Smt. Gend Kanwar Panwar, BHILWARA V. ITO, BHILWARA

ITA 344/JODH/2013

• Counselvise Citation: 34423314 RSA 2013
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-03-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: U C JAIN
• Keywords: Rejection of books of accounts; Loose papers; Opportunity of being heard; Question of law
• Section: 145

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 344/JODH/2013 (A.Y. 2003-04) SMT. GEND KANWAR PANWAR, VS. ITO, WARD-1, C/O SHRI ASHOK KUMAR KABRA-ADVOCATE, BHILWARA. ASHOK BHAWAN, BAZAR NO.3, BHILWARA. PAN NO. ABMPP 7716 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 07/03/2014. DATE OF PRONOUNCEMENT : 09/04/2014. O R D E R PER N.K. SAINI, A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 21/03/2013 OF LD. CIT(A), AJMER. THE FOLLOWING GRO UNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT IN FACT & CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW THE LEARNED LOWER AUTHORITIES GROSSLY ERRED & PASSED AN ERRONEO US ORDER AND IMPOSED THE PENALTY OF RS. 420776/- U/S 271(1)(C) O F THE I.T. ACT, 1961 TREATING AND OBSERVING THE WRONGFUL CONCLUSION IN T HE WHOLE OF THE 2 MATTER AND CALCULATE IN RESPECT TO TRADING ADDITION AND ENHANCED THE SALE ON WHICH THE G.P. WAS APPLIED ON THE ESTIMATIO N BASIS WHICH IS ABSOLUTELY WRONG ILLEGAL AND BEYOND FACTS. 2. THAT IN FACT & CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE ASSESSEE APPELLANT NEITHER CONCEALED ANY TYPE OF INCOME AND NOR FURNISHED ANY TYPE OF PARTICULAR TO THE DEPARTMENT FOUND CONTRARY TO MATERIAL AND INCRIMINATING LOOSE PAPERS AND BOOKS OF ACCOUNTS RE LATED TO REGULAR BUSINESS SO IMPOSITION OF PENALTY U/S 271(1)(C) OF THE I.T. ACT, 1961 OF RS. 420776/- IS ARBITRARY AND UNWARRANTED DESERVES TO BE CANCELLED. 2 THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE CONFIRMATION OF PENALTY OF RS. 4,20,776/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT IN SHORT). 3. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASS ESSEE WAS ENGAGED IN THE BUSINESS OF SELLING KACHORI, KOFTA, SAMOSA O N RETAIL BUSINESS IN THE NAME OF M/S. HARI BHAI RESTAURANT. A SURVEY WAS CA RRIED OUT ON 17/07/2002 AT THE BUSINESS PREMISES OF THE ASSESSEE AND IT WAS FOUND THAT NO BOOKS WERE MAINTAINED AND STATEMENT OF THE ASSESSEE AND HER SON SHRI GOPAL SINGH, WHO LOOKS AFTER THE BUSINESS WERE RECORDED. THE ASSESSEE FILED THE RETURN OF INCOME ON 22/09/2013 D ECLARING TOTAL INCOME OF RS. 72,530/-. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, OBSERVED THAT COPY OF ACCOUNTS FILED W ITH THE RETURN OF INCOME WAS AN AFTERTHOUGHT AND WAS PREPARED ON ESTI MATE BASIS. THE 3 ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS UN DER SECTION 145 OF THE ACT. THE ASSESSING OFFICER ESTIMATED THE SALES AT RS. 63,84,000/- BASED ON THE CONSUMPTION OF RAW MATERIAL AS ADMITTED BY T HE KARIGARS AND DETERMINED THE GROSS PROFIT @ 42.53% AMOUNTING TO R S. 27,15,115/- ON THE ABOVE SALES. THE ASSESSING OFFICER, ACCORDINGL Y, MADE THE ADDITION OF RS. 23,79,802/- AFTER GIVING CREDIT FOR EXPENSES CL AIMED AND NET PROFIT ALREADY SHOWN BY THE ASSESSEE OF RS. 40,966/-. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE AND THE STATEMENTS OF HER SON AND THE WORKERS, ALLOWED RELIEF OF RS. 1 0,01,515/- AND CONFIRMED THE BALANCE ADDITION OF RS. 13,78,287/-. AGAINST THE SAID ORDER, APPEAL FILED BY THE ASSESSEE IN I.T.A.NO. 48 9/JU/2006 WAS DISMISSED EXPARTE FOR NON-PROSECUTION VIDE ORDER DATED 30/04/2007. THE SAID ORDER WAS RECALLED BY THE ITAT VIDE ORDER DATE D 10/11/2009 IN M.A.NO. 94/JU/2007. THEREAFTER, APPEAL OF THE ASSE SSEE WAS DISMISSED ON THIS BASIS THAT THE ORDER OF THE LD. CIT(A) WAS ALREADY CONFIRMED IN APPEAL OF THE REVENUE IN I.T.A.NO. 583/JU/2006 VIDE ORDER DATED 20/03/2008. THE ASSESSING OFFICER INITIATED THE PE NALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND OBSERVED THA T OUT OF THE CONCEALED INCOME DETECTED BY THE ASSESSING OFFICER, A SUM OF RS. 13,87,287/- STANDS 4 CONFIRMED BY THE LD. CIT(A), ON WHICH CONCEALMENT O F INCOME BY THE ASSESSEE WAS CLEARLY PROVED. HE, ACCORDINGLY, LEVI ED THE IMPUGNED PENALTY. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A), WHO CONFIRMED THE PENALTY LEVIED BY THE ASSESSING O FFICER BY STATING THAT THE ADDITION HAD BEEN MADE BY THE ASSESSING OFFICER ON REASONABLE BASIS. NOW THE ASSESSEE IS IN APPEAL. 6 . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE LD. CIT(A) HAD NOT GIVEN DUE AND PROPER OPPORTUNITY OF BEING HEARD AND CONFIRMED THE PENALTY IN ARBITRARY MANNER. IT WAS FURTHER STATED THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS PURELY ON ESTIMATE BAS IS WITHOUT CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE AND EVEN THE AFFIDAVIT FILED BY THE ASSESSEE WAS IGNORED. IT WAS FURTHER STATED THAT TH E ASSESSEE NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTI CULARS OF INCOME AND THE INCOME DETERMINED BY THE ASSESSING OFFICER WAS ONLY ON THE BASIS OF STATEMENTS OF THE WORKERS BY ESTIMATING THE SALES A T RS. 63.84 LAC AND APPLYING GROSS PROFIT RATE @ 42.53%. IT WAS FURTHE R STATED THAT THE LD. CIT(A) ALSO SUSTAINED THE ADDITION ONLY ON ESTIMATE BASIS. THEREFORE, THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT LEVIABLE IN VIEW OF THE 5 RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KRISHI TYRE RETREADING & RUBBER INDUSTRIES REPO RTED AT (2013) 95 DTR (RAJ) 376 . 7 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. STRONGLY S UPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSING OFF ICER ESTIMATED THE SALES AS WELL AS THE INCOME OF THE ASSESSEE ON THE BASIS OF STATEMENTS OF THE WORKERS. THE LD. CIT(A) ALTHOUGH REDUCED THE ADDIT ION, BUT THE ADDITION SUSTAINED WAS ALSO ON ESTIMATE BASIS. THE ASSESSI NG OFFICER LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE E STIMATED ADDITION SUSTAINED BY THE LD. CIT(A) CONSIDERING THE SAME AS CONCEALED INCOME. THE SAID PENALTY WAS CONFIRMED BY THE LD. CIT(A). ON A SIMILAR ISSUE, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KRISHI TYRE RETREADING & RUBBER INDUSTRIES (SUPRA) HAS HELD AS UNDER:- THE ADDITION HAS BEEN SUSTAINED PURELY ON ESTIMAT E BASIS AND NO POSITIVE FACT OR FINDING HAS BEEN FOUND SO AS TO EV EN MAKE THE SAID ADDITION. IT IS A PURE GUESSWORK AND ON SUCH GUESS WORK, NO PENALTY UNDER SECTION 271(1)(C) CAN BE SAID TO BE LEVIABLE. FOR IMPOSING PENALTY UNDER SECTION 271(1)(C), THE AO HAS TO CLEA RLY PROVE THE 6 CONDUCT OF THE ASSESSEE, WHICH IN THIS CASE, HAS NO T BEEN PROVED. MERELY BECAUSE THE BOOKS OF ACCOUNTS OF THE ASSESSE E WERE REJECTED OR ESTIMATED ADDITION WAS MADE, NO PENALTY IS LEVIABLE . THE ASSESSEE OFFERED AN EXPLANATION, WHICH COULD NOT BE TERMED A S NOT BONAFIDE. IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO PROVE THE CHARGE OF CONCEALMENT, THE PENALTY COULD NOT BE IMPOSED. THE FINDING REACHED BY THE TRIBUNAL IS ESSENTIALLY A FINDING OF FACT AN D NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THE PRESENT APPEAL. 9 . IN THE PRESENT CASE ALSO, THE ASSESSING OFFICER M ADE THE ADDITION PURELY ON ESTIMATE BASIS, WHICH WAS A PURE GUESSWOR K AND THE LD. CIT(A) ALSO SUSTAINED THE ADDITION ON ESTIMATE BASIS. THE REFORE, IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID REFERRED TO CASE OF CIT VS. KRISHI TYRE RETREADING & RUBBER INDUSTRIES (SUPRA), THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT LEVIABLE TO THE FACTS OF THE PRESENT CASE. IN THAT VIEW OF THE MATTER, THE PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY TH E LD. CIT(A) IS DELETED. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 09 TH APRIL, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09 TH APRIL, 2014. VR/- 7 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.