The ITO, Ward-1(1), RAJKOT-GUJARAT V. M/s. Jitendra G. Patel Project Ltd., RAJKOT-GUJARAT

ITA 143/RJT/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6833 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 03-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C P BHATIA
• Keywords: Corroborative evidences
• Section: 44AD; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: SHRI S.S. GODARA, JUDICIAL MEMBER AND S H RI AMARJIT SINGH , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] THE IT O , WARD - 1( 1 ) , RAJKOT (APPELLANT) VS M/S. JITENDRA G. PATEL PROJECT LTD. C - 15, USHA KIRAN APARTMENT, SARDARNAGAR MAIN ROAD, RAJKOT P AN: AABCJ3182G (RESPONDENT) REVENUE BY : S H RI C.P. BHATIA , SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 2 3 - 1 1 - 2 017 DATE OF PRONOUNCEMENT : 18 - 12 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THI S REVENUE S APPEAL FOR A.Y. 2007 - 08 , AR ISES FROM ORDER OF THE CIT(A), JAMNAGAR DATED 11 - 12 - 2013 , IN PROCEEDINGS UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE R EVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - I T A NO . 143 / RJT /20 14 A SSESSMENT YEAR 200 7 - 08 I.T.A NO. 143 /RJT /20 14 A.Y. 2007 - 08 PAGE NO IT O VS. M/S. JITENDRA G. PATEL PROJECT LTD. 2 1. THE LD. CIT(A), JAMNAGAR HAS ERRED IN LAW AND ON FACT IN DELETING THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT OF RS.18,69,950/ - . 2. ON LEGAL AND FACTUAL STATUS OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UP HELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS, PRAYED THAT ORDER PASSED BY THE LD. CIT(A) MAY BE QUASHED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 15 ,7 6 , 800/ - WAS FILED ON 8 TH NOV EMBER, 2007. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 2 0 TH SEPTEMBER, 2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VERIFICATION OF AUDIT REPORT THE ASSESSING OFFICER NOTICED THAT THE ASSESS EE HAD RECEIVED NEW UNSECURED LOAN TO THE AMOUNT OF RS.21,80000/. IN THIS REGARD THE ASSESSING OFFICER HAS ASKED THE ASSESSE TO FURNISH THE NAME, ADDRESSES, BANK STATEMENT, ACKNOWLEDGEMENT OF RETURN OF INCOME ETC OF THE DEPOSITORS FROM WHOM THE DEPOSIT W ERE ACCEPTED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE FAILED TO FURNISH ANY DETAIL, THE REFORE, IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTIONS COULD NOT BE PROVED. CONSEQUENTLY, THE ASSESSING OFFICER HAD MADE ADDITION OF RS.21,80 000/ UNDER SECTION 68 OF THE ACT. THE ASSESSING OFFICER ALSO NOTICED THAT THERE WAS TRADE CREDITORS FOR GOODS AND EXPENSES WORTH RS.8,14,66,580.DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE ALSO FAILED TO FURNISH THE SUPPORTING EVIDENCES TO PR OVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS THEREFORE, T HE ASSESSING OFFICER HAS MADE ADDITION OF R S. 40 , 73 , 329/ - BEING 5% OF TOTAL SUNDRY CREDITORS OF RS. 8 , 14 , 66 , 580/ - AND ADDED THE SAME U/S. 68 OF THE ACT . THE ASSESSING OFFICER F URTHER OBSERVED THAT IN THE ASSESSMENT PROCEEDINGS THAT DURING T HE YEAR I.T.A NO. 143 /RJT /20 14 A.Y. 2007 - 08 PAGE NO IT O VS. M/S. JITENDRA G. PATEL PROJECT LTD. 3 UNDER CONSIDERATION THE NET PROFIT DECLARED BY THE ASSESSEE WAS 0.83% AS COMPARED TO NET PROFIT 2.1% DECLARED IN THE IMMEDIATE PRECEDING ASSESSMENT ORDER. T HE ASSESSING OFFICER OBSER VED THAT ASSESSEE WAS A CONSTRUCTION CONTRACTOR AND AS PER SECTION 44AD MINIMUM PROFIT CHARGEABLE TO TAX UNDER THE HEAD PROFIT AND GAIN FROM PROFESSION WAS 8%, TH E REFO R E, T HE ASSESSING OFFICER ESTIMATED THE NET PROFIT AT 5% INSTEAD OF DECLARED NET PROFIT 0 .83% AND MADE ADDITION OF RS. 55,55 , 404/ - TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSING OFFICER HAS ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(1) (C) OF THE ACT ON THE AFORESAID ADDITION MADE FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEA LMENT OF INCOME. 4. THE LD. CIT(A) HAS CONFIRMED THE ADDITION TO THE EXTENT OF RS. 55,55 , 404/ - MADE ON ACCOUNT OF ESTIMATING OF PROFIT AND RS. 21,80,00/ - MADE ON ACCOUNT OF UNPROVED UNSECURED LOAN U/S. 68 OF THE ACT. DURING THE COURSE OF PENALTY PRO CEEDINGS, THE ASSESSING OFFICER HAS STATED THAT NEITHER THE DIRECTOR OF THE ASSESSEE COMPANY NO R THE AUTHORIZED REPRESENTATIVE REM AINED PRESENT AND NOT FILE D ANY SUBMISSION ON THE DATE OF HEARING . CONSEQUENTLY, THE ASSESSING HAS LEVIED PENALTY OF RS. 26 , 03 , 740/ - U/S 271(1)(C) OF THE ACT . 5 . AGGRIEVED AGAINST THE IMPUGNED ORDER OF PENALTY LEVIED U/S 271(1)(C) OF THE ACT THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS PARTLY SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFI CER . THE LD.CIT(A) HAS STATED THAT PENALTY CANNOT BE LEVIED ON ESTIMATED NET PROFIT. HOWEVER, THE LD.CIT(A) HAS SUSTAINED I.T.A NO. 143 /RJT /20 14 A.Y. 2007 - 08 PAGE NO IT O VS. M/S. JITENDRA G. PATEL PROJECT LTD. 4 THE PENALTY IN RESPECT OF UNPROVED NEW UNSECURED LOAN TO THE AMOUNT OF RS.21,80000/ AS THE ASSESSEE FAILED TO SUBSTANTIATE THE IDENTI TY, GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTIONS. 6 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. D.R. HAS CONTENDED THAT TH E LD. CIT(A) HAS ERRED IN DELETING THE PART OF THE PENALTY LEVIED BY THE ASSESSING OFFICER AS THE ASESSEE FAILED TO FURNISH COM PLETE DETAILS IN RESPECT OF LOW NET PROFIT M ARGIN . HE FURTHER CONTENDED THAT THE ASSESSING OFFICER HAS RIGHTLY IMPOSED PENAL TY AS THE AS SESSEE HAS CONCEALED THE INCOME BY FURNISHING INACCURATE PARTICULARS . N O - BODY HAS ATTENDED FROM TH E SID E OF THE ASSESSEE. 7. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSING OFFICER HAS LEVIED PENALTY U/S. 271(1)(C) OF THE ACT IN RESPECT OF ADDITION MADE ON ACCOUNT OF LOW NET PROFIT OF RS. 55,55,404/ - AND OTHER ADDITION MAD E UNDER SE C TION 68 OF THE ACT FOR RS. 21,80,000/ - FOR NOT PROVING THE GENUINENESS OF UNSECURED LOAN BY THE ASSESSEE. THE LD. CIT(A) HAS SUSTAINED T HE PENALTY LEVIED IN RESPECT OF ADDITION MADE U/S. 68 OF THE ACT AND DEL ETED THE PENALTY LEVIED BY THE ASSESSING OFFICER ON THE ESTIMATED ADDITION MADE BECAUSE OF L OW NET PROFIT . WE OBSERVED THAT THE ASSESSEE HAS DECLARED N E T PROFIT AT 0.83% WHEREAS THE ASSESSING OFFICER WAS OF THE OPINION THAT THE NET PROFIT OF THE ASSESSEE SHOULD NOT BE LESS THAN 5% ON THE GROUND THAT THE ASSESSEE WAS NOT MAINTAINING ANY LABOUR REGISTER OR BILLS AND VOUCHERS. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THE ASSESSEE WAS A CONSTRUCTION I.T.A NO. 143 /RJT /20 14 A.Y. 2007 - 08 PAGE NO IT O VS. M/S. JITENDRA G. PATEL PROJECT LTD. 5 CONTRACTOR AND AS PER SECTION 44AD THE MINIMUM PROFIT C HARGEABLE TO TAX UNDER THE HEARD PROFIT AND GAINS WAS 8% , THEREFORE , THE ASSESSING OFFICER HAS ESTIMATED THE NET PROFIT @ 5% IN THE CASE OF THE ASSESSEE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT IS EVIDENT THAT THE ASSESSING OFFICER HAS MADE ADD ITION UNDER THE HEAD NET PROFIT ON ESTIMATION BASIS, THEREFORE, WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A) STATING THAT PENALTY PARTICULARLY ON THE ESTIMATED ADDITION BECAUSE OF LOW NET PROFIT IS NOT JUSTIFIED. THEREFORE, THE APPEAL OF THE RE VENUE IS DISMISSED . 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 18 - 12 - 201 7 SD/ - SD/ - (S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEM BER AHMEDABAD : DATED 18 /12 /201 7 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT