Navnidhi Specific Family Trust, Mehsana V. The ACIT.,Mehsana Circle, Mehsana

ITA 793/AHD/2012

• Counselvise Citation: 79320514 RSA 2012
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 10-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH SR DR
• Assessee Lawyers: S N SOPARKAR SRAR
• Keywords: Gross profit estimation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.793/AHD/2012 ASSESSMENT YEAR :2005-06 NAVNIDHI SPECIFIC FAMILY TRUST PROP OF BHOOMI PACKAGING & BHOMMI ENTERPRISE, PLOT NOS. 280/281/282, GIDC MODHERA ROAD, MEHSANA, [ PAN NO.AAATN 0750E ] V/S . ASSTT. COMMISSIONER OF INCOME TAX, MEHSANA CIRCLE, MEHSANA / APPELLANT .. / RESPONDENT) /BY APPELLANT SHRI S.N.SOPARKAR, SR-AR & SHRI HIMANSHU SHAH, AR /BY RESPONDENT SHRI D.K.SINGH, SR-DR /DATE OF HEARING 06-12-2012 /DATE OF PRONOUNCEMENT 14 -12-2012 / // / O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-GANDHINAGAR, A HMEDABAD (CIT(A) FOR SHORT) DATED 24-01-2012 PERTAINING TO ASSESSMEN T YEAR (AY) 2005-06. THE SOLITARY GROUND HAS RAISED BY ASSESSEE, WHICH IS RE PRODUCED AS UNDER:- 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT(A) HAS GROSSLY ERRED INN POINTS OF LAW AND FACTS. ITA NO.793/AHD/2012 A.Y. 2005-06 NAVNIDHI SPECIFIC FAMILY TRUST V. ACIT CIR. MEHSA NA PAGE 2 2. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APP ELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMISSING THE APPEAL AGAINST PENALTY LEVIED FOR RS.3,13,100/- U/S 271(1)(C) OF I NCOME-TAX ACT. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS ENGAGE D IN THE BUSINESS OF MANUFACTURING OF CORRUGATED BOXES ON THE BASIS OF T HE MATERIALS SUPPLIED BY THE PARTY. THE CASE OF THE ASSESSEE WAS PICKED UP F OR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) OF THE INCOME-TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DAT ED 27-12-2007. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFICER (AO) MADE ADDITION IN RESPECT OF GROSS PROFIT (GP) ON ESTIMATION BASIS AND A SUM OF RS.9.30 LAKHS WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. THE AO ALSO INITIATED PENALTY PROCEEDINGS SEPARATELY. THE ASSESSEE CARRIED THE MA TTER IN QUANTUM PROCEEDINGS UP TO THE STAGE OF INCOME TAX APPELLATE TRIBUNAL AND THE HONBLE CO-ORDINATE BENCH OF THIS TRIBUNAL PARTLY ALLOWED T HE APPEAL OF THE ASSESSEE. THEREBY IT WAS DIRECTED THAT DIFFERENCE OF THE GP O F 4% BE APPLIED ONLY IN RESPECT OF MANUFACTURING OF GOODS STATED TO RS.92,9 4,550/-. IN PENALTY PROCEEDINGS ON ENTIRE ADDITION OF RS.9.30 LAKHS PEN ALTY WAS LEVIED. AGAINST THIS, ASSESSEE FILED APPEAL BEFORE LD. CIT(A) WHO A FTER CONSIDERING THE SUBMISSION OF ASSESSEE DISMISSED THE APPEAL. 3. THE ASSESSEE FEELING AGGRIEVED BY THIS ORDER OF LD. CIT(A) PREFERRED APPEAL BEFORE US. 4. LD. SR-COUNSEL. SHRI S.N.SOPARKAR WHO APPEARED F OR THE ASSESSEE SUBMITTED THAT LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT IN QUANTUM PROCEEDINGS THE ADDITION WAS FURTHER REDUCED AND PE NALTY PROCEEDINGS OUGHT TO HAVE BEEN RESTRICTED TO THE EXTENT REDUCED ADDIT ION. HE FURTHER SUBMITTED THAT THE PENALTY IS NOT LEVIABLE UNDER THE FACTS AN D CIRCUMSTANCES OF THE CASE. HE SUBMITTED THAT THE ADDITION IS MADE MERELY ON TH E BASIS OF ESTIMATION. HE FURTHER SUBMITTED THAT THE DISCREPANCY AS NOTED BY THE AO WAS DULY EXPLAINED BUT THE AO WORKED OUT THE AVERAGE GP OF TWO PROCEED INGS YEARS I.E., AYS ITA NO.793/AHD/2012 A.Y. 2005-06 NAVNIDHI SPECIFIC FAMILY TRUST V. ACIT CIR. MEHSA NA PAGE 3 2003-04 AND 2004-05 RESPECTIVELY. ON THE CONTRARY, LD. SR-DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. HE SUBMI TTED THAT THERE WAS VARIOUS DISCREPANCIES RESULTING THE ESTIMATION OF GP BY THE AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ADMITTEDLY, THE PENALTY PROCEE DINGS AND THE ASSESSMENT PROCEEDINGS ARE SEPARATE AND DISTINGUISHED PROCEEDI NGS. THE UNDISPUTED FACT IS THAT IN THE CASE IN HAND, THE ADDITION HAS BEEN MADE ON ESTIMATION BASIS. IT IS NOT THE DISPUTED BY THE REVENUE THAT IN QUANTUM PROCEEDINGS, THE HONBLE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OW N CASE IN ITA NO.742/AHD/2009 DATED 13-01-2011 FOR THE AY 2005-06 HAS PARTLY ALL OWED THEREBY DIRECTING THE AO TO APPLY GP RATE 4% ONLY T O THE MANUFACTURING ACTIVITY. THIS BEING THE POSITION, THE PENALTY ON E NTIRE ADDITION MADE BY AO CANNOT BE SUSTAINED. NOW QUESTION TO BE DECIDED WHE THER THE PENALTY UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE IS TO BE CO NFIRMED ON THE REST OF THE ADDITION OR NOT. THE ASSESSEE HAD GIVEN EXPLANATION IN RESPECT OF DISCREPANCIES AS NOTICED BY THE AO WHICH WAS NOT AC CEPTED THE CONTENTION OF THE ASSESSEE IS THAT ON THE BASIS OF WRONG APPRAISA L OF THE FACTS AND ADDITION MADE ON GP ESTIMATION NO PENALTY U/S. 271(1) OF TH E ACT CAN BE SUSTAINED. THE RELIANCE IS PLACED ON THE FOLLOWING CASE LAW AT PAGE-5 OF THE ASSESSEES PAPER BOOK, WHICH IS REPRODUCED HEREINBELOW:- 1) CIT VS. RELIANCE PETROPRODUCTS PVT. LTD 322 I TR 158 (SC) 2) CIT VS HARSHVARDHAN CHEMICALS 259 ITR 212 (RA J) 3) AGGRAWAL OIL & GENERAL MILLS LTD. VS. CIT - P & H 4) CIT VS. M.S. BINDRA & SONS PVT. LTD. 336 ITR 125 (DEL) 5) CIT VS. NALWA SONS IND. LTD. 327 ITR 543 (DEL ) SINCE THE ADDITION HAS BEEN MADE ON ESTIMATION BASI S AND THE ADDITION EVEN REDUCED TO THE EXTENT 4% OF GP ON MANUFACTURING ACT IVITY, THEREFORE THIS IS NOT A CASE OF FURNISHING INACCURATE PARTICULARS OF INCO ME OR CONCEALING MATERIAL PARTICULARS. IN THIS CASE THE EXPLANATION OFFERED B Y THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO. MOREOVER, THE HONBLE C O-ORDINATE BENCH HAS NOTED THE FACT THAT THE ASSESSEE WAS NOT CONFRONTED WITH REGARD TO DECREASE IN ITA NO.793/AHD/2012 A.Y. 2005-06 NAVNIDHI SPECIFIC FAMILY TRUST V. ACIT CIR. MEHSA NA PAGE 4 GP IN THE YEAR UNDER CONSIDERATION. THIS FACT IS NO T CONTROVERTED BY THE REVENUE. AFTER CONSIDERING ALL ASPECTS OF THE MATTE R AND THE RATIO LAID IN THE JUDGMENTS AS RELIED BY THE ASSESSEE, WE HEREBY DIRE CT THE ASSESSING OFFICER TO DELETE PENALTY. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) `(JUDICIAL MEMBER) AHMEDABAD, *DKP !' #- 14/12/2012 )*+ , --. --. --. --. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '+'-2 3 / CONCERNED CIT 4. 3- / CIT (A) 5. .56 ---2, -2 , )*+ / DR, ITAT, AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER/ , /TRUE COPY/ =/) '> -2 , )*+ , STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 06/12 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 06/12 4) DATE OF CORRECTION 07/12 5) DATE OF FURTHER CORRECTION - - 6) DATE OF INITIAL SIGN BY MEMBERS 11/12 7) ORDER UPLOADED ON 14/12 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 14/12