Sudhir Kumar Shukla, Kanpur V. Income Tax Officer-3(4), Kanpur

ITA 311/LKW/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1098 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 31-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRADEEP MEHROTRA
• Keywords: Business income
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 311/LKW/2016 ASSESSMENT YEAR: 2005 - 06 SUDHIR KUMAR SHUKLA 118, SHANKARACHARYA NAGAR KANPUR V. INCOME TAX OFFICER 3(4) KANPUR T AN /PAN : AHDPS2275B (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI PRADEEP MEHROTRA, ADVOCATE RESPONDENT BY: SMT. MANJU THAKUR, D.R. DATE OF HEARING: 28 0 3 201 8 DATE OF PRONOUNCEMENT: 09 0 3 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - I, KANPUR DATED 1/3/2016 ON THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED ON FACTS A ND IN LAW IN HOLDING THAT THE ASSESSEE DID NOT OFFER ANY EXPLANATION REGARDING LOW NET PROFIT RATE AND ALSO DID NOT PRODUCE THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER OR BEFORE THE LEARNED CIT(APPEAL) DUR ING THE APPELLATE PROCEEDINGS. 2. THAT THE LE ARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE PARTICULARS OF INCOME WERE NOT GIVEN DURING FILING OF THE RETURN & WERE DETECTED BY ASSESSING OFFICER AFTER ACTION U/S. 143 BY THE DEPARTMENT DURING THE COURSE OF A SSESSMENT PROCEEDINGS. ITA NO.311/LKW/2016 PAGE 2 OF 5 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED ON FACTS AND IN LAW IN GIVING A FINDING THAT THERE WAS CLEAR' DELIBERATENESS' ON THE PART OF THE ASSESSEE IN NOT DISCLOSING FACTS AND TRUE INCOME. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED ON FACTS AND IN LAW IN CONFORMING THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 5. THAT THE ORDER DATED 01/03/2016 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) IS ARBITRARY, ILLEGAL AND BAD IN LAW LIABLE TO BE QUASHED. 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL CARRYING ON THE BUSINESS OF TRADING IN CEMENT AND PAINTS IN PROPRIETORSHIP CONCERN, HAS FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 31/10/2005 DECLARI NG A TOTAL INCOME OF RS.15,880/ - . THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE ACT ESTIMATING THE NET PROFIT @ 5% OF THE TOTAL SALES , RESULTING INTO AN ADDITION OF RS.1,86,501/ - AND ASSESSING THE INCOME OF THE ASSESSEE AT RS.2,0 2,380/ - AS AGAINST THE RETURNED INCOME OF RS.15,880/ - . AGGRIEVED WITH THE ORDER OF THE ASSESSING OFFICER, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER APPLYING THE NET PROFIT OF 5% ON T HE GROSS RECEIPTS. BEING FURTHER AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 23/7/2017 IN ITA NO.770/LKW/2013 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO RECOMPUTE T HE INCOME OF THE ASSESSEE BY APPLYING NET PROFIT RATE OF 4% AS AGAINST 5%. 3 . SUBSEQUENTLY , T HE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS AND IMPOSED A PENALTY OF RS. 39,000/ - , WHICH WAS CONFIRMED BY THE LD. CIT(A). ITA NO.311/LKW/2016 PAGE 3 OF 5 4 . NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE ACCOUNTS OF THE ASSESSEE IS AUDITED BY A CHARTERED ACCOUNTANT AND THE AUDIT REPORT ALONG WITH AUDITED ACCOUNTS WERE FILED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER DID NOT REJECT THE ACCOUNTS OF THE ASSESSEE, THEREFORE, ASSESSEE CANNOT BE HELD TO BE A DEFAULTER UNDER SECTION 271 ( 1)(C) OF THE ACT. HE FURTHER SUBMITTED THAT IT IS W ELL SETTLED LAW THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT CANNOT BE IMPOSED UNLESS IT IS ESTABLISHED THAT THE ACCOUNTS FILED BY THE ASSESSEE WERE EITHER INCORRECT, FALSE OR FABRICATED. THE LD. A.R. OF THE ASSESSEE HAS ALSO PLACED R ELIANCE UP ON THE J UDGMENT OF HON'BLE APEX COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158: 230 CTR 320 (SC) WHEREIN IT HAS BEEN HELD THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED EXPENDITURE AND THE CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) OF THE ACT. T HEREFORE, IT WAS CONTENDED THAT PENALTY SO IMPOSED NEEDS TO BE CANCELLED. 5 . THE LD. D.R., ON THE OTHER HAND, PLACED RELIANCE UPON THE ORDERS OF THE AUTHORITIES BELOW. 2 . WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS. IT IS AN UNDISPUTED FACT THAT THE ADDITION WAS MADE BY ESTIMATING THE NET PROFIT RATE OF 5% OF THE TOTAL SALES MADE BY THE ASSESSEE . THE ASSESSING OFFICER IMPOSED PENALTY OF RS.39,000/ - UNDER SECTION 271(1)(C) OF THE ACT OBSERVING THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND CONCEALED HIS INCOME, W HICH HAS BEEN CONFIRMED BY THE LD. CIT(A) AND THE TRIBUNAL HAD REDUCED THE ESTIMATION OF NET PROFIT RATE TO 4% AS AGAINST 5% ESTIMATED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). IT IS ALSO AN UNDISPUTED FACT ITA NO.311/LKW/2016 PAGE 4 OF 5 THAT ADDITION HAS BEEN SUSTAINED PURELY ON ESTIMATE BASIS AND NO POSITIVE FACT OR FINDING HAS BEEN FOUND S O AS TO EVEN MAKE THE SAID ADDITION. 3 . THE HON'BLE APEX COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) AFTER CONSIDERING THE JUDGMENT BY THE HON'BLE APEX COURT IN THE CASE OF UNION OF INDIA V. DHARMENDRA TEXTILES PROCESSORS [2007] 212 CTR 432, AND THERE BEING NO FINDING WITH RESPECT TO THE DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN TO BE INCORRECT OR ERRONEOUS OR FALSE, IT WAS HELD THAT MERE MAKING OF THE CLA IM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING INCOME OF THE ASSESSEE AND AS SUCH THAT BY ITSELF WOULD NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4 . IN THE CASE OF CIT VS. KRISHI TYRE RETREADING & RUBBER INDUSTRIES, 44 TAXMANN.COM 9, THE HON'BLE RAJASTHAN HIGH COURT HAS HELD THAT WHERE ADDITION HAD BEEN SUSTAINED PURELY ON ESTIMATE BASIS AND NO POSITIVE FACT OR FINDING HAD BEEN FOUND SO AS TO EVEN MAKE SAID ADDITION, NO PENALTY WA S LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. 5 . KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT IN THE PRESENT CASE, PENALTY UNDER SECTION 271(1)(C) OF THE ACT CANNOT BE IMPOSED SINCE THE ADDITI ON IS MADE ONLY ON ESTIMATE BASIS . ACCORDINGLY, WE CANCEL THE PENALTY AND ALLOW THE APPEAL RAISED BY THE ASSESSEE. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 / 0 3 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SAR ATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH MARCH , 201 8 JJ: 0503 ITA NO.311/LKW/2016 PAGE 5 OF 5 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR