Ms. Mohd. Khalid & Co., Kanpur V. Income Tax Officer (3)2, Kanpur

ITA 556/LKW/2014

• Counselvise Citation: 55623714 RSA 2014
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-10-2014
• Assessment Year: 1992-1993
• Appeal Filed On: 30-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: O N PATHAK
• Keywords: Business income; Bonafide belief

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.556/LKW/2014 ASSESSMENT YEAR:1992 - 93 INCOME TAX OFFICER - 3(2), KANPUR. VS M/S MOHD. KHALID & COMPANY, 94/120, FARRASHKHANA, KANPUR. PAN:AALFM8033E (RESPONDENT) (APPELLANT) NONE APPELLANT BY SHRI O. N. PATHAK, D.R. RESPONDENT BY 13/10/2014 DATE OF HEARING 10 /12/2014 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, KANPUR DATED 28/03/2014 FOR THE ASSESSMENT YEAR 1992 - 1993. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) - II, KANPUR HAS BEEN WRONG IN LAW ON FACTS IN SUSTAINING THE PENALTY OF RS.1,33,000/ - IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THAT INCOME ADOPTED U/S 143 (3) OF THE INCOME TAX ACT 1961 BEING BASED WHOLLY ON ESTIMATE BASIS, THE LEARNED COM MISSIONER OF INCOME TAX (A) ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF ITS INCOME OR HAD FURNISHED INACCURATE PARTICULARS THEREOF WITHIN THE MEANING OF SECTION 271 (1) (C ) OF THE INCOME TAX ACT ,1961. 3. THAT THE LEARNED COMMISSION OF INCOME TAX (A) - II, KANPUR FAILED TO APPRECIATE THE CORRECT FACTS RELATING TO ASSESSMENT YEAR 1986 - 87 AND DRAWINGS INFERENCE FORM SUCH INACCURATE 2 FACTS RENDERS HIS ORDER U/S 271 (1) (C ) AS BEING VITIATED IN LAW BEING BASED ON IRRE LEVANT CONSIDERATIONS. 4. THAT THE LEARNED COMMISSION OF INCOME TAX (A) - II, KANPUR FAILED ON FACTS AND IN LAW IN ESTABLISHING ANY MENS - ERA ON PART OF THE ASSESSEE - THUS RENDERING THE PENALTY ORDER 271 (1) (C) ON 7/05/2007 OF INCOME TAX ACT 1961 WITHOUT ANY LEGS TO STAND UPON. 5. THAT THE ORDER PASSED ON 7/05/2007 U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961 IMPOSING A PENALTY OF RS.1,33,000/ - BEING BAD ON FACTS AND ERRONEOUS IN LAW IS LIABLE TO CANCELLED. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE A PPOINTED DATE OF HEARING INSPITE OF NOTICE AND HENCE, WE PROCEED TO DECIDE THIS APPEAL OF THE ASSESSEE EX - PARTE QUA THE ASSESSEE. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARN ED D.R. OF THE REVENUE, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AGAINST THE ASSESSEE ON THE BASIS THAT THE ASSESSING OFFICER HAS PROVED BEYOND DOUBT THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME FOR RS.2,36, 278/ - . HE HAS ALSO GIVEN A FINDING THAT IT COULD NOT BE ESTABLISHED BY THE ASSESSEE THAT THERE WAS ANY BONAFIDE BELIEF BY THE ASSESSEE AND THEREFORE, THERE WAS NO CONCEALMENT OF INCOME. THE CIT(A) HAS REFERRED TO VARIOUS JUDGMENTS IN HIS ORDER AND DECIDED THE ISSUE BY FOLLOWING THESE JUDGMENTS BUT IN OUR CONSIDERED OPINION, IN THE FACTS OF THE PRESENT CASE, IT CANNOT BE SAID THAT THERE IS CONCEALMENT OF INCOME BECAUSE IN THE PRESENT CASE, THE RETURN OF INCOME WAS FILED BY THE ASSESSEE BY SHOWING AN INCOME OF RS.2,42,811/ - BUT THE ASSESSING OFFICER APPLIED NET PROFIT RATE OF 10% AND ASSESSED THE INCOME OF THE ASSESSEE AT RS.10,64,243/ - ON TOTAL SALES OF RS.1,06,43,426/ - . WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) IN QUANTUM PROCEEDINGS , HE DIRECTED THE 3 A.O. TO APPLY NET PROFIT OF 4.5% AS AGAINST 10%. WHEN BOTH PARTIES CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL SET ASIDE THE ORDER OF CIT(A) AND RESTORED THE MATTER BACK TO ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE APPLICABILITY OF NET PROFIT RATE IN THIS CASE AS TAKEN IN THE CASE OF M/S SHARIQ HIDE SUPPLIERS FOR ASSESSMENT YEAR 86 - 87. WHILE COMPLETING THE ASSESSMENT AFRESH, AS DIRECTED BY THE T RIBUNAL, IT IS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE WAS NOT ABLE TO PROVE THAT THE NET PROFIT RATE OF 2.54% WAS ACCEPTED BY THE DEPARTMENT IN THE CASE OF SHAFIQ HIDE SUPPLIERS FOR ASSESSMENT YEAR 86 - 87. BY MAKING THESE OBSERVATIONS, THE ASSESS ING OFFICER APPLIED NET PROFIT RATE OF 4.5% AND ASSESSED THE INCOME OF THE ASSESSEE AT RS.4,79,089/ - AND FOR THIS ADDITION , HE INITIATED PENALTY PROCEEDINGS AND ULTIMATELY IMPOSED THE PENALTY OF RS.1,33,000/ - . IN THE FACTS OF THE PRESENT CASE, AS DISCUSSE D ABOVE, WE ARE OF THE OPINION THAT THE ADDITION WAS MADE ON ESTIMATED BASIS FIRST @10% AND THEN 4.5% AS PER THE DIRECTION OF CIT(A), AND HENCE, IT CANNOT BE SAID THAT ANY CONCEALMENT OF INCOME HAS BEEN ESTABLISHED BY THE ASSESSING OFFICER AND HENCE, IN OU R CONSIDERED OPINION , THE PENALTY IS NOT JUSTIFIED. WE, THEREFORE, DELETE THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 /12/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR