HIRARAM PATAJI PATEL, MUMBAI V. ITO 25(2)(1), MUMBAI

ITA 4561/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2615 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 02-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 03-07-2014
• Court: TRIBUNAL
• Assessee Lawyers: VIPUL J SHAH
• Keywords: Rejection of books of accounts
• Section: 133(6)

Judgement Text

, , H, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.4561/MUM/2014 ASSESSMENT YEAR: 2006-07 HIRARAM PATAJI PATEL, 603 SARASWATI AZPARTMENT, 6 TH FLOOR, S.V. ROAD, BORIVALI (W) MUMBAI -400092 / VS. ITO 25(2)(1) MUMBAI- ( REVENUE ) ( RESPONDENT ) P.A. NO. AAFPP96 67B ASSESSEE BY SHRI VIPUL J. SHAH ( A R) REVENUE BY SHRI ABHISHEK SHARMA (D R) ! ' # / DATE OF HEARING : 02/08/2016 ' # / DATE OF ORDER: 03/10/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER OF LD. ORDER OF LD. COMMISSIONER OF INCOME TAX (APP EALS)- 35 MUMBAI, {(IN SHORT CIT(A)}, DATED 12.05.2004 PAS SED AGAINST PENALTY ORDER U/S 271(1)(C) 03.03.2012 FOR A.Y. 200 6-07. HIRARAM P. PATEL 2 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI VIPUL J. SHAH, AUTHORISED REPRESENTATIVE (AR) ON BE HALF OF THE ASSESSEE AND BY SHRI ABHISHEK SHARMA, DEPARTMENTAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3 . IN THIS CASE, THE BRIEF BACKGROUND WAS THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY TH E AO THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRANSPORTAT ION. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE AO ISSUED NOTICE U/S 133(6) TO SUNDRY CREDITORS. SINCE, THERE WAS NO PROPER RESPONSE FROM THE CREDITORS, THE AO REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE NET PROFIT OF THE ASS ESSEE AT 4% OF THE TOTAL TURNOVER AND COMPUTED INCOME OF THE AS SESSEE ACCORDINGLY. SUBSEQUENTLY, THE PENALTY PROCEEDINGS WERE INITIATED AND AO LEVIED THE PENALTY ON THE AMOUNT O F ADDITION MADE BY THE AO. 3.1. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFO RE THE LD. CIT(A) WHEREIN IT WAS SUBMITTED THAT AN APPEAL AGAINST QUANTUM ORDER WAS NOT FILED ONLY TO BUY PEACE OF MI ND. BUT, THERE WAS NO CONCEALMENT OF INCOME. IT WAS ALSO SUB MITTED THAT MERELY BECAUSE THE CREDITORS COULD NOT APPEAR BEFORE THE AO, IT WOULD NOT PROVE THAT TRANSACTIONS OF THE ASS ESSEE WAS BOGUS. IT WAS ALSO ARGUED THAT ADDITION WAS MADE ON ESTIMATE BASIS WITHOUT PROVING ANY CONCEALMENT AND THEREFORE , PENALTY WAS WRONGLY LEVIED. BUT, LD. CIT(A) DID NOT FIND FO RCE IN THE SUBMISSIONS OF THE ASSESSEE AND UPHELD THE PENALTY ON THE GROUND THAT SINCE THE AO HAD NO OTHER ALTERNATIVE B UT TO HIRARAM P. PATEL 3 ESTIMATE THE INCOME THEREFORE, ADDITION WAS MADE ON ESTIMATE BASIS AND THEREFORE, PENALTY HAS BEEN RIGHTLY LEVIE D BY THE AO. 3.2. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFO RE THE TRIBUNAL WHEREIN SUBMISSIONS MADE BEFORE THE LD. CI T(A) HAVE BEEN REITERATED. 3.3. WE HAVE GONE THROUGH THE FACTS OF THIS CASE AND CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES. IT IS NOTED BY US THAT WHILE LEVYING THE PENALTY, THE AO WAS NO T SURE WHETHER IT WAS CASE OF CONCEALMENT OF INCOME OR FUR NISHING OF INACCURATE PARTICULARS OF INCOME. FURTHER, WHILE MA KING ADDITION IN THE ASSESSMENT ORDER, THE AO ESTIMATED THE NET PROFIT @ OF 4% OF THE TOTAL RECEIPTS. THE AO DID NO T GIVE ANY BASIS MUCH LESS ANY SCIENTIFIC OR CONCRETE BASIS TO ADOPT THE RATE OF PROFIT AT 4%. THUS, IT WAS A PURE EXERCISE OF ESTIMATION. FURTHER, MERELY BECAUSE THE CREDITORS DID NOT CHOOS E TO APPEAR BEFORE THE AO, IT WOULD NOT IPSO FACTO MEAN THAT THE TRANSACTIONS OF THE ASSESSEE WITH THESE PERSONS WER E BOGUS. NOTHING HAS BEEN BROUGHT ON RECORD IN THE PENALTY PROCEEDINGS TO SHOW THAT THE TRANSACTIONS OF THE AS SESSEE WERE FALSE. THE CASE OF THE ASSESSEE WAS NOT DISPROVED A T ANY STAGE. THE INCOME OF THE ASSESSEE HAS BEEN COMPUTED ON THE BASIS OF PURE GUESS WORK, IT IS CERTAINLY NOT A CASE OF LEVY OF PENALTY. UNDER THESE CIRCUMSTANCES, WE DIRECT THE AO TO DELE TE THE PENALTY. HIRARAM P. PATEL 4 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD OCTOBER, 2016. SD/- (JOGINDER SINGH) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER ! MUMBAI; % DATED: 03/10/2016 CTX? P.S/. . . #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. '() / THE APPELLANT 2. *+() / THE RESPONDENT. 3. , , - ( ' ) / THE CIT, MUMBAI. 4. , , - / CIT(A)- , MUMBAI 5. 01 *2 , , '# 23 , ! / DR, ITAT, MUMBAI 6. 45 6! / GUARD FILE. / BY ORDER, +0' * //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ! / ITAT, MUMBAI