ITO, New Delhi V. Mrs. Neeru Gambhir, New Delhi

ITA 2359/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3514 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 20-07-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 18-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAOREM
• Assessee Lawyers: DHARMENDER KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 2359/DEL/2010 ASSESSMENT YEAR: 2000-01 INCOME TAX OFFICER, WARD 13(2), NEW DELHI. VS. MRS. NEERU GAMBHIR, M-18, MUNISH PLAZA, 20, ANSARI ROAD, DARYAGANJ, DELHI-2. PAN NO. AAAPG8384L (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. BANITA DEVI NAOREM, SR. DR RESPONDENT BY: SHRI DHARMENDER KUMAR, AR O R D E R PER I.P. BANSAL, J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER OF CIT(A) DATED 02.03.10 FOR A.Y. 2000-01. GROUNDS OF APPEAL READ AS UNDER: - 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS. 2,75,00 0/- IMPOSED U/S 271(1)(C)OF THE INCOME TAX ACT, 1961. 2. THE APPELLANT CRAVES TO BE ALLOWED TO ADD, DELET E OR AMEND ANY OTHER GROUNDS OF APPEAL. 2. THE ASSESSEE IS ENGAGED IN THE ACTIVITY OF TRADI NG IN CHEMICALS. A SURVEY WAS CONDUCTED ON 23.02.2000 AT THE BUSINESS PREMISES OF THE ASSESSEE, WHEREIN EXCESS STOCK OF RS. 1,95,04,670/- AND EXCESS CASH OF RS. 21.09 LAKH WAS FOUND. THE AGGREGATE OF THESE TWO I TEMS WAS RS. 2,12,13,670/- WHICH WAS OFFERED BY THE ASSESSEE AS HER ADDITIONAL INCOME FOR F.Y. 1999- 2 ITA NO. 2359/DEL/2010 2000. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED, INTER-ALIA THAT STOCKS SURRENDERED VALUING RS. 64,43,710/- WAS ALLEGEDLY SOLD BY THE ASSESSEE IN THE POST SURVEY PERIOD FOR RS. 56,33,63 6/- RESULTING INTO LOSS OF RS. 8,10,073/-. THE BOOKS OF THE ASSESSEE WERE REJECTE D U/S 145(3). POST SURVEY SALES WERE ESTIMATED RS.1,50,00,000/- UPON WHICH GP RATE OF 7.5% WAS APPLIED WHICH RESULTED INTO GROSS PROFIT OF RS. 11, 25,000/-. SINCE GROSS LOSS OF RS. 21,54,636/- WAS SHOWN FOR THE POST SURVEY PERIO D. ADDITION OF RS. 32,79,636/- WAS MADE BEING AGGREGATE OF THE TWO SUM S MENTIONED HEREINABOVE. THE SAID ADDITION WAS DELETED BY LD. CIT(A) BY ACCEPTING THE ASSESSEES EXPLANATION. THE DECISION OF CIT(A) WAS FURTHER CONTESTED IN AN APPEAL FILED BEFORE ITAT, WHEREIN THE ORDER OF CIT( A) WAS PARTLY REVERSED AND AN ADDITION OF RS. 8,10,073/- WAS UPHELD FOR THE RE ASON OF CASH DISCREPANCY AND NON-PRODUCTION OF GO-DOWN REGISTER. THE RELEVA NT OBSERVATIONS OF ITAT IN QUANTUM PROCEEDINGS WHILE UPHOLDING THE ADDITION OF RS. 8,10,073/- ARE AS UNDER: - THE DISCREPANCIES NOTED IN THE POST SURVEY PERIOD WERE IN RESPECT OF CASH BALANCES, ALBEIT OF A SMALL AMOUNT OF ABOUT RS. 30,000/- AND NON-PRODUCTION OF GO-DOWN REGISTER OR STOCK REGISTER, AS THE CASE MAY BE. IN RESPECT OF THESE DISCREPANCIES AND OMISSION, THE AO COULD HAVE MADE ESTIMATION OF INCOME FOR THE POST SURVEY PERIOD THE LAW REQUIRES THAT THE ESTIMATE MUST BE AN HONEST ONE AN D NOT ARBITRARY. IN SUCH CIRCUMSTANCES, THE ADDITION OF RS. 32,79,636/- CANNOT BE UPHELD IN TOTO. WE ARE OF TH E VIEW THAT IN VIEW OF LACK OF IDENTIFICATION OF OPENING S TOCK AS ON 24.02.2000 BECAUSE OF NON PRODUCTION OF GO-DOWN REG ISTER, IT WOULD BE APPROPRIATE TO DISALLOW THE LOSS OF RS. 8, 10,073/- INCURRED AS PER BOOKS ON SALE THEREOF. THUS, THE A DDITION IS 3 ITA NO. 2359/DEL/2010 REDUCED FROM RS. 32,79,636/- TO RS. 8,10,073/- IN R ESPECT OF CASH DISCREPANCY AND NON PRODUCTION OF GO-DOWN REGI STER. 3. ON THE ABOVE AMOUNT OF THE ADDITION SUSTAINED BY ITAT THE IMPUGNED PENALTY HAS BEEN IMPOSED. 4. BEFORE AO AS WELL AS CIT(A) IT WAS THE CASE OF T HE ASSESSEE THAT THE ADDITION WHICH HAS BEEN UPHELD IS BASED ON THE ESTI MATE, HENCE CONCEALMENT PENALTY COULD NOT BE LEVIED. LD. CIT(A) HAS ACCEPT ED SUCH CLAIM OF THE ASSESSEE. LD. CIT(A) HAS OBSERVED THAT THE ADDITIO N HAS BEEN SUSTAINED ON THE BASIS OF ESTIMATE ONLY. THE DIFFERENCE OF OPIN ION EXISTED ON ALL THE THREE LEVELS NAMELY AT THE LEVEL OF AO, AT THE LEVEL OF C IT(A) AND AT THE LEVEL OF ITAT AND THUS, HE HAS DIRECTED TO DELETE THE PENALTY. T HE REVENUE IS AGGRIEVED, HENCE IN APPEAL. 5. LD. DR AFTER NARRATING THE FACTS RELYING ON THE PENALTY ORDER PLEADED THAT PENALTY WAS RIGHTLY LEVIED BY THE AO AND LD. CIT(A) HAS WRONGLY CANCELLED THE SAME. THE ORDER OF CIT(A) SHOULD BE SET ASIDE AND THAT OF AO BE RESTORED. 6. LD. AR HOWEVER, RELIED UPON THE ORDER OF CIT(A) AND PLEADED THAT PENALTY HAS RIGHTLY BEEN DELETED. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THE AO MADE THE ADDITIO N OF RS. 32,79,636/- BY REJECTING THE ACCOUNTS OF THE ASSESSEE FOR THE POST SURVEY PERIOD. LD. CIT(A) HAD DELETED THE ENTIRE ADDITION AND IT IS OBSERVED BY THE TRIBUNAL ALSO THAT THE 4 ITA NO. 2359/DEL/2010 COURSE ADOPTED BY THE AO WAS COMPLETELY ARBITRARY A S THE RATIO IN RESPECT OF TWO DIFFERENT SOURCE CHEMICALS ARE BOUND TO BE DIFF ERENT. IT WAS OBSERVED THAT THE LAW REQUIRES THAT THE ESTIMATE MUST BE AN HONES T ONE AND NOT ARBITRARY AND THUS, IT WAS OBSERVED THAT THE ADDITION OF RS. 32,7 9,636/- COULD NOT BE UPHELD IN TOTO. THE PARTIAL ADDITION WAS UPHELD FOR THE REAS ON THAT THERE WAS LACK OF IDENTIFICATION OF OPENING STOCK AS ON 24.2.2000 BEI NG START OF THE POST SURVEY PERIOD AND SECONDLY ON GROUND OF NON-PRODUCTION OF GO-DOWN REGISTER. THUS, THE ADDITION HAS BEEN UPHELD ONLY ON THE BASIS OF E STIMATE ON THE GROUND THAT ASSESSEE COULD NOT IDENTIFY THE OPENING STOCK AS ON 24.02.2000 AND GO-DOWN REGISTER WAS NOT PRODUCED. THE LAW IS WELL SETTLED THAT CONCEALMENT PENALTY COULD NOT BE LEVIED IN THE CASES WHERE ADDITION IS SIMPLY BASED ON ESTIMATION AND REFERENCE IN THIS REGARD CAN BE MADE TO THE DEC ISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARI GOPAL SINGH VS. CIT 258 ITR 85 (PUNJAB) AND THIS DECISION HAS ALSO BEEN RELIED UPO N BY BEFORE CIT(A). 8. IN VIEW OF ABOVE DISCUSSION, WE DECLINE TO INTER FERE IN THE ORDER OF CIT(A) VIDE WHICH THE IMPUGNED PENALTY HAS BEEN DELETED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23.07.10 (R.C. SHARMA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 23.07.10 *KAVITA 5 ITA NO. 2359/DEL/2010 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR