Mayank Electronics Co.,, Anand vs Assessee

सुनवाई क तार ख/Date o f Hearing : 22/05/2015 घोषणा क तार ख /Date o f Prono unceme nt: 12/06/2015

आदेश /O R D E R

PER S.S. GODARA, JUDICIAL MEMBER

This assessee's appeal for A.Y.2001-02, arises from order of CIT(A)-IV, Baroda dated 5.12.2011 passed in case no.CAB/IV-A-112/09-10 upholding penalty of Rs.3 lacs in proceedings under section 271(1)(c) of the Income Tax Act, in short 'the Act'.

2. The assessee's authorized representative has filed an adjournment petition dated 18.5.2015. However, there is nobody to pursue the same in the course of hearing. In these ITA No.315/Ahd/2012 M/s. Mayank Electronics Co.

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circumstances, we reject this prayer and proceed to decide the case on merits.

3. The assessee-firm is a wholesale dealer in mirrors and other glasses. It filed its return on 22.10.2001 admitting income of Rs.3,39,700/-. The Assessing Officer took up scrutiny. He noticed the assessee to have shown G.P. @5.88% on sales of Rs.2,83,27,467/- as against the same declared @11.41% on turnover of Rs.2,05,76,588/- in the preceding assessment year. The assessee attributed the same to severe damage and breakage of its glass stock to a major earthquake on 26.1.2001. It also pleaded to have claimed insurance which was later on withdrawn for want of disparities. The Assessing Officer took a serious notice of this withdrawal and lack of tallying between month-wise and audited sales and purchase, conducted thorough inquiries with all concerned for rejecting assessee's books claiming breakage and damage of its glass stock. He framed assessment vide order dated 29.3.2004 adopting gross profit rate from 1.4.2000 to 25.1.2001 to be @16.39% and from 26.1.2001 to 31.3.2001 as that @5.88%. He proceeded to finalize the former gross profit rate for whole of the relevant previous year resulting in addition of Rs.29,78,320/-. Penalty proceedings also stood initiated against the assessee alleging concealment and furnishing of inaccurate particulars of income.

ITA No.315/Ahd/2012 M/s. Mayank Electronics Co.

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4. The assessee preferred an appeal. The CIT(A) in his order dated 3.1.2005 adopted telescoping and sustained addition of Rs.15,13,225/- only. The matter came to the tribunal. The assessee appears to have aggrieved to 50% of the amount sustained in the lower appellate proceedings. This reduced the gross profit addition to Rs.7,56,613/-. The quantum proceedings attained finality at this stage.

5. The Assessing Officer took up penalty proceedings. He inter alia observed in penalty order dated 18.11.2009 that the assessee could not produce substantive evidence of glass stock damage and breakage, its claim suffered from discrepancies and was not based on sufficient evidence etc. He treated the present case giving rise to the gross profit addition in question as a case of furnishing of inaccurate particulars of income u/s.271(1)(c) of the Act. The impugned penalty stood imposed accordingly. The CIT(A) has also confirmed the same. This leaves the assessee aggrieved.

6. We have heard the Revenue and gone through the case file. Relevant facts of the case stand narrated hereinabove. The impugned penalty has arisen from an estimated gross profit addition made after rejection of assessee's books claiming damage and breakage of its glass stocks due to a major earthquake in the year 2001. It has already come on record that ITA No.315/Ahd/2012 M/s. Mayank Electronics Co.

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the assessee has raised insurance claim as well which was withdrawn due to certain discrepancies. These facts indicate that assessee's claim was not a bogus one. At the best, it failed to substantiate the same by way of leading cogent evidence. The gross profit addition in question has finally come down to 8.5% upto the tribunal instead of 16.39% made in the course of assessment. The facts also remains that it is based on estimation only without any concrete evidence. We reiterate settled position of law that quantum and penalty proceedings stand on different footings and each and every addition does not lead to automatic imposition of penalty as held by the hon'ble apex court in the case of Reliance Petro Chemicals reported as 328 ITR 158. The Revenue fails to rebut this settled preposition. We accept the assessee's sole substantive ground in these circumstances and hold that the present is not a case falling within the four corners of section 271(1)(c) of the Act. The impugned penalty of Rs.3 lacs is deleted.

7. The assessee's appeal is allowed.

Order pronounced in the Court on this day, the 12th June, 2015 at Ahmedabad.

Sd/- Sd/- (G.D. AGRAWAL) (S.S. GODARA) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 12/06/2015 ITA No.315/Ahd/2012 M/s. Mayank Electronics Co. For A.Y. 2001-02 -5- Prabhat Kr. Kesarwani, Sr. P.S. 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)-III, Ahmedabad

5. वभागीय त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आदेशानुस ार / BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad