The Sifti Rice Mills, Amritsar. V. The Dy.Commissioner of Income-tax, Amritsar.

ITA 661/ASR/2013

• Counselvise Citation: 66120914 RSA 2013
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUDERSHAN KAPOOR
• Keywords: Loose papers
• Section: 133A

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.661(ASR)/2013 ASSESSMENT YEAR:2007-08 PAN :AAPFS6797G M/S. SIFTI RICE MILLS, VS. DY. COMMR. OF INCOME TA X, VILL. KATHANIA, CENTRAL CIRCLE, DISTT. AMRITSAR. AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.SUDERSHAN KAPOOR, ADVOCATE RESPONDENT BY:SH.MAHAVIR SINGH, DR DATE OF HEARING: 13/02/2014 DATE OF PRONOUNCEMENT:24/02/2014 ORDER PER BENCH ; THIS APPEAL ASSESSEE ARISES FROM THE ORDER OF THE CIT(A)-1, LUDHIANA, DATED 14.10.2013 RELATING TO ASSESSMENT YEAR 2007- 08.THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A)-1, LUDHIANA HAS, IN VIEW OF THE FACTS & CIRCUMSTANCES OF THE CASE, GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS.1,83,970/- LEVIED BY T HE DCIT, C.C. AMRITSAR U/S 271(1)(C) AT THE RATE OF 100% OF THE TAX ITA NO.661(ASR)/2013 2 ALLEGED AS SOUGHT TO BE EVADED. THE PENALTY PROCEED INGS WERE WRONGLY INITIATED AND THE PENALTY WAS WRONGLY IMPOS ED. 2. THAT THE OBSERVATIONS MADE ARE AGAINST FACTS AND ARE BASED ON SURMISES AND CONJECTURES AND DO NOT AFFORD ANY LEGA L JUSTIFICATION TO THE IMPOSITION OF PENALTY U/S 271( 1)(C) . IN ANY CASE, THE EXPLANATIONS GIVEN HAVE NOT BEEN PROPERLY CONSIDERED AND THE IMPOSITION OF PENALTY IS NOT JUSTIFIED BY A NY MATERIAL ON RECORD. 3. THAT IN ANY CASE, THE PENALTY IMPOSED IS UNJUST, UNLAWFUL AND HIGHLY EXCESSIVE. 4. THAT IN ANY CASE, THE ALLEGED APPROVAL OF ADDL. CIT, CENTRAL RANGE, JALANDHAR U/S 274(2) BY HIS LETTER DATED 26. 02.2009 IS GRANTED WITHOUT APPLICATION OF MIND, IN A MECHANICA L MANNER AND WITHOUT AFFORDING OPPORTUNITY TO THE APPELLANT AND THE IMPOSITION OF PENALTY IS UNLAWFUL EVEN ON THIS ACCO UNT. 2. THE BRIEF FACTS OF THE CASE ARE THAT SURVEY U/S 133A WAS CONDUCTED IN THIS CASE ON 25.05.2006 AND A DIARY MARKED ANNEXURE A-7 AND LOOSE PAPER MARKED ANNEXURE A-8 WERE FOUND AND IMPOUNDED DURING SURVEY PROCEEDINGS. THE DIARY CONTAINS ENTRIES OF A.Y. 200 7-08 WHEREAS THE LOOSE PAPERS CONTAIN ENTRIES OF A.YS. 2006-07 & 2007-08. THE DIARY CONTAINS INWARD ENTRIES WHICH REPRESENT PURCHASE IN QUANTITY FROM WHICH AMOUNT OF PURCHASE CAN BE CALCULATED. THE DIARY ALSO CONTAINS OUTWARD ENTRIES WHICH REPRESENT SALE IN QUANTITY FROM WHICH AMOUNT OF SAL E CAN BE CALCULATED. DURING THE COURSE OF ASSTT. PROCEEDINGS, THE ASSESS EE WAS ASKED TO EXPLAIN ITA NO.661(ASR)/2013 3 THE NATURE OF INWARD ENTRIES AND OUTWARD ENTRIES. I N REPLY TO THIS QUERY, THE ASSESSEE SUBMITTED VIDE REPLY DATED 23.10.2008 AND 30.10.2008 THAT TOTAL AMOUNT OF UNACCOUNTED INWARDS AND OUTWARDS FOR THE A.Y. 2008-09 WORKS OUT TO RS.1,38,60,017/- AND RS.20,68,314/- RESPECTI VELY. THE INWARD AMOUNT OF RS.1,38,60,017/- REPRESENTS UNDISCLOSED PURCHASE S WHICH MUST HAVE BEEN SOLD BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNTS AS NO SUCH STOCK OF PADDY OR RICE WAS FOUND DURING SURVEY PROCEEDINGS. THE SA LE EQUIVALENT OF PURCHASE OF RS.1,38,60,017/- WORKS OUT TO RS.1,53,4 3,400/- ON WHICH PROFIT WORKS OUT TO RS.14,68,480/- AT G.P. @ OF 9.58% AGAI NST WHICH THE ASSESSEE SURRENDERED RS.10 LACS DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A. IN THIS WAY ADDITION OF RS.468480/- ON ACCOUNT OF UNDI SCLOSED PROFIT WAS MADE TO THE TOTAL INCOME AND PENALTY PROCEEDING U/S 271( 1)(C) WERE INITIATED DURING ASSESSMENT PROCEEDINGS FOR CONCEALMENT OF IN COME AMOUNTING TO RS.4,68,480/-. THE ASSESSEE ON BEING CONFRONTED WIT H THE PROPOSED PENALTY CONTENDED BEFORE THE AO THAT THE IMPOUNDED DIARY RE LIED UPON FOR MAKING ADDITION HAD BEEN RECOVERED FROM THE PART TIME ACCO UNTANT SH. MOHAN LAL AND DID NOT PERTAIN TO THE ASSESSEE FIRM. IT WAS FU RTHER CONTENDED THAT AFFIDAVIT OF SH. MOAN LAL DATED 20.01.2009 HAD BEEN SUBMITTED BEFORE THE AO WHEREIN SH. MOHAN LAL HAD DEPOSED THAT THE ENTRI ES RECORDED IN THE DIARY DID NOT PERTAIN TO THE ASSESSEE FIRM BUT OTHE R PARTIES. THE AO REQUIRED ITA NO.661(ASR)/2013 4 THE ASSESSEE TO PRODUCE SH. MOAN LAL FOR CROSS EXAM INATION BUT THE ASSESSEE DESPITE BEING GIVEN NUMBER OF OPPORTUNITIES TO COMP LY WITH THE SAME COULD NOT PRODUCE SH. MOHAN LAL. THE AO, THEREFORE, CONCL UDED THAT THE ENTRIES RECORDED IN THE IMPUGNED IMPOUNDED DIARY MAINTAINED BY SH. MOHAN LAL PERTAIN TO AFFAIRS OF ASSESSEE FIRM AND NOT TO ANY OTHER CONCERN AS CLAIMED. THE AO, THEREAFTER DISCUSSED VARIOUS JUDICIAL PRONO UNCEMENTS RELIED UPON BY THE AR AND DISTINGUISHED EACH OF THEM WITH REFER ENCE TO FACTS OF THE CASE UNDER CONSIDERATION. 3. THE A.O. ACCORDINGLY LEVIED PENALTY OF RS.1,83,9 70/- UNDER SECTION 271(1)(C) OF THE ACT @ 100% OF THE AMOUNT OF TAX S OUGHT TO BE EVADED. 4. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS EXPLAINED BY THE ASSESSEE THAT THE UNEXPLAIN ED PURCHASES/SALES DID NOT PERTAIN TO THE ASSESSEE-FIRM. IT WAS ALSO CLAIMED THAT THE QUANTUM APPEAL HAS NOT BEEN FILED BY THE ASSESSEE WITH A VIEW TO AVOID LITIGATION. THE PENALTY HAS BEEN LEVIED ON THE BASIS OF AN ADDITION OF RS.4 ,68,480/- MADE ON ACCOUNT OF UNDISCLOSED PROFIT. THE AMOUNT OF ALLEGED UNDISC LOSED PROFIT WAS WORKED OUT BY APPLYING G.P. RATE OF 9.58% ON THE SALES ES TIMATED ON THE BASIS OF CERTAIN FIGURES FOUND IN ONE DIARY AND LOOSE PAPER S WHICH WERE FOUND AND SEIZED DURING THE COURSE OF SURVEY, WHICH WERE IN THE HAND-WRITING OF PART- ITA NO.661(ASR)/2013 5 TIME ACCOUNTANT SH. MOHAN LAL. THEREFORE, THE ASSES SEE HAD SUBMITTED THE EXPLANATION THAT THESE LOOSE PAPERS NEITHER WRITTEN BY ANY PARTNER NOR THE SAME WERE ATTESTED OR SIGNED BY ANY PARTNER. THE LE VY OF PENALTY IS MERELY ON THE BASIS OF ADDITION AND WITHOUT ANY EVIDENCE I S NOT AUTOMATIC. THERE SHOULD BE SOME CONCEALMENT BY THE ASSESSEE OF THE P ARTICULARS OF HIS INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INC OME. THE INCOME OF ASSESSEE WHEN ASSESSED ON ESTIMATE BASIS AND ADDITI ONS ARE MADE, THEN SUCH ADDITIONS CANNOT BE A CONCRETE EVIDENCE OF CONCEAL MENT AND PENALTY IS NOT LEVIABLE. IN THE CASE OF HARIGOPAL SINGH VS. CIT (2 002) 258 ITR 85 (P&H), IT HAS BEEN HELD THAT THE PROVISIONS OF SECTION 271 (1)(C) ARE NOT ATTRACTED TO CASES WHERE THE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND ADDITIONS ARE MADE THEREIN. THE ASSESSEE HAD MADE B ONA FIDE EXPLANATION, WHICH HAS BEEN SUBSTANTIATED WITH AFFIDAVIT OF PAR T TIME ACCOUNTANT SH. MOHAN LAL AND NO STATEMENT OF ACCOUNTANT AT THE TI ME OF SURVEY WAS RECORDED AND NO SUMMONS WERE ISSUED, EVEN THE AFFID AVIT WAS FILED. THE EXPLANATION HAS NOT BEEN PROVED TO BE FALSE. ACCORD INGLY, WE ARE OF THE VIEW THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE AO AND ACCORDINGLY, THE SAME IS DIRECTED TO BE CANC ELLED.. THUS, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. ITA NO.661(ASR)/2013 6 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.661(ASR)2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH FEBRUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24TH FEBRUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SIFTI MILLS, AMRITSAR. 2. THE DCIT, CENTRAL CIRCLE, ASR. 3. THE CIT(A)-1, LUDHIANA. 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR