RAVI BUILDER & CONTRACTOR,TILAK NAGAR, STADIUM ROAD, AURAIYA V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1), AAYKAR BHAWAN, SANJAY PLACE, AGRA

ITA 16/AGR/2023

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The case involves Ravi Builder & Contractor, a partnership firm, which faced penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 2015-16. The firm had filed its return declaring an income of Rs.16,60,790, which was later scrutinized, leading to the rejection of its books of account due to insufficient documentation of expenses and confirmations of sundry creditors. The Assessing Officer, after rejecting the books, estimated the income and initiated penalty proceedings. The CIT(Appeals) upheld the penalty, referencing Supreme Court judgments. However, the Tribunal, after considering the submissions and the principles of law regarding penalty proceedings, decided in favor of the assessee, emphasizing that admissions in such proceedings must be accepted wholly and not in parts.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474812 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-10-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 25-01-2023
• Other Referred Cases: Union of India vs. Dharmendra Textile Processors, 295 ITR 244 (SC), Mak Data Pvt. Ltd. vs. CIT, 358 ITR 593 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Assessee Lawyers: APPLYING
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 22

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE: SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI P.C. YADAV, JUDICIAL MEMBER ITA No. 16/Agr/2023 Assessment Year: 2015-16 Ravi Builder & Contractor, Tilak Nagar, Stadium Road, Auraiya. PAN: AABFR9364B versus DCIT, Circle 1(1)(1), Agra. (Appellant) (Respondent) Assessee by : None (Adj. application filed) Revenue by : Sh. Shailendra Srivastava, Sr. DR Date of hearing : 08/10/2024 Date of pronouncement: 22/10/2024 ORDER PER P.C. YADAV, JM: Present appeal of the assessee is arising from the order of learned CIT(Appeals) dated 24.11.2022 having DIN & Order No. ITBA/NFAC/S/250/2022-23/1047628444(1) for the assessment year 2015-16. 2. The assessee raised six grounds of appeal, out of which ground No. 6 is general in nature and in rest of the grounds, the only ITA No. 16/2023 2 issue involved is the justification of levy of penalty of Rs.4,55,000/- u/s. 271(1)(c) of the Income-tax Act, 1961. 3. Brief facts leading to the present appeal are that the assessee is a partnership firm, filed its return of income on 10.10.2015 declaring income of Rs.16,60,790/-. Thereafter, the case of assessee was picked up for scrutiny and statutory notices were issued to the assessee. In response to the notice, Shri Sanjeev Kumar Agarwal, CA attended the assessment proceedings and filed necessary details along with production of books of accounts before the Assessing Officer. The books of account were examined by the Assessing Officer on test check basis. Thereafter, the Assessing Officer observed that the assessee could not produce the bills and vouchers in respect of the expenses claimed as well as not able to file confirmation of the sundry creditors. Observing these two anomalies, the Assessing Officer vide order sheet entry dated 15.12.2017 asked the AR of the assessee to explain as to why books of account of the assessee could not be rejected. In response, the AR of the assessee agreed to rejection of books of account with a condition that no penalty proceedings would be initiated against the assessee. ITA No. 16/2023 3 Thereafter, the Assessing Officer rejected the books of account of the assessee and computed the income of the assessee by applying gross profit rate of 8% and assessed the income of the assessee on estimate basis. The Assessing Officer also initiated penalty proceedings u/s. 271(1)(c) of the Act. So far as quantum of addition is concerned, the assessee could not file any appeal. Thereafter, the Assessing Officer vide order dated 26.06.2018 levied a penalty of Rs.4,55,000/- on the ground that the assessee has filed inaccurate particulars of his income. 4. Aggrieved with the penalty order of Assessing Officer, assessee filed appeal before ld. CIT(Appeals) who affirmed the order of Assessing Officer by placing reliance on two judgments of Hon’ble Supreme Court in the case of Union of India vs. Dharmendra Textile Processors, 295 ITR 244 (SC) and Mak Data Pvt. Ltd. vs. CIT, 358 ITR 593 (SC). Now, the assessee has come up in appeal before us. 5. This matter has already been listed four times. However, no one is appearing from the side of assessee. Today also, when this matter was called for, the counsel for the assessee Mr. Anurag Sinha, Advocate has requested for an adjournment. However, considering ITA No. 16/2023 4 the smallness of the dispute, the application filed by the assessee is hereby rejected and the matter is decided after hearing the ld. DR and on the basis of material available on record. 6. Learned DR appearing on behalf of the Revenue placed reliance on the orders of the authorities below and contended that since the Assessing Officer has no power to drop the initiation of penalty proceedings, the Assessing Officer has correctly levied penalty. 7. We have heard ld. DR and perused the material available on record. We observe that in this case, the counsel for the assessee who was handling the assessment proceedings before the Assessing Officer has agreed that the books of account of the assessee may be rejected subject to non-initiation of penalty proceedings. We observe that the Assessing Officer has partly accepted the reply of the ld. AR of the assessee, as evident from the fact that he has rejected the books of account, however, he initiated penalty proceedings, which means, part of the submission made by the AR of assessee has not been accepted by the Assessing Officer, which in our view, is not permissible, since it is settled position that an admission made has to ITA No. 16/2023 5 be accepted and acted as whole and not in parts. We further observe that it is settled position of law that penalty and assessment are separate proceedings. In penalty proceedings, the burden is on the Revenue to prove with cogent material that the assessee has either filed inaccurate particulars of its income or has concealed the particulars of income. The reasoning on the basis of which, additions have been made in assessment proceedings may be good so far as framing of assessment is concerned. However, these reasonings on standalone basis are not enough for levying penalty u/s. 271(1)(c) of the Act. We have examined the facts of the present case on the touchstone of settled principle of law applicable in penalty proceedings, as discussed by us and found that penalty in the facts of present case is not leviable. Further, we observe that in this case the assessee has neither furnished inaccurate particulars of income nor concealed the particulars of its income and the income has been determined on estimate basis only. In such circumstances, no penalty is leviable against the assessee. We hold accordingly. 8. In the result, appeal of the assessee is allowed. ITA No. 16/2023 6 Order pronounced in accordance with Rule 34(4) of the Income Tax Appellate Tribunal Rules, 1963 on 22.10.2024. Sd/- Sd/- (RAMIT KOCHAR) (P.C. YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 22 /10/2024 *aks/- "