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Facts
The assessee, a brick kiln business, received an advance payment for bricks which the AO treated as a bogus liability, leading to a penalty under section 271(1)(c). The matter was previously remanded by the Tribunal for the assessee to produce evidence of brick supply against the payment.
Held
The Tribunal found that the assessee duly furnished certificates from the concerned department and ledger extracts confirming that bricks were supplied in subsequent years against the payment. Consequently, finding no adverse material, the Tribunal deleted the penalty.
Key Issues
Whether penalty under section 271(1)(c) was correctly levied for treating an advance payment as bogus liability, despite the assessee subsequently providing evidence of actual brick supply.
Sections Cited
Section 271(1)(c) of the Income Tax Act
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Income Tax Appellate Tribunal, ‘DB’, AMRITSAR BENCH, AMRITSAR
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI UDAYAN DAS GUPTA, JM
(िनधा�रण वष� / Assessment Year: 1982-83) M/S RPK Bricks Manufactures ITO बनाम/ Vs. 113, Church Road Ward III(2) Ferozepur Cantt. Ferozepur. �थायीलेखासं./जीआइआरसं./PAN/GIR No. 183-R (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/Appellant by : Mrs. Sangeeta Garg (CA) & Ms. Monika (CAs) – Ld. ARs ��थ�कीओरसे/Respondentby : Sh. Charan Dass (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 05-08-2025 घोषणाकीतारीख /Date of Pronouncement : 18-08-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) Aforesaid appeal by assessee for Assessment Year (AY) 1. 1982-83 arises out of an order of Ld. Commissioner of Income Tax (Appeals), Bathinda [CIT(A)] dated 03-01-2008 confirming penalty of Rs.96,010/- as levied by Ld. AO u/s 271(1)(c) vide order dated 09-03-2007. Having heard rival submissions, the appeal is disposed-off as under.
From case records, it emerges that the assessee-firm carried out bricks kiln business. The assessee received cheque of Rs.1,87,786/- from Lining division, Faridkot against supply of bricks. The same was duly reflected in the financial statements. However, Ld. AO treated the same as bogus liability on the ground that government department would not make advance payment without receiving the bricks from the assessee. The Tribunal confirmed this addition and accordingly, penalty of Rs.96,010/- was levied by Ld. AO u/s 271(1)(c) vide order dated 08-09-1999. During penalty proceedings, the assessee, in its reply dated 24-08-1999, provided details of bricks supplied in FYs 1982-83 to 1986-87 and stated that the liability was discharged by supplying the bricks to the Lining division, Faridkot. However, Ld. AO rejected the same. The matter reached up-to Tribunal wherein, by order dated 21-04- 2005, the issue of impugned penalty was restored back to the file of Ld. AO for fresh consideration with a direction to the assessee for producing evidence from the concerned department that against such payments, bricks were supplied and accounted for in the subsequent years.
In the set aside penalty proceedings, Ld. AO again confirmed the penalty by order dated 29-11-2005 on the ground that no fresh evidences were filed by the assessee though the assessee, vide submissions dated 28-08-2005, stated that fresh copies of accounts from government department could not be submitted since the department was closed / merged and almost after huge gap of 23-24 years, the records were not available as confirmed by the concerned department in its reply dated 24-11-2005. During first appeal, the assessee filed certificate dated 28-05-2006 from concerned department certifying that no bricks were pending against payment made to the assessee in FY 1981-82. Another similar certificate dated 31-08-2007 was also filed in further support. However, Ld. CIT(A) still confirmed the impugned penalty against which the assessee is in further appeal before us.
The factual position that emerges is that the assessee has duly furnished the certificates from the concerned department pursuant to the directions of the Tribunal. In these certificates, it is clearly been confirmed that no supply of bricks is pending against the assessee for the payments made during FY 1981-82. The assessee also furnished copies of ledger extracts of Lining Department from 01-04-1981 to 31-03-1987 to support the facts that the material was duly supplied in subsequent years. There is no adverse material against the assessee which would justify confirmation of impugned penalty. On these facts, we delete the impugned penalty of Rs.96,010/- and allow the appeal of the assessee. Consequently, the other grounds as urged by Ld. AR has been rendered mere academic in nature and hence, not dealt with at this stage.
The appeal stand allowed in terms of our above order. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.
Sd/- Sd/- (UDAYAN DAS GUPTA) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 18-08-2025. आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF ASSISTANT REGISTRAR
ITAT AMRITSAR