MESERS GRAND LILLY MOTELS LIMITED, JALANDHAR V. THE ASSISTANT COMMISIONER OF INCOME TAX, CIRCLE-3, JALANDHAR

ITA 550/ASR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4477 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 12-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR SMC BENCH, AMRITSAR BEFORE SH. N. S. SAINI, ACCOUNTANT MEMBER ITA NO. 548/ASR./2018 : ASSTT. YEAR : 2014-15 ITA NO. 549/ASR./2018 : ASSTT. YEAR : 2014-15 ITA NO. 550/ASR./2018 : ASSTT. YEAR : 2015-16 THE GRAND LILLY MOTELS LTD., 4, MODEL TOWN, JALANDHAR VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-3, JALANDHAR (APPELLANT) (RESPONDENT) PAN NO. AABCG4527E ASSESSEE BY : SHRI. R. K. BAJAJ, ADV. REVENUE BY : SH. CHARAN D ASS, DR DATE OF HEARING : 16 .05 .201 9 DATE OF PRONOUNCE MENT : 17 .05 .201 9 ORDER ITA NOS. 548 & 549/ASR./2018 ARE THE APPEALS FILED BY THE ASSESSEE FOR QUANTUM ADDITION AGAINST SEPARATE ORDE R OF COMMISSIONER OF INCOME TAX(APPEALS)-2 BOTH DATED 04 .09.2018 FOR ASSESSMENT YEARS 2014-15 AND 2015-16 AND ITA NO . 550/ASR./2018 IS THE APPEAL FILED BY THE ASSESSEE F OR ASSESSMENT YEAR 2014-15 AGAINST THE ORDER OF COMMISSIONER OF I NCOME TAX(APPEALS)-2 DATED 05.09.2018 FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SHRI. R. K. BAJAJ, ADV. SUBMITTED THAT HE IS NOT PRESSING THE Q UANTUM APPEAL FOR ASSESSMENT YEARS 2014-15 AND 2015-16 AFTER MAKI NG THE ADDITION BY THE ASSESSING OFFICER THE ASSESSED INCO ME OF THE ASSESSEE IS A LOSS. THE APPEALS WERE FILED ONLY BEC AUSE OF LEVY OF PENALTY BY THE ASSESSING OFFICER U/S 271(1)(C) OF T HE ACT. IF THE ITA NOS. 548, 549 & 550/ASR./2018 GRAND LILLY MOTELS 2 PENALTY IS DELETED THEN THE QUANTUM APPEALS FILED M AY BE TREATED AS NOT PRESSED. 3. AS NO SERIOUS ARGUMENTS WERE ADVANCED BY THE AUT HORIZED REPRESENTATIVE OF THE ASSESSEE IN THE QUANTUM APPEA L FILED FOR ASSESSMENT YEARS 2014-15 AND 2015-16 THEY ARE BEING DISMISSED. 4. IN ASSESSMENT YEAR 2014-15, THE ASSESSING OFFICE R HAS LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT OF RS.6 ,98,815/- ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME. 5. THE FACTS OF THE CASE LEADING TO THE LEVY OF PEN ALTY U/S 271(1)(C) OF THE ACT ARE THAT THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS SHOWN RECEIPT FROM SALE OF FOOD, COLD DRINKS, LIQUOR, ROO M RENT, LAWN CHARGES ETC. AND FOOD SALES ARE SHOWN AT RS.1,11,68 ,021/- DURING THE YEAR UNDER CONSIDERATION, AGAINST WHICH PURCHAS ES OF RS.59,83,832/- HAS BEEN SHOWN AND OPENING AND CLOSI NG STOCK HAS BEEN SHOWN AT RS.1,83,65,565/- AND RS.1,90,82,9 03/- RESPECTIVELY. THE ASSESSING OFFICER OBSERVED THAT T HE ASSESSEE IS NOT MAINTAINING ANY STOCK REGISTER OR DETAIL OF DAI LY CONSUMPTION OF VARIOUS ITEMS USED IN THE BUSINESS. THE CONTENTI ON OF THE ASSESSEE IS THAT CONSUMPTION OF GROCERY ITEMS IN FO OD SALES CANNOT BE WORKED OUT BECAUSE THE ITEMS USED BY THE ASSESSEE COMPANY ARE NUMEROUS. ACCORDING TO THE ASSESSING OF FICER, EVEN IF THIS CONTENTION IS CONSIDERED, IT IS NOT UNDERST OOD AS TO WHY EVEN THE INVENTORIES OF OPENING AND CLOSING STOCK C OULD NOT BE FURNISHED. HE OBSERVED THAT IN THE ABSENCE THEREOF, IT WAS NOT UNDERSTANDABLE AS TO HOW THE FIGURES AND VALUATION OF OPENING AND CLOSING STOCK WAS ARRIVED AT. HE, THEREFORE, HE LD THAT THE TRADING ACCOUNT PREPARED BY THE ASSESSEE COMPANY IS INCORRECT AND INCOMPLETE AND NOT RELIABLE. HE ALSO OBSERVED T HAT THE ITA NOS. 548, 549 & 550/ASR./2018 GRAND LILLY MOTELS 3 AUTHORIZED REPRESENTATIVE OF THE ASSESSEE IN HIS RE PLY SUBMITTED THAT ITEM USED FOR CONSUMPTION BY ASSESSEE COMPANY ARE PERISHABLE AND IF NOT CONSUMED WITHIN TIME HAVE THR OWN AWAY. IN SUCH CIRCUMSTANCES, IT IS NOT UNDERSTANDABLE AS TO HOW AND WHY THE ASSESSEE IS MAINTAINING OPENING AND CLOSING STO CK OF HUGE VALUE LIKE RS.1,83,65,565/- AND RS.1,90,82,903/- RE SPECTIVELY, AGAINST WHICH SALES OF ONLY RS.1,11,68,021/- HAS BE EN SHOWN. THE FIGURES OF OPENING STOCK, CLOSING STOCK AND SAL ES ARE ENOUGH TO SHOW THAT THE BOOKS OF ACCOUNTS OF ASSESSEE ARE BEING MANIPULATED AND TRADING RESULTS SHOWN DO NOT PRESEN T THE TRUE AND CORRECT PICTURE OF STATE OF AFFAIRS O THE ASSES SEE. THE ASSESSING OFFICER NOTED THAT DURING EXAMINATION OF BOOKS ON 06.12.2016, COMPLETE BILLS FOR SALE AND PURCHASE WE RE NOT FOUND TO BE AVAILABLE AND THE ASSESSEE COULD NOT PRODUCE ANY DISTINCTIVE NUMBER OF STOCK ITEMS OUT OF BILLS OR V OUCHERS PRODUCED OR VERIFICATION OR OTHERWISE. HE OBSERVED THAT IN THE ASSESSEES OWN CASE OR ASSESSMENT YEAR 2008-09, SIM ILAR OBSERVATION WAS MADE BY THE ASSESSING OFFICER AND A DDITION WAS MADE ON 1:3 RATIO BASIS WHICH HAS BEEN CONFIRMED BY COMMISSIONER OF INCOME TAX(APPEALS) VIDE ORDER DATE D 30.03.2012. THEREFORE, THE ASSESSING OFFICER REJECT ED THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 14 5(3) OF THE ACT. HE OBSERVED THAT IN ASSESSMENT YEAR 2005-06 AN D EARLIER ASSESSMENT YEARS, FOOD SALES OF THE ASSESSEE COMPAN Y HAD BEEN ESTIMATED BY THE ASSESSING OFFICER BY TAKING THE SA ME TO BE 5 TIMES OF GROCERY/PROVISIONS CONSUMED. HOWEVER, IN A PPEAL BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESS EE GOT PAT RELIEF AND THE RATIO OF 1:3 WAS APPLIED BY THE COMM ISSIONER OF INCOME TAX(APPEALS) AS AGAINST THE RATIO 1:5 APPLIE D BY THE ASSESSING OFFICER. THIS RATIO WAS SUBSEQUENTLY CONF IRMED BY AMRITSAR BENCH O THE TRIBUNAL WHICH BECAME FINAL. T HE ASSESSING ITA NOS. 548, 549 & 550/ASR./2018 GRAND LILLY MOTELS 4 OFFICER NOTED THAT THE ASSESSEE HAS SHOWN OPENING S OCK OF PROVISIONS AT RS.1,83,65,565/-, CLOSING STOCK OF RS .1,90,82,903/- AND PURCHASE OF RS.59,83,832/-. THUS, THE GROCERY C ONSUMED BY THE ASSESSEE WAS RS.52,66,494/-. OUT OF THE TOTAL C ONSUMPTION OF GROCERY OF RS.52,66,494/-, 15% IS BEING REDUCED FOR FOOD WASTAGE ETC. WHICH COMES TO RS.7,89,974/- AND THERE AFTER THE NET CONSUMPTION OF GROCERY IS ARRIVED AT RS.44,76,5 20/- FOR THE YEAR UNDER CONSIDERATION. THUS, THE TOTAL FOOD SALE S OF THE ASSESSEE IS WORKED OUT AT RS.1,34,29,560/- (RS.44,7 6,520 X 3), AGAINST WHICH, THE ASSESSEE HAS DECLARED FOOD SALE OF RS.1,11,68,021/- ONLY. THUS, THE DIFFERENCE AMOUNT IS WORKED OUT AT RS.22,61,539/- WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFF ICER THEREAFTER OBSERVED THAT SINCE THE ASSESSEE HAS CONCEALED AND FURNISHED INACCURATE PARTICULARS OF INCOME TO THIS EXTENT PEN ALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT BEING INITIATE D SEPARATELY. THEREAFTER, THE ASSESSING OFFICER LEVIED PENALTY AN D FURNISHING INACCURATE PARTICULARS OF INCOME OF RS.6,98,815/- A ND ADDITION OF RS.22,61,539/-. 6. ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEAL S) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER. 7. BEFORE US, THE CONTENTION OF THE AUTHORIZED REPR ESENTATIVE OF THE ASSESSEE IS THAT THE SALES OF THE ASSESSEE H AS BEEN ESTIMATED IN THE RATIO OF 1:3 ON THE BASIS OF CONSU MPTION OF GROCERY/PROVISIONS AND ADDITION HAS BEEN MADE TO TH E INCOME OF THE ASSESSEE. IT IS, THEREFORE, THE SUBMISSION OF T HE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WAS THAT WHEN ADDITION HAS BEEN MADE ON THE BASIS OF ESTIMATION OF INCOME NO PENALTY U/S 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME CAN BE LEVIED. ITA NOS. 548, 549 & 550/ASR./2018 GRAND LILLY MOTELS 5 8. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE OR DER OF THE LOWER AUTHORITIES. 9. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAS SHOWN TURNOVER OF RS.1,11,68,021/-. BECAUSE OF NON-COMPLIANCE ON THE PART OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED. AFTER REJ ECTING THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER ESTIMATED T HE SALES OF THE ASSESSEE AT 3 TIMES OF THE CONSUMPTION OF GROCERIES /PROVISIONS WHICH WORKED OUT TO RS.1,34,29,560/-. THE DIFFERENC E BETWEEN THE ESTIMATED TURNOVER AND THE DISCLOSED TURNOVER C AME TO RS.22,61,539/- AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE AND IN VIEW OF THE BROUGHT FORWARD LOSS TO TAL INCOME WAS DETERMINED AT RS. NIL. 10. THE ASSESSING OFFICER THEREAFTER LEVIED PENALT Y U/S 271(1)(C) OF THE ACT IN RESPECT OF AFORESAID ADDITI ON OF RS.22,61,539/- AT RS.6,98,815/- ON THE GROUND OF FU RNISHING OF INACCURATE PARTICULARS OF INCOME. 11. ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEA LS) CONFIRMED THE ABOVE LEVY OF PENALTY OF RS.6,98,815/ -. 12. I FIND THAT NO MATERIAL HAS BEEN BROUGHT ON REC ORD OR BEFORE ME BY THE REVENUE TO SHOW THAT ACTUAL TURNOVER OF T HE ASSESSEE WAS MORE THAN THE DISCLOSED TURNOVER. 13. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT ESTIMATION OF TURNOVER AT 3 TIMES OF THE CONSUMPTIO N OF GROCERIES/PROVISIONS WAS BASED ON THE ESTIMATION WH ICH WAS MADE IN EARLIER YEARS IN CASE OF THE ASSESSEE. HOWEVER, THE ITA NOS. 548, 549 & 550/ASR./2018 GRAND LILLY MOTELS 6 DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY MAT ERIAL BEFORE ME TO SHOW THAT ANY PENALTY U/S 271(1)(C) OF THE AC T WAS LEVIED IN EARLIER YEARS. 14. MOREOVER, I FIND THAT NO MATERIAL HAS BEEN BROU GHT ON RECORD TO SHOW THAT THERE WAS ACTUALLY ANY INACCURA CY IN ANY OF THE PARTICULARS OF INCOME FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME. 15. IN THE FACTS OF THE INSTANT CASE, PENALTY U/S 2 71(1)(C) OF THE ACT, IN MY CONSIDERED VIEW CANNOT BE LEVIED ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. I, THEREFORE, DELETE THE LEVY OF PENALTY OF RS.6,98,815/- U/S 271(1)(C) OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 16. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN I TA NOS. 548 & 550/ASR./2018 ARE DISMISSED AND THE APPEAL OF THE A SSESSEE IN ITA NO. 549/ASR./2018 IS ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 17 TH DAY OF MAY 2019 AT AMRITSAR) SD/- (N. S. SAINI) ACCOUNTANT MEMBER DATED: 17/05/2019 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR