Supra Farms & Leasing Ltd.,, New Delhi v. ITO, New Delhi

ITA 4408/DEL/2009 | 2002-2003
Pronouncement Date: 29-01-2010 | Result: Allowed

Appeal Details

RSA Number 440820114 RSA 2009
Assessee PAN AAACS0430K
Bench Delhi
Appeal Number ITA 4408/DEL/2009
Duration Of Justice 2 month(s) 11 day(s)
Appellant Supra Farms & Leasing Ltd.,, New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 29-01-2010
Assessment Year 2002-2003
Appeal Filed On 18-11-2009
Judgment Text
ITA NOS.4407&4408/DEL/09 A.Y. 2001-02&2002-03 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NOS. 4407&4408/DEL/2009 A.YRS. : 2001-02 & 2002-03 M/S SUPRA FARMS & LEASING LTD. VS. INCOME TAX OFFICER FLAT NO. 402 32/33 NEHRU PLACE WARD 9(4) NEW DELHI KUSAL BAZAR NEW DELHI 19 [PAN : AAACS0430K] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAVINDER BHATIA CA & MS. NEERU SINGH CA DEPARTMENT BY : SHRI KISHORE B. SR. DR O R D E R PER SHAMIM YAHYA AM : THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE LD. CIT(A) FOR RESPECTIVE ASSESSMENT YEARS P ERTAINING TO LEVY OF PENALTY UNDER SECTION 271(1)(C). 2. ASSESSEE IN THIS CASE IS A COMPANY AND SHOWN AG RICULTURAL INCOME AND RENTAL INCOME IN THE RETURNS OF INCOME. THE AGRICULTURAL INCOME SHOWED IN ASSESSMENT YEAR 20 02-03 WAS RS. 5808181/- (FOR A.Y. 2001-02 RS. 41 97 600/-). WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) ADD ITION ON ACCOUNT OF UNDISCLOSED INCOME INTRODUCED UNDER THE GUISE OF WHEAT CROP RICE CROP JOO CROP AND MAKKA CROP TO THE TUN E OF ITA NOS.4407&4408/DEL/09 A.Y. 2001-02&2002-03 2 RS. 5289783/- WAS MADE (RS. 2740637/- FOR A.Y. 2001 -02). THE MATTER TRAVELLED TO THE ITAT AND ITAT VIDE ORDER IT A NO. 1793/DEL/06 & OTHERS DATED 30.4.2008 SUSTAINED TH E ADDITION MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INCOME INT RODUCED UNDER THE GUISE OF WHEAT CROP AMOUNTING TO RS. 20 4 0 875/- (RS. 656901/- FOR A.Y. 2001-02). AO INITIATED THE PENALTY PROCEEDINGS ON THE SAME. A SHOW CAUSE NOTICE WAS I SSUED. ASSESSEE RESPONDED AS UNDER:- THAT THE ONLY ADDITION SUSTAINED BY THE APPELLATE COURT IS REGARDING THE DIFFERENCE IN YIELD OF PRODUCTION OF CROPS AS SHOWN BY THE ASSESSEE AND AS CALCULATED BY THE ASSESSING OFFICER. THUS THERE WAS NO CONCEALMENT OF ANY NATURE OF ITS INCOME BY THE ASSESSEE. THE ADD ITION SUSTAINED IS ON ACCOUNT OF DIFFERENCE OF OPINION A S TO THE ACTUAL YIELD AS SHOWN IN THE ACCOUNTS OF THE ASSESS EE AND AS CALCULATED BY THE AO. BESIDES THE ASSESSEE COMPANY HAS ALSO QUOTED THE FOLLOWING CITATIONS IN ITS FAVOUR. : IT VS. AJAYAB SIND & CO. 253 ITR 630 NEWCHEM LTD. VS. DCI LTD. 49 ITD 441 2.1 AO DID NOT AGREE WITH THE ABOVE CONTENTION AN D LEVIED THE PENALTY AMOUNTING TO RS. 743420/- (RS. 225071 FOR A.Y. 2001-02). 2.2 UPON ASSESSEES APPEAL IN THIS REGARD LD. CIT( A) CONFIRMED THE ORDER OF THE AO. WHILE DOING SO THE LD. CIT(A) REF ERRED THE DECISION ITA NOS.4407&4408/DEL/09 A.Y. 2001-02&2002-03 3 OF THE HONBLE APEX COURT IN UNION OF INDIA VS. DHA RMENDRA TEXTILE PROCESSOR 166 TAXMAN 65 (2008). 2.3 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 2.4 LD. COUNSEL OF THE ASSESSEE VEHEMENTLY CONTENDE D THAT THE ADDITION IN QUANTUM IN THIS REGARD HAS SOLELY BEEN MADE AS A MATTER OF OPINION OR ESTIMATE. UNDER THE CIRCUMSTA NCES HE ARGUED ON THE MATTER WHERE THE DECISION IS BASED UPON ESTI MATES OR OPINIONS THE PENALTY UNDER SECTION 271(1)(C) WAS N OT LEVIABLE. IN THIS REGARD HE FURTHER PLACE RELIANCE UPON HONBLE PUNJAB AND HARYANA HIGH COURT DECISION IN THE CASE OF CIT VS. SOOD HARVESTER 304 ITR 279 AND HONBLE DELHI HIGH COURT DECISION I N THE CASE OF CIT VS. P.H.I. SEEDS INDIA LTD. 301 ITR 13. 2.5 LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 2.6 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. THE ADDITION INS THIS REGARD IN QUANTUM APPEAL WAS MADE ON ACCOUNT OF DIFFERENCE IN AGRICULTURAL INCOME AS CL AIMED BY THE ASSESSEE AND AS SUSTAINED BY THE ITAT. IT WOULD B E WORTHWHILE TO REFER THE DECISION OF THE ITAT IN QUANTUM APPEAL VI DE CONSOLIDATED ORDER DATED 30.4.2008 ABOVE. PARA 4.3 AND 4.4 OF T HE SAME READS AS UNDER:- 4.3 THE QUESTION THAT ARISES FOR CONSIDERATION IS AS TO WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN PLACING REL IANCE ON THE OPINION OF A THIRD PARTY GIVEN ON A GENERAL BASIS D ISCARDING THE ITA NOS.4407&4408/DEL/09 A.Y. 2001-02&2002-03 4 EVIDENCE TO THE CONTRARY ON RECORD. WE MAY CLARIFY HERE THAT THERE WAS NO DIRECT EVIDENCE REGARDING YIELD PER AC RE OF AGRICULTURAL PRODUCE EXCEPT THE SALE BY THE ASESSEE WHICH OTHERWISE HAS NOT BEEN FOUND TO BE INCORRECT. THE REASONING OF THE ASSESSING OFFICER IS THAT IF SOMEBODY CANNOT PR ODUCE A PARTICULAR QUANTITY OF AGRICULTURAL PRODUCE FROM HO LDING A PARTICULAR EXTENT OF LAND THEN NOT WITHSTANDING EVI DENCE OF SALE THE QUANTUM CLAIMED TO HAVE BEEN PRODUCED CANNOT BE BELIEVED. IT THEREFORE BECOMES NECESSARY TO FIND OUT THE EX TENT OF VARIATION IN THE YIELD AS CLAIMED BY THE ASSESSEE A ND THAT CLAIMED BY THE ASSESSING OFFICER. THE COMPARATIVE CHART IN THIS REGARD IS AS FOLLOWS:- (IN QUINTAL PER ACRE) CROP PRODUCTION AS SHOWN BY THE ASSESSEE YIELD RELIED UPON BY AO ON THE BASIS OF LETTER OF IARI PUSA YIELD AS PER HARYANA AGRICULTURAL UNIVERSITY MAXIMUM OPTIMUM YIELD AS PER ICAR WHEAT 57.60 17.41 18.00 TO 23.6 25.80 GHANNA 14.75 6.00 8.10 16.44 MAKKA 26.04 11.33 22.00 33.91 BAJRA 8.24 6.07 9.00 TO 15.00 ----- 4.4 FROM THE ABOVE CHART IT IS CLEAR THAT THE YIELD AS CLAIMED BY THE ASSESSEE IS EXORBITANT COMPARED TO EVEN THE MAXIMUM OUTPUT AS CERTIFIED BY THE ICAR WHICH CERT IFICATE IS AN EVIDENCE FILED BY THE ASSESSEE ITSELF. THE QUESTION IS WHETHER THIS EVIDENCE CAN BE THE BASIS TO DISCAR D THE ITA NOS.4407&4408/DEL/09 A.Y. 2001-02&2002-03 5 CLAIM OF THE ASSESSEE. AT LEAST IN THE CASE OF YIE LD OF WHEAT WE ARE OF THE VIEW THAT IT CAN. WE THINK SO BECAUSE OF THE HUGE VARIATION IN YIELD. IN COMING TO THE A BOVE CONCLUSION WE HAVE DULY TAKEN NOTE OF THE FACT THA T THE ASSESSEE HAS NOT COME OUT WITH ANY ACCEPTABLE EXPLANATION REGARDING THE HIGH YIELD OF WHEAT AS CL AIMED BY IT. THE CLAIM OF THE ASSESSEE IS THAT IT PRODUC ED 57.60 QUINTALS PER ACRE WHEREAS THE CERTIFICATE ON WHICH THE ASSESSEE ITSELF PLACED RELIANCE SHOWED ONLY A MAXIM UM YIELD OF 25.80 QUINTALS PER ACRE. IN THE LIGHT OF THE FACT THAT THE CLAIM OF THE ASSESSEE IS OTHERWISE SUBSTANTIAT ED BY EVIDENCE WE WOULD ADOPT THE MAXIMUM OUTPUT AS PER CERTIFICATE OF ICAR IN THE CASE OF WHEAT AS A YARDS TICK IN PLACE OF THE AVERAGE AS ADOPTED BY THE CIT(APPEALS) . IN THE CASE OF CHANNA MAKKA AND BAJRA THE YIELD AS CLAIMED BY THE ASSESSEE IS ACCEPTED IN VIEW OF THE SAME BEING COMPARABLE WITH THE FIGURES OF YIELD AS GIVEN BY EXPERT BODIES. THE ADDITION TO BE MADE IS RE-WORKE D AS FOLLOWS:- CHANNA: PRODUCTION OF CHANNA 162.30 QTL. YIELD AS CLAIMED BY THE ASSESSEE 14.75 QTL. PER A CRE AVERAGE REQUIRED TO PRODUCE THE 162.30 / 14.75 = 1 1 ACRES QUANTITY CLAIMED BY THE ASSESSEE. AREA AVAILABLE FOR WHEAT : 199 11 = 188 ACRES ITA NOS.4407&4408/DEL/09 A.Y. 2001-02&2002-03 6 WHEAT: AREA CULTIVATED 188 ACRES AVERAGE YIELD PER ACRE 25.80 PRODUCTION OF WHEAT 188 X 25.80 = 4850.40 QTL. PRODUCTION SHOWN BY THE ASSESSEE 5760.93 QT L. DIFFERENCE 910.53 QTL. VALUE OF EXCESS PRODUCTION @RS. 6.25 PER KG. = 5 69 081.25P. THE ADDITION OF RS. 11 63 618/- AS SUSTAINED BY THE CIT(APPEALS) IS DIRECTED TO BE REDUCED TO RS. 5 69 08 1=25P. 2.7 A READING OF THE ABOVE MAKES IT CLEAR THAT AS NOTED BY THE TRIBUNAL WE MAY CLARIFY HERE THAT THERE WAS NO DIR ECT EVIDENCE REGARDING YIELD ACRE OF AGRICULTURAL PRODUCE EXCEPT THE SALE BY THE ASSESSEE WHICH OTHERWISE HAS NOT BEEN FOUND TO BE I NCORRECT. AS AGAINST THE YIELD SHOWN BY THE ASSESSEE THE YIELD RELIED UPON BY THE AO WAS BASED ON LETTER OF IARI PUSA. THE TRI BUNAL HAD RELIED UPON THE MAXIMUM OPTIMUM YIELD AS PER ICAR. THUS IT IS CLEAR THAT THE ADDITION MADE IS BASED UPON MAXIMUM OPTIM UM YIELD AS PER THE OPINION OF THE ICAR. AS OBSERVED BY THE TR IBUNAL THERE IS NO DIRECT EVIDENCE REGARDING YIELD ACRE OF AGRICULT URAL PRODUCE EXCEPT THE SALE BY ASSESSEE WHICH OTHERWISE HAS NO T BEEN FOUND TO BE INCORRECT. 2.8 IN THE LIGHT OF THE ABOVE SAID WE HAVE TO EX AMINE WHETHER THE PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE OR NOT. WE FIND ITA NOS.4407&4408/DEL/09 A.Y. 2001-02&2002-03 7 SECTION 271(1)(C) OF THE ACT POSTULATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMEN T OF INCOME. 2.9 IN THE PRESENT CASE WE FIND THAT ASSESSEE HAS SHOWN EXCEPTIONALLY HIGH AGRICULTURE YIELD AND THE SAME HAVE BEEN DISPUTED BY THE AO ON THE BASIS OF REPORT REGARDING THE OPTIMUM YIELD AS PER OPINION OF THE IARI PUSA. THE ITAT D ID NOT AGREE WITH THE AUTHORITY ON WHOM AO HAD RELIED BUT IT PLACED RELIANCE UPON THE AUTHORITY NAMELY ICAR AND ACCORDINGLY HAVE SU STAINED A PART OF THE ADDITION. THE ASSESSEES CLAIM OF EXCEPTIO NALLY HIGH YIELD HAS BEEN NOT ACCEPTED ON THE BASIS OF MAXIMUM OPTIM UM YIELD REPORT OF ICAR. ADMITTEDLY IT IS NOT THE CASE THAT ANY INCRIMINATING MATERIAL HAS BEEN FOUND WHICH CAN SHOW THAT ASSESSE E HAS MADE ANY CONCEALMENT OR SUBMITTED FALSE PARTICULARS. U NDER THE CIRCUMSTANCES IN OUR CONSIDERED OPINION ASSESSEE S CONDUCT CANNOT BE SAID TO BE CONTUMACIOUS SO AS TO ENTAIL L EVY OF PENALTY UNDER SECTION 271(1)(C). 2.10 IN THIS REGARD WE ALSO DRAW SUPPORT FROM THE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI- CRIMINAL PROCEEDINGS AND PENALTY WILL NOT ORDINARI LY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WIL L NOT ALSO BE ITA NOS.4407&4408/DEL/09 A.Y. 2001-02&2002-03 8 IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHET HER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTOR Y OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCIS ED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED THE AUTHORITY COMPETENT TO I MPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WH EN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFEND ER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 2.11 AS REGARDS THE RELIANCE PLACED UPON LD. CIT(A ) ON THE DECISION OF DHARMENDRA TEXTILE (SUPRA) WE FIND THA T THE SAME IS NOT APPLICABLE. THE HONBLE APEX COURT IN 317 ITR 1 HA S ITSELF EXPLAINED THE RATIO OF THE DECISION AS UNDER:- 23. THE DECISION IN DHARMENDRA TEXTILE MUST THERE FORE BE UNDERSTOOD TO MEAN THAT THOUGH THE APPLICATION OF SECTION 11AC WOULD DEPEND UPON THE EXISTENCE OR OTHERWISE OF THE CONDITIONS EXPRESSLY STATED IN THE SECTION ONCE THE SECTION IS APPLICABLE IN A CASE T HE CONCERNED AUTHORITY WOULD HAVE NOT DISCRETION IN QUANTIFYING THE AMOUNT AND PENALTY MUST BE IMPOSED ITA NOS.4407&4408/DEL/09 A.Y. 2001-02&2002-03 9 EQUAL TO THE DUTY DETERMINED UNDER SUB-SECTION (2) OF SECTION 11A. THAT IS WHAT DHARMENDRA TEXTILE DECID ES. 2.12 WE HAVE ALREADY OBSERVED THAT THE ASSESSEE S ACTION CANNOT BE SAID TO BE COMING UNDER THE AMBIT OF PENAL PROVI SION OF SECTION 271(1)(C). 2.13 IN THE BACKGROUND OF THE AFORESAID DISCUSSI ONS AND PRECEDENT WE SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW AND DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) O F THE IT ACT. 13. IN THE RESULT BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2010. SD/- SD/- [R.P. TOLANI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29/01/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES