Income Tax Appellate Tribunal - Ahmedabad
Krishna Terine Prints Pvt.Ltd.,, Surat vs Assessee on 27 December, 2011
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IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "B" AHMEDABAD
Before S/Shri D.K.Tyagi, JM and A. Mohan Alankamony, AM.
ITA No.2521/Ahd/2009
Asst. Year:2005-06
Krishna Terine Print (P) Vs. Income-tax Officer,
Ltd., Block No.213, Near Ward -1(3), Surat.
Priya Dyeing and Printing
Mills, Kadodara, Tal.
Palsana, Dist. Surat.
(Appellant) (Respondent)
..
Appellant by :- Shri Mehul K. Patel, AR
Respondent by:- Shri Robin Rawal, Sr.DR
Date of hearing :27/12/2011
Date of pronouncement : 27.12.2011.
ORDER
Per D. K. Tyagi, Judicial Member.
This is an appeal file by the assessee against the order of ld. CIT(A) dated 30.06.2009 for Asst. Year 2005-06. The assessee has raised following ground in this appeal :-
(1) The ld. CIT(A) erred in law and on facts in confirming penalty levied u/s 271(1)(c) by AO on the addition of Rs.16,76,672/-
made by estimating higher GP margin at 22% as against actual GP margin of 20.83% and in dismissing the appeal. ITA No.2521/Ahd/2009 Asst. Year 2005-06
2. The facts of the case are that the assessee is engaged in the business of processing of cloth on job work basis. The return was filed at NIL income but the assessment was completed by making an addition of Rs.16,76,672/- on account of low GP. Penalty proceedings were initiated u/s 271(1)(c) in the assessment order for furnishing inaccurate particulars of income. The addition was confirmed by the CIT(A). The AO has stated that the GP addition was made by the following discrepancies and irregularities in the books of account:
(i) The GP rate had fallen by 3.30% from 25.13% in the last year to 20.83% in the current year, even though the turnover had increased from Rs.12.61 crores in the last year to Rs.14.38 crores during the current year.
(ii) There was a much variation in per meter consumption of power-
fuel and labour from month to month.
(ii) The assessee was found to be not maintaining any quantitative records of day-to-day consumption of raw materials.
(iv) The assessee had closing stock of work-in-progress of 37491 meters valued by the AO at Rs.3,77,846/-.
In view of the above reasons, the AO issued a show-cause notice to the assessee as to why penalty u/s 271(1)(c) be not levied. The assessee stated that no penalty should be levied because -
(i) The assessee had given reasons for fall in GP margin. There is nothing on record to prove that the A has brought any material to show that there is furnishing of inaccurate particulars.
(ii) The assessee stated that no penalty should be levied where turnover in the books of account is accepted but GP addition is 2 ITA No.2521/Ahd/2009 Asst. Year 2005-06 made in view of the decision of the Hon'ble Allahabad High Court in the case of Nadir Ali & Co. 106 ITR 151 and Shiv Lal Tak 251 ITR 373. The AO did not accept this argument in view of the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processor & Others 306 ITR 277 wherein the Hon'ble High Court held that the penalty is a civil liability.
(iii) The assessee stated that it has neither concealed any income nor inaccurate particulars of income but the addition is actually made on estimate basis for which no penalty can be made. The AO did not accept the above explanation and stated that the addition has been confirmed by the CIT(A) and this shows that the assessee has suppressed its GP which clearly amounts to deliberate furnishing of inaccurate particulars. The AO, therefore, relied on the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors & Others (supra) and levied the minimum penalty.
3. The assessee went in appeal before the first appellate authority wherein the assessee had given same argument as given before the AO and stated that it had given a bona fide explanation which had not been found to be wrong and therefore, as per explanation (1) the assessee is not deemed to have concealed the income or furnishing inaccurate particulars of income. The assessee had argued that in a recent case of Hon'ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills 224 CTR 1, the Hon'ble Supreme Court has clarified that its decision in the case of Dharmendra Textile Processors (supra) does not mean that in all the cases of additions penalty would be automatically levied. The 3 ITA No.2521/Ahd/2009 Asst. Year 2005-06 assessee argued that the Hon'ble ITAT, Mumbai in the case of VIP Industries Ltd., ITA No.4524 & 4383/Mum/06 for Asst. Year 2000-01, vide its order dated 20.03.2009, has clarified that even after the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors (supra), penalty can only be levied if it is a case of concealment or furnishing inaccurate particulars. The assessee had argued that since the AO made the addition on estimate basis which is not supported by any documentary evidences, no penalty could be levied.
4. The ld. CIT(A) after considering the contention of AO and the submissions of the assessee confirmed the action of the AO. Against this order of the ld. CIT(A), the assessee is in appeal before the Tribunal.
5. Before us the ld. counsel of the assessee submitted that the ld. CT(A) is not justified in upholding the action of AO in levying penalty, because the penalty has been levied on the addition made on estimate basis. However, he submitted that the quantum addition has been restored back to the file of ld. CIT(A) for fresh decision by the Tribunal vide its order dated 10th January, 2011 in ITA No.1076/Ahd/2008 for Asst. Year 2005-06. Therefore, he requested that this issue also may kindly be 4 ITA No.2521/Ahd/2009 Asst. Year 2005-06 restored back to the file of ld. CT(A) for fresh decision in view of his decision in the quantum appeal.
6. The ld. DR supported the orders of lower authorities.
7. After considering the rival submissions and going through the material on record, we find that vide order dated 10th January, 2011 in ITA No.1076/Ahd/2008 for Asst. Year 2005-06, the Tribunal has set aside the order of ld. CIT(A), confirming the addition of Rs.16,76,672/- made by AO by estimating the GP and restored the matter back to the file of ld. CIT(A) for fresh adjudication. Therefore, we are of the considered view that it will be just and proper to send back the issue of penalty also to the file of ld. CIT(A) for deciding the issue afresh in view of his decision in the quantum proceedings. The ground raised by the assessee is allowed for statistical purposes.
8. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order was pronounced in open Court on 27.12.2011.
Sd/- Sd/-
(A. Mohan Alankamony) (D.K. Tyagi)
Accountant Member Judicial Member
Ahmedabad,
Mahata/-
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ITA No.2521/Ahd/2009
Asst. Year 2005-06
Copy of the Order forwarded to:-
1. The Assessee.
2. The Revenue.
3. The CIT(Appeals)-
4. The CIT concerns.
5. The DR, ITAT, Ahmedabad
6. Guard File.
BY ORDER,
Deputy/Asstt.Registrar
ITAT, Ahmedabad
1.Date of dictation 27/12/2011.
2.Date on which the typed draft is placed before the Dictating Member................Other Member 28/12/2011
3.Date on which the approved draft comes to the Sr.P.S./P.S.............
4.Date on which the fair order is placed before the Dictating Member for pronouncement..............
5.Date on which the fair order comes back to the Sr.P.S./P.S...............
6.Date on which the file goes to the Bench Clerk...........
7.Date on which the file goes to the Head Clerk.............
8.The date on which the file goes to the Asstt. Registrar for signature on the order........................
9.Date of Despatch of the Order................. 6