HARPREET SINGH CHAWLA, AMRITSAR V. INCOME TAX OFFICER WARD - 5(2), AMRITSAR

ITA 497/ASR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7706 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 24-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV K GUBGOTRA
• Assessee Lawyers: P N ARORA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 497(ASR)/2017 AS SESSMENT YEAR: 2013-14 PAN: AAIPC1546K HARPREET SINGH CHAWLA 7-S, SANTOKH SINGH ROAD, AMRITSAR-143001 VS. INCOME TAX OFFICER, WARD-5(2), AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P. N. ARORA (ADV.) RESPONDENT BY: SH. RAJEEV K. GUBGOTRA (D. R.) DATE OF HEARING: 19.12.2017 DATE OF PRONOUNCEMENT: 21.12.2017 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR ('CIT(A)' FOR S HORT) DATED 15.6.2017, CONFIRMING THE LEVY OF PENALTY U/S. 271(1)(C) OF TH E INCOME TAX ('THE ACT' HEREINAFTER) FOR ASSESSMENT YEAR (AY) 2013-14 BY TH E ASSESSING AUTHORITY VIDE PENALTY ORDER DATED 21.9.2016. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-INDIVIDUAL, A TRADER, WAS OBSERVED DURING THE COURSE OF ASSESSMENT PROCEEDING S TO HAVE DISCLOSED NIL OPENING STOCK PER THE PROFIT AND LOSS ACCOUNT (P&L A/C) FOR THE RELEVANT YEAR, I.E., ON 01.4.2012, AS AGAINST CLOSING STOCK OF RS. 4,47,060/- AS AT THE END OF THE ITA NO.497 (ASR)/2017(AY 2013-14) HARPREET S. CHAWLA V. ITO 2 IMMEDIATELY PRECEDING YEAR, I.E., 31.3.2012. IN EXP LANATION, IT WAS SUBMITTED THAT THE CLOSING STOCK WAS VERY OLD, IN DEPLETED CONDITI ON, AND NOT SALEABLE. THE SAME WAS ACCORDINGLY WRITTEN OFF (ON 01.4.2012). IN THE VIEW OF THE ASSESSING OFFICER, (A.O.), THE SAME WOULD HAVE SOME SCRAP VALUE, WHICH WAS ESTIMATED BY HIM AT 8%, I.E., AT RS. 35,764/-, WHICH VALUE WAS BROUGHT TO T AX AS INCOME VIDE ORDER U/S. 143(3) DATED 09.3.2016. THE ASSESSEE DID NOT CARRY THE MATTER IN APPEAL. IN PENALTY PROCEEDINGS, INITIATED ALONGWITH, THE ASSESSEE FILE D WRITTEN SUBMISSIONS ON 12.9.2016, WHEREIN HE APPEARS TO HAVE ADVANCED THE SAME REASON AS IN THE ASSESSMENT PROCEEDINGS, TO NO AVAIL. IN APPEAL, THE ASSESSEE ALSO RELIED ON THE DECISION BY THE HON'BLE KARNATAKA HIGH COURT IN CIT V. SSAS EMRALD MEADOWS (IN ITA NO. 380 OF 2015, DATED 23.11.2015), FURTHER STATING, ON THAT BASIS, THAT WHERE THE SPECIFIC DEFAULT, I.E., CONCEALMENT OF, O R FURNISHING INACCURATE, PARTICULARS OF INCOME IS NOT MENTIONED EXPLICITLY I N THE SHOW CAUSE NOTICE U/S. 274 (ENCLOSED AT PB PAGE 3), PENALTY PROCEEDINGS U/S. 2 71(1)(C) ARE NOT SUSTAINABLE IN LAW. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE ASSESSEES CASE IS THAT THE GOODS ARE NOT SALEA BLE AND, THEREFORE, DO NOT CARRY ANY VALUE. THE REVENUE, ON THE OTHER HAND, IN SISTS THAT THE SAME WOULD HAVE SOME SALVAGE OR SCRAP VALUE, WHICH IT ESTIMATES AT 8% (OF COST). AND THAT THEREFORE THERE IS UNDER-DISCLOSURE OF INCOME TO THAT EXTENT. WE FIND NO BASIS TO THE REVENUES CASE. UNDER-DISCLOSURE OF OPENING STOCK W OULD RATHER ORDINARILY IMPLY THAT THE ASSESSEE HAS DISCLOSED A HIGHER INCOME TO THAT EXTENT, I.E., TO THE EXTENT OF UNDER-VALUATION. THIS IS AS WHILE THE OPENING STOCK (IN THE TRADING ACCOUNT) WOULD STAND INCREASED BY RS. 35,764/-, THE CLOSING STOCK WOULD REMAIN UNDISTURBED AT THE AMOUNT ALREADY DISCLOSED IN ITS RESPECT. FURTHER, E VEN CONSIDERING THAT THE SAME (STOCK) CONTINUES TO BE HELD AS AT THE YEAR-END AND , THEREFORE, OUGHT TO FIND ITA NO.497 (ASR)/2017(AY 2013-14) HARPREET S. CHAWLA V. ITO 3 REFLECTION IN THE CLOSING STOCK AS WELL, BOTH THE O PENING AND CLOSING STOCK FOR THE YEAR WOULD STAND INCREASED BY THE SAID AMOUNT (RS. 35764), SO THAT THERE IS NO UNDER REPORTING OF INCOME. THERE IS FURTHER NO EVID ENCE OR BASIS WITH THE REVENUE TO CONTEND THAT ANY PART OF THE SAID STOCK STANDS S OLD AT WHATEVER VALUE, DURING THE RELEVANT YEAR, IN WHICH CASE ONLY THERE WOULD B E, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, SUPPRESSION OF INCOME, A TTRACTING PENALTY U/S.271(1)(C). IN OTHER WORDS, INDEPENDENT OF THE VALUATION OF STO CK, THE SAME BEING CARRIED OVER FROM AN EARLIER YEAR, WOULD NOT IMPACT THE ASSESSEE S INCOME FOR THE YEAR UNLESS THERE IS SOMETHING ON RECORD TO SUGGEST IT'S SALE - TO WHATEVER EXTENT, OR OTHERWISE ANY BENEFIT DERIVED BY THE ASSESSEE THERE-FROM OUT OF BOOKS DURING THE YEAR, AND WHICH CANNOT BE A MATTER OF PRESUMPTION. EVEN AS THEREFORE WE DO NOT CONSIDER THE ISSUE ARIS ING AS ONE OF ESTIMATION, PRECLUDING PENALTY, AS ADVANCED BEFORE US, IN OUR V IEW NO CASE OF FURNISHING INACCURATE OR CONCEALMENT OF, PARTICULARS OF INCOME IS MADE OUT IN THE PRESENT CASE. THERE IS ALSO NO OCCASION FOR US TO TRAVEL TO THE L EGAL ASPECT OF THE MATTER, I.E., THE VALIDITY OF THE NOTICE U/S. 274, ALSO CANVASSED BEF ORE US. A SHOW CAUSE NOTICE ONLY SEEKS AN EXPLANATION (IN RESPECT OF ANY FACT MATERI AL TO THE COMPUTATION OF INCOME), WHILE WE HAVE SHOWN THAT NO CASE FOR ANY ADDITION/D ISALLOWANCE IN ASSESSMENT IS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, MADE OU T. WE DECIDE ACCORDINGLY, AND THE ASSESSEE SUCCEEDS. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COU RT ON 21.12.2017 SD/- SD/- (N. K. CHOUDHARY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 .12.2017. /GP/SR. PS. ITA NO.497 (ASR)/2017(AY 2013-14) HARPREET S. CHAWLA V. ITO 4 COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER