DCIT, New Delhi V. M/s. Shree Jee Apparels Pvt. Ltd., Uttar Pradesh

ITA 4746/DEL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2739 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 29-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Section: 271(1)(c); 143(3); 145; 144

Judgement Text

1 ITA NO. 4746/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 4746/DEL/2014 ( A .Y 2008-09) DCIT CIRCLE-8(1) NEW DELHI (APPELLANT) VS SHREE JEE APPARELS PVT. LTD. A-50, SECTOR-2 NOIDA UTTAR PRADESH AABCS7435D (RESPONDENT) APPELLANT BY SH. S. S. RANA, CIT(DR) RESPONDENT BY SH. SANJAY ISSAR, CA ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 17/06/2014 PASSED BY CIT(A), XI, NEW DELHI FOR ASSESSMENT YEAR 2008-09. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE PENALTY OF RS. 24,90,6 96/- IMPOSED BY A.O U/S 271(1)(C) ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE OF RS. 73,99,575/-. 3. THE RETURN DECLARING INCOME OF RS.16,02,820/- WA S FILED BY THE ASSESSEE ON 30.09.2008. THE ASSESSMENT WAS COMPLETED U/S 144 /147 R.W.S 143(3) OF THE ACT AT AN INCOME OF RS. 90,02,395/-, AFTER MAKI NG AN ADDITION OF RS. 73,99,575/- ON ACCOUNT OF DISALLOWANCE OF EXPENDITU RE MADE ON ESTIMATED BASIS BY APPLYING A RATIO OF 4% OF TURNOVER. PENALT Y PROCEEDINGS U/S 271 (L)(C) DATE OF HEARING 07.05.2019 DATE OF PRONOUNCEMENT 12.06.2019 2 ITA NO. 4746/DEL/2014 WERE ALSO INITIATED DURING THE ASSESSMENT PROCEEDIN GS. AGGRIEVED WITH SUCH AN ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHERE THE APPEAL WAS DISMISSED CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER. ON RECEIPT OF SUCH ORDER, THE ASSESSING OFFICER PROCEE DED TO COMPLETE THE PENALTY PROCEEDINGS AFTER ISSUING NOTICE U/S 271(L)(C) OF T HE ACT. THE ASSESSING OFFICER, IMPOSED PENALTY U/S 271 (L)(C) OF THE ACT FOR FURNI SHING INACCURATE PARTICULARS OF HIS INCOME. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A) AND CIT(A) ALLOWED THE APPEAL OF THE ASSESSE E. 5. THE LD. DR SUBMITTED THAT THE CIT(A) ERRED IN DE LETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE. THE LD. DR FURTHER SUBMITTED THAT PEN ALTY CAN BE IMPOSED ON ESTIMATED BASIS ADDITION AS WELL. 6. THE LD. AR RELIED UPON THE ORDER OF THE PENALTY AND ASSESSMENT ORDER AS WELL AS ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER:- 7.2. I HAVE CONSIDERED THE FACTS OF THE CASE AS WE LL AS THE SUBMISSIONS FURNISHED BY THE APPELLANT AT EVERY STAGE OF THE PR OCEEDINGS. THE PAST HISTORY OF THE APPELLANTS CASE IS ALSO KEPT IN MIND. IT IS A FACT THAT THE APPELLANT HAS NOT PRODUCED BOOKS OF ACCOUNTS AT ANY STAGE OF PROC EEDINGS INCLUDING THE PRESENT APPELLATE PROCEEDINGS. THEREFORE, THE CLAIM MADE BY THE APPELLANT THAT DULY AUDITED ACCOUNTS WERE SUBMITTED BY IT ON THE BASIS OF REGULAR BOOKS OF ACCOUNTS IS A HOLLOW CLAIM WHICH CANNOT BE SUBST ANTIATED BY PRODUCING EVEN THE LEDGER AND CASH BOOK BY THE APPELLANT. THI S COULD HAVE BEEN AN APPROPRIATE CASE WHERE THE AO SHOULD HAVE INVOKED T HE PROVISIONS OF SECTION 145 OF THE ACT AND ESTIMATED THE PROFIT ON THE BASI S OF A COMPARABLE CASE. HOWEVER, TO MY UTTER DISMAY, THE AO HAS PROCEEDED I N MAKING A 3 ITA NO. 4746/DEL/2014 DISALLOWANCE OF EXPENDITURE CLAIMED BY THE APPELLAN T BY ESTIMATING THE QUANTUM OF DISALLOWANCE @ 4% OF TURNOVER. WITHOUT P REJUDICE TO THE QUANTUM OF ADDITION MADE BY THE AO, THE APPELLANT'S EASE OF PENALTY IS VIEWED FROM THE NATURE OF ADDITION. THE HON'BLE SUPREME COURT I N THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS [2010] 322 ITR 158 (SC) HAS HELD: WE HAVE ALREADY SEEN THE MEANING OF THE WORD PARTI CULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNC TION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT A CCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MU ST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DET AILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT O R ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(L)(C) OF THE ACT. A MERE MAKING O F THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 7.3. IN THE APPELLANTS CASE, THE AO HAS MERELY DIS ALLOWED THE EXPENSES CLAIMED BY IT IN ITS PROFIT & LOSS ACCOUNT. SUCH DI SALLOWANCE OF EXPENSES HAS BEEN MADE ON ESTIMATE BASIS AND NO REASONS HAVE BEE N GIVEN BY THE AO FOR ADOPTING '4% OF TURNOVER AS A METHOD OF DISALLOWAN CE OF EXPENSE. THE APPELLANTS CASE IS SQUARELY COVERED BY THE DECISIO N OF HON'BLE SUPREME COURT. THE DISALLOWANCE OF EXPENDITURE ON ESTIMATED BASIS CANNOT BE TERMED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME A ND THEREFORE IMPOSITION OF PENALTY U/S 271 (1 )(C) OF THE ACT IN THE CASE IS N OT JUSTIFIED. THE AOS ACTION IN IMPOSING THE PENALTY OF RS. 24,90,696/- IS THEREFOR E, NOT JUSTIFIED AND THE SAME IS DIRECTED TO BE CANCELLED. GROUNDS OF APPEAL ARE ALLOWED. 8. IN THE RESULT, THE APPEAL IS ALLOWED. 4 ITA NO. 4746/DEL/2014 IT IS HELD IN VARIOUS DECISIONS OF THE HONBLE APEX COURT AND HONBLE HIGH COURTS THAT PENALTY CANNOT BE LEVIED ON ADDITION ON ACCOUNT OF ESTIMATED DISALLOWANCE. WE, THEREFORE, UPHOLD THE ORDER OF TH E CIT(A) IN DELETING THE PENALTY WHICH WAS LEVIED ON ACCOUNT OF ADDITIONS MA DE ON AD-HOC DISALLOWANCE OF EXPENSES. HENCE, THE APPEAL OF THE REVENUE IS DI SMISSED. 8. IN RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2019 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12/06/2019 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 4746/DEL/2014 DATE OF DICTATION 06.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 1 2 . 6 . 1 9 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 1 2 . 6 . 1 9 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 2 . 6 . 1 9 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 2 . 6 . 1 9 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 2 . 6 . 1 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER