M/s. Indukumar & Brothers, Bhavnagar V. The Income tax Officer,Ward-2(2), Bhavnagar

ITA 3355/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73099 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 27-02-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 20-12-2010
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD . .. . . . . . , , , , ! '# ! '# ! '# ! '#, , , , $ $ $ $ BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ././ ./ ITA NO. 3355/AHD/2010 & '& & '& & '& & '& / // / ASSESSMENT YEAR 2005-06 M\S. INDUKUMAR & BROTHERS LOKHAND BAZAR, BHAVNAGAR. PAN: AAKFT5350H VS. INCOME TAX OFFICER WARD-2(2) BHAVNAGAR. ()/ APPELLANT *+() / RESPONDENT REVENUE BY : SH. O.P. BATHEJA, SR. D.R. ASSESSEE(S) BY : SH. TUSHAR P. HEMANI, AR !, - #./ // / DATE OF HEARING : 27/02/2014 /0' - #. / DATE OF PRONOUNCEMENT : 28/02/2014 1 1 1 1/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)- XX, AHMEDABAD DATED 22.09.2010 BY TAKING FOLLOWING GROUNDS OF APPEAL: (1) THE ORDER OF CIT APPEALS IS AGAINST THE LAW, E QUITY AND JUSTICE. (2) THE APPELLANT PRAYS THAT THE PENALTY ORDER PASS ED BY THE CIT APPEALS MAY BE REVERSED. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN T HE INSTANT CASE, THE PENALTY OF RS 2,53,082/- WAS LEVIED BY THE ASSESSING OFFICE R U/S 271(1)(C) ON THE ITA NO. 3355 /AHD/201 0 M/S INDUKUMAR & BROS., VS ITO, WD.-2(2). FOR A.Y. 2005-06 - 2 - GROUND OF CONCEALMENT OF INCOME. IN THE INSTANT CA SE, DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER FOUND THAT THE PA RTIES FROM WHOM THE ASSESSEE CLAIMED TO HAVE MADE PURCHASES WERE NOT GE NUINE. THE ASSESSING OFFICER, THEREFORE, REJECTED THE BOOK RESULT OF THE ASSESSEE. THE ASSESSING OFFICER ACCEPTED THE SALES AS SHOWN BY THE ASSESSEE BUT ESTIMATED GROSS PROFIT AT THE RATE OF 12.3% IN PLACE OF 6.96% SHOWN BY THE ASSESSEE AND CONSEQUENTLY MADE ADDITION OF RS 8,15,050/- TO THE INCOME OF THE ASSESSEE. 3. ON APPEAL, THE LD. CIT(A) ESTIMATED THE GROSS PR OFIT AT 11% AND THEREBY RESTRICTED THE ADDITION TO RS 7,59,246/-. 4. AFTER THIS, THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) IN RESPECT OF ADDITION OF RS 7,59,246/- WHICH WAS CONFIRMED BY THE LD. CIT(A). 5. WE FIND THAT THE TRIBUNAL IN THE QUANTUM APPEAL IN THE CASE OF THE ASSESSEE VIDE ITS ORDER DATED 19.11.2010 PASSED IN ITA NO. 1150/AHD/2009 HAS HELD AS UNDER: WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. WE NOTICE THAT THE AUTHORITIES BELOW DID N OT HAVE ANY BASIS EXCEPT RESULTS OF PREVIOUS YEAR WHERE GP RATE WAS 8 .05% WAS APPLIED. THIS SHOULD BE CONSIDERED AS REASONABLE YARDSTICK U NLESS THERE IS SOME OTHER MATERIAL IN POSSESSION OF THE AO. CONSIDERIN G THE NON- AVAILABILITY OF MATERIAL WE DIRECT THE AO TO APPLY GP OF 8.05% AND CALCULATE THE ADDITION ACCORDINGLY. AS A RESULT AP PEAL IS PARTLY ALLOWED. 6. WE FIND THAT ADDITION OF RS 7,59,246/- IN RESPEC T OF WHICH PENALTY U/S 271(1)(C) HAS BEEN LEVIED IN THE INSTANT CASE HAS B EEN SUBSTANTIALLY REDUCED BY THE TRIBUNAL AND THEREFORE, THE PENALTY IN RESPE CT OF ADDITION WHICH HAS BEEN DELETED BY THE TRIBUNAL, CANNOT BE SUSTAINED. 7. FURTHER, WE FIND THAT THE ADDITION WHICH WAS SUS TAINED BY THE TRIBUNAL WAS ON THE BASIS OF GROSS PROFIT RATE OF THE PRECED ING YEAR. THE TRIBUNAL HAS ITA NO. 3355 /AHD/201 0 M/S INDUKUMAR & BROS., VS ITO, WD.-2(2). FOR A.Y. 2005-06 - 3 - CATEGORICALLY RECORDED THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE ASSESSEE ACTUALLY EARNED I NCOME MORE THAN WHAT WAS DISCLOSED BY IT IN THE RETURN OF INCOME. WE FI ND THAT IN THE INSTANT CASE, SALE OF THE ASSESSEE AS SHOWN BY IT HAS BEEN ACCEPT ED BY THE REVENUE. IT IS AN UNDISPUTABLE PROPOSITION THAT WITHOUT PURCHASE, THERE CANNOT BE SALE. THUS IT IS UNDISPUTABLE THAT THE ASSESSEE MADE PURC HASES FOR MAKING ITS SALES. NO MATERIAL HAS BEEN BROUGHT BEFORE US TO S HOW THAT PURCHASES WERE IN FACT MADE AT A PRICE LOWER THAN THE PRICE AT WHI CH IT WAS SHOWN BY THE ASSESSEE IN ITS RETURN OF INCOME OR THE MARKET VALU E OF THE GOODS WERE LOWER THAN THE VALUE AT WHICH IT WAS SHOWN BY THE ASSESSE E AT THE MATERIAL TIME. 8. IT IS AN ESTABLISHED POSITION OF LAW THAT THE CO NSIDERATION WHICH APPLIES IN A PENALTY PROCEEDING IS DIFFERENT FROM THE CONSI DERATION WHICH APPLIES IN ASSESSMENT PROCEEDINGS. IN THE INSTANT CASE, IN AB SENCE OF ANY POSITIVE MATERIAL BROUGHT ON RECORD TO SHOW THAT THE ASSESSE E ACTUALLY CONCEALED ANY INCOME IN THE RETURN OF INCOME, IN OUR CONSIDERED V IEW, PENALTY U/S 271(1)(C) CANNOT BE SUSTAINED EVEN IN RESPECT OF TH AT PART OF ADDITION WHICH WAS CONFIRMED BY THE TRIBUNAL ON THE BASIS OF GROSS PROFIT RATE ACCEPTED IN THE CASE OF THE ASSESSEE IN THE PAST. WE, THEREFOR E, DELETE THE ENTIRE PENALTY OF RS 2,53,082/- LEVIED IN THE INSTANT CASE U/S 271(1)(C) OF THE ACT. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 28 TH OF FEBRUARY, 2014 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 28/02/2014 GHANSHYAM MAURYA, SR. P.S.