M/s. Raghu Marbles Pvt. Ltd., MAKRANA V. ITO, MAKRANA

ITA 98/JODH/2012

• Counselvise Citation: 9823314 RSA 2012
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-06-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 29-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURESH OJHA SHRI N A JOSHI
• Keywords: Question of law
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 98 /JODH/201 2 (A.Y. 200 6 - 07 ) M/S. RAGHU MARBLES (P) LTD., VS. THE ITO, WARD - 1, BYE PASS ROAD, MAKRANA. MAKRANA. PAN NO. AABCR 1637 G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURESH OJHA DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 1 2 / 0 6 /201 4 . DATE OF PRONOUNCEMENT : 21 /0 7 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 07/12/2011 OF L D . CIT(A), J ODHPUR . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY LD. CIT(A) ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C), WHICH IS BAD IN LAW AND BAD IN FACTS. 2. THAT PENALTY IMPOSED ON THE BASIS OF ORDER PASSED U/S 143(3) DATED 20/11/2008. BUT LD. A.O. FAILED TO SPECIFY IN THE NOTICE THE NATURE OF DE FAULT I.E. CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 2 3. THAT PENALTY IMPOSED ON THE BASIS OF LUMP SUM TRADING ADDITION ON ROTATIONAL SALE. BUT THE ROTATIONAL SALE WERE ALSO CALCULATED ON ESTIMATED BASIS. INVENTORIES PREPARE D AT THE TIME OF SURVEY WAS IN THE ABSENCE OF ANY RESPONSIBLE PERSON. HENCE PERSUMPTION OF ROTATION SALE IS ONE ASSUMPTION AND PRESUMPTION. WITHOUT PREJUDICED TO ABOVE AND IN THE ALTERNATIVE. 4. (A) THAT ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE THE LD. AO ERRED IN IMPOSING PENALTY MORE THAN 100% OF THE TAX ALLEGED TO BE EVADED. 5. THAT THE PETITIONER MAY KINDLY BE PERMITTED TO ADD/AMEND ANY ADDITIONAL OR ALTERNATIVE GROUND AT OR BEFORE THE TIME OF HEARING. 6. THAT THE PETITIONER PRAYS FOR JUSTICE AND RELIEF. 2 THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE CONFIRMATION OF PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT). 3. FACTS RELATING TO THIS CASE , IN BRIEF, ARE THAT THE ASSESSEE FIL ED THE RETURN OF INCOME ON 30/11 /2006 DECLARING TOTAL INCOME OF RS. NIL . THE ASSESSMENT, HOWEVER, WAS FRAMED U/S 143(3) OF THE ACT ON 2 0 /1 1 /2008 DETERMINING THE TOTAL INCOME AT RS. NIL . THE ASSESSING OFFICER IN THE AS SESSMENT MADE NOTED THAT A SURVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 22/12/2005 AND STOCK FOUND WAS AT RS. 62,65,839/ - WHICH WAS CORRECTED TO RS. 61,62,609/ - DURING THE ASSESSMENT PROCEEDINGS WHILE IN THE BOOKS OF ACCOUNTS IT WAS AT 3 RS. 68,45,500/ - . THUS , STOCK WAS FOUND SHORT BY RS. 6,82,891/ - (RS. 68,45,500 ( - ) RS. 61,62,609/ - ) . T HE ASSESSING OFFICER CALCULATED ROTATIONAL SALES AT 1.5 TIMES FOR A PERIOD OF NINE MONTHS AT RS. 10,24,337 / - ON WHICH LUMP SUM TRADING ADDITION OF RS. 2,46,558 / - WAS MADE. LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. IN THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE ADDITION WAS MADE ON ESTIMATE BASIS, THEREFORE, NO PENALTY WAS LEVIABLE. HOWEVER, THE ASSESSING OFFICER DID NOT AC CEPT THE SUBMISSIONS OF THE ASSESSEE AND LEVIED THE PENALTY OF RS. 83 ,000/ - . THE SAID PENALTY WAS CONFIRMED BY THE LD. CIT(A). NOW THE ASSESSEE IS IN APPEAL. 4. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE NEITHER CONCEALED THE INCOME NO R FURNISHED INACCURATE PARTICULAR OF INCOME. THE ADDITION MADE BY THE ASSESSING OFFICER WAS ON ESTIMATE BASIS WITHOUT BRINGING ANY MATERIAL ON RECORD TO SUBSTANTIVE THAT THE ASSESSEE CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE REFORE, THE PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1. VERMA TRACTORS VS. ACIT REPORTED AT (2007) 106 TTJ JODH 591 4 2. CIT VS. KRISHI TYRE RETRADING & RUBB ER INDUSTRIES (2013) 95 DTR (RAJ.) 376 3. SEEMA BANSAL VS. ITO, WARD (2), MAKRANA IN I.T.A.NO. 97/JODH/2012 ORDER DATED 21/03/2012. 5. IN HIS RIVAL SUBMISSIONS, LEARNED D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE STOCK WAS FOUND SHORT AT THE TIME OF SURVEY PROCEEDINGS AND ON THAT BASIS, THE ASSESSING OFFICER ESTIMATED THE SALE AND MADE THE ADDITION ON ESTIMATE BASIS. ON A SIMILAR ISSUE, THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN DELETED VIDE ORDER DATED 21/03/2012 IN I.T.A.NO. 97/JODH/2012 IN THE CASE OF SEEMA BANSAL VS. ITO, W ARD - 2, MAKRANA (SUPRA) . THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 3 OF THE SAID ORDER WHICH READ AS UNDER: - 3. AFTER CONSIDERING THE ORDERS OF THE ASSESSING OFFICER AND LD. CIT(A) ON WHICH RELIANCE HAS BEEN PLACED BY LD. D/R I FOUND THAT LEVY OF PENALTY IS NOT JUSTIFIED. ON ESTIMATION BASIS THE STOCK WAS TAKEN BY SURVEY PARTY AND IT WAS NOT FOUND MORE BUT IT WAS F OUND LESS. IT MEANS THE STOCK WAS SOLD WHICH COULD NOT BE ENTERED IN THE BOOKS OF ACCOUNT. THEREFORE, IF ANY ADDITION COULD HAVE BEEN MADE THAT COULD 5 HAVE BEEN MADE ON THE PROFIT ON SHORT STOCK FOUND. EVEN OTHERWISE, THIS IS AN ESTIMATION OF STOCK DURIN G THE COURSE OF SURVEY, THEREFORE, DIFFERENCE ON ACCOUNT OF ESTIMATION OF STOCK, IN MY VIEW, AT LEAST PENALTY SHOULD NOT HAVE BEEN LEVIED. ACCORDINGLY, I CANCEL THE LEVY OF PENALTY. 7 . ON A SIMILAR ISSUE, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT VS. KRISHI TYRE RETREADING & RUBBER INDUSTRIES REPORTED AT (2013) 95 DTR (RAJ.) 376 HAS HELD AS UNDER: - THE ADDITION HAS BEEN SUSTAINED PURELY ON ESTIMATE BASIS AND NO POSITIVE FACTOR FINDING HAS BEEN FOUND SO AS TO EVEN MAKE THE SAID ADDITION. IT IS A PURE GUESSWORK AND ON SUCH GUESSWORK, NO PENALTY UNDER SECTION 271(1)(C) CAN BE SAID TO BE LEVIABLE. FOR IMPOSI N G PENALTY UNDER SECTION 271(1)(C), THE AO HAS TO CLEARLY PROVE THE CONDUCT OF THE ASSESSEE, WHICH IN THIS CASE, HAS NOT BEEN PROVED. M ERELY BECAUSE THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE REJECTED OR ESTIMATED ADDITION WAS MADE, NO PENALTY IS LEVIABLE. THE ASSESSEE OFFERED AN EXPLANATION, WHICH COULD NOT BE TERMED AS NOT BONAFIDE. IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO PROV E THE CHARGE OF CONCEALMENT, THE PENALTY COULD NOT BE IMPOSED. THE FINDING REACHED BY THE TRIBUNAL IS ESSENTIALLY A FINDING OF FACT AND NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THE PRESENT APPEAL. 8 . SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE AFORESAID CASE OF CIT VS. KRISHI TYRE RETREADING & RUBBER INDUSTRIES (SUPRA), SO RESPECTFULLY FOLLOWING THE SAID DECISION, WE DELETE THE PENALTY AMOUNTING TO RS. 83 ,000/ - LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT WHICH WAS CONFIRMED BY THE LD. CIT(A). 6 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ( ORDER PRONOUNCED IN THE COURT ON 21 ST JULY , 201 4) . SD/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21 ST JULY , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR .