NARAYAN SINGH J. DEORA, MUMBAI V. ACIT CIR 2, THANE

ITA 5895/MUM/2010

• Counselvise Citation: 589519914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 26-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O A MAO
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE SHRI R.S. SYAL (A.M.) AND SHRI D.K.AGARWAL (J M) ITA NO.5895/MUM/2010 (ASSESSMENT YEAR: 2001-02) SHRI NARAYANSINGH J. DEORA 5C, BOMBAY MARKET, STATION ROAD, BHAYANDER (WEST), THANE-401101 PAN:AEFPD1596M ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-R, THANE. APPELLANT V/S RESPONDENT DATE OF HEARING : 5.12.2011 DATE OF PRONOUNCEMENT : 9.12.2011 APPELLANT BY : NONE (WRITTEN SUBMI SSIONS) RESPONDENT BY : SHRI O.A.MAO O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26.3.2010 PASSED BY THE LD.CIT(A), THANE FOR THE ASSESSMENT YEAR 2001-02. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR AND PROPRIETOR OF ASHAPURA CONSTRUCTION COMPANY. IT FILED RETURN OF INCOME FOR AY.2001-02 ON 30.10.2001 DECLARING TOTAL INCOME OF RS.5,09,819/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNTS WHICH WERE NOT COMPLETE AND NOT ITA NO.5895/MUM/2010 (ASSESSMENT YEAR: 2001-02) 2 SUPPORTED BY NECESSARY BILL/VOUCHERS, ETC. IN VIEW OF THE INCOMPLETE BOOKS OF ACCOUNT THE AO REJECTED THE BOOKS U/S 145(2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE AO PROCEEDED TO ESTIMATE THE PROFIT OF THE BUSINESS OF THE ASSESSEE @ 12% OF THE TOTAL RECEIPTS. THE ASSESSEE AGITATED THE ABOVE ESTIMATION OF THE PROFIT OF BUSINESS @ 12% BEFORE T HE LD.CIT(A), WHO REDUCED THE ESTIMATED PROFITS OF THE ASSESSEE FROM 12% TO 5%. IN APPEAL, BEFORE THE ITAT , BY THE REVENUE, THE ESTIMATE OF THE PROFITS OF THE ASSESSEE WAS INCREASED TO 8% OF THE GROSS RECEIPTS ON THE BASIS OF SECTION 44AD OF THE INCOME TAX ACT. AFTER RECEIVING THE ORDER OF THE ITAT, MUMBAI, A SH OW CAUSE U/S. 274 READ WITH SECTION 271(1)(C) WAS ISSU ED BY THE AO TO THE ASSESSEE AND IN RESPONSE TO THAT T HE ASSESSEE VIDE ITS LETTER DATED 25.06.2007 INTERALIA STATED THAT ALL THE FACTS OF THE INCOME AND EXPENDI TURE WERE DISCLOSED BY THE ASSESSEE AND ALL PARTICULAR O F INCOME WAS ALSO FURNISHED WHILE FILING OF THE RETUR N AND DURING THE COURSE OF ASSESSMENT. THEREFORE THER E WAS NO CONCEALMENT ON PART OF THE ASSESSEE FALLING UNDER THE AMBIT OF SECTION 271(1)(C) OF THE ACT AN D HENCE IT WAS REQUESTED TO DROP THE PENALTY ITA NO.5895/MUM/2010 (ASSESSMENT YEAR: 2001-02) 3 PROCEEDINGS. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES EXPLANATION, ON THE GROUND THAT ASSESSEE HAD PRODUCED FABRICATED DOCUMENTS. ACCORDING TO AO, PRODUCTION OF THE FABRICATED DOCUMENTS CLEARLY SHOW S THAT ASSESSEE HAD INTENTION TO CONCEAL THE PARTICU LARS OF INCOME AND THEREFORE THE ASSESSEE IS LIABLE FOR PENALTY ACTION U/S 271(1)(C) OF THE ACT AND ACCORDINGLY, HE IMPOSED THE PENALTY OF RS. 3,24,078 /- VIDE ORDER DATED 8.8.2007 PASSED U/S 271(1)(C) OF T HE ACT. 3. ON APPEAL BEFORE THE LD. CIT(A), WHILE AGREEING WITH THE VIEWS OF THE AO CONFIRMED THE PENALTY IMPOSED BY THE AO. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF PENALTY IMPOSED BY T HE AO U/S 271(1)(C) OF THE ACT. 5. THE ASSESSEE IN HIS WRITTEN STATEMENT DATED 25.11.2011 AFTER NARRATING THE FACTS OF THE CASE INTERALIA SUBMITTED THAT IN THE ABSENCE OF REQUIRED INFORMATION, THE AO WAS WITHIN HIS RIGHTS TO ESTIMA TE ITA NO.5895/MUM/2010 (ASSESSMENT YEAR: 2001-02) 4 THE PROFITS BUT THERE IS NO PARTICULARS SUGGESTING ANY SPECIFIC CONCEALMENT OF INCOME AND HENCE LEVY OF PENALTY MERELY ON THE BASIS OF ESTIMATED INCOME AS CONCEALED INCOME DESERVES TO BE DELETED. IN THE ALTERNATIVE, THE ASSESSEE SUBMITS THAT THE PENALTY MAY BE RESTRICTED TO THE EXTENT OF INCOME AT THE RATE O F 5% OF THE TOTAL CONTRACT RECEIPT. 6. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDE R OF THE AO AND LD. CIT(A). 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE A O AFTER REJECTING THE BOOKS OF ACCOUNTS ESTIMATED THE ASSESSEES INCOME BY APPLYING 12% OF THE TOTAL CONTRACT RECEIPT OF RS.1,98,75,956/- AND ESTIMATED THE ASSESSEES INCOME AT RS.23,87,869/-. ON APPEAL, THE LD. CIT(A) REDUCED THE PERCENTAGE OF PROFIT TO 5% O F THE TOTAL CONTRACT RECEIPT. ON FURTHER APPEAL BY T HE REVENUE, THE TRIBUNAL, IN VIEW OF THE PROVISIONS OF SECTION 44AD DIRECTED THE AO TO APPLY NET RATE OF PROFIT AT 8% OF THE GROSS RECEIPTS. THUS, THERE I S NO DISPUTE THAT THE ASSESSEES INCOME WAS ASSESSED ON ITA NO.5895/MUM/2010 (ASSESSMENT YEAR: 2001-02) 5 ESTIMATE BASIS. IT IS SETTLED LAW THAT THE PENALTY IS NOT LEVIABLE ON ESTIMATE OF INCOME. 8. IN ORDER TO APPLY THE PROVISIONS OF SECTION 271(1)(C) THERE HAS TO BE CONCEALMENT OF PARTICULAR S OF INCOME, SECONDLY THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF INCOME. 9. IN THE RECENT JUDGMENT OF THE HONBLE APEX COURT IN CIT V/S RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC) THEIR LORDSHIPS, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SH ROFF VS. JCIT (2007) 291 ITR 519(SC), UNION OF INDIA V/S DHARAMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277(SC) AND SREE KRISHNA ELECTRICALS VS. STATE OF TAMIL NADU (2009) 23 VST 249 (SC) HAVE OBSERVED AND HELD (PAGE 158 HEADNOTES) AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY ITA NO.5895/MUM/2010 (ASSESSMENT YEAR: 2001-02) 6 OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 10. RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE DECISIONS AND KEEPING IN VIEW THAT IT IS NOT THE CA SE OF THE REVENUE THAT THE GROSS RECEIPTS SHOWN BY THE ASSESSEE ARE NOT CORRECT OR IT IS NOT A CASE OF ESTIMATION OF INCOME WE ARE OF THE VIEW THAT THERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE WHICH MA Y ITA NO.5895/MUM/2010 (ASSESSMENT YEAR: 2001-02) 7 CALL FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND ACCORDINGLY, THE PENALTY IMPOSED BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. THE GROUND S TAKEN BY THE ASSESSEE ARE, THEREFORE, ALLOWED. 11. IN THE RESULT, THE ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH DEC.,2011 . SD SD ( R.S. SYAL) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, 9 TH DECEMBER, 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI