Aggarwal Engineering Co v. The Income Tax Officer-Iv

ITA No. 904 of 2008 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Aggarwal Engineering Co. Versus The Income Tax Officer-IV ITA No. 904 of 2008 Date of Decision: 6.12.2010 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. K.L. Goyal, Senior Advocate with Mr. Sandeep Goyal, Advocate for the appellant.Mr. Sandeep Goyal, Advocate for the appellant. Mr. Vivek Sethi, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This order shall dispose of ITA Nos. 904 and 948 of 2008as common questions of law and facts are involved therein. For brevity,the facts are being extracted from ITA No. 904 of 2008. 2.This appeal has been filed by the assessee under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 25.4.2008 passed by the Income Tax Appellate Tribunal, AmritsarBench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No.437(ASR)/2006 for the assessment year 1995-96 raising followingsubstantial questions of law:- i)Whether on the facts and circumstances of the case,the Ld. ITAT is justified to ignore the fact that nothe Ld. ITAT is justified to ignore the fact that no proper satisfaction has been recorded by AssessingOfficer to initiate proceedings of penalty andtherefore as held by different courts, no validproceedings of penalty were ever initiated? ii) Whether, on the facts and circumstances of the case,the Ld. ITAT is justified to reverse the well-reasonedorder passed by the CIT, cancelling the penaltyimposed u/s 271(1)(c) of Assessing Officer on theground that income has been assessed by AssessingOfficer on estimate basis and there is no mens reaon the part of assessee? iii) Whether on the facts and circumstances of the case,the penalty imposed by Assessing Officer as upheldby the Tribunal is liable to be set aside taking intoconsideration the final decision in the matter relatingto assessment of the case by this Hon'ble Court? 3.Put shortly the facts for adjudication as narrated in theappeal are that the assessee is a partnership firm doing the business ofcivil construction and filed its return for the assessment year 1995-96 on10.1.1997 declaring an income of Rs.47,040/-. The assessee's returnwas taken up for scrutiny and during the assessment proceedings, theassessee filed revised return on 5.5.1997 declaring total income atRs.4,01,940/-. Thereafter, the assessee on 26.6.1997 filed anotherrevised return declaring the income at Rs.3,57,295/- by calculating theprofit at a flat net profit rate of 6% on the gross receipts ofRs.71,54,922/-. The Assessing Officer finally assessed the income of 3.Put shortly the facts for adjudication as narrated in theappeal are that the assessee is a partnership firm doing the business ofcivil construction and filed its return for the assessment year 1995-96 on10.1.1997 declaring an income of Rs.47,040/-. The assessee's returnwas taken up for scrutiny and during the assessment proceedings, theassessee filed revised return on 5.5.1997 declaring total income atRs.4,01,940/-. Thereafter, the assessee on 26.6.1997 filed anotherrevised return declaring the income at Rs.3,57,295/- by calculating theprofit at a flat net profit rate of 6% on the gross receipts ofRs.71,54,922/-. The Assessing Officer finally assessed the income of the assessee at Rs.4,61,846/- on 26.2.1999. Subsequently, theCommissioner of Income Tax, Jalandhar exercising the powers ofrevision, cancelled the assessment order and directed the AssessingOfficer to make fresh assessment in accordance with law. TheAssessing Officer framed the assessment rejecting the books ofaccounts by applying 10% net profit rate on the gross receipts and onthe total receipts of Rs.71,54,922/-, the net profit was assessed atRs.7,15,492/-. Certain other additions were also made on account ofunexplained credits etc. and the assessment was made atRs.21,30,220/- on 28.2.2002. Feeling aggrieved, the assessee filed anappeal before the Commissioner of Income Tax (Appeals) [in short “theCIT(A)”] who vide order dated 26.2.2003 while deleting all the additions,enhanced the net profit rate to 13% by increasing net income byRs.2,14,647/-. Against the order of the CIT(A), the revenue as well asthe assessee filed appeals before the Tribunal who vide order22.8.2005 dismissed the same. Thereafter, the Assessing Officer videorder dated 29.3.2006 imposed a penalty of Rs.3,47,056/- underSection 271(1)(c) of the Act and the appeal of the assessee against thesaid order was allowed by the Ist appellate authority vide order dated21.9.2006. On appeal of the department, the Tribunal vide order dated25.4.2008 while allowing the appeal restored the order of the AssessingOfficer. Hence, the present appeal by the assessee. 4.We have heard learned counsel for the parties.5.Since the order of quantum has been set aside by thisCourt vide order of even date passed in ITA No. 478 of 2006(Aggarwal Engineering Co. v. Assistant Commissioner of Income ITA No. 904 of 2008 -4- Tax), these appeals are disposed of accordingly and the matter isremanded to the CIT(A) to adjudicate the same afresh after decision ofthe appeals in the assessment case in accordance with law. 6.The parties through their counsel are directed to appearbefore the CIT(A) on 14.2.2011 for further proceedings in accordancewith law. (AJAY KUMAR MITTAL) JUDGE December 6, 2010gbs (ADARSH KUMAR GOEL)JUDGE ITA No. 904 of 2008 -5- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 948 of 2008 Date of Decision: 6.12.2010 Aggarwal Engineering Co. ....Appellant. Versus The Assistant Commissioner of Income Tax ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. K.L. Goyal, Senior Advocate with Mr. Sandeep Goyal, Advocate for the appellant. Mr. Vivek Sethi, Advocate for the respondent. AJAY KUMAR MITTAL, J. The appeal is disposed of in terms of the order of even datepassed in ITA No. 904 of 2008 (Aggarwal Engineering Co. v. the Income Tax Officer-IV). (AJAY KUMAR MITTAL) JUDGE December 6, 2010gbs (ADARSH KUMAR GOEL)JUDGE