Bil Metal Industries Ltd.,, Dist.Baroda v. The ACIT., Circle-1(1),, Baroda

ITA 900/AHD/2008 | misc
Pronouncement Date: 26-02-2010 | Result: Allowed

Appeal Details

RSA Number 90020514 RSA 2008
Assessee PAN AABFB7131Q
Bench Ahmedabad
Appeal Number ITA 900/AHD/2008
Duration Of Justice 1 year(s) 11 month(s) 17 day(s)
Appellant Bil Metal Industries Ltd.,, Dist.Baroda
Respondent The ACIT., Circle-1(1),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 26-02-2010
Date Of Final Hearing 16-02-2010
Next Hearing Date 16-02-2010
Assessment Year misc
Appeal Filed On 10-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH JM & SHRI A.N. PAHUJA AM I.T.A. NO.900/AHD/2008 (ASSESSMENT YEAR 1989-90) M/S BIL METAL WORKS VS ACIT CIRCLE-2(1) OPP BHALLI RAILWAY STATION BARODA PO : BHALLI DIST : BARODA -391 410 [PAN : AABFB7131Q] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJAY R SHAH AR REVENUE BY : SHRI CK MISHRA DR O R D E R A.N. PAHUJA : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST AN ORDER DATED 18-12-2007 OF THE LD. CIT(A)-II BARODA UPH OLDING THE PENALTY OF RS. 5 29 355/- LEVIED U/S 271(1)(C) R.W.S.254 OF THE IN COME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) . 2. FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT PENALTY U/S 271(1)(C) OF THE ACT WAS INITIALLY IMPOSED BY THE ASSESSING OFFICER[ AO IN SHORT] VIDE ORDER DATED 27.6.2002 @125% OF THE TAX SOUGHT TO BE EVADED FOR CONCEALING PARTICULARS OF INCOME ON ACCOUNT DISCREPANCY IN STOCK TO THE EXTEN T OF RS.6 48 000/- AND INCORRECT CLAIM OF INVESTMENT ALLOWANCE OF RS.3 60 300/-. THOUGH THE LD. CIT(A) VIDE HIS ORDER DATED 24.12.2002 UPHELD THE LEVY OF PENALTY @100% OF THE TAX SOUGHT TO EVADED THE ITAT VIDE THEIR ORDER DATED 17.8.2005 IN ITA NO.745/AHD/2003 WHILE UPHOLDING LEVY OF PENALTY ON THE AMOUNT OF RS.3 60 300/- ON ACCOUNT OF INVESTMENT ALLOWANCE IN THE ABSENCE OF ANY EXPLANATION BEFORE THE AO/LD. CIT(A) SET ASIDE THE ORDER IMPOSING PEN ALTY WITH REGARD TO ADDITION OF RS.6 48 000/- ON ACCOUNT OF STOCK ON THE GROUND T HAT THE HONBLE HIGH COURT VIDE THEIR ORDER DATED 27.1.2003 EXPUNGED PARA 11 O F THE ORDER DATED 27.11.2001 OF THE ITAT IN QUANTUM APPEAL IN THE FOLLOWING TERMS : ITA NO.900/AHD/2008 2 WE MAY OBSERVE THAT WE DO NOT SUBSCRIBE TO THE OBS ERVATIONS MADE IN PARAGRAPH 11 OF THE ORDER BY THE TRIBUNAL A GAINST THE CHARTERED ACCOUNTANT IN RESPECT OF HIS CONDUCT WHIC H EVEN AS PER THE LEARNED COUNSEL FOR THE REVENUE WERE UNNECESSA RY FOR DECIDING THE MATTER. 3. CONSEQUENTLY THE AO ALLOWED FRESH OPPORTUNITY O F HEARING AND IN RESPONSE THE ASSESSEE VIDE LETTER DATED 13.10.2006 REITERATED THAT ADDITION WAS MADE ON ACCOUNT OF CLERICAL MISTAKE IN CALCULATING AND PREPARING DETAILED STOCK STATEMENT OF RAW MATERIAL . HOWEVER THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE SAID EXPLANATIO N OF THE ASSESSEE WAS ALSO CONSIDERED DURING THE COURSE OF SCRUTINY OF ASSES SMENT AS ALSO IN APPELLATE PROCEEDINGS. THE AO FURTHER REFERRED TO THE FOLLOW ING OBSERVATIONS OF THE TRIBUNAL IN THE QUANTUM ORDER DATED 27.11.2001 IN ITA NO.2730/AHD./2005 : IT IS VERY DIFFICULT TO BELIEVE FROM THE EXPLANATI ON AND REASON GIVEN BY THE ASSESSEE FOR DIFFERENCE IN QUANTITATIVE DETA ILS OF CRCA SHEET IN BETWEEN STOCK CARD AND TAX AUDIT REPORT. IT HAS BEEN EXPLAINED BY THE ASSESSEE IN FEBRUARY 1989 THE QUANTITY OF S HEETS ISSUED WAS 80530 KGS. WHEREAS IN AUDIT REPORT IT HAS BEE N TAKEN AS 34 530 KGS OF WHICH DIFFERENCE COMES 46 000 KGS. OF SHEETS.IN THE MONTH OF MARCH 1989 SHEETS AS PER STOCK CARD WAS 59 820 KGS. WHEREAS IN THE AUDIT REPORT IT WAS 69 820 KGS OF W HICH DIFFERENCE IS 10 000 KGS SHEETS AND IN THIS WAY NET DIFFERENCE O F 36 000 KGS NOTICED BY ASSESSING OFFICER AS RECONCILED BY THE ASSESSEE. THIS TYPE OF RECONCILIATION OF FIGURES HAVE NO VALUES FO R THE PURPOSE OF EVIDENCE. UNDER THE FACTS AND CIRCUMSTANCES IT HA S BEEN NOTICED THAT THE EXPLANATION OF THE ASSESSEE IS PERVERSE EX PLANATION. ACCORDINGLY THE AO MAINTAINED THE PENALTY IN RES PECT OF ADDITION OF RS. 6 48 000/- ON ACCOUNT OF INCORRECT VALUATION OF CLO SING STOCK. . 4. ON APPEAL THE ASSESSEE SUBMITTED THAT THE AO P ASSED THE ORDER WITHOUT CONSIDERING THE IMPLICATIONS OF THE AFORESAID OBSER VATIONS OF HON.GUJARAT HIGH COURT. THE ORDER OF THE ITAT SETTING-ASIDE THE PEN ALTY LEVIED EARLIER WAS PASSED IN 2005 WHILE THE IMPUGNED PENALTY ORDER WAS PASSE D ON 08-12-2006 PURPORTING TO GIVE EFFECT TO ITATS ORDER. THEREFORE THE SAID ORDER HAS BEEN PASSED BY THE ITA NO.900/AHD/2008 3 AO BEYOND THE LIMITATION PERIOD STIPULATED U/S 275 OF THE ACT. BESIDES POINTING OUT DEFECT IN THE DEMAND NOTICE IN MENTIONING THE A .Y.. 2004-05 INSTEAD OF AY 1989-90 IT WAS FURTHER ARGUED THAT THE AO DID NOT MENTION IN THE ORDER THAT PRIOR APPROVAL OF JT.COMMISSIONER WAS TAKEN. SINCE THE IS SUE WAS RESTORED BACK TO THE FILE OF THE AO FOR A FRESH DECISION THE SUBMISSIO NS ON MERIT OF THE ADDITION SHOULD HAVE BEEN CONSIDERED BY THE AO THE ASSESSEE ARGUED.INTER ALIA RELIANCE WAS PLACED ON THE JUDGMENTS IN THE CASE OF CIT VS V ALMIKBHAI H PATEL 280 ITR 467 (GUJ) HINDUSTAN STEEL LTD. VS STATE OF ORISSA 83 ITR 26 (SC) CIT VS SUBHASH TRADING CO 86 TAXMAN 20 (GUJ) CIT VS RAHUL G & CO 250 ITR 225 (DEL) CIT VS DHULI T CO. LTD 231 ITR 65 (CAL) KC B UILDERS VS ACIT 265 ITR 562 (SC) DILIP N SHROFF VS JCIT 291 ITR 519 (SC) AND N ATIONAL TEXTILE CO VS CIT 249 ITR (GUJ). THE ASSESSEE ADDED THAT THERE WAS NO MENS REA ON THE PART OF THE ASSESSEE AS THE ADDITION TO CLOSING STOCK EVEN AFTER BEING UPHELD IN THE QUANTUM PROCEEDINGS WILL BE TAX NEUTRAL. AFTER CON SIDERING THESE SUBMISSIONS THE LD. CIT(A) CONCLUDED AS UNDER: 2.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. C OUNSEL AND FACTS OF THE CASE. THE PENALTY IN THIS CASE WAS LE VIED BY THE ASSESSING OFFICER AFTER THE ADDITION WAS NOT ONLY C ONFIRMED BUT HAD SEVERE OBSERVATION AGAINST THE APPELLANT AND ITS CH ARTERED ACCOUNTANT. HON. GUJARAT HIGH COURT DID NOT AGREE WITH THE OBSERVATION AGAINST THE CONDUCT OF CHARTERED ACCOUN TANT AND THEREFORE THE OBSERVATION OF HON. ITAT AGAINST THE CHARTERED ACCOUNTANT HAS TO BE IGNORED WHILE CONSIDERING THE LEVY OF PENALTY. THE OBSERVATION OF ITAT IN QUANTUM APPEAL IN PARA-1 1 (EXCLUDING THE OBSERVATION AGAINST CHARTERED ACCOUNTANT) ARE A S UNDER: IT IS VERY DIFFICULT TO BELIEVE FROM THE EXPLANATI ON AND REASON GIVEN BY THE ASSESSEE FOR DIFFERENCE IN QUANTITATIVE DETA ILS OF CRCA SHEET IN BETWEEN STOCK CARD AND TAX AUDIT REPORT. IT HAS BEEN EXPLAIED BY THE ASSESSEE IN FEBRUARY 1989 THE QUANTITY OF SHEE TS ISSUED WAS 80530 KGS. WHEREAS IN AUDIT REPORT IT HAS BEEN TA KEN AS 34 530 KGS OF WHICH DIFFERENCE COMES 46 000 KGS. FF SHEETS . IN THE MONTH OF MARCH 1989 SHEETS AS PER STOCK CARD WAS 59 820 K GS. WHEREAS IN THE AUDIT REPORT IT WAS 69 820 KGS OF WHICH DIF FERENCE IS 10 000 KGS SHEETS AND IN THIS WAY NET DIFFERENCE OF 36 00 0 KGS NOTICED BY ASSESSING OFFICER AS RECONCILED BY THE ASSESSEE. THIS TYPE OF RECONCILIATION OF FIGURES HAVE NO VALUES FOR THE PU RPOSE OF EVIDENCE. ITA NO.900/AHD/2008 4 UNDER THE FACTS AND CIRCUMSTANCES IT HAS BEEN NOTI CED THAT THE EXPLANATION OF THE ASSESSEE IS PERVERSE EXPLANATION . FROM THE ABOVE IT IS CLEAR THAT THE EXPLANATION G IVEN BY THE APPELLANT IS FOUND TO BE PERVERSE AND SUCH OBSERVAT ION ARE VALID SINCE HON.HIGH COURT DID NOT COMMENT ON THE SAME. THE OBSERVATION AGAINST THE CHARTERED ACCOUNTANT WAS NO T NECESSARY TO PROVE WHETHER THE EXPLANATION GIVEN BY THE ASSES SEE IS BONA- FIDE OR NOT. SINCE THE HIGHEST FACT FINDING AUTHORITY HAD ALREAD Y CONCLUDED THAT THE EXPLANATION OF THE ASSESSEE IS P ERVERSE EXPLANATION THE SAME CANNOT BE HELD TO BE BONA-FID E IN VIEW OF EXPLANATION 1 TO SECTION 271(1)(C). CONSIDERING THESE APPELLANT HAD DEFINITELY CONCEALED THE PARTICULARS OF INCOME AND THE EXPLANATION OFFERED BY IT WAS FOUND TO BE FALSE AND PERVERSE AND THEREFORE PENALTY U/S 271(1)(C) IS LEVIABLE. CONSI DERING THESE THE PENALTY LEVIED BY THE ASSESSING OFFICER IS JUSTIFIE D ON MERIT. COMING TO THE OTHER OBJECTIONS OF THE APPELLANT TH AT ASSESSING OFFICER DID NOT CONSIDER IMPLICATION ARIS ING OUT OF THE OBSERVATION OF HON. GUJARAT HIGH COURT IS NOT CORR ECT. ASSESSING OFFICER DEALT THIS ASPECT CLEARLY IN HIS ORDER AND THEREFORE THE SAME DOES NOT SUFFER FROM ANY INFIRMITY. AS REGARDS LIM ITATION PERIOD IN PASSING THE ORDER APPELLANTS OBSERVATION IS JUST SUSPICION OR INFERENTIAL. THE SAME IS NOT BASED ON FACTS AND TH EREFORE CANNOT BE ADJUDICATED. AS REGARDS THE WRONG MENTION OF ASSESSMENT YEAR IN DEMAND NOTICE THE SAME IS COVERED UNDER THE PROVIS IONS OF SECTION 292B AND SUCH MISTAKES DO NOT INVALIDATE THE ORDER. AS REGARDS APPELLANTS OBJECTION THAT THE PRIOR AP PROVAL FROM HIGHER AUTHORITIES IS NOT MENTIONED IN THE ORDER. THE PENALTY ORDER WAS PASSED ORIGINALLY WITH THE APPROVAL. THE PRESE NT ORDER IS IN CONSEQUENCE TO THE DIRECTIONS OF HON.ITAT GIVEN TO THE ASSESSING OFFICER. IN ANY CASE THE APPROVAL TAKEN NEED NOT BE MENTIONED IN THE ORDER AND THAT DOES NOT MAKE THE ORDER LEGALLY WEAK. THE ORDER WAS SET-ASIDE WITH A SPECIFIC PURPOSE FO R CONSIDERING THE OBSERVATION OF HON.GUJARAT HIGH COU RT THE SAME CANNOT BE CONSIDERED AS SET-ASIDE IN GENERAL AND TH EREFORE AGAIN GOING INTO THE MERITS OF THE ADDITION AND LEVY OF P ENALTY ETC. MAY NOT BE REQUIRED. THE DECISIONS RELIED UPON BY THE APPELLANT WERE GO NE THROUGH. NONE OF THEM APPLIED TO THE FACTS OF THE APPELLANTS CASE SINCE THE EXPLANATION OFFERED BY THE APPELLANT TO E XPLAIN THE ITA NO.900/AHD/2008 5 DISCREPANCY IN STOCK WAS FOUND TO BE PERVERSE. IN NONE OF THE DECISIONS ASSESSEES EXPLANATION WAS FOUND TO BE P ERVERSE AND THEREFORE THE APPELLANT HAD DEEMED TO HAVE CONCEALE D THE PARTICULARS OF INCOME WITHIN THE MEANING OF EXPLANA TION 1 TO SECTION 271(1)(C). IN VIEW OF THE SPECIFIC FACTS OF THE AP PELLANTS CASE THE DECISIONS REFERRED BY THE APPELLANT ARE NOT INDIVID UALLY DISCUSSED HERE. AS REGARDS APPELLANTS CLAIM THAT MENS REA WAS NOT PROVED BY THE DEPARTMENT THE SAME IS NOT REQUIRED TO BE D ONE AFTER THE WORD DELIBERATELY HAVE BEEN REMOVED AND EXPLANATI ON 1 HAVE BEEN INSERTED TO SECTION 271(1)(C). CONSIDERING THE ABOVE THE PENALTY LEVIED BY THE A SSESSING OFFICER IS JUSTIFIED ON THE FACTS OF THE CASE AND H ENCE THE SAME IS CONFIRMED. 5. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). AT THE OUTSET THE LD. AR ON BEH ALF OF THE ASSESSEE SUBMITTED THAT THE ORDER DATED 17.8.2005 OF THE ITA T HAVING BEEN RECEIVED BY THE CIT ON 19.9.2005 APPARENTLY THE ORDER PASSED BY THE AO ON 8.12.2006 IS BARRED BY LIMITATION. IN THIS C ONNECTION THE LD. AR RELIED UPON A DECISION IN THE CASE OF CIT VS. SHIV DAS SIRE MAL 175 ITR 546(RAJ). ON THE OTHER HAND THE LD. DR WHILE SUPPOR TING THE IMPUGNED ORDER DID NOT DISPUTE THAT THE ORDER DATED 17.8.200 5 OF THE ITAT HAD BEEN RECEIVED BY THE CIT ON 19.9.2005. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. UNDISPUTEDLY AND AS MENTIONED BY THE DCIT CIR CLE-2(1) BARODA IN HIS LETTER DATED 26.11.2009 ORDER DATED 17.8.2005 OF THE ITAT HAD BEEN RECEIVED BY THE CONCERNED CIT ON 19.9.2005 . ADMITT EDLY. IMPUGNED ORDER IMPOSING PENALTY WAS PASSED ON 8.12.2006 I.E BEYOND THE PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH ORDER OF THE ITAT HAD BEEN RECEIVED BY THE CONCERNED CIT. THE LD. CIT(A) WHIL E CONSIDERING THE PLEAN ON BEHALF OF THE ASSESSEE REGARDING LIMITATION PERIOD IN PASSING THE ORDER MERELY OBSERVED THAT APPELLANTS OBSERVATION IS JUST SUSPICION OR INFERENTIAL AND THAT THE SAME IS NOT BASED ON FACTS AND THEREFORE CANNOT BE ITA NO.900/AHD/2008 6 ADJUDICATED. HOWEVER IN SOMEWHAT SIMILAR CIRCUMST ANCES WHEN A PENALTY ORDER HAD BEEN SET ASIDE BY THE AAC HONBL E RAJASTHAN HIGH COURT IN THE CASE OF SHIV DAS SIRE MAL (SUPRA) HEL D THAT AN ORDER IMPOSING PENALTY UNDER SECTION 271 IS APP EALABLE TO THE APPELLATE ASSISTANT COMMISSIONER UNDER SECTION 246. ASSUMING THAT REMAND COULD BE VALIDLY MADE UNDER SECTION 251 (1) (B) AS CLAIMED BY THE REVENUE THE LIMITATION PRESCRIBED UNDER SECTION 275(A)(II) FOR MAKING AN O RDER IMPOSING PENALTY IS SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER IS RECEIVED BY THE COMMISSIONER WHICH IS ADMITTEDLY THE PERIOD WHICH EXPIRED LATER IN THE PRESENT CASE. IT IS ALSO AN ADMITTED FACT THAT THE INCOME-TAX OFFICER'S FRESH ORDER IMPOSING PENALTY P ASSED ON MARCH 30 1979 WAS MADE AFTER THE EXPIRY OF THIS PERIOD OF SIX MON THS PRESCRIBED UNDER SECTION 275(A)(II). THIS BEING SO THE INCOME-TAX OFFICER'S ORDER IMPOSING PENALTY PASSED ON MARCH 30 1979 WAS BARRED BY LIMITATION PRESCRI BED UNDER SECTION 275 OF THE ACT. WE MAY ALSO MENTION THAT THERE WAS NO PROVISION COR RESPONDING TO SUBCLAUSE (II) OF CLAUSE (A) OF SECTION 275 IN SECTION 33B OF THE INDIAN INCOME-TAX ACT 1922 AND THIS PROVISION WAS ALSO NOT PRESENT IN SECTION 275 OF THE 1961 ACT AS ORIGINALLY ENACTED. FOR THIS REASON THE DECISIONS RENDERED IN CONNECTION WITH SECTION 33B OF THE 1922 ACT OR SECTION 275 OF THE 1 961 ACT AS INITIALLY ENACTED ARE DISTINGUISHABLE. THE SUPREME COURT DECISION IN CIT V. NATIONAL TAJ TRADERS [1980] 121 ITR 535 RELATES TO SECTION 33B OF THE 1922 ACT AND THE DE CISION OF THIS COURT IN J. P. SHARMA AND SONS V. CIT [1985] 151 ITR 138 RELATES TO SECTION 275 OF THE 1961 ACT PRIOR TO ITS AMENDMENT WHEREBY SUB-CLAUSE (II) OF CLAUSE (A) OF SECTION 275 HAS BEEN INSERTED. AFTER THIS AMENDM ENT IN SECTION 275 WITH WHICH WE ARE CONCERNED IN THE PRESENT CASE IT IS CLEAR T HAT THE BAR OF LIMITATION FOR IMPOSING PENALTY APPLIES NOT ONLY TO THE INITIAL OR DER IMPOSING PENALTY BUT ALSO TO AN ORDER OF PENALTY IMPOSED AS A CONSEQUENCE OF THE APPELLATE ORDER. ACCORDINGLY THE TRIBUNAL'S VIEW THAT THE FRESH ORD ER IMPOSING PENALTY WAS TIME- BARRED IS JUSTIFIED. 6.1 IN THE LIGHT OF VIEW TAKEN IN THE AFORESAI D DECISION WE ARE OF THE OPINION THAT IN TERMS OF PROVISIONS OF SECTION 275 OF THE ACT WITH WHICH WE ARE CONCERNED IN THE PRESENT CASE IT IS CLEAR THAT THE BAR OF LI MITATION FOR IMPOSING PENALTY APPLIES NOT ONLY TO THE INITIAL ORDER IMPOSING PENA LTY BUT ALSO TO AN ORDER OF PENALTY IMPOSED AS A CONSEQUENCE OF THE APPELLATE O RDER. CONSEQUENTLY THE PENALTY ORDER DATED 8.12.2006 HAVING BEEN PASSED A DMITTEDLY BEYOND THE PERIOD OF SIX MONTHS FROM THE END OF SEPTEMBER 2005 I.E THE MONTH IN WHICH ORDER OF THE ITAT HAD BEEN RECEIVED BY THE CONCERNED CIT I S BARRED BY LIMITATION IN ITA NO.900/AHD/2008 7 TERMS OF PROVISIONS OF SEC. 275 OF THE ACT. IN THES E CIRCUMSTANCES WE HAVE NO OPTION BUT TO VACATE THE FINDINGS OF THE LD. CIT(A) AND QUASH THE AFORESAID PENALTY ORDER. AS A COROLLARY GROUNDS ON MERIT OF PENALTY DO NOT SURVIVE FOR ADJUDICATION. 7. IN THE RESULT APPEAL IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26TH DA Y OF FEBRUARY 2010. SD/- SD/- (MAHAVIR SINGH) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED :26TH FEBRUARY 2010 PK/- COPY TO: 1. THE ASSESSEE 2. ACIT CIRCLE-2(1) BARODA 3. CIT(A)-II BARODA 4. CIT CONCERNED BY ORDER 5. DR D BENCH DEPUTY REGISTRAR ITAT AHMEDABAD