Shri Narendra N. Pala, RAJKOT-GUJARAT V. The Assistant Commr. Income Tax,Cen. Cir-2, RAJKOT-GUJARAT

ITSSA 23/RJT/2013

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3739 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 6 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 09-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SINHA CIT D R
• Assessee Lawyers: MJ RANPURA
• Keywords: Search and seizure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT , ! '# $ , % ! & ' BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER #./ I.T(SS)A. NO.23/RJT/2013 ( / ASSESSMENT YEAR : 2005-06) SHRI NARENDRA N. PALA, PROP. J. N. JEWELLERS, MANDVI CHOWK, PALACE ROAD, RAJKOT. / VS. THE ACIT, CC 2, RAJKOT. !* # ./ + # ./ PAN/GIR NO. : ACGPP 7914 A ( *, / APPELLANT ) .. ( -*, / RESPONDENT ) *, . / APPELLANT BY : SHRI M. J. RANPURA , A.R. -*, / . / RESPONDENT BY : SHRI A. K. SINHA, CIT - D.R. 0 1 / 2 / DATE OF HEARING 16 /03/2018 34 / 2 / DATE OF PRONOUNCEMENT 09 / 0 4 /201 8 5 / O R D E R PER MAHAVIR PRASAD JUDICIAL MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTAN CE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISS IONER OF INCOME TAX(APPEALS)- IV, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO. CIT(A)-IV/55/RJT/CC-2/12-13 DATED 23/08/2013 ARISIN G IN THE PENALTY ORDER PASSED UNDER S.271(1)(C) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 18/10 /2012 RELEVANT TO ASSESSMENT YEAR (AY) 2005-06. 2. THE GROUND OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER:- IT(SS)A NO.23/R JT/2013 SHRI NARENDRA N. PALA VS. ACIT ASSESSMENT YEAR 2005-06 - 2 - THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-IV, A HMEDABAD ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING THE LEVY OF P ENALTY U/S.271(1)(C) OF THE ACT AT RS.3,51,993/-. THE PENALTY LEVIED U/S .271(1)(C) OF THE ACT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW, MAY KINDLY BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A BULLION MERCHANT MANUFACTURING GOLD ORNAMENTS. ON VERIFICAT ION OF AUDIT REPORT FOR ASST. YEAR 2005-06 IT WAS SEEN THAT THE DETAILS OF OPENING STOCK, PURCHASE, MANUFACTURING, SALES AND CLOSING S TOCK OF FINE GOLD ORNAMENTS DURING THE YEAR WAS MENTIONED AS UNDER: OPENING STOCK OF GOLD ORNAMENTS 14843.483 GR AMS ADD:- JEWELLERY MANUFACTURED DURING THE YEAR 2788.210 GRAMS 17631.693 GRAMS LESS:- JEWELLERY SOLD 9205.7 25 GRAMS CLOSING STOCK 8425.968GRAMS 4. ON THE ABOVE SALE OF 9205.725 GRAMS, THE VALUE O F SALE SHOWN IN P&L ACCOUNT WAS RS.52,41,433/-. HOWEVER, DURING THE COURSE OF VERIFICATION OF SOFT COPY OF BOOKS OF ACCOUNTS, ON LEDGER ACCOUNT FOR GOLD ORNAMENTS FOR THE PERIOD 01/04/2004 TO 31/03/2 005 WAS FOUND. HOWEVER, ON THE LAST DAY OF THE MONTH, I.E. 31/03/2005, ONE ENTRY OF 1714.285 GRAM WAS APPEARED AS SALES BUT NO CORRESPONDING VALUE WAS MENTIONED. THIS MEANT THAT EITHER THE ASS ESSEE HAD SOLD ONLY 7491.440 GRAMS OF GOLD FOR VALUE OF RS.52,41,4 33/- OR JEWELLERY WEIGHTING 1714.285 GRAMS WAS SOLD OUT OF BOOKS. 5. THEREAFTER, A SHOW-CAUSE NOTICE WAS ISSUED TO TH E ASSESSEE. IN REPLY ASSESSEE STATED THAT REGISTERS AND CHALLANS A RE MISPLACED WHILE SHIFTING HIS OFFICE FROM MANDVI CHOWK TO PALACE ROA D. FURTHER, STATED THAT IN FINANCIAL YEAR 2004-05 AND EXPLANATION AS T O MELTING LOSS OF 1714 GRAMS OF GOLD, IT WAS SUBMITTED THAT WHILE ISS UE AND RECEIPT OF IT(SS)A NO.23/R JT/2013 SHRI NARENDRA N. PALA VS. ACIT ASSESSMENT YEAR 2005-06 - 3 - THE GOLD ORNAMENTS, ASSESSEE HAD TO PREPARE THE CHA LLANS, BUT BECAUSE OF SHIFTING OF OFFICE, SAME HAVE BEEN MISPL ACED. 6. LD. AO WAS NOT CONVINCED WITH THE PLEA TAKEN BY THE ASSESSEE AND HELD THAT ASSESSEE HAS WILLFULLY AND INTENTIONA LLY CONCEALED THE PARTICULARS OF HIS INCOME, WITHIN THE MEANING OF PR OVISIONS OF SECTION 271(1)(C) OF THE ACT AND LEVIED THE PENALTY OF RS.3 ,51,993/-. 7. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ORDER OF TH E ACIT. 8. NOW APPEAL IS BEFORE US. 9. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. ASSESSEE IS AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF GOLD ORNAMENTS UNDER T HE NAME AND STYLE M/S. J. N. JEWELLERS. A SEARCH AND SEIZURE AC TION U/S.132 OF THE ACT HAS BEEN CARRIED OUT BY THE DEPARTMENT AT THE R ESIDENTIAL PREMISES OF THE APPELLANT. FURTHER SURVEY ACTION WA S ALSO CARRIED OUT AT THE BUSINESS PREMISES OF THE APPELLANT. IN RESPO NSE TO THE NOTICE U/S.153A OF THE ACT, RETURN OF INCOME FOR THE ASSES SMENT YEAR UNDER CONSIDERATION WAS FILED ON 04/08/2010 DECLARING THE TOTAL INCOME AT RS.4,94,340/-. THE AO, VIDE ORDER U/S.153A OF THE A CT ASSESSED THE TOTAL INCOME AT RS.15,40,072/-, WHEREIN HE TREATED MELTING LOSS OF 1714.315 GRAMS OF GOLD ORNAMENTS AS ALLEGED SUPPRES SED SALES AND BY APPLYING SALE RATE OF RS.610/- PER GRAM MADE ADD ITION OF RS.10,45,732/-. IN QUANTUM APPEAL, LD. CIT(A) CONFI RMED THE ALLEGED UNACCOUNTED SALES AND AFTER ALLOWING SET OFF OF INC OME ADMITTED ON AD HOC BASIS, RETAINED ADDITION OF RS.7,45,732/-. I N THIS CASE, LD. AO TREATED THE WHOLE OF MELTING LOSS AS UNACCOUNTED SA LES AND BY ESTIMATING MARKET RATE, BUT APART FROM THAT THERE I S NOTHING ON RECORD SHOWING ANY UNACCOUNTED SALES AND RECEIPT OF MONEY ON THAT IT(SS)A NO.23/R JT/2013 SHRI NARENDRA N. PALA VS. ACIT ASSESSMENT YEAR 2005-06 - 4 - COUNT. AN ADDITION OF RS.7,45,732/- WAS MADE BY DRI FTING FROM THE APPELLANTS BOOKS OF ACCOUNT AND ESTIMATING SALE PR ICE. THIS SUGGESTS THAT ALL THE PARTICULARS WERE FURNISHED BY THE APPE LLANT AND BASED ON ESTIMATE WORK THE ADDITION WAS MADE ACCORDINGLY. 10. IN THE CASE OF NATIONAL TEXTILE VS. CIT(2001) 2 49 ITR 125 (GUJ), WHEREIN, IT HAS BEEN HELD THAT: IN ORDER TO JUSTIFY THE LEVY OF PENALTY, TWO FACTO RS MUST COEXIST, (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADIN G TO THE REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESEN T THE ASSESSEE'S INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME, AND (II) THE CIRCUMSTA NCES MUST SHOW THAT THERE WAS ANIMUS, I.E., CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESS EE. 11. IN THE CASE OF CIT VS. L. H. VORA (56 ITR 126), WHEREIN, IT HAS BEEN HELD THAT: .. MERE FALSITY OF EXPLANATION GIVEN IN ASSESSMENT PROCEEDINGS WOULD NOT NECESSARILY LEAD TO INFERENCE THAT THE DISPUTE AMOUNT REPRESENTED INCOME IN CASE OF ASSESSEE EVEN HER EXPLANATION IS NOT FOUND FALSE BUT IT IS NOT BELIEVED. 12. THUS, WHERE INCOME HAS BEEN ADDED ON ESTIMATE B ASIS, IN SUCH CASE PENALTY CANNOT BE LEVIED. 13. IN THE RESULT, APPEAL FILED BY THE APPELLANT IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 09/04/2018 SD/- SD/- ( ) ($ ) ! % ! ( PRADIP KUMAR KEDIA ) ( MAHAVIR PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER IT(SS)A NO.23/R JT/2013 SHRI NARENDRA N. PALA VS. ACIT ASSESSMENT YEAR 2005-06 - 5 - DATED 09/04/2018 PRITI YADAV, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. *, / THE APPELLANT 2. -*, / THE RESPONDENT. 3. #8# 2 92 / CONCERNED CIT 4. 92 () / THE CIT(A)-IV, AHMEDABAD. 5. :; < %2%0 , , /DR,ITAT, RAJKOT 6. < = 1 / GUARD FILE. / BY ORDER, - :2 %2 //TRUE COPY// / ! '#$ ( DY./ASSTT.REGISTRAR) ! $%! &, / ITAT, RAJKOT 1. DATE OF DICTATION 02/04/2018. (DICTATION-PAD 4 P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02/04/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER