M/s Ekta Dairy Pvt. Ltd., Kanpur V. Astt. Commissioner of Income Tax-VI, Kanpur

ITA 265/LKW/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1119 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-02-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Depreciation
• Section: 143(3)

Judgement Text

I.T.A. NO.265/LKW/2015 ASSESSMENT YEAR:2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.265/LKW/2015 ASSESSMENT YEAR:2009-10 M/S EKTA DAIRY PVT. LTD., FLAT NO. 2, LAKSHIYA APARTMENT, W-2, JUHI, KANPUR. PAN:AABCE 8164 B VS. A.C.I.T.-VI, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 15/01/2015. THE ASSESSEE IS AGGRIEVED WITH T HE ACTION OF THE CIT(A) BY WHICH HE HAS CONFIRMED A PENALTY OF RS.5,85,000/ - WHICH WAS IMPOSED BY ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. 2. AT THE OUTSET, LEARNED A. R. SUBMITTED THAT PENA LTY WAS SUSTAINED BY LEARNED CIT(A) WHICH THE ASSESSING OFFICER HAD MADE ON ACCOUNT OF TWO ADDITIONS; ONE RELATING TO DISALLOWANCE OF DEPRECIA TION CLAIMED ON ADDITION MADE TO FIXED ASSETS AND OTHER ON ACCOUNT OF ESTIMA TION OF PROFITS OF THE ASSESSEE AFTER REJECTION OF BOOKS OF ACCOUNT. AS REGARDS THE PENALTY ON ESTIMATED PROFITS, LEARNED A. R. SUBMITTED THAT HON 'BLE ALLAHABAD HIGH COURT IN THE CASE OF NARESH CHAND AGARWAL VS. CIT [ 2013] 357 ITR 514 (ALL) HAS HELD THAT WHERE THE PROFITS ARE ESTIMATED AFTER REJECTION OF BOOKS OF APPELLANT BY SHRI P. K. KAPOOR, C. A. RESPONDENT BY S MT JYOTI VERMA, D.R. DATE OF HEARING 13/02/2018 DATE OF PRONOUNCEMENT 22 / 02 /201 8 I.T.A. NO.265/LKW/2015 ASSESSMENT YEAR:2009-10 2 ACCOUNT, PENALTY U/S 271(1)(C) CANNOT BE IMPOSED. AS REGARDS REJECTION OF CLAIM OF DEPRECIATION, LEARNED A. R. SUBMITTED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION AND HAD PROVIDED FULL PARTICUL ARS OF ITS CLAIM AND FROM THE CLAIM ITSELF THE ASSESSING OFFICER HAD REJECTED THE CLAIM OF DEPRECIATION. IT WAS SUBMITTED THAT HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PRIVATE LIMITED HAS HELD THAT MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION OF INTEREST EXPENDITURE WHICH HAS NOT BEEN ACCEPTED BY THE REVENUE, PENALTY U/S 271(1)(C) IS NOT IMPOSABLE . 3. LEARNED D. R., ON THE OTHER HAND, HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT AS REGARDS THE CLA IM OF THE ASSESSEE THAT INCOME OF THE ASSESSEE WAS ESTIMATED AFTER REJECTIO N OF BOOKS OF ACCOUNT, WE FIND THAT TRIBUNAL VIDE ITS ORDER DATED 05/06/20 15 HAS NOTED THIS FACT AND AFTER NOTING DOWN THE FACTS REGARDING REJECTION OF BOOKS OF ACCOUNT, HAS REDUCED THE GROSS PROFIT RATE APPLIED BY ASSESSING OFFICER AND THEREFORE, THIS IS UNDISPUTED FACT THAT THE PROFITS OF THE ASSESSEE WERE ESTIMATED AFTER REJECTION OF BOOKS OF ACCOUNT. UNDER THESE CIRCUMS TANCES, HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF NARESH CHAND AG ARWAL (SUPRA) HAS HELD AS UNDER: PENALTY PROCEEDINGSBOOKS REJECTEDPROFIT ESTIMATE DNO EVIDENCE OF CONCEALMENT PENALTY INITIATEDLEVIABILITYORIGINAL RETURN WAS FILED DECLARING INCOMEAFTER NOTICE, ASSESSMENT WAS COMPL ETED U/S 143(3) ON ENHANCED INCOME BY REJECTING BOOKS OF ACCOUNTS U /S 145CIT (A) PARTIALLY ALLOWED ASSESSEE'S APPEALTRIBUNAL REMAND ED BACK MATTER AO PASSED AN ORDER WHERE INTEREST ON FDRS WAS SHOWE D SEPARATELY AS INCOME FROM OTHER SOURCE & FURTHER ADDITION WAS MAD E BY COMPUTING NET PROFIT RATE AT SPERCENT U/S 44ADPENALTY WAS LEVIED BY AOHELD, IN INSTANT CASE, NOTHING WAS CONCEALED BY ASSESSEE IT WAS A.O, WHO HAD REJECTED BOOKS OF ACCOUNT IN SECOND ROUND & APPLIED 8 PERCENT NET PROFIT RATE PRESCRIBED U/S 44 ADIT WAS HELD THAT TU RNOVER WAS MORE THAN 40, SO SECTION 44 AD WAS NOT APPLICABLEREJECTION OF BOOKS OF ACCOUNT A FLOWED-A.O. TO MAKE ADDITION ON ESTIMATE BASISIT WAS HELD I.T.A. NO.265/LKW/2015 ASSESSMENT YEAR:2009-10 3 THAT WHEN ADDITION WAS MADE ON ESTIMATE BASIS, NO P ENALTY U/S 271 (L)(C), COULD BE IMPOSEDIN CASE OF C.I.T. VS. ARJUN PRASAD AJIT KUMAR, (2008) 214 CTR (ALL) 355, IT WAS OBSERVED THAT CIT (A) DELETED PENALTY U/S 271(L)(C) ON GROUND THAT THERE BEING NOTHING ON RECORD THAT ASSESSEE'S EXPLANATION LACKED BONA FIDES, PENALTY U /S 271(L)(C) COULD NOT BE IMPOSED ON BASIS OF ESTIMATING SALES & MAKING AD DITION BY APPLYING NET PROFIT RATEMOREOVER, IT MAY BE MENTIONED THAT NO FINDING OF DELIBERATE CONCEALMENT OF INCOME WAS BROUGHT IN INS TANT CASE AS ASSESSEE HAD NEVER SUPPRESSED INTEREST INCOME FROM F DRSIT WAS FOR A.O. TO TREAT THIS INCOME AS BUSINESS INCOME OR INC OME FROM OTHER SOURCESSO NO PENALTY FOR CONCEALMENT WAS LEVIABLE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE PENALTY ON ACCOUNT OF ESTIMATION OF PROFITS IS NOT IMPOSABLE. 4.1 NOW COMING TO SECOND ASPECT REGARDING DISALLOWA NCE OF CLAIM OF DEPRECIATION, WE FIND THAT HON'BLE TRIBUNAL HAS UPH ELD THE DISALLOWANCE OF DEPRECIATION BY RECORDING ITS FINDINGS IN PARA 12. HOWEVER, THE CONFIRMATION OF DISALLOWANCE BY HON'BLE TRIBUNAL ITSELF IS NOT S UFFICIENT TO IMPOSE PENALTY AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VS. RELIANCE PETROPRODUCTS PRIVATE LIMITED WHEREIN IT HAS BEEN H ELD THAT MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION OF INTEREST EXPENDIT URE WHICH HAS NOT BEEN ACCEPTED BY THE REVENUE, PENALTY U/S 271(1)(C) IS N OT ATTRACTED. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE HAD FURNISH ED ALL THE PARTICULARS REGARDING ITS CLAIM WITH RESPECT TO DEPRECIATION HO WEVER, THE AUTHORITIES DID NOT ACCEPT THE CLAIM OF THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCES, THE IMPOSITION OF PENALTY WAS NOT JUSTIFIED. THER EFORE, WE DELETE THE PENALTY IN THIS RESPECT ALSO. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 22/02/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:22/02/2018 *SINGH I.T.A. NO.265/LKW/2015 ASSESSMENT YEAR:2009-10 4 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. R EGISTRAR