M/S SANDEEP SHARMA, Kota V. ITO, Kota

ITA 490/JPR/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7818 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 17-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEPH
• Assessee Lawyers: SIDDARTHA RANKA
• Section: 143(3)

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 490/JP/2012 ASSTT. YEAR- 2004-05 PAN NO. AAHFS 0949 M M/S SANDEEP SHARMA, THE I.T.O. OLD BAGGI KHANA, CIVIL LINES, VRS. WARD 2(1), KOT A. KOTA. (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI SIDDARTHA RANKA. DEPARTMENT BY :- MRS. NEENA JEPH. DATE OF HEARING : 22/10/2014 DATE OF PRONOUNCEMENT : 05/12/2014 O R D E R PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 12/03/2012 OF THE LEARNED CIT(A), KOTA FOR THE A.Y. 2004-05. THE SOLE GROUND OF APPEAL IS AGAINST CONFIRMING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE AC T). 2. THE ASSESSEE IS A CIVIL CONTRACTOR AND HIS CASE WA S SECURITIZED U/S 143(3) OF THE ACT. THE ASSESSEES TOTAL CONTRACT REC EIPTS WERE RS. 1.32 ITA 490/JP/2012 SANDEEP SHARMA VS. ITO 2 CRORES ON WHICH HE DISCLOSED N.P. RATE @ 6.04% BUT TH E LEARNED ASSESSING OFFICER POINTED OUT DEFECTS IN MATERIAL PURCHASE, R UBBEL- MALVA ACCOUNT, MIXER RENT, GITTY PURCHASE, TRAVELLING AND CONVEYAN CE AND ON THE BASIS OF DISCREPANCIES FOUND, HE REJECTED THE BOOK RESULT U/ S 145(3) OF THE ACT AND ESTIMATED N.P. RATE @ 8%. THE DIFFERENCE WAS ADDED IN THE INCOME OF THE ASSESSEE. THE ASSESSEE DID NOT FILE ANY APPEAL AGAIN ST THE QUANTUM ADDITION. THE LEARNED ASSESSING OFFICER IMPOSED PENA LTY U/S 271(1)(C) OF THE ACT ON THE BASIS OF DISCREPANCIES POINTED OUT I N THE ASSESSMENT ORDER AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE AND IT HAS BEEN HELD THAT EXPENDITURE SO MADE BY THE ASSES SEE WAS JUST ONLY TO ADJUST THE INCOME IN THE INCOME TAX PURPOSES SO AS TO REDUCE THE LIABILITY AT ITS DESIRABLE LEVEL AND IT IS JUSTIFIED TO HOLD THAT THE ASSESSEE HAD CONCEALED THE INCOME BY FURNISHING INACCURATE PARTI CULARS THEREOF. ACCORDINGLY HE IMPOSED 100% PENALTY AT RS. 1,13,724 /- OF TAX SOUGHT TO BE EVADED. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD PARTLY ALLOWED THE APPEAL AND FINALLY PENALTY AMOUNT WORKED OUT AT RS. 48,142/- BY THE LEARNED CIT(A) IN PLACE OF RS. 1,13,724/- B Y OBSERVING THAT THE ITA 490/JP/2012 SANDEEP SHARMA VS. ITO 3 INCOME OF THE ASSESSEE WAS ESTIMATED BY THE ASSESSIN G OFFICER, THE ASSESSING OFFICER HAS MENTIONED SPECIFIC DEFECTS IN THE ORDER OF PENALTY, THESE DEFECTS TOTAL TO RS. 1,09,502. ACCORDINGLY, P ENALTY WAS LEVIABLE WITH RESPECT TO SPECIFIC DEFECTS TOTALING TO RS. 1,09,50 2 WHEREAS THE ASSESSING OFFICER LEVIED PENALTY ON ADDITION OF RS, 2,58,670/ -. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED A.R. FOR THE ASSESSEE SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS IMPOSED PENALTY ON THE ADDITI ON SUSTAINED OF RS. 2,58,670/- ON ACCOUNT OF REJECTION OF BOOKS OF ACCO UNT AND FOR FURNISHING INACCURATE PARTICULARS OF INCOME BUT THE ASSESSEE H AD NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME AS HELD BY THE LOWE R AUTHORITIES. THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNT. T HE ACCOUNTS WERE BEING AUDITED YEAR TO YEAR U/S 44AB OF THE ACT. THE PENALTY U/S 271(1)(C) OF THE ACT CAN BE IMPOSED ONLY WHEN THERE IS A POSI TIVE FINDING OF ADDITION BUT MERE DISALLOWANCE/REJECTION OF BOOKS, PENALTY CA NNOT BE LEVIED. BOTH THE PROCEEDINGS ARE INDEPENDENT. IT IS APPARENT ON THE FACE OF RECORD THAT THE ADDITION WAS MADE PURELY ON ESTIMATE BASIS BY TH E LEARNED ASSESSING OFFICER. ON ESTIMATE, NO PENALTY IS LEVIABLE IN LAW AS HAS BEEN HELD CONSISTENTLY. FOR WHICH HE RELIED UPON THE DECISION IN THE CASE OF ITA 490/JP/2012 SANDEEP SHARMA VS. ITO 4 HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P&H) (HC ) WHEREIN IT HAS BEEN HELD THAT PENALTY CANNOT BE LEVIED WHEN INCOME HAS BEEN ESTIMATED. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KRISHI TYRE RETREADING & RUBBER INDUSTRIES IN DBITA 542/2008 VI DE ORDER DATED 19/09/2013 HAS HELD THAT MERELY BECAUSE BOOKS OF A CCOUNTS OF THE ASSESSEE WERE REJECTED OR ESTIMATED ADDITION WAS MADE , IN OUR VIEW, NO PENALTY IS LEVIABLE. HE FURTHER RELIED UPON THE FO LLOWING CASE LAWS: (I) CIT VS. KAILASH CROCKERY HOUSE (1999) 235 ITR 54 4 (PAT). (II) CIT VS. METAL PRODUCTS OF INDIA (1984) 150 ITR 714 (P&H). (III) CIT VS. WHITELINE CHEMICALS (GUJ) (TAX APPEAL NO. 496/2012) DATED 15/01/2013. (IV) CIT VS. SUBHASH TRADING COMPANY (1996) 221 ITR 110 (GUJ). (V) CIT VS. RAJ BANS SINGH (2005) 276 ITR 351 (ALL). (VI) CIT VS. AERO TRADERS (2010) 231 CTR 524 (DELHI). (VII) CIT VS. MODI INDUSTRIAL CORPORATION (2010) 19 5 TAXMAN 68 (P&H). (VIII) CIT VS. VIJAY KUMAR JAIN (2010) 325 ITR 378 (CHATTISGARH). (IX) SHIV NARAIN JAMNALAL (MP HIGH COURT) 7 ITD 795 . HE FURTHER ARGUED THAT THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN (2010 ) 322 ITR 158 (SC) WHERE CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURN ISHING INACCURATE PARTICULARS. ITA 490/JP/2012 SANDEEP SHARMA VS. ITO 5 6. AT THE OUTSET, THE LEARNED D.R. SUPPORTED THE OR DER OF THE LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THIS CASE, THE LEARNED ASSESSING OFFICER HAD POINTED OUT VARIOUS DEFECTS UNDER VARIO US HEADS IN ASSESSMENT PROCEEDINGS AND INCOME WAS ESTIMATED @ 8% AFTER REJE CTING THE BOOK U/S 145(3) OF THE ACT. WHATEVER DEFECTS POINTED OUT BY THE ASSESSING OFFICER IN PENALTY ORDER, DOES NOT SUPPORT THE REVENUES CA SE AS THERE IS NO POSITIVE FINDING OF ADDITIONS, WHO ESTABLISHED THE C ONCEALMENT OF INCOME AND INACCURATE PARTICULARS OF INCOME. THE BOOKS OF A CCOUNT WERE AUDITED AND PRODUCED BEFORE THE ASSESSING OFFICER. THE TOTAL ADDITION WAS MADE BY THE ASSESSING OFFICER AT RS. 2,58,770/- AFTER AP PLY THE N.P. RATE OF 8% AND ESTIMATED THE ASSESSEES INCOME. NO SPECIFIC CO NCEALED INCOME HAS BEEN ADDED BY THE ASSESSING OFFICER IN ASSESSMENT P ROCEEDINGS ON WHICH PENALTY CAN BE IMPOSED. THE LEARNED A.R. RELIED ON VARIOUS CASE LAWS, WHICH HAS CLEARLY APPLICABLE PARTICULARLY THE DECISI ON OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA). IN THIS CASE, THE HON'BLE SUPREME COURT HAS HELD AS UN DER:- A GLANCE AT THE PROVISIONS OF SECTION 271(1) OF T HE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO ITA 490/JP/2012 SANDEEP SHARMA VS. ITO 6 BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORK PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MAD E. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO NS, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE WAS BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICUL ARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACC URATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAIL S SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NO ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOU S OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 2 71(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNO T AMOUNT TO FURNISHING INACCURATE PARTICULARS. ITA 490/JP/2012 SANDEEP SHARMA VS. ITO 7 THE ASSESSEE HAS FURNISHED THE REPLY TO THE ASSESSIN G OFFICER, WHICH IS BONAFIDE, THEREFORE, WE DELETE THE PENALTY CONFIRMED BY THE LEARNED CIT(A). ACCORDINGLY, ASSESSEES APPEAL IS ALLOWED. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/12/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 05 TH DECEMBER, 2014 * RANJAN COPY FORWARDED TO :- 1. M/S SANDEEP SHARMA, KOTA. 2. THE ITO, WARD 2(1), KOTA. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 490/JP/2012) BY ORDER, AR ITAT JAIPUR.