Income Tax Appellate Tribunal - Ahmedabad
Matra Ahar Pvt.Ltd.,, Surat vs Assessee on 17 October, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH
Before: Sri Anil Chaturvedi, Accountant Member
and Shri Kul Bharat, Judicial Member
ITA No. 2082/Ahd/2010
Assessment Year 1999-2000
Matra Ahar Pvt. Ltd, ITO,
34, Swaminarayan Ward-1(3),
Industrial Estate, Village Vs Surat
Tanyithiaya, Tal. Palsana, (Respondent)
Dist. Surat
PAN: AABCM 5106 F
(Appellant)
Revenue by: Sri Roopchand, Sr.D.R.
Assessee by: Sri G.C. Pipara, A.R.
Date of hearing : 22-09-2014
Date of pronouncement : 17-10-2014
आदे श/ORDER
PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:-
This is the assessee's appeal against the order of Ld. CIT(A)-I Surat dated 28-04-2010 for A.Y. 1999-2000.
2. The facts as culled out from the material on record are as under. I.T.A No. 2082/Ahd/2010 A.Y. 1999-2000 Page No 2 Matra Ahar Pvt. Ltd. vs. ITO
3. Assessee is a company stated to be engaged in the business of manufacturing of bread. In this case, the assessment was framed u/s. 143(3) r.w.s. 147 vide order dated 08-11-2003 and the total income was determined at Rs. 13,52,853/- before the adjustment of unabsorbed business losses. While framing the assessment, following additions were made:
i). Addition of Rs. 7,78,000/- u/s. 69 being the amount found credited in Hind Roadways Ltd in the name of assessee
ii). Commission of Rs. 2,27,432/-
iii). Disallowance of salary expenses of Rs. 26,130/-
iv). Addition of Rs. 1,39,471/- being the difference in balance of two parties as per diary and books of accounts On the aforesaid addition of Rs. 12,63,028/-made by AO, AO vide penalty order dated 27th March, 2006 levied penalty of Rs. 4,09,862/- u/s. 271(1)(c) of the Act.
4. Aggrieved by the penalty order of AO, Assessee carried the matter before Ld. CIT(A) who vide order dated 28-04-2010 dismissed the appeal of the assessee. Aggrieved by the order of Ld. CIT(A), Assessee is now in appeal before and has raised the following ground:
"The Ld. CIT(A) has erred in confirming the penalty order passed by the AO levying penalty of Rs. 4,09,862/- u/s. 271(1)(c) of the Act without proper appreciation of the facts, submissions and legal position as well as arguments put forth in the written submissions filed during the course of appeal. In view of the facts and submissions filed, the impugned penalty of Rs. 4,09,862/- requires to be deleted/cancelled."
5. Before us, Ld. AR submitted that against the quantum addition made by the AO and which was confirmed by Ld. CIT(A), Assessee had I.T.A No. 2082/Ahd/2010 A.Y. 1999-2000 Page No 3 Matra Ahar Pvt. Ltd. vs. ITO preferred an appeal before Hon'ble Tribunal. He submitted that Hon'ble Tribunal vide order dated 21/07/2006 (ITA No. 1688/Ahd/2004) dismissed the appeal of Assessee as none had appeared at the time of hearing of the appeal. Against the dismissal of ex-parte appeal, Assessee preferred a MA. He pointed out that MA No. 293/Ahd/2009 was decided on 02-03- 2007 where though in the body of the order, it was stated that the order dated 21-07-2006 is recalled and the registry was directed to fix the matter for hearing but inadvertently in the conclusion it was stated that assessee's MA is dismissed. Assessee was therefore under a bonafide belief that the ex-parte order has been recalled but later on inquiry it is Assessee's submission that it was informed that the MA No. 293/Ahd2009 has been treated as dismissed. Assessee thereafter again preferred MA but the same was also dismissed vide order dated 02-02-2011 for the reason that the MA by the assessee has been made beyond the time limit prescribed u/s.254(2) of the Act. He pointed to the copies of the order placed at page no. 11 to 16 of the paper book. He therefore submitted that though assessee wanted to challenge the quantum proceedings but due to technical reasons, quantum appeals were dismissed. With respect to the additions made by the AO, he submitted that assessee had furnished the replies during the course of assessment proceedings but since the same were not found to be acceptable the additions were made. He further submitted that merely because additions have been confirmed in quantum proceedings, it is not necessary that penalty should be levied as penalty proceedings and assessment proceedings are distinct and separate. He further placed reliance on the decisions in the case of Banaras Textorium vs. CIT (1988) 169 ITR 782(All.), in the case of CIT vs. Dharmchand L. Shah (1993) 204 ITR 462 (Bom), and in the case of National Textile Corporation vs. CIT (2000) 164 CTR 209 (Guj). He also placed reliance on the decisions in the case of ITO vs. Smt. Pramilla Pratap Shah [2006] 100 I.T.A No. 2082/Ahd/2010 A.Y. 1999-2000 Page No 4 Matra Ahar Pvt. Ltd. vs. ITO ITD 160 (Mum), in the case of Shiv Lal Tal vs. CIT (2001) 251 ITR 373 (Rajasthan High Court), and in the case of Sheraton Apparels vs. ACIT [2002] 256 ITR 20/123 Taxman 238 (Bom.). Ld. DR on the other hand supported the order of AO and Ld. CIT(A).
6. We have heard the rival submissions and perused the material on record. In the present case on the additions made during the course of assessment proceedings, penalty u/s. 271(1)(c) has been levied by AO. Before us, it is ld. AR's submission that though the assessee wanted to challenge the addition made during the quantum proceedings, but the appeal of the assessee was dismissed due to technical reasons and in such circumstances the non-filing of appeal cannot be considered against the Assessee. As far as penalty u/s. 271(1)(c) is concerned, in the present case, we find that assessee had furnished explanation during the course of assessment proceedings and the explanations submitted by the assessee have not been found to be false. It is settled law that penalty proceedings and assessment proceedings are two independent proceedings and the penalty order cannot be solely based on the reasons given in the original order of assessment. Further apart from the falsity of the explanation given by the assessee, the Department must have before it before levying the penalty, cogent material or evidence from which it could be inferred that assessee has consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars of income. It is well settled that the parameters of judging the justification for addition made in the assessment case of the asssessee is different from the penalty imposed on account of concealment of income or filing inaccurate particulars of income and that certain disallowance/addition could legally be made in the assessment proceedings on the preponderance of probabilities but no penalty could be imposed u/s. 271(1)(c) of the Act on the preponderance I.T.A No. 2082/Ahd/2010 A.Y. 1999-2000 Page No 5 Matra Ahar Pvt. Ltd. vs. ITO of probabilities and Revenue has to prove that the claim of expenses by the assessee was not genuine or was inflated to reduce its tax liability. Further merely because additions have confirmed in appeal or no appeal has been filed by assessee against additions made, it cannot be the sole ground for coming to the conclusion that assessee has concealed any income. Considering the aforesaid and peculiar facts of the case, we are of the view that in the present case no case for penalty has been made out. We thus direct the deletion of penalty.
7. In the result, this appeal of the assessee is allowed.
Order pronounced in open court on the date mentioned hereinabove at caption page Sd/- Sd/-
(KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 17/10/2014 ak
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद