Income Tax Appellate Tribunal - Chandigarh
M/S Shagun Traditional Jewellers, ... vs Dcit, Chandigarh on 31 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE MS. DIVA SINGH, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.1144/Chd/2016
(Assessment Year: 2012-13)
M/s Shagun Traditional Jewellers, Vs. The D.C.I.T.,
SCO 818, Manimajra, Central Circle-1,
Chandigarh. Chandigarh.
P A N : ABMFS9478B
(Appellant) (Respondent)
Appellant by : Shri Parikshit Aggarwal, CA
Respondent by : Shri Manjit Singh, DR
Date of hearing : 02.08.2017
Date of Pronouncement : 31.10.2017
O R D E R
PER ANNAPURNA GUPTA, A.M.:
Th i s a p p e a l h a s b e e n f i l e d b y th e a s s e s s e e a g ai n st t h e order pa s s e d by the L d . CI T ( A p p e a l s ) -3 , Gu rg a o n d at e d 2 2 . 8 . 2 0 1 6 c o n f i rm i n g t h e l e v y of p e n a l t y u / s 27 1 ( 1 ) ( c ) of t h e I n c o m e Ta x A c t , 1 9 6 1 ( i n s ho r t ' t h e A c t ') a mo u n t i n g to R s . 8 2 , 0 6 0/ - .
2. Th e f a c t s l e a d i n g t o t h e c a s e a r e t h a t a s u r v e y u / s 1 3 3 A o f t h e A c t w a s c a r r i e d o ut a t t h e b u s i n e ss p r e m i s e s o f t h e a s s e s s ee w he r e t h e a s s es s e e i s c a r r y i n g on t r a d i n g o f jewellery. During the course of survey the a s s e s s ee s u r r e n d e re d R s .1 . 9 0 c r o r e s t o c o v e r u p d i s cr ep a n c i e s i n s t o c k a n d R s . 3 5 l a c s o n a c c o u n t o f o t h e r i s s u e s. Th e s a m e w e r e d u l y d i sc l o s e d i n t h e P r of i t & L o s s A c c ou n t o f t h e assessee for t he i m p u g n ed y ea r . Th e r e a f t e r return of i n c o m e w as f i l ed a t a t ot a l i nc o m e o f Rs . 2 , 4 4, 9 7 , 6 3 0 / -. 2 A s s e s s m e nt u / s 1 4 3 ( 3 ) of t h e A c t w a s f r a m e d m a k i n g an addition of R s .2 , 6 5 , 5 7 0 /- on account of di f fe r e n c e in c l o s i n g s t o c k as p e r a c c o u n ts s u b m i tt e d at th e t i m e o f s u r v e y a nd c l o si n g s t o c k a s p er t h e t r a di n g a cc ou n t o n th e d a t e o f s u r v e y su b m i t t e d a l o n g wi t h i n c om e t a x re t u r n f i l e d by the a s s e ss ee . Th e r e a f t e r penalty p r oc e e di n g s were i n i t i a t ed o n th e s a i d a dd i t i o n a n d p e n a l t y l ev i e d b y t he A s s e s s i n g O f fi c e r v i d e h i s o r d e r d a t e d 2 9 . 9 . 2 0 15 . Th e s a m e w a s c o n f i r m e d by t h e L d .CI T( A p pe a l s ) .
3. A g g r i e v e d b y t he s a m e , t h e a ss e s s e e h a s f i l ed t h e p r e s e n t ap p e a l be f o r e u s r a i s i ng fo l l o w i n g g r o u n ds:
"1. That the impugned order is against facts and law.
2. That on law, facts and circumstances of the case, the Worthy CIT(A) was not justified in confirming the action of the Ld. AO, wherein the Ld. AO had levied penalty of Rs. 82,060/- u/s 271(1)(c) of the Act on addition of Rs. 2,65,570/- on account of difference in closing stock. The penalty has been imposed against the settled principle of law that quantum proceedings and penalty proceedings are separate and distinct from each other and levy of penalty is not automatic consequence of addition in quantum proceedings and moreso when the addition in quantum proceedings was made on estimated basis without finding any specific defect.
3. That on the facts, circumstances and legal position of the case, CIT(A) was not justified in confirming the actions of the Ld. AO, wherein the Ld. AO in the impugned penalty order, has imposed penalty of Rs.82,060/- u/s 271(1)(c) of the Act, is not sustainable since the appellant has not been charged with any specific limb of sec. 271(1((c) in the penalty order.
4. That on the f acts, circumstances and legal position of the case, Worthy CIT(A) was not justif ied in confirming the action of the Ld. AO, wherein the Ld. AO in the impugned penalty order, has imposed penalty of Rs.82,060/- u/s 271(1)(c) of the Act, since the appellant was not 3 show caused with any specific limb of sec.271(1)(c) of the show cause notice/quantum assessment order.
5. That on the f acts, circumstances and legal position of the case, Worthy CIT(A) was not justif ied in confirming the actions of the Ld. AO, wherein the Ld. AO in the impugned penalty order, initiation of penalty in the quantum assessment order does not amount to issuance of "direction" as contemplated in s.271(1)(c) of the Act.
6. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same."
4. D u r i n g t he c o u rse o f h e a ri n g b ef or e u s , t he L d . c ou n s e l f o r a s s e s s ee f i rs t m a d e h i s a rg u m e n t s o n g rou n d N O . 5 r a i s e d be f o r e u s c h a l l e n g i n g t he i m p o s i t i o n o f p e na l t y i n t he a b s e n c e o f a n y d i r e c t i o n i n t h e q u a n t u m as s e s sm e n t o r de r f o r i n i t i a ti o n o f p e n a l t y . Th e L d . c o u n s e l f o r a s se s s e e d r e w o u r a t t e nt i o n to p a r a 2 o f t h e as s e s s m e n t o r d e r p a s s e d i n q u a n t u m pr o c e ed i n g s a nd p o i nt ed o u t t ha t t he ad d i t i o n o n a c c o u n t o f di f f e re n c e i n t h e q u a nt i t y o f s t oc k w as d e a l t w i t h i n t h e s a i d pa r a . Th e L d . c ou n s el f o r as s e s s ee p oi n t e d o ut t h a t n o d i r e ct i on s f o r i n i t i at i o n o f p e na l t y p r o ce e d i n g s o n a c c o u n t of t h e sa i d a d d i ti o n h ave b e e n m ad e a f te r m a k i n g t h e a d di t i o n . P ar a - 2 o f t h e A s s e ss m e n t or d e r i s re p r o d u c ed h e r e u n d e r:
2. During the course of assessment it was found that there was some difference an amount of Rs.2,65,570/- in quality of closing stock as per accounts submitted at the time of survey and closing stock as per trading account on 08.09.2011 submitted along-with income tax return filed by the assessee.
This fact was confronted to the assessee. The assessee vides his submission dated 24.03.2015 stated as under:
"Calculation of that difference was attached in the submission of the assessee. At the time of final audit of accounts those petty discrepancies were identified and posted in the books 4 which had not been done at the time of surprise survey u/s 13A of the Act. However, to avoid litigation to buy peace of mind subject to non-initiation of any penalty or prosecution we hereby offer this amount of difference of Rs.2,65,570/- as additional income."
5. Th e r e a f t e r t h e Ld . c o u n s el f o r as s e s s e e dr e w o ur a t t e n t i o n t o p a r a 3 o f t h e a s se s sm e n t o rd e r a n d p o i n t e d o ut t h a t t h e s a me d ea l t w i t h t h e i s s ue o f s u r r e n de r ma d e b y t h e a s s e s s e e d u ri n g t h e c o u r s e o f s ur v e y , w h i c h t h e A s s e s s i n g O f f i c e r v er i f i e d fr o m t h e r e t ur n o f i n c o m e a s hav i n g b e e n d i s c l o s e d t h e r ei n , b u t st i l l i n i ti a t e d p e na l t y pr o c e e d i n gs t h e r e o n h ol d i n g t h a t t h e s ur r en d e r h a d b e en m a d e a s a c o n s e q u e nc e o f s u r v e y pr o c e e di n g s a n d t h u s pe n a l t y u/ s 2 7 1 ( 1 ) ( c ) o f t h e A c t w a s w a rr a n te d . Th e r e l e v a nt p a r a 3 of t h e a s s e ss m e n t or d e r i s as u n d er :
3. During the assessment proceeding vide q'aire dated 07.08.2013 the assessee was asked the following question related to survey conducted at his premise reply to the same the assessee replied as under "
"However a survey was conducted on 08.09,2011 u/s 133A on the business premises of M/s Shagun traditional Jewellers SCO 848 NAC Mani Majra and the following amount was voluntarily surrendered Rs. 1.90 Crores to cover up the discrepancy in stock and Rs. 35 lacs to cover up the rough estimate of sales as per note-pade impounded as per annexure A-l to annexure A-22. The above discrepancy was made over and above the regular business Income of the assessee firm subject to no penal action under the Income Tax act, The above fact was verified from the return of income filed by the assessee. The contention of the assessee was found to be correct. Accordingly, it is accepted. However since the surrender was done as a consequence of survey proceedings penalty proceedings u/s 271(l)(c) are hereby initiated.
Looking and the circumstance of the case the income of the assessee is recalculated as under:
Returned Income 2,44,97,630/-
Addition as per Para 2 2,65,570/-
5
Assessed Income 2,47,63,200/-
Assessed Income Rs.2,47,63,200/-
6. Th e Ld. c o u n se l for a s s es s ee pointed o ut that
t h e r e a f t er t h e re i s n o m e nt i o n o f a n y d i re c t i o n r e g a r d i ng i n i t i a t i o n of p e na l t y p ro c e e d i n g s i n th e as s e s s me n t o r de r.
Th e L d . c o u n s el f o r a ss e s s e e s ta t e d t h at i t i s ev i d e n t fr o m t h e a b o v e t h a t v i s - à - v i s t he a d d i t i o n m a d e o n a c c o u n t o f d i f f e r e n ce i n s t oc k o f R s. 2 , 6 5 ,5 70 / - n o di r e c t i o n h a d b e e n i s s u e d by t h e A ss e s s i n g O f f i ce r fo r i n i ti a t i o n o f pe n a l t y u/ s 2 7 1 ( 1 ) ( c ) o f t h e A c t a n d i n t h e ab s e n c e of s u ch a d i r e ct i on t h e A s s e s s i ng O f f i c e r c o u l d n ot h a v e a s s u m e d ju r i s d i c t i on to levy of p e n al t y on the s a me . Th e L d. c ou n s e l for a s s e s s e e r e l i e d u p o n t h e d e c i s i on o f t h e H o n ' bl e A l l a h a b ad H i g h C o u r t i n th e c a s e o f CI T V s . Tr i v e n i E n g i n e e r i n g & I n du s t r i es L t d .( 20 1 4 ) 3 6 9 I TR 6 60 ( A l l . ) i n t hi s r eg a r d .
7. Th e L d . D R , o n t h e o t h e r h a n d , re b u t t e d t h e a rg um e n t s of the a s s e s se e v i s -à - v i s th e i n i ti a t i o n of penalty p r o c e e d i ng s by s t a t i n g t h a t t h e d i r e c ti o n o f th e A s s e s si n g Officer at p ar a 3 of the a ss es s m e n t or d e r co v e r e d th e s u r r e n d e r m a de b y t h e a s s e s s e e i n p a r a 2 o f t h e a s s e s s m e n t o r d e r a l s o a n d co u l d b e t re a t e d a s a d i r e ct i o n f or i n i t i a ti on of penalty p r o ce e d i n g s vi s - à - vi s the a d di t i o n made on a c c o u n t o f d i f f ere n c e i n s to c k o f R s . 2 , 6 5 , 00 0 / - a l s o . Th e L d .
D R f u r t h e r s t a t ed t h a t t h e d e c i s i o n o f t h e H o n ' b l e A l l a h a b a d H i g h C o u r t i n t he c a s e o f Tr i v e n i E n g i n e e r i ng & I n d u s t r i e s L t d . ( s u p ra ) d i d n o t a p p l y t o t he p r e s e n t c as e s i n c e t h e d i r e c t i o n f o r i n i ti a t i o n of p e n a l t y p r o c e e d i ng s w a s c l e a r .6
8. W e h a v e he a r d th e c o n t e nt i o n s of b o t h t he p a r ti es . Th e f a c t s o f t h e c a se a r e t h a t d u r i n g a s s e s s m e nt p r o c e e d i ngs t h e A s s e ss i n g Off i c e r d e al t w i t h t w o i s s u e s:
a) D i i s c r e p an c y o f s t o c k as p er b ook s o n t h e d a t e of s u r v e y , a s s h o wn d u r i n g s u r v e y p r o c e e di n g s and a s s e s s m e nt p r o ce e d i n g s , wh i c h w a s n o t c o nt e s t ed by the a s se s se e r e s u l ti n g in addition of R s . 2 , 6 5 , 57 0 / - and ;
b) S u r r e n d e r m a d e d u r i n g s u rv e y o n a c c o u n t o f d i f f e r e n ce i n p h ys i c a l s t o c k of j e w e l l e r y f o un d a nd t h e s t o ck a s p e r b o o k s o f R s. 1 . 90 c r o r e s a n d o n a c c o u n t of s a l es m a d e o f Rs . 3 5 l ac s .
P e n a l t y w a s l e v i ed o n l y o n a c c o un t o f a d d i t i on ma d e o f R s . 2 , 6 5 , 57 0 / - , wh i c h t h e a s s e ss ee h a s c h a l l e ng e d b e f o r e u s o n a c c o u nt o f abs e n c e o f d i r e c ti on t o l e v y o f sa m e.
9. W e f i n d m er i t i n t h e c o n t en t i o n o f t h e L d . c o u n se l f or assessee. U nd i sp u t e d l y , t h e j u r i s d i c t i o n t o i m p os e p e n a l t y f l o w s f r om s a t i sfa c t i o n o f t h e A ss e s s i n g Of f i c e r d u r i n g t h e c o u r s e o f p r o c e ed i n g s b e f o r e h i m t o a n y d e f a u l t c o m m i t t ed b y t h e a s s e ss e e , a s sp e c i f i e d i n s e c t i o n d e a l i n g w i t h l ev y of p e n a l t y , a n d con s e q u e n t d i r e ct i o n t h a t s u c h p er s o n s h al l p a y p e n al t y fo r th e d e f a ul t . I n t he p r e s e nt c a se , sa t i s f a c ti on o f t h e A s s e ss i n g O f f i c e r a nd t h e d i r e c t i o n i s s u e d i s c l e a r l y v i s - à - v i s t h e s u rr e n d e r m ad e b y t h e a s s e ss e e d uri n g s u r v e y p r o c e e d i ng s o n l y a n d n o t t h e am o u n t s u r r e nd er e d d u r i n g a s s e s s m e nt p r oce e d i n g s o f R s. 2 ,6 5 , 5 7 0 / - . A ba r e r e a d i n g o f t h e d i re c t i o n f o r l e v y o f p e n al t y at p a r a 3 of t h e as s e s s m e n t o r d e r a s r e p ro du c e d a b ov e r e ve a l s t h e a b o ve fa c t , w he r e the A s se s s i n g Officer after d ea l i n g wi t h the issue on q u e s t i o n r a i s e d re l a t e d t o s u r v e y c o n d u c t e d a t t h e p r e m i s e s 7 o f t h e a s s e s s e e an d r e p l y o f t h e a s s e s s e e w i t h r e ga r d t o t h e same s t a ti n g tha t the as s e s s e e had s u r re n d e re d Rs.1.9 c r o r e s t o c o v e r u p d i s c r ep a n c y i n s t o c k a nd R s .3 5 l a c s to c o v e r up r o ug h es t i m a t e o f sa l e as p e r n o t e p a d i m p o u n d e d , s t a t e d t ha t t h e a b o v e f a ct s w e re v e r i f i e d f r o m t he r e t u r n o f i n c o m e f i l e d b y t h e a s s e s s e e a nd f o u n d correct and thus accepted. Th e A s s e s s i n g O ff i c e r t h e r e a f t er w e n t o n t o s t a t e that h o we v e r , since the su r r e n d e r was done as a c o n s e q u e nc e o f su r v e y p r o c ee d i n gs , p e n a l t y pr o c e ed i n g s u /s 2 7 1 ( 1 ) ( c ) of t h e A c t w a s i n i ti a t ed . C l e a r l y , th e A s s e s s i n g O f f i c e r w hi l e i s su i n g t h e a f or e s ai d d i r e c t i o n , r e fe r r e d a nd w a s s a t i sf i e d wi th l e v y o f p e n a l t y o n l y v i s- à - v i s th e a m o u n t s u r r e n d e re d b y t h e a s s e s s e e o f R s . 1 . 9 c r o r e s a n d R s . 3 5 l a c s , a s s ta t e d ab o v e d u r i ng s u r ve y p r o c e e di n g s an d n o t t he a d d i t i o n ma d e o f R s . 2 , 6 5 , 57 0 / - on a c c o u n t o f d i f fe r e n c e i n c l o s i n g st o c k a s p e r a c c o un t s s ub m i t t e d du r i n g su r v e y a n d t h a t s u b m i tt e d a l o n g w i t h i n c o me - t a x r e t u rn f i l ed a n d o n w h i c h p en a l t y i n t h e i m pu g n e d ca s e h a s b e e n l ev i e d . Th e same we find was s u r re n d e r ed only du r i n g a s s e s s m e nt p r o c e e d i ng s a n d, t h e r e f o re , w h en t h e A s s e s si n g O f f i c e r i n h i s d i r e c ti o n s r ef e r r e d t o su r r e nd e r m a d e a s a co n s e q u e n ce o f s u r v e y p r oc e ed i n g s , t h e r ef e r en c e c l e a r l y w a s n o t t o t h e a f o r e s a i d s u r re nd e r m a d e b y t h e a s s e s s ee o f R s .2 , 6 5 , 5 7 0 /- . W e , t h e r e fo r e , f i n d n o m e r i t i n th e c o n t e n t i o n o f t h e L d . DR t h a t t h e d i r e c t i on f o r l e v y of p e na l t y c o v e re d t h e a m o u n t of a d d i t i o n m a d e of R s . 2 , 6 5 ,5 7 0 / - al s o .
8
10. I n v i e w o f t h e a b o v e , i t i s c l e a r th a t d u r i n g t h e co u r s e o f a s s e s sm e n t pr o c e e d i n gs t h e A s s e s s i n g O f f i cer w a s n o t satisfied t h at th e a s s es s e e h ad c o n c ea l e d or f u r n i sh e d i n a c c u r a te p a r t i cu l a r s o f i n c o m e v i s - à - v i s t he a d di t i o n m a d e o f R s . 2 ,6 5 , 5 7 0 /- a n d c o ns e q u e ntl y h a d gi v e n n o d i r e c t i o ns for levy of penalty on the same. Th e r e f o r e , i n t h e a b s e n ce of h a v i ng a s s um e d j u r i s d i c t i on to l ev y of pe n a l t y , the p e n a l t y l e v i ed on t h e a d d i t i o n m a d e o f R s . 2, 6 5, 5 7 0 / - w e h o l d w a s w i t h o ut j u r i s d i c ti o n a nd n e e d s t o b e d e l e t e d f or the a f o r e s ai d re a s o n . Th e reliance p l a ce d by the Ld. counsel for a ss e s s e e on the decision of th e Hon'ble A l l a h a b a d H i g h C o u r t i n t he c a se o f Tr i v e n i E n gi n e e r i n g & I n du s t r i es L t d . ( su p r a ) i s a p t whe r e i n i t h a s be en h e l d a s under:
"Undoubtedly, as held in the decision of the Supreme Court in Mak Data Private Limited Vs. Commissioner of Income Tax[1], the Assessing Officer has to satisfy himself whether penalty proceedings should be initiated or not during the course of assessment proceedings and he is not required to record his satisfaction in a particular manner or reduce it into writing. However, in the present case, there is no direction whatsoever by the Assessing Officer in respect of the specific head of interest on the SDF loan, on which the penalty was deleted by the Tribunal. This omission in the case of the SDF loan stands in sharp contrast to those items where the Assessing Officer has specifically directed the initiation of penalty proceedings under section 271(1)(c). Consequently, and for this reason, we are of the view that the Tribunal was justified in deleting the penalty under section 271(1)(c) in respect of the SDF loan."
I n v i e w of t h e abo v e , w e de l e t e the p e n a l t y l e v i e d i n t h e a b s e n c e o f a n y di r e c t i o n i n th e as s e s s m e n t or d e r f o r l e v y o f t h e s a m e. G r oun d N o . 5 r a i s ed b y t h e a s s e s s ee t h e r e f or e stands allowed.
9
11. Th e r e a f t e r t a k i ng u p g r o u n d No .2 w h i c h d e a l t w it h t h e m e r i t s o f t h e c as e t h e L d . co u ns e l f o r a s se s s e e s u b m i t t e d t h a t t h e i m p ug ne d a d d i ti o n h ad b e e n ma d e o n a c c o u n t o f p e t t y d i f f er e n c es i n s t o c k . Th e L d . c o u n s e l f or a s s e s s ee s u b m i t t e d t h at th e d i f fe r e n c e w as o n ac c o u n t o f q u a n t i t y o f s t o c k as p e r a c co u n t s ub m i t t ed a t t h e t i m e o f su r v e y an d c l o s i n g s t oc k a s p e r t r a d i n g a c co u n t o n t h e d a te o f s u r v e y submitted a l o ng w i t h income tax return f i l ed by the assessee. Th e L d . c o u n s e l f o r as s e s s e e s u b m i t t ed t h a t t h e q u a n t i t y o f s t o ck d e t e rm i n e d a t t h e t i me o f s u rve y i s b a s e d on estimates, a s s u m p t i on s a nd yardsticks of different v a l u e r s o n a c co un t o f w h i c h t h e re m a y b e p e t t y di f f e r e n c es a r i s i n g l at e r o n w h i c h d o n ot w ar r a n t a n y ad d i t i o n a t a l l . Th e L d . c o u n s e l f o r a s s e s s ee s t a te d t h a t i n t h e p re s e n t c a se a l s o t h e d i f fe r e nc e p o i n t e d o ut by t h e A s s e s s i n g O f f i c e r w as p e t t y a nd d i d no t w a r r an t a n y a d d i t i o n b u t th e a s s e s s ee h a d a g r e e d t o t he s a m e t o a vo i d l i t i g a t i o n a n d b uy p e a c e of mind. Th e L d . c o u n s e l f o r a s s e ss e e d r e w o u r a t t o t h e c o py o f r e p l y fi l e d be f o r e t h e A s s e ss i n g O f f i c e r i n t h i s r e g ard p l a c e d a t Pa p e r B o o k p a g e No s. 2 8 t o 3 1 . The r e l e v a n t p o r t i o n of t h e r ep l y i s as u n d e r:
"2. During the course of last hearing, an objection was raised that there is some petty difference in quantity of closing stock as per accounts submitted at the time of survey and closing stock as per trading account on 08.09.2011 submitted alongwith income tax return filed by the assessee. Calculation of this difference is attached herewith. It is submitted that the difference is only in grams. At the time of final audit of accounts, these petty discrepancies were identified and posted in the books which had not been done at the time of 10 surprise survey u/s 133A of the Act. However, to avoid litigation, to buy peace of mind, subject to non-initiation of any penalty or prosecution, we hereby offer this amount of difference of Rs. 2,65,570/- as additional income."
12. Th e L d . c o u n s e l f o r a s s e s s e e dr e w o u r a t t e n t i on t o t h e s u m m a r y o f d i ff er e n c e i n s t o c k f i l e d t o t h e A s s e s s in g O f f i c e r placed at P a pe r B o o k p a g e N o .3 1 , w h i c h i s re p r o d u c e d h e r e u n d e r:
S. Name of the Quantity Quantity as Difference Rate Value of No. Item as per per Trading in Qty. difference books at account as (in Rs.) the time of on Survey 08.09.2011 submitted alongwith ITR 1 Gold (22Ct) 18619.16 19702.788 83.628 2,727.00 2,28,053.56 2 Diamond 4939.57 4919.93 -19.64 1,620.00 31,816.80 jewellery 3 Diamond 1110.81 1110.24 -0.57 10,000.00 5,700.00 4 Silver 11558.21 11558.21 - 59,700.00 -
Total 2,65,570.36
13. Th e L d . D R c ou n t e r e d b y s a y i n g t h a t t h e a s se s s e e had s u r r e n d e red the i m p u g n ed amount only on being c o r n e r e d a n d th e L d . CI T( A p p e al s ) h a d , t h e r e for e , r i g h t l y a p p l i e d t h e de c i s i o n o f t h e H o n 'b l e A p e x C o u rt i n t h e c a s e o f M a k D a t a Pv t . L t d . V s . CI T ( 2 01 3 ) 3 5 8 I TR 5 9 2 t o c o n f i r m the levy of p e na l t y . Th e L d . DR also stated that the assessee at th i s stage c an n o t revisit a s s e s s m e nt p r o c e e d i ng s a n d s t a t e t h a t t he a d d i t i o n ma d e th e r e i n w a s i n c o r r e c t. Th e L d . D R r e f e r r e d t o t h e d e c i s i o n i n th e c a s e o f R a t t a n C ha n d B ho l a N a t h, 2 1 0 I TR 6 8 2 .
14. Th e Ld. c o u n se l for a s s es s ee at this j u nc t u r e c o u n t e r e d t he a rg u m e n t s o f t h e L d . D R v i s - à - vi s r e v i s i t i n g the a s s e s s m en t order by s t a ti n g that r e f e r ri n g to the e x p l a n a t i o n o f t he a s s e s s ee v i s -à -v i s t h e addition made on 11 account of d i f fe r e n c e in stock did not t a n t am o u n t to r e v i s i t i n g t he a ss e s s m e n t o r d er a n d , t he r e f o re , th e d e c i s i on c i t e d b y t h e L d. D R d i d n ot a p p l y i n t h e pr e s e n t ca s e .
15. W e h a v e h e a r d b o t h t h e p a r t i es. Th e f a c t s a s r e l a t i n g t o t h e i s s u e a nd w h i c h a r e u nd i s p u t e d a r e tha t d u r i n g s u r v e y c on d u c t ed o n t h e a s s e s se e ' s b u s i n e s s pre m i s e s o n 8.9.2011 d i f f e ren c e in p hy s i c a l stock as per books of account was f ou n d , on a c c o un t of which t he a s s e s s ee s u r r e n d e re d a s u m o f R s . 1 . 9 0 cr o r e s . Th e d i f f e re n c e f o u n d i n t h e s t o c k o f j e w e l l e r y , as r e p r od u c e d i n t h e qu es t i o n n a i re issued to t he assessee d u r i ng a s s e s sm e n t p ro c e e d i n g s p l a c e d i n t h e Pap e r B o o k b e f o r e u s a t p a ge 3 9 i s a s u n d e r :
Sr. Item Quantity as Quantity as per Difference No. per Physical closing stock Inventory 1 Diamond Jewellery 10083.466 g 4939.57 g 5143.896 g 18ct 2 Gold Ornaments 19274.603 g 18619.16 g 655.443g 22ct 3 Diamond 1967.37 ct 1110.81 ct 9143.44 ct 4 Silver 14500 11558.21 g 2941.79 g g11558.21 Total Th e r e a f t e r d u ri n g a s s e s s me nt p r o c e e d i ng s the A s s e s s i n g Of f i c er f o u n d d i f f e re nc e i n t h e s t o c k o f i t e m s a s r e f l e c t e d i n t h e b o o k s d ur i n g sur v e y a n d i n th e b o o k s f i l e d a l o n g w i t h r e t u rn o f i n c om e a n d wh i c h i s as u n d er :
S. Name of the Quantity Quantity as Difference Rate Value of No. Item as per per Trading in Qty. difference books at account as (in Rs.) the time of on Survey 08.09.2011 submitted alongwith ITR 1 Gold (22Ct) 18619.16 19702.788 83.628 2,727.00 2,28,053.56 2 Diamond 4939.57 4919.93 -19.64 1,620.00 31,816.80 jewellery 3 Diamond 1110.81 1110.24 -0.57 10,000.00 5,700.00 12 4 Silver 11558.21 11558.21 - 59,700.00 -
Total 2,65,570.36
Th e said difference t a n t amo u n t e d in all to
R s . 2 , 6 5 , 57 0 / - . A l l t h e ab o v e fa ct s a r e u nd i s p u ted .
16. I t i s c l e a rl y ev i de n t f r om t he a b ov e t h a t t h e d i f fer e n c e i n s t o c k d e t e c ted d u r i n g a s s e s sm e n t p r o ce e d i n gs a n d on w h i c h p e n al t y ha s b e e n l e vi e d i s p e t t y , b ei n g on l y 0 . 5 % o f s t o c k as p e r b o ok s o f g o l d o r n a me n t s a nd d i am o nd j e w e l l e r y a n d 0 . 0 5 % i n c as e o f d i a m o n d . Th e s a m e i s e v i d en t f r o m t he value of the su r r e n d e r made during su r v e y being 1 .9 0 c r o r e s a s ag a i n st t h e d i f f er e n c e f o u n d d u r i n g as s e s s m e n t b e i n g 2 . 6 5 l a cs, w h i c h a g a i n i s a r o u n d o n l y 1 % o f t h e a m o u n t s u rr e n d er e d . Th e e x p l an a t i o n o f th e a s se s s e e t h a t the same could b e a t t r i b u t e d t o h a v i n g a r i s e n on a c c o u nt o f e s t i m a te s a n d a s s u m p t i o n mad e w h i l e c a l c u l at i n g t h e m i s p l a u s i b l e. W e a l s o a g r e e w i th t h e L d . C o u n se l f o r t h e a s s e s s e e t h a t t ho u g h a d d i t i o n o n a c c o u n t o f s u c h d i f f e r e n ce c a n b e m a d e i n q u a n t u m p r oc e ed i n g s b u t c l e a r l y i t i s n o t a g o o d e n o u gh c a se f o r l e v y o f p en a l t y h o l d i n g t he a s s e s s ee l i a b l e f or h a v i ng e i t h e r c on c e a l ed o r f u r n i s h e d i n a c c u r a t e p a r t i c u l ar s o f i nc o m e . W e a r e a l s o n o t i n a gr e em e n t w i t h t h e c o n t en t i o n o f t h e L d . DR t h a t th e a s s e s se e i s ch a l l e n g i ng the a d di t i o n ma d e d u ri n g qua n t u m pr o c e e di n g s , t hu s r e v i s i t i n g t h e a ss e s s m e n t o r de r b y v i r t u e o f i t s e x p l a n a t i o n t h a t t h e di f f e r enc e s i n s t oc k w e re m i n o r w ar r a n t i n g n o l e v y of penalty. Th e L d . C o u n s el f o r t h e a s s e s s e e w e fi n d h a s i n f a c t a gr e e d t o t he f a c t t h a t t h e r e w e r e d i f f e re n c es i n st o ck w a r r a n t i ng a d d i ti o n b u t ha s s t at ed t h a t t he d i ff e r en c e s w e r e 13 t o o m i n o r s o as t o a t t r i b ut e a n y c o n c e a l m en t o r fu r n i s h i n g o f a n y i n a c c ur a te p a r t i c u l ar s o f i n c o m e t o t h e ass e s s e e f o r l e v y i n g p e na l t y . I t i s t h e r e fo r e n ot a c a s e o f r e v i s i t i n g the a s s e s s m e nt o r d er a t a l l a n d t h e d e c i s i o n r e l i e d up o n b y t h e L d . D R i n t h e c as e o f R a t t a n Ch a n d B h ol a N a th , 2 1 0 I TR 6 8 2 . t h e r ef o r e d oe s not apply in the facts of the present case.
17. We, t h e r e f o re , hold that no pe n a l t y is l e v i abl e on a c c o u n t o f t h e a d d i t i o n m ad e of R s . 2 , 6 5 , 57 0 / - s i n c e i t i s b a s e d p ur e l y o n e s t i m a te s a nd a s s u m p t i on s a nd r e l i a nc e p l a c e d b y t h e L d. c o u n s e l f o r a s se s s e e i n t h e c a s e o f C I T V s.
I q ba l S i n g h & C o m p a n y 1 8 0 Ta x m a n 3 5 5 a n d C I T V s . S a n g r u r V a n a s p at i M i l l s L t d . 3 0 3 I TR 5 3 i s a p t, wh e r e i n the Hon'ble j ur i s d i ct i o n a l H i gh C ou r t has c a t eg o ri c a l l y held t h a t i f a d d i ti o n i n t h e q u a n tum p r o c e ed i n g s i s b a s e d o n e s t i m a t e s o r a ssu m p t i o n s w i th o ut a n y c o n c r e t e ev i d e n c e o f c o n c e a l m en t b y th e a s s e s s ee n o pe n a l t y u /s 2 7 1 ( 1) ( c ) o f the Act is leviable.
In view of the above, ground No.2 raised by the assessee stands allowed.
18. S i n c e we h a ve de l e t e d t h e pe n a l t y l e v i ed o n a c c ou n t of a b s e n c e o f a ny d i r e c t i o n t o l e v y o f p e n a l t y a nd ev e n o n t h e m e r i t s o f t he c as e , w e a r e n ot de a l i n g w i th t h e r e s t o f t h e grounds raised by t h e a s s e s s ee c h a l l e ng i n g t he levy of penalty.
14
19. I n t h e r e s u l t , th e a p p e al o f t he a s s e ss e e , t h e re f o r e, s t a n d s a l l o w e d i n a b o v e te r m s .
O r d e r p r on o u n c ed i n t h e o p e n cou r t .
Sd/- Sd/-
(DIVA SINGH) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 31 s t October, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh