M/S KUMAR BUILDERS vs. COMMISSIONER OF INCOME TAX AAYAKAR BHAWAN LUDHIANA

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ITA/166/2014HC Punjab & HaryanaPHHC01109293201408 September 2015Author: MR. JUSTICE SURINDER GUPTA,MRS JUSTICE DAYA CHAUDHARY6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, finding no merit in it. The Court noted that the assessee, a contractor, had suppressed contract receipts by ₹21,54,387 from PWD, Sirhind. Part of this amount was credited to the security account but not declared as taxable receipts. The AO, CIT(A), and Tribunal concurrently found concealment of income and upheld the levy of penalty under Section 271(1)(c) on this suppressed amount. The Tribunal had specifically held that the assessee, by under-declaring receipts, was exigible to penalty under Section 271(1)(c) and confirmed the levy on suppressed receipts of ₹21,54,387. The Court found that the judgments relied upon by the assessee, CIT v. Reliance Petro Products Pvt. Ltd. and CIT v. Ms. Sania Mirza, did not provide any benefit due to the concurrent findings of concealment. Consequently, no substantial question of law arose, and the appeal was dismissed.

What were the facts?

The assessee, M/s Kumar Builders, filed its return for AY 2006-07 declaring income of ₹57,49,202. The Assessing Officer (AO) found that contract receipts from PWD, Sirhind were suppressed by ₹21,54,387, based on information received from PWD. The assessee initially attributed the discrepancy to non-receipt of Form 16-A and later surrendered a sum as income. The AO made an addition of ₹21,54,387 for suppressed receipts and also estimated income at 12% on total turnover, telescoping the suppressed receipt addition. Penalty proceedings under Section 271(1)(c) were initiated, and a penalty of ₹17,32,335 was imposed. The CIT(A) deleted the penalty on estimated income but confirmed it on suppressed receipts. The Tribunal dismissed appeals filed by both the assessee and the revenue.

What were the issues?

1. Whether, on the facts and circumstances, the Tribunal was justified in confirming the penalty levied under Section 271(1)(c) for wrong entry in account books due to non-receipt of proper documents, treating it as concealment? 2. Whether, on the facts and circumstances, the Tribunal was justified in confirming the penalty levied under Section 271(1)(c) for wrong entry in account books, ignoring the Supreme Court's decision in CIT v. Reliance Petro Products Pvt. Ltd.? 3. Whether the order of the Tribunal is perverse and against the provisions of law? Assessee's Arguments: The assessee argued that there was no concealment of income and that the penalty was unsustainable. Reliance was placed on CIT v. Reliance Petro Products Pvt. Ltd. and CIT v. Ms. Sania Mirza. The assessee contended that it had not claimed any benefit under TDS certificates as they were not issued at the time of filing the return, and the findings of the AO, CIT(A), and Tribunal were against the record. Revenue's Arguments: The revenue supported the order passed by the Tribunal.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 260A,Section 142(2A)

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 8.9.2015 M/s Kumar Builders, Kotakpura, Faridkot ....Appellant. Versus Commissioner of Income Tax, Ludhiana ...Respondent.

1.

Whether the Reporters of the local papers may be allowed to see the judgment?

2.

To be referred to the Reporters or not? Yes

3.

Whether the judgment should be reported in the Digest? CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE RAMENDRA JAIN. PRESENT: Mr. S.K. Mukhi, Advocate for the appellant. Mr. Rajesh Katoch, Advocate for the respondent. AJAY KUMAR MITTAL, J.

1.

This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 25.9.2013 (Annexure A-4) passed by the Income Tax Appellate Tribunal, Chandigarh Bench “A”, Chandigarh (hereinafter referred to as “the Tribunal”) in ITA No. 1357/Chd/2012, for the assessment year 2006- 07, claiming the following substantial questions of law:- i) Whether, on the facts and circumstances of the case, the Tribunal was justified in confirming the penalty so levied by AO u/s 271(1)(c) of the Income Tax Act, 1961 on account of wrong GURBACHAN SINGH 2015.11.02 11:07 authenticity of this document High Court Chandigarh -2- entry in account books due to non receipt of proper and complete documents by assessee firm and thereby booking under wrong heads by treating the same as concealment? ii) Whether, on the facts and circumstances of the case, the Tribunal was justified in confirming the penalty so levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 on account of wrong entry in account books ignoring the trite law as settled by Hon'ble Supreme Court of India in the case of CIT v. Reliance Petro Products Pvt. Ltd. 322 ITR 158 (SC)? iii) Whether the order of the Tribunal is perverse and against the provisions of law?

2.

Put shortly, the facts necessary for disposal of the present appeal as mentioned therein are that the assessee is a firm engaged in the business as Civil Contractor based at Ludhiana and filed its return of income on 31.10.2006 for the assessment year 2006-07 declaring taxable income at ` 57,49,202/-. The assessee also filed revised return where the returned income remained unchanged. The assessee claimed the credit of Tax Deducted at Source (TDS) at ` 2,66,292/- whereas the TDS certificates annexed with the return of income showed total receipts of ` 1,18,87,936/-. The Assessing Officer called for the information from the Executive Engineer, PWD, Sirhind and as per the information received, the total contract receipts were ` 1,40,42,320/- against which TDS of ` 3,14,551/- was deducted. The assessee was, thus, found to have suppressed the contract receipts to the extent of GURBACHAN SINGH 2015.11.02 11:07 authenticity of this document High Court Chandigarh -3- ` 21,54,387/-. Accordingly, the assessee was issued show cause notice to explain the difference. The assessee filed reply by pleading that the difference of ` 20,52,268/- be added to the gross receipts on which GP rate be applied. The plea of the assessee before the Assessing Officer was that the said mistake had taken place due to non-receipt of Form No.16-A. Thereafter, the assessee vide letter dated 24.11.2008 surrendered a sum of ` 2,15,439/- as income on gross receipts of ` 21,54,387/-. Another communication dated 8.12.2008 was submitted by the assessee that due to bonafide mistake, ` 10 lacs was credited to the security account while for the balance amount, profit @ 5.36% was offered for taxation. The case of the assessee was referred under Section 142(2A) of the Act for special audit by the Assessing Officer and made an addition of ` 21,54,387/- on account of suppression of receipts from PWD, Sirhind vide assessment order dated 28.5.2009 (Annexure A-1). Another addition was made by the Assessing Officer by rejecting the books of account and income of the assessee was estimated @ 12% on total turnover of ` 9,59,16,586/-. The addition made on account of suppression of receipts was telescoped with the total addition made while estimating the net profit @ 12%. The penalty proceedings were also initiated and penalty of ` 17,32,335/- was imposed upon the assessee vide order dated 27.1.2011 (Annexure A-2) on the total assessed income. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [hereinafter referred to as “the CIT(A)”]. The CIT(A) vide order dated 31.10.2012 (Annexure A-3) deleted the penalty on account of addition made on estimate basis but confirmed the addition made on account of suppression of receipts to the extent of ` 21,54,387/-. Being dissatisfied, the revenue as well as GURBACHAN SINGH 2015.11.02 11:07 authenticity of this document High Court Chandigarh -4- the assessee filed appeals before the Tribunal. The revenue filed appeal against the deletion of penalty by the CIT(A) which was on account of concealed income in pursuance to estimation of profits whereas the assessee filed the appeal against penalty sustained by the CIT(A) on suppression of receipts to the tune of ` 21,54,387/-. The Tribunal vide order dated 25.9.2013 (Annexure A-4) dismissed both the appeals. Hence, the present appeal by the assessee.

3.

Learned counsel for the assessee submitted that there was no concealment of income. Relying upon the judgment of the Apex Court in Commissioner of Income Tax v. Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158 (SC) and of the Bombay High Court in Commissioner of Income-Tax v. Ms. Sania Mirza, ITA No. 526 of 2011 decided on 9.2.2012, it was submitted that the penalty imposed was unsustainable. In fact the assessee had never claimed any benefit under TDS certificate as it had not been issued till the time of filing of the return. The finding recorded by the Assessing Officer, confirmed by the CIT(A) as well as the Tribunal for levy of penalty are against the record.

4.

On the other hand, learned counsel for the revenue supported the order passed by the Tribunal.

5.

After hearing learned counsel for the parties, we do not find any merit in the appeal. The assessee is a contractor carrying on contracts of various government bodies. The assessee had short declared contract receipts from the civil work undertaken by it by ` 21,54,387/-. Some part of the said amount was declared in the security amount by the assessee but not as part of the taxable receipts from PWD, Sirhind. Thus, the assessee had suppressed its contract receipts on which tax was also deducted at source by the said concern. The GURBACHAN SINGH 2015.11.02 11:07 authenticity of this document High Court Chandigarh -5- Assessing Officer, the CIT(A) and the Tribunal maintained levy of penalty under Section 271(1)(c) of the Act on that account. The Tribunal had recorded that the assessee having under declared its receipt is exigible to levy of penalty under Section 271(1)(c) of the Act. The relevant findings recorded by the Tribunal read as under:- “19. The other addition on which penalty under Section 271(1)(c) of the Act was levied, was under declaration of the receipts by the assessee. The assessee is a Contractor and during the year under consideration, had undertaken contracts of various government bodies. The assessee had declared contract receipts from the civil work undertaken by the assessee. However, receipts totalling Rs.21,54,387/- were not declared and some part was declared in the security account by the assessee but were not declared as part of the receipts from PWD, Sirhind. When information was called from the PWD, Sirhind, the Assessing Officer found the assessee to have suppressed its contract receipts on which tax was also deducted at source by the said concern. The case of the assessee, however was that it had not received the said TDS certificates from the said department and, hence the confusion and under- declaration of the receipts by the assessee. We find no merit in the stand of the assessee in this regard and it is a fit case of levy of penalty for furnishing in accurate particulars of income. The assessee having GURBACHAN SINGH 2015.11.02 11:07 authenticity of this document High Court Chandigarh -6- under declared its receipts is exigible to levy of penalty under section 271(1)(c) of the Act. Accordingly, we uphold the order of the CIT(Appeals) in this regard and confirm the levy of penalty on suppressed receipts to the extent of Rs.21,54,387/-. Upholding the order of CIT(Appeals), we dismiss the ground of appeal raised by the assessee.”

6.

Adverting to the judgments in Reliance Petro Prodcuts Pvt. Ltd. and Ms. Sania Mirza's cases (supra) relied upon by the learned counsel for the appellant, it may be noticed that the principle of law enunciated therein, is well recognized, but in view of the concurrent findings of concealment of income recorded by the Assessing Officer, the CIT(A) and the Tribunal as noticed hereinbefore, no benefit can be derived by the assessee from the aforesaid pronouncements.

7.

In view of the above, no question of law muchless a substantial question of law arises in this appeal. Accordingly, finding no merit in the appeal, the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE September 8, 2015 (RAMENDRA JAIN) gbs JUDGE GURBACHAN SINGH 2015.11.02 11:07 authenticity of this document High Court Chandigarh

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