LATE SHRI BANSIDHAR AGARWAL, L/H SHRI N L AGRAWAL, Jaipur V. ASSISTANT COMMISSIONER OF INCOME TAX, Jaipur

ITA 197/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4210 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 09-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR ASHWINI HOSMANI CIT DHK
• Section: 271(1)(c)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES B, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA -@ ITA NO. 197/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2007-08 N.L. AGARWAL, L/H-LATE SHRI BANSHIDHAR AGARWAL, PROP.- M/S AGARWAL & CO., 1307, KEDIA BHAVAN, GOPAL JI KA RASTA, JAIPUR. CUKE VS. A.C.I.T., CIRCLE-1, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: AANPA 6881 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : DR. ASHWINI HOSMANI (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/05/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 10/05/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A)-I, JAIPUR DATED 13/11/2017 FOR THE A.Y. 2007-08 IN THE MATTER OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURING OF JEWELLERY. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE A.O. REJECTED BOOKS OF ACCOUNT BY INVOKING PROVISIONS OF SECTION 145(3) ITA 197/JP/2018_ N.L. AGARWAL VS ACIT 2 OF THE ACT AND MADE TRADING ADDITION OF RS. 7,98,053/-. IN THE QUANTUM APPEAL, THE MATTER TRAVELLED UP TO THE ITAT WHEREIN THE ITAT UPHELD THE TRADING ADDITION TO THE TUNE OF RS. 97,113/- WHICH WAS ON THE BASIS OF ESTIMATION OF GP RATE OF 15% ON ALLEGED UNVERIFIABLE PURCHASES. IN RESPECT OF THE ADDITION SO UPHELD, THE A.O. LEVIED PENALTY TO THE TUNE OF RS. 32,688/- WHICH WAS CONFIRMED BY THE LD. CIT(A), AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 3. IT WAS ARGUED BY THE LD AR OF THE ASSESSEE THAT THE AO HAD INITIATED PENALTY FOR CONCEALMENT OF INCOME WHEREAS PENALTY HAS BEEN LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, WHICH MAKES SUCH LEVY BAD IN LAW . FOR THIS PURPOSE, RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE THIRD MEMBER IN THE CASE OF HPCL MITTAL ENERGY LTD. VS ADDL.CIT IN ITA NOS. 554 & 555/ASR/2014 DECISION DATED 07/05/2018. 4. WITH REGARD TO MERIT OF THE ADDITION, IT WAS CONTENDED THAT THE ADDITION HAS BEEN UPHELD ON ESTIMATED BASIS ON WHICH NO PENALTY IS IMPOSABLE FOR WHICH RELIANCE WAS PLACED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KRISHI TYRE RETREADING AND RUBBER INDUSTRIES (2014) 360 ITR 580. ITA 197/JP/2018_ N.L. AGARWAL VS ACIT 3 5. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND CONTENDED THAT THE A.O. HAS CORRECTLY LEVIED PENALTY WITH RESPECT TO THE ADDITION UPHELD BY THE TRIBUNAL IN QUANTUM APPEAL. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE TRADING ADDITION HAS BEEN UPHELD BY THE TRIBUNAL BY ESTIMATING THE GP RATE AT 15% ON THE ALLEGED UNVERIFIABLE PURCHASES. I T IS SETTLED PROPOSITION OF LAW THAT MERELY CONFIRMATION OF THE TRADING ADDITION MADE ON ESTIMATE BASIS DOES NOT LEAD TO THE CONCLUSION THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED ANY INCOME. FURTHER ESTIMATION IS ALWAYS ON PRESUMPTIONS AND ASSUMPTIONS AND WITHOUT PROPER AND SPECIFIC LINKING WITH ANY EVIDENCE IN SUPPORT OF SUCH ESTIMATION ASSESSEE CANNOT BE FASTENED WITH LIABILITY OF PENALTY. ACCORDINGLY, IT IS WELL SETTLED THAT NO PENALTY IS LEVIABLE U/S 271(1)(C) ON THE BASIS OF TRADING ADDITION DUE TO DISTURBANCE IN THE G.P. RATE DISCLOSED BY THE ASSESSEE. THEREFORE, ADDITIONS WERE MADE IN THE ASSESSMENT ORDER NOT ON THE BASIS OF ANY CONCEALMENT BEING DETECTED IN ASSESSMENT BUT ONLY ON AD HOC BASIS. HENCE IT CANNOT BE DEEMED TO CONCEALED INCOME FOR THE PURPOSE OF PENALTY U/S 271(1)(C) ITA 197/JP/2018_ N.L. AGARWAL VS ACIT 4 AS HELD BY DELHI HIGH COURT IN THE CASE OF CIT VS. SUPER METAL RE- ROLLERS PVT. LTD. (2004) 265 ITR 082 (DEL.). 7. THE HONBLE JURISDICTIONAL HIGH COURT HAS IN THE CASE OF CIT VS. KRISHI TYRE RETREADING AND RUBBER INDUSTRIES (SUPRA) HAS HELD AS UNDER: 'PENALTY 271 (1) (C) CONCEALMENT ADDITION ON ESTIMATE BASIS MERELY BECAUSE THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED OR ESTIMATED ADDITION WAS MADE, NO PENALTY IS LEVIABLE ASSESSEE OFFERED AN EXPLANATION, WHICH COULD NOT BE TERMED AS NOT BONA FIDE IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO PROVE THE CHARGE OF CONCEALMENT, PENALTY U/S 271(1)(C) COULD NOT BE IMPOSED.' 8. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE PENALTY SO IMPOSED WITH REGARD TO THE ADDITION UPHELD ON ESTIMATION BASIS, THEREFORE, WE DIRECT TO DELETE THE SAME. WE DIRECT ACCORDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH MAY, 2019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 10 TH MAY, 2019 ITA 197/JP/2018_ N.L. AGARWAL VS ACIT 5 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI N.L. AGARWAL, L/H-LATE SHRI BANSHIDHAR AGARWAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-1, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 197/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR