TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 735
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.... Shiv Lal Tak vs CIT (2001) 251 ITR 373 (Raj), CIT Vs Harshwardhan Chemical & Material Ltd (2003) and Durga Kamal Rice Mills Vs CIT(2004)." 2.1 Brief facts of the case are that the assessee is a Private Limited Co. engaged in manufacturing and trading of medicines with registered office at Navi Mumbai. Shri Radhey Shyam Mittal and Shri Atul Burman (working director) are Directors of the company and not related. Shri Atul looked after the business and accounts at Mumbai office. Assessee filed its regular return u/s 139(1) on the basis of its audited books of accounts declaring loss of Rs. 16,96,113/-. Search & Seizure operations were carried on 27-08-2008 as a consequence to searches over Mittal Group at Mumbai. Neither incriminating documents qua the assessee were found during search or post search inquiries and in statement of Mr. Mittal taken during the search. Consequent to notice u/s 153A assessee filed its return declaring same loss of Rs. 16,96,113/-. By that time assessment was taken up, dispute arose between the directors due to various reasons. Ld. AO in 153A assessment asked for production of books of accounts. Assessee explained the factual position that computerized bo....
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....f books of account. However, circumstantial corroborated facts indicate that the appellant was prevented by sufficient cause for production of books of account and the case of appellant is covered under clause -b of rule 46A(1) of IT Rules...." Surprisingly the present ld. CIT(A) on same material and evidence held that assessee has deliberately not produced the books of account. Thus the penalty in question is based on two contradictory findings in AY 2005-06 & AY 2007-08 which is not justifiable in the light of such contradictory findings of facts. Assessee's contention are corroborated and strengthened in view of the following facts:- a) In AY 2005-2006, no application for additional evidence was made as no quantum appeal was filed for this year. b) In AY 2005-2006, in Assessment Order there is no findings that the assessee has shown low GP or understated revenue or inflated expenses. The ld AO has only disallowed the loss for the reason the books of account were not produced before him. Ld. Counsel for the assessee vehemently argued that penalty proceedings being separate and independent of quantum proceedings, the assessee can raise the issue about validity of 153A....
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....ratio laid down by Hon'ble Delhi High Court in the case of Addl. CIT Vs Jai Engineering Works Ltd. (1978) 113 ITR 389, 391-2 (Del), wherein, Hon'ble High Court has held that audit report is a reliable evidence. It is further contended that: a. It is by now settled law that the scope of the assessment u/s 153A is limited to incriminating documents/evidence found as a result of search. In search and seizure operations admittedly no incriminating material belonging to this assessee was found. In assessment order, no such incriminating document is relied to disallow the loss. There is no finding of the AO as regard document showing unaccounted sales or purchases or inflation of expenses or any other unaccounted income. b. The assessee filed its regular return u/s 139(1) on 8-10-2005 which was processed u/s 143(1). No notice u/s 143(2) was issued till the last date of limitation for issue of such notice i.e. 30.09.2006. Consequently by operation of the provisions impugned assessment for AY 2005-06 of the assessee stands abated. In these circumstances notice u/s 153A cannot be issued for an abetted assessment, 'more particularly where no incriminating documents as a result o....
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....income nor filed inaccurate particulars thereof, therefore penalty u/s 271(1)(c) is not imposable in this case. 2.7 LD. DR relied on the orders of lower authorities and contends that ld. CIT(A) has held that facts of the assessee's case are different than AY 2007-08. Assessee could not properly substantiate that books of accounts were in the possession of Mr. Barman, therefore, a proper inference has been drawn that assessee deliberately failed to produce the books. Adverting to the assessee's plea about no loss to revenue, it is contended that after amendment in sec. 271(1) (c), penalty can be imposed even in cases of reduction of losses. 2.8 We have heard the rival contentions and peruse the material available on record. We are of the view that this is not a fit case for imposition of penalty u/s 271(1)(c) on following facts, reasoning and observations: (i) In assessment order, no incriminating document is alleged to be discovered as a result of search or has been relied on by AO in assessment order to disallow the loss. There is no finding of the AO alleging any document showing unaccounted sales or purchases or inflation of expenses or any other unaccounted income. ....