INMA ENTERPRISES, MUMBAI V. ITO WD 23(1)(2), MUMBAI

ITA 2559/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1395 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 25-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 2559/MUM/2018 FOR ASSESSMENT YEARS: 2006-20 07 INMA ENTERPRISES 202-A, DHEERAJ ARCADE, PALI NAKA, BANDRA (W), MUMBAI-400050. PAN : AAAFI0365A VS ITO- 23(1)(2), MATRU MANDIR, TARDEO, MUMBAI-400007. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI CHAUDHARY ARUNKUMAR SINGH (DR) DATE OF HEARING : 26/08/2019 DATE OF PRONOUNCEMENT : 30/08/2019 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-32, [CIT(A)], MUMBAI DATED 22. 12.2017, WHICH IN TURN ARISES FROM THE PENALTY ORDER LEVIED UNDER SEC TION 271(1)(C) OF THE ACT DATED 25.03.2015 OF RS. 4,20,000/- FOR ASSESSMENT Y EAR 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING OF LEATHER GOODS, FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 9,40,010/-. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DECLARED NET PROFIT (NP) OF RS. 9.0 LAKHS FROM TURN OVER OF RS. 6.21 CRORE. THE GROSS PROFIT (GP) IS DECLARED AT RS. 66.40 LAKH S AND PURCHASE IS SHOWN ITA NO. 2559 MUM 2018-INMA ENTERPRISES. 2 AT RS. 3.78 CRORE. FROM THE FINANCIAL RESULT, THE A SSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE HAS SHOWN EXTREME LOW PROFIT I.E. ONLY 2.57% OF TOTAL TURNOVER, THE GP SHOWN BY ASSESSEE IS ALSO AT 10.68 %. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT BY TAKING VIE W THAT GP AND THE NP DECLARED BY THE ASSESSEE IS FROM LOW COMPARISON WIT H RESULT DECLARED BY OTHER ENTITIES INVOLVED IN IDENTICAL BUSINESS ON TR ADING AND EXPORT OF LEATHER GOODS. OTHER ENTITIES SHOWN GP AT 14.97% AND NP AT 5.03% FOR SAME ASSESSMENT YEAR, THEREBY THE NP OF ASSESSEE WAS DET ERMINED AT RS. 37,27,764/- AND INCOME WAS ASSESSED AT RS. 21,84,15 8/-. ON APPEAL BEFORE THE LD. CIT(A) IN QUANTUM ASSESSMENT, NO RELIEF WAS GRANTED TO ASSESSEE. AFTER RECEIPT OF ORDER FROM FIRST APPELLATE AUTHORI TY (FAA). THE ASSESSING OFFICER ISSUED SHOW-CAUSE NOTICE FOR LEVY OF PENALT Y UNDER SECTION 271(1)(C). THE ASSESSEE FILED ITS REPLY, WHEREIN TH E ASSESSEE STATED THAT THEY HAVE ALREADY FILED APPEAL BEFORE THE TRIBUNAL AND P ENALTY MAY BE KEPT IN ABEYANCE. THE ASSESSING OFFICER NOT ACCEPTED THE CO NTENTION OF ASSESSEE AND LEVIED THE PENALTY OF RS. 4,20,000/- IN ITS ORD ER DATED 25.03.2013. ON FURTHER APPEAL BEFORE THE FAA, THE ASSESSEE RAISED SPECIFIC GROUND OF APPEAL THAT IN QUANTUM APPEAL THE ENTIRE ADDITION HAS BEEN DELETED BY TRIBUNAL IN ORDER DATED 04.04.2014. HOWEVER, THE LD. CIT(A) CON FIRMED THE ORDER OF PENALTY BY TAKING VIEW THAT ASSESSEE HAS NOT ATTEND ED THE APPELLATE PROCEEDING BEFORE HIM. FURTHER, AGGRIEVED BY THE OR DER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TR IBUNAL. ITA NO. 2559 MUM 2018-INMA ENTERPRISES. 3 3. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE SENDING REPEATED NOTICE OF HEARING THROUGH RPAD FOR MORE THAN ONE OCCASION. TH EREFORE, WE LEFT NO OPTION EXCEPT TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DR FOR THE REVENUE . THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF LOWER AUTHORITIES. T HE LD. DR SUBMITS THAT ASSESSEES BOOKS OF ACCOUNT WERE REJECTED AND THE I NCOME OF ASSESSEE WAS REASONABLY ESTIMATED BY ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPU TE THAT AO WHILE PASSING THE ASSESSMENT ORDER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ESTIMATED INCOME ON THE BASIS OF INCOME SHOWN BY SI MILAR ENTITIES ENGAGED IN THE BUSINESS OF TRADING AND EXPORT OF LEATHER GO ODS. WE HAVE FURTHER NOTED THAT BEFORE THE LD. CIT(A), THE ASSESSEE HAS SPECIFICALLY BROUGHT THE FACT ON RECORD THAT THE ENTIRE ADDITION HAS BEEN DE LETED BY TRIBUNAL IN QUANTUM ASSESSMENT APPEAL VIDE ORDER DATED 04.04.20 14. THE LD CIT(A) DESPITE BRINGING THIS FACT ON RECORD THAT THE ADDIT IONS IN THE QUANTUM ASSESSMENT HAS BEEN DELETED, THE LD CIT(A) INSTEAD OF VERIFYING THE FACT CONFIRMED THE PENALTY. IN OUR VIEW, ONCE THE ADDITI ON IN THE QUANTUM ASSESSMENT IS DELETED, THE PENALTY ORDER HAS NO LEG TO STAND. 5. EVEN OTHERWISE THE ADDITION IN THE QUANTUM ASSESSME NT WAS BASED ON ESTIMATION. IT IS SETTLED LAW THAT NO PENALTY UNDER SECTION 271(1)(C) IS ITA NO. 2559 MUM 2018-INMA ENTERPRISES. 4 LEVIABLE ON ESTIMATED ADDITION, HENCE, WE DIRECT TH E AO TO DELETE THE ENTIRE PENALTY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT O N THIS 30/08/2019. SD/- SD/- (R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMB ER MUMBAI, DATE: 30.08.2019 SK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT BY ORDER ASSISTANT REGISTRAR IT AT MUMBAI