Sh.Paramjit Singh prop .P.S., Ludhiana V. ACIT, Ludhiana

ITA 299/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95547 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: S R CHHABRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 299/CHD/2015 ASSESSMENT YEAR: 2008-09 SHRI PARAMJIT SINGH, VS THE ACIT, PROP. P.S. CONSTRUCTIONS, CIRCLE V, LUDHIANA. LUDHIANA. PAN: ADGPS5783D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.R.CHHABRA RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 10.09.2015 DATE OF PRONOUNCEMENT : 16.09.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-2 LUDHIANA DATED 29.01.20 15 FOR ASSESSMENT YEAR 2008-09 CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT. 2. THE BRIEF FACTS RELATING TO THE PENALTY ARE THAT THE ASSESSEE IS A CONTRACTOR. THE ASSESSING OFFICER AS KED THE ASSESSEE TO PRODUCE COMPLETE BOOKS OF ACCOUNT ALONGWITH VOUCHERS. THE ASSESSING OFFICER HOWEVER NOTED THAT ASSESSEE HAD NOT MAINTAINED STOCK REGIST ER, 2 WORK-IN-PROGRESS REGISTER, MUSTER ROLL WITH RESPECT TO LABOUR AND MAN-POWER DEPLOYED, VOUCHERS OF LABOUR A ND WAGES AND VOUCHERS OF CASH PAYMENTS. THE ASSESSEE EXPLAINED THAT THERE WAS ONE ACCOUNTANT DURING THE YEAR AND AS SUCH DETAILS OF COST PERTAINING TO ALL THE S ITES COULD NOT BE MAINTAINED. THE MUSTER ROLL PERTAININ G TO LABOUR WAS NOT MAINTAINED DUE TO PROBLEM OF LABOUR BECAUSE OF NAREGA. THE ASSESSING OFFICER ALSO NOTE D THAT THERE IS A FALL IN THE PROFIT RATE. THE ASSES SING OFFICER ACCORDINGLY, REJECTED THE BOOK RESULTS AND APPLIED PROFIT RATE OF 3% AND MADE ADDITION OF RS. 9,54,446/- AND ALSO INITIATED THE PENALTY PROCEEDIN GS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. T HE ASSESSING OFFICER VIDE SEPARATE ORDER, LEVIED THE P ENALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH WAS CONFIR MED BY THE LD. CIT(APPEALS). 3. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE LD. COUNSEL FOR THE ASSESSEE FILED THE REVISED FORM NO. 36 CHALLENGING THE LEVY OF PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT, AS IN THE ORIGINAL FORM NO. 3 6, THE PENALTY UNDER SECTION 271A WAS ALSO CHALLENGED. HE HAS SUBMITTED THAT SINCE ESTIMATED ADDITION IS MADE, THEREFORE, PENALTY IS NOT LEVIABLE AND RELIED UPON DECISION OF RAJASTHAN HIGH COURT IN THE CASE OF KRI SHI TYRE RETREADING & RUBBER INDUSTRIES 360 ITR 580 AND DECISION OF THE GUJRAT HIGH COURT IN THE CASE OF 3 WHITELENE CHEMICALS 360 ITR 385. ON THE OTHER HAND , LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L AVAILABLE ON RECORD. THE ASSESSEE PRODUCED BOOKS O F ACCOUNT ETC. BEFORE ASSESSING OFFICER WHICH WERE CHECKED AT THE ASSESSMENT STAGE, HOWEVER, BOOK RESU LTS WERE REJECTED BECAUSE OF NON-MAINTENANCE OF CERTAIN RECORDS IN SUPPORT OF THE BOOKS OF ACCOUNT. BUT ASSESSEE HAS DECLARED NET PROFIT RATE OF 2.43% IN T HIS YEAR AS AGAINST NET PROFIT RATE OF 3.57% AND 0.48% SHOWN IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 AND 2006-07 RESPECTIVELY. THE ASSESSING OFFICER, HOWEVER, APPLIED PROFIT RATE OF 3% FOR THE PURPOSE OF MAKING ESTIMATED ADDITION. THE HISTORY OF THE ASSESSEE, THUS, SHOWS THAT ASSESSEE MAINTAINED BOOKS OF ACCOUNT AND PRODUCED THE SAME BEFORE ASSESSING OFFICER, HOWEVER, THERE WERE NON- MAINTENANCE OF CERTAIN REGISTERS, THEREFORE, ASSES SING OFFICER ESTIMATED THE PROFIT RATE BY REJECTING BOOK RESULTS OF THE ASSESSEE. IN ASSESSMENT YEAR 2006-0 7, EVEN THE PROFIT SHOWN BY ASSESSEE WAS LESSER AS COMPARED TO THE PROFIT DECLARED IN ASSESSMENT YEAR UNDER APPEAL. THESE FACTS, THEREFORE, CLEARLY SHOW THAT IT IS NOT A CASE OF FURNISHING INACCURATE PARTICULA RS OF INCOME OR CONCEALING THE PARTICULARS OF INCOME. THE ASSESSING OFFICER HAS NOT BROUGHT ANY COGENT AND RELIABLE FACTS ON RECORD TO SHOW THAT ASSESSEE HAS 4 FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCE ALED THE PARTICULARS OF INCOME. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASES OF DHILLON RICE MIL LS 256 ITR 447 AND HARI GOPAL SINGH 258 ITR 85 HELD TH AT PENALTY UNDER SECTION 271(1)(C) OF THE ACT NEED NOT TO BE IMPOSED ON ESTIMATED INCOME. THE DECISIONS CITED B Y LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORT THE CASE OF THE ASSESSEE THAT WHEN BOOKS OF ACCOUNT HAVE BEEN REJEC TED AND PROFIT IS ESTIMATED BY APPLYING HIGHER PROFIT R ATE, WOULD NOT DISCLOSE CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME. THEREFORE, IN OU R VIEW, IT IS NOT A FIT CASE OF LEVY OF THE PENALTY. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BE LOW AND CANCEL THE PENALTY UNDER SECTION 271(1)(C) OF T HE ACT. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNE SH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH SEPTEMBER, 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH