M/S DEEPSHREE BUILDCON LTD., Kota V. ACIT, Kota

ITA 310/JPR/2012

• Counselvise Citation: 31023114 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 30-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law

Judgement Text

ITA NO. 310/JP/2012 M/S. DEEPSHREE BUILDCON LTD. VS. ACIT, CIRCLE- 1, KOTA 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 310/JP/2012 ASSESSMENT YEAR: 2006-07 PAN : AACCD0605 M M/S. DEEPSHREE BUILDCON LTD. VS. THE ACIT IST FLOOR, DEEPSHREE PARISAR CIRCLE- 1 JHALAWAR ROAD, OPP. HDFC BANK, KOTA KOTA (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SIDDHARTH RANKA, ADVOCATE. DEPARTMENT BY: SHRI KAILASH MANGAL, JCIT DATE OF HEARING: 08-12-2014 DATE OF PRONOUNCEMENT: 09 -01-2015 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A), KOTA DATED 20-01-2012: THE SOLITARY ISSU E AGITATED BY THE ASSESSEE PERTAINS TO IMPOSITION OF PENALTY OF RS. 90,000/ U/ S 271(1)(C) OF THE ACT. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF REAL ESTATE INCLUDING REPAIR AND RECONSTRUCTION OF ALL TYPES OF BUILDING AND SALE AND PURCHASE OF LAND. REGULAR BOOKS OF ACCOUNT S ARE MAINTAINED WHICH ARE AUDITED U/S 44AB. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE COULD NOT FURNISH SOME O F THE VOUCHERS AND WIP ITA NO. 310/JP/2012 M/S. DEEPSHREE BUILDCON LTD. VS. ACIT, CIRCLE- 1, KOTA 2 STOCK DETAILS AS FINELY REQUIRED BY HIM. THE ASSESS EE FILED EXPLANATION IN THIS BEHALF DATED 26-12-2008 CONTENDING THAT THE BOOKS O F ACCOUNT WERE DULY AUDITED UNDER THE COMPANIES ACT AS WELL AS INCOME T AX ACT U/S 44AB. THE RECORD HAS BEEN MAINTAINED TO THE MAXIMUM POSSIBLE EXTENT. THE VALUATION OF WORK IN PROGRESS HAS BEEN DONE BY WAY OF PHYSICA L VERIFICATION. LOOKING AT THE NATURE OF THE ASSESSEE'S BUSINESS, IT WAS NO T POSSIBLE TO MAINTAIN THE MINUTE DETAILS WHICH WERE BEING ASKED FOR, HOWEVER IN THE CONCLUSION OF THE LETTER, ASSESSEE STATED AS UNDER. TO AVOID ANY FURTHER LITIGATION AND PURCHASE PEA CE YOU ARE KINDLY REQUESTED TO MAKE TRADING ADDITION REASO NABLY WITH THE REQUEST THAT NO PECUNIARY ACTION WHATSOEVER PRO VIDED IN THE ACT WILL BE INITIATED AGAINST THE ASSESSEE. THE AO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSE E U/S 145(3) OF THE ACT AND MADE IMPUGNED ADDITION AS UNDER:- IN THE INSTANT CASE OF THE ASSESSEE, EVEN THE SA LES ARE NOT VERIFIABLE NOR THE EXPENSES CAN BE SAID TO BE C OMPLETELY VOUCHED OR VERIFIABLE. THUS, CONSIDERING THE FACTS, THE GROSS SALES ARE ESTIMATED AT RS. 9865000/- ENHANCING THE DECLARED RECEIPTS OF RS. 9365000/- BY RS. 5 LAKHS. ON THE E STIMATED GROSS RECEIPTS NET PROFIT RATE OF 12.5% IS APPLIED. THIS GIVES THE NET PROFIT OF RS. 1233125/-. THE ASSESSEE HAS ALREA DY DISCLOSED THE NET PROFIT RATE OF RS. 980282/- IN THE RETURN. THUS THE ADDITION OF RS. 252843/- IS MADE TO THE TOTAL INCOM E OF THE ASSESSEE TO COVER UP THE DISCREPANCIES IN THE CONST RUCTION OF BUSINESS. ITA NO. 310/JP/2012 M/S. DEEPSHREE BUILDCON LTD. VS. ACIT, CIRCLE- 1, KOTA 3 2.2 CONSEQUENT TO ADDITIONS, PENALTY PROCEEDINGS WE RE INITIATED U/S 271(1) OF THE ACT. THE ASSESSEE DEFENDED THE SAME CONTENDING THAT DESPITE PROPER BOOKS OF ACCOUNT MAINTAINED THEY HAVE BEEN A RBITRARILY REJECTED AND THE SALES, CLOSING STOCK OF WORK IN PROGRESS AND TH E GROSS PROFIT ALL WERE ESTIMATED. THE ENTIRE EDIFICE OF THE ADDITION WAS I NDISCRIMINATE REJECTION OF BOOKS AND ESTIMATION ON ADHOC BASIS FOR WHICH PENAL TY CANNOT BE IMPOSED. THE ASSESSEE RELIED ON THE FOLLOWING CASE LAWS. (1) MOTI LAL PADAMPAT SUGAR MILLS LTD. VS. STATE OF UP & OTHERS 118 ITR 326. (2) HINDUSTAN STEEL LTD. VS. STATE OF ORRISA, 80 ITR 26 (S.C.) (3) D.M. DHANUKAR VS. CIT , 65 ITR 280 (BOMBAY) (4) CHHOTA BHAI JETHA BHAI PATEL & CO. VS. CIT, 134 ITR 201 (GUJ.) THE AO HOWEVER, IMPOSED THE PENALTY. 2.3 IN THE FIRST APPEAL, THE LD. CIT(A) CONFIRMED T HE FINDING OF THE AO THAT THE ASSESSEE HAS NOT FURNISHED THE CORRECT PARTICUL ARS OF INCOME AND UPHELD THE PENALTY. 2.4 BEING AGGRIEVED, THE ASSESSEE IS BEFORE US. 2.5 THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE FACTS AND CIRCUMSTANCES OF THE CASE AS CONTENDED BEFORE THE LOWER AUTHORITI ES. IT IS PLEADED THAT ASSESSEE DID NOT OFFER TO REJECT THE BOOKS AND AS A O WAS UNRELENTING ON THE ITA NO. 310/JP/2012 M/S. DEEPSHREE BUILDCON LTD. VS. ACIT, CIRCLE- 1, KOTA 4 SPECIFIC DETAILS WHICH WERE NOT POSSIBLE TO BE FURN ISHED IN TIME URGED FOR A REASONABLE ADDITION. THE AO HOWEVER REJECTED THE B OOKS AND MADE AD HOC ADDITIONS ON VARIOUS COUNTS. QUANTUM AND PENALTY PR OCEEDINGS ARE SEPARATE AND INDEPENDENT OF EACH OTHER. MERELY BECAUSE SOME ADDITIONS ARE MADE ON AD HOC ESTIMATE, CONCEALMENT PENALTY CANNOT BE AUTO MATICALLY LEVIED. RELIANCE IS PLACED ON THE DECISION OF HON'BLE RAJA STHAN HIGH COURT IN THE CASE OF CIT VS. KRISHI TYRE RETREADING AND RUBBER I NDUSTRIES (ITA NO. 542/2008 DATED 19-09-2013) WHERE ON THE SIMILAR FAC TS AND CIRCUMSTANCES, ITAT JAIPUR BENCH DELETED THE PENALTY. IN DEPARTMEN TAL APPEAL, THE HON'BLE HIGH COURT HELD THAT NO SUBSTANTIAL QUESTION OF LAW AROSE. 2.6 THE LD. COUNSEL FOR THE ASSESSEE REEMPHASIZED T HE JUDGEMENT OF HINDUSTAN STEEL LTD. VS. STATE OF ORRISA (SUPRA) FO R THE PROPOSITION THAT PENALTY CANNOT BE IMPOSED FOR TECHNICAL AND VENIAL BREACH. IN THIS CASE, THE ASSESSEE'S BOOKS OF ACCOUNT ARE DULY AUDITED AS PER COMPANIES ACT AND INCOME-TAX ACT, THE EXPENDITURE IN RESPECT OF THE ASSESSEE'S BUSINESS WAS INCURRED AT VARIOUS SITES. SOMETIMES, IN ASSESSEE BUSINESS OF WORKING THE EXACT DETAILS MAY NOT BE AVAILABLE WITH THE ASSESSE E BUT THEY DO NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. BESIDES ADDITION IN RESPECT OF WIP STOCK AMOUNTS TO POSTPONEMENT OF INCOME AS THE SAME STOCK BECOMES OPENING STOCK OF THE NEXT YEAR. FURTH ER RELIANCE IS PLACED ON ITA NO. 310/JP/2012 M/S. DEEPSHREE BUILDCON LTD. VS. ACIT, CIRCLE- 1, KOTA 5 THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD . , 322 ITR 158 (SC) FOR THE PROPOSITION THAT THE ASSESSEE HAS FILED ALL THE RELEVANT DETAILS ALONG WITH RETURN OF INCOME. THEREAFTER IF SOME DISALLOWANCES OR ADDITIONS BY AO BASED ON THE INFORMATION FURNISHED IN THE RETURN DO NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IS NOT EXIG IBLE TO IMPUGNED PENALTY. THUS THE PENALTY IMPOSED BY THE LD. CIT(A) MAY BE D ELETED. 2.7 THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHOR ITIES AND ALSO PLACED RELIANCE IN THE CASE OF MAK DATA (P) LTD. VS . CIT ,358 ITR 593 (SC). 2.8 THE LD. COUNSEL FOR THE ASSESSEE IN REPLY OF MA K DATA (P) LTD. CASE (SUPRA) CONTENDED THAT IN MAK DATA CASE THERE WAS U N-QUANTIFIED SURRENDER WHEREAS IN THIS CASE OF THE ASSESSEE THERE WAS NO S URRENDER TO REJECT BOOKS OF ACCOUNTS AND REQUEST WAS TO MAKE SOME REASONABLE AD DITION TO AVOID LITIGATION AND CONCLUDE THE PROCEEDINGS. THIS DOES NOT AMOUNT TO UN- QUANTIFIED SURRENDER AS HELD IN THE CASE OF MAK DAT A (P) LTD. VS. CIT(SUPRA). 2.9 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT HAS NOT BEEN DISPUTED THAT THE BOOKS OF ACCOUNT ARE AUDITED AND THE EXPENSES ARE INCURRED AT VARIOUS SI TES. THE ADDITIONS ARE AS A RESULT OF ESTIMATION BASED ON ASSESSEE'S EFFORTS TO GET THE PROCEEDINGS SETTLED WITH A PERTINENT REQUEST TO MAKE REASONABLE ADDITIO N. THE ASSESSEE NO WHERE AGREED FOR REJECTION OF BOOKS AND SAME DOES NOT AMO UNT TO UN-QUANTIFIED ITA NO. 310/JP/2012 M/S. DEEPSHREE BUILDCON LTD. VS. ACIT, CIRCLE- 1, KOTA 6 SURRENDER IN TERMS OF FACTS OF MAK DATA (P) LTD. VS . CIT (SUPRA). BESIDES WIP STOCK ADDITION LEADS TO INCREASE IN THE OPENING STOCK OF NEXT YEAR. WE ARE OF THE VIEW THAT DECISIONS OF HON'BLE SUPREME COURT IN THE CASES OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (SUPRA) AND HI NDUSTAN STEEL LTD. VS. STATE OF ORRISA (SUPRA) ARE SQUARELY APPLICABLE TO THE ASSESSEE CASE THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, WE ARE INCLINED TO DELETE THE PENALTY IMPOSED U/S 271(1) BY THE LOWER AUTHORITIES. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09- 01-2015 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 9 TH JAN 2015 *MISHRA COPY FORWARDED TO:- 1.M/S. DEEPSHREE BUILDCON LTD. , KOTA 2. THE ACIT, CIRCLE- 1, KOTA 3. THE LD. CIT(A) 4. THE LD. CIT BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO. 310/JP/2012) AR ITAT, JAIPUR