ZAVERCHAND VAJA JAKHARIA, MUMBAI V. ITO 18(2)(2), MUMBAI

ITA 5081/MUM/2010

• Counselvise Citation: 508119914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 26-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: SURESH GUDKA
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI J SUDHAKAR REDDY, ACCOUNTANT MEMBER I T A NO: 5081/MUM/2010 (ASSESSMENT YEAR: 2004-05) ZAVERCHAND VAJA JAKHARIA, MUMBAI APPELLANT (PAN: AAEPJ9519M) VS INCOME TAX OFFICER, WARD 18(2)(2), MUMBAI RESPOND ENT ASSESSEE BY: MR SURESH GUDKA REVENUE BY: MR A K NAYAK DATE OF HEARING: 26 TH SEPTEMBER 2011 DATE OF PRONOUNCEMENT: 29 TH SEPTEMBER 2011 O R D E R R V EASWAR, PRESIDENT: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E LEVY OF PENALTY OF ` 18,217/- UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IS AN INDIVIDUAL CARRYING ON BUSINE SS AS RETAILER OF MEDICINES. HE FILED THE RETURN SHOWING TOTAL INCOM E OF ` 1,31,954/- WHICH INCLUDED BUSINESS INCOME OF ` 1,16,069/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. THE ASS ESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN NET PROFIT OF ` 1,16,070/- WHICH 2 ITA NO: 5081/MUM/2010 IS LESS THAN 5% OF THE TOTAL SALES OF ` 36,56,164/-. ACCORDING TO HIM THE ASSESSEE OUGHT TO HAVE DECLARED 5% OF THE SALES AS HIS INCOME, WHICH WOULD HAVE COME TO ` 1,82,808/-. THE DIFFERENCE OF ` 66,738/- WAS ADDED AND PENALTY PROCEEDINGS WERE ALSO INITIATED F OR CONCEALMENT OF INCOME. IN RESPONSE TO THE PENALTY NOTICE, THE ASS ESSEE SUBMITTED THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 WAS COMPLETED UNDER SECTION 143(1) WITHOUT MAKING ANY ADDITION AN D NO PENALTY PROCEEDINGS WERE ALSO INITIATED. THE SUBMISSION WA S REJECTED BY THE ASSESSING OFFICER, WHO IMPOSED THE IMPUGNED PENALTY . THE SAME HAVING BEEN CONFIRMED BY THE CIT(A) BY AN EX PARTE ORDER, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE EXAMINED THE FACTS AND THE RIVAL CONTENT IONS. IT IS SEEN THAT THE ASSESSING OFFICER HAS SIMPLY ADOPTED 5% OF THE TURNOVER AS THE BUSINESS INCOME, RELYING ON SECTION 44AF(6) OF THE ACT. HOWEVER, THAT SECTION ONLY PROVIDES FOR A PRESUMPTI VE INCOME. THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE SHOWED PROFIT OF ` 1,16,069/- WHICH WAS LESS THAN THE PRESUMPTIVE INCO ME PROVIDED IN SECTION 44(AF). THAT HOWEVER DOES NOT MEAN THAT TH E ASSESSEE CONCEALED HIS INCOME, WITHOUT ANYTHING MORE. SECTI ON 44(AF) IS ONLY TO PROVIDE FOR SUMMARY ASSESSMENTS WITHOUT GOING TH ROUGH THE RAMIFICATIONS OF A LONG DRAWN OUT ASSESSMENT PROCEE DING. WE ARE SATISFIED THAT MERELY BECAUSE THE INCOME WAS DETERM INED UNDER SECTION 44(AF), THE ASSESSEE CANNOT BE SAID TO HAVE CONCEALED HIS 3 ITA NO: 5081/MUM/2010 INCOME. WE CANCEL THE PENALTY AND ALLOW THE APPEAL WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH SEPTEMBER 2011. SD/- SD/- (J SUDHAKAR REDDY) (R V EASWAR) ACCOUNTANT MEMBER PRESIDE NT MUMBAI, DATED 29 TH SEPTEMBER 2011 SALDANHA COPY TO: 1. ZAVERCHAND VAJA JAKHARIA 212, MAKER BLDG., PRABHADEVI MUMBAI 400 025 2. ITO, WARD 18(2)(2), 3. CIT-18, MUMBAI 4. CIT(A)-29, MUMBAI 5. DR G BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI