IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : D : NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SMT. DIVA SINGH, JUDICIAL MEMBER
ITA No.3925/Del/2011
Assessment Year : 2006-07
Lukesh Singh, Vs. Addl. CIT,
39, Khanna Nagar, Haridwar Range,
Jwalapur, Haridwar.
Haridwar.
PAN : AWOPS9824L
(Appellant) (Respondent)
Assessee by : Shri Ashwani Taneja, Advocate and
Shri Somil Agarwal, CA
Revenue by : Ms Shumana Sen, DR
ORDER
PER DIVA SINGH, JUDICIAL MEMBER
This is an appeal filed by the assessee against the order dated
18.7.2011 of CIT (A), Dehradun, pertaining to 2006-07 Assessment
Year on the following grounds:-
" That having regard to the facts and circumstances o the
case, Ld. CIT (A)-I has erred in law and on facts in confirming the
penalty u/s 271(1)(c) imposed by the ld. A.O. of Rs.3,91,407/-."
2. The relevant facts of the case are that the assessee declared an
income of ` 23,86,095/- wherein the Assessing Officer required him to
produce the supporting vouchers for the expenses claimed after giving
a few opportunities. Finally, on 27.11.2008, the ld. counsel of the
assessee expressed his inability to produce the bills and agreed to
offer the income from the civil contract at 8% of the gross receipt in
2 ITA No.3925/Del/2010
the absence of evidence. As such, the total income was computed at `
35,48,918/- and penalty proceedings were initiated. The said addition
was accepted by the assessee and as no appeal was filed against the
said addition, however, the penalty proceedings were contested by the
assessee before the Assessing Officer and the CIT (A), who upheld the
action of the Assessing Officer in upholding the penalty imposed.
Aggrieved by this, the assessee is in appeal before the Tribunal.
3. The Ld. AR, inviting attention to the assessment order,
contended that a perusal of the assessment order would show that the
assessee in the year under consideration, was the owner of three
firms, namely, Creative Constructions, Shree Raj Enterprises and S.K.
Enterprises. M/s Creative Constructions, it was submitted, is engaged
in civil construction work and M/s Shree Raj Enterprises and M/s S.K.
Enterprises were engaged in labour supply work as per the assessment
order and the assessee had shown in the income and expenditure
account of M/s Creative Enterprises net income of ` 20,15,576/- out of
the gross receipts of ` 3,97,30,000/-. Inviting attention to the
assessment order, it was further emphasized that on examination of
the accounts submitted, it was found that the bills in regard to the
expenses claimed of raw material consumed were found to be not
supported completely by bills and vouchers and since the assessee
expressed his inability to produce the bills, the assessee agreed to
offer the income from civil contract at 8% of the gross receipts. The
Ld. AR, emphasizing the fact that the assessee was engaged in civil
construction work wherein certain bills were raised for purchase of
`bajri', `'Reta' (sand) and `miti' (loose soil). As such, looking at the
nature of purchases, which were from the unorganised sector, the bills
necessarily either would be hand made or at times were self made as
on account of dealing with illiterate and unorganized sector, necessary
bills were not issued by the small parties who supplied some of their
3 ITA No.3925/Del/2010
raw materials on account of this reason in order to buy peace of mind
and avoid litigation the assessee agreed to offer 8% of the gross
receipts. However, this fact, it was argued, would not amount to either
concealment or of filing of inaccurate particulars. It was his argument
that there are a plethora of judgements which lay down the proposition
that agreed additions would not attract penalty proceedings. It was
also his argument that penalty proceedings and assessment
proceedings are separate and distinct and simply because the
assessee did not contest the addition in the quantum proceedings, as
he had agreed to offer the same, it does not mean that automatically
penalty is justified. It was also his contention that the gross receipts of
the assessee had not been interfered with and it is only on account of
the nature of the work of the assessee that expenses claimed were
disallowed resorting to estimation of income. It was his stand that in
the case of estimated additions, penal provisions are not attracted as
no concealment or filing of inaccurate particulars can be made out.
Reliance was placed upon:
(i) Sahyog Sahkari Shram Samveda Samiti Ltd. vs. ACIT , 111
TTJ 540 (Luck).
(ii) Ripudaman Singal vs. ITO, 55 TTJ 396 (Chd.)
(iii) CIT vs. Sidhartha Enterprises, 322 ITR 80 (P&H)
4. Reliance was also placed upon National Textiles vs. CIT 249 ITR
125 (Guj). Specific attention was invited to the judgement of the
Hon'ble Mumbai High Court in the case of CIT vs. Upendra V. Mithani
rendered on 5th August, 2009 in ITA (L) No.1860 of 2009 for the
proposition that if the assessee gives an explanation which is
unproved, but not disproved i.e., it is not accepted, the circumstances
do not lead to the reasonable and positive inference that the
assessee's case is false, then, in such an eventuality, the view taken
by the Tribunal that the penalty proceedings are not attracted is a
4 ITA No.3925/Del/2010
reasonable and possible view. Accordingly, it was his prayer that the
impugned order be set aside and the penalty order be quashed.
5. The ld. Sr. DR, Ms Shumana Sen inviting specific attention to the
assessment order, contended that three different and distinct
opportunities were given by the Assessing Officer, namely, on
11.11.2008, 18.11.2008 and on 25.11.2008 and on each of these
occasions the assessee could not produce the supporting bills. As
such, the Assessing Officer had no alternative, but to estimate the
addition which, as per facts has been agreed to by the assessee as no
appeal has been filed. Inviting attention to the penalty order, it was
the submission that neither in the penalty proceedings before the
Assessing Officer or the CIT (A) the assessee could file original bills and
nor have they been filed before the Tribunal. The books of the
assessee have been rejected, as such, the CIT (A) was fully justified in
holding that Explanation 1 to Section 271(1)(c) was attracted.
Accordingly, it was her contention that the impugned order deserves to
be upheld.
6. The Ld. AR, in reply, contended that it is a settled principle that
penalty is not automatically attracted and penalty proceedings and
assessment proceedings are separate and distinct. In the peculiar
facts of the case, it was argued that the revenue has not demonstrated
that there was concealment or filing of inaccurate particulars and in
terms of the principle laid down by the Hon'ble Gujarat High Court, in
National Textiles vs. CIT 249 ITR 125 (supra), it was his contention that
falsity has to be proved and it cannot be presumed that the version of
the assessee is false which view is supported by the judgement of the
Hon'ble Karnataka High Court in CIT vs. M.M. Gujamgadi 290 ITR 168
(Kar.), (copy placed at pages 90 93 of the paper book) and the
judgement of Hon'ble Supreme Court in CIT vs. Suresh Chand Mittal
251 ITR 9 (SC).
5 ITA No.3925/Del/2010
7. We have heard rival submissions and perused the material
available on record. On a careful consideration of the same, looking at
the nature of the business of the assessee and taking note of the
findings in the assessment order, which specifically records that the
assessee, on account of his inability to produce the bills, agreed to
offer the income from civil contract at 8% of the gross receipts in the
absence of evidence, juxtaposed with the contention that the nature of
the assessee's business necessarily had bills and vouchers which were
from the unorganized sector pertaining to the `bajri', sand, `miti', etc.,
which, as per the assessment order, is borne out as the assessee has
been required to support by way of vouchers of the raw material
consumed. The explanation of want of supporting evidence in the
peculiar facts and circumstances of the case can be accepted as
necessarily the bills and vouchers in support of the raw materials like
sand, `reti', `bajra', etc. may not be upto the satisfaction of the
Assessing Officer. The facts remains that the gross receipts have not
been interfered with. Thus, looking at the overall factual matrix and
the explanations of the assessee qua the issue involved, we are of the
view that the impugned order deserves to be set aside and the penalty
order needs to be quashed.
8. In the result, the appeal filed by the assessee is allowed.
The order pronounced in the open court on 05.02.2013.
Sd/- Sd/-
[G.D. AGRAWAL] [DIVA SINGH]
VICE PRESIDENT JUDICIAL MEMBER
Dated, 05.02.2013.
dk
6 ITA No.3925/Del/2010
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order,
Deputy Registrar,
ITAT, Delhi Benches
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