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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI JAMLAPPA D BATTULL
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the CIT (Appeals), Bilaspur, dated 30.08.2016, which in turn arises from the order passed by the A.O under Sec 271(1)(c) of the Income-tax Act, 1961 ( in short ‘the Act’) dated 27.03.2014 for assessment year 2006-07. Before us the assessee has assailed the impugned order on the following grounds of appeal :
“1. That on the facts and circumstancdes of the case, the Ld. CIT(A) was highly unjustified erred by confirming the imposition of the alleged peanlty, imposed mechanicalluy without exercising the discretion vested by the statue judiciously is unsustainable on facts in law, submissions made, hence, the same be cancelled and justice rendered.
That the penalty order is bad in law deserves to be cancelled.
3. That the appellant humbly craves leave to add, urge, after modify the grounds before or at the time of hearing.”
Succinctly stated, the assessee who is engaged in the business of 2. manufacturing and trading of aluminum utensils had filed his return of income for the assessment year 2006-07, declaring an income of Rs.9,24,470/-. Subsequently, the case of the assessee was selected for Ramesh lal Makhija Vs. ACIT 3 /RPR/2017 scrutiny assessment u/s.143(2) of the Act. During the course of assessment proceedings, it was observed by the Assessing Officer that survey u/s.133A of the Act was conducted at the business premises of the assessee on 06.03.2006. It was observed by him that during the course of the survey proceedings excess cash and excess stock of Rs.2,05,630/- and Rs.6,04,532/-, respectively, was found, which thereafter was offered by the assessee as his income in the Profit & loss account for the year under consideration. On a perusal of the financial results of the assessee, it was observed by the Assessing Officer that the gross profit percentage of the assessee had witnessed a fall at 29.10% during the year under consideration, as against 31.91% that was reflected in the immediately preceding year. On being queried as regards the aforesaid decline in the gross profit percentage, it was claimed by the assessee that the same had occasioned due to lower profits that had resulted due to higher turnover. However, the Assessing Officer was not persuaded to subscribe to the aforesaid explanation of the assessee. Observing that the purchases of the assesee could not be verified in the absence of Ramesh lal Makhija Vs. ACIT 4 /RPR/2017 supporting bills, as well as complete books of account, bills and vouchers etc. were not produced for verification by him during the course of assessment proceedings, the Assessing Officer was not inspired as regards the authenticity of the books results of the assessee. Also, it was observed by him, that in the course of the survey proceedings it had transpired that all the transactions were not recorded by the assessee in his books of accounts. Backed by his aforesaid observations, the Assessing Officer rejected the books of account of the assessee u/s 145(3) of the Act and estimated the gross profit by adopting that as was shown by the assessee in the immediately preceding year, i.e, 32%. Accordingly, the Assessing Officer made an addition of Rs.1,04,748/- by estimating the gross profit of the assessee at 32% and vide his order passed u/s.143(3), dated 27.11.2008 assessed his income at Rs.10,76,720/-. The Assessing Officer while culminating the assessment also initiated penalty proceedings u/s 271(1)(c) of the Act.
After the culmination of the assessment proceedings, the Assessing Officer called upon the assessee to show cause as to why
Ramesh lal Makhija Vs. ACIT 5 /RPR/2017 penalty may not be imposed on him. As the assessee failed to come forth with any explanation, therefore, the Assessing Officer vide his order u/s 271(1)(c) of the Act, dated 27.03.2014 imposed a penalty of Rs.74,436/-.
Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success.
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. As the assessee appellant despite having been intimated about the hearing of appeal had failed to put up an appearance before us, therefore, we are constrained to proceed with and disposed off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963, i.e, after hearing the respondent revenue and perusing the orders of the lower authorities.
As observed by us hereinabove, the addition of Rs.1,04,748/- (supra) was made by the Assessing Officer, for the reason, that having rejected the books of account of the assessee u/s.145(3) of the Act, he had therein estimated the gross profit rate of the assessee at 32%, i.e,
Ramesh lal Makhija Vs. ACIT 6 /RPR/2017 the gross profit rate that was reflected by the assessee in the immediately preceding year. In our considered view, the rejection of books of account of the assessee u/s.145(3) of the Act though triggers the process of estimation of the income of the assessee on a justifiable basis, but the same on a standalone basis cannot form a basis for saddling the assessee with penalty u/s 271(1)(c) of the Act, which we may herein observe is nothing short of a quasi criminal proceeding. In our considered view, a mere addition to the returned income of an assessee, which in itself is backed by a mere process of estimation cannot justify imposition of penalty u/s 271(1)(c) on the basis of such standalone simpliciter addition. Apart from that, we find that the Assessing Officer both while initiating the penalty proceedings in the assessment order, as well as while imposing the same vide his order u/s.271(1)(c) of the Act, dated 27.03.2014 had failed to specify the default for which the same was being imposed.Also, we may herein observe, that the Assessing Officer had neither in the course of assessment proceedings specified the default for which the impugned penalty proceedings had been initiated in the hands of the assessee
Ramesh lal Makhija Vs. ACIT 7 /RPR/2017 nor had clearly pointed out the same while imposing the penalty vide his order passed u/s.271(1)(c) of the Act. In so far the assessment order passed u/s.143(3) of the Act dated 27.11.2008 is concerned, we find that the A.O had merely stated that penalty proceedings u/s 271(1)(c) of the Act are being separately initiated. Coming to the order passed by the Assessing Officer u/s 271(1)(c) of the Act, we find that while imposing the penalty, he had stated that the assessee had concealed his income and furnished inaccurate particulars of income. In our considered view, there is a clear absence of mentioning of the specific default for which the impugned penalty proceedings was initiated, and also, thereafter, as to for which default the same had been imposed.
We, thus, in the backdrop of our aforesaid deliberations, not being able to persuade ourselves to subscribe to the imposition of penalty by the A.O, therefore, set-aside the order of the CIT(A) who had upheld the same. The penalty of Rs.74,436/- imposed by the A.O under Sec. 271(1)(c) is quashed in terms of our aforesaid observations.
Ramesh lal Makhija Vs. ACIT 8 /RPR/2017
In the result, appeal of the assessee is allowed in terms of our aforesaid observations.
Order pronounced in the open court on 30th day of March 2022.
Sd/- Sd/- JAMLAPPA D BATTULL RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 30th March, 2022 SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
1. 1. अपीलाथ� / The Appellant. 2. ��यथ� / The Respondent.
3. The CIT (Appeals), Bilaspur (C.G) 4. The CIT, Raipur (C.G) 5.�वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण,रायपुरब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // �नजी स�चव / Private Secretary आयकरअपील�यअ�धकरण, रायपुर / ITAT, Raipur.
Ramesh lal Makhija Vs. ACIT 9 /RPR/2017
Date 1 Draft dictated on 09.03.2022 Sr.PS/PS 2 Draft placed before author 09.03.2022 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order