Pragati Foods Pvt. Ltd., Delhi v. ITO, New Delhi

ITA 914/DEL/2010 | 2006-2007
Pronouncement Date: 06-05-2010 | Result: Allowed

Appeal Details

RSA Number 91420114 RSA 2010
Assessee PAN EMBER2006D
Bench Delhi
Appeal Number ITA 914/DEL/2010
Duration Of Justice 2 month(s) 1 day(s)
Appellant Pragati Foods Pvt. Ltd., Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 06-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 06-05-2010
Date Of Final Hearing 06-05-2010
Next Hearing Date 06-05-2010
Assessment Year 2006-2007
Appeal Filed On 05-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A NO. 914/DEL/10 ASSTT. YEAR 2006-07 PRAGATI FOODS PVT. LTD. VS. INCOME TAX OFFICER 39/1386 CHANDNI CHOWK WARD 14(3) NEW DELHI. DELHI- 110 006. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AJAY KUMAR AR RESPONDENT BY: SHRI H.K. LAL SR. DR ORDER PER RAJPAL YADAV JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 30 TH DECEMBER 2009 PASSED FOR ASSTT. YEAR 2006-07 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT L D. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 18 435/- LEVIED U/ S 271(1)(C) OF THE INCOME TAX ACT. 3. IN RESPONSE TO THE NOTICE OF HEARING THE ASSESSE E HAS PRAYED FOR AN ADJOURNMENT. HOWEVER AFTER GOING THROUGH THE ORD ER OF LD. CIT(A) ITA NO. 4194/DEL/09 ASSTT. YEAR 2006-07 2 WITH THE ASSISTANCE OF LD. DR WE DO NOT DEEM IT NEC ESSARY TO ADJOURN THE HEARING. WE REJECTED THE PRAYER OF ASSESSEE AND PROCEED TO DECIDE THE APPEAL IN THE ABSENCE OF INEFFECTIVE REPRESENTA TION BECAUSE SHRI AJAY KUMAR WHO CAME TO SEEK ADJOURNMENT WAS NOT WEL L VERSED WITH ANY FACTS AND CIRCUMSTANCES. 4. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE CO MPANY AT THE RELEVANT TIME WAS ENGAGED IN PURCHASE AND SALE OF S HARES AND PROVIDING FINANCE AND ADVANCE TO OTHER CONCERN. IT HAS FILED ITS RETURN OF INCOME ON 30 TH NOVEMBER 2006 DECLARING TOTAL LOSS OF RS. 1230/-. THE AO ON A DETAILED ANALYSIS REPRODUCED A LIST OF MORE THAN 10 0 COMPANIES ON PAGES NO. 1-4 OF THE ASSTT. ORDER AND OBSERVED THAT ALL THESE COMPANIES ARE GROUP CONCERN. ACCORDING TO THE AO THESE GROUP CONCERN USED TO ROTATE THE ENTRIES. HE DID NOT FIND ANY TRANSACTION EFFECTIVELY CARRIED OUT BY THE ASSESSEE. HOWEVER ON AN ANALYSIS OF ASSESSEE S BANK ACCOUNT HE FOUND THAT TRANSACTIONS CARRIED OUT BY THE ASSES SEE IN THE SHAPE OF BUSINESS TRANSACTIONS ARE NOTHING MORE THAN SHAM TR ANSACTIONS TO COVER UP THE TRANSFER OF MONEY FROM ONE ACCOUNT TO THE OT HER ACCOUNT. IN OTHER WORDS WHATEVER AMOUNT ASSESSEE HAS RECEIVED THROUGH THE ACTIVITIES SAME HAS BEEN FORWARDED TO SOME OTHER ACCOUNT. THE AO HARBORED A BELIEF THAT IN TRANSFERRING THE ENTRIES FROM ONE AC COUNT TO OTHER ACCOUNT OF OTHER ASSESSEE THEY MUST BE EARNING SOME SORT OF COMMISSION. IN THE ITA NO. 4194/DEL/09 ASSTT. YEAR 2006-07 3 CASE OF ASSESSEE HE FOUND THAT ENTRIES HAVE BEEN RO UTED THROUGH 4-5 ENTITIES. IN THE UNDERSTANDING OF THE AO IF 2% OF C OMMISSION WAS AVAILED BY THESE ASSESSEES THEN 0.05% WOULD COME TO THE PR ESENT ASSESSEE. ON THE BASIS OF THIS HYPOTHESIS HE WORKED OUT AN IN COME OF RS. 56 000/- WHICH IS .05% OF THE TOTAL ENTRIES EFFECTED IN THE ACCOUNTS OF ASSESSEE DURING THE YEAR. IN THIS WAY THE AO HAS FORMED AN O PINION THAT ASSESSEE HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS A ND ALSO CONCEALED THE PARTICULARS OF ITS TRUE AND CORRECT INCOME TO THE E XTENT OF RS. 56 000/-. HE VISITED THE ASSESSEE WITH PENALTY U/S 271(1) AN D IMPOSED THE PENALTY OF RS. 18 435/-. 5. APPEAL TO THE LD. CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE 6. WITH THE ASSISTANCE OF LD. DR WE HAVE GONE THROUGH THE RECORD CAREFULLY. NOWHERE IN THE ASSTT. ORDER OR IN THE PE NALTY ORDER AO COULD MAKE OUT A CASE WHAT SORT OF INACCURATE PARTICULARS ASSESSEE HAS FURNISHED. THE ADDITION MADE BY HIM IS PURELY ON ES TIMATE BASIS. THERE IS NO FOUNDATION EVEN IN THE ASSTT. ORDER. IN SUPPO RT OF THIS ADDITION THE AO UNDER A PRESUMPTION THOUGHT THAT ASSESSEE MUST H AVE RECEIVED COMMISSION INCOME ON ROTATING THE ENTRIES IN THE BA NK ACCOUNT. HE QUANTIFIED SUCH COMMISSION INCOME AT 0.05%. THERE M AY BE SOME SUBSTANCE IN HIS LOGIC FOR ESTIMATING THE INCOME OF ASSESSEE WHICH CAN BE TESTED IN THE QUANTUM APPEAL BUT AS FAR AS VISIT ING THE ASSESSEE WITH ITA NO. 4194/DEL/09 ASSTT. YEAR 2006-07 4 A PENALTY FOR FURNISHING INACCURATE PARTICULARS THE AO FAILED TO MAKE OUT ANY CASE. ACCORDING TO THE ASSESSEE IT HAS NO INCOM E ON SUCH TRANSACTION WHEREAS ACCORDING TO THE AO SOME ELEMEN T OF INCOME IS INVOLVED. SUCH OPINION HAS BEEN FORMED BY THE AO ON ASSUMPTION BASIS TAKING INTO CONSIDERATION THE ABOVE FACTS AND CIRCU MSTANCES WE ARE OF THE OPINION THAT PENALTY IS NOT SUSTAINABLE. WE ALL OW THE APPEAL OF ASSESSEE AND DELETE THE PENALTY. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH MAY 2010. [SHAMIM YAHYA] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER VEENA DATED: COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT