HARI NARAYAN SHARMA, Jaipur V. INCOME TAX OFFICER, Jaipur

ITA 207/JPR/2011

• Counselvise Citation: 20723114 RSA 2011
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 09-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Section: 69C; 143(3); 133A; 6

Judgement Text

1 ITA 207-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 207/JP/2011 ASSTT. YEAR : 2002-03. SHRI HARI NARAYAN SHARMA, VS. THE INCOME-TAX OFFI CER, PROP. M/S.SHIV PLYWOOD, HARDWARE & WARD 2(4), TIMBER, NEW SANGANER ROAD, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH AGARWAL RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING : 12.8.2011 DATE OF PRONOUNCEMENT : 19.8.2011 ORDER DATE OF ORDER : 19/08/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) UPHOLDING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF I.T. ACT, 1961, RELATING TO ASSESSMENT YEAR 2002-03. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. SHIV PLYWOOD, HARDWARE & TIMBER, WHICH IS ENGAGED I N THE TRADING OF PLYWOOD, FEVICOL, HARDWARE ITEMS ETC. A SURVEY UNDER SECTION 133A OF IT ACT, 1961 WAS CONDUCTED O 24.10.2001 AT BUSINESS PREMISES OF THE ASSESSEE. D URING THE COURSE OF SURVEY STOCK WAS PHYSICALLY QUANTIFIED AND A SURRENDER OF RS. 6.50 L ACS ON ACCOUNT OF EXCESS STOCK WAS OBTAINED FROM ASSESSEE. 2 3. THE ASSESSEE HAS FILED THE RETURN OF INCOME DECL ARING INCOME OF RS. 83,565/- WHICH WAS ASSESSED UNDER SECTION 143(3) OF THE IT A CT AT A TOTAL INCOME OF RS. 10,13,383/- BY MAKING VARIOUS ADDITIONS (INCLUDING AN ADDITION OF RS. 6.50 LACS ON ACCOUNT OF EXCESS STOCK). THE ENTIRE ADDITIONS STO OD REDUCED TO RS. 3,83,383/- BY THE JAIPUR BENCH OF THE TRIBUNAL VIDE ORDER DATED 31.3. 2010 IN ITA NO. 86/JP/2008, THE ADDITIONS AS MADE AND FINALLY UPHOLD ARE TABULATED AS UNDER :- NATURE OF ADDITION ADDITIONS MADE BY LD. A.O. SUSTAINED BY LD. CIT (A) UPHELD BY THE HONBLE ITAT ADDITION ON ACCOUNT OF EXCESS STOCK 6,50,000.00 2,50,000.00 2,50,000.00 TRADING ADDITION 1,80,155.00 50,155.00 50,155.00 ADDITION ON ACCOUNT OF DIFFERENCE IN CASH BALANCE 33,228.00 33,228.00 33,228.00 U/S 69C ON ACCOUNT OF MARRIAGE EXPENSES 1,50,000.00 1,50,000.00 50,000.00 TOTAL 10,13,383.00 4,83,383.00 3,83,383.00 THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961 WERE INITIATED AND A PENALTY OF RS. 2,31,903/- WAS IMPOSED BY HOLDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME TO THE EXTENT OF RS. 4,83,383/- I.E. THE ADDITIONS SUSTAINED BY LD. CIT (A). 4. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) WHO ALSO UPHOLD THE LEVY OF PENALTY. THE CONTENTION RAISED BEFORE THE LOWER AUTHORITIES WERE REITERATED HERE BEFORE THE TRIBUNAL. IT WAS SUBMITTED THAT BOOKS OF ACCOUNT W ERE INCOMPLETE DURING THE COURSE OF SURVEY. SURVEY PARTY HAS ESTIMATED THE EXCESS STOCK OF RS. 6,50,000/- AND A SURRENDER WAS OBTAINED ON ACCOUNT OF EXCESS STOCK FOUND DURING TH E COURSE OF SURVEY. HOWEVER, AFTER COMPLETING THE BOOKS OF ACCOUNT, AFTER THE SURVEY, IT WAS FOUND THAT THERE IS NO EXCESS STOCK. ACCORDINGLY THIS WAS NOT SHOWN IN THE RETURN OF INCOME. HOWEVER, ON THE BASIS OF SURRENDER MADE DURING THE COURSE OF SURVEY, THE AO MADE ADDITION OF RS. 6,50,000/- ON 3 ACCOUNT OF EXCESS STOCK. FURTHER, TRADING ADDITION WAS ALSO MADE AT RS. 1,80,155/- AND ON ACCOUNT OF DIFFERENCE IN CASH BALANCE AN ADDITION O F RS. 33,228/- WAS ALSO MADE. AN ADDITION OF RS. 1,50,000/- WAS MADE UNDER SECTION 6 9C. THE LD. CIT (A) CONFIRMED PART ADDITION I.E. RS. 2,50,000/- ON ACCOUNT OF EXCESS S TOCK, RS. 50,155/- ON ACCOUNT OF TRADING ADDITION AND RS. 33,228/- ON ACCOUNT OF DIFFERENCE IN CASH AND A SUM OF RS. 1,50,000/- ON ACCOUNT MARRIAGE EXPENSES. ON SECOND APPEAL, THE TR IBUNAL CONFIRMED THE FIRST THREE ADDITIONS. HOWEVER, ON ACCOUNT OF MARRIAGE EXPENSES THE ADDITION WAS REDUCED TO RS. 50,000/-. THEREAFTER PENALTY PROCEEDINGS WERE STAR TED. ACCORDINGLY IT WAS SUBMITTED THAT ALL THE ADDITIONS MADE AND SUSTAINED BY LOWER AUTHO RITIES ARE ON ESTIMATE BASIS. THERE IS NO IOTA OF EVIDENCE THAT ASSESSEE HAS CONCEALED ANY PARTICULARS OF INCOME. IT WAS ALSO SUBMITTED THAT NO BENEFIT ON ACCOUNT OF EXCESS STOC K ADDED BY THE AO HAS BEEN OBTAINED ASSESSEE. THEREFORE, THIS IS NOT A CASE OF CONCEAL MENT. FURTHER, RELIANCE WAS PLACED ON DETAILED WRITTEN SUBMISSIONS PLACED ON RECORD AND O N VARIOUS CASE LAWS MENTIONED IN THE WRITTEN SUBMISSION. 5. ON THE OTHER HAND, THE LD. D/R PLACED RELIANCE O N THE ORDER OF LD. CIT (A). 6. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN HIS APPEAL. I T IS NOTICED THAT THOUGH THERE WAS AN EXCESS STOCK FOUND BY SURVEY PARTY AND A SURRENDER WAS OBTAINED, BOOKS OF ACCOUNT WERE INCOMPLETE AT THAT TIME. THEREAFTER THE BOOKS OF AC COUNT WERE COMPLETED AND AS PER COMPLETED BOOKS OF ACCOUNT, THERE WAS NO EXCESS STO CK. HOWEVER, THE ENTIRE ADDITION ON ACCOUNT OF EXCESS STOCK WAS MADE BY THE AO AS PER S URRENDER. THE LD. CIT (A) HAS REDUCED THE SAME TO RS. 2,50,000/- ON ESTIMATE BASI S WHICH HAS BEEN CONFIRMED BY THE TRIBUNAL ALSO. THIS IS A CASE OF CONFIRMATION OF A DDITION ON ACCOUNT OF ESTIMATION OF 4 EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. TH E BOOKS OF ACCOUNT WERE LATER ON PREPARED AND AS PER BOOKS OF ACCOUNT THERE WAS NO E XCESS STOCK. THERE WERE SOME ITEMS ON STOCK, VALUE OF THE SAME COULD NOT BE EXPLAINED PROPERLY AND, THEREFORE, THE AO HAS MADE ADDITION ON ACCOUNT OF EXCESS STOCK WHICH HAS BEEN REDUCED BY LD. CIT (A) TO RS. 2.50 LACS AND ORDER OF LD. CIT (A) HAS BEEN CONFIRM ED BY TRIBUNAL. AS STATED ABOVE, IN OUR VIEW, AT LEAST PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE ON THE AMOUNT OF EXCESS STOCK ADDED BY THE AO OR CONFIRMED BY THE TRIBUNAL. ASSESSEE HAS NOT TAKEN ANY BENEFIT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. AS PER THE STATEMENT, THERE WAS NO DIFFERENCE IN STOCK. PROPER VALUATION COULD NOT BE DONE AND, THEREFORE, JUST TO COVER UP THE LEAKAGE OF REVENUE, THE ADDITION WAS SUSTAINED. IN OUR VIEW, PENALTY IS NOT LEVIABLE. IT IS ALSO WELL SETTLED THAT IT IS NOT NECESSARY THAT IF ANY ADDITION HAS BEEN SUSTAINED PENALTY IS ALSO LEVIABLE. VARIOUS CASES ON WHICH RELIANCE HAS BEEN PLACED ARE IN SUPPORT OF THE CASE OF THE ASSESSEE. THEREFORE, IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT PENALTY IS NOT LEVIABLE ON THE AMOUNT OF RS. 2.50 LACS SUST AINED ON ACCOUNT OF EXCESS STOCK. 7. REMAINING ITEMS ON WHICH PENALTY IS LEVIED I.E. RS. 33,228/- ON ACCOUNT OF DIFFERENCE IN CASH BALANCE. 8. SINCE THE BOOKS OF ACCOUNT WERE NOT COMPLETE AT THE TIME OF SURVEY AND JUST TO BUY PEACE THE ASSESSEE AGREED TO SURRENDER RS. 33,2 28/- AS DIFFERENCE IN CASH BALANCE. THE AO LEVIED THE PENALTY. THE ASSESSEE VOLUNTARIL Y AGREED TO PAY THE TAX ON THIS AMOUNT AND ADDITION HAS BEEN MADE UPTO THE STAGE OF TRIBUN AL. 9. AFTER CONSIDERING THE SUBMISSIONS ON THIS AMOUNT ALSO, WE FIND THAT PENALTY IS ALSO NOT LEVIABLE ON THIS AMOUNT. DUE TO INCOMPLETE BOOK S OF ACCOUNT THE ASSESSEE COULD NOT EXPLAIN THE REASON FOR CASH DIFFERENCE. THE AO MAD E THIS ADDITION ONLY ON THE BASIS OF 5 VOLUNTARY SURRENDER BY THE ASSESSEE DURING THE COUR SE OF SURVEY. SINCE THE BOOKS OF ACCOUNT WERE INCOMPLETE AND JUST TO BUY PEACE THE A SSESSEE SURRENDERED THE AMOUNT DURING SURVEY. IN OUR VIEW, SINCE ASSESSEE VOLUNTA RILY CAME FORWARD TO MAKE THIS ADDITION ON THE BASIS OF STATEMENT OBTAINED DURING THE SURVEY PROCEEDINGS, THEREFORE, AT LEAST PENALTY SHOULD NOT HAVE BEEN LEVIED. IN CAS E OF RAMSARAN GUPTA VS. ACIT, 20 TAX WORLD 76, THE JAIPUR BENCH HAS HELD THAT SIMPLY ON THE BASIS OF AGREEING TO AN ADDITION PENALTY SHOULD NOT HAVE BEEN LEVIED. THEREFORE, WE HOLD THAT PENALTY LEVIED AND CONFIRMED ON THIS ACCOUNT WAS ALSO NOT JUSTIFIED. ACCORDINGLY THE SAME IS CANCELLED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 .8.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- SHRI HARI NARAYAN SHARMA, JAIPUR. THE ITO WARD 2(4), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 207/JP/11) BY ORDER, AR ITAT JAIPUR.