Dharrit Yogen Shah, Pune V. Assistant Commissioner of Income-tax,

ITA 2154/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1671 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUDHANSU SHEKHAR
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Corroborative evidences

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS.2151 TO 2154/PN/2014 '% % / ASSESSMENT YEARS : 2005-06 TO 2008-09 DHARRIT YOGESH SHAH, MSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN NO.ADLPS5102M . / APPELLANT V/S A CIT , CIRCLE - 5, PUNE . / RESPONDENT / ASSESSEE BY : SHRI NILESH KHANDELWAL / RESPONDENT BY : SHRI SUDHANSU SHEKHAR / ORDER PER VIKAS AWASTHY, JM : THESE APPEALS FOR THE FOUR ASSESSMENT YEARS (2005-06 T O 2008- 09) ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INC OME TAX(A)- III, PUNE DATED 09-09-2014 COMMON FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 PASSED U/S.271(1)(C) OF THE I.T. ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT). SINCE COMMON ISSUE IS INVOLVED IN ALL THESE APPEALS, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDIC ATION AND ARE DECIDED BY THIS SINGLE ORDER. / DATE OF HEARING :14.06.2016 / DATE OF PRONOUNCEMENT:14.06.2016 2 ITA NOS.2151 TO 2154/PN/2014 2. IN THE APPEALS THE ASSESSEE HAS ASSAILED THE FINDINGS OF THE CIT(A)-III, PUNE IN CONFIRMING THE LEVY OF PENALTY. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE REC ORDS ARE : A SURVEY ACTION U/S.133A OF THE ACT WAS CARRIED OUT IN THE CASE OF ASSESSEE ON 10-03-2011. DURING THE COURSE OF ENQUIRIES IT WAS FOUND THAT THE ASSESSEE WAS MAINTAINING 3 BANK ACCOUNTS WITH KOTAK MAHINDRA BANK LTD. WHICH WERE NOT DISCLOSED IN HIS RETURN OF INCOME. ACCORDINGLY, NOTICE U/S.148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 23-03-2011. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE AO OBSERVED THAT THE ASSESSEE HAD ESTIMATED ADDITIONAL PRO FIT @20% ON THE UNDISCLOSED SALES. WHEREAS, IN THE ORIGINAL RETURN OF INC OME, THE GROSS PROFIT DECLARED BY THE ASSESSEE WAS MUCH LESS. TH E GROSS PROFIT DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FOR THE ASSESSMENT YEARS UNDER APPEAL IS AS UNDER : ASST. YEAR GROSS PROFIT SHOWN BY THE ASSESSEE IN ORIGINAL RETURN OF INCOME 2005 - 06 4.8% 2006 - 07 11.8% 2007 - 08 7.5% 2008 - 09 7.69% 3.1 THE AO INVOKED THE PROVISIONS OF SECTION 145(3) AND REJ ECTED THE BOOKS OF ACCOUNT. FURTHER, THE AO ESTIMATED INCOME OF THE ASSESSEE AT 15%. IN RESPECT OF UNDISCLOSED INCOME, THE AO INITIATED PEN ALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. THE AO VIDE SEPARATE ORDERS OF EVEN DATE, I.E. 28-06-2012 LEVIED PENALTY U/S. 271(1)(C) OF T HE ACT FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09. 3.2 AGGRIEVED BY THE PENALTY ORDERS, THE ASSESSEE PREFER RED APPEALS FOR RESPECTIVE ASSESSMENT YEARS BEFORE THE CIT(A). THE C IT(A) VIDE COMMON ORDER FOR THE IMPUGNED ASSESSMENT YEARS DISMISS ED THE 3 ITA NOS.2151 TO 2154/PN/2014 APPEALS OF THE ASSESSEE AND CONFIRMED THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. 3.3 IN THE MEANTIME, THE COMMISSIONER OF INCOME TAX-III, P UNE INITIATED REVISIONAL PROCEEDINGS U/S.263 AND ISSUED SHOW CAU SE NOTICE DATED 06-03-014 TO THE ASSESSEE. THE CIT OBSERVED T HAT THE ASSESSMENT ORDERS SUFFERS FROM ERRORS WHICH ARE AS UNDER : I. SURVEY U/S.133A OF THE INCOME-TAX ACT, 1961 WAS C ARRIED OUT IN THIS CASE ON 10-03-2011. ON EXAMINATION OF THE INFORMATI ONS RECEIVED AND INVESTIGATIONS CARRIED OUT BY THE ASSESSING OFFICER, IT W AS FOUND THAT THE ASSESSEE IS HAVING THREE UNDISCLOSED BANK ACCOUNTS WITH KOT AK MAHINDRA BANK LTD. AS UNDER : 1. 07212010000320 2. 07212010000363 3. 07212000015045 ON THE BASIS OF DETAILED EXAMINATION OF ALL THE ENTRI ES IN THE ABOVE THREE ACCOUNTS, IT WAS NOTICED THAT IN ALL THESE ACCOUNTS THE ASSESSEE HAD DEPOSITED CHEQUES, PART OF WHICH WERE IN THE NATURE O F UNDISCLOSED SALES. IN THE YEAR UNDER CONSIDERATION, UNRECORDED SALES OF R S.1,55,80,919/- WERE NOTICED IN THESE BANK ACCOUNTS, WHICH WERE NOT R ECORDED IN THE REGULAR BOOKS OF ACCOUNT. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT U/S.145(3) AND ADOPTED 15% NET PROFIT ON DISCLOSED AS WELL AS UNDISCLOSED SALES AND ASSESSED H IM ACCORDINGLY. THE ACTION OF THE ASSESSING OFFICER IN REJ ECTING BOOKS OF ACCOUNT U/S.145(3) AND THEN ADOPTING ESTIMATION OF NE T PROFIT IS NOT IN CONFORMITY WITH THE EVIDENCE FOUND DURING SURVEY AND SUBSEQUENT ENQUIRIES.TLT IS EVIDENT FROM THE RECORD THAT THE ASSESSEE DID NOT FUR NISH ALL THE DETAILS OF EXPENSES WITH SUPPORTING EVIDENCE PE RTAINING TO THESE UNDISCLOSED SALES. THEREFORE, THE PROFIT ESTIMATED ON T HE UNDISCLOSED SALES IN THESE BANK ACCOUNTS IS NOT JUSTIFIED IN ABSENCE OF ANY COGENT EVIDENCE THEREON. INSTEAD THE ASSESSING OFFICER SHOULD HAVE ALLOWE D ONLY THOSE EXPENSES WHICH WERE SUBSTANTIATED BY THE ASSESSEE WITH PROP ER AND COGENT EVIDENCE, PERTAINING TO THOSE UNDISCLOSED SALES. IN ABSENCE OF PROPER AND COGENT EVIDENCE OF EXPENSES, THE ASSESSING OF FICER SHOULD HAVE ADDED ALL THESE UNDISCLOSED SALES DIRECTLY TO THE INCOME OF THE ASSESSEE DISCLOSED IN THE ORIGINAL RETURN. THE CIT FINALLY SET ASIDE THE ASSESSMENT ORDER FOR A.Y. 20 05-06 PASSED U/S.143(3) R.W.S.147 AND DIRECTED THE AO TO MAKE DENOVO A SSESSMENTS AFTER PROPER EXAMINATION OF THE FACTS. LIKEWISE, CIT SET AS IDE THE ASSESSMENT ORDERS FOR THE OTHER ASSESSMENT YEARS, I.E. 2006-07, 2007- 08 AND 2008-09. 4 ITA NOS.2151 TO 2154/PN/2014 4. SHRI NILESH KHANDELWAL APPEARING ON BEHALF OF THE ASSESS EE SUBMITTED AT THE OUTSET THAT THE PRESENT APPEALS FILED B Y THE ASSESSEE HAVE BECOME INFRUCTUOUS AS THE ASSESSMENT ORDERS ON T HE BASIS OF WHICH PENALTY HAS BEEN LEVIED U/S.271(1)(C) HAS BEEN SET ASI DE BY THE CIT. SINCE THE ORDER ON THE BASIS OF WHICH PENALTY WAS LE VIED HAS BEEN SET ASIDE, THE PENALTY ORDER ARISING THERE FROM WILL NOT SUR VIVE. THE LD. AUTHORISED REPRESENTATIVE PLACED ON RECORD THE COPY OF ORDERS OF THE CIT DATED 28-03-2014 PASSED U/S.263 OF THE ACT FOR ALL THE ASSESSM ENT YEARS UNDER APPEAL. 5. SHRI SUDHANSHU SHEKHAR REPRESENTING THE DEPARTMENT FAIRLY ADMITTED THAT SINCE THE QUANTUM ORDER HAS BEEN SET AS IDE BY THE CIT IN REVISIONAL PROCEEDINGS U/S.263, THE ASSESSMENT ORDERS H AVE TO BE PASSED AFRESH BY THE AO AS PER THE DIRECTIONS OF THE CIT. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO EXAMINED THE ORDERS OF CIT PASSED ON 28-03-2 014 U/S.263. A PERUSAL OF THE REVISIONAL ORDERS SHOW THAT THE CIT VIDE SEPARATE ORDERS HAS SET ASIDE THE ASSESSMENT ORDERS PASSED U/ S.143(3) R.W.S.147 IN THE ASSESSMENT YEARS UNDER APPEAL. SINCE TH E SUBSTRATUM FOR LEVY OF PENALTY HAS BEEN ERODED, THE PENA LTY WILL NOT SURVIVE. IN VIEW OF THE FACT THAT AS ON DATE THERE IS NO ASSESSMENT ORDER IN THE IMPUGNED ASSESSMENT YEARS, THERE IS NO QUE STION OF PENALTY. HENCE, THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) CONFIRMING LEVY OF PENALTY HAVE BECOME INFRUCTUOUS AND ARE DISMISSED AS SUCH. 5 ITA NOS.2151 TO 2154/PN/2014 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 14 TH DAY OF JUNE, 2016. SD/- SD/- ( R.K.PANDA ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER IQ.KS PUNE ; # DATED : 14 TH JUNE, 2016. LRH'K ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. CIT (A) - I II , PUNE CIT-III, PUNE ' *, *, IQ.KS / DR, ITAT, B PUNE; / GUARD FILE. / BY ORDER , ' //TRUE COPY // / * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE