RAMLAL BISARAM KATRE, Nagpur V. THE ACIT, CENTERAL CIRCLE-2(1), Nagpur

ITA 24/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1734 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 21-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Search and seizure; Reasonable cause
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER ITA NO. 24/NAG./2014 ( ASSESSMENT YEAR : 2004-05 ) ITA NO. 25/NAG./2014 ( ASSESSMENT YEAR : 2007-08 ) ITA NO. 26/NAG./2014 ( ASSESSMENT YEAR : 2008-09 ) SHRI RAMLAL BISRAM KATRE C/O ADVOCATE SHRI MANOJ G. MORYANI C/O MANOJ MORYANI & CO., SUDAMA BHAWAN, BEHIND SUT MARKET, GANDHIBAUG NAGPUR PAN AGWPK9297M APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(1), NAGPUR .... RESPONDENT ITA NO. 27/NAG./2014 ( ASSESSMENT YEAR : 2003-04 ) ITA NO. 28/NAG./2014 ( ASSESSMENT YEAR : 2007-08 ) ITA NO. 29/NAG./2014 ( ASSESSMENT YEAR : 2008-09 ) SHRI RADHESHYAM BISARAM KATRE C/O ADVOCATE SHRI MANOJ G. MORYANI C/O MANOJ MORYANI & CO., SUDAMA BHAWAN, BEHIND SUT MARKET, GANDHIBAUG NAGPUR PANAGWPK0255H APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(1), NAGPUR .... RESPONDENT SHRI RAMLAL BISRAM KATRE SHRI RADHESHYAM BISARAM KATRE SHRI KESHAORAO BISARAM KATRE 2 ITA NO. 30/NAG./2014 ( ASSESSMENT YEAR : 2005-06 ) ITA NO. 31/NAG./2014 ( ASSESSMENT YEAR : 2006-07 ) ITA NO. 32/NAG./2014 ( ASSESSMENT YEAR : 2007-08 ) ITA NO. 33/NAG./2014 ( ASSESSMENT YEAR : 2008-09 ) SHRI KESHAORAO BISARAM KATRE C/O ADVOCATE SHRI MANOJ G. MORYANI C/O MANOJ MORYANI & CO., SUDAMA BHAWAN, BEHIND SUT MARKET, GANDHIBAUG NAGPUR PAN AGWPK0255H APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(1), NAGPUR .... RESPONDENT ASSESSEE BY : SHRI MANOJ G. MORYANI REVENUE BY : SHRI NARENDRA KANE DATE OF HEARING 21.07.2015 DATE OF ORDER 19.08.20 15 O R D E R THESES APPEALS FILED BY THREE DIFFERENT ASSESSEES ARE EMANATING FROM THE ORDERS OF EVEN DATED 23 RD DECEMBER 2013, PASSED BY THE LEARNED COMMISSIONER (APPEALS)-III, NAGPUR, FOR THE ASS ESSMENT YEARS MENTIONED IN THE CAUSE TITLE. SINCE COMMON ISSUE INV OLVE, EXCEPT VARIATION IN FIGURES, IN ALL THE THREE GROUP OF APPEAL S, THEREFORE, AS A SHRI RAMLAL BISRAM KATRE SHRI RADHESHYAM BISARAM KATRE SHRI KESHAORAO BISARAM KATRE 3 MATTER OF CONVENIENCE, THESE APPEALS WERE HEARD TOGET HER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. 2. THE SOLE COMMON DISPUTE IS ALL THESE APPEALS IS WIT H REGARD TO THE DIRECTION OF THE LEARNED CIT(A) IN CONFIRMING THE PENAL TY SO IMPOSED BY THE ASSESSING OFFICER U/S 271A OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT'). 3. THE ORDERS IN QUESTION PASSED UNDER SECTION 271A, HA S BEEN CAREFULLY PERUSED. THE FACTS ARE ALMOST IDENTICAL IN ALL THESE APPEAL AS MENTIONED IN THE PENALTY ORDER. 4. IN BRIEF, THE FACTS ARE THAT, INITIALLY A SURVEY WAS CO NDUCTED ON 3 RD SEPTEMBER 2007. LATER ON, A SEARCH WAS ALSO CONDUCTED ON 27 TH MAY 2008, ON KARTA GROUP OF CASES. FACTS HAVE ALSO REVEALED THAT THE ASSESSEE HAD FILED A RETURN OF INCOME UNDER SECTION 1 39(1) OF THE ACT AND DECLARED THE INCOME, HOWEVER, THE SAME WAS ENHANC ED BY THE ASSESSING OFFICER WHILE PASSING THE ORDER UNDER SECTIO N 153A OF THE ACT AND ASSESSED THE INCOME BY ADOPTING ESTIMATED PROFIT @ 8%. ACCORDINGLY, YEARWISE ASSESSMENTS HAVE BEEN MADE. THE ALLEGATION OF THE REVENUE WAS THAT THE ASSESSEE HAD NOT MAINTAINED THE BOOKS OF ACCOUNT. SINCE THE ASSESSEE HAD NOT OFFERED ANY REASONA BLE CAUSE FOR SHRI RAMLAL BISRAM KATRE SHRI RADHESHYAM BISARAM KATRE SHRI KESHAORAO BISARAM KATRE 4 NOT MAINTAINING THE BOOKS OF ACCOUNT, THEREFORE, THE IM PUGNED PENALTY UNDER SECTION 271A WAS IMPOSED. 5. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY, THE ASSESSEE HAS CONTESTED THAT THE ADMITTED FACTUAL POSITION WAS THAT THE ASSESSEE HAS DECLARED THE INCOME ON THE BASIS O F CERTAIN VOUCHERS AND RELATED DOCUMENTS PROCURED BY HIM. THEREFORE, TH E ARGUMENT WAS THAT THE ASSESSEE HAS MAINTAINED SUCH BOOKS OF ACCOUNT THROUGH WHICH THE CORRECT INCOME COULD HAVE BEEN COMPUTED. RELIANCE WAS PLACED ON THE DECISION OF ITO V/S PAPELAL GAUR, 47 IT D 33 (NAG.). HOWEVER, THE LEARNED CIT(A) WAS NOT CONVINCED AND HELD THAT NO PROPER BOOKS OF ACCOUNT WERE MAINTAINED. THE ORIGINAL RETURN OF INCOMES WERE FILED BY THE ASSESSEE DECLARING A NOMINAL INCOME WHI CH WAS ALSO NOT A TRUE AND CORRECT DECLARATION OF INCOME. SINCE THE DOC UMENTS SEIZED DURING THE SEARCH OPERATION WERE NOT COMPLETE IN AL L RESPECT, THEREFORE, THE ASSESSING OFFICER HAD TO ADOPT ON AN ESTIMATION BA SIS TO ARRIVE AT THE CORRECT ASSESSMENT OF INCOME. THE LEARNED CIT(A) HA S ALSO RECORDED A FINDING THAT THE ASSESSEE HAD EVEN NOT PREFERRED A NY APPEAL AGAINST THE ASSESSMENT ORDER. 6. ONE MORE ASPECT WAS DISCUSSED IN THE ORDER OF THE L EARNED CIT(A) THAT THE ASSESSEE WAS IN A POSITION TO PRODUCE BOOK S OF ACCOUNT, BANK PASS BOOK, LEDGER CASH BOOK, ETC. BEFORE THE ASSESSING OFFICER, WHICH SHRI RAMLAL BISRAM KATRE SHRI RADHESHYAM BISARAM KATRE SHRI KESHAORAO BISARAM KATRE 5 WERE BASED UPON THE MATERIAL AVAILABLE ON RECORD. HO WEVER, THE LEARNED CIT(A) HAS DISMISSED THE SAME BY ASSIGNING A REASON T HAT THE SAID ARGUMENT WAS DEVOID OF MERITS. FINA LLY, THE ACTION O F THE ASSESSING OFFICER WAS CONFIRMED. 7. WITH THIS BRIEF FACTUAL BACKGROUND, WE HAVE HEARD BOTH THE SIDES. INSOFAR AS THE LAST PLANK OF ARGUMENT OF THE ASSESSEE WAS CONCERNED ON THE BASIS OF SOME MATERIAL AVAILABLE ON RECORD, THE A CCOUNTS WERE PREPARED AND PLACED BEFORE THE ASSESSING OFFICER. WE HA VE NOTED THAT THE ASSESSING OFFICER AT PAGE-4 OF HIS ORDER, HAS RECO RDED CERTAIN FINDINGS AS UNDER:- FROM THE ABOVE IT IS CLEAR THAT THE ASSESSEE HAS I NVOLVED SIMULTANEOUSLY IN MANY OF BUSINESS CONCERNS EITHER A S PROPRIETOR OR PARTNER. THE TRUE AND CORRECT INCOME FR OM HIS BUSINESS PURSUITS, PRIMA FACIE, HAS NOT BEEN REFLECTED IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THE ASSESSEE W AS ASKED TO SUBSTANTIATE HIS INCOME WITH VARIOUS DOCUM ENTARY EVIDENCES SUCH AS REGULAR BOOKS OF ACCOUNT, VOUCHERS, BILLS, ETC. THE SUBMISSIONS OF THE ASSESSEE ON VARIOUS ISSUE S ARE VAGUE, GENERAL AND STEREO TYPED WITHOUT ANY MATERIAL BASIS. HOWEVER, LOOKING AT THE CONCEPT OF CORRECTNESS AND COMPLETENESS OF ACCOUNTS A FAIR OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE TO SUBSTANTIATE THAT HE IS MAINTIAI NING REGULAR BOOKS OF ACCOUNT. BEFORE GETTING INTO THE ISSUE OF FAIRNESS OF THE BOOKS OF ACCOUNT A STUDY HAS BEEN DONE ON ENCLOSURES SUBMITTED BY THE ASSESSEE ALONG WITH HIS RETURN OF INCOME. FROM THESE, IT IS UNDERSTOOD THAT THE ASSE SSEE HAS PREPARED BOOKS OF ACCOUNT CONSISTING OF SALE RECE IPTS, PURCHASE AGREEMENTS, POWER OF ATTORNEY AND SALE DEEDS AND RECEIPTS BOOKS, ETC. WHICH WERE SEIZED. THE ASSESSEE W AS GIVEN AN OPPORTUNITY OF INSPECTION OF THE MATERIAL AS WELL AS WAS ALLOWED TO TAKE COPIES OF THE SEIZED MATERIAL. IT IS ALSO SHRI RAMLAL BISRAM KATRE SHRI RADHESHYAM BISARAM KATRE SHRI KESHAORAO BISARAM KATRE 6 WORTH MENTIONING HERE THAT EITHER DURING THE SURVEY OPERATION OR DURING THE SEARCH AND SEIZURE OPERATIO N NO REGULAR BOOKS SUCH CASH BOOKS, LEDGER, JOURNAL, PURCHASE AND SALE REGISTER, STOCK REGISTER, BANK BOOK, ETC. WERE FOUN D. THE SEARCH HAS GATHERED INCRIMINATING MATERIAL MAINLY F OCUSING ON DETAILS ABOUT SALE RECEIPTS, PURCHASE AGREEMENTS , POSSESSION LETTERS, SALE DEEDS, LAYOUT PARTICULARS, ETC. IT IS ONLY MENTIONED HERE THAT THOUGH THE ASSESSEE KEEPS ON HARPING THAT HE HAS MAINTAINED BOOKS OF ACCOUNT WHIC H ARE MANDATORILY REQUIRED TO BE MAINTAINED IS NOT A VALI D ARGUMENT. AS PER THE PROVISION OF SECTION 44AA OF THE ACT, IT IS MANDATORY ON THE PART OF THE ASSESSEE TO MAINTAIN REGULAR BOOKS OF ACCOUNT SUCH AS CASH BOOK, LEDGER, BANK BOOK, STOCK REGISTER, PURCHASE REGISTER, SALE REGISTERS, ETC . A SHOW CAUSE WAS ISSUED ON 25-11-2010, AS TO WHY THE PENALT Y UNDER SECTION 271A SHOULD NOT BE LEVIED FOR NON- MAINTENANCE OF BOOKS OF ACCOUNT FOR THE ASSESSMENT YEA R 2004-05 SEEKING THE ASSESSEES REPLY ON OR BEFORE 29.11.2010. 8. DUE TO THIS REASON, SINCE THE ASSESSING OFFICER HAS GIV EN AN INDICATION IN THE BODY OF THE ASSESSMENT ORDER THAT THERE WERE CERTAIN BOOKS OF ACCOUNT WHICH WERE PREPARED BY THE ASSESSEE ON THE BASIS OF THE RECORD, HENCE, PRIMA-FACIE THIS ASPECT CANNOT BE RULED OUT ON THE FACE OF IT. 9. NEXT IS THE ARGUMENT IS THAT EVEN AT THE TIME OF SEA RCH, THERE WERE VOUCHERS AND CONNECTED DOCUMENTS WHICH WERE IN THE SHAPE OF EVIDENCE ON THE BASIS OF WHICH THE INCOME COULD HAVE BEEN DEDUCED. IN SUPPORT OF THIS ARGUMENT, IT HAS BEEN PLEADED BEFORE ME THAT THE YEARWISE DETAILS OF THE TOTAL RECEIPTS AS COMPUTED B Y THE ASSESSING OFFICER IN RESPECT OF ALL THESE CASES INVOLVED, THE DOC UMENTS WHICH WERE SEIZED DURING THE COURSE OF OPERATION WERE THE BASIS TO COMPUTE THE SHRI RAMLAL BISRAM KATRE SHRI RADHESHYAM BISARAM KATRE SHRI KESHAORAO BISARAM KATRE 7 TOTAL RECEIPTS OF THE ASSESSEE FOR EACH YEAR. THEREFORE , THE ARGUMENT IS THAT IT WAS WRONG ON THE PART OF THE REVENUE TO ALLEG E THAT THE ASSESSEE HAS ALTOGETHER NOT MAINTAINED ANY RECORD. IT IS PLEA DED THAT THE ASSESSEE HAD MAINTAINED SUCH BOOKS OF ACCOUNT ON THE BASIS OF WHICH THE ASSESSING OFFICER WAS ABLE TO COMPUTE THE INCOME. 10. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCE S OF THE CASE, WE ARE OF THE VIEW THAT THE FOLLOWING DECISIONS, AS C ITED BY THE ASSESSEE, HAVE GIVEN THE VERDICT IN FAVOUR OF THE ASSESSEE:- I) BLUE HEAVEN CONSTRUCTION V/S ITO, [2010] 39 SOT 39 (KOL.); II) ITO V/S PAPELAL GAUR, [1993] ITD 33 (NAG.) 11. THERE ARE FEW MORE DECISIONS ON THIS ISSUE, HOWEVER, I N SHORT, WE HEREBY HOLD THAT CONSIDERING THE PECULIARITY OF THE FACTS OF THESE CASES, IT COULD BE HELD THAT THERE WERE CERTAIN DOCUMENTS, BANK ACCOUNTS AS WELL AS CONNECTED EVIDENCES THROUGH WHICH THE ASSESS ING OFFICER WAS ENABLE TO COMPUTE THE TOTAL RECEIPTS OF THE ASSESSEE AND ON THOSE RECEIPTS APPLIED THE NET PROFIT RATE. THE ASSESSEE H AS ALSO FURNISHED THE INCOME ON THE BASIS OF THOSE DOCUMENTS AND EVIDENCES AND, THEREFORE, HE WAS UNDER A BONA FIDE BELIEF THAT THE VOUCHERS, DET AILS OF RECEIPTS, ETC., WERE SUFFICIENT TO MAINTAIN FOR THE PURPOSE OF C OMPUTATION OF TAXABLE INCOME. THUS, THE PROVISIONS OF SECTION 273B, C AN ALSO HELP THE ASSESSEE WHICH PRESCRIBES THAT NOTWITHSTANDING ANYT HING CONTAINED IN THE PROVISIONS OF SECTION 271A OF THE ACT, NO PENALTY W OULD BE IMPOSABLE ON AN ASSESSEE FOR ANY FAILURE IF HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. CONSIDERING ALL THESE FACTS, CASE LAWS AND THE PROVISIONS OF THE ACT, I HEREBY DIRECT TO DELETE THE PENALTY IN ALL THE CASES. GROUNDS ARE ALLOWED. SHRI RAMLAL BISRAM KATRE SHRI RADHESHYAM BISARAM KATRE SHRI KESHAORAO BISARAM KATRE 8 12. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SD/ - MUKUL K. SHRAWAT JUDICIAL MEMBER NAGPUR, DATED: 19 TH AUGUST 2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY A SSISTANT REGISTRAR ITAT, NAGPUR