INDUS JEWELLERY PVT. LTD., Jaipur V. DCIT, Jaipur

ITA 933/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5379 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH EQDQY DS-JKOR] U;KF;D LNL; DS LE{K BEFORE: SHRI MUKUL K. SHRAWAT, JUDICIAL MEM BER VK;DJ VIHY LA-@ ITA NO. 933/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08. M/S. INDUS JEWELLERY PVT. LTD., 101, ARIHANT PLAZA, MALVIYA NAGAR, JAIPUR. CUKE VS. THE DCIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AA BCI 1495 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01/03/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04/03/2016. VKNS'K@ ORDER PER MUKUL K. SHRAWAT, JM : THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATING FROM THE ORDER OF LD. CIT (APPEALS)-II, JAIPUR DATED 05.09.2013 AND THE ONLY GROUND IS IN RESPECT OF CONFIRMATION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF I.T. A CT, 1961 AMOUNTING TO RS. 25,245/-. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 26.12.2007 WERE THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING OF GEMS AND JEWELLERY. A RETURN OF LOSS OF RS. 7,21,357/- WAS DECLARED. THE AO HAS EXAMINED THE REASONS OF THE LOSS. IT WAS EXPLAI NED THAT DURING THE YEAR SALES TO THE TUNE OF RS. 41,62,599/- WAS MADE AND THE GROSS PROF IT WAS AT RS. 3,03,572/-. HOWEVER, DUE TO EXPENDITURE ON INTEREST, DEPRECIATION, RENT, WAGES ETC., A NET LOSS WAS SUFFERED. THE AO HAS EXAMINED THE RECORDS OF THE ASSESSEE AND THE UNDISPUTED FACT WAS THAT THE 2 ITA NO. 933/JP/2013 M/S. INDUS JEWELLERY PVT. LTD. VS. DCIT. YEAR UNDER CONSIDERATION WAS THE FIRST YEAR OF THE BUSINESS. THE AO HAS DOUBTED CERTAIN PURCHASES AND THEREUPON INVOKED THE PROVISIONS OF S ECTION 145(3) OF IT ACT. THEREUPON A GROSS PROFIT RATE @ 18% ON THE SALES WAS APPLIED. THE GROSS PROFIT AS PER THE CALCULATION OF THE AO WAS RS. 7,49,267/-. HOWEVER, THE ASSESSEE HAS DISCLOSED THE GROSS PROFIT AT RS. 3,03,572/-, THEREFORE, THE DIFF ERENCE BETWEEN THE TWO AMOUNTING TO RS. 4,45,695/- WAS TAXED IN THE HANDS OF THE ASSESS EE. 2.1 WHEN THIS ADDITION WAS CHALLENGED BEFORE LD. CI T (A), THE IMPUGNED TRADING ADDITION WAS RESTRICTED TO RS. 75,000/- ONLY. SINCE THE FINALLY TAXED ADDITION WAS SUSTAINED TO THE EXTENT OF RS. 75,000/-, THEREFORE, IMPUGNED PENALTY UNDER SECTION 271(1)(C) VIDE ORDER DATED 29.03.2011 WAS IMPOSED O F RS. 25,245/-. 3. IN THE LIGHT OF THE ABOVE FACTUAL BACKGROUND ON THIS SMALL ISSUE HEARD BOTH THE SIDES. 4. AS PER THE ABOVE FACTS, THE ADMITTED FACTUAL POS ITION IS THAT ONE ESTIMATION WAS MADE BY THE AO AND THAT ESTIMATION WAS REVISED BY L D. CIT (A) AND MADE ANOTHER ESTIMATION. IN OTHER WORDS, THIS IS A CASE WHERE T HE ASSESSEE IS PENALIZED ON ACCOUNT OF ONE ESTIMATION AGAINST ANOTHER ESTIMATION. 4.1. THE ARGUMENT OF LD. D/R SHRI RAJ MEHRA IS THAT THE PROVISIONS OF SECTION 145(3) HAVE BEEN INVOKED BECAUSE THE AO HAS FOUND THAT THE PURCHASES WERE UNVERIFIABLE. THEREFORE, THIS IS A CASE WHERE THE INCOME DISCLOSE D WAS FOUND TO BE INCORRECT AND THE PARTICULARS OF THE INCOME HAVE BEEN CONCEALED BY CL AIMING EXCESSIVE EXPENDITURE OF PURCHASES. THE LD. D/R HAS PLACED RELIANCE ON A DEC ISION OF ITAT JAIPUR BENCH PRONOUNCED IN THE CASE OF ITO VS. BHANSALI TRADING CORPORATION, 42 ITR 254 (JP TRIB.). 3 ITA NO. 933/JP/2013 M/S. INDUS JEWELLERY PVT. LTD. VS. DCIT. 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE SI DES, PRIMA FACIE, I AM OF THE VIEW THAT IN THIS CASE IF THE AO HAD FOUND THAT CERTAIN PURCHASES WERE DOUBTFUL, THEN IT WAS EXPECTED FROM HIM TO MAKE THE ADDITION OF THOSE PUR CHASES WHICH WERE NOT FOUND VERIFIABLE. INSTEAD OF MAKING CERTAIN SPECIFIC ADDI TION IN RESPECT OF UNVERIFIABLE PURCHASES, HE HAS TAKEN THE RECOURSE OF ASSESSING T HE INCOME OF THE ASSESSEE MERELY ON ESTIMATED BASIS. I HAVE ALSO PERUSED THE DECISI ON CITED BY THE LD. D/R REFERRED ABOVE. BUT THE FACTS WERE THAT THE REVENUE DEPARTME NT HAD DETECTED THAT SOME OF THE PARTIES HAVE GIVEN ACCOMMODATION ENTRY AND ALSO FOU ND THAT THE ACCOMMODATION BILLS WERE PROCURED. EVEN IN QUANTUM APPEAL, THE ITAT HAD CONFIRMED THE QUANTUM ADDITION. BECAUSE OF THOSE REASONS, A VIEW WAS EXPRESSED BY T HE RESPECTED COORDINATE BENCH THAT THE SAID CASE WAS HAVING SPECIFIC ADDITIONS, T HUS A FIT CASE WHERE THE ASSESSEE HAD NOT ONLY CONCEALED THE INCOME BUT ALSO FURNISHED IN ACCURATE PARTICULARS. AS AGAINST THAT, IN THE PRESENT CASE MY OBSERVATION IS THAT MERE EST IMATION FOR QUANTUM ADDITION SHOULD NOT BE MADE THE BASIS FOR LEVY OF CONCEALMENT PENAL TY. RELIANCE CAN BE PLACED ON AJAIB SINGH AND CO. VS. CIT, 253 ITR 630 (P&H), NAVJIVAN OIL MILLS VS. CIT, 252 ITR 417 (GUJ.). BY PLACING RELIANCE ON THESE PRECEDENTS, I HEREBY DIRECT TO DELETE THE PENALTY. 6. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/03/201 6. SD/- EQDQY DS-JKOR (MUKUL K. SHRAWAT) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/03/2016. DAS/ 4 ITA NO. 933/JP/2013 M/S. INDUS JEWELLERY PVT. LTD. VS. DCIT. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. INDUS JEWELLERY PVT. LTD., JAIP UR. 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT CIRCLE-6, JAIPUR. 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.933/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 5 ITA NO. 933/JP/2013 M/S. INDUS JEWELLERY PVT. LTD. VS. DCIT.