SH. LAKHWINDER SINGH , PaTHANKOT V. A.C.I.T, CIRCLE - VI, PATHANKOT

ITA 249/ASR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5741 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-02-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 05-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S NEGI
• Assessee Lawyers: P N ARORA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER ITA NO.249/ASR/2017 ASSESSMENT YEAR : 2007-08 SHRI LAKHWINDER SINGH, C/O ANIL VASUDEVA & CO., OPP. S.P. OFFICE, NEAR DHANGU CHOWK, PATHANKOT. PAN: ACLPS4296F VS. ACIT, CIRCLE-VI, PATHANKOT. (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI P.N. ARORA, ADVOCATE DEPARTMENT BY : SHRI S.S. NEGI DATE OF HEARING : 21.02.2018 DATE OF PRONOUNCEMENT : 22.02.2018 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 03.02.2017 CONFIRMING THE PENALTY OF RS.13,49,175/- ITA NO.249/ASR/2017 2 IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF T HE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATIO N TO THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE TH AT THE ASSESSEE IS A CIVIL CONTRACTOR. GROSS RECEIPTS OF RS.5.93 CRORE WERE S HOWN ALONG WITH CERTAIN OTHER INCOMES. THE ASSESSING OFFICER OBSER VED THAT THE NET PROFIT SHOWN AT RS.31,64,888/-, BEING AT 5.13% OF THE CONTRACT RECEIPTS, WAS ON A LOWER SIDE. ON BEING CALLED UPON TO SUBSTA NTIATE SUCH A LOWER PROFIT RATE, THE ASSESSEE STATED THAT THE BOOKS OF ACCOUNT WERE LOST. THIS DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER DESP ITE FILING A COPY OF THE FIR. INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT, THE ASSESSING OFFICER REJECTED THE BOOK RESULTS AND EST IMATED THE NET PROFIT AT 8% OF CONTRACT RECEIPTS. THE LD. CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER. WHEN THE MATTER CAME UP FOR CON SIDERATION BEFORE THE TRIBUNAL, IT REDUCED THE PROFIT RATE TO 6.51% A ND DIRECTED THE ASSESSING OFFICER TO APPLY THE SAME FOR ESTIMATION OF INCOME. THE ASSESSING OFFICER IMPOSED PENALTY U/S 271(1)(C) OF THE ACT WITH ITA NO.249/ASR/2017 3 REFERENCE TO THE RESULTANT ADDITION, WHICH CAME TO BE ECHOED IN THE FIRST APPEAL. THE ASSESEE IS AGGRIEVED AGAINST SUCH CONFI RMATION OF PENALTY. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE R ELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ONLY BASIS FOR IMP OSITION OF PENALTY IS AN ADDITION MADE BY THE ASSESSING OFFICER ON ESTIMATIN G A PARTICULAR PROFIT RATE ON THE CONTRACT RECEIPTS. SUCH ESTIMATE HAS B EEN EVENTUALLY REDUCED BY THE TRIBUNAL TO 6.51% FROM THAT MADE BY THE ASSE SSING OFFICER AT 8%. THUS, IT IS EVIDENT THAT THE BEDROCK FOR THE I MPOSITION OF PENALTY IN THE EXTANT CASE IS ONLY AN ESTIMATION OF INCOME. SU CH TYPE OF ADDITIONS BASED ON MERE ESTIMATE BASIS , IN OUR CONSIDERED OP INION, DO NOT PROVIDE A VALID AND LEGAL FOUNDATION FOR IMPOSITION OF PENA LTY U/S 271(1)(C) OF THE ACT. THE HONBLE PUNJAB & HARYANA HIGH COURT I N HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P&H) AND CIT VS. DHILLON RICE MILLS (2002) 256 ITR 447 (P&H) HAS DELETED PENALTY U/S 271(1)(C) OF THE ACT IMPOSED ON THE BASIS OF ADDITIONS MADE ON ESTIMATES . SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE DELHI HIGH COURT IN CIT VS. AERO TRADERS ITA NO.249/ASR/2017 4 PVT. LTD. (2010) 322 ITR 316 (DEL) AND THE HONBLE GUJARAT HIGH COURT IN CIT VS. SUBHASH TRADING COMPANY, 221 ITR 110 (GU J) . 4. AS THE INSTANT PENALTY IS SIMPLY BASED ON TH E ESTIMATE MADE BY THE AO, WHICH HAS BEEN PARTLY REDUCED, WE ARE SATISFIED THAT NO PENALTY CAN BE LEVIED UNDER THESE CIRCUMSTANCES. ERGO, WE OVERT URN THE IMPUGNED ORDER AND DIRECT THE DELETION OF PENALTY. 5. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 22.02.201 8. SD/- SD/- [N.K. CHOUDHRY] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 22 ND FEBRUARY, 2018. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, AMRITSAR.