M/s Bansal Iron Scrap Co., Chandigarh V. ITO, Chandigarh

ITA 162/CHANDI/2006

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1635 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-09-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 03-03-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Opportunity of being heard
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 162/CHD/2006 ASSESSMENT YEAR: 1999-2000 M/S BANSAL IRON SCRAP CO., VS. THE ITO, WARD-2(1) , CHANDIGARH CHANDIGARH PAN NO. AAEFB3104F (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 14.09.2015 DATE OF PRONOUNCEMENT : 27.10.2015 ORDER PER H.L.KARWA, VP THIS APPEAL FILE BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 23.12.2005 OF CIT(A), CHANDIGARH IN CONFIRMING THE PENALTY OF RS. 5 LAKHS MADE U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 RELATING TO ASSESSMENT YEAR 1999-2000. 2. THIS BENCH OF THE TRIBUNAL VIDE ITS ORDER DATED 30.3.2007 IN ITA NO. 162/CHD/2007 CANCELLED THE PENALTY OBSERVING THAT P ENALTY PROCEEDINGS HAD BEEN INITIATED BY THE ASSESSING OFFICER WITHOUT RECORDIN G HIS SATISFACTION IN THE ASSESSMENT ORDER IN RESPECT OF THE ALLEGED CONCEALM ENT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE REVENUE FILED AN APPEAL BEFORE THE HON'BLE 2 JURISDICTIONAL HIGH COURT AGAINST THE ORDER DATED 30.3.2007 PASSED BY THE TRIBUNAL. THE HON'BLE JURISDICTIONAL HIGH COURT V IDE ITS ORDER DATED 1.8.2012 IN ITA NO. 832 OF 2008 SET ASIDE THE ORDER OF THE TRIB UNAL AND REMANDED THE MATTER TO THE TRIBUNAL TO ADJUDICATE THE ISSUE ON MERITS I N ACCORDANCE WITH LAW. 3. THE ABOVE APPEAL WAS FIXED FOR HEARING ON 14.9.2 015. DESPITE SERVICE OF NOTICE, NO BODY APPEARED ON BEHALF OF THE ASSESSEE. IT APPEARS THAT ASSESSEE IS NOT INTERESTED IN PURSUING THE MATTER. HOWEVER, SHRI S. K.MITTAL, LD. DR APPEARED ON BEHALF OF THE REVENUE. IN COMPLIANCE TO THE DIRECTI ONS OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE PROCEED TO DECIDE THE APPEAL ON MERITS. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SUBMITTED ITS RETURN OF INCOME ON 9.11.1999 DECLARING TOTAL INCOME AT RS. 6 ,83,840/-. IN THIS CASE A SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE BUS INESS PREMISES OF THE ASSESSEE ON 9.9.1998. DURING THE COURSE OF SURVEY, THE ASSESSEE SURRENDERED AN ADDITIONAL INCOME OF RS. 6,50,000/- FOR ASSESSMENT YEAR 1999-2000 AND ANOTHER SUM OF RS. 6 LAKHS FOR THE ASSESSMENT YEAR 1998-99. THE ORDER OF ASSESSMENT WAS PASSED U/S 143(3) OF THE ACT ON 14.3.2002, WHEREIN INTER ALIA, AN ADDITION OF RS. 11,31,601/- WAS MADE ON ACCOUNT OF UNDERSTATEMENT O F STOCK AND THE TOTAL INCOME WAS DETERMINED AT RS. 21,05,400/-. BEING AG GRIEVED BY THE SAID ORDER OF ASSESSMENT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), PATIALA, WHO VIDE HIS ORDER DATED 5.7.2004 DISMISSED THE APPEAL. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND ASSESSING OFFICER IMPOSED A PENALTY OF RS. 5 LAKHS UPON THE A SSESSEE FOR MAKING UNACCOUNTED PURCHASES AND BEING IN POSSESSION OF EXCESS STOCK TO THE TUNE OF RS. 11,31,601/-. 5. ON APPEAL, THE LD. CIT(A) CONFIRMED THE IMPUGNE D PENALTY VIDE HIS ORDER DATED 23.12.2005. 3 6. IT IS OBSERVED THAT THE ORDER OF CIT(A), DATED 5 .7.2004 PASSED IN QUANTUM APPEAL WAS THE SUBJECT MATTER OF ASSESSEES APPEAL BEFORE THE TRIBUNAL IN ITA NO. 986/CHD/2004 AND THE TRIBUNAL VIDE ITS ORDER 1.8.20 06 HAS REDUCED THE ADDITION OF RS. 11,31,601/- TO RS. 4.27 LAKHS AND ALLOWED A RELIEF OF RS. 7,04,601/- TO THE ASSESSEE, OBSERVING AS UNDER:- 8. THE ONLY OTHER ISSUE SURVIVING FOR OUR CONSIDE RATION IS THE QUANTUM OF THE ADDITION. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT ASSESSEE HAS DISCLOSED GP RAT E OF 13.60% IN THE YEAR UNDER APPEAL AS AGAINST 17.17% IN THE IMMEDIATELY PRECEDING . THERE WAS DISCREPANCY IN TH E CLOSING STOCK ALSO INSOFAR AS PURCHASES MADE IN THE MONTH OF MARCH WERE FOUND NEITHER TO HAVE BEEN SOLD TILL THE END OF THE PREVIOUS YEAR NOT REFLECTED IN THE CLOSING STOCKS . THE ASSESSEE HAD DISCLOSED CLOSING STOCK OF RS. 1,1 8,878/- ONLY. THE STOCKS AVAILABLE WITH THE ASSESSEE OUGHT HAVE BEEN AT LEAST TO THE TUNE OF RS, 5,46,042, IT WAS HELD BY THE AO. THE EXPLANATION FURNISHED BY THE ASSESSEE I N REGARD TO NON-REFLECTION OF THE PURCHASES MADE TOWA RDS THE END OF MARCH WAS NOT SUPPORTED BY ANY EVIDENCE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE A DDITION OF RS.4,27,000/- TO THE DECLARED RESULTS IS WARRAN TED IN THIS CASE IN ADDITION TO THE SUM OF RS.6.50 LAKHS D ISCLOSED BY THE ASSESSEE AS SURRENDERED IN THE COURSE OF SUR VEY. IN OUR CONSIDERED VIEW, NO SEPARATE ADDITION OF RS.7,0 4,435/- IS JUSTIFIED IN THIS CASE FOR VARIOUS REASONS FIR STLY, THE STATEMENT FURNISHED TO THE BANK IS NOT ON THE BASIS OF BOOKS OF ACCOUNT, IT IS IN THE MIDDLE OF MONTH GIVE N ON ESTIMATE. THE ASSESSES HAS FURNISHED AN AFFIDAVIT TO SUPPORT THE CONTENTION THAT THE STATEMENT FURNISHED TO THE .BANK WAS NOT AUTHENTIC. THE GOODS HAD BEEN HYPOTHE CATED TO THE BANK AND NOT PLEDGED AND, THEREFORE, THERE W AS NO VERIFICATION OF STOCKS BY THE BANKERS. IT IS ALSO OBSERVED THAT THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSE E SUFFER FROM VARIOUS DEFECTS AND, THEREFORE, ITS ACCURACY I N RESPECT 4 OF CERTAIN ENTRIES IS DOUBTFUL. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT A FAIR ESTIMATION OF INCOME I N THIS CASE IS MORE APPROPRIATE THAN MAKING SPECIFIC ADDIT IONS ON ACCOUNT OF CLOSING STOCK. IT MAY BE PERTINENT TO ME NTION THAT AFTER SUSTAINING THE ADDITION OF RS 4.27 LAKHS , THE GP RATE OF THE ASSESSEE WOULD WORK OUT TO MORE THAN 17 .17% DISCLOSED IN THE PRECEDING YEAR. WE THEREFORE, SUST AIN THE ADDITION OF RS.4.27 LAKHS AND ALLOW RELIEF OF RS. 7 , 04, 601 (1131601-4.27.000). 7. CONSIDERING THE ORDER OF THE TRIBUNAL PASSED IN QUANTUM APPEAL IN ITA NO. 986/CHD/2004, WE THINK IT APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER AND REMAND THE MATTER TO THE ASSESSING OFFICER FOR A FR ESH DECISION. IT IS A MATTER OF RECORD THAT THE IMPUGNED ORDER WAS PASSED BY CIT(A) ON 23.12.2005, WHICH WAS PASSED MUCH BEFORE THE ORDER OF THE TRIBUNAL IN THE QUANTUM APPEAL. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER AND RE MAND THE MATTER TO THE ASSESSING OFFICER TO DECIDE THE MATTER AFRESH IN AC CORDANCE WITH LAW CONSIDERING THE DECISION OF THE TRIBUNAL PASSED IN ASSESSEES C ASE IN ITA NO. 986/CHD/2004 RELATING TO ASSESSMENT YEAR 1999-2000. THE ASSESSI NG OFFICER IS DIRECTED TO GIVE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN TH E MASTER. 8. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.10.2015 SD/- SD/- (ANNAPURNA MEHROTRA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 27 TH OCTOBER, 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 5