Income Tax Appellate Tribunal - Ahmedabad
Gujarat Transport Services(Ipcl ... vs Assessee on 7 August, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL " D " BENCH, AHMEDABAD
(BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI, A.M.)
I.T. A. No. 630 /AHD/2010
(Assessment Year: 1998-99)
M/s. Gujarat Transport V/S The A.C.I.T, Circle-3,
Services [IPCL Division] Baroda
Navi Dharti Naka,
Nagarwada, Baroda
(Appellant) (Respondent)
PAN: AACFG 2424M
Appellant by :Shri M.K. Patel. A.R. with Shri A.R
Shah.
Respondent by : Smt. Sonia Kumar, Sr. D.R.
आदे श)/ORDER
(आदे Date of hearing : 31-07-2014 Date of Pronouncement : 07-08-2014 PER SHRI ANIL CHATURVEDI,A.M.
1. This appeal is filed by the Assessee against the order of CIT(A)-V, Baroda dated 16.12.2009 for A.Y. 1998-99.
2. The facts as culled out from the material on record are as under.
3. Assessee is a partnership firm stated to be engaged in the business of transportation. Assessee file its return of income for A.Y. 98-99 on 31.10.98 2 ITA No 630/AHD/2010 . A.Y. 1998-99 showing total income of Rs. 2,40,637/-. Assessment was framed u/s. 143(3) vide order dated 2.03.2001 and the total income was determined at RS. 55,01,680/-. While framing the assessment A.O estimated gross profit at 18% of the gross receipts received from KRIBCO and made addition of Rs. 50,92,838/-. Aggrieved by the order of A.O Assessee carried the matter before CIT(A) who reduced the estimation of gross profit from 18% to 3% and thus the addition on account of gross profit was reduced to Rs. 8,48,806/-. Aggrieved by the order of CIT(A), Assessee as well as Revenue preferred appeal before Tribunal where both the appeals were dismissed. On the addition of Rs. 8,48,806/- which was confirmed by CIT(A), A.O vide penalty order dated 29.06.2009 levied penalty u/s. 271(1)(c) of Rs. 2,97,100/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) dismissed the appeal of the Assessee by holding as under:-
4.3. I have carefully considered the facts of the case, the submissions of the appellant, the assessment and penalty order and the quantum appeal orders of CIT(A) and Hon'ble ITAT. It is noticed that during the course of assessment proceedings the AO had recorded the statement of Shri Jayantilal Patni, Managing Partner who admitted in reply to Q. No. 21 that certain expenses were bogus. Further, in reply to Q.No. 19, it was stated that certain payment for hiring trucks were also bogus payments. In regard to Q .No. 13, the assessee admitted that certain Bhada Chitties were fictitiously signed assessee's own men. It was also admitted before the AO that certain expenses were debited which pertained to the earlier period. On these facts, the CIT(A) and the Hon'ble ITAT confirmed the GP addition to the extent of Rs. 5,01,627/-. It was the specific admission of the partner in regard to claim of various bogus expenses that the income was estimated and this fact was also recognized by the higher appellate authority. In the case of CIT vs T Mathai 269 ITR 492 (Kerala) and CIT vs Shakuntaladevi 270 ITR 590 (Rajasthan) the penalty on best judgement assessment was also sustained. Coming to the legal plea that no satisfaction was recorded by the AO, it is observed that by Finance Act 2008 w.r.e.f. 01/04/1989 sub section (IB) was inserted in Section 271 providing that direction for initiation of penalty proceedings u/s. 271(l)(c) in the order of assessment shall be deemed to constitute the satisfaction of the AO. Coming to other plea of the appellant that the notice is unclear as to whether it is issued for concealment of income or furnishing of wrong particulars of income, it is noticed that in the case of A.M. Shal\& Co. vs CIT 238 ITR 415 (Gujarat) it was held that there could be no straitjacket formula to determine under which of the two categories the case fell and that the duty was enjoined upon the assessee to make a complete and correct disclosure of income. In view of the foregoing, I am of the humble opinion that the penalty on the addition confirmed by the Hon'ble ITAT is justified. However, I am in agreement with the appellant that the AO has wrongly computed the penalty on Rs. 8,48,806/- instead of Rs. 5,01,627/-The AO is accordingly directed to re-compute the penalty amount.
3 ITA No 630/AHD/2010 . A.Y. 1998-99
4. Aggrieved by the order of CIT(A), Assessee is now in appeal before us and has raised the following concise ground:-
On Point of Law
1. The Comm. of Income-tax (A) has erred both in Law and in fact in confirming penalty of Rs.2,97,100 levied by the Assessing Officer u/s.271(1)(c ).
2. The notice of Penalty issued by Assessing Officer and Penalty levied of u/s. 271(1) ( c) was vague, capable of two views and not clear as to whether the "penalty was initiated for concealment of income" or "for furnishing inaccurate particulars of such income" and therefore levy of Penalty is not valid.
On Merits
1. On facts of the case it is submitted by your Appellant that for addition of Gross Profit and applying section 145 Penalty u/s.271(l)(c ) cannot be levied since there is no concealment of Income.
2. It is further submitted that merely by not accepting Explanation given by the Appellant, and Penalty Order based on quantum addition without independently proving any malafide or guilt the Penalty u/s.271(l)(c ) is liable to be cancelled .
5. Though the Assessee has raised the various grounds but the only effective ground is with respect to levy of penalty u/s. 271(1)(c) of the Act.
6. Before us, ld. A.R. reiterated the submissions made before A.O and CIT(A). It was further submitted that in the present case since the addition has been made on estimated basis, no penalty is leviable and for the aforesaid proposition he relied on the decision in the case of Navjivan Oil Mills vs. CIT 2001 170 CTR Gujarat 224. Ld. D.R. on the other hand supported the order of A.O and CIT(A).
7. We have heard the rival submissions and perused the material on record. In the present case AO had estimated gross profit @ 18% of receipts and made addition of Rs 50,92,838/- but the addition was substantially reduced by CIT(A) and the addition only to the extent of Rs 8,48,806/- was sustained and that too was sustained on estimated basis. It is a settled law that when the addition is made on the estimate basis, no penalty is sustainable. Further It is an admitted proposition in law that the finding in the quantum 4 ITA No 630/AHD/2010 . A.Y. 1998-99 proceeding is not a factor for determining the question for the purpose of imposing penalty and question of penalty has to be decided independent of such finding. It is well settled that the parameters of judging the justification for addition made in the assessment case of the assessee is different from the penalty imposed on account of concealment of income or filing inaccurate particulars of income and that certain disallowance/addition could legally be made in the assessment proceeding on the preponderance of probabilities, but no penalty could be imposed u/s 271(l)(c) of the Act on the preponderance of probabilities. In view of the aforesaid facts we are of the view that no penalty is leviable in the present case and therefore direct its deletion. In the result this ground of Assessee is allowed.
8. In the result, the appeal of the Assessee is allowed.
Order pronounced in Open Court on 07 -08 - 2014.
Sd/- Sd/-
(G.C.GUPTA) (ANIL CHATURVEDI)
VICE PRESIDENT ACCOUNTANT MEMBER
Ahmedabad. TRUE COPY
Rajesh
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad