G.Manoharan, CHENNAI V. ITO Non Corporate Ward 5(3), CHENNAI

ITA 1856/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5591 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 01-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K MEENAKSHI SUNDARAM; MRS JESULINCY SRINIDHI
• Keywords: Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , , & BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.1856/CHNY/2018 ' ' /ASSESSMENT YEAR: 2010-11 SHRI G.MANOHARAN, NO.8/75, MUTHIYALU MAISTRY ST. OLD WASHERMANPET, CHENNAI-600 021. VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD-5(3), CHENNAI. [PAN : AAIPM 6010 A ] ( * /APPELLANT) ( +,* /RESPONDENT) * - / APPELLANT BY : MRS.JESULINCY SRINIDHI, CA & MR.K.MEENAKSHISUNDARAM, ITP +,* - /RESPONDENT BY : MR.AR.V.SREENIVASAN, JCIT - /DATE OF HEARING : 17.01.2019 - /DATE OF PRONOUNCEMENT : 30.01.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI, DATED 26.03.2018, FOR THE AY 2010-11. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APP EAL: ITA NO.1856/CHNY/2018 :- 2 -: 1.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) O UGHT TO HAVE APPRECIATED THE FACT THAT THE PENALTY UNDER SECTION 271(B) HAD BEEN LEVIE D WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS A COMMISSION TRADER IN OILS AND BOO KING OF TRANSPORT ORDERS AND THAT THE TURNOVER FOR COMPULSORY AUDIT IN THE ASSESSEES CAS E IS THE COMMISSION THAT IS EARNT AND NOT THE PURCHASE AND THE SALE VALUES OF THE GOODS H ANDLED. 2.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) O UGHT TO HAVE APPRECIATED THE FACT THAT THE GROSS COMMISSION THAT HAS BEEN EARNT BY TH E ASSESSEE WAS ONLY RS.5,43,397/- WHICH HAD BEEN WELL BELOW THE LIMIT OF RS.40,00,000 /- FIXED FOR GETTING COMPULSORY TAX AUDIT REPORTS AND THAT THERE WAS NO NECESSITY TO DO COMPULSORY AUDIT IN ASSESSEES CASE. 3.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) O UGHT TO HAVE APPRECIATED THE FACT THAT THE CBDT HAD ISSUED A CIRCULAR NO.452 DATED 17 /3/1986 TO THE EFFECT THAT IN THE CASE OF COMMISSION TRADERS THE TURN OVER MEANS ONLY THE COMMISSION THAT HAD BEEN EARNT AND NOT THE PURCHASE VALUES AND THE SALES VALUES INVOLV ED WHILE CARRYING OUT THE COMMISSION TRADE. 4.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) O UGHT TO HAVE APPRECIATED THE FACT THAT THE PENAL ACTION UNDER SECTION 271(B) HAD BEEN INITIATED NEARLY 6 YEARS AFTER THE END OF THE RELEVANT ASSESSMENT YEAR IN WHICH THE OFFENC E IS SAID TO HAVE BEEN COMMITTED AND THE INITIATION OF PENAL ACTION AFTER NEARLY 6 YEARS IS VEXATIOUS IN NATURE WHICH HAS TO BE AVOIDED. 5.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) O UGHT TO HAVE APPRECIATED THE FACT THAT PENALTY IS NOT A SOURCE OF REVENUE, THAT PENAL TY CANNOT BE LEVIED SIMPLY BECAUSE IT IS LEGAL TO DO SO, THAT THE LEVY OF PENALTY IS NOT MEA NT FOR AUGMENTING THE INCOME OF THE STATE AND THAT LEVY OF ANY PENALTY IS ONLY A DISCRETIONAR Y LEVY TO BE USED SPARINGLY IN INCORRIGIBLE CASES. 6.THE ASSESSEE CRAVES LEAVE TO FILE ADDITIONAL GROU NDS AND OR ADDITIONAL EVIDENCES AS THE HEARING PROGRESSES IN CASE A NEED ARISES FOR THE SA ME. 7.THE ASSESSEE UNDER THE CIRCUMSTANCES SUBMITS THAT THE HONORABLE TRIBUNAL MAY BE PLEASED TO CANCEL THE PENALTY OF RS.87,437/- LEVIED UNDER SECTION 271(B ) OF THE INCOME TAX ACT. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF EDIBLE OIL AND BOOKING O F TRANSPORT ORDERS. THE RETURN OF INCOME FOR THE AY 2010-11 WAS FILED ON 23 .02.2012 DISCLOSING INCOME OF RS.2,11,740/-. SUBSEQUENTLY, THE ASSESSM ENT WAS RE-OPENED AND THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 0 9.02.2016 PASSED U/S.143(3) R.W.S.147. DURING THE COURSE OF RE-ASSE SSMENT PROCEEDINGS, THE AO NOTICED THAT THE GROSS TURNOVER OF THE ASSES SEE WAS MORE THAN RS.40.00 LAKHS AND NO TAX AUDIT REPORT AS PRESCRIBE D U/S.44AB OF THE ACT WAS FURNISHED BY THE ASSESSEE. ACCORDINGLY, A SHOW CAUSE NOTICE U/S.274 ITA NO.1856/CHNY/2018 :- 3 -: R.W.S.271B OF THE ACT WAS ISSUED. IN RESPONSE TO T HE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT THE ASSESSEE UNDER THE BONA FIDE BELIEF THAT IT WOULD NOT COME WITHIN THE PURVIEW OF PROVISIONS OF SEC.44AB AND THEREFORE, THE PRESCRIBED AUDIT REPORT U/S.44AB WAS NOT FURNISHED. THE AO REJECTING THE EXPLANATION LEVIED PENALTY OF RS.8 7,437/-. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE THE LD.CIT(A) WHO VIDE IMPUGNED ORDER CONFIRMED THE LEVY OF PENALTY. 5. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE US IN THE PRESENT APPEAL. LD.AR CONTENDED BEFORE US THAT THE ASSESSE E IS ONLY A COMMISSION AGENT AND THE GROSS COMMISSION ALONE TO BE CONSIDERED FOR THE PURPOSE OF COMPUTING THE TURNOVER. HE HAS ALSO PLACED RELIANCE ON THE CBDT CIRCULAR NO.452 DATED 17.03.1986. HE FURT HER SUBMITTED THAT THE PENALTY PROCEEDINGS WERE NOT INITIATED PURSUANT TO THE ASSESSMENT PROCEEDINGS AND THEREFORE, PENALTY CANNOT BE LEVIED IN THE RE-ASSESSMENT PROCEEDINGS. ON THE OTHER HAND, LD.DR PLACED RELIA NCE ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE M ATERIALS PLACED ON RECORD. 7. THE CONTENTION OF THE LD.AR THAT THE ASSESSEE IS ONLY A COMMISSION AGENT, IS REQUIRED TO BE VERIFIED WITH REFERENCE TO THE NATURE OF BUSINESS ITA NO.1856/CHNY/2018 :- 4 -: CARRIED ON BY THE ASSESSEE AND THEREFORE, WE REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF VERIFICAT ION WHETHER THE ASSESSEE IS A RETAIL DEALER OR A COMMISSION AGENT. IN CASE, IT IS FOUND THAT THE ASSESSEE IS A COMMISSION AGENT, THE ENTIRE GROSS CO MMISSION TO BE RECKONED AS A TURNOVER OR ELSE IF HE IS A RETAILER, THE ENTIRE GROSS RECEIPTS TO BE RECKONED AS A TURNOVER. THE MATTER IS REMITT ED BACK TO THE FILE OF THE AO ON THE ABOVE LINES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 30 TH JANUARY, 2019, IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) ( INTURI RAMA RAO ) /ACCOUNTANT MEMBER /CHENNAI, 3 /DATED: 30 TH JANUARY, 2019. TLN - +45 65 /COPY TO: 1. * /APPELLANT 4. 7 /CIT 2. +,* /RESPONDENT 5. 5 + /DR 3. 7 ( ) /CIT(A) 6. ' /GF