Laxmikant Ramniwas Baldawa, Latur V. Income-tax Officer,

ITA 2308/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1875 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 271(1)(c); 147; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.2308/PUN/2016 / ASSESSMENT YEAR : 2010-11 SHRI LAXMIKANT RAMNIWAS BALDAWA, MAHALAXMI WIRES, MURUD, RING ROAD, LATUR-413572. PAN-ABBPB1789K ....... / APPELLANT / V/S. ITO, WARD-3(3), LATUR. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 16.05.2019 / DATE OF PRONOUNCEMENT : 25.06.2019 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL BY THE ASSESSEE IS FILED AGAINST THE ORDER OF THE LD. CIT(APPEALS)-2, AURANGABAD DATED 04.05.2016 FOR THE ASSESSMENT YEAR 2010-11. 2. THERE WAS NONE TO REPRESENT THE ASSESSEE BEFORE THE CIT(A) THEREFORE, THE APPEAL WAS DECIDED EX-PARTE . THE ISSUE RAISED IN THE APPEAL RELATES TO LEVY OF PENALTY OF RS.1,72,690/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) IN CONNECTION WITH THE ESTIMATED G.P. ADDITION OF RS.5,86,837/-. 2 ITA NO.2308/PUN/2016 A.Y. 2010-11 3. BACKGROUND FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF WIRES. THE ASSESSEE FILED RETURN OF INCOME OF RS.3,50,540/-. THE EX-PARTE REASSESSMENT WAS COMPLETED U/S 144 R.W.S 147 OF THE ACT DETERMINING THE TOTAL INCOME AT RS.9,37,377/-. 4. DURING THE RE-ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THIS IS A CASE OF BOGUS PURCHASES INVOLVING ONKAR TRADING CO. AND SHIVRAJ TRADERS. THE ASSESSING OFFICER NOTICED THE ABSENCE OF DOCUMENTS AND EVIDENCES THEREFORE, RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH IN ITA NO.553 OF 2012. THE ASSESSING OFFICER ESTIMATED THE RATE OF PROFIT @ 12.5% AT RS.5,86,837/-. THIS ADDITION IS THE SUBJECT MATTER OF PENALTY BEFORE THE TRIBUNAL IN THE CURRENT APPEAL. THE ASSESSING OFFICER LEVIED THE PENALTY AND THE CIT(A) CONFIRMED THE SAME AND DISMISS THE APPEAL OF THE ASSESSEE. 5. BEFORE CIT(A), THERE WAS NONE TO REPRESENT THE ASSESSEE. EVEN BEFORE US DESPITE THE SERVICE OF NOTICE, THERE IS NONE TO REPRESENT THE CASE OF THE ASSESSEE. CONSIDERING THE FACTS THAT THIS IS A CASE OF ESTIMATED ADDITION. WE PROCEED TO ADJUDICATE THE SAME WITH THE HELP OF LD.DR FOR THE REVENUE. AT THE OUTSET, LD. DR SUBMITTED THAT THIS CASE OF ESTIMATED ADDITIONS ALTHOUGH THE ADDITIONS ARE BASED ON THE BOOKS PURCHASE. 6. WE FIND THAT IT IS NOT THE CASE OF THE REVENUE THAT THE ENTIRE BOOKS PURCHASES CONSTITUTES INCOME OF THE ASSESSEE. ONLY 12.5% OF SUCH PURCHASES ARE CONSIDERED AS INCOME OF THE ASSESSEE. THUS, THERE IS AN ELEMENT OF ESTIMATION IN THIS CASE. IN OUR VIEW, BEING THE CASE OF ESTIMATED ADDITION, THE PENALTY IS UNSUSTAINABLE IN LAW. THERE IS A LEGAL REQUIREMENT OF PRECESSION IN MATTERS OF QUANTIFICATION OF PENALTY AMOUNT. THE SAME IS MISSING IN THIS CASE. THE PENALTY LEVIED IS RELATABLE TOT EH ESTIMATED ADDITIONAL INCOME WHICH SUFFERS FROM AMBIGUITY SO FAR AS ACCURACY AND 3 ITA NO.2308/PUN/2016 A.Y. 2010-11 PRECISION ARE CONCERNED. THEREFORE, WE ARE OF THE OPINION THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) SHOULD BE DELETED. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 25 TH DAY OF JUNE, 2019. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATED : 25 TH JUNE, 2019. AMIT KUMAR/ SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-2, AURANGABAD. 4. THE PR.CIT-2, AURANGABAD. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE.