International Creations Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(2), Surat

ITA 312/AHD/2012

• Counselvise Citation: 31220514 RSA 2012
• Duration Of Justice: 3 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 02-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL VICE PRESIDENT AND SHRI S.S. GODARA JUDICIAL MEMBER ITA S NO . 312 /AHD/ 2012 A. Y .20 0 5 - 06 M/S. INTERNATIONAL CREATIONS PVT. LTD., 561, ADARSH MARKET, RING ROAD, SURAT. PA N: AAACI 8917P VS ITO, WARD - 1(2), SURAT. (APPELLANT) (RESPONDENT) REVENUE BY : S HRI M.K. SINGH , SR. D.R. , ASSESSEE(S) BY : NONE / DATE OF HEARING : 22 / 06 /201 5 / DATE OF PRONOUNCEMENT: 12 / 0 6 /201 5 / O R D E R PER S.S. GODARA , JUDICIAL MEMBER THIS ASSESSEE S APPEAL FOR A.Y. 200 5 - 0 6 , ARISE S FROM ORDER O F CIT(A) - I, SURAT DATED 30.11.2011 PASSED I N CASE NO .CAS - I/112/2011 - 12 UPHOLDING PENALTY SUM OF RS.3,76,260/ - IMPOSED BY THE ASSESSING OFFICER IN PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT , IN SHORT THE ACT . 2. CASE CALLED TWICE. NONE HAS COME PRESENT AT THE ASSESSEE BEHEST. IT HAS CHOSEN TO FILE RETURN SUBMISSIONS ON 11.5.2015. ITA NO. 312 /AHD/20 1 2 M/S. INTERNATIONAL CREATIONS PVT. LTED. FOR A.Y. 200 5 - 0 6 - 2 - WE TAKE ON RECORD THE SAME AND PROCEED EX - PARTE AGAINST THE ASSESSEE. 3. THE ASSESSEE - COMPANY TRADES IN ART SILK CLOTH. IT FILED NIL INCOME RETURN ON 30.10.2005 W ITH BOOK PROFITS OF RS.91,664/ - . THE ASSESSING OFFICER FRAMED A REGULAR ASSESSMENT MAKING ADDITION OF RS.10,75,020/ - ON ACCOUNT OF SUPPRESSION OF GROSS PROFITS AFTER REJECTING ASSESSEE S BOOKS. HE ALSO INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE ALL EGING CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) UPHELD THE ASSESSING OFFICER S ACTION IN ORDER DATED 7.8.2008. WE INFER FROM THE CASE FILE THAT QUANTUM PROCEEDINGS ATTAIN FINALITY AT THIS STAG E. 4. THE ASSESSING OFFICER TOOK UP PENALTY PROCEEDINGS. THE ASSESSEE DOES NOT APPEAR TO HAVE FILED ANY REPLY IN FURTHERANCE TO SHOW CAUSE NOTICE. THE ASSESSING OFFICER PASSED PENALTY ORDER DATED 25.3.2010 REITERATING HIS FINDINGS IN ASSESSMENT ORDERS AF TER REJECTING ASSESSEE S BOOKS OF ACCOUNTS AND RE - ESTIMATION OF GROSS PROFITS THEREBY TREATING THE SAME AS AN ACT OF CONCEALMENT. HE ACCORDINGLY IMPOSED MINIMUM PENALTY OF RS.3,76,260/ - . THE SAME STANDS CONFIRMED IN THE LOWER APPELLATE ORDER. THIS LEAVES T HE ASSESSEE AGGRIEVED. ITA NO. 312 /AHD/20 1 2 M/S. INTERNATIONAL CREATIONS PVT. LTED. FOR A.Y. 200 5 - 0 6 - 3 - 5. WE HAVE HEARD THE REVENUE AND PERUSED THE CASE FILE. THERE IS NO DISPUTE THAT THE PRESENT IS A CASE OF RE - ESTIMATION OF GROSS PROFITS IN ASSESSEE S CASE AFTER REJECTION OF ITS BOOKS. THE ASSESSEE S GROSS PROFITS IN ASSESSMENT YE AR 2003 - 04, 2004 - 05 AND IMPUGNED ASSESSMENT YEAR 2005 - 06 TURN OUT TO BE 10.3%, 9.5% AND 6.13% RESPECTIVELY. THE ASSESSING OFFICER IN QUANTUM PROCEEDINGS ADOPTED AVERAGE THEREOF @9.3% FOR THE REASON THAT SUM OF HIS LETTERS ISSUED TO VARIOUS CREDITORS HAD BE EN RETURNED UNSERVED, ASSESSEE COULD NOT EXPLAIN DIFFERENCE BETWEEN PROCESSING CHARGES OF THE CLOTH RANGING BETWEEN RS.3.73 PER METER TO RS.9.95 PER METER AND ALSO QUOTED LACK OF DETAILS IN QUALITY GRADATION OF THE STOCK LEADING TO ITS VALUATION. THE AUTHO RITIES BELOW TREATED AS A CASE COVERED BY SECTION 271(1)(C) LIABLE TO BE PENALIZED. HOWEVER, THE FACT REMAINS THAT PRESENT IS A CASE OF AN ESTIMATED GROSS PROFITS ADDITIONS BASED ON ESTIMATION WITHOUT ANY CONCRETE EVIDENCE. IT TRANSPIRES FROM THE CASE FILE THAT THE ASSESSEE S GROSS PROFIT FOR ASSESSMENT YEAR 2004 - 05 @9.5% AROSE FROM TURNOVER OF RS.14.15 CRORES AS AGAINST 6.1% OUT OF RS.2.82 CRORES IN THE IMPUGNED ASSESSMENT YEARS. WE OBSERVE ON THE BASIS OF TH ESE FACT S THAT DECLINE IN THE ASSESSEE S GROSS PRO FITS IS DUE TO DRASTIC FALL IN TURNOVER AS WELL. WE REITERATE SETTLED PROPOSITION OF LAW THAT QUANTUM AND PENALTY STANDS ON DIFFERENT FOOTINGS AND EACH AND EVERY ADDITION DOES NOT LEAD TO AUTOMATIC IMPOSITION OF PENALTY AS PER THE DECISION ITA NO. 312 /AHD/20 1 2 M/S. INTERNATIONAL CREATIONS PVT. LTED. FOR A.Y. 200 5 - 0 6 - 4 - OF HON BLE APEX COURT IN RELIANCE PETRO CHEMICALS 322 ITR 158. THEREFORE, WE AGREE WITH THE ASSESSEE S PLEADINGS AND DELETE THE IMPUGNED PENALTY OF RS.3,76,260/ - . 6. THE ASSESSEE S APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 12TH JUNE , 201 5 AT AHM EDABAD . SD/ - SD/ - ( G.D. AGRAWAL ) ( S.S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED / 06/ 20 1 5 PRABHAT KR. KESA RWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD