ACIT, Palampur V. Sh. Ashok Indoria, Kangra

ITA 1330/CHANDI/2010

• Counselvise Citation: 133021514 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-12-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 23-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA
• Keywords: Unexplained investment; Initiation of penalty proceedings
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.1330/CHD/2010 ASSESSMENT YEAR: 2001-02 ACIT, CIRCLE, V SHRI ASHOK INDORIA, PALAMPUR (HP). VPO JANERA, TEH. NURPUR, KANGRA. PAN: AAHPI-6387B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AKHILESH GUPTA RESPONDENT BY : NONE DATE OF HEARING : 12.12.2011 DATE OF PRONOUNCEMENT : 27.12.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER DATED 14.09.2010 PASSED BY THE LD. CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE ACT'). 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED U/ S 271(1)(C) AT RS.5,05,000/-, EVEN THOUGH THE ASSESSE E HAD NOT FURNISHED ANY EXPLANATION AT ALL ON THE ISS UES INVOLVED, AND HENCE, THE CASE FELL SQUARELY WITHIN THE PURVIEW OF EXPLANATION 1 OF SECTION 271(1)(C). 2. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO IS RESTORED. 3. THE APPELLANT CARVES LEAVE TO ADD ANY OTHER GROUND OF APPEAL WHICH MAY ARISE AT THE TIME OF HEARING. 2 3. LD. 'DR' PLACED RELIANCE ON THE ORDER PASSED BY THE LOWER AUTHORITIES PASSED ON THE PENALTY ORDER BY THE AO. NONE ATTENDED ON BEHALF OF THE APPELLANT. HOWEVER, THE CASE IS DECIDED ON MERIT ON THE BASIS OF AVAILABLE MATERIAL . 4. THE REVENUE CHALLENGED THE DELETION OF PENALTY I MPOSED U/S 271(1)(C) OF THE ACT AT RS.5,05,000/- . IN THIS CASE, THE ASSESSEE FILED RETURN OF INCOME ON 01.03.2002 FOR T HE ASSESSMENT YEAR 2001-02 DECLARING LOSS OF RS.358/-. ASSESSEE IS ENGAGED IN THE BUSINESS OF STONE CRUSHER AND SUP PLY OF EXCAVATING JCB MACHINES ON HIRE. THE CASE WAS REOP ENED U/S 148 OF THE ACT AND AO ASSESSED THE INCOME AT RS.14, 86,255/- BY MAKING THE FOLLOWING ADDITIONS : 1. ON ACCOUNT OF INCOME FROM STONE CRUSHER RS.1,30, 375/- 2. ON ACCOUNT OF UNDISCLOSED INCOME RS.4,51,109/- 3. ON ACCOUNT OF UNEXPLAINED INVESTMENT RS.9,06,98 9/- MADE TO PURCHASE JBC MACHINE 5. THE AO WAS OF THE OPINION THAT AS HAS CONCEALED THE IMPUGNED ASSESSED INCOME WITHIN THE MEANING OF SECT ION 271(1)(C) OF THE ACT AND CONSEQUENTLY, IMPOSED A PE NALTY OF RS.5,05,000/-. THE CIT(A), AFTER MAKING A REFERENC E TO THE INSERTION OF CLAUSE (1B) BELOW EXPLANATION 1 TO SEC TION 271(1)(C) OF THE ACT, WHICH PROVIDES THAT DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS UNDER CLAUSE (C) OF SUB-SECT ION (1) SHALL BE DEEMED TO CONSTITUTE SATISFACTION FOR INITIATION OF PENALTY UNDER CLAUSE (C), CATEGORICALLY RECORDED THE FINDI NG THAT THE ADDITION WAS MADE BY THE AO ON ESTIMATE BASIS AND CONSEQUENTLY FOLLOWING THE DECISION OF THE BOMBAY H IGH 3 COURT IN R.K.SAREE MUSEUM (1971) 197 ITR 147 (BOM), DELETED THE PENALTY IMPOSED ON SUCH ESTIMATE. 6. HAVING REGARD TO THE FACT SITUATION OF THE PRESE NT CASE, FINDINGS OF THE LD. CIT(A) AND THE NATURE OF ADDITI ON MADE BY THE AO, IT IS EVIDENT THAT THE IMPUGNED PENALTY WAS LEVIED ON THE ADDITION MADE BY THE AO ON ESTIMATE BASIS. THE AO IS COMPETENT TO MAKE ADDITION ON ESTIMATE BASIS BASED ON RATIONALE AND COGENT EVIDENCES. HOWEVER, ADDITION MADE ON ESTIMATE BASE CANNOT BE MADE THE FOUNDATION FOR LEV Y OF PENALTY U/S 271(1)(C) OF THE ACT, BEING A MERE OPIN ION BASED ADDITION. THE AO HAS NOT QUOTED ANY JUDICIAL MANDA TE TO SUPPORT HIS FINDINGS IN THE MATTER OF LEVY OF IMPUG NED PENALTY. CONSEQUENTLY, WE ARE OF THE CONSIDERED OPINION THAT SUCH PENALTY CANNOT BE LEVIED BY THE AO, THEREFORE, FIND INGS OF THE CIT(A) ARE UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DEC.,2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 27 TH DEC.,2011. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH