M/S Kumar Builders, Kotakpura, Faridkot v. Commissioner Of Income Tax, Ludhiana

ITA No. 166 of 2014 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 166 of 2014 Date of Decision: 8.9.2015 M/s Kumar Builders, Kotakpura, Faridkot ....Appellant. Versus Commissioner of Income Tax, Ludhiana ...Respondent. 1.Whether the Reporters of the local papers may be allowed to see the judgment?the judgment? 2.To be referred to the Reporters or not? Yes 3.Whether the judgment should be reported in the Digest? CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE RAMENDRA JAIN. PRESENT: Mr. S.K. Mukhi, Advocate for the appellant. Mr. Rajesh Katoch, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This appeal has been filed by the assessee under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 25.9.2013 (Annexure A-4) passed by the Income Tax AppellateTribunal, Chandigarh Bench “A”, Chandigarh (hereinafter referred to as“the Tribunal”) in ITA No. 1357/Chd/2012, for the assessment year 2006- 07, claiming the following substantial questions of law:- i)Whether, on the facts and circumstances of the case, the Tribunal was justified in confirming thepenalty so levied by AO u/s 271(1)(c) of theIncome Tax Act, 1961 on account of wrongpenalty so levied by AO u/s 271(1)(c) of theIncome Tax Act, 1961 on account of wrong entry in account books due to non receipt ofproper and complete documents by assesseefirm and thereby booking under wrong heads bytreating the same as concealment? ii)Whether, on the facts and circumstances of thecase, the Tribunal was justified in confirming thepenalty so levied by the AO u/s 271(1)(c) of theIncome Tax Act, 1961 on account of wrongentry in account books ignoring the trite law assettled by Hon'ble Supreme Court of India in thecase of CIT v. Reliance Petro Products Pvt.Ltd. 322 ITR 158 (SC)? iii) Whether the order of the Tribunal is perverseand against the provisions of law? 2.Put shortly, the facts necessary for disposal of the presentappeal as mentioned therein are that the assessee is a firm engaged inthe business as Civil Contractor based at Ludhiana and filed its return ofincome on 31.10.2006 for the assessment year 2006-07 declaringtaxable income at ` 57,49,202/-. The assessee also filed revised returnwhere the returned income remained unchanged. The assesseeclaimed the credit of Tax Deducted at Source (TDS) at ` 2,66,292/-whereas the TDS certificates annexed with the return of income showedtotal receipts of ` 1,18,87,936/-. The Assessing Officer called for theinformation from the Executive Engineer, PWD, Sirhind and as per theinformation received, the total contract receipts were ` 1,40,42,320/-against which TDS of ` 3,14,551/- was deducted. The assessee was,thus, found to have suppressed the contract receipts to the extent of ` 21,54,387/-. Accordingly, the assessee was issued show cause noticeto explain the difference. The assessee filed reply by pleading that thedifference of ` 20,52,268/- be added to the gross receipts on which GPrate be applied. The plea of the assessee before the Assessing Officerwas that the said mistake had taken place due to non-receipt of FormNo.16-A. Thereafter, the assessee vide letter dated 24.11.2008surrendered a sum of ` 2,15,439/- as income on gross receipts of` 21,54,387/-. Another communication dated 8.12.2008 was submittedby the assessee that due to bonafide mistake, ` 10 lacs was credited tothe security account while for the balance amount, profit @ 5.36% wasoffered for taxation. The case of the assessee was referred underSection 142(2A) of the Act for special audit by the Assessing Officer andmade an addition of ` 21,54,387/- on account of suppression of receiptsfrom PWD, Sirhind vide assessment order dated 28.5.2009 (AnnexureA-1). Another addition was made by the Assessing Officer by rejectingthe books of account and income of the assessee was estimated @ 12%on total turnover of ` 9,59,16,586/-. The addition made on account ofsuppression of receipts was telescoped with the total addition madewhile estimating the net profit @ 12%. The penalty proceedings werealso initiated and penalty of ` 17,32,335/- was imposed upon theassessee vide order dated 27.1.2011 (Annexure A-2) on the totalassessed income. Feeling aggrieved, the assessee filed an appealbefore the Commissioner of Income Tax (Appeals) [hereinafter referredto as “the CIT(A)”]. The CIT(A) vide order dated 31.10.2012 (AnnexureA-3) deleted the penalty on account of addition made on estimate basisbut confirmed the addition made on account of suppression of receiptsto the extent of ` 21,54,387/-. Being dissatisfied, the revenue as well as the assessee filed appeals before the Tribunal. The revenue filed appealagainst the deletion of penalty by the CIT(A) which was on account ofconcealed income in pursuance to estimation of profits whereas theassessee filed the appeal against penalty sustained by the CIT(A) onsuppression of receipts to the tune of ` 21,54,387/-. The Tribunal videorder dated 25.9.2013 (Annexure A-4) dismissed both the appeals.Hence, the present appeal by the assessee. 3.Learned counsel for the assessee submitted that there wasno concealment of income. Relying upon the judgment of the ApexCourt in Commissioner of Income Tax v. Reliance Petro ProductsPvt. Ltd. (2010) 322 ITR 158 (SC) and of the Bombay High Court inCommissioner of Income-Tax v. Ms. Sania Mirza, ITA No. 526 of 2011decided on 9.2.2012, it was submitted that the penalty imposed wasunsustainable. In fact the assessee had never claimed any benefitunder TDS certificate as it had not been issued till the time of filing of thereturn. The finding recorded by the Assessing Officer, confirmed by theCIT(A) as well as the Tribunal for levy of penalty are against the record. 4.On the other hand, learned counsel for the revenuesupported the order passed by the Tribunal. 5.After hearing learned counsel for the parties, we do not findany merit in the appeal. The assessee is a contractor carrying oncontracts of various government bodies. The assessee had shortdeclared contract receipts from the civil work undertaken by it by` 21,54,387/-. Some part of the said amount was declared in the securityamount by the assessee but not as part of the taxable receipts fromPWD, Sirhind. Thus, the assessee had suppressed its contract receiptson which tax was also deducted at source by the said concern. The Assessing Officer, the CIT(A) and the Tribunal maintained levy of penaltyunder Section 271(1)(c) of the Act on that account. The Tribunal hadrecorded that the assessee having under declared its receipt is exigibleto levy of penalty under Section 271(1)(c) of the Act. The relevantfindings recorded by the Tribunal read as under:- Assessing Officer, the CIT(A) and the Tribunal maintained levy of penaltyunder Section 271(1)(c) of the Act on that account. The Tribunal hadrecorded that the assessee having under declared its receipt is exigibleto levy of penalty under Section 271(1)(c) of the Act. The relevantfindings recorded by the Tribunal read as under:- “19.The other addition on which penalty underSection 271(1)(c) of the Act was levied, was underdeclaration of the receipts by the assessee. Theassessee is a Contractor and during the year underconsideration, had undertaken contracts of variousgovernment bodies. The assessee had declaredcontract receipts from the civil work undertaken by theassessee. However, receipts totalling Rs.21,54,387/-were not declared and some part was declared in thesecurity account by the assessee but were notdeclared as part of the receipts from PWD, Sirhind.When information was called from the PWD, Sirhind,the Assessing Officer found the assessee to havesuppressed its contract receipts on which tax wasalso deducted at source by the said concern. Thecase of the assessee, however was that it had notreceived the said TDS certificates from the saiddepartment and, hence the confusion and under-declaration of the receipts by the assessee. We findno merit in the stand of the assessee in this regardand it is a fit case of levy of penalty for furnishing inaccurate particulars of income. The assessee having under declared its receipts is exigible to levy ofpenalty under section 271(1)(c) of the Act.Accordingly, we uphold the order of the CIT(Appeals)in this regard and confirm the levy of penalty onsuppressed receipts to the extent of Rs.21,54,387/-.Upholding the order of CIT(Appeals), we dismiss theground of appeal raised by the assessee.” 6.Adverting to the judgments in Reliance Petro Prodcuts Pvt. Ltd. and Ms. Sania Mirza's cases (supra) relied upon by thelearned counsel for the appellant, it may be noticed that the principle oflaw enunciated therein, is well recognized, but in view of the concurrentfindings of concealment of income recorded by the Assessing Officer, theCIT(A) and the Tribunal as noticed hereinbefore, no benefit can bederived by the assessee from the aforesaid pronouncements. 7.In view of the above, no question of law muchless asubstantial question of law arises in this appeal. Accordingly, finding nomerit in the appeal, the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE September 8, 2015gbs (RAMENDRA JAIN) JUDGE