M/s. Kashish Enterprise, Bhuj V. The Income Tax Officer, Ward-2, Bhuj

ITA 256/RJT/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5436 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 09-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Revised return
• Section: 143(3); 133A; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 256/RJT/2014 / ASSESSMENT YEAR: 2009-10 M/S. KASHISH ENTERPRISE POONAM APARTMENT, NEW STATION ROAD, BHUJ-KUTCH VS. ITO, WARD 2, BHUJ. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M. J. RANPURA, A.R. REVENUE BY : SHRI PRAVEEN VERMA, SR. D. R. / DATE OF HEARING : 28.08.2018 / DATE OF PRONOUNCEMENT : 15.10.2018 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESS EE AGAINST THE APPELLATE ORDER OF THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-II, RAJKOT [CIT(A) IN SHORT] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- '1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WIT HOUT PREJUDICE TO ONE ANOTHER. 2.0 THE LD CIT(A)-II, RAJKOT [CIT(A)] ERRED IN FACTS AS ALSO IN RETAINING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON INCOME OF RS.55,53,360/-. THE PENALTY U/S 271(1)(C) OF THE ACT MAY KINDLY BE DELETED. 3.0 THE HONORS APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 3. THE SOLITARY ISSUE RAISED BY ASSESSEE IS THAT LD CIT( A) ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT FOR RS. 55,53,360/-. 2 ITA NO.256/RJT/2014 KASHISH ENTERPRISES VS. ITO. AY : 2009-10 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS PARTNERS HIP FIRM AND ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. THERE WAS A SUR VEY U/S 133A OF THE ACT AT THE PREMISES OF THE ASSESSEE DATED 28.10.2010 AND 29.10.2010. AS A RESULT OF SURVEY CERTAIN DOCUMENTS WERE FOUND AND SEIZED BEARING ANNEXURE NO.B-1 TO B- 27. 4.1 THE ASSESSEE DURING THE RELEVANT YEAR WAS CONSTRUCTIN G THE COMMERCIAL COMPLEX KNOWN AS KASHISH ARCADE. AS PER THE SEIZED MATERI AL BEARING NO B-27, IT WAS FOUND THAT CERTAIN TRANSACTIONS WERE MADE BY THE AS SESSEE WITHOUT RECORDING IN THE BOOKS OF ACCOUNTS. THE ASSESSEE DET ERMINED THE PROFIT BASED ON SURVEY MATERIALS FOR RS. 37,83,981/- FOR THE YEAR UNDER CONSI DERATION. HOWEVER, THE ASSESSEE IN RESPONSE TO THE NOTICE ISSUED U/S 148 O F THE ACT FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 53,09,666/- ONLY. 4.2 THE AO WAS NOT SATISFIED WITH THE WORKING OF THE ASS ESSEE AND THE BOOKS OF ACCOUNTS FILED DURING THE COURSE OF HEARING. ACCORD INGLY, THE AO INVOKED THE PROVISION OF SECTION 145(3) OF THE ACT AND ESTIMATED THE PROFIT @20% OF ITS GROSS RECEIPTS. THUS, THE AO WORKED OUT THE PROFIT OF RS. 59 ,49,656/- (20% OF 2,97,48,281). ACCORDINGLY, THE AO MADE THE ADDITION OF RS. 6,39,990/- (59,49,656-53,09,666) AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ACCORDINGLY, THE AO COMPLETED THE ASSESSMENT PROCEEDI NGS U/S 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 11.10.2011 AT RS. 59,49,656/-. THE AO DU RING THE ASSESSMENT PROCEEDINGS INITIATED THE PENALTY PROCEEDI NGS U/S 271(1)(C) OF THE ACT ON ACCOUNT OF CONCEALMENT OF THE PARTICULARS OF INCOME. 3 ITA NO.256/RJT/2014 KASHISH ENTERPRISES VS. ITO. AY : 2009-10 4.3 SUBSEQUENTLY, THE AO ISSUED NOTICE U/S 274 OF THE ACT DATED 21.02.2012 FOR LEVYING THE PENALTY U/S 271(1) OF THE ACT. THE ASS ESSEE IN COMPLIANCE TO IT SUBMITTED ITS REPLY DATED 07.11.2011 THAT IT HAS NEITHER CONCE ALED THE PARTICULARS OF INCOME NOR FURNISHED THE INACCURATE PARTICULARS OF INCOME . HOWEVER, THE AO DISREGARDED THE CONTENTION OF THE ASSE SSEE. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS FILED HIS ORIGINAL RETU RN OF INCOME DECLARING INCOME OF RS. 1,46,640/- ONLY. THUS THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS CONCEALED HIS INCOME AMOUNTING TO RS.58,03,020/- (RS. 59,49,660 RS . 1,46,640) AND ACCORDINGLY LEVIED THE PENALTY OF RS. 17,93,140/- BEING 100% OF TAX SOUGHT TO BE EVADED FOR FURNISHING THE PARTICULARS OF INCO ME. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD CIT(A). T HE ASSESSEE BEFORE THE LD CIT(A) SUBMITTED THAT THE PENALTY IF AT ALL IS TO BE LEVIED THEN IT SHOULD HAVE BEEN LEVIED ON RS. 6,39,990/- BEING THE DIFFERENCE IN THE AMOUNT BETWEEN THE INCOME DECLARED IN THE RETURN FILED U/S 148 OF THE ACT AND THE INCOME ASSESSED BY THE AO IN THE ASSESSMENT FRAMED U/S 147 OF THE ACT. 5.1 THE ASSESSEE WITHOUT PREJUDICE TO THE ABOVE SUBMITT ED THAT THE ADDITION WAS MADE BY THE AO FOR RS. 6,39,990/- ON ESTIMATED BASIS. THERE FORE THERE IS NO QUESTION OF ANY PENALTY IN RESPECT OF THE ADDITION WHI CH WAS BASED ON ESTIMATION. THE ASSESSEE IN RESPECT OF HIS CLAIM RELIE D ON VARIOUS ORDERS OF THE HONBLE COURTS. HOWEVER, THE LD CIT(A) DISREGARDED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ORDER OF AO IN PART BY OBSERVING AS UNDER: 4 ITA NO.256/RJT/2014 KASHISH ENTERPRISES VS. ITO. AY : 2009-10 6.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPE LLANT AND THE ASSESSMENT AS WELL AS PENALTY ORDER. THERE IS NO DISPUTE AS TO FACTS. HOWEVER, IT IS PERTINENT TO MENTION HERE THAT THE QUANTUM APPEAL IN THIS CASE AGAINST ORDER U/S. 143(3) R.W.S. 147 HAS ALREADY BEEN DECIDED AND THE APPEAL ORDER HA S BEEN PASSED BY THE UNDERSIGNED VIDE ORDER IN APPEAL NO.CIT(A)-II/ RJT/0188/11-12, DT. 20/2/2014. IN THIS APPEAL ORDER, THE ADDITION OF RS.6,39,990/- MADE BY THE A.O. HAS BEEN DELETED. THUS, THE INCOME RETURNED BY THE APPEL LANT IN ITS RETURN OF INCOME TILED IN RESPONSE TO NOTICE U/S.148 IS NOW RE QUIRED TO BE CONSIDERED FOR THE LEVY OF PENALTY. THE FIRST ISSUE REQUIRED TO BE ANSW ERED IS WHETHER THE PENALTY U/S.271(1)(C) CAN BE LEVIED OR NOT. THE APPELLANT HAS CONTEN DED THAT IT HAD SUO MOTO OFFERED ADDITIONAL INCOME IN RESPONSE TO NOTICE U/S.148. THUS, THERE IS NO CONCEALMENT. IT HAS ALSO BEEN CONTENDED THAT THE ADDITION WAS ON ESTIMATE BASIS AND HENCE NO PENALTY CAN BE LEVIED. I FIND NO MERIT IN THE CONTENTION OF THE APPELLANT. IT IS AN UNDISPUTED FACT, WHICH HAS ALSO BEEN ACCEPTED BY THE APPELLANT, THAT MANY ENTRIES IN ANNEXURE-B/27 WERE NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS. THE INCOME OFFERED BY THE APPELLANT IN RESPON SE TO NOTICE U/S.148 IS ONLY AFTER IT HAS BEEN DETECTED BY THE DEPARTMENT AND IT I S NOT A VOLUNTARY ACT ON PAIL OF THE APPELLANT. IN THE CASE OF LMP PRECISION EN GINERRING LTD. VS. DCIT 330 1TR 93, THE HON'BLE GUJARAT HIGH COURT HAS HELD AS UNDER:- 'THE LAW ON THE SUBJECT OF TREATING A REVISED RETURN OF INCOME AS VOLUNTARY OR OTHERWISE IS WELL-SETTLED. MERELY BECAUSE A RETURN IS REVISED THAT FACT BY ITSELF CANNOT LEAD TO ANY PRESUMPTION AS TO CONCEALMENT IN T HE ORIGINAL RETURN OF INCOME, BECAUSE LEGISLATURE ITSELF HAS PROVIDED FOR FURNISH ING A REVISED RETURN IN CASE OF ANY OMISSION IN THE ORIGINAL RETURN. ALBEIT SU CH OMISSION HAS TO BE INADVERTENT AND BONA FIDE. IF THE OMISSION IS INTENTIONAL THE REVISED RETURN CANNOT ABSOLVE AN ASSESSEE. THE FACT THAT THE DEPARTMENT HAS INITIATED CERTAIN INQUIRIES PER SE WOULD NOT BE SUFFICIENT TO TREAT THE REVISED RETURN AS NOT BEING VOLUNTARY. THIS WOULD DEPEND ON FACTS OF EACH CASE CONSIDERI NG THE STAGE AT WINCH THE INVESTIGATION HAS PROGRESSED, THE SUBJECT-MATT ER OF INVESTIGATION BY THE DEPARTMENT, AND THE EVIDENCE AVAILABLE IN THE COURSE OF SUCH INVESTI GATION. 10. IF THE AFORESAID PRINCIPLES ARE APPLIED TO THE FACTS O F THE CASE, IT CAN SAFELY BE NOTED THAT THE OVERALL CONDUCT OF THE ASSESSEE DOES NOT IN DICATE THAT THE REVISED RETURNS WERE FILED VOLUNTARILY AND IN GOOD FAITH. IN FACT, THE FIRST DISCLOSURE ON 20-10-1988 CAME IN PURSUANCE OF THE INQUIRIES UNDERTAKEN BY DD 1T (INV,). MUMBAI AND AFTER STATEMENT OF CHAIRMAN AND MANAGING DI RECTOR IN RELATION TO THE SUBJECT-MATTER OF PURCHASES BEING RECORDED ON 21-9-1988. FO R ASSESSMENT YEAR 1985-86 THE ASSESSEE, BY ITS VERY CONDUCT, ACTED CONTRARY TO ITS OWN STAND OF THE REVISED RETURN BEING VOLUNTARY WHEN THE ASSESSEE IT SELF REVISED THE REVISED RETURN UNDER LETTER DATED 30-3-1990 BY DISCLOSING A FURTHER SUM OF RS. 78 LAKHS AND ODD. IT IS (RUE THAT MERE FACT OF NOT CHALLENGING THE ASSESSMENT ORDER PER SE WOULD NOT BE INDICATIVE OF ANY ACCEPTANCE THAT THERE WAS CONCEALMENT OF INCOME, 5 ITA NO.256/RJT/2014 KASHISH ENTERPRISES VS. ITO. AY : 2009-10 BUT IN (HE FACTS OF THE PRESENT CASE, THE SAID FACT OF THE ASSESSEE NOT HAVING CHALLENGED, ANY OF THE ASSESSMENT ORDERS FOR THE THREE YE ARS UNDER CONSIDERATION, ASSUMES SIGNIFICANCE. THIS FACT ON ITS OWN, AS A SOLI TARY FACTOR MAY NOT BE SUFFICIENT BUT READ IN CONJUNCTION WITH OVERALL CONDUCT OF THE ASSESSEE WOULD DEFINITELY BE A POINTER TO THE FACTUM OF ASSESSEE HAVING INDULGED IN AN ACT OF CONCEALMENT OF INCOME IN THE FORM OF UNVERIFIABLE PURCHASES. 6.5 SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE KERALA HI GH COURT IN CASE OF CIT VS. A. SRINIVASA PAI 242 ITR 29. IN THE CASE OF CIT VS. K . A. SAMPAT REDDY 197 ITR 232. THE HONBLE. KARNATAKA HIGH COURT HAS HELD THAT WHEN SURVEY OF BUSINESS PREMISES LED TO IMPOUNDING OF BOOKS WHICH REVE ALED VARIOUS ERRONEOUS ENTRIES, THE IMPOSITION OF PENALTY WAS VALID SINCE THE RE VISED RETURN WAS FILED ONLY AFTER DISCOVERY OF CONCEALMENT BY THE REVENUE. THE FA CTS OF THE PRESENT CASE ARE VERY MUCH COVERED BY THE ABOVE DECISIONS. IN THE PRESENT CASE, FIRST OF ALL, THE RETURN IS NOT A REVISED RETURN BUT HAS BEEN FILED IN R ESPONSE TO THE NOTICE U/S. 148. THIS HAS BEEN FILED AFTER THE SURVEY ACTION WHERE THE BOOK S WERE IMPOUNDED AND DISCREPANCIES IN THE SAME WERE NOTED. THE ACT OF FILIN G OF THE RETURN IN RESPONSE TO NOTICE U/S. 148 CANNOT BE SAID TO BE A VOLUN TARY ACTION ON PART OF THE APPELLANT. IT GOES WITHOUT SAYING THAT HAD THE APPELLANT NOT FILED THIS RETURN AND NOT OFFERED THIS INCOME, THE ADDITION WAS INEVITABLE AS IT WAS VERY VIVIDLY DEMONSTRATED IN THE IMPOUNDED BOOKS. THIS IS A VERY CLEAR C ASE OF CONCEALMENT OF PARTICULARS OF INCOME AND THE A.O. IS JUSTIFIED IN LEVYI NG THE PENALTY U/S.271(1)(C). THE ACTION OF THE A.O. IS CONFIRMED. 6.6 THE ISSUE IS ABOUT THE QUANTUM OF THE INCOME ON WHICH T AX WAS SOUGHT TO BE EVADED. THE APPELLANT HAD OFFERED AN INCOME OF RS.57,00,000/ - IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.148. THE INCOME RETURNED I N THE ORIGINAL RETURN OF INCOME WAS RS.1,46,640/-. THE APPELLANT HAD THUS SHOWN ADDITIO NAL INCOME OF RS.55,53,360/-. THE A.O. HAD LEVIED PENALTY ON CONCEALED INCOME OF RS.58,03,020/-. HOWEVER, AS PER THE APPEAL ORDER REGARDING, THE QUANTUM ADDITION, THE ADDITION OF RS.6,39,990/- HAS BEEN DELETED. THUS, THE INCOME ON WHICH TAX SOUGHT TO BE EVADED NOW STANDS AT RS.55,53,360/-. THE A.O . IS DIRECTED TO RECOMPUTE THE PENALTY @ 100% OF TAX SOUGHT TO BE EVADED ON THIS AMOUNT. BEING AGGRIEVED BY THE ORDER OF LD CIT(A) ASSESSEE IS IN APPEAL B EFORE US. 6 ITA NO.256/RJT/2014 KASHISH ENTERPRISES VS. ITO. AY : 2009-10 6. THE LD AR BEFORE US REITERATED THE SUBMISSION AS MA DE BEFORE THE LD CIT(A). 7. ON THE OTHER HAND, LD DR BEFORE US SUBMITTED THAT T HE INCOME WAS OFFERED BY THE ASSESSEE AS A RESULT OF SURVEY. THUS, IT IS CLEAR THAT THE ASSESSEE WOULD NOT HAVE DISCLOSED HIS INCOME, HAD THERE NOT BE EN SURVEY PROCEEDINGS U/S 133A OF THE ACT. THE LD DR VEHEMENTLY SUPPORTED T HE ORDER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. THE FACTS OF THE CASE AS DISCUSSED ABOVE ARE N OT IN DISPUTED THEREFORE WE ARE INCLINED NOT TO REPEAT THE SAME FOR THE SAKE OF BREVITY AND CONVENIENCE. 8.1 IT IS A FACT ON RECORD, THE ASSESSEE DID NOT DISCLOSE THE INCOME VOLUNTARILY BUT IT WAS DISCLOSED IN PURSUANCE TO THE SURVEY CONDU CTED U/S 133A OF THE ACT. DURING THE COURSE OF SURVEY, CERTAIN DOCUMENTS WERE F OUND AND SEIZED WHICH WERE SUFFICIENT ENOUGH TO MAKE THE ADDITION IN THE H ANDS OF THE ASSESSEE. THEREFORE THE ASSESSEE HAS DISCLOSED INCOME OF RS. 53,09,66 6/-. THUS, IN OUR CONSIDERED VIEW HAD THERE NOT BEEN SURVEY U/S 133A OF THE ACT, THE ASSESSEE WOULD NOT HAVE OFFERED SUCH UNDISCLOSED INCOME. THERE FORE, IN OUR CONSIDERED VIEW, THE PENALTY U/S 127(1)(C) OF THE ACT WAS CORRECTLY L EVIED BY THE AUTHORITIES BELOW. IN THIS REGARD, WE ALSO FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF L.M.L. PRECISION ENGINEERING LTD. VS. DCIT REPORTED IN 330 ITR 93. THE RELEVANT EXTRACT OF THE ORDER IS ALREADY BEEN REPRODUCED HEREINABOVE. THUS, WE DO NOT FI ND ANY REASON TO 7 ITA NO.256/RJT/2014 KASHISH ENTERPRISES VS. ITO. AY : 2009-10 DISTURB THE FINDING OF LD. CIT(A). HENCE, THE GROUND O F APPEAL OF THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 15 TH OCTOBER, 2018 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER ( WASEEM AHMED ) ACCOUNTANT MEMBER AHMEDABAD; DATED 15/10/2018 PRITI YADAV, SR.PS ! / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #$!' / THE RESPONDENT. 3. % & ' / CONCERNED CIT 4. & ' ( ) / THE CIT(A)- II, RAJKOT. 5. () * # , , /DR,ITAT, RAJKOT 6. * + , - / GUARD FILE. / BY ORDER, $ ( # //TRUE COPY// ' / # $% ( DY./ASSTT.REGISTRAR) &'( , / ITAT, RAJKOT 1. DATE OF DICTATION 19/09/2018(DICTATION PAD 4 PAGE S ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12/10/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 15/10/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK.. . 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER