Shri Jayendra Nandlal Shah, Vadodara V. The Asstt. Commissioner of Income Tax, Circle-3, Baroda

ITA 1383/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2659 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Document seized; Documents seized
• Section: 69C; 143(3); 153A; 132

Judgement Text

, CH CHCH CH IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD L LL LK KK KOZJH OZJH OZJH OZJH OLHE OLHE OLHE OLHE VGEN VGEN VGEN VGEN] YS[KK ] YS[KK ] YS[KK ] YS[KK LNL; ,O LNL; ,O LNL; ,O LNL; ,O EK/KQFERK EK/KQFERK EK/KQFERK EK/KQFERK JKW; JKW;JKW; JKW;] U;KF;D ] U;KF;D ] U;KF;D ] U;KF;D LNL; LNL; LNL; LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NOS.1381 TO 1385/AHD/2016 ( / ASSESSMENT YEARS : 2006-07,2007-08,2008-09, 2009-10 & 2010-11) SHRI JAYENDRA NANDAL SHAH, JANOD, 4, AMRAKUNJ SOCIETY, ELLORA PARK, VADODARA 390 007. / VS. ACIT, CIRCLE-3, VADODARA. ./ ./ PAN/GIR NO. :AJKPS 6643 Q ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MANISH J SHAH, A.R. / RESPONDENTBY : SHRI MUDIT NAGPAL, SR. D.R. / DATE OF HEARING 19/07/2018 !'# / DATE OF PRONOUNCEMENT 20/08/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE FIVE CAPTIONED APPEALS HAVE BEEN FILED AT THE I NSTANCE OF THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)5, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB/5- 703/2014-15, CAB/5-704/14-15, CAB/5-705/14-15, CAB/ 5-706/2014-15 & CAB/5-708/2014-15 DATED 09.03.2016 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 271(1)(C) OF THE I NCOME TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 06.03.2014 RELEVANT TO ASSESSMENT YEARS (AYS) 2006-07, 2007-08, 2008-09, 2 009-10 & 2010- 11. ITA NOS.1381 TO 1385/AHD/2016 SHRI JAYENDRA N SHAH VS. ACIT A.YS. 2006-07, 2007-08, 2008-09, 2009-10 & 2010- 11 - 2 - 2. THE ISSUE INVOLVE IN ALL THESE APPEALS FILED BY THE ASSESSEE ARE COMMON THEREFORE ALL OF THEM HAVE BEEN CLUBBED TOGE THER FOR THE PURPOSE OF BREVITY, CONVENIENCE AND ADJUDICATION. 3. WE TAKE ITA NO.1381/AHD/2016 PERTAINING TO ASS T. YEAR 2006-07 AS THE LEAD CASE. THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF YOU R APPELLANT'S CASE, THE LD. CIT(APPEALS) IN LAW HAS ERRED IN CONFIRMING LEVY OF PENALTY U/S 271 (1) (C) OF THE ACT ON ADDITION OF R S.84,350/- MADE U/S 69C OF THE ACT IN RESPECT OF EXPENDITURE ON PUR CHASE AND STITCHING OF CLOTHES, WITHOUT FOLLOWING ANY PROCEDU RE, ON THE GROUND OF CONCEALMENT OF PARTICULARS OF INCOME BY S UO MOTTO RATIFYING THE ORDER OF THE LD. A.O. WHO LEVIED PENA LTY ON THE DIFFERENT GROUND OF FURNISHING OF INACCURATE PARTIC ULARS OF INCOME IN THE IMPUGNED PENALTY ORDER. IN THE ASSESSMENT ORDER DTD. 30-12-2011, THE LD. A. O. INITIATED PENALTY PROCEEDINGS ON THE GROUND OF CONCEALMENT OF INCOME; THE SHOW-CAUSE NOTICE IS ISSUED FOR 'CONCEALMENT OF PAR TICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME; WHEREAS IN THE ORDER DTD. 06-03-2014 U/S 271(1)(C) THE PENA LTY IS LEVIED ON A DIFFERENT GROUND VIZ. FURNISHING OF INACCURATE PARTICULARS OF INCOME BY MAKING INCORRECT STATEMENT THAT IN THE AS SESSMENT ORDER THAT THE PENALTY PROCEEDINGS WERE INITIATED O N 30.12.2011 FOR FURNISHING INACCURATE PARTICULARS OF INCOME.' THE LD. CIT (APPEALS) CONFIRMED THE LEVY OF PENALTY ON A DIFFERENT GROUND I.E. CONCEALMENT OF PARTICULARS OF INCOME AN D HAS STATED THAT THE ANOMALY OF GROUND OF LEVY OF PENALTY IN TH E ORDER OF THE LD AO HAS BEEN RATIFIED BY THE IMPUGNED APPELLATE O RDER SINCE THE ORDER OF THE ID. A.O. MERGES WITH THAT OF THE L D CIT(A). YOUR APPELLANT SUBMITS THAT THE ACTION OF THE LD CI T(A) IN CONFIRMING LEVY OF THE IMPUGNED PENALTY ON THE GROU ND OF 'CONCEALMENT OF PARTICULARS OF INCOME' BY RATIFYING THE ORDER OF THE LD. A.O. BY THE LD. CIT (A) WITHOUT FOLLOWING A NY PROCEDURE ITA NOS.1381 TO 1385/AHD/2016 SHRI JAYENDRA N SHAH VS. ACIT A.YS. 2006-07, 2007-08, 2008-09, 2009-10 & 2010- 11 - 3 - JUST BY STATING THAT HIS ORDER MERGES WITH THAT OF THE LD AO IS BAD IN LAW AND THEREFORE THE IMPUGNED ORDER IS BAD IN LAW AND REQUIRED TO BE QUASHED IN RESPECT OF THE AFORESAID ADDITION OF RS. 84,350/-. YOUR APPELLANT, THEREFORE, PRAYS YOUR HONOUR TO HOL D SO NOW AND KINDLY DIRECT THE LD. A.O. TO DELETE THE IMPUGNED P ENALTY LEVIED ON RS.84,350/-. 1.2 WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AN D IN THE CIRCUMSTANCES OF YOUR APPELLANT'S CASE C M LAW, THE ID. CIT(APPEALS) HAS ALSO ERRED IN CONFIRMING LEVY OF P ENALTY U/S 271(1)(C) OF THE ACT ON ADDITION OF RS.84,350/- MADE U/S 69C OF THE ACT ON THE GROUND OF CONCEALMENT OF PARTICULARS OF INCOME, SINCE THE IMPUGNED ADDITION IS NOT CONNECTED WITH I NCRIMINATING MATERIAL SEIZED DURING THE SEARCH. APPELLANT SUBMITS THAT THE IMPUGNED ADDITION IS NOT CONNECTED WITH INCRIMINATING MATERIAL SEIZED DURING THE SEARC H AND HENCE IN THE CASE OF YOUR APPELLANT, SUCH ADDITION CANNOT BE MADE IN THE ASSESSMENT ORDER MADE U/S 153A R.W.S. 143(3) OF THE ACT. YOUR APPELLANT SUBMITS THAT THE DECISIONS RELIED UP ON BY APPELLANT AND HON'BLE CIT (APPEALS) WHILE CONFIRMIN G ADDITION IN QUANTUM APPEAL AT LEAST PROVE THAT THE ISSUE INV OLVED IS DEBATABLE AND HENCE PENALTY LEVIED IS UNWARRANTED. YOUR APPELLANT, THEREFORE, PRAYS YOUR HONOUR TO HOLD SO NOW AND DIRECT THE LD. A.O. TO DELETE THE PENALTY LEVIED ON THE IMPUGNED ADDITION OF RS.84,350/-. 1.3 WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS A ND IN THE CIRCUMSTANCES OF YOUR APPELLANT'S CASE AND IN LAW, ON MERITS ALSO THE LD. CIT(APPEALS) HAS ERRED IN CONFIRMING LEVY O F PENALTY U/S 271 (1) (C) OF THE ACT ON ADDITION OF RS.84,350/- M ADE U/S 69C OF THE ACT IN RESPECT OF EXPENDITURE ON PURCHASE AND S TITCHING OF CLOTHES ON THE GROUND OF CONCEALMENT OF PARTICULARS OF INCOME. APPELLANT SUBMITS THAT EVEN AFTER MAKING HUGE AD-HO C ADDITION OF RS.84,350/- ON THE GROUND OF LOWER WITHDRAWALS, THE LD. A.O. SHOULD NOT HAVE REJECTED APPELLANT'S EXPLANATION TH AT IMPUGNED EXPENDITURE OF RS.84,350/- IS OUT OF SUCH WITHDRAWA LS FOR ITA NOS.1381 TO 1385/AHD/2016 SHRI JAYENDRA N SHAH VS. ACIT A.YS. 2006-07, 2007-08, 2008-09, 2009-10 & 2010- 11 - 4 - HOUSEHOLD EXPENSES, APPELLANT SUBMITS THAT THE EXPL ANATION OF THE APPELLANT IS NOT ACCEPTED BY THE LD. A.O. BUT A T THE SAME TIME IS NOT PROVED TO BE FALSE ALSO. THEREFORE, APPELLAN T SUBMITS THAT LEVY OF PENALTY ON ADDITION OF RS.84,350/-IS UNWARR ANTED AND THEREFORE, PRAYS YOUR HONOUR TO KINDLY HOLD SO NOW AND DIRECT THE ID. A.O. TO DELETE THE IMPUGNED PENALTY ON THE SAID AMOUNT OF ADDITION. THE SOLE GRIEVANCE OF THE ASSESSEE IS AGAINST THE O RDER OF LD. CIT-A IN WHICH THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN CONFIRMED 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF TRANSPORT ER AND TRADING IN BITUMEN AS A SOLE PROPRIETOR OF M/S. VIVEK ROADWAYS AND BRIJ CHEMICALS. THERE WAS A SEARCH U/S 132 OF THE ACT CO NDUCTED AT THE PREMISES OF THE ASSESSEE DATED 11-02-2010. AS A RES ULT OF SEARCH CERTAIN DOCUMENTS WERE SEIZED AND IMPOUNDED, WHICH WERE INC REMENTING IN NATURE. DURING THE ASSESSMENT PROCEEDINGS, VARIOUS ADDITIONS WERE MADE INCLUDING THE ADDITION OF RS. 84,350/- ON ACCOUNT O F PURCHASES AND STITCHING OF CLOTHES CHARGES ON THE BASIS OF SEIZED DOCUMENTS VIDE PAGE NO.1 TO 132 OF ANNEXURE-10 U/S 69C OF THE ACT. THE AO ACCORDINGLY, FRAMED ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT AFTER MAKING THE ADDITION OF RS.84,350/- IN HIS ORDER DATED 30-12-20 11. THE AMOUNT OF ADDITION WAS CONFIRMED BY THE LD. CIT(A) AS WELL AS BY THE HONBLE ITAT IN THE QUANTUM PROCEEDINGS. ITA NOS.1381 TO 1385/AHD/2016 SHRI JAYENDRA N SHAH VS. ACIT A.YS. 2006-07, 2007-08, 2008-09, 2009-10 & 2010- 11 - 5 - THE AO IN HIS ASSESSMENT ORDER INITIATED THE PENALT Y PROCEEDINGS U/S 271(1)(C) OF THE ACT ON ACCOUNT OF CONCEALMENT OF I NCOME. SUBSEQUENTLY, THE AO ISSUED A NOTICE U/S 274 R.WS. 271(1)(C) DATED 30.12.2011. THEREAFTER, THE AO CONFIRMED THE PENALT Y U/S 271(1)(C) OF THE ACT ON ACCOUNT OF FURNISHING INACCURATE PARTICU LARS OF INCOME VIDE ORDER DATED 06.03.2014. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD. C IT(A) WHO HAS CONFIRMED THE ORDER OF AO BY HOLDING THAT THE ASSES SEE HAS CONCEALED PARTICULARS OF INCOME. BEING AGGRIEVED BY THE ORDER OF LD CIT(A) ASSESSEE IS IN SECOND APPEAL BEFORE US. THE LD AR BEFORE US FILED A PAPER BOOK W HICH IS RUNNING FROM PAGES 1-57 AND SUBMITTED THAT THE AO IN HIS PENALTY ORDER LEVIED THE PENALTY ON ACCOUNT OF FURNISHING OF INACCURATE PART ICULARS OF INCOME WHEREAS, THE LD CIT(A) HAS CONFIRMED THE PENALTY ON ACCOUNT OF CONCEALMENT OF PARTICULARS OF INCOME. THE LD AR FURTHER SUBMITTED THAT THE PENALTY IS NOT SUSTAINABLE IN THE CASES WHERE THE PENALTY WAS LEVIED BY THE AO IN HIS ORDER ON ONE CHARGE BUT THE LD CIT(A) CONFIRMED THE PENALTY ON A DIFFER ENT CHARGE. THE LD AR IN SUPPORT OF HIS CLAIM RELIED ON THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI KANTIBHAI NARANBHAI PRAJAPATI IN ITA NO.2880/A HD/2014 PERTAINING TO THE A.Y. 2009-10 VIDE ORDER DATED 15.02.2018. ITA NOS.1381 TO 1385/AHD/2016 SHRI JAYENDRA N SHAH VS. ACIT A.YS. 2006-07, 2007-08, 2008-09, 2009-10 & 2010- 11 - 6 - ON THE OTHER HAND LD. DR VEHEMENTLY SUPPORTED THE O RDER OF AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT IN THE IDENTICAL FACTS AND CIRCUMSTANCES THE HONBLE ITAT IN THE CASE OF KANTIBHAI NARANBHAI PRAJAPATI (SUPRA) HAS DELETED THE PENALTY IMPOSED BY THE LOWER AUTHORITIES. THE RELEVANT EXTRACT OF THE ORDER IS R EPRODUCED BELOW: 8. WE STRAIGHT AWAY FIND THAT THE AO VIDE PENALTY ORDER DATED 25/11/2013 UNDER S.271(1)(C) OF THE ACT IMPOSED PEN ALTY ON ADDITIONS MADE ALLEGING 'CONCEALMENT OF PARTICULARS OF INCOME '. HOWEVER, THE CIT(A), ON THE OTHER HAND, HAS CONFIRMED THE PENALT Y ON THE GROUND OF 'FURNISHING INACCURATE PARTICULARS OF INCOME'. APPA RENTLY, THE BASIS AND FOUNDATION FOR IMPOSITION OF PENALTY HAS BEEN ALTER ED BY THE CIT(A). IT IS THUS OSTENSIBLE THAT FINDINGS RECORDED BY THE CI T(A) SHOW THAT PENALTY HAS BEEN CONFIRMED ON A DIFFERENT PREMISE AND THE O RIGINAL SATISFACTION FOR IMPOSITION OF PENALTY HAS BEEN ALTERED OR MODIF IED BY THE APPELLATE AUTHORITY. IN SUCH CIRCUMSTANCES, WHERE THE ORIGINA L BASIS OF IMPOSITION OF PENALTY HAS BEEN ALTERED IN A SIGNIFICANT WAY BY THE FIRST APPELLATE AUTHORITY, THE VERY BASIS FOR SUSTAINING THE PENALT Y IS RENDERED NON- EXISTENT. NEEDLESS TO SAY, THE IMPOSITION OF PENALT Y IS SOLELY DEPENDENT UPON THE 'SATISFACTION' OF THE AO [UNLESS INITIATED BY CIT(A)] AND NON- ELSE. THE GROUND FOR ACTION BY AO WAS ALLEGATION OF 'CONCEALMENT'. THIS GROUND HAS BEEN SUBSTITUTED BY CIT(A) TO 'FURNISHIN G INACCURATE PARTICULARS OF INCOME' WHILE CONFIRMING THE PENALTY QUANTIFIED BY THE AO. THUS, IN THE ABSENCE OF CONTINUITY IN THE FINDI NGS OF THE AO AND THE CIT(A), THE ORDER OF THE PENALTY PASSED BY THE AO I S LIABLE TO BE STRUCK DOWN ON THIS GROUND ALONE. FOR SUCH A VIEW, WE USEF ULLY REFER TO THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF NEW SORATHIA ENGINEERING COMPANY VS. CIT (2006) 282 ITR 642 (GUJ.) AND CIT VS. MANU ENGINEERING WORKS (1980) 122 ITR 306 (GUJ.). S IMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE BENCH OF THE TRIBUNAL IN GIAN CHAND BATIA VS. DCIT 61 ITD 24(ALL.). THEREFORE, WHERE CO NCURRENT I.T.AUTHORITIES ARE NOT SURE ABOUT NATURE OF DEFAUL T, THE PENAL ACTION UNDER S.271(1)(C) OF THE ACT IS NOT SUSTAINABLE IN LAW. ITA NOS.1381 TO 1385/AHD/2016 SHRI JAYENDRA N SHAH VS. ACIT A.YS. 2006-07, 2007-08, 2008-09, 2009-10 & 2010- 11 - 7 - THE FACTS OF THE CASE IN HAND ARE IDENTICAL TO THE FACTS OF THE CASE AS DISCUSSED ABOVE. THEREFORE, THE RATIO LAID DOWN BY THIS TRIBUNAL IN THE CASE OF KANTIBHAI NARANBHAI PRAJAPATI (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE. THEREFORE, RESPECTFU LLY FOLLOWING THE SAME WE REVERSE THE ORDERS OF AUTHORITIES BELOW. THUS, T HE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. NOW COMING TO THE OTHER APPEALS OF THE ASSESSEE. 7. IN ALL THE APPEALS OF ASSESSEE THE ISSUE IS COMM ON AS ADJUDICATED ABOVE IN PARA 6 OF THIS ORDER, THEREFORE RESPECTFUL LY FOLLOWING THE SAME WE SET ASIDE THE ORDER OF LD. CIT-A AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) O F THE ACT. HENCE THE GROUNDS RAISED IN ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED. 8. IN THE RESULT, ALL FIVE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 20/08/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D U;KF;D U;KF;D U;KF;D LNL; LNL; LNL; LNL; YKS[KK YKS[KK YKS[KK YKS[KK LN LNLN LNL; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 20/08/2018 PRITIYADAV, SR.PS ITA NOS.1381 TO 1385/AHD/2016 SHRI JAYENDRA N SHAH VS. ACIT A.YS. 2006-07, 2007-08, 2008-09, 2009-10 & 2010- 11 - 8 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-5, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD. 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 21/07/2018 (DICTATION-PAD 3 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16/08/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 20/08/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER