The ACIT, Central Circle-1, RAJKOT-GUJARAT V. M/s Balaji Wafers Pvt. Ltd., RAJKOT-GUJARAT

ITA 1280/RJT/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89154 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-03-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 22-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: MJ RANPURA
• Keywords: Document seized; Revised return; Documents seized; Reassessment proceedings
• Section: 143(3); 147; 27; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI, ACCOUNTANT MEMBER. ITA. NO. 1280/RJT/2010 (ASSESSMENT YEAR:1999-2000) ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1,RAJKOT APPELLANT VS. M/S. BALAJI WAFERS PVT. LTD. VAD VAJDI, KALAVAD ROAD, RAJKOT RESPONDENT PAN: AAACB8755A /BY APPELLANT : SHRI AVINASH KUMAR, D.R. /BY RESPONDENT : SHRI M. J. RANPURA, C.A. /DATE OF HEARING :19.03.2015 /DATE OF PRONOUNCEMENT : 27.03.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IV, AHMEDABAD, DATED SEPTEMBER 14, 2010 FOR A.Y. 1999-2000 ON THE FOLLOW ING GROUNDS. ITA NO. 1280/RJT/10 A.Y. 1999-2000 [ACIT VS. M/S. BALAJI WAFERS PVT. LTD.] PAGE 2 1. THE L EA R NED CIT(A) ERRED I N LAW AND ON FACTS I N DELETING PENALTY OF RS . 16 , 54 , 292/- LEVIED BY THE ASSESS I NG OFFICER BY H O LD IN G THAT PENALTY CANNOT BE LEVIED I N RESPECT OF THE ADDITION MADE ON ESTIMATE BASIS BY APPLYING THE GROSS PROF I T RATE . 2. IN DOING SO , THE LD. CIT(A) FAILED TO APPRECIATE THAT WHERE THERE IS A JUSTIFICATION FOR THE ADMISSION OF INCOME, AS IN THE INSTANT CASE, THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THERE IS NO CONCEALMENT AND WHERE THERE IS FAILURE IN THAT DIRECTION TO DISCHAR GE THE BURDEN, PENALTY IS LEVIA B LE . 3. THEREFORE ON THE F ACTS A ND I N T HE C I RCUMSTANCES OF T H E CASE , T HE LD . CIT ( A) OUGHT TO H AVE UPHE L D THE ORDER U/S . 2 7 1(1 ) OF T HE AC T I MPOSING THE PENAL T Y O F RS . 1 6 , 54 , 292/- PASSED BY THE ASSESS I NG OFFICER . 2. ASSESSING OFFICER IMPOSED PENALTY OF RS.16,54,29 2/- U/S. 271(1)(C) OF THE ACT ON ACCOUNT OF ADDITION OF ADDI TIONAL INCOME OF RS.20 LACS IN THE RETURN FURNISHED IN RESPONSE T O NOTICE ISSUE U/S. 148 OF THE ACT AND ON THE ESTIMATED ADDI TION OF RS.3,63,275/-. THE SEARCH AND SURVEY PROCEEDINGS W ERE CARRIED OUT IN CASE OF ASSESSEE ON 27.10.2006. DUR ING SEARCH, DOCUMENTS INDICATING UNACCOUNTED SALES THROUGH ITS NETWORK OF DEALERS WERE FOUND AND RELEVANT DOCUMENTS WERE S EIZED . SEIZED DOCUMENTS ALSO GAVE A INDICATION THAT UNACCO UNTED SALES WERE GOING ON OVER THE YEARS INCLUDING A.Y. 1 999-2000. UNDISCLOSED SALES PERTAINING TO YEAR UNDER CONSIDER ATION WERE FOR RS . 