SHANTILAL J . SOPARIWALA, MUMBAI V. ASST CIT CEN CIR 24, MUMBAI

ITA 1309/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0498 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-03-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: BHAVIN PAREKH
• Keywords: Unexplained expenditure
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1309/MUM/2014 ASSESSMENT YEAR : 2002-03 M/S SHANTILAL J SOPARIWALA 1/212 NAVJIVAN SOCIETY, LAMINGTON ROAD, MUMBAI 400 008 PAN AABFS2956A VS. ACIT CENT. CIR 24, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BHAVIN PAREKH RESPONDENT BY : SHRI RAM TIWARI DATE OF HEARING : 02. 08 .2017 DATE OF PRONOUNCEMENT : 08 .0 8 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), DATED 23.10.2013, FOR A.Y.2002-03. THE ONL Y ISSUE INVOLVED IN THIS APPEAL RELATES TO THE SUSTENANCE OF PENALTY LEVIED U/S. 271(1)(C) BY THE ASSESSING OFFICER AMOUNTING TO ` 4,11,978/- 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM. IT FILED ITS RETURN OF INCOME ON 31.10.2002 DECLARING TOTAL INCOME AT ` 1,54,580/, WHICH WAS PROCESSED U/S. 143(1). SUBSEQUENTLY, A S EARCH AND SEIZURE ACTION U/S. 132 WAS CONDUCTED ON 10.01.2004 AT THE RESIDEN TIAL/BUSINESS PREMISES OF SHANTILAL SOPARIWALA GROUP. IN RESPONSE TO NOTI CE U/S. 153A OF THE I T ACT, ITA NO.1309/MUM/2014 M/S SHANTILAL J SOPARIWALA 2 THE ASSESSEE FILED RETURN OF INCOME EON 31.3.2005 D ECLARING INCOME AT ` 1,54,580/-. THE ASSESSING OFFICER DETERMINED THE I NCOME U/S. 143(3) R.W.S 153A AT ` 13,08,580/- ON 28.03.2006. THE MAIN ADDITION HAS BEEN MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE OF ` 4,58,424/- AND PROFIT ON SUPPRESSED SALES OF ` 6,95,577/- THE ADDITION OF ` 4,58,424/- WAS MADE DUE TO THE DIFFERENCE IN THE EXPENSES RECORDED IN TWO PETTY CA SH BOOK, WHILE SUPPRESSION OF SALES WAS WORKED OUT AT ` 1,46,43,741/- BY ESTIMATING THE AVERAGE RATE OF SUPPRESSION @ 35%. SINCE THE ASSES SEE HAD DISCLOSED GROSS PROFIT @4.75%, THE PROFIT ON SUPPRESSED SALES WAS W ORKED OUT AT ` 6,95,577/- THE ASSESSING OFFICER IMPOSED PENALTY O N THE ASSESSEE ON THE SAID ADDITION AMOUNTING TO ` 11,54,000 BEING 100% OF THE TAX SOUGHT TO BE EVADED AMOUNTING TO ` 4,11,978/- AGGRIEVED, THE ASSESSEE PREFERRED APPE AL BEFORE THE CIT(A), WHO CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. THUS, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CON SIDERED THE SAME ALONG WITH THE ORDERS OF THE AUTHORITIES BELOW. BE FORE US, THE LEARNED AR VEHEMENTLY CONTENDED THAT DURING THE COURSE OF SEAR CH TWO SETS OF PETTY CASH REGISTERS WERE FOUND. THE ASSESSEE EXPLAINED THAT BY MISTAKE THE EXPENSES OF OTHER FIRM WERE RECORDED IN THE ASSESSE ES PETTY CASH BOOK. THE MISTAKE WAS POINTED OUT AT THE TIME OF AUDIT AND WA S RECTIFIED ACCORDINGLY ITA NO.1309/MUM/2014 M/S SHANTILAL J SOPARIWALA 3 WITH A SEPARATE PETTY CASH REGISTER. HOWEVER, THE OLD REGISTER MUST NOT HAVE BEEN DISCARDED. THE ADDITION HAS BEEN MADE IN RESP ECT OF THE EXPENDITURE, WHICH HAS NEVER BEEN INCURRED BY THE ASSESSEE. THE SUPPRESSION OF SALE HAS ALSO BEEN ESTIMATED AND THE GROSS PROFIT THEREON HA S BEEN MADE ON ESTIMATION BASIS. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 5. FACT REMAINS THAT THE ADDITION SUSTAINED IS ON E STIMATE BASIS. IN OUR VIEW, NO PENALTY CAN BE LEVIED WHEN THE ADDITION HA S BEEN MADE ON ESTIMATE BASIS. IN OUR OPINION, EXPLANATION GIVEN BY THE ASS ESSEE BEFORE US IS A POSSIBLE ONE. IN VIEW OF THIS FACT, WE DELETE THE PENALTY OF ` 4,11,978/- IMPOSED U/S. 271(1)(C) OF THE ACT. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH DAY OF AUGUST, 2017. SD/- SD/- (PAWAN SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 8 TH AUGUST, 2017 SA ITA NO.1309/MUM/2014 M/S SHANTILAL J SOPARIWALA 4 COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, E BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI