HANDEE FOODS,BARODA vs. THE ACIT.,CIRCLE-3, BARODA

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ITA 2106/AHD/2014Status: DisposedITAT Ahmedabad30 October 2017AY 2005-065 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that a co-ordinate bench had set aside the quantum proceedings to the Assessing Officer for fresh adjudication. Following this, the Tribunal deleted the penalty levied against the assessee.

What were the facts?

The assessee firm engaged in the restaurant business incurred a net loss. The Assessing Officer made additions to the total income due to unexplained unsecured loans, incorrect GP ratio, disallowed depreciation, and unverified indirect expenses. Penalty proceedings under section 271(1)(c) were initiated.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the quantum addition is set aside for fresh adjudication. The assessee's contention that additional evidence was ignored by the CIT(A) was also a point of contention.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD

Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD

For Respondent: Shri Mudit Nagpal, Sr.D.R
Pronounced: 30/10/2017

आदेश / O R D E R

PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : This is an appeal by the assessee against the order of the Commissioner of Income Tax(Appeals)-II, Baroda, dated 21/03/2014 for the Assessment Year (AY) 2005-06, on the following Grounds: i. The Learned CIT (Appeals) erred in ignoring the additional evidences filed in respect of unsecured loans during the course of appellate proceedings against penalty levied u/s.271(1)(c).

ITA No.2106/Ahd/2014 Handee Foods vs. ACIT Asst.Year –2005-06 - 2 - ii. The Learned CIT (Appeals) erred in holding that the appellant firm could not prove that it had not furnished inaccurate particulars of income.

iii. The Learned CIT (Appeals) erred in confirming the penalty levied u/s.271 (l)(c) amounting to Rs.6,56,820/-. 2. The relevant facts as culled out from the materials on record are as under:- In this case, the assessee firm is engaged in the business of restaurant. During the year the assessee has net loss of Rs.8,26,213/-.

2.2 Learned AO stated that despite of the fact that notice was issued to the assessee but he did not co-operate, therefore, on the basis of material available on record, as per provision of section 68 of the Act Rs.16,66,800/- was added to the total income of the assessee.

2.3 The comparative gross profit for the year under consideration and preceding year under consideration is enumerated as under: A.Y. Sales Gross Profit GP ratio 2004-05 1497274 286096 19.10 2005-06 1378582 78715 05.70 AO was of the opinion that GP rate declared is not correct and accordingly, the most appropriate GP of 19% was adopted for the year under consideration. The difference of the GP adopted and declared by

ITA No.2106/Ahd/2014 Handee Foods vs. ACIT Asst.Year –2005-06 - 3 - the assessee i.e. Rs.1,83,215/- was added back to the total income of the assessee.

2.4 During the assessment year, assessee has made addition of assets by way of purchase of utensils to the tune of Rs.61,542/-. However, the assessee has not produced anything on record to justify the claim of depreciation on said addition in asset. Accordingly, the depreciation claimed on said addition in asset to the tune of Rs.6,154/- is disallowed and added back to the total income of the assessee.

2.5 As compared to the preceding year, the assessee has shown increase in indirect expenses to the tune of Rs. 1.22 lacs. As the assessee has not brought anything on record except the confirmation of unsecured loans, the expenses are not verifiable. The assessee has not furnished any contra account from the depositors confirming the amount of interest paid nor the depreciation chart has been furnished along with return of income or with the submissions. Accordingly, as the expenses debited as indirect expense are not verifiable, the increase shown to the extent of Rs.1.22 lacs as compared to preceding year is disallowed.

2.6 Finally disallowance of Rs.19,78,169/- were made against the assessee.

ITA No.2106/Ahd/2014 Handee Foods vs. ACIT Asst.Year –2005-06 - 4 - 2.7 Penalty proceedings u/s.271(1)(c) of Act were initiated and same was confirmed by the learned CIT(A).

3.

We have gone through the relevant record and impugned order. Learned AR cited an ITAT, Ahmedabad order copy in ITA No.1582/Ahd/2011 for asst. year 2005-06 vide order dtd.06/01/2016, in this case, in quantum proceedings co-ordinate bench has set aside the matter to the file of the assessing officer for fresh adjudication and appeal of the assessee was allowed.

4.

In view of the ITAT order, in quantum proceedings, we delete the penalty against the assessee and allowed the assessee’s appeal.

5.

In the result, appeal filed by the assessee is allowed. This Order pronounced in Open Court on 30/10/2017

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ITA No.2106/Ahd/2014 Handee Foods vs. ACIT Asst.Year –2005-06 - 5 -

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-II, Baroda. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad True Copy 1. Date of dictation 09/10/2017 (dictation-pad 3 pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …10/10/2017 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S……. 7. Date on which the file goes to the Bench Clerk………………… 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………

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