Sh. Keshav Garg, New Delhi V. ITO, New Delhi

ITA 885/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97247 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 12-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GARIMA JAIN SENIOR
• Assessee Lawyers: G S KOHLI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH SMC SMC SMC SMC- -- -1 11 1 : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT ITA NO ITA NO ITA NO ITA NO S SS S . .. . 884/DEL/2014 & 885/DEL/2014 884/DEL/2014 & 885/DEL/2014 884/DEL/2014 & 885/DEL/2014 884/DEL/2014 & 885/DEL/2014 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009 - -- - 10 1010 10 SHRI KESHAV GARG, SHRI KESHAV GARG, SHRI KESHAV GARG, SHRI KESHAV GARG, B BB B- -- -2/39, SECTOR 2/39, SECTOR 2/39, SECTOR 2/39, SECTOR- -- -6, 6,6, 6, ROHINI, ROHINI, ROHINI, ROHINI, DELHI DELHI DELHI DELHI 110 085. 110 085. 110 085. 110 085. PAN : AEHPG5861J. PAN : AEHPG5861J. PAN : AEHPG5861J. PAN : AEHPG5861J. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -21(1), 21(1), 21(1), 21(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.S. KOHLI, CA. RESPONDENT BY : MS. GARIMA JAIN, SENIOR DR. DATE OF HEARING : 12.08.2015 12.08.2015 12.08.2015 12.08.2015 DATE OF PRONOUNCEMENT : 08. 08. 08. 08.09.2015 09.2015 09.2015 09.2015 ORDER ORDER ORDER ORDER THESE TWO APPEALS BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 ARE DIRECTED AGAINST THE ORDER OF LEARNED CI T(A)-XXII, NEW DELHI DATED 20 TH DECEMBER, 2013. THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.884/DEL/2014 ITA NO.884/DEL/2014 ITA NO.884/DEL/2014 ITA NO.884/DEL/2014 : :: :- -- - 2. THE GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER:- 1. THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY IMPOSED U/S 271B WAS UNJUSTIFIED, ILLEG AL AND AGAINST THE NATURAL LAW OF JUSTICE. 2. THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AN ACTION OF THE LEARNED A.O. AS WELL AS CIT(APPE AL) WAS NOT JUSTIFIED IN PENALIZING THE APPELLANT UNDER T WO CHARGES SIMULTANEOUSLY I.E. ON ONE SIDE NON-MAINTENANCE OF BOOKS OF ACCOUNTS AND ON THE OTHER HAND FOR NON- CONDUCT OF TAX AUDIT. ITA-884 & 885/D/2014 2 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASS ESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND, THEREFOR E, NO PENALTY U/S 271B OF THE INCOME-TAX ACT, 1961 COULD BE LEVIED FO R NON-AUDIT OF THE ACCOUNTS. HE RELIED ON THE DECISION OF HONBLE ALLAH ABAD HIGH COURT IN CIT VS. BISAULI TRACTORS [2008] 299 ITR 219 (ALL), C IT VS. S.K. GUPTA AND CO. [2010] 322 ITR 86 (ALL) AND OF HONBLE KA RNATAKA HIGH COURT IN ACIT AND ANOTHER VS. DR. K. SATISH SHETTY [2009] 310 ITR 366 (KARN) IN SUPPORT OF HIS ARGUMENTS. HE SUBMITTED THAT THE ASSESSEE HAS BEEN SEPARATELY PENALIZED FOR NON-MAINTENANCE OF ACCOUNTS BY THE ASSESSING OFFICER BY LEVYING PENALTY OF `25,000/- BY OR DER DATED 27.06.2012 AND HAS FILED A COPY THEREOF BEFORE THE T RIBUNAL. HE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING PENALTY TWICE FOR THE SAME CHARGE. 4. LEARNED DR HAS RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). SHE SUBMITTED THAT THE ASSESSEE HAS ADMITTEDLY NOT UNDERTAKEN THE AUDIT OF ITS ACCOUNTS AND HAS NOT MAINTAINED ACCOUNT BOOKS AND SEPARATE PENALTIES ARE PROVIDED UNDE R THE ACT FOR THE TWO SEPARATE DEFAULTS BY THE LEGISLATURE. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERU SED THE ORDER OF THE AO AND THE LEARNED CIT(A). I FIND THA T THE ASSESSEE HAS CLAIMED THAT IT WAS NOT MAINTAINING ANY ACCOUNT BOOK S AND, THEREFORE, THE AUDIT OF THE SAME WAS NOT POSSIBLE AND HAS RELIED ON THE DECISION OF HONBLE COURTS CITED AT THE BAR BY THE LEARNED CO UNSEL FOR THE ASSESSEE. I FIND THAT THE ASSESSING OFFICER HAS SEPARATELY P ENALIZED THE ASSESSEE FOR NON-MAINTENANCE OF ACCOUNTS BY LEVYING A PE NALTY OF `25,000/- U/S 271A OF THE ACT AND THE LEARNED COUNSEL FOR THE ASSESSEE HAS STATED AT THE BAR THAT THE ORDER HAS BECOME FINAL AND ASSESSEE HAS ALREADY PAID THE AMOUNT OF PENALTY. IN THESE FACTS, I HOLD THAT SINCE ITA-884 & 885/D/2014 3 THE ASSESSEE HAS BEEN SEPARATELY PENALIZED FOR NON-MAINTE NANCE OF ACCOUNTS, THE PENALTY FOR NON-AUDIT OF THE ACCOUNTS SE PARATELY WAS NOT JUSTIFIED AND ACCORDINGLY, THE PENALTY IMPOSED U/S 271 B IS DELETED AND THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. ITA NO.885/DEL/2014 : ITA NO.885/DEL/2014 : ITA NO.885/DEL/2014 : ITA NO.885/DEL/2014 :- -- - 6. THE GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER:- 1. THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY IMPOSED U/S 271(1)(C) WAS UNJUSTIFIED, ILLEGAL AND AGAINST THE NATURAL LAW OF JUSTICE. 2. THAT THE MAXIMUM JUSTIFICATION HAVE ALREADY BEEN ENDED BY ASSESSING THE APPELLANT ON ADHOC RATE ON AGREE D BASIS, THUS, AN ACTION OF THE LEARNED A.O. WAS NOT JUSTI FIED. 3. THAT THERE IS NOTHING ON THE RECORD FROM WHERE IT IS PROVED THE CONCEALMENT OF EXACT INCOME, THUS, AN IMPOSITION OF PENALTY U/S 271(1)(C) ON ESTIMATED INCOM E WAS NOT JUSTIFIED. 7. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALTHOU GH THE ASSESSEE HAS NOT DECLARED THE TWO OF HIS BANK ACCOUNTS BUT THEY WERE DECLARED ON THE FIRST DATE OF HEARING ITSELF VOLUNTAR ILY BEFORE THE ASSESSING OFFICER. HE SUBMITTED THAT THE ENTRIES IN THES E TWO BANK ACCOUNTS REPRESENT IRREGULAR BUSINESS OF THE ASSESSEE IN WH ICH HE SUFFERED A LOSS OF `79,610/-, WHICH WAS NOT CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. THE ASSESSING OFFICER, BY WAY OF ESTIMATE, HAS APPLIED A FLAT RATE OF NET PROFIT AT THE RATE OF 6% ON THE TOTAL AMOUNT OF ENTRIES AND HAS MADE THE ADDITION OF `4,38,556/-, ON WHICH PENALTY U/S 271(1)(C) HAS BEEN LEVIED. HE SUBMITTED THAT THE ADD ITION WAS MADE ONLY BY WAY OF ESTIMATE AND THERE IS NO EVIDENCE BROU GHT ON RECORD ON BEHALF OF THE REVENUE THAT THE ASSESSEE HAS EARNED THE INCOME OF `4.38 LAKHS ON THESE ENTRIES. ITA-884 & 885/D/2014 4 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERU SED THE ORDER OF THE AO AND THE LEARNED CIT(A). I FIND THA T THE REVENUE COULD NOT CONTROVERT THAT THE ASSESSEE HAS VOLUNTARILY DECLARE D THE ENTRIES IN THE TWO BANK ACCOUNTS NOT ORIGINALLY DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED AND WHICH WERE DECLARED ON T HE FIRST DATE OF HEARING BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. THE ASSESSEE HAS FILED A COPY OF ITS LETTER ADDRESSED TO THE ASSESSING O FFICER FILED ON 22.11.2011 WHEREIN ALL THE BANK ACCOUNTS OF THE ASSESSE E WERE DISCLOSED. THE ASSESSEE HAS ALSO FILED CASH FLOW STATEMENT A ND PROFIT & LOSS ACCOUNT FOR THE RELEVANT YEAR AND ALSO THE BALANC E SHEET TO PROVE THAT IT HAS SUFFERED A LOSS OF `79,610/-. THE ASSESSEE HAS CLAIMED THAT IT HAS SUFFERED LOSS IN HIS IRREGULAR BUSINESS, WHICH WAS NO T CLAIMED IN THE RETURN OF INCOME FILED. HOWEVER, THE ASSESSING OFF ICER HAS ESTIMATED THE INCOME FROM THESE TRANSACTIONS RECORDED I N THE TWO BANK ACCOUNTS OF THE ASSESSEE AT `4.38 LAKHS BY APPLYING A FLAT RATE OF NET PROFIT AT 6% ON THE TOTAL AMOUNT OF ENTRIES THER EIN. I FIND THAT THE ADDITION IS BASED ON ESTIMATE ONLY AND PRE-PONDERANCE OF PROBABILITIES AND THERE IS NO CONCRETE MATERIAL BROUGHT ON RECORD TO SUGGEST THAT THE ASSESSEE HAS IN FACT EARNED `4,38,556/- ON ACCOUNT OF EN TRIES IN THESE TWO BANK ACCOUNTS OF THE ASSESSEE. IN THESE FACTS OF THE CASE, I AM OF THE VIEW THAT IT IS NOT A FIT CASE FOR LEVY OF PENALT Y U/S 271(1)(C) OF THE ACT, WHICH IS ACCORDINGLY CANCELLED, AND THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE A LLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 8 TH SEPTEMBER, 2015. SD/- (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. ITA-884 & 885/D/2014 5 COPY FORWARDED TO: - 1. APPELLANT : SHRI KESHAV GARG, SHRI KESHAV GARG, SHRI KESHAV GARG, SHRI KESHAV GARG, B BB B- -- -2/39, SECTOR 2/39, SECTOR 2/39, SECTOR 2/39, SECTOR- -- -6, ROHINI, DELHI 6, ROHINI, DELHI 6, ROHINI, DELHI 6, ROHINI, DELHI 110 085. 110 085. 110 085. 110 085. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -21(1), NEW DELHI. 21(1), NEW DELHI. 21(1), NEW DELHI. 21(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR