MR. SAT PRAKASH GOYAL, MUMBAI v. THE ITO 12(2)(1), MUMBAI

ITA 5296/MUM/2007 | 1999-2000
Pronouncement Date: 16-03-2011 | Result: Allowed

Appeal Details

RSA Number 529619914 RSA 2007
Assessee PAN AACPH2988H
Bench Mumbai
Appeal Number ITA 5296/MUM/2007
Duration Of Justice 3 year(s) 7 month(s) 9 day(s)
Appellant MR. SAT PRAKASH GOYAL, MUMBAI
Respondent THE ITO 12(2)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted J
Tribunal Order Date 16-03-2011
Date Of Final Hearing 26-04-2011
Next Hearing Date 26-04-2011
Assessment Year 1999-2000
Appeal Filed On 06-08-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH MUMBAI BEFORE SHRI R.V. EASWAR PRESIDENT AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 5296/MUM/2007 (ASSESSMENT YEAR: 1999-2000) SHRI SAT PRAKASH GOYAL INCOME TAX OFFICER - 12(2)( 1) 109 CHURCHGATE CHAMBERS ROOM NO. 137/123 1ST FLOO R 5 NEW MARINE LINES VS. AAYAKAR BHAVAN M.K. ROAD MUMBAI 400020 MUMBAI 400020 PAN - AACPH 2988 H APPELLANT RESPONDENT APPELLANT BY: SHRI SAT PRAKASH GOYAL RESPONDENT BY: SHRI K. SINGH O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A) XII MUMBAI DATED 27.06.2007 CONFIRMING THE PENALTY UNDE R SECTION 271(1)(C). 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1.1 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) XII MUMBAI [LD. CIT(A)] ERRED IN PARTLY CONFIRMING T HE PENALTY LEVIED BY THE ASSESSING OFFICER (THE AO) U/S. 271 (1)(C) OF THE ACT ON THE ALLEGATION OF CONCEALMENT OF INCOME. 1.2 WHILE DOING SO THE LD. CIT(A) FAILED TO APPREC IATE THAT THE APPELLANT HAD NEITHER CONCEALED NOR FILED ANY INACC URATE PARTICULARS OF INCOME; AND 1.3 IT IS SUBMITTED THAT THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN LAW NO SUCH PENALTY IS LIVABLE. 1.4 THE APPELLANT PRAYS THAT PENALTY BE CANCELLED I N TOTO. 3. IN THE COURSE OF PENDENCY OF THE APPEAL ASSESSEE F ILED ADDITIONAL GROUND WHICH IS AS UNDER: - THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND FACTS IN IMPOSING THE PENALTY ON 29/03/2006 AFTER THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 30/03/20 04 I.E. AFTER ABOUT 2 YEARS WHEREAS AS PER PROVISION OF SECTION 2 75(1) THE PENALTY IS TO BE IMPOSED WITHIN 6 MONTHS. THEREFORE THE PEN ALTY ORDER IS BAD IN LAW BEING TIME BARRED. ITA NO. 5296/MUM/2007 MR. SAT PRAKASH GOYAL 2 THE ASSESSMENT WAS ALSO DONE IN 143(1)(A) WHICH IS EVIDENT THAT THERE WAS NO INACCURATE PARTICULARS OR CONCEALMENT. THE PENALTY SHOULD BE DROPPED WITH EXEMPLARY COST O N THE ASSESSING OFFICER MR. ANAND NAGRALE WHO SUPPOSED TO KNOW THE PROVISION OF INCOME TAX ACT. HE HAS IMPOSED THE PENALTY WITH BIA S MIND AND UNDER CERTAIN MOTIVE TO HARASS THE ASSESSEE. THE PE NALTY CANNOT BE IMPOSED AFTER 6 MONTHS PERIOD PRESCRIBED UNDER SECT ION 275(1) OF INCOME TAX ACT 1961. 4. IN ORDER TO EXAMINE THE ADDITIONAL GROUND THE REVEN UE HAS FURNISHED THE RECORD AND IT IS NOTICED THAT THE CIT(A) HAS PA SSED THE ORDER ON THE QUANTUM APPEAL DATED 30.03.2004 AND THE SAME ORDER WAS RECEIVED IN THE OFFICE OF THE CIT (ADMN) ON 5 TH APRIL 2004. AS PER THE PROVISIONS OF SECTION 275(1) THE A.O. GOT TIME UPTO ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE CIT(A) IS RECEIVED BY THE CH IEF COMMISSIONER OR COMMISSIONER WHICHEVER IS LATER. SINCE THE ORDER W AS RECEIVED ON 5 TH APRIL 2004 PERIOD OF ONE YEAR FROM THE END OF THE FINANC IAL YEAR WAS UPTO 31.03.2006. THE A.O. PASSED THE ORDER ON 29.03.2006 . THE ORDER IS WITHIN TIME LIMITS AND ACCORDINGLY THE ADDITIONAL GROUND R AISED BY THE ASSESSEE ON THE ISSUE OF LIMITATION CANNOT BE CONSIDERED. THE A DDITIONAL GROUND RAISED IN THIS REGARD IS REJECTED. 5. NOW COMING TO THE MAIN GROUND OF THE APPEAL THE AS SESSEE HAS DECLARED A TOTAL INCOME OF RS.57 610/- WHICH WAS P ROCESSED UNDER SECTION 143(3) VIDE ORDER DATED 28.03.2002 AND THE TOTAL IN COME WAS DETERMINED AT RS.1 69 71 250/- . DURING THE ASSESSMENT PROCEEDING S THE A.O. HAD OBSERVED THAT THE ASSESSEE HAD DISCLOSED BUSINESS P ROFIT OF RS.13 04 221/- AND AFTER CLAIMING THE DEDUCTIONS UNDER SECTION 80H HC OF RS.12 79 583/- DECLARED THE TOTAL INCOME OF RS.24 638/-. IT WAS AL SO OBSERVED THAT THE ASSESSEE HAD SHOWN TO HAVE EARNED PROFIT OF RS.12 7 9 583/- AGAINST THE EXPORT SALES OF RS.30 48 000/- WHEREAS IN RESPECT OF LOCAL SALE THE ASSESSEE HAD DISCLOSED PROFIT OF RS.24 638/- AGAINST THE TOT AL TURNOVER OF RS.24 63 73 678/-. FURTHER VERIFICATION OF DETAILS IT WAS FOUND THAT THE ASSESSEE HAD SHOWN LOCAL PURCHASES OF RS.25 76 79 3 74/- OF WHICH PURCHASES WORTH RS.16 70 74 290/- WAS MADE IN CASH BY INDIVIDUAL PURCHASES IN ALL CASES REMAINED LESS THAN RS.20 000 /-. ACCORDING TO THE A.O. THE OBVIOUS REASON WAS ATTRACTION OF PROVISIONS OF SECTION 40A(3). IN RESPECT OF G.P. MARGIN IT WAS OBSERVED THAT ON LOCAL TURNOVER THE ASSESSEES G.P. ITA NO. 5296/MUM/2007 MR. SAT PRAKASH GOYAL 3 MARGIN WORKS OUT TO 0.50% AS AGAINST 41.98% IN RESP ECT OF EXPORT SALES. THE A.O. ALSO FOUND THAT THE ASSESSEE HAD PURCHASED/SOL D GOODS FROM/TO ONE M/S. PRINKA KNITWEARS AMOUNTING TO RS.32 58 796/- A ND RS.85 93 872/-. FURTHER THE ASSESSEE HAD ALSO ENTERED INTO SALES A ND PURCHASES TRANSACTIONS WORTH RS.9 75 23 931/- AND RS.2 68 71 946/- RESPECT IVELY BUT WHEN THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF QUANTIT Y WISE SALES AND PURCHASES THE SAME WAS NOT PRODUCED BEFORE THE A.O . THE A.O. ALSO FOUND THAT IN LUDHIANA ONE M/S. SURAJ HOSIERY FACTORY WHO WAS ALSO DEALING IN THE SAME LINE HAS SHOWN THE G.P. MARGIN OF 2.59% HAVING THE TURNOVER OF RS.3.08 CRORES. SIMILARLY IN CASE OF ONE M/S. ANIL ENTERPR ISES G.P. MARGIN WAS WORKED OUT TO 1.33% HAVING THE TURNOVER OF RS.3.08 CRORES. CONSIDERING THE ABOVE FACTS THE A.O. REJECTED THE BOOK RESULT OF T HE ASSESSEE AND ESTIMATED THE PROFIT ON THE BASIS OF G.P. WORKING OF 1.5% ON LOCAL SALES. THE CIT(A) DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE A.O. IN THIS REGARD AND AS SUCH THE CIT(A) HAS SUSTAINED THE ADDITION MADE BY THE A.O. ON ACCOUNT OF ESTIMATING THE PROFIT ON LOCAL SALES AT RS.25 04 20 3/-. 6. THE A.O. FINALIZED THE PENALTY PROCEEDINGS CONSEQUE NT TO THE ORDER OF THE CIT(A) IN THIS REGARD. SUBSEQUENTLY THE ITAT VI DE ORDER IN ITA NO. 3253/MUM/2004 DATED 23.08.2006 REDUCED THE G.P TO 0.8% AS AGAINST THE G.P RATE OF 1.5% APPLIED BY THE A.O. AND ALSO HELD THAT THE ASSESSEE IS TRADER EXPORTER AND THE DEDUCTION UNDER SECTION 80H HC HAS TO BE COMPUTED ON THE BASIS OF SECTION 80HHC(3)(B) AND THE ADDITIO N OF G.P HAS NO BEARING ON THE DEDUCTION COMPUTED UNDER SECTION 80HHC(3)(B) . THE A.O. LEVIED PENALTY ON THE G.P. ADDITION TAKING THE G.P. AT 1.5 % AND ON DISALLOWANCE OF 80HHC CLAIM. HE DETERMINED 100% OF THE TAX SOUGHT T O BE EVADED AT RS.7 17 870/- AND LEVIED PENALTY ACCORDINGLY. THE C IT(A) AFTER GIVING AN OPPORTUNITY GAVE PARTIAL RELIEF TO THE EXTENT OF RE LIEF GRANTED BY THE ITAT IN THE G.P. ADDITION. 7. IT WAS THE CONTENTION OF THE ASSESSEE WHO APPEARED IN PERSON THAT THE BOOKS OF ACCOUNTS WERE AUDITED AND THE SAME WER E ACCEPTED IN THE COURSE OF ASSESSMENT PROCEEDINGS. HE RELIED ON THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 ON THE ISSUE THAT PENALTY CANNOT BE IMPOSED EVEN FOR MAKIN G UNSUSTAINABLE CLAIMS. IT WAS SUBMITTED THAT A MERE MAKING OF THE CLAIM W HICH IS NOT SUSTAINABLE ITA NO. 5296/MUM/2007 MR. SAT PRAKASH GOYAL 4 IN LAW ITSELF WILL NOT AMOUNT TO FURNISHING INACCU RATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. ASSESSEE ALSO MADE SUBM ISSIONS WITH REFERENCE TO THE AMOUNT DELETED BY THE CIT(A) ON THE ADDITION UNDER SECTION 2(22)(E)) ON WHICH THERE WAS NO PENALTY LEVIED HENCE THOSE S UBMISSIONS REGARDING DELETION OF DEEMED DIVIDEND ADDITION HAS NO RELEVAN CE FOR THE PURPOSE OF CONSIDERING PENALTY UNDER SECTION 271(1)(C). THE LD . DR RELIED ON THE ORDERS. 8. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE ORDE RS OF THE REVENUE AUTHORITIES THE A.O. HAS ESTIMATED THE G.P. BY REJE CTING THE BOOKS OF ACCOUNT AS THERE ARE CERTAIN DEFECTS AS POINTED OUT IN THE ASSESSMENT ORDER. THIS ASPECT OF REJECTION OF BOOKS OF ACCOUNT WAS UPHELD BY THE ITAT BUT THE ADDITION ON G.P. RATE WAS REDUCED FROM 1.5% TO 0.8% . THE OTHER ADDITION/REDUCTION IN CLAIM IS BECAUSE OF 80HHC WOR KING. SINCE THE ADDITION IS MADE ON THE BASIS OF REJECTION OF BOOKS OF ACCOUNT AND ESTIMATING THE PROFITS THERE IS NOTHING ON RECORD TO INDICATE THAT THE ASSESSEE DELIBERATELY CONCEALED PARTICULARS OF INCOME OR FUR NISHED INACCURATE PARTICULARS. IT IS TRITE LAW THAT PENALTY CANNOT BE LEVIED WHEN THE ADDITION IS ONLY ON THE BASIS OF G.P. AFTER REJECTING THE BOOKS OF ACCOUNT. WITH REFERENCE TO THE 80HHC CLAIM AS RIGHTLY POINTED OUT BY THE A SSESSEE IT IS ONLY REJECTION OF THE CLAIM WHICH RESULTED IN CERTAIN DI SALLOWANCES OF THE DEDUCTIONS SO CLAIMED. THE PRINCIPLES ESTABLISHED B Y THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LT D. (SUPRA) WILL EQUALLY APPLY TO THE FACTS OF THE CASE. IN VIEW OF THIS WE ARE OF THE OPINION THAT THERE IS NO JUSTIFICATION FOR LEVY OF PENALTY ON THE G.P. ADDITION AND REDUCTION IN THE CLAIM OF 80HHC AMOUNT. ACCORDINGLY THE PENALTY LEVIED UNDER SECTION 271(1)(C) IS THEREFORE CANCELLED. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH 2011. SD/- SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED: 16 TH MARCH 2011 ITA NO. 5296/MUM/2007 MR. SAT PRAKASH GOYAL 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XII MUMBAI 4. THE CIT XII MUMBAI CITY 5. THE DR J BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.