DCIT, Ludhiana V. M/s Kumar Builders, Faridkot

ITA 1357/CHANDI/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68533 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 31-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: I S KH URANA
• Keywords: Wrong claim; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1357/CHD/2012 ASSESSMENT YEAR:2006-07 THE DY. COMMISSIONER OF INCOME TAX, VS M/S KUMAR BU ILDERS, CIRCLE-II, 298, ISLAMIA SCHOOL ROAD, LUDHIANA. LUDHIANA, (NOW : KRISHNA ST.NO. 1, MALL GODOWN, NEAR RAM AASHRAM, KOTKAPURA, FARIDKOT. PAN NO. AAJFM-2533P & ITA NO. 6/CHD/2013 ASSESSMENT YEAR:200 6-07 M/S KUMAR BUILDERS, VS THE ACIT, 298, ISLAMIA SCHOOL ROAD, CIRCLE II, LUDHIANA, LUDHIANA. (NOW : KRISHNA ST.NO. 1, MALL GODOWN, NEAR RAM AASHRAM, KOTKAPURA, FARIDKOT. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI AKHILESH GUPTA ASSESSEE BY : SHRI I.S.KH URANA DATE OF HEARING : 01.08.2013 DATE OF PRONOUNCEMENT : 25.09.2013 O R D E R PER SUSHMA CHOWLA, J.M. THE REVENUE AND THE ASSESSEE HAVE FILED CROSS-APPEA LS AGAINST THE ORDER OF THE CIT(APPEALS)-II, LUDHIANA DATED 31 .10.2012 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER PASSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 ( 'THE ACT' F OR SHORT). 2 2. BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEI NG DISPOSED OF BY THE CONSOLIDATED ORDER FOR THE SAKE OF BREVITY. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW IN DELETIN G THE PENALTY LEVIED BY THE ASSESSING OFFICER ON ADDITION ON ACCOUNT OF ESTIMATION OF NET PROFIT. 2. THAT THE LD. CIT(A -HAS ERRED IN LAW IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER TO THE EXTENT OF R S. 10,07,167/- (RS. 17,32,335 MINUS RS. 7,25,168/- ) UNDER SECTION 271(1)(C) OF THE IT ACT, 1961. 4. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: 1. ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(APPEALS) HAS ERRED BY CONFIRMING THE PENALTY LEVIED ON ACCOUNT O F ADDITION IN INCOME AMOUNTING TO RS. 2154387/- MADE BY THE LD. A CIT CIRCLE- II, LUDHIANA. 5. THE ISSUE ARISING IN THE REVENUES APPEAL IS IN RELATION TO PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 6. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS FILED RETURN OF INC OME DECLARING TOTAL INCOME OF RS. 57,49,202/-. THE ASSESSEE ALSO FILED A REVISED RETURN WHERE THE INCOME RETURNED REMAINED UNCHANGED. THE ASSESSEE HAD CLAIMED THE CREDIT OF TAX DEDUCTED AT SOURCE AT RS. 266,292/-. THE TDS CERTIFICATES ANNEXED TO THE RETURN OF INCOME RE FLECTED TOTAL RECEIPTS OF RS. 1,18,87,936/-. THE ASSESSING OFFIC ER CALLED FOR THE INFORMATION FROM THE EXECUTIVE ENGINEER, PWD, SIRHI ND AND AS PER THE INFORMATION RECEIVED, THE TOTAL CONTRACT RECEIP TS WERE RS. 1,40,42,320/- AGAINST WHICH TDS OF RS. 314,551/- WA S DEDUCTED. THE ASSESSEE WAS, THUS FOUND TO HAVE SUPPRESSED THE CON TRACT RECEIPTS TO THE EXTENT OF RS.21,54,384/-THE ASSESSEE WAS SHOW C AUSED TO EXPLAIN THE DIFFERENCE. IN REPLY, THE ASSESSEE SUBMITTED T HAT THE DIFFERENCE OF RS. 20,52,268/- MAY BE ADDED TO THE GROSS RECEIPTS ON WHICH GP RATE 3 MAY BE APPLIED. THE PLEA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE SAID MISTAKE OCCURRED DUE TO NON-RECEI PT OF FORM NO. 16A. THEREAFTER, THE ASSESSEE VIDE LETTER DATED 24 .11.2008 SURRENDERED SUM OF RS. 215,439/- AS INCOME ON GROSS RECEIPTS OF RS. 21,54,384/-. ANOTHER LETTER DATED 3.12.2008 WAS FI LED UNDER WHICH IT WAS POINTED OUT BY THE ASSESSEE THAT DUE TO BONAFID E MISTAKE, RS. 10 LACS WERE CREDITED TO THE SECURITY ACCOUNT WHILE FO R THE BALANCE AMOUNT, PROFIT @ 5.36% WAS OFFERED FOR TAXATION. T HE ASSESSING OFFICER REFERRED THE CASE OF THE ASSESSEE FOR SPECI AL AUDIT UNDER SECTION 142(2A) OF THE ACT AND THEREAFTER, ADDITION OF RS. 21,54,387/- ON ACCOUNT OF SUPPRESSION OF RECEIPTS FROM PWD, SIR HIND WAS MADE. ANOTHER ADDITION WAS MADE BY THE ASSESSING OFFICER BY REJECTING THE BOOKS OF ACCOUNT AND ESTIMATION THE INCOME OF THE A SSESSEE @ 12% ON TOTAL TURNOVER OF RS. 9,59,16,586/-. THE ADDITI ON MADE ON ACCOUNT OF SUPPRESSION OF RECEIPTS WAS TELESCOPED WITH THE TOTAL ADDITION MADE WHILE ESTIMATING THE NET PROFIT @ 12%. THEREAF TER, PENALTY PROCEEDINGS WERE COMPLETED AND PENALTY OF RS. 17,32 ,335/- WAS LEVIED ON THE BASIS OF TOTAL ASSESSED INCOME. 7. THE CIT(APPEALS) WAS OF THE VIEW THAT THE CONDUC T OF THE ASSESSEE WHEREIN VARIOUS DISCREPANCIES WERE OWNED U P BY THE ASSESSEE REFLECTS PREPONDERANCE OF EVIDENCE POINTIN G TOWARDS CONTUMACIOUS CONDUCT OF CONCEALMENT ON THE PART OF THE ASSESSEE. THE CIT(APPEALS) ALSO NOTED THAT THOUGH THE ASSESSE E RAISED SEPARATE GROUNDS OF APPEAL WITH REGARD TO THE ADDITION OF RS . 21,54,387/-, THE SAME WAS NOT ADDRESSED BEFORE THE TRIBUNAL AND IT W AS DISMISSED. THE CIT(APPEALS), THUS UPHELD THE LEVY OF PENALTY I N RELATION TO THE SUPPRESSION OF RECEIPTS TO THE EXTENT OF RS. 21,54, 387/-. HOWEVER, IN 4 RESPECT OF ESTIMATION OF PROFITS, THE CIT(APPEALS) HELD THAT THERE WAS NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1 )(C) OF THE ACT. 8. THE ASSESSEE IS IN APPEAL AGAINST THE UPHOLDING OF PART OF THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT A ND THE REVENUE IS IN APPEAL AGAINST THE PART OF PENALTY DELETED BY TH E CIT(APPEALS). 9. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE TDS CERTIFICATES WERE NOT RECEIVED BY THE ASSESSEE AND BY MISTAKE, THE AMOUNT WAS CREDITED TO THE SECURITY DEPOSIT ACCOUNT . THE LD. AR FAIRLY CONCEDED THAT THE TRIBUNAL IN ASSESSEE'S OWN CASE HAD CONFIRMED THE SAID ADDITION BUT THE ENTIRE RECEIPTS WERE REFLECTED IN THE BOOKS OF ACCOUNT THOUGH THERE WAS A MISTAKE IN REFLECTING THE RECEIPTS IN THE PROFIT & LOSS ACCOUNT. IT WAS POIN TED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE TOTAL RECEIPTS OF THE ASSESSEE ON ACCOUNT OF CONTRACT WERE ABOVE RS. 10 CR. AND RE-CONCILIATI ON COULD NOT BE MADE BY THE ASSESSEE. RELIANCE WAS PLACED ON VIT VS RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (S.C) AND CIT V S SIDHARTHA ENTERPRISES, LUDHIANA (ITA NO.908 OF 2008 (O&M) ORD ER DATED 14.07.2009 (P&H). 10. THE LD. DR FOR THE REVENUE POINTED OUT THAT ON SUCH INCOME, WHICH HAD BEEN SURRENDERED BY THE ASSESSEE, THERE W AS MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN RESPECT OF THE ESTIMATION OF GP RATE AND DELETION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY THE CIT(APPEALS), THE LD. DR FOR THE REVENUE PLACED RELIANCE ON THE FOLLOWING CASE LAWS : I) ADDL. CIT VS CHANDARKANTHA & ANR 205 ITR 607 (M P) II) CIT VS WARASAT HUSSAIN 171 ITR 405 (PAT) III) A.M.SHAH AND CO. VS CIT, 238 ITR 415 (GUJ) 5 11. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT TH ERE WAS NO MERIT IN LEVY OF PENALTY WHEREIN INCOME HAS BEEN ESTIMATE D IN THE HANDS OF THE ASSESSEE. HE PLACED RELIANCE ON CIT VS MODI IN DUSTRIAL CORPORATION 34 DTR 158 (P&H) AND AGGARWAL CONT. COM PANY VS ACIT (ITA NO. 843/CHD/2009, A.Y. 2003-04 ) ITAT CHA NDIGARH BENCH. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. PENALTY FOR CONCEALMENT IS LEVIABLE U/S 271 (1)(C) OF THE ACT IN CASE ANY ONE OF THE TWO PRE-CONDITIONS ARE SATISFIED. THE PRE-CONDITIONS FOR LEVY OF PENALTY ARE WHERE THE ASSESSEE HAD CONC EALED THE PARTICULARS OF ITS INCOME OR IN THE ALTERNATIVE, TH E ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. EITHER OF THE TWO CONDITIONS NEEDS TO BE FULFILLED BEFORE LEVY OF PEN ALTY U/S 271 (1)(C) OF THE ACT. THE PROVISIONS OF THE ACT ENVISAGES AN OPPORTUNITY OF HEARING TO BE AFFORDED TO THE ASSESSEE TO PROVE ITS BONAFIDES AND WHERE THE ASSESSEE IS ABLE TO PROVE THE BONAFIDES O F HIS CLAIM, WITH REGARD TO THE PARTICULARS OF INCOME FURNISHED IN TH E RETURN OF INCOME, IN SUCH CIRCUMSTANCES NO PENALTY IS LEVIABLE FOR CO NCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME U/S 271 (1)(C) OF THE ACT. THE EXPRESSIONS CONCEALMENT AND INACCURATE PARTICULARS U/S 271 (1)(C) OF THE ACT HAS BEEN DE LIBERATED UPON IN PLETHORA OF JUDGMENTS BY VARIOUS COURTS. 13 . THE HON'BLE SUPREME COURT OF INDIA IN CIT, AHEMDABA D VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) WHILE REFER RING IN THE WORD PARTICULARS IN 'INACCURATE PARTICULARS OF INCOME', OBSERVED, 'AS PER LAW LEXICON, THE MEANING OF WORD 'PARTICULAR' IS A DETAIL OR DETAILS, THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD 'PARTICULARS' USED IN SECTION 271 (L)(C) W OULD EMBRACE THE 6 MEANING OF THE DETAILS OF THE CLAIM MADE. ' IT WAS FURTHER HELD AS UNDER:- 'WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTICULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN TH E DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCUR ATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERR ONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THE CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE I N ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR F ALSE. SUCH NOT BEING THE CASE, THERE -WOULD BE NO QUESTIO N OF INVITING THE PENALTY UNDER SECTION 271(L)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCU RATE PARTICULARS REGARDING THE INCOME OF THE ASSESSES. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURAT E PARTICULARS, (UNDERLINED SUPPLIED BY US) 14. THE HON'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT LTD (SUPRA) FURTH ER NOTED THAT IN THE FACTS OF THE CASE BEFORE IT, THERE WERE NO FINDING S THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN OF INCOME WE RE NOT INCORRECT OR ERRONEOUS OR FALSE NOR ANY STATEMENT MADE OR ANY DE TAILS SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. THE COURT TH US HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, W HICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT PENALTY UNDER SECTION 271 (L)(C) OF T HE ACT. IT WAS ALSO LAID DOWN BY THE COURT THAT THE INTENDMENT OF THE LEGISLATURE IS NOT TO LEVY PENALTY U/S 271 (L)(C) OF THE ACT IN CASE OF EVERY NON ACCEPTANCE OF CLAIM MADE BY THE ASSESSEE IN THE RE TURN OF INCOME. 15. SIMILAR RATIO HAS BEEN LAID DOWN BY THE HON'BLE PUN JAB & HARYANA HIGH COURT IN CIT VS. SHAHBAD COOPERATIVE SUGAR MILLS LTD [322 ITR 73 (P&H)], WHEREIN IT HAS BEEN OBSERVED TH AT MAKING WRONG CLAIM FOR DEDUCTION, DOES NOT AMOUNT TO CONCEALMENT OR GIVING OF INACCURATE PARTICULARS WITHIN THE MEANING OF SECTIO N 271 (L)(C) 7 OF THE ACT. 16. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. TEK RAM (HUF) 300 ITR 354 (P&H) HAD HELD THAT WHERE THE ISSUE IS HIGHLY DEBATABLE IN AS MUCH AS TWO VIEWS WERE POSSIBLE ON THE SAID ISSUE AND WHERE THE CLAIM OF THE ASSESSEE ON THE ISSUE WA S BASED ON ONE POSSIBLE VIEW, THE MAKING OF SUCH BONAFIDE CLAIM ON THE BASIS OF A POSSIBLE VIEW COULD NOT BE TREATED AS CONCEALMENT OF ITS INCOME BY THE ASSESSEE OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT THE PENAL PR OVISIONS OF SECTION 271 (L)(C) OF THE INCOME TAX ACT. 17. THE HON'BLE PUNJAB & HARYANA HIG H COURT IN CIT VS. SIDHARTHA ENTERPRISES [(2010) 228 CTR (P&H) 579 ] HELD THAT 'THE JUDGMENT OF THE HON'BLE SUPREME COURT IN DHARMENDRA TEXTILE (SUPRA) CANNOT BE READ AS LAYING DOWN THAT EVERY CASE -WHERE PARTIC ULARS OF INCOME ARE INACCURATE, PENALTY MUST FOLLOW. WHAT HAS BEEN LAID DOWN IS THAT QUALITATIVE DIFFERENCE BETWEEN CRIMINAL LIABILITY UNDER SECTION 276C AND P ENALTY UNDER S. 271(L)(C) HAD TO BE KEPT IN MIND AND APPROACH ADOPTED TO THE TRIAL OF A CRIMINAL CASE NEED NOT BE ADOPTED WHILE CONSIDERING THE LEVY OF P ENALTY. EVEN SO, CONCEPT OF PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF TH E SAID JUDGMENT. PENALTY IS IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIBERA TE DEFAULT AND NOT A MERE MISTAKE. THIS BEING THE POSITION, THE FINDING HAVI NG BEEN RECORDED ON FACTS THAT THE FURNISHING OF INACCURATE PARTICULARS WAS S IMPLY A MISTAKE AND NOT A DELIBERATE ATTEMPT TO EVADE TAX, THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE HELD TO BE PERVERSE. ' 18. THE ISSUE ARISING IN THE PRESENT APPEAL BEFORE US IS IN RELATION TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE A CT. THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON TWO ACCOUN TS I.E. (I) 8 BECAUSE OF NON DECLARATION OF RECEIPTS BY THE ASSES SEE AND; (II) ESTIMATION OF PROFITS IN THE HANDS OF THE ASSESSEE. AS FAR AS THE ISSUE OF ESTIMATION OF PROFITS IN THE HANDS OF THE ASSESS EE IS CONCERNED, WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AS IT IS THE CASE OF T WO VIEWS AND BECAUSE OF THE DIVERGENCE OF VIEW, ESTIMATION OF PR OFITS IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(APPEALS) IN THIS REGARD AND CONFIRM THE DELETIO N OF PENALTY ON ESTIMATION OF PROFITS IN THE HANDS OF THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 19. THE OTHER ADDITION ON WHICH PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT WAS LEVIED, WAS UNDER DECLARATION OF THE RE CEIPTS BY THE ASSESSEE. THE ASSESSEE IS A CONTRACTOR AND DURING THE YEAR UNDER CONSIDERATION, HAD UNDERTAKEN CONTRACTS OF VARIOUS GOVERNMENT BODIES. THE ASSESSEE HAD DECLARED CONTRACT RECEIPT S FROM THE CIVIL WORK UNDERTAKEN BY THE ASSESSEE. HOWEVER, RECEIPTS TOTALING RS. 21,54,387/- WERE NOT DECLARED AND SOME PART WAS DEC LARED IN THE SECURITY ACCOUNT BY THE ASSESSEE BUT WERE NOT DECLA RED AS PART OF THE RECEIPTS FROM PWD, SIRHIND. WHEN INFORMATION WAS C ALLED FROM THE PWD, SIRHIND, THE ASSESSING OFFICER FOUND THE ASSES SEE TO HAVE SUPPRESSED ITS CONTRACT RECEIPTS ON WHICH TAX WAS A LSO DEDUCTED AT SOURCE BY THE SAID CONCERN. THE CASE OF THE ASSESS EE, HOWEVER WAS THAT IT HAD NOT RECEIVED THE SAID TDS CERTIFICATES FROM THE SAID DEPARTMENT AND, HENCE THE CONFUSION AND UNDER-DECLA RATION OF THE RECEIPTS BY THE ASSESSEE. WE FIND NO MERIT IN THE STAND OF THE ASSESSEE IN THIS REGARD AND IT IS A FIT CASE OF LEV Y OF PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE A SSESSEE HAVING UNDER DECLARED ITS RECEIPTS IS EXIGIBLE TO LEVY OF PENALTY UNDER 9 SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, WE UPHOL D THE ORDER OF CIT(APPEALS) IN THIS REGARD AND CONFIRM THE LEVY OF PENALTY ON SUPPRESSED RECEIPTS TO THE EXTENT OF RS. 21,54,387/ -. UPHOLDING THE ORDER OF CIT(APPEALS), WE DISMISS THE GROUND OF APP EAL RAISED BY THE ASSESSEE. 20. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF SEPTEMBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 25 TH SEPTEMBER,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH