M/s Amarjeet Singh. S/o Jagdish Singh, Amritsar. V. The Income-tax Officer, Amritsar.

ITA 49/ASR/2015

• Counselvise Citation: 4920914 RSA 2015
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 07-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 19-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: TARSEM LAL
• Assessee Lawyers: SUBASH MAHAJANADV
• Keywords: Initiation of penalty proceedings; Agreed addition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH(SMC); AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER I.T.A. NO.48 & 49 (ASR)/2015 ASSESSMENT YEAR: 2006-07 PAN: ADIPV2905Q AMARJIT SINGH, S/O JAGDISH SINGH 360/9, GALI NADIANWALI KT. KARAM SINGH, AMRITSAR VS. INCOME TAX OFFICER, WARD-2(1), AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SUBASH MAHAJAN,(ADV.) RESPONDENT BY: SH. TARSEM LAL (DR) DATE OF HEARING: 0 7.09.2015 DATE OF PRONOUNCEM ENT: 07.09.2015 ORDER PER A.D.JAIN (JM): THESE ARE ASSESSEES APPEALS FOR A.Y.2006-07. ITA NO. 48(ASR)/2015 IS THE QUANTUM APPEAL, WHEREAS ITA NO. 49(ASR)/2015 IS THE APPEAL AGAINST THE CONFIRMATION OF LEVY OF CONCEALMENT PENALTY OF RS.8 9,365/-. 2. THE FACTS AS PER THE RECORD ARE THAT IN THE ASSESSM ENT PROCEEDINGS IN THE YEAR UNDER CONSIDERATION, THE AO NOTED DISCREPANCIE S IN THE VOUCHERS OF THE ASSESSEE INDIVIDUAL, WHO CARRIED ON THE BUSINESS OF A CONTRACTOR. IT WAS FOUND THAT THE VOUCHERS WERE NOT BEARING THE COMPLETE IDE NTITY OF THE PAYEES AND THE BILLS PRODUCED WERE ALSO FOUND TO BE INCOMPLETE FOR EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT. THE AO FURTHER OBSERVED TH AT THE MAIN EXPENSES, LIKE 2. ITA NOS.48& 49 (ASR)/2015 ASST. YEAR 2006-07 LABOUR FOR CONSTRUCTION, MATERIAL CONSUMED AND OTHE R EXPENSES SUCH AS FREIGHT, CARTAGE AND OCTROI WERE NOT FULLY AVAILABL E. ON BEING CONFRONTED WITH THE ABOVE DISCREPANCIES, AS PER THE ASSESSMENT ORDE R, THE ASSESSEE AGREED FOR ADDITION @ OF 8% PROFIT RATE ON THE GROSS RECEIPTS, SUBJECT TO NO PENALTY. THE AO, VIDE ORDER 20/27. 11.2008, MADE ADDITION OF RS. 3,08,894/- AT THE RATE OF 8% PROFIT RATE ON THE GROSS RECEIPTS. PENALTY PROC EEDINGS UNDER SECTION 271(1) (C) OF THE I.T ACT WERE INITIATED. CONCEALMENT PEN ALTY OF RS.89,365/- WAS LEVIED ON THE ASSESSEE VIDE ORDER PASSED UNDER SECTION 271 (1) (C ) OF THE I.T. ACT. (THE DATE OF THIS ORDER HAS BEEN MENTIONED AS ____ -05- 2009 AT PAGE 1 OF THE PENALTY ORDER. THIS PENALTY WAS CONFIRMED VIDE ORDE R DATED 08.10.2014, WHEREIN, AT PAGE 1, THE DATE OF THE PENALTY ORDER H AS BEEN GIVEN AS 21.21.2009.) IN THE QUANTUM PROCEEDINGS, VIDE SEPARATE ORDER DAT ED 08.10.2014, THE ADDITION HAS BEEN CONFIRMED. THE AS SESSEE IS BEFORE US ON BOTH THE COUNTS, VIDE ITS SEPARATE APPEALS. 3. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE A.O WITHOUT PINPOINTING ANY SPECIFIC DISCREPANCIES; THAT THE IN ITIATION OF THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE I.T. ACT WAS WRONGLY CONFIRMED BY THE LEARNED CIT(A) WHEN THE ASSESSEES OFFER FOR AG REEING TO BE ASSESSED @ 8% ON GROSS PROFIT RECEIPT OF RS.59,68,712/- WAS SUBJE CT TO NO PENALTY AND WAS MADE TO BUY PEACE OF MIND AND TO AVOID LITIGATION; AND THAT THE LEARNED CIT(A) HAS ALSO ERRED IN CONFIRMING THE LEVY OF CONCEALMEN T PENALTY OF RS.89,365/- ON THE ASSESSEE. IT HAS BEEN CONTENDED THAT THIS IS A CASE OF AN ESTIMATED ADDITION 3. ITA NOS.48& 49 (ASR)/2015 ASST. YEAR 2006-07 AND ON AN ESTIMATED ADDITION, NO CONCEALMENT PENALT Y IS LEVEABLE. RELIANCE IN THIS REGARD HAS BEEN PLACED ON FOLLOWING CASE LAWS. (1) HARIGOPAL SINGH VS. CIT 258 ITR 85 (P&H) (2) CIT VS. RAVAIL SINGH & CO. 254 ITR 191 (P&H) (3) CIT VS. SANGRUR VANSPATI MILLS LTD. 303 ITR 53 (P &H) 4. ON THE OTHER HAND, THE LEARNED DR HAS PLACED STRON G RELIANCE ON BOTH THE IMPUGNED ORDERS. IT HAS BEEN SUBMITTED THAT AS RIGHTLY FOUND BY THE AUTHORITIES BELOW, THE ASSESSEE OFFERED FOR THE PRO FIT TO BE ASSESSED AT 8% ON THE GROSS RECEIPT ONLY ON DISCOVERY BY THE DEPARTME NT; THAT THEREFORE, SUCH OFFER HAVING BEEN MADE SUBJECT TO NO PENALTY DOES N OT CARRY THE ASSESSEES CASE ANYWHERE; AND THAT IN THIS REGARD, THE LEARNED CIT( A) HAS RIGHTLY PLACED RELIANCE ON THE SUPREME COURT DECISION IN THE CASE OF MAK DATA PVT. LTD. VS. COMMISSIONER OF INCOME TAX, 358 ITR 593(SC). IT HA S BEEN CONTENDED THAT THOUGH THE ADDITION WAS AN ESTIMATED ADDITION, IT W AS AN AGREED ADDITION AND THEREFORE, THE APPLICABILITY OF MAK DATA PVT. LTD. (SUPRA) CANNOT BE DOUBTED. 5. I HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATER IAL ON RECORD. THE UNDISPUTED FACTS ARE THAT NUMEROUS DISCREPANCIES WE RE FOUND BY THE A.O IN THE ACCOUNTS OF THE ASSESSEE, WHO IS A CONTRACTOR B Y VOCATION. THE ASSESSEES VOUCHERS DID NOT CONTAIN THE COMPLETE IDENTITY DETA ILS OF THE PAYEES. THE BILLS PRODUCED BY THE ASSESSEE WERE FOUND BY THE A.O TO B E INCOMPLETE FOR EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT. EVEN THE MA IN EXPENSES, SUCH AS LABOUR FOR CONSTRUCTION AND MATERIAL CONSUMED AND OTHER EX PENSES, LIKE FREIGHT, 4. ITA NOS.48& 49 (ASR)/2015 ASST. YEAR 2006-07 CARTAGE AND OCTROI WERE ALSO NOT VERIFIABLE. IT WAS ONLY WHEN THE ASSESSEE WAS CONFRONTED BY THE AO WITH ALL THE DISCREPANCIES, TH AT THE ASSESSEE AGREED TO THE ADDITION @ 8% OF THE GROSS RECEIPT OF RS.59,68,712/ -. THIS CAME TO THE ADDITION OF RS.3,08,894/- MADE BY THE AO. IN THE QUANTUM APP EAL BEFORE THE LEARNED CIT(A), THE ASSESSEE RAISED ONLY THE ISSUE REGARDIN G INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND NO CHALLENGE WHATSOEVER WAS RAISED QUA THE QUANTUM ADDITION. IT HAS BEEN SO OBS ERVED BY THE LEARNED CIT(A) AT PAGE 6 OF THE QUANTUM APPEAL ORDER. THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE. BEFORE US, THE LEARNED COUNSEL FOR T HE ASSESSEE HAS SUBMITTED, AS HAS ALSO BEEN STATED IN GROUND NO.1, THAT THE AD DITION HAS WRONGLY BEEN CONFIRMED, SINCE IT WAS MADE BY THE A.O WITHOUT POI NTING OUT ANY DISCREPANCY. THIS, HOWEVER, IS FOUND TO BE NOT THE CASE. IN THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT, THE A.O HAS OBSERVED AS FOLLOWS IN THIS REGARD (ASSESSMENT ORDER IN ITA NO.48 PAGE-2): DURING THE COURSE OF HEARING OF THE CASE, THE ASSE SSEE WAS REQUIRED TO PRODUCE BOOKS OF ACCOUNT AND DETAILS OF EXPENSES DEBITED TO THE P & L ACCOUNT, ALONG WITH VOUCHERS, BILLS AND SUPPORTING DOCUMENTARY EVI DENCE TO JUSTIFY HIS CLAIM FOR EXPENSES CLAIMED. ON SCRUTINY OF THESE DOCUMENT S PRODUCED ALONG WITH BOOKS OF ACCOUNT, CERTAIN DISCREPANCIES LIKE DEFECT IVE VOUCHERS I.E. THESE WERE NOT HAVING COMPLETE IDENTITY OF THE PAYEES AND BILL S PRODUCED WERE ALSO FOUND INCOMPLETE FOR EXPENSES CLAIMED IN THE PROFIT AND L OSS ACCOUNT AND THE BIG EXPENSES LIKE LABOUR FOR CONSTRUCTION, MATERIAL CON SUMED ALONG WITH OTHER EXPENSES SUCH AS FREIGHT, CARTAGE AND OCTROI AND VA N HIRING CHARGES WERE NOT FOUND FULLY VERIFIABLE. ACCORDINGLY, THE ASSESSEES COUNSEL WAS CONFRONTED ON THIS ISSUE AND WAS ASKED AS TO WHY IN THE ABSENCE O F COMPLETE INFORMATION, VOUCHERS AND BILLS REQUIRED FRO COMPLETION OF ASSES SMENT, THIS BEING A CASE OF A 5. ITA NOS.48& 49 (ASR)/2015 ASST. YEAR 2006-07 CONTRACTOR, A RATE OF 8% MAY NOT BE APPLIED IN HIS CASE AGAINST THE DECLARED NET PROFIT OF RS.1,69,538/-. ASSESSEES COUNSEL WAS UNA BLE TO TENDER ANY REASONABLE EXPLANATION TO THIS.. 6. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN A BLE TO REFUTE THE AFORESAID CATEGORICAL OBSERVATIONS MADE BY THE A.O POINTING OUT THE VARIOUS DISCREPANCIES IN THE ACCOUNTS OF THE ASSESSEE. THIS IS BESIDES THE FACT THAT THE LEARNED CIT(A) HAS OBSERVED, AS NOTED ABOVE, THAT T HE ASSESSEE DID NOT CHALLENGE BEFORE HIM, THE MERITS OF THE ADDITION MA DE. 7. IN THE ABOVE VIEW OF THE MATTER, SPECIFIC NUMEROUS DISCREPANCIES HAVING BEEN POINTED OUT BY THE AO IN THE ACCOUNTS OF THE A SSESSEE AND THE ASSESSEE HAVING UTTERLY FAILED TO EXPLAIN THESE DISCREPANCIE S AND, THIS APART, THE ASSESSEE HAVING HIMSELF AGREED TO THE ADDITION IN W RITING BY WAY OF LETTER DATED 18.11.08, HE CANNOT SUBSEQUENTLY SEEK TO RESCIND TH IS ACTION. IT GOES WITHOUT GAINSAYING THAT IT WAS ONLY BECAUSE THE ASSESSEE HA D REMAINED UNABLE TO EXPLAIN THE NUMEROUS DISCREPANCIES SPECIFICALLY POI NTED OUT BY THE AO, THAT IT CAME TO SUCH PASS THAT THE ASSESSEE HAD TO AGREE TO THE ADDITION IN QUESTION. AS DISCUSSED, THE LEARNED CIT(A) CONFIRMED THIS ADD ITION, BECAUSE IT WAS NOT CHALLENGED BY THE ASSESSEE IN THE APPEAL BEFORE THE CIT(A). 8. IN THESE FACTS AND CIRCUMSTANCES, I DO NOT FIND ANY MERIT IN THE SOUGHT TO BE RAISED BY GRIEVANCE OF THE ASSESSEE AGAINST THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION MADE. THE INITIATION OF THE PENALTY PROCEEDINGS HAS ALSO BEEN RIGHTLY CONFIRMED IN VIEW OF THE FACT THA T THE AGREED ADDITION WAS 6. ITA NOS.48& 49 (ASR)/2015 ASST. YEAR 2006-07 MADE ONLY THE DETECTION OF THE DISCREPANCIES, WHICH REMAINED AND STILL REMAIN UNEXPLAINED. 9. THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE IN TH E QUANTUM APPEAL ARE REJECTED. 10. APROPOS, THE CONFIRMATION OF PENALTY, THE A.O HAS D ONE SO FOLLOWING MAK DATA PVT. LTD., (SUPRA), ACCORDING TO WHICH, IN TH E CASE OF VOLUNTARILY SURRENDERED INCOME, AS IN THE PRESENT CASE, THERE I S NO AUTOMATIC IMMUNITY FROM CONCEALMENT PENALTY. IN THAT DECISION, THE HON BLE SUPREME COURT HAS HELD THAT SURRENDER SUBJECT TO NON INITIATION OF P ENALTY PROCEEDINGS AND PROSECUTION DOES NOT ABSOLVE THE ASSESSEE FROM LIA BILITY TO PENALTY; AND THAT IT IS TO BE SEEN WHETHER THE ASSESSEE HAS OFFERED AN E XPLANATION FOR CONCEALMENT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. NO DECISION CONTRARY TO MAK DATA, (SUPRA) HAS BEEN BROUGHT TO MY NOTICE. THE CA SE LAWS CITED BY THE ASSESSEE ARE PRE-MAK DATA (SUPRA) AND, THEREFORE, N OT OF HELP TO THE ASSESSEE. 11. ACCORDINGLY, THE GRIEVANCE OF THE ASSESSEE IN THE P ENALTY APPEAL ALSO DOES NOT HOLD ANY WATER. THIS GRIEVANCE IS ALSO REJECTED . 12. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH SEPTEMBER, 2015. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 07.09. 2015 /PK/ PS. COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: AMARJEET SINGH 7. ITA NOS.48& 49 (ASR)/2015 ASST. YEAR 2006-07 2. THE INCOME TAX OFFICER, WARD -2(1), AMRITSAR. 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.