SHRI SURESH KUMAR MITTAL, L/H SHRI DEVI SAHAI MITTAL, JAIPUR V. INCOME TAX OFFICER, WARD-1-2, JAIPUR

ITA 726/JPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3580 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 27-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S NEHRA
• Assessee Lawyers: NIKHILESH KATARIA
• Section: 271(1)(c); 133A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 726/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 SURESH KUMAR MITTAL, L/H- SHRI DEVI SAHAI MITTAL, PROP.- M/S SURESH KUMAR & COMPANY, RADHA DAMODAR KI GALI, JAIPUR. CUKE VS. I.T.O., WARD 1(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACFPM 8506 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI NIKHILESH KATARIA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI A.S. NEHRA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 08/05/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 14/05/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A)- I, JAIPUR DATED 26/07/2017 FOR A.Y. 2008-09, WHEREI N THE ASSESSEE HAS CHALLENGED THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DESPITE THE FACT THAT THE ADDITIONS WERE MADE PURELY ON ESTIMATED BASIS. 2. EARLIER, THIS APPEAL WAS DISMISSED FOR WANT OF PR OSECUTION BY THE COORDINATE BENCH VIDE ITS ORDER DATED 07/11/2017, W HICH WAS SUBSEQUENTLY RECALLED VIDE M.A. ORDER DATED 23/01/2018. HENCE, T HIS APPEAL HAS COME UP FOR HEARING BEFORE US. ITA 726/JP/2017_ SURESH KUMAR MITTAL VS ITO 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE DERIVES HIS INCOME FROM CONTRACT AND JOB WORK OF IRON FABRICATI ON. FOR THE YEAR UNDER CONSIDERATION, HE HAS FILED HIS RETURN OF INCOME DE CLARING TOTAL INCOME OF RS. 3,46,770/- ON 30/09/2008. SUBSEQUENTLY, A SURVEY U/ S 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 22/4/2009 WHEREIN IT WAS FOUND THAT THE ASSESSEE HAD NOT KEPT ANY BOOKS OF ACCOUNT IN RELATION TO ITS BUSINESS AND IN HIS STATEMENT RECORDED THEREON, THE ASSESSEE HAS ALSO CONFIRMED THE SAME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER AFTER MAKING VARIOUS OBSERVATIONS HAS ACCEPTED THE TURNOVER AS DECLARED BY THE ASSESSEE AMOUNTING TO RS. 89,97, 900/-, HOWEVER HAS NOT ACCEPTED THE NP DECLARED BY THE ASSESSEE AND HAS ES TIMATED THE N.P. RATE @ 20%. FURTHER THE ASSESSING OFFICER ALSO ESTIMATED T HE INCOME FROM JOB WORK AMOUNTING TO RS. 90,000/-. IN THE QUANTUM PROCEEDIN GS, THE N.P. RATE WAS REDUCED BY THE LD. CIT(A) FROM 20% TO 12% AND THE J OB WORK CHARGES ESTIMATED AT RS. 90,000/- WERE SUSTAINED. APPARENTL Y, THE ASSESSEE HAS NOT FILED ANY FURTHER APPEAL AGAINST THE ORDER OF LD. CIT(A), HENCE, QUANTUM PROCEEDINGS HAVE SEEN ATTAINED FINALITY. 4. DURING THE COURSE OF PENALTY PROCEEDINGS, THE AS SESSING OFFICER ISSUED FRESH SHOW CAUSE NOTICE AND HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME BY NOT DISCLOSING TRUE AN D CORRECT PROFITS OF THE CONTRACT BUSINESS. HE, THEREFORE, LEVIED THE PENALTY AMOUNTI NG TO RS. 2,79,731/- @ 100% OF TAX SOUGHT TO BE EVADED. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO HAS CONFIRMED THE SAID LEVY OF PENALTY. NOW, THE ASSESSEE IS IN APPEAL AGAINST THE SAID FINDINGS OF THE LD CIT(A). 6. DURING THE COURSE OF HEARING, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT FIRSTLY, THE ADDITIONS MADE BY THE ASSESSING O FFICER HAVE BEEN SUBSTANTIALLY REDUCED IN THE APPELLATE PROCEEDINGS, THEREFORE, TH E VERY FOUNDATION OF LEVYING ITA 726/JP/2017_ SURESH KUMAR MITTAL VS ITO 3 OF PENALTY BECOME NON-EXISTENT AND HENCE, THERE WAS NO JUSTIFICATION FOR LEVYING THE SAID PENALTY. IT WAS FURTHER SUBMITTED THAT THE ORDER OF THE LD. CIT(A) COULD NOT BE CHALLENGED DUE TO DEATH OF ASSESSEE, H ENCE, NONE FILING OF APPEAL IN THE QUANTUM PROCEEDINGS BY THE ASSESSEE SHOULD N OT BE CONSIDERED ADVERSELY. IT WAS FURTHER SUBMITTED THAT EVEN THE D EPARTMENT HAS NOT FILED ANY FURTHER APPEAL AGAINST THE ORDER OF THE LD. CIT(A). IT WAS FURTHER SUBMITTED THAT THERE IS ABSOLUTELY NO POSITIVE EVIDENCE AGAINST TH E ASSESSEE THAT IT HAS EARNED MORE THAN WHAT HAS BEEN DECLARED IN HIS RETURN OF I NCOME DESPITE THE FACT THAT THE SURVEY PROCEEDINGS WERE TAKEN AGAINST THE ASSES SEE ON 20/4/2009 AND IN ABSENCE OF ANY POSITIVE EVIDENCE, NO PENALTY CAN BE IMPOSED. IT WAS FURTHER SUBMITTED THAT NO INCRIMINATING DOCUMENTS WERE FOUN D DURING THE COURSE OF SURVEY AND THE ASSESSING OFFICER HAS NOT BEEN ABLE TO REFER TO ANY SINGLE SLIP OR LOOSE PAPER TO BASE HIS ADDITIONS, WHICH ITSELF PRO VES THAT THERE WAS NO CONCRETE BASIS FOR MAKING OF ADDITION. IT WAS FURTHER SUBMIT TED THAT THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER AND PARTLY SUSTAINED BY THE LD. CIT(A) ARE BASED ON ESTIMATION ONLY WITHOUT ANY POSITIVE MATERIAL AG AINST THE ASSESSEE. REGARDING THE REASONS FOR NON-MAINTENANCE OF BOOKS OF ACCOUNT , IT WAS SUBMITTED THAT THIS FACT IS NOT AN AFTERTHOUGHT RATHER IT WAS ACCEPTED IN THE SURVEY PROCEEDINGS AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS . IT WAS SUBMITTED THAT THE ASSESSEE WAS NOT AWARE ABOUT THE COMPULSORY MAINTEN ANCE OF BOOKS OF ACCOUNT AS NEITHER IN THE PAST NOR IN THE FUTURE THE TURNOV ER OF THE ASSESSEE EXCEEDED THE LIMIT AS PRESCRIBED U/S 44AB OF THE ACT. IT WAS FURTHER SUBMITTED THAT THERE WAS COMPLETE DISCLOSURE MADE IN THE RETURN OF INCOM E AND IN THE BALANCE SHEET, P&L ACCOUNT AND THE OTHER DETAILS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT THE DECI SIONS RELIED UPON BY THE ASSESSING OFFICER AND THE LD. CIT(A) ARE DISTINGUIS HABLE ON FACTS. IT WAS SUBMITTED THAT THE DECISION OF HON'BLE SUPREME COUR T IN THE CASE OF MAK DATA PVT. LTD. 358 ITR 593 (SC) RELIED UPON BY THE LD. C IT(A) IS FACTUALLY DISTINGUISHABLE AS IN THAT CASE THERE WAS A SPECIFI C SURRENDER BASED ON VOLUMINOUS DOCUMENTS FOUND DURING THE COURSE OF SUR VEY AND THE RETURN WAS ITA 726/JP/2017_ SURESH KUMAR MITTAL VS ITO 4 FILED AFTER THE SURVEY PROCEEDINGS WHICH IS NOT THE FACTS IN THE PRESENT CASE. THE LD AR FURTHER RELIED ON THE VARIOUS DECISIONS FOR T HE PROPOSITION THAT WHERE THE ADDITIONS HAVE BEEN MADE ON ESTIMATE BASIS, WHICH W AS SUBSTANTIALLY REDUCED IN THE APPELLATE PROCEEDINGS, THE SAME DO NOT QUALIFY FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THIS REGARD, THE LD AR HAS RELIED ON THE DECISIONS OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MAHENDRA SINGH KHEDLA (2012) 252 CTR 0453 (RAJ) AND CIT VS. KRISHI TYRE R ETRADING & RUBBER INDUSTRIES (2013) 263 CTR 484 (RAJ). BESIDES, HE HA S RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF PR.CIT VS. FORTUNE TECHNOCOMPS (P) LTD. (2016) 96 CCH 0018 (DEL) AND THE DECISION OF HONBL E GUJARAT HIGH COURT IN THE CASE OF ITO VS. BOMBAYWALA READYMADE STORES (2015) 230 TAXMAN 0313. 7. PER CONTRA, THE LD SR. DR VEHEMENTLY ARGUED THE MATTER AND RELIED ON THE FINDINGS OF THE ASSESSING OFFICER AS WELL AS THE LD . CIT(A) AND SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THE TUR NOVER DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME FILED MUCH PRIOR T O SURVEY HAS BEEN ACCEPTED BY THE ASSESSING OFFICER AND THEREAFTER THE ASSESSING OFFICER HAS ESTIMATED THE NP RATE @ 20%. SUBSEQUENTLY, DURING THE APPELLATE PROC EEDINGS, THE NP RATE HAS BEEN REDUCED BY THE LD. CIT(A) TO 12%. THERE IS NO FINDING RECORDED BY EITHER OF THE AUTHORITIES REGARDING LINKAGE AND ESTIMATION OF NET PROFIT RATE WITH FINDINGS, IF ANY DURING THE COURSE OF SURVEY PROCEEDINGS. IT IS, THEREFORE, A CASE WHERE THE NP RATE HAS BEEN ESTIMATED BY BOTH THE AUTHORIT IES AND THE ADDITIONS HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. 9. IN THIS FACTUAL BACKGROUND, WE REFER THE DECISIO N OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KRISHI TYRE RETRADING & RUBBER INDUSTRIES 360 ITR 580 (RAJ) WHEREIN THE HON'BLE HIGH COURT HAS HELD AS UNDER: ITA 726/JP/2017_ SURESH KUMAR MITTAL VS ITO 5 8. ON A PERUSAL OF FACTS, IT IS APPARENT THAT THE TRIBUNAL IN THE REGULAR PROCEEDINGS HAD UPHELD THE ADDITION BY OBSE RVING THAT THE ASSESSING OFFICER, THOUGH JUSTIFIED IN MAKING SOME ADDITION, HOWEVER, IT OBSERVED THAT EVEN THE ASSESSING OFFICER HAD MADE A N ESTIMATED ADDITION FOR HE WAS NOT SURE AS TO EXACT AMOUNT OF ADDITION, TO BE MADE AND CONSIDERING THE PECULIAR FACTS OF THE CASE, THE TRI BUNAL MODIFIED THE ORDER BY OBSERVING THAT 'WE FIND JUSTIFICATION IN THE ORD ER OF THE LOWER AUTHORITIES WHO HAVE RIGHTLY MADE THE ADDITION ON ESTIMATE BASI S. BUT THE SAME IS LOOKING ON HIGHER SIDE DUE TO THE PECULIAR FACTS AN D CIRCUMSTANCES OF THE CASE. BY MODIFYING BOTH THE ORDERS OF THE LOWER AUT HORITIES, WE RESTRICT THE ADDITION TO RS. 1,00,000 (RS. ONE LAKH) ONLY. THUS, THE ASSESSEE WILL GET THE RELIEF OF RS.44,000 (RS. FORTY FOUR THOUSAND) FROM THE ORDERS OF THE LOWER AUTHORITIES ON AD HOC BASIS'. 9. ON A PERUSAL OF THE FACTS STATED HEREINBEFORE, IT TRANSPIRED THAT THE ADDITION HAS BEEN SUSTAINED PURELY ON ESTIMATE BASIS AND, IN OUR VIEW, NO POSITIVE FACT OR FINDING HAS BEEN FOUND SO AS TO EVEN MAKE T HE SAID ADDITION. IT IS, ACCORDING TO US, A PURE GUESS WORK AND, IN OUR VIEW , ON SUCH GUESS WORK OR ESTIMATION, NO PENALTY UNDER SECTION 271(1)(C) OF T HE ACT CAN BE SAID TO BE LEVIABLE. FOR IMPOSING PENALTY UNDER SECTION 271(1) (C) OF THE ACT, THE ASSESSING OFFICER HAS TO CLEARLY PROVE THE CONDUCT OF THE ASSESSEE, WHICH IN THIS CASE, HAS NOT BEEN PROVED. MERELY BECAUSE THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED OR ESTIMATED ADDITION WAS MA DE, IN OUR VIEW, NO PENALTY IS LEVIABLE. THE ASSESSEE OFFERED AN EXPLAN ATION, WHICH COULD NOT BE TERMED AS NOT BONA FIDE. IN THE ABSENCE OF ANY CORR OBORATIVE EVIDENCE TO PROVE THE CHARGE OF CONCEALMENT, IN OUR VIEW, THE P ENALTY COULD NOT BE IMPOSED. 10. WE ALSO REFER TO THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MAHENDRA SINGH KHEDLA (SUPRA) WHEREIN THE HON'BLE HIGH COURT HAS HELD AS UNDER: ITA 726/JP/2017_ SURESH KUMAR MITTAL VS ITO 6 8. THE ABOVE FINDING OF THE TRIBUNAL MAKES IT CLEAR THAT ADDITIONS MADE BY THE ASSESSING OFFICER WERE BASED ON ESTIMATION ONLY . A FACT OR ALLEGATION BASED ON ESTIMATION CANNOT BE SAID TO BE CORRECT ON LY, IT CAN BE INCORRECT ALSO. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, PENALTY WAS WRONGLY LEVIED BY THE ASSESSING OFFICER. THE BASIS FOR LEVYING PENALTY IN THE PRESENT CASE IS ONLY ESTIMATION, WHICH IS PURELY A QUESTION OF FACT AND THERE IS A CONCURRENT FINDING OF FACT RECORDED BY FIRST A PPELLATE AUTHORITY AS WELL AS THE APPELLATE TRIBUNAL BOTH. 11. IN THE LIGHT OF THE ABOVE, IN THE ENTIRETY OF F ACTS AND CIRCUMSTANCES OF THE CASE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE H ON'BLE RAJASTHAN HIGH COURT REFERRED SUPRA, THE LEVY OF PENALTY U/S 271(1)(C) I S HEREBY DELETED. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/05/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14 TH MAY, 2018 * RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SURESH KUMAR MITTAL, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD 1(2) JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K]T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 726/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR