Income Tax Appellate Tribunal - Chandigarh
M/S Heera Moti Agro Products, Solan vs Dcit, Cc-I, Chandigarh on 9 August, 2018
I N T H E I N CO ME T A X A P PE L L AT E T RI B UN A L
D I VI S I O N B E NC H , ' A ' , CH A ND I G AR H
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND
Ms. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No. 140/CHD/2018
Assessment Year : 2008-09
M/s Heera Moti Agro Products, Vs. The DCIT, Central Circle-1,
199, HPSIDC, Industrial Area, Chandigarh
Baddi, Distt. Solan
PAN No. AACFH8098M
(Appellant) (Respondent)
Appellant by : Sh. Sudhir Sehgal Advocate
Respondent by : Ms. Deepkita Mohan, JCIT
Date of Hearing : 15.05.2018
Date of Pronouncement : 09.08. 2018
ORDER
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 24.11.2017 of the Commissioner of Income Tax(A)-3, Gurgaon [hereinafter referred to as 'CIT(A)'].
2. The assessee in this appeal has raised following grounds of appeal:-
1. That the Ld. CIT(A)-3 Gurgaon has erred in confirming the levy of penalty u/s 271(1)(c) on addition of Rs. 30,000/- in respect of rental income and on account of addition on estimated basis on account of lease & gross profit of Rs.
64,536/-.
2. That Ld. CIT(A) has also erred in confirming the levy of penalty on Rs. 4,60,000/- un-reconciled expenses.
ITA No. 140/Chd/2018-
M/s Heera Moti Agro Products, Solan 2
3. That the levy of penalty on lease rental and gross profit on estimated basis is against the facts and circumstances of the case.
4. That the penalty has been levied against the facts and circumstances of the case.
3. The perusal of above grounds of appeal reveal that the assessee is aggrieved against the action of the CIT(A) in confirming the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act') on various issues.
4. Ground No.1 : In this ground, the assessee has agitated the penalty levied u/s 271(1)(c) of the Act in respect of two issues. The first issue is regarding the levy of penalty on addition for Rs. 30,000/- in respect of rental income.
In this respect, the Ld. Counsel for the assessee has invited our attention to the impugned assessment order as well as order of the CIT(A) in quantum proceedings and has stated that the impugned penalty has been levied assuming that the assessee had received rental income from its sister concern M/s Jindal Sales Corporation. However, it was pleaded before the lower authorities that no rent was paid by the sister concern to the assessee and even that proprietor of M/s Jindal Sales Corporation namely Shri Rajneesh Jindal had filed an affidavit dated 1.3.2013 deposing therein that premises was vacated w.e.f. 1.4.2005. It has been further pleaded that even no expenditure in this respect was claimed by M/s Jindal Sales Corporation in its books of account. However, the lower authorities confirmed the addition only assuming that rent in question might have been received by the assessee observing that the affidavit of ITA No. 140/Chd/2018- M/s Heera Moti Agro Products, Solan 3 Shri Ranjeesh Jindal was self-serving and cannot be taken as credence of. The Assessing officer also initiated penalty proceedings on this issue and imposed the impugned penalty on an addition of Rs. 30,000/- made in this respect which has been further confirmed by the CIT(A).
5. We have considered the rival submissions and have gone through the record. The assessee in this case had come with the averment that no rent was received from M/s Jindal Sales Corporation. That the premises was vacated on 1.4.2005 and that no rent was received from M/s Jindal Sales Corporation from 1.4.2005 onwards. There is no evidence on the file to show that assessee actually received the rent in question. Though in the quantum proceedings, the addition was made on assumption basis and further considering the evidence of the assessee in the shape of affidavit of the lessee as not reliable. However, so far as penalty proceedings are concerned, we do not find that there is any evidence on file that the assessee has furnished inaccurate particulars of income or concealed his income in this respect. It has been held time and again held that every addition made in the quantum proceeding does not necessary lead to levy of penalty u/s 271(1)(c) of the Act. The penalty levied by the lower authorities in this respect is, therefore, ordered to be deleted.
6. The second issue taken by the assessee in this ground of appeal is regarding addition on account of lease & gross profit of Rs. 64,536/- estimated on the basis of unaccounted sales. ITA No. 140/Chd/2018-
M/s Heera Moti Agro Products, Solan 4
7. During the search action carried out at the premises of the assessee, a seized paper page 13 had been generated from the data accounting software from the computer of the assessee representing the receipts and payment account for the month of September to December 2007. The assessee failed to reconcile the receipt of Rs. 2,79,500/- with the books of account. In the absence of an y explanation of the aforesaid receipts, the said receipts were taken as sales outside the books of account on which the GP was estimated and taxable income was calculated at Rs. 64,536/-. The penalty proceedings was also initiated and the impugned penalty was levied in respect of the above stated addition to the income of the assessee; which has been further confirmed by CIT(A).
8. Before us, the Ld. Counsel for the assessee has submitted that penalty cannot be levied on the basis of estimated addition. Further, that the documents found during search action was dumb documents and that even the additions were not warranted. The Ld. counsel has further invited our attention to para 23 of the order dated 17.1.2017 of the Tribunal passed in the case of assessee in respect of quantum additions in ITA Nos. 751 & 752/Chd./2013 decided along with other appeals of the related concerns of the assessee, wherein, the addition of Rs. 4,60,000/- made (as taken in ground No.2 of the appeal) on the basis of identical dumb document has been deleted b y the Tribunal.
9. The Ld. counsel, therefore, has submitted that though the assessee has not pressed the issue before the Tribunal on the addition ITA No. 140/Chd/2018- M/s Heera Moti Agro Products, Solan 5 made on this issue, however, the findings of the Tribunal in respect of the addition for Rs. 4,60,000/- which was based on the same documents found during the search action, since stood deleted, hence, it cannot be said to be a case of concealment of income or furnishing of inaccurate particulars of income.
10. The Ld. counsel has made similar submission in respect of ground No.2 and has stated that since the quantum addition of Rs. 4,60,000/- stood deleted vide order of the Tribunal dated 17.1.2017, hence, there is no basis for the sustainability of the impugned addition.
11. After considering the above submissions of the Ld. Counsel for the assessee, we do not find any justification on the part of the lower authorities on levying penalty on the above issues and the same is ordered to be deleted.
12. Ground Nos. 3 & 4 are general in nature.
In the result, the appeal of the assessee is hereby allowed. Order pronounced in the Open Court on 09.08.2018 Sd/- Sd/-
(ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 09.08.2018 Rkk Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR