The DCIT, Circle-1, Surat V. M/s. Akruti Dyeing & Printing Mills Pvt.Ltd., Surat

ITA 2954/AHD/2009

• Counselvise Citation: [2010] 137 COUNSELVISE.COM (IT) 0208 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 30-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P ORAM
• Section: 143(3)

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AAHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, AM DY. COMMISSIONER OF INCOME-TAX, CIR-1, ROOM NO.108, AAYAKAR BHAVAN, MAJURA GATE, SURAT. V/S . M/S AKRUTI DYG. & PTG. MILLS (P) LTD.. PLOT NO.49-50, OPP: SAHELI DYG., GIDC, PANDESARA, SURAT. PAN NO.AACCA 0039 N (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI P. ORAM, SR. DR RESPONDENT BY:- NONE O R D E R PER BHAVNESH SAINI, JUDICIAL MEMBER . THIS DEPARTMENTAL APPEAL BY REVENUE IS DIRECTED AG AINST THE ORDER OF CIT(A)-I, SURAT, DATED 26 TH AUGUST, 2009 FOR ASSESSMENT YEAR 2004-05, CHALLENGING THE CANCELLATION OF PENALTY UNDER SECTI ON 271(1)(C) OF THE IT ACT, 1961. 2. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND PERUSED THE FINDINGS OF AUTHORITIES BELOW. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTIFYING THE DATE OF HEARING. ITA NO.2954/AHD/2009 ASST. YEAR :2004-05 2 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER COMPLETED THE ASSESSMENT ORDER UNDER SECTION 143(3) ON 26 TH DECEMBER, 2006 AND MADE THE ADDITION OF RS.6,89,281/- ON ACCO UNT OF ESTIMATION OF PROFIT AND RS.5,115/- ON ACCOUNT OF VALUATION OF CL OSING STOCK OF WORK-IN- PROGRESS. VIDE SEPARATE ORDER PENALTY UNDER SECTION 271(1)(C) WAS IMPOSED. IT WAS SUBMITTED BEFORE LD. CIT(A) THAT AS SESSEE COMPANY HAS BEEN DOING JOB WORK ONLY AND NOT THE MANUFACTURING OF ANY PRODUCT OF ITS OWN AND IT WAS CONSISTENTLY NOT SHOWING THE WORK-IN -PROGRESS BECAUSE OF THESE REASONS AND THE SAME METHOD HAS BEEN ACCEPTED IN THE EARLIER YEARS. IT WAS FURTHER SUBMITTED THAT THE ADDITION IS ON TH E BASIS OF ESTIMATION OF WORK-IN-PROGRESS AND NOT ON THE BASIS OF ANY MATERI AL FOUND, THEREFORE, NO PENALTY SHOULD BE LEVIED. AS REGARDS THE GP ADDITIO N IT WAS SUBMITTED THAT THE GP ADDITION CANNOT LEAD TO CONCEALMENT BECAUSE THERE WERE NO FURNISHING OF INACCURATE PARTICULARS AND ORDER OF I TAT IN THE CASE OF SUDESH KHANNA VS. ACIT WAS RELIED UPON. THE CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE BECAUSE OF MERE ESTIMAT E OF INCOME BY APPLYING HIGHER G.P. RATE NO PENALTY COULD BE IMPOS ED. THE LD. CIT(A) ALSO RELIED UPON THE DECISION OF HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF J.H.PARABIA TRANSPORT (P) LTD. 284 ITR 361 IN WHICH IT WAS HELD THAT IN THE LIGHT OF THE FACTS FOUND BY THE TRIBUN AL, AND IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT SUCH FINDINGS WERE INC ORRECT IN ANY MANNER, THE TRIBUNAL WAS JUSTIFIED IN DELETING THE PENALTY UNDER SECTION 271(1)(C). LD. CIT(A) ACCORDINGLY CANCELLED THE PENALTY. 4. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 5. ON CONSIDERATION OF THE ABOVE FACTS, WE ARE OF T HE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE IMPUGNED ORDER. T HE ASSESSING OFFICER 3 NOTED IN THE ASSESSMENT ORDER THAT ASSESSEE IS ENGA GED IN BUSINESS OF PRINTING GREY CLOTH ON JOB WORK BASIS. THE ASSESSIN G OFFICER MADE THE ADDITION OF WORK-IN-PROGRESS WITHOUT BRINGING ANY M ATERIAL ON RECORD AS TO HOW ASSESSEE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. ON THE BASIS OF EARLIER FIN DINGS, NOMINAL ADDITION OF RS.5,115/- WAS MADE. THE LD. CIT(A) ACCEPTED THE CONTENTION OF ASSESSEE THAT SAME METHOD OF ACCOUNTING IS ACCEPTED IN EARLIER YEARS AND WORK-IN-PROGRESS IS NOT SHOWN BECAUSE ASSESSEE WAS DOING JOB WORK ONLY. ASSESSING OFFICER ALSO FOUND THAT GP RATE OF THE AS SESSEE IN THE ASSESSMENT YEAR UNDER APPEAL WAS 16.48% AS COMPARED TO THE PRECEDING YEAR 2003-04 IN WHICH ASSESSEE HAS SHOWN GP RATE OF 18.28%. THUS THERE WAS LESSER GP OF 1.80% SHOWN. THE ASSESSING OFFICER NOTED THAT IT IS NOT POSSIBLE TO ASSESS THE REASONABLENESS OF THE CONSUM PTION OF THE MATERIAL, THEREFORE, HALF OF THE LESSER GP RATE I.E. 0.90% WA S TAKEN FOR THE PURPOSE OF MAKING THE ADDITION. THUS EVEN ON ESTIMATE OF IN COME NO DEFINITE MATERIAL OR EVIDENCE WAS FOUND TO SHOW THAT ASSESSE E HAS CONCEALED PARTICULARS OR FURNISHED INACCURATE PARTICULARS OF INCOME. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. DHILLON RICE MILLS (2002) 256 ITR 447 (P & H) AND IN THE CASE OF HARIGOPAL SI NGH VS. CIT (2002) 258 ITR 85 (P & H) HELD THAT ON ESTIMATED INCOME NO PENALTY SHOULD BE IMPOSED. SIMILAR DECISION OF THE HONBLE GUJARAT HI GH COURT WAS RELIED UPON BY THE LD. CIT(A) WHILE CANCELING THE PENALTY IN THE CASE OF J H PARABIA TRANSPORT (P) LTD. (SUPRA). HONBLE SUPREME COURT IN THE RECENT DECISION IN THE CASE OF M/S RAJASTHAN SPINNING AND WEAVING MILLS (2009) T. I. O. L 63 HELD THAT ON EVERY DEMAND IMP OSITION OF PENALTY IS NOT AUTOMATIC. 6. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED AB OVE, WE DO NOT FIND IT TO BE A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF 4 THE IT ACT, 1961. LD. CIT(A) WAS, THEREFORE, JUSTIF IED IN CANCELING THE PENALTY. WE CONFIRM HIS FINDING AND DISMISS THE DEP ARTMENTAL APPEAL. 7. AS A RESULT, DEPARTMENTAL APPEAL STANDS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 08 /01/2010 SD/- SD/- (D.C.AGRAWAL) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 08/01/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD