SHRI ANIL KUMAR AGRAWAL, Dewas V. THE ACIT 1(1), Ujjain

ITA 167/IND/2015

• Counselvise Citation: 16722714 RSA 2015
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Assessee Lawyers: S S DESHPANDE; PIYUSH MANDOVRA
• Keywords: Rejection of books of accounts; Search and seizure
• Section: 40A(3); 131

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NOS. 162 TO 165/IND/2015 A.YS. 2004-05 TO 2007-08 M/S SHIVSHAKTI LAND & FINANCE DEWAS PAN AAPFS 5060H ::: APPELLANT VS ASSISTANT COMMISSIONER OF INCOME TAX 1(1) UJJAIN ::: RESPONDENT ITA NOS. 166/IND/2015 A.Y. 2008-09 M/S SHREE GANGASAGAR LAND & FINANCE CO. DEWAS PAN AABPG 0251A ::: APPELLANT VS ASSISTANT COMMISSIONER OF INCOME TAX 1(1) UJJAIN ::: RESPONDENT 2 ITA NOS. 167 TO 169/IND/2015 A.YS. 2006-07 TO 2008-09 SHRI ANIL KUMAR AGRAWAL DEWAS PAN AEIPA 8838A ::: APPELLANT VS ASSISTANT COMMISSIONER OF INCOME TAX 1(1) UJJAIN ::: RESPONDENT ITA NOS. 170 & 171/IND/2015 A.YS. 2005-06 & 2006-07 M/S ANAND LAND & FINANCE CO. DEWAS PAN AAIFA 9468L ::: APPELLANTS VS ASSISTANT COMMISSIONER OF INCOME TAX 1(1) UJJAIN ::: RESPONDENT 3 APPELLANT BY SHRI S.S. DESHPANDE AND SHRI PIYUSH MANDOVRA RESPONDENT BY SHRI R. R . MEENA DATE OF HEARING 1 6 . 6 .2015 DATE OF PRONOUNCEMENT 1 7 .6 .2015 O R D E R PER SHRI B.C. MEENA, AM ALL THESE APPEALS EMANATE FROM DIFFERENT ORDERS OF THE LEARNED CIT(A), UJJAIN, DATED 2.12.2014 AND 1.12.2 014. IN ALL THESE APPEALS THE ONLY ISSUE INVOLVED IS SUSTAIN ING THE PENALTY LEVIED U/S 271(1)() OF THE INCOME TAX A CT, 1961. THE GROUNDS OF APPEAL IN ITA NO. 162/IND/2015 ARE REPRODUCED AS UNDER :- 1. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE HON'BLE TRIBUNAL IN QUANTUM APPEAL HAS DIRECTED TO TAKE N.P. @ 8% BY REJECTING BOOKS OF ACCOUNTS AND UNDER SUCH CIRCUMSTANCES, IF THE PROFIT IS ESTIMATED BY APPLYING NET PROFIT RATE, NO PENALTY COULD BE LEVIED. 4 2. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE HON'BLE TRIBUNAL IN QUANTUM APPEAL HAS DIRECTED TO TAKE N.P. @ 8% BY REJECTING BOOKS OF ACCOUNTS AND UNDER SUCH CIRCUMSTANCES, IF THE PROFIT IS ESTIMATED BY APPLYING NET PROFIT RATE, NO PENALTY COULD BE LEVIED. 3. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY WHEN THE A.O. HIMSELF WAS NOT SATISFIED ABOUT CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. PENALTY UPHELD MAY PLEASE BE CANCELLED 5. THE APPELLANT PRAYS TO GRANT SUCH OTHER RELIEF AS IS FOUND ADMISSIBLE UNDER LAW & EQUITY. 2. BRIEF FACTS OF THE CASE ARE THAT THERE WAS SEARCH AND SEIZURE OPERATION ON 28-29.1.2008 IN THIS GROUP O F CASES. DURING THE SEARCH OPERATION, STATEMENTS OF SHRI MANOJ KUMAR AND SHRI LAXMI NARAYAN AGRAWAL U/S 132(4) OF THE ACT AND OF OTHER TWO CONTRACTORS WERE RECORDED U/S 131 OF THE ACT. INITIALLY, THESE CONTRACTORS DENIED H AVING DONE ANY WORK AS CONTRACTORS. HOWEVER, ON THE VERY NEX T DAY, THESE PERSONS RETRACTED FROM THEIR STATEMENTS BY FILING AN AFFIDAVIT DATED 30.1.2008 AND CONFIRMED THAT TH EY 5 HAVE DONE THE WORK. IT WAS ALSO RECORDED THAT THE PAYMENTS TO THESE CONTRACTORS WERE MADE THROUGH CHEQUES. TDS WAS ALSO DEDUCTED. THESE CONTRACTORS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND THEY CATEGORICALLY ACCEPTED HAVING DONE WORK. THE ASSESSING OFFICER MADE THE ADDITION AND THE LEARNED CIT(A) SUSTAI NED THE ADDITION BY INVOKING PROVISIONS OF SECTION 40A(3 ) OF THE ACT BEING DISALLOWANCE OF 20% OF THE CONTRACTUAL PAYMEN T. HON'BLE ITAT IN ITS ORDER DATED 27.3.2012 SET ASIDE T HE ORDER OF THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) AND DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE PROFIT OF THE ASSESSEE FIRM BY TAKING NET PROFIT @ 8% OF TH E GROSS RECEIPTS WITHIN THE MEANING OF PROVISIONS OF SECTION 44AB OF THE ACT. THE ITAT DID NOT TREAT THE BOOK RESULTS AS RELIABLE AND REJECTED THE BOOK PROFIT. NOW BEFORE US THE ASSESSEES ARE IN APPEAL AGAINST LEVYING AND SUSTAINING THE PENALTY U/S 271(1)() OF THE ACT. 6 3. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE ASSESSING OFFICER MADE THE ADDITION BY NOT ALLOWING PAYMENTS MADE TO THE CONTRACTORS WHOSE STATEMENTS WERE RECORDED DURING THE SEARCH OPERATION. ALTHOUGH THESE CONTRACTORS HAVE RETRACTED FROM THEIR STATEMENTS ON TH E VERY NEXT DAY AND IT WAS ALSO SUBMITTED BY THEM THAT TH E PAYMENTS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL AND TDS HAS BEEN DEDUCTED ON THESE PAYMENTS. THE LEARNED CIT(A) SUSTAINED THE QUANTUM ADDITION BY RESTRICTING IT TO THE TUNE OF 20% OF THE CONTRACTUAL PAYMENTS BY INVOKING PROVISIONS OF SECTION 40A(3) O F THE ACT. HOWEVER, IN QUANTUM APPEAL, THE ITAT DIRECTED TO WORK OUT THE NET PROFIT @ 8% ON THE GROSS CONTRACTUAL RECEIPTS. THUS, THERE IS CHANGE IN THE GROUNDS ON WH ICH THE ADDITION HAS BEEN FINALLY SUSTAINED. THUS, THE ADDI TION FINALLY SUSTAINED IS ON ESTIMATING INCOME @ 8% ON THE GROSS CONTRACTUAL RECEIPTS. THE ASSESSING OFFICER MADE THE 7 ADDITION BY HOLDING CONTRACTUAL RECEIPTS AS BOGUS. THUS , THE PENALTY U/S 271(1)() OF THE ACT WAS INITIATED ON DIFFERENT GROUND THAN THE ADDITION FINALLY SUSTAINED. THEREFORE, WE FIND THAT THERE WAS NO MERIT IN SUSTAINI NG THE PENALTY LEVIED U/S 271(1)() OF THE ACT BY LEARNE D CIT(A) FOR FILING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE PARTICULARS OF INCOME. WE WOULD ALSO LIK E TO MAKE IT CLEAR THAT MERE REJECTION OF BOOKS OF ACCOUNTS AND MAKING ESTIMATED ADDITION DOES NOT IB SO FACTO LEAD TO PENALTY U/S 271(1)() OF THE ACT. THERE MUST BE SOM E MATERIAL ON RECORD TO ESTABLISH THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED THE PARTICULARS OF INCOME. SUCH VIEW GETS SUPPORT FRO M JUDICIAL PRONOUNCEMENT IN THE CASE OF CIT VS. SHIV NARAYAN JAMNALAL & CO.; 232 ITR 311 (MP) WHEREIN THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT PENALT Y WAS RIGHTLY DELETED IN A SIMPLE CASE OF REJECTION OF B OOKS 8 AND ESTIMATION OF INCOME BY APPLYING A FLAT RATE AND NO FINDING OF FRAUD OR GROSS OR WILLFUL NEGLECT ON THE PART OF THE ASSESSE. IN THE ASSESSEES CASE ALSO, THE BOOK RESU LTS HAVE BEEN REJECTED AND THE INCOME HAS BEEN ESTIMATED BY APPLYING FLAT RATE OF 8% AND THERE IS NO FINDING OF ANY FRAUD OR GROSS OR WILLFUL NEGLECT ON THE PART OF THE ASSESSEE. THEREFORE, IN OUR CONSIDERED VIEW, THERE WAS NO MER IT IN SUSTAINING THE PENALTY. 4. FOLLOWING JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUPPORT O UR VIEW :- (I) NARESHCHAND AGRAWAL VS. CIT (2013) 357 ITR 514 (II)CIT VS. KRISHI TYRE RETRADING & RUBBER INDUSTRIES (2013) 263 CTR (RAJ.) 484 (III) CIT VS. KAILASH CROCKERY (1998) 150 CTR (PAT) 18 0 : (1999) 235 ITR 544 (PAT.) (IV) CIT VS. METAL PRODUCTS OF INDIA; (1985) 45 CTR ( P&H) 150 ITR 714 (P&H) 9 WE, THEREFORE, DIRECT TO DELETE THE PENALTY IN ALL T HESE CASES. 5. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED. PRONOUNCED IN OPEN COURT ON 17 TH JUNE, 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 17 TH JUNE , 2015 DN/-1617