M/s. Shivam Projects, Surat V. Asstt.Commissioner of Income Tax,Circle-5, Surat

ITA 3059/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2097 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 02-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Assessee Lawyers: MITISH S MODI
• Keywords: Tangible material
• Section: 68; 271(1)(c)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.1496/AHD/2013/SRT / ASSESSMENT YEAR: 2007-08 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-5, SURAT. VS. M/S. SHIVAM PROJECTS, 13, KRISHNA NAGAR SOCIETY, KAMREJ CHAR RASTA, SURAT - 394 285. [PAN: AAZFS 3828F] ( / APPELLANT) ( !' /RESPONDENT) . / ITA NO.3059/AHD/2015/SRT / ASSESSMENT YEAR: 2007-08 M/S. SHIVAM PROJECTS, 13, KRISHNA NAGAR SOCIETY, KAMREJ CHAR RASTA, SURAT - 394 285. [PAN: AAZFS 3828F] ASST. COMMISSIONER OF INCOME TAX, CIRCLE-5, SURAT. ( / APPELLANT) ( !' /RESPONDENT) / ASSESSEE BY : SHRI MITISH S. MODI, C.A /REVENUE BY : SHRI R.P. RASTOGI, SR. D.R /DATE OF HEARING : 19-04-2018 /DATE OF PRONOUNCEMENT : 25-04-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THESE ARE CROSS APPEALS, I.E., BY THE REVENUE AND T HE ASSESSEE, ARISING OUT OF THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-1, SURAT 2 ITA NOS. 1496/AHD/2013/SRT & ITA NO.3059/AHD/2015 (A.Y: 2007-08) M/S. SHIVAM PROJECTS (CIT(A) FOR SHORT) DATED 11.03.2013 & 07.09.2015 RESPECTIVELY FOR THE ASSESSMENT YEAR (A.Y) 2007-08. 2. THE GROUNDS RAISED BY THE REVENUE IN ITA NO.149 6/AHD/2013/SRT READ AS FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) HAS ERRED IN RESTRICTING THE ADDITION OF RS.34,53,232/- FROM RS. 1,24,01,628/- MADE BY THE A .O. FOR VARIOUS DISALLOWANCES AND ADDITION U/S.68 OF THE AC T DISREGARDING THE FINDING OF THE A.O. IN ASSESSMENT PROCEEDINGS AND IGNORING THE FACT THAT THE ADDITION MADE BY THE A.O. ARE AS PER THE PROVISIONS OF THE ACT, IN ADDITION TO THE R EGULAR PROFITS OFFERED/ARISING FROM BUSINESS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A), SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS, THEREFORE, PRAYED THAT TH E ORDER OF THE LD.CIT(A), SURAT MAY BE SET-ASIDE AND THAT OF THE A SSESSING OFFICER'S ORDER MAY BE RESTORED. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.305 9/AHD/2015/SRT READ AS FOLLOWS: 1. THE LEARNED CIT (APPEALS)-1, SURAT HAS ERRED IN LAW AS WELL AS ON THE FACTS WHILE CONFIRMING THE ORDER U/S 271(L)(C) OF T HE ACT PASSED BY THE ACIT, CIRCLE 5, SURAT LEVYING PENALTY TO THE EXTENT OF RS. 8,46,267/- FOR THE ALLEGED FURNISHING OF INACCURATE PARTICULARS OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, BOTH THE LOWER AUTHORITIES ERRED IN OVERLOOKING AND IN SUMMA RILY REJECTING THE DETAILED STATEMENT OF FACTS SUBMITTED ALONG WITH ME MORANDUM OF APPEAL, EXPLANATIONS DULY SUBSTANTIATED BY VARIOUS DOCUMENT S AND EVIDENCES PLACED IN PAPER BOOK FILED AND BOOKS OF ACCOUNTS, E TC. PRODUCED VIDE VARIOUS WRITTEN SUBMISSIONS AND HENCE, THE PENALTY U/S 271(L)(C) OF THE ACT FOR THE ALLEGED CONCEALMENT OF INCOME CONFIRMED BY THE CIT (APPEALS) IS LIABLE TO BE STRUCK DOWN. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, BOTH THE LOWER AUTHORITIES HAVE GRIEVOUSLY FAILED TO SEE AND CONSI DER IN THE RIGHT AND PROPER PERSPECTIVES THAT THE ADDITIONS/DISALLOWANCE S CONFIRMED IN THE QUANTUM/ASSESSMENT PROCEEDINGS WAS PURELY ON ESTIMA TION AND PRESUMPTION OF NET PROFIT EARNING RATIO IN DUE CONS IDERATION OF THE COGENT AND AUTHENTIC EVIDENCES AND BOOKS OF ACCOUNTS FURNI SHED AN THEREFORE, 3 ITA NOS. 1496/AHD/2013/SRT & ITA NO.3059/AHD/2015 (A.Y: 2007-08) M/S. SHIVAM PROJECTS THE ACTION OF THE LOWER AUTHORITIES IN CONFIRMING T HE PENALTY FOR THE ALLEGED CONCEALMENT OF INCOME SOLELY ON REPRODUCTIO N OF THE ASSESSMENT ORDER AND MUSH LESS, WITHOUT BRINGING AN Y TANGIBLE MATERIAL DURING THE PENALTY PROCEEDINGS TO PROVE ANY ACT OF CONCEALMENT OF INCOME BY THE APPELLANT, IS WITHOUT JURISDICTION, B AD IN LAW, PERVERSE, ILLEGAL AND LIABLE TO THE QUASHED. ITA NO.1496/AHD/2013/SRT : 4. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBU NAL. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD. CIT(A) H AS ERRED IN RESTRICTING THE ADDITION OF RS.34,53,232/- FROM RS. 1,24,01,628/- M ADE BY THE ASSESSING OFFICER(AO) FOR VARIOUS DISALLOWANCES AND ADDITIONS U/S.68 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) DISREGARDING THE FI NDING OF THE A.O IN ASSESSMENT PROCEEDINGS AND IGNORING THE FACT THAT T HE ADDITION MADE BY THE A.O ARE AS PER THE PROVISIONS OF THE ACT, IN ADDITI ON TO THE REGULAR PROFITS OFFERED/ARISING FROM BUSINESS. THE LD. DR FURTHER SUBMITTED THAT THE FIRST APPELLATE AUTHORITY OUGHT TO HAVE UPHELD THE ASSESS MENT ORDER BUT HE GRANTED TO THE ASSESSEE WITHOUT ANY JUSTIFIED BASIS AND REASON. THEREFORE, IMPUGNED ORDER MAY KINDLY BE SET ASIDE BY RESTORING THAT OF THE ASSESSING OFFICER (AO). 5. REPLYING TO THE ABOVE, THE ASSESSEES REPRESENTA TIVE (AR) DREW OUR ATTENTION TOWARDS RELEVANT PARAS 17-17.6 AND SUBMIT TED THAT THE FIRST APPELLATE AUTHORITY HAS GRANTED RELIEF TO THE ASSES SEE AFTER PROPER APPRECIATION OF FACTS AND CIRCUMSTANCES AND THERE I S NO INFIRMITY IN THE FIRST APPELLATE ORDER. THEREFORE, THE SAME MAY KINDLY BE UPHELD BY DISMISSING APPEAL OF THE REVENUE. 4 ITA NOS. 1496/AHD/2013/SRT & ITA NO.3059/AHD/2015 (A.Y: 2007-08) M/S. SHIVAM PROJECTS 6. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, FIRST OF ALL, ON PERUSAL OF RELEVANT PART OF ASSESSMENT ORDER IT IS APPARENT THAT THE AO MADE ADDITIONS/DISALLOWANCES ON EXCAVATION EXPENSES, LAB OUR EXPENSES, CEMENT EXPENSES ETC., AND THE LD. CIT(A) UPHELD THE ACTION OF THE AO IN PRINCIPLE BY OBSERVING THAT THE CLAIM OF EXPENDITURE UNDER VARIO US HEADS REFERRED IN THE GROUNDS STATED IN FORM NO.35 I.E., FROM 2 (II) TO 2 (VII) ARE NOT FULLY VERIFIED. THE LD. CIT(A) FURTHER NOTED THAT THESE ADDITIONS, EXCEPT ADDITION U/S. 68 OF THE ACT, COMES TO 29.9% OF TOTAL TURNOVER WHICH IS AN UNREALISTIC PREPOSITION. THEREAFTER, THE LD. FIRST APPELLATE AUTHORITY PROCE EDED TO ESTIMATE GROSS PROFIT OF THE ASSESSEE. AFTER CONSIDERING THE ENTIRE FACT S AND CIRCUMSTANCES THE LD. CIT(A) HELD THAT WHILE THERE IS A MARGINAL IMPROVEM ENT IN THE NET PROFIT, THE FALL IN G.P IS TO THE EXTENT OF 12.66% ON THE TURNO VER OF RS. 3,45,32,320/- COMES TO RS. 43,71,792/- AND DISALLOWANCES LIKE EXC AVATION EXPENSES, LABOUR EXPENSES AND CEMENT EXPENSES ETC., AFFECT TH E GROSS PROFIT. FINALLY, THE FIRST APPELLATE AUTHORITY ESTIMATED NET PROFIT @ 10% OF TURNOVER AND TOTAL INCOME OF ASSESSEE WAS TAKEN RS. 34,53,232/-. 7. FROM PARA 17.6 OF FIRST APPELLATE ORDER, WE OBSE RVE THAT THE LD. CIT(A) AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCE S AND GP/NP RATE OF ASSESSEE FOR PRECEDING YEAR AND THE AMOUNTS OF ADDI TIONS/DISALLOWANCES MADE BY THE A.O, EXCEPT ADDITION U/S. 68 OF THE ACT , THEREAFTER, HE REACHED TO A BALANCING CONCLUSION THAT THE TOTAL INCOME OF THE ASSESSEE IS TO BE ESTIMATED @ 10% OF TURNOVER. IN THIS CONCLUSION, WE ARE UNABLE TO SEE ANY AMBIGUITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE SAME AS 5 ITA NOS. 1496/AHD/2013/SRT & ITA NO.3059/AHD/2015 (A.Y: 2007-08) M/S. SHIVAM PROJECTS THE LD. CIT(A) HAS NOT ONLY TAKEN ON ACCOUNT GP AND NP RATE OF ASSESSEE DURING IMMEDIATELY PREVIOUS YEARS, BUT ALSO CONSIDE RED THE PERCENTAGE OF GP AND NP AFTER MAKING ADDITIONS/DISALLOWANCE MADE BY THE A.O. IN THIS SITUATION, WE DECLINE TO ACCEPT ALLEGATION OF THE A .O THAT THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE AND THUS, WE UPHOLD THE FIRST APPELLATE ORDER. ACCORDINGLY, GROUND NO.1 & 2 OF REVENUE ARE DISMISSED. ITA NO.3059/AHD/2015/SRT : 8. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBU NAL. THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE LEARNED CIT (APPEALS)-1, SURAT HAS ERRED IN LAW AS WELL AS ON THE FACTS WHILE CONFIRMI NG THE ORDER U/S 271(L)(C) OF THE ACT PASSED BY THE ACIT, CIRCLE 5, SURAT LEVYING PENALTY TO THE EXTENT OF RS. 8,46,267/- FOR THE ALLEGED FURNISHING OF INACCU RATE PARTICULARS OF INCOME. THE LD. AR FURTHER SUBMITTED THAT BOTH THE LOWER AU THORITIES ERRED IN OVERLOOKING AND IN SUMMARILY REJECTING THE DETAILED STATEMENT OF FACTS SUBMITTED ALONG WITH MEMORANDUM OF APPEAL, EXPLANAT IONS DULY SUBSTANTIATED BY VARIOUS DOCUMENTS AND EVIDENCES PL ACED IN PAPER BOOK FILED AND BOOKS OF ACCOUNTS, ETC. PRODUCED VIDE VAR IOUS WRITTEN SUBMISSIONS AND HENCE, THE PENALTY U/S 271(L)(C) OF THE ACT FOR THE ALLEGED CONCEALMENT OF INCOME CONFIRMED BY THE CIT (APPEALS) IS LIABLE TO BE STRUCK DOWN. 9. THE LD. AR VEHEMENTLY CONTENDED THAT BOTH THE LO WER AUTHORITIES HAVE GRIEVOUSLY FAILED TO SEE AND CONSIDER IN THE RIGHT AND PROPER PERSPECTIVES THAT 6 ITA NOS. 1496/AHD/2013/SRT & ITA NO.3059/AHD/2015 (A.Y: 2007-08) M/S. SHIVAM PROJECTS THE ADDITIONS/DISALLOWANCES CONFIRMED IN THE QUANTU M/ASSESSMENT PROCEEDINGS WAS PURELY ON ESTIMATION AND PRESUMPTIO N OF NET PROFIT EARNING RATIO IN DUE CONSIDERATION OF THE COGENT AND AUTHEN TIC EVIDENCES AND BOOKS OF ACCOUNTS FURNISHED AN THEREFORE, THE ACTION OF T HE LOWER AUTHORITIES IN CONFIRMING THE PENALTY FOR THE ALLEGED CONCEALMENT OF INCOME SOLELY ON REPRODUCTION OF THE ASSESSMENT ORDER AND MUSH LESS, WITHOUT BRINGING ANY TANGIBLE MATERIAL DURING THE PENALTY PROCEEDINGS TO PROVE ANY ACT OF CONCEALMENT OF INCOME BY THE APPELLANT, IS WITHOUT JURISDICTION, BAD IN LAW, PERVERSE, ILLEGAL AND LIABLE TO THE QUASHED. 10. THE LD. AR SUBMITTED THAT THE MAJOR PART OF ADD ITION HAS BEEN DISMISSED BY THE LD. CIT(A) AND A MINOR PART OF ADD ITION WAS UPHELD ON THE BASIS OF ESTIMATION OF PROFIT ON TURNOVER. THEREFOR E, ALLEGATION OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME CANNOT BE ALLEGED AGAINST THE ASSESSEE FOR IMPOSING PENALTY U/S. 271(1)(C) OF THE ACT. THE LD. AR SUBMITTED THAT PENALTY BASED O N ESTIMATION OF INCOME CANNOT BE HELD AS SUSTAINABLE AND THEREFORE, PENALT Y MAY KINDLY BE CANCELLED. THE LD. AR ALSO SUBMITTED THAT AS PER D ECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS (P.) LTD. [2010] 322 ITR 158 (SC), MERELY BECAUSE THE ASSESSEE HAD CLAIMED EXPENDITUR E, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT FOUND TO BE ACCEPTED BY THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U /S. 271(1)(C) OF THE ACT. 7 ITA NOS. 1496/AHD/2013/SRT & ITA NO.3059/AHD/2015 (A.Y: 2007-08) M/S. SHIVAM PROJECTS 11. THE LD. AR PLACING RELIANCE ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGG. CO. VS. CIT 282 ITR 642 (GUJ) SUBMITTED THAT IN CONCLUDING PARA OF PENALTY ORDER AND IN PARA 6.6 AND 6.7 OF FIRST APPELLATE ORDER THERE IS NO CLEAR CUT FINDING BY THE AUTHORITIES BELOW AS TO WHETHER PENALTY U/S. 271(1)(C) OF THE ACT IS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME OR WHETHER ANY INACCURATE PAR TICULARS OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE THEN, PENALTY CANNOT BE HELD AS SUSTAINABLE. 12. REPLYING TO THE ABOVE, THE LD. CIT-DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE C LAIMED EXPENSES WHICH WERE NOT VERIFIABLE. THEREFORE, ESTIMATION OF INCO ME WAS DONE BY THE LD. CIT(A). IN THIS SITUATION, ASSESSEE IS LIABLE FOR PENALTY U/S. 271(1)(C) OF THE ACT. 13. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISS IONS, WE ARE OF THE VIEW THAT UNDISPUTEDLY A.O MADE ADDITIONS BY DISALL OWING VARIOUS EXPENSES AND THE LD. CIT(A) AFTER CONSIDERING ENTIRE FACTS A ND CIRCUMSTANCES RESTRICTED THE ADDITION TO 10% OF TURNOVER AND IT WAS DONE BY ESTIMATION OF INCOME BY FOLLOWING BASIS OF PRECEDING YEAR PROFIT PERCENTAGE . IN THIS SITUATION, WE HAVE NO HESITATION TO HOLD THAT ADDITION HAS BEEN MADE O N ESTIMATION BASIS. IN THE CASE OF RELIANCE PETRO (SUPRA) OF HON'BLE SUPREME C OURT HELD THAT MERELY BECAUSE CLAIM OF ASSESSEE WAS NOT ACCEPTED OR WAS N OT FOUND TO BE ACCEPTABLE BY THE REVENUE AUTHORITIES, DOES NOT AUT OMATICALLY ALLOW TO IMPOSE PENALTY U/S. 271(1)(C) OF THE ACT. IN THE PR ESENT CASE, IT IS NOT AN 8 ITA NOS. 1496/AHD/2013/SRT & ITA NO.3059/AHD/2015 (A.Y: 2007-08) M/S. SHIVAM PROJECTS ALLEGATION OF A.O THAT THE ASSESSEE MADE A BOGUS OR MALAFIDE CLAIM. HOWEVER, IN ABSENCE OF VERIFICATION THE AUTHORITIES BELOW RAISED A DOUBT REGARDING CLAIM OF ASSESSEE ON CERTAIN EXPENSES AND FINALLY THE LD. CIT(A) RESTRICTED THE ADDITION BY ESTIMATING THE PROFIT @ 10% OF TURNOVER WHICH IS ON THE ESTIMATION BASIS. IN THIS SITUATION, ALLEGATIO N OF EITHER CONCEALMENT OF PARTICULARS OF INCOME OR ALLEGATIONS OF FURNISHING OF INACCURATE PARTICULARS OF INCOME CANNOT BE MADE AGAINST THE ASSESSEE FOR IMPO SING PENALTY U/S. 271(1)(C) OF THE ACT. AT THIS JUNCTURE, IT ALSO RE LEVANT TO POINT OUT THAT IN THE LAST PARA OF PENALTY ORDER, THE A.O HOLD THAT IT IS A FIT CASE OF IMPOSING PENALTY, BUT THERE IS NO CLEAR FINDING ON WHICH LIM B OF S. 271(1)(C) OF THE ACT HE IS IMPOSING THE PENALTY. SIMILARLY, IN PARA 6.6 & 6.7 THERE IS NO CLEAR FINDING BY THE FIRST APPELLATE AUTHORITY THAT WHAT WAS THE ACT OF ASSESSEE WHICH ATTRACTS PENALTY PROVISIONS U/S. 271(1)(C) OF THE ACT. THEREFORE, IN VIEW OF RATIO OF DECISION OF HON'BLE JURISDICTION HIGH C OURT IN THE CASE OF NEW SORATHIA ENGG. CO. (SUPRA) PENALTY U/S. 271(1)(C) O F THE ACT CANNOT BE HELD AS SUSTAINABLE AND VALID. FURTHER MORE, AS PER DEC ISION HOBLE HIGH COURT OF CHHATTISGARH IN THE CASE OF CIT VS. VIJAY KUMAR JAIN 325 ITR 378 (CHHATTISGARH) AS ALSO RELIED BY THE LD. AR, PENALTY FOR CONCEALM ENT OF INCOME U/S. 271(1)(C) OF THE ACT CANNOT BE IMPOSED IN THE CASE OF ESTIMATION OF INCOME. 14. ON THE BASIS OF FOLLOWING DISCUSSION, WE REACH OF A LOGICAL CONCLUSION THAT THE A.O IMPOSED PENALTY WITHOUT ANY VALID REAS ON ON THE BASIS OF ADDITION BASED ON ESTIMATION BASIS AND THE SAME WAS UPHELD BY THE LD. 9 ITA NOS. 1496/AHD/2013/SRT & ITA NO.3059/AHD/2015 (A.Y: 2007-08) M/S. SHIVAM PROJECTS CIT(A) WITHOUT ANY REASONABLE AND ACCEPTABLE CAUSE. HENCE, PENALTY ORDER AS WELL AS FIRST APPELLATE ORDER IS NOT SUSTAINABLE AND WE DIRECT THE AO TO DELETE THE PENALTY. ACCORDINGLY, GROUNDS OF REVENU E IN THIS APPEAL ARE ALLOWED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THAT OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 5 TH APRIL, 2018. / SURAT ; DATED : 25 TH APRIL, 2018 EDN ! $ / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. # ( ) / THE CIT (A) - 1, SURAT; 4. PRL. CIT, SURAT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE. / BY ORDER, // TRUE COPY // ) / ASSISTANT REGISTRAR , / ITAT, SURAT SD/ - SD/ - ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER