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M/s. General Mechanical Works Versus ACIT, Cir. 2 (1) , Vadodara

Penalty u/s 271(1)(c) - Held that:- Evidence possessed by the AO is an information transmitted by the Department from the assessment proceedings of M/s.Prakash Marbles and Engineering Company. There is no independent affidavit collected from the proprietor of Girnar Sales Corporation and M/s.Shiv Metal Corporation. The assessee was not provided material collected in the assessment proceedings of different entities. The assessee has given complete details as to how it had made payment through acc .....

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osed - Decided in favour of assessee. - ITA. No. 1025/Ahd/2013 - Dated:- 11-11-2016 - Shri Rajpal Yadav, Judicial Member And Shri Pradipkumar Kedia, Accountant Member Assessee by : None Revenue by : Ms. Anita Hardasani, Sr. DR ORDER Per Shri Rajpal Yadav, Judicial Member Assessee is in appeal before the Tribunal against the order of the ld.CIT(A)-II, Baroda dated 31.1.2013 passed for the Asstt.Year 2002-03. 2. Solitary grievance of the assessee is that the ld.CIT(A) has erred in confirming the p .....

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rns viz. M/s.Girnar Sales Corporation and Shiv Metal Corporation respectively. The AO has observed that during the course of assessment proceedings of M/s.Prakash Marbles Engineering Co., it came to the notice of the department that proprietor of M/s.Girnar Corporation, Shri Jabbarsingh Chauhan and Shri Navin Raval, proprietor of Shiv Metal Corporation were indulged in providing accommodation bills. They have filed their affidavits during the assessment proceedings of M/s.Prakash Marbles Enginee .....

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Appeal to the CIT(A) did not bring any relief to the assessee. 4. In response to the notice of haring, the ld.counsel for the assessee sought adjournment. After considering the same, we do not deem it appropriate to grant adjournment without any reasonable cause, therefore, we proceed to decide the appeal ex parte qua the assessee. 5. With the assistance of the ld.representatives, we have gone through the record carefully. We find that the assessee has made an elaborate submissions before the l .....

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bogus, b. The AO in the assessment order has mentioned that both the above parties through their respective proprietor have confirmed that they have not supplied any material and have issued only accommodative bills. c. The AO while scrutinizing the records noted that the Appellant had made some purchases from the above 2 parties. d. The AO had therefore called for the details of the purchases made. The Appellant submitted the bills and also stated the use of the material. e. It was submitted th .....

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ck to the Appellant. i. However, the AO relying the papers filed by M/s. Girnar Sales Corporation and M/s. Shiv Metal Corporation made the addition. j. The order of the AO was confirmed by CIT(A). k. As of now the Appellant has preferred an appeal before the IT AT, And which is pending disposal. We most respectfully submit that despite the addition has been confirmed by the CIT(A) no penalty can be levied. The AO has used material in some other case for making addition in the case of the Appella .....

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t during the course of hearing also filed the quantitative tally showing the materials used. It was stated that the material was supplied at the site of 6MDC Ltd. for fabrication contract given by GMDC Ltd. It was stated that the material purchased from others and from the above two parties was used for fabrication contract given by M/s. GMDC Ltd. a. Copies of Bills of M/s. Girnar Sales Corporation and M/s. Shiv Metal Corporation are attached in the paper book at page nos. 2 to 7. b. Evidence of .....

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d Lime storage (refer page 104). g. Out of the above, total quantity supplied was 535.350 sq mtrs which is equal to 15.418 MT while the Appellant has purchased total quantity of 17.305 MT from M/s. Girnar Sales Corporation and SAIL. Out of that 1.887 MT was scrap and wastage and the total quantity of 535.350 sq mtr tallied with the material used and supplied to GMDC. . h. Regarding the purchase of electrodes from M/s. Shiv Metal Corporation it was stated that electrodes were purchased from M/s. .....

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lant for executing the contract of GMDC Ltd. The payment has been made by cheque and also the Appellant has received further payment. We therefore submit that despite the addition made the penalty levied may please be deleted. Order of ITAT, Ahd 5. It may be mentioned that in similar type of cases the AO had made identical addition. One such case is of M/s. First Industries. The ITAT, Ahd in the case of M/s. First Industries has held that under such situations disallowance of entire purchases is .....

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n view of direct decision of ITAT, Ahd on similar facts, we submit that penalty levied by the AO may please be deleted. No material supplied to the Appellant: 7. There is yet another reason why penalty cannot be levied in the case of the Appellant. We have already mentioned that the AO has used material collected in some other case for making the addition in the case of the Appellant. The AO has made reference to the material used in the case of M/s. Prakash Marbles and Engineering Co. However, .....

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tter dated 3-2- 2005 and affidavit dated 9-2-2005 the above two parties have admitted of providing accommodative bills. It has also been stated by the AO that the letter dated 3-2-2005 and affidavit dated 9-2-2005 have been kept on record. However, no such letter or affidavit has been provided to the Appellant. The letter and the affidavit have been kept on record but without parting with the Appellant. Despite the said evidences have been used against the Appellant no such material has been sup .....

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of Appellant: 10. We may also like to mention that the Partner of the Appellant firm vide Affidavit dated 15-10-2007 (refer page 51-52) had confirmed that the purchases made from M/s. Girnar Sales Corporation and M/s. Shiv Metal Corporation have been used for executing contract of GMDC Ltd. This affidavit was filed with the AO however, the AO has choosen to ignore the said affidavit. It may be mentioned that an affidavit is a valid piece of evidence and is required to be considered while framing .....

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ble. c. The Appellant has produced all the evidences to prove that the purchases made by it are genuine and also confirmed the same by filing a counter affidavit. d. The onus cast on the Appellant to prove that the purchases are genuine has been discharged by the Appellant. 12. Considering the above we request your kind office to delete the levy of penalty. 13. Should you require any further information or explanation we shall be pleased to submit the same on hearing from your kind office to do .....

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of penalty. (i)and (Income-tax Officer,)** ** ** (iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such income or fringe benefits: Explanation 1- Where in respect of any facts material to the computation of the .....

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in computing the total income or such person as a result thereof shall, for the purposes of Clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 7. A bare perusal of this section would reveal that for visiting any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inacc .....

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curate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation-1 to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessin .....

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anation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such .....

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