Pawan Kumar Tyagi, Ghaziabad V. ACIT, Circle-2, Ghaziabad

ITA 5379/DEL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3732 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 14-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C P SINGH
• Assessee Lawyers: ANKIT GUPTA AO
• Keywords: Gross profit estimation; Stock register not maintained
• Section: 271(1)(c); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F: NEW DELHI , . . !'# !'# !'# !'# $ $$ $% % % % & & & & BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER & SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER ' '' ' / ITA NO:- 5379/DEL/2018 (( (( (( (( / ASSESSMENT YEAR: 2012-13 SHRI PAWAN KUMAR TYAGI, 1516, SECTOR-5, VASUNDHARA, GHAZIABAD. PAN-ACGPT1302A ........... )* /APPELLANT VS ACIT, CIRCLE-2, GHAZIABAD. . +,)* / RESPONDENT )*-. / APPELLANT BY : SH. ANKIT GUPTA, AO +,)*-. / RESPONDENT BY : SH.C.P.SINGH, SR.DR /-01% / DATE OF HEARING : 27.08.2019 23-01% / DATE OF PRONOUNCEMENT: 30.08.2019 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CI T(A), GHAZIABAD, DATED 24.05.2018 RELATING TO ASSESSMENT YEAR 2012-13 AGAINST THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). ITA NO:- 5379/DEL/2018 (ASSESSMENT YEAR: 2012-13) PAGE | 2 2. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 3. THE LD.AR FOR THE ASSESSEE AT THE OUTSET, POINTE D OUT THAT WHILE INITIATING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, THE AO HAS FAILED TO RECORD ANY SATISFACTION WHATSOEVER. FURT HER THE PENALTY HAS BEEN LEVIED BOTH FOR CONCEALMENT OF INCOME AND FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD.AR FOR TH E ASSESSEE FURTHER POINTED OUT THAT IN ANY CASE ON MERITS ALSO, THE AD DITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE ON ESTIMATION OF NET PROFIT RATE WHERE THE AO HAD APPLIED THE NET PROFIT RATE @ 8% AND THE TRIBUNAL VIDE ITS ORDER DATED 13.02.2019 HAS DIRECTED THE A PPLICATION OF NET PROFIT RATE @ 6%. IN SUCH CIRCUMSTANCES, HE POINTE D OUT THAT NO PENALTY IS LEVIABLE FOR CONCEALMENT U/S 271(1)(C) O F THE ACT. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SHRI VIVEK JAIRATH VS DCIT IN ITA NO.4103 & 4104/DEL/2015 VIDE ORDER DATED 27.12.2018. 3. THE LD.DR FOR THE REVENUE ON THE OTHER HAND STRO NGLY PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND ALSO POINTED OUT THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED IN THE CASE AND THERE IS MERIT IN THE AFORESAID LEVY OF PENALTY. IT WAS ALSO POINTED OUT THAT ON MERITS, THE BOOKS OF ACCOUNTS OF THE ASSESSEE HA D BEEN REJECTED ITA NO:- 5379/DEL/2018 (ASSESSMENT YEAR: 2012-13) PAGE | 3 AND NET PROFIT HAS BEEN ESTIMATED, HENCE, THE LEVY OF PENALTY FOR CONCEALMENT NEEDS TO BE UPHELD. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BRIEFLY IN THE FACTS OF THE CASE THE ASSESSEE HAD FURNISHED RETURN OF INCOME ON 29.09.2012 DECLARING TOTAL INCOME OF RS.7 8,22,670/-. THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY. TH E ASSESSEE HAD NOT MAINTAINED ANY STOCK REGISTER; HENCE, SHOW CAUSE WA S ISSUED TO THE ASSESSEE AS TO WHY THE BOOKS OF ACCOUNTS BE NOT REJ ECTED AND PROFIT BE NOT ESTIMATED @ 8% OF GROSS RECEIPTS. THE PLEA OF THE ASSESSEE THAT IT WAS MAINTAINING THE BOOKS OF ACCOUNTS WHICH WERE AU DITED, WAS NOT ACCEPTED AND THE AO COMPLETED THE ASSESSMENT BY AP PLYING NET PROFIT RATE @ 8% TO WORK OUT THE INCOME IN THE HAND S OF THE ASSESSEE. THE CIT(A) UPHELD THE AFORESAID ESTIMATION OF INCOM E. THE TRIBUNAL IN ITA NO.4830/DEL/2016 IN THE CASE OF P.K. BUILDERS V S DCIT VIDE ORDER DATED 13.02.2019 DIRECTED THE APPLICATION OF NET PR OFIT RATE @ 6% ON THE CONTRACT RECEIPTS. 5. THE AO WHILE COMPLETING THE ASSESSMENT HAD DIREC TED TO ISSUE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT. THE PE RUSAL OF THE ASSESSMENT ORDER REFLECTS THE AO NOT TO HAVE RECORD ED ANY SATISFACTION FOR INITIATING THE PENALTY PROCEEDINGS FOR CONCEALM ENT U/S 271(1)(C) OF THE ACT. THE ISSUE WHICH ARISES WHETHER NON-RECORD ING OF SUCH ITA NO:- 5379/DEL/2018 (ASSESSMENT YEAR: 2012-13) PAGE | 4 SATISFACTION IS FATAL TO THE LEVY OF PENALTY PROCE EDINGS U/S 271(1)(C) OF THE ACT. 6. PENALTY FOR CONCEALMENT IS LEVIABLE WHERE THE AS SESSEE HAD EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE AO WHILE COMPLETING THE ASSESSMENT HAS TO RECORD A SATISFACTION IN THIS REGARD, IN ORDER TO SHOW CAUSE THE ASSESSEE AS TO WHICH LIMB TO SECTION 271(1)(C) OF THE ACT HAS NOT BEEN SATISFIED BY IT. THIS IS THE BASIC CONDITION OF THE AFORESAID SECTIO N. ON PERUSAL OF THE ASSESSMENT ORDER PASSED FOR THE INSTANT ASSESSMENT YEAR REFLECTS NO SUCH SATISFACTION HAS BEEN RECORDED. IN THE ABSENC E OF THE SAME, THE ASSESSEE WAS NOT IN A POSITION TO MEET THE REQUIREM ENTS OF THE SECTION. MERELY, AN ORDER ISSUING NOTICE U/S 274 R.W.S 271(1)(C) OF THE ACT DO NOT MEET THE CONDITIONS OF THE SAID INITIATI ON OF PENALTY PROCEEDINGS. IN THE ABSENCE OF THE SAME, THERE IS NO MERIT IN THE PENALTY ORDER PASSED IN THE CASE. IN THIS REGARD, W E FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BO M) . 7. ANOTHER ASPECT WHICH NEEDS TO BE KEPT IN MIND IS THE ORDER OF PENALTY U/S 271(1)(C) OF THE ACT. THE AO HAD LEVIE D THE PENALTY BOTH FOR CONCEALMENT OF THE PARTICULARS OF INCOME AND FU RNISHED INACCURATE PARTICULARS OF INCOME. THE AO THUS FAILED TO COME TO ANY CONCLUSION AS TO WHICH LIMB OF THE SAID SECTION HAS NOT BEEN F ULFILLED BY THE ITA NO:- 5379/DEL/2018 (ASSESSMENT YEAR: 2012-13) PAGE | 5 ASSESSEE. IN THE ABSENCE OF THE SAME, WE FIND NO M ERIT IN THE ORDER PASSED BY THE AO IN THIS REGARD. FOR THIS, WE PLAC E RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KANHAIYALAL D. JAIN VS. ACIT (2016) 185 TTJ 553 (PUNE) /(2017) 88 TAXMANN.COM 830 (PUNE-TRIB.). 8. EVEN ON MERITS WHERE THE INCOME HAS BEEN ESTIMAT ED IN THE HANDS OF THE ASSESSEE BY APPLYING NET PROFIT RATE, THERE IS NO MERIT IN THE LEVY OF THE AFORESAID PENALTY FOR CONCEALMENT. WHERE THERE IS ONLY AN ESTIMATION OF INCOME IN THE HANDS OF THE ASSESSE E, THERE IS NO MERIT IN THE AFORESAID LEVY OF PENALTY FOR CONCEALM ENT. WE FIND SUPPORT FROM THE RATIO LAID DOWN IN CIT VS AERO TR ADERS P.LTD. [2010] 322 ITR 316 (DELHI). ACCORDINGLY, WE DIRECT THE AO TO DELETE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF AUGUST, 2019. SD/- SD/- (N.K.BILLAIYA) (SUSHM A CHOWLA) % % % % /ACCOUNTANT MEMBER /JUDICIAL MEMBER / DATED : 30 TH AUGUST, 2019 . * AMIT KUMAR * ITA NO:- 5379/DEL/2018 (ASSESSMENT YEAR: 2012-13) PAGE | 6 -+0!5!06 COPY OF THE ORDER IS FORWARDED TO : 1. )* / THE APPELLANT; 2. +,)* / THE RESPONDENT; 3. 7 8 9 / THE CIT(A) 4. !:;+0 $ $ / DR, ITAT, DELHI 5. ;<(/ 6 GUARD FILE. / BY ORDER , ,!0+0 // TRUE COPY // >?@ , $ / ITAT, DELHI