Sh. Ajay Gupta, New Delhi V. ACIT, New Delhi

ITA 6767/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98095 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-09-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 27-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Keywords: Gross profit estimation

Judgement Text

I.T.A. NO. 6767 & 6768/D/2013 ASSESSMENT YEARS 2000-01 2001-02 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A .NO.6767/DEL/2013 ASSESSMENT YEAR-2000-01 I.T.A .NO.6768/DEL/2013 ASSESSMENT YEAR-2001-02 SHRI AJAY GUPTA, A-2/14A, MODEL TOWN-I, NEW DELHI. (PAN: AAJPG0481E) (APPELLANT) VS ACIT, CENTRAL CIRCLE-15, NEW DELHI. (RESPONDENT) APPELLANT BY SHRI ANIL JAIN, CA RESPONDENT BY SHRI K.K. JAISWAL, SR. DR ORDER PER I.C. SUDHIR, JM THE ASSESSEES HAVE QUESTIONED FIRST APPELLATE ORDE R WHEREBY THE LD. CIT(A) HAS UPHELD THE PENALTY LEVIED BY THE ASSESSI NG OFFICER U/S 271(1)(C) OF THE ACT. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW, MATERI AL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. DATE OF HEARING 22.09.2015 DATE OF PRONOUNCEMENT 11.12.2015 I.T.A. NO. 6767 & 6768/D/2013 ASSESSMENT YEARS 2000-01 2001-02 2 3. THE RELEVANT FACTS IN THE CASE OF SHRI AJAY GUPT A IN THE YEAR 2000-01 REMAIN THAT THE ASSESSEE HAD RECEIVED A LOAN OF RS . 2,00,000/- FROM M/S ANAND JUTE COMPANY FOR WHICH NO CONFIRMATION WAS FILED BE FORE THE ASSESSING OFFICER. THE ASSESSEE, HOWEVER, HAD FILED BALANCE SHEET WITH HIS REPLY DATED 29.11.07 SHOWING A LIABILITY OF RS. 5,48,000/- STAN DING IN THE NAME OF M/S ANAND JUTE COMPANY AS AGAINST RS. 2,00,000/- MENTIO NED IN THE LETTER. THE ASSESSING OFFICER ADDED THE ENTIRE AMOUNT OF RS.5,4 8,000 AS NO CONFIRMATION WAS FILED. BEFORE THE LD. CIT(A), THE ASSESSEE FIL ED APPLICATION UNDER RULE 46A FOR SUBMITTING CONFIRMATION LETTER FROM M/S ANAND J UTE COMPANY. LD. CIT(A) DID NOT ACCEPT THE CONFIRMATION LETTER ON THE BASIS THAT IT WAS SIGNED BY THE ACCOUNTANT AND NOT BY THE PROPRIETOR OF M/S ANAND J UTE COMPANY AND THAT NO PERMANENT ACCOUNT NUMBER WAS MENTIONED THEREIN. IN THE RESULT, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 2,00,000/- ONL Y WHICH, ACCORDING TO HIM, WAS RECEIVED DURING THE YEAR AND RS. 3,48,000 WAS T HE OPENING BALANCE. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS.66,000/- @100% OF TAX SOUGHT T O BE EVADED. LD. CIT(A) HAS SUSTAINED THIS PENALTY AGAINST WHICH THE ASSESS EE IS IN APPEAL. 4. IN SUPPORT OF THE GROUND, LD. AR SUBMITTED THAT THE ADDITION OF RS. 2,00,000/- UPHELD BY THE LD. CIT(A) HAS BEEN DELETE D BY THE TRIBUNAL IN I.T.A. NO. 4139/DEL/2010 AND OTHERS VIDE ORDER DATED 22.9. 14. LD. AR, ON THE OTHER HAND, TRIED TO JUSTIFY THE LEVY OF PENALTY IN QUEST ION. CONSIDERING THE ABOVE I.T.A. NO. 6767 & 6768/D/2013 ASSESSMENT YEARS 2000-01 2001-02 3 SUBMISSION, SPECIALLY KEEPING IN MIND THAT THE SUBJ ECT MATTER OF THE PENALTY I.E. ADDITION OF RS. 2,00,000/- MADE ON ACCOUNT OF LOAN TAKEN FROM M/S ANAND JUTE COMPANY HAS ULTIMATELY BEEN DELETED BY THE TRIBUNAL , WE ARE OF THE VIEW THAT THE PENALTY IN QUESTION IS NOT SUSTAINABLE, REASON BEING THAT IT CANNOT BE SAID BEYOND DOUBT THAT THERE WAS CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE REGARDING THE ABOVE ADDITION. WE, THUS, WHILE SETTING ASIDE THE ORDER S OF THE AUTHORITIES BELOW, DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT AT RS.66,000/-. THE GROUND IS ACCORDINGLY ALLOWED. 5. IN THE ASSESSMENT YEAR 2001-02, THE ASSESSING OF FICER HAD MADE ADDITION OF RS.12,00,000/- IN THE PROPRIETARY CONCERN OF THE ASSESSEE I.E. M/S BALAJI PRODUCTS ON ACCOUNT OF LOW GP. LD. CIT(A) OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE GP RATE DECLARED BY THE AS SESSEE AT 23.56% WAS LESS THAN THE GP RATE OF 25% DECLARED IN THE CASE OF M/S BALAJI PRODUCTS AND GP RATE OF 26% IN CASE OF ASSESSEE ITSELF FOR THE ASSESSMEN T YEAR 2000-01. HE ACCORDINGLY FOUND IT REASONABLE TO APPLY GP RATE AT 26% RESULTING INTO SUSTENANCE OF ADDITION OF RS. 90,129/-. 6. THE ASSESSING OFFICER MADE ANOTHER ADDITION OF R S.28,599 ON ACCOUNT OF UNCONFIRMED SUNDRY CREDITORS. LD. CIT(A) HELD THA T LIKE IN THE CASE OF M/S ROYAL PACKAGING WHEREIN THE ASSESSEE HAD OFFERED TH E AMOUNT ON THE GROUND OF CESSATION OF LIABILITY IN THE ASSESSMENT YEAR 2002- 03, THE ASSESSEE COULD HAVE I.T.A. NO. 6767 & 6768/D/2013 ASSESSMENT YEARS 2000-01 2001-02 4 OFFERED THE SUM OF RS.28,599 IN THE CASE OF M/S SHI VANGI PRINTERS ALSO. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS.62,510 @150% OF THE TAX SOUGHT TO BE EVADED. LD. CIT(A) HAS REDUCED THE PENALTY TO RS.41,673 BY APPLYING TH E RATE OF 100% OF THE TAX SOUGHT TO BE EVADED. THIS ACTION OF THE LD. CIT(A) HAS BEEN QUESTIONED BY THE ASSESSEE. 7. LD. AR SUBMITTED THAT PENALTY CANNOT BE LEVIED O N THE ESTIMATED TRADING ADDITION AND THE ADDITION OF RS.28,559 SUSTAINED BY THE LD. CIT(A) HAS BEEN DELETED BY THE TRIBUNAL IN THE CASE OF ASSESSEE ITS ELF FOR THE ASSESSMENT YEAR 2001-02 IN I.T.A. NO. 4140/DEL/2010 VIDE ORDER DATE D 22.9.2014. LD. AR PLACED RELIANCE ON THE DECISION OF CIT VS AERO TRADERS PVT. LTD. 322 ITR 316 (DEL) HOLDING THAT PENALTY U/S 271(1)(C) OF THE ACT CANN OT BE LEVIED ON ESTIMATED INCOME. 8. LD. DR, ON THE OTHER HAND, PLACED RELIANCE ON T HE ORDERS OF THE AUTHORITIES BELOW. 9. CONSIDERING THE ABOVE SUBMISSION THAT THE TRADIN G ADDITION WAS MADE ON ESTIMATE BASIS AND ANOTHER ADDITION OF RS.28,599 MA DE ON ACCOUNT OF UNCONFIRMED SUNDRY CREDITOR HAS BEEN DELETED BY THE TRIBUNAL, WE FIND THAT THE PENALTY IN QUESTION IS NOT SUSTAINABLE IN ABSENCE O F A FINDING BEYOND DOUBT THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR F URNISHING INACCURATE I.T.A. NO. 6767 & 6768/D/2013 ASSESSMENT YEARS 2000-01 2001-02 5 PARTICULARS THEREOF ON THE PART OF THE ASSESSEE TOW ARDS THE ADDITIONS WHICH REMAINED THE SUBJECT MATTER OF THE PENALTY. WE, TH US, SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW, DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S 271(1)( C) OF THE ACT AT RS.62,510. THE GROUND IS ACCORDINGLY ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2015. SD/- SD/- (L.P. SAHU) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11TH DECEMBER, 2015 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR