Shri Amar Natvarlal Shah, Surat V. The Income tax Officer,Ward-3(3), Surat

ITA 1758/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6871 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 25-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS R K TOPIWALA
• Keywords: Loose papers; Difference of opinion
• Section: 69C; 143(3); 132

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI D.K. TYAGI, JM AND D.C.AGRAWAL, AM AMARBHAI NATVARLAL SHAH, URMI BUNGLOW, OPP. KHUSALDAS JEWELLERS, ATHWALINES, SURAT. VS. ITO, WARD 3(3), SURAT. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- NONE (WRITTEN SUBMISSION) RESPONDENT BY:- MRS. R. K. TOPIWALA, DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUND:- (1) THE LD. CIT(A) ERRED IN CONFIRMING LEVYING PENALTY OF RS.1,38,225/- I\U/S 271(1)(C) OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT A SEARCH U/S 132 WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 22.12.2004. ASSESSMENT U/S 143(3) READ WITH SECTION 158 WAS COMPLETED ON 27.11.2006 ON AN INCOM E OF RS.14,10,553/- AGAINST DECLARED INCOME OF RS.3,57,3 70/-. FOUR ADDITIONS U/S 69C WERE MADE AS UNDER :- ITA NO.1758/AHD/2010 ASST. YEAR 2005-06 ITA NO.1758/AHD/2010 ASST. YEAR 2005-06 2 RS.4,04,383/- - ON ACCOUNT OF EXPENSES INCURRED ON SHRIPAL RESIDENCY PROJECT. RS.1,97,800/- - ON ACCOUNT OF EXPENSES BEING PERSON AL IN NATURE. RS.2,00,000/- - ON ACCOUNT OF INVESTMENT MADE IN FU RNITURE & FIXTURES AND OTHER VALUABLES. RS.2,51,000/- - ON ACCOUNT OF EXPENSES BEING PERSO NAL IN NATURE. 3. THE LD. CIT(A) CONFIRMED AN ADDITION OF RS.1,40, 147/- OUT OF RS.4,04,383/-. OUT OF ADDITION OF RS.1,97,800/- LD. CIT(A) CONFIRMED A SUM OF RS.1,20,600/- AND THE ADDITION OF RS.2,51,00 0/- WAS FULLY DELETED. BUT THE SUM OF RS.2 LACS BEING INVESTMENT IN FURNIT URE AND FIXTURES WAS CONFIRMED. THE AO IN PENALTY PROCEEDINGS ISSUED A S HOW CAUSE NOTICE TO THE ASSESSEE IN RESPONSE TO WHICH ASSESSEE FURNISHE D REPLY WHICH IS REFERRED TO BY THE AO IN PARA 7 OF HIS ORDER. IN RE SPECT OF ADDITION OF RS.4,04,383/- REDUCED TO RS.1,40,147/- IT WAS SUBMI TTED THAT ENTIRE SUM RELATED TO SHRIPAL RESIDENCY PROJECT AND NOT TO THE ASSESSEE THOUGH LD. CIT(A) ONLY ACCEPTED PART OF THE EXPLANATION. IN RE SPECT OF ADDITION OF RS.1,97,800/- REDUCED TO RS.1,20,600/- IT WAS SUBMI TTED THAT NOTHING WAS FOUND INCRIMINATING IN THE SEARCH OR IN THE ASSESSM ENT PROCEEDINGS SHOWING SUCH PERSONAL EXPENDITURE. THE ADDITION WAS MAINLY MADE ON PRESUMPTIVE BASIS. IN RESPECT OF ADDITION OF RS.2 L ACS THE ASSESSEE SUBMITTED THAT THE ASSETS WERE ACQUIRED PRIOR TO BL OCK PERIODBUT THE DETAILS WERE NOT AVAILABLE. NO EVIDENCE WAS FOUND A S TO THE ACTUAL PURCHASE OF FURNITURE. ADDITION WAS ONLY MADE ON PR ESUMPTIVE BASIS. THE LD. AO, HOWEVER, WAS NOT SATISFIED AND HELD THAT T HE ADDITION WAS MADE AFTER ANALYZING THE SEIZED MATERIAL, INCOME WAS NOT DECLARED SUO MOTTU BY THE ASSESSEE BUT WAS DETECTED BY THE DEPARTMENT, TH E ADDITION IS OVER AND ABOVE THE AMOUNT DECLARED BY THE ASSESSEE, AND ASSE SSEE HAS FAILED TO ITA NO.1758/AHD/2010 ASST. YEAR 2005-06 3 SUBMIT ANY CLARIFICATION REGARDING THIS ADDITION OT HER THAN WHAT HE SAID IN THE ASSESSMENT PROCEEDINGS. HE ACCORDINGLY LEVIED A PENALTY OF RS.1,38,225/- 4. THE LD. CIT(A) ALSO HELD THAT ADDITIONS ARE MADE ON THE BASIS OF SEIZED AND INCRIMINATING MATERIAL, THE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT SUBSTANTIATED AND HENCE CANNOT BE T REATED AS BONA FIDE, ALL THE MATERIAL RELATING TO EXPLANATION AND INVESTMENT ARE NOT DISCLOSED BY THE ASSESSEE. HE ACCORDINGLY DIRECTED TO REDUCE PEN ALTY ON A SUM OF RS.4,60,747/- BEING THE ADDITION FINALLY SUSTAINED BY THE LD. CIT(A). 5. AGAINST THIS, A WRITTEN SUBMISSION IS FILED WHER EIN IT IS STATED THAT IN RESPECT OF ADDITION OF RS.1,40,147/- THERE IS A DIFFERENCE OF OPINION REGARDING THE CONTENTS OF THE LOOSE PAPERS AND THE ADDITION WAS SUBSTANTIALLY REDUCED BY THE TRIBUNAL. THE ADDITION OF RS.1,97,800/- WAS MADE ON THE BASIS OF LOOSE PAPER 42 OF A-2 WHICH WA S REDUCED TO RS.1,20,600/- PERTAINING TO M/S SHRIPAL CORPORATION . HOWEVER, THE LD. CIT(A) HELD IT AS BELONGING TO ASSESSEE. THUS THERE IS A DIFFERENCE OF OPINION FOR WHICH PENALTY SHOULD NOT BE LEVIED. 6. REGARDING ADDITION OF RS.2 LACS IN RESPECT OF IN VESTMENT IN FURNITURE AND FIXTURES IT WAS SUBMITTED THAT NOTHIN G WAS FOUND IN THE SEARCH AND ADDITION IS MADE ONLY ON PRESUMPTION. TH E ASSESSEE IN THE WRITTEN SUBMISSION REFERRED TO THE FOLLOWING JUDGME NTS :- CIT VS. DHOOLI TEA CO. (1998) 231 ITR 65 (CAL) CIT VS. AGGRAWAL PIPE CO. (1998) 240 ITR 880 (DEL) CIT VS. INDEN BISLERS (1999) 240 ITR 943 (MAD) CIT VS. G.R. RAJENDRA (2003) 259 ITR 109 (MAD) CIT VS. GURUDAYALRAM MUTHIAL (1991) 190 ITR 39 (GUJ ) ANANTRAM VEERASINGHNIA VS. CIT 123 ITR 457 (SC) CIT VS. GAURISHANKAR SURESH PRASAD 224 ITR 27 (PAT) ITA NO.1758/AHD/2010 ASST. YEAR 2005-06 4 BURMA SHELL OIL STORAGE & DISTRIBUTORS OF INDIA CO. VS. ITO 112 ITR 592 (CAL) CIT VS. RAMSWAMI NAIDU 208 ITR 377 (MAD) KAMBAY SOFTWARE INDIA (P) LTD. VS. DCIT (2009) TIOL 278 ITAT-PUNE 283 (2009) 41-A, BCAJ. ACIT VS. VIP INDUSTRIES LTD. (2009) 41-A, BCAJ/122 TTJ 289/2009- TIOL-193-ITAT-MUMBAI. GM GRANITE (KARNATAKA) VS. DCIT 18 DTR 358 (CHENNAI ) 7. ON THE OTHER HAND LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW PENALTY IN RESPEC T OF INVESTMENT IN FURNITURE AND FIXTURES IS REQUIRED TO BE SUSTAINED BECAUSE ASSESSEE HAS FAILED TO SHOW AS TO WHEN THEY WERE PURCHASED. ASSE TS ARE FOUND WITH THE ASSESSEE AND, THEREFORE, INVESTMENT HAS TO BE CONSI DERED IN FY IN WHICH ASSETS ARE FOUND. SINCE INVESTMENT IN SUCH ASSETS H AVE BEEN WORKED OUT AT RS.2 LACS THEN PENALTY IN RESPECT OF SUCH SUM IS LE VIABLE. BY NOT DECLARING INVESTMENT IN FURNITURE AND FIXTURES ASSESSEE HAS C ONCEALED THE PARTICULARS OF INCOME AND ACCORDINGLY THE ADDITION IS A GOOD CA SE FOR LEVY OF PENALTY. IN RESPECT OF ADDITION OF RS.1,20,600/- THE ONLY EX PLANATION OF THE ASSESSEE IS THAT ENTIRE SUM OF RS.1,97,800/- BELONG ED TO M/S SHRIPAL ASSOCIATES OR SHRIPAL CORPORATION. EVEN THOUGH ASSE SSEE WAS NOT ABLE TO SUBMIT ANY EVIDENCE IN SUPPORT OF EXPLANATION. EXPL ANATION-1 TO SECTION 271(1)(C) WOULD, THEREFORE, BE APPLICABLE WHERE EXP LANATION OF ASSESSEE IS NOT SUPPORTED BY MATERIAL EVIDENCE. THEREFORE, PENA LTY ON THIS AMOUNT IS ALSO SUSTAINED. IN RESPECT OF SUM OF RS.1,40,147/- AGAIN THE EXPLA NATION IS THAT AMOUNT PERTAINED TO M/S SHRIPAL ASSOCIATES AND M/S SHRIPAL CORPORATION BUT ASSESSEE WAS NOT ABLE TO FURNISH ANY EVIDENCE. THIS AMOUNT AND THE AMOUNT OF RS.1,20,600/- WERE DISCOVERED ON THE BASI S OF SEIZED ITA NO.1758/AHD/2010 ASST. YEAR 2005-06 5 DOCUMENTS IN ANNEXURE-A-2 AND, THEREFORE, IT WAS FO R THE ASSESSEE TO SHOW HOW THE EXPENDITURE REFLECTED FROM THE SEIZED DOCUMENT IS ACCOUNTED FOR. THE EXPLANATION FURNISHED BEFORE THE AO AND AS REFERRED TO ABOVE IS UNSUBSTANTIATED AND, THEREFORE, EXPLANATIO N-1 TO SECTION 271(1)(C) IS APPLICABLE. 9. THERE IS NO DISPUTE WITH THE PROPOSITION LAID OU T IN VARIOUS CASE LAWS REFERRED TO BY THE ASSESSEE BUT THE LEVY OF PE NALTY HAS TO BE SEEN ON THE BASIS OF FACTS MATRIX OF EACH CASE. NOT ONLY TH E APPLICABILITY OF MAIN PROVISION OF SECTION 271(1)(C) HAS TO BE EXAMINED B UT ALSO THE EXPLANATION-1 TO SECTION 271(1)(C) WHEREAS FULFILLM ENT OF CONDITIONS LAID DOWN THEREIN ADDITION IS DEEMED AS CONCEALED INCOME OR INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FILED. THE PRESENT BEING PURELY THE CASE WHERE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT SUBSTANTIATED. THE ADDITION MADE ON THE BASIS OF SIZED DOCUMENTS AND ASSETS FOUND DURING SE ARCH WOULD BE DEEMED CONCEALMENT. ONE ITEM OF ADDITION AS REFERRE D TO ABOVE IS COVERED IN THE MAIN PROVISION AND OTHER TWO ITEMS A RE COVERED IN THE EXPLANATION-1 TO SECTION 271(1)(C). AS A RESULT, WE CONFIRM THE LEVY OF PENALTY AND DISMISS THE APPEAL FILED BY THE ASSESSE E. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 8/4/11. SD/- SD/- (D. K. TYAGI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 8/4/11. ITA NO.1758/AHD/2010 ASST. YEAR 2005-06 6 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 1/4/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 7/4/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..