The DCIT, Circle-9, Ahmedabad V. Shri Madan Ranulal Chopra, Ahmedabad

ITA 978/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1759 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: S H RI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER THE DCIT, CIRCLE - 9, AHMEDABAD (APPELLANT) VS SHRI MADAN RANULAL CHOPRA, PROP. CHOPRA LOGISTICS, 18, BABA BALAKNATH ESTATE, NAROL CHAR RASTA, NAROL, AHMEDABAD - 382405 PAN: AFXPC6731Q (RESPONDENT) REVENUE BY : S H R I ALPESH PARMAR, SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 29 - 04 - 2 016 DATE OF PRONOUNCEMENT : 29 - 04 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2007 - 08 , AR IS ES FROM ORDER OF THE CIT(A) - XV, AHMEDABAD DATED 22 - 02 - 2012 IN APPEAL NO. CIT(A) - XV/DCIT/CR.9/ 7 2/10 - 11 , IN PROCEEDIN GS UNDER SECTION 271(C ) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 978 / A HD/20 12 A SSESSMENT YEAR 200 7 - 08 I .T.A NO. 978/AHD/2012 A.Y. 2007 - 08 PAGE NO DCIT VS. SHRI MADAN RANULAL CHOPRA 2 2. THE REVENUE S SO LITARY GRIEVANCE SEEKS TO REVIVE SECTION 271(1) (C) PENALTY OF RS. 13,40,674/ - IMPOSED BY THE ASSESSING OFFICER IN ORDER DATED 31 - 05 - 2010 AND DELETED IN THE LOWER APPELLATE PROCEEDINGS. 3. WE COME TO RELEVANT FACTS FIRST. THE ASSESSEE - INDIVIDUAL CARRIES OUT LOGISTIC BUSINESS THROUGH HIS PROPRIETARY CONCERN M/S CHOPRA LOGISTICS. THE DEPARTMENT CONDUCTED A SURVEY IN ITS CASE. IT WOULD NOTICE ASSESSEE S TOTAL FREIGHT RECEIPTS FROM 01 - 04 - 2006 TO 14 - 11 - 2006 AMOUNTING TO RS. 4,23,71,557/ - AND PAYMENTS TO TRUC K OWNERS OF RS. 3,33,65,825/ - LEADING TO PROFITS OF RS. 90,05,732/ - NOT ACCOUNTED IN BOOKS. THE ASSESSEE IN HIS STATEMENT DURING SURVEY ON 17 - 11 - 2006 DECLARED INCOME OF RS. 85 LAC S AFTER C LAIMING EXPENDITURE OF RS. 5 LAC . WE FIND FROM ASSESSMENT ORDER DA TED 18 - 12 - 2009 THAT ASSESSEE S DISCLOSED GROSS PROFIT ARE @ 21.53% ON THE TURNOVER F R O M 01 - 04 - 2006 TO 09 - 11 - 2006 FOLLOWED BY THE SAME BEING @ 8.3% FOR REST OF THE PERIOD UP TO 31 - 03 - 2007. THIS MADE THE ASSESSING OFFICER TO REJECT ASSESSEE S BOOKS. HE ADO PTED GROSS PROFIT RATIO OF 20% TO ARRIVE AT A CONSEQU EN TIAL FIGURE OF RS. 1,13,95,000/ - . THE SAME STOOD ADDED IN ASSESSEE S HANDS. THE ASSESSING OFFICER ALSO INITIA TED THE IMPUGNED PENALTY PROCEEDINGS ALLEGING CONCEALMENT AND FURNISHING OF INACCURATE PAR TICULARS OF INCOME. QUANTUM PROCEEDINGS SEEM TO HAVE ATTAINED FINALITY AT THIS STAGE. 4. WE COME TO THE IMPUGNED PROCEEDINGS. THE ASSESSING OFFICER IN HIS ORDER DATED 31 - 01 - 2005 REJECTED ASSESSEE S EXPLANATION ON THE I .T.A NO. 978/AHD/2012 A.Y. 2007 - 08 PAGE NO DCIT VS. SHRI MADAN RANULAL CHOPRA 3 ABOVE STATED GP ADDITION TO TREAT IT AS AN INSTANCE OF CONCEALMENT OF PARTICULARS OF INCOME AND ALSO FURNISHING OF INACCURATE PARTICULARS THEREBY IMPOSING THIS PENALTY IN QUESTION OF RS. 13,40,674/ - . 5. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) ACCEPTS ITS SUBMISSION S ON MERITS AS UNDER : - 10. I HAVE CONSIDERED THE FACTS AND SUBMISSION MADE BY THE APPELLANT BEFORE THE AO DURING THE ASS ESSMENT AND PENAL PROCEEDINGS. I HAVE ALSO CONSIDERED THE SUBMISSION AND RATIO OF CASES RELIED ON BEFORE ME DURING THE APPELLATE PROCEEDINGS. I AM INCL INED TO ACCEPT THE CONTENTION OF THE APPELLANT THAT HIS CASE IS NOT A FIT CASE FOR IMPOSITION OF PENALTY ON ACCOUNT OF FOLLOWING REASONS : (I) THE SATISFACTION OF THE AO IS NOT FOUND SPECIFICALLY FOR THE ADDITION. THE REFERENCE OF INITIATION OF PENALTY IS R OUTINE FOR THE ADDITION SO MADE. (II) THE ADDITION MADE BY THE AO IS BASED ON STATEMENT OF THE ASSESSEE DURING THE COURSE OF SURVEY WHICH WAS REBUTTED AND CLAIMED TO BE IRRATIONAL AND ILLOGICAL BY THE APPELLANT ON THE BASIS OF EVIDENCES AND SUBMISSION. T HE AO COULD NOT SPECIFY ANY DEFECT IN THE AUDITED RECORDS OF THE APPELLANT. EVEN SUCH EXPLANATION FOR REDUCTION IN G.P. WAS NOT APPRECIATED BY THE AO. (III) THE ADDITION MADE BY THE AO IS AN ESTIMATION BASED ON THE RESULT OF APPELLANT'S TRANSACTION BEFORE PRE - SURVEY PERIOD BUT HAS NO T CO NSIDERED THE ADVERSE POSITION POST SURVEY FOR REDUCTION OF G.P. FRO M 21.54 % TO 8.37% AND ESTIMATED IT AT 20% OF G.P. INTERESTINGLY THE COMBINED G.P. OF THE APPELLANT DURING THE PREVIOUS YEAR IS 18.18% AS FOLLOWS: PARTICULARS 1.4.06TO 09.11.06 10. 11.06 TO 31.3.07 TOTAL I .T.A NO. 978/AHD/2012 A.Y. 2007 - 08 PAGE NO DCIT VS. SHRI MADAN RANULAL CHOPRA 4 SALES 4,24,61,333 1,45,15,882 5,69,77,215 PURCHASE 3,33,15,145 1,33,01,374 4,66,16,519 GROSS PROFIT 91,46,188 12,14,508 1,03,60,696] PERCENTAGE 21.54% 8.37% 18.18% (IV) THE AO PRIMA FACIE ACCEPTED THE GENUINENESS OF VARIOUS EXPENSES BUT WITHOUT ADDUCING ANY REASON OR JUSTIFICATION DISALLOWED A PART OF IT. THE AO HAS NOT CONSIDERED THE EXPLANATION OF THE APPELLANT AND HAS MADE NO INDEPENDENT INQUIRY. EVEN DURING THE C OURSE OF SURVEY NO FINDING ABOUT BOGUS OR INFLATED EXPENSE HAS BEEN FOUND. (V) THE APPELLANT ACCEPTED THE ADDITION TO BY PEACE OF MIND, TO AVOID LITIGATION AND TO SAVE HIM FROM LITIGATION EXPENDITURE AND TIME CONSIDERING HIS BUSINESS CONDITION. THIS CANNO T BE ACCEPTED AS THE APPELLANT'S ADMISSION FOR LEVY OF PENALTY. (VI) THE AO FAILED TO IDENTIFY THE ADDITION MADE OF ESTIMATION OR DISALLOWANCE OF EXPENSES FOR HIS SATISFACTION OF IMPOSITION OF PENALTY. IT IS ONLY THE BALANCE OF AMOUNT OF RS.39,82,987 BETW EEN RETURNED INCOME AND ASSESSED INCOME AS INCOME ABOUT WHICH PARTICULARS OF INCOME WAS CONCEALED AND SUCH AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. THE APPELLANT HAS DISCLOSED ALL THE FACTS RELATED TO RECEIPT AND EXPENSES IN ITS AUDITED ACCOUNTS AND RETURN OF INCOME AND THEREFORE SUCH GENERAL AND ROUTINE SATISFACTION ABOUT INDETERMINATE CONCLUSION BETWEEN CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS CANNOT BE TREATED AS JUSTIFIED. (VI I) DURING THE COURSE OF SURVEY UNRECORDED RECEIPT AND EXP ENSES W ERE FOUND RECORDED IN TWO REGISTER MANUALLY MAINTAINED. THERE BEING NO DUE DATE FOR THE PREVIOUS YEAR EXPIRED, THE APPELLANT HAS OPPORTUNITY TO RECORD THEM AND SHOW THEM IN REGULAR BOOKS OF ACCOUNTS. THE APPELLANT HAS ACCEPTED THE PROFIT AS ON DATE OF SURVEY A ND RECORDED ALL THE TRANSACTION S WITH SUBSEQUENT TRANSACTION OF POST SURVEY PERIOD. HE GOT HIS ACCOUNTS AUDITED IN WHICH NO DISCREPANCY WAS MENTIONED. EXCEPT THE DISCREPANCY WITH STATEMENT OF THE ASSESSEE AND GROSS PROFIT DECLINE IN POST SURVEY PERIOD, AO I .T.A NO. 978/AHD/2012 A.Y. 2007 - 08 PAGE NO DCIT VS. SHRI MADAN RANULAL CHOPRA 5 HAS NOT BROUGHT OUT ANY DEFECT OR DEFICIENCY. THE INCOME IS ADDED HAVING JOINT EFFECT OF ESTIMATION AND DI SALLOWANCE WHICH WERE NOT SPECIFIED BY THE AO. EVEN NO REASON FOR DISALLOWANCE WAS DISCUSSED. IT IS THEREFORE THE APPELLANT'S EXPLANATION OFFERED DURING PENAL PROCEEDINGS CANNOT BE TREATED AS GENERAL AND ROUTINE. IT THEREFORE DOES NOT REQUIRE PENALTY PROCEEDINGS. 11. IN CONCLUSION, THE PENALTY IMPOSED BY THE AO WAS FOUND TO BE NOT ON THE BASIS OF ANY SPECIFIC FINDING BUT ON ESTIMATE DISALLO WANCE BASED ON PRESUMPTION AND ASSUMPTION. THE SATISFACTION OF THE AO IS NOT JUSTIFIED ON SUCH ASSUMPTIONS AND ESTIMATE. VARIOUS CASES RELIED ON BY THE APPELLANT ARE RELEVANT TO THE FACTS OF THE APPELLANT. THEREFORE THE AO IS DIRECTED TO DELETE THE PENALTY SO IMPOSED 6. BOTH PARTIES STRONGLY REITERATE THEIR RESPECTIVE STANDS FOR AND AGAINST THE IMPOSITION OF THE IMPUGNED PENALTY. THERE IS NO DISPUTE THAT THE SAME ARISES FROM RE - ESTIMATION OF ASSESSEE S GROSS PROFITS FROM 09 - 11 - 2006 TO 01 - 04 - 2006 @ 8.36% AS REVISED TO 20% BY ASSESSING OFFICER AFTER REJECTING ITS BOOKS. THERE IS NO OTHER MATERIAL AGAINST THE ASSESSEE EXCEPT ITS GROSS PROFITS RE - ESTIMATION. WE FIND THAT A CO - ORDINATE BENCH OF THE TRIBUNAL IN ITA 2068/AHD/2011 DEEP JYOTI DYING AND PRINTING MILLS PVT. LTD VS. ITO DECIDED ON 07 - 05 - 2015 DECIDES THE VERY ISSUE IN ASSESSEE S FAVOUR BY HOLDING THAT SUCH A RE - ESTIMATION OF GROSS PROFITS IS NEITHER CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT FO LLOWS HON BLE JURISDICTIONAL HI GH COURT DECISION IN CIT VS. SUBHASH TRADING CO. (1996) 221 ITR 110 (GUJ) ON THE VERY ISSUE. THERE IS NO EXCEPTION OR DISTINCTION ON FACTS POINTED OUT AT REVENUE S BEHEST. WE ACCORDINGLY HOLD THAT THE CIT(A) HAS RIGHTLY DELETED THE IMPUGNED SECTION 271( 1)(C) PENALTY. I .T.A NO. 978/AHD/2012 A.Y. 2007 - 08 PAGE NO DCIT VS. SHRI MADAN RANULAL CHOPRA 6 7. THIS REVENUE S APPEAL IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 29 - 04 - 201 6 SD/ - SD/ - ( ANIL CHATURVEDI ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DA TED 29 / 04 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,