M/s. R M E C Projects Ltd., Pune V. Assistant Commissioner of Income-tax,

ITA 1699/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0972 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-07-2016
• Assessment Year: misc
• Appeal Filed On: 09-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Block assessment
• Section: 132

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE ! ' , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM ITA NO.1699/PN/2014 BLOCK ASSESSMENT YEARS 1997-98 TO 2003-04 M/S RMEC PROJECTS LTD., KALPANA TARANAG 42/9, ERANDWANA, KARVE ROAD, PUNE 411 004. PAN: AABCR3039G .. APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE. ... RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / DEPARTMENT BY : SHRI P. L. KUREEL / DATE OF HEARING : 31.08.2016 / DATE OF PRONOUNCEMENT: 31.08.2016 % / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL, PUNE DATED 25.07.2 014 CONFIRMING THE LEVY OF PENALTY UNDER SECTION 158BFA OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE BLOCK ASSESSMENT YEARS 1997-9 8 TO 2003-04. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. A S EARCH ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE OFFICE PREMISES OF T HE ASSESSEE ON 23.07.2002. 2 ITA NO.1699/PN/2014 DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. BASED ON THESE DOCUMENTS AND DATA GATHERED DURING SEARCH, ASSESSMENT UNDER SECTION 158BC WAS MADE. THE ASSESSEE FILED R ETURN OF INCOME FOR THE BLOCK PERIOD ON 27.02.2004 DECLARING UNDISCLOSED INCOME O F RS.30 LAKHS ON AD-HOC BASIS. THE ASSESSING OFFICER DETERMINED THE UNDISC LOSED INCOME OF THE ASSESSEE AT RS.7,22,50,014/-. AGGRIEVED BY THE ASSESSMENT O RDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE FIRST APPELLATE AUTHORITY RESTRICTED THE ADDITI ON ON ACCOUNT OF UNDISCLOSED INCOME TO RS.37,43,181/-. AGAINST THE FINDINGS OF THE CIT(A), BOTH, THE DEPARTMENT AND THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 30.08.2011 IN ITA NO.95/P N/2009 AND ITA NO.155/PN/2009 FILED BY THE DEPARTMENT AND THE ASSE SSEE, RESPECTIVELY UPHELD THE FINDINGS OF THE CIT(A) AND DISMISSED BOTH THE APPEA LS. THEREAFTER, THE ASSESSING OFFICER LEVIED PENALTY OF RS.35 LAKHS UNDER SECTION 158BFA(2) OF THE ACT IN RESPECT OF THE ADDITION CON FIRMED BY THE TRIBUNAL. AGAINST THE LEVY OF PENALTY, THE ASSESSEE FILED APPEAL BEFO RE THE CIT(A). THE CIT(A) VIDE IMPUGNED ORDER RESTRICTED THE PENALTY TO RS.23.58 L AKHS. NOW, THE ASSESSEE IS SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORD ER OF THE CIT(A) IN CONFIRMING THE LEVY OF PENALTY. 3. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE AS SESSEE SUBMITTED THAT THE CIT(A) HAS ERRED IN UPHOLDING THE LEVY OF PENALTY U NDER THE PROVISIONS OF SECTION 158BFA(2) OF THE ACT. THE LD. AR ADMITTED THAT ALT HOUGH THE TRIBUNAL HAS CONFIRMED THE ADDITION TO THE EXTENT OF RS.37,43,18 1/-, BUT EVERY ADDITION IPSO FACTO WOULD NOT RESULT IN LEVY OF PENALTY. THE LD. AR CO NTENDED THAT THE AUTHORITIES BELOW HAVE ERRED IN NOT APPRECIATING THE FACT THAT THE AD DITION WAS MADE ON PRESUMPTION 3 ITA NO.1699/PN/2014 AND SURMISES AND THERE WAS NO CONCRETE EVIDENCE THA T THE PAYMENTS MADE TO M/S SIMRAN ENTERPRISES WAS BOGUS AND HENCE, THERE WAS N O REASON TO LEVY PENALTY UNDER SECTION 158BFA(2) OF THE ACT. THE PAYMENTS W ERE MADE TO M/S SIMRAN ENTERPRISES BY ACCOUNT PAYEE CHEQUE AND THE SAID PA RTY HAS ALSO ADMITTED TO HAVE CARRIED OUT THE WORK FOR ASSESSEE AND PAID THE TAXE S ON THE AMOUNT RECEIVED. THEREFORE, NO ADDITION WAS CALLED FOR IN RESPECT OF THE PAYMENTS MADE TO M/S SIMRAN ENTERPRISES AND THERE IS NO QUESTION OF LEVY OF PENALTY UNDER SECTION 158BFA(2) OF THE ACT. THE LD. AR SUBMITTED THAT IN THE LIGHT OF THE FACTS ON RECORD, NO PENALTY SHOULD HAVE BEEN LEVIED. THE LD. AR MADE AN ALTERNATE SUBMISSION THAT AS PE R THE PROVISIONS OF SECTION 158BFA(2) OF THE ACT, THE PENALTY IS TO BE LEVIED ONLY IN RESPECT OF ADDITION SUSTAINED IN THE QUANTUM PROCEEDINGS. THE ASSESSEE HAD FILED BLOCK RETURN DECLARING UNDISCLOSED INCOME OF RS.30 LAKHS. THE A DDITION OF RS.37,43,181/- WAS UPHELD BY THE TRIBUNAL. THUS, THE PENALTY SHOULD H AVE BEEN LEVIED ONLY ON THE DIFFERENCE BETWEEN THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE AND THE FINAL AMOUNT ASSESSED I.E. RS.7,43,181/- AND NOT THE ENTI RE AMOUNT OF RS.37,43,181/-. 4. ON THE OTHER HAND, SHRI P. L. KUREEL REPRESENTIN G THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF THE CIT(A) IN CONFIRMING THE LEVY OF PENALTY. THE LD. DR SUBMITTED THAT THE CIT(A) IN A WELL REAS ONED ORDER HAD CONFIRMED THE LEVY OF PENALTY AND HAS REDUCED THE QUANTUM OF PENA LTY FROM RS.35 LAKHS TO RS.23.58 LAKHS. THE ASSESSEE HAS MERELY REITERATED THE SUBMISSIONS WHICH WERE MADE BEFORE THE CIT(A). THE CIT(A) AFTER APPRECIAT ING THE SAME HAS REJECTED THE CONTENTION OF THE ASSESSEE. 4 ITA NO.1699/PN/2014 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRES ENTATIVES OF THE RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE ASSESSEE BEFORE THE TRIBUNAL HAS MADE TWO-FOLD SUBMISSIONS. (I) TO DELETE THE ENTIRE PENALTY LEVIED UNDER SECTION 158BFA(2) OF THE ACT, AND (II) TO RES TRICT THE LEVY OF PENALTY ON THE ADDITION SUSTAINED IN QUANTUM PROCEEDINGS I.E. RS.7 ,43,181/- (RS.37,43,181/- MINUS RS.30,00,000/-). IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS DECL ARED RS.30 LAKHS AS UNDISCLOSED INCOME IN THE RETURN FILED FOR THE BLOC K PERIOD 1997-98 TO 2003-04. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER MADE HUGE ADDITION OF RS.7.22 CRORES. IN THE FIRST APPEAL, T HE CIT(A) GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE BY RESTRICTING THE ADDITION TO RS.3 7.43 LAKHS. THE TRIBUNAL UPHELD THE FINDINGS OF THE CIT(A). IN SO FAR AS THE FIRST PRAYER OF THE ASSESSEE TO DELETE THE ENTIRE PENALTY LEVIED UNDER SECTION 158BFA(2) OF TH E ACT IS CONCERNED, WE FIND THAT THE CIT(A) IN WELL REASONED AND ELABORATE MANNER HA S DEALT WITH THE ISSUE AND AFTER APPRECIATING THE FACTS HAS UPHELD THE LEVY OF PENALTY. THE LD. AR OF THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT THE WELL R EASONED FINDINGS OF THE CIT(A). FOR THE SAKE OF BREVITY, WE ARE NOT REPRODUCING THE FINDING OF THE CIT(A) ON THIS ISSUE. THE HONBLE SUPREME COURT OF INDIA IN THE C ASE OF CIT VS. K. Y. PILLIAH AND SONS REPORTED AS 63 ITR 411 (SC) HAS HELD THAT WHER E THE TRIBUNAL HAS CONCURRED WITH THE CONCLUSION OF THE ORDER OF CIT(A), THERE I S NO NEED TO REPEAT THE REASONING OF CIT(A). THE RATIO LAID DOWN BY THE HONBLE APEX COURT HAS BEEN REITERATED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. GLOBAL VANTEDGE PVT. LTD. REPORTED AS 354 ITR 21 (DELHI). ACCORDINGLY, THE G ROUND NOS.1 TO 5 RAISED IN THE APPEAL OF THE ASSESSEE ARE DISMISSED BEING DEVOID O F ANY MERIT. 5 ITA NO.1699/PN/2014 6. THE LD. AR OF THE ASSESSEE HAS MADE AN ALTERNATE SUBMISSION THAT IF AT ALL PENALTY UNDER SECTION 158BFA(2) OF THE ACT IS CONFI RMED, THE PENALTY SHOULD BE LEVIED ON THE DIFFERENCE OF AMOUNT BETWEEN THE UNDI SCLOSED INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AND THE ADDITION M ADE DURING THE ASSESSMENT PROCEEDINGS. BEFORE PROCEEDINGS WITH THIS ISSUE IT WOULD BE RELEVANT TO REFER TO PROVISIONS OF SECTION 158BFA(2) OF THE ACT. THE SA ME ARE REPRODUCED HEREUNDER :- [ LEVY OF INTEREST AND PENALTY IN CERTAIN CASES. 158BFA. (1) XXXXX (2) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS CHAPTER, MAY DIRECT T HAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN T HE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TA X SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 158BC : PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MADE IN RE SPECT OF A PERSON IF (I) XXXXX (II) XXXXX (III) XXXXX (IV) XXXXX PROVIDED FURTHER THAT THE PROVISIONS OF THE PRECEDING PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED BY THE ASSE SSING OFFICER IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN AND IN SUCH CASES THE PENALTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCLOSED INCOME DETER MINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RE TURN. 7. A BARE PERUSAL OF SECOND PROVISO TO SUB-SECTION (2) OF SECTION 158BFA SHOWS THAT THE PENALTY SHALL BE IMPOSED ON THE PORT ION OF THE UNDISCLOSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDI SCLOSED INCOME SHOWN IN THE RETURN. THUS, IN VIEW OF THE SECOND PROVISO TO SEC TION 158BFA(2), THE PENALTY CAN BE LEVIED ONLY ON THE DIFFERENCE BETWEEN THE AMOUNT OF UNDISCLOSED INCOME DETERMINED DURING THE ASSESSMENT PROCEEDINGS I.E. R S.37,43,181/- AND THE UNDISCLOSED AMOUNT SHOWN BY THE ASSESSEE IN THE RET URN OF INCOME I.E. RS.30 LAKHS. THUS, IN THE PRESENT CASE, PENALTY COULD HA VE BEEN LEVIED ONLY ON RS.7,43,181/-. THEREFORE, IN VIEW OF THE PROVISION S OF SECTION 158BFA(2), WE 6 ITA NO.1699/PN/2014 ACCEPT THE ALTERNATE SUBMISSION OF THE ASSESSEE AND ALLOW GROUND NO.6 RAISED IN THE APPEAL OF THE ASSESSEE, ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON WEDNESDAY, THE 31 ST DAY OF AUGUST, 2016. SD/- SD/- ( R.K. PANDA ) ( VIKAS AWASTHY ) / ACCOUNTANT MEMBER # / JUDICIAL MEMBER PUNE ; DATED : 31 ST AUGUST, 2016. %&'#()!*!+( ! COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-CENTRAL, PUNE; 4) THE CIT-CENTRAL, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %, / BY ORDER , '# //TRUE COPY// $ %&# '( / SR. PRIVATE SECRETARY '* + / ITAT, PUNE