Kalyanjee Saree Wale Pvt. Ltd., Meerut V. CIT, Meerut

ITA 4126/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2734 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 24-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI R. S. SYAL, VICE PRESIDENT AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.4126/DEL/2015 ASSESSMENT YEAR : 2008-09 KALYANJEE SAREE WALE PVT. LTD., C/O. CA, RAMA KANT JAIN, G-25, GANGA PLAZA, BEGUM BRIDGE, MEERUT. VS. CIT, MEERUT. PAN : AACCK2651C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. RAJA KUMAR, ADV. DEPARTMENT BY : MS. ASHIMA NEB, SR. DR DATE OF HEARING : 27-03-2018 DATE OF PRONOUNCEMENT : 28-03-2018 O R D E R PER R. S. SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT, MEERUT U/S 263 OF THE INCOME TAX ACT, 1961, (H EREINAFTER CALLED THE ACT) IN RELATION TO ASSESSMENT YEAR 2008-09. 2. BRIEFLY STATED THE FACTS ARE THAT THE LD. CIT, W HILE EXERCISING REVISIONAL JURISDICTION U/S 263 OF THE ACT, OBSERVED THAT THE ASSESSEE DID NOT PROPERLY DISCLOSE THE PARTICULARS OF HIS INCOME AND THE ASSE SSING OFFICER ERRONEOUSLY ACCEPTED THE SAME WITHOUT PROPER VERIFICATION. TAK ING RECOURSE TO THE PROVISIONS OF SECTION 263 OF THE ACT, LD. CIT REJEC TED THE BOOKS OF ACCOUNTS AND 2 ITA NO.4126/DEL/2015 ESTIMATED TURNOVER AT RS.3.5 CRORE AS AGAINST RS.2, 84,40,958/- DECLARED BY THE ASSESSEE. FURTHER, GROSS PROFIT RATE OF THE ASSESS EE WAS ESTIMATED AT 30%. THE COMPUTATION OF INCOME WAS THEREAFTER MADE AS UNDER :- 30% OF 3,50,00,000 = RS.1,05,00,000/- LESS: GROSS RETURNED = RS. 5596782/- = RS. 4903218/- LESS: LUMP SUM ADDITION MADE BY AO = RS. 150 000/- RS. 4753218/- 3. THAT IS HOW THE ADDITION OF RS.47,53,218/- WAS M ADE AND THE CONSEQUENTIAL PENALTY WAS IMPOSED. THE ASSESSEE IS AGGRIEVED AGAINST THE IMPOSITION OF PENALTY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE LD. CIT H AS IMPOSED PENALTY BY ESTIMATING THE TURNOVER OF THE ASSESSEE AND ALSO TH E GROSS PROFIT RATE. THUS, IT IS EVIDENT THAT THE FOUNDATION OF THE PENALTY IS BASED ON ESTIMATION DONE BY THE LD. CIT AFTER REJECTING THE BOOKS OF ACCOUNT. IT IS A S ETTLED LEGAL POSITION THAT NO PENALTY U/S 271(1)(C) OF THE ACT CAN BE IMPOSED WIT H REFERENCE TO ESTIMATED INCOME. THE HONBLE DELHI HIGH COURT IN CIT VS. AERO TRADERS PVT. LTD. (2010) 322 ITR 316 (DELHI) HAS HELD THAT NO PENALTY CAN BE IMPOSED WHEN THE INCOME IS DETERMINED ON ESTIMATE BASIS. SIMILAR VI EW HAS BEEN TAKEN BY THE HONBLE GUJARAT HIGH COURT IN CIT VS. SUBHASH TRADING CO. 221 ITR 110 3 ITA NO.4126/DEL/2015 (GUJARAT) AND THE HONBLE PUNJAB & HARYANA HIGH COURT IN HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P&H) . IN VIEW OF THE AFOREMENTIONED DISCUSSION, WE ARE SATISFIED THAT THE LD. CIT ERRED IN IMPOSING PENALTY. THE SAME IS HEREBY DIRECTED TO BE DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF MARCH, 2018. SD/- SD/- (SUCHITRA KAMBLE) (R. S. SYAL) JUDICIAL MEMBER VICE PRESIDENT DATED: 28-03-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI