Rajesh Popli, Shimla V. DCIT, Chandigarh

ITA 1393/CHANDI/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6688 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 24-10-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 15-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RENU AMITABH CIT DR
• Keywords: Unexplained investment; Business income; Income from undisclosed sources
• Section: 271(1)(c); 69B; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BEN CH B, CHANDIGARH , ! . .., # $, %& BEFORE: SH. SANJAY GARG, JUDICIAL MEMEMBER & DR. B. R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 1393 /CHD/ 2016 ASSESSMENT YEAR : 2011-12 RAJESH POPLI HEMANT LODGE, MURRAY FIELD ESTATE NAV BAHAR, SHIMLA THE DCIT CENTRAL CIRCLE-II, CHANDIGARH ITO, HIMALAYA MARG, SECTOR 17 CHANDIGARH PAN NO: ABLPP3283G APPELLANT RESPONDENT !' ASSESSEE BY : SHRI TEJ MOHAN SINGH (PROXY FOR SHR I VISHAL MOHAN) #!' REVENUE BY : SMT. RENU AMITABH, CIT DR $ %! & DATE OF HEARING : 14/02/2019 '()*! & DATE OF PRONOUNCEMENT : 06/05/2019 %'/ ORDER PER DR. B.R.R. KUMAR, A.M THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A)-3, GURGAON DT. 26/09/2016. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE LEVY OF UNDER SECTION 271(1)(C) OF RS. 3,17,525/- . THE PENALTY SO IMPOSE D IS ILLEGAL AND HAS WRONGLY BEEN UPHELD. 2. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TA X (APPEALS) IS BAD IN LAW AND FACTS. 3. FACTS TAKEN FROM THE ORDER OF THE LD. CIT(A) ARE THAT A SEARCH & SEIZURE OPERATION U/S 132(1) OF THE I.T.ACTL961 WAS CONDUCT ED ON 08.10.2010 IN POPLI GROUP OF CASES. THE ASSESSEE HAD FILED RETURN U/S 139 OF THE INCOME TAX ACT,1961 ON 07.07.2012 SHOWING A TOTAL INCOME OF RS . 8,94,195/-. THE FOLLOWING ISSUES HAVE COME BEFORE FOR IMPOSITION OF PENALTY U /S271(L)(C). PROFIT ON SALES MADE OUTSIDE BOOKS 4. BASED ON THE STATEMENT GIVEN BY THE ASSESSEE AND ILLUSTRATIONS GIVEN BY HIM IN RESPECT OF SOME OF THE ITEMS REGARDING UNDER VALUATION OF SALE INVOICES, 2 THE AVERAGE PERCENTAGE OF UNDERVALUATION OF SALES M ADE BY THE ASSESSEE WAS WORKED OUT AND THE SAME IS REPRODUCED BELOW :- TABLE-ILL SR. \ O NAME OF THE ITEMS SALE BILL VALUE SHOWN IN BOOKS (IN RS) ACTUAL SALE PRICE DIFFERENCE DEFLATION % 1 MACHINE-CUTTER 850 1050 200 23.53% 2 MACHINE-DRILL 500 650 150 30% 3 NAILS (PER KG) 40 45 5 12.25% 4 CUTTER BLADES 40 60 20 50% 5 CHANNEL (DRAWER) (PER INCH) 4 4.70 0.70 17.5% 6 IRON TOOLS- HAMMER(PER KG) 55 TO 60 67 TO 70 11 (APPX) 20% (APPX) AVERAGE UNDERVALUATION/ DEFLATION % 25.55% 4.1. IN VIEW OF THE ABOVE TABLE (TABLE-ILL), AVERAG E DEFLATION / UNDERVALUATION OF SALES BILLS WORKED OUT TO 25.55 % (APPROXIMATELY ). BASED ON THIS, THE SALES MADE BY THE ASSESSEE OUTSIDE BOOKS OF ACCOUNTS WERE ESTIMATED ASSESSMENT YEAR WISE AND REPRODUCED BELOW IN THE TABLE-IV. ACC ORDINGLY, BY APPLYING THE GROSS PROFIT RATE AS ADOPTED BY THE ASSESSEE, THE G ROSS PROFIT ON THE SALES MADE OUTSIDE BOOKS FOR RESPECTIVE YEARS WAS ALSO CALCULA TED AS UNDER: - TABLE-IV ASSTT. YEAR TOTAL SALES MADE DURING THE YEAR (IN RS) SALES MADE OUTSIDE BOOKS (IN RS) -SALES SHOWN IN THE BOOKS/(100- 25.55) X 25.55 GROSS PROFIT RATE ADOPTED BY THE ASSESSEE GROSS PROFIT ON SALES MADE OUTSIDE BOOKS (IN RS) 1) (2) (3) 2005-06 40,35,255 13,84,832 9.00% 1,24,635 2006-07 29,36,804 10,07,862 9.01 % 90,808 2Q07-08 43,36,341 14,88,160 9.03% 1,34,381 2008-09 1 46,52,250 15,96,575 8.96% 1,43,053 2009-10 59,50,809 20,42,218 8.52% 1,73,997 2010-11 64,97,417 22,29,805 8.59% 1,91,540 2011-12 59,06,022 20,26,848 8.76% 1,77,552 TOTAL 3,43,14,898 1,17,76,300 10,35,966 4.2 IN VIEW OF THE ABOVE, THE ASSESSING OFFICER HEL D THAT THE ASSESSEE IN HIS STATEMENT GIVEN ON OATH AT THE TIME OF SEARCH HAS ADMITTED THAT THE PURCHASES AS WELL AS SALES HAD BE EN MADE OUTSIDE BOOKS. AND THE ONUS IS ON THE ASSESSEE TO PROVE THAT IF PU RCHASE PRICE OR SALE 3 PRICE OF ANY OF THE ITEMS HAS NOT BEEN UNDERVALUED, WHICH HE HAS FAILED TO DISCHARGE. THE ASSESSING OFFICER AFTER DETERMINING THAT THE ASSESSEE HAS INDULGED IN SUPPRESSION OF THE PURCHASE PRICE AND SALE PRICE OF ITEMS AND IN COMPUTED THE GROSS PROFIT @ 8.76% OF RS. 1,77,552/ -ON THE AMOUNT OF RS. 20,26,848/-. 5. SUPPORTING THE CASE OF THE ASSESSEE IT WAS SUBMI TTED THAT THAT ENTIRE ADDITION HAS BEEN MADE ON THE STATEMENT OF THE ASSE SSEE IN WHICH HE HAD ALSO SUBMITTED THAT ONLY A PART OF HIS TOTAL SALES HAS B EEN UNDER BILLED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE APPELLATE PROCEEDINGS, IT WAS SUBMITTED THAT ONLY 5% OF THE SALE ARE NON-BRANDED ITEMS, WHEREAS, 95% OF THE SALES WERE ON BRANDED ITEMS. THE SAID SUBMISSIONS O F THE ASSESSEE HAVE NOT BEEN CONSIDERED BY ANY OF THE AUTHORITIES BELOW. IT IS FURTHER SUBMITTED THAT NO SUCH CASE OF UNDER BILLING HAS BEEN BROUGHT ON RECO RD BY ANY OF THE AUTHORITIES AND AS SUCH ONLY ESTIMATION OF INCOME HAVE BEEN MAD E ON THE BASIS OF THE ALLEGED STATEMENT OF THE ASSESSEE. IT IS SETTLED LA W THAT IN CASE OF ESTIMATION OF INCOME NO PENALTY THAT TOO, UNDER SECTION 271 (L)(C ) OF THE INCOME TAX ACT, 1961 ARE LEVIABLE. RELIANCE IN THIS REGARD IS BEING PLAC ED ON THE FOLLOWING JUDGMENTS:- I. HARIGOPAL SINGH VERSUS CIT, REPORTED AS 258 ITR 85 P&H II. COMMISSIONER OF INCOME TAX VERSUS KRISHI TYRE R ETREATING AND RUBBER INDUSTRIES REPORTED AS 360 ITR580(RAJ) III. NARESH CHAND AGGARWAL VERSUS COMMISSIONER OF INCOME TAX 357 ITR 514 (ALL] IV. COMMISSIONER OF INCOME TAX VERSUS P. ROJES REPORTED AS 356 ITR 703(MAD) 6. IT IS ALSO PERTINENT TO MENTION THAT APPEAL AGAI NST THE SAID ORDERS HAS BEEN ADMITTED BY THE HON'BLE HIGH COURT OF HIMACHAL PRAD ESH AND COPY OF THE ORDER OF ADMISSION OF THE APPEAL AND FORMULATION OF QUEST IONS OF LAW WILL BE PLACED ON RECORD SUBSEQUENTLY AND AS SUCH ISSUE IN QUESTION I S DEBATABLE. RELYING UPON THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE O F CIT VERSUS NAIN BUILDERS AND DEVELOPERS, NO PENALTY IS SUSTAINABLE. 7. ON THE OTHER HAND THE REVENUE RELIED ON THE ORDE R OF THE LD. CIT(A) . 4 8. WE FIND THAT THE MATTER STANDS ADJUDICATED BY TH E ORDER OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE EARLIER YEARS WHER EIN THE COORDINATE BENCH OF ITAT CHANDIGARH HELD AS UNDER: 1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND T HAT IT IS NOT A SIMPLE CASE OF ADDITIONS ON ESTIMATION BASIS. DURING THE COURSE OF SEARCH ACTION, THE ASSESSEE HIMSELF HAD ADMITTED THAT HE WAS INDULGED IN UNACCO UNTED PURCHASES AND UNACCOUNTED SALES. THE TRIBUNAL HAS CONFIRMED THE A DDITIONS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE INITIAL ASSESSMENT YE AR 2005-06 AND HAS DELETED THE ADDITIONS IN THIS RESPECT F OR THE REMAINING YEARS CONSIDERING THAT THE SAME AMOUNT MIGHT HAVE BEEN REINVESTED BY THE ASSESSEE. THE ASS ESSEE DID NOT PRODUCE THE SOURCE OF THE INITIAL INVESTMENT. SO F A R AS THE A DDITIONS ON ACCOUNT OF UNEXPLAINED SALES IS CONCERNED, A PERUSAL OF THE ASSESSMENT ORD ER REVEALS THAT THE ASSESSING OFFICER FIRST CALCULATED SALES MADE OUTSIDE THE BOO KS OF ACCOUNT AND HAS MADE THE ADDITION IN RESPECT OF THE SAID SALES AT THE SAME R ATE OF PROFIT AT WHICH THE ASSESSEE HAD SHOWN ON THE ACCOUNTED F OR SALES. THE ASSESSIN G OFFICER HAS MADE A SCIENTIFIC CALCULATION AND HAS BEEN VERY MUCH REASONABLE IN AR RIVING AT THE AMOUNTS OF THE ADDITIONS LIABLE TO BE MADE TO THE INCOME OF THE AS SESSEE. IT IS NOT THE CASE OF THE ASSESSEE THAT IT WAS NOT INDULGED IN UNACCOUNTED SA LES. HAD THE SEARCH ACTION NOT BEEN TAKEN, THE AFORESAID UNACCOUNTED INCOME OF THE ASSESSEE, WOULD HAVE ESCAPED TAXATION. THE FACTS ON THE FILE CLEARLY PRO VE THAT THE ASSESSEE HAD NOT ONLY FURNISHED THE INACCURATE PARTICULARS OF INCOME BUT HAD ALSO CONCEALED HIS INCOME. THE PROPOSITION OF LAW L AID DOWN B Y THE ITA NOS 1 387 TO 1392/CHD/2016- SHRI RAJESH POPLI, SHIMLA 4 HON'BLE SUPREME COURT IN THE CASE O F MAK DATA( P) LTD (2013) 388 ITR 593 (SC) IS SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE . WE THEREFORE, DO NOT FIND AN Y INFIRMITY IN THE PENALTY LEVIED B Y THE A SSESSING OFFICER ON THE ASSESSEE U/S 271(1)(C) OF THE ACT. SINCE THE FACTS AND ISSUES IN VOLVED IN ALL THE AFORESAID APPEALS ARE IDENTICAL, HENCE, THE PENALTY IS CONFIRMED ON T HIS ISSUE IN ALL THE APPEALS. KEEPING IN VIEW THE JUDICIAL PRECEDENT, WE HEREBY DECLINE TO INTERFERE IN THE ORDER OF THE LD. CIT(A). UNEXPLAINED INVESTMENT 9. REGARDING THE PENALTY LEVIED ON THE UNEXPLAINED INVESTMENT OF RS. 5,00,000/-, THE BRIEF FACTS ARE THAT THE STOCK WAS VALUED AT RS. 24,21,754/- AND TREATED AS UNEXPLAINED INVESTMENT UNDER SECTION 69B . THE TRIBUNAL AFTER CONSIDERATION OF FACTS HAS GIVEN PROVISION FOR THE STOCK FOUND IN THE INVENTORY AND DETERMINED AN AMOUNT OF RS. 5,00,000/- TOWARDS THE UNEXPLAINED INVESTMENT ON ACCOUNT OF THE STOCK. SINCE THE STOCK CAN BE SAID TO HAVE BEEN PURCHASED INVARIABLY FROM THE UNDISCLOSED INCOME IN THE ABSENCE OF ANY OTHER EVIDENCE PUT FORWARD BY THE ASSESSEE TO PROVE THE I NVESTMENT, THE SAME RATIO IS APPLICABLE FOR CONCEALMENT THE INCOME, AND THE PENA LTY LEVIED IS HEREBY CONFIRMED. SHORT TERM CAPITAL GAIN 10. REGARDING THE SHORT TERM CAPITAL GAIN ON SALE O F FLATS THE ASSESSEE HAS DECLARED AN AMOUNT OF RS. 3,50,000/- ON ACCOUNT OF COST OF IMPROVEMENT. 5 11. BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS S HOWN THE SOURCE OF RS. 3,50,000/- AS ROUTED THROUGH BANK ACCOUNT WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THOUGH IT MAY BE A FIT CASE FOR ADDITION OF THE AMOUNT BUT NOT FOR LEVY OF PENALTY AS NO CASE OF FURNISHING OF INA CCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME CAN BE MADE OUT. HENCE, WE HE REBY DIRECT THE AUTHORITIES TO GIVE DUE REMISSION ON THE PENALTY LE VIED ON THIS GROUND. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. SD/- SD/- . .., # $, (SANJAY GARG ) ( DR. B.R.R. KUM AR, AM) / JUDICIAL MEMBER %& / ACCOUNTANT MEMBER 06/05/2019 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR