Hotel Sunrise Pvt.Ltd., Vapi V. The Income Tax Officer,Vapi Ward-3, Vapi

ITA 1625/AHD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1599 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 09-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: M K PATEL
• Keywords: Fair market value; Retraction
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 1625/AHD/2014 (ASSESSMENT YEAR: 2005-06) HOTEL SUNRISE PRIVATE LIMITED, 106, AMIDHARA COMPLEX, OPP. HOTEL PRITAM, CHAR RASTA, GIDC, VAPI-396195, GUJARAT V/S INCOME TAX OFFICER, VAPI WARD-3, VAPI (APPELLANT) (RESPONDENT) PAN: AAACH9274N APPELLANT BY : SHRI M.K. PATEL, A.R. RESPONDENT BY : SMT. SONIA KUMAR SR. D.R. ( )/ ORDER DATE OF HEARING : 09 -05-20 16 DATE OF PRONOUNCEMENT : 10-05-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL FILED BY THE ASSESSEE IS PREFERRED AGAI NST THE ORDER OF LD. CIT(A), VALSAD DATED 26.03.2014 PERTAINING TO A.Y. 2005-06. ITA NO. 1625 /AHD/2014 . A.Y. 2005-0 6 2 2. THE GRIEVANCE OF THE ASSESSEE RELATES TO UPHOLDING OF THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT AMOUNTING TO RS. 1 1,86,400/-. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER MADE U/S. 143(3) OF THE ACT DATED 28.12.2007. DURING THE COUR SE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE A.O OBSERVED THAT DURIN G THE COURSE OF SURVEY PROCEEDINGS, STATEMENT OF SMT. RASHMIN MAHEN DRA ABHOTI WAS RECORDED ALONG WITH THE STATEMENT OF SHRI JAY CHAND RAKANT PATEL WHO IS ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY. TH E STATEMENT WAS RECORDED IN RESPECT OF THE TRANSACTION RELATING TO A SHOP AT AMIDHARA COMPLEX. 4. IN HIS STATEMENT OF RASHMIN MAHENDRA ABHOTI ADMITTE D THAT HE HAS PAID AN AMOUNT OF RS. 4,75,000/- TO THE ASSESSEE WH EREAS THE ASSESSEE HAS ACCOUNTED THE RECEIPT OF RS. 1,80,000/ - ONLY. FURTHER, IN HIS STATEMENT SHRI JAY CHANDRAKANT PATEL (DIRECTOR) ADMITTED THAT SALE CONSIDERATION OF THE SHOPS IS RECORDED IN THE BOOKS TO THE EXTENT OF 50% ONLY. 5. TAKING A LEAF OUT OF THESE TWO STATEMENTS, THE A.O DREW A CONCLUSION THAT RS. 32,70,000/- HAS NOT BEEN SHOWN IN ITS BOOK S OF ACCOUNTS BY THE ASSESSEE AND THE SAME WAS ADDED TO THE TOTAL IN COME AS UNDISCLOSED INCOME BY THE ASSESSEE FROM SALE OF SHO PS. 6. PENALTY PROCEEDINGS WERE SEPARATELY INITIATED FOR C ONCEALMENT OF INCOME. 7. DURING THE COURSE OF THE PENALTY PROCEEDINGS, THE A SSESSEE WAS ASKED TO SHOW CAUSE WHY PENALTY SHOULD NOT BE LEVIED U/S. 271(1)(C) OF THE ACT. ASSESSEE FILED A DETAILED REPLY WHICH READS AS UNDER:- ITA NO. 1625 /AHD/2014 . A.Y. 2005-0 6 3 IN OUR CASE ASSESSMENT FOR A.Y. 2005-06 HAS BEEN C OMPLETED VIDE ORDER DATED 28.12.2007 COMPUTING TOTAL INCOME AT RS . 