The DCIT, Circle3, Surat V. Shri Parshottamdas N.Deladia, Surat

ITA 1809/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9711 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 15-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: M K PATEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE S/SHRI G. D. AGARWAL, VP & RAJPAL YADAV, J M. ITA NO.1809/AHD/2011 ASST. YEAR 2007-08 .DY. CIT, CIRCLE-3, SURAT. VS SHRI PARSHOTTAM N. DELADIA, U- 71, SANDHYA DARSHAN APT., ADAJAN ROAD, SURAT. (APPELLANT) (RESPONDENT) PA NO. ABPPD0177K APPELLANT BY SMT. SONIA KUMAR, SR.DR RESPONDENT BY SHRI M. K. PATEL, AR DATE OF HEARING: 23/6/2015 DATE OF PRONOUNCEMENT: 17/7/2015 O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER. REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER O F CIT(A) DATED 11 TH MAY, 2011 PASSED FOR AY 2007-08. THE SOLITARY GRIE VANCE OF THE REVENUE IS THAT LD. CIT(A) HAS ERRED IN DELE TING THE PENALTY OF RS.4,41,838/- IMPOSED BY THE AO UNDER SECTION 271(1 )(C) OF THE I.T. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL. HE HAS FILED HIS RETURN OF INCOME FOR AY 2007-08 ON 31 .3.2008 DECLARING ITA NO.1809/AHD/2011 ASST. YEAR 2007-08 2 AN INCOME OF RS.25,28,600/-. THE ASSESSEE AT THE RE LEVANT TIME WAS WORKING AS AN ELECTRICAL CONTRACTOR. HE HAS SHOWN N ET PROFIT OF RS.24,34,814/- OUT OF THIS ACTIVITY. ON SCRUTINY OF THE ACCOUNTS IT REVEALED TO THE AO THAT ASSESSEE HAS DEBITED LABOUR EXPENDITURE OF RS.1,31,26,483. HE VERIFIED VARIOUS DETAILS MAINTAI NED IN SUPPORT OF THE LABOUR EXPENDITURE AND ULTIMATELY DISALLOWED TH E LABOUR EXPENSES BY 10% OF THE TOTAL CLAIM. THE AO HAS MADE AN ADDIT ION OF RS.13,12,648/- AND DETERMINED THE INCOME OF THE ASS ESSEE AT RS.38,41,250/- AS AGAINST THE INCOME AT RS.25,28,60 0/- DECLARED BY THE ASSESSEE. 3. THIS DISALLOWANCE WAS CONFIRMED BY THE CIT(A). T HE ISSUE TRAVELLED TO THE ITAT IN ITA NO.1881/AHD/2010. THE TRIBUNAL APPEARS TO HAVE CHANGED THE COLOUR OF THE ADDITION. THE OBS ERVATIONS OF THE TRIBUNAL IN PARA 6 ARE WORTH TO NOTE :- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT ASSESSEE HAS NOT G IVEN ANY REASON FOR NOT SUBMITTING BEFORE US ANY GP CHART SH OWING GP RATE FOR ASST. YEAR 2005-06 TO 2007-08. IN ASST. YE AR 2005-06 GP RATE IS 22.39% WHEREAS IT IS SHOWN AT RS.13.26% THIS YEAR. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT TO APPLY GP RATE OF 15%. THE AO WILL CALC ULATE THE RESULTANT ADDITION AND ALLOW RELIEF TO THE ASSESSEE . THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO.1809/AHD/2011 ASST. YEAR 2007-08 3 4. THE LD. AO HAS INITIATED PENALTY PROCEEDINGS. HE IMPOSED A PENALTY OF RS.4,41,838/- ON THE ORIGINAL ADDITION O F RS.13,12,648/- MADE BY HIM OUT OF THE DISALLOWANCE OF LABOUR EXPEN DITURE. THE CIT(A) HAS DELETED THE PENALTY BY OBSERVING AS UNDE R :- 4.1 I HAVE DULY PERUSED THE ORDER DATED 17.9.2010 OF THE HOBLE D BENCH OF THE ITAT, AHMEDABAD, IN ITA NO.1881/AHD/2010 BEING THE APPEAL OT THE APPELLANT AGAINST THE ORDER OF THE CIT(A) CONFIRMING THE ADDITION OF RS.13,12,648/-, VIZ. DISALLOWANCE @ 10% OUT OF LABO UR EXPENSES. THE HONBLE BENCH HAS, INSTEAD OF CONFIRM ING THE ABOVE ADDITION HELD THAT THE GP @ 15% SHOULD BE ADO PTED AS AGAINST 13.26% DECLARED BY THE APPELLANT. THUS, THE ADDITION MADE FROM THE DISALLOWANCE OF LABOUR EXPENSES HAS N OT BEEN UPHELD IN ENTIRETY, BUT THE SAME HAS PROPORTIONATEL Y MERGED WITH THE ADDITION MADE ON ACCOUNT OF GP BY THE ITAT . I, THEREFORE, FIND THAT THE ADDITION ON WHICH ACCOUNT PENALTY HAS BEEN INITIATED AND LEVIED, I.E. CONCEALMENT OF 10% OF LABOUR EXPENSES OF RS.13,12,648/- IS NO LONGER EXISTING, I NSTEAD AS HELD BY THE TRIBUNAL, ADDITION TO BE MADE TO THE IN COME OF THE APPELLANT IS THE DIFFERENCE OF GP BETWEEN 15% AND 1 3.26% DECLARED BY THE APPELLANT DURING THE YEAR. I THEREF ORE, DO NOT FIND ANY REASON TO SUSTAIN THE PENALTY ORDER AND CA NCEL THE SAME. THE GROUND OF APPEAL IS, THEREFORE, ALLOWED. 5. WITH THE ASSISTANCE OF LD. REPRESENTATIVES WE HA VE GONE THROUGH THE RECORD CAREFULLY. THE AO HAS MADE AN AD DITION OF RS.13,12,648/- @ 10% OF THE TOTAL LABOUR EXPENSES C LAIMED BY THE ASSESSEE. THE LD. FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER HAS RIGHTLY OBSERVED THAT COLOUR OF THIS ADDITION HAS T OTALLY BEEN CHANGED AFTER THE ORDER OF THE TRIBUNAL. THE AO OUGHT TO HA VE WORKED OUT A FIXED FIGURE ON THE BASIS OF GP ADDITION DIRECTED B Y THE TRIBUNAL AND THAT CAN ONLY BE CONSIDERED FOR VISITING THE ASSESS EE WITH PENALTY. ITA NO.1809/AHD/2011 ASST. YEAR 2007-08 4 THE CHARACTER OF THE ORIGINAL ADDITION IS NO MORE. THEREFORE, PENALTY IS NOT SUSTAINABLE. THE LD. FIRST APPELLATE AUTHORITY HAS CONSIDERED THE FACTS AND CIRCUMSTANCES IN RIGHT PERSPECTIVE AND NO INTERFERENCE IS CALLED FOR. OUR OBSERVATION THAT ADDITION WHICH IS REQUIRED TO BE COMPUTED ON THE BASIS OF THE RATE OF PROFIT REQUIRE D TO BE ADOPTED AT 15%, AS PER DIRECTION OF THE TRIBUNAL SHOULD NOT BE CONSTRUED THAT TRIBUNAL WISHES TO INITIATE FRESH PENALTY PROCEEDIN GS AGAINST THE ASSESSEE. THIS OBSERVATION IS FOR BUTTRESSING THE R EASONING THAT CIT(A) HAS RIGHTLY DELETED THE PENALTY. IN VIEW OF THE ABOVE, WE FIND NO MERIT IN THIS APPEAL. IT IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/7/2015 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (RAJPAL YADAV) JUDICIAL MEMBER DATED 17/7/15 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD ITA NO.1809/AHD/2011 ASST. YEAR 2007-08 5 1. DATE OF DICTATION: 7/7/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 7/7/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 17/7/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: