Shri Gurinder Kahlon, Baroda V. The Income Tax Officer,Ward-1(1), Baroda

ITA 641/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5963 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 20-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Salary income; Reasonable cause

Judgement Text

, ,L ,L,L ,L- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] U;KF;D LNL; DS LE{KA IZLKN] U;KF;D LNL; DS LE{KA IZLKN] U;KF;D LNL; DS LE{KA IZLKN] U;KF;D LNL; DS LE{KA BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NOS.640, 641 & 642/AHD/2015 ( / ASSESSMENT YEAR : 2007-08) GURINDER KAHLON 23, DHANUSHYA SOCIETY, NEW SAMA ROAD, BARODA 390 008 / VS. ITO, WARD -1(1), BARODA 390 007. ./ ./ PAN/GIR NO. : AAZPK 4731 H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M. K. PATEL, A.R. / RESPONDENT BY : SHRI UMA SHANKAR PRASAD, SR. D.R. / DATE OF HEARING 06/02/2018 !'# / DATE OF PRONOUNCEMENT 27/02/2018 $% / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THESE ARE THREE APPEALS BY THE ASSESSEE AGAINST T HE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, VADO DARA, VIDE APPEAL NOS.CAB-1/119/2014-15, CAB-1/120/2014-15 AND CAB-1/ 121/2014-15 DATED 22/12/2014 FOR CONFIRMING THE PENALTY FOR THE ASSESSMENT YEAR (AY) 2007-08. 2. SINCE IN THESE THREE APPEALS ISSUES ARE INTERCON NECTED, THEREFORE FOR THE SAKE OF CONVENIENCE, WE WOULD LIKE TO DISPOSE O F ALL THREE APPEALS BY WAY OF A COMMON ORDER. IN THESE APPEALS FOLLOWING G ROUNDS HAVE TAKEN BY THE ASSESSEE: ITA NOS.640, 641 & 642/AHD/ 2015 SHRI GURINDER KAHLON VS. ITO ASST.YEARS 2007-08 - 2 - 2.1 IN ITA NO.640/AHD/2015 FOR ASST. YEAR 2007-08: 1.0 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS.2,17,542/- LEVIED UNDER SECTION 271(1 )(C) OF THE ACT FOR THE ALLEGED CONCEALMENT AND/OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME IN RESPECT OF ADDITIONS MADE ON ACCOUNT OF ESTIMATION OF NET PROFIT @ 8% OF TOTAL SALES. 2.2 IN ITA NO.641/AHD/2015 FOR ASST. YEAR 2007-08: 1.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS.25 ,000/- LEVIED UNDER SECTION 271A OF THE ACT FOR THE ALLEGED FAILU RE TO MAINTAIN THE BOOKS OF ACCOUNT AS REQUIRED UNDER SECTION 44AA OF THE IT ACT. 2.3 IN ITA NO.642/AHD/2015 FOR ASST. YEAR 2007-08: 1.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS.47 ,575/- LEVIED UNDER SECTION 271B OF THE ACT FOR THE ALLEGED FAILU RE TO MAINTAIN THE BOOKS OF ACCOUNT AS REQUIRED UNDER SECTION 44AB OF THE IT ACT. 1.1 IT WAS ALREADY SUBMITTED THAT ALTHOUGH DURING T HE YEAR UNDER CONSIDERATION THE APPELLANT HAD ENTERED INTO A CONT RACT WITH M/S. ALFAGEO INDIA LIMITED FOR RENDERING CERTAIN CONSULT ANCY SERVICES, AN AMOUNT OF RS.18,87,269/- HAD BEEN RECEIVED ONLY AS ADVANCE. THE ENTIRE BALANCE AMOUNT WAS ACTUALLY RECEIVED BY THE APPELLANT DURING THE SUBSEQUENT YEAR VIZ., ASST. YE AR 2008-09. 1.2 HOWEVER, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DID NOT CONSIDER THE APPELLANT'S EXPLANATION AND CO NFIRMED THE PENALTY OF RS,47,575/- UNDER SECTION 271B OF THE IT ACT. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ORIGINAL RETURN OF INCOME WAS FILED ON 31.03.2009 D ECLARING INCOME AT RS.2,35,040/- WHICH COMPRISED OF SALARY INCOME. THE RETURN WAS ACCEPTED U/S. 143(1) OF THE ACT. ITA NOS.640, 641 & 642/AHD/ 2015 SHRI GURINDER KAHLON VS. ITO ASST.YEARS 2007-08 - 3 - 4. ON THE BASIS OF AN INFORMATION, THE A.O. CAME TO KNOW THAT ASSESSEE HAS RECEIVED RS.88,86,449/- FROM M/S. ALFA GEO INDIA LIMITED ON WHICH THE PAYER HAS DEDUCTED TAX AT SOURCE. ON NOT FINDING THIS TRANSACTION IN THE RETURN OF INCOME ACCEPTED U/S.14 3(1) OF THE ACT, THE ASSESSMENT WAS REOPENED BY ISSUE AND SERVICE OF NOT ICE U/S.148 OF THE ACT. 5. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, THE A.O. ASKED THE ASSESSEE WHY AMOUNT RECEIVED FROM M/S. ALFAGEO INDIA LIMITED HAS NOT BEEN OFFERED FOR TAXATION. IT WAS EXPLAINED BY THE ASSESSEE THAT THE AMOUNT RECEIVED FROM M/S. ALFAGEO INDIA LIMITED WAS AN ADVANCE DURING THE YEAR AND THE SAME HAS BEEN OFFERED FOR TAXATION IN THE SUBSEQUENT YEAR, WHEN THE CONTRACT WAS EXECUTED AND THE INVOIC ES WERE RAISED. 6. THIS EXPLANATION OF THE ASSESSEE DID NOT FIND AN Y FAVOUR WITH THE A.O. WHO WAS OF THE OPINION THAT SINCE THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING IT SHOULD HAVE OFFE RED THE INCOME DURING THE YEAR UNDER CONSIDERATION. THE A.O. COMPUTED THE NET PROFITS @ 8% AND MADE AN ADDITION OF RS.7,10,920/-. 7. AGAINST THE SAID ADDITION, ASSESSEE PREFERRED FI RST STATUTORY APPEAL BEFORE THE LD. CIT(A) BUT CONTENTION OF THE ASSESSE E WAS DISMISSED BY THE LD.CIT(A) FOR THE SAME REASON THAT ASSESSEE MENTION ING BOOKS OF MERCANTILE SYSTEM OF ACCOUNT, HENCE SHOULD HAVE OFF ERED THE INCOME IN THE YEAR UNDER CONSIDERATION. ITA NOS.640, 641 & 642/AHD/ 2015 SHRI GURINDER KAHLON VS. ITO ASST.YEARS 2007-08 - 4 - 8. THEREAFTER, ASSESSEE PREFERRED APPEAL BEFORE THE ITAT, AHMEDABAD VIDE ITA NO.2219/AHD/2012 AND HONBLE BENCH DELETED THE QUANTUM. 9. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. SO FAR AS ITA NO.640/AHD/2015 IS CONCERNED. IN THIS MA TTER, CO-ORDINATE BENCH DELETED THE PENALTY VIDE ITA NO.2217/AHD/2012 . SINCE WHEN FOUNDATION HAS BEEN REMOVED IN THAT CASE BUILDING M UST FALL. THEREFORE, WE DELETE THE PENALTY AND ALLOW THE APPEAL OF THE A SSESSEE IN THIS APPEAL. 10. IN ITA NO.641/AHD/2015 PENALTY OF RS.25,000/- W AS LEVIED U/S.271A OF THE ACT FOR THE ALLEGED FAILURE TO MAIN TAIN THE BOOKS OF ACCOUNT AS REQUIRED UNDER SECTION 44AA OF THE I.T. ACT. THE ASSESSEE HAS SOUGHT RELIEF AGAINST THE IMPOSITION OF PENALTY OF RS.25,000/- U/S.271A FOR DEFAULT TOWARDS NON MAINTENANCE OF BOOKS OF ACC OUNTS. WE HAVE PERUSED THE REASONING PLACED BEFORE THE LOWER AUTHO RITIES IN THIS REGARD. WE DO NOT FIND ANY REASONABLE CAUSE FOR NON MAINTEN ANCE OF BOOKS OF ACCOUNTS AS CONTEMPLATED BY LAW. THEREFORE, WE DECL INE TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). IN THE RESULT, APPEAL IN ITA NO.641/AHD/2015 IS DISMISSED. 11. NOW WE COME TO ITA NO.642/AHD/2015. IN THIS CAS E, WE FIND THAT THE REVENUE AUTHORITIES HAVE IMPOSED AND CONFIRMED PENALTY U/S.271B FOR FAILURE OF THE ASSESSEE TO FURNISH TAX AUDIT REPORT . AS NOTICED THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS. THEREFORE , WE FIND REASONABLE CAUSE FOR NOT SUBJECTING THE BOOKS OF ACCOUNTS FOR TAX AUDIT. THEREFORE, ITA NOS.640, 641 & 642/AHD/ 2015 SHRI GURINDER KAHLON VS. ITO ASST.YEARS 2007-08 - 5 - WE DELETE THE PENALTY U/S.271B. IN THE RESULT, APPE AL IN THIS ITA NO.642/AHD/2015 IS ALLOWED. 12. IN THE RESULT, APPEALS IN ITA NO.640 & 642/AHD/ 2015 ARE ALLOWED AND APPEAL IN ITA NO.641/AHD/2015 IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 27/02/2018 SD/- SD/- IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRADIP KUMAR KEDIA) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 27/02/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-I, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 06/02/2018 (DICTATION-PAD 2 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07/02/2018 3. OTHER MEMBER 07/02/2018 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 20/02/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 21/02/2018 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER