Income Tax Appellate Tribunal - Ahmedabad
Parle International Pvt. Ltd.,, ... vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "A", AHMEDABAD
Before Shri Bhavnesh Saini,JM & Shri A.N. Pahuja, AM
ITA No.1084/Ahd/2006
(Assessment year 1990-91)
ACIT Circle-5 vs Parle International Ltd
Ahmedabad 101, GIDC Estate, Vatva
Ahmedabad
[PAN : AAAC9018Q]
(Appellant) (Respondent)
Revenue by : Shri Govind Singhal, DR
Assessee by : Shri JP Shah, AR
ORDER
A.N. Pahuja : This is an appeal by the Revenue against an order dated 10-02- 2006 of the ld.CIT(A)-XI, Ahmedabad, cancelling penalty of Rs. 4,60,960/- levied u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as the Act).
2. Facts, in brief, as per relevant orders are that the return declaring income of Rs. 2,12,22,297/- was filed on 31-12-1990 by the assessee, manufacturing mango pulp and non alcoholic beverages. The assessment was subsequently completed u/s 143(3) of the Act on an income of Rs.5,31,23,056/- vide order dated 26-03-1993. Inter alia, an addition of Rs. 8,53,630/- was made on account of suppression of profits in the Chitoor Unit on the ground that percentage of yield was lower[44.71%] as against 48.77% in the AY 1989-90 while in other units yield was above 45% .Accordingly, the Assessing Officer[AO in short] applied yield of 45% and added the aforesaid amount. On appeal, the ld. CIT(A) deleted the addition,the AO having not pointed out any defects in the books while the difference between 44.71% & 45% was very narrow. On further appeal by the Revenue, the ITAT vide order dated 29-08-2000,inter alia, set aside the issue of addition on account of yield to the file of the AO. In the subsequent assessment completed vide order dated 18-03-2002, the AO made an addition of Rs.50,18,230/- on account of suppression in sales, the assessee having not furnished the details desired by the AO, considering the yield of 46.5% of the 2 ITA No.1084/Ahd/2006 mango pulp as reasonable. On appeal, the ld.CIT(A) restricted the addition to Rs. 8,53,630/- in the light of decisions relating to powers of enhancement by the ITAT on remand, thereby upholding the estimate of yield of 45% made by the AO in the original assessment. On appeal, the ITAT vide their order dated 19-12- 2008 in ITA No.1723/Ahd/2004 directed the AO to adopt the yield of 45%. Meanwhile, in response to a show cause notice dated 16-02-2005 issued before levy of penalty, according to the AO, the assessee did not furnish any reply. In the absence of any explanation, the AO imposed a penalty of Rs. 4,60,960/- @100% of the tax sought to be evaded on the amount of Rs.8,53,630/- upheld by the ld.CIT(A) .
3. On appeal , ld.CIT(A) cancelled the penalty, inter alia, on the ground that the two appellate authorities had expressed different opinions on the issue. The findings of the ld. CIT(A) are as under:
"4. I have perused the submissions and the decisions, referred to above, as relied upon by the AR of the appellant carefully. I have also perused the observations of the assessing officer in the penalty order.
4.1 It is seen that the appellant had filed reply to the penalty notice issued by the A.O. It appears this was not noticed by the A.O. and therefore, he was under the impression that the appellant did not file any reply to penalty notice issued by him calling for an explanation.
4.2 Further, it is seen that when there was an appeal at the time of first round of assessment, the appellant had favourable order. Whereas, at the time of second round of appeal before CIT(A) against the second round assessment, some relief was granted by CIT(A) and some addition was confirmed. The penalty levied, which is the subject matter of appeal now is against above such confirmed part of addition. Therefore, the same issue was decided by the two appellate authorities of the same rank differently at different occasions.
4.3 Therefore, considering all the facts and circumstances of the case and also after perusing the case laws cited by the AR, I am of the opinion that the alleged addition which was confirmed in part by the CIT(A) does not conclusively prove that the appellant had 3 ITA No.1084/Ahd/2006 concealed any income or furnished inaccurate particulars. Hence, I am constrained not to accept the A.O's decision with regard to levy of penalty."
4. The Revenue is now in appeal before us against the against the aforesaid findings of ld.CIT(A). The ld. DR supported the order of the AO while the ld. AR on behalf the assessee supported the findings of the ld. CIT(A).
5. We have heard both the parties and gone through the facts of the case. Undisputedly, reply dated 07-02-2005 of the assessee received in the office of ACIT on 08-02-2005 has not been considered by the AO. Since the AO imposed penalty without considering the explanation of the AO, ordinarily ,we would have restored the matter to the file of the AO. However, this matter being quite old relating to the AY 1990-91, considering the facts and circumstances of the case as also the ld. CIT(A) having considered the explanation of the assessee, no useful purpose would be served in remanding the matter at this stage. Undisputedly, penalty for furnishing inaccurate particulars of income has been imposed on the basis of estimated addition of Rs. Rs. 8,53,630/-, applying the yield of 45% as against 44.71% declared by the assessee in their Chitoor unit. The expression 'has concealed the particulars of income' and 'has furnished inaccurate particulars of income' have not been defined either in section 271 or elsewhere in the Act. However, notwithstanding the difference in the two circumstances, it is now well established that they lead to the same effect namely, keeping off a certain portion of the income from the return. According to Law Lexicon, the word "conceal" means:
"to hide or keep secret. The word 'conceal' is con+celare which implies to hide. It means to hide or withdraw from observation; to cover or keep from sight; to prevent the discovery of ; to withhold knowledge of. The offence of concealment is, thus, a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities."
In Webster's Dictionary, "inaccurate" has been defined as :
4 ITA No.1084/Ahd/2006"not accurate, not exact or correct; not according to truth; erroneous ; as an inaccurate statement, copy or transcript."
5.1 The penalty u/s 271(1)(c) of the Act is leviable if the AO is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. It is well settled that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon'ble Supreme Court in the case of Ananthraman Veerasinghaiah & Co. Vs. CIT - 123 ITR 457; the finding in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in sec. 271(1 )(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. The issue as to whether or not the yield reflected by the assessee is correct is highly debatable. In the case under consideration, it is apparent that all the relevant facts have been disclosed by the assessee in the original assessment proceedings. It is well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(l)(c) are different than those applied for making or confirming the additions. When the assessee has made a particular claim in the return of income and has also furnished all the material facts relevant thereto, the rejection of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing of inaccurate particulars thereof . What is to be seen is whether the said claim made by the assessee was bona-fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s 271(l)(c) of the Act. In order to examine the case of penalty, one has primarily to see the nature of concealment, the explanation offered by the assessee, his conduct, etc. These are essentially the matters which are required to be gone into with a view to find 5 ITA No.1084/Ahd/2006 out whether or not any case as contemplated in section 271(1)(c) is made out so as to exercise the discretion of imposing the penalty on the assessee . Since all the material facts relevant to the said claim had been furnished by the assessee, in our opinion ,it is not a fit case to attract the levy of penalty u/s 271(l)(c) of the Act. A mere rejection of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars of income, by the assessee. When two views, are possible, no penalty can be imposed, is a principle that has been enunciated in the decision in the case of CIT v. P.K. Narayanan [1999] 238 ITR 905 (Ker).
5.2 In the light of aforesaid decision, especially when in the case under consideration also addition has been made merely on estimating the yield, we are in agreement with the findings of ld. CIT(A) that this is not a clear case of furnishing inaccurate particulars of income. The Hon'ble Punjab and Haryana High Court in the case of CIT v. Metal Products of India [1984] 150 ITR 714 has observed that the addition if made on estimate under the proviso to section 145(1) of the Act by adopting the view that gross profit shown in the books of account was too low, then that does not automatically lead to the conclusion that there was failure to return the correct income by means of fraud or gross or wilful neglect. The provisions of sec. 271(1)(c) of the Act are not attracted in cases where the income of an assessee is assessed on estimate basis and additions are made therein.[CIT Vs. Sangrur Vanaspati Ltd.,303 ITR 53(Punjab & Haryana) & CIT vs. Dhillon Rice Mills (2002) 256 ITR 447 (P&H)],.
5.3. In view of the foregoing, we are of the opinion that since the difference in estimates was based on a difference of opinion and there was no positive proof regarding concealment of income by the assessee, we have no hesitation in concluding that it is not a case fit for levy of penalty u/s 271(1)(c) of the Act Accordingly, we uphold the findings of the ld. CIT(A). Therefore, ground no.1 dismissed.
6 ITA No.1084/Ahd/20066. Ground nos. 2 & 3 in the appeal, being general in nature, do not require any separate adjudication and are, therefore, dismissed.
7. In the result, appeal is dismissed Order pronounced in the open court, on this 19th day of March, 2010.
Sd/- Sd/-
(Bhavnesh Saini) (A.N. Pahuja)
Judicial Member Accountant Member
Ahmedabad,
Dated :19th March, 2010
Copy to:
1. The assessee
2. ACIT Circle-5, Ahmedabad
3. CIT(A)-XI, Ahmedabad
4. CIT-concerned, Ahmedabad By order
5. DR, "A" Bench
Deputy Registrar, ITAT, Ahmedabad