6,54,12,063/-. ON THE BASIS OF INFORMATION RECEIVED FROM THE ADDITIONAL DIT (INV.) , A NOTICE U/S 148, DATED 29.03 . 2006 WAS ISSUED AND ASSESSEE FURNISHED ITS RETURN O F ITA NO. 1280/RJT/10 A.Y. 1999-2000 [ACIT VS. M/S. BALAJI WAFERS PVT. LTD.] PAGE 3 INCOME ON 22.12 . 2006 DECLARING INCOME OF RS.13,73,793/- INCLUDING THE ADDITIONAL INCOME OF RS . 20 , 00 , 000/- WHICH WAS NOT DISCLOSED IN THE ORIGINAL RETURN FILED U/S. 139 (1) OF THE ACT . A SSESSMENT U/S. 143(3) R . W . S . 147 WAS COMPLETED ON THE TOTAL INCOME OF RS . 24,64 , 230/- . THE ADDITION OF RS . 10,90 , 436/- MADE FOR PROFIT ON SUPPRESSED SALES WAS REDUCED TO RS . 3 , 63 , 275/- IN SECOND APPEAL . PENALTY PROCEED I NGS WERE INITIATED DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS. ASSESSEE FURNISHED DETAILED SUBMISSION IN RESPONSE TO SHOW CAUSE NOTICE OF PENALTY WHICH IS REPRODUCED IN PARA 4 OF PENALTY ORDER . THE SUBMISSION OF ASSESSEE WAS CLAIMED TO BE NOT CONSIDERED SATISFACTORY BY ASSESSING OFFICER AN D HE HAD IMPOSED THE PENALTY OF RS. 16 , 54,292/- U/S 271(1)(C) OF THE ACT APPLYING THE RATE OF 200% OF TAX SOUGHT TO BE EVADE D. ASSESSING OFFICER HAD ALSO GIVEN FINDING THAT BOTH THE INGREDIENTS (RS. 20 , 00 , 000 AND RS . 3,63,275) GET MERGED AT THE END BECAUSE THE BASIS OF CONCEALMENT OF INCOME WAS ADMITTEDLY SUPPRESSED SALES. 3. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED AND HAVING CONSIDERED THE SAME, CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE . SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE INTER A LIA SUBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN DELETING PENALTY OF RS . 16 , 54 , 292/- LEVIED BY ASSESS I NG OFFICER BY H O LD IN G THAT PENALTY CANNOT BE LEVIED I N RESPECT OF THE ADDITION MADE ON ITA NO. 1280/RJT/10 A.Y. 1999-2000 [ACIT VS. M/S. BALAJI WAFERS PVT. LTD.] PAGE 4 ESTIMATE BASIS BY APPLYING THE GROSS PROF I T RATE . CIT(A) FAILED TO APPRECIATE THAT WHERE THERE IS JUSTIFICATION FOR ADMISSION OF INCOME, AS IN THE INSTANT CASE, THE BURDEN IS ON ASSESSEE TO PROVE THAT THERE WAS NO CONCEALMENT AND WHERE THERE IS FAILURE IN THAT DIRECTION TO DISCHAR GE THE BURDEN, PENALTY IS LEVIA B LE . I N T HE C I RCUMSTANCES, CIT ( A) OUGHT TO H AVE UPHE L D THE ORDER U/S . 2 7 1(1 )(C) OF T HE AC T I MPOSING PENAL T Y O F RS . 1 6 , 54 , 292/- PASSED BY ASSESS I NG OFFICER. ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SUPPO RTED THE ORDER OF CIT(A) AND STATED THAT THIS ISSUE IS COVER ED IN FAVOUR OF ASSESSEE BY VARIOUS DECISIONS. 4. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERI AL ON RECORD, WE FIND THAT DURING POST SURVEY/SEARCH PROC EEDINGS, ASSESSEE DISCLOSED ADDITIONAL INCOME OF RS.300.00 L ACS VIDE LETTER DATED 30.11.2005 ON ADHOC BASIS WHICH WAS LA TER ON REVISED TO RS.440.00 LACS ON ADHOC BASIS FOR VARIOU S YEARS VIDE LETTER DATED 30.01.2006 SUBJECT TO CONDITION THAT I MMUNITY FROM PENALTY PROCEEDINGS IS GRANTED. ASSESSEE SPEC IFICALLY MENTIONED IN AFORESAID LETTER THAT DETAILED BREAKUP AS TO YEAR- WISE INCOME. INVESTMENT/EXPENSES ETC. SHALL BE FURN ISHED ALONG WITH RETURNS TO BE FILED IN DUE COURSE. THE ADDITIONAL INCOME OF RS.20.00 LACS DECLARED FOR THE YEAR UNDER CONSIDERATION WAS PART OF TOTAL ADMITTED INCOME OF RS.440.00 LACS. AS ASSESSEE IN RETURN FILED IN RESPONSE TO NOT I CE U/ S 1 4 8, DISCLOSED THE SAID INCOME . ACCORDING TO ASSESSEE, NO PENALTY IS ITA NO. 1280/RJT/10 A.Y. 1999-2000 [ACIT VS. M/S. BALAJI WAFERS PVT. LTD.] PAGE 5 LEVIABLE IN CASE OF ASSESSEE BECAUSE ADDITIONAL INC OME DISCLOSED BY ASSESSEE IN RETURN OF INCOME F I LED U/S 148 WAS NOT DUE TO THE FINDING OF ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS . WE FIND THAT ASSESSEE HAD DISCLOSED THE INCOME OF RS . 440 . 00 LACS VIDE ITS LETTER DATED 30.01 . 2006 . ASSESSING OFFICER HAD RECEIVED THE INTIMATION OF SU PPRESSED SALES FROM THE ADDITIONAL DIT (INVESTIGATION) , RAJKOT, VIDE HIS LETTER 24.03.2006 AND ON THAT BASIS THE ASSESSING O FFICER HAD REOPENED THE CASE FOR THE AY . 1999-2000 VIDE NOTICE U/S 148 DATED 29.03.2006, WHICH SHOWS THAT ASSESSIN G OFFICER AS ONLY HAVING THE DETAILS OF SUPPRESSED SALES ON T HE DATE OF INITIATION OF RE-ASSESSMENT PROCEEDINGS. HE WAS NOT HAVING THE DETAILS OF UNDISCLOSED INCOME EMBEDDED IN THE SUPPR ESSED SALES . WHEREAS , ASSESSEE HAD DISCLOSED INCOME OF RS. 20.00 LAKHS EMBEDDED IN SUPPRESSED SALES LONG BACK VIDE I TS LETTER DATED 30.01 . 2006 . THUS, THE DISCLOSURE OF INCOME OF RS . 20 . 00 LAKHS WAS VOLUNTARY AND WAS DISCLOSED BEFORE THE IN ITIATION OF REASSESSMENT PROCEEDINGS . WE FIND THAT HON ' BLE SUPREME COURT IN THE CASE OF SUDARSHAN SILKS & SAREES VS. C IT 300 ITR 205 (SC) WHEREIN PURSUANT TO A SEARCH , ASSESSEE FILED ITS REVISED RETURNS DECLARING ADDITIONAL INCOME AS ESTI MATED BY SEARCH PARTY. ASSESSING OFFICER ACCEPTED THOSE RETU RNS IN TOTO BUT LEVIED MAXIMUM PENALTY UNDER SECTION 271(1)(C) UPON ASSESSEE . HOWEVER, COMMISSIONER (APPEALS) AS WELL AS TRIBUNAL DELETED PENALTY BY OBSERVING THAT SEARCH HAD MERELY LED TO UNDISCLOSED INCOME AND IT WOULD NOT HAVE BEEN POSSI BLE FOR ITA NO. 1280/RJT/10 A.Y. 1999-2000 [ACIT VS. M/S. BALAJI WAFERS PVT. LTD.] PAGE 6 DEPARTMENT TO ASSESS UNDISCLOSED INCOME OVER ALL YE ARS WITHOUT ASSESSEE'S CO - OPERATION . THIS FINDING OF THE CIT(A) AS WELL AS OF THE TR I BUNAL WAS RESTORED BY THE HON'BLE SUPREME COURT BY SETTING ASIDE THE ORDER OF THE HON ' BLE KARNATAKA HIGH COURT BY HOLDING THAT ACCORDINGLY, THE ORDER UNDER APPEAL WAS TO BE SET ASIDE AND THAT OF THE COMMISSIONER (APPEALS) AND THE TRIBUNAL WERE TO BE RESTORED. IN FACTS AND CIRCUMSTANCES, PENALTY UNDER SECTION 271(1)(C) WAS NOT EXIGIBLE . WE ALSO FIND THAT HON'BLE PUNJAB & HARYANA H I GH COURT IN CASE OF CIT VS. RAJIV GARG [2009] 313 I TR 256 (P&H.) WHEREIN IT WAS HELD THAT T HE REVISED RETURN FILED BY THE ASSESSEE WAS ACCOMPANIED BY A NOTE IN WHICH HE HAD SUBMITTED THAT HE HAD SURRENDERED THE ENTIRE AMOUNT OF SALE PROCEEDS OF SHARES TO BUY PEACE OF MIND AND TO AVOID HAZARDS OF LITIGATION AND ALSO TO SAVE HIMSELF FROM ANY PENAL ACTION. DURING COURSE OF ASSESSMEN T, T H E AFORESAID EXPLANATION GIVEN BY ASSESSEE WAS NEITHER REJECTED NOR IT WAS HELD TO BE MALA FIDE. THE TRIBUNAL HAD RECORDED A PURE FINDING OF FACT TO THE EFFECT THAT ASSESSING OFFICER HAD NOT PLACED ON RECORD ANY MATERIAL OR EVIDENCE TO DISCHARGE H I S BURDEN OF PROVING CONCEALMENT. IN THE ASSESSMENT ORDER, NO SUCH FINDING HAD BEEN RECORDED. ASSESSING OFFICER HAD SIMPLY RES TED HIS CONCLUSION ON ASSESSEE OF HAVING OFFERED ADDITIONAL INCOME IN REVISED RETURN FILED IN RESPONSE TO NOTIC E ISSUED UNDER SECTION 148. THE TRIBUNAL HAD FURTHER HELD THAT ITA NO. 1280/RJT/10 A.Y. 1999-2000 [ACIT VS. M/S. BALAJI WAFERS PVT. LTD.] PAGE 7 ADDITIONAL INCOME SO OFFERED BY ASSESSEE WAS DONE IN GOOD FAITH AND TO BUY PEACE OF MIND. HONBLE PUNJAB & HARYANA HIGH COURT FOLLOWING HONBLE APEX COURT DECISION IN CASE OF CIT VS. SURESH CHANDRA MITTAL [ 2001] 251 ITR 9 (SC) HAS UPHELD THE DECISION OF MADHYA PRADESH HIGH COURT RENDERED IN CASE OF CIT VS. SURE SH CHANDRA MITTAL [2000] 241 ITR 124 WHEREIN SIMILAR CIRCUMSTANCES, IT WAS HELD THAT INITIAL BURDEN LIES ON REVENUE TO ESTABLISH THAT ASSESSEE HAD CONCEALED INCOME AND HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE BURDEN SHIFTS TO ASSESSEE ONLY IF HE FAILS TO OFFER ANY EXPLANATION FOR THE UNDISCLOSED INCOME OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE BY ASSESSING OFFICER . IN THE INSTANT CASE, IN PURSUANCE TO NOTICE UNDER SECTION 148, REVISED RETURN OF INCOME WAS FILED IN WHICH ENTIRE INCOME WAS SURRENDERED WITH AN EXPLANATION. THE REVISED ASSESSMENT WAS REGULARIZED BY THE REVENUE. ASSESSING OFFICER HAD FAILED TO TAKE A NY OBJECTION THAT DECLARATION OF INCOME MADE BY ASSESSEE IN HIS REVISED RETURN AND HIS EXPLANATION WERE NOT BONA FIDE. THEREFORE, IMPUGNED ORDER OF TRIBUNAL WAS HELD JUSTIFIED AND ACCORDINGLY UPHELD. IN THIS BACKGROUND, CIT(A) RIGHTLY OBSERVED THAT CASE OF AS SESSEE IS SQUARELY COVED BY THE AFORESAID DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT AS REFERRED TO ABOVE. IN VIEW OF DISCUSSION, IN LIGHT OF SUDARSHAN SILKS & SAREES (S UPRA) AND ITA NO. 1280/RJT/10 A.Y. 1999-2000 [ACIT VS. M/S. BALAJI WAFERS PVT. LTD.] PAGE 8 CIT V . SURESH CHANDRA MITTAL (SUPRA) AND CIT VS . RAJIV GARG (SUPRA), CIT(A) RIGHTLY HELD THAT ASSESS I NG OFFICER WAS NOT JUST I FIED I N LEVYING PENALTY U/S 271 (1 )(C) OF THE ACT ON THE ADDITIONAL INCOME OF RS . 20.00 LACS SO DISCLOSED IN THE RETURN OF INCOME FURNISHED IN RESPONSE TO NOTICE ISSUED U/ S 148 OF THE ACT . WITHOUT PREJUDICE TO ABOVE, CIT(A) OBSERVED THAT ASSESSING OFFICER VIDE PARA-5(3) OF PENALTY ORDER H AD OBSERVED THAT BOTH THE INGRED I ENTS ( 20,00,000 AND RS. 3,63,275) GET MERGED AT THE END BECAUSE THE BASIS OF CONCEALMENT OF I NCOME IS ADMITTEDLY SUPPRESSED SALES . IF IT IS CONSIDERED, THEN THE WHOLE OF THE ADDITION WAS MADE BY APPLYING THE PART ICULAR PROFIT RATE AND THE SAID ADDITION IS ONLY ON ESTIMA TED BASIS. THE PENALTY CANNOT BE LEVIED ON ESTIMATED INCOME AS HEL D BY HON'BLE GUJRAT HIGH COURT IN CASE OF CIT VS. SUBHAS H TRADING CO. 221 ITR 110 (GUJ) . SIMILAR VIEW WAS EXPRESSED BY RAJKOT BENCH IN ASSESSEES OWN CASE IN ITA NO. 15/RJT/2011 FOR A.Y. 2000-01 IN CASE OF ACIT VS. M/S. BALAJI WAFERS PVT. LTD. IN THIS BACKGROUND, PENALTY WAS NOT JUSTIFIED AND SAME HAS BEEN RIGHTLY DELETED BY CIT(A). 4.1 COMING TO SECOND LIMB OF IMPOSITION OF PENALTY IS RELATED TO ADDITION MADE ON ACCOUNT OF PROFIT ON SUPPRESSED SALES. ASSESSING OFFICER HAD MADE ADDITION OF RS. 10,90 , 436/- BY APPLYING THE PROFIT RATE OF 8.5% ON THE UNACCOUN TED SALES. IN APPEAL, CIT(A) HAD RESTRICTED THE PROFIT RATE AT 6 . 5%. IN APPEAL BEFORE THE TRIBUNAL, THE PROFIT RATE OF 6 . 5% WAS HELD ITA NO. 1280/RJT/10 A.Y. 1999-2000 [ACIT VS. M/S. BALAJI WAFERS PVT. LTD.] PAGE 9 REASONABLE BY ITAT , RAJKOT . THUS, ADDITION MADE FOR RS . 10,90,436/- BY ASSESSING OFFICER CAME TO RS. 3,63,2 75/- AFTER APPELLATE ORDER OF CIT(A) AND SAME HAD CONFIRMED BY TRIBUNAL AS STATED ABOVE. IN VIEW OF ABOVE, CIT(A) JUSTIFIED IN DELETING PENALTY OF CONCEALMENT OF INCOME ON ADDITIONAL INCO ME DISCLOSED FOR RS. 20 LACS AS WELL AS ON ESTIMATED I NCOME OF RS.3,63,275/- WHICH WAS RIGHTLY DELETED BY CIT(A). WE UPHOLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF MARCH, 2015. SD/- SD/- (N. S. SAINI) (SHAILENDR A KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R RAJKOT : DATED 27/03/2015 S K SINHA COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, RAJKOT. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT