The DCIT, Circle-9, Ahmedabad V. Shri Mahendra D.Desai, Ahmedabad

ITA 1877/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63150 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 31-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gross profit estimation
• Section: 154

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , ! '#, $% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. ./ I.T.A.NO.1877/AHD/2010 - ! ) ! ) ! ) ! )/ // / A.Y. 2005-06 2. ./ I.T.A.NO.1878/AHD/2010 - ! ) ! ) ! ) ! )/ // / A.Y. 2007-08 THE DY.CIT CIRCLE-9 AHMEDABAD ! ! ! ! / VS. SHRI MAHENDRA D.DESAI 32, ASHWAMEGH BUNGALOWS SCHEME-3 SATELLITE RING ROAD AHMEDABAD-380 015 * $% ./+, ./ PAN/GIR NO. : AAJPD 4857 H ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) ASSESSEE BY : SHRI S.N.SOPARKAR REVENUE BY : SL.NO.1 SHRI T.SHANKAR,SR.D.R. SL.NO.2 SHRI A.TIRKEY, SR.D.R. !0 1 %/ // / DATE OF HEARING : 26/10/2012 23) 1 % / DATE OF PRONOUNCEMENT : 23.11.12 $4 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : [A] ITA NO.1877/AHD/2010 FOR A.Y. 2005-06 THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M THE ORDER OF THE LD.CIT(A)-XV, AHMEDABAD DATED 31/03/2010 AND THE O NLY GRIEVANCE IS IN RESPECT OF DELETION OF PENALTY LEVIED U/S.271(1) ( C) OF THE IT ACT OF RS.9,55,379/-. ITA NOS.1877 & 1878/AHD/2010 DY.CIT VS. SHRI MAHENDRA D.DESAI ASST.YEARS - 2005-06 & 2007-08 RESPECTIVELY - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG ASSESSMENT ORDER PASSED U/S.143(3) OF THE IT ACT DATED 26.12.2007 AND THE PENALTY ORDER U/S.271(1)(C) DATED 3.3.2010 WERE THAT THE ASSESSE E IN INDIVIDUAL CAPACITY IS IN THE BUSINESS OF TRADING IN COAL, COKE AND LI GNITE. AGAINST THE DECLARED INCOME OF RS.4,45,590/- THE ASSESSMENT WAS MADE ON A TOTAL INCOME OF RS.1,11,49,600/-. SOME OF THE ADDITIONS WHICH WERE THE SUBJECT MATTER OF PENALTY WERE AS UNDER:- I) ADDITION ON ACCOUNT OF LOW GP RS.12,27,096/- II) ADDITION ON ACCOUNT OF BOGUS DEPOSIT U/S.68 OF IT ACT RS.47,14,900/- III) DISALLOWANCE OUT OF FREIGHT LIABILITIES RS.4 3,05,770/- IV) DISALLOWANCE OF INTEREST RS. 3,93,947/- V) DISALLOWANCE OUT OF MOTOR NOOR & JAKAT EXPENSES RS. 2,02,840/- 3. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT THE LD.CIT(A) HAS DELETED THE PENALTY IN THE FOLLOW ING MANNER:- 3 M/S.SHYAM ROADLINES IN ITA NO.2609/AHD/2006 AY 2001- 02 HON'BLE ITAT A BENCH AHMEDABAD DECISION DATED 20 .11.2009 WHEREIN IN PARA 6 HON'BLE ITAT RELIED ON SUPREME CO URT DECISIONS WHILE STATING AS UNDER: .. IT IS WELL SETTLED THAT ASSESSMENT PROCEEDING S AND PENALTY PROCEEDINGS ARE DIFFERENT AND THOUGH THE FINDINGS R ECORDED IN THE ASSESSMENT PROCEEDINGS ARE GOOD EVIDENCE, THEY CANN OT BE CONSIDERED TO BE CONCLUSIVE EVIDENCE IN THE COURSE OF THE PENALTY PROCEEDINGS INITIATED FOR CONCEALMENT OF INCOME. T HIS PRINCIPLE HAS BEEN LAID DOWN BY THE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX MADRAS V. KHODAY ESWARSA AND SONS ITA NOS.1877 & 1878/AHD/2010 DY.CIT VS. SHRI MAHENDRA D.DESAI ASST.YEARS - 2005-06 & 2007-08 RESPECTIVELY - 3 - (1972) 83 ITR 369 AND CITY VS. ANANTRAM VEERSINGIAH & SONS 123 ITR 457. 4. HONBLE ITAT SMC BENCH AHMEDABAD IN THE CASE OF BABUBHAI HAJI S KAPADI IN ITA NO.2443/AHD/2009 AY 1991-92 D ATED 30.10.2009 HELD WHILE DELETING PENALTY ON ADDITIONS UPHOLD U/S.68. IN PENALTY PROCEEDINGS THE4 ENTIRE EVIDENCE IN THE CASE HAS TO UNDERGO A REAPPRAISAL IN ORDER TO ESTABLISH THE GUI LT OF THE ASSESSEE AND THAT MERELY BECAUSE THE ADDITION HAS B EEN SUSTAINED BY THE TRIBUNAL, PENALTY UNDER SECTION 271(1)(C) IS NOT AUTOMATICALLY LEVIABLE. 4. FOR A.Y. 2005-06 IN ASSESSEES OWN CASE AN ORDER HAS BEEN PRONOUNCED BY ITAT C BENCH AHMEDABAD TITLED AS M AHENDRA D. DESAI VS. DCIT (CROSS APPEALS ITA NO.2835/AHD/2008 & 2896/AHD/2008) ORDER DATED 21.09.2012. IN RES PECT OF LOW GP AND ADDITION MADE ON ACCOUNT OF BOGUS FREIGHT LIABILITY , THE TRIBUNAL HAS HELD VIDE PARA NO.2.2.5 AS UNDER: 2.2.5 IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT IN THE FACTS OF THE PRESENT CASE, EVEN THE REJECTION OF BOOKS OF ACCOUNT IS NOT PROPER AND EVEN IF REJECTIO N OF THE BOOKS OF ACCOUNTS IS ACCEPTED, THE ADDITION MADE BY THE A.O. ON ACCOUNT OF G.P. ADDITION AND DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF BOGUS FREIGHT LIABILITY CANNOT BE SUSTAINED. WE, T HEREFORE ALLOW ALL THESE THREE GROUNDS OF THE ASSESSEE. 5. IN RESPECT OF THE ADDITION MADE U/S.68, A PART R ELIEF WAS GRANTED BY THE TRIBUNAL VIDE PARAGRAPH NO.2.3.4, WHICH READS A S UNDER:- ITA NOS.1877 & 1878/AHD/2010 DY.CIT VS. SHRI MAHENDRA D.DESAI ASST.YEARS - 2005-06 & 2007-08 RESPECTIVELY - 4 - 2.3.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE OR DERS OF AUTHORITIES BELOW. REGARDING DEEPAL DESAI (HUF), W E FIND THAT IT IS NOTED BY LD. CIT(A) ON PAGE 12 OF HIS ORDER THAT A CASH LOAN OF RS.17,000/-WAS GIVEN TO THE ASSESSEE ON 01.11.2004 WHILE THIS PERSON RECEIVED THIS AMOUNT IN CASH FORM BHAGWATI A VIATION ON 15.02.2005. REGARDING THE SECOND LOAN OF RS.18,000 /- IN CASH GIVEN TO THE ASSESSEE ON 01.07.2004, IT WAS SUBMITT ED THAT SOURCE OF THIS WAS AGRICULTURAL INCOME BUT THE SAME WAS NO T SUPPORTED BY CONVINCING EXPLANATION. IT WAS ALSO NOTED THAT AGR ICULTURAL INCOME HAS NOT BEEN REFLECTED IN ANY OF THE INCOME TAX RET URNS FILED IN INDIVIDUAL CAPACITY AND HUF IS NOT FILING ANY RETUR N. IN OUR CONSIDERED OPINION, THE LOAN OF RS.17,000/- GIVEN O N 01.11.2004 CANNOT BE ACCEPTED AS EXPLAINED OUT OF RECEIPT OF C ASH FROM BHAGWATI AVIATION ON 15.02.2005 BUT THE SECOND LOAN OF RS.18,000/-RECEIVED ON 01.07.2004 FOR WHICH IT WAS EXPLAINED THAT AGRICULTURAL INCOME IS THE SOURCE, CANNOT BE REJECT ED MERELY ON THIS BASIS THAT HUF IS NOT FILING ANY INCOME TAX R ETURN. HENCE, WE UPHOLD THIS ADDITION OF RS.17,000/- REGARDING LOAN TAKEN FORM DEEPAL DESAI (HUF) AND DELETE THE ADDITION OF RS.18 ,000/- REGARDING LOAN FROM THIS PERSON. SIMILARLY, REGARD ING DEPOSITS TAKEN FORM TEJAL DESAI (HUF), WE FIND THAT ONE LOAN IS TAKEN ON 01.11.2004 OF RS.17,000/- IN CASH WHEREAS THE SOURC E IS EXPLAINED TO BE CASH FROM BHAGWATI AVIATION ON 15.02.2005. A DDITION ON THIS ACCOUNT IS UPHELD BECAUSE FOR A LOAN ON 01.11. 2004, WITHDRAWAL ON 15.02.2005 CANNOT BE ACCEPTED AS THE SOURCE. THE 2 ND LOAN OF RS.18,000/- IN CASH ON 01.07.2004 HAS BEEN EXPLAINED THAT THE SOURCE IS AGRICULTURAL INCOME. IT IS STAT ED BY LD. CIT(A) THAT AS PER 7/12 EXTRACT, THIS PARTY IS HAVING ONLY VERY SMALL PIECE OF LAND ON WHICH JAWAR IS GROWN AND NO SALE BILL OR OTHER EVIDENCE WAS FILED TO JUSTIFY THIS AGRICULTURAL INCOME. WE ARE OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE IS HOLDIN G A LAND IN WHICH SOME CROP IS ALSO GROWN, THEN FOR THIS SMALL AMOUNT OF RS.18,000/-, SOURCE SHOULD BE ACCEPTED AND HENCE, W E DELETE THIS ADDITION OF RS.18,000/- REGARDING DEPOSIT FROM TEJA L DESAI (HUF) ALSO. REGARDING ADDITION OF RS.33,000/- IN RESPECT OF DEPOSIT BY J. LAL & CO., WE UPHOLD THE ENTIRE ADDITION BECAUSE NO EXPLANATION COULD BE FURNISHED WITH REGARD TO THIS DEPOSIT. RE GARDING DISALLOWANCE OF INTEREST, WE DIRECT THE A.O. TO ALL OW RELIEF WITH ITA NOS.1877 & 1878/AHD/2010 DY.CIT VS. SHRI MAHENDRA D.DESAI ASST.YEARS - 2005-06 & 2007-08 RESPECTIVELY - 5 - REGARD TO 2 ND LOAN OF RS.18,000/- EACH, WHICH IS FROM DEEPAL DES AI AND TEJAL DESAI (HUF) FOR WHICH ADDITIONS ARE DELET ED BY US. ACCORDINGLY, GROUNDS NO.4, 5 & 7 ARE PARTLY ALLOWED WHEREAS GROUND NO.6 IS REJECTED. 6. FURTHER, IN RESPECT OF NOOR & JAKAT EXPENSES T HE ADDITION WAS DELETED VIDE PARA 2.4.3 WHICH READS AS UNDER:- 2.4.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE OR DERS OF AUTHORITIES BELOW. WE FIND THAT IT IS NOTED BY THE A.O. ON PAGE 12 OF THE ASSESSMENT ORDER THAT THE ASSESSEE WAS ASKED TO FURNISH FULL AND COMPLETE DETAILS BUT IT IS NOT SPECIFIED AS TO WHAT WERE THOSE DETAILS WHICH WERE CALLED FOR. THIS IS NOT THE CAS E OF THE A.O. THAT PAYMENT OF NOOR JAKAT EXPENSES IS EXCESSIVE OR UNRE ASONABLE AS COMPARED TO EARLIER YEARS. IT IS ALSO NOT MENTIONE D THAT WHAT TYPE OF DETAILS WERE CALLED FOR AND MOREOVER, NO ACTUAL ADDITION WAS MADE BY THE A.O. IN THE COMPUTATION OF INCOME IN PA GE 13 OF THE ASSESSMENT ORDER AND IT HAS NOT BROUGHT ON RECORD T O SHOW THAT THE MISTAKE WAS RECTIFIED U/S 154 WITHIN THE TIME ALLOW ED UNDER THAT SECTION. EVEN IF THIS HAS BEEN RECTIFIED THEN ALSO WE FEEL THAT SUCH AD-HOC DISALLOWANCE WITHOUT POINTING OUT AS TO WHAT WAS THE DETAILS CALLED FOR WHICH WERE NOT SUBMITTED, IS NOT JUSTIFIED. WE, THEREFORE, DELETE THIS DISALLOWANCE. THIS GROUND I S ALLOWED. 7. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, IN THE LIGHT OF THE ORDER OF THE TRIBUNAL, RELEVANT PARAS REPRODUCED AB OVE, WE ARE OF THE CONSIDERED OPINION THAT SINCE MOST OF THE ADDITIONS WERE DELETED OR CONSIDERING THE FACTS OF THE CASE HAVE BEEN PARTLY ALLOWED, THEREFORE WE HEREBY UPHOLD THE FINDINGS OF THE LD.CIT(A) THAT TH IS IS NOT A FIT CASE TO LEVY PENALTY U/S.271(1)(C) OF I.T. ACT. RESULTANTL Y, WE FIND NO FORCE IN THIS GROUND OF THE REVENUE, HENCE HEREBY DISMISSED. ITA NOS.1877 & 1878/AHD/2010 DY.CIT VS. SHRI MAHENDRA D.DESAI ASST.YEARS - 2005-06 & 2007-08 RESPECTIVELY - 6 - [B]. ITA NO.1878/AHD/2010 FOR A.Y. 2007-08 8. THIS IS AN APPEAL OF THE REVENUE ARISING FROM T HE ORDER OF THE LD.CIT(A)-XV AHMEDABAD DATED 26/03/2010 AND THE O NLY GROUND IS REPRODUCED BELOW;- 1) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.67,10,074/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF FICTITIOUS LIABILITY/CREDIT U/S.68 OF THE ACT. 9. WHILE DELETING THE ADDITION, LD.CIT(A) HAS FOLLO WED HER DECISION FOR A.Y. 2006-07 IN THE FOLLOWING MANNER:- 6. GROUND NO. 4 TO 6 IS THAT THE LD.AO ERRED IN ADDING RS.67,10,074 U/S.68 BEING 20% OF UNPAID FREIGHT LIA BILITY OF RS.3,35,50,374. THE AO MADE THE ADDITION AS PER NARRATION GIVEN I PARA 4 OF THE ASSESSMENT ORDER. THE LD.AR INFORMED THAT SIMILAR ADDITION HAD BEEN MADE IN AY 2006-07 ALSO AND HAD BEEN DWELT UP ON IN APPEAL. IT IS SEEN THAT VIDE THIS OFFICE APPELLATE ORDER DA TED 4.9.2009 PASSED IN AY 2006-07 FICTITIOUS LIABILITY ADDITION WAS TELESCOPED IN THE GP ADDITION. AFTER GOING THROUGH RIVAL SUBMISSIONS I FIND THAT T HE FACTS OF THE CASE ARE SAME AS WERE IN AY 2006-07 AND RELYING ON THIS OFFICE ORDER DATED 4.9.2009 IN AY 2006-07 GP ADDITION AT 17% IS UPHELD OF RS.1,36,44,024 AND IN THIS FICTITIOUS LIA BILITY ADDITION OF RS.67,10,074 IS TELESCOPED AS WAS DONE IN AY 2006- 07 ITA NOS.1877 & 1878/AHD/2010 DY.CIT VS. SHRI MAHENDRA D.DESAI ASST.YEARS - 2005-06 & 2007-08 RESPECTIVELY - 7 - 10. AS FAR AS THE FATE OF THE DECISION OF LD.CIT(A) -XV AHMEDABAD FOR A.Y. 2006-07 IS CONCERNED, WE HAVE NOTED THAT IN AS SESSEES OWN CASE VIDE AFORECITED ORDER OF THE TRIBUNAL DATED 21.09.2 012 (SUPRA), THE ADDITION ON ACCOUNT OF FICTITIOUS LIABILITY WAS DE LETED BY FOLLOWING THE OUTCOME OF A.Y. 2005-06 OF THE TRIBUNAL IN THE FOLL OWING MANNER:- 5. NOW, WE TAKE UP THE REVENUES APPEAL FOR THE AS SESSMENT YEAR 2006-07 IN I.T.A.NO. 3025/AHD/2009. THE GROUN DS RAISED BY THE REVENUE ARE AS UNDER: 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN GRANTING RELIEF OF RS.52,54,781/- OUT OF ADDITION OF FICTITI OUS LIABILITIES. 2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING TELESCOPING OF THE ADDITION MADE OUT OF FICTITIOUS LIABILITY AGAINST THE ADDITION MADE BY REJECTING OF BOOKS AND ESTIMAT ION OF GROSS PROFIT. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 4) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 5.1 IT WAS AGREED BY BOTH THE SIDES THAT THIS ISSUE IS SIMILAR TO GROUND NO.3 RAISED BY THE REVENUE IN ASSESSMENT YEA R 2005-06. BOTH THE SIDES AGREED THAT THIS ISSUE CAN BE DECIDE D ON SIMILAR LINES AS IN ASSESSMENT YEAR 2005-06 WHEREIN WE HAVE DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AS PER PARA 2.2.5 A BOVE AND ACCORDINGLY, IN THE PRESENT YEAR ALSO, THIS ISSUE I S DECIDED IN FAVOUR OF THE ASSESSEE. 11. SINCE IN THE PAST THE TRIBUNAL HAS TAKEN A VIEW IN ASSESSEES FAVOUR IN RESPECT OF THE ABOVE ISSUE, THEREFORE TAKING A C ONSISTENT VIEW FOR THIS ITA NOS.1877 & 1878/AHD/2010 DY.CIT VS. SHRI MAHENDRA D.DESAI ASST.YEARS - 2005-06 & 2007-08 RESPECTIVELY - 8 - YEAR AS WELL, WE HEREBY APPROVE THE FINDING OF LD.C IT(A) AND DISMISS THIS GROUND OF THE REVENUE. REVENUES APPEAL IS DISMIS SED. 12. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. SD/- SD/- ( ! '# ) ( ) $% ( ANIL CHATURVEDI ) ( MUKU L KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/ 11 /2012 5..!, .!../ T.C. NAIR, SR. PS $4 1 .6 7$6) $4 1 .6 7$6) $4 1 .6 7$6) $4 1 .6 7$6)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. 8 / CONCERNED CIT 4. 8() / THE CIT(A)-XV, AHMEDABAD 5. 6;< .! , , / DR, ITAT, AHMEDABAD 6. < =0 / GUARD FILE. $4! $4! $4! $4! / BY ORDER, /6 . //TRUE COPY// > >> >/ // / + + + + ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DIRECT DICTATION ON COMPUTER DATED 5.11.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.11.12 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 D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 23.11.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.11.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER