Shri Laxmilal B. Shah, Baroda V. The Income tax Officer,Ward-5(2), Baroda

ITA 812/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9934 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 19-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA NO: 812/AHD/2013 (ASSESSMENT YEAR: 2007-08) SHRI LAXMILAL B. SHAH HAKIM SAHEB WADA, NEAR MES HIGH SCHOOL, NAGARWADA CHAR RASTA, BARODA V/S THE INCOME TAX OFFICER, WARD-5(2), BARODA (APPELLANT) (RESPONDENT) PAN: AJFPS4521E APPELLANT BY : MS. KINJAL SHAH, A.R. RESPONDENT BY : SHRI KEYUR PATEL, SR. D.R. ( )/ ORDER DATE OF HEARING : 16-12-2015 DATE OF PRONOUNCEMENT : 01 -01-2016 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-V, BARODA DATED 18.12.2012 FOR A.Y. 2007-08. ITA NO. 812/ AHD/2013 . A.Y. 2007-08 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN T HE BUSINESS OF TRADING OF METAL SCRAPS. ASSESSEE FILED HIS RETURN OF INCOME F OR A.Y. 2007-08 ON 31-10- 2007 DECLARING TOTAL INCOME AT RS. 1,48,250/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U NDER SECTION 143(3) VIDE ORDER DATED 29.12.2009 AND THE TOTAL INCOME WAS DET ERMINED AT RS. 39,39,050/- INTERALIA BY MAKING ADDITION OF RS. 37, 70,803/- ON ACCOUNT OF UNACCOUNTED PURCHASES. ON THE AFORESAID ADDITION OF UNACCOUNTED PURCHASES, A.O VIDE ORDER DATED 28.03.2011 HELD THAT ASSESSEE HAS COMMITTED A DEFAULT BY FURNISHING INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED THE INCOME AND WAS THEREFORE LIABLE FOR PENALTY U/S. 27 1(1)(C) OF THE ACT AND ACCORDINGLY VIDE ORDER DATED 28.03.2011 IMPOSED A P ENALTY OF RS. 2,26,723/- U/S. 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER O F A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 1 4.12.2012 UPHELD THE LEVY OF PENALTY AND DISMISSED THE APPEAL OF ASSESSE E. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND:- 1. THE CIT(A) HAS GROSSLY ERRED IN LAW AND ON THE FACT S OF THE CASE IN CONFIRMING PENALTY U/S. 271(1)(C) AMOUNTING TO RS. 2,26,723/-. 4. SUBSEQUENTLY, THE LD. A.R. BY LETTER DATED 24.04.20 15 RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL. 1. THE CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN CON FIRMING LEVY OF PENALTY OF RS. 2,26,723/- LEVIED BY ASSESSING OFFIC ER U/S. 271(1)(C) STATING IN THE SHOW CAUSE NOTICE HAVE CONCEALED THE PARTIC ULARS OF YOUR INCOME OR/AND HAVE FURNISHED INACCURATE PARTICULARS OF SUC H INCOME. ITA NO. 812/ AHD/2013 . A.Y. 2007-08 3 2. IT IS SUBMITTED THAT IN VIEW OF ABOVE SHOW CAUSE NO TICE AS HELD IN THE CASE OF NEW SARATHIA ENGINEERING CO. VS. CIT REPORT ED IN 282 ITR P. 642 (GUJARAT) THE PENALTY SHOULD HAVE BEEN CANCELLE D. 5. BEFORE US, LD. A.R. AT THE OUTSET, SUBMITTED THAT T HE SOLITARY ISSUE IS WITH RESPECT TO LEVY OF PENALTY U/S. 271(1)(C) OF THE AC T. SHE REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURT HER SUBMITTED THAT AGAINST THE QUANTUM ADDITION MADE BY A.O, ASSESSEE HAD PREFERRED APPEAL BEFORE LD. CIT(A) WHO RESTRICTED THE ADDITION TO 30 % OF SUCH PURCHASES. THEREAFTER ASSESSEE PREFERRED SECOND APPEAL BEFORE TRIBUNAL WHEREBY ORDER DATED 01.10.2010 THE ADDITION WAS REDUCED TO 20% OF PURCHASES. SHE THEREFORE SUBMITTED THAT IN THE PRESENT CASE SINCE THE ADDITION HAS BEEN MADE ON THE BASIS OF ESTIMATE, NO PENALTY BE LEVIED AND FOR THE AFORESAID PROPOSITION, SHE RELIED ON THE DECISION OF THE CO-O RDINATE BENCH OF TRIBUNAL IN THE CASE OF BHOLANATH POLYFAB PVT. LTD. VS. ITO ITA NON 807/AHD/2010 ORDER DATED 12.10.2010 AND THE DECISION IN THE CASE OF RAJLAXMI PRINTS PVT. LTD. ITA NO. 809/AHD/2010 ORDER DATED 15.06.2012. T HE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND LD. CIT(A ). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY O F PENALTY U/S. 271(1)(C) ON THE PURCHASES WHICH WAS CONSIDERED AS BOGUS BY THE A.O. IT IS ALSO AN UNDISPUTED FACT THAT AGAINST THE ADDITION OF ENTIRE PURCHASES THAT WAS MADE BY A.O, LD. CIT(A) RESTRICTED THE ADDITION TO 30% O F PURCHASES AND IN SECOND APPEAL THE ADDITION WAS FURTHER REDUCED TO 20% AND THUS THE ADDITION HAS BEEN MADE ON BASIS OF ESTIMATE. IT IS A SETTLED LAW THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITION MADE IN THE ASSESSMENT CASE OF THE ITA NO. 812/ AHD/2013 . A.Y. 2007-08 4 ASSESSEE IS DIFFERENT FROM THE PENALTY IMPOSED ON A CCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME A ND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDING ON THE PREPONDERANCE OF PROBABILITIES, BUT NO PENAL TY COULD BE IMPOSED U/S.271(L)(C) OF THE ACT ON THE PREPONDERANCE OF PR OBABILITIES. IN THE CASE OF CIT VS. SANGRUR VANASPATI MILLS LTD. (SUPRA) IT HAS BEEN HELD THAT THE PROVISIONS OF SEC. 271(1)(C) OF THE ACT ARE NOT ATT RACTED TO CASES WHERE THE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND ADDITIONS ARE MADE THEREIN. IN THE PRESENT CASE SINCE THE ADDITIONS HA VE BEEN MADE ON ESTIMATE BASIS, WE THEREFORE RELYING ON THE AFORESAID DECISI ON OF HON'BLE HIGH COURT IN THE CASE OF SANGUR VANASPATI(SUPRA), ARE OF THE VIEW THAT NO PENALTY ON ACCOUNT OF CONCEALMENT OF INCOME U/S. 271(1)(C) OF THE ACT CAN BE LEVIED IN THE PRESENT CASE. WE THUS DELETE THE PENALTY LEVIED BY THE A.O. THUS THE GROUND OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 01- 01 - 2016. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE.