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Income Tax Appellate Tribunal - Ahmedabad

Pooja Paper Craft, Ahmedabad vs Acit.,Circle-10,, Ahmedabad on 7 February, 2017

           IN THE INCOME TAX APPELLATE TRIBUNAL
           AHMEDABAD '' SMC " BENCH - AHMEDABAD

      Before Shri Rajpal Yadav, JM & Shri Manish Borad, AM.

                           ITA No. 270/Ahd/2014
                            Asst. Year: 2007-08

     M/s Pooja Paper Craft,      Vs. ACIT, Cir-10,
     15, Swastik Avenue, Swastik     Ahmedabad.
     Society, Navrangpura,
     Ahmedabad.
               Appellant                   Respondent
                         PAN AADFP 5875B

           Appellant by      Smt. Urvashi Shodhan, AR
           Respondent by     Shri James Kurien, Sr. DR

                     Date of hearing: 06/02/2017
                  Date of pronouncement: 07/02/2017

                              ORDER

PER Manish Borad, Accountant Member.

This appeal of assessee for Asst. Year 2007-08 is directed against the order of ld. CIT(A) -XVI, Ahmedabad, dated 12th December,2013 vide appeal No.CIT(A)-XVI/ACIT-Cir-10/035/12-13 arising out of order dated 27.03.2012 u/s 271(1)(c) of the IT Act, 1961 (in short the Act).

2. Assessee has raised various grounds from 1.1 to 3.1 but the solitary grievance revolves round a single issue relating to penalty u/s 271(1)(c) of the Act of Rs.13,24,000/- confirmed by ld. CIT(A).

Asst. Year 2007-08

3. Briefly stated facts are that the assessee is a partnership firm engaged in the business of manufacturing paper tubes. Return of income was filed on 27.10.2007 declaring total income of Rs.27,91,059/-. The case was selected for scrutiny assessment and assessment order u/s 143(3) was completed on 31.12.2009 after making addition of Rs.39,33,123/- which inter alia included disallowance of Rs.21,27,405/-, addition for unaccounted stock at Rs.18,00,164/- and a minor disallowance u/s 14A of the Act of Rs.5,554/-. Income was assessed at Rs.67,24,180/- and penalty proceedings u/s 274 r.w.s. 271(1)(c) of the Act were initiated for furnishing inaccurate particulars of income. Penalty order u/s 271(1)(c) of the Act was framed on 27.03.2012 imposing penalty of Rs.13,24,000/- on the additions of Rs.39,27,569/- relating to disallowance of processing charges of Rs.21,27,405/- and addition on account of unaccounted stock for Rs.18,00,164/-. Against the impugned penalty order u/s 271(1)(c) of the Act assessee filed appeal before ld. CIT(A) but could not succeed.

4. Aggrieved, assessee is now in appeal before the Tribunal.

5. At the outset, ld. Authorised Representative (AR) placed on record the copy of Tribunal's order in ITA No.683/Ahd/2011 for Asst. Year 2007-08 dated 22.07.2016 relating to quantum appeal of assessee and submitted that the Hon'ble Tribunal has deleted disallowance of Rs.21,27,405/- relating to processing charges and as regards another addition for unaccounted stock of Rs.18,00,164/-

Asst. Year 2007-08 Hon. Tribunal has scaled down the addition to Rs.1,13,395/- In view of the decision of the Tribunal, it is humbly prayed that penalty u/s 271(1)(c) may be deleted.

6. On the other hand, ld. Departmental Representative submitted that penalty should be sustained to the extent of addition sustained by Hon. Tribunal.

7. We have heard the rival contentions and perused the material placed on record and also gone through the decision of the Co- ordinate Bench on quantum additions in assessee's case. Solitary grievance of the assessee is against the order of ld. CIT(A) confirming the penalty of Rs.13,24,000/- imposed by the Assessing Officer u/s 271(1)(c) of the Act on following two additions :-

1. Disallowance out of processing charges of Rs.21,27,405/-

2. Addition for unaccounted investment at Rs.18,00,164/-

8. We further observe that assessee went in appeal against the above two additions before the Tribunal and major relief has been given by the Co-ordinate Bench by way of deleting disallowance of Rs.21,27,405/- on account of processing charges and the addition of Rs.18,00,164/- has been scaled down to Rs.1,13,395/- vide order in ITA No.683/Ahd/2011 dated 22.07.2016. We find that against total addition of Rs.39,33,123/- only an amount of Rs.1,13,395/- has been sustained towards unaccounted investment in stock. As far as imposition of penalty u/s 271(1)(c) is concerned the same is not ITA No. 270/Ahd/2014 4 Asst. Year 2007-08 leviable on the disallowance and addition deleted by the Co-ordinate Bench and as far as the imposition of penalty on the remaining sustained addition of Rs.1,13,395/- is concerned we find that ld. Assessing Officer made addition of Rs.18,00,164/- on the basis of information and records provided by the Survey team which was conducted in the case of assessee u/s 133A of the Act. The survey team found the discrepancy to the tune of Rs.18,00,164/- but later on when the working of survey team was reconciled with the records provided by the assessee it was revealed by assessee that the difference in physical stock v/s books stock is of Rs.1,13,395/- only. From going through the above factual matrix we are able to understand that in the given circumstances figure calculated by survey team was more of estimation and actually difference was due to improper reconciliation of certain types of stocks. Certainly there was no element of furnishing inaccurate particulars of income or concealment of particulars of income as the working of addition of Rs.18,00,164/- was not correct to a large extent and the Co-ordinate Bench only found minor difference of Rs.1,13,395/- as unaccounted stock which certainly cannot come under the clutches of provisions of section 271(1)(c) of the Act. In view of our above discussion and in the light of decision of Co-ordinate Bench on the quantum addition, we are of the view that penalty of Rs.13,24,000/- u/s 271(1)(c) is uncalled for. The same is deleted.

9. Other grounds are of general nature, which need no adjudication.

Asst. Year 2007-08

10. In the result, appeal of assessee is allowed.

Order pronounced in the open Court on 7th February, 2017 Sd/- sd/-

             (Rajpal Yadav)                    (Manish Borad)
            Judicial Member                  Accountant Member

Dated     07/02/2017

Mahata/-

Copy of the order forwarded to:
1.  The Appellant
2.  The Respondent
3.  The CIT concerned
4.  The CIT(A) concerned
5.  The DR, ITAT, Ahmedabad
6.  Guard File
                                                 BY ORDER

                                      Asst. Registrar, ITAT, Ahmedabad
 ITA No. 270/Ahd/2014                                                  6
Asst. Year 2007-08



1.    Date of dictation: 06/02/2017

2. Date on which the typed draft is placed before the Dictating Member: 06/02/2017 other Member:

3. Date on which 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: 7/2/17

7. Date on which the file goes to the Head Clerk:

8. The date on which the file goes to the Assistant Registrar for signature on the order:

9. Date of Despatch of the Order: