ACIT, Tiruppur v. M/s C.A.V.Cotton Mills (P) Ltd., Annur

ITA 1432/CHNY/2007 | 2003-2004
Pronouncement Date: 26-05-2010 | Result: Dismissed

Appeal Details

RSA Number 143221714 RSA 2007
Bench Chennai
Appeal Number ITA 1432/CHNY/2007
Duration Of Justice 3 year(s) 3 day(s)
Appellant ACIT, Tiruppur
Respondent M/s C.A.V.Cotton Mills (P) Ltd., Annur
Appeal Type Income Tax Appeal
Pronouncement Date 26-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 26-05-2010
Date Of Final Hearing 19-05-2010
Next Hearing Date 19-05-2010
Assessment Year 2003-2004
Appeal Filed On 23-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE SHRI N. BARATHVAJA SANKAR VP AND SHRI GEORGE MATHAN JM .. I.T.A. NO.52/CHNY/2010 A.Y :2003-04 DCIT COMPANY CIRCLE 121 60 FEET ROAD ADAMS BUILDING TIRUPPUR. VS. M/S.SANGEETH TEXTILES P. LTD. NO.551 GANESHAPURAM SS KULAM (VIA) ANNUR COMBATORE 641 107. (PAN NO.AACCS 7188 Q) (APPELLANT) (RESPONDENT) I.T.A. NO.1431/CHNY/2007 A.Y :2003-04 ACIT CIRCLE-I 5 COLLEGE ROAD TIRUPPUR-2. VS. M/S.SRI VASUDEVA TEXTILES LTD. NO.551 GANESHAPURAM SS KULAM (VIA) ANNUR COMBATORE 641 107. (PAN NO.AACCS 9189 B) (APPELLANT) (RESPONDENT) PAGE 2 OF 8 I.T.A. NO. 52/CHNS/2010 I.T.A. NO. 1431/1432/CHNS/07 I.T.A. NO. 1432/CHNY /200 7 A.Y :2003 - 04 ACIT CIRCLE-I 5 COLLEGE ROAD TIRUPPUR-2. VS. M/S.CAV COTTON MILLS (P) LTD. NO.551 GANESHAPURAM SS KULAM (VIA) ANNUR COMBATORE 641 107. (PAN NO.AAACC 8779 K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.BANUSEKAR DEPARTMENT BY : SHRI P.B. SEKARAN O R D E R PER GEORGE MATHAN JM THESE THREE APPEALS FILED BY THE REVENUE ARE AGAI NST THE ORDER OF CIT(A) II COIMBATORE IN APPEAL NO.308C/06-07 DT.23.03.07 CI T(A) II COIMBATORE IN APPEAL NO.310C/06-07 DT.23.03.07 CIT(A) II COIMB ATORE IN APPEAL NO.309C/06-07 DT.23.03.07 AND CIT(A) II COIMBATOR E IN APPEAL NO.308C/06-07 DT.23.03.07 FOR THE ASSESSMENT YEAR 2003-04. SHRI P.B. SEKARAN REPRESENTED ON BEHALF OF THE REVENUE AND SHRI T. BANUSEKAR ON BEHALF OF THE ASSESSEE. 2. AT THE OUTSET IT WAS SUBMITTED BY THE LD. AR TH AT IN RESPECT OF ITA NO.52/CHNY/10 THE APPEAL OF REVENUE WAS BARRED BY LIMITATION BY MORE THAN TWO YEARS. HOWEVER IT WAS THE SUBMISSION THAT HE HAD NO OBJECTION TO CONDONATION OF DELAY. AS LD. AR HAS SUBMITTED THAT ASSESSEE HAS NO OBJECTION TO THE CONDONATION OF DELAY THE DELAY IN FILING TH E APPEAL BY THE REVENUE STANDS CONDONED AND THE APPEAL IS BEING DISPOSED OF F ON MERITS ALONG WITH ITA PAGE 3 OF 8 I.T.A. NO. 52/CHNS/2010 I.T.A. NO. 1431/1432/CHNS/07 NOS.1431 & 1432/CHNS/07. AS ALL THE THREE APPEALS CONTAINED IDENTICAL ISSUES BEING THE CANCELLATION OF PENALTY U/S.271(1)(C) OF THE ACT BY THE LD. CIT(A). THEREFORE ALL THESE THREE APPEALS ARE BEING DISPOS ED OFF BY THIS COMMON ORDER. 3. IT WAS SUBMITTED BY THE LD. DR THAT ASSESSEES H AD DISCLOSED AGRICULTURAL INCOME ON ACCOUNT OF THE SALE OF TREES OF SPONTANEO US GROWTH. IT WAS THE SUBMISSION THAT THE ASSESSEES HAD DISCLOSED AGRICUL TURAL INCOME IN THE CASE OF SANGEETH TEXTILES P. LTD. TO THE EXTENT OF RS.10 25 543/- I N THE CASE OF CAV COTTON MILLS PVT LTD. TO THE EXTENT OF RS.6 95 000/- AND IN THE CASE OF SRI VASUDEVA TEXTILES LTD. TO THE EXTENT OF RS.13 00 910/-. IT WAS THE S UBMISSION THAT IN THE COURSE OF ASSESSMENT THE ASSESSING OFFICER HAD NOT ACCEPT ED THE CLAIM OF THE ASSESSEE OF THE AGRICULTURE INCOME IN THE ABSENCE OF SATISFA CTORY AND SUPPORTING EVIDENCE AND TREATED THE SAME AS INCOME FROM UNEXPL AINED SOURCE BY INVOKING THE PROVISIONS OF SEC.68 OF THE ACT. IT WAS THE SU BMISSION THAT THE ASSESSEES HAD NOT APPEALED AGAINST THE ASSESSMENT ORDER. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD LEVIED PENALTY AGAINST WHICH THE ASSESSEE HAD FILED AN APPEAL TO THE LD. CIT(A) WHO HAD DELETED THE PENAL TY LEVIED HOLDING THAT THE ASSESSEES WERE ASSESSED UNDER THE PROVISIONS OF MA T AND BY TREATING THE AGRICULTURAL INCOME AS DISCLOSED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES THE POSSIBILITY OF THE EVASION OF TAX BY APPLYING THE PROVISIONS OF MAT VARIED BETWEEN RS.54 000/- AND RS.1 02 000/- WHICH WAS AGAINST PROBABILITY ESPECIALLY WHEN THE ASSESSEES WERE PAYING TAXES BY APPLYING PROVISIONS OF MAT OF RS.15 LAKHS OR MORE. IT WAS THE SUBMISSION THAT THE ASSESSEES COULD NOT PROVE THE CLAIM OF AGRICULTURAL INCOME AND LD. CIT( A) HAD ERRED IN DELETING THE PENALTY. IT WAS THE SUBMISSION THAT THE ORDER OF THE CIT(A) WAS LIABLE TO BE REVERSED AND THE ORDER OF THE ASSESSING OFFICER RE STORED. PAGE 4 OF 8 I.T.A. NO. 52/CHNS/2010 I.T.A. NO. 1431/1432/CHNS/07 4. IN REPLY LD. AR SUBMITTED THAT IN RESPECT OF SA NGEETH TEXTILES LTD. THE LAND HOLDING WAS 210 ACRES AND THE AGRICULTURAL I NCOME DISCLOSED WAS RS.10 25 543/- AND THE TAX UNDER MAT PROVISION WAS ONLY RS.80 761/-IN RESPECT OF AGRICULTURAL INCOME DISCLOSED WHEREAS THE PENALT Y LEVIED WAS BY APPLYING A REGULAR PROVISION. IN RESPECT OF CAV COTTON MILLS P LTD. IT WAS THE SUBMISSION THAT THE LAND HOLDING WAS 205.63 ACRES AND AGRICUL TURAL INCOME DISCLOSED WAS RS.6 95 000/- AND THE TAX UNDER MAT PROVISION WAS O NLY RS.54 732/-. IN RESPECT OF SRI VASUDEVA TEXTILES LTD IT WAS THE S UBMISSION THAT THE LAND HOLDING WAS 175.205 ACRES AND AGRICULTURAL INCOME DISCLOSED WAS RS.13 00 910/- AND THE TAX UNDER MAT PROVISION WAS ONLY RS.1 02 446/-. IT WAS THE SUBMISSION THAT ASSESSEE IS NOT IN THE BUSINESS OF DOING AGRICULTURE OPERATIONS. THESE TREES WHICH WERE CUT AND SOLD WERE PURELY SPONTANEOUS GROWTH TREES WHICH COULD HAVE BEEN USED ONLY FOR F UEL AND COUNTRY WOOD. IT WAS THE SUBMISSION THAT THE INCOME OF THE ASSESSEE IN RESPECT OF AGRICULTURAL INCOME FROM THE SPONTANEOUS GROWN TREES HAD NOT BEE N ACCEPTED BY THE ASSESSING OFFICER AND THE ADDITION WAS AGREED BY TH E ASSESSEE AS THE TAX EFFECT WAS NOMINAL. IT WAS THE SUBMISSION THAT THE CLAIM OF ASSESSEE HAS NOT BEEN FOUND TO BE FALSE. IT WAS THE SUBMISSION THAT FOR THE PURPOSE OF LEVYING PENALTY U/S.271(1)(C) ASSESSEE SHOULD HAVE FAILED TO OFFE R EXPLANATION AND THE EXPLANATIONS OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR ASSESSEE OFFERS AN EXPLANATION WHICH H E IS UNABLE TO SUBSTANTIATE THEN THE PENALTY U/S.271(1)(C) OF THE ACT COULD BE LEVIED. IT WAS THE SUBMISSION THAT RIGHT FROM THE BEGINNING THE ASSESSEE HAS BEEN CLAIMING THAT IT IS NOT DOING BUSINESS OF AGRICULTURE AND THAT IT IS NOT HAVING A NY EVIDENCE TO PROVE THE AGRICULTURAL INCOME. IT WAS THE SUBMISSION THAT TH E ASSESSEE HAD RIGHT FROM THE BEGINNING STATED THAT THE AGRICULTURAL INCOME DISCL OSED BY THE ASSESSEE WAS FROM THE SALE OF THE SPONTANEOUSLY GROWN TREES AND SUCH SALE HAD BEEN MADE TO PAGE 5 OF 8 I.T.A. NO. 52/CHNS/2010 I.T.A. NO. 1431/1432/CHNS/07 THE LOCAL PEOPLE LIVING NEARBY ITSELF. IT WAS THE SUBMISSION THAT IF THE ASSESSING OFFICER HAD DOUBTED THE ASSESSEES CLAIM NOTHING S TOPPED THE ASSESSING OFFICER FROM HAVING THE SAME VERIFIED WITH THE PERSONS LIVI NG NEARBY TO THE AGRICULTURAL LANDS HELD BY THE ASSESSEE. IT WAS THE SUBMISSIO N THAT THE EXPLANATION WHICH HAS BEEN GIVEN BY THE ASSESSEE HAS ALSO FOUND ACCE PTABLE IN SO FAR AS IN PARA 4.1. OF THE ORDER OF THE CIT(A) THE LD. CIT(A) HA S ACCEPTED THAT THE CLAIM OF THE ASSESSEE IS PROBABLE. IT WAS THE SUBMISSION TH AT THIS FINDING OF THE LD. CIT(A) HAS NOT BEEN CHALLENGED BY THE REVENUE. IT WAS THE SUBMISSION THAT REVENUE HAS ONLY CHALLENGED THE FINDING OF THE LD. CIT(A) HOLDING THAT THE ADANGAL EXTRACT DID NOT SHOW THE DETAILS OF THE SP ONTANEOUSLY GROWN TREES. IT WAS THE SUBMISSION THAT LD. CIT(A) HAS DELETED THE PENALTY ON THREE ACCOUNTS BEING (I) EXPLANATION OF THE ASSESSEE IS PROBABLE AND THE ASSESSEE HAS GIVEN AN EXPLANATION (II) THE TAX IMPACT WAS VERY LOW FOR T HE ASSESSEE TO ATTEMPT AN EVASION WHICH SUPPORTED THE BONA FIDE OF THE ASSESS EE AND (III) THE ASSESSING OFFICER HAS NOT BEEN ABLE TO ESTABLISH THAT THE EXP LANATION GIVEN BY THE ASSESSEE IS FALSE. IT WAS THE SUBMISSION THAT REVE NUE HAS ONLY CHALLENGED THE DELETION OF THE PENALTY ON THE GROUND THAT ADANGAL EXTRACT DID NOT CONTAIN THE SPONTANEOUSLY GROWN TREES. IT WAS THE SUBMISSION T HAT THE OTHER FINDING OF THE LD. CIT(A) HAVE NOT BEEN CHALLENGED THE ORDER OF T HE CIT(A) WAS LIABLE TO SUSTAINED. IT WAS THE SUBMISSION THAT ADANGAL EXTR ACT DID NOT PROVIDE IN COLUMN 18(A) FOR THIS SPONTANEOUSLY GROWN TREES AND COLUMN 18(A) AS WAS BEING HARPED UPON BY THE REVENUE WAS THE COLUMN WHICH SHO WED THE NATURE OF THE AGRICULTURAL OPERATIONS AND THE AGRICULTURAL CROP WHICH WAS GROWN ON THE LAND. IT WAS THE SUBMISSION THAT THE ASSESSEE DID NOT DO ANY AGRICULTURAL OPERATION AND THE TRESS WERE SPONTANEOUS GROWTH AND THE SAME COULD NOT HAVE BEEN RECORDED IN COLUMN 18(A) OF THE ADANGAL EXTRACT. I T WAS THE SUBMISSION THAT EVEN ASSUMING THAT THERE COULD BE AN ENTRY IN THE COLUMN 18(A) OF THE ADANGAL EXTRACT THE PROOF THERETO OR THE AREA COVERED THER EOF WOULD HAVE TO BE PAGE 6 OF 8 I.T.A. NO. 52/CHNS/2010 I.T.A. NO. 1431/1432/CHNS/07 BROUGHT OUT AND IT WOULD HAVE TO BE SHOWN THAT THE ASSESSEE WAS DOING THE AGRICULTURAL OPERATIONS PER SAY WHICH IN FACT THE A SSESSEE HAD NOT DONE AND HAS ADMITTED TO HAVE EVEN NOT DONE. IT WAS THE SUBMISS ION THAT THE ADANGAL EXTRACT COULD NOT BE THE FOUNDATION FOR PROVING THE AGRICULTURAL INCOME ESPECIALLY WHEN THE ASSESSEE ITSELF HAS BEEN CLAIMI NG THAT TREES ARE SPONTANEOUS GROWTH. HE VEHEMENTLY SUPPORTED THE OR DER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSEE HAS DISCLOSED AGRIC ULTURAL INCOME IN ITS PROFIT AND LOSS ACCOUNT AND THE ASSESSEE HAS ALSO FURNISHE D THE DETAILS OF THE LAND HOLDING ALONG WITH THE COPIES OF CHITTA ADANGAL AD ANGAL EXTRACT OBTAINED FROM VILLAGE ADMINISTRATIVE OFFICER (VAO). IN THE COURS E OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS CATEGORICALLY ADMITTED THAT THE TR EES WERE OF SPONTANEOUS GROWTH IN THE WINDMILL LAND AND THE SAME WERE CUT AND SOLD TO VARIOUS PERSONS. IN THE COURSE OF ASSESSMENT THE ASSESSIN G OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE AND HAS TREATED THE AGRICULTURAL INCOME AS NON AGRICULTURAL INCOME. IN COURSE OF PENALTY PROCEEDIN GS ASSESSEE HAS CATEGORICALLY GIVEN A EXPLANATION WHEREIN THE ASSES SEES HAVE STATED THAT THE LOCAL PEOPLE LIVING IN AN AROUND THE LANDS TOOK PER MISSION FROM THE ASSESSEE TO CUT THE TREES AND SOLD THEM AS FUEL WOOD. ASSESSEE HAS ALSO IN THE EXPLANATION CATEGORICALLY ADMITTED THAT COLUMN 18(A) OF THE ADN AGAL EXTRACT FURNISHED BY THE LOCAL AUTHORITIES WOULD CONTAIN THE PERCENTAGE OF CULTIVATION OF THE LAND ALONE AND AS TREES WERE SPONTANEOUS GROWTH LOCAL AUTHORITIES HAVE NOT MENTIONED ANYTHING IN COLUMN 18(A). THE ASSESSING OFFICER HAS IN THE PENALTY ORDER MADE COMPUTATION OF THE POSSIBLE NUMBER OF TR UCK LOADS WHICH WOULD HAVE TO BE USED WITHOUT APPRECIATING THAT THIS TOT AL OF 5036 TONES OF FUEL WOOD OR COUNTRY WOOD WHICH HAS BEEN COMPUTED BY HIM IN RESPECT OF THREE ASSESSEES ARE RELATING TO VARIOUS VILLAGES AND PLAC ES. LD. ASSESSING OFFICER HAS PAGE 7 OF 8 I.T.A. NO. 52/CHNS/2010 I.T.A. NO. 1431/1432/CHNS/07 ALSO FAILED TO APPRECIATE THAT THE LANDS ARE IN VAR IOUS VILLAGES AND IT IS LOCAL VILLAGE PEOPLE WHO ARE CUTTING AND SELLING THE TRE ES FOR FIRE WOOD AND IT IS NOT THE ASSESSEE. THE ASSESSEE HAS RIGHT FROM THE BE GINNING MAINTAINED THAT IT HAS NO ASSOCIATION WITH THE CUTTING AND SELLING OF THE TREES AND IT IS USED TO COLLECT THE MONEY FROM THE VILLAGERS AND CREDIT THE SAME TO ITS BOOKS AS AND WHEN SAME IS RECEIVED. IN SUCH A SITUATION OBVIOUS LY THE ASSESSEE COULD NOT BE FOUND TO HOLD ANY SUBSTANTIAL EVIDENCE TO PROVE THE SALE OF THE SPONTANEOUS GROWN TREES. IT IS ALSO WELL KNOW THAT IN TAMILNAD U IN THE VILLAGE AREAS ON UNCULTIVATED LANDS SPONTANEOUS GROWN THORN TREES AR E SUBSTANTIAL WHICH ARE MOSTLY USED FOR FIRE WOOD. FURTHER IT WAS THE SUBM ISSION THAT IF THE ASSESSING OFFICER DID DOUBT THE GENUINENESS OF THE BONA FIDE OF THE CLAIM OF THE ASSESSEE NOTHING STOPPED THE ASSESSING OFFICER FROM HAVING T HE SAME VERIFIED BY SENDING HIS INSPECTOR TO THE LAND AREAS CLAIMED BY THE ASSE SSEE FOR VERIFICATION WITH VILLAGERS LIVING NEARBY. AS PER PROVISION OF SEC .271(1)(C) WHAT IS REQUIRED IS THAT THE ASSESSEE SHOULD HAVE GIVEN AN EXPLANATION AND SUCH EXPLANATION SHOULD BE A PLAUSIBLE EXPLANATION AND SUCH EXPLANATION IS NOT FOUND BY THE ASSESSING OFFICER TO BE FALSE. HERE IT SHOULD BE UNDERSTOOD THAT THE REJECTION OF AN EXPLANATION DOES NOT MAKE AN EXPLANATION OF THE ASS ESSEE TO BE FALSE. THE EXPLANATION OF THE ASSESSEE SHOULD BE FOUND BY THE ASSESSING OFFICER TO BE FALSE. ASSESSEE HAS GIVEN THE BASIC DETAILS AND PL AUSIBLE EXPLANATION. ASSESSING OFFICER OTHER THAN REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE AND DRAWING CALCULATIONS HAS NOT DONE ANYTHING FURTHER TO SHOW THAT THE EXPLANATION WAS FALSE. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THA T THE EXPLANATIONS OF THE ASSESSEES HAVING NOT BEEN FOUND TO BE FALSE AND THE ASSESSEES HAVING FURNISHED PLAUSIBLE EXPLANATION THE FINDING OF THE LD. CIT(A ) ON THE ISSUE FOR CANCELLING THE PENALTY IS ON RIGHT FOOTING AND DOES NOT CALL F OR ANY INTERFERENCE. IN THE CIRCUMSTANCES THE APPEALS OF THE REVENUE STANDS DI SMISSED. PAGE 8 OF 8 I.T.A. NO. 52/CHNS/2010 I.T.A. NO. 1431/1432/CHNS/07 6. IN THE RESULT THE APPEALS OF THE REVENUE ARE DI SMISSED. ORDER PRONOUNCED ON 26.05.2010. ( N. BARATHVAJA SANKAR ) ( GEORGE MATHAN ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI DATED THE 26 TH MAY 2010. KSS COPY TO: ASSESSEE/AO/ CIT (A)/CIT/D.R./GUARD FILE