The Spunpipe & Construction Co.(Baroda)Pvt.Ltd., Baroda V. The ACIT.,Circle-4, Baroda

ITA 358/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60359 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 08-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: A C SHAH
• Keywords: Wrong claim
• Section: 27

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' ( & &' ( & &' ( & &' ( & ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.358/AHD/2012 [ASSTT.YEAR : 2003-2004] THE SPUNPIPE & CONSTRUCTION CO. (BARODA) PVT. LTD. A/505-506, ALKAPURI ARCADE, 5 TH FLOOR, OPP: HOTEL WELCOME GROUP R.C. DUTT ROAD BARODA 390 007. PAN : AAACT 6738 R /VS. THE ACIT, CIR.4 BARODA. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : SHRI A.C. SHAH ( / 0 &/ REVENUE BY : SHRI B.L. YADAV, SR.DR 2 / %3'/ DATE OF HEARING : 9 TH APRIL, 2012 456 / %3'/ DATE OF PRONOUNCEMENT : 15-05-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-2004 IS DIREC TED AGAINST THE ORDER OF THE LD CIT(A)-III, BARODA. ITA NO.358/AHD/2012 -2- 2. THE ONLY ISSUE IS REGARDING THE VALIDITY OF PENA LTY OF RS.3,12,871/- IMPOSED UNDER SECTION 271(1)(C) OF TH E ACT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT PEN ALTY UNDER SECTION 271(1)(C) WAS IMPOSED ON THE ONLY GROUND OF ESTIMAT ION OF INCOME BY APPLYING FLAT GP RATE TO THE TURNOVER OF THE ASSESS EE. HE SUBMITTED THAT THE ASSESSEE WAS MANUFACTURER OF PIPES AND DOI NG CHEMICAL BUSINESS AND ITS ACCOUNTS WERE AUDITED BY THE CHART ERED ACCOUNTANT. HE SUBMITTED THAT IT IS NOW WELL SETTLED THAT NO PE NALTY UNDER SECTION 271(1)(C) OF THE ACT WAS IMPOSABLE ON MERE TRADING ADDITION. HE SUBMITTED THAT THE REVENUE COULD NOT BRING ANY MATE RIAL ON RECORD TO SUGGEST THAT EXPLANATION OF THE ASSESSEE WAS NOT BONA FIDE AND THAT IT COULD NOT POINT OUT ANY IRREGULARITY IN THE BOOKS O F ACCOUNTS OF THE ASSESSEE. THE LEARNED DR HAS OPPOSED THE SUBMISSIO NS OF THE LEARNED COUNSEL OF THE ASSESSEE. HE SUBMITTED THAT THE TRA DING ADDITION HAS BEEN SUSTAINED BY THE TRIBUNAL IN THE QUANTUM APPEA L OF THE ASSESSEE, AND THEREFORE TO THAT EXTENT PENALTY UNDER SECTION 271(1)(C) OF THE ACT SHOULD BE SUSTAINED. HE SUBMITTED THAT THE ASSESSE ES EXPLANATION WAS NOT BONA FIDE AND IT COULD NOT JUSTIFY THE GENUINENESS OF THE EX PENSES CLAIMED IN THE PROFIT & LOSS ACCOUNT AND THEREFORE THE ASSESSEE WAS GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCO ME. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 3. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THERE WAS A FA LL IN THE GP RATE OF THE ASSESSEE DURING THIS YEAR AS COMPARED TO THE GP RATE OF THE ASSESSEE IN THE IMMEDIATELY PRECEDING TWO ASSESSMEN T YEARS. THE AO REJECTED THE TRADING ACCOUNT OF THE ASSESSEE, AND D IFFERENTIAL RATE OF GP AS COMPARED TO THE EARLIER YEARS WAS HELD AS SUPPRE SSION OF PROFIT TO THE EXTENT OF 7.2% ON ACCOUNT OF DECLARING LOWER GP . THE CIT(A) ITA NO.358/AHD/2012 -3- SUSTAINED THE ADDITION OF 1% OF THE GP ONLY WHICH W AS CONFIRMED BY THE TRIBUNAL. WE FIND THAT THERE IS NO MATERIAL BR OUGHT ON RECORD ON BEHALF OF THE REVENUE TO SUGGEST THAT THE EXPLANATI ON OF THE ASSESSEE WAS NOT BONA FIDE . MERELY BECAUSE THERE WAS A REMARKABLE FALL IN TH E GP RATE OF THE ASSESSEE FOR THE RELEVANT YEAR AS CO MPARED TO THE EARLIER YEARS AND THE ASSESSEE COULD NOT SUBSTANTIATE THE S AME WITH DOCUMENTARY EVIDENCE, IT DOES NOT FOLLOW THAT THE A SSESSEE IS GUILTY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE SITE EXPENSES CLAIMED BY THE ASSESSEE WERE FOUND BY THE TRIBUNAL TO BE EXCESSIVE AND THIS FACT MAY JUSTIFY UPHOLDING OF THE TRADING ADDITION CONFIRMED BY THE CIT(A), BUT IS NO T IN ITSELF SUFFICIENT TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN CASE THE ASSESSEE COULD NOT SUBSTANTIATE ITS EXPENSES CLAIME D IN THE P&L ACCOUNT, THE REVENUE WOULD BE WHOLLY JUSTIFIED TO D ISALLOW THE SAME, BUT IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO PROVE THAT THE EXPLANATION OF THE ASSESSEE WAS NOT BONA FIDE AND THAT IN FACT HAS MADE A FRAUDULENT OR BOGUS CLAIM BY THE ASSESSEE, T HERE SEEMS TO BE NO JUSTIFICATION TO IMPOSE PENALTY UNDER SECTION 27 1(1)(C) OF THE ACT. IN THESE FACTS OF THE CASE, WE HOLD THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WHICH I S ACCORDINGLY CANCELLED AND THE GROUNDS OF THE APPEAL OF THE ASSE SSEE ARE ALLOWED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT ITA NO.358/AHD/2012 -4- C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD 1. DATE OF DICTATION : 09-04-2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER. : 10-04-2012 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S : 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT. : 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 15-05-2012 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER :