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Income Tax Appellate Tribunal, DELHI BENCHES: ‘F’, NEW DELHI
Before: SHRI R.S. SYAL & SMT. BEENA A PILLAI
PER BEENA A PILLAI, JUDICIAL MEMBER Present penalty appeal has been preferred by revenue against order dated 20/08/15 passed by Ld. CIT (A), Muzaffarnagar for assessment year 2009-10 on the following grounds of appeal:
1. The order of Ld.CIT(A) Muzaffarnagar, may be set aside and the penalty order of AO restored since the Ld.CIT(A) Muzaffarnagar erred in law and on facts, in deleting the penalty u/s 271(1)(c) in respect of unaccounted generation and sale of scrap of Rs.14,29,979/- without considering:
ITA 6174/Del/2015 A.Y. 2009-10 The Ganga Kisan Sahkari Chini Mills Ltd. a. That the estimate of generation and sale of scrap @ 10% of repairs was based on identical addition made in the assessee’s own case in Assessment Year 2008-09 that the assessee’s method of recording scrap in the year of sale was not appropriate and estimating scrap at 10% of total expenses of repair and maintenance was justifiable. b. That in the year under consideration the assessee, while admitting to the generation of scrap, failed to maintain and or furnish specific details, resulting in inevitable estimation at the assessment stage; c. That the quantum of scrap was estimated at 10% only in respect of those repairs which admittedly generated scrap and not the total expenses of repair and maintenance. d. That penalty for concealment and furnishing of inaccurate particulars is imposable where the addition is made on estimate basis due to failure of the assessee to maintain specific records. e. That penalty for concealment and furnishing of inaccurate particulars imposable in terms of Explanation 1 appended to section 271 of the Act.”
Brief facts of the case are as under: Assessee filed its return of income on 30/09/09 declaring income of Rs.6,44,30,629/-. Assessment was completed by Ld.AO under section 143 (3) of the Act by making certain additions. Against the assessment order assessee preferred appeal before Ld. CIT (A) who partly allowed relief on account of generation of sale of scrap. Assessing officer while deciding the penalty proceedings levied penalty by holding that assessee has furnished inaccurate particulars and concealed income.
Aggrieved by the order of Ld. AO in the penalty proceedings, assessee preferred an appeal before the Ld. CIT (A). Page 2 of 7 ITA 6174/Del/2015 A.Y. 2009-10 The Ganga Kisan Sahkari Chini Mills Ltd.
4. Ld. CIT (A) observed that the assessing officer made addition on account of generation of sale of scrap by taking the average rate of 10% on estimate basis. He therefore held that no penalty could be levied under section 271(1)(c) of the Act on an estimated addition. Ld. CIT (A) placed reliance upon the decision of Hon’ble Supreme Court in the case of CIT vs. Sangrrur Vanaspati Mills Ltd., Hon’ble Supreme Court dismissed the SLP of revenue in the case of CIT vs. Sangrrur Vanaspati Mills Ltd., and had upheld the decision of Hon’ble Punjab and Haryana High Court reported in (2008) 303 ITR 53 (P & H) wherein it has been held that in the case of addition based on estimate, penalty was not leviable.
Aggrieved by the order of Ld. CIT (A) the revenue is in appeal before us now.
Ld. DR placed his reliance upon the decision of Ld. AO. None has appeared on behalf of the assessee before us today.
We have perused the submissions advanced by Ld.D.R. in the light of the records placed before us. 6.1. From the factual observations narrated by Ld. CIT (A), it is clear that Ld. AO made addition by estimating generation of scrap at 10%, outside the books which was confirmed by his predecessor while deciding the case of assessee for assessment year 1991-92. It has been observed that the assessing officer for the year under consideration has also taken the generation of scrap at 10%. Ld. AO however ignored the submissions of the assessee that there may be certain items which could generate scrap more than 10% and there may be certain items in which nominal scrap generated. Thus Ld.
ITA 6174/Del/2015 A.Y. 2009-10 The Ganga Kisan Sahkari Chini Mills Ltd. CIT (A) observed that the entire addition is based on pure estimation without there being any evidence regarding the actual figures. 6.2. It is observed that Ld. CIT(A) placed reliance upon the ratio upheld by Hon’ble Supreme Court in the case of CIT vs. Sangrur Vanaspati Mills Ltd. (supra), where Hon’ble Court had upheld the ratio of Hon’ble Punjab and Haryana High Court, which held as under. “We have heard counsel for the appellant and have gone through the impugned order. The order passed by the ITAT is based upon two decisions of this Court in CIT vs. Ravail Singh and Co. (2002) 254 ITR 191 and Harigopal Singh vs. CIT(2002) 258 ITR 85. In both these decisions, this Court has held that in order to attract clause (c ) of section 271(1) of the Act, it is necessary that there must be concealment by the assessee of the particulars of his income or furnishing of inaccurate particulars of such income. The provisions of section 271(1)(c ) of the Act are not attracted to cases where the income of an assessee is assessed on estimate basis and additions are made therein. It was held that when the addition had been made on the basis of estimate and not on account of any concrete evidence of concealment, then the penalty was not leviable. The similar view was also taken by this Court in CIT vs. Dhillon Rice Mills (2002) 256 ITR 447, where the addition was made by the AO by estimating the yield of super phak as well as of chhika and also the price of chhika, that addition was reduced by the CIT(A). However, the penalty
ITA 6174/Del/2015 A.Y. 2009-10 The Ganga Kisan Sahkari Chini Mills Ltd. levied by the AO was deleted by CIT(A). The order of CIT(A) was confirmed by ITAT and the appeal filed by Revenue against the said order of ITAT was dismissed by this Court, on the ground that the AO had made additions on the basis of estimate of the yield of phak and chhika and an estimate of the price and that the estimate would not ipso facto lead to penalty. In view of the aforesaid factual and legal position, we are of the opinion that no substantial question of law is arising from the order passed by ITAT.” 6.3. Under such circumstances and based on the discussions above we do not find any reason to interfere with the decision of Ld. CIT (A), and the same is upheld. Accordingly the grounds raised by the revenue stand dismissed.
7. In the result appeal filed by the revenue stands dismissed. Order pronounced in the Open Court on 22nd November, 2017.
Sd/- Sd/- (R.S. SYAL) (BEENA A PILLAI) Vice President Judicial Member Dated: 22nd November, 2017.
ITA 6174/Del/2015 A.Y. 2009-10 The Ganga Kisan Sahkari Chini Mills Ltd.