Shri Arvindbhai Jasmat Bhesdadiya, Surat V. The Income Tax Officer, Ward-6(4), Surat

ITA 2571/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2093 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 18-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Assessee Lawyers: M K PATEL
• Keywords: Rejection of books of accounts; Income from undisclosed sources; Peak credit
• Section: 271(1)(c)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.2571/AHD/2014/SRT / ASSESSMENT YEAR: 2008-09 SHRI ARVINDBHAI JASMAT BHESDADIYA, SHOP NO.12, TURNNING POINT, KUNWARDS CHAR RASTA, KOSAMBA (RS), TAL: MANGROL, SURAT 394 120. [PAN: AABFU 2572L] VS. INCOME TAX OFFICER, WARD-6(4), SURAT. ( / APPELLANT) ( !' /RESPONDENT) / ASSESSEE BY : SHRI M.K.PATEL, ADVOCATE /REVENUE BY : SHRI R.P. RASTOGI, SR. D.R /DATE OF HEARING : 17-04-2018 /DATE OF PRONOUNCEMENT : 25-04-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, SURAT (CIT (A) FOR SHORT) DATED 10.07.2014 FOR THE ASSESSMENT YEAR (A.Y) 2008-09, W HICH IN TURN HAS ARISEN FROM THE PENALTY ORDER DATED 14.03.2013 PASSED BY I NCOME TAX OFFICER, WARD-6(4), SURAT (IN SHORT THE A.O) UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2 ITA NO.2571/AHD/2014/SRT (A.Y: 2008-09) SHRI ARVINDBHAI J. BHESDADIYA 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS FOLLO WS: 1. THAT ON FACTS, AND IN LAW, THE LEARNED CIT (A) H AS GRIEVOUSLY ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 1,34,387/- LE VIED U/S. 271(1)(C) OF THE ACT. 2. THAT ON FACTS, EVIDENCE ON RECORD AND IN LAW, TH E ENTIRE PENALTY OUGHT TO HAVE BEEN DELETED AS PRAYED FOR. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBU NAL. THE ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE LD. CIT(A) W AS NOT CORRECT IN CONFIRMING THE PENALTY OF RS. 1,34,387/- U/S. 271(1 )(C) OF THE ACT AS THE ASSESSEE DID NOT CONCEAL PARTICULARS OF INCOME AND DID NOT FURNISH ANY INACCURATE PARTICULARS OF INCOME AS THE ADDITION WA S MADE BY THE ASSESSING OFFICER (AO) ON ESTIMATE BASIS OF RS. 16,27,445/- W HICH WAS REDUCED TO RS. 4,34,910/- BY THE LD. CIT(A) AND APPEAL OF THE REVE NUE IN ITA NO.709/AHD/2012 HAS BEEN DISMISSED BY THE TRIBUNAL UPHOLDING THE PART CONFIRMATION OF ADDITION. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST PART CONFIRMATION ADDITION BY TH E LD. CIT(A) BEFORE THE TRIBUNAL. 4. THE LD. AR ALSO SUBMITTED THAT THE A.O MADE ADD ITION ON ESTIMATE BASIS BY TAKING G.P RATE OF 14.45% OF TOTAL UNRECOR DED SALES AND THE PURCHASES PERTAINING TO UNRECORDED SALES OF RS. 16, 27,445/- WERE TREATED AS UNACCOUNTED AND THIS AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) REDUCED/DELETED MAJOR PART O F ADDITION BY CONFIRMING A SMALL PART OF ADDITION ON INCOME OF ASSESSEE FROM U NRECORDED SALES I.E., ON TWO COUNTS VIZ., PROFIT EMBEDDED IN THE UNRECORDED SALE AND INVESTMENT 3 ITA NO.2571/AHD/2014/SRT (A.Y: 2008-09) SHRI ARVINDBHAI J. BHESDADIYA REQUIRED FOR SUCH SALE. THE LD. AR SUBMITTED THAT THE AO TREATED THE ENTIRE UNRECORDED PURCHASES AS INCOME OF THE ASSESSEE AND MADE ADDITION OF RS. 16,27,445/- WITHOUT ANY BASIS AND THE FIRST APPELLA TE AUTHORITY REDUCED THE MAJOR PART OF ADDITION BY TAKING A VERY LOGICAL AND WELL ACCEPTED PREPOSITION OF TAX JURISPRUDENCE AND CONCLUSION DRAWN BY THE LD . CIT(A) HAS BEEN UPHELD BY THE TRIBUNAL BY DISMISSING THE APPEAL OF THE REV ENUE, THEREFORE, PENALTY IMPOSED ON THE BASIS OF ESTIMATED ADDITION U/S. 271 (1)(C) OF THE ACT CANNOT BE HELD AS SUSTAINABLE AND THE LD. CIT(A) WAS NOT C ORRECT IN UPHOLDING THE SAME. 5. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REPR ESENTATIVE (DR) STRONGLY SUPPORTED THE CONCLUSION DRAWN BY THE FIRS T APPELLATE AUTHORITY AND SUBMITTED THAT THE AO WAS RIGHT IN IMPOSING PENALTY ON UNACCOUNTED SALES AS THE ADDITION WHICH WAS UPHELD BY THE LD. CIT(A). T HE LD. DR SUBMITTED THAT THE AMOUNT OF ADDITION INCLUDES PROFIT EMBEDDED UNR ECORDED SALES AND ALSO INCLUDES THE AMOUNT OF INVESTMENT/CAPITAL, WHICH WA S UNACCOUNTED INCOME OF THE ASSESSEE, WHICH WAS USED FOR THE PURPOSE OF UND ERTAKING UNACCOUNTED SALES AND THUS, THE ASSESSEE CONCEALED PARTICULARS OF INCOME WILLFULLY AND DELIBERATELY WHICH ATTRACTS PENALTY PROVISION OF S. 271(1)(C) OF THE ACT THEREFORE, APPEAL MAY KINDLY BE DISMISSED BY UPHOLD ING THE FIRST APPELLATE ORDER. 6. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, FROM THE ORDER OF THE TRIBUNAL DATED 03.08.2015 IN ITA NO.709/AHD/201 2 FOR AY 2008-09 4 ITA NO.2571/AHD/2014/SRT (A.Y: 2008-09) SHRI ARVINDBHAI J. BHESDADIYA (SUPRA), IT IS CLEAR THAT THE TRIBUNAL HAS DISMISSE D APPEAL OF REVENUE AGAINST THE FIRST APPELLATE ORDER WHEREIN THE LD. CIT(A) HA D DELETED THE MAJOR PART OF ADDITION BY OBSERVING THAT THE AO WAS NOT CORRECT I N MAKING ADDITION OF AMOUNT OF PURCHASES RELATED TO THE UNRECORDED SALES AND THE PROFIT/TOTAL INCOME OF APPEAL FROM UNRECORDED SALES INCLUDES TWO AMOUNTS I.E., PROFIT EMBEDDED IN THE SALE PROCEED AND INVESTMENT REQUIRE D FOR SUCH SALES. FROM PARAS 3.2 AND 3.2.1 OF FIRST APPELLATE ORDER OF LD. CIT(A) IN THE QUANTUM APPEAL CLEARLY SHOWS THAT THE AMOUNT OF PROFIT ON U NRECORDED SALE WAS TAKEN @ 7% OF UNRECORDED SALES ON THE BASIS OF PROFIT PER CENTAGE OF REPORTED SALES OF ASSESSEE AND AMOUNT OF INVESTMENT REQUIRED FOR S UCH SALE WAS CALCULATED ON THE BASIS OF FINANCIAL ACCOUNTS OF THE ASSESSEE AT RS. 3,01,747/- AND TOTAL ADDITION WAS MADE OF RS. 4,34,910/- ON WHICH THE AO IMPOSE PENALTY OF RS. 1,34,387/-. THUS, THERE IS NO GUESS WORK OR MERE E STIMATION OF ADDITION BUT FROM THE FACTUAL FINDING RECORDED BY THE LD. CIT(A) , WHICH HAD BEEN UPHELD BY THE TRIBUNAL CLEARLY SHOWS THAT THE ASSESSEE CONCEA LED PARTICULARS OF INCOME PERTAINING TO UNRECORDED SALES, WHICH WAS CONSISTIN G OF TWO PARTS FIRST PROFIT EMBEDDED IN THE SALE PROCEED AND INVESTMENT/CAPITAL REQUIRED FOR MAKING SUCH UNRECORDED SALES. 7. FROM PENALTY ORDER IT IS DISCERNABLE THAT THE A O HAS IMPOSE PENALTY AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCE S BY OBSERVING THAT THE ASSESSEE COULD NOT PROVE ANY CONTRARY TO WHAT THE A SSESSING OFFICER HELD EITHER DURING ASSESSMENT PROCEEDINGS OR DURING APPE LLATE PROCEEDINGS. HE ALSO OBSERVED THAT VIDE LETTER DATED 26.11.2010, IT WAS ASKED TO FURNISH 5 ITA NO.2571/AHD/2014/SRT (A.Y: 2008-09) SHRI ARVINDBHAI J. BHESDADIYA CLARIFICATION IN RESPECT OF VARIOUS CREDIT ENTRIES REFLECTED IN THE BANK ACCOUNT AND TO FURNISH COMPLETE DETAILS OF BANK ACCOUNTS, C ASH BOOK, SOURCE OF ABOVE MENTIONED CREDIT ENTRIES BUT ASSESSEE DID NOT REPLY TO THE SAID NOTICE. THE LD. AO ALSO OBSERVED THAT ON VARIOUS OCCASIONS THE ASSESSEE AND HIS REPRESENTATIVE FAILED TO GIVEN ANY EXPLANATION AND DID NOT DISCLOSE ALL THE DOCUMENTS AND INFORMATION AND THEY ALSO FAILED IN D OING SO DURING THE FIRST APPELLATE PROCEEDINGS. THE AO FINALLY IMPOSED PENAL TY BY OBSERVING THAT THE ASSESSEE HAS FAILED TO SHOW ANY REASONABLE AND SATI SFACTORY CAUSE REGARDING UNRECORDED SALES AND THEREFORE, THE ASSES SEE HAS WILLFULLY CONCEALED PARTICULARS OF INCOME OF RS. 4,34,910/- A ND THUS, PENALTY U/S. 271(1)(C) OF THE ACT IS LEVIABLE ON THE ASSESSEE. 8. FROM VIGILANT READING OF FIRST APPELLATE ORDER, WE FURTHER FIND THAT IN PARA 4 THE LD. CIT(A) RECORDED THE RELEVANT FACTS O F THE CASE AND THEREAFTER HE VALUATED THE PENALTY ORDER. IT WAS THE CONTENTI ON OF THE ASSESSEE THAT THE AO HAS FAILED TO PROVE THE DELIBERATE CONCEALMENT O N THE PART OF THE ASSESSEE AND GUILTY CONSCIENCE OR MALAFIDE INTENTION CANNOT BE ATTRIBUTED TO THE APPELLANT AS HE HAS NOT MADE ANY EFFORTS TO ERA SE THE CUTTING OCCURRING IN THE BOOKS OF ACCOUNTS. IT WAS ALSO SUBMITTED THAT REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF PROFIT OR ARRIVING THE P EAK CREDIT CANNOT BE A BASIS OF IMPOSITION OF PENALTY, BUT ON VIGILANT READING O F ASSESSMENT ORDER, WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. DR THAT IT IS NOT A CASE OF REJECTION OF BOOKS OF ACCOUNTS FOLLOWED BY ESTIMATION OF PROF IT OR ARRIVING THE PEAK CREDIT, BUT IN THE PRESENT CASE THE LD. CIT(A) HAS PROPERLY RESTRICTED THE 6 ITA NO.2571/AHD/2014/SRT (A.Y: 2008-09) SHRI ARVINDBHAI J. BHESDADIYA ADDITION TO THE AMOUNT OF PROFIT EMBEDDED IN THE UN RECORDED SALES ON THE BASIS OF PROFIT OF RECORDED SALES AND ALSO MAKE ADD ITION ON AMOUNT OF INVESTMENT/CAPITAL REQUIRED FOR EFFECTING UNRECORDE D SALES. 9. FROM FIRST APPELLATE ORDER WE CLEARLY OBSERVE TH AT THE LD. CIT(A) HAS CONFIRM THE PENALTY WITH FOLLOWING OBSERVATIONS AND CONCLUSION: I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMIS SIONS OF APPELLANT. FROM THE FACTS, IT IS CLEAR THAT APPELLANT HAS CONC EALED THE PARTICULARS OF HIS INCOME. IT IS AN ADMITTED FACT THAT THE ENTRIES OF THE SAID BANK ACCOUNT WERE NOT DISCLOSED BY ASSESSEE IN THE RETUR N OF INCOME ON THE BASIS OF WHICH UNDISCLOSED SALES OF RS. 16,27,445/- WAS DETECTED BY AO, THOUGH THE ADDITION MADE BY AO WAS RESTRICTED B Y CIT(A) BY ESTIMATING THE UNDISCLOSED INVESTMENT AND UNDISCLOS ED PROFIT AT RS. 4,34,910/- BUT THE FACT REMAINS THAT THE SALES AND ESTIMATED PROFIT WERE NOT DISCLOSED BY APPELLANT VOLUNTARILY IN THE RETUR N OF INCOME OR BOOKS OF ACCOUNT. THIS ACT OF APPELLANT CLEARLY SHOWS THAT H E HAS DELIBERATELY AND WILLFULLY CONCEALED HIS INCOME AND FURNISHED INACCU RATE PARTICULARS WITH THE INTENTION TO HIDE THE INCOME SO AS TO AVOID THE IMPOSITION OF TAX THEREON. THE CONDUCT OF APPELLANT PROVES THAT THE APPELLANT HAS CONSCIOUSLY MADE THE CONCEALMENT OR FURNISHED INACCURATE PARTICULARS OF INCOME. ADDITION CONFIRMED BY LD. CIT(A) ALSO ESTABLISHES THIS ASPECT. HON'BLE ORISA HIGH COURT IN THE CASE CIT VS . INDIAN METALS & FERRO ALLOYS LTD, 117 CTR 378 HAS HELD THAT THE OFFENCE OF CONCEALMENT IS A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME TAX AUTHORITIES. IN FURNISHING ITS RETURN OF INCOME, AN ASSESSEE IS REQUIRED TO FURNISH PARTICUL ARS AND ACCOUNTS ON WHICH SUCH RETURNED INCOME HAS BEEN ARRIVED AT. THE SE MAY BE PARTICULARS AS PER ITS BOOKS OF ACCOUNT IF IT HAS MAINTAINED THEM, OR ANY OTHER BASIS ON WHICH IT HAS ARRIVED AT THE RETURNED FIGURE OF INCOME. ANY INACCURACY MADE IN SUCH BOOKS OF ACCOUNT OR OTHERWI SE WHICH RESULTS IN KEEPING OFF OR HIDING A PORTION OF ITS INCOME IS PU NISHABLE AS FURNISHING INACCURATE PARTICULARS OF INCOME, IN THE CASE OF AP PELLANT ALSO, IT HAS DELIBERATELY HIDDEN THE PART OF ITS INCOME WHICH IS PUNISHABLE AS FURNISHING INACCURATE PARTICULARS OF HIS INCOME. TH E BASIS TAKEN BY APPELLANT THAT SINCE THE PROFIT WAS ESTIMATED, PENA LTY IS NOT LEVIABLE IN VIEW OF VARIOUS JUDGMENTS RELIED UPON, IS MISPLACED . IN THOSE CASES BOOKS OF ACCOUNT AND OTHER MATERIAL FACTS ARE DISCL OSED BY ASSESSEE BEFORE AO BUT DUE TO SOME DEFECTS IN THOSE BOOKS OF ACCOUNT, PROFIT IS ESTIMATED OR PEAK AMOUNT IS ARRIVED. BUT IN THE CAS E OF APPELLANT, HE HAS NOT DISCLOSED THE SALES OF RS. 16,27,445/- TO T HE DEPARTMENT, LEAVE ASIDE THE PROFIT ON SUCH TRANSACTIONS. ONCE THE ENT IRE TRANSACTIONS ARE UNDISCLOSED, ANY PROFIT ESTIMATED ON THOSE TRANSACT IONS ALSO REMAIN UNDISCLOSED AS WELL AS CONCEALED. IN VIEW OF THIS, IT IS ESTABLISHED THAT 7 ITA NO.2571/AHD/2014/SRT (A.Y: 2008-09) SHRI ARVINDBHAI J. BHESDADIYA THE APPELLANT HAS WILLFULLY AND DELIBERATELY CONCEA LED HIS INCOME WHICH ATTRACTS THE PENAL PROVISIONS U/S. 271(L)(C) OF THE ACT. IN SUCH SITUATION, THE LEVY OF PENALTY OF RS. 1,34,387/- BY AO IS JUST IFIED. I, THEREFORE, CONFIRM THE PENALTY IMPOSED BY AO AND DISMISS THE G ROUNDS TAKEN BY APPELLANT. 10. IN VIEW OF ABOVE, WE ARE INCLINED TO AGREE WITH THE CONCLUSION DRAWN BY THE FIRST APPELLATE AUTHORITY THAT THE ACT OF TH E ASSESSEE CLEARLY SHOWS THAT HE HAS DELIBERATELY AND WILLFULLY CONCEALED PARTICU LARS OF HIS INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME WITH AN INTENTION TO HIDE THE INCOME TO AVOID IMPOSITION OF TAX THEREON. THE AO DETECTED THE UNRECORDED SALES ON THE BASIS OF CREDITS FOUND IN THE BANK ACC OUNT OF ASSESSEE AND THERE IS NO SATISFACTORY EXPLANATION FROM THE ASSES SEE IN THIS REGARD. IN THE CIRCUMSTANCES, CONDUCT OF APPELLANT CLEARLY SHOWS T HAT THE APPELLANT HAS CONSCIOUSLY CONCEALED PARTICULARS OF HIS INCOME WHI CH ATTRACTS PENALTY U/S. 271(1)(C) OF THE ACT. THE LD. CIT(A) HAS RELIED ON THE DECISION OF HON'BLE ORISSA HIGH COURT IN THE CASE OF CIT V. INDIAN METAL AND FERRO ALLOYS LTD. (SUPRA), WHEREIN IT WAS HELD THAT THE OFFENCE OF CO NCEALMENT IS A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THER EOF FROM THE KNOWLEDGE OF THE INCOME AUTHORITIES. LOOKING INTO THE ENTIRE F ACTS AND CIRCUMSTANCES OF THE CASE IN THE BACKDROP OF FINDINGS OF THE AUTHORI TIES IN THE QUANTUM ORDERS, WE ARE INCLINED TO HOLD THAT ANY KIND OF INACCURACY IN THE BOOKS OF ACCOUNTS WHICH RESULTS IN KEEPING OF OR HIDING A PORTION OF INCOME IS AN ACT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IN THE PRESENT CASE ASSESSEE HAS DELIBERATELY HIDDEN THE PART OF HIS IN COME WHICH IS PUNISHABLE AS FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE, 8 ITA NO.2571/AHD/2014/SRT (A.Y: 2008-09) SHRI ARVINDBHAI J. BHESDADIYA ASSESSEE HAS NOT DISCLOSED SALES OF RS. 19,02,334/- AGAINST PURCHASES OF RS. 16,27,445/- WHICH REPRESENTS UNRECORDED SALES A ND WHEN ENTIRE TRANSACTIONS ARE UNDISCLOSED THEN, PROFIT THEREFROM ALSO REMAIN UNDISCLOSED AND THE SAME HAS TO BE HELD AS CONCEALMENT OF PARTI CULARS OF INCOME. IN THIS SITUATION, AO WAS RIGHT IN IMPOSING PENALTY AND THE LD. CIT(A) WAS ALSO CORRECT IN UPHOLDING THE SAME. ACCORDINGLY, WE REA CH TO A CONCLUSION THAT THERE IS NO AMBIGUITY, PERVERSITY OR ANY OTHER VALI D REASON TO INTERFERE WITH THE CONCLUSION DRAWN BY THE AUTHORITIES BELOW IN TH E PENALTY AND IN FIRST APPELLATE ORDER AND THUS, WE UPHOLD THE SAME. CONS EQUENTLY, GROUNDS OF APPEAL OF ASSESSEE BEING DEVOID OF MERITS ARE DISMI SSED BY CONFIRMING THE PENALTY ORDER. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 5 TH APRIL, 2018. / SURAT ; DATED : 25 TH APRIL, 2018 EDN ! $ / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. # ( ) / THE CIT (A) - I, SURAT; 4. PRL. CIT, SURAT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE. / BY ORDER, // TRUE COPY // ) / ASSISTANT REGISTRAR , / ITAT, SURAT SD/- SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER