Sh. Manmohan Jain, New Delhi V. ITO, Muzaffarnagar

ITA 315/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97822 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 03-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GARIMA JAIN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-2 : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO.315/DEL/2014 ASSESSMENT YEAR : 2009-10 SHRI MANMOHAN JAIN, C/O S.P. JAIN & ASSOCIATES, F- 83, GREEN PARK, NEW DELHI 110 016 (PAN: ABQPJ2719Q) VS. ITO-1(1), MUZAFFARNAGAR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL JAIN, ADV. DEPARTMENT BY : MS. GARIMA JAIN, SR. DR DATE OF HEARING : 04.11.2015 DATE OF PRONOUNCEMENT : 04.11.2015 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A), MUZAFFARNAGAR ON 18.10.2013 UPHOLDING THE PENALTY OF ITA NO.519/DEL/2014 2 RS.2,63,000/- IMPOSED BY THE AO U/S 271(1)(C) OF TH E INCOME-TAX ACT, 1961 IN RELATION TO THE ASSESSMENT YEAR 2009-10. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS AN INDIVIDUAL, FILED RETURN DECLARING INCOME OF RS. 3, 22,740/- ON 30.9.2009. THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IC AT RS. 2,05,97,788/-. ASSESSMENT IN THIS CASE WAS COMPLETED U/S. 143(3) O F THE ACT ON 20.12.2011 DETERMINING INCOME AT RS. 11,48,600/-. THE ADDITION OF RS. 8,00,000/- WAS MADE AFTER THE ASSESSEE ADMITTED THE DIFFERENCE OF 6,465 MT IN THE FINISHED GOODS AND 3995 KG. IN RAW MATERI AL. HOWEVER, THE ASSESEE AGREED FOR LUMP SUM ADDITION OF RS. 8,00,00 0/- ON ACCOUNT OF DIFFERENCE IN STOCK AS PER PHYSICALLY VALUED FINISH ED GOODS AND RAW MATERIAL AT THE TIME OF SURVEY AND STOCKS AS PER BO OKS AS ON DATE. THEREAFTER, THE AO IMPOSED PENALTY AMOUNTING TO RS. 2,63,000/- @ 100% OF TAX SOUGHT TO BE EVADED U/S 271(1)(C) OF TH E ACT IN RELATION TO THE SAID ADDITION. THE LD. CIT(A) UPHELD THE PENAL TY. 3. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE LEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT THE PENALTY U /S 271(1)(C) HAS BEEN ITA NO.519/DEL/2014 3 IMPOSED ON THE BASIS OF DIFFERENCE IN THE VALUE OF STOCK SHOWN BY THE ASSESSEE AND AS ESTIMATED BY THE AO. BUT, FOR THAT , THERE IS NOTHING TO SHOW THAT THE ASSESSEE, IN FACT, CONCEALED HIS INCO ME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 4. IT IS AN ADMITTED POSITION THAT THE ASSESSEE ACCEPTED THE ADDITION AND DID NOT CHALLENGE IT FURTHER. BUT THE MERE FACT THA T AN ADDITION HAS BEEN ACCEPTED OR IS CONFIRMED IN QUANTUM PROCEEDINGS CAN NOT BE CONCLUSIVE OF THE IMPOSITION OF PENALTY. THE HONBLE CALCUTTA HIGH COURT IN DURGA KAMAL RICE MILL VS. CIT (2004) 265 ITR 25 (CAL), HAS HELD THAT QUANTUM PROCEEDINGS ARE DIFFERENT FROM PENALTY PROCEEDINGS. THE HONBLE KERALA HIGH COURT IN CIT VS. P.K. NARAYANAN (1999) 238 ITR 905 (KER.) , HAS HELD THAT DESPITE THE ADDITION BEING CONFIRMED BY T HE TRIBUNAL IN QUANTUM PROCEEDINGS, THE PENALTY CAN STILL BE DELET ED BY THE TRIBUNAL, IF THE FACTS JUSTIFY. 5. IT IS NOTICED THAT THE ONLY BASIS OF ADDITION IS THE ESTIMATE OF VALUATION MADE BY THE AO IN VALUING THE STOCK. IT IS ALSO NOTED THAT ASSESSMENT COMPLETED U/S. 143(3) AND ASSESSEE EXPLA INED THE DIFFERENCE ITA NO.519/DEL/2014 4 IN STOCK AND RECONCILED THE DIFFERENCE IN STOCK AND RECONCILED THE DIFFERENCE WHICH IS REDUCED TO RAW MATERIAL 3995 K G AND FINISHED GOODS 6.465 KG. BESIDES THIS THE AO HAD AGREED TO T HE SUBMISSION OF THE ASSESSEE THAT THE ACCURACY OF THE WEIGHT IN F INISHED GOODS AT THE TIME OF SURVEY CANNOT BE DENIED. APART FROM THE ESTIMATION MADE BY THE AO, THERE IS NOTHING TO SHOW THAT THE WAY IN WH ICH THE ASSESSEE VALUED ITS STOCK WAS INCORRECT. THIS DIVULGES THA T THE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF ESTIMATE MADE BY THE AO. IT IS A SETTLED LEGAL POSITION THAT WHEN INCOME IS ESTIMATED, THEN, THERE CAN BE NO QUESTION OF IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. THE HON BLE DELHI HIGH COURT IN CIT VS. AERO TRADERS PVT. LTD., (2010) 322 ITR 316 (DEL), HAS HELD THAT NO PENALTY U/S 271(1)(C) CAN BE IMPOSED W HEN INCOME IS DETERMINED ON ESTIMATE BASIS. SIMILAR VIEW HAS BEE N TAKEN BY THE HONBLE P&H HIGH COURT IN HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P&H) AND THE HONBLE GUJARAT HIGH COURT IN CIT VS. SUBHASH TRADI NG COMPANY, 221 ITR 110 (GUJ) . I ALSO FIND THAT SIMILAR VIEW WAS TAKEN BY THE ITAT, SMC, BENCH, NEW DELHI IN ITA NO. 519/DEL/ 2014 (AY 2009-10) IN THE CASE OF RAJIV KUMAR GARG VS. ITO VI DE ORDER DATED ITA NO.519/DEL/2014 5 15.6.2015. IN VIEW OF THE FOREGOING PRECEDENTS INCL UDING THE ONE FROM THE HONBLE JURISDICTIONAL HIGH COURT, IT IS APPARE NT THAT WHEN THE BEDROCK OF INSTANT PENALTY IS THE ESTIMATE OF STOCK , THE SAME CANNOT BE SUSTAINED. COMING TO THE IMPUGNED ORDER, I ORDER FOR THE DELETION OF PENALTY AMOUNTING TO RS.2,63,000/-. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 04.11.201 5. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED, 04 TH NOVEMBER, 2015. SR BHATNAGAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.