DY.COMMISSIONER OF INCOME TAX ,VAPI CIRCLE,, VAPI vs. M/S. BHARAT STEEL SUPPLIERS,, VAPI

Grounds raised by the Revenue in ITA No.621/Ahd/2016 read as under: “1. On the facts and circumstances of the case as well as law, the CIT(A), has erred in deleting the penalty levied u/s.271(1)(c) of the I.T. Act of Rs.43,20,735/- ignoring the fact that disclosure was made u/s.132(4) of the I.T.Act and the assessee is not eligible for the benefit of immunity and exemption under clause 2 of Explanation 5 ton section 271(1)(c) of the I.T.Act.

The issue involved in both the appeals are interlinked, therefore we have heard both the appeals together and disclosing the same by passing the one common order for the sake of convenience.

The assessee is a concern of the Remi Steel Group of Vapi which consists of M/s.Remi Steel House, M/s.Bharat Steel Supliers and M/s.Rolex

Further, Shri Kamlesh Jain had given bifurcation of the unexplained and unaccounted stock and cash on 14.02.2007. The Assessing Officer found that assessee firm has been in possession of unexplained cash of Rs.5,00,000/- and unaccounted stock of Rs.1,23,36,409/-. The assessee has filed its Return of Income of Rs.1,01,17,550/- on 31.10.2007. The Assessing Officer completed assessment u/s.143(3) of the Income Tax Act on 28.11.2008 for the assessed income of Rs.1,31,26,410/-. Penalty

Aggrieved by this penalty order, the assessee filed appeal before the ld.First Appellate Authority who vide order dated 03.03.2010 has confirmed the same and dismissed appeal of the assessee.

The assessee preferred an appeal before the ITAT against the order of the ld.CIT(A). The Hon'ble ITAT “C” Bench, Ahmedabad deleted the penalty in dispute.

Aggrieved by the order of ITAT the Revenue preferred an appeal before the Hon'ble Gujarat High Court and the Hon'ble High Court vide order dated 21.10.2013 quashed the order of the ITAT and has set-aside the matter and remanded back to the Assessing Officer to consider the penalty proceedings u/s.271(1)(c) of the Income Tax Act afresh in accordance with law and on merits.

In compliance of the same, the Assessing Officer after giving the opportunity to the assessee against levied the penalty of Rs.43,20,735/- on 24.07.2014.

Aggrieved with the penalty order, the assessee filed appeal before the ld.CIT(A) who allowed the appeal of the assessee and deleted the penalty in dispute by observing that the disclosure was made under the survey proceedings and this fact is also emanating from the assessment order as well as from the penalty order. The appellant cannot be visited with the penalty as per specific provisions contained under Explanation 5 of section 271(1)(c) of the Act.

Aggrieved by the order of ld.CIT(A), the Revenue preferred the present appeal.

At the time of hearing, the ld.CIT-DR relied on the penalty orders passed by the Assessing Officer and contention raised by the Revenue in the grounds of appeals.

On the contrary, the ld.Counsel for the assessee relied on the order of ld.CIT(A) and stated that this disclosure has been made during survey proceedings u/s.133A of the Income Tax Act and as regards to the penalty the Explanation 5 of section 271(1)(c) is not applicable in the case of assessee, therefore, he relied on the order of the ld.First Appellate Authority and requested that appeal filed by the Revenue may be dismissed.

We have heard the both parties and perused the orders passed by the Revenue Authorities and we are of the considered view that ld.First Appellate Authority has passed well-reasoned order and rightly not apply the provision of Explanation 5A of section 271(1)(c) of the Income Tax Act in the both cases of Assessee and rightly deleted the penalties in dispute. For the sake of convenience the relevant portion of ld.CIT(A) order is reproduced as under: “I have carefully considered the facts of the case as contained in the penalty order passed by the assessing officer as well as the written submission made by AR of the appellant during the appellate proceedings. While passing the penalty order in compliance of directions of Hon'ble High Court of Gujarat, the assessing officer did not comply with all the limbs of the directions of Hon'ble High Court of Gujarat. While levying the penalty the assessing officer merely relied upon the order of CIT(A) who confirmed the penalty levied by the assessing officer vide order dt:03.03.2010. No finding as to whether the disclosure made by the appellant u/s 133A of the Act or u/s 132 of the Act was made by the assessing officer. No rebuttal of the submissions made by the appellant before the assessing officer during the penalty proceedings was also made. No reasoned penalty order based on findings which were required to be made, was passed by assessing officer. The assessing officer simply relied upon the order of CIT(A) who upheld the penalty considering the disclosure made under search because later on this was the line of the argument of the Department before hon High Court of Gujarat against the decision of TIAT Ahmadabad setting aside the order of CIT(A) after considering the accepting the disclosure as made under the survey proceedings by the appellant. As the assessing officer has not given any finding as to the disclosure made under survey proceedings or under search proceedings so I am left with no alternative except to rely on the submissions as well as the evidences adduced by the AR of the appellant during the appellate proceedings. After considering the submission of the appellant I am of the considered view that the disclosure was made under the survey proceedings, is not disputed by the assessing officer and also keeping in view the various submissions of the AR of the appellant and also the evidences such as statements, documents prepared at the time of survey and submitted during the appellate proceedings there remains no doubt that the

After going through the aforesaid findings of the ld.First Appellate Authority on the issue involved in the present appeal, we are of the considered view that no interference is called for in the well-reasoned orders passed by the ld.First Appellate Authority. We uphold the impugned orders by dismissing the appeals of the Revenue for both the assessment years.

In the result, both appeals of the Revenue are dismissed.