AJAY KUMAR JINDAL HUF, MUMBAI V. ITO 13(2)(4), MUMBAI

ITA 1847/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8024 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1847/MUM/2010 (ASSESSMENT YEAR: 2006-07) SHRI AJAY KUMAR JINDAL (HUF), (PROP OF M/S. SAJANI INTERNATIONAL), 512, ASHIRWAD BLDG., MAJSID (E), MUMBAI -400 009 ASSESSEE VS INCOME-TAX OFFICER WARD13(2)(4), MUMBAI REVENUE PAN: AADHM 5918 C ASSESSEE BY: SHRI SATISH R. MODY REVENUE BY: SHRI D. SONGATE O R D E R PER R.S. PADVEKAR, JM THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING TH E IMPUGNED ORDER OF THE LD. CIT (A)- 24, MUMBAI DATED 29.01.2010 FOR THE A.Y. 2006-07. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROU NDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, WITHOUT APPRECIATING THE CONTENTION AND SUBMISSION OF THE AR THE ASSESSEE THAT WHILE IMPOSING PENALTY U/S.271(1) (C) OF THE INCOME TAX ACT, 1961 THE LD. AO FAILED TO BRING ON RECORDS ANY THING TO SHOW THAT THE ASSESSEE CONCEALED ANY I NCOME OR SUBMITTED INACCURATE PARTICULARS OF INCOME, THE LD. CIT ITA 1847/M/2010 SHRI AJAY KUMAR JINDAL (HUF) 2 APPEAL-24, MUMBAI ERRED IN HAVING CONFIRMED THE ACT ION OF THE AO FOR IMPOSING PENALTY OF ` 2,10,000/- U/S.271(1)(C) OF INCOME TAX ACT, 1961. 2. THE FACTS PERTAINING TO THE CONTROVERSY BEFORE U S WHICH REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE IS IN T HE TRADING OF THE IRON AND STEEL AND ALLIED PRODUCTS. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2001-02 DECLARING TOTAL LOSS OF ` 8,67,273/-. THE RETURN WAS ACCOMPANIED BY AUDITED STATEMENT OF ACCOUNTS AS PER THE PROVISIONS OF SECTION 44AB. THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY. IT APPEARS THAT THE A.O. ISSUED THE DIFFERENT NOTIC ES TO THE ASSESSEE BUT THERE WAS NO RESPONSE. FINALLY, THE ASSESSEE APPEA RED BEFORE THE A.O. AND FILED CERTAIN DETAILS. THE A.O. ESTIMATED THE GROSS PROFIT OF THE ASSESSEE AT 1.5% AND ALSO MADE CERTAIN DISALLOWANCE S AND FINALLY DETERMINED THE INCOME OF ` 8,46,620/-. THE A.O. ALSO INITIATED THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT R.W.S. 274. IT APPEARS THAT THE ASSESSEE DID NOT FILE ANY EXPLANATION BEFORE TH E A.O. IN THE PENALTY PROCEEDINGS. THE A.O., THEREFORE, CAME TO THE CONC LUSION THAT THE ASSESSEE HAS NO EXPLANATION TO OFFER AND HE, THEREF ORE, PROCEEDED TO LEVY PENALTY OF ` 2,10,000/- ON THE REASON OF CONCEALMENT OF INCOME. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD . CIT (A) BUT WITHOUT SUCCESS AND ORDER OF THE A.O. LEVYING THE PENALTY W AS CONFIRMED. NOW, THE ASSESSEE IS N APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE LD. COUNSEL SUBMITTED THAT DUE TO THE SERIOUS HEALTH PR OBLEMS THE ASSESSEE COULD NOT APPEAR BEFORE THE A.O. HE, FURTHER ARGUE D THAT THE ASSESSEE ALSO COULD NOT FILE THE EXPLANATION TO THE A.O. THO UGH THERE WAS NO JUSTIFICATION TO LEVY THE PENALTY. HE, FURTHER CON TENDED THAT IN RESPECT OF AUDITED STATEMENT OF ACCOUNTS THE A.O. DISCARDED TH E ACCOUNTING RESULTS WITHOUT POINTING OUT ANY DEFECT AND PROCEEDED TO ES TIMATE THE GP ON THE ITA 1847/M/2010 SHRI AJAY KUMAR JINDAL (HUF) 3 GROSS TURNOVER. HE FURTHER SUBMITS THAT THE ASSESS MENT IS COMPLETED U/S.143(3) AND NOT U/S.144 AND THAT GOING TO SUGGES T THAT THERE WAS NO SITUATION TO PASS BEST JUDGMENT ASSESSMENT. THE LD . COUNSEL TOOK US THROUGH THE ASSESSMENT ORDER AND FINALLY PLEADED TH AT ENTIRE ASSESSMENT IS BASED ON THE ESTIMATION AND AD HOC DISALLOWANCES AND HENCE, THERE WAS NO JUSTIFICATION TO LEVY THE PENALTY. PER CONT RA, THE LD. D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. ON THE PERUSAL OF THE ORDER, WE FIND THAT NOWHE RE THE A.O. HAS REJECTED THE AUDITED STATEMENT OF ACCOUNT FILED BY THE ASSESSEE AS PER PROVISIONS OF SECTION 44AB OF THE ACT. THE A.O. HA S ALSO NOT SPECIFICALLY POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNT OF T HE ASSESSEE. AT THE SAME TIME, THE A.O. PROCEEDED TO ESTIMATE THE GP ON THE GROSS TURNOVER DISCARDING THE P&L ACCOUNT OF THE ASSESSEE. THE A. O. ALSO MADE AD-HOC DISALLOWANCES AND MADE ADDITION TO THE INCOME. FOR LEVY OF THE PENALTY, THE FIRST MANDATE IS THAT THE ASSESSEE SHOULD HAVE CONCEALED THE PARTICULARS OF THE INCOME OR SHOULD HAVE FILED INAC CURATE PARTICULARS OF INCOME. IN THE PRESENT CASE, THE A.O. ESTIMATED TH E GROSS PROFIT OF THE ASSESSEE. IT IS TRUE THAT AS PER THE NOTING OF THE A.O. IN THE ASSESSMENT ORDER, THE ASSESSEE DID NOT FILE ALL REQUIRED DETAI LS AND HENCE, THE A.O. HAD TO COMPLETE THE ASSESSMENT AS PER MATERIAL AVAI LABLE ON RECORD. AT THE SAME TIME, IN OUR OPINION, THE A.O. SHOULD HAVE GIVEN THE REASONS FOR NOT ACCEPTING THE ACCOUNTING RESULTS OF THE ASSESSE E. MOREOVER, WE FURTHER FIND THAT AD-HOC DISALLOWANCES ARE MADE. I N OUR OPINION, AS PER THE FACTS ON RECORD, IT CANNOT BE SAID THAT THE ASS ESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULA RS OF INCOME. MERELY, BECAUSE BY ADOPTING THE ESTIMATION METHOD, THE INCO ME IS ENHANCED THAT ITSELF MAY NOT COMPLY WITH THE MANDATE OF SECTION 2 71(1)(C) OF THE ACT. WE DO NOT FIND ANY JUSTIFICATION TO SUPPORT THE PEN ALTY ORDER WE, ACCORDINGLY, CANCEL THE SAME. ITA 1847/M/2010 SHRI AJAY KUMAR JINDAL (HUF) 4 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY O F 23RD MARCH 2011. SD/- SD/- ( J. SUDHAKAR REDDY ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 23RD MARCH 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) 24, MUMBAI. 4) THE CIT -13, MUMBAI. 5) THE D.R. A BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR *CHAVAN I.T.A.T., MUMBAI ITA 1847/M/2010 SHRI AJAY KUMAR JINDAL (HUF) 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 16.03.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 17.03.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER