Shivganga Builders Pvt. Ltd., Ahmedabad V. The Dy.CIT.,(OSD),Circle-8, Ahmedabad

CO 158/AHD/2010

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9228 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-11-2013
• Assessment Year: misc
• Appeal Filed On: 30-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: P M MEHTA
• Keywords: Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , , , , BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND .., !' # # # # SHRI T.R. MEENA, ACCOUNTANT MEMBER $%.. , &' ( & ' ) & ' ) & ' ) & ' ) IT(SS)A NO. 313/AHD/2010 BLOCK YEAR :01/04/1995 TO 12/07/2001 D.C.I.T.(OSD), CIRCLE-8, AHMEDABAD V/S . SHIVGANGA BUILDERS PVT. LTD. 4, SEARS TOWERS, GULBAI TEKRA, AHMEDABAD. PAN NO. A ABCS6714K (APPELLANT) .. (RESPONDENT) C.O. NO. 158/AHD/2010 BLOCK YEAR :01/04/1995 TO 12/07/2001 SHIVGANGA BUILDERS PVT. LTD. 4, SEARS TOWERS, GULBAI TEKRA, AHMEDABAD. V/S . D.C.I.T.(OSD), CIRCLE-8, AHMEDABAD (APPELLANT) .. (RESPONDENT) ( * + & BY REVENUE SHRI O. P. BATHEJA, SR. D.R. & * + & /BY ASSESSEE SHRI P. M. MEHTA, A.R. , * -%' /DATE OF HEARING 11.11.2013 ./0 * -%' /DATE OF PRONOUNCEMENT 17.01.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL AT THE BEHEST OF REVENUE AND C.O. AT TH E BEHEST OF ASSESSEE FILED, WHICH HAVE EMANATED FROM THE ORDERS OF CIT(A)-XIV, AHMEDABAD, DATED 27.01.2010 FOR BLOCK YEAR 01/04/19 95 TO 12/07/2001, PENALTY U/S. 158BFA. BOTH WERE HEARD T OGETHER AND ARE IT(SS)A NO. 313/AHD/2010 & C.O. NO. 158/AHD/2010 FOR BLOCK YEAR :01/04/1995 TO 12/07/2001 PAGE 2 BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. THE SOLE GROUND OF REVENUES APPEAL IS AGAINST DELE TING THE PENALTY OF RS.21,42,000/- LEVIED U/S.158BFA(2) R.W.S. 158BF(3) OF THE ACT AND ASSESSEES C.O. IS IN SUPPORT OF THE ORDER OF THE C IT(A). 2. THE A.O. OBSERVED THAT THERE WAS SEARCH AND SEIZ URE OPERATION U/S. 132 IN GROUP CASE ON 12.07.2001. NOTICE FOR CALLIN G OF RETURN FOR THE BLOCK PERIOD WAS SERVED ON 07.01.2002 AND RETURN WAS FILE D ON 01.05.2003 SHOWING UNDISCLOSED INCOME OF RS.35 LACS. AFTER SCRUTINY O F THE VARIOUS SEIZED MATERIAL, THE ASSESSING OFFICER DETERMINED UNDISCLO SED INCOME AT RS.6,82,73,038/- AND INITIATED PENALTY PROCEEDING U /S.158BFA(2) OF THE IT ACT. AGAINST ASSESSMENT ORDER, THE ASSESSEE FILED AN APP EAL BEFORE THE LD. CIT(A). THE LD. CIT(A) VIDE HIS ORDER DATED 23.03.2004 REST RICTED THE ADDITION ON UNDISCLOSED INCOME OF RS.81,57,717/-. THE REVENUE AS WELL AS ASSESSEE FILED APPEAL AGAINST THE ORDER OF THE CIT(A) BEFORE THE HONBLE ITAT AND HONBLE ITAT HAS RESTRICTED UNDISCLOSED INCOME AT R S. 10 LACS. THE FINDING OF THE HONBLE ITAT IS AS UNDER: 5. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF T HE TRIBUNAL, WE DISMISS THE GROUND TAKEN BY THE REVENUE AND ALSO PA RTLY ALLOW THE GROUND OF THE ASSESSEE BY HOLDING THAT THE SHARES OF THE A SSESSEE BE TAKEN TO BE 70% OF THE PROFIT OF THE PROJECT. THE CIT(A) HAS C ONFIRMED THE PROFIT IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF RS.40,67,717 /- BEING 70% OF RS.58,01,124/-. SINCE THE CLOSING STOCK WILL GET R EDUCED IN VIEW OF OUR FINDING GIVEN UNDER PARA-7 OF THAT ORDER BY RS.45,4 0,000/-, THE PROFIT OF THE PROJECT WILL GET REDUCED TO RS.12,61,124/-, THE ASS ESSEES SHARE BEING 70% WILL COME TO RS.8,82,787/- AND ACCORDINGLY THE ADDITION OF RS.40,67,717 WILL GET REDUCED TO RS.8,82,787/-. IN CASE THE AO FINDS THAT IT(SS)A NO. 313/AHD/2010 & C.O. NO. 158/AHD/2010 FOR BLOCK YEAR :01/04/1995 TO 12/07/2001 PAGE 3 THE ASSESSEE HAS DISCLOSED THE INCOME MUCH MORE THA N RS.8,82,787/-, THEN THE ADDITION MADE WILL NOT BE REDUCED BELOW TH E INCOME AS THE ASSESSEE HAS RETURNED FROM SHILPGRAM SCHEME AND THE ADDITION REMAIN SUSTAINED TO THAT EXTENT. THUS, GROUND NO.1 TAKEN BY THE ASSESSEE IS PARTLY ALLOWED. THE LD. A.O. GAVE REASONABLE OPPORTUNITY OF BEING H EARD BEFORE IMPOSING PENALTY U/S.158BFA(2) TO THE ASSESSEE, WHICH WAS CO NSIDERED BUT NOT FOUND CONVINCING TO HIM ON THE GROUND THAT ASSESSEE HAS C ONCEALED INCOME TO THE EXTENT OF RS.35 LACS, WHICH WAS CONFIRMED BY THE IT AT. THIS INCOME WOULD HAVE BEEN ESCAPED. HAD THERE BEEN NO SEARCH OPERATI ON WAS CONDUCTED IN THIS CASE? THUS, HE IMPOSED PENALTY ON UNDISCLOSED INCOME OF RS.35 LACS AT RS.21,42,000/-. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD ALLOWED THE ASSESS EES APPEAL BY OBSERVING AS UNDER: 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E SUBMISSIONS OF THE APPELLANT. I AM INCLINED TO ACCEPT THE CONTENTION O F THE APPELLANT BASED ON FACTS AND CIRCUMSTANCES OF CASE AND SUPPORTED BY VA RIOUS JUDGEMENT. THE PROVISIONS OF SECTION 158BFA WERE INTRODUCED TO CUR B THE PRACTICE FOLLOWED BY ASSESSEE DECLARING NIL OR LESS UNDISCLO SED INCOME U/S, 158BC DESPITE OF BEING BLOCK ASSESSMENT SCHEME OF S UCH INCOME AT 60% RATE TAXATION WITH IMMUNITY FROM PENALTY AND PROSEC UTION. IT IS THEREFORE, THE REGOURE OF INTEREST AS WELL AS PENALTY WERE INT RODUCED ON THE DIFFERENCE OF UNDISCLOSED INCOME RETURNED BY APPELA NT AND FINALLY ASSESSED BY REVENUE. THIS IMPOSITION WAS SUBJECT TO SOME CONDITIONS AS MENTIONED IN THE PROVISIONS ITSELF. FURTHER, THE IM POSITION OF PENALTY WERE HELD TO BE NOT AUTOMATIC EVEN IN THE CASES U/S. 158 BFA(2) OF THE ACT. IN THE PRESENT CASE, THE A.O. EXTENDED THE INTERPRETAT ION OF CONCEALMENT AS IT(SS)A NO. 313/AHD/2010 & C.O. NO. 158/AHD/2010 FOR BLOCK YEAR :01/04/1995 TO 12/07/2001 PAGE 4 ASSIGNED IN SECTION 271(1)(C) OF THE ACT, TREATING ENTIRE UNDISCLOSED INCOME AS CONCEALMENT BUT THE SAME IS NOT PROPER AN D JUSTIFIED. THE SCHEME OFBLOCK ASSESSMENT WAS INTRODUCED WITH ALTOG ETHER DIFFERENT OBJECTIVE AND LIMITED TO UNDISCLOSED INCOME OVER A PERIOD OF TEN YEARS. VARIOUS PROVISIONS PROVIDED IN CHAPTER-XIV-B WITH S PECIFIC HEADING 'SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES' ARE SELF CONTAINED CODE IN ITSELF. IT IS THEREFORE, AS PER THE PROVISI ONS OF SECTION 158BFA, THE PENAL PROVISIONS ARE ATTRACTED ONLY IN THOSE CASES WHERE UNDISCLOSED INCOME RETURNED BY THE ASSESSEE IN THE RETURN FOR B LOCK ASSESSMENT IS FINALLY ASSESSED AT HIGHER AMOUNT. IN THE PRESENT C ASE, THIS CONDITION IS NOT FULFILLED AND THEREFORE THE PROVISIONS OF SECTION 1 58BFA ARE NOT AT ALL ATTRACTED. THE A. O, ALSO GONE BEYOND THE SIMPLE PR OVISIONS OF COMPUTING THE PENALTY WHICH AS PER SECOND PROVISIO TO 158BFA( 2) STATE THAT 'THE PENALTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCL OSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDI SCLOSED INCOME SHOWN IN THE RETURN.' IN THE PRESENT CASE APPELLANT DECLARED UNDISCLOSED INCOME OF RS.35 LACS. THE HONBLE ITAT DETERMINED T HE SAME AT RS.18.83 LACS BUT UPHELD THAT EVEN AFTER THIS, THE UNDISCLOS ED INCOME OF THE APPELLANT AS RETURNED WILL NOT BE REDUCED. IT IS T HEREFORE, THOUGH AS PER HONBLE ITAT ORDER, THE UNDISCLOSED INCOME OF THE A PPELLANT IS DETERMINED AT RS.18.83 LACS BUT THE SAME IS ACCEPTED AT RS.35 LACS AS RETURNED. THIS CLEARLY SHOWS THAT THERE IS NO EXCESS UNDISCLOSED I NCOME THAN THAT OF RETURNED BY THE APPELLANT. HENCE, PENALTY IMPOSED U /S.158BFA(2) OF THE ACT IS NOT TENABLE IN THE EYE OF LAW. THE A.O. IS DIRECTED TO DELETE THE PENALTY SO IMPOSED. 4. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEH EMENTLY RELIED UPON THE ORDER OF THE A.O., WHEREAS LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE HAD DISCLOSED RS.35LACS INCOME IN THE BLOC K RETURN AND THERE IS NO ADDITION MADE ON ACCOUNT OF UNDISCLOSED INCOME U/S. 158BC OF THE IT ACT. THERE IS NO DIFFERENCE BETWEEN THE UNDISCLOSED INCO ME DISCLOSED IN THE BLOCK RETURN AND UNDISCLOSED INCOME DETERMINED BY THE A.O . THUS, NO PENALTY CAN IT(SS)A NO. 313/AHD/2010 & C.O. NO. 158/AHD/2010 FOR BLOCK YEAR :01/04/1995 TO 12/07/2001 PAGE 5 BE LEVIED ON THE ASSESSEE. HE FURTHER RELIED UPON IN CASE OF HONBLE ITAT, AHMADABAD A BENCH DECISION IN CASE OF DCIT (OSD), CIRCLE-8 VS. SHIVGANGA REALITY (P) LTD. IN IT(SS) A NO. 489/AHD/2010 ALONG WITH C.O. NO. 217/AHD/2010 FOR BLOCK PERIOD 01.04.1995 TO 12.07.2001, ON IDENTICAL FACTS WHEREIN PENALTY IMPOSED BY THE A.O. U/S. 158BFA HAD BEEN DELETED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS DISCLOSED RS.35LACS INCOM E IN BLOCK RETURN AND ALL ADDITIONS WERE MADE BY THE A.O., RESTRICTED BELOW T HE RETURN INCOME OF RS.35 LACS. THUS, THERE IS NO DIFFERENCE BETWEEN UNDISCL OSED INCOME RETURN IN THE BLOCK RETURN AND UNDISCLOSED INCOME DETERMINED BY T HE A.O. U/S. 158BC OF THE IT ACT. AS PER SECOND PROVISO OF SECTION 158BF A(2), ONLY PENALTY CAN BE IMPOSED ON THAT PORTION OF UNDISCLOSED INCOME DETER MINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RE TURN. THE CO-ORDINATE A BENCH IN CASE OF DCIT (OSD), CIRCLE-8 VS. SHIVGANGA REALITY (P) LTD. (SUPRA), HELD AS UNDER: 5. WE HAVE HEARD THE ID. DR AND THE ID. AR. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF I D. CIT(A). THE REASONS ARE THAT PENALTY UNDER SECTION 158BFA(2) CAN BE LEVIED ON THE DIFFERENCE BETWEEN THE TAX WORKED OUT ON DECLARED.UNDISCLOSED INCOME IN THE RETURN AND THE TAX ON ASSESSED UNDISCLOSED INCOME UNDER SE CTION 158BC/158BD. THUS WHERE RETURNED UNDISCLOSED INCOME AND ASSESSED UNDISCLOSED INCOME IS THE SAME THEN TAX ON THE TWO INCOME WOULD ALSO BE THE SAME. SINCE THERE WILL NOT BE ANY DIFFERENCE B ETWEEN THE TWO FIGURES, THE QUESTION OF LEVYING PENALTY UNDER SECTION 158BF A(2) WILL NOT ARISE. IN OUR CONSIDERED VIEW THE AO HAS NOT CORRECTLY UNDERS TOOD THE PROVISIONS OF LAW. WE ARE ALSO SURPRISED AS TO WHY THE DEPARTMENT IS CHOOSING TO FILE IT(SS)A NO. 313/AHD/2010 & C.O. NO. 158/AHD/2010 FOR BLOCK YEAR :01/04/1995 TO 12/07/2001 PAGE 6 APPEAL OF THIS TYPE. THIS IN OUR VIEW IS AVOIDABLE WASTAGE OF RESOURCES. THE APPEAL FILED BY THE REVENUE IS DISMISSED. BY RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINA TE BENCH DECISION IN CASE OF SHIVGANGA REALITY (P) LTD.(SUPRA), WE DO NOT HESITATE TO CONFIRM THE ORDER OF THE CIT(A). ACCORDINGLY, REVENUES APPEAL IS DISMI SSED AND ASSESSEES C.O. IS ALLOWED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED AND ASSESSEES C.O. IS ALLOWED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 17.01.2014 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA &1 &1 &1 &1 * ** * 2-3 2-3 2-3 2-3 4&30- 4&30- 4&30- 4&30- / COPY OF ORDER FORWARDED TO:- 1. ( / REVENUE 2. & / ASSESSEE 3. ## - 8 / CONCERNED CIT 4. 8- / CIT (A) 5. 3< 2- , , / DR, ITAT, AHMEDABAD 6. > ?@ / GUARD FILE. BY ORDER/ &1 &, / # , )