World Trade Impex Ltd., Baroda V. The ACIT.,Circle-4, Baroda

ITA 1614/AHD/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2445 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 20-07-2017
• Assessment Year: 1994-1995
• Appeal Filed On: 25-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Bogus Share capital
• Section: 271(1)(c); 142(1); 144

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER ./ ITA NO.1614/AHD/2012 / ASSTT. YEAR: 1994-95 WORLD TRADE IMPEX LTD. 102/A, STERLING CENTRE 1 ST FLOOR, R.C. DUTT ROAD ALKAPURI, BARODA PAN : AAACW 2072 K VS. ACIT, CIR.4 BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M.K. PATEL, AR REVENUE BY : SHRI VINOD TANWANI, SR.DR ! / DATE OF HEARING : 19/06/2019 '#$ ! / DATE OF PRONOUNCEMENT: 20/06/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-III, BARODA DATED 17.5.2012 PASSED FOR THE ASSTT.YEAR 1994-95. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING PENALTY OF RS.4,04,660/- IMPOSE D BY THE AO UNDER SECTION 271(1) OF THE INCOME TAX ACT. 3. BRIEF FACTS EMERGING OUT FROM THE ASSESSMENT ORDE R ARE THAT RETURN OF INCOME FOR THE ASSTT.YEAR 1994-95 BECAME DUE ON ITA NO.1614/AHD/2012 2 30.11.1994, BUT NO RETURN WAS FILED BY THE ASSESSEE . THE AO HAS ISSUED NOTICE UNDER SECTION 142(1) REQUESTING THE A SSESSEE TO FILE RETURN OF INCOME ON OR BEFORE 27.12.1995. HOWEVER, ACCORDING TO THE AO NO RETURN WAS FILED BY THE ASSESSEE, THEREAF TER OTHER NOTICES WERE ISSUED, BUT THE ASSESSEE FAILED TO COM PLY. IT HAS FILED RETURN OF INCOME FOR THE ASSTT.YEAR 1994-95 O N 12.2.1997 SHOWING TOTAL INCOME AT RS.1,74,420/-. BUT ACCORDIN G TO THE AO THIS RETURN WAS FILED AFTER 31.3.1996 AND BEYOND ST ATUTORY LIMIT. IT WAS TREATED TO BE INVALID. HE ISSUED NOTICE UNDE R SECTION 142(1) AND ULTIMATELY PASSED AN ASSESSMENT ORDER UNDER SEC TION 144 ACCORDING TO HIS BEST JUDGMENT BECAUSE THE ASSESSEE DID NOT APPEAR BEFORE HIM. THE LD.AO HAS MADE ADDITIONS ON FIVE GROUNDS; OUT OF WHICH THE LD.CIT(A) DELETED ADDITIO NS ON TWO ACCOUNTS. THE ADDITIONS MADE BY THE AO AND DELETED BY THE LD.CIT(A) ARE AS UNDER: A) NET PROFIT (RS.4,79,023 + RS.4,49,470) RS.9,28,493 B) UNEXPLAINED SHARE CAPITAL RS.47,50,000/ - C) UNSECURED LOAN RS.10,50,000 D) FOREIGN TRAVEL EXPENSES RS.1,13,479 E) BALANCE SHEET DIFFERENCE AS PER SEIZED PAPER RS.95,852 DELETED BY THE CIT(A) A) RELIEF ON ACCOUNT UNEXPLAINED SHARE CAPITAL RS.30,00,000 B) RELIEF ON ACC O UNT OF UNSECURED LOAN RS.10,50,000/ - ITA NO.1614/AHD/2012 3 4. THE LD.AO HAS MADE ADDITION ON 4% OF THE TOTAL T URNOVER ON AN ESTIMATE BASIS WHICH HAS BEEN REDUCED TO 2% BY T HE ITAT IN ITA NO.3845/AHD/2007. THE ASSESSEE HAS BEEN VISITE D WITH PENALTY AFTER TAKING INTO CONSIDERATION ORDER OF TH E ITAT AND PENALTY OF RS.4,04,660/- HAS BEEN IMPOSED. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 HAS DIRECT BEARING ON THE CONTROVERSY. T HEREFORE, IT IS PERTINENT TO TAKE NOTE OF THE SECTION. '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B)** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR ITA NO.1614/AHD/2012 4 (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE N, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O R SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 6. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICE R OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCE EDINGS BEFORE THEM SHOULD BE SATISFIED, THAT THE ASSESSEE HAS; (I ) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PEN ALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100% TO 300 % OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS. THE OTHER MOST IMPORTANT FEATURES OF THIS SECTION IS DE EMING PROVISIONS REGARDING CONCEALMENT OF INCOME. THE SEC TION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CON CEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, S TATUTORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INT O PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FIRST WHETHER IN RES PECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UND ER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME ITA NO.1614/AHD/2012 5 UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NO T ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS , TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME. UNDER FIRST SITUATION, THE DEEM ING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED TO GIVE A NY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATIO N OF TOTAL INCOME OR BY ACTION OF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDING TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILU RE OF THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANA TION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANAT ION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT T HAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN THE ABOVE TWO SI TUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING T HE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C ) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 7. IN THE LIGHT OF THE ABOVE, IF WE EXAMINE FACTS O F THE PRESENT CASE THEN IT WOULD REVEAL THAT THE ASSESSMENT ORDER WAS EX PARTE . MATERIAL EXHIBITING NON-DISCLOSURE OF PROFIT ON TUR NOVER UNEARTHED DURING THE SEARCH. THE ASSESSEE HAS NOT OFFERED AN Y EXPLANATION ABOUT THE INCOME FOR WHICH IT HAS FURNISHED INACCUR ATE PARTICULARS. ITA NO.1614/AHD/2012 6 ESTIMATION OF INCOME IS BY COMPULSION AT THE END OF THE AO AND NOT BY CHOICE. IT IS NOT CASE THAT THE AO WAS NOT SATISFIED WITH THE DETAILS MAINTAINED BY THE ASSESSEE OR EXPLANATION G IVEN BY THE ASSESSEE. THEREAFTER, HE ESTIMATED PROFIT AT A DIF FERENT RATE. HERE ESTIMATION OF PROFIT IS A MODE OF COMPUTATION OF IN COME UNDER COMPELLING CIRCUMSTANCE, WHEN THE ASSESSEE FAILED T O GIVE REQUITE DETAILS. CONSIDERING CONCURRENT FINDING OF THE BOT H THE AUTHORITIES WE DO NOT FIND ANY MERIT IN THIS APPEAL. IT IS DIS MISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 20 TH JUNE, 2019. SD/- SD/- (RIFAUR RAHMAN) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 20/06/2019