issue stationery like company prospectus, brochures and share application forms, etc. The assessee takes up the job of printing on job work basis whereas the paper is supplied by its sister-concern namely, Vikas Printers. On 26th Feb., 1996, a survey operation was conducted on the assessee but it was in respect of verification of certain expenditure incurred by Ramgopal Polytex Limited. During the course of survey, the assessee surrendered incomes of Rs. 4,10,000 for the asst. yr. 1993-94, Rs. 9,00,000 for the asst. yr. 1994-95 and Rs. 6,00,000 for the asst. yr. 1995-96. The assessee also revised the IT returns to show these additional surrendered incomes and in the covering letters it was stated that additional income was being offered to tax only to avoid litigation and buy peace of agreed basis on the condition that no concealment penalty will be levied. While the AO did not impose penalty for the asst. yr. 1995-96, a specific order dropping the penalty proceedings was also passed by the AO for that year, penalties under Section 271(1)(c) were imposed for the asst. yrs. 1993-94 and 1994-95. The penalties were imposed mainly on the ground that the income surrendered during the survey constituted concealed income which would not have come to the light but for the fact of survey having been conducted, and that there was nothing to establish that it was a case of agreed settlement. Aggrieved by the penalties so imposed, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee is not satisfied and is in appeal before us.
3. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position.
4. It is difficult to understand as to how can Revenue defend imposition of penalties for asst. yrs. 1993-94 and 1994-95, when, on the materially similar set of facts, no penalty is imposed for the asst. yr. 1995-96. The dropping of penalty proceedings for the asst. yr. 1995-96 is a conscious act by the AO as evident from the specific order dropping the penalty proceedings for that year. During the course of hearing before us, we did ask the Departmental Representative to explain this contradiction in the stand but he was not able to explain the same and he made a vague statement to the effect that the facts of that year may be different. This is unacceptable. In any case, the material facts, as evident from the documents before us, were clearly the same so far as the question of declaration was concerned. On one set of facts, in one year, the penalty is dropped, and for the remaining years, the penalties are imposed. Once this happens and no distinguishing features, for the years for which penalties are imposed, are pointed out, for this reason alone, penalties imposed are not sustainable in law. In any event, the imposition of penalties is based on the surrender made during the course of survey, but then mere surrender of income during the survey is not even a sound basis for addition to the returned Income. The fact of surrender per se cannot lead to the conclusion that there was a concealment of income. The factors surrounding the surrender of income also, in our considered view, do not establish that there was a concealment of income. In fact, all along the assessee has taken a stand that at the time of survey, relevant records could not be located and that there was no justification for this additional income on merits, but these explanations have been simply brushed aside by the authorities below. This kind of an approach cannot be sustainable in law. Keeping in view all these factors, as also entirety of the case, we deem it fit and proper to delete the impugned penalties of Rs. 2,63,925 for 1993-94 and of Rs. 4,65,750 for the asst. yr. 1994-95. The assessee gets the relief accordingly.
5. In the result, both the appeals are allowed.