Commissioner Of Income Tax v. M/S Dabwali Transport Company

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. Commissioner of Income Tax. Vs. M/s Dabwali Transport Company. I.T.A. No.872 of 2010 (O&M)Date of decision: 15.3.2011 -----Appellant. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE JASWANT SINGH Present:-Mr. K.K. Mehta, Sr.Standing counselfor the Revenue. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the revenue underSection 260-A of the Income Tax Act, 1961 (for short, “the Act”)against the order of the Income Tax Appellate Tribunal,Chandigarh dated 24.8.2009 in I.T.A. No.596/Chd/2009 for theassessment year 2000-01 proposing following substantialquestions of law:- “(i)Whether on the facts and in the circumstances of the caseand in law, the Ld. CIT(A) is justified in cancelling thepenalty levied u/s 271(1)(c) without appreciating that theadditions/disallowance made which formed basis ofpenalty had been upheld not only by the Ld. ITAT but alsoby the Hon’ble High Court vide order dated 15.10.2007.and in law, the Ld. CIT(A) is justified in cancelling thepenalty levied u/s 271(1)(c) without appreciating that theadditions/disallowance made which formed basis ofpenalty had been upheld not only by the Ld. ITAT but alsoby the Hon’ble High Court vide order dated 15.10.2007. (ii) Whether on the facts and in the circumstances of the caseand in law, the Ld. ITAT was justified in canceling thepenalty by ignoring the fact that the assessee hadconsciously concealed its income by deliberately claimingand in law, the Ld. ITAT was justified in canceling thepenalty by ignoring the fact that the assessee hadconsciously concealed its income by deliberately claiming excessive expenses which remained unsupported/substantiated and were not found to be genuine inquantum appeal proceedings by the Ld. ITAT?” 2. The Assessing Officer, during the course of assessment,disallowed the labour expenses claimed by the assessee in respect ofloading and unloading of wheat bags for Haryana WarehousingCorporation, FCI and other departments. It was observed that theassessee failed to produce evidence in support of the claim for theexpenses and to rebut the information collected by the AssessingOfficer that the charges paid were at a lesser rate. On appeal, the CIT(A) reduced the addition and on further appeal, disallowance ofexpenses was further reduced. The Assessing Officer also initiatedpenalty proceedings and finally, levied penalty, which was upheld bythe CIT(A). On further appeal, the Tribunal set aside the penalty. Itwas held that there was no material to show that the assesseeconsciously concealed the income or furnished inaccurate particulars.Mere disallowance of expenses for want of evidence could notautomatically entail penalty. The finding recorded by the Tribunal is asunder:- “4. ………A perusal of the assessment records showsthat the books of account were duly audited and thefirm showed net profit at the rate of 0.41% against0.47% showed in immediate proceeding year. Theimpugned profit was declared after setting of interestand salaries to the partners. Admittedly, the profitdeclared in assessment year 1999-2000 wasaccepted by the department. The huge labour andtransportation expenses left unpaid duringassessment year 1999-2000 and disbursed this year had already explained and accepted and verifiedduring scrutiny proceedings for assessment year2000-01. Similarly, the labour and transport expensescarried over this year and paid in next year were alsoverified by the learned Assessing Officer duringassessment proceedings for 2001-02. In view ofthese facts, it can be said that there was no consciousact by the assessee, which lead to the concealment ofincome or furnishing of inaccurate particulars ofincome……” had already explained and accepted and verifiedduring scrutiny proceedings for assessment year2000-01. Similarly, the labour and transport expensescarried over this year and paid in next year were alsoverified by the learned Assessing Officer duringassessment proceedings for 2001-02. In view ofthese facts, it can be said that there was no consciousact by the assessee, which lead to the concealment ofincome or furnishing of inaccurate particulars ofincome……” xxxxxxxxxx“21. …… In the light of the above, we are of the viewthat there is no justification in imposing the penaltyespecially when necessary information/particularswere furnished by the assessee. It may be a goodcase of addition on quantum but may not be good forimposition of penalty as quantum and penaltyproceedings are altogether different. The AssessingOfficer is directed to delete the penalty so imposed.” 3. We have heard learned counsel for the parties. 4. Contention raised on behalf of the appellant is thataddition on account of disallowance of expenses having beenupheld by this Court, burden of proof was on the assessee toshow that expenses were claimed on valid basis, in absence ofwhich, it could be presumed that the assessee had consciouslyfurnished incorrect particulars to conceal income by deliberatelyclaiming excessive expenses. 5. We are unable to accept the submission. 6. No doubt the assessee claimed expenses which couldnot be substantiated and on that ground, the same weredisallowed and disallowance was partly upheld upto this Court,but mere fact that the assessee could not furnish evidence insupport of the expenses claimed, was not by itself enough to holdthat the assessee had furnished incorrect particulars of incomeconsciously. As held by the Tribunal in the order reproducedabove, the books of account of the assessee were duly auditedand profit declared by the assessee was accepted by thedepartment for the previous year. Substantial part of theexpenses claimed was duly explained by the assessee. Whetheror not in the facts and circumstances of the case, an inferencecould be drawn that there was concealment of income or therewas furnishing of incorrect particulars, is a question of fact. In thepresent case, the Tribunal has analysed the facts and held thatthe assessee could not be held to have consciously giveninaccurate particulars. 7. In these circumstances, we are unable to hold thatany substantial question of law arises for consideration. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE March 15 2011ashwani (JASWANT SINGH) JUDGE