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ITA 4900/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4191 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 12-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: M L DUA
• Keywords: Wrong claim

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH B, NEW DELHI BEFORE : SHRI H.S. SIDHU., JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 4900/DEL./2016 ASSESSMENT YEARS: 2008-09 CTC PLAZA INTERNATIONAL TRADEX PVT. LTD., F-43, KILOKRI RINGH ROAD, NEAR ASHRAM, NEW DELHI (PAN-AAACO1115B) (APPELLANT) VS. INCOME - TAX OFFICER, WARD 1(1), FARIDABAD. (RESPONDENT) APPELLANT BY SH. M.L. DUA, ADVOCATE RESPONDENT BY MS. ASHIMA NEB, SR. DR ORDER PER T.S. KAPOOR, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-2, NEW DELHI DATED 24.06.2016. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. THAT THE CIT (A) ERRED IN CONFIRMING PENALTY OF RS. 2,71,920/-U/S. 271 (1 )(C) OF THE IT ACT 1961. 2. THAT THE CIT (A) PASSED AN ILLEGAL ORDER SINCE THE RE WAS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE APPELLANT. 3. THAT THERE WAS NO SPECIFIC CHARGE WHETHER THE PEN ALTY IMPOSED WAS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME ; HENCE THE AO AS WELL AS THE CIT (A) PASSED ORDERS U/S 271(1)(C) ON VAGUE CHARGES , THUS PASSING AN ILLEGAL ORDER TH AT DESERVES TO BE QUASHED. DATE OF HEARING 04.01.2018 DATE OF PRONOUNCEMENT 04 .01.2018 ITA NO. 4900/DEL./2016 2 4. THAT THE DISALLOWANCE OF PART OF EXPENSES WAS MAD E BY THE AO ON SHEER ESTIMATE BASIS, AND THAT WOULD NOT MEAN CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME; HEN CE NO PENALTY WAS IMPOSSIBLE ON THAT BASIS. 2. DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE DID NOT PRESS GROUNDS NOS. 1 TO 3. THE SAME ARE ACCORDINGLY DISMI SSED AS NOT PRESSED. 3. ADDRESSING TO GROUND NO. 4, THE LD. AR SUBMITTED THAT PARTIAL DISALLOWANCE OF EXPENSES, THAT TOO ON ESTIMATE BASI S, WOULD NOT CONSTITUTE FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THEREFORE, THE PENALTY IMPOSED AND CONFIRMED BY THE AUTHORITIES BELOW IS N OT JUSTIFIED IN VIEW OF SEVERAL DECISIONS RELIED BY HIM IN THE FOLLOWING CA SES: (I). SHIELA JAIN VS. ITO (ITAT DELHI BENCH ITA NO . 4007/DEL./2016) (II). MANMOHAN JAIN VS. ITO(ITAT DELHI BENCH ITA NO. 315/DEL./2015) (III). RAJIV KUMAR GARG VS. ITO (ITAT DELHI BENCH ITA NO. 519/DEL./2014) (IV). CIT VS. AERO TRADERS PVT. LTD., 322 ITR 316 ( DEL.) 4. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE PENALTY. IT WAS SUBMITT ED THAT THE ASSESSEE HAD MADE WRONG CLAIM OF EXPENDITURES AND THE AO HAD MAD E PARTIAL DISALLOWANCE THEREOF, WHICH STOOD CONFIRMED IN APPEAL. THE ASSES SEE DID NOT CHALLENGE THE SAID ADDITION. THEREFORE, THE PENALTY, IMPOSED BY T HE AUTHORITIES BELOW IS LIABLE TO BE SUSTAINED. 5. WE HAVE HEARD THE RIVAL PARTIES AND GONE THROUGH THE MATERIAL PLACED ON RECORD AND WE FIND NO JUSTIFICATION TO SUSTAIN T HE PENALTY CONFIRMED BY THE LD. CIT(A) IN THE INSTANT CASE. IT IS NOTABLE THAT THE PARTIAL DISALLOWANCE OF ITA NO. 4900/DEL./2016 3 VARIOUS EXPENDITURES CLAIMED BY THE ASSESSEE, WAS M ADE BY THE AO ON ESTIMATE BASIS WITHOUT POINTING OUT ANY PARTICULAR EXPENDITURE OF DISALLOWABLE NATURE. THEREFORE, IN OUR CONSIDERED OPINION, DISAL LOWANCE MADE ON THE BASIS OF ESTIMATE DOES NOT CONSTITUTE CONCEALMENT OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS THEREOF BY THE ASSESSEE, ENT AILING PENALTY U/S. 271(1)(C) OF THE ACT. SIMILARLY, MERELY, BECAUSE THE ADHOC DI SALLOWANCE WAS NOT CHALLENGED BY THE ASSESSEE, WOULD ALSO NOT CONSTITU TE FURNISHING OF INACCURATE PARTICULARS OF INCOME TO IMPOSE PENALTY U/S. 271(1) (C) OF THE ACT. FOR THIS VIEW, STAND FORTIFIED BY THE DECISION OF DELHI TRIB UNAL IN THE CASE OF RAJIV KUMAR GARG VS. ITO (SUPRA), WHEREIN IT HAS BEEN HEL D AS UNDER : 3. I HAVE HEARD THE ID. DR AND PERUSED THE RELEVAN T MATERIAL AVAILABLE ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSES DESPITE NOTICE. AS SUCH, I AM PROCEEDING TO DISPOSE OF THIS APPEAL EX PARTE QUA THE ASSESSEE. IT IS NOTED THAT THE PENALTY U/S 271(1)(C) HAS BEEN IMPO SED ON THE BASIS OF DIFFERENCE IN THE VALUE OF STOCK SHOWN BY THE ASSESSEE ITA NO. 519/DEL/2014 AND AS ESTIMATED BY THE AO BY APPLYING THE RATE OF LAST PU RCHASE BILL DATED 28.3.2009. BUT, FOR THAT, THERE IS NOTHING TO SHOW THAT THE AS SESSEE, IN FACT, CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. THERE CAN BE SEVERAL REASONS FOR A DIFFERENT VALUATION. IT IS NOT NECESS ARY THAT ALL THE BAGS ARE ALWAYS OF GOOD QUALITY. SOME OF THE CEMENT BAGS MAY HAVE L EAKED, SPOILT OR FIXED. 4. IT IS AN ADMITTED POSITION THAT THE ASSESSEE ACC EPTED THE ADDITION AND DID NOT CHALLENGE IT FURTHER. BUT THE MERE FACT THA T AN ADDITION HAS-BEEN ACCEPTED OR IS CONFIRMED IN QUANTUM PROCEEDINGS CAN NOT BE CONCLUSIVE OF THE IMPOSITION OF PENALTY. THE HON'BLE CALCUTTA HIGH COU RT IN DURGA KAMAL RICE MILL VS. CTT (2004) 265 ITR 25 (CAL), HAS HELD THAT QUANTUM PROCEEDINGS ARE DIFFERENT FROM PENALTY PROCEEDINGS. THE HON'BLE KERA LA HIGH COURT IN CIT VS. P.K. NARAYANAN (1999) 238 ITR 905 (KER.), HAS HELD THAT D ESPITE THE ADDITION BEING CONFIRMED BY THE TRIBUNAL IN QUANTUM PROCEEDINGS, T HE PENALTY CAN STILL BE DELETED BY THE TRIBUNAL, IF THE FACTS JUSTIFY. 5. IT IS NOTICED THAT THE ONLY BASIS OF ADDITION IS THE ESTIMATE OF VALUATION MADE BY THE AO IN VALUING THE CLOSING STOCK @ RS,2 00.50 PER BAG, BEING THE COST PRICE OF CEMENT BAGS VIDE LAST PURCHASE BILL DATED 28.3.2009. APART FROM THIS ITA NO. 4900/DEL./2016 4 ESTIMATE MADE BY THE AO, THERE IS NOTHING TO SHOW T HAT THE WAY IN WHICH THE ASSESSEE VALUED ITS DOSING STOCK WAS INCORRECT. THIS DIVULGES THAT THE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF ESTIMATE MADE BY THE AO. IT IS SETTLED LEGAL POSITION THAT WHEN INCOME IS ESTIMATED, THEN, THERE CAN BE NO QUESTION OF IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. THE HON'B LE DELHI HIGH COURT IN CIT VS._AERO TRADERS PVT. LTD.(2010) 322 ITR 316 HAS HEL D THAT NO PENALTY U/S 271(1)(C) CAN BE IMPOSED WHEN INCOME IS DETERMINED ON ESTIMATE BASIS. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE P&H HIGH COURT I N HARIGOPAL SINGH VS CIT (2002) 258 ITR 85 (P&H) AND THE HON'BLE GUJARAT HIGH COURT IN CIT VS. SUBHASH TRADING COMPANY, 221 ITR 110 (GUJ). IN VIEW OF THE FO REGOING PRECEDENTS INCLUDING THE ONE FROM THE HON'BLE JURISDICTIONAL H IGH COURT, IT IS APPARENT THAT WHEN THE BEDROCK OF INSTANT PENALTY IS THE ESTIMATE OF VALUATION OF CLOSING STOCK, THE SAME CANNOT BE SUSTAINED. OVERTURNING THE IMPUG NED ORDER, I ORDER FOR THE DELETION OF PENALTY AMOUNTING TO RS.45,100/-. 6. IN VIEW OF THE AFORESAID DECISION OF CO-ORDINATE BENCH, AS ALSO THE OTHER DECISIONS RELIED BY THE LD. AR, WE ARE OF THE OPINI ON THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT. WE, THEREFORE, DELETE THE IMP UGNED PENALTY AND ALLOW THE GROUND NO. 4 OF THE APPEAL. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JANUARY, 2018. SD/- SD/- (H.S. SIDHU) (T.S. KAPOO R) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04.01.2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI