Krushangi Keyur Bhagat, Surat V. The Income Tax Officer,Ward 3(3) New Ward-1(3)(3), Surat

ITA 2706/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2190 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-08-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 24-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P S CHAUDHARY
• Assessee Lawyers: P M JAGASHETH
• Keywords: Gross profit estimation; Unexplained cash credit
• Section: 68; 271(1)(c)

Judgement Text

KRUSHANGI KEYUR BHAGAT V. ITO 3(3)SURAT /I.T.A. NO.2706/AHD/2015/A.Y.08-09 PAGE 1 OF 4 , , INCOM TAX APPELLATE TRIBUNAL-SURAT-BENCH-SURAT . . , . . , BEFORE C .M. GARG, JM & O. P. MEENA, AM . . ./ I.T.A NO. 2706/AHD/2015: / ASSESSMENT YEAR:2008-09 SMT. KRUSHANGI KEYUR BHAGAT 3, MAITRI ROW HOUSE PARLEY POINT, ATHWALINES, NEAR SARJAN SOCIETY SURAT 395 007 PAN:AGPPB3246A V. INCOME TAX OFFICER WARD-3(3) SURAT (NEW ITO, WARD-1(3)(3), SURAT. APPELLANT /RESPONDENT ASSESSEE BY SHRI P. M. JAGASHETH, CA REVENUE BY SHRI P.S. CHAUDHARY, SR. D.R. DATE OF HEARING 04.09.2018 DATE OF PRONOUNCEMENT 26.09.2018 /ORDER PER O. P. MEENA, AM 1. THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST AN ORDER DATED 05.08.2015 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, SURAT (IN SHORT THE CIT (A)) FOR THE ASSESSMENT YEAR 2008-09. 2. THE SOLE GROUND RELATES TO CONFIRMING PENALTY OF RS. 6,35,766 LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 3. FACTS APROPOS OF THIS GROUND ARE THAT THE AIR INFORMATION REVEALED THAT THE ASSESSEE HAS HAD BANK ACCOUNT WITH YES BANK LTD. IN WHICH TOTAL DEPOSITS WERE AT RS. 25,82,079 INCLUDING CASH DEPOSITS OF RS. 12,50,000. IT WAS EXPLAINED THAT THE TRANSACTION IN THIS BANK ACCOUNT RELATES TO BUSINESS TRADING WHICH WERE NOT REFLECTED IN HER BOOKS OF ACCOUNTS. FURTHER, THESE DEPOSITS INCLUDE CHEQUE ISSUED BUT RETURNED KRUSHANGI KEYUR BHAGAT V. ITO 3(3)SURAT /I.T.A. NO.2706/AHD/2015/A.Y.08-09 PAGE 2 OF 4 UNPAID BY THE BANK HENCE, SAME SHOULD BE REDUCED FROM TOTAL DEPOSITS. THUS, TOTAL DEPOSIT WERE AT RS. 18,32,079 WHICH WERE ADDED TO TOTAL INCOME. BESIDE THIS AN ADDITION OF RS. 1,93,841 WAS ALSO MADE ON ACCOUNT OF SUPPRESSION OF GROSS PROFIT. FURTHER ADDITION OF RS. 2 LAKH WAS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE AO THEREFORE, THE AO HAS INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) IN RESPECT OF THESE ADDITION. SINCE THE ASSESSEE HAS FILED AN APPEAL BEFORE CIT (A). THEREFORE, PENALTY PROCEEDINGS WERE KEPT IN ABEYANCE. IN APPEAL CIT (A) HAS CONFIRMED THE ADDITION TO RS. 14,76,614 ON ACCOUNT OF BANK DEPOSITS FURTHER, THE ADDITION OF RS. 2 LAKHS AS WELL AS ADDITION OF GROSS PROFIT OF RS.1,93,841 WAS CONFIRMED. THUS, THE TOTAL ADDITION CONFIRMED WAS AT RS. 18,70,455. THE AO THEREFORE, LEVIED A PENALTY OF RS. 6,35,766 BEING 100% OF TAX SOUGHT TO BE EVADED OF RS. 18,70 455. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT (A). HOWEVER, CIT (A) HAS CONFIRMED THE PENALTY SO IMPOSED ON THE GROUND THAT THE ASSESSEE HAS IS NOT ABLE TO EXPLAIN THE SOURCE OF CASH DEPOSITS IN BANK ACCOUNT, WHICH WAS NOT DISCLOSED IN THE RETURN OF INCOME. FURTHER ADDITION OF RS. 2 LAKH WAS CONFIRMED BY THE CIT (A). SIMILARLY ADDITION WAS MADE ON ACCOUNT OF GROSS PROFIT ADDITION BY REJECTING BOOKS OF ACCOUNTS AND APPLYING GROSS PROFIT RATE AT 15.54%. THEREFORE, CIT (A) OPINIONED THAT THE ASSESSEE HAS DELIBERATELY NOT DISCLOSED TRUE INCOME HENCE, THE AO WAS RIGHT IN LEVYING PENALTY HENCE, SAME WAS CONFIRMED. KRUSHANGI KEYUR BHAGAT V. ITO 3(3)SURAT /I.T.A. NO.2706/AHD/2015/A.Y.08-09 PAGE 3 OF 4 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT LEVY OF PENALTY IS CONSEQUENTIAL TO DECISION OF TRIBUNAL IN QUANTUM APPEAL OF THE ASSESSEE IN RESPECT OF ADDITION OF CASH DEPOSITS AS TO BE SUSTAINED BY TRIBUNAL. HOWEVER, IT WAS SUBMITTED THAT ADDITION OF RS. 1,93,841 IS MADE ON ACCOUNT OF GROSS PROFIT ADDITION WHICH IS BEING ESTIMATE HENCE, NO PENALTY SHOULD BE LEVIED ON SAID ACCOUNT FURTHER, THE DETAILS AND CONFIRMATION IN RESPECT OF UNEXPLAINED CASH CREDIT OF RS. 2 LAKH WAS FILED HENCE, NO PENALTY IS LEVIABLE ON THIS AMOUNT ALSO. 6. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED ORDER OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE IS A SALARIED PERSON AND DERIVING SALARY FROM KALYANI MULTILINK PVT. LTD. WE FIND THAT THE AO HAS LEVIED PENALTY ON FOLLOWING ADDITION: 1. UNACCOUNTED CASH DEPOSITS IN BANK ACCOUNT RS. 14,76 614 2. SUPPRESSION OF PROFIT RS. 1,93,841 3. UNSECURED LOAN RS. 2,00,000 4. TOTAL RS. 18,70,455 8. WE FIND THAT THE ADDITION OF RS. 1,93,841 WAS MADE AS THERE WAS LOW GROSS PROFIT BY 6.96% . THE ASSESSEE HAS HAD DISCLOSED GROSS PROFIT RATE AT 8.58% WHEREAS THE AO HAS ESTIMATED GROSS PROFIT RATE AT 15.54%. SINCE THIS ADDITION IS BASED ON ESTIMATE ON ACCOUNT OF LOW GROSS PROFIT RATE, THEREFORE, THIS CANNOT BE SAID AS POSITIVE KRUSHANGI KEYUR BHAGAT V. ITO 3(3)SURAT /I.T.A. NO.2706/AHD/2015/A.Y.08-09 PAGE 4 OF 4 CONCEALMENT OF INCOME. HENCE, PENALTY LEVIED IN RESPECT OF THIS ADDITION IS DIRECTED TO BE DELETED. WITH REGARD TO ADDITION OF RS. 14,76,614 MADE ON ACCOUNT OF BANK DEPOSITS, WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE AND REDUCED THE ADDITION TO GROSS PROFIT RATE OF 5% WHICH WORKED OUT TO RS. 91,600. HENCE, THE AO IS DIRECTED TO CALCULATE PENALTY ON SAID AMOUNT IN RESPECT OF ADDITION CONFIRMED IN APPEAL BY TRIBUNAL IN I.T.A.NO. 1434/AHD/2013 DTD. 26.09.2018 FOR THE ASSESSMENT YEAR 2008-09. SINCE THE ADDITION OF RS. 2 LAKH WAS CONFIRMED BY TRIBUNAL, HENCE, PENALTY ON SAID AMOUNT IS ALSO LEVIABLE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE DIRECT THE AO TO RECALCULATE PENALTY LEVIABLE ON THE ADDITION CONFIRMED AT RS. 91,600 PLUS RS. 2 LAKH OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT ONLY AS CONFIRMED BY TRIBUNAL IN THE CASE OF THE ASSESSEE. ACCORDINGLY, THIS APPEAL IS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 10. THE ORDER PRONOUNCED IN THE OPEN COURT ON 26. 09. 2018. SD/- SD/- (C.M. GARG) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: 26.09.2018 /OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT