DCIT, Agra V. M/s Jagdish & Co, Agra

ITA 694/AGR/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6770 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 16-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C SHARMA
• Assessee Lawyers: VITHAL DAS
• Keywords: Depreciation; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.694/AGR/2008 ASST. YEAR: 2004-05 D.C.I.T. - 4(1), AGRA VS. M/S. JAGDISH & CO., F-15, PHASE-II, TRANS YAMUNA COLONY, AGRA. (PAN : AADFJ 1577 A). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.C. SHARMA, JR. D.R. RESPONDENT BY : SHRI VITHAL DAS, ADVOCATE ORDER PER P.K. BANSAL, A.M.: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 16.09.2008 BY WHICH THE CIT(A) HAS DELETED THE PENA LTY IMPOSED UNDER 271(1)(C) OF THE INCOME- TAX ACT, 1961 (THE ACT HEREINAFTER) AMOUNTING TO RS.7,10,000/- IMPOSED BY THE A.O. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS RETURNED AN INCOME OF RS.6,22,820/- SHOWING A NET PROFIT @ 2.35% BEFORE INTEREST AND SA LARY TO THE PARTNERS AND DEPRECIATION ON GROSS CONTRACT RECEIPT OF RS.3,50,36,207/-. THE A. O. REJECTED THE BOOKS UNDER SECTION 145(3) OF THE ACT AND DETERMINED TOTAL INCOME AT RS.9,63,231/ - AGAINST THE RETURNED INCOME OF RS.6,22,820/-. THE A.O. IMPOSED THE PENALTY UNDER SECTION 271(1)(C) AMOUNTING TO RS.7,10,000/- HOLDING THAT THE ASSESSEE HAS DELIBER ATELY CONCEALED THE INCOME AND DELIBERATELY 2 FURNISHED INACCURATE PARTICULARS OF INCOME. WHEN T HE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE PENALTY BY HOLDING AS UNDER :- 4.1 KEEPING IN VIEW THE SUBMISSIONS MADE BY THE A. R. AND THE OBSERVATIONS OF THE HONBLE ITAT, IT IS AN ADMITTED POSITION THAT T HE NET PROFIT RATE OF 3.36% IS APPLIED ON GROSS RECEIPTS OF RS.3,50,36,307/- AS SH OWN AND CERTIFIED BY THE INDIAN RAILWAYS. THERE IS NO DIFFERENCE IN THE GROSS RECE IPTS AS SHOWN AND FINALLY ACCEPTED. ONCE THE NET PROFIT RATE IS APPLIED ON G ROSS RECEIPTS SHOWN, THE RELEVANCE OF VERIFICATION OF EXPENSES DO NOT MATERS MUCH. AS THERE IS DIFFERENCE OF OPINION AT DIFFERENT STAGES REGARDING APPLICABIL ITY OF N.P. RATE, THE DIFFERENCE IN INCOME RETURNED AND INCOME ASSESSED CANNOT BE SAID TO BE ON ACCOUNT OF GROSS NEGLECT ON THE PART OF THE ASSESSEE IN FURNISHING T HE RETURN. FURTHER HAVING APPLIED HIGHER NET PROFIT RATE CANNOT ATTRIBUTE TO GUILTY OF FRAUD OR WILLFUL NEGLECT. THERE APPEARS TO BE NO CONSCIOUS CONCEALMENT OF INC OME ON THE PART OF THE ASSESSEE. 4.2 HAVING SEEN THE FACTS AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ON GOING THROUGH THE VARIOUS DECISIONS REFERRED BY THE ASSESSEE I AM OF THE OPINION THAT THERE IS NO WILLFUL NEGLECT AND THERE IS NO CONCEALMENT OF FACTS AND FURNISHING OF INACCURATE PARTICULARS. IT IS AL SO SEEN THAT THE FINAL DIFFERENCE IN TAX DUE AS PER INCOME RETURNED AND INCOME FINALLY A SSESSED COME TO RS.1,22,121/- (345558-223437) AS AGAINST RS.7,10,000/- WHICH HAS BEEN WORKED OUT ON THE BASIS OF INCOME ASSESSED AFTER REDUCTION ALLOWED IN FIRST APPEAL. 4.3 APART FROM OTHER JUDICIAL RULINGS CITED BY THE A.R., THE HONBLE KOLKATA BENCH OF ITAT HAS DELIVERED A RULING IN THE CASE OF SHRI T.K. DUTTA VS. ITO WD 33(4), KOLKATA REPORTED IN (2008) 206 TAXATION 1 (K OLKATA) WHICH APPEARS TO SIT ON ALL FOURS OVER THE FACTS OF THE PRESENT CASE. T HERE ALSO THE BUSINESS WAS OF CIVIL CONSTRUCTION AND IN ABSENCE OF DETAILS THE AO APPLI ED NP OF 10% AFTER REJECTING ACCOUNTS, THE CIT(A) REDUCED IT TO 8% & THE ITAT TO 7% AND DELETED THE PENALTY U/S 271(1)(C) AS INCOME WAS ASSESSED ON ESTIMATE BA SIS. ACCORDINGLY IN VIEW OF THE FACTS OF THE CASE AND TH E LEGAL PRECEDENTS THE PENALTY IMPOSED U/S 271(1)(C) IS HEREBY CANCELLED. THUS, APPEAL OF THE ASSESSEE IS ALLOWED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE NOTED THAT IN THIS CASE, THE ADDITION HAS BEEN MADE MERELY ON EST IMATE BASIS. THE ASSESSEE HAS SUBMITTED THE EXPLANATION BEFORE THE A.O. ONCE THE ASSESSEE HAS SUBMITTED THE EXPLANATION, THE ONUS GETS SHIFTED TO THE REVENUE TO PROVE THAT THE EXPLANATIO N FURNISHED BY THE ASSESSEE IS FALSE. THE FALSE 3 IS OPPOSITE TO THE TRUE. THE REVENUE HAS NOT BROUG HT OUT ANY EVIDENCE ON RECORD WHICH MAY PROVE THAT THE EXPLANATION SUBMITTED BY THE ASSESSE E IS FALSE. THE ADDITION HAS BEEN SUSTAINED ONLY DUE TO THE CHANGE IN NET PROFIT RATIO I.E. MER ELY ON THE BASIS OF ESTIMATE. THIS IS SETTLED LAW THAT NO PENALTY CAN BE IMPOSED WHEN THE ADDITION IS MADE ON ESTIMATE BASIS. OUR AFORESAID VIEW IS DULY SUPPORTED BY THE FOLLOWING CASES :- CIT VS. NADIR ALI & CO (ALL HC) 106 ITR 151 SAHYOG SAHKARI SHRAM SAMVIDA SAMITI LTD. VS. ACIT ( ITAT LUCKNOW) 111 TTJ 540 CIT VS. ARJUN PRASAD AJIT KUMAR (ALL HC) 214 CTR 35 5 HARI GOPAL SNGH VS. CIT (PUNJAB & HARYANA HC) 258 I TR 85 CIT VS. M.M. RICE MILLS (PUNJAB & HARYANA HC) 253 I TR 17 CIT MADRAS VS. KHODAY ESWARSA AND SONS (SC) 83 ITR 369 CIT VS. SHIVNARAYAN JAMMALAL & CO. (M.P. HC) 140 CT R 215 RAJAN H SHINDE VS. DCIT (ITAT PUNE THIRD MEMBER) 10 3 ITD 360 CIT VS. SANGRUR VANASPATI MILLS LTD. (PUNJAB & HARY ANA HC) 216 CTR 92. 4. NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDG E BY THE LD. D.R. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) DELETING THE PENALT Y. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE STAND S DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.06.2010) . SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH JUNE, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY