Vijay Kumar, Karnal V. ITO, Karnal

ITA 1496/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3898 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 16-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PERMIL GOEL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.1496/DEL/2015 ASSESSMENT YEAR : 2007-08 VIJAY KUMAR, C/O. DHARAM PAL GUPTA, ADV. 7-RAILWAY ROAD KARNAL VS. ITO, WARD-1, KARNAL PAN : AESPK1066J (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. PERMIL GOEL, ADV. REVENUE BY : SH. AMIT JAIN, SR. DR DATE OF HEARING : 25-10-2017 DATE OF PRONOUNCEMENT : 27-10-2017 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 13 TH MARCH, 2014 OF THE CIT(A) - KARNAL RELATING TO ASSESSMENT YEAR 2007-08. 2. LEVY OF PENALTY OF RS. 8,82,754/- BY THE AO U/S 271(1)(C) OF THE IT ACT WHICH HAS BEEN CONFIRMED BY THE CIT(A) IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND ENGAGED TIMBER BUSINESS. HE FILED HIS RETURN OF IN COME ON 26 TH OCTOBER, 2007 DECLARING TOTAL INCOME OF RS. 3,91,460/-. THE AO VI DE ORDER PASSED U/S 143(3) DATED 18 DECEMBER, 2009 COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS. 43,34,130/- BY MAKING ADDITION OF RS. 39,42,670/-. THE BASIS OF SUCH ADDITION 2 ITA NO.1496/DEL/2015 (VIJAY KUMAR) WAS ADOPTION OF HIGHER GP RATE OF 4.90%. SUBSEQUENT LY, THE AO INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY OF RS. 8,82, 754/- U/S 271(1)(C) OF THE IT ACT WHICH HAS BEEN UPHELD BY THE CIT(A). 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAD ADOPTED GP RATE 4.9% WHICH WAS REDUCED TO 4% BY THE CIT(A) IN QUANTUM PROCEEDING. ON FURTHER APPEAL BY THE REVENUE AS WELL AS THE ASSESS ED, THE TRIBUNAL VIDE ITA NO. 478.DEL.2012 CO NO. 292.DEL.2012 AND ITA NO. 719.D EL.2012 ORDER DATED 8 TH SEPTEMBER, 2015 FOR ASSESSMENT YEAR 2007-08 DISMISS ED THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY TH E ASSESSEE. SO FAR AS THE APPEAL FILED BY THE ASSESSEE IS CONCERNED, THE TRIBUNAL SU STAINED ADHOC DISALLOWANCE OF RS. 2,00,000/- ON ESTIMATE BASIS ON ACCOUNT OF P OSSIBLE LEAKAGE OF REVENUE AS AGAINST ADDITION OF RS. 39,42,670/- MADE BY THE AO AND PARTLY CONFIRMED BY THE CIT(A). HE ACCORDINGLY SUBMITTED THAT SINCE SUBSTAN TIAL ADDITION HAS BEEN DELETED BY THE TRIBUNAL AND ONLY ADDITION OF RS. 2 ,00,000/- ON ADHOC BASIS HAS BEEN SUSTAINED , THEREFORE, NO PENALTY U/S 271(1)(C ) IS LEVIABLE. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 5. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON T HE ORDER OF THE CIT(A). 6. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE PAPER BOOK FIL ED ON BEHALF OF THE ASSESSEE. I FIND THE AO IN THE ASSESSMENT ORDER HAD MADE ADD ITION OF RS. 39,42,670/- WHICH HAS BEEN DELETED BY THE TRIBUNAL SUBSTANTIALL Y AND ONLY ADHOC ADDITION RS. 2,00,000/- ON ESTIMATE BASIS HAS BEEN SUSTAINED . SINCE THE CIT(A) HAD PASSED THE ORDER ON 13 TH MARCH, 2014, HE HAD NO BENEFIT OF THE ORDER OF THE TRIBUNAL DELETING THE SUBSTANTIAL ADDITION WHICH WA S PASSED ON 8 TH SEPTEMBER, 2015. SINCE THE MAJOR ADDITION HAS ALREADY BEEN DEL ETED BY THE TRIBUNAL AND ONLY AN AMOUNT OF RS. 2,00,000/- ON ADHOC BASIS HAS BEEN SUSTAINED, THEREFORE, 3 ITA NO.1496/DEL/2015 (VIJAY KUMAR) IN MY OPINION, PENALTY U/S 271(1)(C) OF IT ACT IS NOT LEVIABLE. IT HAS BEEN HELD IN VARIOUS DECISIONS THAT PENALTY 271(1)(C) OF THE ACT IS NOT LEVIABLE ON ESTIMATED ADDITION ON ADHOC BASIS. SINCE THE TRIBUN AL IN INSTANT CASE HAS DELETED SUBSTANTIAL ADDITION MADE BY THE AO ON ACCOUNT OF GP ADDITION AND SINCE ONLY AN AMOUNT OF RS. 2,00,000/- HAS BEEN SUSTAINED ON E STIMATE BASIS, THEREFORE, PENALTY U/S 271(1)(C) OF IT ACT , IN MY OPINION, I S NOT LEVIABLE IN THE INSTANT CASE. I, THEREFORE, SET ASIDE THE ORDER OF THE CIT (A) AND DIRECT THE AO TO CANCEL THE PENALTY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27/10/2017. - Z SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 27-10-2017 BINITA COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI 4 ITA NO.1496/DEL/2015 (VIJAY KUMAR) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 25.10.2017 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 2 6 . 10 .2017 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT ON 27.10.2017 SR. PS/PS 7 DATE OF UPLOADING OF ORDER .2017 SR. PS/PS 8 FILE SENT TO BENCH CLERK .2017 SR. PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R. 11 DATE OF DISPATCH OF ORDER