Income Tax Appellate Tribunal - Jaipur
Deepak Dalela, Jaipur vs Ito, Jaipur on 22 December, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 1027/JP/2013
fu/kZkj.k o"kZ@Assessment Year : 2006-07
Deepak Dalela, cuke I.T.O.,
C-28, Peeyush Path, Bapu Vs. Ward-6(3),
Nagar, Jaipur. Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAOPD 6587 H
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj l@
s Assessee by : Shri Mukesh Khandelwal (CA)
jktLo dh vksj ls@ Revenue by : Shri Rajendra Singh (Addl.CIT)
lquokbZ dh rkjh[k @ Date of Hearing : 07/12/2016
mn?kks"k.kk dh rkjh[k @ Date of Pronouncement : 22/12/2016
vkns'k@ ORDER
PER: KUL BHARAT, J.M. This is an appeal filed by the assessee arises against the order dated 18/11/2013 passed by the ld. CIT(A)-II, Jaipur pertaining to the A.Y. 2006-07, wherein the assessee has raised sole ground of appeal, which is as under:
"1. That under the facts and circumstances of the case, the ld. CIT(A) has erred seriously in law and on the facts in confirming the penalty amounting to Rs.
2 ITA 1027/JP/2013_ Deepak Dalela Vs ITO 3,31,411/- levied U/s 271(1)(c) of the IT Act, 1961 by the ld. A.O.
2. Briefly stated facts of the case are that the case of the assessee was picked up for scrutiny assessment and the assessment U/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act) was framed vide order dated 31/12/2008. While framing the assessment, the Assessing Officer rejected the books of account and applied gross profit @ 25% on the basis of unverifiable purchases. The A.O. also initiated penalty U/s 271(1)(c) of the Act for furnishing inaccurate particulars/concealing true particulars of income.
3. Ld. Counsel for the assessee has submitted that the issue in quantum proceedings reached up to the Hon'ble Tribunal and the Tribunal was pleased to modify the estimation of profit and adopted GP rate @ 15% in place of 25% as applied by the A.O.. Ld. Counsel further submitted that the penalty proceedings of the quantum proceedings are two different and distinct proceedings. In the penalty proceedings, the A.O. has to demonstrate with a specific instance of concealment of income/furnishing of inaccurate particulars of income, in case in hand the Assessing Officer has merely estimated the GP rate. Therefore, he submitted that the penalty cannot be sustained where the addition was 3 ITA 1027/JP/2013_ Deepak Dalela Vs ITO made on the basis of estimation. In support of this contention, the ld. Counsel for the assessee has relied on the decisions of the Hon'ble Rajasthan High Court rendered in the case of Shiv Lala Tak Vs CIT 251 ITR 373 (Raj), Addl. CIT Vs. Agarwal Misthan Bhandar 131 ITR 619 (Raj). He also relied upon the decisions of the Hon'ble ITAT Jaipur Benches in the case of Shri Kamlesh Dangayach Vs. ACIT-1, Jaipur in ITA No. 18 & 19/JP/2012 order dated 16/05/2012 and ACIT-7, Jaipur Vs M/s Dwarka Gems Ltd. in ITA No. 549/JP/2010 order dated 28/4/2011.
4. On the contrary, the ld Sr. DR has strongly opposed the submissions of the assessee and placed reliance on the judgment of the Hon'ble Kerela High Court in the case of Kalpaka Bazar Vs CIT 313 ITR
414. In support of the contention that the expenditure in the nature of bogus purchases has accounted by the assessee which means concealment of income, therefore, it was held that the penalty pertaining to inflation of purchases are rightly levied. He also relied on the decision of the Hon'ble ITAT Chandigarh Bench decision in the case of ITO Vs. Sru Knitters (P) Ltd. 110 TTJ 671.
5. We have heard the rival contentions of both the parties, perused the material available on the record and also gone through the orders of 4 ITA 1027/JP/2013_ Deepak Dalela Vs ITO the lower authorities. The Coordinate Bench in the identical case i.e. in the case of ITO Vs. M/s Bhansali Trading Corporation, has held as under:-
"6. We have heard the rival contentions of both the parties and perused the material available on the record. The addition made by the Assessing Officer was specific on account of unverifiable purchases on which G.P. @ 25% was applied and added in the income. However, the same was reduced by the ld CIT(A) and applied different G.P. rate. However, the additions were specific. The assessee has not been able to produce these parties for verification and also summons were returned back to the officer unserved. This Bench recently decided this issue in detail in the case of Shri Anuj Kumar Varshney Vs. I.T.O. and other cases in ITA No. 187/JP/2012 order dated 22/10/2014 and gave detail findings on unverifiable purchases in number of cases. The department has been able to prove that in gems and jewellery business, some of the parties were giving accommodation entry and some of them accepting the accommodation bill to reduce the profit. The parties names figured in this case also were similar to those cases, therefore, we hold that the addition made by the Assessing Officer was specific and assessee had concealed the income and furnished inaccurate particulars of income. Further the assessee's explanation is not bonafide. The case laws referred by the assessee are not squarely
5 ITA 1027/JP/2013_ Deepak Dalela Vs ITO applicable. In this case, the addition was specific with reference to unverifiable purchases. Therefore, we reverse the order of the ld CIT(A)."
Ld. AR of the assessee has placed reliance on the decision in the case of Shiv Lal Tak Vs CIT (supra) wherein the Hon'ble High Court has held that "in making computation of total income where the income returned has been rejected by rejecting the trading results, finding some discrepancy in the books of account and substituting the same by an estimated figure, in the strict sense, can neither be said to be addition of any amount in the returned income nor disallowance of any amount as deductions claimed. The word ''amount'' of which additions made or deductions disallowed also denotes reference to specific item of amount added or disallowed as deduction in contrast to substitution of altogether a new estimated sum in place of the income returned. It is a case neither of addition or disallowance but a case of substitution." In view thereof, the Hon'ble High Court has upheld the decision of the Tribunal for deleting the penalty. In the light of the above decision of the Hon'ble Jurisdictional High Court, we hereby direct the Assessing Officer to delete the penalty as in the present case also the Assessing Officer has estimated the profit by rejecting the books of account.
6 ITA 1027/JP/2013_ Deepak Dalela Vs ITO Accordingly, we delete the penalty levied by the Assessing Officer and confirmed by the ld. CIT(A).
10. In the result, appeal of the assessee is allowed Order pronounced in the open court on 22nd December, 2016.
Sd/- Sd/-
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(Vikram Singh Yadav) (Kul Bharat)
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated:- 22nd December, 2016
*Ranjan
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Deepak Dalela, Jaipur.
2. izR;FkhZ@ The Respondent- The I.T.O., Ward-6(3), Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 1027/JP/2013) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar