Krishna Terine Prints Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(3), Surat

ITA 2521/AHD/2009

• Counselvise Citation: 252120514 RSA 2009
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 31-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Assessee Lawyers: MEHUL K PATEL
• Keywords: Gross profit estimation

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI D.K.TYAGI, JM AND A. MOHAN ALANKAMON Y, AM. ITA NO.2521/AHD/2009 ASST. YEAR:2005-06 KRISHNA TERINE PRINT (P) LTD., BLOCK NO.213, NEAR PRIYA DYEING AND PRINTING MILLS, KADODARA, TAL. PALSANA, DIST. SURAT. VS. INCOME-TAX OFFICER, WARD -1(3), SURAT. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI MEHUL K. PATEL, AR RESPONDENT BY:- SHRI ROBIN RAWAL, SR.DR DATE OF HEARING :27/12/2011 DATE OF PRONOUNCEMENT : 27.12.2011. O R D E R PER D. K. TYAGI, JUDICIAL MEMBER . THIS IS AN APPEAL FILE BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) DATED 30.06.2009 FOR ASST. YEAR 2005-06. THE ASSESSEE HAS RAISED FOLLOWING GROUND IN THIS APPEAL :- (1) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRM ING PENALTY LEVIED U/S 271(1)(C) BY AO ON THE ADDITION OF RS.16 ,76,672/- MADE BY ESTIMATING HIGHER GP MARGIN AT 22% AS AGAIN ST ACTUAL GP MARGIN OF 20.83% AND IN DISMISSING THE APPEAL. ITA NO.2521/AHD/2009 ASST. YEAR 2005-06 2 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF PROCESSING OF CLOTH ON JOB WORK BASIS. THE RETURN WAS FILED AT NIL INCOME BUT THE ASSESSMENT WAS COMPLETED BY MAKI NG AN ADDITION OF RS.16,76,672/- ON ACCOUNT OF LOW GP. PENALTY PROCEE DINGS WERE INITIATED U/S 271(1)(C) IN THE ASSESSMENT ORDER FOR FURNISHIN G INACCURATE PARTICULARS OF INCOME. THE ADDITION WAS CONFIRMED BY THE CIT(A) . THE AO HAS STATED THAT THE GP ADDITION WAS MADE BY THE FOLLOWING DISC REPANCIES AND IRREGULARITIES IN THE BOOKS OF ACCOUNT: (I) THE GP RATE HAD FALLEN BY 3.30% FROM 25.13% IN THE LAST YEAR TO 20.83% IN THE CURRENT YEAR, EVEN THOUGH THE TURNOVE R HAD INCREASED FROM RS.12.61 CRORES IN THE LAST YEAR TO RS.14.38 C RORES DURING THE CURRENT YEAR. (II) THERE WAS A MUCH VARIATION IN PER METER CONSUM PTION OF POWER- FUEL AND LABOUR FROM MONTH TO MONTH. (II) THE ASSESSEE WAS FOUND TO BE NOT MAINTAINING A NY QUANTITATIVE RECORDS OF DAY-TO-DAY CONSUMPTION OF RAW MATERIALS. (IV) THE ASSESSEE HAD CLOSING STOCK OF WORK-IN-PROG RESS OF 37491 METERS VALUED BY THE AO AT RS.3,77,846/-. IN VIEW OF THE ABOVE REASONS, THE AO ISSUED A SHOW- CAUSE NOTICE TO THE ASSESSEE AS TO WHY PENALTY U/S 271(1)(C) BE NOT LEV IED. THE ASSESSEE STATED THAT NO PENALTY SHOULD BE LEVIED BECAUSE - (I) THE ASSESSEE HAD GIVEN REASONS FOR FALL IN GP MARGI N. THERE IS NOTHING ON RECORD TO PROVE THAT THE A HAS BROUGHT A NY MATERIAL TO SHOW THAT THERE IS FURNISHING OF INACCURATE PART ICULARS. (II) THE ASSESSEE STATED THAT NO PENALTY SHOULD BE LEVIE D WHERE TURNOVER IN THE BOOKS OF ACCOUNT IS ACCEPTED BUT GP ADDITION IS ITA NO.2521/AHD/2009 ASST. YEAR 2005-06 3 MADE IN VIEW OF THE DECISION OF THE HONBLE ALLAHAB AD HIGH COURT IN THE CASE OF NADIR ALI & CO. 106 ITR 151 AN D SHIV LAL TAK 251 ITR 373. THE AO DID NOT ACCEPT THIS ARGUMEN T IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSOR & OTHERS 306 ITR 277 W HEREIN THE HONBLE HIGH COURT HELD THAT THE PENALTY IS A C IVIL LIABILITY. (III) THE ASSESSEE STATED THAT IT HAS NEITHER CONCEALED A NY INCOME NOR INACCURATE PARTICULARS OF INCOME BUT THE ADDITION I S ACTUALLY MADE ON ESTIMATE BASIS FOR WHICH NO PENALTY CAN BE MADE. THE AO DID NOT ACCEPT THE ABOVE EXPLANATION AND STA TED THAT THE ADDITION HAS BEEN CONFIRMED BY THE CIT(A) AND THIS SHOWS THA T THE ASSESSEE HAS SUPPRESSED ITS GP WHICH CLEARLY AMOUNTS TO DELIBERA TE FURNISHING OF INACCURATE PARTICULARS. THE AO, THEREFORE, RELIED O N THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEX TILE PROCESSORS & OTHERS (SUPRA) AND LEVIED THE MINIMUM PENALTY. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE FIRST APP ELLATE AUTHORITY WHEREIN THE ASSESSEE HAD GIVEN SAME ARGUMENT AS GIV EN BEFORE THE AO AND STATED THAT IT HAD GIVEN A BONA FIDE EXPLANATIO N WHICH HAD NOT BEEN FOUND TO BE WRONG AND THEREFORE, AS PER EXPLANATION (1) THE ASSESSEE IS NOT DEEMED TO HAVE CONCEALED THE INCOME OR FURNISHING I NACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAD ARGUED THAT IN A RECENT CASE OF HONBLE SUPREME COURT IN THE CASE OF RAJASTHAN SPINNING & W EAVING MILLS 224 CTR 1, THE HONBLE SUPREME COURT HAS CLARIFIED THAT ITS DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (SUPRA) DOES NOT MEAN THAT IN ALL THE CASES OF ADDITIONS PENALTY WOULD BE AUTOMATICAL LY LEVIED. THE ITA NO.2521/AHD/2009 ASST. YEAR 2005-06 4 ASSESSEE ARGUED THAT THE HONBLE ITAT, MUMBAI IN TH E CASE OF VIP INDUSTRIES LTD., ITA NO.4524 & 4383/MUM/06 FOR ASST . YEAR 2000-01, VIDE ITS ORDER DATED 20.03.2009, HAS CLARIFIED THAT EVEN AFTER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DHARMEN DRA TEXTILE PROCESSORS (SUPRA), PENALTY CAN ONLY BE LEVIED IF I T IS A CASE OF CONCEALMENT OR FURNISHING INACCURATE PARTICULARS. T HE ASSESSEE HAD ARGUED THAT SINCE THE AO MADE THE ADDITION ON ESTIMATE BAS IS WHICH IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCES, NO PENALTY COULD BE LEVIED. 4. THE LD. CIT(A) AFTER CONSIDERING THE CONTENTION OF AO AND THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ACTION OF THE AO. AGAINST THIS ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT THE LD. CT(A) IS NOT JUSTIFIED IN UPHOLDING THE ACTION OF A O IN LEVYING PENALTY, BECAUSE THE PENALTY HAS BEEN LEVIED ON THE ADDITION MADE ON ESTIMATE BASIS. HOWEVER, HE SUBMITTED THAT THE QUANTUM ADDIT ION HAS BEEN RESTORED BACK TO THE FILE OF LD. CIT(A) FOR FRESH DECISION B Y THE TRIBUNAL VIDE ITS ORDER DATED 10 TH JANUARY, 2011 IN ITA NO.1076/AHD/2008 FOR ASST. YE AR 2005-06. THEREFORE, HE REQUESTED THAT THIS ISSUE AL SO MAY KINDLY BE ITA NO.2521/AHD/2009 ASST. YEAR 2005-06 5 RESTORED BACK TO THE FILE OF LD. CT(A) FOR FRESH DE CISION IN VIEW OF HIS DECISION IN THE QUANTUM APPEAL. 6. THE LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORI TIES. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOIN G THROUGH THE MATERIAL ON RECORD, WE FIND THAT VIDE ORDER DATED 1 0 TH JANUARY, 2011 IN ITA NO.1076/AHD/2008 FOR ASST. YEAR 2005-06, THE TR IBUNAL HAS SET ASIDE THE ORDER OF LD. CIT(A), CONFIRMING THE ADDIT ION OF RS.16,76,672/- MADE BY AO BY ESTIMATING THE GP AND RESTORED THE MA TTER BACK TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT IT WILL BE JUST AND PROPER TO SEND BACK T HE ISSUE OF PENALTY ALSO TO THE FILE OF LD. CIT(A) FOR DECIDING THE ISSUE AF RESH IN VIEW OF HIS DECISION IN THE QUANTUM PROCEEDINGS. THE GROUND RAI SED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 27.12.2011. SD/- SD/- (A. MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD, MAHATA/- ITA NO.2521/AHD/2009 ASST. YEAR 2005-06 6 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 27/12/2011. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 28/12/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..