Sachin Security Services, Haridwar V. DCIT, Haridwar

ITA 3191/DEL/2012

• Counselvise Citation: 319120114 RSA 2012
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 28-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 21-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY
• Assessee Lawyers: RAKESH K SEHGAL
• Keywords: Search and seizure; Revised return
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.3191 /DEL/2012 ASSESSMENT YEAR : 2008-09 M/S SACHIN SECURITY SERVICES, DCIT, T-65, SHIVALIK NAGAR, CIRCLE HARIDWAR, BHEL RANIPUR, HARIDWAR. V. HARIDWAR. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.ABDFS ABDFS ABDFS ABDFS- -- -9206 9206 9206 9206- -- -N NN N APPELLANT BY : SHRI RAKESH K. SEHGAL, C.A. RESPONDENT BY : SMT. SURJANI MOHANTY, SR. DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) DATED 24.6.2011. THE GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER:- 1. IMPOSITION OF PENALTY U/S 271(1)( C) BY THE ASSESSING OFF ICER AMOUNTING TO ` .5,00,000/- AND MODIFICATION OF THE SAME BY THE CIT(A) WITH REFERENCE TO THE TAX SOUGHT TO BE EVADED AFTER GIVING EFFECT OF APPEAL ORDER OF CIT(A) IS CONTRARY TO FACT S AND LAW. 2. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY OF TH E GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND IT FILED ITS RETURN OF INCOME THROUGH E.FIL ING ON 29.9.2008 ITA NO../DEL/ 2 DECLARING A TOTAL INCOME OF ` .6,16,310/-. THEREAFTER, THE RETURN WAS REVISED ON 20.10.2008 DECLARING TOTAL INCOME AT NIL. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. VARIOUS NOTICES U./S 142 (1) WERE ISSUED AND SERVED ON THE ADDRESS FURNISHED IN THE RETURN OF INCOME BUT THE ASSESSEE DID NOT MAKE COMPLIANCE WITH ANY OF THESE N OTICES ISSUED FROM TIME TO TIME. THEREFORE, THE ASSESSMENT WAS COMPLET ED ON 27.12.2010 U/S 144 OF THE INCOME TAX ACT, 1961 ON TH E BASIS OF MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER F OUND THAT FROM FORM NO.26 THAT ASSESSEE HAD RECEIVED CONTRACTUAL RECEI PTS OF ` .1,85,70,848/- FROM VARIOUS PARTIES. THE ASSESSING OFFICE R THEN ASSESSED THE INCOME OF ASSESSEE IN ACCORDANCE WITH THE PROV ISIONS OF SECTION 4AAD OF THE ACT I.E. 8% OF TOTAL TURNOVER. THE ASSESSING OFFICER THEN PROCEEDED TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT ON ACCOUNT OF CONCEALMENT OF INCOME. IN REPLY TO PENALTY NOTIC E, THE ASSESSEE SUBMITTED THAT BOTH THE RETURNS WERE FILED BY HIS PREV IOUS COUNSEL AND IT WAS NOT AWARE OF THE REVISED RETURN AS REVISED RETUR N HAD BEEN FILED WITHOUT ANY REASON AS WELL AS WITHOUT THEIR CONSENT. T HEREFORE, IT PLEADED THAT THERE WAS NO MALA FIDE INTENTION. THE A SSESSING OFFICER AFTER CONSIDERING THE REPLY OF THE ASSESSEE DID NOT AGR EE WITH THE CONTENTION OF ASSESSEE AND IMPOSED PENALTY OF ` .5 LAKHS. 3. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND SUBMITTED THAT THE ADDITION WAS MADE ON E STIMATE AND THEREFORE PENALTY SHOULD NOT HAVE BEEN IMPOSED. RELI ANCE WAS PLACED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS PVT. LTD. THE LD CIT(A) AFTE R CONSIDERING THE SUBMISSIONS OF ASSESSEE OBSERVED THAT EXPENDITURE TO THE TU NE OF ` .6,16,900/- WAS INCREASED IN THE REVISED RETURN OF INC OME AND CORRESPONDINGLY SUNDRY CREDITORS WERE INCREASED WITH T HE EQUIVALENT AMOUNT. THE LD CIT(A) OBSERVED THAT THE ASSESSEE HAD FA ILED TO EXPLAIN ITA NO../DEL/ 3 AS TO WHY IT WAS DONE AND HAD FAILED TO SUBSTANTIATE THE CONTENTION WITH REGARD TO THE RELEVANT DOCUMENTARY EVIDENCE. T HE LD CIT(A) FURTHER OBSERVED THAT ASSESSED INCOME AFTER GIVING APPEA L EFFECT SHOULD WORK OUT AT ` .7,62,802/- AND THUS THERE WAS A DIFFERENCE BETWEEN THE ASSESSED INCOME AND ASSESSEES OWN ADMITTED INC OME IN THE FIRST INSTANCE. AS REGARDS THE ASSESSEES RELIANCE ON T HE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT V. RELIA NCE PETRO PRODUCTS PVT. LTD. (SUPRA) THE LD CIT(A) OBSERVED THAT THERE I S NOTHING IN THE DECISION WHICH PREVENTS THE ASSESSING OFFICER TO IMPOSE PE NALTY U/S 271(1)( C) WHERE INACCURATE PARTICULARS ARE FURNISH ED. HE FURTHER HELD THAT LAW ITSELF ALLOWS THE ASSESSEE AN OPPORTUNITY TO SHOW THAT IT HAS OFFERED AN EXPLANATION IN CONNECTION WITH FACTS MATE RIAL TO THE COMPUTATION OF HIS TOTAL INCOME. HE OBSERVED THAT IN THIS CASE THE ASSESSEE SOUGHT TO CONVERT ITS NET PROFIT FROM ` .6,16,312/- TO NET LOSS OF ` .588/- BY INFLATING THE EXPENDITURE BETWEEN TWO P&L ACCOUNTS FURNISHED WITH TWO RETURNS OF INCOME AND FAILED TO F URNISH ANY EXPLANATION FOR THE SAME. IN VIEW OF THIS, THE ACTION OF ASSESSING OFFICER WAS CONFIRMED. HOWEVER, DIRECTION WAS GIVEN T O ASSESSING OFFICER TO RE-COMPUTE THE PENALTY WITH REFERENCE TO TAX SOUGHT TO BE EVADED INSTEAD OF ` .5 LAKHS IMPOSED BY THE ASSESSING OFFICER. 4. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THIS TRIB UNAL. 5. AT THE OUTSET, LD AR SUBMITTED THAT ASSESSMENT WAS C OMPLETED U/S 144 AND LD CIT(A) HAD UPHELD THE ADDITION BUT HA D ALLOWED DEDUCTION ON ACCOUNT OF PARTNERS SALARY AND ASSESSEE DID NOT FILE APPEAL BECAUSE IT HAD GOT RELIEF AS PARTNERS SALARY WA S ALLOWED TO BE ADJUSTED AGAINST PROFIT ESTIMATED BY ASSESSING OFFICER. HE FURTHER ARGUED THAT PENALTY U/S 271(1)(C) CANNOT BE IMPOSED W HERE ADDITIONS ITA NO../DEL/ 4 ARE MADE ON ACCOUNT OF ESTIMATION OF INCOME. RELIANC E WAS PLACED ON THE FOLLOWING JUDGMENTS:- 1. CIT V. VIJAY KUMAR JAIN 325 ITR 378. 2. CIT V. MAHENDRA SINGH KHADLA 71 DTR (RAJ.) 189. 3. CIT V. AERO TRADERS PVT. LTD. 322 ITR 316 (DEL.). 6. THE LD AR ARGUED THAT IN ALL THESE CASES DECIDED BY HON'BLE COURTS OF CHHATISGARH, JAIPUR AND DELHI IT WAS HELD T HAT WHERE PROFITS ARE ESTIMATED OR WHERE INCOME IS ESTIMATED, PENALTY U/ S 271(1)(C) CANNOT BE LEVIED. 7. THE LD DR, ON THE OTHER HAND, STRONGLY RELIED UPO N THE ASSESSING OFFICERS ORDER AND LD CIT(A)S ORDER AND ARGUED THAT ASSESSEE HAD SUPPRESSED THE EARLIER INCOME DECLARED IN THE ORIGINAL RETURN OF INCOME AND THEREFORE NO EXPLANATION WAS FURNISHED BY ASSESSEE IN RESPECT OF INCREASED EXPENSES AND THEREFORE ASSESSEE HAD ON THE ONE H AND HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND ON THE OTHER HAND HAD FAILED TO FURNISH THE EXPLANATIONS FOR DIFFERENCE I N THE TWO RETURNS OF INCOME AND THEREFORE ASSESSING OFFICER HAD RIGHTLY IMPO SED THE PENALTY. RELIANCE WAS PLACED ON THE FOLLOWING JUDGME NTS:- 1. CIT V., SMT. CHANDER KANTA & OTHERS 205 ITR 607 (MP) . 2. CIT V. BARSAT HUSSAIN (PAT.). 171 ITR 405. 3. AM SHAH & CO. V. CIT 238 ITR 415 (GUJ.). 4. CIT V. H. KRISHNASWAMY & SONS 219 ITR 157 (MAD.). 8. IN HIS REJOINDER THE LD AR SUBMITTED THAT THE ADDI TION IN THE PRESENT CASE WAS NOT MADE ON THE BASIS OF REVISED RETURN BUT ON THE BASIS OF ESTIMATION OF INCOME AND THEREFORE THE FACTS A ND ITA NO../DEL/ 5 CIRCUMSTANCES OF THE CASE ARE FULLY COVERED WITH FACTS AND CIRCUMSTANCES OF THE CASE LAWS RELIED UPON BY HIM. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES A ND HAS GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE ASSESSEE DID NOT APPEAR BEFORE ASSESSING OFFICER FOR COMPLETION OF A SSESSMENT PROCEEDINGS AND ASSESSING OFFICER ON THE BASIS OF GROSS REC EIPTS AS PER FORM NO.26 AS ESTIMATED THE INCOME OF ASSESSEE ON THE BA SIS OF 8% OF GROSS RECEIPTS IN THE LIGHT OF PROVISIONS OF SECTION 44A D. BOTH THE P&L ACCOUNT ATTACHED WITH ORIGINAL RETURN AND REVISED RE TURNS WERE AUDITED BY DIFFERENT CHARTERED ACCOUNTANTS. HOWEVER, GROSS REC EIPTS IN BOTH THE CASES WAS SAME I.E. ` .2,18,71,876/-. THE DECREASE IN PROFIT IN THE REVISED RETURN WAS DUE TO INCREASE IN LABOUR, WAGES AN D EXPENSES AND CONSEQUENT INCREASE OF AN EQUAL AMOUNT IN THE FIGURE OF TRADE CREDITORS. IN VIEW OF NON COOPERATION BY THE ASSESSEE, T HE ASSESSING OFFICER HAD ESTIMATED THE PROFITS ON THE BASIS OF 8% O F TURNOVER. HOWEVER, THE PENALTY WAS IMPOSED BECAUSE OF THE FAILUR E ON THE PART OF ASSESSEE TO FURNISH EXPLANATION WITH REGARD TO DIFFER ENCE IN PROFIT FIGURES IN THE TWO RETURNS. THE EXPLANATION BEFORE LD CIT(A) THAT REVISED RETURN WAS WITHOUT ITS CONSENT IS OF NO FORCE. I N OUR OPINION, THE ASSESSEE TOOK THIS PLEA BEFORE LD CIT(A) AS IT WAS UNABLE TO EXPLAIN THE DIFFERENCE IN EXPENSES. THEREFORE, IN OUR VIEW, THE A SSESSEE HAD NECESSARILY FAILED TO FURNISH EXPLANATION TO THE DIFFE RENCE IN ORIGINAL RETURN AND REVISED RETURN. THE CASE LAWS RELIED UPON B Y LD AR OF THE ASSESSEE ARE WHEREIN THE BOOKS OF ACCOUNTS WERE REJECTED AND INCOME WAS ESTIMATED ON THE BASIS OF SOME PERCENTAGE. WHEREAS IN THE PRESENT CASE, THE ASSESSEE HAD FILED ORIGINAL RETURN AND HAD REVISED IT BY LOWERING THE PROFITS AND ON EXPLANATION IT COULD NOT EXPLAIN THE DIFFERENCE. THE FACTS OF THE CASE LAWS RELIED UPON BY LD DR IN THE CASE OF CIT V. CHANDER KANTA & OTHERS ARE SIMILAR TO THE F ACTS AND ITA NO../DEL/ 6 CIRCUMSTANCES OF THE CASE. IN THAT CASE ALSO, THE ASSESSEE H AD FILED RETURN SHOWING LOSS OF ` .51,530/- AND THEN REVISED RETURN WAS FILED SHOWING PROFIT OF ` .7500/-. THE ASSESSING OFFICER ESTIMATED THE TOTAL INCOME AND DETERMINED THE INCOME AT ` .51,000/-. ON A REFERENCE TO HON'BLE MADHYA PRADESH HIGH COURT, THE HON'BLE COUR T HELD THAT WHEN THE ASSESSEE HAD SUBMITTED HIS RETURN AND SHOWED LOSS OF ` .50,000/- AND THEN REVISED IT AND SHOWED A PROFIT OF ` .7500/- HE HAD NECESSARILY SUPPRESSED THE PARTICULARS OF INCOME AND GIVEN AN INCOR RECT ACCOUNT OF HIS INCOME. THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOU NTS AND THEREFORE HIS INCOME WAS TO BE ASSESSED ON ESTIMATED BASIS ONLY. THEREFORE, THE ASSESSEE WAS LIABLE TO PENALTY. SIMILAR V IEWS WERE HELD BY HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. H. KRISHNASWAMY &SONS 219 ITR 157. THE FACTS OF THAT CASE ARE THAT ASSESSE E WAS DOING TRANSPORT BUSINESS. ORIGINAL ASSESSMENTS FOR ASSESSMENT YEAR 19 79-80 & 1980-81 WERE COMPLETED ON A TOTAL INCOME OF ` .81,370/- AND ` .53,610/-. SUBSEQUENTLY THERE WAS A RAID IN THE PREMI SES OF THE ASSESSEE. THE ASSESSEE FILED REVISED RETURN FOR TWO YEARS A ND ADMITTED THE SUPPRESSION. THE HON'BLE COURT HAD HELD THAT CANCE LLATION OF PENALTY BY THE TRIBUNAL WAS NOT VALID. 10. IN THE PRESENT CASE THE PENALTY U/S 271(1)( C) WA S IMPOSED DUE TO FAILURE OF THE ASSESSEE TO EXPLAIN THE DIFFERENCE IN ORIGINAL RETURN AND REVISED RETURN. THOUGH ASSESSING OFFICER HAD IMPOSED THE PENALTY FOR A LUMP SUM AMOUNT OF ` .5,00,000/-, THE LD CIT(A) MODIFIED IT AND DIRECTED THE ASSESSING OFFICER TO CALCULATE THE PENALTY ON THE BASIS OF TAX OUGHT TO BE EVADED. IN OUR OPINION, THE TAX OUG HT TO BE EVADED IS DIFFERENCE BETWEEN FIGURES OF PROFITS BETWEEN THE TWO PROFIT & LOSS ACCOUNTS FOR WHICH ASSESSEE COULD NOT FURNISH ANY EXPLANA TION. ITA NO../DEL/ 7 11. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LD CIT(A) EXCEPT REGARDING QUANTUM OF PENALTY WHICH SHOULD BE CALCULATED ON THE BASIS OF DIFFERENCE BETWEE N FIGURES OF PROFITS BETWEEN TWO PROFITS & LOSS ACCOUNTS. WE DIRECT T HE ASSESSING OFFICER TO CALCULATE PENALTY ACCORDINGLY. 12. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE A SSESSEE IS PARTLY ALLOWED. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH DAY OF OCTOBER, 2012. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 19.10.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 28.8.2012 DATE OF DICTATION 19.10.2012 DATE OF TYPING 19.10.2012 DATE OF ORDER SIGNED BY 19.10.2012 ITA NO../DEL/ 8 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 22.10.2012 & SENT TO THE BENCH CONCERNED.