ACIT, Noida V. M/s krishan Vir Singh, Noida

ITA 1497/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77802 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N BHATIA SENIOR
• Keywords: Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI GEORGE GEORGE K. : JUDICIAL MEMBER AND SHRI B.C. MEENA : ACCOUNTANT MEMBER ITA NO. 1497/DEL/2013 ASSTT. YR: 2007-08 ACIT, CIRCLE 1, VS. KRISHAN VIR SINGH, NOIDA. G-2, SECTOR-56, NOIDA. PAN/GIR NO. ALZPS 9122 P ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI VIVEK GUPTA, AR REVENUE BY : SHRI S.N. BHATIA, SENIOR DR O R D E R PER B.C. MEENA, A.M :- THIS IS DEPARTMENTS APPEAL ASSAILING THE ORDER DAT ED 17-12-2012 PASSED BY THE LD. CIT(A), NOIDA, DELETING THE PENAL TY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE I.T. ACT, RELATING TO A.Y. 2007-08. 2. BRIEF FACTS ARE: THE ASSESSEE, A PWD ROAD CONTRA CTOR, ENGAGED IN THE ROAD CONSTRUCTION AT VARIOUS PLACES IN THE STATE OF U.P., FILED RETURN FOR A.Y. 2007-08 DECLARING INCOME OF RS. 11,27,270/-. THE AS SESSMENT WAS COMPLETED AT AN INCOME OF RS. 20,29,711/- BY MAKING ADDITION OF RS. 20,29,711/- BY ADOPTING THE NET PROFIT RATE OF 8% AS AGAINST 3.23% SHOWN BY THE ASSESSEE. PENALTY PROCEEDINGS U/S 271(1)(C) WER E ALSO INITIATED BY ISSUING NOTICE U/S 274 READ WITH SECTION 271 (1)(C) OF THE I.T. ACT, 1961. 2.1. IN PENALTY PROCEEDINGS BEFORE THE ASSESSING OF FICER, ASSESSEE HAD CONTENDED THAT ASSESSEE HAD AGREED TO BE ASSESSED O N 8% OF TURNOVER JUST TO AVOID LITIGATION WITH THE DEPARTMENT AND KEEPING PE ACE IN MIND AND THAT THE ITA 1497/DEL/13 ACIT VS. KRISHAN VIR SINGH 2 ADDITION MADE UNDER THE ASSESSMENT PERTAINED TO INT ANGIBLE ADDITION, NOT COVERED U/S 271 (1)(C) OF THE INCOME TAX ACT. 2.2. REJECTING THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE DIFFERENCE OF PROFIT RATE DISCLOS ED RESULTED DUE TO INFLATED EXPENSES HAVING BEEN UNVOUCHED, THEREFORE, ASSESS EE HAD PROVIDED INACCURATE PARTICULARS OF HIS INCOME AMOUNTING TO R S. 20,29,7111- AS CONCEALED INCOME. ACCORDINGLY THE ASSESSING OFFICE R IMPOSED PENALTY OF RS. 7,68,000/- U/S 271(1)(C) FOR CONCEALING THE PARTICU LARS OF INCOME. 2.3. IN APPEAL BEFORE THE CIT(A), THE ASSESSEE HAD SUBMITTED THAT: (I) THE ASSESSEE HAS GIVEN CLEAR AND COMPLETE DISCLOSUR E IN RESPECT OF ITS NET PROFIT EARNED FROM BUSINESS THROUGH ITS AUD ITED ACCOUNTS AND TAX AUDIT REPORT WHICH WERE FILED ALONG WITH ITS RE TURN OF INCOME. (II) THE ADDITION HAS BEEN MADE BY AO DUE TO DIFFERENCE OF OPINION, ON ESTIMATED BASIS ONLY, WHICH WAS AGREED BY THE AS SESSEE TO BUY PEACE OF MIND AND TO AVOID LITIGATION WITH THE REVE NUE. PENALTY U/S 271 (1) (C) CAN NOT BE LEVIED ON THE BASIS OF ESTIM ATED ADDITIONS. RELIANCE WAS PLACED ON THE DECISION OF HONBLE DELH I HIGH COURT IN THE CASES OF: - CIT VS. AERO TRADERS PVT. LTD. (ITA NO. 107912009 ORDER DATED 25/01/2012). - ITAT DELHI BENCH ORDER IN THE CASE OF M/S KALINDI RAIL NIRMAN ENGG. LTD VS. DCIT IN ITA NO. 3221DE112008 O RDER DATED 2910212012 - CIT V. MAHENDRA SINGH KHEDLA (2012) 71 DTR 189 (RAJ.)(HIGH COURT.) - HARGOPAL SINGH VS. CIT (2002)258 ITR 85(PUNJAB& HAR YANA). 2.4. LD. CIT(A) DELETED THE PENALTY, INTER ALIA, OB SERVING AS UNDER: ITA 1497/DEL/13 ACIT VS. KRISHAN VIR SINGH 3 IN THE PRESENT CASE A.O. APPLIED FLAT RATE OF 8% A GAINST THE DECLARED NET PROFIT RATE OF 3.23% WHICH WAS AGREED TO BY THE ASSESSEE TO AVOID LITIGATION WITH THE DEPARTMENT AN D TO BUY PEACE OF MIND SUBJECT TO THE CONDITION THAT NO PENA LTY SHALL BE LEVIED. IN FACT IT WAS A CONDITIONAL AGREEMENT TO A VOID LITIGATION WITH THE DEPARTMENT AND TO BUY PEACE OF MIND. SINCE THE ADDITION MADE IS PURELY ON AD-HOC ESTIMATION OF INC OME BY APPLYING FLAT RATE OF 8% OF THE PROFIT, THE SAME CA N NOT BE HELD EITHER AS CONCEALMENT OR FILING OF INACCURATE PARTI CULARS. I HAVE ALSO OBSERVED THAT THE ALLEGED CONCEALMENT OF PROFI T FROM CONTRACT BUSINESS HAS NOT BEEN ESTABLISHED BY THE A O AS THE ALLEGATIONS REMAIN UNPROVED. NOWHERE, IN THE PENALT Y ORDER THE A.O. HAS POINTED OUT ANY SPECIFIC ITEMS OF ADDITION WITH ANY CONCLUSIVE EVIDENCE. IN FACT ASSESSED INCOME BEEN E STIMATED SOLELY ON THE BASIS OF ESTIMATED NET PROFIT RATIO O NLY AND THAT IT IS NOT ON ACCOUNT OF ANY SPECIFIC ITEM OF ADDITION OR DISALLOWANCE. IN MY CONSIDERED VIEW THAT SUCH AN AD DITION, MADE ON THE BASIS OF GUESS WORK CAN NOT BE A SUBJEC T MATTER OF PENALTY FOR CONCEALMENT OF INCOME. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. THE SUBJECT ADDITION FOR LEVY OF PENALTY HAS BEEN MADE BY THE AO BY APPLYING N.P. RATE OF 8% ON ESTIMATE B ASIS WITHOUT MENTIONING ANY SPECIFIC ITEM OF ADDITION/DISALLOWANCE. THE ASS ESSEE AGREED TO THE ESTIMATED ADDITION TO BUY PEACE AND SUBJECT TO THE CONDITION THAT NO PENALTY WOULD BE LEVIED. HOWEVER, THE ASSESSING OFFICER LEV IED THE PENALTY AS IN HIS OPINION THE ASSESSEE HAD INFLATED THE EXPENSES WHIC H WERE FOUND UNVOUCHED AND TO THAT EXTENT THE ASSESSEE HAD PROVIDED INACCU RATE PARTICULARS OF HIS INCOME. WE FIND THAT IN THE CASE IN HAND THE ASSESS EE HAS FILED AUDITED A/CS AND AUDIT REPORT ALONG WITH THE RETURN OF INCOME. T HE ASSESSEE HAVING FILED ALL PARTICULARS OF HIS INCOME ALONG WITH THE RETUR N, IT CANNOT BE SAID THAT ASSESSEE HAS CONCEALED PARTICULARS OF ITS INCOME. THE ASSESSEE AGREED TO BUY PEACE OF MIND AND TO AVOID LITIGATION WITH THE REVENUE. IT IS TRITE LAW THAT ITA 1497/DEL/13 ACIT VS. KRISHAN VIR SINGH 4 PENALTY U/S 271 (1) (C) CAN NOT BE LEVIED ON ESTIMA TED ADDITIONS. WE AGREE WITH THE ELABORATE ORDER PASSED BY THE CIT(A) IN DE LETING THE PENALTY IN QUESTION. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A ) IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30.07.2014. SD/- SD/- ( GEORGE GEORGE K. ) ( B.C. MEENA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30-07-2014. *MP* COPY TO: (1) ASSESSEE (2) AO. (3) CIT(A) (4) CIT (5) CIT(DR)