Sh. Laxmi Narayan Shivhare, Gwalior V. J.C.I.T., Gwalior

ITA 68/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0684 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 2 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANUJ SHARMA
• Keywords: Business income; Corroborative evidences; Set aside
• Section: 271(1)(c); 143(3); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 68/AGRA/2013 ASSTT. YEAR : 2005-06 SHRI LAXMI NARAYAN SHIVHARE VS. J.C.I.T., RANGE-3 , B-17, ASHOK VIHAR COLONY, GWALIOR. GWALIOR. (PAN: AHIPS 2394 E) (APPELLANT) (RESPONDENT) APPELLANT BY : S/SRI RAJENDRA SHARMA & ANUJ SHARMA , ADV. RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 20.06.2013 DATE OF PRONOUNCEMENT OF ORDER : 28.06.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A), GWALIOR DATED 09.01.2013 CONFIRMING THE LEVY OF PEN ALTY U/S. 271(1)(C) OF THE IT ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO H AS DISCUSSED THE MATTER IN THE ORDER THAT IN THE ABOVE MENTIONED CASE, ASSESSM ENT FOR A.Y. 2005-06 WAS COMPLETED U/S. 143(3) ON 31.12.2007 AT TOTAL INCOME OF RS.1,32,36,474/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O . EXAMINED THE SALES OF THE ITA NO. 68/AGRA/2013 2 ASSESSEE AND IT WAS NOTICED THAT THE ASSESSEE'S SAL ES WERE NOT VERIFIABLE AS HE COULD NOT PRODUCE THE SAME BILLS. EVEN QUANTITY SOL D COULD NOT BE VERIFIED BECAUSE THE STOCK REGISTER WAS NOT PRODUCED BY THE ASSESSEE. ACCORDINGLY, THE A.O ESTIMATED THE SALES AT RS.30 CRORES AS AGAINST DISCLOSED SALES OF RS.29,31,23,140/- AND MADE AN ADDITION OF RS.68,76, 860/- ON ACCOUNT OF SUPPRESSION OF SALES. FURTHER THE A.O HAS ALSO DISA LLOWED AN AMOUNT OF RS..20,000/- ON ACCOUNT OF VARIOUS EXPENSES AS PER PARA 7 OF ASSESSMENT ORDER. ACCORDINGLY, PENALTY U/S 271(1)(C) WAS INITIATED. 2.1. SUBSEQUENTLY, LD. CIT(A) VIDE ORDER DATED 21.5 .2008 UPHELD THE ESTIMATION OF SALES AT RS.30 CRORES BY THE A.O IN V IEW OF NON-MAINTENANCE OF SALE BILLS. HOWEVER, THE CIT(A) HELD THAT THE ENTIR E SALES DIFFERENCE OF RS.68,76,860/- CANNOT BE THE INCOME OF THE LIQUOR C ONTRACTOR AND DIRECTED THAT THE INCOME OF THE ASSESSEE SHOULD BE COMPUTED BY AP PLYING A NET PROFIT RATE OF 1.34% ON THE ENTIRE ESTIMATED SALES. WHILE DECIDING THE NET PROFIT RATE OF 1.34%, THE CIT(A) HELD THAT THIS NET PROFIT RATE WILL ALSO TAKE CARE OF PART OF ADDITION MADE BY THE A.O VIDE PARA 7 OF ASSESSMENT ORDER AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (A) TO THE EXTENT OF RS. 10 LACS. FURTHER, THE CIT(A) HELD THAT THE ADDITION OF RS.9, 97,168/- ON ACCOUNT OF AGRICULTURAL INCOME BEING TREATED AS INCOME FROM UNDISCLOSED SOU RCES, SHOULD BE TELESCOPED ITA NO. 68/AGRA/2013 3 IN THE ADDITIONS MADE BY THE A.O ON ACCOUNT OF SUPP RESSION OF SALES AND OTHER EXPENSES. 2.2. AGAINST THE ORDER OF CIT(A) BOTH THE DEPARTMEN T AND ASSESSEE WENT IN APPEAL BEFORE ITAT. THE ITAT IN ITS ORDER HAS CONSI DERED THE RIVAL SUBMISSIONS AND HAS HELD THAT NET PROFIT SHOULD BE ADOPTED AT 1 .2% AS AGAINST 1.34% ADOPTED BY LD. CIT(A). THE ITAT FURTHER HELD THAT A DDITION ON ACCOUNT OF AGRICULTURAL INCOME WILL BE TELESCOPED IN THE ADDIT ION MADE IN N.P. THE ASSESSEE HAS DISCLOSED A NET PROFIT OF RS.25,78,570 /- IN THE P&L ACCOUNT. THE NET PROFIT ON THE TOTAL SALES OF RS.29,31,23,140/- @ 1.2% COMES TO RS.35,17,477/- WHICH IS THE TOTAL INCOME OF THE ASS ESSEE AFTER GIVING EFFECT TO THE ORDER OF ITAT. ACCORDINGLY, AN ADDITION OF RS.9 ,38,907/- IS CONFIRMED BY THE ITAT. 2.3. OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO EXPLA IN THE ABOVE POSITION FOR LEVY OF PENALTY. THE ASSESSEE SUBMITTED THAT ADDITI ON WAS MADE ON MERE ESTIMATE WITHOUT ANY MATERIAL. THEREFORE, SUCH ADDI TIONS CANNOT BE BASIS TO TREAT THE ASSESSEE HAVING CONCEALED THE PARTICULARS OF IN COME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE AO DID NOT ACCEPT THE EX PLANATION OF THE ASSESSEE ITA NO. 68/AGRA/2013 4 AND LEVIED THE PENALTY FOR FILING INACCURATE PARTIC ULARS OF INCOME. THE LD. CIT(A) CONFIRMED THE ORDER AND DISMISSED THE APPEAL OF THE ASSESSEE. 3. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ADDITI ON ON ACCOUNT OF APPLICATION OF HIGHER NET PROFIT RATE FOR NON-PRODUCTION OF THE BOOKS OF ACCOUNT AND ESTIMATE OF PROFIT WOULD NOT BE A GROUND FOR LEVY OF PENALTY . HE HAS SUBMITTED THAT ON MERE ESTIMATION OF HIGHER INCOME, PENALTY IS NOT LE VIABLE AND RELIED UPON THE FOLLOWING DECISIONS. (I). DECISION OF HONBLE CHATTISGARH HIGH COURT IN THE CASE OF CIT VS. VIJAY KUMAR JAIN, 232 CTR 255. (II). DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. AERO TRADERS (P) LTD., 322 ITR 316. (III). DECISION OF HONBLE PUNJAB & HARYANA HIGH CO URT IN THE CASE OF CIT VS. MODI INDUSTRIAL CORPORATION, 195 TAXMAN 68. (IV). DECISION OF HONBLE PUNJAB & HARYANA HIGH COU RT IN THE CASE OF CIT VS. SANGRUR VANASPATI MILLS LTD., 303 ITR 53. (V). DECISION OF HONBLE ALLAHABAD HIGH COURT IN TH E CASE OF CIT VS. ARJUN PRASAD AJIT KUMAR PUBLISHED IN TAX PUBLISHERS . (VI). DECISION OF ITAT HYDERABAD BENCH IN THE CASE OF HOE LEATHER GARMENTS LTD. VS. DCIT, 39 SOT 210. 3.1 HE HAS ALSO SUBMITTED THAT THE ASSESSEE HAS DEC LARED ALL THE PARTICULARS OF INCOME IN THE RETURN OF INCOME. THEREFORE, IT IS NO T A CASE OF FILING OF INACCURATE ITA NO. 68/AGRA/2013 5 PARTICULARS OF INCOME. ON THE OTHER HAND, THE LD. D R SUBMITTED THAT EVEN ON ESTIMATE OF INCOME, PENALTY COULD BE IMPOSED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE DID NOT PRODUCE THE RECORD/DETAILS BEFORE THE AO. THE ASSESSEE ALSO DID NOT PRODUCE BOOKS OF ACCO UNT AND VOUCHERS. THEREFORE, THE AO HAS TO RESORT TO ESTIMATE OF INCO ME. THE MATTER ULTIMATELY TRAVELED TO THE TRIBUNAL AND HIGHER PROFIT RATE WAS FURTHER REDUCED AND ULTIMATELY ADDITION WAS MADE TO THE EXTENT OF RS.9, 38,907/-. THE ASSESSEE HAS DISCLOSED ALL THE PARTICULARS OF INCOME IN THE RETU RN OF INCOME. MERELY BECAUSE SUPPORTING EVIDENCES COULD NOT BE PRODUCED, HIGHER INCOME WAS ESTIMATED. HONBLE CHATTISGARH HIGH COURT IN THE CASE OF CIT V S. VIJAY KUMAR JAIN (SUPRA) HELD THAT NON-PRODUCTION OF BOOKS OF ACCOUN T AND ESTIMATE OF HIGHER NET PROFIT DID NOT FIND IT JUSTIFIED TO LEVY THE PENALT Y. THE OTHER DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE CLEARLY SUPPORT TH E CASE OF THE ASSESSEE THAT ON MERE ESTIMATE OF INCOME, PENALTY IS NOT LEVIABLE. H ONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. ARJUN PRASAD AJIT KUMAR (SUP RA) HELD THAT PENALTY COULD NOT BE IMPOSED ON THE BASIS OF ESTIMATING SALES AND APPLYING NET PROFIT FOR THE PURPOSE OF MAKING ADDITION. ALL THESE DECISIONS CIT ED BY THE LD. COUNSEL FOR THE ASSESSEE CLEARLY SUPPORT THE CONTENTION OF THE ASSE SSEE THAT PENALTY IS NOT ITA NO. 68/AGRA/2013 6 LEVIABLE ON ESTIMATE OF INCOME. FOLLOWING THE SAME DECISIONS, WE DO NOT FIND IT TO BE A FIT CASE FOR LEVY OF PENALTY. WE, ACCORDING LY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY