Jyoti Deepak Bhivpathaki, V. Deputy Commissioner of Income-tax,

ITA 1370/PUN/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7500 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 21-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: K SRINIVASAN
• Keywords: Search and seizure; Document seized; Documents seized
• Section: 133A; 43; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 1370 /PUN/201 6 / ASSESSMENT YEAR : 20 04 - 05 JYOTI DEEPAK BHIVPATHAKI, 536, SHANIWAR PETH, PUNE 411030 PAN : AAVPB4241M ....... / APPELLANT / V/S. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE / RESPONDENT ASSESSEE BY : SHRI K. SRINIVASAN REVENUE BY : SHRI S.P. WALIMBE / DATE OF HEARING : 20 - 01 - 2020 / DATE OF PRONOUNCEMENT : 29 - 01 - 20 20 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 16 - 02 - 2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 12, PUNE [CIT(A)] FOR ASSESSMENT YEAR 2004 - 05. 2 ITA NO. 1370/PUN/2016, A.Y. 2004 - 05 2. THIS APPEAL WAS FILED WITH A DELAY OF 37 DAYS. THE ASSESSEE FILED AN AFFIDAVIT EXPLAINING THE REASONS FOR DELAY. AFTER HEARING BOTH THE PARTIES, WE FIND THAT TH E REASONS STATED BY THE ASSESSEE ARE BONAFIDE WHICH REALLY PREVENTED THE ASSESSEE TO FILE THE PRESENT APPEAL IN TIME. THEREFORE, THE DELAY OF 37 DAYS ARE CONDONED. 3. GROUND NO. 1 RAISED BY THE ASSESSEE CHALLENGING THE ACTION OF CIT(A) IN CONFIRMING THE ADDITION OF RS.8,35,483/ - ON ACCOUNT OF SUPPRESSED GP. 4. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT A SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 26 - 07 - 2005 AT THE RESIDENTIAL PREMISES OF THE ASSESSEE. SIMULTANEOUSLY , A SURVEY ACTION WAS ALSO INITIATED U/S. 133A OF THE ACT ON THE BUSINESS PREMISES OF EVEREST PUBLISHING HOUSE IN WHICH THE HUSBAND OF ASSESSEE IS ONE OF THE DIRECTORS . PURSUANT TO THE SEARCH, THE AO ISSUED NOTICE U/S. 153A(B) ISSUED TO THE ASSESSEE BUT N O RETURN OF INCOME WAS FILED BY THE ASSESSEE. AS THERE WAS NO RESPONSE FROM THE ASSESSEE , THE SUMMON S U/S. 131 OF THE ACT ISSUED REQUIRING HER PERSONAL APPEARANCE . THE ASSESSEE FILED RETURN OF INCOME FOR A.Y. 2001 - 02 ON 17 - 09 - 2007 DECLARING A TOTAL INCOM E OF RS.5,83,220/ - BUT HOWEVER THE AO ON THE BASIS OF SEIZED DOCUMENTS WHICH IS AT PAGE NO. 15 I.E. LOOSESHEET SAID TO HAVE BEEN DATED 07 - 04 - 2004 WHEREIN THE GP HAS BEEN SHOWN AT 45.27% ADDED AN AMOUNT OF RS.8,35,483/ - ON ACCOUNT OF SUPPRESSED GP. WE NOTE THAT THE ASSESSEE CLAIMED EXPENDITURE IN THE NATURE OF TYPESETTING CHARGES AND ROYALTY CHARGES OVER AND ABOVE PURCHASES RECORDED IN THE SEIZED PAPER. THE LD. DR SUBMITTED THAT SUCH 3 ITA NO. 1370/PUN/2016, A.Y. 2004 - 05 EXPENDITURE WAS NOT CLAIMED IN THE EARLIER YEARS AND THERE WAS NO DEBIT T O THE ACCOUNT SEPARATELY. THE CIT(A) ALSO OBSERVED THAT THE ASSESSEE DID NOT FILE ANY DETAILS REGARDING TYPESETTING CHARGES AND ROYALTY WHICH WAS CLAIMED TO HAVE BEEN RECORDED IN THE SEIZED DOCUMENTS AND WE FIND NO SUCH EVIDENCE TO BROUGHT ON RECORD BEFOR E THIS TRIBUNAL. THEREFORE, WE COMPLETELY AGREE WITH THE REASONS RECORDED BY THE CIT(A) IN ITS IMPUGNED ORDER AT PARA NO. 44.4 AND IT IS JUSTIFIED. THE RELEVANT PORTION OF CIT(A) IS REPRODUCED HERE - IN - BELOW : 44.4 I HAVE GONE THROUGH THE TRADING A/C FILES ALONGWITH THE RETU RN O F IN COME F I LED IN RESPONSE TO NOT I CE U/S. 1 53A AND IT WAS NOTED THAT THE G R OS S PROFIT DECLARED I N THE TRADING A /C WAS OF RS.18,63,882/ - AS AGAINST R EV I SED GROSS PROFIT OF RS.18 , 47,307 / - DECLARED IN THE WORKING FURNISHED BEFORE ME . NO SEPARATE ROYALTY OR TYPESETTING CHARGES WERE MENTIONED IN THE T RAD ING AI C FILED ALONGWITH THE AUDIT REPORT. TOTAL DIRECT EXPENSES WERE DEB I TED UNDER THE HEAD ' PURCHASES ' ONLY WH I CH TOTALED TO RS . 42,85 , 777 / - A S AGAIN ST PURCHASES OF RS.32, 53,527 / - RECORDED IN TH S E SEIZED PAPER . APPELLANT D I D NOT FURNISH ANY DETAIL REGARDING TYPESETTING CHARGES AND ROYALTY WHICH WA S CLAIMED TO HAVE BEEN NOT FOUND RECORDED ON THE SEIZED PAPE R . TRADING A /C FILED ALONGWITH THE RETURN AND FILED DURING THE COURSE OF APPEL LATE P R OCEEDINGS DI D NOT MATCH AND THEREFORE, NOT CREDIBLE. NO SUCH CL AIM WAS M ADE BEFORE THE AO. IT IS TO BE NOTED THAT FOR AY 2000 - 01 , THE G R OSS PROFIT BEFORE THE SEARCH WAS DISCLOSED AT 14.39% WHICH WAS REV I SED UPWARD TO 3 1 . 18% AF T ER THE SEARCH AND IN THE PUBLISHING DIVISION, G R OSS PROFIT DISCLOSED WAS 43 . 42 % . IN NONE OF THE PROFIT & LOSS AND TRADING A/C, APPE L LANT HAS DEBITED SEPARATE TYPESETTING CHARGES OR ROYALTY CHARGES. NO DETA I LS WERE FURNISHED SEPARATELY IN RESPECT OF PARTY TO WHOM ROYALTY OR TY PESETTING CHARGES WERE PAID. EXPENDITURE OF THIS NATURE WERE CLAIMED FOR T HE FIRST TIME WH I CH WERE NOT POINTED OUT BEFORE THE AO DUR I NG THE COURSE OF ASS E SSMENT P R OCEEDINGS. THEREFORE, CLAIM OF APPELLANT THAT THERE WERE EXP E NDITURE SPECIALLY DURING THIS YE AR IN NATURE OF TYPESETTING CHA R GES AND ROYALTY CHARGES OVER AND ABOVE THE PURCHASES RECORDED IN T H E SEIZED PAPER IS NOT FOUND GENUINE. AO WAS RIGHT IN ADOPTING THE GROSS PROFIT AS F OUND R ECORDED ON THE SEIZED PAPER AS TRADING AIC FILED LATER WAS NOT CREDIBLE. ADDITIO N MADE OF RS . 8,35,483 / - IS UPHELD AND GROUND RAISED BY THE APPELLANT IS DISMISSED. 5. IN VIEW OF THE ABOVE, GROUND NO. 1 RAISED BY THE ASSESSEE IS DISMISSED. 4 ITA NO. 1370/PUN/2016, A.Y. 2004 - 05 6. GROUND NO. 2 RAISED BY THE ASSESSEE CHALLENGING THE ACTION OF CIT(A) IN RESTRICTING THE DISALLOWANCE AT 10% AS AGAINST THE 20% MADE BY THE AO IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CONTEN TION OF THE LD. AR IS THAT THE AO MADE SAID DISALLOWANCE ON AD HOC BASIS AND THE ADDITION THEREON IS NOT MAINTAINABLE FOR THE REASON THE SAID DISALLOWANCE MADE ON THE BASIS OF ESTIMATION. THE ASSESSEE IS A PROPRIETOR OF EVEREST PUBLISHING HOUSE. THE ASSE SSEE HAS SHOWN SALES TURNOVER OF RS. 52,28,841/ - FROM TRADING FROM PUBLISHING UNITS AND WORKED OUT THE GROSS PROFIT OF RS.18,63,882/ - . THE ASSESSEE CLAIMED EXPENDITURE OF RS.15,36,581/ - . THE ASSESSEE WAS ASKED TO PRODUCE EVIDENCE IN RESPECT OF SAID EXPENS ES BUT HOWEVER NO EVIDENCE WAS PRODUCED BEFORE THE AO. IT WAS SUBMITTED THAT THE VOUCHER FILE OF VARIOUS EXPENSES IS NOT READILY TRACEABLE. FOR WANT OF EVIDENCE THE AO DISALLOWED THE EXPENSES AT 20% AND ADDED AN AMOUNT OF RS.3,50,837/ - BY ALLOWING DEPREC IATION OF RS.3,37,035/ - . THE CIT(A) DIRECTED THE AO TO RESTRICT DISALLOWANCE AT 10% EXCLUDING BANK CHARGES, SALARY, POSTAGE AND TELEPHONE ETC. WE FIND THAT THE SEARCH RESULTING TO SURVEY OPERATION INVOLVING THE BLOCK PERIOD 2000 - 01 TO 2005 - 06 , WE FIND M ERITS IN THE ARGUMENTS OF LD. AR OF ASSESSEE THAT THE VOUCHERS RELATING TO EXPENSES WERE NOT TRACEABLE AS IT DATES BACK TO THE FINANCIAL YEAR 2003 - 04 AND REQUESTED TO DELETE THE ADDITION RESTRICTED BY THE CIT(A) AT 10%. TAKING INTO CONSIDERATION SUBMISSIO NS OF LD. AR AND FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THE ADDITION MADE ON THE BASIS OF ESTIMATION , T HEREFORE, IN THE INTEREST OF JUSTICE, WE RESTRICT 5 ITA NO. 1370/PUN/2016, A.Y. 2004 - 05 THE ADDITION TO 5% AS MADE BY THE CIT(A). THUS, GROUND NO. 2 RAISED BY THE ASSESSEE IS PARTLY AL LOWED. 8. GROUND NO. 3 IS GENERAL IN NATURE, HENCE, REQUIRES NO ADJUDICATION AND IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2020 . SD/ - SD/ - ( D. KARUNAKARA RAO ) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBE R / PUNE; / DATED : 29 TH JANUARY, 2020 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 12, PUNE 4. THE PR. C.I.T. CENTRAL, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // // TRU E COPY // / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE