M/s Awasthi Traders, Auraiya V. A.C.I.T.-(I), Agra

ITA 569/AGR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0343 (ITAT-AGRA)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 27-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: NAVIN GARGH
• Keywords: Peak credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 569/AGRA/2012 ASSTT. YEAR : 2007-08 M/S. AWASTHI TRADERS, A.C.I.T. 1, PHAPHUND ROAD, DIBIYAPUR AGRA. DIBIYAPUR, DISTT. AURAIYA. (PAN : AAIFA 6499 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARGH, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 06.03.2013 DATE OF PRONOUNCEMENT OF ORDER : 15.03.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-I, AGRA DATED 30.07.2012 FOR THE ASSESSMENT YEAR 2007- 08, CHALLENGING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE IT ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT IN THIS CASE, THE ASSESSMENT ORDER HAS BEEN COMPLETED U/S. 143(3) VIDE ORDER DATED 29.12.2 009 DETERMINING THE ASSESSED INCOME AT RS.18,32,570/- AS AGAINST RETURNED INCOME OF RS.12,28,660/-. THE ASSESSED INCOME OF THE ASSESSEE HAS BEEN ENHANCED A FTER REJECTING ITS BOOKS OF ITA NO. 569/AGRA/2012 2 ACCOUNT AS PER PROVISIONS OF SECTION 145(3) AND COM PUTED ITS ASSESSED INCOME AT THE PROFIT RATE OF 8.5%. THE ASSESSEE IS A CIVIL CO NTRACTOR AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT HAS BEEN FOUND THAT IT H AS NOT MAINTAINED ITS BOOKS OF ACCOUNT IN CORRECT MANNER AS PROVIDED U/S. 145(3) O F THE IT ACT BECAUSE THE AO DURING THE COURSE OF SCRUTINY FOUND SEVERAL DEFECTS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE WHICH ARE LIKE THAT SOME AMOUNT IS SHOWN IN THE ACCOUNT OF SHAI BUILDER RECEIVED IN CASH BUT NO SUC H ENTRY IS INCORPORATED IN THE CASH BOOK, AS THESE ARE BANKING TRANSACTION. FURTHE R, THE ASSESSEE HAS NOT MAINTAINED CONSUMPTION REGISTER / STOCK REGISTER AN D PURCHASE BILLS OF MATERIAL ARE NOT POSSESSED ALONG WITH VOUCHERS OF THE EXPENSES. THESE FACTS WERE CONFRONTED TO THE ASSESSEE THAT THE ASSESSEE DID NOT MAINTAIN PRO PER BOOKS OF ACCOUNT AND RECORD AND THE BOOKS HAVE BEEN REJECTED. THE AO APPLIED TH E PROFIT RATE OF 8.5% FOR THE PURPOSE OF MAKING ASSESSMENT TO WHICH THE ASSESSEE ALSO AGREED TO THE ADDITION. PENALTY PROCEEDINGS WERE ACCORDINGLY INITIATED FOR CONCEALMENT OF INCOME U/S. 271(1)(C) OF THE IT ACT. THE ASSESSEE SUBMITTED BEF ORE THE AO THAT INCOME IS ESTIMATED BECAUSE CERTAIN VOUCHERS OF THE EXPENSES WERE NOT AVAILABLE. THEREFORE, IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS. THE AO, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSES SEE BECAUSE THE CASES OF THE ASSESSEE WERE SCRUTINIZED IN EARLIER YEARS ALSO, TH EREFORE, THE ASSESSEE SHALL HAVE TO MAINTAIN PROPER BOOKS OF ACCOUNT AND VOUCHERS FOR V ERIFICATION OF THE AO. THE AO ITA NO. 569/AGRA/2012 3 WAS OF THE VIEW THAT SINCE PROPER RECORDS ARE NOT M AINTAINED, THEREFORE, THE ASSESSEE CONCEALED ITS TRUE INCOME AND PENALTY WAS IMPOSED. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT(A) AND SAME SUBMISSIONS WERE REITERATED AND CERTAIN DECISIONS WERE RELIED UPON I N RESPECT OF CONTENTION THAT ON ESTIMATE OF INCOME, PENALTY IS NOT JUSTIFIABLE. THE LD. CIT(A) ALSO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONSIDERING THE OBJECTIONS OF THE AO IN THE ASSESSMENT ORDER FOR REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE, CONFIRMED THE PENALTY ORDER AND FOUND THAT THERE IS NO VOLUNTARY SURRENDER OF ADDL. INCOME. THE APPEAL OF THE ASSESSEE WAS ACCORDINGLY DISMISSED. 3. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT PROFIT IS ULTI MATELY ESTIMATED AT 8.5% AND NO ADDITION IS MADE ON ACCOUNT OF DEFECT IN THE ACCOUN T OF SHAI BUILDERS AND IN THE CASE OF CONTRACTOR, CERTAIN VOUCHERS OF PURCHASE OF BALU, GITTI ETC. WERE NOT AVAILABLE, BUT ULTIMATELY RECEIPTS OF THE ASSESSEE HAVE BEEN ACCEPTED, ON WHICH INCOME IS ENHANCED BY APPLYING THE ENHANCED PROFIT RATE. THEREFORE, IT IS NOT THE CASE OF LEVY OF PENALTY. HE HAS RELIED UPON CERTAIN DECISIONS OF ITAT, AGRA BENCH IN RESPECT OF HIS CONTENTION AND ALSO RELIED UPON T HE DECISION OF HONBLE CHATTISGARH HIGH COURT IN THE CASE OF CIT VS. VIJAY KUMAR JAIN, 222 TAXATION 191, IN WHICH THE ISSUE OF PENALTY U/S. 271(1)(C) WAS CO NSIDERED. THE ASSESSEE HAS ITA NO. 569/AGRA/2012 4 SHOWN PROFIT AT 6.36% OF GROSS RECEIPTS. THE AO, HO WEVER, APPLIED PROFIT RATE OF 10%. PARTICULARS OF GROSS RECEIPTS WERE NOT FOUND I NACCURATE NOR ASSESSEE CONCEALED ANY INCOME. IT WAS, THEREFORE, HELD THAT THE PENALTY IS NOT LEVIABLE U/S. 271(1)(C) OF THE IT ACT AND DEPARTMENTAL APPEAL HAS BEEN DISMISSED. 3.1 THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED COP Y OF THE PROFIT AND LOSS ACCOUNT AND SUBMITTED THAT THE ASSESSEE HAS SHOWN NET PROFI T RATE OF 2.72% AND AFTER EXCLUDING DEDUCTION ALLOWED BY THE ASSESSEE, NET PR OFIT RATE WOULD COME TO 4.17%. THEREFORE, THERE IS NO MUCH DIFFERENCE IN THE PROFI T RATE EVEN AFTER ADDITION MADE BY THE AO FOR ENHANCING THE PROFIT RATE. ON THE OTH ER HAND, THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND RELIED UPON THE DECISION OF DELHI HIGH COURT IN THE CASE OF POLO SINGH AND CO. VS. CIT, 98 ITR 5 64, IN WHICH IT WAS HELD THAT THE FINDING GIVEN THAT CASH CREDITS WERE NOT GENUIN E AND REPRESENTED CONCEALED INCOME IS A FINDING OF FACT AND THE APPEAL OF THE A SSESSEE WAS DISMISSED. HE HAS ALSO RELIED UPON THE DECISION OF HONBLE MADRAS HIG H COURT IN THE CASE OF CIT VS. KRISHNA & CO., 120 ITR 144, IN WHICH THE ITO FOUND THAT TRANSACTIONS SHOWN BY THE ASSESSEE OF BORROWINGS AND REPAYMENTS WERE BOGU S. THE ASSESSEE AGREED TO THE ADDITION OF PEAK CREDIT. LEVY OF PENALTY WAS FOUND JUSTIFIED. ITA NO. 569/AGRA/2012 5 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. ITAT, AGRA BENCH RECENTLY IN THE CASE OF LATE SMT. SADHAN A SHARMA VS. DCIT AND SHRI MAHESH CHAND SHARMA VS. DCIT IN ITA NO. 513 AND 516 /AGRA/2012 VIDE ORDER DATED 22.02.2013 HELD AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD. THE ASSESSEE CLAIMED AGRICULTURAL INCOME OF RS.3,00,000/- IN THE ASSESSMENT YEAR UNDER APPEAL, BUT THE AO TREATE D THE SAME AS INCOME FROM OTHER SOURCES. THE LD. CIT(A) ON QUANTU M ACCEPTED THE CLAIM OF THE ASSESSEE OF AGRICULTURAL INCOME AT RS. 2,00,000/- AND CONFIRMED THE ADDITION OF RS.1,00,000/-. THE LD. CI T(A) IN THE PENALTY ORDER FOUND THAT THE AGRICULTURAL INCOME DECLARED B Y THE ASSESSEE IS ALSO BASED ON ESTIMATE BASIS. THEREFORE, IT IS ADMI TTED FACT THAT IT WAS AN ESTIMATE OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AGAINST WHICH THE LD. CIT(A) ALSO ESTIMATED THE AGRICULTURA L INCOME AND CONFIRMED THE ADDITION OF RS.1,00,000/-. THE ASSESS EE HAS DECLARED LAND OWNED BY HER IN EARLIER YEAR AS WELL AS EARNIN G OF AGRICULTURAL INCOME AND DECLARED THE SAME FACTS ALSO IN ASSESSME NT UNDER APPEAL AS WELL. THEREFORE, THE ASSESSEE HAS DECLARED COMPL ETE FACTS BEFORE THE AUTHORITIES BELOW AND MERELY BECAUSE THE PART OF TH E AGRICULTURAL INCOME COULD NOT BE SUPPORTED THROUGH EVIDENCE WOUL D NOT LEAD TO PRESUMPTION THAT THE ASSESSEE HAS CONCEALED THE PAR TICULARS OF INCOME OR FILED INACCURATE PARTICULARS OF INCOME. HONBLE SUPREME COURT IN THE CASE HINDUSTAN STEEL LTD. VS. STATE OF ORISSA, 83 ITR 26 HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF QUASI CRIMINAL PROCEEDI NGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CO NDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT WAS LAWF UL TO DO SO. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASES OF DHILLON RICE MILLS, 256 ITR 447, CIT VS. RAVEL SINGH & CO., 254 ITR 191 AND HARI GOPAL SINGH VS. CIT, 258 ITR 85 HAVE HELD THAT THE ADDITIONS MADE ON THE BASIS OF ESTIMATE AND NOT ON CONCRETE E VIDENCE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF ITA NO. 569/AGRA/2012 6 INCOME, THEREFORE, NO PENALTY IS LEVIABLE. CONSIDER ING THE FACTS OF THE CASE AS NOTED ABOVE AND HISTORY OF THE ASSESSEE IN WHICH THE ASSESSEE CLAIMED AGRICULTURAL INCOME AND STAND OF THE ASSESS EE HAS BEEN ACCEPTED IN EARLIER YEAR ALSO AND IN ASSESSMENT YEA R UNDER APPEAL SUBSTANTIAL CLAIM OF AGRICULTURAL INCOME HAS BEEN A CCEPTED ON ESTIMATE, WOULD CLEARLY PROVE THAT IT IS NOT A FIT CASE OF LEVY OF PENALTY. WE ACCORDING, SET SIDE THE ORDERS OF THE AUTHORITIE S BELOW AND CANCEL THE PENALTY IN THE CASE OF SMT. SADHANA SHARMA. 6. THE FACTS ARE SAME IN THE CASE OF OTHER ASSESSEE , SHRI MAHESH CHAND SHARMA, IN WHICH ALSO SIMILARLY, AGRICULTURAL INCOME WAS REDUCED FROM RS.3,00,000/- TO RS.1,00,000/-. THE FA CTS ARE SAME AS HAVE BEEN CONSIDERED IN THE CASE OF SMT. SADHANA SH ARMA (SUPRA). FOLLOWING THE REASONS FOR DECISION IN THE CASE OF S MT. SADHANA SHARMA (SUPRA), WE SET ASIDE THE ORDERS OF THE AUTH ORITIES BELOW AND CANCEL THE PENALTY. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES ARE ALLOWED. HONBLE CHATTISGARH HIGH COURT ALSO IN THE CASE OF CIT VS. VIJAY KUMAR JAIN (SUPRA) ON ESTIMATE OF INCOME DID NOT FIND IT PROPE R FOR LEVY OF PENALTY. THEREFORE, CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF A BOVE DECISION, WE ARE OF THE VIEW THAT THE PENALTY IS NOT LEVIABLE IN THIS CASE. THE ASSESSEE HAS FILED RETURN OF INCOME AT RS.12,28,664/- AND ACCORDING TO THE ASSESSEE NET PROFIT RATE DISCLOSED WAS 2.72% AND EVEN AFTER THE ADDITION MADE AFTER GIVING DEDUC TION OF THE EXPENSES BY THE AO, THE NET PROFIT RATE WOULD COME TO 4.17%. THE TURNOV ER OF THE ASSESSEE HAS BEEN ACCEPTED BY THE AO IN THE ASSESSMENT ORDER AND ONLY THE PROFIT RATE HAS BEEN ENHANCED FOR THE PURPOSE OF MAKING ADDITION, WHICH IS THE BASIS OF LEVY OF PENALTY. ONE OF THE DEFECTS FOUND IN THE BOOKS OF ACCOUNT WA S CASH RECEIVED IN THE ACCOUNT ITA NO. 569/AGRA/2012 7 OF SHAI BUILDERS, WHICH IS NOT RECORDED IN THE CASH BOOK AS THESE WERE BANK TRANSACTIONS, BUT THE AO DID NOT MAKE ANY ADDITION ON THIS ISSUE U/S. 68 OF THE IT ACT. THE REST OF THE DEFECTS ARE IN THE NATURE OF N ON-MAINTENANCE OF STOCK REGISTER, CONSUMPTION REGISTER, PURCHASE BILLS OF BALU, GITTI ETC. AND VOUCHERS FOR EXPENSES. THE MAJOR DEFECT IN THE STOCK REGISTER AND PURCHASE BILL ETC. ARE CONNECTED WITH THE TRADING ACCOUNT OF THE ASSESSEE BUT THE AO DID NOT DISPUTE THE TOTAL TURNOVER OF THE ASSESSEE FOR THE PURPOSE OF MAKING ADDITION. THUS, THE MAJOR REASONS FOR REJECTION OF BOOKS OF ACCOUNT WERE ULTIMATELY CONSIDERED BY T HE AO FAVOURABLY IN FAVOUR OF THE ASSESSEE BY NOT DISPUTING THE TOTAL TURNOVER OF THE ASSESSEE. THUS, IN OUR VIEW, THE ASSESSEE HAS DISCLOSED ALL THE PARTICULARS OF I NCOME BEFORE THE AO AT THE ASSESSMENT STAGE. NO PARTICULARS OF INCOME HAVE BEE N CONCEALED. IT WAS CASE OF ENHANCEMENT OF THE GROSS PROFIT RATE ONLY AND THAT TOO ON ESTIMATE BASIS AND THERE WAS NO SUBSTANTIAL DIFFERENCE IN THE NET PROFIT RAT E SHOWN BY THE ASSESSEE AND APPLIED BY THE AO. THEREFORE, IN OUR VIEW, THE ADDI TION MADE ON ESTIMATE BASIS SHOULD NOT BE CONSIDERED FOR THE PURPOSE OF LEVY OF PENALTY. IT IS WELL SETTLED LAW THAT PENALTY IS NOT AUTOMATIC IN EACH AND EVERY CAS E, AS IT DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. THEREFORE, THE AO S HOULD HAVE APPLIED DISCRETION IN THIS CASE IN FAVOUR OF THE ASSESSEE BY NOT LEVYI NG PENALTY U/S. 271(1)(C) OF THE IT ACT. IT IS, THEREFORE, NOT A FIT CASE OF CONCEALMEN T OF INCOME OR FILING INACCURATE ITA NO. 569/AGRA/2012 8 PARTICULARS OF INCOME. WE ACCORDINGLY, SET ASIDE TH E ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY