Sh.Ashok Sharma, Panchkula V. Deputy Commissioner of Income Tax, Panchkula

ITA 866/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9093 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 21-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Keywords: Period of limitation
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 866/CHD/2016 ASSESSMENT YEAR: 2006-07 SHRI ASHOK SHARMA, VS THE DCIT, # 1051, SECTOR 4, PANCHKULA CIRCLE, PANCHKULA. PANCHKULA. PAN: APAPS8472F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMITOZ SINGH KAMBOJ RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 22.08.2016 DATE OF PRONOUNCEMENT : 14.09.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) PANCHKULA DATED 31.03.2016 FOR ASSESSMENT YEAR 2006-07 CHALLENGING LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TA X ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR UNDER APPEAL O N 26.10.2006 DECLARING TOTAL INCOME OF RS. 12,70,393/ -. THE ASSESSING OFFICER EXAMINED THE BOOKS OF ACCOUNT ALONGWITH BILLS AND VOUCHERS AND FOUND VARIATION IN THE ACCOUNTS OF CERTAIN EXPENSES. ON THE BASIS OF DISCREPANCIES, ASSESSING OFFICER ISSUED SHOW CAUSE 2 NOTICE AS TO WHY BOOKS OF ACCOUNT BE NOT REJECTED U NDER SECTION 145 OF THE ACT AND NET PROFIT OF 35% SHOULD NOT BE APPLIED. SINCE THE ASSESSEE WAS NOT ABLE TO SUP PORT ITS CLAIM OF UN-VOUCHED AND NON VERIFIABLE EXPENSES , THEREFORE, THE ASSESSING OFFICER AFTER APPLYING PROVISIONS OF SECTION 145(3) OF THE ACT REJECTED TH E BOOKS OF ACCOUNT AND ASSESSED THE INCOME BY APPLYIN G NET PROFIT RATE OF 35% AND MADE ADDITION OF RS. 4,09,443/-. THE APPEAL OF THE ASSESSEE HAS BEEN DISMISSED BY THE LD. CIT(APPEALS), PANCHKULA. 3. THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS. THE ASSESSEE SUBMITTED THAT PENALTY I S NOT LEVIABLE. THE ASSESSING OFFICER, HOWEVER, PLACING RELIANCE UPON DECISIONS OF SUPREME COURT IN THE CAS ES OF DHARMENDRA TEXTILE PROCESSORS & OTHERS 306 ITR 2 77 AND ATUL MOHAN BINDAL 2009(9) SCC 589 HELD THAT PENALTY IS CIVIL LIABILITY AND VIDE SEPARATE ORDER LEVIED THE PENALTY. 4. THE PENALTY ORDER WAS CHALLENGED BEFORE LD. CIT(APPEALS), HOWEVER, APPEAL OF THE ASSESSEE HAS B EEN DISMISSED. 5. THE APPEAL IS TIME BARRED BY 47 DAYS. IT IS EXPLAINED IN THE APPLICATION FOR CONDONATION OF DEL AY THAT SINCE EARLIER COUNSEL OF THE ASSESSEE WAS NOT PROPERLY DEALING WITH THE CASE OF THE ASSESSEE, THEREFORE, EARLIER COUNSEL WAS CHANGED. THE ASSESS EE 3 CLAIMED AGED PERSON OF 64 YEARS AND STATED THAT IT TOOK TIME IN CHANGING THE COUNSEL AND THEN APPEAL WAS PROPERLY FILED. THE APPLICATION IS SUPPORTED BY AF FIDAVIT OF THE ASSESSEE. THE LD. DR DID NOT HAVE ANY OBJEC TION FOR CONDONATION OF NOMINAL DELAY. 5(I) CONSIDERING EXPLANATION OF THE ASSESSEE, I AM SATISFIED THAT ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION. THE DELAY IN FILING THE APPEAL IS, THE REFORE, CONDONED. 6. I HAVE CONSIDERED RIVAL SUBMISSIONS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ONLY PART O F THE EXPENSES WERE DISALLOWED ON ACCOUNT OF SALARY EXPEN SES, TRAVELING AND CONVEYANCE, POSTAGE AND TELEGRAPH EXPENSES, TELEPHONE AND INTERNET EXPENSES, BUSINESS PROMOTION EXPENSES. THEREFORE, ON MERE DISALLOWANC E OF PART OF THE EXPENSES, PENALTY MAY NOT BE IMPOSED. HE HAS RELIED UPON DECISION OF HON'BLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF CIT V AJAIB SINGH & CO. 2 53 ITR 630 IN WHICH IT WAS HELD THAT, DISALLOWANCE OF EXPENSES PERSE CANNOT MEAN THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. HE HAS ALSO RELIED UPON ORDER OF ITAT AHMEDABAD BENCH IN T HE CASE OF SHRI MINESH NATUBHAI PATEL V ITO ITA NO. 33 99 (2007) DATED 14.05.2010 IN WHICH IT WAS HELD THAT MERE NON PRODUCTION OF BILLS AND VOUCHERS WOULD NOT LEAD TO 4 PRESUMPTION THAT THE ASSESSEE HAVE CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE BECA USE IT IS A CIVIL LIABILITY AND RELIED UPON THE DECISIONS OF SUPREME COURT RELIED UPON BY ASSESSING OFFICER. 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, I AM OF THE VIEW PENALTY IS NOT LEVIABLE IN THE MATTER. TH E ASSESSEE PRODUCED BOOKS OF ACCOUNT ALONGWITH VOUCHE RS FOR VERIFICATION OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER NOTED VARIOUS EXPENSES I.E. SALARY EXPENSES , TRAVELING AND CONVEYANCE, POSTAGE AND TELEGRAPH EXPENSES, TELEPHONE AND INTERNET EXPENSES AND BUSIN ESS PROMOTION EXPENSES AND FOUND THAT PART OF THESE EXPENSES ARE NOT ALLOWABLE BECAUSE SOME OF THE EXPENSES WERE NOT GENUINE OR THERE ARE SELF MADE VOUCHERS. THEREFORE, PART OF THE EXPENSES COULD NO T BE VERIFIED. THE ASSESSING OFFICER, ON THE BASIS OF T HESE FACTS, REJECTED THE BOOK RESULTS UNDER SECTION 145 AND COMPUTED THE INCOME OF THE ASSESSEE BY APPLYING HIG HER PROFIT RATE. THE ASSESSING OFFICER HAS NOT BROUGHT ANY DEFINITE OR CONCRETE MATERIAL ON RECORD TO PROVE AN Y CONCEALMENT OF INCOME BY THE ASSESSEE AND FURNISHIN G INACCURATE PARTICULARS OF INCOME. IN THE CASE OF S HRI AJAIB SINGH & CO. (SUPRA), HON'BLE PUNJAB & HARYANA HIGH COURT DISMISSED THE DEPARTMENTAL APPEAL IN WHI CH 5 ON MERE DISALLOWANCE OF EXPENSES, PENALTY WAS CANCE LLED BY THE TRIBUNAL. HON'BLE PUNJAB & HARYANA HIGH COU RT IN THE CASES OF DHILLON RICE MILLS 256 ITR 447 AND HARI GOPAL SINGH 258 ITR 85 DID NOT APPROVE LEVY OF THE PENALTY ON ESTIMATED INCOME. IN THE PRESENT CASE, THE ASSESSING OFFICER FOUND CERTAIN EXPENSES NOT VERIFI ABLE BECAUSE THERE WERE NO GENUINE ENTRIES OR EXPENSES W ERE SUPPORTED BY SELF MADE VOUCHERS. THE ASSESSING OFFI CER, INSTEAD OF MAKING SPECIFIC DISALLOWANCE OF THESE EXPENSES, REJECTED THE BOOK RESULTS AND ESTIMATED T HE INCOME BY APPLYING HIGHER PROFIT RATE. THEREFORE, MERE REJECTION OF THE BOOKS OF ACCOUNT IN SUCH CIRCUMSTA NCES, WOULD NOT LEAD TO PRESUMPTION THAT ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME. IN MY VIEW, IT IS NOT A FIT CASE OF LEVY OF PENALTY. I, THEREFORE, SET ASIDE THE ORDER S OF AUTHORITIES BELOW AND CANCEL THE PENALTY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 14 TH SEPT., 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH