M/s. Sangam Prints, Surat V. The Income tax Officer,Ward-2(1), Surat

ITA 2766/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6283 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-06-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 08-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SOURYAVANSHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER DATE OF HEARING : 29/6/11 DRAFTED ON:29/6/11 ITA NO.2766/AHD/2009 ASSESSMENT YEAR : 2003-04 M/S.SANGAM PRINTS 4035-36, J.J.A/C. MARKET RING ROAD,SURAT VS. THE ITO WARD-2(1) SURAT PAN/GIR NO. : AAJFS 9331 H (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI HARDIK VORA RESPONDENT BY: SHRI G.S. SOURYAVANSHI, SR. D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-II, SURAT DATED 22/06/2009 PASSED FOR ASSESSMENT YEAR 2003-04 AND THE ONLY GROUND IS IN RESPECT OF CONFIRMATION OF PENALTY LEVIED U/S.27 1(1)(C) OF THE I.T.ACT OF RS.6,72,744/-. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPOND ING PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT, 1961 DATED 28 /03/2008 AND ASSESSMENT ORDER MADE U/S.143(3) DATED 29/03/2006 W ERE THAT THE ASSESSEE-FIRM IS IN THE BUSINESS OF TRADING IN FAB RICS. A SURVEY WAS CONDUCTED AND DISCREPANCY IN RESPECT OF STOCK WAS N OTICED. AS PER REVENUE, THERE WAS AN UNACCOUNTED STOCK OF RS.20,01 ,977/- WHICH WAS ITA NO. 2766/AHD/2009 M/S. SANGAM PRINTS VS. ITO ASST.YEAR - 2003-04 - 2 - DETECTED IN THE COURSE OF SURVEY. IN ADDITION TO THE SAID DISCREPANCY IN THIS STOCK AN ANOTHER ADDITION IN RESPECT OF INADEQ UATE GROSS PROFIT HAS ALSO BEEN MADE. GROSS PROFIT @ 9.21% WAS ESTIMATE D AND AN ADDITION OF RS.7,05,783/- WAS MADE. THE ASSESSING OFFICER HAS, THEREFORE, CONCLUDED THAT A PENALTY IN RESPECT OF THE TOTAL OF THE TWO, I.E. RS.27,07,760/- WAS TO BE LEVIED WHICH WAS WORKED OU T AT MINIMUM AMOUNT OF RS.9,95,103/-. WHEN THE MATTER WAS CARR IED BEFORE THE FIRST APPELLATE AUTHORITY, THE LEARNED CIT(APPEALS) HAS D ISCUSSED THE DECISION OF THE TRIBUNAL PRONOUNCED IN QUANTUM APPEAL AND HA VE FOUND THAT THE PURCHASES TOTALLING TO RS.29,00,816/- WERE FULLY VE RIFIABLE. HOWEVER, THE TRIBUNAL HAS FOUND THAT THE GROSS PROFIT DISCLOSED WAS VERY LOW, HENCE RELATED DISALLOWANCE OF PURCHASE OF RS.5,80,163/- W AS CONFIRMED. THE LEARNED CIT(APPEALS) HAS, THEREFORE, HELD THAT CONS IDERING THE ORDER OF THE TRIBUNAL IN QUANTUM APPEAL THE CONCEALMENT PENA LTY HAD TO BE LIMITED TO THE AMOUNT OF ADDITION WHICH WAS AFFIRMED BY THE TRIBUNAL. CONSEQUENTLY HE HAS DIRECTED THE ASSESSING OFFICER TO RECOMPUTED THE PENALTY. 3. AGAINST THE PART RELIEF NOW THE ASSESSEE IS FURT HER IN APPEAL. 4. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES, AT THE OUTSET, IT IS PERTINENT TO CONSIDER THE FINDINGS OF THE RESPECTED ITAT D BENCH AHMEDABAD BEARING ITA NO.1350/AHD/2007 (A.Y. 2003-0 4) TITLED AS SANGAM PRINTS, SURAT VS. ITO, ORDER DATED 24/10/20 08, WHEREIN IT WAS HELD AS UNDER, RELEVANT PORTION REPRODUCED BELOW:- ITA NO. 2766/AHD/2009 M/S. SANGAM PRINTS VS. ITO ASST.YEAR - 2003-04 - 3 - 13. FURTHER, IT IS OBSERVED THAT THE A.O, AFTE R EXAMINING THE BOOKS OF ACCOUNT, HAS NOT REJECTED THE BOOKS OF ACC OUNT OF THE ASSESSEE. THE LD. CIT(A) HAS NOT BOUGHT ANY MATERI AL TO SHOW THAT THE BOOKS OF ACCOUNT WERE EITHER INCOMPLETE OR ANY BOGUS EXPENDITURES WERE ENTERED THEREIN OR THE METHOD OF ACCOUNTING EMPLOYED WAS SUCH ON THE BASIS OF WHICH PROPER PROF IT OF THE ASSESSEE COULD NOT BE COMPUTED. THUS, IN OUR CONSI DERED OPINION, THE LD. CIT(A) WAS NOT JUSTIFIED IN REJECTING THE B OOK RESULT ON WHOLESALE BASIS MERELY ON THE SUSPICION AND SURMISE S. THEREFORE, IN OUR CONSIDERED VIEW, ENHANCEMENT MADE BY THE LD. CIT(A) IS UNSUSTAINABLE. FURTHER, THE PLEA OF THE ASSESSEE T HAT THE ADDITION OF RS.5,80,163/- MADE BY THE A.O IS ALSO UNSUSTAINA BLE, IS NOT ACCEPTABLE AS THE ASSESSEE COULD NOT BRING ANY MATE RIAL BEFORE US TO SHOW THAT THE PURCHASE OF RS.29,00,816/- IS FULL Y VERIFIABLE. ON THE ABOVE FACTS AND KEEPING IN VIEW THAT THE DECLAR ED GROSS PROFIT RATE AS SHOWN BY THE ASSESSEE, IN OUR CONSIDERED OP INION, THE A.O WAS JUSTIFIED IN ADDING RS.5,80,163/- TO THE GROSS PROFIT OF THE ASSESSEE 5. ON CAREFUL PERUSAL OF THE ORDER OF THE TRIBUNAL, IT IS EVIDENT THAT THE REJECTION OF BOOK RESULT WAS REVERSED AND HELD THAT THE SAME WAS MERELY ON SUSPICION AND SURMISES. IT HAS ALSO BEEN HELD B Y THE TRIBUNAL THAT THE ENHANCEMENT WAS UNSUSTAINABLE. HOWEVER, THE TRIBUN AL HAS HELD THAT ONLY PART OF THE PURCHASES WERE NOT FULLY VERIFIABL E BUT THE CONSEQUENCE WAS THAT THE ADOPTION OF GROSS PROFIT RATE BY THE A SSESSING OFFICER WAS HELD AS JUSTIFIED. WITH THE RESULT, THE IMPUGNED A DDITION OF RS.5,80,163/- WAS UPHELD WHICH REMAINED THE SUBJECT MATTER OF THI S APPEAL FOR THE PURPOSE OF LEVY OF CONCEALMENT PENALTY. ON DUE APP RECIATION OF THESE FACTS, IT IS EVIDENT THAT THE IMPUGNED ADDITION REM AINED SUBJECT MATTER OF CONTROVERSY WITHOUT ANY CONCLUSIVE FINDING THAT THE ASSESSEE HAS DELIBERATELY ACTED IN MALA FIDE MANNER. FURTHER, I T IS ALSO EVIDENT THAT THE BOOKS OF ACCOUNT WERE AUDITED AND THOSE BOOKS OF AC COUNT WERE NOT REJECTED BY THE TRIBUNAL RATHER REVERSED THE REJECT ION OF BOOKS. THE ITA NO. 2766/AHD/2009 M/S. SANGAM PRINTS VS. ITO ASST.YEAR - 2003-04 - 4 - EXPLANATION OFFERED BY THE ASSESSEE, THEREFORE APPE ARS TO BE BONA FIDE SPECIALLY WHEN THE SAID EXPLANATION WAS NOT FOUND T O BE FALSE. TOTALITY OF THE CIRCUMSTANCES THUS, WARRANTS TO REVERSE THE FIN DING OF LEARNED CIT(APPEALS) AND RESULTANTLY WE HEREBY DIRECT TO QU ASH THE IMPUGNED PENALTY. GROUND IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30 TH JUNE, 2011. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 30 / 6 /2011 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II, SURAT 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD ITA NO. 2766/AHD/2009 M/S. SANGAM PRINTS VS. ITO ASST.YEAR - 2003-04 - 5 - 1. DATE OF DICTATION..29/6/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29/6/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S30.6.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.6.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER