SILVER CONSTRUCTION, MUMBAI V. ACIT CIR 23(3), MUMBAI

ITA 1840/MUM/2010

• Counselvise Citation: 184019914 RSA 2010
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-04-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 09-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: JAYANT BHATT

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH (ACCOUNTANT MEMBER) ITA NOS. 1840 & 1841/MUM/2010 ASSESSMENT YEARS :2004-05 AND 2005-06 SILVER CONSTRUCTION, HOTEL SILVER INN, MEHER PLAZA, NEAR COURT, M.G.ROAD, NASHIK PA NO.AAAFS 7465 D ACIT, CIRCLE 23(3), MUMBAI. (APPELLANT) VS. (RESPONDENT) ITA NO.4069/M/2010 ASSESSMENT YEAR: 2005-06 ACIT, CIRCLE 23(3), MUMBAI. SILVER CONSTRUCTION, HOTEL SILVER INN, MEHER PLAZA, NEAR COURT, M.G.ROAD, NASHIK PA NO.AAAFS 7465 D (APPELLANT) VS. (RESPONDENT) ASSSESSEE BY : MR JAYANT BHATT DEPARTMENT BY: MR C.G.K.NAIR DATE OF HEARING: 3.4.2012 DATE OF PRONOUNCEMENT: 12. 4.2012 ORDER PER BENCH THE ASSESSEE HAS FILED THE APPEALS FOR THE ASSESSM ENT YEAR 2004-05 AND 2005- 06 AGAINST THE ORDERS OF LD CIT(A) BOTH DATED 2.2.2 010 AND ALSO THE DEPARTMENT HAS FILED APPEAL AGAINST THE ORDER DATED 2.2.2010 OF LD CIT(A) IN DELETING THE PENALTY UNDER SECTION 271(1)(C) FOR THE ASSESSMENT YEAR 2005-06. 2. IN RESPECT OF APPEAL FOR THE ASSESSMENT YEAR 200 4-05, BEING I.T.A. NO.1840/M/2010, THE ASSESSEE HAS TAKEN THE FOLLOWIN G GROUNDS IN DISPUTING THE ORDER OF LD CIT(A) WHILE CONFIRMING THE PENALTY UNDER SECTIO N 271(1)(C) OF THE I.T.ACT, 1961: LD CIT(A) HAS ERRED IN CONFIRMING THE PENALTY U/S. 271(1)(C) OF THE I.T.ACT, ON AMOUNT OF RS.4,83,500 BEING AMOUNT OF CAPITAL INTRO DUCED BY THE PARTNERS. 2 3. IN RESPECT OF APPEAL FOR A.Y. 2005-06, BEING I.T .A. NO.1841/M/10, ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: LD CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S.271( 1)(C) OF THE I.T.ACT ON AMOUNT OF RS.7,12,000 BEING AMOUNT OF CAPITAL INTRO DUCED BY THE PARTNERS. 4. THE DEPARTMENT IN I.T.A. NO.4069/M/2010, HAS TAKEN THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S.271(1)(C) ON THE PR OFIT OF RS.3,03,703 ESTIMATED U/S.144 AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE LOSS DECLARED IN THE RETURN OF INCOME FILED BY IT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD CIT(A) ERRED IN APPRECIATING THE FACT THAT THE ASSESSEE DID NOT PRO DUCE THE BOOKS OF ACCOUNT, BILLS, VOUCHERS DURING THE COURSE OF ASSESSMENT PRO CEEDINGS INSPITE OF SEVERAL OPPORTUNITIES ALLOWED TO IT TO SUBSTANTIATE THE COR RECTNESS OF STATEMENT OF INCOME FILED BY IT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S.271(1)(C) ON UNEXPL AINED INTRODUCTION OF THE CAPITAL OF RS.7,00,000 BY THE PARTNER. 4. THE LD CIT(A) FAILED TO APPRECIATE THE FACT THAT THE LAND WAS SOLD BY SHRI WAMAN RAO, THE PARTNER TO SHRI PRAKASH DEVJI CHAVAN WHEREAS IN THE CAPITAL ACCOUNT, ATTACHED WITH THE RETURN OF INCOME, THE AB OVE AMOUNT WAS MENTIONED TO HAVE BEEN RECEIVED FROM SHIVSHANKAR. 5. FIRSTLY, WE TAKE UP THE APPEAL FOR THE ASSESSMEN T YEAR 2004-05 FILED BY THE ASSESSEE. 6. WE HAVE HEARD THE REPRESENTATIVES OF THE PARTIES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 7. IT IS RELEVANT TO STATE THAT ALONGWITH THESE APP EALS, WE HAVE HEARD THE QUANTUM APPEALS FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDE RATION, AND HAVE PASSED SEPARATE ORDER. 8. IT IS RELEVANT TO STATE THAT THE ASSESSMENT OR DER FOR A.Y. 2004-05 WAS PASSED U/S.144 OF THE I.T.ACT AND THE INCOME OF THE ASSESS EE WAS ESTIMATED BY ADOPTING THE NET PROFIT RATE OF 8% IN RESPECT OF CONSTRUCTION AC TIVITY AND AT 12% IN RESPECT OF HOTEL ACTIVITY. FURTHER, THE CAPITAL INTRODUCTION OF RS. 4,83,500 WAS NOT ACCEPTED AS GENUINE BECAUSE ASSESSEE FAILED TO PROVE THE SOURCE OF INTR ODUCTION OF SAID CAPITAL BY THE 3 PARTNERS, NAMELY SHRI WAMANRAO LOKHANDE. THE ASSES SEE CONTENDED THAT THE PARTNER SHRI WAMANRAO LOKHANDE HAS INTRODUCED THE CAPITAL O UT OF SALE OF AGRICULTURAL PRODUCTS BUT THE ASSESSEE FAILED TO ESTABLISH THAT SHRI WAMA NRAO LOKHANDE HAD AGRICULTURAL INCOME BY PRODUCING DOCUMENTARY EVIDENCES. THEREFO RE, IN THE QUANTUM APPEAL, IT HAS BEEN CONFIRMED BY THE TRIBUNAL THAT THE ASSESSEE CO ULD NOT ESTABLISH THE SOURCE OF INTRODUCTION OF CAPITAL OF RS.4,83,500 BY THE PAR TNER. DURING THE COURSE OF HEARING BEFORE US, LD A.R. SUBMITTED THAT IF THE PARTNER CO ULD NOT PROVE THE SOURCE OF INTRODUCTION OF CAPITAL WITH THE ASSESSEE, THE SAID AMOUNT BE TREATED AS UNDISCLOSED INCOME OF THE PARTNER AND NO PENALTY COULD BE IMPOS ED IN THE ASSESSEES FIRM. WE DO NOT FIND MERIT IN THE CONTENTION OF THE ASSESSEE AS ONUS IS ON ASSESSEE TO PROVE GENUINENESS OF AMOUNT BROUGHT BY THE PARTNER & FAIL ING WHICH ADDITION HAS BEEN CONFIRMED IN THE HANDS OF THE ASSESSEES FIRM BECAU SE THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF INTRODUCTION OF CAPITAL BY THE PARTN ER AND THE AMOUNT HAS BEEN TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. THEREFORE, WE HOLD THAT LD CIT(A) HAS RIGHTLY HELD THAT THE ASSESSEE FILED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS.4,83,500 AS THE ASSESSEE COULD NOT ESTABLISH THE SOURCE OF S AID AMOUNT. HENCE, WE HOLD THAT LEVY OF PENALTY @ 100% OF TAX SOUGHT TO BE EVADED ON RS. 4,83,500 U/S.271(1)(C) OF THE ACT IS JUSTIFIED. ACCORDINGLY, WE UPHOLD THE LEVY OF P ENALTY BY REJECTING THE GROUND OF APPEAL TAKEN FOR THE ASSESSMENT YEAR 2004-05 BY THE ASSESS EE. 9. IN RESPECT OF APPEAL FOR THE ASSESSMENT YEAR 200 5-06 BEING I.T.A. NO.1841/M/2010, THE ASSESSEE IS DISPUTING THE CONFI RMATION OF PENALTY ON RS.7,12,000 U/S.271(1)(C) BEING AMOUNT OF CAPITAL INTRODUCED B Y THE PARTNERS. 10. AT THE TIME OF HEARING, LEARNED REPRESENTATIVES OF THE PARTIES CONCEDED THAT THE FACTS ARE IDENTICAL TO THAT OF THE ASSESSMENT YEAR 2004-05. 11. IN VIEW OF ABOVE AND FOR THE REASONS STATED HER EINABOVE IN PARA 8 (ABOVE) THAT WE HAVE CONFIRMED THE PENALTY FOR THE ASSESSMENT YE AR 2004-05 IN RESPECT OF INTRODUCTION OF UNEXPLAINED PARTNERS CAPITAL, WE CONFIRM THE ORDER OF LD CIT(A) IN RESPECT OF LEVY OF PENALTY @ 100% OF TAX SOUGHT TO BE EVADED ON RS.7,12,000(WRONGLY STATED IN CIT(A)S ORDER THE AMOUNT RS.7,21,000) U/ S.271(1)(C) OF THE ACT BY REJECTING THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE. 4 12. IN RESPECT OF APPEAL FILED BY THE DEPARTMENT FO R THE ASSESSMENT YEAR 2005-06, LD D.R. SUBMITTED THAT THE ORDER OF THE AO FOR LEVY OF PENALTY ON ESTIMATED PROFIT OF RS.3,03,703 U/S.144 OF THE ACT IS JUSTIFIED. HOWE VER, LD A.R. SUBMITTED THAT SIMILAR ESTIMATION OF INCOME WAS MADE FOR A.Y. 2004-05 AND THE PENALTY LEVIED BY THE AO WAS DELETED BY THE CIT(A), BUT DEPARTMENT HAS NOT FILED ANY APPEAL BEFORE THE TRIBUNAL. LD D.R. COULD NOT CONTROVERT THE ABOVE SUBMISSION OF L D A.R. 13. ON CONSIDERATION OF FACTS AND SUBMISSIONS OF L EARNED REPRESENTATIVES, WE FIND SUBSTANCE IN THE ABOVE SUBMISSIONS OF LD A.R. AS TH E APPEAL FOR THE ASSESSMENT YEAR 2004-05 HAS BEEN HEARD ALOGNWITH THIS APPEAL. WE O BSERVE THAT THE FACTS IN THE ASSESSMENT YEAR 2005-06 ARE IDENTICAL TO A.Y. 2004- 05. FURTHER, WE OBSERVE THAT THE INCOME HAS BEEN ADOPTED IN RESPECT OF BOTH THE ACTI VITIES OF THE ASSESSEE I.E. CIVIL CONSTRUCTION AND HOTEL ACTIVITY BY ESTIMATING THE I NCOME WHILE MAKING BEST JUDGMENT OF ASSESSMENT. WE HAVE HELD IN QUANTUM APPEALS THAT ESTIMATION OF NET PROFIT RATE IN RESPECT OF HOTEL ACTIVITIES IS EXCESSIVE AND HAVE R EDUCED TO 10% OF RECEIPTS AS AGAINST 12% CONFIRMED BY LD CIT(A) FOR BOTH ASSESSMENT YEAR S UNDER CONSIDERATION. WE ARE OF CONSIDERED VIEW THAT LD CIT(A) HAS RIGHTLY STATED T HAT THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT ON THE ESTIMATION OF INCOME IS NOT JUSTI FIED. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SUSHIL KUMAR SARAD KUMAR V. COMMISSIONER OF INCOME- TAX, 232 ITR 588(ALL) HAS HELD THAT WHERE ADDITIONS ARE MADE PURELY ON E STIMATE WITHOUT REFERENCE TO ANY EVIDENCE/MATERIALS BEING ON RECORD , PENALTY CANNOT BE LEVIED ON THE FIGURES WHICH ARE MERELY BASED ON GUESS WORK OR ES TIMATE. CONSIDERING THE FACTS OF THE CASE AND IN THE LIGHT OF ABOVE DECISION OF HONBLE ALLAHABAD HIGH COURT, WE HOLD THAT LD CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED BY TH E AO U/S.271(1)(C) OF THE ACT FOR ASSESSMENT YEAR 2005-06 ON ESTIMATION OF INCOME. 14. HOWEVER, THE DEPARTMENT HAS ALSO DISPUTED THE A CTION OF THE CIT(A) IN DELETING THE PENALTY LEVIED AT RS.7,00,000 INTRODUCED BY THE PARTNERS. SINCE IN THE QUANTUM APPEAL, WE HAVE DELETED THE ADDITION OF RS.7 LAKHS, WE HOLD THAT LEVY OF PENALTY ON THE SAID AMOUNT IS NOT JUSTIFIED. THEREFORE, THE APPEA L FIELD BY THE DEPARTMENT FOR THE ASSESSMENT YEAR 2005-06 IS DISMISSED. 5 15. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06 AND ALSO THE APPEAL FILED BY TH E DEPARTMENT FOR THE ASSESSMENT YEAR 2005-06 ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL, 2012 SD/- (RAJENDRA SINGH) ACCOUNTANT MEMBER SD/- (B.R. MITTAL) JUDICIAL MEMBER MUMBAI, DATED 12 TH APRIL , 2012 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),33, MUMBAI 4. COMMISSIONER OF INCOME TAX,23 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH D MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI