Income Tax Appellate Tribunal - Ahmedabad
Mardia Copper Industries, Ahmedabad vs Assessee on 15 March, 2012
1 ITA No.2020/AHD/2009
. Assessment Year 1992-93.
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, AHMEDABAD
(BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI A.M.)
I.T.A. No. 2020/AHD/2009
(Assessment Year: 1992 -93 )
Mardia Copper Industries, Vs. Income Tax Officer,
Mehta Lodha & Co., Ward 10 (3),
105, 1st Floor, Narayan Chambers,
Sakar-1, Nr. Patang Hotel,
Off Gandhigram Rly. Station, Ashram Road, Ahmedabad.
Ashram Road, Ahmedabad.
(Appellant) (Respondent)
PAN: AACFM 9310R
Appellant by : Smt. Urvashi Shodhan
Respondent by : Shri Rahulkumar, Sr. D.R.
आदे श)/ORDER
(आदे Date of hearing : 15-3-2012.
Date of Pronouncement : 4-5-2012.
PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER.
This appeal is filed by the assessee against order of Ld. CIT (A)-XVI, Ahmedabad confirming the penalty Rs,.4,38,414/- levied under section 271(1)(c) of the Income Tax Act.
2. The brief facts of the case are that in this case the assessee filed its return of income on 31-10-1992 declaring total loss at Rs 9,51,780/-. The 2 ITA No.2020/AHD/2009 . Assessment Year 1992-93.
assessment was completed u/s 143(3) vide order dated 31.3.2005 and the total income was determined at Rs.12,96,370/- after making additions on account of receipt of unaccounted job charges of Rs.4,38,414/- and bogus purchases of Rs. 14,92,565/-. Against these two additions made by the Assessing Officer (AO), the assessee carried the matter in appeal before the Ld. CIT (A). CIT (A) vide his order dated 30-9-1996 gave partial relief to the assessee and it directed the deletion of the addition to the extent of Rs 9,92,565/-. Before ITAT, Revenue contested the deletion of Rs 9,92,565/- and the assessee contested the addition of Rs 5 lacs. Hon'ble ITAT vide order dated 22.9.2005 dismissed the assessee's ground and admitted the Revenue's appeal the effect of which was that the addition of Rs 14,92,565/- made by the AO was sustained. Later, the A.O. vide order dated 28.6.2006 levied penalty of Rs 3,42,307/- on account of unaccounted receipts in respect of job work charges Rs 4,38,414/-, Bogus purchases of Rs 14,92,565/- and on capital gains of Rs 25,730/-. The assessee carried the matter before CIT (A).
3. On the order against the levy of penalty, CIT (A) vide order dated 2.3.2009 gave partial relief to assessee. He directed the deletion of penalty on capital gains of Rs 25,730/- but however sustained the penalty on unaccounted job work charges of Rs 4,38,414/- and bogus purchase of Rs 14,92,565/- by holding as under:
"3.2 I have considered the submission of the appellant. For the levy of penalty the finding in the assessment order are important as has been held by Gujarat High Court in the case of Somnath Oil Mills 214 ITR 32 (Guj.) In this case the Hon'ble ITAT at para 35 of the order had held that "it is established beyond doubt that assessee was 3 ITA No.2020/AHD/2009 . Assessment Year 1992-93.
manipulating its books of accounts with regards to job work done by it of the associate concern....".
This finding itself is sufficient for the levy of penalty because the assessee has failed to prove that he was not manipulating its books of accounts and that there was no bonafide mistake on its part,. The judgment relied upon by the appellant are not of any help to the appellant for the reasons that the mensrea ( even though not relevant for the department to establish) has been proved by the ITAT by way of above mentioned findings. Therefore, in view of the judgment of the Hon'ble Supreme Court in the case of Dharmendra Textiles and Processors and others 306 ITR 227 (SC), the penalty levied by the Assessing Officer on account of unaccounted job work of Rs.5,50,000/- is confirmed.
4. As regards the second issue i.e. penalty on bogus purchases from :-
1. Mukesh MetalCorporation. Rs. 98,640/-
2. Pooja Enterprise. Rs. 5,37,025/-
3. S.R. Metal Corporation Rs. 8,56,900/-
-------------------
Rs.14,92,565/-
=========== The Hon'ble ITAT in para 29 of their order has mentioned that these Three parties not only accepted before the Excise Authority but also before the Assessing Officer that they did not make any sale to the assessee firm. The statement made before the Excise Authorities were statements recorded on oath. It was also accepted by those parties that the payment received by cheques were paid in cash to the assessee's representative. The appellant was also confronted with the material gathered by the Assessing Officer and the appellant was asked to offer its reply. The appellant was also granted opportunity to cross examine these three parties which was not availed of and it was only contended that statements by seller before Excise Authorities were baseless. In other words, the partner of the appellant by not cross examining the above mentioned three parties admitted that the purchases shown from them are not genuine purchases. The appellant has not been able to produce any document showing that the purchases from those parties were genuine or were done in good faith or the material from them was 4 ITA No.2020/AHD/2009 . Assessment Year 1992-93.
received. Therefore, relying on the judgment in the case of Dharmendra Textiles & Processors 306 ITR 277 (SC) on this issue also the levy of penalty by the Assessing Officer is confirmed."
4. Aggrieved by the order of CIT (A) sustaining penalty, the assessee is now in appeal before us.
5. Before us, the Ld. AR has contended that no evidence relating to unaccounted job work has been found. A.R. has also contended that the additions/disallowances made are purely on estimations, assumptions, conjectures or surmises basis and the AO has highly relied upon the assessment order only and he has not attempted to make out the case for levy of penalty u/s. 271(1)(c) of the Act. The addition of the job work income and the purchases has been made, after rejecting the book result under section 145 of the Act for which reference was made to para 1 of Page No.3 of the assessment order. It was therefore contended that since, section 145 of the Act has been applied by the Ld. A.O. and the additions/disallowances have been made on estimate basis, penalty under section 271(1)(c) of the Act cannot be imposed. With regard to penalty levied on the addition of the purchases, it was submitted that the Ld. CIT(A) has reduced the addition and the addition was later restored by the Hon'ble ITAT. It was therefore urged that since the quantum and nature of addition itself is subject to difference of opinion of two appellate authorities, penalty u/s. 271(1)(c) should not be imposed. The Ld. AR also relied on the following decisions:-
(1) CIT Vs Haryana Warehousing Corporation (2009) 314 ITR 215 (P&H) 5 ITA No.2020/AHD/2009 . Assessment Year 1992-93.
(2) CIT Vs Sangur Vanaspati Mills Ltd (2008) 303 ITR 53 (P & H) (3) Sanjay Oilcakes Ltd Vs CIT (2009) 316 ITR 274 (Guj.) (4) CIT Vs Jagabandhu Prasanna Kumar Ruplal Sen Poddar (1982) 133 ITR 156 (Cal.)
6. The Ld. D.R. on the other hand vehemently argued that in the facts and circumstances of the case the AO was perfectly justified in levying the penalty. He pointed out to the findings of H'ble ITAT where it has been held that the assessee was manipulating its books of accounts with regard to job work done by it of associate concern, the calculation done by AO with respect to job work done was not held to be incorrect, there was no evidence to prove that the addition made by AO was purely on presumption basis. The Ld. D.R. also pointed out to the fact that the ITAT in para 30 of the order has concluded that the purchases made by the assessee from 3 parties were bogus/non genuine purchases for which the assessee could not furnish supporting evidence particularly when the parties from whom the purchases were made had clearly stated that they did not make any such sale to the assessee concern. Ld. D.R. also pointed out to para-29, page 21 of ITAT order wherein it has observed that the three parties were examined by Excise authorities before whom they not only denied to have made any sales to the assessee but they also accepted before the AO that they did not make any sale to the Assessee. These parties also clarified before AO that they had also procured bogus bills to give colour of genuineness to the transaction. It was also stated by them that the payments received by cheque were repaid in cash to the assessee's representative. The assessee was also granted opportunity to cross 6 ITA No.2020/AHD/2009 . Assessment Year 1992-93.
examine the parties which was not availed of and it was only contended that statements given by sellers before Excise authorities were baseless.
7. We have heard the rival submissions considered the arguments put forth by both the parties, material placed on record.
8. It is an undisputed fact that during the assessment proceedings the AO made additions on account of receipts of unaccounted job charges and bogus purchases. During the appellate proceedings on quantum, partial relief was granted to the Assessee by CIT (A) but the same was reversed by Honourable ITAT. It is also an undisputed fact that the addition of job work income and the purchases were made after rejecting the book results u/s 145 and the additions/disallowances were made on the basis of estimates. In the present case the penalty has been levied on the aforesaid additions. The claim made by the assessee may not have been accepted by the Revenue but that cannot be a ground for levy of penalty. In the case of CIT vs Sangrur Vanaspati Mills Ltd (supra), following the decisions of CIT Vs Ravail Singh & CO. (2002) 254 ITR 191 (P&H), Harigopal Singh Vs CIT(2002) 258 ITR 85 (P&H) and CIT Vs Dhillon Rice Mills (2002) 256 ITR 447 (P&H) it was held that when addition had been made on the basis of estimate and not on account of any concrete evidence of concealment, then the penalty was not leviable. It is a settled law that both penalty proceedings and assessment proceedings are separate though findings recorded in the assessment order lay down a foundation for levy of penalty u/s 271(1)(c). The mere fact that the addition has been made and sustained in appeal does not by itself justify imposition of penalty. For levy of penalty the ingredients of sec 271(1)(c) pshould be satisfied. In the 7 ITA No.2020/AHD/2009 . Assessment Year 1992-93.
penalty proceedings there is no finding that the assessee has concealed particulars of income or furnished inaccurate particulars of income. In view of the totality of the facts and the judicial pronouncements, we are of the considered view that the CIT (A) was not right in confirming the levy of penalty. We accordingly direct the deletion of penalty.
9. In the result, the appeal of the Assessee is allowed.
Order pronounced in Open Court on 4 - 5 - 2012.
Sd/- Sd/-
(G.C.GUPTA) (ANIL CHATURVEDI)
VICE PRESIDENT ACCOUNTANT MEMBER
Ahmedabad.
S.A.Patki.
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals)-XVI, Ahmedabad.
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad.
8 ITA No.2020/AHD/2009
. Assessment Year 1992-93.
1.Date of dictation 25 - 3 -2012
2.Date on which the typed draft is placed before the Dictating 2 / 5 / 2012 Member................Other Member................
3.Date on which the approved draft comes to the Sr.P.S./P.S 2 - 6 -2012.
4.Date on which the fair order is placed before the Dictating Member for pronouncement 4 - 5 -2012
5.Date on which the fair order comes back to the Sr.P.S./P.S 4 - 5 -2012
6.Date on which the file goes to the Bench Clerk 7 - 5 -2012.
7.Date on which the file goes to the Head Clerk.............
8.The date on which the file goes to the Asstt. Registrar for signature on the order........................
9.Date of Despatch of the Order.................