High Court Of Punjab & Haryana
CIT vs. Bhoj Raj & Co.
G.S. Singhvi & Nirmal Singh, JJ.
ITA No. 45 of 2000
26th July, 2000
R.P. Sawhney with Rajesh Bindal, for the Appellant
G.S. SINGHVI, J.:
This is an appeal against the order dt. 16th Sept., 1999, passed by the Tribunal, Amritsar Bench, confirming the order dt. 19th Jan., 1993, passed by the CIT(A), Bhatinda, vide which he quashed the penalty imposed on the assessee under s. 271(1)(c) of the IT Act, 1961 (for short “the Act”).
2. The facts relevant to the decision of the appeal are that on the basis of a search conducted at the premises of the assessee under s. 132 of the Act, the assessing authority made an addition of Rs. 1,45,659 for the asst. yr. 1984-85 and then imposed penalty of Rs. 95,000 under s. 271(1)(c) of the Act for furnishing inaccurate particulars of income. The CIT(A) deleted the penalty by making the following observations : “I have given careful consideration to the entire matter and I am of the considered view that even if the method of accounting being followed by the assessee is not accepted and additions are made and confirmed holding that the assessee was following the mercantile system of accounting, there is no justification for imposition of penalty especially when income on account of credit notes as well as expenses on account of debit notes was duly disclosed in the year of receipt/intimation in this regard. This view has been held by the Tribunal, Amritsar Bench in the case of Shyama Textiles for the asst. yrs. 1982-83 to 1985-86 quoted supra. It has been held by the Tribunal in that case in similar circumstances that method of accounting of showing commission/expenses on receipt basis is a recognised method since there could always to some dispute or difference regarding the actual amount receivable as commission. That this might arise subsequently because of sales returned, quality difference, complaint from customers and expenditure incurred by the mills on behalf of the assessee. That when the credit note is sent, only then it could be said that there was no further dispute on account of commission receivable. That if the books of account are maintained on the basis of credit notes received it was certainly an accepted method of accounting and that can never be a basis for holding that concealment of income was involved. The Tribunal deleted the penalties for all the four years relying on the following decisions : (i) CIT vs. Devandas Perumal and Co. (1983) 140 ITR 943 (Bom) (ii) CIT vs. Mohammed Yakub Mohd. Ibrahim and Co. (1983) 143 ITR 67 (Bom) It was held by the Tribunal that where addition was made by rejecting the method of accounting being followed (as in the case of Shyame Textile Agency), there was no basis for arriving at a finding of concealment. Reference application filed against the combined penalty order for the four years has since before rejected by the Tribunal. The facts of the appellantâs case being the same as in the case of Shyama Textile Agency, respectfully following the decision of the Tribunal, it is held that there was no inaccurate furnishing of particulars of income since income on account of credit notes was duly disclosed in the asst. yr. 1985-86 as per method of accounting being followed by the appellant. Penalty is, therefore, not exigible and penalty imposed is, accordingly, deleted.” The Tribunal upheld the order passed by the CIT by observing that it is in consonance with the similar decision rendered in other cases.
3. After hearing Shri R.P. Sawhney, senior advocate for the appellant, we are convinced that no substantial question of law arises for consideration by the court which may justify entertaining this appeal. The CIT(A) has given cogent reasons for holding that the non-acceptance of the method of accounting adopted by the assessee cannot lead to a conclusion that it had deliberately suppressed the income from the Department and we do not find any reason to take a different view.
Hence, the appeal is dismissed.
[Citation : 247 ITR 696]