Prince Builders, CHENNAI V. ACIT Non Corporate Circle 2, CHENNAI

ITA 856/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1275 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: S SRIDHAR
• Keywords: Reasonable cause; Set aside
• Section: 271(1)(c)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! ' , $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NOS.855, 856 & 857/CHNY/2018 ( )( / ASSESSMENT YEAR : 2006-07 M/S PRINCE BUILDERS, NEW NO.20, OLD NO.17/2, KUTCHERY LANE, MYLAPORE, CHENNAI - 600 004. PAN : AAHFP 0862 G V. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 2, CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI S. BHARATH, CIT 1 / 2$ / DATE OF HEARING : 31.07.2019 34) / 2$ / DATE OF PRONOUNCEMENT : 05.09.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : ALL THE THREE APPEALS OF THE ASSESSEE ARE DIRECTE D AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, CHENNAI. THEREFORE, WE HEARD THESE APPEALS TOGETHE R AND DISPOSING THE SAME BY THIS COMMON ORDER. 2. THERE WAS A DELAY OF 6 DAYS IN FILING THESE APPE ALS BY THE ASSESSEE. THE ASSESSEE HAS FILED PETITIONS FOR CON DONATION OF DELAY. 2 I.T.A. NOS.855 TO 857/CHNY/18 WE HAVE HEARD THE LD.COUNSEL FOR THE ASSESSEE AND T HE LD. D.R. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR NOT FILING THESE APPEALS BEFORE THE STIPULATED TIME. THEREFORE, WE CONDONE THE DELAY A ND ADMIT THE APPEALS. 3. I.T.A. NO.857/CHNY/2018 IS AGAINST THE QUANTUM A SSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. I.T.A. NO.8 56/CHNY/2018 IS AGAINST THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'TH E ACT'). I.T.A. NO.855/CHNY/2018 IS AGAINST THE PENALTY LEVIED BY T HE ASSESSING OFFICER UNDER SECTION 271(1)(B) OF THE ACT. 4. LETS FIRST TAKE THE QUANTUM APPEAL IN I.T.A. NO .857/CHNY/2018. 5. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF CIVIL CONSTRUCTI ON. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER ESTIMATED THE PROFIT AT 8% OF THE TURNOVER. THE CIT(APPEALS) ALSO CONFIRMED THE ORDER OF THE AS SESSING OFFICER. ACCORDING TO THE LD. COUNSEL, ESTIMATION OF PROFIT AT 8% OF TOTAL TURNOVER IS INCORRECT. THE REMAND REPORT FILED BY THE ASSESSIN G OFFICER WAS NOT PROPERLY APPRECIATED BY THE CIT(APPEALS). 6. WE HEARD SHRI S. BHARATH, THE LD. DEPARTMENTAL R EPRESENTATIVE ALSO. THE ASSESSEE APPEARS TO HAVE FILED PROFIT & LOSS ACCOUNT AND BALANCE SHEET BEFORE THE ASSESSING OFFICER. HOWEVE R, NO OTHER MATERIAL WAS FILED BEFORE THE ASSESSING OFFICER TO ASCERTAIN THE CORRECTNESS OF THE 3 I.T.A. NOS.855 TO 857/CHNY/18 NET PROFIT DECLARED. THE ASSESSING OFFICER IS EXPE CTED TO VERIFY THE BOOKS OF ACCOUNT AND OTHER BILLS AND VOUCHERS TO ASCERTAI N WHETHER THE PROFIT IS RIGHTLY DETERMINED. SINCE THE ASSESSEE HAS NOT FIL ED ANY OTHER MATERIAL EXCEPT PROFIT & LOSS ACCOUNT AND BALANCE SHEET EVEN AFTER GIVING PROPER OPPORTUNITY, THE ASSESSING OFFICER ESTIMATED THE PR OFIT AT 8% OF TOTAL TURNOVER. THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT IN THE ABSENCE OF ANY OTHER MATERIAL TO ASCERTAIN THE CORRECTNESS OF THE PROFIT DECLARED BY THE ASSESSEE, ESTIMATION OF PROFIT AT 8% IS VERY RE ASONABLE, THEREFORE, THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE SAME. HENCE , THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 7. NOW COMING TO THE APPEAL REGARDING THE LEVY OF P ENALTY UNDER SECTION 271(1)(C) OF THE ACT. 8. WE HEARD THE LD.COUNSEL FOR THE ASSESSEE AND THE LD. D.R. THE ASSESSEE HAS DISCLOSED NET PROFIT AT 2.64%. HOWEVE R, THE ASSESSING OFFICER ESTIMATED THE PROFIT AT 8% FOR THE PURPOSE OF TAXATION. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER ESTIMA TION AT 8% WOULD AMOUNT TO CONCEALMENT OF ANY PART OF INCOME OR FURN ISHING INACCURATE PARTICULARS OF INCOME? THIS TRIBUNAL IS OF THE CON SIDERED OPINION THAT ESTIMATION OF PROFIT INVOLVES LITTLE BIT OF GUESS W ORK, PRESUMPTION AND ASSUMPTION. SINCE THE ASSESSEE COULD NOT PRODUCE N ECESSARY MATERIAL TO SUPPORT THE PROFIT DISCLOSED AT 2.64%, THE ASSES SING OFFICER ADMITTEDLY 4 I.T.A. NOS.855 TO 857/CHNY/18 ESTIMATED THE PROFIT AT 8% WHICH WAS ALSO CONFIRMED BY THIS TRIBUNAL IN THE EARLIER PART OF THIS ORDER. IT DOES NOT MEAN T HAT THE ASSESSEE HAS CONCEALED ANY PART OF INCOME OR FURNISHED INACCURAT E PARTICULARS OF INCOME. ESTIMATION OF PROFIT AT 8% IS AS PER STATU TORY PROVISION, THEREFORE, THERE CANNOT BE ANY PRESUMPTION THAT THE ASSESSEE H AS CONCEALED ANY PART OF INCOME OR FURNISHED INACCURATE PARTICULARS. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW A RE SET ASIDE AND THE PENALTY LEVIED BY THE ASSESSING OFFICER IS DELETED. 9. NOW COMING TO LEVY OF PENALTY UNDER SECTION 271( 1)(B) OF THE ACT, THE ASSESSING OFFICER LEVIED PENALTY OF 20,000/- FOR NON-COMPLIANCE OF NOTICE ISSUED BY THE ASSESSING OFFICER. 10. WE HEARD BOTH SHRI S. SRIDHAR, THE LD.COUNSEL F OR THE ASSESSEE AND SHRI S. BHARATH, THE LD. D.R. FROM MATERIAL AV AILABLE ON RECORD IT APPEARS THAT THE ASSESSEE-FIRM WAS CLOSED ON DISSOL UTION ON 10.02.2006 BY MEANS OF DISSOLUTION DEED. THE ASSESSEE CLAIMS THAT OTHER THAN THE LETTER DATED 22.05.2009, NO OTHER COMMUNICATION WAS RECEIVED. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT DISSOLUT ION OF PARTNERSHIP FIRM IS A REASONABLE CAUSE ON THE PART OF THE ASSESSEE FOR NON-APPEARANCE. MOREOVER, THE ASSESSEE HAS FILED APPEAL BEFORE THIS TRIBUNAL AGAINST THE ASSESSMENT ORDER AS WELL AS THE PENALTY PROCEEDINGS , WHICH WERE CONFIRMED BY THE CIT(APPEALS). ON FURTHER APPEAL B EFORE THIS TRIBUNAL, 5 I.T.A. NOS.855 TO 857/CHNY/18 THE ASSESSMENT PROCEEDINGS WERE CONFIRMED. HOWEVER , THE PENALTY UNDER SECTION 271(1)(C) WAS DELETED. IN THOSE CIRC UMSTANCES, LEVY OF PENALTY UNDER SECTION 271(1)(B) OF THE ACT IS NOT W ARRANTED. THEREFORE, WE ARE UNABLE TO UPHOLD THE ORDERS OF THE AUTHORITI ES BELOW. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BLOW ARE SET ASIDE A ND THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(B) OF TH E ACT IS ALSO DELETED. 11. IN THE RESULT, I.T.A. NO.857/CHNY/2018 IS DISMI SSED, I.T.A. NOS.855 & 856/CHNY/2018 ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 5 TH SEPTEMBER, 2019 AT CHENNAI. SD/- SD/- ( ! ' ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 5 TH SEPTEMBER, 2019. KRI. / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 :2 () /CIT(A)-2, CHENNAI 4. PRINCIPAL CIT, CHENNAI-1, CHENNAI 5. 8; -2 /DR 6. <( = /GF.