M/s. Deep Jyoti Dyeing & Printing Mills Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(2), Surat

ITA 2068/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89423 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 19-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.) I.T. A. NO. 2068/AHD/2011 (ASSES SMENT YEAR: 2005-06) DEEP JYOTI DYEING & PRINTING MILLS PVT. LTD. BLOCK NO. 63/C, POST VARELI, TAL. PALSANA, SURAT V/S THE I.T.O., WARD-1(2), SURAT (APPELLANT) (RESPONDENT) PAN: AAACF7989C APPELLANT BY : SMT. URVASHI SODHAN, A.R. RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 21-04-2015 DATE OF PRONOUNCEMENT : 07 -05-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-I, SURAT DATED 13.06.2011 FOR A.Y. 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF DYEING & PRINTING OF FABRIC ON JOB WORK BASIS. ASSESSEE FILE D ITS RETURN OF INCOME FOR A.Y. 2005-06 ON 18.10.2005 DECLARING TOTAL INCOME A T RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION ITA NO 2068/ AHD/2011 . A.Y. 2005-06 2 143(3) VIDE ORDER DATED 24.12.2005 BY MAKING ADDITI ONS/DISALLOWANCES AGGREGATING TO RS. 33,70,580/- WHICH INCLUDED ADDIT ION OF RS. 32,98,880/- ON ACCOUNT OF SUPPRESSION OF GROSS PROFIT. ON THE ADDI TION ON ACCOUNT OF GROSS PROFIT, PENALTY OF RS. 11,54,610/- WAS LEVIED ON AC COUNT OF CONCEALMENT OF INCOME U/S. 271(1)(C) VIDE ORDER DATED 25.03.2010. AGGRIEVED BY THE AFORESAID PENALTY ORDER OF A.O, THE MATTER WAS CARR IED BEFORE LD. CIT(A) WHO VIDE ORDER DATED 13.06.2011 DISMISSED THE APPEA L OF THE ASSESSEE AND UPHELD THE PENALTY LEVIED BY A.O. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND;- 1. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CO NFIRMING PENALTY LEVIED BY AO OF RS. 11,54,610/- ON ESTIMATED ADDITIONS WITHOUT ANY COGENT EVIDENCE BROUGHT ON RECORD U/S 271(1)(C) OF THE ACT. BOTH THE LOWER AUT HORITIES HAVE FAILED TO APPRECIATE THE FACT THAT THE APPELLANT CANNOT BE CHARGED WITH ANY GUILT OF HAVING FURNISHED INACCURATE PARTICULARS OF INCOME OR HAVING CONCEALE D PARTICULARS OF INCOME AS ENUMERATED WITHIN MISCHIEF OF SECTION 271(1)(C) OF THE ACT. THE PENALTY LEVIED BEING WITHOUT ANY MERITS AND JUSTIFICATION DESERVES TO BE QUASHED. 4. BEFORE US, LD. A.R. SUBMITTED THAT THE BOOKS OF ACC OUNTS WERE REJECTED U/S. 145(3) BY THE A.O AND THEREAFTER THE GROSS PROFIT W AS ESTIMATED @ 16%. AGAINST THE ORDER OF ESTIMATION OF GROSS PROFIT @ 1 6% MADE BY A.O, THE MATTER WAS CARRIED IN APPEAL BY THE ASSESSEE BEFORE HONBLE TRIBUNAL. HONBLE TRIBUNAL VIDE ORDER DATED 8 TH JULY, 2011 IN ITA NO. 39/AHD/2009 ESTIMATED THE GROSS PROFIT RATE AT 15% AS AGAINST 1 6% ADOPTED BY A.O. THE LD. A.R. THEREFORE SUBMITTED THAT THE PENALTY HAS B EEN LEVIED ON THE ESTIMATION OF GROSS PROFIT. IT WAS FURTHER SUBMITTE D THAT ASSESSEE HAD GIVEN EXPLANATION FOR THE FALL IN GROSS PROFIT BUT THE EX PLANATION WAS NOT ACCEPTED BY THE A.O BUT AT THE SAME TIME, THE SUBMISSIONS AN D THE EXPLANATIONS GIVEN ITA NO 2068/ AHD/2011 . A.Y. 2005-06 3 BY THE ASSESSEE WERE ALSO NOT FOUND TO BE FALSE. I T WAS FURTHER SUBMITTED THAT WHEN ADDITION HAS BEEN MADE ON ESTIMATED BASIS , IT IS NOT NECESSARY THAT PENALTY SHOULD BE LEVIED ON SUCH ADDITION AS THE PE NALTY AND QUANTUM PROCEEDINGS ARE DISTINCT AND SEPARATE. RELIANCE WAS ALSO PLACED ON THE DECISION IN THE CASE OF CIT VS. WHITELENE CHEMICALS 360 ITR 385 AND IN THE CASE OF CIT VS. SUBHASH TRADING COMPANY (1996) 221 ITR 110 (GUJ). SHE THEREFORE SUBMITTED THAT THE PENALTY BE DELETED. LD . D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND LD. CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN THE PRESENT CASE THE ADDITION ON ACCOU NT OF GROSS PROFIT WAS ESTIMATED BY THE A.O AT 16% AND ON THE AFORESAID AD DITION, PENALTY U/S. 271(1)(C) HAS BEEN LEVIED BY THE A.O. IT IS ALSO A FACT THAT THE ADDITION ON ACCOUNT OF GROSS PROFIT WAS REDUCED TO 15% BY THE T RIBUNAL BUT THE ADDITION HAS BEEN FINALLY MADE ON ESTIMATED BASIS. IT IS ALS O A FACT THAT THE ASSESSEE HAD FURNISHED THE EXPLANATION WITH RESPECT TO THE F ALL IN GROSS PROFIT BUT HOWEVER THE EXPLANATION OF THE ASSESSEE WAS NOT ACC EPTED. IT IS NOT A CASE WHERE THE EXPLANATION FURNISHED BY THE ASSESSEE HAS BEEN FOUND TO BE FALSE OR INCORRECT. IT IS A SETTLED LAW THAT WHEN THE AD DITION IS MADE ON THE ESTIMATE BASIS, NO PENALTY ON ACCOUNT OF CONCEALMEN T OF INCOME U/S.271(1)(C) IS SUSTAINABLE. FURTHER, IT IS AN ADM ITTED PROPOSITION IN LAW THAT THE FINDING IN THE QUANTUM PROCEEDING IS NOT A FACT OR FOR DETERMINING THE QUESTION FOR THE PURPOSE OF IMPOSING PENALTY. QUEST ION OF PENALTY HAS TO BE DECIDED INDEPENDENT OF SUCH FINDING. IT IS WELL SET TLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITION MADE IN THE ASSESSMENT CASE OF THE ASSESSEE IS DIFFERENT FROM THE PENALTY IMPOSED ON A CCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME A ND THAT CERTAIN ITA NO 2068/ AHD/2011 . A.Y. 2005-06 4 DISALLOWANCE/ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDING ON THE PREPONDERANCE OF PROBABILITIES, BUT NO PENAL TY COULD BE IMPOSED U/S 271(L)(C) OF THE ACT ON THE PREPONDERANCE OF PROBAB ILITIES. WE FURTHER FIND THAT HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SUBHASH TRADING COMPANY (1996) 221 ITR 110 (GUJ) HAD CONCLUDED THA T WHERE INCOME IS ASSESSED ON ESTIMATE BASIS AFTER REJECTING BOOK RES ULTS, PENALTY U/S. 271(1)(C) CANNOT BE IMPOSED BY MERE APPLICATION OF EXPLANATIO N THEREOF IN THE ABSENCE OF ANY EVIDENCE TO CONCLUDE A POSITIVE FINDING THAT THERE WAS CONCEALMENT OF INCOME. IN VIEW OF THE AFORESAID FACTS WE ARE OF T HE VIEW THAT NO PENALTY IS LEVIABLE IN THE PRESENT CASE AND THEREFORE DIRECT I TS DELETION. IN THE RESULT THIS GROUND OF ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 07 - 05 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD