Sri Raj Kumar Bansal, Kolkata V. I.T.O Wd - 42(1),kolkata, Kolkata

ITA 1943/KOL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4997 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 17-06-2013
• Court: TRIBUNAL
• Department Lawyers: DEBASISH ROY
• Assessee Lawyers: VINAY KUMAR GUPTA ACA
• Keywords: Business income; Initiation of penalty proceedings; Reassessment proceedings
• Section: 133A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI WASEEM AHMED , AM] I.T.A NO.1943/KOL/2013 ASSESSMENT YEAR: 2004-05 SRI RAJ KUMAR BANSAL (PAN: ACYPB1778N) VS. INCOME -TAX OFFICER, WD-42(1), KOLKATA ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 08.03.2016 DATE OF PRONOUNCEMENT: 11.03.2016 FOR THE APPELLANT: SHRI VINAY KUMAR GUPTA, ACA FOR THE RESPONDENT: SHRI DEBASISH ROY, JCIT, SR. DR ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XII, KOLKATA VIDE APPEAL NO. 148/XII/42(1)/10-11 DATED 12.03.2013. ASSESSMEN T WAS FRAMED BY ITO, WD-42(1), KOLKATA U/S. 143(3)/263 OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2004-05 VIDE HIS ORDER DATED 31 .12.2009. PENALTY WAS IMPOSED BY ITO, WD-42(1), KOLKATA U/S. 271(1)(C) OF THE ACT V IDE HIS ORDER DATED 29.10.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE PENALTY IMPOSED BY AO U/S. 271(1)(C) OF THE ACT ON INCOME ESTIMATED BY CIT(A) AND CONFIRMED BY TRIBUNAL. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF TRANSPORTATION AND AO DURING THE REASSESSMENT PROCEEDINGS I.E. AFT ER REVISION ORDER OF CIT U/S. 263 OF THE ACT, AND GOING THROUGH THE SUBMISSIONS AND DETAILS NOTED THAT THE ASSESSEE HAS MAINTAINED SAME SET OF BOOKS OF ACCOUNT WHEREIN HE COULD NOT F URNISH THE PARTY WISE BREAK-UP OF FREIGHT CHARGES PAID AT RS.68,80,433/- AS AGAINST THE TOTAL CLAIM OF RS.71,22,093/-. ACCORDING TO AO, THE ASSESSEE COULD PRODUCE ONLY THE BREAK-UP OF FREIGHT CHARGES AT RS.2,41,600/- AS THE SAME WAS PRODUCED IN THE ORIGINAL ASSESSMENT PROCE EDINGS. ACCORDINGLY, HE TREATED THE BALANCE FREIGHT CHARGES OF RS.68,80,433/- AS FREIGH T EXPENSES REMAINED UNVERIFIABLE AND DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. AGGRIEVED, ASSESSEE PREFERRED 2 ITA NO.1943/KOL/2013 SRI RAJ KUMAR BANSAL, AY 2004-05 APPEAL BEFORE CIT(A) AGAINST THE QUANTUM ADDITION A ND CIT(A) AFTER TREATING THE RECEIPTS AS BUSINESS RECEIPTS ESTIMATED THE NET PROFIT @ 4% OF THE GROSS RECEIPT AND ADDED A SUM OF RS.3,00,316/-. AGGRIEVED, REVENUE PREFERRED APPEAL BEFORE TRIBUNAL AND TRIBUNAL ALSO CONFIRMED THE ACTION OF CIT(A) AND DISMISSED REVENU ES APPEAL. THEREFORE, THE ADDITION TO THE EXTENT OF RS.3,00,316/- WAS CONFIRMED ON ACCOUN T OF ESTIMATION OF INCOME BY APPLYING NET PROFIT RATE @ 4% ON GROSS RECEIPT OF RS.75,05,3 53/- THAT INCLUDES THE ADDITION MADE BY AO OF UNEXPLAINED FREIGHT CHARGES AT RS.68,80,433/- . THE AO IN THE MEANTIME, INITIATED PENALTY PROCEEDINGS AND TAKEN NOTE OF INCOME ESTIMA TED BY CIT(A) AT RS.3,00,316/-. THE AO LEVIED THE PENALTY BY OBSERVING AS UNDER: SINCE THE INCOME OF THE ASSESSEE WAS ESTIMATED A ND APPROVED BY THE CIT(A) BY MAKING A REMARK THE ESTIMATION OF PROFIT IS THE ONLY ALTERN ATIVE IN THE CIRCUMSTANCES AND FACTS OF THE CASE. I THINK THIS IS A FIT CASE FOR IMPOSITION O F PENALTY U/S. 271(1)(C) OF THE I. T. ACT. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT (A), WHO ALSO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER: I HAVE CONSIDERED THE FINDING OF THE AO AND WRITT EN SUBMISSION FILED BY THE ASSESSEE. AS THE LD. ITAT, KOLKATA HAS DISMISSED THE APPEAL OF THE D EPARTMENT AGAINST THE ORDER OF THE CIT(APPEAL)-XII, KOLKATA AND THE CROSS OBJECTION FI LED BY THE ASSESSEE, THEREFORE, THE ADDITION OF INCOME ESTIMATED BY THE CIT(APPEAL)-XII, KOLKATA , HOWEVER, IT CANNOT BE SAID THAT THE ESTIMATION WAS WITHOUT ANY BASIS. IT IS ALSO IMPOR TANT TO NOTE THAT IN THIS CASE THE ESTIMATION OF INCOME WAS NOT BY REJECTING THE EXPENSES OF THE ASSESSEE ONLY. THIS ESTIMATION WAS BASED ON FACTS AND FIGURES AND, THEREFORE, THE HONBLE IT AT, KOLKATA CONFIRMED THE ADDITION SUSTAINED BY CIT(APPEAL)-XII, KOLKATA. HENCE, ASSE SSEES ARGUMENT THAT PENALTY U/S. 271(1)(C) SHOULD NOT BE CONFIRMED ON ESTIMATED INCO ME DOES NOT HAVE MERIT. ACCORDINGLY, ASSESSEES APPEAL ON THIS ISSUE IS DISMISSED. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THIS IS A CASE OF PURE ESTIMATI ON OF NET PROFIT BY APPLYING NET PROFIT RATE. THE AO ESTIMATED THE INCOME AT RS.3,00,316/-. THE ASSESSEE IS A TRUCK OPERATOR NOT OWNING ANY TRUCKS ON HIS OWN. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, APPELLATE PROCEEDINGS AND PROCEEDINGS BEFORE TRIBUNAL, THE ASSESSEE PRODU CED COMPLETE FREIGHT REGISTER WHICH CONTAINS COMPLETE DETAILS OF INDIVIDUAL CONSIGNMENT I.E. DATE, CN NO., TRUCK NO., DESTINATION, CONSIGNORS NAME, CONSIGNEES NAME, ADVANCE PAID FO R FREIGHT, DATE OF PAYMENT, PAYABLE FREIGHT, BALANCE FREIGHT PAYABLE, DATE OF PAYMENT, CORRESPONDING BILL NO., BILL DATE, PARTY NAME, BILL AMOUNT, ADVANCE RECEIVED AND BALANCE REC EIVABLE IN COLUMNAR FORM. WE FIND FROM THE PENALTY ORDER THAT THE CASE OF ASSESSEE IS SIMPLY ON ESTIMATE BASIS AND THERE IS NO 3 ITA NO.1943/KOL/2013 SRI RAJ KUMAR BANSAL, AY 2004-05 IOTA OF SUPPRESSION OF FACTS OR THE ASSESSEE HAS FU RNISHED INACCURATE PARTICULARS OF INCOME. THIS IS NOT A CASE OF CONCEALMENT OF INCOME BECAUSE THE ASSESSEE HAS DISCLOSED ALL PARTICULARS BEFORE THE AO DURING ORIGINAL ASSESSMEN T PROCEEDINGS AND EVEN PROCEEDINGS DURING ASSESSMENT FRAMED U/S. 143(3)/263 OF THE ACT . THE AO HAS NO WHERE PROVED CONCEALMENT OR HE IS SATISFIED FOR INITIATION OF PE NALTY OR LEVY OF PENALTY. THE ENTIRE ONUS IS ON REVENUE FIRSTLY THAT HE HAS TO PRIMA FACIE PROVE THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME DESPITE THE FACT THAT ALL THE DETAILS WERE AVAILABLE BEFORE HIM DURING ORIGINAL ASSESSMENT PROCEEDINGS OR PENALTY PROCEEDI NGS. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAMPUR ENGINEERING CO. LTD. 309 ITR 143 (DEL.) (FB) HAS NOTED THAT HOW THE AO HAS TO REACH SATISFACTION BEFORE IMPOSIN G PENALTY. THE HONBLE COURT HAS OBSERVED THAT POWER TO IMPOSE PENALTY U/S. 271(1) D EPENDS UPON SATISFACTION OF AO IN COURSE OF ASSESSMENT PROCEEDINGS AND IT CANNOT BE E XERCISED IF HE IS NOT SATISFIED AND HAS NOT RECORDED HIS SATISFACTION ABOUT EXISTENCE OF CONDIT IONS SPECIFIED IN CLAUSES (A), (B) AND (C) OF SUB SECTION (1) OF SECTION 271 BEFORE PROCEEDINGS A RE CONCLUDED; THOUGH MERE ABSENCE OF WORDS I AM SATISFIED IN ASSESSMENT ORDER MAY NOT BE FATAL, YET SUCH A SATISFACTION MUST BE SPELT OUT FROM ORDER OF AO AS TO CONCEALMENT OF INC OME OR DELIBERATELY FURNISHING OF INACCURATE PARTICULARS AND IN ABSENCE OF A CLEAR FI NDING AS TO CONCEALMENT OF INCOME OR DELIBERATELY FURNISHING OF INACCURATE PARTICULARS, INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) WOULD BE WITHOUT JURISDICTION. EVEN THE COORDINATE BENCH OF ITAT, KOLKATA, IN THE CASE OF ITA NO.1303/K/2010, SUVAPRASANNA BHATTA CHARYA VS. ACIT, AY 2006-07 DATED 06.11.2015 HAS HELD AS UNDER: 6. WE SHALL NOW DEAL WITH THE QUESTION WHETHER PRO PER SATISFACTION WAS ARRIVED AT BY THE AO FOR INITIATING PENALTY PROCEEDINGS U/S.271(1)(C) , IN THE COURSE OF CONCLUDING THE ASSESSMENT PROCEEDINGS, WHEREIN THE ADDITIONS IN RE SPECT OF WHICH PENALTY WAS IMPOSED WERE MADE. ON THE ABOVE ISSUE, THE FIRST ASPECT WHICH, WE NOTICE IS THAT IN THE ORDER OF ASSESSMENT, WHICH WE HAVE EXTRACTED IN THE EARLIER PART OF THIS ORDER, NOWHERE SPELLS OUT OR INDICATES THAT THE AO WAS OF THE VIEW THAT THE ASSESSEE WAS GUILTY OF EITHER CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. TH E OFFER TO TAX OF INCOME BY THE ASSESSEE HAS JUST BEEN ACCEPTED. IT IS NO DOUBT TRUE THAT IT IS NOT THE REQUIREMENT OF THE LAW THAT THE SATISFACTION HAS TO BE RECORDED IN A PARTICULAR MAN NER, ESPECIALLY AFTER THE INTRODUCTION OF THE PROVISIONS OF SEC.271(1B) OF THE ACT WITH RETROSPEC TIVE EFFECT FROM 1.4.1989. NEVERTHELESS, AS LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CA SE OF MS.MADHUSHREE GUPTA (SUPRA), THE POSITION OF LAW BOTH PRE AND POST SEC.271(1B) OF TH E ACT IS SIMILAR, INASMUCH, THE AO WILL HAVE TO ARRIVE AT A PRIMA FACIE SATISFACTION DURING THE COURSE OF PROCEEDINGS WITH REGARD TO THE ASSESSEE HAVING CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS, BEFORE HE INITIATES PENALTY PROCEEDINGS PRIMA FACIE SATISFACTION OF THE AO THAT THE CASE MAY DESERVE THE IMPOSITION OF PENALTY SHOULD BE DISCERN IBLE FROM THE ORDER PASSED DURING THE 4 ITA NO.1943/KOL/2013 SRI RAJ KUMAR BANSAL, AY 2004-05 COURSE OF THE PROCEEDINGS. AT THE STAGE OF INITIATI ON OF PENALTY PROCEEDING, THE ORDER PASSED BY THE AO NEED NOT REFLECT SATISFACTION VIS-A-VIS EACH AND EVERY ITEM OF ADDITION OR DISALLOWANCE, IF OVERALL SENSE GATHERED FROM THE ORDER IS THAT A FURTHER PROGNOSIS IS CALLED FOR. THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DAT A (P) LTD. (SUPRA) HAS TO BE UNDERSTOOD IN THE CONTEXT OF THE FACTS OF THE SAID CASE. THE R ELEVANT PORTION OF THE JUDGMENT IN THE AFORESAID CASE, READS THUS: 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION F ORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANS FER 8 DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PROCEED INGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN THE CASE OF A SISTER CO NCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSE E TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE R ETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR T HAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STA TUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT , TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UND ER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. 10. THE AO HAS TO SATISFY WHETHER THE PENALTY PROCE EDINGS BE INITIATED OR NOT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCE IT INTO WRITING. 7. THE REVENUE PLACES RELIANCE ONLY ON THE SENTENCE APPEARING IN PARA-10 OF THE JUDGMENT WITHOUT READING IT IN THE CONTEXT OF THE O BSERVATIONS IN THE LAST PORTION OF PARA-9 OF THE SAID JUDGMENT. THEREFORE EVEN THE HONBLE SUPRE ME COURTS DECISION SUGGESTS THAT THE SATISFACTION NEED NOT BE RECORDED IN A PARTICULAR M ANNER BUT FROM A READING OF THE ASSESSMENT ORDER AS A WHOLE SUCH SATISFACTION SHOULD BE CLEARL Y DISCERNIBLE. IF THE AO ACCEPTS ALL THE CONTENTIONS OF THE ASSESSEE AND THE OFFER OF INCOME THAT HAS NOT BEEN DECLARED IN THE RETURN OF INCOME TO TAX WITHOUT INDICATING EITHER DIRECTLY OR INDIRECTLY THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME, IT CANNOT BE SAID THAT SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS IS DISCERNIBLE FROM THE ORDER OF ASSESSMENT. IF THE ASSESSEE IN GOOD FAITH OFFERS INCOME TO TAX VOL UNTARILY PRIOR TO ANY POSITIVE DETECTION BY THE AO, SUCH VOLUNTARY OFFER CANNOT BE TAKEN ADVANT AGE OF BY THE AO TO INITIATE PENALTY PROCEEDINGS AGAINST THE ASSESSEE WITHOUT SPECIFYING THE REASONS WHY PENALTY PROCEEDINGS ARE INITIATED U/S.271(1)(C) OF THE ACT. IN THE PRESENT CASE, WE HAVE READ THE ORDER OF ASSESSMENT AS A WHOLE AND ARE SATISFIED THAT SATISFACTION FOR INI TIATION OF PENALTY PROCEEDINGS IS NOT DISCERNIBLE FROM THE ORDER OF ASSESSMENT. WE THEREF ORE CONCUR WITH THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT INITIATION OF PENALTY PROCEEDINGS WAS NOT PROPER IN THE PRESENT CASE AND ON THAT GROUND THE IMPOSITION OF P ENALTY U/S.271(1)( C) OF THE ACT IS UNSUSTAINABLE. 5 ITA NO.1943/KOL/2013 SRI RAJ KUMAR BANSAL, AY 2004-05 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND TH E PRECEDENTS CITED, THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME BY THE ASSESSEE AND EVEN REVENUE IS UNABLE TO DISCHARGE ITS ONUS. ACCO RDINGLY, WE DELETE THE PENALTY AND ALLOW THE APPEAL OF ASSESSEE. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.03.2016 SD/- SD/- (WASEEM AHMED) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11 TH MARCH, 2016 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI RAJ KUMAR BANSAL, 38, SOVA BAZAR S TREET, 4 TH FLOOR, NEAR SABUJ PATRA CLUB, KOLKATA-700 005. 2. RESPONDENT ITO, WARD-42(1), KOLKATA. 3. CIT(A) , KOLKATA 4. CIT , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .