SHRI RAJENDRA KUMAR GOYAL, JAIPUR V. INCOME TAX OFFICER, WARD-1-2, AJMER

ITA 106/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9413 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 30-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DEVANG GARGIEYA ITP
• Keywords: Unexplained investment
• Section: 271(1)(c); 133A; 73; 72; 27

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 106/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2010-11 SHRI RAJENDRA KUMAR GOYAL, PROP. M/S RAJENDRA TRADING COMPANY, KESAR GANJ, AJMER CUKE VS. ITO, WARD-1(2), AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACZPG2181R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. MAHENDRA GARGIEYA (ADV.) & SH. DEVANG GARGIEYA (ITP) JKTLO DH VKSJ LS @ REVENUE BY : MS. CHANCHAL MEENA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 17/08/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 18/08/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), AJMER DATED 24.09.2018 WHEREIN THE ASSESSEE HAS TAK EN THE FOLLOWING GROUNDS OF APPEAL:- 1. THE IMPUGNED PENALTY ORDER U/S 271(1)(C) OF THE ACT DATED 03.03.2017 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE THE SAME KINDLY BE QUASHED. 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FA CTS OF THE CASE IN CONFIRMING THE ORDER OF AO DATED 03.03.2017 IMPOSIN G PENALTY U/S 271(1)(C) OF THE ACT OF RS. 2,00,000/-. THE PENALTY SO IMPOSED, BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS , HENCE THE SAME KINDLY BE DELETED IN FULL. ITA NO. 106/JP/2019 SH. RAJENDRA KUMAR GOYAL, AJMER VS. ITO, AJMER 2 3. THAT THE IMPUGNED SHOW CASE NOTICE ISSUED U/S 27 4 R/W 271(1)(C) OF THE ACT, IS QUITE VAGUE AND DID NOT AT ALL SPECI FY UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDIN GS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE IMPUGNED PENA LTY BASED ON SUCH A NOTICE BEING CONTRARY TO THE PROVISIONS OF LAW & FA CTS KINDLY BE QUASHED. 2. AT THE OUTSET, IT IS NOTED THAT THERE IS A DELAY IN FILING THE PRESENT APPEAL BY 56 DAYS. IN THIS REGARD, THE LD. AR SUBMITTED TH AT THERE IS NO DISPUTE THAT THE ORDER PASSED BY THE LD CIT(A) WAS DULY SERVED U PON THE ASSESSEE. THEREAFTER, THE ASSESSEE HANDED OVER THE SAME TO HI S REGULAR TAX CONSULTANT SHRI R. N. AGARWAL, ADVOCATE. UNFORTUNATELY, HOWEVE R, SHRI AGRAWAL, THOUGH RECEIVED THE SAME BUT AT THAT POINT OF TIME REMAINI NG IN A HASTE TO ATTEND A HEARING, MISPLACED THE PAPERS SOMEWHERE AND EVEN TH EREAFTER FORGOT THAT ANY SUCH ORDER WAS EVER RECEIVED BY HIM. THAT IT IS ONL Y SOMETIME IN THE FIRST WEEK OF JANUARY WHERE THE ASSESSEE REPORTED A RECOVERY P RESSURE EXERTED BY THE DEPARTMENT AND WHEN THE MATTER WAS BEING DISCUSSED BY THE ASSESSEE WITH THE SHRI R. N. AGRAWAL, ADVOCATE, THIS REMINDED HIM OF THE RECEIPT OF THE CIT(A) ORDER AND ALSO OF THE FACT THAT FURTHER APPEAL WAS TO BE FILED BEFORE THE HONBLE ITAT, HOWEVER, BY HIS OVERSIGHT, COULD NOT BE DONE AND THEREAFTER, IMMEDIATE EFFORTS WERE MADE TO SEARCH OUT THESE PAPERS, WHICH FORTUNATELY COULD BE LOCATED IN HIS CABIN ITSELF. THAT THEREAFTER, THE P APERS WERE HANDED OVER TO A DIFFERENT COUNSEL, WHO PREPARED THE APPEAL. HOWEVER , THIS ENTIRE EXERCISE DELAYED THE FILING. FINALLY THE APPEAL COULD BE FIL ED ON 30.01.2019, WITH A DELAY OF 56 DAYS. THAT IN SUPPORT OF THE AFORESAID FACTS, AFFIDAVIT OF THE ASSESSEE IS PLACED ON RECORD. THAT UNDER THESE CIRCUMSTANCES, IT WAS SUBMITTED THAT FIRSTLY, THERE WAS NO DELAY ATTRIBUTABLE ON THE PAR T OF THE APPLICANT ASSESSEE. IN ANY CASE, THESE CIRCUMSTANCES WERE BEYOND THE CONTR OL AND ANTICIPATION OF THE HUMBLE APPLICANT ASSESSEE. THE DELAY OCCURRED BECAU SE OF THE MISPLACING OF PAPERS, AS STATED ABOVE AND THE POOR ASSESSEE WAS H ELPLESS. IT WAS FURTHER ITA NO. 106/JP/2019 SH. RAJENDRA KUMAR GOYAL, AJMER VS. ITO, AJMER 3 SUBMITTED THAT THERE WAS NO WILLFUL ATTEMPT ON THE PART OF THE ASSESSEE TO CAUSE DELAY NOR DID HE HAS ANY VESTED INTEREST IN T HE DELAY MORE SO WHERE THE MATTER IN THE QUANTUM PROCEEDINGS HAS BEEN DECIDED IN HIS FAVOUR. THE HONBLE SUPREME COURT IN A CATENA OF JUDICIAL PRONOUNCEMENT S INCLUDING THAT OF COLLECTOR LAND ACQUISITION VS M. KATIJI & OTHERS HA S HELD THAT DELAY IN FILING AN APPEAL MAY BE CONDONED IF THERE IS SUFFICIENT CAUSE FOR THE DELAY. THE HONBLE SUPREME COURT HAS ALSO HELD THAT A LIBERAL VIEW MAY BE TAKEN ON THIS ISSUE SINCE THE PRIMARY DUTY OF THE COURTS IS TO DISPENSE JUSTICE AND NOT TO DISMISS APPEALS ON MERE TECHNICALITIES. IT WAS ACCORDINGLY SUBMITTED THAT THE PRAYER OF THE ASSESSEE FOR CONDONATION OF THE DELAY MAY BE AC CEPTED AND APPEAL MAY BE ADMITTED FOR ADJUDICATION ON MERITS. 3. PER CONTRA, THE LD DR OPPOSED THE PRAYER FOR CO NDONATION OF DELAY SO SUBMITTED BY THE ASSESSEE. IT WAS SUBMITTED THAT T HE ASSESSEE HAS BEEN VERY CAUSAL IN HIS APPROACH AND SHOULD HAVE TAKEN NECESS ARY STEPS IN TERMS OF REACHING OUT TO HIS COUNSEL AND IN FILING THE PRESE NT APPEAL IN TIME WHICH HE FAILED TO DO SO IN THE INSTANT CASE. IT WAS SUBMIT TED THAT NO SUFFICIENT CAUSE HAS BEEN SUBMITTED WHICH CALLS FOR ANY INDULGENCE B Y THE BENCH IN CONDONING THE DELAY SO HAPPENED IN FILING THE PRESENT APPEAL. 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS REASONABLY EX PLAINED THE REASONS FOR THE DELAY IN FILING THE PRESENT APPEAL DUE TO OVERSIGHT ON PART OF THE COUNSEL OF THE ASSESSEE AS SUBMITTED IN HIS AFFIDAVIT WHICH IS PLA CED ON RECORD. HENCE, THE DELAY IN FILING THE PRESENT APPEAL IS HEREBY CONDON ED AND THE APPEAL IS ADMITTED FOR ADJUDICATION. 5. NOW, COMING TO THE MERITS OF THE CASE. DURING THE COURSE OF HEARING, THE LD. AR SUBMITTED THAT THE ASSESSEE DERIVES INCOME F ROM BUSINESS OF WHOLESALE TRADING OF VEGETABLE OILS, GHEE, COCONUT AND SALT E TC. IN THE NAME AND STYLE M/S ITA NO. 106/JP/2019 SH. RAJENDRA KUMAR GOYAL, AJMER VS. ITO, AJMER 4 RAJENDRA TRADING COMPANY, AJMER. THE ASSESSEE HAS F ILED ROI ON 15.10.2010 DECLARING TOTAL INCOME OF RS. 3,61,125/-. A SURVEY U/S 133A WAS CONDUCTED ON 15.09.2009 ON THE BUSINESS PREMISES AT AJMER. DURIN G THE COURSE OF SURVEY THE ASSESSEE OFFERED FOR TAXATION THE AMOUNTS OF UNDISC LOSED INCOME ON ACCOUNT OF CASH, STOCK AND UNDISCLOSED PURCHASES, TOTALING TO RS. 6,30,626/-. BUT THE SAME WERE NOT INCLUDED BY THE ASSESSEE IN ITS RETUR N OF INCOME. HOWEVER, ASSESSMENT WAS COMPLETED AT TOTAL INCOME OF RS. 9,9 1,750/-, BY MAKING TRADING ADDITIONS OF RS. 18,566/-, THE ALLEGED INVE STMENTS IN THE UNACCOUNTED PURCHASES OF RS. 5,50,000/- AND OTHER DISALLOWANCES OF RS. 62,060/-. THE LD. CIT(A) CONFIRMED THE ADDITIONS MADE BY THE AO WHICH ON FURTHER APPEAL, THE TRIBUNAL HAS DELETED THE ADDITION OF RS 5,50,000/- BUT CONFIRMED THE TRADING ADDITION OF RS 18,566/-. 6. OUR REFERENCE WAS DRAWN TO THE TRIBUNALS ORDER DATED 10.02.2020 IN ITA NO. 129/JP/2016 AND IT WAS SUBMITTED THAT HE TRIBUN AL IN THE QUANTUM PROCEEDING HAS REJECTED THE APPROACH OF THE LOWER A UTHORITIES AND RESTORED THE INCOME AS DECLARED IN THE RETURN OF INCOME AND THE RELEVANT FINDINGS OF THE TRIBUNAL READS AS UNDER:- 10. THE CO-ORDINATE JAIPUR BENCH OF ITAT HAS ALREA DY BEEN TAKING THIS VIEW IN THE CASE OF ITO VS. SURESH CHANDRA KOOLWAL (2004) 32 TW 23 (JP). VARIOUS BENCHES OF THE ITAT HAVE TAKEN SIMILA R VIEW SUCH AS IN THE CASES OF R. K. SYNTHETICS 30 TW 228 (JD). ASHOK KUM AR SONI VS. DCIT (2001) 72 TTJ 323 (JD), KARAM CHAND VS. ACIT (2000) 73 ITD 434 (CHD): (2000) 68 TTJ 789 (CHD) & RISHAB KUMAR JAIN VS. ACIT (1999) 63 TTJ 236 (DEL). IN THE CASE OF RAJESH JAIN VS. DCIT (2006) 100 TTJ 929 (DEL), HELD THAT COMPUTATION OF UNDISCLOSED INCOME SOLELY ON THE BASIS OF CONFESSIONAL STATEMENT OF THE ASSESSEE WAS NOT JUST IFIED. 11. FROM A BARE READING OF THE EXAMPLE GIVEN BY LD. CIT(A), IT IS EVIDENTLY CLEAR THAT HE HAS PROCEEDED ON THE PRESUM PTION THAT THE ENTIRE ITA NO. 106/JP/2019 SH. RAJENDRA KUMAR GOYAL, AJMER VS. ITO, AJMER 5 PURCHASES AND ENTIRE SALES WERE OUT OF THE BOOKS WH ICH IS NOT THE CASE HERE IN AS MUCH AS ADMITTEDLY THE SHORTAGE OF STOCK WAS THE RESULT OF THE UNDISCLOSED SALES ONLY AS STATED ABOVE. 12. IT IS ADMITTEDLY A CASE OF RECORDED PURCHASES W HEREIN ONLY PROFIT OF PURCHASE AND SALES COULD BE ADDED. ACCORDINGLY, I D IRECT THE A.O TO RESTRICT ADDITION ONLY TO THE EXTENT OF PROFIT ON T HE ALLEGED SALES AMOUNTING TO RS. 18,566/-. I DIRECT ACCORDINGLY. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. 7. IT WAS ACCORDINGLY SUBMITTED THAT ONLY BASIS OF IMPOSITION OF THE PENALTY VIDE THE IMPUGNED PENALTY ORDER IS THE ADDITION OF RS. 5,50,000/- BEING ALLEGED UNEXPLAINED INVESTMENT MADE IN THE PURCHASE OF STOC K AND WHICH HAS SINCE HAS BEEN DELETED BY THE TRIBUNAL AND THE CONSEQUENT PEN ALTY LEVIED DESERVES TO BE DELETED. 8. PER CONTRA, THE LD. DR SUBMITTED THAT THE ADDITI ON HAS BEEN MADE BY THE AO PURSUANT TO SURVEY CONDUCTED BY THE DEPARTMENT A ND IT IS THEREFORE, NOT A CASE OF VOLUNTARILY DISCLOSURE BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE TRIBUNAL HAS RECORDED A CATEGORICAL FINDING THAT IT IS A CASE OF UNRECORDED SALES WHICH IS CLEARLY A CASE FOR LEVY OF PENALTY. GIVE N THAT IN THE QUANTUM PROCEEDINGS, THE TRIBUNAL HAS RESTRICTED THE TRADIN G ADDITION MADE BY THE AO TO THE EXTENT OF RS 18,566/-, IT WAS SUBMITTED THAT TH E MATTER MAY BE SET-ASIDE TO THE FILE OF THE AO TO RECALCULATE THE QUANTUM OF PE NALTY SO LEVIED U/S 271(1)(C) OF THE ACT. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE PENALTY HAS BEEN LEVIED ON ADDITION OF RS 5,50,000/-, BEING INVESTMENT IN UNACCOUNTED PURC HASES MADE BY THE AO ITA NO. 106/JP/2019 SH. RAJENDRA KUMAR GOYAL, AJMER VS. ITO, AJMER 6 PURSUANT TO SURVEY CONDUCTED AT THE PREMISES OF THE ASSESSEE. THE TRIBUNAL IN THE QUANTUM PROCEEDINGS HAS HOWEVER HELD THAT IT WA S NOT A CASE OF UNEXPLAINED INVESTMENT/UNACCOUNTED PURCHASES AS WRO NGLY UNDERSTOOD BY THE AUTHORITIES BELOW AND IT WAS A CASE OF SUPPRESSED S ALES MADE OUT OF RECORDED PURCHASES AND IN RESPECT OF UNDISCLOSED SALES, ONLY PROFIT ELEMENT CAN BE ADDED AND THE AO WAS ACCORDINGLY DIRECTED TO RESTRICT THE ADDITION TO THE EXTENT OF RS 18,566/-, BEING THE PROFIT ELEMENT ON UNACCOUNTED S ALES. THEREFORE, ON PERUSAL OF THE ORDER PASSED BY THE TRIBUNAL, WE FIN D THAT THERE IS A CLEAR FINDING RECORDED THAT IT IS A CASE OF UNRECORDED SALES WHIC H HAS NOT BEEN DISCLOSED BY THE ASSESSEE AT THE TIME OF FILING OF RETURN OF INC OME AND WE THEREFORE AGREE WITH THE CONTENTION OF THE LD DR THAT THE PENALTY H AS BEEN RIGHTLY LEVIED IN THIS CASE INVOKING PROVISIONS OF SECTION 271(1)(C) OF TH E ACT. WE ALSO DONOT AGREE WITH THE CONTENTION OF THE LD AR THAT THE TRIBUNAL HAS RESTORED THE INCOME AS DECLARED IN THE RETURN OF INCOME IN VIEW OF THE CLE AR FINDING OF THE TRIBUNAL WHERE THE AO IS DIRECTED TO RESTRICT THE ADDITION T O THE EXTENT OF PROFIT OF RS 18,566/- ON UNDISCLOSED SALES. AT THE SAME TIME , WHERE THE VERY BASIS OF LEVY OF PENALTY, BEING THE QUANTUM ADDITION, HAS BE EN RESTRICTED BY THE TRIBUNAL TO RS 18,566/- IN THE QUANTUM PROCEEDINGS, THE CONSEQUENT LEVY OF PENALTY U/S 271(1)(C) SHALL ALSO BE REQUIRED TO BE COMPUTED ON THE SAID AMOUNT OF RS 18,566/- AS AGAINST THE ADDITION MADE BY THE AO. 10. NO OTHER ARGUMENTS HAVE BEEN TAKEN OR CANVASSED DURING THE HEARING IN SUPPORT OF GROUND NO. 2, HENCE THE SAME IS DISMISSE D. 11. IN THE RESULT, THE AO IS DIRECTED TO RECOMPUTE THE PENALTY U/S 271(1)(C) BY TAKING THE QUANTUM ADDITION OF RS 18,566/- AS TH E BASIS FOR SUCH LEVY AS CONFIRMED BY THE TRIBUNAL IN THE QUANTUM PROCEEDING S AND THE REMAINING PENALTY IS HEREBY DIRECTED TO BE DELETED. THE APPEAL IS DISPOSED OFF IN LIGHT OF AFORESAID DI RECTIONS. ITA NO. 106/JP/2019 SH. RAJENDRA KUMAR GOYAL, AJMER VS. ITO, AJMER 7 ORDER PRONOUNCED IN THE OPEN COURT ON 18/08/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/08/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RAJENDRA KUMAR GOYAL, AJMER 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD 1(2), AJMER 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 106/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR