JANTA CONSTRUCTION CO., Jaipur V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, Jaipur

ITA 578/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2469 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 578/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. M/S. JANTA CONSTRUCTION CO., E-47,ROAD NO.2B, VKI AREA, JAIPUR. CUKE VS. THE ACIT, CIRCLE-4, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABFJ 0003 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MUKESH KHANDELWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27.08.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 29/08/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12 TH MARCH, 2018 OF LD. CIT (A)-2, JAIPUR ARISING FROM PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE IT ACT FOR THE ASSESSMENT YEAR 20 09-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON F ACTS IN SUSTAINING THE PENALTY OF RS. 4,70,269/- LEVIED BY THE LD. AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THAT THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, AL TER, DELETE ANY OF THE GROUNDS OF APPEAL BEFORE THE HEARING. 2 ITA NO. 578/JP/2018 M/S. JANTA CONSTRUCTION CO., JAIPUR. 2. THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED I N THE BUSINESS OF CIVIL CONTRACT WORK FOR VARIOUS GOVERNMENT DEPARTMENTS. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE IT ACT, THE AO INTER AL IA MADE ADDITION OF RS. 14,25,059/- ON ACCOUNT OF SUPPRESSION OF CLOSING WO RK IN PROGRESS DECLARED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT. THE SAID AD DITION WAS CONFIRMED UPTO THE STAGE OF TRIBUNAL IN THE QUANTUM APPEAL AND HENCE A TTAINED THE FINALITY. THE AO IN THE MEANTIME INITIATED THE PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) AND LEVIED THE PENALTY OF RS. 4,70,269/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE AO HAS MADE THE ADDITION ON THE BASIS OF THE DETAILS COLLECTED FROM THE GOVERNMENT DEPARTMENTS ABOUT THE WORK ORDERS, DATE OF INSPECTION AND PAYME NTS MADE BY THEM FROM TIME TO TIME TO THE ASSESSEE. THUS THE AO FOUND THAT THERE IS UNDERSTATEMENT OF CLOSING WORK IN PROGRESS BY THE ASSESSEE TO THE EXTENT OF R S. 14,25,059/-. THE LD. A/R HAS SUBMITTED THAT THE AO HAS MADE THE ADDITION BY CONS IDERING THE INFORMATION OBTAINED FROM VARIOUS DEPARTMENTS AS PER WHICH THE TOTAL RECEIPTS FROM THE CONTRACT WORK WAS CONSIDERED AT RS. 4,26,84,832/- WHEREAS TH E ASSESSEE HAD DECLARED THE TOTAL RECEIPTS AT RS. 4,61,66,265/-. THEREFORE, TH E ADDITION MADE BY THE AO IS NOT BASED ON THE CORRECT INFORMATION RECEIVED BY THE AO FROM THE DEPARTMENTS AS THERE IS A DIFFERENCE OF ABOUT RS. 35 LACS IN THE TOTAL C ONTRACT RECEIPTS. ONCE THE ASSESSEE HAS DECLARED THE CONTRACT RECEIPTS WHICH IS MORE TH AN THE RECEIPTS AS PER THE INFORMATION RECEIVED BY THE AO, THEN THE ADDITION O F RS. 14,25,059/- ON ACCOUNT OF 3 ITA NO. 578/JP/2018 M/S. JANTA CONSTRUCTION CO., JAIPUR. SUPPRESSION OF CLOSING WORK IN PROGRESS WOULD NOT A MOUNT TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. TH US THE LD. A/R HAS SUBMITTED THAT ONCE THE ASSESSEE HAD ALREADY DECLARED THE RECEIPTS WHICH IS MORE THAN THE INFORMATION PROVIDED BY THE DEPARTMENTS ABOUT THE T OTAL CONTRACT RECEIPTS, THEN THE ADDITION THOUGH SUSTAINED AND ATTAINED THE FINALITY WOULD NOT ATTRACT THE PENAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT. HE HAS FURTHER CONTENDED THAT THE AO HAS NOT CONFRONTED WITH THE INFORMATION OBTAINED FROM T HE DEPARTMENTS AND MADE THE ADDITION UNILATERALLY. FURTHER, THE ADDITION MADE IN THE ASSESSMENT PROCEEDINGS WOULD NOT IPSO FACTO ATTRACT THE PENALTY UNDER SECT ION 271(1)(C) WITHOUT CONSIDERING THE EXPLANATION OF THE ASSESSEE. THE LD. A/R HAS P OINTED OUT THAT THE SAID ADDITION MADE BY THE AO IN THE CLOSING WORK IN PROGRESS WAS NOT CONSIDERED AS AN OPENING STOCK OF THE SUBSEQUENT YEAR AND, THEREFORE, THE AD DITION SO MADE FOR THE YEAR UNDER CONSIDERATION OTHERWISE WOULD NOT HAVE ANY RE VENUE EFFECT WHEN IT WILL BE PART OF THE OPENING BALANCE OF WORK IN PROGRESS. T HE LD. A/R HAS SUBMITTED THAT THE ADDITION MADE BY THE AO IS BASED ON THE ESTIMATION AS THE DETAILS PROVIDED BY THE DEPARTMENTS ARE NOT THE COMPLETE DETAILS. HE HAS T HUS PLEADED THAT THE ADDITION BE DELETED. 3.1. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ADDITION MADE BY THE L D. CIT (A) ON ACCOUNT OF SUPPRESSION OF CLOSING WORK IN PROGRESS HAS BEEN CO NFIRMED BY THE LD. CIT (A) AS WELL AS BY THIS TRIBUNAL AND, THEREFORE, IT IS A CL EAR CASE OF CONCEALMENT OF PARTICULARS OF INCOME AS THE SAID CLOSING WORK IN PROGRESS HAS NOT BEEN SHOWN IN THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE. THE AO HAS DETECTED THIS SUPPRESSION OF CLOSING WORK 4 ITA NO. 578/JP/2018 M/S. JANTA CONSTRUCTION CO., JAIPUR. IN PROGRESS BY CONDUCTING AN ENQUIRY FROM THE CONCE RNED DEPARTMENTS AND, THEREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY UND ER SECTION 271(1)(C). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ADDITION MADE BY THE AO OF RS. 14,25,059/- ON ACCOUNT OF SUPPRESSION OF CLOSING WORK IN PROGRESS HAS ATTAINED THE FINALITY. HOWEVER, THE SAID ADDITION WAS MADE BY THE AO ON TH E BASIS OF DETAILS OBTAINED FROM THE DEPARTMENTS FOR WHICH THE ASSESSEE HAS CAR RIED OUT THE WORK CONTRACT AND RECEIVED THE PAYMENTS. AS PER THE DETAILS GIVEN BY THE AO, THE TOTAL RECEIPTS DURING THE YEAR WAS SHOWN AT RS. 4,26,84,832/- WHEREAS THE ASSESSEE DECLARED THE TOTAL RECEIPTS IN ITS BOOKS OF ACCOUNTS AT RS. 4,61,66,26 5/-. THE AO AFTER ANALYZING THE PURCHASES MADE BY THE ASSESSEE DURING THE MONTH OF MARCH AND MEASUREMENT OF THE WORK BY THE DEPARTMENT ON 8 TH MARCH, 2009 HAS COME TO THE CONCLUSION THAT THE CLOSING STOCK OF THE ASSESSEE SHOULD HAVE BEEN AT R S. 24,03,399/- AS AGAINST THE DECLARED CLOSING STOCK OF RS. 9,78,340/-. THEREFOR E, THE DIFFERENCE OF RS. 14,25,059/- WAS ADDED AS SUPPRESSION OF CLOSING WOR K IN PROGRESS. CONSIDERING THESE FACTS ALONG WITH THE TOTAL RECEIPTS DECLARED BY THE ASSESSEE WHICH IS MORE THAN RS. 4.61 CRORES AS COMPARED TO THE TOTAL RECEIPTS A S PER THE INFORMATION RECEIVED FROM THE DEPARTMENTS AT RS. 4,26,84,832/-, THE DIFF ERENCE AMOUNT CAN BE PART OF THE DECLARED RECEIPTS OF THE ASSESSEE. HOWEVER, WITHOU T GOING INTO THE SAID ISSUE, WHEN IT IS NOT DISPUTED THAT THE ASSESSEE HAS NOT CLAIME D THE SAID AMOUNT OF RS. 14,25,059/- AS PART OF THE OPENING BALANCE OF WORK IN PROGRESS OF SUBSEQUENT YEAR THEN THE ADDITION MADE BY THE AO FOR THE YEAR UNDER CONSIDERATION WOULD NOT IPSO FACTO AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOM E. THE EXPLANATION OF THE 5 ITA NO. 578/JP/2018 M/S. JANTA CONSTRUCTION CO., JAIPUR. ASSESSEE THAT THERE MAY BE A DISCREPANCY IN THE INF ORMATION OBTAINED BY THE AO AND ANALYZING THE SAME WHEN THE ASSESSEE HAS ALREADY DE CLARED THE TOTAL RECEIPTS MORE THAN THE TOTAL RECEIPTS AS PER THE INFORMATION FURN ISHED BY THE DEPARTMENTS, THEN IN CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE, WE FIND THAT ALL THESE EXPLANATIONS OF THE ASSESSEE WOULD CONSTITUTE A BONAFIDE EXPLANATION THOUGH THE SAME MAY NOT BE ACCEPTED FOR THE PURPOSE OF ADD ITION IN QUANTUM PROCEEDINGS. HENCE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, W E DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 29/08/ 2018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 29/08/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. JANTA CONSTRUCTION CO., JAIP UR. 2. THE RESPONDENT THE ACIT, CIRCLE-4, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 578/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 6 ITA NO. 578/JP/2018 M/S. JANTA CONSTRUCTION CO., JAIPUR.