DEVANAND B. TEJWANI, MUMBAI v. ACIT CC-35, MUMBAI

ITA 1506/MUM/2009 | 2005-2006
Pronouncement Date: 14-05-2010 | Result: Dismissed

Appeal Details

RSA Number 150619914 RSA 2009
Assessee PAN AAAPT9350J
Bench Mumbai
Appeal Number ITA 1506/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 9 day(s)
Appellant DEVANAND B. TEJWANI, MUMBAI
Respondent ACIT CC-35, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 14-05-2010
Date Of Final Hearing 01-04-2010
Next Hearing Date 01-04-2010
Assessment Year 2005-2006
Appeal Filed On 05-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI R.S.SYAL AM AND SMT.ASHA VIJAYARAGHAVA N JM ITA NO.1506/MUM/2009 : ASST.YEAR 2005-2006 SHRI DEVANAND B.TEJWANI SHOP NO.U/11 SEVA SAMITI NAGAR KOLIWADA MUMBAI 400 037. PAN : AAAPT9350J. VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 35 MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.1507/MUM/2009 : ASST.YEAR 2005-2006 SHRI KISHIN K.TEJWANI SHOP NO.V/5 SEVA SAMITI NAGAR KOLIWADA MUMBAI 400 037. PAN : AAAPT6556A VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 35 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK KOTANGLE RESPONDENT BY : SHRI K.RAVIKIRAN O R D E R PER R.S.SYAL AM : THESE TWO APPEALS BY DIFFERENT BUT RELATED ASSESSEE S ARISE OUT OF THE COMMON ORDER PASSED BY THE LEARNED CIT(A) ON 10.02.2009 UP HOLDING THE PENALTY OF RS.1 78 407 AND RS.3 70 539 RESPECTIVELY IN RELATI ON TO ASSESSMENT YEAR 2005- 2006. AS COMMON ISSUE IS RAISED IN BOTH THE APPEALS WE ARE THEREFORE PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FACTS IN THE CASE OF SHRI KISHIN K.TEJWANI A RE THAT HE WAS ENGAGED IN THE BUSINESS OF GENERAL AND KIRYANA STORES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED FROM M ONTH-WISE PURCHASE AND SALES THAT THE AVERAGE G.P. FOR THE FIRST EIGHT MONTHS FR OM APRIL 2004 TO NOVEMBER 2004 WAS OVER 23%. HE NOTED THAT THE IF THE SALES AND PU RCHASE OF LAST FOUR MONTHS WERE ALSO TAKEN INTO ACCOUNT THE G.P. FOR THE ENTIRE YE AR WOULD BE JUST ABOUT 8%. CONSIDERING THE FIGURE OF PURCHASE AND SALE FOR THE LAST FOUR MONTHS OF THE YEAR AND ASSUMING THAT ALL THE SALES WERE MADE AT COST THE CLOSING STOCK OF THE ASSESSEE WAS WORKED OUT AT RS.5 75 221 AS AGAINST RS.53 289 DISC LOSED IN THE BOOKS OF ACCOUNT. ITA NOS.1506 & 1507 /MUM/2009 SHRI DEVANAND & KISHIN TEJWANI. 2 THE ASSESSEE FILED A LETTER DATED 12.12.2007 STATIN G THAT THE THREE PROPRIETORSHIP CONCERNS OF SIX FAMILY MEMBERS WERE RUNNING FROM TH E SAME PREMISES LEADING TO MIX UP OF TRANSACTIONS. HOWEVER CONSIDERING THE DI SCREPANCIES THE ASSESSEE FILED A REVISED STATEMENT OF TOTAL INCOME SHOWING G.P. AT 18% OF SALES. THE ASSESSING OFFICER TRANSLATED G.P. AT 18% ON SALES TO G.P. ON PURCHASE AT 22% AND MADE ADDITION OF RS.2 01 452. NO APPEAL WAS PREFERRED BY THE ASSESSEE AGAINST THE QUANTUM. PENALTY ORDER WAS PASSED U/S.271(1)(C) BY THE A.O. WITH REFERENCE TO THE DIFFERENCE IN THE AMOUNT OF INCOME AS ORIGINALLY DE CLARED AND AS REVISED DURING THE COURSE OF ASSESSMENT. THE LEARNED CIT(A) UPHELD THE PENALTY. FACTS IN THE CASE OF SHRI DEVANAND B.TEJWANI ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF SHRI KISHIN K.TEJWANI. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTICED THAT THE CALCULATION MADE BY THE A.O. BIFURCATING PURCHASES AND SALES INTO EIGHT MONTHS AND FOUR MONTHS PERIOD AND THUS FINDING OUT G.P. RATE FOR THE LATER FOUR MONTHS PERIOD AT 8% IS BASED ON T HE ASSESSING OFFICERS CALCULATION APPLYING 23% G.P. RATE ON THE FIRST EIGHT MONTHS I. E. APRIL 2004 TO NOVEMBER 2004. IT IS QUITE NATURAL THAT IF HIGHER G.P.. RATE IS AP PLIED FOR THE FIRST EIGHT MONTHS THE LOWER AMOUNT OF G.P. BEING THE BALANCING FIGURE WOULD BE AVAILABLE FOR THE NEXT FOUR MONTHS AND VICE VERSA. THERE IS BASICALLY NO B ASIS OR WHISPER IN THE ASSESSMENT ORDER AS TO ON WHAT BASIS THE ASSESSING OFFICER APPLIED G.P. RATE OF 23% OR CALCULATED THE FIGURE OF STOCK AS ON NOVEMBE R 2004. IT IS AUSTERE THAT IN ORDER TO FIND OUT THE FIGURE OF GROSS PROFIT OR THE CLOSING STOCK FROM THE TRADING OPERATIONS ONE OF SUCH FIGURES ALONG WITH THE FIGU RES OF OPENING STOCK PURCHASES AND SALES IS MANDATORY. IT IS ONLY WHEN ONE OF SUCH FIGURES IS NOT AVAILABLE THAT THE SAME CAN BE FOUND OUT BY BALANCING THE ACCOUNT. IN WORKING OUT THE G.P. RATE AT OVER 23% IT IS BUT NATURAL THE ASSESSING OFFICER MUST HAVE CONSIDERED SOME FIGURE AS CLOSING STOCK AS ON 30 TH NOVEMBER 2004 WHICH COULD HAVE FACILITATED THE WORKING OF THE AMOUNT OF G.P. AND THE RESULTANT RA TE OF G.P. IT IS BUT NATURAL THAT ITA NOS.1506 & 1507 /MUM/2009 SHRI DEVANAND & KISHIN TEJWANI. 3 THERE IS NEITHER THE FIGURE OF CLOSING STOCK AS ON 30 TH NOVEMBER 2004 OR THE AMOUNT OF GROSS PROFIT. IT SHOWS THAT ONE OF THE FIGURES W AS ESTIMATED BY THE A.O. TO FIND OUT THE SECOND FIGURE OF G.P. AT 23%. IT IS NOT PE RMISSIBLE TO SPLIT THE TRADING RESULTS INTO DIFFERENT PERIODS WITHOUT ANY BASIS JU ST WITH A VIEW TO CAST DOUBT ON THE FIGURE OF CLOSING STOCK OR THE GROSS PROFIT AT THE END OF THE YEAR. IT IS FURTHER SEEN THAT THE ASSESSEE AT HIS OWN FURNISHED REVISED STATEMENT OF TOTAL INCOME AT 18% OF SALES WHICH WAS DULY ACCEPTED BY THE ASSESSING O FFICER AS SUCH. THUS IT CAN BE SEEN THAT THERE IS ABSOLUTELY NO BASIS FOR IMPOSING OR CONFIRMING ANY PENALTY U/S.271(1)(C) IN THE BACKDROP OF THESE FACTS. AS SI MILAR FACTS AS PREVAILING IN BOTH THE CASES WE ARE THEREFORE SATISFIED THAT THE LEA RNED CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE PENALTY ORDERS. WE THEREFORE ORDER FOR THE DELETION OF PENALTY IN BOTH THE APPEALS. 4. IN THE RESULT BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF FEBRUARY 2011. SD/- SD/- (ASHA VIJAYARAGHAVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 11 TH FEBRUARY 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) CENTRAL VI MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.