Shri B. Mothilal Ranka, Mysore V. ITO, Mysore

ITA 77/BANG/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0595 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1996-1997
• Appeal Filed On: 24-01-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: K PRATAPAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE B BENCH, BANGALORE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI A. MOHAN ALANKAMONY, AM ITA NOS.77 & 78(BANG.)/2006 (ASSESSMENT YEARS :1996-97 & 1997-98) SHRI B.MOTHILAL RANKA, PROPRIETOR, MYSORE AUTO AGENCIES, L.B.S.ROAD, MYSORE APP ELLANT VS THE INCOME-TAX OFFICER, WARD-2(2), MYSORE RESPOND ENT APPELLANT BY : SHRI K.PRATAPAN RESPONDENT BY : SMT. V.S.SREELEKHA O R D E R PER SHAILENDRA KUMAR YADAV, JM BOTH THESE APPEALS PERTAINS TO SAME ASSESSEE FOR T HE ASSESSMENT YEARS 1996-97 & 1997-98 ON THE POINT OF PENALTY LEV IED U/S 271(1) (C) OF THE IT ACT. SO THEY ARE BEING DISPOSED OF BY A COM MON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE IS AN INDIVIDUAL RUNNING PROPRIETA RY BUSINESS IN THE NAME AND STYLE OF M/S MYSORE AUTO AGENCIES. HE ALSO DEALS IN AUTOMOBILE SPARE PARTS. FOR THE ASSESSMENT YEAR 19 96-97, IN QUANTUM PROCEEDING AN EX-PARTE ORDER WAS PASSED WHEREBY CER TAIN ESTIMATED ADDITIONS WERE MADE WHICH WERE CONFIRMED BY THE CIT (A). 3. IN SECOND APPEAL, THE TRIBUNAL GRANTED PARTIAL RELIEF BY OBSERVING AS UNDER: ITA NOS.77 & 78(B)/06 2 5. LOOKING TO THE CIRCUMSTANCES OF THE CASE, I A M OF THE VIEW THAT TH4 BOOKS OF ACCOUNT WERE ALREADY IMPOUNDED BY THE DEPARTMENT. THEREFORE, THOSE COUL D HAVE BEEN CONSIDERED BY THE AO AT THE TIME OF FRAMI NG EX- PARTE ASSESSMENT ORDERS. MOREOVER, AS SUBMITTED BY THE ASSESSEE, IT IS SUBSTANTIALLY CORRECT THAT WHILE DE ALING IN VEHICLES, THE ASSESSEE IS GETTING A FIXED AMOUNT OF COMMISSION BECAUSE THE SALE PRICE OF THE VEHICLE IS ALREADY FIXED BY THE COMPANY, WHICH PRODUCES THE VEHICLES. HOWEVER, LOOKING TO THE CIRCUMSTANCES THA T ALL THE QUERIES MADE BY THE AO COULD NOT BE SATISFACTOR ILY REPLIED BY THE ASSESSEE, IN MY OPINION, NET PROFIT OF 4% MAY BE ACCEPTED FOR COMPUTING THE TOTAL INCOME OF T HE ASSESSEE FOR ALL THE YEARS. IN RESPECT OF THE ADDI TION REGARDING THE TURNOVER FOR THE ASSESSMENT YEARS 199 5-96 TO 1997-98 MADE BY THE AO, I DO NOT FIND ANY REASON TO SUSTAIN THE SAME. THE ADDITION WAS MADE WHILE FRAM ING THE EX-PARTE ASSESSMENTS. THE LEARNED AR HAS FURTHE R INFORMED THAT THE SALES SHOWN BY THE ASSESSEE COULD NOT BE REJECTED BY POINTING OUT ANY DEFECT AND NO ADDIT ION WAS MADE BY THE SALES TAX AUTHORITIES IN THIS REGAR D. ACCORDINGLY, I DIRECT THE AO TO RE-WORK THE NET PRO FIT AS INDICATED ABOVE. FURTHER, THE ADDITION IN RESPECT OF TURNOVER IS DELETED. IN THIS BACKGROUND, THE STAND OF THE ASSESSEE IS T HAT THE ESTIMATED ADDITION CANNOT BE THE BASIS FOR LEVYING PENALTY U/ S 271(1)(C ) OF THE IT ACT. ESPECIALLY, WHEN PARTIAL RELIEF WAS GRANTED BY THE TRIBUNAL AS STATED ABOVE. ON THE OTHER HAND, DR SUPPORTED THE ORDER OF AUTHORITI ES BELOW. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE ARE NOT INCLINED TO CONCUR WITH THE FINDINGS OF THE CIT(A). IT IS NOT DISPUTED THAT THE ADDITION IN QUESTION HAS BEEN MADE BASED ON THE ESTIMATION AND ITA NOS.77 & 78(B)/06 3 SUBSTANTIAL RELIEF HAS BEEN GRANTED BY THE TRIBUNAL . THOUGH THE SUSTAINED ADDITION HAS BEEN APPEALED BEFORE THE JURISDICTIONA L HIGH COURT WHICH IS SUB- JUDICE. WITHOUT PREJUDICE TO THE MERIT OF THE ADDI TION WHICH IS SUB-JUDICE BEFORE THE JURISDICTIONAL HIGH COURT, WE ARE OF THE VIEW THAT THE ESTIMATED ADDITION CANNOT BE THE BASIS OF PENALTY UNDER THE P ROVISIONS OF SEC.271(1)( C ) OF THE IT ACT. PENALTY IS NOT AUTOMATIC ON THE BASIS OF ADDITION. THERE IS NOTHING ON THE RECORD TO SUGGEST THAT THE ASSESSEE HAS CONC EALED THE INCOME. IRRESPECTIVE OF THE FACT THAT THE ADDITION HAS BEEN SUSTAINED BY THE TRIBUNAL PARTIALLY PENALTY IN QUESTION CANNOT BE SUSTAINED. ACCORDING TO US, THIS IS NOT A FIT CASE FOR LEVYING PENALTY U/S 271(1)( C) OF TH E IT ACT. SO WE DELETE THE SAME. FACTS BEING SIMILAR IN NEXT YEAR, SO FOLLOWING SAME REASONING PENALTY IN NEXT YEAR IS ALSO DELETED. 5. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE OF HEARING. (A. MOHAN ALANKAMONY) (SHAILENDRA K UMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: BANGALORE DATED: AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) 7. GF(DELHI) BY ORDER AR, ITAT, BAN GALORE