BAHRTI MALPANI, Jaipur V. ITO, Jaipur

ITA 316/JPR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1910 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 05-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P P MEENA
• Assessee Lawyers: VIMAL CHOPRA
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : JAIPUR [BEFORE HONBLE SRI VIJAY PAL RAO, JM & DR. ARJUN LAL SAINI, AM] I.T.A NO. 316/JP/2016 ASSESSMENT YEAR : 2008-0 9 BAHRTI MALPANI -VS.- ITO, WARD 1( 2), JAIPUR JAIPUR JAIPUR [PAN : ADGPM6495G) (APPELLANT) (RESPONDENT) I.T.A NO. 317/JP/2016 ASSESSMENT YEAR : 2009-1 0 BAHRTI MALPANI -VS.- ITO WARD 1(2), JAIPUR JAIPUR JAIPUR [PAN : ADGPM6495G) (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI VIMAL CHOPRA (CA) FOR THE RESPONDENT : SHRI P.P.MEENA (JCIT) DATE OF HEARING : 08.11.2017. DATE OF PRONOUNCEMENT : 10 .11.2017. ORDER PER DR.ARJUN LAL SAINI, AM THE CAPTIONED TWO APPEALS FILED BY THE ASSESSEE PER TINENT TO AY 2008-09 AND 2009-10, ARE DIRECTED AGAINST THE ORDERS PASSED BY CIT(A)-1, JAIPUR IN ITA NO. 400/13- 14 WHICH IN TERM ARISE OUT OF PENALTY ORDERS PASSED BY THE ASSESSING OFFICER U/S 271 (1)(C) READ WITH SECTION 274 OF I.T.ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT). 2. SINCE THESE TWO APPEALS RELATE TO THE SAME ASSE SSEE, DIFFERENT YEARS, IDENTICAL ISSUES INVOLVED. THEREFORE, THESE HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2 ITA NO.316 & 317/JP/2016 M/S BAHRTI MALPANI, JAIPUR A.Y 2008-09 & 200 9-10 2 3. GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ITA NO. 316/JP/2016, AY 2008-09 READS AS UNDER:- 1. THAT THE LD. CIT(APPEALS) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE PENALTY U/S 271(1)(C) WITHOUT APPRECIATING THAT INCOME WAS ESTIMATED. 2. THAT THE LD. CIT(APPEALS) HAS ERRED IN LAW AND FACT S IN CONFIRMING THE PENALTY THOUGH INITIATION OF PENALTY IN THE ASSESSM ENT ORDER DO NOT INDICATE AS TO WHETHER PENALTY WAS FOR CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS. 3. THAT THE LD. CIT(APPEALS) HAS ERRED IN LAW AND FACT S IN CONFIRMING THE PENALTY IN ABSENCE OF POSITIVE EVIDENCE COLLECTED BY AO AND EXPLANATION 1 IS NOT RELEVANT FOR THE CHARGE OF FILING IN ACCURATE PARTI CULARS. 4. THAT THE APPELLANT RESERVES THE RIGHT TO ADD, ALTER , AMEND, DELETE ANY GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF APPEAL. 4. GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ITA NO. 317/JP/2016, AY 2009-10 READS AS UNDER:- 1. THAT THE LD. CIT (APPEALS) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE PENALTY U/S 271(1)(C) WITHOUT APPRECIATING THAT INC OME WAS ESTIMATED. 2. THAT THE LD. CIT(APPEALS) HAS ERRED IN LAW AND FACT S IN CONFIRMING THE PENALTY THOUGH INITIATION OF PENALTY IN THE ASSESSMENT ORDE R DO NOT INDICATE AS TO WHETHER PENALTY WAS FOR CONCEALMENT OF INCOME OR FI LING OF INACCURATE PARTICULARS. 3. THAT THE LD. CIT(APPEALS) HAS ERRED IN LAW AND FACT S IN CONFIRMING THE PENALTY IN ABSENCE OF POSITIVE EVIDENCE COLLECTED BY AO AND EXPLANATION 1 IS NOT RELEVANT FOR THE CHARGE OF FILING IN ACCURATE PARTI CULARS. 4. THAT THE APPELLANT RESERVES THE RIGHT TO ADD, ALTER , AMEND, DELETE ANY GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF APPEAL. 5 . ALTHOUGH, IN THIS APPEAL, THE ASSESSEE HAS RAISED A MULTIPLE GROUNDS OF APPEAL, FOR BOTH THE ASSESSMENT YEARS, BUT DURING THE COURSE OF HEARING THE MAIN GRIEVANCE OF THE 3 ITA NO.316 & 317/JP/2016 M/S BAHRTI MALPANI, JAIPUR A.Y 2008-09 & 200 9-10 3 ASSESSEE HAS BEEN CONFINED TO THE ISSUE THAT INITIA TION OF THE PENALTY IN THE ASSESSMENT ORDER DO NOT INDICATE AS TO WHETHER PENALTY FOR CON CEALMENT OF THE INCOME OR FURNISHING OF INACCURATE PARTICULAR INCOME, THAT IS, THE ASSES SING OFFICER HAS ISSUED DEFECTIVE NOTICE U/S 271 (1)(C) READ WITH SECTION 274 OF THE ACT. 6. THE ASSESSEES APPEAL IN ITA NO. 316/JP/2016 FOR AY 2008-09 IS TAKEN AS THE LEAD CASE. 7. THE BRIEF FACTS QUA THE ISSUE ARE THAT ASSESSEE WAS ENGAGED IN MANUFACTURING AND EXPORT OF GEM STONES AND STUDDED JEWELLERY. DURING THE YEAR UNDER CONSIDERATION IT WAS NOTICED THAT ASSESSEE HAD SHOWN PURCHASES FROM CERT AIN TAINTED PARTIES WHICH WERE FOUND INGENUINE BOGUS BY THE INVESTIGATION WING, DU RING THE COURSE OF SURVEY BY THE BCTT BRANCH OF THE WING. DURING SURVEY, IT WAS FOUN D THAT THESE PARTIES WERE ONLY PAPER CONCERNS AND ISSUED ONLY BILLS AGAINST CERTAI N COMMISSION WITHOUT DELIVERY OF ANY GOODS. SINCE THE ASSESSEE FAILED TO PROVE THE GENUI NENESS AND CREDITWORTHINESS OF THESE PARTIES AS WELL AS PURCHASES FROM THEM, THEREFORE, ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) AND MADE ADDITION BASED ON T HE GROSS PROFIT RATE OF 16% AS TRADING ADDITIONS OF RS. 16,08,982/-. CONSEQUENTLY, THE PENALTY PROCEEDINGS U/S 271(1)(C) WAS INITIATED BY THE ASSESSING OFFICER AN D HE IMPOSED THE PENALTY AT RS. 176600/-. 8. AGGRIEVED BY THE PENALTY ORDER U/S 277(1)(C), TH E ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO HAS CONFIRMED THE PENALTY U/S 271(1) (C). NOT BEING CERTIFIED WITH THE ORDER OF THE CIT(A). THE ASSESSEE IS IN FURTHER APP EAL BEFORE US. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE NOTICES U/S. 274 OF THE ACT R.W.S. 271 OF THE ACT DATED 14.10.2010 AND SERVED O N THE ASSESSEE WHEREIN WE NOTE THAT THE AO HAS NOT STRUCK DOWN THE LIMB OF CHARGE/DEFAU LT FOR WHICH THE PENALTY IS BEING INITIATED AGAINST THE ASSESSEE. WE FIND THAT THE NO TICE HAS BEEN ISSUED FOR HAVING CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME. WE NOTE THAT IN A SIMILAR CASE THE HONBLE HIGH COU RT OF KARNATAKA IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY REPORTED I N (2013) 359 ITR 565 (KAR) HAS 4 ITA NO.316 & 317/JP/2016 M/S BAHRTI MALPANI, JAIPUR A.Y 2008-09 & 200 9-10 4 CANCELLED THE PENALTY TAKING NOTE OF THE FACT THAT THE PENALTY NOTICE DID NOT SPELL OUT CLEARLY AS TO WHETHER THE ASSESSEE HAS CONCEALED TH E PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. WE ALSO FIND THAT HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, REPORTED IN (2016) 73 TAXMANN.COM 241 (KAR) ENDORSED THE SAME VIEW IN MAN JUNATHA COTTON AND GINNING FACTORY (SUPRA) AND HELD AS UNDER: 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY T HE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WIT H SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT), TO BE BAD IN L AW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDIN GS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSE SSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CA SE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565/218 TAXMAN 423/3 5 TAXMANN.COM 250(KAR). 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUD GMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL QUESTI ON OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDI NGLY DISMISSED. WE ALSO FIND THAT THE AFORESAID ORDER OF THE HONBL E HIGH COURT WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HONBLE SUPREME COURT BY PREF ERRING AN SLP WHICH HAS BEEN DISMISSED WHICH FACT HAS BEEN REPORTED IN CIT VS. S SAS EMERALD MEADOWS (2016) 73 TAXMANN.COM 248 (SC). 9. WE NOTE THAT SINCE THE PENALTY NOTICE ISSUED TO THE ASSESSEE DATED 14.10.2010 DID NOT SPELL OUT AS TO WHICH DEFAULT THE ASSESSEE HAS COMMITTED FOR WHICH PENALTY U/S. 271(1)(C) OF THE ACT HAS BEEN INITIATED, THEREFORE, RESPECTFULLY FOLLOWING THE HONBLE KARNATAKA HIGH COURTS ORDER IN MANJUNATHA COTTON & GINNING FACTORY (SUPRA) AND SSAS EMERALD MEADOWS (SUPRA), WE CANCEL THE PENAL TY IMPOSED BY THE AO WHICH HAS BEEN ERRONEOUSLY CONFIRMED BY THE LD. CIT(A). THER EFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED. IN THE RESULT, THE APPEAL OF ASSESSEE (ITA NO. 316 & 317/JP/2016) ARE ALLOWED. 5 ITA NO.316 & 317/JP/2016 M/S BAHRTI MALPANI, JAIPUR A.Y 2008-09 & 200 9-10 5 ORDER PRONOUNCED IN THE OPEN COURT ON 10/11/2017. SD/- SD/- [VIJAY PAL RAO] [ DR ARJUN LAL SAINI] JUDICIAL MEMBER ACCO UNTANT MEMBER DATED : 10 .11.2017. [GANESH KR. PS] COPY OF THE ORDER FORWARDED TO: 1. BAHRTI MALPANI, JAIPUR 2. ITO WARD 1(2), JAIPUR 3. CIT(A)-JAIPUR 4. CIT-IV, JAIPUR 5. CIT(DR), JAIPUR BENCH, JAIPUR. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, JAIPUR B ENCHES