3,62,06,193/-. ON BEING AGGRIEVED BY THE ORDER, THE ASSESSEE HAD F ILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). TH E HONBLE COMMISSIONER OF INCOME (APPEALS), VALSAD, PARTLY AL LOWED THE APPEAL OF THE ASSESSEE. THE ASSESSEE COMPANY HAS FILED AN APPEAL BEFORE THE HONBLE ITAT WHICH IS PENDING FOR DISPOSAL AS ON DA TE. IN OUR CASE WE HAVE DISCLOSED ALL FACTS AND PARTICULARS BOTH IN OU R RETURN OF INCOME AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE NCE WE REQUEST YOU GOOD SELF NOT TO LEVY PENALTY AND DROP THE CONT EMPLATED PENALTY PROCEEDINGS. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE WE WOULD LIKE TO SUBMIT BEFORE YOUR GOOD SELF AS UNDER :- 1.THERE IS NO FINDING OF FACT IN THE BODY OF ASSESS MENT ORDER THAT THE ASSESSEE HAS EITHER CONCEALED ANY INCOME OR HAS FUR NISHED ANY INACCURATE PARTICULARS OF INCOME. HENCE WE REQUEST YOUR GOOD SELF TO KINDLY DROP THE CONTEMPLATED PENALTY PROCEEDINGS AN D OBLIGE. 1.2THE THEN LEARNED ASSESSING OFFICER HAD TREATED R S. 32,70,000/- RECEIVED IN CASH FROM SALE OF SHOPS AS UNDISCLOSED INCOME EARNED BY THE ASSESSEE COMPANY AND INITIATED PENALTY. AS REGA RDS THIS ADDITION MADE BY THE THEN LEARNED ASSESSING OFFICER WE WOULD LIKE TO HUMBLY SUBMIT BEFORE YOUR GOOD SELF AS UNDER 2.1 DURING THE YEAR UNDER CONSIDERATION AN ACTION U /S. 133A WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE COMPANY AND A STATEMENT WAS RECORDED ON OATH OF SHH JAY CHANDRAKANT PATEL, ONE OF THE DIRECTORS OF THE COMPANY AND SHRI RASHMIN MAHENDRA ABHOTI, WHO HAS PURCHASED A SHOP IN THE NAME OF HIS WIFE SMT. RANJA NBEN R. ABOTI. THE ASSESSEE COMPANY HAD SHOWN SATES PROCEEDS FROM SALE OF SHOPS AS RS. 32,70,000/- IN ITS PROFIT AND LOSS ACCOUNT. SOLELY BASED ON THE FINDING OF THE SURVEY TEAM AND THE STATEMENT RECORD ED ON OATH THE THEN LEARNED ASSESSING OFFICER OBSERVED THAT THE AS SESSEE COMPANY HAD DISCLOSED ONLY 50% OF THE GROSS RECEIPTS. THE T HEN LEARNED ASSESSING OFFICER ACCORDINGLY ASSUMED GROSS RECEIPT S-AS RS. ITA NO. 1625 /AHD/2014 . A.Y. 2005-0 6 4 65,40,000/- AND ADDED BACK THE BALANCE AMOUNT RECEI VED IN CASH TO THE TUNE OF RS. 32,70,000/- TREATING THE SAME AS UN DISCLOSED INCOME EARNED FROM SALE OF SHOPS. 2.3 IN THIS REGARD WE WOULD LIKE TO HUMBLY SUBMIT B EFORE YOUR GOOD SELF THAT THE ADDITION HAS BEEN MADE BY THE THEN LE ARNED ASSESSING OFFICER SOLELY BASED ON THE STATEMENT RECORDED BY T HE DIRECTOR OF THE ASSESSEE COMPANY, WHICH WAS DULY RETRACTED WITHIN A REASONABLE TIME. THE LEARNED ASSESSING OFFICER FURTHER RELIED UPON T HE STATEMENT OF SHRI RASHMIN MAHENDRA ABHOTI, WHO HAS NOT PURCHASED ANY SHOP IN HIS NAME. THE THEN LEARNED ASSESSING OFFICER HAS NOT CO NFRONTED THE ASSESSEE REGARDING THE RECEIPT OF MONEY IN CASH AND MERELY ASSUMED THAT THE ASSESSEE COMPANY HAS RECEIVED CASH FROM EA CH AND EVERY PURCHASE. 2.4 IN THIS REGARD WE WOULD LIKE TO SUBMIT BEFORE Y OUR GOOD SELF THE ABOVE ADDITIONS WERE MADE BY THE THEN LEARNED ASSES SING OFFICER AND UPHELD BY THE THEN HONORABLE CIT(APPEALS) WITHOUT B RINGING ANYTHING ON RECORD TO PROVE THAT 3. THE ASSESSEE COMPANY HAS CONCEALED ITS INCOME 4. IT HAS SUBMITTED INACCURATE PARTICULARS OF ITS I NCOME. 2.5 FOR INITIATING PENALTY PROCEEDINGS THERE HAS TO BE A CONCLUSION REACHED BY THE ASSESSING OFFICER THAT THE ASSESSEE COMPANY HAS CONCEALED INCOME OR HAS FURNISHED ANY INACCURATE PA RTICULARS OF INCOME. IN THE ASSESSEE COMPANYS CASE WE HAVE DISC LOSED ALL FACTS AND PARTICULARS BOTH IN OUR RETURN OF INCOME AND DU RING THE COURSE OF ASSESSMENT PROCEEDINGS. HENCE WE REQUEST YOUR GOOD SELF NOT TO LEVY PENALTY AND DROP THE CONTEMPLATED PENALTY PROCEEDIN GS INITIATED ON THIS ADDITION. 3.1 THE THEN LEARNED ASSESSING OFFICER HAD ALSO MAD E ADDITION TO THE TUNE OF RS. 3,29,64,000/- BY REPLYING UPON THE FIND INGS OF THE SURVEY TEAM REGARDING THE FAIR MARKET VALUE OF THE LAND EV EN THOUGH THE ASSESSEE COMPANY HAS PURCHASED THE LAND IN THE YEAR 1979. THE THEN LEARNED ASSESSING OFFICER HAS INITIATED PENALTY ON THIS ADDITION AS WELL. ITA NO. 1625 /AHD/2014 . A.Y. 2005-0 6 5 3.2 IN THIS REGARD WE WOULD LIKE TO BRING BEFORE YO UR GOOD SELF THAT PENALTY CANNOT STAND INDEPENDENTLY ALONE OF THE ASS ESSMENT. IN RESPECT OF THE ABOVE ADDITION MADE BY THE THEN LEAR NED ASSESSING OFFICER THE HONBLE CIT(A) HAS DELETED THE SAME. HE NCE WE REQUEST YOUR GOOD SELF NOT TO LEVY PENALTY ON THE ABOVE ADD ITION. KEEPING IN VIEW OF THE ABOVE WE HUMBLY REQUEST YOUR GOOD SELF TO DROP THE CONTEMPLATED PENALTY PROCEEDINGS INITIATED AGAINST ASSESSEE COMPANY AND OBLIGE. 8. THE DETAILED SUBMISSION OF THE ASSESSEE DID NOT FIN D ANY FAVOUR WITH THE A.O WHO WAS SATISFIED THAT THE ASSESSEE HAS CON SCIOUSLY CONCEALED ITS INCOME TO THE TUNE OF RS. 32.70 LACS AND ACCORD INGLY LEVIED PENALTY OF RS. 11,86,400/-. 9. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. BEFORE US, THE LD. COUNSEL FOR THE ASSESSE E BROUGHT TO OUR NOTICE, ORDER OF THE TRIBUNAL IN QUANTUM APPEAL IN ITA NO. 3032/AHD/2008 DATED 30.05.2014. IT IS THE SAY OF TH E LD. COUNSEL THAT SINCE THE QUANTUM ADDITION OF RS. 32.70 LACS HAVE B EEN REDUCED TO 2.95 LACS SHOWS THAT THE IMPUGNED ADDITION WAS DEBA TABLE AND, THEREFORE, NO PENALTY SHOULD BE LEVIED. 10. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE REVENUE AUTHORITIES. 11. HAVING HEARD THE RIVAL CONTENTIONS, WE HAVE CAREFUL LY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO G ONE THROUGH THE DECISION OF THE TRIBUNAL IN ITA N0. 3032/AHD/2008 W HILE DECIDING THE QUANTUM ADDITION THE TRIBUNAL HELD AS UNDER:- ITA NO. 1625 /AHD/2014 . A.Y. 2005-0 6 6 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE IS OF TWO FOLDS . FIRSTLY, THAT THE STATEMENT MADE DURING THE COURSE OF SURVEY U/S.133A OF THE AC T HAS NO EVIDENTIARY VALUE. SECONDLY, THE REVENUE HAS NOT PLACED ANY IND EPENDENT MATERIAL ON RECORD TO SUBSTANTIATE THE ADDITION. THE LD. COUNSE L FOR THE ASSESSEE HAS RELIED ON THE DECISION OF THE COORDINATE BENCH REND ERED IN ITA NO.366/AHD/2009 FOR AY 2005-06 IN THE CASE OF SHRI ABBAS NABI SHAIKH VS. ACIT. WE FIND THAT THE COORDINATE BENCH IN PARAGRAP H NOS. 11 & 12 HAS OBSERVED AS UNDER: - '11. IN THE CASE OF CIT VS. KHADER KHAN SON (SUPRA) THE HON'BLE HIGH COURT HAS HELD THAT SEC. 133A DOES NOT EMPOWER ANY I.T. AUTHORITY TO EXAMINE ANY PERSON ON OATH, HENCE, AY SUCH STATEMEN T HAS NO EVIDENTIARY VALUE AND ANY ADMISSION MADE DURING SUC H STATEMENT CANNOT BY ITSELF BE MADE THE BASIS FOR ADDITION. FU RTHER THE HON'BLE HIGH COURT HAS HELD AS UNDER:- '7. IN THE DECISION OF PULLANGODE RUBBER PRODUCTS C O. LTD. VS. STATE OF KERALA (1973) 91 ITR 18, THE APEX COURT HE LD THAT AN ADMISSION IS EXTREMELY AN IMPORTANT PIECE OF EVIDEN CE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT .' 12. CONSIDERING THE TOTALITY OF THE FACTS AND RESPE CTFULLY FOLLOWING THE DECISIONS OF HIGH COURT STATED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT IN THE PRESENT CASE, THE ADDITIONS ARE BASED O N THE STATEMENT RECORDED AT THE TIME OF SURVEY U/S.133A WHICH HAVE BEEN LATER ON RETRACTED BY THE ASSESSEE. THE A.0. HAS NOT BROUGH T ANY CORROBORATIVE EVIDENCE AND MATERIAL ON RECORD TO JUSTIFY THE ADDI TION. THE A.O HAS NOT BROUGHT ANY INDEPENDENT EVIDENCE OR GIVEN ANY F INDING TO SUBSTANTIATE THE DECLARATION MADE AT THE TIME OF SU RVEY. IN VIEW OF THESE FACTS WE ARE OF THE VIEW THAT NO ADDITION CAN BE MADE ONLY ON ITA NO. 1625 /AHD/2014 . A.Y. 2005-0 6 7 THE BASIS OF ADMISSION DURING THE COURSE OF SURVEY. WE THUS DIRECT THE DELETION OF THE ADDITION MADE. THUS THIS GROUND OF THE ASSESSEE IS ALLOWED.' 5.1. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO RELI ED ON THE DECISION OF HON'BLE APEX COURT RENDERED IN THE CASE OF CIT VS. S. KHADER KHAN SON IN CIVIL APPEAL NOS.13224 OF 2008 & 6747 OF 2012, DATE D 20 TH SEPTEMBER-2012, WHEREBY THE APPEAL FILED BY THE REVENUE WAS DISMISS ED. THE LD.SR.DR HAS RELIED ON THE ORDER OF THE AUTHORITIES BELOW. THE A O MADE THE ADDITION ON THE BASIS OF A STATEMENT GIVEN DURING THE COURSE OF SUR VEY. THE LD. CIT(A) HAS UPHELD THE ACTION OF THE ASSESSING OFFICER BY OBSER VING AS UNDER:- '7.1. I HAVE PERUSED THE FACTUAL MATRIX OF THE CASE . ADMITTEDLY THE ADDITION IN RESPECT OF VARIOUS PURCHASERS OF SHOPS HAS BEEN MADE BY THE ASSESSING OFFICER BASED ON THE STATEMENT RECORD ED ON OATH OF A THIRD PARTY OF HIS WIFE'S AFFAIR AND ONE OF THE DIR ECTORS OF THE APPELLANT COMPANY. THE ASSESSING OFFICER HAS NOT CONFRONTED T HE APPELLANT REGARDING RECEIPT OF MONEY IN CASH AND MERELY ASSUM ED THAT THE APPELLANT HAS RECEIVED CASH FROM EACH AND EVERY PUR CHASER. THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY AGAINST ANY OF THE PURCHASES THAT GAVE RISE TO AN INFERENCE THAT THE A DDITION HAS BEEN MADE ON THE BASIS OF PRESUMPTION. ON THE OTHER HAND THE APPELLANT HAS ALSO NOT PROVED TO THE SATISFACTION OF THE ASSE SSING OFFICER THAT PART OF THE CONSIDERATION HAS NOT BEEN OBTAINED IN CASH AS ADMITTED IN THE STATEMENT RECORDED DURING THE TIME OF SURVEY. I AM OF THE CONSIDERED OPINION WITH THE ASSESSING OFFICER THAT THE RETRACT ION LETTER FILED BY THE APPELLANT IS NOT VALID. I AM CONSTRAINED TO AGREE W ITH THE ASSESSING OFFICER AND THE ADDITION MADE BY THE ASSESSING OFFI CER IS UPHELD. THIS GROUND OF APPEAL IS ACCORDINGLY DISMISSED.' 5.2. IT IS EVIDENT FROM THE ABOVE OBSERVATION OF TH E LD.CIT(A) THAT THE AO HAD NOT CONFRONTED THE ASSESSEE REGARDING RECEIPT OF MO NEY IN CASH AND MERELY ITA NO. 1625 /AHD/2014 . A.Y. 2005-0 6 8 ASSUMED THAT THE ASSESSEE HAS RECEIVED CASH FROM EA CH AND EVERY PURCHASER. UNDISPUTEDLY, THE AO HAS NOT MADE ENQUIR Y FROM THE OTHER PURCHASERS AND NO MATERIAL HAS BEEN PLACED ON RECOR D THAT MONEY WAS RECEIVED IN CASH EXCEPT THAT STATEMENT WAS MADE BY ONE OF THE DIRECTORS OF THE COMPANY DURING THE COURSE OF SURVEY. THE LD. CIT(A) HAS HELD THAT THE RETRACTION LETTER OF THE ASSESSEE IS NOT VALID WITH OUT GIVING ANY REASON. WE ALSO FIND THAT THE ID.CIT(A) HAS NOT TAKEN INTO ACC OUNT THE DECISION OF THE HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF C IT VS. KHADER KHAN SON REPORTED AT (2008) 214 CTR 589 (MAD.) AND THE APPEA L FILED BY THE REVENUE BEFORE THE HON'BLE APEX COURT. THEREFORE, LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O AND MOREOVER THE R EVENUE HAS NOT PLACED ANY INDEPENDENT MATERIAL ON RECORD TO SUBSTANTIATE THE ADDITION. UNDER THESE FACTS, THE ADDITION TO THE EXTENT OF RS. 2,95,000/- ONLY (RS. 4.75,000 RS. 1,80,000) IS HEREBY SUSTAINED AND THE A.O IS DIRECT ED TO DELETE THE BALANCE AMOUNT OF RS. 29,75,000/-. THUS, THIS GROUND OF ASS ESSEES APPEAL IS PARTLY ALLOWED. 12. THE AFOREMENTIONED FINDINGS OF THE TRIBUNAL IN THE QUANTUM APPEAL SPEAKS FOR ITSELF IN AS MUCH AS THE ADDITION S BASED ON THE STATEMENTS WERE DISCARDED FOLLOWING THE RATIO LAID DOWN IN THE CASE OF S. KHADER KHAN 300 ITR 157. FURTHER, WE DO NOT FIND ANY EVIDENCE ON RECORD WHICH COULD SUGGEST THAT THE ASSESSEE HAS AC TUALLY RECEIVED RS. 4.75 LACS INSTEAD OF RS. 1.80 LACS THOUGH THE DIFFE RENCE MAY HAVE BEEN SUSTAINED BY THE TRIBUNAL IN QUANTUM APPEAL BUT IN OUR CONSIDERED OPINION, THE SAME CANNOT BE A JUSTIFIABLE REASON FO R THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O TO DELETE THE IMPUGNE D PENALTY. ITA NO. 1625 /AHD/2014 . A.Y. 2005-0 6 9 13. APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 10 - 05 - 2016. SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD