Income Tax Appellate Tribunal - Agra
Haryana Delhi Tpt Commission Agency vs Asstt. Cit on 21 June, 2000
Equivalent citations: (2001)72TTJ(AGRA)189
ORDER
Phool Singh, J.M. These two appeals of the assessee are directed against common order dated 30-3-1995, recorded by the Commissioner (Appeals)-I, Agra, by which penalties imposed by the assessing officer (hereinafter referred to as the assessing officer) under section 271(1)(c) of the Income Tax Act, 1961, for assessment years 1983-84 and 1984-85 were confirmed in part.
2. Facts, relevant in both the appeals, are identical. It may be seen that assessee filed return of income for assessment year 1983-84 showing income from commission earned by booking goods for transportation. A search and seizure operation took place on 5-1-1983, at the business premises of the assessee-firm and at the residence of partners in which alleged incriminating documents were found and seized. The assessing officer proceeded to examine the source of income of the assessee and first head was "Income from commission". On the basis of serial No. 13 of seizure memo, the assessing officer noted that said paper was from April, 1982, to March, 1983, and on the last page assessee had mentioned that it was for income-tax purposes. Serial No. 35 of the seizure memo was also looked into which contained datewise account of the number of trucks booked on a particular day. He examined this serial No. 35 with the commission receipt book (serial No. 2 of seizure memo) and noted that number of trucks booked as per serial No. 35 were much more than that shown in the commission receipt book. He gave certain instances and called upon the assessee to explain the reason of variation. The assessee submitted that some of the bookings of the trucks mentioned in serial No. 35 were that is why commission receipt book was containing lesser number of trucks. The assessing officer did find some force in the contention of the assessee that some of the trucks were repeated on subsequent dates but he was of the opinion that it is possible that truck may go to Delhi and come back on that very day and ready for business on subsequent date. He also noted that commission charged was between Rs. 30 to Rs. 40 and some time it was Rs. 23 or Rs. 24 but he took average of Rs. 34 and worked out the income from commission at Rs. 1,57,487 after deducting the total expenses claimed in profit & loss account. The assessing officer also noted that assessee had not shown any income from Gitti business and commission income from transporting of Gitti. He considered serial No. 3 which was ledger maintained for purchase and sales of Gitti and the amount was being credited in the name of truck owners and debited in the name of contractor/Gitti purchaser. From details it was noted that there were some differences ranging between Rs. 25 to Rs. 100 in the amount so credited and debited. The assessing officer concluded that assessee was earning income from this business and he estimated it at Rs. 20,000. About commission income from transportation of Gitti the assessing officer noted that book No. 3 of seizure memo was for the period 2-2-1983, to 31-3-1983, and book No. 4 was for the period November, 1982, to March, 1983. He also took into consideration serial No. 35 of seizure memo and then noted that assessee was earning commission income from transportation of Gitti. In this connection explanation of assessee that no such income was being earned by assessee-firm, was not found convincing even though assessee gave out the list of truck owners and purchasers who stated in their respective confirmation letters that no such commission was being paid to the assessee. The assessing officer worked out the income at Rs. 2,80,000.
2.1. The assessing officer also initiated proceedings for penalty under section 271(1)(c) after serving a show-cause notice. The assessee submitted that assessee had only one source of income i.e. commission agency of transportation of goods from Agra to Delhi and no other income was being earned by it. In this connection reference to the statements of Maya Prakash Goyal, Prakash Chand Goyal and Raj Pal Kohli, contractors, recorded during assessment proceedings by assessing officer were also referred to in which each of them stated that assessee was not being paid any commission income for transporting Gitti. The submission was that assessee-firm was doing this work for the convenience of contractors as once a truck was going with Gitti, on return trip the assessee was getting commission for transportation of goods of others in those return trips and earning commission income and not from transportation of Gitti. The assessing officer asked the assessee as to why this plea was not taken at the time of assessment. It was submitted that case was not properly represented before the assessing officer and Commissioner (Appeals) and further penalty proceedings are distinct proceedings in which any new ground can be taken and reference was made to the decision of jurisdictional High Court in the case of CIT v. Mahendra Singh (1983) 139 ITR 160 (All) and Banaras Taxtorium v. CIT (1988) 169 ITR 782 (All). Ratio of these cases was not found applicable in the facts of the present case and assessing officer placed reliance on p. No. 38 of serial No. 30 of seizure memo and noted that assessee was preparing different figures for income-tax purpose. Other facts noted by assessing officer was the finding in the assessment order on book note at SI. No. 4 of seizure memo and concluded that assessee was having commission income from transportation of Gitti and income from that business. He took into consideration that no doubt amount of income stood reduced by Commissioner (Appeals) and further by Tribunal but fact remains that what source of income stood confirmed and that showed that assessee had concealed the main source of income. The plea of the learned counsel for the assessee that income was assessed on the basis of estimate by assessing officer, by Commissioner (Appeals) and by Tribunal, did not bring any result of the plea that concealment was found proved when it was proved that there was income and not disclosed in the return by the assessee. The assessing officer took into consideration the ratio of the decision of Rajasthan High Court in the case of CIT v. Chandra Pd. Khaitan (1979) 120 ITR 314 (Raj) in which it was concluded that once appellate authority confirms the addition in quantum that will be good piece of evidence for holding the assessee liable to penalty under section 271(1)(c). The assessing officer levied a penalty of Rs. 2 lakh for assessment year 1983-84.
2.2. Facts in assessment year 1984-85 were identical and penalty was imposed by the assessing officer at Rs. 1,07,000.
2.3. The assessee challenged both the penalty orders before the Commissioner (Appeals). It was submitted before the Commissioner (Appeals) that no penalty was leviable because income determined from various sources was on estimate at all the three levels, viz., assessing officer, Commissioner (Appeals) and Tribunal. This plea was rejected by the Commissioner (Appeals) after noting that even best judgment assessment can also give rise to penalty under section 271(1)(c) and in the case in hand facts stand proved on record that assessee had concealed bare facts by which it can easily be inferred that assessee was concealing the source of income as well as the real income from commission. It was also the case of the assessee that all the contractors and truck owners who were doing business in sale and purchase of Gitti have denied through their confirmation letters as well as in their statements recorded by assessing officer that no commission was being paid to the assessee-firm. The learned Commissioner (Appeals) was of the opinion that such argument will be of no help to the assessee as addition stands confirmed before the Tribunal level and that became final. He took into consideration the finding recorded during assessment proceedings and concluded that assessee was having three sources of income out of which assessee had shown one source of income and that too at a very lesser amount and additions in all the three sources of income stood confirmed upto the Tribunal and thus penalty was leviable in all the three counts except an amount of Rs. 15,000 on which no penalty was found leviable as it was Commissioner (Appeals) in quantum appeal who made the addition of Rs. 30,000 out of extra labour charges received by the assessee which was reduced by the Tribunal to Rs. 15,000 and remaining penalties were confirmed.
2.4. Aggrieved, the assessee is in appeal before the Tribunal.
3. The learned counsel for the assessee has pointed out that detailed written submissions were made before the assessing officer as well as before the Commissioner (Appeals) who have not taken into consideration all the factual position. Copy of written submissions made before the assessing officer is appearing at pp. 30 to 42 of the paper-book in which it was submitted that assessee was being assessed from assessment year 1980-81 onwards and till 1982-83 the assessee was showing one source of income from transport of goods from Agra to Delhi and being assessed on the negligible increased returned income. In assessment years 1983-84 and 1984-85 alone there was finding of assessing officer that assessee was having two other sources of income but in assessment year 1985-86 onwards the assessee was showing only one source of income from transportation of goods and up to assessment year 1988-89 the same income was being assessed. The other plea of the learned counsel was that assessing officer has taken wrong inference out of seized material. If assessee had marked at last page of Sl. No. 13 of seizure memo that figures were for income-tax then there was no bad intention of the assessee. Further, SI. No. 35 was register for availability of trucks for loading. The assessing officer wrongly inferred that number of trucks mentioned in the register were actually giving out the number of bookings. The other plea was that assessing officer as well as Commissioner (Appeals) have taken note of the seized material and allowed the expenses as shown in SI. No. 13 of the seizure memo and once figures of expenses are taken as correct then income shown in that register has to be given effect and assessing officer or Commissioner (Appeals) were not justified to work out the income on estimate basis. It was also the case of assessee that case was not properly represented before the assessing officer or before the Commissioner (Appeals) as well as before the Tribunal but addition confirmed upto the Tribunal will not be going to affect the fate of penalty proceedings as they are different and distinct from assessment proceedings and findings of assessment order may be relevant but not conclusive and assessee was at liberty to prove all the facts and to lead all evidence as laid down in the case of Banaras Taxtorium v. CIT (supra). It was also submitted that assessing officer completed the assessment order in 12 days for assessment year 1983-84 comprising of three dates of hearing and that is why the assessee could not represent the case and lead the evidence.
3.1. It was also submitted that the assessment was framed on the basis of estimate. Admittedly in assessment year 1983-84 the assessee returned income of commission on transport of goods at Rs. 41,930. The assessing officer assessed the same at Rs. 1,57,483 which was restricted to Rs. 1,31,590 by Commissioner (Appeals) and at Tribunals level it remained at Rs. 1,11,594. Further, assessing officer worked out income from Gitti business and commission on transportation of Gitti at Rs. 3 lakh which was restricted to Rs. 1,91,340 lakh by Commissioner (Appeals) and by Tribunal it was restricted to Rs. 1.40 lakh. In the same way in assessment year 1983-84 it was matter of estimate by assessing officer against returned income but Commissioner (Appeals) instead of assessing three sources of income, confirmed one source and Tribunal also reduced such estimated income substantially to Rs. 1.75 lakh as against Rs. 4.90 lakh by the assessing officer. In such cases the contention of the learned counsel was that no penalty is leviable as it was a matter of estimate and there is no specific finding about actual figure of concealment.
3.2. The learned counsel submitted on merit that no addition was warranted. About commission on transportation of goods the assessees case was that SI. No. 13 of the seizure memo is the basis for making addition by assessing officer. This was the book containing day-to-day income as well as expenditure but assessing officer and Commissioner (Appeals) admitted the correctness of expenses claimed by the assessee and strangely enough rejected the income shown by the assessee while under section 132(4A) of the Act all the entries in SI. No. 3 was to be taken as correct. In the same way income from Gitti business was on the basis of estimate at Rs. 20,000 by assessing officer and the Tribunal restricted to Rs. 5,000 but there was no basis and entry was of that amount which was being given by the assessee to the employees of purchasers to keep them happy. About commission income from transportation of Gitti the learned counsel submitted that there was no entry in the note book that assessee ever received commission from trucks used for bringing Gitti from Delhi. The assessee gave out all the names of owners of the Gitti, names and addresses of contractors as well as truck operators who were carrying on the business of Gitti along with their confirmation letters that no commission was being paid to the assessee. A request was made to the assessing officer as well as to the Commissioner (Appeals) that they can summon all of them at the expenses of assessee but no action was taken by the assessing officer. Reference to page No. 37 containing such request to assessing officer was made and further the same request was made to Commissioner (Appeals) as is apparent from copy of written submissions submitted before the Commissioner (Appeals), Agra, copy of which is appearing at pp. 64 to 67 of the paper-book and in last para thereof it was submitted that the assessment record be summoned and assessee would prove that there was no entry in any of the seized material which will show that assessee was earning any income from transportation of Gitti.
3.3. Again it was pointed out by the learned counsel that it was a case of search and seizure but not a single receipt for the commission earned on transportation of Gitti nor any paper suggesting that assessee was maintaining any office at Haryana or Delhi for earning such income or having any telephone connection or staff to conduct the business or any paper regarding sales-tax registration, etc. was found nor there was any cash recovered. Not only this it was submitted that all the three partners were examined at the time of recovery of tax arrears and each of them stated not to have any improvement in their immovable property. All these facts were pointed out by the learned counsel to prove that if there had been such income it should have been visible in one form or the other.
3.4. On these facts it was submitted that there was no justification for making additions and even if additions were there in assessment proceedings, there is no justification at all for levy of penalty as assessee had made out a plausible case and thus in similar circumstances no penalty was found leviable by jurisdictional High Court in the case of CIT v. Garg Engineering Co. (1999) 235 ITR 451 (All). Other case referred to by the learned counsel for the assessee is that of CIT v. Hari Ram Sri Ram (1987) 167 ITR 578 (All) in which it was concluded that mens rea is to be proved in spite of the fact that Explanation to section 271(1)(c) had been added. In the case in hand the department has not proved that fact. Again reliance was placed on the decision of Calcutta High Court in the case of CIT v. Bhuramal Manickchand (1980) 121 ITR 840 (Cal) in which it was laid down that burden is on the department to prove that assessee is liable to penalty and there must be some positive cogent material or evidence. If only evidence is an explanation submitted by the assessee which has been found to be false, that is not sufficient material for attracting the penal provision as finding of assessment proceedings may be prima facie evidence but not conclusive and no penalty can be imposed solely on such findings. On the basis of it, it was submitted that in the case in hand the assessing officer had not brought any thing except finding of assessment proceedings and thus penalty was not leviable.
4. The learned Departmental Representative placed reliance on the order of assessing officer as well as Commissioner (Appeals). It was submitted that in the present case the assessment had been framed on the basis of material on record and all the three sources of income stood confirmed up to the Tribunal which is the last fact-finding forum. From the perusal of the order of the Tribunal it appears that assessee was having three sources of income and only one out of them was shown and that indicated the factum of concealment and furnishing of inaccurate particulars and the assessing officer was justified to levy of penalty. Explanation given by the assessee was not bona fide and that was against the seized material. The difference was very much in the returned income from the commission earned on transportation of goods and in the seized material and that difference was substantial one. The learned Departmental Representative also placed reliance on the case laws in the cases of Samunder Bhan Sadh v. CIT (1991) 188 ITR 638 (All), CIT v. Mahavir Prasad Jawahar Lal (1991) 191 ITR 271 (All); and Madras Bangalore Transport Co. v. CIT (1991) 190 ITR 679 (Bom). So far as first two case laws, cited by the learned Departmental Representative are concerned that is in respect of cases where Explanation 1 to section 271(1)(c) was made applicable and last case is in respect of search and seizure case and in that case penalty was found leviable.
5. We have considered the rival submissions and perused the record carefully. Undisputedly it is a case of search and seizure and previous history of the assessee reveals that assessee was being assessed from assessment year 1980-81 to the present assessment years for only one source of income and as submitted by assessee and not controverted from revenue, the assessment in subsequent years also is in respect of one source of income. It is also undisputed fact that assessee was being assessed on substantially returned income for earlier years and subsequent years. In these two assessment years, the first addition is in respect of income from commission on transportation of goods, main source of assessee. Against returned income of Rs. 40,930, the assessing officer assessed at Rs. 1,57,483 for assessment year 1983-84 and ultimately it stood confirmed at Rs. 1,11,594. In the same way for assessment year 1984-85 the assessee returned commission income on transportation of goods at Rs. 40,000. The assessing officer assessed it at Rs. 1,82,671 which was reduced substantially by the Tribunal. About new source of income viz., income from Gitti business and commission on transportation of Gitti from Haryana the assessing officer had assessed at Rs. 3 lakh in assessment year 1983-84 and Commissioner (Appeals) restricted it and ultimately all the sources of income were restricted to Rs. 1.75 lakh by the Tribunal as noted by the Commissioner (Appeals) in the impugned order. So far as first source of income is concerned, the explanation of the assessee is that assessing officer had wrongly taken serial No. 35 as the register of showing booking of the trucks while in fact it was register of availability of trucks for loading. The other plea was that some of the books were cancelled. This fact is also getting corroboration from the observation of assessing officer in assessment order itself that in some cases number of trucks were being utilised on subsequent dates but he did not agree with the assessee as trucks may go after doing their business from Delhi on that very day. Whatever may be the fact the assessee was able to make it a plausible case that serial No. 35 was register of the availability of trucks and there was some logic in the plea that some of the bookings of trucks were cancelled. This creates high doubt. Undisputedly legal position as it stands now is that penalty proceedings are quite distinct and separate. Assessee is supposed to prove its innocence by leading any type of evidence he likes in penalty proceedings. In the case in hand no doubt assessment had been completed and addition stands confirmed on mere estimate basis up to Tribunal stage but that fact will not be conclusive so far as penalty proceedings are concerned. It is also settled proposition of law that penalty proceedings are quasi-criminal in nature and charge is to be proved to the hilt and in the case in hand assessee had been able to make the cracks in the very addition. There may be justification for addition but so far as penalty proceedings are concerned they have to be examined strictly and it assessee is able to make a probable and plausible case then as laid down in the case of CIT v. Garg Engineering Co. (supra) that standard of proof for imposition of penalty is different from that on which addition of an income on the quantum side could be sustained and where assessee is found to have plausible case and there could legitimately be two opinions about it then no case for penalty. Assessee as noted above has been able to make out a plausible case that Sl. No. 35 of seizure memo was register of availability of trucks and there were cancellation of bookings and these facts have not been rebutted by assessing officer or by Commissioner (Appeals) in penalty proceedings. So far as other two additions are concerned, the main addition was income from commission from transportation of Gitti on contract. The assessees case is very simple that it was maintaining ledger which was found during the search and in that register assessee was containing two portions. In first portion assessee was crediting the truck owners with the amount of Gitti and in other side debiting the account of purchaser of Gitti. It was being done by the assessee on behalf of those persons who were doing Gitti business and the only reason for helping those persons was that whenever truck was coming to Agra with Gitti assessee was getting commission for its booking in return trip and for getting good business, assessee was keeping an the contractors in cordial way. The main plea was that assessee was not earning any commission income from transportation of Gitti and to prove that fact he gave out the list of eight contractors with their addresses and names of eight truck operators with their addresses to assessing officer in assessment proceedings and also filed certificate from each of them. Copies of such certificates are appearing at pp. 43 to 61 of the paper-book. Each of them has stated that Gitti business was their own but being done through assessee-firm. To examine the authenticity of such certificates the assessing officer examined three of them who supported the contents of certificates but their testimony was rejected on the ground that they were not maintaining any account. In penalty proceedings the assessee again requested the assessing officer to examine all the contractors and truck owners in respect of their certificates but assessing officer or the Commissioner (Appeals) did nothing in that way. These certificates as well as one affidavit of partner Om Prakash, copy of which is appearing at pp. 68 to 72 goes unchallenged and unrebutted. From these facts the conclusion is that there was specific version of contractors and truck owners that no commission was being paid to assessee-firm. No evidence from assessing officers side that assessee was earning any income. The plea of the assessee was that no material was found at the time of search indicating any business of assessees earning commission income from transportation of Gitti. No immovable property of partners was detected nor cash was found at the time of search. Further, assessee had come out with specific plea before the Commissioner (Appeals) during proceedings that assessment record be summoned so that assessee may prove and establish that assessee had only one source of income but that prayer was also not accepted. The evidence of assessee in the absence of any rebuttal remains intact and at least create a probable case that assessee may be not earning any commission income from transportation of Gitti or from its business. Assessing officer except placing reliance on the assessment order had not brought any other material on record and finding of assessment order are not conclusive but only relevant. In the absence of any other corroborative evidence assessee at least had been able to make out a plausible case and if we examine with the standard of proof required to levy penalty the evidence from the department which is nothing but finding in the assessment proceedings, are not sufficient to conclude that assessee had concealed or suppressed his income. Thus, penalty was not leviable merely on the basis of addition sustained in quantum proceedings. Accordingly, orders of the Commissioner (Appeals), confirming penalty under section 271(1)(c) of the Act, for both the assessment years under consideration are set aside and penalties levied under section 271(1)(c) of the Act stand cancelled.
6. In the result, both the appeals are allowed.