BHARAT DANA BERA PROPRIETOR OF M/S.NAUGHTY, MUMBAI V. I.T.O. 19(1)(3), MUMBAI

ITA 4910/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3487 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 21-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIKLD
• Assessee Lawyers: MARGAV SHUKLA LD
• Keywords: Business income; Reasonable cause
• Section: 271(1)(c); 273B; 274; 144

Judgement Text

ITA NO.4910/MUM/2018 ASSESSMENT YEAR :2007-08 SHRI BHARAT DANA BERA 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4910/MUM/2018 ( / ASSESSMENT YEAR : 2007-08 ) SHRI BHARAT DANA BERA [PROP. OF NAUGHTY GIRL] JAYESH SANGHRAJKA & CO. LLP (CA) UNIT NO. 405, HIND RAJASTHAN CENTRE D.S. PHALKE ROAD, DADAR (E) MUMBAI- 400 014. / VS. INCOME TAX OFFICER - 1 9 ( 1 )(3) MUMBAI- 400 020. $% ./ ./PAN/GIR NO. AKVPB-8714-H ( %' /APPELLANT ) : ( ()%' / RESPONDENT ) ASSESSEE BY : SHRI MARGAV SHUKLA-LD. AR REVENUE BY : MS. KAVITA P. KAUSHIK-LD. DR / DATE OF HEARING : 28/11/2019 / DATE OF PRONOUNCEMENT : 29/11/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2007-08 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-34, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-34/ITO-19(1)(3)/IT-76/2013-14 DAT ED 26/05/2018 QUA ITA NO.4910/MUM/2018 ASSESSMENT YEAR :2007-08 SHRI BHARAT DANA BERA 2 CONFIRMATION OF PENALTY U/S 271(1)(C). THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: - 1. ON THE GIVEN FACTS, CIRCUMSTANCES, AND JUDICIAL PRONOUNCEMENTS HON. CIT (APPEALS) ERRED IN UPHOLDING THE ORDER OF LD, AO OF LEVYING THE PENALTY, SUCH CONFIRMATION OF PENALTY IS BAD IN LAW AND LIABLE TO BE DELETED. 2. ON THE GIVEN FACTS, CIRCUMSTANCES, AND JUDICIAL PRONOUNCEMENTS HON. CIT (APPEALS) ERRED IN UPHOLDING THE ORDER OF LD. AO OF LEVYING THE PENALTY, EVEN THOUGH THERE WAS NO VALID APPROVAL AS REQUIRED UNDER PROVI SIONS OF SECTION 274 AND THEREFORE SUCH CONFIRMATION OF PENALTY IS BAD IN LA W AND LIABLE TO BE DELETED. 3. ON THE GIVEN FACTS, CIRCUMSTANCES, AND JUDICIAL PRONOUNCEMENTS HON. CIT APPEALS ERRED IN CONFIRMING THE PENALTY LEVIED BY L D. AO ON ACCOUNT OF FURNISHING INACCURATE PARTICULARS OF INCOME FOR ADDITION MADE U/S 41(1) AND AD-HOC EXPENSES, EVEN THOUGH THERE WAS REASONABLE CAUSE WITHIN THE P ROVISIONS OF SECTION 273B AND HENCE SUCH PENALTY WAS LIABLE TO BE DELETED. 4. ON THE GIVEN FACTS, CIRCUMSTANCES, AND JUDICIA L PRONOUNCEMENTS HON. CIT APPEALS ERRED IN CONFIRMING THE PENALTY LEVIED BY L D. AO ON ACCOUNT OF FURNISHING INACCURATE PARTICULARS OF INCOME FOR ADDITION MADE ON ACCOUNT OF AD-HOC EXPENSES, EVEN THOUGH THE SAME HAS BEEN DELETED BY THE HON. I TAT AND HENCE PENALTY LEVIED ON SUCH ADDITION IS BAD IN LAW AND IS LIABLE TO BE DELETED. FACST 2. FACTS LEADING TO IMPOSITION OF PENALTY ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN GARMENT S BUSINESS WAS ASSESSED FOR YEAR UNDER CONSIDERATION ON BEST JUDGMENT BASIS U/S 144 ON 11/12/2009 WHEREIN THE INCOME OF THE ASSESSEE WA S DETERMINED AT RS.47.76 LACS AS AGAINST RETURNED INCOME OF RS.8.96 LACS FILED BY THE ASSESSEE ON 29/10/2007. THE ASSESSEE REFLECTED NET PROFIT OF RS.3.15 LACS ON TOTAL SALES OF RS.69.58 LACS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS SADDLED WITH ADDITION U/S 41(1) FOR RS.35.13 LACS AGAINST OLD SUNDRY CREDITORS STANDING IN ITS BOOKS OF ACCOUNT SINCE IT WAS CONCLUDED THAT THE SAME WERE N O MORE PAYABLE. IN THE ABSENCE OF BOOKS OF ACCOUNTS, THE NET PROFIT WA S ESTIMATED @10% OF SALES WHICH RESULTED INTO ENHANCEMENT OF NET PROFIT TO THE EXTENT OF RS.3.80 LACS. ITA NO.4910/MUM/2018 ASSESSMENT YEAR :2007-08 SHRI BHARAT DANA BERA 3 3. BEFORE LEARNED FIRST APPELLATE AUTHORITY, REMAND PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE. ON THE BASIS OF REM AND REPORT, THE ADDITION U/S 41(1) WAS REDUCED TO RS.23.34 LACS WHE REAS THE NET PROFIT WAS ESTIMATED @7% AS AGAINST 10% ESTIMATED BY LD. A O. THE TRIBUNAL, VIDE ITA NO.7537/MUM/2011 ORDER DATED 05/03/2015 CO NFIRMED THE ADDITIONS MADE U/S 41(1) AS SUSTAINED BY LD. FIRST APPELLATE AUTHORITY BUT PROVIDED PARTIAL RELIEF AGAINST ADHOC DISALLOWANCE OF EXPENSES. 4. IN THE MEANTIME, PENALTY PROCEEDINGS WERE INITIA TED AGAINST THE ASSESSEE U/S 271(1)(C) AND THE ASSESSEE WAS SADDLED WITH PENALTY OF RS.8.50 LACS VIDE PENALTY ORDER DATED 26/03/2013. T HE SAME, UPON CONFIRMATION BY LEARNED FIRST APPELLATE AUTHORITY V IDE IMPUGNED ORDER DATED 26/05/2018, IS UNDER CHALLENGE BEFORE US. 5. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING JUDICIAL PRON OUNCEMENTS AS CITED BEFORE US. WE HAVE ALSO NOTED THE BASIC FACTS AS EN UMERATED IN THE PRECEDING PARAGRAPHS. UPON DUE CONSIDERATION, IT TR ANSPIRES THAT THE ASSESSEE HAS BEEN SADDLED WITH ADDITIONS U/S 41(1) FOR REMISSION / CESSATION OF TRADING LIABILITY IN VIEW OF THE FACT THAT SUNDRY CREDITORS WERE LONG OUTSTANDING IN THE BOOKS OF ACCOUNTS AND THE A SSESSEE WAS UNABLE TO ESTABLISH THE EXISTENCE OF THESE LIABILITIES BY PRODUCING THE PARTIES. NEVERTHELESS, THE FACT REMAINS THAT THESE SUNDRY CR EDITORS WERE REFLECTED AS OUTSTANDING IN THE BOOKS OF ACCOUNTS AND THEY WE RE SHOWN IN THE FINANCIAL STATEMENTS ALSO SINCE LONG WHICH WERE NEV ER DOUBTED BY THE REVENUE. IN FACT, SOME OF THE SUNDRY CREDITORS WERE SETTLED BY THE ASSESSEE IN SUBSEQUENT YEARS. THERE COULD BE MULTIP LE REASONS FOR SUNDRY CREDITORS REMAINING OUTSTANDING SINCE A LONG TIME. THE MERE FACT ITA NO.4910/MUM/2018 ASSESSMENT YEAR :2007-08 SHRI BHARAT DANA BERA 4 THAT THE ASSESSEE COULD NOT ESTABLISH THE EXISTENCE OF THESE LIABILITIES DURING ASSESSMENT PROCEEDINGS, WOULD NOT, IPSO-FACTO, LEAD TO A CONCLUSION THAT THERE WAS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. SIMILARLY, THE ADDITIONS ON MERE ESTIMA TION BASIS, WOULD NOT MAKE IT A FIT CASE FOR IMPOSITION OF PENALTY. THERE FORE, BY DELETING THE PENALTY, WE ALLOW THE APPEAL. GROUND NOS. 3 & 4 STA NDS ALLOWED. GROUND NOS. 1 IS GENERAL IS NATURE. NOTHING HAS BEEN ARGUE D AGAINST GROUND NO.2. 6. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 29/11/2019 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. %' / THE APPELLANT 2. ()%' / THE RESPONDENT 3. 0 ( ) / THE CIT(A) 4. 0 / CIT CONCERNED 5. 12(+3 , 3 , / DR, ITAT, MUMBAI 6. 2456 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.