Sh. Subash Chander, UDHAMPUR V. The Income Tax Officer, UDHAMPUR

ITA 143/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0066 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 18-03-2019
• Assessment Year: 1993-1994
• Appeal Filed On: 17-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: GAURAV ARORA
• Keywords: Competent authority; Reassessment proceedings; Set aside
• Section: 271(1)(c); 143(3); 195; 147; 27; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO.142 & 143/ASR/2017 ASSESSMENT YEA RS: 1992-93 & 1993-94 SUBASH CHANDER, PROP. M/S. SUBASH TRUNK FACTORY LAMBI GALI, UDHAMPUR. [PAN: AFUPC 7311M] VS. INCOME TAX OFFICER, UDHAMPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. GAURAV ARORA (C.A.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 18.03.2019 DATE OF PRONOUNCEMENT: 29.03.2019 ORDER PER SANJAY ARORA, AM: THIS IS A SET OF TWO APPEALS BY THE ASSESSEE, I.E., FOR TWO CONSECUTIVE YEARS, BEING ASSESSMENT YEARS (AYS.)1992-93 & 1993-94, ARI SING OUT OF SEPARATE ORDERS BY THE COMMISSIONER OF INCOME TAX (APPEALS), JAMMU ('CIT(A)' FOR SHORT) OF EVEN DATE (15.11.2016), CONFIRMING THE LEVY OF PENA LTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) FOR THE RELEV ANT YEARS, IMPOSED AT THE MINIMUM AMOUNT OF 100% OF THE TAX SOUGHT TO BE EVAD ED IN TERMS OF EXPLANATION 4 TO THE PROVISION VIDE SEPARATE ORDERS, BOTH DATED 20.3.2015. 2. IT WOULD BE RELEVANT TO RECOUNT THE BACKGROUND F ACTS OF THE CASE, WHICH ARE THE SAME FOR BOTH THE YEARS, AS ALSO THE RESPECTIVE CASES OF BOTH THE PARTIES, AND WHICH EXPLAINS THE HEARING OF THE APPEALS TOGETHER, AND THEIR DISPOSAL PER A ITA NO. 142 & 143/ASR/2017 (AYS: 1992-93 & 1993-94) SUBASH CHANDER V. ITO 2 COMMON, CONSOLIDATED ORDER. REFERENCE TO THE DATES AND FIGURES IN THE NARRATIVE IS FOR AY1992-93, WITH THAT FOR AY 1993-94 BEING IN BR ACKETS. ASSESSMENT IN THE FIRST INSTANCE WAS MADE AT AN INCOME OF RS.2,79,000 (RS.3,44,000), AS AGAINST THE RETURNED INCOME OF RS.23,000 (RS.29,125), COMPRISIN G RS.11,000 (RS.17,125) AS PROFIT OF THE ASSESSEES TRUNK BUSINESS, AND THE BA LANCE RS.12,000 (RS. 12,000) AS RENTAL INCOME. ADDITION TO THE RETURNED INCOME WAS MADE BY APPLYING A NET PROFIT RATE OF EIGHT PER CENT. ON THE ASSESSEES TURNOVER OF RS.31,49,384 (RS.38,51,480) AFTER REJECTING THE ASSESSEES ACCOUNTS U/S. 145(3) VIDE SEPARATE ORDERS U/S. 143(3) R/W S. 147 DATED 24.3.1998. THE ASSESSEE HAD EARLIE R PER THE ORIGINAL RETURN (FILED ON 18.6.1993 FOR BOTH THE YEARS) DISCLOSED A TURNOV ER OF RS.1,37,000 FOR BOTH THE YEARS (REFER GROUND 4), AND THE REVISED TURNOVER WA S PURSUANT TO A NOTICE U/S. 148(1) ON INFORMATION WITH THE REVENUE THAT THE ASS ESSEE HAD MADE PURCHASES FOR RS.24,37,810 (RS.32,40,083) DURING THE RELEVANT YEA RS FROM SICOP. THOUGH THE ASSESSEE ADMITTED THE UNDISCLOSED PURCHASE TRANSACT IONS WITH SICOP, AS WELL AS THE CORRESPONDING SALES, THE PROFIT DISCLOSED PER THE R EVISED PROFIT AND LOSS ACCOUNT (P&L A/C) REMAINED THE SAME, I.E., AS RETURNED EARL IER, BEING RS.11,000 (RS.17,125). THE ASSESSEE CARRIED THE MATTER IN APP EAL, EVEN AS THE ASSESSMENTS WERE ALSO SUBJECT TO REVISION U/S. 263. THE FIRST A PPELLATE AUTHORITY DISMISSED THE ASSESSEES APPEALS VIDE CONSOLIDATED ORDER DATED 15 .02.1999. THE TRIBUNAL, IN SECOND APPEAL, SET ASIDE THE ORDER OF THE FIRST APP ELLATE AUTHORITY DATED 15.02.1999 ON THE BASIS THAT THE COMPETENT AUTHORITY HAD ALREA DY CANCELLED THE ASSESSMENTS U/S. 263 OF THE ACT, ALSO CANCELLING THE PENALTY U/S. 27 1(1)(C), SINCE LEVIED, WITH LIBERTY TO INITIATE PENALTY PROCEEDINGS AFRESH, AND DIRECTE D FRESH ASSESSMENT FOR BOTH THE YEARS (ITA NO. 3662/ASR/2000, DATED 30/4/2004). ASSESSMENTS WERE ACCORDINGLY MADE AFRESH, ENHANCING THE INCOME TO RS.4,06,500 (RS.4,26,700), AND PENALTY PROCEEDINGS U/S. 271(1)(C) INITIATED, THOUGH ITA NO. 142 & 143/ASR/2017 (AYS: 1992-93 & 1993-94) SUBASH CHANDER V. ITO 3 THE NET PROFIT RATE OF 8% ON THE REVISED TURNOVER W AS NOT DISTURBED (VIDE SEPARATE ORDERS U/S. 143(3) R/W S. 263, DATED 22.03.2002). T HE SAID RATE OF PROFIT STOOD REDUCED TO 2.5% IN FIRST APPEAL, AND THE ASSESSEE D ID NOT CARRY THE MATTER FURTHER. PENALTY PROCEEDINGS, INITIATED AT THE CONCLUSION OF THE ASSESSMENTS, WERE PROCEEDED WITH. PENALTY WAS LEVIED IN RESPECT OF THE ADDITION AL PROFIT ON THE UNDISCLOSED TURNOVER (I.E., WITH REFERENCE TO THE ORIGINAL RETU RN); THE ASSESSEE NOT FURNISHING ANY REPLY IN RESPONSE TO THE SHOW CAUSE NOTICE U/S. 274 DATED 06.8.2014. IN APPEAL, IT WAS CONTENDED THAT PENALTY COULD NOT BE LEVIED AS T HE BUSINESS PROFIT WAS ESTIMATED. THE LD. CIT(A) FOUND NO MERIT IN THE ASS ESSEES CASE AS THE ASSESSEE HAD SUPPRESSED HIS TURNOVER. IT WAS, THEREFORE, A CLEAR CASE OF SUPPRESSION OF INCOME. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 3. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. THE ASSESSEES CASE BEFORE THE TRIBUNAL WAS THAT N O PENALTY COULD BE LEVIED ON THE UNDISCLOSED TURNOVER, BUT ONLY ON THE UNDISC LOSED INCOME, WHICH HAD IN FACT BEEN ESTIMATED. THAT NO PENALTY U/S. 271(1)(C) COUL D BE LEVIED WHERE THE INCOME IS ASSESSED ON ESTIMATE BASIS IS WELL-SETTLED. THE LD. COUNSEL FOR THE ASSESSEE, SH. ARORA, WAS POSED A QUESTION BY THE BENCH DURING HEA RING, I.E., WHETHER THE ASSESSEE HAD AT ANY STAGE, I.E., IN THE QUANTUM OR THE PENALTY PROCEEDINGS, BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT HE DID NOT EARN ANY PROFIT WHATSOEVER ON THE UNDISCLOSED TURNOVER OF RS.30.12 LACS (RS.37.14 LAC S). THIS IS AS THE REVISED P & L ACCOUNT, FURNISHED IN THE REASSESSMENT PROCEEDINGS, EXHIBITED THE SAME PROFIT AS THAT RETURNED ORIGINALLY BY THE ASSESEEE. THE SALES , AS STATED, ARE OF THE SAME GOODS AS THE ASSESEEE DEALS IN IN THE NORMAL COURSE OF HI S TRADE. THE DISCLOSED PROFIT IS RS.11,000 (8.03%) AND RS. 17,125 (12.50%) FOR AY 19 92-93 AND AY 1993-94 RESPECTIVELY. HE REPLIED IN THE NEGATIVE. WHY, THEN , SHOULD NOT THE INCOME ON THE ITA NO. 142 & 143/ASR/2017 (AYS: 1992-93 & 1993-94) SUBASH CHANDER V. ITO 4 ADDITIONAL, ADMITTED TURNOVER BE ASSESSED AT THE SA ME RATE, AS INDEED IT WAS IN THE ORIGINAL ASSESSMENT PROCEEDINGS? THE UNDISCLOSED PU RCHASES BY THE ASSESSEE FOR THE RELEVANT YEARS ARE AT RS.24.38 LACS AND RS.32.4 0 LACS FOR AY 1992-93 AND 1993- 94 RESPECTIVELY. THAT IS, AS IT APPEARS, THE UNDISC LOSED PROFIT FOR THE TWO YEARS IS IN FACT IN A MUCH HIGHER SUM OF RS.5.74 LACS (RS.30.12 LACS - RS.24.38 LACS) AND RS.4.74 LACS (RS.37.14 - RS.32.40 LACS) FOR THE TWO CONSECUTIVE YEARS RESPECTIVELY. ALL THESE FACTS ARE ON THE BASIS OF THE MATERIAL ON RECORD AND, IN FACT, ADMITTED. THE INCOME HAD, RATHER, BEEN ASSESSED A MUCH LOWER RATE OF 2.5%, APPLIED UNIFORMLY FOR BOTH THE MANUFACTURING AND TRADING TURNOVER. HO W THEN, AND ON WHAT BASIS, ONE WONDERS, THE ASSESSEE STATES THAT HE HAS NOT CONCEA LED PARTICULARS OF INCOME WHEN HE HAD CONCEALED THE TURNOVER ON THE PURCHASES FROM SICOP. IN FACT, PENALTY WOULD ARISE EVEN IF THE ASSESSEE HAD DECLARED THE S AME PROFIT RATE AS ON THE DISCLOSED TURNOVER IN THE REASSESSMENT PROCEEDINGS. THIS IS AS THE SAME WOULD ONLY BE UPON DETECTION BY THE DEPARTMENT. REFERENCE IN T HIS REGARD BE MADE TO THE DECISION IN RAJESH CHAWLA V. CIT [2006] 203 CTR 209 (P&H) [154 TAXMAN 364], RENDERED RELYING ON SEVERAL DECISIONS, INCLUDING CIT V. J.K.A. SUBRAMANIA CHETTIAR [1977] 110 ITR 602 (MAD), ALSO QUOTING THERE-FROM. FURTHER, THAT PENALTY IS TO BE LEVIED WITH REFERENCE TO ORIGINAL RETURN IS, AGAIN, WELL SETTLED ( CIT VS. ONKAR SARAN & SONS [1992] 195 ITR 01 (SC)). THE PENALTY IMPOSED FOR B OTH THE YEARS IS, AS AFORE-STATED, AT THE MINIMUM RATE. NO INTERFERENCE, IN MY VIEW, IS ACCORDINGLY CALLED FOR. I DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEALS ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN CO URT ON MARCH 29, 2019 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER ITA NO. 142 & 143/ASR/2017 (AYS: 1992-93 & 1993-94) SUBASH CHANDER V. ITO 5 DATE: 29.03.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: SUBASH CHANDER, PROP. M/S. S UBASH TRUNK FACTORY, LAMBI GALI, UDHAMPUR, J & K. (2) THE RESPONDENT: INCOME TAX OFFICER, UDHAMPU R. (3) THE CIT(APPEALS), JAMMU (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER