Club Sales, Baroda V. The Income tax Officer,Ward-5(2), Baroda

ITA 551/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76843 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-04-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 05-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M. & SHRI ANIL CHATURVE DI, A.M.) I.T. A. NO. 551 /AHD/2012 (ASSESSMENT YEAR: 2003-04) CLUB SALES NAVBHARIA MAHOLLA, B/H. CITY POINT, MAGAR BAZAR, BARODA V/S THE ITO, WARD-5 (2), BARODA (APPELLANT) (RESPONDENT) PAN: AABFC 5915D APPELLANT BY : SHRI A.R. SHAH A.R. RESPONDENT BY : SHRI K.C. MATHEWS, SR. D.R. ( )/ ORDER DATE OF HEARING :15-04-2014 DATE OF PRONOUNCEMENT :19 -06-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-V, BARODA DATED 26.12.2011 FOR A.Y. 2003-04. 2. THE FACTS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A FIRM STATED TO BE ENGAGED IN THE B USINESS OF TRADING OF FOOTWEAR ON WHOLESALE BASIS. ASSESSEE FILED ITS RETURN OF IN COME FOR AY 03-04 ON 30.11.2003 DECLARING TOTAL INCOME OF RS 27,053/-. T HEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 6.3.2006 AND THE TOTAL INCOME WAS DETERMINED AT RS 21,01,460/- BY MAKING VARIOUS ADDI TION, THE MAIN ADDITION BEING OF RS 20,02,993/- ON ACCOUNT OF BOGUS PURCHAS ES I.E. UNEXPLAINED EXPENDITURE. AGAINST THE ADDITION MADE, ASSESSEE PR EFERRED APPEAL BEFORE ITA NO 551/AHD/201 2 . A.Y. 2003-0 4 2 CIT(A). CIT(A) VIDE ORDER DATED 22.12.2008 GRANTED RELIEF TO THE EXTENT OF RS 18,42,753/- AND CONFIRMED THE BALANCE ADDITION OF R S 1,60,240/-. ON THE ADDITION THAT WAS CONFIRMED BY CIT(A), AO VIDE ORDE R DATED 26.3.2010 LEVIED PENALTY OF RS 60,000/- U/S 271(1) OF THE ACT. AGGR IEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) V IDE ORDER DATED 26.12.2011 UPHELD THE PENALTY LEVIED BY A.O. AGGRIE VED BY THE ORDER OF CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. THE CIT(A) HAS GROSSLY ERRED IN LAW AND ON THE FACT S OF THE CASE IN CONFIRMING PENALTY U/S. 271(1)(C) AMOUNTING TO RS. 60,000/-. 4. BEFORE US, LD AR SUBMITTED THAT AO HAD MADE ADDI TION OF RS 20,02,993/- ON ACCOUNT OF BOGUS PURCHASE. THE ADDITION MADE BY THE AO WAS SUBSTANTIALLY REDUCED BY CIT(A) AND THE ADDITION ONLY TO THE EXTE NT OF RS 1,60,240/- WAS SUSTAINED AND THAT TOO ON ESTIMATED BASIS. HE THERE FORE SUBMITTED THAT SINCE THE ADDITIONS HAVE BEEN MADE ON ESTIMATED BASIS, NO PENALTY U/S. 271(1)(C) IS LEVIABLE. HE ALSO PLACED RELIANCE ON VARIOUS DECISI ONS. THE ID. DR ON THE OTHER HAND STRONGLY SUPPORTED THE ORDER OF AO AND C IT(A) AND SUBMITTED THAT THE PRESENT CASE IS NOT OF ADDITION ON ESTIMATED BA SIS. THE PURCHASES OF THE ASSESSEE WAS TREATED AS BOGUS AND INSTEAD OF THE EN TIRE PURCHASES THE ADDITION WAS CONFIRMED ONLY FOR A PART AMOUNT. HE F URTHER SUBMITTED THAT EVEN AFTER ADDITION OF BOGUS PURCHASES HAVE NOT BEEN DEL ETED. HE THUS SUBMITTED THAT THE PENALTY WAS RIGHTLY LEVIED BY ASSESSING OF FICER AND SUBMITTED THAT THE ORDER OF A.O AND CIT(A) BE UPHELD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE AO HAD MADE ADDITION OF RS 20,02,9 93/- ON ACCOUNT OF BOGUS PURCHASE BUT THE ADDITION WAS SUBSTANTIALLY R EDUCED BY CIT(A) AND THE ADDITION ONLY TO THE EXTENT OF RS 1,60,240/- WAS SU STAINED AND THAT TOO WAS SUSTAINED ON ESTIMATED BASIS. IT IS A SETTLED LAW T HAT WHEN THE ADDITION IS MADE ON THE ESTIMATE BASIS, NO PENALTY IS SUSTAINAB LE. FURTHER IT IS AN ITA NO 551/AHD/201 2 . A.Y. 2003-0 4 3 ADMITTED PROPOSITION IN LAW THAT THE FINDING IN THE QUANTUM PROCEEDING IS NOT A FACTOR FOR DETERMINING THE QUESTION FOR THE PURPOSE OF IMPOSING PENALTY. QUESTION OF PENALTY HAS TO BE DECIDED INDEPENDENT O F SUCH FINDING. IT IS WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFIC ATION FOR ADDITION MADE IN THE ASSESSMENT CASE OF THE ASSESSEE IS DIFFERENT FROM T HE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURA TE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALL Y BE MADE IN THE ASSESSMENT PROCEEDING ON THE PREPONDERANCE OF PROBA BILITIES, BUT NO PENALTY COULD BE IMPOSED U/S 271(L)(C) OF THE ACT ON THE PR EPONDERANCE OF PROBABILITIES. IN VIEW OF THE AFORESAID FACTS WE AR E OF THE VIEW THAT NO PENALTY IS LEVIABLE IN THE PRESENT CASE AND THEREFORE DIREC T ITS DELETION. IN THE RESULT THIS GROUND OF ASSESSEE IS ALLOWED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 19 - 06 - 2014. SD/- SD/- (D.K. TYAGI ) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD