M/s. Batra Autos, Hoshiarpur V. The Income tax Officer, Hoshiarpur

ITA 164/ASR/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0604 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 28-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Keywords: Reasonable cause
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.164(ASR)/2011 ASSESSMENT YEAR:2005-06 PAN :AADFB658Q M/S. BATRA AUTOS, VS. THE INCOME TAX OFFICER, FATEHGARH ROAD, WARD-3, HOSHIARPUR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:NONE RESPONDENT BY:SH. R.L. CHHANALIA, DR DATE OF HEARING: 02/01/2013 DATE OF PRONOUNCEMENT:08/01/2013 ORDER PER BENCH ; THE ASSESSEE HAS FILED THE RESENT APPEAL AGAINST T HE IMPUGNED ORDER OF CIT(A), JALANDHAR, DATED 14.03.2011 FOR THE ASSESSM ENT YEAR 2005-06 ON THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) ERRED BOTH IN LAW AS WELL IN RESPECT OF THE FACTS OF THE CASE, WHILE PARTLY UPHOLDING THE PEN ALTY OF RS.33,028/- OUT OF RS.50,925/- IMPOSED BY THE A.O . ITA NO.164(ASR)/2011 2 2. THAT THE LD. CIT(A) FAILED TO APPRECIATE THE SU BMISSIONS OF THE APPELLANT IN REGARDS TO UPHOLDING OF PENALTY ON A CCOUNT OF UNCALLED FOR AND UNJUSTIFIED ADDITION OF RS.52,48 1/- MADE ON ACCOUNT OF ALLEGED UNRECORDED PURCHASES. 3. HE WAS FURTHER WRONG IN UPHOLDING THE PENALTY O N ACCOUNT OF UNJUSTIFIED DISALLOWANCE OF RS.55,450/- ALLEGED A S EXCESS SALARY DEBITED TO PROFIT & LOSS ACCOUNT. 4. THAT THE LD. CIT(A) WAS ABSOLUTELY UNJUSTIFIED IN DISAGREEING WITH THE CONTENTIONS OF THE APPELLANT IN REGARDS TO BONA-FIDE CLAIM OF SALARY PAID TO ITS EMPLOYEES, AND ARBITR ARILY UPHELD THE PENALTY IMPOSED ON THE SAID UNCALLED FOR DISALLOW ANCE. 5. THAT ALL THE COMMENTS PASSED BY LD. CIT(A) ARE CONTRARY TO THE FACTS OF THE CASE, WITHOUT APPRECIATING THE SAME JUDICIOUSLY ERRED IN PARTLY UPHOLDING THE PENALTY OF RS.33,02 8/- IN RESPECT OF RS.52,481 ADDED ALLEGING UNRECORDED PURCHASES AND RS.55,450/- WRONGLY DISALLOWED ALLEGING EXCESS SA LARY DEBITED TO P & ACCOUNT. 6. THE APPELLANT RESERVES FOR AWARDING OF APPROPRI ATE COST FOR THE APPEAL, AS PER SECTION 254(2B) OF THE I.T.ACT, 19 61, BY THE HONBLE BENCH. 2 THE AFORESAID CASE CAME UP FOR HEARING BEFORE THE BENCH ON 02.01.2013 AND THE LD. COUNSEL FOR THE ASSESSEE FIL ED AN APPLICATION FOR ADJOURNMENT. BUT KEEPING IN VIEW THE ISSUE IN DISPU TE WE ARE OF THE VIEW THAT NO REASONABLE CAUSE HAS BEEN MENTIONED BY THE LD. COUNSEL FOR THE ASSESSEE FOR SEEKING ADJOURNMENT. THEREFORE, THE AD JOURNMENT APPLICATION DATED 31.12.2012 IS REJECTED AND WE PROCEED TO DECI DE THE PRESENT APPEAL EX- PARTE ASSESSEE, AFTER HEARING THE LD. DR. 3. THE LD. DR RELIED UPON THE ORDERS PASSED BY THE AUTHORITIES BELOW. ITA NO.164(ASR)/2011 3 4. THE PRESENT APPEAL FILED BY THE ASSESSEE AGAINST PENALTY OF RS.50,925/- LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE I.T .ACT,1961 (IN SHORT, THE ACT) @ 100% OF THE TAX SOUGHT TO BE EVADED IN RESP ECT OF THREE ADDITIONS. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THE C ASE OF THE ASSESSEE ON 10.04.2004. INVENTORY OF STOCK WAS PREPARED AT THE TIME OF SURVEY WHICH REVEALED A DIFFERENCE OF RS.1,35,432/- BETWEEN THE PHYSICAL INVENTORY OF STOCK AND STOCK PREPARED FROM THE TRADING ACCOUNT F ILED BY THE ASSESSEE. THE ASSESSEE EXPLAINED THAT THIS DIFFERENCE HAS ARISEN BECAUSE THE INVENTORY WAS PREPARED AT THE SALE PRICE WHEREAS IN THE TRADING A CCOUNT THE COST OF VEHICLES/SPARES PARTS WAS TAKEN AT COST. THE ASSESS EE FURTHER SUBMITTED THAT IN THE STOCK INVENTORY BENEFIT OF G.P. RATE WAS NOT ALLOWED AND CLAIMED THAT THE GP RATE ON SPARE PARTS RANGED FROM 10% TO 12%. THE AO ALLOWED BENEFIT OF GP RATE AT 9% AND MADE AN ADDITION OF RS .42,030/- ON THE DIFFERENCE IN STOCK.. ON APPEAL, THE LD. CIT(A) HA S ALLOWED THE BENEFIT OF GP RATE AT 10% AS AGAINST 10% ALLOWED BY THE AO BEC AUSE OF WHICH THE ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK WAS REDU CED TO RS.31,230/-. THE SECOND ADDITION OF RS.32,517/- AND RS.19,994/- ON A CCOUNT OF UNRECORDED PURCHASES FOR WHICH NO CORRESPONDING SALE OF GOODS WAS SHOWN BY THE ASSESSEE. THE ASSESSEE HAS RECORDED THESE PURCHASES IN A DIARY IMPOUNDED DURING THE COURSE OF SURVEY AND THE ASSESSEE HAD CO NFESSED THAT THESE ITA NO.164(ASR)/2011 4 PURCHASES WERE NOT RECORDED IN THE BOOKS. THIS ADDI TION WAS CONFIRMED BY THE LD. CIT(A). DURING THE COURSE OF SURVEY, LIST O F EMPLOYEES WAS PREPARED WHICH HAD FIVE EMPLOYEES TO WHOM TOTAL SALARY WAS PAID @ RS.21,500/- PER MONTH I.E. RS.2,58,000/- DURING THE YEAR. BUT THE A SSESSEE SUPPLIED LIST OF NINE EMPLOYEES DURING THE ASSESSMENT PROCEEDINGS AN D DEBITED A SALARY OF RS.4,10,950/- IN ITS ACCOUNT. THE LIST INCLUDED SH . DEEPAK BATRA AS MANAGER GETTING SALARY OF RS.7500/- P.M. AND SH. SAHIB DAYA L , ACCOUNTANT GETTING SALARY RS.2000/- PER MONTH AND TWO OTHER PERSONS, L UCKY AND BAHADUR JOINED IN JULY, 2004. NO ATTENDANCE REGISTER AND SA LARY WERE REGISTER OR VOUCHERS WERE STATED TO HAVE BEEN MAINTAINED BY THE ASSESSEE. BUT THE AO ACCEPTED THE SALARY PAID TO SH. DEEPAK BATRA BUT PR OPOSED TO DISALLOW THE BALANCE SALARY CLAIMED AT RS.55,450/- TO WHICH THE ASSESSEE DID NOT OBJECT AND THE LD. CIT(A) UPHELD THE ADDITION. 5. IN THE PENALTY PROCEEDINGS, THE ASSESSEE PLEADED THAT THE ADDITION IN DISPUTE IS ON ESTIMATION BASIS AND NOT ATTRACTED TH E PROVISIONS OF SECTION 271(1)(C) OF THE ACT. BUT THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND LEVIED THE PENALTY IN DISPUTE. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE RELIED UPON THE SUBMISSIONS MADE BEFOR E THE AO AND FURTHER STATED THAT ONE ADDITION TO THE TRADING ACCOUNT WAS MADE ON ESTIMATE ON WHICH NO PENALTY COULD BE LEVIED. IN RESPECT OF PEN ALTY LEVIED FOR ITA NO.164(ASR)/2011 5 DISALLOWANCE OF SALARY, THE ASSESSEE SUBMITTED THAT PART OF THE SALARY DISALLOWED WAS IN RESPECT OF PART-TIME ACCOUNTANT, WHO DID NOT COME EVERY DAY. THE ASSESSEE ALSO STATED THAT SH. DEEPAK BATR A WAS PRESENT AT THE TIME OF SURVEY AND HIS SALARY COULD NOT BE DISALLOWED AN D ASSESSEE REQUESTED FOR CANCELLATION OF PENALTY IN DISPUTE. 6. IN THE IMPUGNED ORDER, THE LD. FIRST APPELLATE A UTHORITY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND FOUND THAT AS REGAR DS THE ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK, THE AO HAS ALLOWED G.P. RATE BENEFIT OF 9%, THE G.P. ON SPARE PARTS WAS ALSO UPTO 12%, ON WHICH BASIS THE DIFFERENCE IN STOCK WOULD REMAIN AT A NOMINAL FIGURE OF RS.9,9990 /-. BUT IN THE APPEAL, THE LD. CIT(A) HAS ALLOWED BENEFIT @ 10% OF G.P. A ND CONCLUDED THAT WHERE INCOME OF THE ASSESSEE WAS ASSESSED ON ESTIMA TE BASIS AND THERE WAS NO EVIDENCE TO SHOW THAT THE INCOME WAS MORE THAN T HE INCOME RETURNED BY THE ASSESSEE, IT COULD NOT LEAD TO THE CONCLUSION T HAT THE ASSESSEE HAD EITHER CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF SUCH INCOME BY RELYING UPON THE VARIOUS DECISIONS OF HIG H COURTS AS WELL AS THE TRIBUNAL. THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE PENALTY ON ACCOUNT OF DIFFERENCE IN STO CK ON ESTIMATE BASIS AND UPHELD THE PENALTY ON ACCOUNT OF ADDITION OF UNDIS CLOSED PURCHASES AS WELL AS EXCESS CLAIM OF SALARY AMOUNTING TO RS.55,450/- . ITA NO.164(ASR)/2011 6 7. AFTER HEARING THE LD. DR AND PERUSING THE RELEVA NT RECORDS AVAILABLE WITH US, WE ARE OF THE CONSIDERED VIEW THAT THAT TH E LD. FIRST APPELLATE AUTHORITY HAS LEVIED PENALTY ON THE ADDITION WHICH IS ON ACCOUNT OF UNRECORDED PURCHASES MADE FROM M/S. TAGGAR OIL STOR E AND M/S. RANA SPARE PARTS AS RECORDED IN THE IMPOUNDED DIARY, WHI CH WERE NOT RECORDED IN ASSESSEES BOOKS OF ACCOUNT. WE FIND THAT THE LD. FIRST APPELLATE AUTHORITY IN THE APPEAL HAS REJECTED THE CONTENTION OF THE ASSES SEE ONLY ON THE GROUND THAT THE EXPLANATION OF THE ASSESSEE WAS NOT REASONABLE. HE HAS NOT SPECIFICALLY POINTED OUT ANY CONCEALMENT BY THE ASSESSEE INTENTI ONALLY OR FURNISHED INACCURATE PARTICULARS OF INCOME, FILED IN THE RETU RN AND THE EXPLANATION OF THE ASSESSEE IS NOT BONA FIDE. THEREFORE, PENALTY O N THE ADDITION ON ACCOUNT OF PURCHASES HAVE WRONGLY BEEN LEVIED BY THE LD. FI RST APPELLATE AUTHORITY, WHICH DESERVES TO BE DELETED AND WE DELETE THE SAME ACCORDINGLY. 8. AS REGARDS TO THE PENALTY ON THE CLAIM OF SALARY , WE FIND THAT THE REVENUE AUTHORITIES HAVE FAILED TO ESTABLISH ANY WI LLFUL CONCEALMENT BY THE ASSESSEE IN THEIR ORDERS. EVEN NO IOTA OF EVIDENCE IS ON RECORD TO DISBELIEVE THE EXPLANATION OF THE ASSESSEE. THEREFORE, THE PEN ALTY IS NOT AUTOMATIC WHICH DESERVES TO BE CANCELLED UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. KEEPING IN VIEW THE FACTS AND CIRCUMS TANCES OF THE PRESENT CASE AS WELL AS THE IMPUGNED ORDER, WE ARE OF THE CONSID ERED OPINION THAT THE LD. ITA NO.164(ASR)/2011 7 FIRST APPELLATE AUTHORITY HAS WRONGLY LEVIED PENALT Y IN DISPUTE, WHICH DESERVES TO BE CANCELLED AND WE CANCEL THE SAME BY ALLOWING THE APPEAL FILED BY THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH JANU ARY, 2013. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8TH JANUARY, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. BATRA AUTOS, HOSHIARPUR. 2. THE ITO WARD-3, HOSHIARPUR. 3. THE CIT(A), JALANDHAR. 4. THE CIT,JALANDHAR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.