M/S.ROYAL ASSOCIATES, MUMBAI V. ACIT CIRCLE-2, KALYAN

ITA 1239/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8109 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 05-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAMAL MANGAL J
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 133A; 274; 131; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH MUM BAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMB ER & SHRI G. MANJUNATHA, ACCOUNTANT MEMB ER ITA NO.1239/MUM/2018 ( ASSESSMENT YEAR :2012-13 ) ROYAL ASSOCIATES 2 ND FLOOR, LAXMI SAGAR APARTMENT SHIV MANDIR ROAD AMBERNATH-421 501 VS. ACIT, CIRCLE-2 2 ND FLOOR MOHAN PLAZA WAYALE NAGAR KHADAKPADA KALYAN (W) PAN/GIR NO. AAKFR9661C APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI KAMAL MANGAL, JCIT-DR ASSESSEE BY NONE DATE OF HEARING 1 5 /01/2020 DATE OF PRONOUNCEMENT 22/01/2020 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)03, TH ANE, DATED 15/12/2017 AND IT PERTAINS TO ASSESSMENT YEAR 2012- 13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE COMMISSIONER OF INCOME TAX- (APPEALS) - 3, THANE [H EREINAFTER REFERRED TO AS CIT(A) ERRED .IN UPHOLDING THE PENALTY U/S 27 1 (1) (C) AMOUNTING TO RS. 8,52,840/- MADE BY ASSESSING OFFICER (HEREINAFT ER REFERRED TO AS THE A.O.)BY IGNORING THE FACT THAT NOTICE U/S. 274 R.W. S 271 {1} (C) WAS BAD IN LAW AS A.O WAS NOT CLEAR ABOUT THE CHARGE FOR LEVY OF PENALTY U/S. 271(1) (C). 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A)) ERRED IN CONFIRMING THE PENALTY U/S 271 {1} (C) AMOUNTING TO RS, ITA NO.1239/MUM/2018 ROYAL ASSOCIATES 2 8,52, 840/- MADE BY THE A.O, BY NEITHER BRINGING ON RECORD ANY EVIDENCE THAT AN AMOUNT OF RS, 2.7,60,000/- IS ON MONEY NOR MADE VERIFICATION OF THE FLAT BUYERS AND WITHOUT BRINGING ON RECORD ANY EVIDENCE THAT APPELLANT CONCEALED ANY PARTICULARS OF INCOME. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA .SE AND IN LAW THE CIT{A) ERRED IN CONFIRMING THE PENALTY U/S 271 (1) (C) AMOUNTING TO RS. 8,52,84O/- MADE BY THE AO. ON THE BASIS OF SUSPICI ON AND GUESS WORK, WITHOUT POINTING OUT ANY DEFECT FROM THE EXPLANATIO N OF THE APPELLANT AND BY IGNORING THE FACT THAT ITS NATURE S SOURCE WERE ACCEPTED BY SURVEY TEAM. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) ERRED IN UPHOLDING THE PENALTY U/S 271 (1) { C) AMOUNTING TO RS. 8,52,840/- MADE BY A.O, ON THE GROUND THAT NO QUANT UM APPEAL WAS FILED BY THE APPELLANT FIRM BY IGNORING THE FACT THAT THE RE ARE 20 PARTNERS, THE PROJECT WAS COMPLETED AND IN ORDER TO AVOID PAIN OF LITIGATION, THE PARTNERS DECIDED NOT TO FILE QUANTUM APPEAL. 5) THE REASONS MENTIONED IN THE ORDER ARE CONTRARY TO FACTS AND LAW. 6) THE APPELLANT CRAVES LEAVE TO ADD, AMEND, MODIF Y, AND ALTER ALL OR ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED ITS RETURN OF INCOME FOR AY 2012-13 ON 27/09/2012, DECL ARING TOTAL INCOME AT RS. 2,52,27,610/-. IN THIS CASE, A SURVEY ACTION U/S 133A OF THE I.T.ACT, 1961 WAS CARRIED OUT AT THE BUSINES S PREMISES OF THE ASSESSEE FIRM ON 02/02/2012. DURING THE COURSE OF S URVEY ACTION, A LOOSE PAPER BUNDLE CONTAINING RECEIPT OF ON-MONEY W AS FOUND. ACCORDINGLY, A STATEMENT OF SHRI VIKRAMRAJ AJITSIN GH CHAUHAN, ONE OF THE PARTNERS WAS RECORDED ON OATH U/S 131 OF THE I.T.ACT, ON 02/02/2012, WHERE HE HAD ADMITTED RECEIPT OF ON-MON EY OF RS. 3,38,74,015/- AND OUT OF WHICH AN AMOUNT OF RS. 27, 60,000/- HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE FIRM. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AR OF THE ASSESS EE WAS ASKED TO AS TO WHY THE AMOUNT OF RS. 27,60,000/- DEPOSITE D IN BANK ACCOUNT OF THE ASSESSEES FIRM SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN RESPONSE TO THE SAME, T HE LD. AR OF THE ITA NO.1239/MUM/2018 ROYAL ASSOCIATES 3 ASSESEE SUBMITTED THAT THE PARTNER OF THE FIRM HAS INTRODUCED CAPITAL OF RS. 27,60,000/- AND THE SAME HAD BEEN ACCOUNTED IN THE BOOKS OF ACCOUNTS, WHICH IS SOURCE FOR CASH DEPOSIT TO BA NK ACCOUNT OF FIRM. THE LD. AO DID NOT FIND MERIT IN THE SUBMISSI ONS OF THE ASSESEE AND ACCORDINGLY, MADE ADDITIONS OF RS. 27,60,000/- TOWARDS UNRECORDED SALES (ON-MONEY). THEREAFTER, PENALTY PR OCEEDINGS U/S 271(1)(C) OF THE I.T.ACT, 1961 WAS INITIATED FOR C ONCEALMENT OF PARTICULARS OF INCOME, AND AFTER CONSIDERING RELEVA NT SUBMISSION OF THE ASSESSEE LEVIED PENALTY OF RS. 8,52,840/-, WHIC H IS 100% OF TAX SOUGHT TO BE EVADED. 4. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESEE HAS FILED ELABORATE WRITTEN SUBMISSIONS ON THE ISSUE AL ONG WITH CERTAIN JUDICIAL PRECEDENTS, WHICH HAS BEEN REPRODUCED AT P ARA 4 ON PAGE 4 TO 15 OF LD.CIT(A) ORDER. THE SUM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFORE THE LD.CIT(A) ARE THAT CASH DEP OSITS FOUND IN BANK ACCOUNT OF FIRM IS OUT OF CAPITAL INTRODUCED B Y THE PARTNER, WHICH HAS BEEN RECORDED IN BOOKS OF ACCOUNTS AND EXPLAINE D BEFORE THE LD. AO. THEREFORE, THE LD. AO WAS INCORRECT IN LEVY OF CONCEALMENT PENALTY U/S 271(1)(C) OF THE I.T.ACT, 1961. THE LD. CIT(A) AFTER CONSIDERING RELEVANT FACTS AND ALSO TAKEN NOTE OF F ACTS GATHERED DURING THE COURSE OF SURVEY U/S 133A, INCLUDING STA TEMENT OF OATH RECORDED FROM THE PARTNER, CAME TO THE CONCLUSION T HAT WHEN, UNRECORDED SALES FOUND DURING THE COURSE OF SURVEY WAS CONFRONTED TO THE PARTNER, HE HAD ADMITTED THAT OUT OF UNRECOR DED SALES A SUM OF RS. 27,60,000/- HAS BEEN DEPOSITED IN BANK ACCOU NT OF THE FIRM. ACCORDINGLY, HE OPINED THAT THE ARGUMENTS OF THE AS SESEE THAT CASH DEPOSITS FOUND IN BANK ACCOUNT OF THE FIRM IS OUT O F CAPITAL ITA NO.1239/MUM/2018 ROYAL ASSOCIATES 4 CONTRIBUTION OF PARTNER IS INCORRECT. THEREFORE, HE OPINED THAT THERE IS NO ERROR IN LEVY OF PENALTY U/S 271(1)(C) FOR CONCE ALMENT OF PARTICULARS OF INCOME . ACCORDINGLY, CONFIRMED PENA LTY LEVIED BY THE LD. AO AND DISMISSED, APPEAL FILED BY THE ASSESSEE. AGGRIEVED BY THE LD.CIT(A) ORDER, THE ASSESEE IS IN APPEAL BEFOR E US. 5. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD TH E LD. DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE T HROUGH ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. AO HAS LEVIED PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME, IN RESPECT OF ADDITIONS OF RS. 27,60,000/- MADE TOWARDS ON-MONEY RECEIPT, WHICH IS FOUND DEPOSITED IN BANK ACCOUNT OF THE FIRM, ON THE BASIS OF STATEMENT OF ONE OF THE PARTNERS OF THE FIRM DURING THE COURSE O F SURVEY PROCEEDINGS. ACCORDING TO THE LD. AO, ALTHOUGH THE ASSESSEE HAS EXPLAINED THAT CASH DEPOSITS FOUND IN BANK ACCOUNT OF THE FIRM IS OUT OF CAPITAL CONTRIBUTION FROM THE PARTNER, BUT SUCH CAPITAL CONTRIBUTION IS ALSO OUT OF UNRECORDED SALES OF FIRM (ON-MONEY). THEREFORE, THE CLAIM OF THE ASSESEE THAT CASH DEPOSITS IN BANK ACC OUNT HAS BEEN RECORDED IN BOOKS OF ACCOUNTS AND EXPLAINED IS FOUN D TO BE INCORRECT. FURTHER, DURING THE COURSE OF SURVEY, IN THE STATEMENT RECORDED U/S 131 OF THE ACT, THE PARTNER OF THE FIR M HAS CATEGORICALLY STATED THAT THE FIRM HAS RECEIVED ON- MONEY AND OUT OF WHICH AN AMOUNT OF RS. 27,60,000/- HAS BEEN DEPOSITED IN THE BANK ACCOUNTS OF THE FIRM AND THE SAME HAS BEEN ACCOUNTED FOR AS CAPITAL INTRODUCED BY THE PARTNER OF THE FIRM. THEREFORE, W E ARE OF THE CONSIDERED VIEW THAT THE ARGUMENTS OF THE ASSESSEE THAT CASH DEPOSITS FOUND IN BANK ACCOUNT OF THE FIRM IS OUT O F CAPITAL CONTRIBUTION FROM THE PARTNERS AND IT IS NOTHING TO DO WITH ON-MONEY RECEIVED BY FIRM FOUND TO BE INCORRECT. ACCORDINGL Y, WE ARE OF THE ITA NO.1239/MUM/2018 ROYAL ASSOCIATES 5 CONSIDERED VIEW THAT THERE IS NO ERROR IN THE FINDI NGS RECORDED BY THE LD. AO, AS WELL AS THE LD.CIT(A) IN LEVYING PENALTY U/S 271(1)(C) OF THE I.T.ACT, 1961, FOR CONCEALMENT OF PARTICULARS O F INCOME, BECAUSE THE ASSESSEE HAS CLEARLY CONCEALED PARTICULARS OF I TS INCOME. INSOFAR AS, THE GROUNDS TAKEN BY THE ASSESSE CHALLENGING TH E VALIDITY OF NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT, 1961, WE FIND THAT THE LD. AO HAS ARRIVED AT CLEAR SATISFACTION DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BEFORE INITIATION OF PENAL TY PROCEEDINGS AND CHARGED THE ASSESSEE FOR CONCEALMENT OF PARTICU LARS OF INCOME. FURTHER, THE PENALTY PROCEEDINGS HAS BEEN INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME AND FINALLY PENALTY HAS BE EN LEVIED FOR CONCEALMENT OF INCOME. THEREFORE, WE ARE OF THE CON SIDERED VIEW THAT THERE IS NO MERIT IN GROUND TAKEN BY THE ASSES SEE IN LIGHT OF NOTICE ISSUED U/S 274 R.W.S 271(1)(C) OF THE I.T.AC T, 1961, BECAUSE ONCE A PROPER SATISFACTION HAS BEEN RECORDED BEFORE INITIATION OF PENALTY PROCEEDINGS OR DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THEN SUBSEQUENT ISSUE OF NOTICE U/S 27 4 R.W.S. 271(1)(C) OF THE I.T.ACT, 1961, IS A FORMALITY TO COMMUNICATE THE ASSESSEE, THE PROCEEDINGS INITIATED UNDER THE ACT. HENCE, WE REJECT GROUND TAKEN BY THE ASSESEE CHALLENGING VALIDITY OF NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE I.T.ACT, 1961. 6. IN THIS VIEW OF THE MATTER AND CONSIDERING FACTS AND CIRCUMSTANCES OF THIS CASE, WE ARE OF THE CONSIDERE D VIEW THAT THERE IS NO ERROR IN FINDINGS RECORDED BY THE LD.CIT(A) I N CONFIRMING PENALTY LEVIED U/S 271(1)(C) OF THE I.T.ACT, 1961. HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD.CIT(A) AN D DISMISSED, APPEAL FILED BY THE ASSESSEE. ITA NO.1239/MUM/2018 ROYAL ASSOCIATES 6 7. IN THE RESULT, APPEAL FILED BY THE ASSESEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 /01 /2020 SD/- (SAKTIJIT DEY) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 22/01/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//