HANUMAN SINGH, Jaipur V. ITO, BUNDI

ITA 424/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2194 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM ROY DCIT DHK
• Assessee Lawyers: G C JAIN
• Keywords: Salary income; Non compliance

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 424/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 HANUMAN SINGH, S/O- SH. SWAROOP SINGH, VILLAGE- DAGARIYA, TEHSIL- INDERGARH, BUNDI (RAJ). CUKE VS. INCOME TAX OFFICER, BUNDI. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: BGYPS 7082 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.C. JAIN (ADV). JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM ROY (DCIT). LQUOKBZ DH RKJH[K@ DATE OF HEARING : 10/01/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 11/01/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER OF THE LD. CIT(A), ALWAR DATED 02/03/2017 FOR THE A.Y. 2 009-10. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AGAINST SUSTAINING THE PENALTY OF RS. 54,710/- U/S 271B OF THE INCOME TAX ACT, 1961 (HEREI NAFTER REFERRED AS THE ACT). ITA 424/JP/2017_ HANUMAN SINGH VS ITO 2 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,27 ,900/- AND AGRICULTURAL INCOME OF RS. 70,200/- ON 16/03/2010 A ND THE SAME WAS PROCESSED U/S 143(1) OF THE ACT ON 24/04/2010. THE A SSESSEE WAS ALSO DERIVING INCOME FROM LIQUOR BUSINESS CARRIED ON IN AOPS STATUS. THE GROSS RECEIPT SHOWN BY THE ASSESSEE IN THE LIQUOR B USINESS WERE RS. 1,09,42,255/-. AS PER PROVISIONS OF LAW, THE ASSESS EE WAS TO KEEP ITS ACCOUNT AUDITED BUT THE ASSESSEE HAS FAILED TO DO S O, THEREFORE, A SHOW CAUSE WAS ISSUED TO THE ASSESSEE IN THIS REGARD AND THE ASSESSING OFFICER LEVIED THE PENALTY @ % OF THE GROSS TURNOVE R U/S 271B OF THE ACT. 3. THE LD. CIT(A) HAD SUSTAINED THE PENALTY LEVIED B Y THE ASSESSING OFFICER BY HOLDING AS UNDER: 5.3 I HAVE GONE THROUGH THE PENALTY ORDER AS WELL A S SUBMISSIONS MADE BY THE APPELLANT. IN THE PRESENT CASE, THE ASS ESSEE IS A MEMBER OF AOP M/S UMRAO & PARTY WHICH DEALS IN THE TRADE OF LIQUOR BUSINESS. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS IT WAS FOUND THAT THE ASSESSEE HAS NOT DECLARED THE TU RNOVER OF LIQUOR BUSINESS. THE ASSESSEE HAD SUBMITTED THAT TH E TURNOVER WAS INCLUDED IN THE BOOKS OF ACCOUNTS OF AOP M/S UM RAO & PARTY AND I.E. WHY NO TURNOVER WAS DECLARED BY HIM. THE A.O. DID NOT ACCEPT THE REASONS GIVEN BY THE ASSESSEE AN D INITIATED PROCEEDINGS U/S 271B OF THE ACT. I HAVE CONSIDERED THE ITA 424/JP/2017_ HANUMAN SINGH VS ITO 3 SUBMISSIONS MADE BY THE APPELLANT AND COME TO THE C ONCLUSION THAT THE TURNOVER OF LIQUOR BUSINESS OF HIS PART SH OULD HAVE BEEN DECLARED IN HIS RETURN OF INCOME. THEREFORE, A .O. IS JUSTIFIED IN TREATING THE ASSESSEE AS DEFAULTER FOR VIOLATING THE PROVISION OF SECTION 44AB OF THE ACT. THEREFORE, A. O. IS ALSO JUSTIFIED IN IMPOSING THE PENALTY OF RS. 54,710/- U /S 271B OF THE ACT. ACCORDINGLY, THE PENALTY IS SUSTAINED AND APPELLANTS GROUND OF APPEAL IS DISMISSED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. WHI LE PLEADING ON BEHALF OF THE ASSESSEE, THE LD AR HAS SUBMITTED AS UNDER: 1. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D HIS RETURN FOR THE A. YEAR 2009-10 ON 16-3-2010 DECLARING AN INCOM E OF RS. 127900/- PLUS AGRICULTURE INCOME OF RS. 70200/-. TH E RETURN WAS PROCESSED U/S 143(1) ON 24-4-2010. SUBSEQUENTLY THE ITO PICKED UP THE CASE FOR SCRUTINY AND NOTICE U/S 143( 2) WAS ISSUED. BESIDES INCOME FROM SALARY AND INTEREST PLUS AGRICU LTURE INCOME, THE ASSESSEE WAS ALSO DERIVING INCOME FROM LIQUOR B USINESS CARRIED ON IN A.O.P.'S STATUS. FOR THIS REASON, INC OME FROM LIQUOR BUSINESS WAS NOT DECLARED IN THE IND. RETURN. THE I TO HOWEVER, ASSESSED THE INCOME FROM LIQUOR BUSINESS FOR WHICH LICENSE WAS GRANTED BY THE DISTT. EXCISE OFFICER, BUNDI. THE ITO ALSO MENTIONED THAT THE ASSESSEE DID NOT PRODUCE THE BOO KS OF ACCOUNTS AND AFTER TAKING INTO ACCOUNT THE TOTAL PU RCHASES OF LIQUOR AT RS. 10942255/- HE COMPUTED THE INCOME FRO M LIQUOR BUSINESS AT RS. 13130,000/-. HE ALSO INITIATED PROC EEDINGS U/S 271B FOR NON COMPLIANCE OF THE PROVISIONS OF SEC. 4 4AB. ITA 424/JP/2017_ HANUMAN SINGH VS ITO 4 2. AS STATED ABOVE, THE APPELLANT IS ONE OF THE MEM BERS OF THE A.O.P. NAMED M/S UMRAO SINGH & PARTY (KOTA-BUNDI) U DAIPUR THERE ARE 103 MEMBERS OF THE A.O.P. INCLUDING THE A SSESSEE. THEY ENTERED INTO AN AGREEMENT ON 1-2-2007, COPY OF WHICH IS ENCLOSED. THIS MAY KINDLY BE PERUSED. ON PAGE 4 OF THE AGREEMENT IT IS STATED THAT THE AOP SHALL PARTICIPA TE IN THE OPEN TENDER OF THE STATE GOVERNMENT FOR LIQUOR SHOPS IN THE NAME OF ITS MEMBERS AND MAKE ALL INVESTMENT FOR OBTAINING T HE CONTRACTS AND THE SHOPS IN THE NAME OF MEMBER SHALL BE THE SH OPS OF THE AOP FURTHER ALL THE INCOME/REVENUE AND EXPENDITURE RELATING TO THESE SHOPS WILL ALSO BE TREATED AS INCOME/REVENUE AND EXPENDITURE OF THE AOP. FURTHER ON PAGE 8 OF THE AG REEMENT (PAPER BOOK) IT IS STATED THAT THE ABOVE PARTIES 1 TO 103 HAVE TO DO THE BUSINESS IN ASSOCIATION AND WILL BE CARRIED ON IN THE NAME AND STYLE OF M/S UMRAOSINGH & PARTY THAT THE TCS IN THE NAME OF MEMBER INDIVIDUALLY OR AOP WILL BE TREATED AS TH E TCS OF M/S UMRAOSINGH & PARTY; THAT ALL RECORDS WILL BE MAINTA INED AT FLEAD OFFICE SITUATED AT UDAIPUR, (CLAUSE 16) THE WORK HA S BEEN TAKEN IN THE NAME OF M/S UMRAOSINGH & PARTY KOTA BU NDI GROUP (RAJ.) WHICH WILL BE TREATED AS FIRM M/S UMRAOSINGH & PARTY KOTA BUNDI GROUP (RAJ.) AND WILL BE BINDING TO ALL THE M EMBERS (CLAUSE 17). 3. ALL THESE FACTS WERE BROUGHT TO THE NOTICE OF TH E LEARNED ITO AND HE WAS REQUESTED NOT TO MAKE ANY ASSTT. IN RESPECT OF LIQUOR BUSINESS IN HIS INDIVIDUAL HANDS AS THE ASSTT. OF T HE A.O.P IN THE NAME AND STYLE OF M/S UMRAOSINGH & PARTY HAS ALREAD Y BEEN MADE BY THE ACIT CIRCLE -2, UDAIPUR VIDE ORDER U/S 143 (3) DATED 14-5-2009 FOR A. YEAR 2008-09 AND ORDER U/S 143(1) DATED 23-3- ITA 424/JP/2017_ HANUMAN SINGH VS ITO 5 2010 FOR THE ASSTT. YEAR 2009-10 AFTER THOROUGHLY E XAMINING ALL THE BOOKS OF ACCOUNTS WHICH WERE AUDITED BY THE CHA RTERED ACCOUNTANT FIRM OF M/S SAMPATILAL BOHRA & CO. UDAIP UR VIDE REPORT DATED 29-9-2009. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE BOOKS WHICH WERE MAI NTAINED AT THE HEAD OFFICE AT UDAIPUR COULD NOT BE PRODUCED. F URTHER ALL THE ACCOUNTS I.E. ACCOUNTS OF ALL THE SHOPS TO WHOM LIC ENSES WERE GRANTED WERE SUBJECTED TO AUDIT SO AS TO MAKE A FIN AL AUDIT REPORT OF THE A.O. P. IN THE NAME OF M/S UMRAOSINGH & PARTY (KOTA BUNDI) UDAIPUR, AND HENCE THERE WAS NO QUESTI ON OF ANY SEPARATE AUDIT REPORT OF THE SHOP LICENSED TO THE A SSESSEE. THE AUDIT REPORT IN THE NAME OF AOP M/S UMRAOSINGH & PA RTY CONSISTED OF REPORT IN RESPECT OF ALL SHOPS LICENSE D BY THE EXCISE DEPARTMENT, INCLUDING THE ASSESSEE-APPELLANT. THE E NTIRE PURCHASE/SALES AND TCS WERE CONSIDERED IN THE HANDS OF A.O.P. AS IS EVIDENT FROM THE STATEMENT OF P&L/ACCOUNT AND BALANCE SHEET. THE TOTAL PURCHASES AND SALES DURING THE PER IOD ENDED 31/3/2009 AMOUNTED TO RS. 238701993 AND 283079373/- RESPECTIVELY. THE GROSS PROFIT WAS WORKED OUT AT RS . 40461440/0- MEMBERS CREDIT BALANCE IN CAPITAL A/C A MOUNTED TO RS. 13503922/-. 4. THE LD. ITO ESTIMATED THE PROFIT AT THE RATE OF 12% BUT THE SAME WAS REDUCED TO 2% BY THE LD. CIT (A), AND SUSTAINED THE ADDITION ON OF RS. 211186/-. FURTHER HE DELETED THE ENTIRE ADDITION OF RS. 912000/- MADE BY THE AO U/S 69B OF THE IT ACT. THE CIT (A) HOWEVER, CONFIRMED THE ITO'S ORDER ON T HE POINT OF ASSESSMENT IN THE HANDS OF THE ASSESSEE ON THE GROU ND THAT THE LICENSE WAS IN HIS NAME AND WAS NOT TRANSFERRED TO A.O. P. AN ITA 424/JP/2017_ HANUMAN SINGH VS ITO 6 APPEAL WAS FILED BY THE DEPARTMENT ON THE GROUND OF NET PROFIT RATE AND DELETION OF ADDITION U/S 69B. ON THE OTHER HAND CROSS OBJECTIONS WAS FILED AGAINST THE CIT'S ORDER CONFIR MING THE ASSESSMENT OF LIQUOR BUSINESS IN IND. HANDS. THE DE PARTMENTAL APPEAL WAS SUBSEQUENTLY DISMISSED ON THE GROUND OF MONETARY LIMIT FOR FILING APPEALS BEFORE ITAT AND CONSEQUENT LY THE CO ALSO BECAME REDUNDANT. 5. THE CONTENTION OF THE LEARNED AO AND THE CIT ARE NOT JUSTIFIED. ONCE THE ASSTT. IN THE HANDS OF A.O.P. HAS ALREADY BEEN MADE THE ASSESSMENT OF THE SAME INCOME IN THE INDIVIDUAL HANDS TANTAMOUNT TO DOUBLE ASSESSMENT OF THE SAME INCOME WHICH IS IMPERMISSIBLE UNDER THE LAW. IN OTHER CASES OF MEMB ERS OF THE SAME A.O.P. I.E. VIJENDRA SINGH; RAGHUBEERSINGH AND RAVINDERSINGH (MEMBERS AT S.O. 102,41 AND 38 OF THE AGREEMENT DATED 1 -2-2007) THE SUCCESSOR CIT (A) HA S STRUCK DOWN THE ITO'S ORDER ON THIS POINT WITH THE OBSERVA TION THAT THE ITO'S CONTENTION DOES NOT HOLD GOOD IN VIEW OF THE FACT THAT ASSTT. IN THE CASE OF A.O.P. HAVING ALREADY REACHED FINALITY. HE RELIED ON THE THIRD MEMBER DECISION IN THE CASE OF IT APPEAL NO. 1058 (MDS) OF 2010 (A.Y) 2007-08 VIDE ITS ORDER DAT ED 23RD JANUARY 2013 IN THE CASE OF R. NATRAJAN V/S ACIT. T HERE ARE PLETHORA OF JUDGMENT, WHERE IN THE COURTS HAVE HELD THAT INCOME HAS TO ASSESSED ONLY ONCE I.E. INDIVIDUAL OR A.O. P . AND THE SAME CANNOT BE TAXED IN THE HANDS OF OTHER ENTRY. IN THE CASE OF DURGA MADIRA SANGH VS. CIT (1985) 1 53 ITR 226 THE HON'BLE RAJASTHAN HIGH COURT APPROVED THE FORMA TION OF THE PARTNERSHIP FIRM BY VARIOUS LICENSE HOLDERS AFTER D ISCUSSING THE PROVISIONS OF THE RAJASTHAN EXCISE ACT AND RELEVANT RULES AND ITA 424/JP/2017_ HANUMAN SINGH VS ITO 7 DELIVERED ITS JUDGEMENT IN FAVOUR OF THE ASSESSEE. SIMILAR VIEW WAS TAKEN IN THE CASE OF BARU RAM MILKHI RAM VS ITO (1988) 32 TTJ 164 (DELHI) RELIANCE IS ALSO PLACED ON CIT VS A .U. CHANDRASEKHARAN (1998) 229 ITR 406 (MAD) AND MURLID HAR JHANWAR & PURNA GINNING AND PRESSING FACTORY (SC) F OLLOWING DECISION IN THE CASE OF KANPUR COAL SYNDICATE (1964 ) 53 ITR 225 (SC). IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTAN CES OF THE CASE, THE ASSTT. IN THE CASE OF ASSESSEE IN RESPECT OF LIQUOR BUSINESS WAS NOT JUSTIFIED. AS STATED ABOVE, AFTER INITIATING PROCEEDINGS, THE LD. ITO IMPOSED PENALTY OF RS. 54711/- I.E. 1/2% OF THE TOTAL TURNO VER OF RS. 10942255/- U/S 271B OF THE ACT FOR NONCOMPLIANCE OF THE PROVISIONS OF SECTION 44AB. AS SUBMITTED A CONSOLID ATED AUDIT OF ALL THE SHOPS TO WHOM LICENSE WAS GRANTED BY THE EXC ISE DEPARTMENT, WAS CARRIED OUT AT UDAIPUR BY THE CHART ERED ACCOUNTANT AND A CONSOLIDATED AUDIT REPORT WAS FURN ISHED BY HIM IN THE NAME OF AOP M/S UMRAOSINGH & PARTY (KOTA BUN DI) GROUP UDAIPUR AND THEREFORE IT IS NOT CORRECT TO SAY THAT NO AUDIT WAS GOT DONE THE ASSESSEE IN RESPECT OF HIS LIQUOR BUSI NESS. THE CONSOLIDATED AUDIT REPORT WAS PREPARED AFTER TAKING INTO A/C ALL RELEVANT FACTORS OF THE ASSESSEE AS WELL AS OF OTHE R LICENSE HOLDERS. THE CONSOLIDATED AUDIT OF THE GROUP (AOP) MEMBERS OBVIOUSLY TAKES INTO CONSIDERATION THE AUDIT OF THE ASSESSEE'S BOOKS OF ACCOUNT. THE CONSOLIDATED REPORT IN THE NA ME OF AOP M/S UMRAO SINGH AND PARTY OF WHICH THE ASSESSEE SHR I HANUMANSINGH IS ONE OF THE MEMBERS AT S.O. 14 TH OF THE AGREEMENT DATED 1-2-2007, MAY KINDLY BE TAKEN AS AU DIT REPORT ON BEHALF OF THE ASSESSEE IN TERMS OF SECTION 44AB. AND THE ITA 424/JP/2017_ HANUMAN SINGH VS ITO 8 ORDER OF THE LD. AO AND THAT OF THE CIT(A) MAY KIND LY BE HELD TO BE UNJUSTIFIED AND BE QUASHED AND THE APPEAL MAY VE RY KINDLY BE ALLOWED. 5. ON THE CONTRARY, THE LD DR HAS RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. SHE ALSO PLEADED THAT THE LEVY OF PENALTY SHOULD BE SUSTAINED. 6. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSUE AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE LD AR SUBM ITTED THAT A CONSOLIDATED AUDIT OF ALL THE SHOPS TO WHOM LICENSE WAS GRANTED BY THE EXCISE DEPARTMENT, WAS CARRIED OUT AT UDAIPUR BY THE CHARTERED ACCOUNTANT AND A CONSOLIDATED AUDIT REPORT WAS FURNI SHED BY HIM IN THE NAME OF AOP M/S UMRAO SINGH & PARTY (KOTA BUNDI) GR OUP, UDAIPUR. THE CONSOLIDATED AUDIT REPORT WAS PREPARED AFTER TAKI NG INTO ACCOUNT ALL RELEVANT FACTORS OF THE ASSESSEE AS WELL AS OF OTHER LICENSE HOLDERS. THE CONSOLIDATED REPORT IN THE NAME OF AOP M/S UMRAO SI NGH AND PARTY OF WHICH THE ASSESSEE IS ONE OF THE MEMBER. ONCE THE A SSESSMENT IN THE HANDS OF AOP HAS BEEN MADE THEN THE ASSESSMENT OF T HE SAME INCOME IN THE INDIVIDUAL CAPACITY TANTAMOUNT TO DOUBLE ASS ESSMENT OF THE SAME INCOME, WHICH IS IMPERMISSIBLE IN THE EYES OF LAW. AF TER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS VARIO US CASE LAWS AS ITA 424/JP/2017_ HANUMAN SINGH VS ITO 9 MENTIONED IN THE SUBMISSIONS OF THE LD. AR OF THE A SSESSEE, THE BENCH DIRECT TO DELETE THE PENALTY LEVIED U/S 271B OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/01/2018. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11 TH JANUARY, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI HANUMAN SINGH, BUNDI. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-BUNDI. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 424/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR