M/S EURO JEWELS,JAIPUR vs. INCOME TAX OFFICER, WARD-2-1, JAIPUR

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ITA 712/JPR/2017Status: DisposedITAT Jaipur09 January 2018AY 2009-106 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition sustained by the CIT(A) was an estimated addition made on an ad hoc basis. Relying on various case laws, it was decided that penalty is not automatically leviable when an addition is sustained, especially when it's an estimated trading addition.

What were the facts?

The assessee's appeal concerns a penalty levied under Section 271(1)(c) of the Income Tax Act. The Assessing Officer made a trading addition, which was subsequently restricted by the CIT(A). The assessee argued that the addition was ad hoc and not based on concrete facts, thus no penalty should be imposed.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the sustained addition is estimated and ad hoc, and whether the assessee furnished inaccurate particulars of income.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 44AB

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(11)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, JAIPUR BENCHES (SMC

Before: SHRI BHAGCHANDvk;dj vihy la-@ITA No. 712/JP/2017

For Appellant: Shri Saurabh Harsh (Adv)
Hearing: 04/01/2018Pronounced: 10/01/2018

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh Hkkxpan] ys[kk lnL;] ds le{k BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER vk;dj vihy la-@ITA No. 712/JP/2017 fu/kZkj.k o"kZ@Assessment Year : 2009-10 cuke M/s Euro Jewels, Income Tax Officer, Vs. 2238, Haldion Ka Rasta, Ward-2(1), Johari Bazar, Jaipur- Jaipur. 302003 LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAFE 3220 C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Saurabh Harsh (Adv). jktLo dh vksj ls@ Revenue by : Shri Rajendra Jha (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 04/01/2018 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 10/01/2018 vkns'k@ ORDER

PER: BHAGCHAND, A.M.

This is an appeal filed by the assessee emanates from the

order of the ld. CIT(A)-I, Jaipur dated 31/07/2017 for the A.Y. 2009-

10, wherein the assessee has raised only one ground of appeal,

which is as under:- “1. That on the facts and in the circumstances of the case, the ld. CIT(A) grossly erred in confirming penalty U/s 271(1)(c) of the IT Act to the extent of Rs. 15,450/- as against the amount of Rs. 46,350/- imposed by the ld. Assessing Officer.”

ITA 712/JP/2017_ 2 M/s Euro Jewels Vs ITO

2.

The only issue involved in the appeal, is against sustaining the

penalty U/s 271(1)(c) of the Income Tax Act, 1961 (in short the Act)

of Rs. 15,450/- being 100% of the tax sought to be evaded.

3.

While pleading on behalf of the assessee, the ld AR has

submitted that the assessment U/s 143(3) of the Act was finalized on

21/11/2011 and a trading addition of Rs. 1,36,400/- was made. The

ld. CIT(A) upheld the rejection of books of account and restricted the

addition to Rs. 50,000/- only. Thus, the estimated trading addition

made by the Assessing Officer itself was not based on any concrete

facts and the ld. CIT(A) has just sustained an ad hoc addition of Rs.

50,000/-. Therefore, the assessee should not have been visited by

penalty U/s 271(1)(c) of the Act. This fact shows that the assessee

has neither furnished inaccurate particulars of income nor it has

concealed the income. The books of accounts were audited as per

provisions of Section 44AB of the Act. He also submitted that the ld.

CIT(A) in assessee’s own case while deciding ITA No 63/2012-2013

dated 30/10/2014 for the A.Y. 2006-07 has deleted the penalty in

similar circumstances. The ld AR also submitted that in the case of

Shri Ravi Kumar Rawat, similar penalty levied was deleted by the ld.

CIT(A) while deciding ITA No. 32/2010-11 vide its order dated

ITA 712/JP/2017_ 3 M/s Euro Jewels Vs ITO

01/8/2013 The ld. AR also placed reliance on various other ITAT’s

decisions including the decision in the case of Shri Shyam Mohan

Rawat in ITA No. 04/2012-13 dated 11/11/2014. He also placed

reliance on the various decisions of Hon’ble ITAT and Hon'ble High

Court, which are as under:-

a. Hon’ble Jurisdictional Rajasthan High Court in CIT v. Krishi Tyre Retreading & Rubber Industries in DBITA 542/2008 vide order dated 19.09.2013 has held: Merely because books of accounts of the assessee were rejected or estimated addition was made, in our view, no penalty is leviable.

b. CIT vs. Kailash Crockery House (1999) 235 ITR 544 (Pat)

c. CIT v. Metal Products of India [1984] 150 ITR 714 (P&H)

d. CIT v. Whiteline Chemicals (Guj) (Tax Appeal No. 496/2102) dated 15.01.2013

e. CIT vs. Subhash Trading Company (1996) 221 ITR 110 (Guj)

f. CIT vs. Raj Bans Singh (2005) 276 ITR 351 (All)

g. CIT v. Aero Traders (2010) 231 CTR 524 (Delhi)

h. CIT v. Modi Industrial Corporation (2010) 195 Taxman 68 (P&H)

i. CIT v. Vijay Kumar Jain (2010) 325 ITR 378 (Chattisgarh)

j. Shiv Narain Jamnalal (MP High Court): 7 ITD 795: held that where trading addition has been made by rejecting the books of accounts, no penalty was imposable for such estimated addition.

ITA 712/JP/2017_ 4 M/s Euro Jewels Vs ITO

Ld. AR pleaded that the penalty should not be imposed automatically

merely because some addition has been sustained. He also relied on

the following case laws:

In the case of ACIT v VIP Industries 122 TTJ 289 (Mum) it a. was held that, where addition is made the penalty shall not automatically follow. In a case of genuine difference between AO and A’, penalty cannot be levied. Same view has been taken by Pune bench in the case of Kanbay Software India 122 TTJ 721.

b. In the case of CIT v Sidhartha Enterprises 184 Taxman 460 P&H it was held that it is not necessary that in every case where particulars are inaccurate, penalty must follow. Penalty is imposed only when there is some element of deliberate default and not when there is merely a mistake or bona fide claim.

4.

The Hon’ble Supreme Court in the case of CIT v. Reliance Petro Products Pvt. Ltd. reported in (2010) 322 ITR 158 (SC) has observed as under:-

“A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word - “particulars” used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provisions, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish

ITA 712/JP/2017_ 5 M/s Euro Jewels Vs ITO

the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, no according to the truth or erroneous.

Where there is no finding that any details supplied by the assessee in Its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. ”

4.

On the other hand, the ld Sr.DR has relied on the orders of the

authorities below.

5.

After hearing both the sides and considering the various case

laws relied upon and factual aspect of the case, the Bench is of the

view that the addition sustained by the ld. CIT(A) itself was an

estimated addition and the same has been sustained to the extent of

Rs. 50,000/- only on ad hoc. The penalty is not an automatically

leviable wherever addition is sustained. Further where the trading

additions are made, which has been reduced and sustained on ad

hoc basis, no penalty imposable on such estimated addition. Keeping

in view these facts and circumstances of the case and the case laws

relied upon, the Bench hereby direct to delete the penalty of Rs.

15,450/- sustained U/s 271(1)(c) of the Act.

ITA 712/JP/2017_ 6 M/s Euro Jewels Vs ITO 6. In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 10/01/2018. Sd/- ¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 10th January, 2018 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- M/s Euro Jewels, Jaipur. 1. izR;FkhZ@ The Respondent- The ITO, Ward-2(1), Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए 5. Jaipur xkMZ QkbZy@ Guard File (ITA No. 712/JP/2017) 6.

vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत

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