M/s. J.R. Shroff, Bharuch V. The Dy.CIT, Bharuch Circle, Bharuch

ITA 1062/AHD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0051 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 11-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KR VERMA
• Assessee Lawyers: M J SHAH
• Keywords: Unexplained investment; Income from undisclosed sources; Opportunity of being heard; Reasonable cause
• Section: 143(3); 131; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER M/S. J.R. SHROFF, CHOKSHI BAZAR, JAMBUSAR DIST: BHARUCH PAN: AABFJ4888N (APPELLANT) VS THE DCIT, BHARUCH CIRCLE, BHARUCH (RESPONDENT) REVENUE BY : S H RI SUMIT KR.VERMA , SR. D . R. ASSESSEE BY: S H RI M.J SHAH , A.R. DATE OF HEARING : 07 - 11 - 2 016 DATE OF PRONOUNCEMENT : 11 - 11 - 2 016 / ORDER P ER : MAHAVIR PRASAD, JUDICIAL MEMBER : - THIS IS AN APPEAL FILED BY THE ASSE SSEE AGAINST THE CONFIRMATION OF PENALTY BY THE LD. COMMISSIONER OF INCOME TAX( A). FOLLOWING GROUND HAS BEEN TAKEN BY THE ASSESSEE. I T A NO . 1062 / A HD/20 14 A SSES SMENT YEAR 200 6 - 07 I.T.A NO. 1062 /AHD/20 14 A.Y. 2006 - 07 PAGE NO M/S. J.R. SHROFF VS. DCIT 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED C.I.T(A). ERRED ON LAW AND ON FACTS IN ARRIVING AT THE CONFI RMING THE CONCLUSION MADE BY THE A.O. THAT YOUR APPELLANT HAD CONCEALED THE IMPUGNED INCOME AND THEREBY LEVYING PENALTY OF RS.181000/ - U.S.271(1)(C) OF THE I.T. ACT, 1961. 2 . BRIEF FACTS OF THE CASE ARE THAT I N THIS CASE SURVEY U/S. 133A. OF THE ACT WAS CARRIED OUT ON 10.03.2006. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FILED ON 30.12.2006 DECLARING TOTAL INCOME OF RS. 22,17,741/ - . THE SAID RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 14.11.2008 DETERMINING TOTAL INCOME OF RS.40,43,750/ - BY MAKING ADDITIONS OF RS.18,26,012/ - ON ACCOUNT OF UNACCOUNTED INVESTMENT. PENALTY PROCEEDINGS WERE ALSO INITIATED AND NOTICE U/S. 274 R.W.S. 271(1 )(C) OF THE ACT DATED 14.11. 2008 WAS ISSUED AND DULY SERVED UPON THE ASSESSEE. 3 . DURING THE COURSE OF SURVEY PROCEEDINGS, A STATEMENT U/S. 131 OF THE ACT WAS RECORDED ON 10.03.2006. IN THE STATEMENT RECORDED U/S. 131 OF THE ACT, ONE OF THE PARTNER OF THE ASSESSEE FIRM HAS ADMITTED UNDISCLOSED INCOME OF RS.41,51,005/ - . HOWEVER, IN THE RETURN OF INCOME FILED FOR THE Y EAR UNDER CONSIDERATION, THE ASSESSEE HAS DISCLOSED UNACCOUNTED INCOME OF RS.23,22,993/ - AS AGAINST RS.41,51 ,005/ - ADMITTED DURING THE COURSE OF SURVEY PROCEEDINGS. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT AS AGAINST ADMISSION OF RS. 13,48,281/ - MADE ON ACC OUNT OF UNDISCLOSED THROUGH CHEQ UES, THE ASSESSEE DISCLOSED RS . 4,89,043/ - ONLY. THEREFORE, AN AMOUNT OF RS. 8 , 57,238 / - HAS BEEN I.T.A NO. 1062 /AHD/20 14 A.Y. 2006 - 07 PAGE NO M/S. J.R. SHROFF VS. DCIT 3 A DDE D TO THE TOTAL INCOME OF ASSESSEE FIRM WHICH INCLUDE INTEREST OF RS. 1,02,880 / - AS REGARDS, THE ADMISSION OF RS.9,68,774/ - ON ACCOUNT OF UNDISCLOSED CASH BALANCE, THE ASSESSEE HAS NOT SHOWN IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION . DURING THE COURSE OF SURVEY PROCEEDINGS, IT WAS FOUND THAT AS PER THE BOOKS OF ACCOUNTS MAINTAINED ON COMPUTER, THERE WAS NEGATIVE CASH BALANCE OF RS.1,18,299/ - . IN THIS REGARD, THE ASSESSEE ADMITTED THAT THE NEGATIVE CASH BALANCE OF RS.1,18,299/ - ON ACC OUNT OF UNACCOUNTED MONEY. FURTHER, ONE OF THE PARTNER OF THE ASSESSEE - FIRM IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS HAS STATED THAT CASH BALANCE ACCORDING TO HIM WAS OF RS.8,50,475/ - . THUS, DURING THE COURSE OF SURVEY PROCEEDINGS, THE UNACCOUNTED CASH BALANCE WAS ADMITTED AT RS.9,68,774/ - . HOWEVER, THE ASSESSEE FIRM HAS NOT SHOWN THE UNACCOUNTED CASH BALANCE ADMITTED DURING THE COURSE OF SURVEY PROCEEDINGS OF RS.9,68,774/ - IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERAT ION. THEREFORE, ADDITION MADE OF RS.9,68,774/ - ON ACCOUNT OF UNACCOUNTED INVESTMENT CASH TO THE TOTAL INCOME OF THE ASSESSEE FIRM. PENALTY PROCEEDINGS U/S. 271(1 )(C) OF THE ACT WERE ALSO INITIATED. 4 . AGAINST THE ORDER U/S. 143(3) OF THE ACT DATED 14.11 .2008, THE ASSESSEE FIRM HAS FILED AN APPEAL BEFORE THE CIT(A) - V1, BARODA. THE CIT(A) - VI, BARODA, VIDE ORDER NO. CAB/VI - 331/08 - 09 DATED 17.02.2010 HAS CONFIRMED RS.19,318/ - AND RS.4,50,488/ - ON ACCOUNT OF UNACCOUNTED CHEQUES AND UNACCOUNTED CASH RESPECTIVE LY. O N RECEIPT OF THE ORDER OF THE CI T(A) - VT, BARODA, TO COMPLETE THE I.T.A NO. 1062 /AHD/20 14 A.Y. 2006 - 07 PAGE NO M/S. J.R. SHROFF VS. DCIT 4 PENALTY - PROCEEDINGS U/S. 271(1 )(C) OF THE ACT, THE ASSESSEE WAS GIVEN A FRESH AND FINAL OPPORTUNITY OF BEING HEARD OR TO SUBMIT THE WRITTE N SUBMISSION IN THE MATTER VIDE , THIS OFFICE LETTER DATED 07.03.2011. IN RESPONSE TO THE LETTER DATED 07.03.2011, THE ASSESSEE'S AUTHORIZED REPRESENTATIVE VIDE LETTER DATED 16.03.2011 SUBMITTED HIS REPLY. THE LD. ASSESSING OFFICER CAREFULLY CONSIDERED THE CONTENTION PUT FORTH BY THE AS SESSEE VIS - A - VIS THE FACTS AND C IRCUMSTANCES OF THE CASE, AND FOUND THAT THE SAME ARE WITHOUT ANY FORCE AND NOT CONVINCI NG. T HE ASSESSEE HAS MADE ATTEMPTS TO CONCEAL ITS INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME AND EVADE THE TAX WHEREBY THE AS SESSEE HAS DEPRIVED THE REVENUE OF ITS LEGITIMATE SHARE OF TAX. SINCE THERE IS INVOLVEMENT OF CONCEALMEN T; OF INCOME, THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THERE IS NO CONCEALMENT OF INCOME IN HIS CASE. THE ASS ESSEE FAILED TO PROVE THAT THERE IS NO C ONCEALMENT OF INCOME BUT IN FACT ADMITTED THE CONCEALMENT. IT IS PERTINENT TO NOTE HERE THAT THE CIT(A) - VI, BARODA HAS CONFIRMED ADDITION MADE. IT HAS BEEN HELD BY THE HON'BLE APEX COURT IN THE CASE OF UNION OF INDIA, AND OTHERS V/S. DHARMENDRA TEXTILES PR OCESSORS AND OTHERS - 306 ITR 277(SC) THAT 'THE EXPLAN ATIONS APPENDED TO SECTION 271(1 )(C) OF THE INCOME - TAX ACT, INDICATE THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING THE RETURN. THE OBJ ECT BEHIND THE ENACTMENT OF SECTION 27 1(1 )(C) READ WITH THE EXPLANATIONS INDICATES THAT THE SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL I.T.A NO. 1062 /AHD/20 14 A.Y. 2006 - 07 PAGE NO M/S. J.R. SHROFF VS. DCIT 5 LIABILITY AS IS THE CASE IN THE MATTER OF PROSECUTION UNDER SECTION 276C'. ALSO, I N THE CASE OF DHARMENDRA TEXTILES PROCESSORS [294 ITR], THE APEX COURT HAS HELD THAT THERE IS NO NECESSITY OF MENS REA I N PENALTY PROCEEDI NGS U/S. 271(1 )(C) OF THE ACT. THE PENALTY IS AGAINST CIVIL WRONG AND NOT AGAINST CRIMINAL OFFENCE, THEREFORE, THE DEPARTMENT DID NOT HAVE TO PROVE POSITIVE ACT OF CONCEALMENT. IN THESE CIRCUMSTANCES, IT IS HELD THAT THE ASSESSEE HAS CONCEALED THE PARTICUL ARS OF ITS INCOME AND ALSO FURNISHED INACCURATE PARTICULARS IN RESPECT OF THE INCOME AS STATED ABOVE. THE ASSESSING OFFICER ALSO STATED THAT THE ASSESSEE HAS WILLFULLY, KNOWINGLY AND WITHOUT REASONABLE CAUSE FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND, THUS, TRIED TO CONCEAL THE INCOME SO AS TO EVADE PAYMENT OF TAX THEREON. THUS, EXPLANATION 1 TO SECTION 271 OF THE INCOME TAX ACT, 1961 IS CLEARLY APPLICABLE TO THE CASE OF THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING T HE INCOME FOR WHICH IT IS LIABLE TO FOR PENALTY U/S. 271(1 )(C) OF THE I.T. ACT, 1961. AS MENTIONED SUPRA, THE ASSESSEE BY SURRENDERING THE UNACCOUNTED INCOME OF RS.41,51,005/ - AND DISCLOSED THE SAME AT THE TIME OF SURVEY, WHICH AMOUNT TO ADMISSION OF CONC EALMENT ON THE PART OF THE ASSESSEE AND THUS THE ASSESSEE IS LIABLE TO PENALTY U/S. 271(1 )(C) OF THE ACT. IF THE SURVEY ACTION WAS NOT CARRIED OUT AT THE BUSINESS PREMISES OF THE AS SESSEE , THE ASSESSEE WOULD HAVE NOT DI SCLOS ED ITS INCO ME AND EVADED TAX THE REON. FROM THE SEQU ENCE OF THE EVENTS NARRATED ABOVE, IT IS CRYSTAL CLEAR THAT AT THE TIM E OF ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS, THE ASSESSEE C OULD NOT I.T.A NO. 1062 /AHD/20 14 A.Y. 2006 - 07 PAGE NO M/S. J.R. SHROFF VS. DCIT 6 PROVE THAT THERE WAS NO CONCEALMENT. FINALLY, THE ASSESSING OFFICER IMPOSED THE PENALT Y OF RS. 1,80,960/ - WAS IMPOSED. 5. AFTER BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , ASSESSEE PREFERRED APPEAL BEFO RE THE LD. COMMISSIONER OF INCOME TAX(A) WHO DISMISSED THE APPEAL OF THE APPELLANT. WE HAVE GONE THROUGH THE IMPUGNED ORDER A ND HEARD AS IT ENVISAGED THAT PENALTY IS IMPOSED WITH REFERENCE TO CASH FOUND AT THE TIME OF SURVEY ACTION, CASH OF RS. 8,50,475/ - WAS FOUND . A S PER BOOKS OF ACCOUNT MAINTAINED ON COMPUTER , THE ASSESSEE HAD NEGATIVE CASH BALANCE OF RS. 1 , 18 , 299/ - . THE ASS ESSEE ADMITTED THAT THE CASH AS WELL AS EXPENSES WERE UNACCOUNTED AND ON E OF THE PARTNERS SURRENDERED THE SUM OF RS. 9 , 68 , 774/ - ON ACCOUNT OF CASH AND COMMISSION INCOME. HOWEVER, IN THE RETURN OF INCOME FILED FOR THE RELEVANT YEAR, THE ASSESSEE DID NOT OF FER THIS INCOME TO TAX. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE ACCEPTED RS. 4 , 40 ,48 8/ - AS UNACCOUNTED CASH. THE ASSESSING OFFICER HELD THAT THE BALANCE OF RS. 5,18 , 286/ - W A S UNACCOUNTED INCOME AND ADDED TO THE TOTAL INCOME OF RS. 9 , 68 , 774/ - TO THE INCOME OF THE ASSESSEE. THE ASSESSEE SUBMITTED THAT AFTER UPDATING THE BOOKS OF ACCOUNTS, THE CASH BALANCE ON 13 - 03 - 2006 WAS RS. 4,09,987/ - INTEREST INCOME OF CHEQUE DISCOUNTING INCOME WENT UP TO RS. 5,05,330/ - AS AGAINST RS. 35 , 80 1 / - SHOWN IN THE AC COUNT . T HEREFORE THERE WAS A DIFF ERENCE ONLY OF RS . 4,50,488/ - ,. T HEREFORE , ASSESSEE HAD NO EX P LANA TION FOR THE CASH DIFFERENCE OF RS. 4 , 50,4 88/ - DURING THE APPELLATE PROCEEDINGS . THE ASSESSEE ALSO SUBMITTED THAT HE WAS NOT PROVIDED COPIES OF THE STATEME NT S RECORDED I.T.A NO. 1062 /AHD/20 14 A.Y. 2006 - 07 PAGE NO M/S. J.R. SHROFF VS. DCIT 7 AT THE TIME OF SURVEY TO ENABLE HIM TO FURNISH ACCURATE DETAIL S AT THE TIME OF FILING OF RETURN. PERUSAL OF THE RECORD REVEALS THAT ASSESSEE HAD MADE APPLICATION ON 17 - 03 - 2006 AND 16 - 07 - 2008 REQUESTING THE ASSESSING OFFICER TO PROVIDE IT WITH COPIES OF THE STATEMENT S RECORDED AT THE TIME OF SURV EY. FROM THE ABOVE, IT APPEARS THAT ASSESSEE HAD COPY OF INVENTORIES OF CASH AND OTHER ITEM FOUND AT THE TIME OF SURVEY AND ONLY THE STATEMENT OF PARTNER WAS NOT AVAILABLE TO IT AND ASSESSEE COULD NOT DECLARE THE INCOME ON WHICH PENALTY WAS IMPOSED BECAUSE OF NON - AVAILABILITY OF THE SERVICE OF STATEMENT RECORDED BY THE DEPARTMENT. THEREFORE, THERE WAS A DIFFERENCE OF DECLARED INCOME . IN OUR CONSIDERED OPINION , IF ASSESSEE WOULD HAVE BEEN SUPPLIED THE SURVEY STATEMENT PRIOR TO FILING OF THE RETURN OF DISCLOSED INCOME, HE WOULD HAVE ALSO DECLARED THE SAME. IN SUCH CIRCUMSTAN CES, PENALTY CANNOT BE LEVIED . PENALTY CAN BE LE V IED IN WHOLE INCOME NOT IN PART WHEN BOTH THE INCOME S AS ENUMERATED IN THE IMPUGN ED ORDER WERE SURRENDERED AFTER SURVEY. IN OUR OPINION , ON PART INCOME OF A ONE SURVEY , PENALTY CANNOT I MPOSED . THEREFORE, PENALTY IS DELETED. APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PR ONOUNCED IN THE OPEN C OURT ON 11 - 11 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 11 /11 /2016 / COPY OF ORDER FORWARDED TO: - I.T.A NO. 1062 /AHD/20 14 A.Y. 2006 - 07 PAGE NO M/S. J.R. SHROFF VS. DCIT 8 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,