A.C.I.T., Cicle-3(1), Gwalior V. Sh. Ramswaroop Shivhare, Gwalior

ITA 297/AGR/2013

• Counselvise Citation: 29720314 RSA 2013
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 06-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: WASEEM ARSHAD
• Assessee Lawyers: RAJENDRA SHARMA
• Keywords: Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO. 297/AGRA/2013 ASSTT. YEAR : 2007-08 A.C.I.T., CIRCLE 3(1), VS. SHRI RAMSWAROOP SHIVH ARE, GWALIOR. 47, DURGAPURI, TANSEN ROAD, GWALIOR. (PAN: AGHPS 8985 R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. DR RESPONDENT BY : SHRI RAJENDRA SHARMA, ADVOCATE DATE OF HEARING : 18.12.2013 DATE OF PRONOUNCEMENT OF ORDER : 20.12.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A), GWALIOR DATED 13.05.2013 FOR THE ASSESSMENT YEAR 20 07-08, CHALLENGING THE DELETION OF PENALTY U/S. 271(1)(C) OF THE IT ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A LIQUOR CONTRACTOR AND PRODUCED BOOKS OF ACCOUNT BEFORE THE AO WITH OTHER INFORMATION FOR EXAMINATION. THE AO WANTED TO VERIFY THE SALES, FOR WHICH NO CAS H MEMOS HAVE BEEN KEPT. THE PURCHASES ARE MADE FROM THE GOVERNMENT AND THE ASSE SSEE WAS HAVING COMPLETE ITA NO. 297/AGRA/2013 2 DETAILS OF THE SAME. SINCE THE ASSESSEE MADE SALES IN RETAIL, THEREFORE, THE ASSESSEE SUBMITTED THAT THE SAME MAY BE VERIFIED FROM THE CA SH BOOK. THE AO WAS NOT SATISFIED WITH THE SAME AND THE ASSESSEE AGREED TO SURRENDER RS.12,00,000/- IN ADDITION TO THE RETURNED INCOME. ASSESSMENT WAS ACC ORDINGLY COMPLETED. THE AO ON THE SURRENDERED AMOUNT LEVIED THE PENALTY, WHICH WAS CANCELLED BY THE LD. CIT(A). THE LD. CIT(A) FOUND THAT THE ASSESSEE HAS MAINTAINED AUDITED BOOKS OF ACCOUNT AND NO CONCEALED INCOME WAS FOUND. IN THE C ASE OF THE SAME ASSESSEE FOR THE ASSESSMENT YEAR 2006-07, SIMILAR PENALTY WAS CA NCELLED BY THE LD. CIT(A). 3. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THE PENALTY HAS BEEN RIGHTLY CANCELLED BY THE LD. CIT(A). THE LD. C OUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE BY ORDER OF ITAT, AGRA BENCH IN THE CASE OF GROUP CONCERN IN IT A NO. 545/AGRA/2012 & 547/AGRA/2012 OF ASSESSMENT YEAR 2008-09 IN THE NAM ES OF SHRI LAXMI NARAYAN RAMSWAROOP SHIVHARE AND SHRI LAXMI NARAYAN RAMSWARO OP SHIVHARE & CO. AND VIDE ORDER DATED 14.08.2013, THE APPEALS OF THE ASS ESSEES HAVE BEEN ALLOWED ON IDENTICAL MATTER. THE FINDINGS IN PARA 6 TO 9 ARE R EPRODUCED AS UNDER : 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUS ED THE FINDINGS OF THE AUTHORITIES BELOW. IN BOTH THE CASE S THE ASSESSEES ARE IN THE BUSINESS OF LIQUOR AND FILED THE RETURN OF INCO ME DISCLOSING SUBSTANTIAL INCOME FROM THE BUSINESS. THE A.O. TOOK UP THE MATTER FOR ASSESSMENT ON THE ISSUE OF NET PROFIT. THE ASSESSEE COULD NOT PRODUCE CERTAIN VOUCHERS OF PURCHASE AND EXPENSES. THEREFOR E, A.O. DIRECTED ITA NO. 297/AGRA/2013 3 TO REJECT BOOK RESULT UNDER SECTION 145(3) OF THE A CT AND ALSO DIRECTED AS TO WHY THE SALES SHOULD NOT BE ENHANCED AND HIGH ER N.P. RATE SHOULD NOT BE APPLIED AS AGAINST SALES AND N.P. DEC LARED BY THE ASSESSEE. IN ITA NO. 545/AGRA/2012 EVEN THE A.O. PR OPOSED TO ESTIMATE THE SALES AT THE LESSER TURNOVER AT 11.15 CRORES AS AGAINST 11.44 CRORES DISCLOSED BY THE ASSESSEE. THE VARIATI ON OF N.P. RATE DECLARED BY THE ASSESSEE AND PROPOSED BY THE A.O. W AS ALSO NOT SIGNIFICANTLY HIGHER. SAME IS POSITION IN OTHER APP EAL IN ITA NO. 547/AGR/2012. IT IS, THEREFORE, CLEAR THAT THE A.O. WANTED TO MAKE ADDITION AGAINST THE NET PROFIT OF THE ASSESSEE BY ESTIMATING THE INCOME OF THE ASSESSEE. HOWEVER, THE ASSESSEE EXPLAINED BE FORE A.O. THAT BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED AND T HE PURCHASES ARE MADE FROM THE EXCISE DEPARTMENT AND BUSINESS IS UND ER THE CONTROL OF EXCISE ACT. THIS SUBMISSION OF THE ASSESSEE HAS NOT BEEN DISPUTED BY THE A.O. IN OUR VIEW ALSO THIS SUBMISSION COULD NOT HAVE BEEN DISPUTED BY THE A.O. BECAUSE IN THE LIQUOR BUSINESS THE PURCHASE ARE ALWAYS MADE FROM THE EXCISE DEPARTMENT AND THE BUSI NESS IS ALWAYS UNDER CONTROL OF EXCISE DEPARTMENT. THEREFORE, THER E SHOULD NOT HAVE BEEN ANY DOUBT REGARDING GENUINENESS OF THE PURCHAS E MADE FROM THE EXCISE DEPARTMENT. AT THE MOST, THE SALES WOULD NOT HAVE BEEN VERIFIABLE, BUT IN THE LIQUOR BUSINESS THE SALES AR E GENERALLY MADE IN CASH, THEREFORE, THERE IS NO QUESTION OF VERIFICATI ON OF THE CASH SALES MADE BY THE ASSESSEE. THEREFORE, THE NON-PRODUCTION OF THE PURCHASE BILLS ON EXPENSES WOULD NOT BE MUCH SIGNIFICANT TO PROVE THAT ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME OR CONCE ALED THE PARTICULARS OF INCOME. THE ASSESSEE ALSO EXPLAINED THAT DUE TO HEALTH PROBLEM AND BUSINESS IS NOT BEING RUN SMOOTHLY, THEREFORE, IN O RDER TO BUY PEACE THE ASSESSEE MADE SURRENDER IN BOTH THE CASES FOR P OSSIBLE LEAKAGE OF INCOME FOR NON-MAINTENANCE OF DOCUMENTS AND VOUCHER S. IT WOULD, THEREFORE, PROVE THAT THERE WAS NO DEFINITE FINDING OF FACT RECORDED BY THE A.O. THAT IT IS A CASE OF FILING OF INACCURATE PARTICULARS OF INCOME. THE EXPLANATION OF THE ASSESSEE HAS BEEN FOUND TO B E REASONABLE AND ACCEPTABLE TO THE A.O. AND THE OFFER OF SURRENDER MADE BY THE ASSESSEE IN RESPONSE TO THE REJECTION OF THE BOOKS OF ACCOUN TS HAVE BEEN ULTIMATELY ACCEPTED BY THE A.O. WHEN A.O. ACCEPTED SURRENDER IN BOTH THE CASES AS AGAINST PROPOSED REJECTION OF THE BOOKS OF ACCOUNTS AND ESTIMATE OF INCOME, THE A.O. SHOULD NOT HAVE IN ITIATED THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE. ITA NO. 297/AGRA/2013 4 7. WE MAY ALSO NOTE HERE THAT IN ITA NO.545/AGR/201 2 IF AS PER PROPOSED NOTICE OF THE A.O. THE ENHANCED TURNOVER AND ENHANCED N.P. RATE IS TAKEN INTO CONSIDERATION, THE TOTAL INCOME SHOULD BE COMPUTED AT RS.33,45,000/- BUT THE A.O. AFTER ACCEPTING THE SUR RENDER OF RS.4,00,000/- COMPUTED TO THE TOTAL INCOME ON ESTIM ATE OF RS.30,25,922/-. THUS, EVEN THE A.O. ACCEPTED LESSER SURRENDER FROM THE ASSESSEE. SIMILARLY IN ITA NO.547/AGRA/2012 IF THE PROPOSED TURN OVER OF THE A.O. AND N.P. ARE TAKEN INTO CONSIDERAT ION INCOME SHOULD HAVE BEEN COMPUTED OF RS.2,25,00,000/- BUT THE A.O. AFTER ACCEPTED SURRENDER OF RS.55,00,000/- COMPUTED THE INCOME OF THE ASSESSEE AT RS.1,87,95,773/-. THUS, IN BOTH THE CASES THE A.O. ISSUED PROPOSED NOTICE TO ESTIMATE THE HIGHER INCOME BUT ULTIMATELY ACCEPTED LOWER SURRENDER MADE BY THE ASSESSEE. THEREFORE, IT IS CL EAR FROM THE ABOVE FINDINGS OF FACT THAT THE PROPOSED NOTICE OF THE A. O. TO ENHANCE INCOME OF THE ASSESSEE WAS NOT BASED UPON ANY MATER IAL OR FACT. THE PROPOSED NOTICE OF THE A.O. THUS WOULD NOT DISCLOSE IN ANY MANNER AS TO HOW THE A.O. WAS SATISFIED BY SUCH FIGURE TO MAK E ESTIMATE OF INCOME. THE PROPOSED ESTIMATE OF INCOME BY THE A.O. WAS FOUND NOT ACCURATE TO THE KNOWLEDGE OF THE A.O. THUS, HOW A.O . CAN GIVE FINDING AGAINST THE ASSESSEE THAT ASSESSEE FILED IN ACCURATE PARTICULARS OF INCOME IN THE PENALTY ORDER. THE ASSESSEE HAS MA DE SURRENDER OF THE AMOUNT IN QUESTION FOR POSSIBLE LEAKAGE OF INCO ME FOR NON MAINTENANCE OF SOME DOCUMENTS AND VOUCHERS IN PROPE R MANNER. THEREFORE, THE ASSESSEE NEVER ACCEPTED BEFORE A.O. THAT ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME IN THE RETUR N OF INCOME. THE A.O. DID NOT STATE IN ASSESSMENT ORDER AS TO HOW TH E PARTICULARS OF INCOME DISCLOSED BY THE ASSESSEE IN THE RETURN OF I NCOME WERE INACCURATE. ULTIMATELY, THE ESTIMATED INCOME IS COM PUTED BY THE A.O. IN THE ASSESSMENT ORDER. IT IS WELL SETTLED LAW THA T THE ADDITION MADE ON THE BASIS OF ESTIMATE AND NOT ON CONCRETE EVIDENCE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS, THEREF ORE, NO PENALTY IS LEVIABLE. WE RELY UPON THE DECISIONS OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. DHILLON R ICE MILLS (2002) 256 ITR 447, CIT VS. RAVAIL SINGH AND CO. (2002) 254 ITR 191 AND HARIGOPAL SINGH VS.CIT (2002) 258 ITR 85. HONBLE SUPREME COURT IN THE CASE OF M/S RAJASTHAN SPINNING AND WEAVING M ILLS 2009-TIOL- 63 HELD THAT ON EVERY DEFAULT PENALTY IS NOT AUTOMA TIC. THE HONBLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF IN COME-TAX VS. K.R. CHINNI KRISHNA CHETTY (2000) 246 ITR 121 HELD ITA NO. 297/AGRA/2013 5 HELD, THAT UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING AUTHORITY IS GIVEN THE DISCRETION TO LEVY A PENALTY IF THERE IS CONCEALMENT OF PARTICULARS OF INCOME AND EVEN AS REGARDS THE QUANT UM OF THE PENALTY THERE IS A DISCRETION. THAT DISCRETION WAS AVAILABL E TO THE TRIBUNAL AS WELL WHEN IT CONSIDERED THE MATTER IN APPEAL. OF GR EATER IMPORTANCE IS THE NECESSITY FOR A DEFINITE FINDING THAT THERE IS CONCEALMENT, AS WITHOUT SUCH A FINDING OF CONCEALMENT, THERE CAN BE NO QUESTION OF IMPOSING ANY PENALTY. THE MERE REVISION OF THE INCO ME TO A HIGHER FIGURE BY THE ASSESSING AUTHORITY DID NOT AUTOMATIC ALLY WARRANT AN INFERENCE OF CONCEALMENT OF THE EXPENDITURE ON THE CONSTRUCTION. THE ADDITION TO THE INCOME OF THE ASSESSEE BASED ON THE REPORT OF THE VALUER WAS RIGHTLY REGARDED BY THE TRIBUNAL AS BEIN G INSUFFICIENT FOR RECORDING A FINDING OF CONCEALMENT OF INCOME. CONCE ALMENT IMPLIES SOME DELIBERATE ACT ON THE PART OF THE ASSESSEE IN WITHHOLDING THE TRUE FACTS FROM THE AUTHORITIES. THE FACT THAT THE VALUE R ASSESSED THE BUILDING AT A FIGURE HIGHER THAN THE ONE REPORTED B Y THE ASSESSEE DID NOT BY ITSELF LEAD TO THE INFERENCE THAT THERE HAD BEEN CONCEALMENT. THERE WAS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAD DELIBERATELY CONCEALED THE COST OF CONSTRUCTION. THE ASSESSEE WA S NOT REQUIRED TO REPORT THE PROGRESS OF THE CONSTRUCTION AS THE RETU RN DID NOT REQUIRE HIM TO DO SO. THEREFORE, THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT VALID. 7.1 HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MOOL CHAND SIRI KISHAN DASS (2001) 248 ITR 463 HELD THE ASSESSEE FILED A RETURN OF INCOME FROM SALARY AT RS.1,800. ACTION WAS TAKEN UNDER SECTION 34 OF THE INDIAN INCOME-TAX ACT, 1922, AND REASSESSMENT WAS COMPLETED ON AUGUST 28, 1958, FOR THE ASSESSMENT YEAR 1954-55, WHICH WAS SET ASIDE BY THE APPELLATE ASSISTANT COMMISSIONER ON NOVEMBER 6, 1959. WHILE MAKING A FR ESH ASSESSMENT, THE ASSESSING OFFICER MADE ENQUIRIES IN TO THE BUSINESS ACTIVITIES OF THE ASSESSEE WHO ULTIMATELY AGREED FO R ASSESSMENT ON A TOTAL INCOME OF RS.29,900 AS PER THE ENDORSEMENT IN THE ORDER-SHEET OF THE ASSESSING OFFICER DATED FEBRUARY 7, 1973. THE I NCOME-TAX OFFICER INITIATED PENAL PROCEEDINGS AND IMPOSED PENALTY. ON APPEAL, THE APPELLATE ASSISANT COMMISSIONER UPHELD THE DECISION OF THE ASSESSING OFFICER. ON FURTHER APPEAL, THE TRIBUNAL HELD THAT MERELY BECAUSE THERE WAS AN AGREEMENT FOR ASSESSMENT AT A PARTICUL AR FIGURE THAT DID NOT PER SE BRING IN THE CONCEPT OF CONCEALMENT. THE REVENUE DID NOT ITA NO. 297/AGRA/2013 6 PROVE CONCEALMENT WHICH WOULD ENABLE IT TO LEVY PEN ALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. ON A REFERENCE: HELD, THAT THE RETURN WAS FILED MUCH EARLIER TO AP RIL 1, 1964, AND REASSESSMENT WAS COMPLETED ON AUGUST 28, 1958, WHICH AGAIN WAS SET ASIDE BY THE APPELLATE ASSISTANT COMMISSION ER ON NOVEMBER 6, 1959. THAT BEING THE POSITION, THE REVENUE WAS R EQUIRED TO PROVE CONCEALMENT. HENCE, THE TRIBUNAL WAS RIGHT IN HOLDI NG THAT PENALTY UNDER SECTION 271(1)(C) COULD NOT BE IMPOSED. 7.2 HONBLE M.P. HIGH COURT IN THE CASE OF CIT VS. BETA NEPTHOL LTD. (2005) 272 ITR 323 HELD HELD, DISMISSING THE APPEAL, THAT THE ASSESSEE HA D SURRENDERED THE DISPUTED ITEMS AND PAID TAX THEREON. IN THE OPINION OF BOTH THE AUTHORITIES, I.E., THE COMMISSIONER (APPEALS) AND T HE TRIBUNAL, NO CASE WHATSOEVER WAS MADE OUT TO INVOKE THE PROVISIO NS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, AND HENCE, T HE ORDER OF PENALTY PASSED BY THE ASSESSING OFFICER WAS NOT SUSTAINABLE . THIS WAS CORRECT AND DID NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION O F LAW. 7.3 I.T.A.T. HYDERABAD BENCH IN THE CASE OF BALARAM KRISHNA ENGG. CONTRS. CORPN VS. DEPUTY COMMISSIONER OF INCOME-TAX (1996) 56 ITD 411 HELD SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 PE NALTY- FOR CONCEALMENT OF INCOME- WHETHER, ON FACTS STATED UND ER HEAD BEST JUDGMENT ASSESSMENT, GROSS PROFIT ADDITION WOULD B E A MATTER OF ESTIMATING PROFIT OR DISALLOWANCE OF ROUTINE NATURE AND WOULD NOT CONSTITUTE CONCEALMENT ON PART OF ASSESSEE AND NO P ENALTY WOULD BE LEVIABLE ON THIS ACCOUNT HELD, YES WHETHER THOU GH SUM OF RS.8,28,781/- REPRESENTED CONCEALMENT BECAUSE OF SU PPRESSION OF RECEIPTS, YET NO PENALTY WITH RESPECT THERETO COULD BE LEVIED BECAUSE RETURNED INCOME AS WELL AS ASSESSED INCOME WAS A LO SS AND THERE WAS NO TAX PAYABLE BY ASSESSEE HELD, YES 8. CONSIDERING THE ABOVE DISCUSSION, IN THE LIGHT O F THE ABOVE DECISIONS, IT IS CLEAR THAT NO DEFINITE FINDING OF FACT OR ANY CONTRARY MATERIAL HAS BEEN BROUGHT ON RECORD TO PROVE THAT T HE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME. IN THE ABSE NCE ANY DETAILED DISCUSSION, ANY MATERIAL ON RECORD, WE ARE OF THE V IEW THAT LEVY OF ITA NO. 297/AGRA/2013 7 PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THE F ACTS AND CIRCUMSTANCES OF THE CASE AT ESTIMATE OF INCOME, WO ULD NOT BE WARRANTED. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY UNDER SECTION 271(1)(C ) OF THE ACT. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. THE LD. DR DID NOT DISPUTE THAT THE ISSUE IS COVERE D IN FAVOUR OF THE ASSESSEE BY THE ABOVE DECISION. FOLLOWING THE ABOVE DECISION, WE DI SMISS THE DEPARTMENTAL APPEAL. 4. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY