Shri Vipul D.Shah,HUF, Gandhinagar V. The Income tax Officer,Ward-4, Gandhinagar

ITA 794/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63153 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 15-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K C THAKER
• Keywords: Opportunity of being heard
• Section: 143(3); 133A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBE R I.T.A. NO.794/AHD/2010 A.Y. 2003-04 VIPUL D. SHAH, H.U.F., PLOT NO.671, SECTOR-22, GANDHINAGAR APPELLANT VS. THE I.T.O., WARD-4, GANDHINAGAR RESPONDENT DEPARTMENT BY : SHRI VIVEK ANAND OJHA, SR. D.R. ASSESSEE BY : SHRI K.C. THAKER, A.R. DATE OF HEARING : 05.11.2012 DATE OF PRONOUNCEMENT : 23.11.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-GANDHINAGAR DATED 09.10.2009. 2. ASSESSEE, IN THIS APPEAL, IS AGGRIEVED BY THE OR DER OF LD. CIT(A) IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT LEV IED BY THE A.O. 3. THE A.O. WHILE LEVYING THE PENALTY OF RS.2,58,46 4/- U/S 271(1)(C) HAS OBSERVED AS UNDER:- THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 4,89,520/- WAS FILED BY THE ASSESSEE ON 23/11/2003. THE ORDER U/S 147 R.W.S. UNDER SECTION 143(3) DATED 15/12/2006 WAS PA SSED, ASSESSING THE INCOME OF THE ASSESSEE AT RS.19,39,42 0/-. THE MAJOR ADDITION WAS MADE BY THE ASSESSING OFFICER AS UNDER:- INCOME AS PER SECTION 44AF RS.1,44,519 INCOME DISCLOSED BY THE ASSESSEE RS.14,94,091 UNACCOUNTED OPENING STOCK RS.3,00,000 TOTAL RS.19,39,420 I.T.A. NO.794/AHD/2010 A.Y. 2003-04 2 2. THE BACKGROUND OF THE ASSESSMENT IS THE SURVEY U /S 133A OF CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSE E ON 25/12/2002. THE APPELLANT IS A RETAILER IN CYCLE A ND CYCLE PARTS. IN THE PRECEDING YEAR, HE HAD SHOWN HIS INCOME U/S 44AF. DURING THE YEAR ALSO, THE SURVEY PARTY DID NOT FIND ANY BOOKS OF ACCOUNTS EXCEPT THE SALES BILLS FROM THE ASSESSEES PREMISES AND THEREFORE, POSSIBLY HE WANTED TO DECLARE HIS INCOME U/S 44AF. THE SURVEY PARTY INVENTORISED THE TOTAL STOCK FOUND AND VALUED AT RS.16.94 LACS. WORKING ON THE ASSUMPTION THAT THE ASSESSEE HAD AN OPENING STOCK OF RS.3 LACS [AS NO TRADING ACCOUN T HAD BEEN DRAWN IN THE PRECEDING YEAR], THE SURVEY PARTY CAME TO THE CONCLUSION THAT THE ASSESSEE WAS CARRYING AN UNEXPL AINED STOCK OF RS.13,94,091-. IN THE STATEMENT RECORDED DURING TH E COURSE OF THE SURVEY, ASSESSEE ALSO AFFIRMED THIS VALUE OF UN EXPLAINED STOCK. FURTHER, CASH AMOUNTING TO RS.1,07,000/- WA S FOUND. THE APPELLANT IN HIS STATEMENT OFFERED RS.1 LAC AS UNAC COUNTED CASH AND AGREED TO OFFER IT FOR TAXATION. 3. HOWEVER, AT THE TIME OF FILING OF THE RETURN, TH E APPELLANT SHOWED PROFIT @10% ON GROSS SALES OF RS.14,45,188/- I.E. RS.1,44,519 U/S 44AF AND DISCLOSED A STOCK DIFFEREN CE OF RS.3,45,000/- ONLY. WHILE FRAMING THE ASSESSMENT, APPELLANT GAVE CERTAIN EXPLANATIONS AND A RECONCILITATION OF THE STOCK FOUND AND STOCK EXPLAINABLE, AS PER WHICH THE STOCK REMAI NING UN- RECONCILED IS ONLY RS.3,45,000/-. THE ASSESSING OF FICER DID NOT ACCEPT ANY OF THE ASSESSEES SUBMISSION AND MADE FO R ADDITION ON ACCOUNT OF [I] RS.13,94,091/- TOWARDS UNACCOUNTED S TOCK [II] RS.1 LAC TOWARDS THE UNACCOUNTED CASH FOUND AND [III] RS .3 LACS TOWARD UNACCOUNTED OPENING THE RECONCILIATION CHART FILED BEFORE THE AO IS AS UNDER:- PARTICULARS AMOUNT [RS.LACS] I PHYSICAL STOCK VALUED ON THE DAY OF SURVEY LESS: RATE DIFFERENCE [AS PER STATEMENT] PHYSICAL STOCK ACTUALLY FOUND 16.94 2.04 14.90 II OPENING STOCK AS ESTIMATED 3.00 ADD: TOTAL PURCHASE FROM: I] CREDIT PURCHASES FROM: A] VIPUL CYCLE STORES 8.39 B] VIPUL TRADING CO. 0.86 II] CASH PURCHASES OUT OF CASH SALES RS. 11.06 LESS: CASH ON HAND RS.1.07 PAYMENT TO CREDITORS RS.1.43 17.81 TOTAL AVAILABLE STOCK 20.81 III COST OF STOCK SOLD [UP TO DAY OF SURVEY] SALES 11.06 LACS-1.70 [GROSS PROFIT] LESS: PHYSICAL STOCK FOUND AS SHOWN AT I ABOVE 9.36 11.45 14.90 I.T.A. NO.794/AHD/2010 A.Y. 2003-04 3 STOCK FROM ON DISCLOSED SOURCE 3.45 5. THE LD.CIT(A), GANDHINAGAR HAS PARTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.8 .05 LACS AS UNEXPLAINED DIFFERENCE OF STOCK AND RS.1 LAC AS UNE XPLAINED CASH 6. THE NOTICE UNDER SECTION 274 R.W.S. 271(1) (C) O F THE INCOME TAX ACT, 1961 WAS ISSUED ON 15/12/2006. THE FRESH OPPORTUNITY OF BEING HEARD WAS OFFERED TO THE ASSESSEE VIDE LETTER DATED 18/12/2008. IN RESPONSE TO THE SAID LETTER THE ASS ESSEE HAS REPLIED THAT HIS APPEAL BEFORE LD. CIT(A) IS PARTLY ALLOWED AND HAS REQUESTED NOT TO LEVY THE PENALTY U/S 271[1][C] OF THE I.T. A CT. 7. THE ASSESSEES REPLY IS CONSIDERED BUT NOT ACCEP TED AS DISCUSSED ABOVE. HENCE THE PENALTY U/S 271(1)(C ) IS LEAVIABL E ON THE DIFFERENCE OF THE TAX BETWEEN THE TAX LIABILITY ON INCOME ON ORIGINAL RETURN OF INCOME AND TAX LIABILITY ON ASSESSED INCO ME. I THEREFORE, LEVY THE MINIMUM PENALTY OF RS.2,58,464/- 100% OF T AX AS AGAINST MAXIMUM OF RS.7,75,312/- 300% OF TAX U/S 271(1)(C) INCOME TAX ACT. 8. ORDER U/S 271(1)(C) IS PASSED. DEMAND NOTICE A ND CHALLAN ARE ISSUED ACCORDINGLY. 9. THIS ORDER IS PASSED WITH THE PRIOR APPROVAL OF THE JT. COMMISSIONER OF INCOME TAX, GANDHINAGAR RANGE, GAND HINAGAR VIDE HIS LETTER NO.JT.CIT/GNR/PEN.APP./08-09 DATED MARCH 12, 2009. IN APPEAL LD. CIT(A) CONFIRMED THIS ACTION OF THE A .O. 4. BEFORE US LD. COUNSEL OF THE ASSESSEE, PLACING R ELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE O F NEW SORATHIA ENGINEERING CO. V. CIT [2006] 282 ITR 642 WHEREIN IT WAS HELD T HAT ORDER OF PENALTY MUST CLEARLY STATE WHETHER IT IS FOR CONCEALMENT OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME, SUBMITTED THAT PENALTY IN TH IS CASE DESERVES TO BE DELETED AS NOWHERE THE A.O. HAS MENTIONED WHETHER I T IS FOR CONCEALMENT OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. L D. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF LOWER AUTHORITIES. I.T.A. NO.794/AHD/2010 A.Y. 2003-04 4 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT NOWHERE IN THE PENALTY ORDER, WHICH WE HAVE REPRODU CED ABOVE, THERE IS ANY MENTION THAT THE A.O. IS LEVYING PENALTY EITHER FOR CONCEALMENT OF INCOME OR FOR FILING INACCURATE PARTICULARS OF INCOME. UNLES S THERE IS SUCH FINDING BY THE A.O., THE PENALTY CANNOT BE LEVIED IN VIEW OF THE D ECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO.(S UPRA) WHEREIN IT WAS OBSERVED THAT IT IS INCUMBENT UPON THE A.O. TO STAT E WHETHER PENALTY WAS BEING LEVIED FOR CONCEALMENT OF INCOME OR FOR FILIN G OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THE PENALTY IMPOSED BY THE A.O. AND SUSTAINED BY LD. CIT(A) IS HEREBY DELETED. 6. IN VIEW OF THE ABOVE, ASSESSEES APPEAL IS ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 23.11.2012 SD/- SD/- (A.K. GARODIA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD