The Assistant Commissioner of Income Tax, Bathinda V. Sh. Daljit Singh, Bathinda

ITA 461/ASR/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2965 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-02-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 26-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Keywords: Gross profit estimation; Onus to prove
• Section: 80C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMR ITSAR BEFORE SH. N.S.SAINI, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.461(ASR)/2015 ASSESSMENT YEAR:2007-0 8 ASST. CIT, CIRCLE-I, BATHINDA. VS. SH. DALJIT SINGH, PROP. M/S. SRA CONSTRUCTION CO., SCF-96, ROSE GARDEN MARKET, BATHINDA. [PAN:AXWPS 9271J] (APPELLANT) (RESPONDENT) APPELLANT BY: SH. BHAWANI SHANKAR (LD. DR) RESPONDENT BY: NONE DATE OF HEARING: 12.02.2019 DATE OF PRONOUNCEMENT: 12.02.2019 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE REVENU E DEPARTMENT AGAINST THE ORDER DATED 25.06.2015 PASSED BY THE LD. CIT(A)-BATHINDA, U/S 250(6) OF THE I.T. ACT, 1961 (H EREINAFTER CALLED AS THE ACT). 2. THE BRIEF FACTS OF THE CASE ARE THAT WHILE REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE AMOUNT OF RS.75,87,949/- AND 3,90,000/- WAS ADDED IN THE INCOME OF THE ASSESSEE AND AMOUNT OF RS. 6 LAKHS WHICH WAS CLAIMED AS DEDUCTION UNDER CHAPTER-6A OF THE ACT WAS ITA NO.461 /ASR/2015 (A.Y.2007-08) ASST. CIT VS. DALJIT SINGH, BATHINDA 2 RESTRICTED TO 5 LAKHS BY THE ASSESSING OFFICER AND PENALTY PROCEEDINGS U/S 271(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULAR S OF INCOME HAVE ALSO BEEN INITIATED. THEREAFTER, A PENALTY OF R S.26,88,743/- @ 100% TAX SOUGHT TO BE EVADED, WAS LEVIED BY THE ASSESSI NG OFFICER AND ON CHALLENGE BEFORE THE LD. CIT(E), THE LD. CIT( A) WHILE FOLLOWING THE JUDGMENTS OF THE JURISDICTIONAL HIGH COURT DELETED THE PENALTY, RELEVANT PART OF WHICH, FOR THE SAKE OF BREVITY AND CO NVENIENCE AND READY REFERENCE IS REPRODUCED HEREIN BELOW. 9. THE FACTUAL MATRIX OF THE CASE, AVERMENTS OF TH E APPELLANT AND THE CITED JUDICIAL PRECEDENTS HAVE BE EN CAREFULLY EXAMINED AND CONSIDERED. THE LAW ON PENAL TY HAS NOW CRYSTALLIZED AND ALMOST A TRITE PROPOSITION OF LAW HAS EMERGED THAT PENALTY WOULD NOT BE EXIGIBLE MERE LY BECAUSE AN ADDITION IS MADE ON ESTIMATE BASIS. THIS PROPOSITION HAS BEEN REITERATED BY THE HONBLE JURISDICTIONAL HIGH COURT OF PUNJAB AND HARYANA IN A CATENA OF DECISION. IN CIT VS. DHILLON RICE MILLS [ 2002] 256 ITR 447 (P&H), THE HONBLE HIGH COURT HELD THAT IN A CASE OF ADDITION BASED UPON ESTIMATED HIGHER YIELD IN MANUFACTURE AND LOW GROSS PROFIT, THERE CAN BE NO P ENALTY UNLESS THE DEPARTMENT BRINGS SOMETHING ON RECORD TO INDICATE THAT THERE HAS BEEN CONCEALMENT ON THE PAR T OF THE ASSESSEE. IN COMING TO THIS CONCLUSION, IT FOLLOWED ITS OWN EARLIER DECISION IN CIT VS. METAL PRODUCTS OF INDIA [1984] 150 ITR 714 (P&H). THE PROPOSITION THAT PENALTY CAN NOT BE ITA NO.461 /ASR/2015 (A.Y.2007-08) ASST. CIT VS. DALJIT SINGH, BATHINDA 3 IMPOSED, -ERE AN ADDITION IS BASED MERELY ON ESTIMA TE FINDS FURTHER SUPPORT IN HARIGOPAL SINGH VS CIT [20 02] 258 ITR 85 (P&H). IT CANNOT BE GAINSAID THAT THE APPELLANTS CASE FAL LS IN THE CATEGORY OF ESTIMATED ADDITION AS THE ASSESSING OFF ICER, FOR THE REASONS DISCUSSED IN THE ASSESSMENT ORDER, INSI STED ON THE PARITY OF THE NET PROFIT RATE WITH THAT DISC LOSED BY THE APPELLANT HIMSELF IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. APPLICATION OF A PRESUMED NET PROF IT RATE AND ADDITION THEREON BASED ON HOWSOEVER GOOD AND ADEQUATE REASONS, TANTAMOUNT TO ESTIMATION OF INCOM E. SUCH AN ESTIMATED ADDITION MAY BE A GOOD GROUND FOR QUANTUM ADDITION BUT THE SAME CANNOT HAVE A JUSTIFI CATION FOR IMPOSITION OF PENALTY, THE EXIGIBILITY OF WHICH POSTULATES AN ACT OF POSITIVE CONCEALMENT. THOUGH CONCEALMENT OF INCOME IS PRESUMED IN EVERY CASE OF DIFFERENCE BETW EEN THE REPORTED AND ASSESSED INCOME UNDER EXPLANATION 1 TO SECTION 271(1)(C), BUT SUCH PRESUMPTION IS REBUTTAB LE. THE EXPLANATION ITSELF PROVIDES FOR SUCH REBUTTAL IN CA SES, WHERE THE TAXPAYER HAS AN EXPLANATION FOR THE DIFFE RENCE, PRODUCES ALL THE MATERIALS AVAILABLE WITH HIM AND S UCH EXPLANATION IS NOT FOUND TO BE MALA FIDE. IN THE IN STANT CASE, THE APPELLANT DID PROVIDE EXPLANATION FOR THE LESSER PROFIT DISCLOSED, WHICH WAS NOT ACCEPTED BY THE ASS ESSING OFFICER WHO APPLIED A HIGHER RATE OF PROFIT RESULTI NG IN A ITA NO.461 /ASR/2015 (A.Y.2007-08) ASST. CIT VS. DALJIT SINGH, BATHINDA 4 SUBSTANTIAL ADDITION TO THE RETURNED INCOME. EVEN W HEN SUCH ASSESSMENT IS CONFIRMED IN APPEAL, WHICH HAS B EEN THE CASE HERE, THERE CANNOT BE AN INFERENCE OF CONC EALMENT FOR THE LEVY OF PENALTY U/S 271(1)(C ). ADOPTION OF AGRICULTURAL INCOME FOR RATE PURPOSE, WHICH HAD NOT BEEN DONE BY THE APPELLANT IN HIS RETURN OF INCOME AND T HE DISALLOWANCE OF CLAIM OF DEDUCTION FOR WANT OF DOCUMENTARY EVIDENCE ALSO DO NOT QUALIFY AS POSITIV E CONCEALMENT FOR LEVY OF PENALTY. IN THIS VIEW OF TH E MATTER, IT IS HELD THAT PENALTY IS NOT EXIGIBLE IN THE INST ANT CASE. THE ASSESSING OFFICER IS THUS DIRECTED TO DELETE T HE PENALTY. 3. WHILE ARGUING THE CASE, THE LD. DR AGITATED THAT TH E PENALTY IS RIGHTLY BEEN IMPOSED BY THE ASSESSING OFFICER BECAUSE THE ONUS TO PROVE NON-CONCEALMENT OR NON-FURNISHING OF INACCURATE P ARTICULARS OF ITS INCOME WAS SQUARELY ON THE ASSESSEE AND HE FAILED TO DI SCHARGE SUCH ONUS. FURTHER THE ASSESSEE HAS FAILED TO SUBSTANTIATE HI S CLAIM OF DEDUCTION U/S 80C AND HAS FURNISHED INACCURATE PARTICULA RS OF INCOME/CONCEALED PARTICULARS OF INCOME TO THAT EXTENT. FU RTHER THE ASSESSEE HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNT BEFORE T HE ASSESSING OFFICER WHICH COULD SUBSTANTIATE HIS CLAIM FOR LOW NET PROFIT AND THEREFORE ORDER UNDER CHALLENGE HAS SUFFERED FROM PERVERSITY, IMPROPRIETY AND ILLEGALITY AND HENCE, LIABLE TO BE SE T ASIDE. ITA NO.461 /ASR/2015 (A.Y.2007-08) ASST. CIT VS. DALJIT SINGH, BATHINDA 5 4. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDERS PASSED BY THE AUTHORITIES BELOW AND OBSERVED THAT THE LD. CIT(A) DELETED THE P ENALTY, WHILE FOLLOWING THE PROPOSITIONS LAID DOWN BY THE JURISDICTI ONAL HIGH COURT IN THE CASE OF CIT VS. DHILLON RICE MILLS [2002] 256 ITR 44 7 (P&H), CIT VS. METAL PRODUCTS OF INDIA [1984] 150 ITR 714 (P&H) A ND HARIGOPAL SINGH VS. ITO [2002] 258 ITR 85 (P&H) WHEREBY, THE J URISDICTIONAL HIGH COURT HAS HELD THAT PENALTY WOULD NOT BE EXIGIBL E MERELY BECAUSE AN ADDITION IS MADE ON ESTIMATE BASIS. WE DO NOT FIND A NY CONTRARY MATERIAL/SUBSTANCE EITHER ON RECORD OR IN THE SUBMISSIO NS OF THE LD. DR TO CONTROVERT THE FINDINGS OF THE LD. CIT(A) IN TH E IMPUGNED ORDER, HENCE IN OUR CONSIDERED VIEW THE ORDER UNDER CHALLENGE DOES NOT SUFFER FROM ANY PERVERSITY, ILLEGALITY OR IMPROPRIETY AND T HEREFORE DO NOT REQUIRE ANY INTERFERENCE. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE DEPA RTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.2019. SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED: 12.02.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SH. DALJIT SINGH, PROP. M/S. SRA CONSTRUCTION CO., SCF-96, ROSE GARDEN MARKET, BATHINDA. (2) THE ASST. CIT, CIRCLE-I, BATHINDA (3) THE CIT(A)-BATHINDA (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY FILENAME: DALJIT SINGH 461-15 DIRECTORY: D:\DOCUMENT\NKC ORDERS 2018\NS SAINI & N KC TEMPLATE: C:\USERS\ETC PARMOD\APPDATA\ROAMING\MICROSOFT\TEMPLATES\NORMAL.D OT TITLE: IN THE INCOME TAX APPELLATE TRIBU NAL SUBJECT: AUTHOR: RAHUL PRABHAKAR KEYWORDS: COMMENTS: CREATION DATE: 2/12/2019 5:02:00 PM CHANGE NUMBER: 105 LAST SAVED ON: 2/28/2019 11:03:00 AM LAST SAVED BY: ETC PARMOD TOTAL EDITING TIME: 100 MINUTES LAST PRINTED ON: 2/28/2019 11:04:00 AM AS OF LAST COMPLETE PRINTING NUMBER OF PAGES: 6 (APPROX.) NUMBER OF WORDS: 1,164 (APPROX.) NUMBER OF CHARACTERS: 6,641 (APPROX.)