M/s Frontier Construction Co. Private Ltd., Kanpur V. Dy. Commissioner Of Income Tax, Kanpur

ITA 938/LKW/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2040 (ITAT-LUCKNOW)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PINKI MAHAVAR

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.938/LKW/2014 ASSESSMENT YEAR 2009-10 DY. COMMISSIONER OF INCOME TAX, RANGE-4, KANPUR. VS M/S FRONTIER CONSTRUCTION CO. PVT. LTD., 117/N/10, KULWANTI HOUSE KANPUR 208025 PAN AAACF 2175 J (RESPONDENT) (APPELLANT) NONE APPELLANT BY SMT. PINKI MAHAVAR, D.R. RESPONDENT BY 27/07/2015 DATE OF HEARING 31/08/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT (A)-II DEHRADUN HOLDING CONCURRENT CHARGE OF CI T (A)-II, KANPUR26/07/2012 FOR THE ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. BECAUSE NO PENALTY COULD BE IMPOSED ON US AS TH ERE WAS NEITHER CONCEALMENT OF INCOME NOR FURNISHING INACCURATE PARTICULARS OF INCOME. 2. BECAUSE NO PENALTY COULD BE IMPOSED AS THERE IS NO AVERMENT IN THE ASSESSMENT ORDER THAT THERE WAS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. BECAUSE THE PENALTY COULD BE IMPOSED IF IT WA S HELD THAT THERE WAS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. BECAUSE THE LEARNED COMMISSIONER OF INCOME TA X HAS NOT HELD IN THE APPELLATE ORDER AS TO HOW THE RULINGS A S CITED 2 BY US WERE NOT APPLICABLE AND IN WHAT WAYS THE RULI NG CITED BY HIM WERE APPLICABLE IN OUR CASE AND ACCORD INGLY HIS ORDER IS INCOMPLETE AND ARBITRARY. 5. THAT NO PENALTY COULD BE IMPOSED WHEN INCOME I S ESTIMATED AND A HIGHER GP RATE IS APPLIED. 6. THAT THE ASSESSMENT AND APPELLATE ORDER ARE B OTH ARBITRARY AND NOT BASED ON LAW OF INCOME TAX. 3. THIS APPEAL WAS EARLIER FIXED FOR HEARING ON 24 .02.2015 AND 22.04.2015 AND ON BOTH THESE DATES, HEARING WAS ADJ OURNED ON THE REQUEST OF LD. AR OF THE ASSESSEE. THEREAFTER, THE HEARING WAS FIXED ON 08.06.2015, BUT ON THIS DATE, BENCH DID NOT FUNCTION AND THEREF ORE, THE HEARING WAS ADJOURNED TO 27.07.2015 AND THE NOTICE OF HEARING W AS SENT TO THE ASSESSEE BY RPAD ON 10.07.2015. THE NOTICE HAS NOT COME BACK UNSERVED AND HENCE, SERVICE OF NOTICE IS PRESUMED. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE APPOINTED DATE OF HEARING I.E. 27.0 7.2015 AND THEREFORE, THE APPEAL WAS HEARD EX-PARTE QUA THE ASSESSEE. LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR OF T HE REVENUE AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 5. ISSUE IN DISPUTE WAS DECIDED BY THE LD. CIT (A) AS PER PARA 3.2 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF RE ADY REFERENCE:- 3.2 THE FINDINGS OF LD. AO AND THE SUBMISSIONS OF THE APPELLANT HAVE BEEN CONSIDERED. THERE ARE A CATENA OF DECISIO N IN WHICH PENALTY IS HELD TO BE EXIGIBLE EVEN ON ESTIMATES WH ERE THE REASONABLENESS OF THE ACTION IN QUANTUM IS NOT IN D ISPUTE AS IN THIS CASE. THUS FOLLOWING THE BELOW MENTIONED CASE LAWS, THE PENALTY IS CONFIRMED:- (I) SUSHIL KUMAR SHARAD KUMAR REPORTED IN 2 32 ITR 588 (ALL) (II) CIT VS BALAKRISHNA TEXTILES REPORTED IN 193 ITR 361 (MAD); (III) CIT VS KRISHNASWAMY & SONS REPORTED IN 2 19 ITR 157 (MAD); AND ALSO (IV) CIT VS HARPRASAD & CO. LTD. REPORTED IN 3 28 ITR 53 (DEL) 3 6. FROM THE ABOVE PARA FROM THE ORDER OF THE LD. CI T (A), IT IS SEEN THAT THE ONLY ARGUMENT WHICH WAS RAISED BEFORE THE CIT ( A) WAS THIS THAT THE PENALTY COULD NOT BE LEVIED WHERE INCOME HAS BEEN E NHANCED MERELY ON ESTIMATES AND IN SUPPORT OF THIS CONTENTION, RELIAN CE WAS PLACED ON THE TRIBUNALS DECISION RENDERED IN THE CASE OF THE ITO VS. MADAN LAL REPORTED IN (2003) 78 TTJ 573 (JOD.). 7. AS AGAINST THIS TRIBUNALS DECISION, LD. CIT(A) HAS FOLLOWED FOUR JUDGMENTS OF THE VARIOUS HIGH COURTS INCLUDING ONE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT BEING JURISDICTIONAL HIGH COUR T RENDERED IN THE CASE OF SUSHIL KUMAR SHARAD KUMAR (SUPRA). IN THAT CASE, TH E PENALTY WAS IMPOSED IN RESPECT OF LOW HOUSE WITHDRAWALS AND THEREFORE, IT IS SEEN THAT IN THAT CASE ALSO, THE ADDITION OF INCOME ON WHICH PENALTY WAS IMPOSED WAS ON ESTIMATE BASIS. UNDER THESE FACTS, THE PENALTY IMPO SED BY THE AO WAS UPHELD BY THE TRIBUNAL AS WELL AS BY THE HONBLE HI GH COURT BY MAKING THIS OBSERVATION THAT IN DECIDING WHETHER PENALTY CAN BE IMPOSED IN A GIVEN CASE, THE ENTIRETY OF THE CIRCUMSTANCES MUST BE TAK EN INTO ACCOUNT. IT WAS ALSO HELD THAT IN A CASE, WHERE ADDITIONS HAS BEEN MADE PURELY ON ESTIMATE WITHOUT REFERENCE TO ANY EVIDENCE/MATERIAL BEING ON RECORD, IN SUCH CASE, IT COULD BE ARGUED WITH SOME FORCE THAT PENALTY CANNOT BE LEVIED ON THE FIGURES WHICH ARE MERELY BASED ON GUESS WORK OR EST IMATE. BUT IN A CASE, WHERE AFTER A DETAILED INVESTIGATION, THE ASSESSEE WAS CONFRONTED WITH THE EVIDENCE/MATERIALS AND HE FAILED TO DISLODGE THE FA CTUAL POSITION ON THE BASIS OF WHICH ADDITIONS WERE MADE, THE CASE STANDS ON A DIFFERENT FOOTING. IN SUCH A CASE, IT IS ALWAYS OPEN TO DRAW AN INFERENCE OF CONCEALMENT OR OF FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE, IT IS NOTED BY THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNT AND VARIOUS VOUCHERS. THIS WAS THE OBJECTION OF THE AO THAT THE ASSESSEE HAS MADE PETTY CASH PAYMENT AGAIN ST VARIOUS EXPENSES AND PRIMARY VOUCHERS FOR SUPPORTING THE CLAIM WERE NOT PRODUCED. 4 8. THERE WAS ONE MORE OBJECTION OF THE AO THAT DAY TO DAY STOCK INVENTORY OF RAW MATERIAL AND OTHER CONSUMABLE ITEM WAS NOT MAINTAINED. ON THE BASIS OF THESE GENERAL OBJECTIONS, THE AO MA DE ADDITION BY ADOPTING HIGHER G.P. RATE OF 18.50% AS AGAINST 18.02% DECLAR ED BY THE ASSESSEE. HENCE, IT IS SEEN THAT IN THE PRESENT CASE, THE JUD GMENT OF THE HONBLE ALLAHABAD HIGH COURT DOES NOT SUPPORT THE CASE OF T HE REVENUE AND IN FACT, THIS JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT S UPPORT THE CASE OF THE ASSESSEE BECAUSE IT WAS ALSO HELD BY THE HONBLE AL LAHABAD HIGH COURT IN THIS CASE THAT WHERE THE ADDITIONS WERE MADE PURELY ON ESTIMATE WITHOUT REFERENCE TO ANY EVIDENCE/MATERIAL BEING ON RECORD, IT COULD BE ARGUED WITH SOME FORCE THAT PENALTY CANNOT BE LEVIED. IN THE PR ESENT CASE ALSO, ADDITION HAS BEEN MADE PURELY ON ESTIMATE WITHOUT REFERENCE TO ANY EVIDENCE/MATERIAL BEING ON RECORD. THE OBJECTIONS O F THE A.O. WERE THAT ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNT AND VARI OUS VOUCHERS BUT THE ASSESSEE HAS MADE PETTY CASH PAYMENT AGAINST VARIOU S EXPENSES AND PRIMARY VOUCHERS FOR SUPPORTING THE CLAIM WERE NOT PRODUCED. THERE WAS ONE MORE OBJECTION OF THE AO THAT DAY TO DAY STOCK INVENTORY OF RAW MATERIAL AND OTHER CONSUMABLE ITEM WAS NOT MAINTAIN ED. ON THE BASIS OF THESE GENERAL OBJECTIONS, THE AO MADE ADDITION BY A DOPTING HIGHER G.P. RATE OF 18.50% AS AGAINST 18.02% DECLARED BY THE ASSESSE E. THEREFORE, IT IS SEEN THAT IN THE PRESENT CASE, THE A.O. HAS MADE TH E IMPUGNED ADDITION WITHOUT REFERENCE TO ANY EVIDENCE/MATERIAL BEING ON RECORD. HENCE, BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT, WE HOLD THAT IN THE FACTS OF THE PRESENT CASE, LEVY OF PENALTY ON ESTIMATED ADDITION IS NOT JUSTIFIED AND THEREFORE, WE DELETE THE PENALTY. REGARDING OTHER THREE JUDGMENTS FOLLOWED BY CIT (A), WE WANT TO OBSERVE THAT WHEN THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT I S SUPPORTING THE CASE OF THE ASSESSEE, JUDGMENTS OF OTHER HIGH COURTS ARE NO T RELEVANT EVEN IF THESE JUDGMENTS ARE AGAINST THE ASSESSEE IN SIMILAR FACTS AS IN THE FACTS OF THE ASSESSEE. 5 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/08/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. RE GISTRAR