The DCIT, Circle-9, Surat V. M/s. Pavasia Exports, Surat

ITA 2641/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89699 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-07-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 21-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: R N VEPARI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA KR. YADAV, J.M & SHRI ANIL CHATURVEDI, A.M.) I.T. A. NO. 2641/AHD/2011 (ASSESSM ENT YEAR: 2004-05) THE DEPUTY COMMISSIONER OF INCOME-TAX, CRICLE-9, SURAT V/S M/S. PAVASIA EXPORTS 405 TO 412, SUPER DIAMOND MARKET, VARACHHA ROAD, SURAT (APPELLANT) (RESPONDENT) PAN: AADFP5297P APPELLANT BY : SHRI NARENDRA SINGH, SR. D.R . RESPONDENT BY : SHRI R.N. VEPARI, A.R. ( )/ ORDER DATE OF HEARING : 01-07-2015 DATE OF PRONOUNCEMENT : 03-07-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER. 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-V, SURAT DATED 20.06.2011 FOR A.Y. 2004-05. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF IMPORT, EXPORT AND MANUFACTURING OF DIAMONDS. ASSESSEE FILE D ITS RETURN OF INCOME FOR A.Y. 2004-05 ON 01.11.2004 DECLARING TOTAL INCO ME OF RS. 59,71,010/-. ITA NO 2641 /AHD/2011 . A.Y. 2004-0 5 2 THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER T HE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 26.12.2006 AN D THE TOTAL INCOME WAS DETERMINED AT RS. 81,43,970/- BY MAKING VARIOUS ADD ITIONS INCLUDING ADDITION ON ACCOUNT OF LOW G.P. AGGRIEVED BY THE O RDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO NOT ONLY C ONFIRMED THE ADDITIONS MADE ON THE ISSUE OF G.P BUT ALSO ENHANCED THE SAME BY ESTIMATING THE G.P AND THE TOTAL ADDITIONS WHICH WERE CONFIRMED BY LD. CIT(A) WAS OF RS. 1,37,04,301/- AS AGAINST THE ADDITION OF RS. 13,38, 261/- MADE BY A.O. ON THE ADDITIONS OF RS. 1,37,04,301/- ON ACCOUNT OF ENHANC EMENT MADE AT THE END OF LD. CIT(A), A.O VIDE ORDER DATED 30.03.2010 LEVIED PENALTY U/S. 271(1)(C) OF RS. 49,16,417/-. AGGRIEVED BY THE AFORESAID PENALT Y ORDER, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DELETED THE PENALT Y BY HOLDING AS UNDER:- 6. I HAVE CONSIDERED THE ASSESSMENT ORDER, THE APPE LLATE ORDER THE PENALTY ORDER AND THE SUBMISSIONS OF THE APPELLANT. I AM OF THE OPINI ON THAT PENALTY CANNOT BE LEVIED DUE TO THE FOLLOWING REASONS: I. THE A.O. HAS FAILED TO CONSIDER THE SUBMISSIONS OF THE APPELLANT SUBMITTED DURING THE PENALTY PROCEEDINGS. IN PARA 8 OF THE PENALTY ORDER THE A.O. SIMPLY WRITES ''THE APPROACH OF THE ASSESSEE WAS CASUAL AND IT HA D WITHOUT ANY REASON FILED INACCURATE PARTICULAR OF INCOME'. BUT HE HAS FAILED TO POINT OUT WHAT IS THE INACCURA CY HE HAS RELIED UPON. II. ON GOING THROUGH THE ASSESSMENT ORDER IT IS NOT ICED THAT THE A.O REJECTED THE BOOKS OF ACCOUNT NOT ON THE BASIS OF ANY SPECIFIC DEFECT FOU ND IN THE BOOKS OF ACCOUNT BY HIM. AFTER REJECTING THE BOOKS OF ACCOUNT, HE ESTIMATED THE G. P. AS THERE WAS A FALL IN G.P. RATIO FROM 8.26% TO 6,91% COMPARED-TO IMMEDIATE PRECEDING YEAR. IN THE FIRST APPEAL, THE CIT(A)' ENHANCED THE ADDITION ON ACCOUNT OF THE G.P . ESTIMATION COMPARING N.P. RATIO FROM OTHER CASES. THIS ENHANCEMENT WAS ALSO-MADE ON ESTIMATE BASIS. III. THE DECISIONS QUOTED BY THE APPELLANT ARE IN F AVOUR OF THE APPELLANT. IV. IT IS QUITE CLEAR THAT THE ADDITION MADE BY THE A.O. AND ENHANCED BY THE 'CIT(A) IS ON ESTIMATE BASIS ONLY. THE A.O. HAS NOT BROUGHT OUT A NY FACT/EVIDENCE ON THE RECORD WHICH ITA NO 2641 /AHD/2011 . A.Y. 2004-0 5 3 CAN EVEN INDICATE THAT THE ASSESSEE HAS EITHER CONC EALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. IN MY VIEW, PENALTY CANNOT BE LEVIED ON AN ADDITION MADE ON ESTIMATE BASIS, HOWSOEVER, THE ESTIMATION MAY BE SCIENTIFIC OR LOGICAL. ACCORDINGLY, THE PENALTY LEVIED IS HEREBY DELETED A ND THE GROUND OF APPEAL IS ALLOWED. 4. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED BY THE A.O. OF RS.489,16,417/- WITHOUT APPRECIATING THE ACTION OF THE A.O. AND CONSIDERING THE ORDER OF LD.CIT(A) IN QUANTUM APPEAL. THE LD, CIT(A) HAS ENHANCED THE NP RATIO FOR 1% TO 4.5% . 5. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND SUPPORTED THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY O F PENALTY U/S. 271(1)(C) ON THE ADDITION TO INCOME WHICH WAS ON ACCOUNT OF ENHA NCEMENT OF PROFIT MADE BY LD. CIT(A) IN QUANTUM PROCEEDINGS. LD. CIT(A) WH ILE DELETING THE PENALTY U/S. 271(1)(C) HAS NOTED THAT THE ADDITION MADE BY LD. CIT(A) IN QUANTUM APPEAL ON ACCOUNT OF ENHANCEMENT OF PROFIT WAS ON ESTIMATE BASIS AND A.O HAD NOT BROUGHT ANY EVIDENCE ON RECORD WHIC H COULD INDICATE THAT ASSESSEE HAS EITHER CONCEALED ITS INCOME OR FURNISH ED INACCURATE PARTICULARS OF INCOME. BEFORE US, REVENUE HAS NOT BROUGHT ANY M ATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A) NOR POINTED O UT ANY CONTRARY BINDING DECISION IN SUPPORT. IN VIEW OF THE AFORESAID FACTS , WE FIND NO REASON TO ITA NO 2641 /AHD/2011 . A.Y. 2004-0 5 4 INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 03 - 07 - 2015. SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD