Rajesh Popli, Shimla V. DCIT, Chandigarh

ITA 1387/CHANDI/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4982 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHISH ABROL
• Keywords: Unexplained investment; Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER& MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NOS. 1387 TO 1392/CHD/2016 ASSESSMENT YEARS: 2005-06 TO 2011-12 SH. RAJESHPOPLI, VS. THE DCIT, CC-II, HEMANT LODGE, MURRAY FIELD ESTATE, CHANDIGARH NAVBAHAR, SHIMLA PAN NO. ABLPP3283G (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VISHAL MOHAN, ADV. RESPONDENT BY : SH. ASHISH ABROL, CIT DR DATE OF HEARING : 08.02.2018 DATE OF PRONOUNCEMENT : 24.04.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE BUNCH OF APPEALS HAS BEEN PREFERRED BY TH E ASSESSEE AGAINST THE DIFFERENT ORDERS DATED 29.06.2016 OF TH E COMMISSIONER OF INCOME TAX (APPEALS), [HEREINAFTER REFERRED TO AS C IT(A)]-3, GURGAON FOR DIFFERENT ASSESSMENT YEARS AGITATING THE LEVY O F PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'TH E ACT'). 2. THE BRIEF FACTS RELATING TO THE ISSUE INVOLVED A RE THAT IN A SEARCH ACTION CARRIED OUT IN THE GROUP CONCERN OF THE ASSE SSEE, THE ASSESSEE ADMITTED THAT HE WAS INDULGED IN UNACCOUNTED PURCHA SES AND SALES. ITA NOS 1387 TO 1392/CHD/2016- SHRI RAJESH POPLI, SHIMLA 2 THE ASSESSING OFFICER MADE ADDITIONS OF DIFFERENT A MOUNTS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASES AND AT CERTA IN PERCENTAGE OF GROSS PROFIT ON ACCOUNT OF UNACCOUNTED SALES. THE A SSESSEE AGITATED THE AFORESAID ADDITION BEFORE THE HIGHER AUTHORITIE S. THE MATTER TRAVELLED UP TO THE LEVEL OF THE TRIBUNAL. THE TRIB UNAL VIDE HIS ORDER DATED 11.7.2014 IN ITA NOS. 77 TO 81/CHD/2014 AND I N OTHER APPEALS SUSTAINED THE ADDITION OF RS. 3 LACS ON ACCOUNT OF UNEXPLAINED INVESTMENT FOR INITIAL ASSESSMENT YEAR 2005-06, HOW EVER, DELETED THE ADDITION ON ACCOUNT OF UNACCOUNTED INVESTMENT IN SU BSEQUENT YEARS OBSERVED THAT THE SAME MONEY MIGHT HAVE BEEN REINVE STED BY THE ASSESSEE IN SUBSEQUENT YEARS. SO FAR AS THE UNACCOU NTED SALES WERE CONCERNED, THE TRIBUNAL OBSERVED THAT THE ASSESSING OFFICER HAS BEEN MORE THAN REASONABLE TO ASSESS THE PROFIT AT THE GP RATE DECLARED BY THE ASSESSEE IN VARIOUS YEARS. IN THE MEANTIME PENA LTY, PROCEEDINGS WERE ALSO INITIATED AGAINST THE ASSESSEE AND PENALT Y WAS LEVIED BY THE ASSESSING OFFICER IN RESPECT OF THE UNEXPLAINED INV ESTMENT OF RS. 3 LACS FOR ASSESSMENT YEAR 2005-06 AND ALSO IN RESPE CT OF THE ADDITIONS CONFIRMED BY THE TRIBUNAL IN RESPECT OF UNACCOUNTED SALES FOR OTHER ASSESSMENT YEARS. 3. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS SUBM ITTED THAT THE ADDITION ON ACCOUNT OF GROSS PROFIT WAS MADE ON EST IMATION BASIS. HE HAS RELIED UPON THE DECISION OF HONBLE PUNJAB & HA RYANA HIGH COURT IN THE CASES OF HARI GOPAL SINGH VS. CIT (2002) 2 58 ITR 85 AND OF THE HON'BLE RAJASTHAN HIGH COURT IN CIT VS. KRISHI TYPE RETREADING AND RUBBER INDUSTRIES (2014) 360 ITR 580 (RAJ.) T O SUBMIT THAT IF THE ADDITIONS ARE MADE ON ESTIMATION BASIS, IT CAN NOT BE SAID THAT THE ITA NOS 1387 TO 1392/CHD/2016- SHRI RAJESH POPLI, SHIMLA 3 ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF I NCOME OR CONCEALED HIS INCOME; HENCE, NO PENALTY WAS LEVIABLE. 4. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE F INDINGS OF THE LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT IT IS NOT A SIMPLE CASE OF ADDITIONS ON ESTIMATION BASIS. D URING THE COURSE OF SEARCH ACTION, THE ASSESSEE HIMSELF HAD ADMITTED TH AT HE WAS INDULGED IN UNACCOUNTED PURCHASES AND UNACCOUNTED SALES. THE TRIBUNAL HAS CONFIRMED THE ADDITIONS ON ACCOUNT OF UNEXPLAINED I NVESTMENT IN THE INITIAL ASSESSMENT YEAR 2005-06 AND HAS DELETED THE ADDITIONS IN THIS RESPECT FOR THE REMAINING YEARS CONSIDERING THAT TH E SAME AMOUNT MIGHT HAVE BEEN REINVESTED BY THE ASSESSEE. THE ASS ESSEE DID NOT PRODUCE THE SOURCE OF THE INITIAL INVESTMENT. SO FA R AS THE ADDITIONS ON ACCOUNT OF UNEXPLAINED SALES IS CONCERNED, A PER USAL OF THE ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER FIRST CALCULATED SALES MADE OUTSIDE THE BOOKS OF ACCOUNT AND HAS MAD E THE ADDITION IN RESPECT OF THE SAID SALES AT THE SAME RATE OF PROFI T AT WHICH THE ASSESSEE HAD SHOWN ON THE ACCOUNTED FOR SALES. THE ASSESSING OFFICER HAS MADE A SCIENTIFIC CALCULATION AND HAS BEEN VERY MUCH REASONABLE IN ARRIVING AT THE AMOUNTS OF THE ADDITIONS LIABLE TO BE MADE TO THE INCOME OF THE ASSESSEE. IT IS NOT THE CASE OF THE A SSESSEE THAT IT WAS NOT INDULGED IN UNACCOUNTED SALES. HAD THE SEARCH A CTION NOT BEEN TAKEN, THE AFORESAID UNACCOUNTED INCOME OF THE ASSE SSEE, WOULD HAVE ESCAPED TAXATION. THE FACTS ON THE FILE CLEARLY PRO VE THAT THE ASSESSEE HAD NOT ONLY FURNISHED THE INACCURATE PARTICULARS O F INCOME BUT HAD ALSO CONCEALED HIS INCOME. THE PROPOSITION OF LAW L AID DOWN BY THE ITA NOS 1387 TO 1392/CHD/2016- SHRI RAJESH POPLI, SHIMLA 4 HON'BLE SUPREME COURT IN THE CASE OF MAK DATA( P) L TD (2013) 388 ITR 593 (SC) IS SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE . WE THEREFORE, DO NOT FIND ANY INFIRMITY IN THE PENALTY LEVIED BY THE ASSESSING OFFICER ON THE ASSESSEE U/S 271(1)(C) OF THE ACT. SINCE THE FACTS AND ISSUES INVOLVED IN ALL THE AFORESAID APPE ALS ARE IDENTICAL, HENCE, THE PENALTY IS CONFIRMED ON THIS ISSUE IN AL L THE APPEALS. 6. THE LD. COUNSEL HAS SUBMITTED SO FAR AS THE APPE AL FOR ASSESSMENT YEAR 2010-11 IS CONCERNED, PENALTY IS ALSO LEVIED ON ANOTHER ISSUE IN RELATION TO THE CAPITAL GAINS ASSE SSED. THE ASSESSEE HAD CLAIMED THE COST OF IMPROVEMENT AT RS. 3 LACS O N THE PROPERTY SOLD. HOWEVER, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE REGARDING THE INCURR ING OF EXPENDITURE ON IMPROVEMENT OF PROPERTY, HE THEREFORE, DID NOT A LLOW THE DEDUCTION OF RS. 3 LACS OUT OF THE CAPITAL GAINS ON ACCOUNT OF COST OF IMPROVEMENT. THE MATTER TRAVELLED UPTO THE LEVEL O F THIS TRIBUNAL. THIS TRIBUNAL CONSIDERING THE FACT THAT THE ASSESS EE HAD SHOWN A SUM OF RS. 1,60,000/- TOWARDS CONSTRUCTION, FURTHER A S UM OF RS. 44,333 TOWARDS TRANSFER CHARGES AND RS. 28,550/- FOR PURCH ASE OF WOOD, OBSERVED THAT THE ASSESSEE MIGHT HAVE INCURRED SOME EXPENDITURE TOWARDS THE COST OF IMPROVEMENT WHICH WAS ESTIMATED AT RS. 1 LAKH. THE TRIBUNAL, THEREFORE, RESTRICTED THE ADDITION ON THIS ISSUE AT RS. 2 LAKHS. THE ASSESSING OFFICER LEVIED ONE PENALTY U/S 271(1)(C) OF THE ACT ON THIS ADDITION WHICH WAS BEEN FURTHER CONFIRM ED BY THE CIT(A). THE LD. COUNSEL FOR THE ASSESSEE BEFORE US, HAS SUB MITTED THAT THE ASSESSEE HAD FURNISHED THE CASH FLOW STATEMENT. THA T EVEN THE ITA NOS 1387 TO 1392/CHD/2016- SHRI RAJESH POPLI, SHIMLA 5 TRIBUNAL HAS ALSO OBSERVED THAT THE ASSESSEE HAD IN CURRED SOME EXPENSES TOWARDS COST OF IMPROVEMENT. 7. THE LD. DR ON THE OTHER HAND, HAS SUBMITTED THAT THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE REGARDING THE IN CURRING OF ANY EXPENDITURE ON COST OF IMPROVEMENT. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. WE FIN D THAT THOUGH THE ASSESSEE HAD FAILED TO FULLY PROVE HIS CLAIM RE GARDING THE COST OF IMPROVEMENT AND, HENCE, THE ADDITION HAS BEEN MADE TO THE INCOME OF THE ASSESSEE. HOWEVER, IT DOES NOT SEEM TO BE A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON THIS ISSUE. IT IS NOT ESTABLISHED ON FILE THAT THE ASSESSEE HAD FURNISHED INACCURATE PAR TICULARS OF INCOME OR HAD CONCEALED HIS INCOME ON THIS ISSUE. THE PENA LTY LEVIED ON THIS ISSUE, IS THEREFORE, ORDERED TO BE DELETED. 10. IN THE RESULT, THE ITA NOS. 1387 TO 1391/CHD/20 16 FOR ASSESSMENT YEARS 2005-06 TO 2009-10 ARE HEREBY DISM ISSED WHEREAS THE ITA NO.1392/CHD/2016 FOR ASSESSMENT YEAR 2010-1 1 ARE TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.04.2018. SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24 .04.2018 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR