K.D. Construction Company, Surat V. The Income tax Officer, Ward-3(1), Surat

ITA 2470/AHD/2006

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67675 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 03-09-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 17-11-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS SRDR
• Assessee Lawyers: K N BHATT
• Section: 148

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' &' &' &' ( & ' ( & ' ( & ' ( & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.2470/AHD/2006 [ASSTT.YEAR : 1997-1998] AND ITA NO.3363/AHD/2009 [ASSTT.YEAR : 1997-1998] K.D. CONSTRUCTION COMPANY C/O. KISHOR PAREKH G-1, SHIVANJALI FLATS GANGESHWAR, MAHADEVE ROAD, ADAJAN, SURAT. /VS. ITO, WARD-3(1) SURAT. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : SHRI K.N. BHATT ( / 0 &/ REVENUE BY : SHRI K.C. MATHEWS, SR-DR 2 / %3'/ DATE OF HEARING : 3 RD SEPTEMBER, 2013. 456 / %3'/ DATE OF PRONOUNCEMENT : 5.9.2013 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A)-II, SURAT FOR THE ASSESSMENT YEAR 1997-1998. THESE ARE BEING DIS POSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.2470/AHD/2006 AND ITA NO.3363/AHD/2009 -2 ITA NO.2470/AHD/2006 (QUANTUM APPEAL) 2. THE GROUND NO.1 OF THE ASSESSEE IS AS UNDER: 1. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE IN PARTICULAR, THE LD.CIT(A) OUGHT TO HAVE HELD THAT T HE ACTION OF THE LD.AO TO REOPEN THE ASSESSMENT U/S.147 IS BAD, ULTRA WIRES AND BEYOND THE SCOPE OF THE SECTION AND HENCE ENTIR E ACTION AND THE ORDER IN QUESTION IS BAD IN LAW AND VOID AB-INI TIO AND HENCE YOUR APPELLANT MOST HUMBLY PRAYS THAT THE IMPUGNED ORDER PASSED U/S.143(3) R.W.S 147 BE QUASHED AND THE LD.A O BE DIRECTED TO ACCEPT THE BOOKS OF ACCOUNTS OF THE APP ELLANT. 3. WE HAVE HEARD PARTIES. WE FIND THAT THE REOPENI NG IN THIS CASE WAS DONE UNDER SECTION 147 AFTER EXPIRY OF FOUR YEA RS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ORIGINAL ASSESSM ENT IN THIS CASE WAS FRAMED IN SUMMARY MANNER UNDER SECTION 143(1) OF TH E ACT. THE INFORMATION CAME FROM ADIT(INVESTIGATION), SURAT AL ONG WITH COPY OF DETAILED STATEMENT OF SHRI SONWARIA AS WELL AS STAT EMENT OF PARTNER OF THE FIRM RECORDED BY ADIT (INVEST). THIS INFORMATI ON ESTABLISHED THAT THE ASSESSEE HAS NOT FURNISHED FULLY AND CLEARLY AL L MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT AND THAT THE INCOME HA S ESCAPED ASSESSMENT. WE FIND THAT THE AO HAS RECORDED THAT THE NOTICE UNDER SECTION 148 WAS ISSUED AND SERVED ON THE ASSESSEE O N 31.3.2004, WHICH WAS AFFIXED AT THE BUSINESS PREMISES OF THE A SSESSEE IN PRESENCE OF TWO PANCHAS . IN PURSUANCE TO THE NOTICE U/S.148 OF THE ACT, T HE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 19.5.200 4 AND IN THESE FACTS, WE HOLD THAT THERE IS NO ILLEGALITY IN THE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT, AND THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED AND THE GROUND NO.1 OF THE ASSESSEE IS DISMISSED. ITA NO.2470/AHD/2006 AND ITA NO.3363/AHD/2009 -3 4. THE GROUND NO.2 OF THE ASSESSEE READS AS UNDER: 2. WITHOUT PREJUDICE TO THE FOREGOING, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE IN PARTICULAR, THE LD .CIT(A) OUGHT TO HAVE HELD THAT THE LD.AO HAS ERRED IN MAKING THE ADDITIONS OF RS.4,22,000/-, RS.1,91,201/- AND RS.59,999/- AND HE NCE YOUR APPELLANT THEREFORE PRAYS THAT THE TOTAL ADDITION O F RS.6,73,200/- SO MADE BE DELETED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE IS A PETTY LABOUR CONTRACTOR AND HAS FILED ITS RETU RN OF INCOME DECLARING INCOME AT RS.11,638/- ONLY. THE ADDITION OF RS.4.2 2 LAKHS WAS MADE BY THE AO BY HOLDING THE SAME AS UNACCOUNTED CONTRA CT RECEIPT FROM DHAN PALACE PROJECT, ALTHOUGH THE SAME WAS ON ACCOU NT OF MATERIAL PURCHASED ON BEHALF OF DHAN PALACE APARTMENT, AND T HEREFORE THEIR ACCOUNT WAS DEBITED WITH THE AMOUNT OF RS.4,22,000/ -. HE SUBMITTED THAT THERE IS AN OPENING BALANCE OF AS ON 1.4.1994 IN THE ACCOUNT OF DHAN PALACE APARTMENT, COPY OF WHICH HAS BEEN FILED IN THE COMPILATION BY THE ASSESSEE, AND THE RECEIPT OF THE AMOUNT WAS OF OLD BALANCE SHOWN AS INCOME BY THE ASSESSEE IN THE EARL IER YEARS. THE ASSESSEE HAS FILED A CHART OF THE CONTRACT RECEIPTS FROM VARIOUS PARTIES PERTAINING TO THE EARLIER YEARS, AND ALSO THAT OF M ATERIAL PURCHASED ON BEHALF OF DHAN PALACE APARTMENT FROM THE ASSESSMENT YEARS 1993- 1994 TILL 1997-1998. WITH REGARD OTHER ADDITIONS O F RS.1,91,201/- AND RS.59,999/-, THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT THEY PERTAIN TO VARIOUS PARTIES FOR MATERIAL SUPPLIED AN D DID NOT PERTAIN TO THE ASSESSEE. THE LEARNED DR HAS OPPOSED THE SUBMI SSIONS OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE WAS PROVID ED SUFFICIENT OPPORTUNITY BY THE AO, AND THE CIT(A) AND STILL THE ASSESSEE COULD NOT ITA NO.2470/AHD/2006 AND ITA NO.3363/AHD/2009 -4 PROVE ITS CASE BEFORE THE REVENUE AUTHORITIES. HE SUBMITTED THAT THREE REMAND REPORTS WERE FILED IN THIS CASE. HE REFERRE D TO RELEVANT PORTIONS OF THE ORDER OF THE AO AND THE CIT(A) IN S UPPORT OF THE CASE OF THE REVENUE. HE RELIED ON THE ORDER OF THE AO A ND THE CIT(A). 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A) AND ALSO COPIES OF VARIOUS DOCUMENTS FILED BY THE ASSESSEE IN THE COMPILATION BEFORE US. WITH REGARD TO THE ADDITION OF RS.4.22 LAKHS, WE FIND TH AT THE ASSESSEE HAS BEEN ABLE TO FILE A COPY OF THE ACCOUNT OF DHAN PAL ACE APARTMENT AS APPEARED IN ITS LEDGER ACCOUNT IN THE COMPILATION B EFORE US. WE FIND THAT THE ASSESSEE HAS AN OPENING BALANCE OF RS.3,09 ,938/- AS ON 1.4.1995 IN THE ACCOUNT OF DHAN PALACE PROJECT, AND THEREFORE, THE AMOUNT RECEIVED BY THE ASSESSEE INCLUDES THE RECEIP T ON ACCOUNT OF OLD BALANCE SHOWN BY THE ASSESSEE. THE ASSESSEE HAS FI LED A DETAILED CHART RIGHT FROM THE ASSESSMENT YEARS 1993-94 TILL THE AS SESSMENT YEARS 1997-1998, WHICH SHOWS THAT THE CONTRACT RECEIPTS F ROM VARIOUS PARTIES AND ALSO THE MATERIAL PURCHASED BY THE ASSE SSEE, ON BEHALF OF THE DHAN PALACE APARTMENT. WE FIND THAT THERE IS FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THESE AMOUNTS WERE IN FACT ON ACCOUNT OF MATERIAL PURCHASED ON BEHALF OF DHAN PALACE APARTME NT, FOR WHICH THEIR ACCOUNT WAS DEBITED BY THE ASSESSEE, AND THIS EXPLANATION OF THE ASSESSEE COULD NOT BE CONTROVERTED BY THE REVENUE A UTHORITIES. WE FIND THAT THE ASSESSEE HAS BEEN FILING ITS RETURN O F INCOME YEAR AFTER YEAR FROM PAST MANY YEARS, AND IN SUBSEQUENT ASSESS MENT YEARS ALSO. THE ASSESSEE IS A SMALL LABOUR CONTRACTOR. IN THES E FACTS OF THE CASE, WE ARE OF THE VIEW THAT THERE IS NO JUSTIFICATION F OR MAKING ANY ITA NO.2470/AHD/2006 AND ITA NO.3363/AHD/2009 -5 ADDITION OUT OF RECEIPT OF RS.4.22 LAKHS BY THE ASS ESSEE FROM THE DHAN PALACE APARTMENT, AND THE SAME IS DELETED. 7. WITH REGARD TO OTHER ADDITIONS OF RS.1,91,201/- AND RS.59,999/-, WE FIND THAT THE ASSESSEE HAS TRIED TO EXPLAIN THAT THESE RELATE TO VARIOUS PARTIES FOR MATERIAL SUPPLIED, WHEREAS THE DEPARTMENT HAS CONSIDERED THEM AS RECEIPT FROM SHRI SONWARIA IN CA SH, AND THAT THESE WERE NOT ACCOUNTED FOR BY THE ASSESSEE. WE FIND TH AT THE ASSESSEE COULD NOT PROVE BEFORE US WITH ANY EVIDENCE THAT TH ESE AMOUNTS WERE RECEIVED ON ACCOUNT OF MATERIAL PURCHASED ON BEHALF OF SOME OTHER CUSTOMERS. THE ASSESSEE HAS BEEN GIVEN SPECIFIC OP PORTUNITY IN THIS BEHALF DURING THE COURSE OF REMAND PROCEEDINGS BY T HE AO. HOWEVER, THE ENTIRE AMOUNT COULD NOT BE TREATED AS INCOME IN THE HANDS OF THE ASSESSEE, AND ONLY PROFIT ELEMENT COULD BE ADDED IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, CONSIDERING THE ENTIRE FACT UAL MATRIX OF THE CASE, WE ARE OF THE VIEW THAT ENDS OF JUSTICE SHALL MET, IF THE ADDITION OF RS.1,00,000/- (RUPEES ONE LAKH ONLY) IS SUSTAINE D OUT OF ADDITION OF RS.1,91,201/- AND RS.59,999/- SUSTAINED BY THE C IT(A) AND THE GROUND NO.2 OF THE ASSESSEE IS PARTLY ALLOWED. 8. ITA NO.3363/AHD/2009 (PENALTY UNDER SECTION 271( 1)(C) OF THE ACT.) 9. THE ONLY GROUND OF THE ASSESSEE IS AS UNDER: 1. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE IN PARTICULAR, THE LD.CIT(A) OUGHT TO HAVE HELD THAT T HE LD.AO HAS ERRED IN LAW AND IN FACTS IN LEVYING THE PENALTY OF RS.2,69,2812/- U/S.271(1)(C) AND HENCE YOUR APPELLA NT PRAYS THAT THE SAME BE DELETED. ITA NO.2470/AHD/2006 AND ITA NO.3363/AHD/2009 -6 10. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS APPEAL OF THE ASSESSEE IS CONSEQUENTIAL TO THE QUANTUM APP EAL OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT ADDRES SED BEFORE ON THE MERITS OF THE ISSUE OF VALIDITY OF PENALTY LEVIED O N THE ASSESSEE. THE LEARNED DR HAS SUPPORTED THE CONTENTION OF THE LEAR NED COUNSEL OF THE ASSESSEE. WE HAVE CONSIDERED RIVAL SUBMISSIONS. I N VIEW OF OUR DECISION WHILE DECIDING THE QUANTUM APPEAL OF THE A SSESSEE IN THE FOREGOING PARAS OF THIS ORDER, SUSTAINING AN ADDITI ON OF RS.1,00,000/- AND DELETING THE BALANCE ADDITION, WE DIRECT THE AO TO CALCULATE THE AMOUNT OF PENALTY UNDER SECTION 271(1)(C) OF THE AC T WITH REGARD TO THE ADDITION OF RS.1,00,000/- ONLY SUSTAINED BY US, AND THE BALANCE PENALTY IS DELETED. 11. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD