M/s. Gujarat Transport Services(IPCL Division), Baroda V. The ACIT.,Circle-3, Baroda

ITA 630/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80238 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 31-07-2014
• Assessment Year: 1998-1999
• Appeal Filed On: 25-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 630 /AHD/2010 (ASSESSMENT YEAR: 1998-99) M/S. GUJARAT TRANSPORT SERVICES [IPCL DIVISION] NAVI DHARTI NAKA, NAGARWADA, BARODA V/S THE A.C.I.T, CIRCLE-3, BARODA (APPELLANT) (RESPONDENT) PAN: AACFG 2424M APPELLANT BY :SHRI M.K. PATEL. A.R. WITH SHRI A.R SHAH. RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 31-07-201 4 DATE OF PRONOUNCEMENT : 07-08-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-V, BARODA DATED 16.12.2009 FOR A.Y. 1998-99. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF TRANSPORTATION. ASSESSEE FILE ITS RETURN OF INCOME FOR A.Y. 98-99 ON 31.10.98 ITA NO 630/ AHD/2010 . A.Y. 1998- 99 2 SHOWING TOTAL INCOME OF RS. 2,40,637/-. ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 2.03.2001 AND THE TOTAL INCOME WAS DETERMINED AT RS. 55,01,680/-. WHILE FRAMING THE ASSESSMENT A.O ESTIM ATED GROSS PROFIT AT 18% OF THE GROSS RECEIPTS RECEIVED FROM KRIBCO AND MADE ADDITION OF RS. 50,92,838/-. AGGRIEVED BY THE ORDER OF A.O ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO REDUCED THE ESTIMATION OF GROSS P ROFIT FROM 18% TO 3% AND THUS THE ADDITION ON ACCOUNT OF GROSS PROFIT WA S REDUCED TO RS. 8,48,806/-. AGGRIEVED BY THE ORDER OF CIT(A), ASSES SEE AS WELL AS REVENUE PREFERRED APPEAL BEFORE TRIBUNAL WHERE BOTH THE APP EALS WERE DISMISSED. ON THE ADDITION OF RS. 8,48,806/- WHICH WAS CONFIRMED BY CIT(A), A.O VIDE PENALTY ORDER DATED 29.06.2009 LEVIED PENALTY U/S. 271(1)(C) OF RS. 2,97,100/-. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) DISMISSED THE APPEAL OF THE A SSESSEE BY HOLDING AS UNDER:- 4.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE SUBMISSIONS OF THE APPELLANT, THE ASSESSME NT AND PENALTY ORDER AND THE QUANTUM APPEAL ORDERS OF CIT( A) AND HON'BLE ITAT. IT IS NOTICED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAD RECORDE D THE STATEMENT OF SHRI JAYANTILAL PATNI, MANAGING PARTNER WHO ADMITTED IN REPLY TO Q. NO. 21 THAT CER TAIN EXPENSES WERE BOGUS. FURTHER, IN REPLY TO Q.NO . 19, IT WAS STATED THAT CERTAIN PAYMENT FOR HIRING TRUCK S WERE ALSO BOGUS PAYMENTS. IN REGARD TO Q .NO. 13, THE ASSESSEE ADMITTED THAT CERTAIN BHADA CHITTIES WERE FICTITIOUSLY SIGNED ASSESSEE'S OWN MEN. IT WAS ALSO ADMITTED BEFORE THE AO THAT CERTAIN EXPENSES WERE D EBITED WHICH PERTAINED TO THE EARLIER PERIOD. ON T HESE FACTS, THE CIT(A) AND THE HON'BLE ITAT CONFIRMED TH E GP ADDITION TO THE EXTENT OF RS. 5,01,627/-. IT W AS THE SPECIFIC ADMISSION OF THE PARTNER IN REGARD TO CLAI M OF VARIOUS BOGUS EXPENSES THAT THE INCOME WAS ESTIMATED AND THIS FACT WAS ALSO RECOGNIZED BY THE HIGHER APPELLATE AUTHORITY. IN THE CASE OF CIT VS T MATHAI 269 ITR 492 (KERALA) AND CIT VS SHAKUNTALADE VI 270 ITR 590 (RAJASTHAN) THE PENALTY ON BEST JUDGEMENT ASSESSMENT WAS ALSO SUSTAINED. COMING TO THE LEGAL PLEA THAT NO SATISFACTION WAS RECORDED BY THE AO, IT IS OBSERVED THAT BY FINANCE ACT 2008 W.R .E.F. 01/04/1989 SUB SECTION (IB) WAS INSERTED IN S ECTION 271 PROVIDING THAT DIRECTION FOR INITIATION OF PENA LTY PROCEEDINGS U/S. 271(L)(C) IN THE ORDER OF ASSE SSMENT SHALL BE DEEMED TO CONSTITUTE THE SATISFACTION OF T HE AO. COMING TO OTHER PLEA OF THE APPELLANT THAT T HE NOTICE IS UNCLEAR AS TO WHETHER IT IS ISSUED FOR CO NCEALMENT OF INCOME OR FURNISHING OF WRONG PARTICUL ARS OF INCOME, IT IS NOTICED THAT IN THE CASE OF A.M. SHAL \& CO. VS CIT 238 ITR 415 (GUJARAT) IT WAS HELD THA T THERE COULD BE NO STRAITJACKET FORMULA TO DETERMINE UNDER WHICH OF THE TWO CATEGORIES THE CASE FELL AN D THAT THE DUTY WAS ENJOINED UPON THE ASSESSEE TO MAKE A C OMPLETE AND CORRECT DISCLOSURE OF INCOME. IN VIEW O F THE FOREGOING, I AM OF THE HUMBLE OPINION THAT THE PENALTY ON THE ADDITION CONFIRMED BY THE HON'BLE IT AT IS JUSTIFIED. HOWEVER, I AM IN AGREEMENT WITH THE APPE LLANT THAT THE AO HAS WRONGLY COMPUTED THE PENALTY ON RS. 8,48,806/- INSTEAD OF RS. 5,01,627/-THE AO IS A CCORDINGLY DIRECTED TO RE-COMPUTE THE PENALTY AMOUN T. ITA NO 630/ AHD/2010 . A.Y. 1998- 99 3 4. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US AND HAS RAISED THE FOLLOWING CONCISE GROUND:- ON POINT OF LAW 1. THE COMM. OF INCOME-TAX (A) HAS ERRED BOTH IN LAW A ND IN FACT IN CONFIRMING PENALTY OF RS.2,97,100 LEVIED BY THE ASSESSING OFFICER U/S.271 (1)(C ). 2. THE NOTICE OF PENALTY ISSUED BY ASSESSING OFFICER A ND PENALTY LEVIED OF U/S. 271(1) ( C) WAS VAGUE, CAPABLE OF TWO VIEWS AND NOT CLEAR AS TO WHE THER THE 'PENALTY WAS INITIATED FOR CONCEALMENT OF INCOME' OR 'FOR FURNISHING INACCURAT E PARTICULARS OF SUCH INCOME' AND THEREFORE LEVY OF PENALTY IS NOT VALID. ON MERITS 1. ON FACTS OF THE CASE IT IS SUBMITTED BY YOUR APPELL ANT THAT FOR ADDITION OF GROSS PROFIT AND APPLYING SECTION 145 PENALTY U/S.271(L)(C ) CANNOT BE LEVIED SINCE THERE IS NO CONCEALMENT OF INCOME. 2. IT IS FURTHER SUBMITTED THAT MERELY BY NOT ACCEPTIN G EXPLANATION GIVEN BY THE APPELLANT, AND PENALTY ORDER BASED ON QUANTUM ADDITION WITHOUT IND EPENDENTLY PROVING ANY MALAFIDE OR GUILT THE PENALTY U/S.271(L)(C ) IS LIABLE TO BE CANCELLED . 5. THOUGH THE ASSESSEE HAS RAISED THE VARIOUS GROUNDS BUT THE ONLY EFFECTIVE GROUND IS WITH RESPECT TO LEVY OF PENALTY U/S. 271( 1)(C) OF THE ACT. 6. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A). IT WAS FURTHER SUBMITTED THAT IN THE PRESENT CASE S INCE THE ADDITION HAS BEEN MADE ON ESTIMATED BASIS, NO PENALTY IS LEVIABLE AND FOR THE AFORESAID PROPOSITION HE RELIED ON THE DECISION IN THE CASE O F NAVJIVAN OIL MILLS VS. CIT 2001 170 CTR GUJARAT 224. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE AO HAD ESTIMATED GROSS PROFIT @ 18 % OF RECEIPTS AND MADE ADDITION OF RS 50,92,838/- BUT THE ADDITION WAS SUB STANTIALLY REDUCED BY CIT(A) AND THE ADDITION ONLY TO THE EXTENT OF RS 8, 48,806/- WAS SUSTAINED AND THAT TOO WAS SUSTAINED ON ESTIMATED BASIS. IT I S A SETTLED LAW THAT WHEN THE ADDITION IS MADE ON THE ESTIMATE BASIS, NO PENA LTY IS SUSTAINABLE. FURTHER IT IS AN ADMITTED PROPOSITION IN LAW THAT THE FINDI NG IN THE QUANTUM ITA NO 630/ AHD/2010 . A.Y. 1998- 99 4 PROCEEDING IS NOT A FACTOR FOR DETERMINING THE QUES TION FOR THE PURPOSE OF IMPOSING PENALTY AND QUESTION OF PENALTY HAS TO BE DECIDED INDEPENDENT OF SUCH FINDING. IT IS WELL SETTLED THAT THE PARAMETER S OF JUDGING THE JUSTIFICATION FOR ADDITION MADE IN THE ASSESSMENT CASE OF THE ASS ESSEE IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE /ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDING ON THE PREPONDERA NCE OF PROBABILITIES, BUT NO PENALTY COULD BE IMPOSED U/S 271(L)(C) OF TH E ACT ON THE PREPONDERANCE OF PROBABILITIES. IN VIEW OF THE AFOR ESAID FACTS WE ARE OF THE VIEW THAT NO PENALTY IS LEVIABLE IN THE PRESENT CAS E AND THEREFORE DIRECT ITS DELETION. IN THE RESULT THIS GROUND OF ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON 07 -08 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT 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,AHM EDABAD