Income Tax Appellate Tribunal - Ahmedabad
Vasant C.Soni, Baroda vs Department Of Income Tax on 22 March, 2006
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH - AHMEDABAD
(BEFORE S/ SHRI BHAVNESH SAINI, JM AND A. N.PAHUJA, AM)
ITA No.1413/Ahd/2006
A. Y.: 2002-03
The A. C. I.T., Circle-5, Vs Shri Vasant C. Soni,
Baroda B/4, Raghunath Society,
Nr. Nutan Saurabh Hosing
Society, Opp. Vijay Nagar,
Harni Road, Baroda
PA No. AJMPS 8862K
(Appellant) (Respondent)
Appellant by Smt. Neeta Shah, DR
Respondent by None
ORDER
PER BHAVNESH SAINI: This appeal by the Revenue is directed against the order of the learned CIT(A)-V, Baroda dated 22-03-2006 for assessment year 2002-03 challenging the cancellation of penalty u/s 271 (1) ( c ) of the IT Act on the following grounds:
"1. On the facts and in the circumstances of the case, the learned CIT(A) erred in canceling the penalty of Rs.16,34,000/- imposed u/s 271 (1) ( c ) read with Explanation 1.
2. The learned CIT(A) failed to take note of the decision of the apex court in the cases of B. A. Balsubramaniam and Brothers Co. VS CIT (1999) 236 ITR 977, 978 (SC); CIT Vs Mussadilal Ram Bharose (1987) 165 ITR 14, 20 (SC); CIT Vs K. R. Sadyappan (1990) 185 ITR 49 (SC);
CIT (Addl.) Vs Jeevan Lal Shah (1994) 205 ITR 244 (SC) and K. P. Madhusudana Vs CIT (2001) 251 ITR 99 (SC), laying down that after the omission of the word 'deliberately' in section 271 (1) ( c ) and insertion of the Explanation w. e .f. 01-04-1964, the onus in case of any In ITA No.1413/Ahd/06 2 Shri Vasant C. Soni addition is on the assessee to prove that the same does not involve concealment.
3. The learned CIT(A) erred in deleting the penalty on the ground that it was a best judgement assessment in which the income was determined by estimate, without appreciating that Explanation 1 to section 271 (2) ( c ) takes care of such situation as settled in the case of CIT Vs T.J. Mathai 269 492 (Ker) and CIT Vs Smt. Shakuntala Devi 270 ITR 590 (Raj)."
2. We have heard the learned DR and perused the findings of the authorities below. However, none appeared on behalf of the assessee despite service of the notice through registered post. We may also note that earlier the learned Counsel for the assessee was appearing in this case. But he withdrew his power of attorney on behalf of the assessee. It would, therefore, show that the assessee is not interested in defending the appeal. The assessee is, therefore, proceeded ex-parte.
3. Briefly, the facts of the case are that return of income for the assessment year under appeal was filed showing total income of Rs.7,90,149/-. The assessee did not cooperate with the AO and the statutory notices remained un-complied for. The AO noted that despite giving several opportunities the assessee did not produce regular books of accounts and details of the expenditure. Therefore, book results could not be verified and that genuineness of the expenditure in several crores could not be subjected to verification. The AO accordingly applied the NP rate of 8% and made the addition accordingly by passing ex-parte assessment order u/s 144 of the Act. Penalty proceedings were also initiated u/s 271 (1) ( c ) of the IT Act. It was submitted at the penalty stage before the AO that the assessee has not received any assessment order and did not file any reply before the AO at the penalty stage. The AO accordingly imposed penalty vide separate order.
In ITA No.1413/Ahd/06 3Shri Vasant C. Soni
4. It was submitted before the learned CIT(A) that there is no material on record to indicate that the assessee furnished inaccurate particulars of income and that the learned CIT(A) on quantum has reduced the addition. It was, therefore, prayed that on estimate of income penalty should not have been imposed. The learned CIT(A) considering the above fact and the fact that it is a case of estimate of income only, deleted the penalty by holding that no positive evidence has been brought on record to show that the assessee has deliberately claimed excess expenditure. Penalty was accordingly cancelled.
5. The learned DR referred to the assessment order passed u/s 144 of the IT Act and submitted that the assessee failed to produce books of accounts before the AO on any of the date of hearing and that the assessee claimed expenditure in several crores of which the genuineness of the same could not be subjected to verification because the assessee did not produce any details before the AO. The learned DR submitted that similar is the position before the AO at the penalty stage where the assessee has not explained anything in response to the show cause notice in the penalty matter. The learned DR, therefore, submitted that the learned CIT(A) should not have canceled the penalty in the matter.
6. We have considered the submissions of the learned DR and gone through the material available on record. It is an admitted fact that the assessee was served with several statutory notices at the stage of the assessment, but neither the assessee nor his Counsel appeared on his behalf before the AO nor submitted any detail. The assessee claimed carting, hiring, labour charges in a sum of Rs.4,83,888/-, Rs.2,67,901/- and Rs.1,18,44,448/-. Similarly, interest was claimed in a sum of Rs.15,50,526/- and traveling expenditure of Rs.2,18,051/-. The assessee did not file any details. Therefore, genuineness of the expenditure could not be subjected to verification. The assessee also did not produce any In ITA No.1413/Ahd/06 4 Shri Vasant C. Soni books of account before the AO and no separate evidence or material was produced to prove the genuineness of the book result. At the penalty stage also the assessee did not file any reply before the AO to explain as to why penalty should not be imposed. The assessee only pleaded that he has not received any assessment order. The above facts, therefore, show that the assessee has been making non-compliance at every stage before the AO. The learned DR also filed copy of the order of the Tribunal in the case of the same assessee dated 13-10-2009 in ITA No. 1162/Ahd/2006 which shows that the appeal of the assessee was also dismissed in default of the assessee. The above facts clearly show that the assessee at every stage remained negligent and did not file any explanation to explain the issues. The learned CIT(A) instead of going into the merits of the case and non-compliance by the assessee at every stage has merely presumed that since it is a case of estimate of income, therefore, no positive evidence has been brought on record to show that the assessee has deliberately claimed excess expenditure. The findings of the learned CIT(A) are contrary to the findings given by the AO in the ex-parte assessment order. The AO has clearly brought out findings against the assessee that the assessee failed to file any detail to prove genuineness of the expenditure in Rs.1,50,00,000/- approximately, which is very major as against returned income filed by the assessee. The AO has, therefore, brought positive evidence on record that the assessee has deliberately claimed excessive expenditure. We, therefore, do not subscribe to the view of the learned CIT(A) in deleting the penalty. We accordingly set aside the order of the learned CIT(A) and restore the appeal to his file with direction to re-decide the appeal on penalty by giving reasonable sufficient opportunity of being heard to the assessee and the AO. The learned CIT(A) shall give specific finding in the penalty order considering the observation of the AO in the assessment order.
In ITA No.1413/Ahd/06 5Shri Vasant C. Soni
7. As a result, departmental appeal is allowed for statistical purposes.
Order pronounced in the open court on 26-02-2010 Sd/- Sd/-
(A. N. PAHUJA) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date : 26-02-2010
Lakshmikant/-
Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT, Ahmedabad
6. Guard File
BY ORDER
Dy. Registrar, ITAT, Ahmedabad