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TMI Blog2018 (6) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... peal).Nos.186 and 187 of 2005 & TC.M.P.Nos.164 & 165 of 2005 & W.P.Nos.43110 & 43111 of 2006 - - - Dated:- 4-6-2018 - T. S. Sivagnanam And N. Seshasayee, JJ. For the Appellant : Mr.G.Baskar For the Respondents : Mr.J.Narayanaswamy Mr.M.Swaminathan in JUDGMENT T. S. Sivagnanam. J. These Tax Case (Appeals) have been filed by the Assessee questioning the order passed by the Income Tax Appellant Tribunal, Bench 'A', Chennai in I.T.A.Nos.3167 3168/MDS/2004, for the assessments 2001-02 2002-03. 2. W.P.Nos.43110 43111 of 2006, have been filed by the assessee, challenging the order passed by the Commissioner of Income Tax, Chennai-VIII, Chennai, dated 24.03.2006, rejecting the petitions filed by the assessee under Section 264 of the Income Tax Act, 1961, (hereinafter referred to as Act ) for the assessment years 2001-02 2002-03. 3. Tax Case (Appeals) have been admitted on 28.04.2005, on the following substantial questions of law:- 1.Whether the Income Tax Appellate Tribunal is right in law in not cancelling the levy of penalty? 2. Whether the Income Tax Appellate Tribunal is right in law in not considering the specific grounds raised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Section 264 of the Act for revision of the assessment order by contending that the Assessing Authority had not granted any opportunity to the assessee to reconcile the closing balance and had arbitrarily foisted allegations of irregularities and deficiencies in the assessee's account that were factually and legally untenable and incorrect. Further major suppliers of the assessee are public limited companies and it is inconceivable that a company of stature of M/s.Tata Iron and Steel Co., would be involved in suppression of materials supplied to the assessee, as alleged by the respondents. It is further submitted that the Commissioner of Income Tax proceeded on the basis that it is only on account of the penalty proceedings, the revision applications were filed and the main contention raised by the petitioner that additional income offered, did not represent the reconciled correct figures, after taking into account the credit note and the running notes in respect of four major suppliers were not considered. Therefore, It is submitted that the order passed by the Commissioner rejecting the petition under Section 263 of the Act is erroneous. 6. With regard to the levy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38 Taxmann.com 448 (SC)]. 8. Heard the learned counsels appearing for the parties and perused the materials placed on record. 9. Firstly, we take up the Tax Case (Appeals) for consideration. As mentioned above, the appeals have been filed challenging the order passed by the ITAT, rejecting the assessee's appeal and confirming the order passed by the Commissioner of Income Tax (Appeals)-IX, dated 05.11.2004. The assessment for the year 2001-02, was completed on 17.04.2003, and in the course of assessment proceedings, penalty notice under Section 274 read with Section 271(1)(c), was issued to the assessee. The assessment for the year 2002-03 was completed on 17.04.2003, and in the course of assessment proceedings, penalty notice dated 14.05.2003, was issued to the assessee. The assessee submitted separate replies to the notices. 10. For the assessment year 2001-02, the assessee stated the addition made by the Assessing Officer of ₹ 3,19,021/-, represented amount due to two trade creditors, who were reported to have closed their business and their whereabouts were not known. According to the assessee, it cannot be safely concluded that the credit balances have becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (Appeals) while testing the correctness of this order, held that the assessee cannot contend that revised returns filed, were not valid and they having filed the same voluntary. It was further pointed out that the assessee on the one hand contend that what was found and deducted, can be explained and the other hand states it has accepted the discrepancies in order to buy peace with the department and avoid prolonged litigation. Therefore, the CIT (Appeals) held both the arguments cannot go together. After taking note of certain decisions, the CIT (Appeals) observed that the quality of evidences deducted positively justify levy of penalty under Section 271(1)(c), as mens rea has been fully established with deduction of evidence against the assessee and the assessee having accepted the same by filing revised returns. Similar reasons were assigned by the CIT (Appeals) in the appeal against the penalty order for the assessment year 2002-03. 13. On appeal to the Tribunal, it was pointed out that the assessee raised three contentions, namely, (i) return was filed voluntarily, therefore penal action was not attracted; (ii) the revised return was filed only after an assurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als/revision at the relevant time. It is further submitted that penalty proceedings is independent of the assessment proceedings and mere fact that the assessee did not contest the assessment proceedings, will not be a bar for the assessee to contest the penalty proceedings. 18. The facts of the case has been set out in a fairly elaborate manner to show the conduct of the assessee in the proceedings. It is an admitted fact that after the survey operations, the assessee filed revised returns. The revised returns is deemed to be a voluntary action of the assessee, as there is nothing on record to show that for certain other reasons, the assessee had filed revised returns. Therefore, the Tribunal was justified in rejecting the case of the assessee stating that because the Revenue assured that the penalty proceedings will not be initiated, if addition is admitted, therefore, revised return were filed. In these Appeals, we are required to examine as to whether the requirements under Section 271(1)(c) have been satisfied. 19. The Hon'ble Supreme Court in Mak Data (P) Ltd., (supra), pointed out that the Assessing Officer shall not be carried away by the plea of the assessee like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation and the assessee had no suitable explanation against the evidences found during survey. 23. To examine the correctness of the argument of the learned counsel for the assessee, we perused the order passed by the CIT (A) and the findings recorded on facts, as the assessee would persistently state that the closing balances with reference to four suppliers were not considered. On a perusal of the order passed by the CIT (A), it is seen that during the course of survey, incriminating evidences regarding the purchase were found and the statement of the assessee was recorded. The stock statement showed a negative figure of ₹ 13,71,146/- and there was a difference in closing balances in case of four sundry creditors and the total difference worked out to ₹ 1,68,45,192/ and the assessee accordingly filed revised return admitting additional income. Thus, during the search, there was specific evidence on account of stock, on account of purchases, sundry creditors and closing balances of the stock. The assessee was given an opportunity to explain and no where rebutted the evidences, which were recovered during the course of survey. Thus, in the absence of any explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the difference in closing balance was added as 'income' without proper investigation or verification of the correctness of the figures. It was further submitted that the difference was treated as purchase inflation and therefore, closing stock should have been correspondingly adjusted, which was not done. Further, the amount of ₹ 3,19,021/- was offered to tax to purchase peace with the Department and on assurance that they would be no liability, interest and penalty. 28. Commissioner of Income Tax considered the said factual submission and rejected the same as being erroneous, by taking note of the record of proceedings that addition was made after the same was offered for taxation by the assessee. Further, the Commissioner has noted that as per the assessee's own version, the trade creditors were not traceable. That apart, the Commissioner took note of the order passed by the ITAT confirming the order of penalty. The submission of the learned counsel for the assessee is that the revision petition was rejected by the Commissioner solely for the reason that penalty proceedings were confirmed by the Tribunal and none of the aspects, which have been po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that point of time, the assessee did not take a stand that there was insufficient time or the same does not represent correct figures etc. Assuming, it was so, then the assessee had other remedies upon filing a revised return accepting additional income of ₹ 1.40crores. The assessee did not avail any such remedy, but on the contrary filed a second revised return admitting additional income of ₹ 1.68 crores. 31. Thus, the Commissioner on facts rightly held that the contention of the assessee that additional income was offered without due application of mind is to be rejected and the offer made by the assessee was a conscious one. 32. As observed earlier, though there is an observation regarding the order passed by the ITAT confirming the penalty proceedings in the Section 264 order, we find that is not the reason for rejecting the revision petition, but on facts, the Commissioner has recorded findings and confirmed the order passed by the Assessing Officer. 33. Thus, we find there are no good grounds made out by the assessee to dislodge the factual findings recorded by the Commissioner in the impugned order under Section 264 of the Act. Therefore, the Writ Peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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