Parmod Kumar, Jagadhari V. ITO, Yamunanagar

ITA 916/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9060 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 18-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 916/CHD/2016 ASSESSMENT YEAR: 2007-08 SHRI PARMOD KUMAR, VS THE ITO, PROP. M/S SHREE LAJJA RICE WARD NO. 1, & OIL MILLS, OLD SAHARANPUR ROAD, YAMUNA NAGAR JAGADHRI. PAN: ADSPK5260D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ROHIT GOEL RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 28.09.2016 DATE OF PRONOUNCEMENT : 05.10.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD. CIT(APPEALS) PANCHKULA DATED 15.06.201 6 FOR ASSESSMENT YEAR 2007-08 CHALLENGING THE LEVY OF PEN ALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE DERIVES INCOME FROM RICE MILL AND COMMISSION. THE ADDITION OF RS. 42,91,051/- WAS MADE BY THE ASSESSING OFFICE R ON DIFFERENT HEADS WHICH WERE REDUCED TO RS. 16,43,475 /- BY THE LD. CIT(APPEALS). THE FACTS OF QUANTUM PROCEED INGS WERE CONSIDERED BY ITAT CHANDIGARH BENCH IN ASSESSE E'S CASE IN ITA 264/CHD/2011 DATED 19.03.2012 AND 2 ASSESSEE'S APPEAL AGAINST THE ORDER OF LD. CIT(APPE ALS) ON ALL GROUNDS WAS DISMISSED. LATER, THE ASSESSEE'S A PPEAL AGAINST ORDER OF ITAT WAS ALSO DISMISSED BY HON'BLE PUNJAB & HARYANA HIGH COURT VIDE JUDGEMENT DATED 28.01.201 4. IT IS NOTED IN THE PENALTY ORDER THAT PENALTY HAS BEE N LEVIED ON THE ADDITIONS CONFIRMED ON THE FOLLOWING HEADS : I) ADDITION ON ACCOUNT OF LOW YIELD OF RICE : RS. 6 ,05,766/- II) ADDITION ON ACCOUNT OF UNACCOUNTED : RS. 6,96,9 93/- SALES OF RICE III) ADDITION ON ACCOUNT OF UNDISCLOSED : RS. 2,54, 688/- HUSK IV) ADDITION ON ACCOUNT OF BARDANA : RS. 56 ,318/- CLOSING STOCK 3. IT IS NOTED IN THE IMPUGNED ORDER THAT BOOKS OF ACCOUNT WERE REJECTED ON FINDING CERTAIN DISCREPANC IES. THE ADDITION OF RS. 6,05,766/- WAS MADE ON ACCOUNT OF LOW YIELD OF RICE ON FINDING THAT THE ASSESSEE SHOWED Y IELD OF RICE AT 65.19% WHEREAS ASSESSEE HIMSELF HAD SHOWN Y IELD OF 67% OF PADDY MILLED FOR FCI. THE ADDITION OF RS. 6, 96,993/- ON ACCOUNT OF UNACCOUNTED SALES OF RICE WAS BASED O N THE FACTS THAT ASSESSEE HAD SHOWN THE YIELD OF RICE BRA N WITH RESPECT TO OWN PADDY MILLED AT 13.72% AS AGAINST NO RMAL TRADE OF 7TO8%. THE ASSESSING OFFICER AFTER APPLYI NG YIELD RATE OF RICE BRAN @ 8.5% COMPUTED THE UNDER REPORTE D MILLING OF PADDY AT 3636.70 QTLS. FURTHER, AFTER AP PLYING THE YIELD OF RICE @ 67%, THE UNACCOUNTED RICE MILLE D WAS COMPUTED AT 2436.59 QTLS AND AFTER APPLYING RATE OF RS. 3 1050.4 PER QTL. ASSESSING OFFICER MADE ADDITION OF RS. 2559394/- WHICH ULTIMATELY REDUCED TO RS. 6,96,993/ -. 3(I) AS REGARDS ADDITION OF UNDISCLOSED HUSK OF RS. 2,54,668/- AS AGAINST RS. 6,41,282/- ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF SALE OF HUSK BY EST IMATING YIELD AT 15% THOUGH REDUCING THE SALE PRICE AT RS. 100/- AS AGAINST RS. 150/- APPLIED BY THE ASSESSING OFFICER AND PART ADDITION SUSTAINED BY LD. CIT(APPEALS). ON ACCOUNT OF BARDANA CLOSING STOCK, THE LD. CIT(APPEALS) CONFIRM ED THE ADDITION OF RS. 56,318/- OUT OF RS. 84,477/- BY RED UCING THE AVERAGE RATE ADOPTED BY IT FOR RS. 11/- PER BAG AS AGAINST RS. 12/- PER BAG. IT IS, THEREFORE, CLEAR THAT THE ADDITION ON ACCOUNT OF LOW YIELD OF RICE REMAINED T HE SAME. BUT UNDER REMAINING THREE HEADS, SUBSTANTIAL ADDITI ONS HAVE BEEN REDUCED BY THE LD. CIT(APPEALS). THESE WE RE THE ADDITIONS ON WHICH PENALTY WAS LEVIED BY FURNISHING INACCURATE PARTICULARS OF INCOME. 4. THE LD. CIT(APPEALS) CONFIRMED THE LEVY OF PENAL TY. 5. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW PENALTY IS NOT LEVIABLE IN THE FACTS AND CIRCUMSTAN CES OF THE CASE. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SANGRUR VANASPATI MILLS LTD. 303 ITR 53 IN WHICH IT WAS HELD AS UNDER : IN ORDER TO ATTRACT CLAUSE (C) OF SECTION 271(1) O F THE INCOME- TAX ACT, 1961, IT IS NECESSARY THAT THERE MUST BE C ONCEALMENT BY 4 THE ASSESSEE OF THE PARTICULARS OF HIS INCOME OR FU RNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. THE PROVISIO NS OF SECTION 271(L)(C) OF THE ACT ARE NOT ATTRACTED TO CASES WHE RE THE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND AD DITIONS ARE MADE THEREIN. WHEN THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF ESTIMATE AND NOT ON ACCOUNT OF ANY CONCRETE EVIDENC E OF CONCEALMENT, THEN THE PENALTY IS NOT LEVIABLE. FOR THE ASSESSMENT YEAR 1992-93, THE ASSESSEE FILED A RETURN OF INCOME ON DECEMBER 30,1992, SHOWING AN INCOME OF RS. 65,18,970. DURING THE ASSESS- MENT PROCEEDINGS, THE ASSESSING OFFICER CAME TO KNO W THAT THE CENTRAL ENFORCEMENT 'WING OF THE EXCISE AND TAXATIO N DEPARTMENT CARRIED OUT INSPECTION OF THE BUSINESS P REMISES OF THE ASSESSEE ON JANUARY 23,1993 AND SEIZED CERTAIN DOCUMENTS. ON SCRUTINY OF THOSE DOCUMENTS, THE ASSESSING OFFIC ER NOTICED THAT IN ONE INVOICE BOOK CONTAINING FIVE SALE VOUCH ERS, ORIGINAL COPIES OF FOUR BILLS WERE FOUND TORN AND THE DUPLIC ATE AND TRIPLICATE COPIES WERE AVAILABLE. BY TAKING INTO CO NSIDERATION THE SAID MATERIAL AND THE STATEMENT OF THE DIRECTOR OF THE COMPANY, THE ASSESSING OFFICER ARRIVED AT A CONCLUSION THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT RELIABLE AND DID N OT REFLECT ITS TRUE INCOME. ACCORDINGLY, THE ASSESSING OFFICER REJ ECTED THE ACCOUNTS OF THE ASSESSEE AND CONCLUDED THAT THE ASS ESSEE HAD MADE UNACCOUNTED SALES. WHILE COMPLETING THE ASSESS MENT, THE ASSESSING OFFICER, IN ORDER TO ARRIVE AT THE QUANTU M OF SUCH UNACCOUNTED SALES, EXTRAPOLATED THE AVERAGE SALE PR ICE IN 4 INVOICES TO 53 INVOICES AND PROCEEDED TO MAKE AN AD DITION OF RS. 66,16,865. PENALTY WAS IMPOSED BUT THE TRIBUNAL DEL ETED THE PENALTY ON THE GROUND THAT THERE WAS NO CONCLUSIVE EVIDENCE THAT THE SALES ESTIMATED BY THE ASSESSING OFFICER TO THE EXTENT OF RS. 66,16,865 WERE MADE OUTSIDE THE BOOKS OF ACCOUNT. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL WAS JUSTIFIED IN CANCELLING THE PENALTY. 6. IN THE AFORESAID JUDGEMENT, HON'BLE PUNJAB & HAR YANA HIGH COURT CONSIDERED ITS EARLIER DECISIONS IN THE CASES OF 5 DHILLON RICE MILLS 256 ITR 447, RAWEL SINGH & CO. 2 54 ITR 191 AND HARI GOPAL SINGH 258 ITR 85 ON THE PROPOSIT ION THAT ON ESTIMATE BASIS, PENALTY SHOULD NOT BE LEVIE D. 7. CONSIDERING FACTS OF THE CASE IN THE LIGHT OF TH E ABOVE DECISIONS, IT IS CLEAR THAT THE LD. CIT(APPEALS) SU BSTANTIALLY REDUCED THE ADDITIONS ON MERIT UNDER THE THREE HEAD S AND THREE ADDITIONS HAVE BEEN MADE ON ESTIMATE BASIS AF TER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. WH EN ADDITIONS HAVE BEEN MADE ON THE BASIS OF ESTIMATE A ND NOT ON ACCOUNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, THEN THE PENALTY IS NOT LEVIABLE. IN THIS VIEW OF THE M ATTER, I SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCEL TH E PENALTY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 5 TH OCTOBER,2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH