ZUBERI ENGINEERING CO., Jaipur V. DCIT, Jaipur

ITA 171/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5125 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 23-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Section: 69C; 154; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH , - MH - TSU U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI A.D. JAIN, JM & SHRI VIKRAM SINGH YADA V, AM VK;DJ VIHY LA- @ ITA NO. 171 & 172/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2004-05 & 2009-10 M/S ZUBERI ENGINEERING COMPANY, 2835, JOGIYON KA TIBA, PHUTA KHURRA, JAIPUR. CUKE VS. D.C.I.T., CIRCLE-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAFZ 2103 K VIHYKFKHZ@ APP ELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ANIL SHARMA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 07/09/2016 MN?KKS'K .KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 09/09/2016 VKNS'K@ ORDER PER: A.D. JAIN, J.M. THESE ARE THE ASSESSEES APPEALS FOR A.Y. 2004-05 A ND 2009-10 FILED AGAINST THE ORDER DATED 30/12/2014 PASSED BY THE LD. CIT(A)-I, JAIPUR CONTENDING THAT THE LD. CIT(A) IS NOT JUSTIFI ED IN CONFIRMING THE PENALTY OF RS. 2,50,540/- LEVIED ON THE ASSESSEE U/ S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), IN RESPEC T OF TRADING ADDITION AND LUMP SUM DISALLOWANCE OF EXPENSES. ITA 171 & 172/JP/2015_ M/S ZUBERI ENGINEERING VS. DCIT 2 2. ITA NO. 171/JP/2015 : THE FACTS OF THE CASE ARE THAT, IN THE CASE OF ASSESSEE FIRM FOR THE YEAR UNDER CONSID ERATION, VIDE ORDER DATED 15/12/2006 PASSED U/S 143(3)/144 OF THE ACT, THE LD ASSESSING OFFICER MADE THE FOLLOWING ADDITIONS, COMPLETING THE ASSESSMENT AT A TOTAL INCOME OF RS.65,27,030/-. S. NO. ADDITIONS/DISALLOWANCES AMOUNT 1 ADDITION OF UNSECURED LOANS U/S 68 19,00,000/- 2 ADDITION TOWARDS PURCHASES OF HYDRA CRANES U/S 69C 19,18,176/- 3. TRADING ADDITION BY APPLICATION OF G.P. RATE OF 14% AGAINST THAT OF 11.3% DECLARED BY THE ASSESSEE ON TOTAL CONTRACT RECEIPT OF RS. 70689475/- 19,11,162/- 4 DISALLOWANCE OF EXPENSES 5,00,000/- TOTAL ADDITIONS MADE 62,29,338/- 3. THE LD. CIT(A) VIDE ORDER DATED 24/3/2008, GAVE R ELIEF TO THE ASSESSEE AS FOLLOWS:- S. NO. ADDITIONS/DISALLOWANCES AMOUNT 1 ADDITION OF UNSECURED LOANS U/S 68 NIL 2 ADDITION TOWARDS PURCHASES OF HYDRA CRANES U/S 69C 5,68,176/- 3. TRADE ADDITION BY APPLICATION OF G.P. RATE OF 12% AGAINST THAT OF 11.3% DECLARED BY THE ASSESSEE ON TOTAL CONTRACT RECEIPT OF RS. 70689475/- 4,97,361/- 4 DISALLOWANCE OF EXPENSES NIL TOTAL ADDITIONS SUSTA INED 10,65,537/- 4. AGAINST THE RELIEF GRANTED BY THE LD. CIT(A), TH E DEPARTMENT APPROACHED THE ITAT BY WAY OF AN APPEAL. DURING THE P ENDENCY OF THAT ITA 171 & 172/JP/2015_ M/S ZUBERI ENGINEERING VS. DCIT 3 APPEAL, VIDE ORDER DATED 30/03/2009, THE LD ASSESSI NG OFFICER LEVIED A PENALTY OF RS. 3,82,261/- U/S 271(1)(C) OF THE ACT, IN RESPECT OF THE ADDITIONS OF RS. 10,65,537/-, AS CONFIRMED BY THE L D. CIT(A). IN THE PENALTY APPEAL, THE LD. CIT(A), BY VIRTUE OF ORDER D ATED 4/12/2009, SUSTAINED THE PENALTY IN RESPECT OF ADDITION OF RS. 5,68,176/-, WHEREAS THE PENALTY IN RESPECT OF TRADING ADDITION OF RS. 4 ,97,361/- WAS DELETED. 5. ON 23/7/2014, THE LD ASSESSING OFFICER PASSED AN ORDER U/S 154 OF THE ACT, OBSERVING THEREIN, INTER ALIA, AS FOLLOWS:- NOW, THE ASSESSEE, THROUGH HIS A/R HAS MOVED AN APPLICATION U/S 154 ON 15.07.2014 STATING THERE IN THAT THE PENALTY U/S 271(1) (C) HAS BEEN IMPOSED TWICE ON ADDITIONS RS. 5,68,176/- MADE U/S 69C ON ACCOUNT OF PURCHASE OF HYDRO CRANE IN ORDER U/S 271(1) (C) OF THE ACT DATED 31.03.2009 AND ALSO IS ORDER DATED 01.10.2010. AS THE MISTAKES ARE APPARENT FROM RECORD, ASSESSEE HAD REQUESTED THAT PENALTY IMPOSED ON ADDITION OF RS. 5,68,176/- U/S 69C IN ORDER DATED 01.10.2010 MAY BE REDUCED TO THAT EXTENT. ON GOING THROUGH THE RECORD AND AS PER THE APPLICATION, ASSESSEES CONTENTION ARE FOUND TO BE TRUE. AS DISCUSSED SUPRA IT IS NOTICED THAT THE PENAL TY ITA 171 & 172/JP/2015_ M/S ZUBERI ENGINEERING VS. DCIT 4 WAS IMPOSED TWICE ON ACCOUNT OF ADDITION U/S 69C OF RS. 5,68,176/- IN BOTH THE PENALTY ORDERS. AS THE MISTAKE IS APPARENT FROM RECORD AND FALLS UNDER PURVIEW OF SECTION 154, THE SAME IS HEREBY RECTIFIED U/S 154 OF THE INCOME TAX ACT BY REDUCING THE PENALTY IMPOSED TWICE AND PENALTY OF THE ASSESSEE I S RECOMPUTED AS UNDER: TOTAL CONCEALED INCOME AS DETERMINED BY THE A.O. IN ORDER U/S 271(1)(C) OF THE ACT, 1961: RS. 12,65,54 9/- LESS: ADDITION U/S 69C CONSIDERED TWICE AS DISCUSSED ABOVE : RS. 5,67,176/- TOTAL REVISED CONCEALED INCOME : RS. 6,98,373/- TAX ON CONCEALED INCOME : RS.2,50,540/- 6. MEANWHILE, VIDE ORDER DATED 28/08/2009, THE TRIBU NAL RESTORED THE QUANTUM MATTER TO THE FILE OF THE LD ASSESSING OFFI CER, DIRECTING THE ASSESSING OFFICER TO VERIFY THE CORRECTNESS OF THE DOCUMENTS FILED BY THE ASSESSEE BEFORE THE LD CIT(A) AND TO DECIDE THE ISSU ES RAISED IN THE GROUNDS OF APPEAL AFRESH. 7. THE LD. ASSESSING OFFICER PASSED ORDER DATED 01/1 0/2010, GIVING EFFECT TO THE AFORESAID ITAT ORDER DATED 28/8/2009. THE ASSESSING ITA 171 & 172/JP/2015_ M/S ZUBERI ENGINEERING VS. DCIT 5 OFFICER ASSESSED THE TOTAL INCOME OF THE ASSESSEE A T RS. 15,63,250/-, MAKING THE FOLLOWING ADDITIONS: S. NO. ADDITIONS/DISALLOWANCES AMOUNT 1 ADDITIONS TOWARDS PURCHASES OF HYDRA CRANES U/S 69C 5,68,176/- 2 TRADING ADDITION BY APPLICATION OF G.P. RATE OF 12% AGAINST THAT OF 11.3% DECLARED BY THE ASSESSEE ON TOTAL CONTRACT RECEIPT OF RS. 7,06,89,475/- 4,97,361/- 4 DISALLOWANCE OF EXPENSES 2,00,000/- TOTAL ADDITION MADE 12,65,549/- THE ASSESSEE DID NOT PREFER ANY APPEAL AGAINST THE A SSESSMENT ORDER DATED 01/10/2010. 8. PURSUANT TO THE ABOVE ADDITIONS, THE LD ASSESSIN G OFFICER LEVIED A PENALTY OF RS. 4,54,015/- VIDE ORDER DATED 29/4/201 1. 9. HOWEVER, AS OBSERVED HEREINABOVE, VIDE ORDER DATE D 23/07/2014 PASSED U/S 154 OF THE ACT, THE PENALTY IN RESPECT O F THE ADDITION TOWARDS PURCHASES OF HYDRA CRANES U/S 69C, AMOUNTING TO RS. 5,68,176/-, WAS DELETED. THE PENALTY WITH REGARD TO ADDITION BY APPLI CATION OF G.P. RATE OF 12% AS AGAINST THAT OF 11.3% DECLARED BY THE ASSESS EE ON THE TOTAL CONTRACT RECEIPTS OF RS. 7,06,89,475/-, AMOUNTING T O RS. 4,97,373/-, AND ITA 171 & 172/JP/2015_ M/S ZUBERI ENGINEERING VS. DCIT 6 QUA THE DISALLOWANCE OF EXPENSES AMOUNTING TO RS. 2. 00 LACS WAS SUSTAINED. 10. THE ORDER DATED 23/7/2014, PASSED U/S 154 OF THE ACT WAS APPEALED AGAINST BEFORE THE LD. CIT(A) BY THE ASSESS EE AND THE CIT(A), BY VIRTUE OF THE IMPUGNED ORDER DATED 30/12/2014, D ISMISSED THE SAME. 11. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL. 12. THE ONLY GRIEVANCE RAISED BY THE ASSESSEE THROUG H THE LD. COUNSEL FOR THE ASSESSEE AND AS ALSO STATED IN THE SOLE GRO UND RAISED IS THAT THE PENALTY WAS ILLEGALLY IMPOSED IN RESPECT OF A TRADIN G ADDITION AND LUMP SUM DISALLOWANCE OF EXPENSES, WHICH WAS ILLEGALLY SUS TAINED BY THE LD. CIT(A). 13. THE LD. SR.DR ON THE OTHER HAND, HAS PLACED STRO NG RELIANCE ON THE IMPUGNED ORDER. 14. HAVING HEARD THE RIVAL SUBMISSIONS IN THE LIGHT OF THE CHEQUERED HISTORY OF THE CASE AND THE MATERIAL PLACED ON RECO RD, IT IS SEEN THAT IT REMAINS UNDISPUTED AND PATENT ON RECORD THAT THE PE NALTY IN QUESTION HAS BEEN LEVIED WITH REGARD TO A TRADING ADDITION OF RS. 4,97,393/- BY APPLICATION OF G.P. RATE OF 12%, AS AGAINST THAT OF 11.3%, AS DECLARED BY ITA 171 & 172/JP/2015_ M/S ZUBERI ENGINEERING VS. DCIT 7 THE ASSESSEE ON TOTAL CONTRACT RECEIPTS OF RS. 7,06 ,89,475/-. THE PENALTY HAS ALSO BEEN LEVIED ON LUMP SUM DISALLOWANCE OF EXP ENSES AMOUNTING TO RS. 2.00 LACS. THE QUESTION IS AS TO WHETHER THE LEVY OF PENALTY ON BOTH THESE COUNTS IS SUSTAINABLE IN LAW. 15. IN THE CASE OF CIT VS. MAHENDRA SINGH KHEDLA, (2013) 33 TAXMANN.COM 666 (RAJ), IT HAS BEEN HELD THAT THE AD DITIONS BASED ON ESTIMATION ONLY CANNOT ATTRACT LEVY OF CONCEALMENT PENALTY, OBSERVING THAT A FACT OR ALLEGATION BASED ON ESTIMATION CANNO T BE SAID TO BE CORRECT ONLY, IT CAN BE INCORRECT ALSO. 16. IN THE CASE OF CIT VS KRISHI TYRE RETREADING & R UBBER INDUSTRIES, (2014) 44 TAXMANN.COM 9 (RAJ), IT HAS BEEN HELD THA T WHERE THE ADDITION HAS BEEN SUSTAINED PURELY ON ESTIMATE BASIS AND NO POSITIVE FACT OR FINDING HAS BEEN FOUND SO AS TO EVEN MAKE THE SAID ADDITION, NO PENALTY IS LEVIABLE U/S 271(1)(C) OF THE ACT. 17. NO DECISION TO THE CONTRARY HAS BEEN CITED BEFO RE US. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS IN THE CASE OF CIT VS. MAHENDRA SINGH KHEDLA AND CIT VS KRISHI TYRE RETREADING & RU BBER INDUSTRIES, (SUPRA), THE PENALTY IMPOSED WITH REGARD TO THE ADDI TION OF RS. 4,97,373/-, MADE BY APPLICATION OF G.P. RATE OF 12% AS AGAINST THAT OF ITA 171 & 172/JP/2015_ M/S ZUBERI ENGINEERING VS. DCIT 8 11.3% DECLARED BY THE ASSESSEE ON TOTAL CONTRACT RE CEIPTS OF RS. 7,06,89,475/-, IS DELETED. 18. SO FAR AS REGARDS THE LEVY OF CONCEALMENT PENAL TY ON THE DISALLOWANCE OF EXPENSES AMOUNTING TO RS. 2.00 LACS, IT HAS BEEN CONTENDED ON BEHALF OF THE ASSESSEE THAT THERE IS N O POSITIVE EVIDENCE OR FINDING ON RECORD TO SHOW THAT THE ASSESSEE HAS CLAI MED BOGUS AND FALSE EXPENSES, OR THAT THE ASSESSEE HAS OVERSTATED THE E XPENSES; THAT IT IS THE MERE INABILITY OF THE ASSESSEE TO SUPPORT ITS CLAIM BY COMPLETE VOUCHERS, WHICH, UNDENIABLY, ARE IMPOSSIBLE TO MAINTAIN, CONSI DERING THE NATURE OF THE EXPENSES, LIKE STAFF AND LABOUR WELFARE, VEHICLE REPAIR AND MAINTENANCE, CONVEYANCE, ENTERTAINMENT AND OFFICE EXPENSES, ETC., WHICH HAS ATTRACTED THE PENALTY, THOUGH THE SAME IS NOT LEVIABLE FOR THIS VERY REASON, NO CONCEALMENT AT THE HANDS OF THE ASS ESSEE HAVING BEEN PROVED. 19. PER CONTRA, THE LD. SR.DR HAS CONTENDED THAT TH E EXPENSES CLAIMED WERE DULY TEST CHECKED ON A RANDOM BASIS AND IT WAS FOUND THAT THE ASSESSEE HAD MISERABLY FAILED TO GET THE SAME VERIF IED; AND THAT, THEREFORE, THE PENALTY WAS RIGHTLY LEVIED ON THE LUM P-SUM ADDITION MADE BY DISALLOWING THE EXPENSES TO THE TUNE OF RS. 2.00 LACS. ITA 171 & 172/JP/2015_ M/S ZUBERI ENGINEERING VS. DCIT 9 20. IN THIS REGARD, IT CANNOT BE DISPUTED THAT IT I S WELL NIGH IMPOSSIBLE TO MAINTAIN THE VOUCHERS FOR EACH AND EVERY ITEM OF EXPENDITURE INCURRED, PARTICULARLY WHEN THE EXPENDITURE IS IN TH E NATURE OF THE EXPENSES CLAIMED BY THE ASSESSEE, I.E., ENTERTAINME NT, CONVEYANCE, OFFICE, ETC. IT IS ONLY A CASE WHERE THE CLAIM OF EX PENDITURE WAS NOT ACCEPTED BY THE REVENUE. IN SUCH A CASE, IN THE CAS E OF RELIANCE PETRO PRODUCTS PVT. LTD. 189 TAXMAN 322 (SC), IT HAS BEE N HELD THAT CONCEALMENT PENALTY IS NOT LEVIABLE. 21. THE DECISION IN THE CASE OF RELIANCE PETRO PROD UCTS PVT. LTD., (SUPRA) HAS ALSO NOT BEEN SUCCESSFULLY REBUTTED BY THE DEPARTMENT BEFORE US. THE SAME IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD., (SUPRA), THE PENALTY LEV IED ON THE ADDITION OF THE LUMP-SUM ADDITION OF RS. 2.00 LACS REPRESENTING DISALLOWANCE OF EXPENSES, IS ALSO DELETED. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 23. ITA NO. 172/JP/2015 : THIS IS THE ASSESSEES APPEAL FOR A.Y. 2009-10 CONTENDING THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING ITA 171 & 172/JP/2015_ M/S ZUBERI ENGINEERING VS. DCIT 10 THE PENALTY OF RS. 1.00 LAC LEVIED U/S 271B OF THE ACT, FOR NOT GETTING THE BOOKS OF ACCOUNT AUDITED, AS REQUIRED U/S 44AB OF T HE ACT. 24. THE LD. COUNSEL FOR THE ASSESSEE HAS STATED AT T HE BAR THAT HE DOES NOT WISH TO PRESS THIS APPEAL. THEREFORE, THIS APPEAL IS DISMISSED AS NOT PRESSED. 25. IN THE RESULT, ITA NO. 171/JP/2015 IS ALLOWED, WH EREAS ITA NO. 172/JP/2015 IS DISMISSED AS WITHDRAWN. ORDER PRONOUNCED IN THE OPEN COURT ON 09/09/2016. SD/- SD/- FOE FLAG ;KNO , - MH TSU (VIKRAM SINGH YADAV) (A.D. JAIN) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09 TH SEPTEMBER, 2016 * RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S ZUBERI ENGINEERING COMPANY, JAIPU R. 2. IZR;FKHZ@ THE RESPONDENT- THE D.C.I.T., CIRCLE-2, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 171 & 172/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR