METRO MERCANATILE PVT. LTD., MUMBAI V. A.C.I.T. CIRCLE 4(2), MUMBAI

ITA 2285/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83513 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R PATIL
• Assessee Lawyers: SHRIMAHENDR SANGHVI
• Section: 145; 2

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI .., ! , ' , # BEFORE SHRI I.P.BANSAL, JM AND SHRI RAJENDRA, AM ITA NO.2285/MUM/2012 (A.Y.2006-07) METRO MERCANTILE PVT. LTD. 81, DADYSETH AGIARY LAINE, BHULESHWAR, MUMBAI 400002 PAN: AAACM 3480B ASST. COMMISSIONER OF INCOME TAX, CIRCLE 4(2), AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020. ( $% / // / APPELLANT) ' ' ' ' / VS. ( ()$%/ RESPONDENT) $% * + * + * + * + /APPELLANT BY : SHRIMAHENDR SANGHVI ()$% * + * + * + * + /RESPONDENT BY :SHRI V.R.PATIL ' * ,-' / / / / DATE OF HEARING : 14.8.2014 ./0 * ,-' / DATE OF PRONOUNCEMENT : 14.08.2014 1 1 1 1 / / / / O R D E R PER I.P.BANSAL (JM) : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-8, MUMBAI DATED 18/01/2012 F OR ASSESSMENT YEAR 2006-07. GROUNDS OF APPEAL READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-8; 1.A. ERRED IN CONFIRMING THE PENALTY LEVIED U/S. 2 71(1)(C) OF THE INCOME TAX ACT, 1961. THE PENALTY LEVIED IS BAD, ILLEGAL, VOID AND AGAINS T THE PROVISIONS OF LAW; 1.B OUGHT TO HAVE APPRECIATED THAT THE ADDITION IS ON ACCOUNT OF ESTIMATE OF HIGHER GROSS PROFIT PERCENTAGE; 1.C. FAILED TO APPRECIATE THAT THE APPELLANT NEITH ER CONCEALED THE PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME ; THE APPELLANT CRAVES LEAVE TO AMEND, TO ALTER, TO D ELETE , TO ADD AND TO MODIFY ANY OF THE ABOVE GROUND OR GROUNDS OF APPEAL WHICH ARE WI THOUT PREJUDICE TO ONE ANOTHER. 2. CONCEALMENT PENALTY IN THE PRESENT CASE HAS BEEN LEVIED IN RESPECT OF GP ADDITION. THE AO ADOPTED GP RATE OF 5% AND NET PRO FIT OF THE ASSESSEE WAS ITA NO.2285/MUM/2012 (A.Y.2006-07) 2 ESTIMATED AT RS.35,11,071/- AS AGAINST NET PROFIT S HOWN IN THE BOOKS OF ACCOUNTS AT RS.12,46,067/-. THUS, ADDITION OF RS.22,65,004/- WAS MADE. ON SUCH ADDITION PENALTY OF RS.6,79,501/- WAS IMPOSED. ADDITION WAS CONTESTED IN AN APPEAL FILED BEFORE LD. CIT(A) WHO CONFIRMED THE ACTION OF AO. SECOND APPEAL WAS FILED IN THE TRIBUNAL. THE TRIBUNAL REDUCED THE GP RATE TO 4% VIDE ORDER DATED 24/6/2011 IN ITA NO.3327/MUM/2010. 3. ON THESE FACTS IT IS THE CASE OF THE ASSESSEE TH AT SINCE THE ADDITION ON WHICH PENALTY HAS BEEN LEVIED IS MADE ON ESTIMATE BASIS, PENALTY SHOULD NOT BE LEVIED AS PER WELL ESTABLISHED PRINCIPLE OF LAW ESTABLISHED I N THE DECISION OF CIT VS. VIJAY KUMAR JAIN, (2011) 10 TAXMAN.COM 9 (CHHATTISGARH) W HEREIN PENALTY WAS IMPOSED ON THE ADDITION WHICH WAS MADE ON ACCOUNT OF APPLIC ATION OF HIGHER RATE OF NET PROFIT BY APPLYING THE PROVISIONS OF SECTION 145 AND THERE WAS NO EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE HAD CONCEALED THE PARTICULAR S OF HIS INCOME. THUS, IT WAS PLEADED BY LD. AR THAT THE PENALTY SHOULD BE DELETE D. 4. ON THE OTHER HAND, LD. DR SUBMITTED THAT LD. CIT (A) HAS UPHELD THE PENALTY AND HIS ORDER SHOULD BE CONFIRMED. 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. IT IS THE CASE OF THE ASSESSEE THAT AD DITION HAS BEEN MADE MAINLY ON THE BASIS OF APPLICATION OF GP RATE. THERE IS NO MATER IAL ON RECORD, ACCORDING TO WHICH IT COULD BE SAID THAT EITHER THE ASSESSEE HAD CONCEALE D THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE ADDITION MADE BY AO HAS BEEN REDUCED BY THE TRIBUNAL. THUS, IT IS A CLEAR CASE WHERE ADDITION IS MADE ON THE BASIS OF APPLICATION OF GP RATE. RELYING UPON T HE AFOREMENTIONED DECISION OF HONBLE CHHATISHGARGH HIGH COURT, IT IS THE CASE OF THE ASSESSEE THAT WHERE ADDITION IS BASED MERELY ON ESTIMATE NO CONCEALMENT PENALTY CAN BE LEVIED. AFTER CAREFUL CONSIDERATION OF THE SUBMISSIONS OF THE ASSESSEE AN D FACTS AVAILABLE ON RECORD, WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE WHERE LEVY OF CONCEALMENT PENALTY CAN BE ITA NO.2285/MUM/2012 (A.Y.2006-07) 3 HELD TO BE JUSTIFIED. LD. CIT(A) MERELY UPHELD T HE PENALTY TO THE EXTENT THE ADDITION HAS BEEN UPHELD BY THE TRIBUNAL. IN THESE CIRCUMS TANCES WE DELETE THE PENALTY AND ALLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH AUG., 2014. 1 * ./0 2'3 14.08.2014 / * 9 SD/- SD/- (RAJENDRA) (I.P.BANSAL) ' ' ' ' / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 2' DATED : 14TH AUG. 2014. VM. 1 * (,: ; :0 1 * (,: ; :0 1 * (,: ; :0 1 * (,: ; :0, ,, ,/ COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. ()$% / THE RESPONDENT. 3. <() / THE CIT, MUMBAI. 4. < / CIT(A)-13, MUMBAI 5. :?9 (,' , , / DR, ITAT, MUMBAI 6. 9@ A / GUARD FILE. 1' 1' 1' 1' / BY ORDER, ):, (, //TRUE COPY// B BB B/ // /C C C C (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI