The Assistant Commissioner of Income tax, Amritsar. V. M/s. Sharma Construction Co., Amritsar.

ITA 66/ASR/2011

• Counselvise Citation: 6620914 RSA 2011
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-08-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 24-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Bonafide belief; Source of fund; Reasonable cause
• Section: 133A; 80IB; 133(6); 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.188 (ASR)/2012 ASSESSMENT YEAR:2001-02 PAN :AAOFS1194B M/S. SHRI NATH INDUSTRIES, VS. INCOME TAX OFFICER, HATLI MORH, KATHUA. KATHUA. (APPELLANT) (RESPONDENT) APPELLANT BY:NONE RESPONDENT BY:SH. TARSEM LAL, DR DATE OF HEARING: 30/07/2012 DATE OF PRONOUNCEMENT:06/08/2012 ORDER PER BENCH ; THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER OF THE CIT(A), JAMMU, DATED 13.02.2012 FOR THE ASSESSMENT YEAR 2001-02 ON THE FOLLOWING GROUNDS: 1. THAT THE PENALTY ORDER IS AGAINST LAW AND FACT S OF THE CASE. 2. THAT THE CIT(A) HAS ERRED IN SUSTAINING PENALTY OF RS.85,163/- ON THE ASSESSEE. THERE IS NOTHING TO SHOW THAT ASSE SSEE MADE INVESTMENT OF A SINGLE PENNY OUTSIDE THE BOOKS OF A CCOUNT. IN ANY CASE ESTIMATE OF INCOME IS VERY HIGH. ITA NO.188(ASR)/2012 2 3. PENALTY HAS BEEN LEVIED ON ESTIMATED INCOME WHIC H IS AGAINST SETTLED LAW. ESTIMATE OF INCOME IS BASED ON CONJECT URES AND SURMISES. 4. THERE IS NO JUSTIFICATION FOR PENALTY WHICH MAY BE CANCELLED. 2. NOTICE OF HEARING WAS ISSUED TO THE ASSESSEE FOR 30.07.2012 BY RPAD. IN RESPONSE TO THE SAME, SH. ATAM DEV KATYAL, PARTN ER OF THE ASSESSEE-FIRM FILED AN APPLICATION REQUESTING FOR ADJOURNMENT OF THE CASE ON THE GROUND THAT HIS COUNSEL IS OUT OF STATION AND CAN NOT ATTE ND PROCEEDINGS BEFORE THE BENCH ON 30.07.2012. IN VIEW OF THE REASON MENTIONE D BY THE ASSESSEE FOR SEEKING ADJOURNMENT AS WELL AS THE ISSUE IN DISPUTE ALONG WITH THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VI EW THAT THE ASSESSEE HAS NOT ESTABLISHED ANY REASONABLE CAUSE FOR SEEKING AD JOURNMENT. THEREFORE, WE REJECT THE SAME AND PROCEED TO DECIDE THE MATTER EX -PARTE AFTER HEARING THE LD. DR. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING OF CEMENT AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR IN DISPUTE DECLARING NIL INCOME AFT ER CLAIMING DEDUCTION AT RS.26,76,098/- U/S 80IB OF THE INCOME TAX ACT, 1961 ( IN SHORT, THE ACT). THE AO COMPLETED THE ASSESSMENT ON 31.03.2004 U/S 1 43(3) OF THE ACT AT AN INCOME OF RS.34,28,357/-. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE AO CALLED FOR INFORMATION U/S 133(6) OF THE ACT FRO M THE PARTIES FROM WHOM ITA NO.188(ASR)/2012 3 THE ASSESSEE HAD MADE PURCHASES OR MADE SALES OF CE MENT. A SURVEY U/S 133A WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 12.01.2004. THE AO EXAMINED THE BOOKS OF ACCOUNT AN D OTHER RELEVANT DOCUMENTS AND FOUND VARIOUS DISCREPANCIES IN THE BO OKS OF ACCOUNT WHEN COMPARED WITH INFORMATION COLLECTED U/S 133(6) OF T HE ACT. MOST OF THE ADDITIONS MADE BY THE AO WERE DELETED BY THE LD. FI RST APPELLATE AUTHORITY, WHICH WERE MADE BY THE AO AND FINALLY THE ORDER OF THE LD. CIT(A) DATED 22.02.2005 WAS UPHELD BY THE ITAT, AMRITSAR BENCH. BUT ONE ADDITION AMOUNTING TO RS.9,70,485/- MADE BY THE AO WAS PARTL Y UPHELD BY THE CIT(A). WHILE MAKING THIS ADDITION, THE AO HAS OBSE RVED THAT AS PER PAGE 1 OF THE LEDGER REGISTER AT SL. NO.6 OF ANNEXURE A WHERE THE ACCOUNTS OF M/S. ARORA PACKERS HAVE BEEN WRITTEN BY THE ASSESSEE, TH ERE ARE PURCHASES OF 11,155 NUMBER OF BAGS ON 16.05.2011 FOR RS.58,006/- . SINCE THE ACCOUNT IS A RUNNING ACCOUNT IN NATURE, THEREFORE THE PURCHASE S OF 11,155 NUMBER OF BAGS IN WHICH THE ASSESSEE HAS SOLD THE CEMENT AS U NDISCLOSED SALES IS TAKEN INTO ACCOUNT TO WORK OUT THE PEAK PURCHASE OF THE A SSESSEE OUT OF UNDISCLOSED INCOME DURING THE YEAR AND THE AVERAGE COST PRICE PER BAG OF CEMENT IS TAKEN AT RS.87/- PER BAG APPROXIMATELY. T HEREFORE, 11,155 X 87 + RS.9,70,485/- IS TAKEN AS PEAK PURCHASES MADE BY TH E ASSESSEE OUT OF UNDISCLOSED SOURCES OF INCOME WHICH IS BEING ADDED TO THE INCOME OF THE ITA NO.188(ASR)/2012 4 ASSESSEE AS UNEXPLAINED INVESTMENT AS PER SECTION 6 9 OF THE ACT, SUBJECT TO PENALTY U/S 271(1)(C) OF THE ACT, FOR CONCEALMENT OF INCOME. THE LD. CIT(A) VIDE ORDER DATED 22.02.2005 REDUCED THE ABO VE ADDITION TO AN AMOUNT OF RS.1.95 LAKH WITH THE OBSERVATION THAT TH E ADDITION MADE BY THE AO IS ON PRESUMPTION BASIS AND A LOT OF 11,1155 EMP TY BAGS PURCHASED FROM M/S. ARORA PACKERS ON 16.05.2000 WERE TO BE US ED OF SALE OF CEMENT OUTSIDE BOOKS OF ACCOUNT IN A SINGLE DAY AND FINALL Y THE LD. CIT(A) HAS ALSO HELD THAT THE PEAK CALCULATION WOULD BE REASONABLE AT THE FIGURE OF RS.1.95 LAKH BEING 20% (APPROXIMATELY) OF THE AOS ESTIMATI ON IN VIEW OF THE VARIOUS FACTORS MENTIONED BY THE LD. CIT(A) IN PARA 3 OF PENALTY ORDER. THE ITAT, AMRITSAR BENCH HAS ALSO UPHELD THE ORDER OF T HE LD. CIT(A) ON 04.12.2007. THE LD. FIRST APPELLATE AUTHORITY HAS A LSO DELETED THE SECOND ADDITION OF RS.22,250/- ON ACCOUNT OF DISCREPANCIES OF THE ASSESSEES BOOKS OF ACCOUNT WITH RESPECT TO ONE M/S. GAMA & CO. 4. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES EXPL AINED ABOVE, THE AO ISSUED NOTICE U/S 271(1)(C) OF THE ACT ON 31.03.200 4 WHICH WAS DULY SERVED UPON THE ASSESSEE. THE ASSESSEE HAS ALSO FILED REPL Y WHICH WAS CONSIDERED BY THE AO AND FINALLY THE AO LEVIED PENALTY IN DISPUTE WHILE PASSING ORDER DATED 20.06.2008. AGGRIEVED BY THE SAME, THE ASSESS EE FILED THE APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATE D 13.02.2012 PARTLY ITA NO.188(ASR)/2012 5 ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE PENALTY ON THE AMOUNT OF RS.22,250/- AND CONFIRMED THE LEVY OF PENALTY ON AM OUNT OF RS.1.95 LAKH. NOW THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFOR E THIS BENCH. 5. WE HAVE HEARD THE LD. DR AND PERUSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES. WE ARE OF THE VIEW THAT THE AS SESSEE DERIVED INCOME FROM RUNNING A MINI CEMENT FACTORY AND THE INCOME O F THE ASSESSEE ACCORDING TO THE ASSESSEE IS EXEMPTED U/S 80IB OF T HE ACT. IN THE SURVEY, CERTAIN BOOKS OF ACCOUNT AND DOCUMENTS WERE IMPOUND ED WHICH SHOWS SALES OUTSIDE THE BOOKS OF ACCOUNT. AS WE HAVE DISCUSSED THAT INCOME OF THE ASSESSEE IS EXEMPT U/S 80IB, AND WITH THIS BONAFIDE BELIEF THESE DISCREPANCIES IN THE BOOKS OF ACCOUNT WERE INCURRED AND THE ADDITION IN DISPUTE WAS MADE BY THE AO. FINALLY, THE REVENUE AU THORITY HAS ESTIMATED THE UNEXPLAINED INVESTMENT @ 20% OF THE SALE OUTSID E THE BOOKS OF ACCOUNT AND THE AO HAS LEVIED THE PENALTY ON THE SAME. 5.1. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE ADDITION HAS BEEN MADE ON ESTIMATION BASIS AND THE AO HAS NOT ESTABLISHED THAT THE ASSESSEE HAS CONCEA LED ANY PARTICULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT PENALTY ITA NO.188(ASR)/2012 6 IN DISPUTE DESERVES TO BE CANCELLED AND ACCORDINGLY , WE CANCEL THE SAME BY ACCEPTING THE APPEAL FILED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN IT NO.188(ASR)/2012 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6TH AUGUST, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 6 TH AUGUST, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SHRI NATH INDUSTRIES, KATHUA 2. THE ITO KATHUA 3. THE CIT(A, JAMMU. 4. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.