Sh. Yoginder Kumar Goel, New Delhi V. DCIT, New Delhi

ITA 1352/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3677 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 05-07-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 29-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: N O N E
• Keywords: Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH I DELHI ] BEFORE SHRI C. L. SETHI, JM AND SHRI K. D. RANJAN, AM I. T. APPEAL NO. 1352 (DEL) OF 2010. ASSESSMENT YEAR : 2000-01. SHRI YOGINDER KUMAR GOEL, DY. COMMISSIONE R OF INCOME-TAX, S190, GREATER KAILASH, PARTI, VS. CIRCLE : 23 (1), N E W D E L H I. N E W D E L H I. P A N / G I R NO. AAA PG 4559 A. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : N O N E; DEPARTMENT BY : MS. ANUSHA KHURANA, SR. D.R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 200 0-01 ARISES OUT OF THE ORDER OF THE LD. CIT (APPEALS)-XXIII, NEW DELHI. 2. THE GROUNDS OF APPEAL, RAISED BY THE ASSESSEE, A RE REPRODUCED AS UNDER :- 1. THE LD. CIT (APPEALS) HAS, IN VIEW OF T HE FACTS AND CIRCUMSTANCES OF THE CASE, ERRED IN GIVING A FINDING THAT APPELLANT HAS FAILED TO OFFER EXPLANATION IN RELATION TO ADDITION OF RS.2,19,132/- WHICH IS CONS IDERED AS CONCEALED INCOME AND THEREFORE, HOLDING THE APPELLANT CONCEALING PARTICU LARS OF INCOME INVOKING EXPLANATION 1 TO SEC. 271(1)(C) IGNORING THE FACT T HAT ALL THE MATERIAL AND 2 I. T. APPEAL NO. 1352 (DEL) OF 2010. EVIDENCES IN SUPPORT OF THE ABOVE ADDITION HAD BEEN SUBMITTED BEFORE THE ASSESSING OFFICER AND CIT (APPEALS) AS WELL; 2. THE LD. CIT (APPEALS) ON THE FACTS AND IN LAW HAS ERRED IN REJECTING THE SUBMISSION OF THE APPELLANT THAT THOUGH THE ADDITIO N OF RS.2,19,132/- SUSTAINED BY THE LD. CIT (APPEALS) AND CONFIRMED BY THE HONBLE TRIBUNAL IN THE DEPARTMENTS APPEAL, SUCH ADDITION COULD NOT HAVE BEEN MADE AS T HE ENTIRE STOCK FOUND AT THE TIME OF SURVEY HAS BEEN SOLD OFF IN THE POST SURVEY PERIOD AND THEREFORE, THE ABOVE SUSTAINED ADDITION IS INCLUDED IN THE POST SURVEY I NCOME DECLARED. 3. THE ONLY ISSUE RAISED IN THE ASSESSEES APPEAL R ELATES TO CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE FACTS OF T HE CASE STATED IN BRIEF ARE THAT ON 10/02/2000 SURVEY UNDER SECTION 133-A OF THE ACT WAS TAKEN. D URING THE COURSE OF SURVEY PROCEEDINGS CERTAIN DISCREPANCIES IN THE STOCK WERE FOUND. DUE TO DISCREPANCY IN THE STOCK ON ACCOUNT OF PHYSICAL VERIFICATION AND THE ENTRIES IN THE BOOKS OF ACCOUNTS THE ASSESSEE SURRENDERED AN AMOUNT OF RS.35,27,516/-. HE ALSO TENDERED CHEQUES TOWARD S PAYMENT OF TAX. AS PER THE INVENTORY OF STOCK PREPARED BY THE SURVEY TEAM, THE STOCK WAS VA LUED AT RS.67,26,110/- BUT IN THE RETURN OF INCOME FILED, VALUE OF STOCK WAS DECLARED AT RS.45 ,08,478/-. HOWEVER, THE ASSESSING OFFICER MADE ADDITION OF RS.23,87,660/-. ON APPEAL BEFORE THE LD. CIT (APPEALS) THE ADDITION WAS SUSTAINED TO THE EXTENT OF RS.2,19,132/-. ON FURTH ER APPEAL BEFORE THE ITAT, THE ORDER OF THE LD. CIT (APPEALS) WAS UPHELD. 4. DURING THE COURSE OF PENALTY PROCEEDINGS THE EXP LANATION OFFERED BY THE ASSESSEE WAS REJECTED AND THE ASSESSING OFFICER PROCEEDED TO LEV Y PENALTY ON CONCEALED INCOME OF RS.2,19,132/-. 5. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED BY THE ASSESSEE THAT THERE HAS BEEN NO APPLICATION OF MIND BY THE AO AS HE HAD MERELY LEVI ED PENALTY AS A PART OF ADDITION HAD BEEN SUSTAINED IN APPEAL. SINCE PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS, THE AO SHOULD HAVE EXAMINED THE CASE WHETHER THERE HAD BEEN ANY CONCEALMENT OF INCOME. THE ASSESSEE HAD PREPARED A TRADING ACCOUNT FOR THE PRE -SURVEY PERIOD AND HAD TAKEN THE VALUE OF THE 3 I. T. APPEAL NO. 1352 (DEL) OF 2010. CLOSING STOCK AS ON 10/02/2000, THE DATE OF SURVEY, AT RS.45,08,478/-. HE HAD ACCORDINGLY ALSO PREPARED A TRADING ACCOUNT FOR THE POST-SURVEY PERI OD DURING THE FINANCIAL YEAR AND HAD TAKEN THE FIGURE OF RS.45,08,478/- AS OPENING STOCK. FURTHER THE DIFFERENCE IN THE CLOSING STOCK WAS REDUCED BY THE LD. CIT (A) TO RS.2,19,132/-. THERE FORE, PENALTY UNDER SECTION 271(1)(C) WAS NOT LEVIABLE. THIS CONTENTION OF THE ASSESSEE WAS REJE CTED BY THE LD. CIT (APPEALS) ON THE GROUND THAT THE EXPLANATION OFFERED BY THE ASSESSEE HAD NO T BEEN SUBSTANTIATED. THE BONAFIDE OF THE EXPLANATION WAS NOT PROVED BEYOND THE SHADOW OF DOU BTS. THEREFORE, A PRESUMPTION WAS RAISED BY VIRTUE OF THE EXPLANATION TO SECTION 271(1)(C) W HICH HAD NOT BEEN REBUTTED BY THE ASSESSEE. THEREFORE, PENALTY UNDER SECTION 271(1)(C) OF THE A CT WAS EXIGIBLE. HE ACCORDINGLY UPHELD THE PENALTY IMPOSED BY THE AO. 6. BEFORE US WHEN THE CASE WAS CALLED UP FOR HEARIN G, NONE ATTENDED ON BEHALF OF THE ASSESSEE. HOWEVER, HAVING REGARD TO THE ISSUE INVO LVED, THE APPEAL IS DECIDED AFTER HEARING THE LD. SR. DR. 7. WE HAVE HEARD THE LD. SR. DR AND GONE THROUGH TH E MATERIAL AVAILABLE ON RECORD. THE LD. SR. DR HAVE SUPPORTED THE ORDER OF THE LD. CIT (A) AND HAD VEHEMENTLY ARGUED THAT THE PENALTY UNDER SECTION 271(1)(C) IS EXIGIBLE. FROM THE FACT S STATED ABOVE, IT IS CLEAR THAT THE AO HAD ESTIMATED EXCESS STOCK BY DRAWING PROFIT AND LOSS A CCOUNT AND MADE ADDITION OF RS.23,87,660/-. ON APPEAL BEFORE THE LD. CIT (A) THE EXCESS STOCK O F RS.2,19,132/- HAD BEEN ESTIMATED. ON FURTHER APPEAL THE ESTIMATION OF EXCESS STOCK HAS B EEN UPHELD BY THE ITAT. FROM THESE FACTS IT IS APPARENT THAT THE PENALTY HAS BEEN IMPOSED BY THE A SSESSING OFFICER AND CONFIRMED BY THE LD. CIT (A) IN RESPECT OF THE ADDITION MADE ON THE BASIS OF ESTIMATIONS OF CLOSING STOCK MADE BY THE ASSESSING OFFICER AND THE LD. CIT (APPEALS). THE C LOSING STOCK HAS BEEN WORKED OUT ON THE BASIS OF TRADING ACCOUNT DRAWN DURING THE COURSE OF SURVE Y AND BY APPLYING THE GROSS PROFIT RATE APPLICABLE IN THE CASE OF THE ASSESSEE. FURTHER T HERE IS A DIFFERENCE OF OPINION IN THE ESTIMATE MADE BY THE ASSESSING OFFICER AS WELL AS BY THE LD. CIT (APPEALS). THE ESTIMATION MADE BY THE LD. CIT (A) HAS BEEN UPHELD BY THE ITAT. THEREFORE , THE LD. CIT (A) AS WELL AS ITAT HAVE ESTIMATED THE DIFFERENCE OF STOCK AT RS.2,19,132/- WHEREAS THE ASSESSING OFFICER HAD ESTIMATED THE 4 I. T. APPEAL NO. 1352 (DEL) OF 2010. DIFFERENCE IN STOCK AT RS.23,87,660/-. HONBLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PREM DASS (NO.1) 248 ITR 234 HAS HELD THAT WHER E THE ASSESSEE HAD RETURNED INCOME ON ESTIMATE BASIS, THE ASSESSING OFFICER AND THE LD. C IT (A) ADOPTED DIFFERENT ESTIMATES AND IT WAS A CASE OF DIFFERENCE OF OPINION. THEREFORE, THE TRIB UNAL WAS JUSTIFIED IN LAW IN CANCELLING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. FURTHER HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARI GOPAL SINGH VS. CIT 258 I TR 85 (P & H) HAS ALSO DELETED THE PENALTY BASED ON ESTIMATION OF INCOME. IT HAS BEEN HELD TH AT IN ORDER TO ATTRACT CLAUSE (C) OF SECTION 271(1) OF INCOME-TAX ACT, 1961, IT IS NECESSARY THA T THERE MUST BE CONCEALMENT BY THE ASSESSEE OF THE PARTICULARS OF HIS INCOME OR FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME. THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE NOT ATTRACTED TO CASES WHERE THE INCOME OF THE ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND ADDITION S ARE MADE THEREIN. 8. IN THE CASE BEFORE US, AS DISCUSSED ABOVE, THE D IFFERENCE IN THE CLOSING STOCK HAS BEEN ESTIMATED DIFFERENTLY BY THE ASSESSING OFFICER AND THE LD. CIT (APPEALS). THEREFORE, IN VIEW OF THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE ABOVE-CITED CASES, PENALTY UNDER SECTION 271(1)(C) OF THE ACT CANNOT BE IMPOSED. WE ACCORDINGLY HOLD THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY IMPOSED ON THE BASIS OF DIFFERENCE IN THE ESTIMATION OF THE INVENTORY FOUND IN THE COURSE OF THE SURVEY. WE AC CORDINGLY CANCEL THE PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 09 TH JULY, 2010. SD/- SD/- [ C. L. SETHI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER 5 I. T. APPEAL NO. 1352 (DEL) OF 2010. DATED : 09 TH JULY, 2010. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT. 6 I. T. APPEAL NO. 1352 (DEL) OF 2010. 7 I. T. APPEAL NO. 1352 (DEL) OF 2010.