M/s. Samir M. Mohite, Kolhapur V. Income-tax Officer, Ward - 1(2), Kolhapur

ITA 3090/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3082 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-10-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHADEVAN A M KRISHANAN
• Section: 271(1)(c); 44AD; 143(3); 40(b); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM . / ITA NOS.3089 & 3090/PUN/2017 / ASSESSMENT YEARS : 2007-08 & 2008-09 M/S. SAMIR M. MOHITE, MOHITE MALA, PL. NO.02, R.S. NO.897, A-WARD, DEVKAR PANAND, KOLHAPUR-07. PAN : AATFS5790G ....... / APPELLANT / V/S. ITO, WARD-1(2), KOLHAPUR. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI MAHADEVAN A.M. KRISHANAN / DATE OF HEARING : 28.10.2020 / DATE OF PRONOUNCEMENT : 02.11.2020 / ORDER PER INTURI RAMA RAO, AM: THESE ARE APPEALS FILED BY THE ASSESSEE DIRECTED AGAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLHAPUR (CIT(A) FOR SHORT) COMMONLY DATED 26.10.2017 FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. 2. SINCE, THE IDENTICAL FACTS AND ISSUES ARE INVOLVED IN THESE APPEALS, WE PROCEED TO DISPOSE THE SAME VIDE THIS COMMON ORDER. 3. FOR THE SAKE OF CONVENIENCE AND CLARITY, THE FACTS RELEVANT TO THE APPEAL IN ITA NO.3089/PUN/2017 FOR ASSESSMENT YEAR 2007-08 ARE STATED HEREIN. 2 ITA NOS.3089 & 3090/PUN/2017 4. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL :- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLHAPUR BY HIS ORDER PASSED UNDER SECTION 250 DATED 26-10-2017 RECEIVED ON 07-11-2017 IN CASE OF YOUR APPELLANT M/S. SAMIR M. MOHITE, KOLHAPUR HAS ERRED IN BOTH ON FACTS AND IN LAW: - A) PENALTY LEVIED UNDER SECTION 271(1)(C) OF INCOME TAX ACT, 1961 1. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, CIT(APPEALS) AND AO BOTH HAVE ERRED IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF RS.8,66,400 IN THE CASE WHERE THE INCOME IS ASSESSED BASED ON ESTIMATED PROFIT BY APPLYING AD HOC PERCENTAGE ON THE TURNOVER OF THE ASSESSEE. 2. ITAT ORDER VIDE ITA NO. 941/PN/2011 DATED 31-12-2012 HAS RESULTED INTO REDUCTION OF ASSESSED INCOME AND ASSESSED TAX, AO HAS FAILED TO GIVE EFFECT OF THE SAID REDUCTION UPON PENALTY AMOUNT UNDER SECTION 275(1A) OF INCOME TAX ACT, 1961 FURTHER IT IS REQUESTED THAT: - 1) THE ASSESSEE CRAVES LEAVE TO AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2) IT IS PRAYED THAT THE ABOVE CLAIMS AND ALLOWANCES BE ALLOWED. 5. THE ASSESSEE ALSO RAISED THE FOLLOWING ADDITIONAL GROUND :- 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ORDER PASSED UNDER SECTION 271(1)(C) IS BAD IN LAW, IN VIEW OF THE FACT THAT BOTH AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF IMPOSITION OF THE PENALTY THE ASSESSING OFFICER WAS NOT CLEAR AS TO WHICH LIMB OF SECTION 271(1)(C) WAS ATTRACTED? 6. THE BRIEF FACTS OF THE CASE ARE AS UNDER :- THE APPELLANT IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF CARRYING OUT CIVIL CONTRACT WORKS. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 WAS FILED ON 01.10.2007 DECLARING TOTAL INCOME OF RS.74,632/-. AFTER PROCESSING THE SAID RETURN OF INCOME, THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT CAME TO BE COMPLETED U/S 143(3) OF THE OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) AT TOTAL INCOME OF RS.26,48,586/-. THE DISPARITY BETWEEN THE ASSESSED INCOME AND RETURNED INCOME IS ON ACCOUNT OF TREATING THE GROSS RECEIPTS OF RS.26,48,586/- RECEIVED FROM SOKTAS INDIA PVT. LTD. INCOME WITHOUT ALLOWING THE CLAIM OF EXPENDITURE OF RS.25,73,594/-. DURING THE ASSESSMENT PROCEEDINGS, THE INCOME TAX 3 ITA NOS.3089 & 3090/PUN/2017 OFFICER, WARD-1(4), KOLHAPUR (ASSESSING OFFICER FOR SHORT) GAVE A FINDING THAT THE RECEIPTS FROM SOKTAS INDIA PVT. LTD. ARE NOT IN THE NATURE OF CONTRACT RECEIPTS BUT IN THE NATURE OF COMMISSION/BROKERAGE OR SERVICE CHARGES IN CONNECTION WITH THE ACQUISITION OF LAND AT MIDC, KOLHAPUR. IT WAS CONTENDED BEFORE THE ASSESSING OFFICER THAT THE INCOME WAS OFFERED UNDER THE PROVISIONS OF SECTION 44AD OF THE ACT AND THEREFORE, NO BOOKS OF ACCOUNTS WERE MAINTAINED BY THE APPELLANT FAILED TO PRODUCE THE SUPPORTING VOUCHERS FOR THE ENTIRE EXPENSES AND THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER ALSO ANALYZED THE BANK TRANSACTIONS WHEREIN HE FOUND THAT THE AMOUNT RECEIVED FROM THE SAID SOKTAS INDIA PVT. LTD. WAS TOTALLY WITHDRAWN BY THE ASSESSEE OR HIS SPOUSE. 7. BEING AGGRIEVED BY THE ABOVE DECISION OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. THE MATTER WAS FURTHER CHALLENGED BEFORE THE ITAT AND THE ITAT IN ITA NO.941/PUN/2011 FOR THE ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 31.12.2012 HELD THAT THE ENTIRE GROSS RECEIPTS CANNOT BE BROUGHT TO TAX AND DIRECTED THE ASSESSING OFFICER TO ADOPT ONLY 60% OF THE GROSS RECEIPTS AS TAXABLE INCOME AND ALSO DIRECTED THE ASSESSING OFFICER TO EXAMINE THE ALLOWANCE INTEREST AND SALARY PAID TO THE PARTNERS UNDER THE PROVISIONS OF SECTION 40(B) OF THE ACT. WHILE THE MATTER STOOD THUS THE ASSESSING OFFICER HAD PROCEEDED WITH THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT VIDE AN ORDER DATED 30.03.2012 FOR CONCEALMENT OF PARTICULARS OF INCOME REJECTING THE SUBMISSIONS OF THE APPELLANT TO KEEP THE PENALTY PROCEEDINGS IN ABEYANCE TILL THE APPEAL OF THE ASSESSEE IS DISPOSED OF BY THE TRIBUNAL. 8. BEING AGGRIEVED BY THE ORDER OF PENALTY U/S 271(1)(C) OF THE ACT, THE APPELLANT WAS PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN LEVYING THE 4 ITA NOS.3089 & 3090/PUN/2017 PENALTY U/S 271(1)(C) OF THE ACT REJECTING THE ARGUMENT THAT THE DISALLOWANCE DOES NOT ENTAIL LEVY OF PENALTY, IN CASE, WHEN THE INCOME ASSESSED ON ESTIMATED BASIS THE PENALTY CANNOT BE LEVIED. 9. HENCE, THE APPELLANT IS BEFORE US IN THE PRESENT APPEAL AND THE CASE WAS HEARD IN ABSENCE OF ASSESSEE. BEFORE US, THE ASSESSEE HAD FILED LETTER STATING THAT THE ISSUE MAY BE DECIDED BASED ON THE WRITTEN SUBMISSION FILED BEFORE US. IN THE SAID WRITTEN SUBMISSION, IT WAS REQUESTED THAT THIS TRIBUNAL IN QUANTUM APPEAL VIDE ORDER DATED 31.12.2012 (SUPRA) HELD THAT THE ENTIRE GROSS RECEIPTS SHOULD NOT BE ASSESSED TO TAX BUT ONLY 60% OF THE GROSS RECEIPTS, WHICH SUGGESTS THAT THE INCOME IS FINALLY ASSESSED ON ESTIMATED BASIS, WHEN THE INCOME IS ASSESSED ON ESTIMATED BASIS THE PENALTY CANNOT BE LEVIED. IN SUPPORT OF THE SAME, THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL VIDE ORDER DATED 31.12.2012 (SUPRA). HE ALSO RAISED THE ADDITIONAL GROUND OF APPEAL TO THE EFFECT THAT IN THE SHOW- CAUSE NOTICE, THE ASSESSING OFFICER HAD FAILED TO STRIKE OUT THE RELEVANT LIMB OF CHARGE AND LEVY OF PENALTY IS BAD IN LAW. THUS, IT IS SUBMITTED THAT THE ORDER OF PENALTY IS VITIATED PLACING RELIANCE ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.). 10. ON THE OTHER HAND, LD. SR. CIT-DR SUBMITTED THAT THE PENALTY ORDER MAY BE SET-ASIDE TO THE FILE OF THE ASSESSING OFFICER TO RE-COMPUTE THE PENALTY IN TERMS OF ORDER PASSED BY THIS TRIBUNAL IN QUANTUM APPEAL VIDE ORDER DATED 31.12.2012 (SUPRA). 11. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT APPEAL RELATES TO THE VALIDITY OF THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. FROM THE EVIDENCE ON RECORD, IT IS CLEAR THAT 5 ITA NOS.3089 & 3090/PUN/2017 THE INCOME WAS ASSESSED ON ESTIMATED BASIS I.E. THE RATE OF 60% OF THE GROSS RECEIPTS, THEREFORE, THE INCOME ASSESSED ORIGINALLY BY THE ASSESSING OFFICER HAD COME DOWN WHEREAS THE PENALTY WAS LEVIED WITH RESPECT TO THE ORIGINAL ASSESSED INCOME BY THE ASSESSING OFFICER. THE LD. CIT(A) OBVIOUSLY LOST SIGHT OF THE TRIBUNALS ORDER PASSED IN THE QUANTUM APPEAL, HOWEVER, WITHOUT DWELLING FURTHER ON THIS ASPECT. IT IS SETTLED POSITION OF LAW THAT IN CASE WHERE THE INCOME IS ASSESSED ON ESTIMATED BASIS LEVY OF PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE UPHELD. RELIANCE IN THIS REGARD CAN BE PLACED ON THE FOLLOWING DECISIONS OF THE HONBLE HIGH COURTS :- (I) CIT VS. AERO TRADERS PVT. LTD., 322 ITR 316 (DEL); (II) CIT VS. PARKASH INDUSTRIES LTD., 322 ITR 622 (P&H); (III) CIT VS. VIJAY KUMAR JAIN, 325 ITR 378 (CHHATTISGARH); AND, (IV) CIT VS. S S P LTD, 328 ITR 643 (P&H). 12. IN VIEW OF THIS SETTLED POSITION OF LAW, WE ARE OF THE CONSIDERED OPINION THAT THE LEVY OF PENALTY IN THE FACTS OF THE PRESENT CASE CANNOT BE SUSTAINED. 13. SINCE WE HAVE QUASHED THE LEVY OF PENALTY FOR THE REASON THAT THE PENALTY CANNOT BE LEVIED, IN CASE, WHERE THE INCOME IS ASSESSED ON ESTIMATE BASIS, WE DEEM IT IS UNNECESSARY TO DEAL WITH THE OTHER ASPECTS OF THE CONTENTIONS RAISED BY THE ASSESSEE. ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 14. IN THE RESULT, THE APPEAL IN ITA NO.3089/PUN/2017 FOR ASSESSMENT YEAR 2007-08 IS ALLOWED. 6 ITA NOS.3089 & 3090/PUN/2017 ITA NO.3090/PUN/2017 FOR A.Y. 2008-09 15. SINCE, THE FACTS IN THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS IN ITA NO.3089/PUN/2017 FOR ASSESSMENT YEAR 2007-08, FOR THE REASONS MENTIONED THEREIN, WE ALLOW THE APPEAL ON THE ABOVE LINES INDICATED IN ITA NO.3089/PUN/2017 (SUPRA). HENCE, THE ABOVE CAPTIONED APPEAL FILED BY THE ASSESSEE IN ITA NO.3090/PUN/2017 FOR THE ASSESSMENT YEAR 2008-09 STANDS ALLOWED. 16. RESULTANTLY, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 02 ND DAY OF NOVEMBER, 2020. SD/- SD/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 02 ND NOVEMBER, 2020. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-1, KOLHAPUR. 4. THE PR. CIT-1, KOLHAPUR. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.