M/s Garg Rice Mills, Ismailabad V. ITO, Kurukshetra

ITA 1004/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60834 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-04-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 17-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.1004/CHD/2011 ASSESSMENT YEAR: 2006-07 M/S GARG RICE MILLS, V ITO, WARD-2, ISMAILABAD, KURUKSHETRA. DISTT. KURUKSHETRA. PAN: AADFG-1532A (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SMT. JAISHREE SHARMA DATE OF HEARING : 21.04.2012 DATE OF PRONOUNCEMENT : 10.05.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 18.07.2011 PASSED BY THE LD . CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE AC T'), UPHOLDING THE PENALTY OF RS.81,104/- U/S 271(1)(C) OF THE ACT, LEVIED BY THE AO. 2. NONE ATTENDED FROM THE SIDE OF THE ASSESSEE. HOW EVER, THE CASE IS ADJUDICATED ON MERITS, IN THE LIGHT OF THE AVAILABLE RECORDS AND MATERIAL. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX, APPEAL S KARNAL IS NOT JUSTIFIED IN DISMISSING THE APPEAL AS THERE WAS NO CONCEALMENT OF ANY FACTS/ INCOME. THE SALE OF CHILKA ESTIMATED BY LOWER AUTHORITIES WERE BASED ON ESTIMATES AS NO SUPPRESSION O F SALE WAS EVER DETECTED. 2 THAT THE APPELLANT PRAYS THAT THE ORDERS PASSED BY LOWER AUTHORITIES MAY PLEASE BE QUASHED AND APPEAL MAY PL EASE BE ACCEPTED. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, AMEND O R DELETE ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEAR ING OF APPEAL. THE POWER OF ATTORNEY IS ENCLOSED ALONGWITH MEMORAN DUM OF APPEAL. THE APPEAL FEE OF RS. 500/- PAID ON 14-10-2 01 1 IN P.N.B. ISMAILABAD. 4. THE AO MADE AN ADDITION OF RS.86,066/- ON ACCOUN T OF LOW YIELD OF RICE BRAN AND ADDITION OF RS.4,30,530/ - ON ACCOUNT OF LOW YIELD OF HUSK AND ITS SALE AT LOWER RATE THAN THE MARKET RATE AND ON THE BASIS OF TWO COMPARABLE CASES OF THE SAME AREA, AND ASSESSED THE INCOME OF THE ASSES SEE AT RS.5,27,180/- VIS--VIS ON RETURNED INCOME AT RS.10 ,583/-. THE AO DID NOT ACCEPT THE EXPLANATION FILED BY THE ASSESSEE AND LEVIED THE PENALTY OF RS.81,104/-. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT REQUISITE DETAILS OF PADDY HUSK SOLD, WAS SUPPLIED TO THE AO. IT WAS ALSO POINTED OUT THA T ASSESSEE HAS ALSO USED ABOUT 1000 QTL. OF PADDY HUSK FOR FIELD LIPAI AND UNDER THE STACKES TO SAVE THE PADDY FROM MOISTU RE. IT IS OBSERVED BY THE AO IN THE PENALTY ORDER DATED 23.3 .2010 THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE REPLY OF THE ASSESSEE WAS CONSIDERED AND IT WAS OBSERVED THAT TH E ASSESSEE HAD PURCHASED THE PADDY FROM THE OPEN MARK ET AND NOBODY HAD PREVENTED THE ASSESSEE FROM PURCHASING P ADDY OF GOOD QUALITY. THEREFORE, ADDITION ON ACCOUNT OF LO W YIELD OF RICE BRAN, WEIGHING 219.32 QT. WAS MADE TO THE TUNE OF RS.86,066/-. SIMILARLY, THE AO MADE THE ADDITION I N RESPECT OF LOW YIELD OF HUSK. LD. CIT(A), UPHELD THE LEVY OF PENALTY BY THE AO. 3 5. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND FINDINGS OF BOTH LOWER AUTHORITIES. THE ASSESSEE HAS DISCLOSED ALL THE RELEVANT PARTICULARS OF HIS INCOME IN THE RETURN OF INCOME AND IT IS NOT A CASE WHERE THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE ADDITION HAS BEEN MADE BY THE AO, ON THE BASIS OF COMPARABLE CASES AN D ON APPLYING THE THUMB RULE OF ESTIMATION. THE ESTIMAT ION, MADE BY THE REVENUE, AND BY THE ASSESSEE ARE IN THE SAME CATEGORY, AND NO SUPERIORITY COULD BE CLAIMED BY THE REVENUE, IN THE MATTER OF MAKING ESTIMATION. THE ASSESSEE HAS FILE D EXPLANATION IN THE MATTER. HOWEVER, THE SAME WAS N OT FOUND ACCEPTABLE BY THE AO. THE AO, ON THE BASIS OF COMP ARABLE CASES OF AREA MADE THE IMPUGNED ADDITION. SUCH ADD ITION, CANNOT FALL UNDER THE CONCEPT OF CONCEALED INCOME, AS CONTAINED U/S 271(1)(C) OF THE ACT AND EXPLANATION (I) THEREUNDER. LEVY OF PENALTY, IS NOT AUTOMATIC AND APPLICATION OF MIND, ON THE PART OF THE CONCERNED REVENUE AUTHO RITY IS ESSENTIAL. IN THE PRESENT CASE, LEVY OF PENALTY HAS BEEN CONSIDERED BY THE AO, AS MECHANICAL AND CASUAL EXER CISE, AS NO PENALTY CAN BE LEVIED IN THE LIGHT OF SUCH FACTU AL MATRIX OF THE CASE. THE HON'BLE JURISDICTIONAL HIGH COURT, I N THE CASE OF HARGOPAL SINGH V CIT (2002) 258 ITR 85 (P&H) CLE ARLY HELD THAT PENALTY U/S 271(1)(C) CANNOT BE LEVIED, WHERE THE INCOME HAS BEEN ESTIMATED. IT IS ALSO WELL SETTLED LEGAL PROPOSITION THAT THE PROVISIONS ARE REQUIRED TO BE STRICTLY INT ERPRETED AND NO PENALTY CAN BE LEVIED UNLESS THE CASE SQUARELY F ALLS UNDER THE RELEVANT PROVISIONS OF SECTION 271(1)(C) OF THE ACT. NO 4 PENALTY CAN BE LEVIED AND UPHELD IN FACTS AND CIRCU MSTANCES, WHERE THE ADDITION HAS BEEN MADE ON ESTIMATE BASIS, BY PLACING RELIANCE ON CERTAIN COMPARABLE CASES. CONS EQUENTLY, THE IMPUGNED APPELLATE ORDER, UPHOLDING THE PENALTY , PASSED BY THE CIT(A), CANNOT BE SUSTAINED AND, HENCE, THE SAME IS SET ASIDE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH MAY,2012. SD/- SD/- (H.L.KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 10 TH MAY,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH