M/s. Roop Sons & Co., Amritsar. V. The Income Tax Officer, Amritsar.

ITA 683/ASR/2013

• Counselvise Citation: 68320914 RSA 2013
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 22-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Business income; Assessment record
• Section: 44AD; 40A(3); 143(3); 263

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. 683 (ASR)/2013 ASSESSMENT YEAR: 2005-06 PAN: AABFR2682N M/S ROOP SONS & CO., BHALLA VS. INCOME TAX OFFICER , STREET, PRATAP BAZAR, CHHEHARTA, WARD 3(3), AMRIT SAR AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. PADAM BAHL, CA RESPONDENT BY: SH. MAHAVIR SINGH, SR.DR DATE OF HEARING: 26.02.2014 DATE OF PRONOUNCEMENT: 28.02.2014 ORDER PER BENCH 1. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINS T IMPUGNED ORDER DATED 07.10.2013 PASSED BY LEARNED CIT(A), AM RITSAR, FOR THE ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS: I. THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ), AMRITSAR, HAS GROSSLY ERRED IN CONFIRMING THE PENAL TY U/S 271(1)(C) OF INCOME TAX ACT, 1961 AT RS. 62,000/- HAS AGAINST RS. 1,24,000/- LEVIED BY INCOME TAX OFFICER, WARD 3(3), AMRITSAR. II. THAT BOTH LEARNED INCOME TAX OFFICER, WARD 3(3), AM RITSAR AND COMMISSIONER OF INCOME TAX(APPEALS), AMRITSAR HAVE FAILED TO APPRECIATE THAT NO PENALTY U/S 271(1)(C) WAS EXIGIB LE IN CASES OF ESTIMATED ADDITION AND G.P. RATE ADDITION AS HELD B Y PUNJAB & 2 I.T.A. NO. 683 (ASR)/2013 ASSESSMENT YEAR: 2005-06 HARYANA HIGH COURT AND AMRITSAR BENCH OF INCOME TAX APPELLANT TRIBUNAL, AMRITSAR. III. THAT THE PENALTY OF RS. 62,000/- UPHELD BY WORTHY C OMMISSIONER OF INCOME TAX (APPEALS), AMRITSAR, MAY KINDLY BE DE LETED. 2. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE FIRM DERIVING BUSINESS INCOME FROM CARRYING OUT CIV IL CONTRACTS. THE ASSESSEE FILED ITS RETURN ON 28.10.2005 DECLARING N ET TAXABLE CONTRACT BUSINESS INCOME OF RS. 6,540/- ALONG WITH AUDITED S TATEMENT OF ACCOUNTS. IN THE FIRST ROUND OF REGULAR ASSESSMENT PROCEEDING S FINALIZED U/S 143(3) DATED 30.03.2007 THEREBY DETERMINING THE ASSESSEES NET TAXABLE INCOME OF RS. 70,000/- BASED ON THE RETURN FILED ON 28.10. 2005 DECLARING RETURNED INCOME OF RS. 6,540/- ACCOMPANYING AUDITED STATEMEN T OF ACCOUNTS. IT GOES TO SHOW THAT THE ACCOUNTS OF THE ASSESSEE-FIRM WERE ALREADY AUDITED U/S 44AB OF THE I.T. ACT AND AUDITED STATEMENT OF A CCOUNTS, SUCH AS BALANCE SHEET, PROFIT AND LOSS ACCOUNT, PARTNERS C APITAL ACCOUNTS WERE ALREADY MADE AVAILABLE ON RECORD. THE ORIGINAL ASSE SSMENT WAS SET ASIDE TO BE MADE DE-NOVO VIDE ORDER DATED 30.01.2009 U/S 263 OF THE ACT TO THE LEARNED CIT-I, AMRITSAR. IN RESPONSE TO THE STATUTO RY NOTICE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE PROCEEDINGS AND FILED WRITTEN REPLY INTER ALIA MAKING THE FOLLOWING SPECIFIC PROPOSAL THEREBY OFFERING AND EXPRESSING NO OBJECTION TO BE TAXED BY DETERMINING 3 I.T.A. NO. 683 (ASR)/2013 ASSESSMENT YEAR: 2005-06 ITS TAXABLE CONTRACT BUSINESS INCOME ON APPLICATIO N OF NET PROFIT RATE OF 8% ON ANNUAL GROSS RECEIPTS OF RS. 30,30,210/- ALRE ADY AVAILABLE ON ASSESSMENT RECORD WITH ASSESSING OFFICER AS PRESUMP TIVE PROVISIONS OF SECTION 44AD OF THE ACT ARE RIGHTLY APPLICABLE IN I TS CASE AS IT ANNUAL GROSS RECEIPT DID NOT EXCEED THE STATUTORY LIMITS O F RS. 40 LAKHS LAID DOWN U/S 44AD OF THE ACT SUBJECT TO ALLOWANCE OF SALARY AND INTEREST PAID TO PARTNERS. AS PER ASSESSING OFFICER OWN VERSION, THE ASSESSEE COULD NOT PRODUCE THE REQUISITE BOOKS OF ACCOUNT ON THE GROUN D THAT THESE HAVE BEEN MISPLACED AND IN SUPPORT THERETO, FILING AFFID AVIT TO THIS EFFECT OF ONE OF THE PARTNERS, SH. JAGMOHAN SHARMA. HOWEVER, WHIL E COMPLETING THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER PROCEEDE D TO DETERMINE ITS TOTAL TAXABLE INCOME BY APPLYING FLAT G.P. RATE OF 12% OVER TOTAL CONTRACT RECEIPTS OF RS. 30,30,260/- AS THE APPELLANT FIRM F AILED TO SUBSTANTIATE ITS RETURNED VERSION BY NOT PRODUCING COMPLETE BOOKS OF ACCOUNTS, INCLUDING PURCHASE BILLS, EXPENSES VOUCHERS, POSITION OF WORK -IN-PROGRESS AND COPIES OF BANK ACCOUNT. AFTER GIVING APPEAL EFFECT TO THE CIT(A), AMRITSARS APPELLATE ORDER DATED 13.06.2012, THE IN ITIALLY ASSESSED INCOME OF RS. 3,60,210/- GETS REDUCED TO RS. 64,396 /- BY ALLOWING REMUNERATION AND INTEREST PAID TO PARTNERS AMOUNTI NG RESPECTIVELY TO RS. 18,442/-, RS. 48,000/-. THE INITIATED PENALTY PROCE EDINGS AFTER AFFORDING 4 I.T.A. NO. 683 (ASR)/2013 ASSESSMENT YEAR: 2005-06 HEARING OPPORTUNITY AND AFTER CONSIDERING THE ASSES SEES EXPLANATION, THE ASSESSING OFFICER PROCEEDED TO LEVY A CONCEALMENT P ENALTY OF RS. 1,24,000/- BY HOLDING THAT THE APPELLANT HAS FURNIS HED INACCURATE PARTICULARS OF INCOME AND EXPLANATION BELOW SECTION 271[1][1][C] IS RIGHTLY APPLICABLE AS THE ASSESSEE HAS FAILED TO SU BSTANTIATE ITS EXPLANATION BEING GENUINE AND BONA FIDE AND HAS APPARENTLY FAIL ED TO FURNISH ALL MATERIAL FACTS NECESSITATED TO COMPUTE ITS TRUE TAX ABLE INCOME. BY FINDING THAT THE ASSESSEES DEFAULT IN FURNISHING INACCURAT E PARTICULARS OF ITS INCOME STANDS ESTABLISHED, THE ASSESSING OFFICER PR OCEEDED TO LEVY A CONCEALMENT PENALTY OF RS. 1,24,000/- @ 200% VIDE P ENALTY ORDER DATED 07.03.2013. 3. BEING AGGRIEVED WITH THE PENALTY ORDER DATED 07. 03.2013, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED FIRST A PPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 07.10.2013 REDUCED THE PE NALTY @ 100% OF THE TAX SOUGHT TO BE EVADED IN PLACE OF 200% IMPOSE D BY THE ASSESSING OFFICER BY PARTLY ALLOWING THE APPEAL FILED BY THE ASSESSEE. NOW, THE ASSESSEE AGAIN BEING AGGRIEVED WITH THE ORDER OR LE ARNED FIRST APPELLATE AUTHORITY, FILED THE PRESENT APPEAL. 4. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE REVENUE AUTHORITY HAS IMPOSED THE PENALTY IN DISPUTE ON THE 5 I.T.A. NO. 683 (ASR)/2013 ASSESSMENT YEAR: 2005-06 ADDITION WHICH WAS BASED ON ESTIMATION. HE REQUESTE D THAT NO PENALTY IS LEVIABLE WHERE THE ADDITION IS MADE ON ESTIMATION A S HAS BEEN HELD BY VARIOUS HON'BLE COURTS. IN SUPPORT OF HIS ARGUMENT, HE HAS ALSO FILED A SMALL PAPER BOOK, CONTAINING PAGES FROM 1 TO 19, IN WHICH HE HAS ATTACHED THE COPY OF I.T.A.T., AMRITSAR BENCH ORDER DATED 05.11.2004 IN THE CASE OF M/S CHAWLA TRADERS; COPY OF I.T.A.T., A MRITSAR BENCH ORDER DATED 23.12.2005 IN THE CASE OF M/S LOVELY STONE CR USHING CO., AMRITSAR; COPY OF I.T.A.T., AMRITSAR BENCH ORDER DA TED 16.11.2005 IN THE CASE OF M/S NARULA CRUSHING CO., AMRITSAR; HARI GOPAL SINGH VS. COMMISSIONER OF INCOME TAX, PUNJAB & HARYANA HIGH C OURT REPORTED AT 258 ITR 85 (P&H); COMMISSIONER OF INCOME TAX VS. RA VAIL SINGH & CO., PUNJAB & HARYANA HIGH COURT REPORTED AT 254 IT R 191 (P&H); AND COMMISSIONER OF INCOME TAX VS. DHILLON RICE MILLS R EPORTED AT 256 ITR 447 (P&H). 5. ON THE CONTRARY, LEARNED DR RELIED UPON THE ORDE R PASSED BY LEARNED CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US AND WE ARE OF THE CONSIDERED VIEW THAT AS PER RECORD THE ASSESSEE HAS DECLARED ITS INCOME ORIGINALLY AT RS. 6,540/- AND THE ASSESSMENT WAS COMPLETED AT RS. 70,000/- AND WHEN T HE ASSESSMENT WAS 6 I.T.A. NO. 683 (ASR)/2013 ASSESSMENT YEAR: 2005-06 REOPENED TO VERIFY LABOUR EXPENSES OF RS. 14,77,50 2/- UNDER HEAD WAGES TO WORKERS TO VERIFY POSITION OF WORK-IN-PROGRESS AND TO VERIFY PAYMENTS UNDER SECTION 40A(3) OF THE ACT, AS THE ASSESSEES AUDITED ACCOUNTS AND INCOME WAS SHOWN LOWER THAN AS PROVIDED UNDER SECTI ON 44AD OF THE ACT. THE ASSESSEE HAS SHOWN MUCH LOWER INCOME I.E. RS. 6,540/- AS COMPARED TO 8% NET PROFIT OF APPROXIMATELY RS. 2,40 ,000/-. HOWEVER, INSTEAD OF DEFENDING HIS INCOME AND CONSEQUENTLY AU DITED ACCOUNTS, THE ASSESSEE CHOSE TO OFFER INCOME @ 8% DURING THE RE-A SSESSMENT PROCEEDINGS BY TAKING A PLEA THAT BOOKS OF ACCOUNT ARE MISPLACED. WE ARE OF THE VIEW THAT IT IS A CASE OF ESTIMATION OF INCO ME AND THE REVENUE AUTHORITY HAS IMPOSED THE PENALTY IN DISPUTE UNDER SECTION 271(1)(C) OF THE ACT ON ESTIMATION OF INCOME WHICH IS NOT PERMIS SIBLE UNDER THE LAW. 7. KEEPING IN VIEW THE ORDERS OF THIS BENCH AS WELL AS THE JUDGMENTS OF HON'BLE JURISDICTIONAL HIGH COURT, ATT ACHED WITH THE PAPER BOOK AND MENTIONED SUPRA, WE ARE OF THE VIEW THAT T HIS BENCH HAS CANCELLED THE SIMILAR PENALTY ON THE ADDITION WHICH WAS MADE PURELY ON ESTIMATION BASIS AND HON'BLE JURISDICTIONAL HIGH CO URT HAS ALSO TAKEN THE SAME VIEW, AS TAKEN BY THIS BENCH. WE ARE OF THE VI EW THAT THE ISSUE IS SQUARELY COVERED BY THE AFORESAID DECISIONS/JUDGMEN TS OF THIS BENCH AND HON'BLE JURISDICTIONAL HIGH COURT THEREFORE, THE PE NALTY IN DISPUTE IS NOT 7 I.T.A. NO. 683 (ASR)/2013 ASSESSMENT YEAR: 2005-06 SUSTAINABLE IN THE EYE OF LAW AND WE CANCEL THE PEN ALTY ORDER DATED 07.03.2013 PASSED UNDER SECTION 271(1)(C) OF THE AC T BY ACCEPTING THE APPEAL FILED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2014 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH FEBRUARY, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S ROOP SONS & CO., BHALLA STREET, PRATAP BAZAR, CHHEHARTA, AMRITSAR 2. INCOME TAX OFFICER, WARD 3(3), AMRITSAR 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.