Low Loss Products Pvt. Ltd., Baroda V. The ACIT, Circle-1(1)(2), Baroda

ITA 2361/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5151 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Retraction; Set aside
• Section: 271(1)(c); 143(3); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2361/AHD/2016 (ASSESSMENT YEAR: 2010-11) LOW LOSS PRODUCTS PVT. LTD. REGD. OFF. 103, CHARAKALA TOWER, OPP. BHAVANS SCHOOL, R H JANI MARG, BARODA-390004 V/S ACIT, CIRCLE-1(1)(2), BARODA (APPELLANT) (RESPONDENT) PAN: AABCL 6144L APPELLANT BY : SMT. URVASHI SHODHAN, AR RESPONDENT BY : SHRI RAJDEEP SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 09 -07-201 8 DATE OF PRONOUNCEMENT : 01 -10-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL HAS BEEN PREFERRED BY THE APPELLANT AGA INST THE ORDER OF THE LD. CIT(A) FOR CONFIRMING THE PENALTY OF RS. 29,04,600/ - U/S. 271(1)(C) OF THE ACT. THERE IS A DELAY OF TWO DAYS IN FILING OF APPEAL BE FORE THE ITAT. APPELLANT HAS ITA NO. 2361 /AHD/2016 . A.Y. 2010-1 1 2 FILED AN AFFIDAVIT IN SUPPORT OF ITS CONTENTION. WE ARE SATISFIED BY THE REASON STATED THEREIN IN THE AFFIDAVIT FILED BY THE APPELL ANT. HENCE, WE CONDONE THE DELAY OF TWO DAYS FOR FILING OF APPEAL BEFORE US. 2. DURING THE COURSE OF SURVEY, MR. DILIP N BAGADIA, M D OF THE COMPANY HAD DISCLOSED AN UNACCOUNTED INCOME OF RS. 94 LAKHS IN THE STATEMENT, ON OATH, DATED 20/08/2009. SHRI D N BAGADIA IS ALSO THE MAJO R SHARE HOLDER OF THE COMPANY ACCOUNTING FOR 35% OF THE SHARES. THE DECLA RATION WAS MADE ON ACCOUNT OF CONSTRUCTION OF SHED OF RS.60 LAKHS, INV ESTMENT IN MACHINERY FOR RS.10 LAKHS AND EXCESS PHYSICAL STOCK AMOUNTING TO RS.24 LAKHS. THE ASSESSEE FILED RETRACTION ON THE DISCLOSURE OF UNACCOUNTED , INCOME THROUGH A WRITTEN LETTER DATED 29/01/2010. HOWEVER, THIS RETRACTION L ETTER WAS WITHDRAWN ON 25/02/2010. 3. THE COMPUTATION OF TAXABLE INCOME HAS NOT REFLECTED ADDITIONAL INCOME OF RS. 94 LAKHS OVER AND ABOVE THE REGULAR INCOME. HOWEVER , A CASH ENTRY OF RS.3,80,000/-IN A NOTE BOOK FOUND IN THE OFFICE PRE MISES OF THE ASSESSEE COMPANY WAS SURRENDERED AS UNDISCLOSED INCOME AS PE R THE REPLY TO THE QUESTION NO. 14 IN THE STATEMENT ON OATH, MR. BAGAD IA, MD, ACCEPTED. THE ASSESSEE HAD ACCOUNTED RS.3,80,000/- AS MISCELLANEO US INCOME BEING DISCREPANCY FOUND IN REPLY TO QUESTION NO. 14 RECOR DED DURING COURSE OF SURVEY. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE IS SUE STATED ABOVE WAS THOROUGHLY DISCUSSED IN LENGTH WITH THE AR OF THE A SSESSEE AFTER PROVIDING SUFFICIENT OPPORTUNITY TO JUSTIFY ITS STAND. CONSID ERING ALL THE SUBMISSIONS OF THE ASSESSEE AND FACTS OF THE CASE, ACCORDINGLY THE ADD ITION WAS MADE TO THE TOTAL ITA NO. 2361 /AHD/2016 . A.Y. 2010-1 1 3 INCOME. THE PENALTY PROCEEDINGS UNDER SECTION 271(L )(C) R.W.S. 274 WERE INITIATED FOR CONCEALING THE PARTICULARS OF THE INC OME AS WELL AS FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME. 5. ON APPEAL, THE LD. CIT(A)-I BARODA VIDE ORDER NO. CAB-I/362/2012-13 DATED 10/09/2013 CONFIRMED THE ADDITION IN RESPECT OF 'SURRENDER UNDISCLOSED INCOME' AS THE ENTIRE SUBMISSION REITERATED BY THE ASSESSEE WAS NOT FOUND TO BE CONVINCING AFTER CONSIDERING THE FACTS AND CIRCUMST ANCES OF THE CASE. IT WAS THE FINDINGS OF THE LD. CIT(A) THAT THE RETRACTION LETT ER DATED 29/01/2010 WAS WITHDRAWN ON 25/02/2010. FROM THESE FACTS, IT CAN B E SAID THAT THE ASSESSEE COMPANY HAD NOT RETRACTED FROM THE STATEMENT OF MR. BAGADIA WITH REGARD TO HIS DISCLOSURE OF UNACCOUNTED INCOME OF RS.94 LACS. AGAIN THIS DISCLOSURE OF RS.9.4 LACS AS MADE BY THE ASSESSEE AT THE TIME OF SURVEY ACTION WAS OVER AND ABOVE THE REGULAR INCOME, THUS, THIS INCOME OF RS.9 4 LACS WAS REQUIRED TO BE OFFERED BY THE ASSESSEE IN THE P&L A/C OVER AND ABO VE THE REGULAR INCOME IN VIEW OF THE FACT THAT SUCH DISCLOSURE WAS NOT RETRA CTED BY THE ASSESSEE. AS PER REPLY TO QUERY AT QUESTION NOS.20 & 21, THE DIRECTO R OF THE APPELLANT COMPANY HAD WILLFULLY ACCEPTED AN UNDISCLOSED INCOME OF RS. 60 LAKHS HAVING USED IN CONSTRUCTION OF THE INDUSTRIAL SHED IN THE BUSINESS PREMISES. FURTHER AT QUESTION NO.22, MR. BAGADIA ADMITTED THE EXCESS STOCK AND OFFERED TO SURRENDER AN AMOUNT OF RS.24 LAKHS AS ADDITIONAL IN COME IN ADDITION TO RS.60 LAKHS ADMITTED IN CONSTRUCTION SHED AND RS.10 LAKHS IN MANUFACTURING OF PLANT AND MACHINERY. THUS, THE TOTAL ADMISSION OF A DDITIONAL INCOME OF RS.94 LAKHS WAS ACCEPTED BY MR. BAGADIA FOR THE CURRENT YEAR I.E. AY 2010-12. HE ALSO CATEGORICALLY MENTIONED THAT THIS UNDISCLOSED INCOME SHALL BE IN .ADDITION TO HIS REGULAR INCOME. HE FURTHER CLARIFIED THAT RS .60 LAKHS AND RS.10 LAKHS SHALL BE CAPITALIZED ACCORDINGLY. THUS, THE SURRENDER OF ADDITIONAL UNDISCLOSED ITA NO. 2361 /AHD/2016 . A.Y. 2010-1 1 4 INCOME WAS WILLFULLY ACCEPTED BY THE MD OF THE COMP ANY IN THE LIGHT OF EVIDENCES WHICH WERE FOUND DURING THE COURSE O F SURVEY PROCEEDINGS. THESE EVIDENCES HAD LED TO ACCEPTANCE OF UNDISCLOSED' INC OME DURING THE COURSE OF RECORDING OF STATEMENT ON OATH. SINCE THE UNDISCLOS ED INCOME WAS WELL ESTABLISHED IN THE LIGHT OF EVIDENCE AVAILABLE TILL THE DATE OF SURVEY, THE RETRACTION ON THE BASIS OF RELATED ENTRIES IN BOOKS OF ACCOUNTS DONE SUBSEQUENTLY I.E. MUCH AFTER THE SURVEY WAS CONDUCT ED CANNOT BE ACCEPTED. 6. IN RESPONSE TO NOTICE U/S 274 R.W.S. 271(L)(C) DATE D 19.01.2015 GIVING FRESH OPPORTUNITY, ASSESSEE HAS FILED ITS SUBMISSIONS ON 29.01.2015 & 06.02.2015, WHICH READS AS UNDER ON THIS ISSUE :- 7. 'ASSESSEE WAS IN RECEIPT OF ORDER U/S 143(3) OF INC OME TAX ACT DATED 01.03.2013. WHILE PASSING THE ORDER, ASSESSING OFFI CER HAD MADE ADDITION TO RETURN INCOME BY RS.94,00,000. THE ASSESSED INCOME IS RS.1,19,90,560 AND RAISE DEMAND OF RS.42,70,720. THE ASSESSEE HAD PREFERRED APPEAL TO HONOURABLE COMMISSIONER OF INCOME TAX (APPEAL) BARODA. THE ASS ESSEE WAS IN RECEIPT OF CIT APPEAL ORDER AGAINST APPEAL NO. CAB-I/362/2012- 13 DATED 10.09.2013 ON 17.10.2013 CONFORMING THE ADDITION MADE BY ASSESSIN G OFFICER OF RS. 94,00,000 SIMPLY REPLYING ON STATEMENT OF MANAGING DIRECTOR D URING SURVEY PROCEEDINGS. THE ASSESSEE HAD PREFERRED AN APPEAL TO ITAT AHMEDA BAD AGAINST THE CIT APPEAL ORDER THROUGH LEARNED ADVOCATE SHRI SAURABH SOPARKER ON 30,10.2013.' FURTHER VIDE LETTER DATED 06/02/2015, ASSESSEE ATTA CHED COPY OF ACKNOWLEDGEMENT FOR APPEAL FILED AT INCOME TAX APPE LLATE TRIBUNAL (APPEAL NO.2572/AHD-2013), AHMEDABAD. IT IS REQUESTED TO KE EP THE PENALTY PROCEEDING IN ABEYANCE TILL THE DISPOSAL OF APPEAL AT ITAT AS QUITE HOPEFUL THAT THE APPEAL WILL BE DECIDED IN FAVOUR OF THE ASSESSE E COMPANY. ITA NO. 2361 /AHD/2016 . A.Y. 2010-1 1 5 8. ASSESSEE HAS NOT DISCLOSED RS. 94 LAKHS AS UNACCOUN TED INCOME WHILE FILING ITS RETURN, THOUGH ADMITTED ON OATH DURING THE COURSE O F SURVEY ON ACCOUNT OF CONSTRUCTION OF SHED OF RS.60 LAKHS, INVESTMENT IN MACHINERY FOR RS. 10 LAKHS AND EXCESS PHYSICAL STOCK AMOUNTING TO RS.24 LAKHS. THEREFORE, PENALTY PROCEEDINGS INITIATED U/S 271(L)(C) R.W.S. 274 OF T HE ACT, FOR CONCEALMENT OF INCOME AMOUNTING TO RS.94,00,000 FOR THE YEAR UNDER CONSIDERATION. THUS THE PENALTY WAS INITIATED ON THE QUANTUM OF UNDISCLOSED INCOME OF RS.94,00,000 AS SURRENDERED DURING THE COURSE OF SURVEY ACTION. 9. FURTHER, ASSESSEE HAS ONLY STATED THAT IT HAS FILE D APPEAL BEFORE ITAT, AHMEDABAD IN HIS REPLY DATED 29/01/2015 AND FURNISH ED ACKNOWLEDGEMENT OF ITAT ON 06/02/2015 TO A FRESH NOTICE U/S 274 R.W.S. 271(L)(C) ISSUED ON 19/01/2015. THESE SUBMISSIONS OF THE ASSESSEE ARE O F IN GENERAL NATURE. 10. ACCORDINGLY, LD. ASSISTANT COMMISSIONER OF INCOME T AX LEVIED THE PENALTY OF RS. 29,04,600/-. 11. AGAINST THE ORDER OF THE LD. A.O., ASSESSEE PREFERR ED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) AGAINST THE IMPOSING OF PENAL TY BUT TO NO AVAIL. 12. NOW APPELLANT IS BEFORE US. 13. AT THE OUTSET, ASSESSEE FILED AN ORDER OF CO-ORDINA TE BENCH IN ASSESSEES OWN CASE AND STATED THAT IN QUANTUM PROCEEDING MATTER H AS BEEN SET ASIDE TO THE FILE OF THE LD. A.O. AND OPERATIVE PARA OF THE CO-ORDINA TE BENCH IS REPRODUCED HERE: ITA NO. 2361 /AHD/2016 . A.Y. 2010-1 1 6 3. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. THE ASSESSEE WAS SUBJECTED TO SURVEY PROCEEDINGS ON 20TH AUGUST, 200 9. DURING THE COURSE OF THIS SURVEY, THE ASSESSEE DISCLOSED AN UNDISCLOSED INCOM E OF RS.94 LAKHS. DURING THE ASSESSMENT PROCEEDINGS, HOWEVER, THE ASSESSING OFFI CER FORMED THE VIEW THAT THIS ADDITIONAL DISCLOSURE HAS NOT BEEN OFFERED TO TAX. ON THE BASIS OF THIS FINDING, HE MADE AN ADDITION OF RS.94 LAKHS TO THE INCOME RE TURNED BY THE ASSESSEE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BU T WITHOUT ANY SUCCESS. NOT SATISFIED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 5. WE HAVE TAKEN NOTE OF ASSESSEE'S CONTENTION THAT THE ASSESSEE HAS 'OFFERED VOLUNTARY DISCLOSURE IN BOOKS OF ACCOUNT BY REDUCIN G 'DEBIT' SIDE OF THE PROFIT & LOSS ACCOUNT, INSTEAD OF OFFERING THE SAME AS INCOM E.' LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO INVITED OUR ATTENTION TO THE SUBM ISSIONS DATED 22.02.2013 AND 26.02.2013, EXPLAINING ACCOUNTING EFFECT THROUGH TH E JOURNAL ENTRIES. WE FIND THAT SHORT PLEA OF THE ASSESSEE IS THAT NONE OF THE AUTHORITIES BELOW HAVE EXAMINED THIS ASPECT OF THE MATTER AT ALL, AND THAT , AS EVIDENT FROM PERUSING THE MATERIAL ON RECORD AND ORDERS OF THE AUTHORITIES BE LOW, PLEA IS CORRECT. THERE ARE NO FINDINGS ON THIS ASPECT OF THE MATTER BY THE AO OR THE CIT(A) AND IT WOULD NOT INDEED BE PROPER TO EXAMINE THAT ASPECT OF THE MATT ER, FOR THE FIRST TIME, AT THIS FORUM. WITH THE CONSENT OF THE PARTIES, THEREFORE, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFIC ER FOR ADJUDICATION DENOVO, BY WAY OF A SPEAKING ORDER, IN ACCORDANCE WITH THE LAW AND AFTER GIVING A FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ORDER SO. GROUND NOS.1 & 2 ARE THUS ALLOWED FOR STATISTICAL PURPOSE. 6. GROUND NOS.3 & 4 DO NOT CALL FOR ANY SPECIFIC AD JUDICATION AT THIS STAGE, AND AS SUCH, ARE DISMISSED AS INFRUCTUOUS. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON TH IS 28TH DAY OF MARCH, 2017. ITA NO. 2361 /AHD/2016 . A.Y. 2010-1 1 7 14. SINCE IN QUANTUM PROCEEDING, CO-ORDINATE BENCH HAS SET ASIDE THE MATTER TO THE FILE OF THE A.O., THEREFORE, IN OUR CONSIDERED OPINION, THIS WILL BE IN THE INTEREST OF JUSTICE IF WE ALSO SET ASIDE THE MATTER TO THE FILE OF THE A.O. TO DECIDE THE MATTER ALONG WITH QUANTUM PROCEEDING. WE THINK SAME WOULD MEET THE END OF THE JUSTICE. 15. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 01 - 10- 2018 SD/- SD/- (PRAMOD KUMAR) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 01/10/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD