Sh. Rajiv Kumar Garg, Muzaffarnagar V. ITO, Shamli

ITA 519/DEL/2014

• Counselvise Citation: 51920114 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.519/DEL/2014 ASSESSMENT YEAR : 2009-10 RAJIV KUMAR GARG, C/O PREM PRAKASH, ADVOCATE, 183/2, NORTH CIVIL LINES, MUZAFFARNAGAR. PAN: AJDPG6774H VS. ITO, WARD-2, SHAMLI. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI AMRIT LAL, JCIT DATE OF HEARING : 15.06.2015 DATE OF PRONOUNCEMENT : 15.06.2015 ORDER THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE CIT (A) ON 29.11.2013 UPHOLDING THE PENALTY OF RS.4 5,100/- IMPOSED BY ITA NO.519/DEL/2014 2 THE AO U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEA R 2009-10. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN TRADING OF CEMENT. CLOSING STOCK OF RS.3,85,580 /- WAS SHOWN IN THE AUDITED BALANCE SHEET. THE AO, DURING THE COURSE O F ASSESSMENT PROCEEDINGS, OBSERVED THAT THE CLOSING STOCK OF BAG S SHOULD HAVE BEEN VALUED AT RS.6,25,961/-. IT WAS DONE SO ON THE BASI S OF THE LAST PURCHASE BILL DATED 28.3.2009. THE ASSESSEE AGREED FOR THE RESULTANT ADDITION AMOUNTING TO RS.2,40,381/-. THEREAFTER, THE AO IMP OSED PENALTY AMOUNTING TO RS.45,100/- @ 100% OF TAX SOUGHT TO BE EVADED U/S 271(1)(C) OF THE ACT IN RELATION TO THE SAID ADDITI ON. THE LD. CIT(A) UPHELD THE PENALTY. 3. I HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSEE DESPITE NOTICE. AS SUCH, I AM PROCEEDING TO DISPOSE OF THI S APPEAL EX PARTE QUA THE ASSESSEE. IT IS NOTED THAT THE PENALTY U/S 271 (1)(C) HAS BEEN IMPOSED ON THE BASIS OF DIFFERENCE IN THE VALUE OF STOCK SH OWN BY THE ASSESSEE ITA NO.519/DEL/2014 3 AND AS ESTIMATED BY THE AO BY APPLYING THE RATE OF LAST PURCHASE BILL DATED 28.3.2009. BUT, FOR THAT, THERE IS NOTHING T O SHOW THAT THE ASSESSEE, IN FACT, CONCEALED HIS INCOME OR FURNISHED INACCURA TE PARTICULARS OF INCOME. THERE CAN BE SEVERAL REASONS FOR A DIFFERE NT VALUATION. IT IS NOT NECESSARY THAT ALL THE BAGS ARE ALWAYS OF GOOD QUAL ITY. SOME OF THE CEMENT BAGS MAY HAVE LEAKED, SPOILT OR FIXED. 4. IT IS AN ADMITTED POSITION THAT THE ASSESSEE ACCEPTED 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 HONBLE CALCUTTA HIGH COURT IN DURGA KAMAL RICE MILL VS. CIT (2004) 265 ITR 25 (CAL), HAS HELD THAT QUANTUM PROCEEDINGS ARE DIFFERENT FROM PENALTY PROCEEDINGS. THE HONBLE KERALA HIGH COURT IN CIT VS. P.K. NARAYANAN (1999) 238 ITR 905 (KER.) , HAS HELD THAT DESPITE THE ADDITION BEING CONFIRMED BY T HE TRIBUNAL IN QUANTUM PROCEEDINGS, THE PENALTY CAN STILL BE DELET ED BY THE TRIBUNAL, IF THE FACTS JUSTIFY. ITA NO.519/DEL/2014 4 5. IT IS NOTICED THAT THE ONLY BASIS OF ADDITION IS THE ESTIMATE OF VALUATION MADE BY THE AO IN VALUING THE CLOSING STO CK @ RS.200.50 PER BAG, BEING THE COST PRICE OF CEMENT BAGS VIDE LAST PURCHASE BILL DATED 28.3.2009. APART FROM THIS ESTIMATE MADE BY THE AO , THERE IS NOTHING TO SHOW THAT THE WAY IN WHICH THE ASSESSEE VALUED ITS CLOSING STOCK WAS INCORRECT. THIS DIVULGES THAT THE ADDITION HAS BEE N MADE ONLY ON THE BASIS OF ESTIMATE MADE BY THE AO. IT IS A SETTLED L EGAL POSITION THAT WHEN INCOME IS ESTIMATED, THEN, THERE CAN BE NO QUESTION OF IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. THE HONBLE DELHI HIGH C OURT IN CIT VS. AERO TRADERS PVT. LTD., (2010) 322 ITR 316 (DEL), HAS HELD 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 HONBLE P&H HIGH COURT IN HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P&H) AND THE HONBLE GUJARAT HIGH COURT IN CIT VS. SUBHASH TRADING COMPA NY, 221 ITR 110 (GUJ) . IN VIEW OF THE FOREGOING PRECEDENTS INCLUDING TH E ONE FROM THE HONBLE JURISDICTIONAL HIGH COURT, IT IS APPARENT T HAT WHEN THE BEDROCK OF INSTANT PENALTY IS THE ESTIMATE OF VALUATION OF CLOSING STOCK, THE SAME ITA NO.519/DEL/2014 5 CANNOT BE SUSTAINED. OVERTURNING THE IMPUGNED ORDER , I ORDER FOR THE DELETION OF PENALTY AMOUNTING TO RS.45,100/-. 6. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 15.06.201 5. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED, 15 TH JUNE, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.