Shri Pareshkumar Bhikhamchand Shah, Panchmahal V. The Income tax Officer,Ward-1, Palanpur

ITA 1117/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9237 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAMES KURIEN
• Keywords: Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JM & SHRI MANISH BORA D, AM. ITA NO. 1117/AHD/2014 ASST. YEAR: 2007-08 PARESHKUMAR BHIKAMCHAND SHAH, PROP. PARESH TRADERS, C/O NAVPAD FLEXI PACK, 1706/5, GIDC ESTATE, HALOL, DIST. PANCHMAHAL VS. ITO, WD-1, PALANPUR APPELLANT RESPONDENT PAN AUBPS 3514J APPELLANT BY SHRI A. C. SHAH, AR RESPONDENT BY SHRI JAMES KURIEN, DR DATE OF HEARING: 20/2/2017 DATE OF PRONOUNCEMENT: 21/02/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF ASSESSEE FOR ASST. YEAR 2007-08 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A) XX, AHMEDABAD, DATED 20.2.2014 VIDE APPEAL NO.CIT(A)-XX /164/12-13 ARISING OUT OF ORDER U/S 271(1)(C) OF THE IT ACT, 1 961 (IN SHORT THE ACT DATED 26.2.2013 FRAMED BY ITO, WD-1, PALANPUR. ASSE SSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENA LTY LEVIED OF RS. 1,67,200 UNDER SECTION 271(L)(C) ON THE GROUND THAT THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME IN AS ITA NO. 1117/AHD/2014 ASST. YEAR 2007-08 2 MUCH AS THE ASSESSEE VALUED THE CLOSING STOCK AT CO ST OR MARKET PRICE WHICHEVER IS LOWER. THEREFORE, THERE IS NO QUESTION OF ANY CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF I NCOME. 2. THE APPELLANT SAYS AND SUBMITS THAT THE AO HAS NOT DISCHARGED THE BURDEN TO THE EFFECT THAT THE ASSESSEE HAS IN FACT FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE INCOME [CIT V/S. JALARAM OIL MILLS 253 ITR 192 (GUJ) AND NATIONAL TEXTILES V/S. CIT 249 ITR 125 (GUJ)]. 3. THE APPELLANT FURTHER SAYS AND SUBMITS THAT THE AO HAS MADE HIS FINDINGS ON THE BASIS OF THE ASSESSMENT ORDER. HE HAS NOT AD DUCED ANY NEW MATERIAL TO SHOW THAT THE ASSESSEE HAS CONCEALED TH E INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME [DILIP N. SHROFF V /S. JCIT 291 ITR 519 [SC] AND CIT V/S. KHODAY ESWARSHA & SONS 83 ITR 369 (SC)]. 4. THE APPELLANT FURTHER SAYS AND SUBMIT THAT THE AO H AS HELD IN PARA NO.5 OF PENALTY ORDER THAT THE ASSESSEE HAS CONCEALED TH E INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE AO IS NOT CLE AR AS TO WHAT DEFAULT IS COMMITTED BY THE ASSESSEE. IN THE ABSENCE OF ANY SPECIFIC CHARGE, THE PENALTY FAILS [A.M. SHAH V/S. CIT 238 ITR 415 (GUJ) AND CIT V/S. MANU ENGG. 122 ITR 506 (GUJ) AND NEW SORATHIA ENGG. CO. V/S. CIT 282 ITR 642 (GUJ)]. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL CARRYING ON SOLE PROPRIETARY BUSINESS IN THE NAME OF PARESH TRADERS TRADING OF AGRICULTURE PRODUCTS AND COMMISSION AGENT. CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S 143(3) OF TH E ACT WAS FRAMED ON 16.12.2009 MAKING ADDITION IN RESPECT OF GROSS PROFIT AT RS.5,46,407/- AND ADDITION ON ACCOUNT OF LOW HOUSEH OLD EXPENSES AT RS.90,000/-. RETURNED INCOME AT RS.1,25,870/- WAS A SSESSED AT RS.8,00,537/-. ASSESSEES APPEAL ON QUANTUM ADDITIO N WAS DISMISSED BY LD. COMMISSIONER OF INCOME TAX(A), VID E ORDER DATED 26.02.2013. PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT CONSEQUENTLY AND OUT OF THE QUANTUM ADDITION ON ACCOUNT OF ITA NO. 1117/AHD/2014 ASST. YEAR 2007-08 3 GROSS PROFIT ADDITION OF RS.5,46,407/- AND LOW HOUS EHOLD EXPENSES AT RS.90,000/- LD. ASSESSING OFFICER IMPOSED PENALTY O F RS. 1,67,200/- ON THE CONCEALED INCOME RELATING TO ADDITION OF GRO SS PROFIT ONLY. AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE LD. COMMI SSIONER OF INCOME TAX(A) BUT COULD NOT SUCCEED AND PENALTY U/S 271(1)(C) OF THE ACT AT RS.1,67,200/- WAS CONFIRMED. AGGRIEVED, ASSE SSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL RAISING FOUR GROUNDS BUT THE SOLITARY GRIEVANCE IS AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A) CONFIRMING OF PENALTY OF RS.1,67,200/- U/S 271(1)(C ) OF THE ACT. 3. AT THE OUTSET LD. AUTHORISED REPRESENTATIVE SUBM ITTED THAT THE QUANTUM ADDITION OF RS. 5,46,407/- IN RESPECT OF UN DER VALUATION OF CLOSING STOCK HAS BEEN DELETED BY THE TRIBUNAL, AHM EDABAD VIDE ITA NO.1063/AHD/2013 PRONOUNCED ON 16.8.16 AND, THEREFO RE, AS THE QUANTUM ADDITION HAS BEEN DELETED, THE PENALTY U/S 271(1)(C) OF THE ACT WILL NOT STAND AND DESERVES TO BE DELETED. 4. LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CONTRO VERT THE SUBMISSIONS MADE BY LD. AUTHORISED REPRESENTATIVE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US AND GONE THROUGH THE DECISION RELI ED ON BY THE LD. AUTHORISED REPRESENTATIVE. SOLITARY GRIEVANCE OF TH E ASSESSEE IN THIS APPEAL IS AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A) CONFIRMING PENALTY OF RS.1,67,200/- ON THE QUANTUM ADDITION IN THE GROSS PROFIT TOWARDS UNDER VALUATION OF CLOSING STO CK AT RS.5,46,407/-. RELEVANT PROVISIONS OF SECTION 271(1)(C) OF THE AC T SUGGEST THAT IN ITA NO. 1117/AHD/2014 ASST. YEAR 2007-08 4 ORDER TO COVER THERE HAS TO BE A CONCEALMENT OF PAR TICULARS OF INCOME OR FURNISHING OF INACCURATE OF PARTICULARS OF INCOM E. EXAMINING THE FACTS OF THE CASE IN THE LIGHT OF THESE PROVISIONS WE OBSERVE THAT THE QUANTUM ADDITION RELATING TO UNDERVALUATION OF CLOS ING STOCK OF RS.5,46,407/- ALREADY STANDS DELETED BY THE TRIBUN ALS ORDER IN ITA NO.1063/AHD/2013 BY OBSERVING AS FOLLOWS :- 5. IN THE PRESENT CASE, THE ASSESSEE HAD DULY FURNI SHED A CERTIFICATE FROM THE APMC PALANPUR CONFIRMING THE MARKET PRICE AT THE YEAREND WHICH HAS CLEARLY ESTABLISHED THAT THE MARKET PRICE WERE LOWER THAN T HE COST PRICE. IT WAS ON THE BASIS OF THAT MARKET PRIC E THAT THE STOCKS WERE VALUED. THAT IS PRECISELY WHAT OUGHT TO HAVE BEEN DONE ANYWAY. THE STAND OF THE ASSESSEE DOES MERIT ACCEPTANCE. AS FOR THE VALUATIO N ON FIFO BASIS, I.E. FIRST IN FIRST OUT, I DO NOT FIND ANY LEGAL SANCTION FOR MANDATORY USE OF THIS METHOD. BE THAT IS IT MAY, EVEN IF FIFO IS TAKEN, SINCE THE MA RKET PRICE ARE ADMITTEDLY LOWER THAN THE PRICES SO ARRIV ED AT, ONLY MARKET PRICE CAN BE TAKEN INTO ACCOUNT. VI EWED THUS ALSO, THE STAND OF THE ASSESSEE CANNOT BE FAUL TED WITH. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, I UPHOLD THE PLEA OF THE ASSESSEE. THE ADDITION OF RS 5,46,407 TO THE VALUE OF CLOSING STOCK IS THUS DELETED. THE ASSESSEE GETS TH E RELIEF ACCORDINGLY. 6. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE , WE FIND THAT PENALTY U/S 271(1)(C) OF THE ACT HAS BEEN LEVIED ON THE ADDITION MADE BY LD. ASSESSING OFFICER BUT WHEN THE BASIS I.E. QU ANTUM ADDITION HAS ITSELF BEEN DELETED BY THE CO-ORDINATE BENCH, THERE REMAINS NO BASIS FOR THE PENALTY U/S 271(1)(C) OF THE ACT TO STAND F OR. WE ACCORDINGLY DELETE THE SAME. ITA NO. 1117/AHD/2014 ASST. YEAR 2007-08 5 7. IN THE RESULT, WE SET ASIDE THE ORDER OF LD. COM MISSIONER OF INCOME TAX(A) AND DELETE THE PENALTY U/S 271(1)(C) OF THE ACT AT RS.1,67,200/-. ACCORDINGLY, THE APPEAL OF THE ASSES SEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2017 SD/- SD/- (MAHAVIR PRASAD) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 21/02/2017 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 1117/AHD/2014 ASST. YEAR 2007-08 6 1. DATE OF DICTATION: 20/02/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 20/02/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 21/2/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: