OM SINGH RATHORE PATHAK & PARTY, Jaipur V. ITO, Jaipur

ITA 188/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54161 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Section: 271(1)(c); 143(3)

Judgement Text

1 ITA 188-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 188/JP/2011 ASSTT. YEAR : 2001-02. M/S. OM SINGH RATHORE OMKAR VS. THE INCOME-TAX OF FICER, PATHAK & PARTY, WARD 3(1), C-28, HANUMAN NAGAR, KHATIPURA, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH AGARWAL RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING : 06.9.2011 DATE OF PRONOUNCEMENT : 09.9.2011. ORDER DATE OF ORDER : 09/09/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST CONFIRMING T HE LEVY OF PENALTY IN PART UNDER SECTION 271(1)(C) OF THE IT ACT, 1961, RELATING TO ASSESSMENT YEAR 2001-02. 2. THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETE D ON A TOTAL INCOME OF RS. 14,63,680/- AGAINST RETURNED INCOME OF RS. 29,767/- . AN ADDITION OF RS. 8,92,315/- WAS MADE IN RESPECT OF COUNTRY LIQUOR ACCOUNT AND RS. 4 ,38,802/- IN RESPECT OF IMFL/BEER ACCOUNT WHICH WAS REDUCED TO RS. 2,00,000/- AND RS. 1,50,000/- RESPECTIVELY BY THE LD. CIT (A). IN THE MEANTIME THE AO ISSUED NOTICE UNDE R SECTION 271(1)(C). IN FACT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICE D THAT ASSESSEE HAS NOT MAINTAINED 2 DAY TO DAY QUANTITATIVE AND QUALITATIVE DETAILS. TH E AO, THEREFORE, REJECTED BOOK RESULT DECLARED BY ASSESSEE AND MADE THE IMPUGNED ADDITION MENTIONED ABOVE. WHILE MAKING ADDITION ON ACCOUNT OF COUNTRY LIQUOR, THE AO HAS E STIMATED TURNOVER AT RS. 2.70 CRORES AND APPLIED A G.P. RATE AT 73.09% AND IN IMFL/BEER, THE SALES WERE ESTIMATED AT RS. 85,00,000/- AND APPLIED A G.P. RATE OF 35% AGAINST G.P. DISCLOSED BY ASSESSEE AT 31.42%. THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSIONS A ND FACTS OF THE CASE REDUCED THE TRADING ADDITION TO RS. 2,00,000/- IN COUNTRY LIQUO R ACCOUNT AND RS. 1,50,000/- IN IMFL/BEER ACCOUNT. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE FILED REPLY THAT THE ASSESSMENT WAS COMPLETED ON ESTIMATE BASIS, THEREFO RE, PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. RELIANCE WAS PLACED ON VARIOUS CASE LAWS. HOWEVER, AO WAS NOT SATISFIED. IN HIS VIEW, ASSESSEE HAS FURNISHED INACCURATE PART ICULARS WITHIN THE MEANING OF SECTION 271(1)(C) AND, THEREFORE, HE LEVIED PENALTY OF RS. 1,39,025/-. 3. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) BEF ORE WHOM IT WAS SUBMITTED THAT THE DEPARTMENT AS WELL AS ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF LD. CIT (A) AND THE TRIBUNAL THOUGH HAVE APPROVE D THE ESTIMATION OF SALES MADE BY AO. HOWEVER, THE AO WAS DIRECTED TO APPLY GROSS PRO FIT RATE SHOWN BY ASSESSEE. ACCORDINGLY, IT WAS SUBMITTED THAT THIS IS A DIFFER ENCE OF OPINION AND THE PENALTY LEVIED BY AO ON ESTIMATED INCOME IS NOT JUSTIFIED. AFTER CONSIDERING THE SUBMISSIONS, THE LD. CIT (A) NOTED THAT AO HAS LEVIED PENALTY ON THE BAS IS OF ORDER OF LD. CIT (A). HOWEVER, THE TRIBUNAL HAS FURTHER REDUCED THE ADDITION AND A O WAS DIRECTED TO RECALCULATE THE PENALTY ON THE BASIS OF DIRECTION OF THE TRIBUNAL I N QUANTUM MATTER. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 3 4. THE CONTENTIONS RAISED BEFORE THE LOWER AUTHORIT IES WERE REITERATED BEFORE THE TRIBUNAL. A BRIEF WRITTEN NOTE WAS ALSO FILED. 5. ON THE OTHER HAND, THE LD. D/R PLACED RELIANCE O N THE ORDER OF THE AO AND LD. CIT (A). 6. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN ITS APPEAL. U NDISPUTEDLY, THE ADDITION WAS MADE BY ESTIMATING SALES AND APPLYING A HIGHER G.P. RATE. THE LD. CIT (A) REDUCED THE ADDITIONS FROM RS. 8 LACS OR ODD AND RS. 4 LACS OR ODD TO RS. 2,00,000/- AND RS. 1,50,000/- ON ACCOUNT OF COUNTRY LIQUOR ACCOUNT AND ON ACCOUNT OF IMFL/BEER ACCOUNT RESPECTIVELY. 7. ON FURTHER APPEAL, TRIBUNAL THOUGH CONFIRMED THE ESTIMATION OF SALES MADE BY AO, HOWEVER, THE AO WAS DIRECTED TO ACCEPT GROSS PR OFIT RATE SHOWN BY ASSESSEE WHICH WAS HIGHER AS COMPARED TO EARLIER YEAR. FROM THE AS SESSMENT ORDER AS WELL AS THE ORDER LEVYING PENALTY, IT IS NOT COMING OUT THAT ANY INCO ME WAS CONCEALED BY THE ASSESSEE ON WHICH PENALTY CAN BE LEVIED. THE BOOKS OF ACCOUNT WERE REJECTED ON ACCOUNT OF VARIOUS DISCREPANCIES IN MAINTAINING SALES VOUCHERS. NOTHI NG IS ON RECORD THAT ASSESSEE HAS CONCEALED ANY SALES WHICH WAS NOT RECORDED IN THE B OOKS. BOOKS OF ACCOUNT WERE REJECTED AND THE SALES WERE ESTIMATED. IN OUR VIEW, ON MERE REJECTION OF BOOKS OF ACCOUNT AND THEN ESTIMATION OF SALES DOES NOT ATTRACT PENALTY P ROVISION. THE PENALTY IS QUASI CRIMINAL IN NATURE, THEREFORE, SOMETHING POSITIVE HAS TO BE BROUGHT ON RECORD TO HOLD THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. THERE ARE VARIOUS PRONOUNCEMENTS OF THE HIGH COURTS AND THE BENCHES OF THE TRIBUNAL WHEREIN IT I S HELD THAT ON ESTIMATED PROFIT PENALTY CANNOT BE LEVIED. IN VIEW OF THE ABOVE FACTS AND C IRCUMSTANCES, WE HOLD THAT LEVY OF PENALTY ON ESTIMATED PROFIT WAS NOT JUSTIFIED. ACCO RDINGLY, WE CANCEL THE LEVY OF PENALTY. 4 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09. 9.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- M/S. OM SINGH RATHORE OMKAR PATHAK & PARTY, JAIPUR. THE ITO WARD 3(1), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 188/JP/2011) BY ORDER, AR ITAT JAIPUR.