Raja Ram Contractor, Sangrur V. ACIT, Sangrur

ITA 308/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77012 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-04-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 19-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Competent authority
• Section: 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 308/CHD/2013 ASSESSMENT YEARS : 2005-06 RAJA RAM CONTRACTOR VS. A.C.I.T. CIRCLE, SANGRUR 301, AGGAR NAGAR NOW AT KRISHNA BASTI PATIALA GATE SANGRUR AACFR 7185 B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: SHRI J .S. NAGAR DATE OF HEARING 2.4.2014 DATE OF PRONOUNCEMENT 21.4.2014 O R D E R PER T.R. SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 11 .1.2013 OF THE LD CIT(A), PATIALA. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: 1 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY OF RS. 3,21,12 2/- U/S 271(1)(C) OF THE INCOME -TAX ACT, 1961. 2 THAT THE LD. CIT(A) HAS FAILED TO CONSIDER THAT P ENALTY WAS LEVIED BY THE ASSESSING OFFICER ON THE ADDITION WHI CH WAS MADE ON ESTIMATED BASIS. 3 THAT THE LD. CIT(A) HAS ALSO ERRED IN IGNORING TH E FACTS THAT EVEN PART OF ESTIMATED ADDITION MADE BY THE ASSESSI NG OFFICER WAS REDUCED IN THE QUANTUM APPEAL BY THE LD. CIT(A). 4 THAT THE PENALTY U/S 271(1)(C) HAS BEEN LEVIED A GAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSIONS MADE BY THE ASSESSEE HAS NOT BEEN CONSIDERED PROPERLY. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT THE A SSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS. 4253 21/-. INITIALLY ASSESSMENT WAS FRAMED U/S 144 AT AN INCOM E OF RS. 2914764/- WHEREBY GP ADDITION OF RS. 1357905/- AND FURTHER ADDITION OF RS. 1131538/- ON ACCOUNT OF SUNDRY CRED ITOR WAS 2 MADE. ON APPEAL THE LD. CIT(A) DELETED THE ADDITIO N ON ACCOUNT OF SUNDRY CREDITORS AND ESTIMATED THE PROFI T AT 10% INSTEAD OF 12% ESTIMATED BY THE ASSESSING OFFICER. THIS ORDER HAS BEEN CONFIRMED BY THE TRIBUNAL IN ITA NO. 1075/ CHD/2007. THEREAFTER AN ORDER U/S 263 WAS PASSED DIRECTING TH E ASSESSING OFFICER TO EXAMINE CERTAIN ISSUES AND FIN ALLY THE INCOME HAS BEEN ASSESSED AT RS. 1302880/-. ON THIS PENALTY PROCEEDINGS WERE INITIATED. IN RESPONSE TO THE SHO W CAUSE NOTICE IT WAS MAINLY STATED THAT PENALTY CANNOT BE IMPOSED IN CASE OF ESTIMATED INCOME AND RELIANCE WAS PLACED ON VARIOUS CASE LAWS. THE ASSESSING OFFICER DID NOT FIND FORC E IN THE SAME AND LEVIED A MINIMUM PENALTY OF RS. 321123/-. 4 ON APPEAL ACTION OF THE ASSESSING OFFICER WAS CON FIRMED BY THE LD. CIT(A). 5 BEFORE US. IT WAS MAINLY STATED THAT IT WAS A CAS E OF ESTIMATION OF INCOME AND THEREFORE PENALTY COULD NO T BE IMPOSED AND RELIANCE WAS PLACED ON FOLLOWING CASE L AWS: AGGARWAL CONSTRUCTION CO. VS. ACIT, ITA NO. 843/CHD /2009 (CHD) DCIT VS. KALINDI RAIL NIRMAN ENGG LTD, 52 SOT 91 (D ELHI-TRI) CIT VS. IQBAL SINGH & CO. 180 TAXMAN 355 (PH) FURTHER IT WAS CONTENDED THAT PENALTY ORDER IS TIME BARRED. 6 ON THE OTHER HAND, THE LD. D.R. FOR THE REVENUE STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 7 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT IT IS A SIMPLE CASE OF ESTIMATION OF PROFITS AFTER REJECTIO N OF BOOKS. IN SUCH CASES NORMALLY PENALTY IS NOT LEVIABLE. THE H ON'BLE PUNJAB AND HARYANA HIGH COURT IN CASE OF CIT VS. I QBAL SINGH & CO. (SUPRA) HAS HELD AS UNDER: PENALTY U/S 271(1)(C) CONCEALMENT ADDITION ON THE BASIS OF ESTIMATE CIT(A) WHILE CONFIRMING PENALTY, NOWHERE STATED THAT ASSESSEE HAD NOT DISCLOSED ALL FACTS NECESSARY TO C OMPUTE INCOME IT WAS ALSO FOUND THAT ADDITION TO INCOME HAD BEE N MADE ON THE BASIS OF ESTIMATE NO MATERIAL WAS BROUGHT ON RECO RD TO SUBSTANTIATE THAT ASSESSEE HAD FAILED TO DISCLOSE N ECESSARY PARTICULARS OF INCOME TRIBUNAL WAS JUSTIFIED IN C ANCELLING PENALTY CIT VS. M.M. RICE MILLS, 253 ITR 17 (PH) FOLLOWED . SIMILAR OBSERVATIONS HAVE BEEN MADE BY THE TRIBUNAL IN CASE OF AGGARWAL CONSTRUCTION CO. VS. ACIT (SUPRA) VIDE PAR A 10 WHICH ARE AS UNDER: 3 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIALS AVAILABLE ON RECORD. PERUSAL OF THE FINDI NGS OF THE CIT(A), AS WELL AS THAT OF ASSESSING OFFICER ARE A CLEAR REFLE CTION OF PERCEPTION OF SUCH AUTHORITY, IN THE MATTER OF LEVY OF PENALTY U/ S 271(1)(C) OF THE ACT. THE LEVY OF PENALTY 8IS DISCRETIONARY AND NOT MANDA TORY U/S 271(1)(C) OF THE ACT. THE PROVISIONS OF SECTION 271(1) (C) OF TH E ACT BEING PENAL IN CHARACTER, MUST BE STRICTLY INTERPRETED. BOTH THE A SSESSING OFFICER AND CIT(A), FAILED OT BRING MATERIAL ON RECORD, TO DEMO NSTRATE THAT THE CASE FALLS UNDER THE PROVISIONS OF SECTION 271(1) (C) OF THE ACT. NEEDLESS TO SAY THAT LEVY OF PENALTY UNDER SUCH PROVISIONS OF T HE ACT IS NOT AN AUTOMATIC EXERCISE. COMPETENT AUTHORITY MUST APPLY HIS MIND, TO THE FACTS OF THE CASE BEFORE LEVY OF SUCH PENALTY. THE ASSESSEE APPELLANT DISCLOSED THE PARTICULARS OF INCOME, ON THE BASIS O F CERTAIN PERCENTAGE OF PROFIT, WHICH DID NOT FIND FAVOUR WITH THE ASSESSIN G OFFICER. THE ASSESSING OFFICER SUBSTITUTED HIS OWN VERSION AND M ADE CERTAIN ADDITIONS IN THE ALREADY DISCLOSED INCOME BY THE ASSESSEE, IN HIS RETURN OF INCOME, PURELY ON THE BASIS OF ESTIMATION. THEREFORE, ESTIM ATION MADE BY THE ASSESSING OFFICER CANNOT BE A SUPERIOR ONE VIS A VI S THE ESTIMATION MADE BY THE ASSESSEE, IN DISCLOSING THE INCOME, IN HIS R ETURN OF INCOME. ONE FAILS TO UNDERSTAND HOW THE STATUTORY CONDITIONS OF SECTION 271(1)(C) OF THE ACT- HAS CONCEALED PARTICULARS OF INCOME OR FU RNISHED INACCURATE PARTICULARS OF SUCH INCOME INCLUDING THE EXPLANATI ON THEREUNDER ARE SATISFIED IN THE PRESENT CASE. IT IS A CASE, WHERE, THE PENALTY HAS BEEN LEVIED AND UPHELD WITHOUT APPLICATION OF MIND, TO T HE FACTS OF THE CASE. THE PENAL PROVISION TO SECTION 271(1)(C) OF THE ACT CANNOT BE LIGHTLY INVOKED , ON SUCH NEBULOUS PLEAS. NEEDLESS TO SAY T HAT NON MAINTENANCE OF BOOKS OF ACCOUNT ATTRACTS PENALTY UNDER DIFFEREN T SECTION OF THE ACT. A BARE READING TO THE PROVISIONS OF SECTION 271(1) (C ) OF THE ACT EXCLUDE CASES LIKE THAT THE PRESENT ONE FROM ITS PURVIEW. T HEREFORE, THERE IS HARDLY ANY NEED TO SEEK SUPPORT OF JUDICIAL VERDICT S, IN SUCH CASES. THE CASE LAW RELIED UPON BY THE ASSESSEE HAVE BEEN REJE CTED BY THE CIT(A), IN A SINGLE STROKE, WITHOUT DEMONSTRATING HOW THE S AME ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. HOW EVER, IT IS PERTINENT TO MENTION HERE THAT THE REVENUE AUTHORITIES FAILED, T O BRING ON RECORD ANY JUDICIAL VERDICT, TO SUPPORT THEIR CONCLUSION. IN V IEW OF THE ABOVE FACTS, IT IS PERTINENT TO REFER TO THE DECISION OF THE JURISD ICTIONAL HIGH COURT, IN THE CASE OF HARIGOPAL SINGH VS. CIT(2002) 258 ITR 85 (P &H) WHEREBY IT HAS BEEN CATEGORICALLY HELD THAT PENALTY CANNOT BE LEVI ED WHEN INCOME HAS BEEN ESTIMATED. HAVING REGARD TO THE ABOVE LEGAL AN D FACTUAL DISCUSSION, THE ORDER OF CIT(A), UPHOLDING THE LEVY OR PENALTY, IS SET ASIDE. FOLLOWING THE ABOVE WE ARE OF THE OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY AND ACCORDINGLY WE DELETE THE PENALTY. 8 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.4.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21.4.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 4