RAMABEN H. SHAH, MUMBAI V. ACIT 16 (1), MUMBAI

ITA 2587/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1416 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Revised return
• Section: 133A; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE S/SHRI G S PANNU, AM, & SAKTIJIT DEY, JM I T A NO. 2587 /MUM/2016 ASSESSMENT YEAR 2011 - 12 MRS. RAMABEN H SHAH INDIAN HOUSE, KEMPS CORNER, MUMBAI 400 036 PAN : AAOPS4957N VS. AC IT RANGE 16 (1) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI B S BIST (DR) DATE OF HEARING : 16 .0 3 .201 7 DATE OF PRONOUNCEMENT : 05.04 .2017 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THE INSTANT APPEAL OF THE ASSESSEE IS AGAINST THE O RDER DATED 15.01.2016 OF CIT(A)-30, MUMBAI, CONFIRMING THE PEN ALTY IMPOSED U/S. 271(1)(C) OF THE ACT FOR AN AMOUNT OF RS. 7,71,400/ - FOR A.Y. 2011-12. 2. BRIEFLY, THE FACTS ARE, ASSESSEE, IS AN INDIVIDU AL, DERIVING INCOME FROM RETAIL TRADE OF READYMADE GARMENTS AND ACCESSORIES THROUGH HER PROPRIETARY CONCERN M/S. ROOPALI. THE ASSESSEE FILED HER RETUR N OF INCOME ON 10.09.2011, DECLARING TOTAL INCOME OF RS.3,84,764/- . A SURVEY U/S. 133A WAS CARRIED OUT IN ASSESSEES BUSINESS PREMISES, DURING WHICH ALLEGED SUPPRESSION OF SALES WAS FOUND AND ON THAT BASIS STATEMENT WAS RECORDED FROM SHRI MAHESH PATEL, STATED TO BE IN-CHARGE OF ASSESSEES BUSINESS. IN THE ITA NO. 2587/MUM/2016 MRS. RAMABEN SHAH 2 STATEMENT RECORDED, WHEN THE ALLEGED SUPPRESSION OF SALES WAS CONFRONTED, THE CONCERNED PERSON AGREED TO DECLARE ADDITIONAL I NCOME OF RS.21,95,767/- AND ON THAT BASIS A REVISED RETURN WAS FILED ON 29. 03.2012, DECLARING INCOME OF RS.25,80,531/-. DURING THE ASSESSMENT PROCEEDIN GS, THE AO ON THE BASIS OF MATERIAL AVAILABLE ON RECORD, INCLUDING THE SURV EY PROCEEDINGS, FOUND THAT THE GROSS PROFIT ON SALES OF RS.1,10,78,861/- AT 35 % WORKS OUT TO RS.38,77,601/-, WHEREAS, IN THE REVISED RETURN FILE D, THE ASSESSEE HAS DISCLOSED GROSS PROFIT OF RS.34,71,671/- ONLY. HE THEREFORE, WAS OF THE VIEW THAT THE ASSESSEE HAD SUPPRESSED GROSS PROFIT TO TH E TUNE OF RS.4,35,930/- ACCORDINGLY, HE CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE SUPPRESSED GROSS PROFIT SHOULD NOT BE TREATED AS HER INCOME. THOUGH , THE ASSESSEE OBJECTED TO THE PROPOSED ADDITION, THE AO COMPLETED THE ASSESSM ENT BY ADDING BACK THE AMOUNT OF RS.4,35,930/-. AS IT APPEARS, THE ASSESS EE ACCEPTED THE ADDITION MADE BY THE AO WITHOUT PREFERRING ANY APPEAL BEFORE THE CIT(A). ON THE BASIS OF INCOME DETERMINED IN THE ASSESSMENT ORDER, THE AO INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY U/S. 271(1)(C ) OF THE ACT BY ISSUING A SHOW CAUSE TO THE ASSESSEE. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE OBJECTING TO THE INITIATION OF PENALTY PRO CEEDINGS SUBMITTED THAT SHE IS AN OLD LADY OF 79 YEARS AND DUE TO HER OLD AGE A ND ALSO THE FACT THAT THERE IS NO FAMILY MEMBER TO LOOK AFTER HER BUSINESS, SHE HAD TO SOLELY RELY UPON SHRI MAHESH PATEL, WHO WAS IN OVERALL CHARGE OF BUS INESS. IT WAS SUBMITTED, ON THE BASIS OF THE STATEMENT OF SHRI MAHESH PATEL THE ADDITION OF INCOME ITA NO. 2587/MUM/2016 MRS. RAMABEN SHAH 3 WAS MADE. SHE ALSO SUBMITTED THAT SINCE SHE WAS NO T HAVING CONTROL OVER DAY TO DAY MANAGEMENT OF THE BUSINESS AFFAIRS, SHE WAS NOT AWARE OF THE ALLEGED SALE SUPPRESSION. IT WAS SUBMITTED, ONLY A FTER THE SURVEY SHE WAS INFORMED BY SHRI MAHESH PATEL ABOUT THE SALES SUPPR ESSIONS AND ON HIS ADVICE, TO BUY PEACE WITH THE DEPARTMENT, ASSESSEE HAD FILED THE REVISED RETURN OF INCOME DECLARING ADDITIONAL INCOME AND PA ID TAX. SHE, THEREFORE, SUBMITTED THAT IN THE CIRCUMSTANCES PENALTY U/S. 27 1(1)(C) SHOULD NOT BE IMPOSED AS THERE IS NO DELIBERATE OR WILLFUL CONCEA LMENT OF PARTICULARS OF INCOME BY HER. HOWEVER, THE EXPLANATION SUBMITTED BY THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND HE PROCEEDED TO PASS AN ORDE R IMPOSING PENALTY OF RS.7,71,357/- U/S. 271(1)(C) OF THE ACT. 3. THOUGH, THE ASSESSEE CHALLENGED THE PENALTY ORDE R BEFORE THE CIT(A), HE ALSO CONFIRMED THE IMPOSITION OF PENALTY. 4. THE LEARNED AR REITERATING THE STAND TAKEN BEFOR E THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT THE ASSESSEE IS AN OLD L ADY AND MOSTLY CONFINED TO HER HOME. HE SUBMITTED, THE ENTIRE BUSINESS ACTIVI TY OF THE ASSESSEE WAS MANAGED BY SHRI MAHESH PATEL AND THE SURVEY WAS CAR RIED OUT IN HIS PRESENCE. HE SUBMITTED THAT SINCE THE ASSESSEE WAS NOT LOOKING AFTER THE DAY TO DAY BUSINESS ACTIVITY, SHE WAS NOT AWARE OF THE ALLEGED SUPPRESSION OF SALES, WHICH WAS ONLY IN THE KNOWLEDGE OF SHRI MAHE SH PATEL. HE SUBMITTED, AT THE TIME OF SURVEY NEITHER THE ASSESSEE WAS THER E NOR WAS ANY STATEMENT ITA NO. 2587/MUM/2016 MRS. RAMABEN SHAH 4 RECORDED FROM HER. THE LEARNED AR SUBMITTED, ONLY ON THE BASIS OF THE STATEMENT RECORDED FROM SHRI MAHESH PATEL, THE ASSE SSEE FILED REVISED RETURN DECLARING ADDITIONAL INCOME TO BUY PEACE WITH THE D EPARTMENT. EVEN FOR THAT REASON ALSO, THE ADDITION MADE IN THE ASSESSMENT OR DER WAS ALSO NOT CHALLENGED BY PREFERRING ANY FURTHER APPEAL. THE L EARNED AR SUBMITTED, IN THE AFORESAID CIRCUMSTANCES, IT CANNOT BE ALLEGED T HAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME THEREFORE, PENA LTY IMPOSED SHOULD BE DELETED. 5. THE LEARNED DR JUSTIFYING THE IMPOSITION OF PENA LTY SUBMITTED THAT IT IS DIFFICULT TO BELIEVE THAT THE ASSESSEE WAS NOT AWAR E OF HER BUSINESS ACTIVITIES AND THE ENTIRE SHOW WAS MANAGED BY SHRI MAHESH PATE L. THE LEARNED DR SUBMITTED THAT IN THE STATEMENT RECORDED SHRI MAHES H PATEL HAS ADMITTED THAT HE WAS ONLY MAINTAINING THE ACCOUNTS RELATING TO SA LES AND PURCHASES AND THE OWNER CAN EXPLAIN WHICH PART OF THE SALES ARE ACCOU NTED FOR AND WHICH PART IS UNACCOUNTED. THE LEARNED DR SUBMITTED, FROM THE AF ORESAID STATEMENTS OF SHRI MAHESH PATEL, IT IS CLEAR THAT THE ASSESSEE WA S KEEPING TRACK OF HER BUSINESS ACTIVITIES. HE SUBMITTED, IF THE SURVEY W OULD NOT HAVE TAKEN PLACE, THE SUPPRESSION OF SALES COULD HAVE GONE UNDETECTED . THEREFORE, THERE BEING CLEAR CONCEALMENT OF PARTICULARS OF INCOME BY THE A SSESSEE, PENALTY IMPOSED IS JUSTIFIED. ITA NO. 2587/MUM/2016 MRS. RAMABEN SHAH 5 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD. UNDISPUTEDLY, ON THE BASIS OF ADDITIONAL INCOME OFFERED AT THE TIME OF SURVEY, THE ASSESSEE HAS FILED A REV ISED RETURN OF INCOME SHOWING ADDITIONAL INCOME OF ABOUT 21 LACS. HOWEVE R, THE FACT REMAINS THAT AT THE RELEVANT POINT OF TIME ASSESSEE WAS AN OLD L ADY OF 79 YEARS AND IT IS ALSO EVIDENT FROM THE STATEMENT RECORDED FROM SHRI MAHESH PATEL AT THE TIME OF SURVEY THAT HE WAS IN OVERALL CHARGE OF THE DAY TO DAY BUSINESS OF THE ASSESSEE. IN FACT, SHRI MAHESH PATEL HAS STATED AT THE TIME OF SURVEY THAT THE ASSESSEE GIVES SIGNED BLANK CHEQUES, WHICH WERE UTI LIZED BY HIM FOR MAKING THE PAYMENTS, SINCE, THE ASSESSEE IS NOT ALWAYS AVA ILABLE FOR CARRYING OUT THE BUSINESS ACTIVITIES. THUS, TO SOME EXTENT IT PROVE S ASSESSEES CLAIM THAT DAY TO DAY BUSINESS ACTIVITIES WERE LOOKED AFTER BY SHR I MAHESH PATEL. THIS IS FURTHER PROVED FROM THE FACT THAT AT THE TIME OF SU RVEY CARRIED OUT BY THE DEPARTMENTAL AUTHORITIES, IT WAS SHRI MAHESH PATEL, WHO WAS AVAILABLE IN THE BUSINESS PREMISES AND, IN FACT, ON THE BASIS OF MAT ERIAL FOUND AT THE TIME OF SURVEY IT WAS SHRI MAHESH PATEL, WHO DECLARED ADDIT IONAL INCOME OF RS.21,95,767/-. ADMITTEDLY, NO STATEMENT WAS RECOR DED FROM THE ASSESSEE. THOUGH, IT MAY BE A FACT THAT THE ASSESSEE FILED TH E REVISED RETURN OFFERING ADDITIONAL INCOME ON THE ADVICE OF SHRI MAHESH PATE L, TO WHAT EXTENT THE STATEMENT OF SHRI MAHESH PATEL WOULD BIND THE ASSES SEE IS DEBATABLE. THE FACT THAT THE ASSESSEE HAS OFFERED ADDITIONAL INCOM E AS PER DECLARATION MADE BY SHRI MAHESH PATEL MAY BE FOR VARIOUS REASONS, ON E OF THEM BEING TO BUY ITA NO. 2587/MUM/2016 MRS. RAMABEN SHAH 6 PEACE WITH THE DEPARTMENT. HOWEVER, THAT WILL NOT CONCLUSIVELY PROVE THAT THE ASSESSEE HAS DELIBERATELY CONCEALED PARTICULARS OF INCOME. MOREOVER, THE EXPLANATION SUBMITTED BY THE ASSESSEE IF EXAMINED I N THE CONTEXT OF FACTS AND MATERIALS AVAILABLE ON RECORD, CERTAINLY GIVES AN I MPRESSION THAT THERE IS SOME TRUTH IN THE EXPLANATION OF THE ASSESSEE. THEREFOR E, ASSESSEES EXPLANATION CANNOT BE DISCARDED AS UNBELIEVABLE. CONSIDERING T HE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT BENEFIT OF DOUBT HAS TO BE GIVEN TO THE ASSESSEE WITH REGARD TO ALLEGATION OF CONCEALMENT OF PARTICULARS OF INCOME AS THERE IS NO CONCLUSIVE EVIDENCE TO EST ABLISH THAT THERE IS A DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO C ONCEAL PARTICULARS OF INCOME. IN VIEW OF THE AFORESAID REASONS, WE ARE I NCLINED TO DELETE THE PENALTY IMPOSED U/S. 271(1)(C) OF THE ACT. THE GROU ND RAISED BY THE ASSESSEE IS ALLOWED. 7. IN VIEW OF OUR AFORESAID DECISION, THE ADDITIONA L GROUNDS RAISED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND IS DISMISSED. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 5 TH APRIL 2017 SD/- SD/- (G S PANNU) (SAKTIJIT D EY) ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI; DATED : 5 TH APRIL, 2017. SA ITA NO. 2587/MUM/2016 MRS. RAMABEN SHAH 7 COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI. 4. THE CIT 5. DR, C BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI