The DCIT, Circle-5, Ahmedabad V. M/s. Rasranjan Food Products Pvt. Ltd., Ahmedabad

ITA 2667/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85873 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 24-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: G C PIPARA
• Keywords: Depreciation; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ITA NO . 2667 /AHD/201 1 A. Y . 200 5 - 0 6 DY. CIT, CIRCLE - 5, AHMEDABAD. VS M/S. RASRANJAN FOOD PRODUCTS PVT. LTD ., RASRANJAN COMPLEX, NR. VIJAY CHAR RASTA, AHMEDABAD. PAN: AABCR 8986Q (APPELLANT) (RESPONDENT) REVENUE BY : SHRI DINESH SINGH , SR.D.R. . ASSESSEE(S) BY : SHRI G.C. PIPARA, A.R. / DATE OF HEARING : 23 / 0 3 /201 5 / DATE OF PRONOUNCEMENT: 26 / 0 3 /201 5 / O R D E R PER: MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LE ARNED CIT(A) - XI , AHMEDABAD DATED 17 . 0 8 .201 1 CHALLENGING THE DELETION OF PENALTY LEVIED U/S.271(1)(C) OF RS.7,32,779/ - 2. THE PENALTY WAS LEVIED FOR CONCEALMENT U/S.271(1)(C) ORDER DATED 11.01.2010 IN RESPECT OF FOLLOWING ADDITIONS: (I) ADDITION ON ACCOU NT OF ESTIMATION OF GP RS.8452540 (II) DEPRECIATION ON VEHICLE RS. 145666 (III) DISALLOWANCE U/S.43B RS. 375491 2.1 THE ASSESSEE - COMPANY IS IN THE BUSINESS OF MANUFACTURING AND SALES OF SWEETS AND NAMKEEN. THE ASSESSEE HA D FURNISHED A ITA NO. 2667 /AHD /201 1 M/S. RASRANJAN FOOD PRODUCTS PVT. LTD. FOR A.Y. 200 5 - 0 6 - 2 - RETURN OF INCOME AT RS.NIL BUT PAID TAX U/S.115JB ON BOOK PROFIT OF RS.20,93,544/ - . AS AGAINST THAT AS PER ASSESSMENT ORDER PASSED U/S.143(3) DATED 28.12.2007 THE TOTAL INCOME AS PER THE NORMAL COMPUTATION WAS ASSESSED AT RS.1,03,32,580/ - , THEREF ORE, THE PROVISIONS OF MAT WERE NOT APPLIED. 2.2 WHILE DELETING THE PENALTY ; LEARNED CIT(A) HAS REFERRED THE PAST HISTORY OF THE CASE AS UNDER: 3. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A.R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OF FICER IN THE PENALTY ORDER. IT IS SEEN THAT THE IDENTICAL ISSUE OF LEVY OF PENALTY ON ACCOUNT OF ADDITION ON GROSS PROFIT WAS THERE IN THE APPELLANT'S OWN CASE FOR A.Y.2003 - 04 AND 2004 - 05. THE SAME HAS ALREADY BEEN DECIDED BY MY PREDECESSOR IN FAVOUR OF TH E APPELLANT. THE FINDINGS GIVEN BY MY PREDECESSOR IN APPEAL NO.CLT(A) - XI/406/08 - 09 DATED 17 - 03 - 2010 IN THE APPELLANT'S OWN CASE FOR A.Y.2003 - 04 ARE REPRODUCED HEREUNDER 2.3 FINALLY, THE PENALTY FOR THE YEAR UNDER CONSIDERATION WAS DELETED BY LEAR NED CIT(A) AS UNDER: SINCE, THE ISSUE OF LEVY OF PENALTY FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS SIMILAR TO THAT OF A.Y. 2003 - 04. IT IS SEEN THAT IN THE ASSESSMENT ORDER A G.P. @ 32% WAS APPLIED ON THE TOTAL ESTIMATED SALES OF RS.6.00 CRORES. THIS HAS RESULTED IN A G.P. ADDITION OF RS.84,52,540/ - . THIS ADDITION WAS FINALLY CONFIRMED TO THE EXTENT OF RS.20,02,540 / - BY THE HON'BLE ITAT. THE PENALTY IS IMPOSED ON THE CONFIRMED ADDITION OF RS.20,02,540/ - . AS IS EVIDENT FROM ABOVE DISCUSSIONS THE CONCEAL ED INCOME IS WORKED OUT BY ESTIMATING TOTAL TURNOVER AND THEN APPLYING ESTIMATED GROSS PROFIT RATE. THUS THE CHARGE OF IMPOSING PENALTY IS NOT PRECISE AS IS THE REQUIREMENT OF THE SECTION AND AS HAS BEEN DECIDED IN THE CAS E OF K . M. BHATIA VS. CIT (1991) 19 3 ITR 379 (GUJ), KEEPING IN VIEW THE ABOV E FACTS AND FOLLOWING THE DECISION OF PREDECESSOR, REFERRED TO ABOVE, I AM I NCLINED TO CAN CEL THE ORDER PASSED BY THE ASSESSING OFFICER LEVYING THE IMPUGNED PENALTY AMOUNTING TO RS. 7,32,779/ - U/S. 271(1)(C) OF THE I.T. ACT, 1961. 3. HEARD BOTH THE SIDES. AT THE OUTSET, WE HAVE BEEN INFORMED THAT FOR A.Y.2004 - 05, ITAT A BENCH AHMEDABAD IN ASSESSEE S ITA NO. 2667 /AHD /201 1 M/S. RASRANJAN FOOD PRODUCTS PVT. LTD. FOR A.Y. 200 5 - 0 6 - 3 - OWN CASE IN ITA NO.603/AHD/2011 VIDE ORDER DATED 26 TH AUGUST, 2011 (CO NO.70/AHD/2011) HAS DELETED THE PENALTY U/S. 271(1)(C) IN THE FOLLOWING MANNER: 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD, WE FOUND THAT THE AO HAS LEVIED PENALTY WITH RESPECT TO ESTIMATED ADDITION SUSTAINED ON ACCOUNT OF GROSS PROFIT, ADDITION ON ACCOUNT OF DEFERRED REVENUE EXPENDITURE AND ADDITION FOR DEFERRED REVENUE EXPENDITURE. FROM THE RECORD, WE FOUND THAT ESTIMATED ADDITION MADE ON ACCOUNT OF GROSS PROFIT TO THE EXTENT OF RS.66.24 LAKHS WAS FINALLY CONFIRMED TO THE EXTENT OF RS.8.04 LAKHS. THE ID.CIT(A) IN THE QUANTUM PROCEEDINGS, WHILE DELETING THE ESTIMATION OF SALES MADE BY THE ASSESSING OFFICER, DIRECTED HIM TO ACCEPT THE SALE SHOWN BY THE COMPANY AND ALSO REDUCED THE ESTIMATED ADDITION MADE ON ACCOUNT OF GROSS P ROFIT FROM 32 % TO 31%. IN FURTHER APPEAL, THE I.T.A.T. ALSO ESTIMATED SALES AND REDUCED THE ALLEGED GROSS PROFIT ESTIMATED BY THE ID.CIT(A) FROM 31% TO 30 %. THUS, THE ADDITION CONFIRMED BY THE ID.CIT(A) TO THE EXTENT OF RS.8.07 LAKHS OUT OF TOTAL ADDITION MADE BY THE ASSESSING OFFICER IS ALSO BASED PURELY ON ESTIMATE. THUS, THERE WAS NO CASE OF EITHER FURNISHING INACCURATE PARTICULARS OF INCOME OR ANY CONCEALMENT OF INCOME, SO AS TO LEVY PENALTY U/S . 271( 1 )(C) OF THE INCOME - TAX ACT, 1961, WITH RESPECT TO S UCH ESTIMATED GROSS PROFIT ADDITION. HON'BLE I.T.A.T. IN THE CASE OF SUDESH KHANNA, 98 TTJ 106, HELD THAT WHEN THE ADDITION HAS BEEN CONFIRMED ON ACCOUNT OF FALL IN GROSS PROFIT, IT COULD NOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOM E OR FURNISHED INACCURATE PARTICULARS OF INCOME. UNDER THOSE CIRCUMSTANCES, THE ASSESSEE WAS NOT REQUIRED TO BE VISITED WITH PENALTY U/S . 271( 1 )(C) OF THE ACT. HON'BLE GUJARAT HIGH COURT IN THE CASE OF JUMMA BHAI PREM CHAND, HUF, 242 ITR 812, HELD THAT O NLY ON THE BASIS OF ESTIMATE OF EXPENSES, THE ORDER OF PENALTY WAS PASSED AGAINST THE ASSESSEE, WHICH WAS NOT LEGAL AND VALID. 9. IN THE INSTANT CASE, AFTER DISCUSSING VARIOUS CASE LAWS, THE ID. CIT(A) RECORDED FINDING TO THE EFFECT THAT THERE WAS NO MATE RIAL/EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED INCOME. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE ID. CIT(A) FOR DELETING THE PENALTY WITH RESPECT TO ESTIMATED ADDITION IN GROSS PROFIT. 4. SINCE, THE RESPECTED CO - ORDINATE BENCH HAD ALREADY TAKEN A VIEW IN RESPECT OF THE IMPUGNED ADDITIONS WHICH WERE IDENTICALLY THE BASIS OF LEVY OF CONCEALMENT PENALTY FOR THE YEAR UNDER CONSIDERATION; THEREFORE, RESPECTFULLY FOLLOWING THE VIEW ALREADY T AKEN, FOR THIS YEAR , AS WELL , WE HEREBY CONFIRM THE DELETION OF ITA NO. 2667 /AHD /201 1 M/S. RASRANJAN FOOD PRODUCTS PVT. LTD. FOR A.Y. 200 5 - 0 6 - 4 - PENALTY. WE FIND NO FORCE IN THIS GROUND OF THE REVENUE; HENCE DISMISSED. 5. IN THE RESULT, REVENUE S APPEAL IS DISMISSED. SD/ - SD/ - ( ANIL CHATURVEDI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 26 / 0 3 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . S / COPY OF THE ORDER FORWARD ED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / G UARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD