Assistant Commissioner Of Income Tax, Circle- 7(2)(1), Bangalore V. M/s. Prathibha Jewellery House, Bangalore

ITA 2398/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0027 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 21-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVASAN
• Assessee Lawyers: MANJEET SINGH
• Section: 271(1)(c); 143(3); 153A; 132

Judgement Text

ITA NOS.2397 TO 2403/BANG/2019 M/S. PRATIBHA JEWLLERY HOUSE, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL ABENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2397 TO 2403/BANG/2019 ASSESSMENT YEARS: 2005-06 TO 2011-12 ACIT CIRCLE-7(2)(1) BANGALORE PAN NO :AABFP1771G VS. M/S. PRATHIBHA JEWLLERY HOUSE 1/1, RAJA RAM MOHAN ROY ROAD RICHMOND CIRCLE BANGALORE-560 025 APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, A.R. RESPONDENT BY : SHRI MANJEET SINGH, D.R. DATE OF HEARING : 25.06.2020 DATE OF PRONOUNCEMENT : 26.06.2020 O R D E R PER BENCH: ALL THE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST COMMON ORDER DATED 27.9.2019 PASSED BY LD. CIT(A)-7, BANGALORE AND THEY RELATE TO THE ASSESSME NT YEARS 2005-06 TO 2011-12. THE REVENUE IS AGGRIEVED WITH THE DECISION OF LD. CIT(A) IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. ITA NOS.2397 TO 2403/BANG/2019 M/S. PRATIBHA JEWLLERY HOUSE, BANGALORE PAGE 2 OF 7 2. WE HEARD THE PARTIES AND PERUSED THE RECORDS. T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEALING IN J EWELLERY AND BULLION. A SEARCH U/S 132 OF THE ACT WAS CONDU CTED IN THE HANDS OF THE ASSESSEE ON 2.9.2010. CONSEQUE NT THERETO, THE ASSESSMENTS FOR THE YEARS UNDER CONSIDERATION WERE COMPLETED BY THE A.O. U/S 143(3) R.W.S. 153A OF THE ACT MAKING ADDITIONS ON THE FOLL OWING HEADS: A) ADDITION ON ACCOUNT OF REVALUATION OF CLOSING STOCK . B) ADDITION OF GROSS PROFITS MADE OUTSIDE THE BOOKS. C) EXCESS STOCK FOUND AT THE TIME OF SEARCH. THE ADDITIONS MENTIONED IN (A) & (B) WERE MADE IN A LL THE 7 YEARS AND THE ADDITION MENTIONED IN (C) WAS MADE IN ASSESSMENT YEAR 2011-12 ONLY. SUBSEQUENT TO PASSIN G OF ASSESSMENT ORDER, THE A.O. LEVIED A PENALTY U/S 271 (1)(C) OF THE ACT AS MENTIONED BELOW. ASST. YEAR TOTAL ADDITION MADE FOR THE YEAR PENALTY U/S 271(1)(C) 2005-06 3,07,29,716 1,12,54,773 2006-07 2,87,19,395 96,66,947 2007-08 4,59,83,515 1,54,78,043 2008-09 2,67,00,192 89,84,790 2009-10 4,67,41,925 1,60,99,318 ITA NOS.2397 TO 2403/BANG/2019 M/S. PRATIBHA JEWLLERY HOUSE, BANGALORE PAGE 3 OF 7 2010-11 5,28,24,006 1,63,22,619 2011-12 9,80,82,782 3,03,07,580 TOTAL 32,97,81,531 10,81,14,070 3. THE ASSESSEE CHALLENGED THE PENALTY LEVIED BY TH E A.O. BY FILING APPEALS BEFORE LD. CIT(A). IN THE M EANTIME, THE QUANTUM APPEALS PERTAINING TO ALL THE 7 YEARS C AME TO BE DECIDED BY THE COORDINATE BENCH OF ITAT, WHICH DELETED ALL THE ADDITIONS, VIDE ITS ORDER PASSED ON 17.8.2008 IN ITA NOS.2534 TO 2539/BANG/2017 FOR ASSESSMENT YEARS 2005-06 TO 2010-11 AND ALSO BY THE ORDER PASSED ON 21.8.2018 IN ITA NO.585/BANG/2014 F OR ASSESSMENT YEAR 2011-12. ACCORDINGLY, THE ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT THE ADDITIONS ON W HICH THE IMPUGNED PENALTY WAS LEVIED BY THE A.O. HAS SIN CE BEEN DELETED BY THE ITAT AND HENCE THE IMPUGNED PEN ALTY LEVIED IN ALL THE 7 YEARS ARE LIABLE TO BE DELETED. 4. CONVINCED WITH THE SUBMISSIONS MADE BY THE ASSESSEE, THE LD. CIT(A) DELETED THE PENALTIES LEVI ED IN ALL THE 7 YEARS WITH THE FOLLOWING OBSERVATIONS: ITA NOS.2397 TO 2403/BANG/2019 M/S. PRATIBHA JEWLLERY HOUSE, BANGALORE PAGE 4 OF 7 4.2 THE APPELLANT HAS FILED GROUNDS OF APPEAL CHALLENGING THE PENALTY ORDERS BOTH ON TECHNICAL GR OUND AND ON MERIT. THE APPELLANT HAS FILED DETAILED SUBMISSION IN SUPPORT OF ITS GROUNDS OF APPEAL. TH E APPELLANT ALSO SUBMITTED THAT SINCE THE HONBLE ITA T HAS DELETED ALL THE QUANTUM ADDITIONS FOR ALL THESE YEARS ON THE BASIS OF WHICH PENALTY U/S 271(1)(C) W ERE IMPOSED, THE PENALTY ORDERS ARE NOT SUSTAINED AT TH IS STAGE. THE APPELLANT HAS SUBMITTED ON THIS POINT A S UNDER: 6.1 IT IS SUBMITTED THAT THE ADDITIONS MADE BY THE LEARNED A.O. IN THE ASSESSMENT PROCEEDINGS HAVE SINCE BEEN DELETED BY THE HONBLE ITAT IN THE APPELLATE ORDERS PASSED IN ITA NO.2534 TO 2539/BANG/2017 DATED 17.8.2018 (ANNEXURE-6), FOR THE ASSESSMENT YEARS 2005-06 TO 2010-11 & BY THE ORDER IN ITA NO.585/BANG/2014 DATED 21.8.2018 (ANNEXURE- 7), FOR THE A.Y. 2011-12. THUS, AS A RESULT OF THESE APPELLATE ORDERS THERE ARE NO ADDITIONS OR VARIATIONS TO THE INCOME RETURNED BY THE APPELLANT IN THESE PROCEEDINGS. 6.2 IN AS MUCH AS THE ADDITIONS MADE IN THE ASSESSMENT BASED ON WHICH PENALTY HAVE BEEN IMPOSED ARE THEMSELVES DELETED IN APPEAL, NO PENALTY U/S 271(1)(C) OF THE ACT, CAN EITHER BE IMPOSED OR SUSTAINED AT THIS STAGE AND THE SAME DESERVE TO BE CANCELLED. IT IS PRAYED ACCORDINGLY. 4.3 THE SUBMISSIONS OF THE APPELLANT HAVE BEEN CONSIDERED. IT IS FOUND THAT THE QUANTUM ADDITIONS FOR ALL THESE YEARS ON THE BASIS OF WHICH PENALTY U/S 271(1)(C) WERE IMPOSED BY THE A.O. HAVE BEEN DELETE D VIDE ORDER OF ITAT, BANGALORE. UNDER THESE FACTS A ND CIRCUMSTANCES, THE CONTENTION OF THE APPELLANT THAT THE PENALTY ORDERS U/S 271(1)(C) DO NOT SURVIVE, DO HAV E MERIT. IN THE CASE OF BABUL HARIVADAN PARIKH 37 TAXMANN.COM 52 THE HONBLE GUJARAT HC HAS HELD THAT WHEN QUANTUM ADDITIONS ARE DELETED BY THE ITAT, THE PENALTY WILL NOT SURVIVE. THE HONBLE PUNJAB AND HARYANA HC IN THE CASE SMT. BHARTO DEVI 11 TAXMANN.COM 259 HAS HELD THAT SINCE IN QUANTUM PROCEEDINGS ISSUE HAD BECOME FINAL IN FAVOUR OF ASSESSEE, APPEAL AGAINST IMPOSITION OF PENALTY WAS TO BE DISMISSED. ITA NOS.2397 TO 2403/BANG/2019 M/S. PRATIBHA JEWLLERY HOUSE, BANGALORE PAGE 5 OF 7 4.4. IN VIEW OF ABOVE, IT IS HELD THAT THE PENALTY ORDERS PASSED BY THE A.O. FOR ALL THESE YEARS IMPOSING PEN ALTY U/S 271(1)(C) CANNOT BE SUSTAINED SINCE THE QUANTUM ADDITIONS FOR WHICH THESE PENALTY U/S 271(1)(C) HAV E BEEN IMPOSED, ARE ALREADY DELETED BY THE ORDER OF JURISDICTIONAL ITAT. SINCE, PENALTIES ARE HELD TO BE NON SUSTAINABLE ON ABOVE ACCOUNT, OTHER CONTENTIONS RAI SED BY THE APPELLANT IN GROUNDS OF APPEAL ARE NOT ADJUDICATED. 5. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD. CIT(A). THE LD. D.R. SUBMITTED THAT THE REVENUE HA S CHALLENGED THE DECISIONS RENDERED BY ITAT BY FILING APPEALS BEFORE HONBLE HIGH COURT OF KARNATAKA. ACCORDINGLY HE SUBMITTED THAT THE ISSUES HAVE NOT ATTAINED FINALITY AND HENCE THE LD CIT(A) SHOULD NO T HAVE DELETED THE PENALTIES. 6. ON THE CONTRARY, THE LD. A.R. SUBMITTED THAT THE IMPUGNED PENALTIES ARE LIABLE TO BE DELETED SINCE T HE ADDITIONS MADE IN THE ASSESSMENT ORDER IN ALL THE S EVEN YEARS HAVE SINCE BEEN DELETED BY THE ITAT. HENCE T HE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTIES LEVI ED U/S 271(1)(C) OF THE ACT IN ALL THE SEVEN YEARS. ACCOR DINGLY, HE ITA NOS.2397 TO 2403/BANG/2019 M/S. PRATIBHA JEWLLERY HOUSE, BANGALORE PAGE 6 OF 7 SUBMITTED THAT THE DECISION RENDERED BY LD. CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. 7. WE HAVE NOTICED THAT THE LD. CIT(A) HAS DELETED THE PENALTIES ON THE REASONING THAT THE ADDITIONS, ON W HICH THE PENALTIES WERE LEVIED, HAVE SINCE BEEN DELETED BY THE ITAT. WE NOTICE THAT THE LD. CIT(A) HAS PLACED REL IANCE ON THE DECISION RENDERED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF BABUL HARIVADAN PARIKH (SUPRA) AND BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. BHARTO DEVI (SUPRA) IN SUPPORT OF HIS DECISION. TH OUGH THE LD D.R CONTENDED THAT THE LD CIT(A) SHOULD NOT HAVE DELETED THE PENALTY, YET HE COULD NOT FURNISH ANY D ECISIONS CONTRARY TO THE DECISIONS RELIED UPON BY LD CIT(A). HENCE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION RENDER ED BY LD. CIT(A) IN DELETING THE PENALTY LEVIED U/S 271(1 )(C) OF THE ACT IN ALL THE YEARS UNDER CONSIDERATION. ITA NOS.2397 TO 2403/BANG/2019 M/S. PRATIBHA JEWLLERY HOUSE, BANGALORE PAGE 7 OF 7 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.06.2 020. SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 26 TH JUNE, 2020. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.