Shri Hetal Indravadan Shah, Bhavnagar V. The ACIT.,Circle-1, Bhavnagar

ITA 968/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1575 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAMES KURIEN
• Keywords: Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM, & SHRI MANISH BORAD , AM. ITA NO.968/AHD/2011 ASST. YEAR: 2007-08 HETAL INDRAVADAN SHAH, PROP. NARAYANA ENTERPRISE, 304/305, SHREE VALLABH COMP.JAWAHAR FIELD, BHAVNAGAR. VS. ACIT, CIRCLE-1, BHAVNAGAR. APPELLANT RESPONDENT PAN AVWPS 3734 J APPELLANT BY SHRI SAKAR SHARMA, AR RESPONDENT BY SHRI JAMES KURIEN, SR.DR DATE OF HEARING: 3/5/2016 DATE OF PRONOUNCEMENT: 04/05/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF ASSESSEE IS DIRECTED AT THE INSTANC E OF ASSESSEE AGAINST THE ORDER OF CIT(A)-XX, AHMEDABAD, DATED 14 .12.2010. PENALTY ORDER U/S 271(1)(C) OF I.T. ACT, 1961 (IN S HORT THE ACT) WAS FRAMED ON 17.6.2010 BY ACIT, CIRCLE-1, BHAVNAGAR, F OR ASST. YEAR 2007-08. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF A PPEAL :- 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONF IRMING PENALTY U/S. 271(L)(C) EQUIVALENT TO 100% OF TAX ON ADDITION MAD E IN THE ASSESSMENT ORDER AND ACCEPTED BY THE ASSESSEE BY NOT PREFERRIN G ANY APPEAL OR REVISION AGAINST THE ORDER BEFORE ANY AUTHORITY. ITA NO. 968/AHD/2011 ASST. YEAR 2007-08 2 THE APPELLANT CRAVES PERMISSION TO ADD, ALTER, AMEN D OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF APPEAL. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE ASSE SSMENT RECORDS ARE THAT ASSESSEE WHO IS AN INDIVIDUAL ENGAGED IN T HE BUSINESS OF TRADING AND EXPORT OF REUSABLE MACHINERIES AND NAVI GATIONAL EQUIPMENTS AND PORTABLE GENERATORS ETC. RETURN OF I NCOME FOR ASST. YEAR 2007-08 WAS FILED ON 31.10.2007 DECLARING TOTA L INCOME AT RS.42,46,911/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT. NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 19.9.200 8 AND SERVED UPON THE ASSESSEE ON 22.09.2008. ASSESSMENT WAS COM PLETED ON 9.12.2009 BY ASSESSING THE INCOME AT RS.50,29,750/- AFTER MAKING ADDITION OF RS.7,82,837/-. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED AND 200% PENALTY OF THE TOTAL TA X SOUGHT TO BE EVADED AT RS.2,63,500/- WAS IMPOSED WHICH WAS CALCU LATED AT RS.5,27,000/-. 3. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE CIT(A) WHO PARTLY ALLOWED THE APPEAL OF ASSESSEE BY REDUCING T HE PENALTY TO 100% OF THE TAX SOUGHT TO BE EVADED ON THE ADDITION OF RS.6,81,437/-. 4. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF LD. CIT(A) PARTLY CONFIRMING T HE ORDER OF PENALTY U/S 271(1)(C) OF THE ACT FRAMED BY LD. ASSESSING OF FICER. ITA NO. 968/AHD/2011 ASST. YEAR 2007-08 3 5. LD. AR SUBMITTED THAT 100% PENALTY HAS BEEN CONF IRMED BY LD. CIT(A) ON TAX SOUGHT TO BE EVADED ON ACCOUNT OF FOL LOWING TWO ADDITIONS :- 1. ADDITION ON ACCOUNT OF REVALUATION OF CLOSING STOCK AFTER TAKING INTO CONSIDERATION THE DIRECT EXPENSES ON PURCHASES- RS.6,71,729/- 2. DISALLOWANCE ON ACCOUNT OF TCS PURCHASES RS.9,70 8/- 6. LD. AR FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY LD. ASSESSING OFFICE R THAT THERE WAS SUPPRESSION IN THE VALUATION OF CLOSING STOCK FOR N OT INCLUDING THE DIRECT EXPENSES OF RS.6,71,729/- INCURRED ON THE PU RCHASES WHICH WERE HELD AS STOCK-IN-TRADE AS ON 31.3.2007 AND FUR THER EVEN THOUGH ASSESSEE SUBMITTED BEFORE LD. ASSESSING OFFICER THA T THERE WAS A MISTAKE HAPPENED DUE TO OVERSIGHT AND ACCOUNTING ER ROR AND THERE WAS NO INTENTION TO EVADE TAX BUT STILL LD. ASSESSI NG OFFICER WAS NOT CONVINCED WITH THE REPLY AND MADE ADDITION TO THE C LOSING STOCK OF RS.6,71,729/-. SIMILARLY ASSESSEE CLAIMED TAX COLLE CTED AT SOURCE OF RS.9,708/- AS EXPENDITURE BY ADDING IT TO THE PURCH ASES BUT THE SAME WAS ACTUALLY DISALLOWABLE AND NEEDED TO BE ADDED BA CK TO THE INCOME CREDIT WAS AVAILABLE ONLY AGAINST THE TAX PA YABLE BY ASSESSEE. LD. AR FURTHER SUBMITTED THAT PENALTY U/S 271(1)(C) OF THE ACT HAS BEEN CONFIRMED AT RS.2,29,370/- ON THE IMPU GNED ADDITION OF RS. 6,81,437/- EVEN THOUGH TAX HAS BEEN PAID ON THE IMPUGNED ADDITION POST ASSESSMENT AND NO APPEAL HAS BEEN PRE FERRED BY THE ASSESSEE BEFORE THE APPELLATE AUTHORITIES AND ALSO NO PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME OR F URNISHING OF ITA NO. 968/AHD/2011 ASST. YEAR 2007-08 4 INACCURATE PARTICULARS OF INCOME IS IMPOSABLE FOR T HE UNINTENTIONAL MISTAKE COMMITTED BY THE ASSESSEE. 7. LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND ALSO GONE THROUGH THE JUDGMENT AND DE CISION REFERRED BY THE LD. AR DURING THE COURSE OF HEARING. SOLITAR Y GRIEVANCE OF THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) CONFIRM ING PENALTY OF RS.2,29,370/- ON THE CONFIRMED ADDITION OF RS. 6,81 ,437/- WHICH WAS MADE BY LD. ASSESSING OFFICER ON ACCOUNT OF TCS PUR CHASES OF RS.9,708/- DEBITED TO TRADING ACCOUNT AND ADDITION ON ACCOUNT OF REVALUATION OF CLOSING STOCK AT RS. 6,71,729/-. 9. FROM GOING THROUGH THE RECORDS, WE OBSERVE THAT TCS PURCHASES OF RS.9,708/- WHICH WAS ADDED WITH THE PU RCHASES IN THE TRADING ACCOUNT HAS ALREADY BEEN ADDED TO THE INCOM E OF ASSESSEE AND FOR SUCH A MISTAKE ASSESSEE SHOULD NOT BE VISIT ED WITH PENALTY U/S 271(1)(C) OF THE ACT. AS REGARDS PENALTY ON ADDITION ON ACCOUNT OF REVAL UATION AT RS. 6,71,729/-, WE OBSERVE THAT ASSESSEE HAS FILED RETU RN OF INCOME AT RS.42,46,911/- ALONG WITH AUDITED FINANCIAL STATEME NT AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. ASSESSING OFFI CER OBSERVED THAT DIRECT EXPENSES AT RS. 6,71,729/- INCURRED FO R MAKING PURCHASES AS NOT ADDED PROPORTIONATELY WHILE VALUING CLOSING STOCK AT THE YEAR END. THIS ADDITION OF RS. 6,71,729/- WAS NOT CHALLE NGED BY THE ITA NO. 968/AHD/2011 ASST. YEAR 2007-08 5 ASSESSEE BEFORE THE APPELLATE AUTHORITIES AND HAS P AID TAXES ON THE IMPUGNED ADDITION AND HAS FURTHER ADDED THIS AMOUNT TO THE OPENING STOCK OF THE NEXT YEAR. FROM GOING THROUGH THE ABOV E DISCUSSION, WE ARE OF THE VIEW THAT THE ADDITION WHICH HAS BEEN MA DE BY LD. ASSESSING OFFICER RESTS UPON THE FIGURES WHICH WERE SHOWN IN THE BOOKS OF THE ASSESSEE AND WERE FORMING PART OF THE AUDITED FINANCIAL STATEMENT AND THERE WAS NO CONCEALMENT OF INCOME NO TED BY THE LD. ASSESSING OFFICER. FURTHER THE VALUATION OF CLOSI NG STOCK HAS BEEN INCREASED BY THE PROPORTIONATE DIRECT EXPENSES ATTR IBUTABLE TO THE PURCHASES WHICH REMAINED UNSOLD AT THE END OF THE Y EAR AND, THEREFORE, SUCH TYPE OF ADDITION CANNOT COME UNDER THE CATEGORY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. WE ARE OF THE VIEW THAT LD. CIT(A) HAS ERR ED IN CONFIRMING THE PENALTY ON THE IMPUGNED ADDITION OF RS. 6,81,43 7/-. ACCORDINGLY, WE DELETE THE IMPUGNED PENALTY U/S 271(1)(C) OF THE ACT IMPOSED BY LD. ASSESSING OFFICER. THE GROUND OF ASSESSEE IS AL LOWED. 10. OTHER GROUND IS GENERAL IN NATURE. 11. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MAY, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 4/05/2016 MAHATA/- ITA NO. 968/AHD/2011 ASST. YEAR 2007-08 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 03/05/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 03/05/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 4/5/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: