DCIT ITO WD 21(3)(2), MUMBAI V. SADIQ ISMAIL KANTHARIA, MUMBAI

ITA 2618/MUM/2013

• Counselvise Citation: 261819914 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2004-2005
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH L PATHADE
• Section: 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./I.T.A. NO.2618/MUM/2013 ( / ASSESSMENT YEAR :2004-05) INCOME TAX OFFICER - 2 1 ( 3 )(2), ROOM NO.508, 5 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI-400051. / VS. SHRI SADIQ ISMAIL KANTHARIA, ROOM NO.10, 1 ST FLOOR, BATTI WALA SOCIETY, HANUMAN LANE, TAKIAWAD, KURLA (W), MUMBAI-400070 ( ! / APPELLANT) .. ( '# ! / RESPONDENT) ./ $% ./PAN/GIR NO. : AADPK1898D ! & / APPELLANT BY : SHRI PRAKASH L PATHADE '# ! ' & /RESPONDENT BY : NONE ( ' ) * / DATE OF HEARING : 9.7.2014 +, ' ) * /DATE OF PRONOUNCEMENT : 9.7.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 02.01.2013 PASSED BY LD CIT(A)-32, MUMBAI AND IT RELATES TO TH E ASSESSMENT YEAR 2004-05. NONE APPEARED ON BEHALF OF THE ASSESSEE. HENCE, WE PROC EED TO DISPOSE OF THE APPEAL EX- PARTE, WITHOUT THE PRESENCE OF THE ASSESSEE. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN DELETING THE PENALTY OF RS.6,73,687/- LEVIED U/S 271(1)(C) OF THE ACT. 3. THE FACTS THAT LED TO THE LEVY OF PENALTY AR E SET OUT IN BRIEF. THE ASSESSEE IS RUNNING DAIRY FARMS. A SURVEY OPERATION U/S 133A O F THE ACT WAS CONDUCTED AT HIS BUSINESS PREMISES ON 29.12.2003. DURING THE COURSE OF SURVEY OPERATION, THE ASSESSEE AGREED TO OFFER ADDITIONAL INCOME OF RS.20.00 LAKHS , BUT LATER RETRACTED FROM IT. IN THE I.T.A. NO.2618/MUM/2013 2 ASSESSMENT PROCEEDINGS, THE AO MADE VARIOUS ADDITIO NS, OUT OF WHICH FOLLOWING ADDITIONS WERE SUSTAINED BY LD CIT(A). (A) ADDITION ON ESTIMATION OF G.P - RS.34,810/- (B)ADDITION OF COST OF EXCESS BUFFALOS FOUND DURIN G SURVEY RS.5,60,000/- (C) ADDITION ON SUPPRESSION OF VALUE OF MILK SALES RS. 14,40,000/- (OUT OF RS.50,98,320/- MADE BY THE AO) THE TRIBUNAL ALSO CONFIRMED THE ORDER PASSED BY LD CIT(A). AFTER THE RECEIPT OF ORDER PASSED BY LD CIT(A), THE AO LEVIED MINIMUM PENALTY OF RS.6,73,687/- U/S 271(1)(C) OF THE ACT ON THE ABOVE SAID THREE ADDITIONS. 4. IN THE APPEAL FILED BY THE ASSESSEE, THE LD C IT(A), HOWEVER, DELETED THE PENALTY ON THE GROUND THAT ALL THE THREE ADDITIONS HAVE BEE N MADE ON ESTIMATED BASIS AND HENCE THEY ARE NOT SUSCEPTIBLE FOR PENALTY. AGGRIE VED BY THE DECISION RENDERED BY LD CIT(A), THE REVENUE HAS FILED THIS APPEAL BEFORE US . 5. WE HEARD LD D.R AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAD AGREED TO OFFER A SUM OF RS.20.00 LAKHS IN THE STAT EMENT TAKEN FROM HIM U/S 133A OF THE ACT. ACCORDING TO THE ASSESSEE, A JOINT DECLAR ATION WAS OBTAINED FROM THE ASSESSEE AND OTHER BUSINESSMEN BY WHICH A SUM OF RS.63.00 LA KHS WAS OFFERED JOINTLY BY ALL OF THEM, THAT TOO, WITHOUT MAKING ANY REFERENCE TO ANY OF THE DISCREPANCIES. HENCE THE JOINT DECLARATION WAS RETRACTED BY AN AFFIDAVIT DAT ED 06.01.2004. WITH REGARD TO THE ADDITIONS THAT WERE CONFIRMED BY THE LD CIT(A), THE ASSESSEE HAS OFFERED FOLLOWING EXPLANATIONS BEFORE LD CIT(A) IN THE PENALTY PROCEE DINGS:- (A) THE RATE OF N.P. DECLARED BY THE ASSESSEE WAS 4.1%, BUT THE AO ADOPTED A RATE OF 5% AND ACCORDINGLY ADDED A SUM OF RS.34,810 /-, WHICH IS BASED ON ESTIMATE ONLY. (B) WITH REGARD TO THE COST OF BUFFALOES, IT WAS S UBMITTED THAT THERE WAS A DIFFERENCE OF 28 BUFFALOES AT THE TIME OF SURVEY OP ERATION BETWEEN THE BOOK STOCK AND PHYSICAL STOCK. THOUGH THE ASSESSEE SUBM ITTED THAT THE DIFFERENCE HAS OCCURRED DUE TO NON-ACCOUNTING OF BIRTHS AND DEATHS PROPERLY, YET THE AO PRESUMED THAT THE ASSESSEE WOULD HAVE PURCHASED THE 28 BUFFALOES. ACCORDINGLY HE ESTIMATED THE COST OF EACH BUFFALO A T RS.20,000/- AND ACCORDINGLY ADDED A SUM OF RS.5,60,000/-. THE ASSESSEE HAS ALS O POINTED OUT THAT THE CLOSING STOCK OF BUFFALOES AS AT THE YEAR END WAS S HOWN BY HIM AT 95 AND THE SAME WAS NOT DISTURBED BY THE AO. THUS, ACCORDING TO THE ASSESSEE, THE ABOVE SAID ADDITION WAS ALSO MADE ON PURE ESTIMATE WITHOU T PROPERLY REJECTING THE EXPLANATIONS FURNISHED BY THE ASSESSEE. (C) WITH REGARD TO THE ADDITION RELATING TO SUPPR ESSION OF MILK SALES AMOUNT, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SHOWN YIELD OF MILK AT 6 LITERS PER DAY PER ANIMAL. HOWEVER, THE SURVEY OFFICIALS HAS TAKEN THE YIELD AT 10 LITERS PER I.T.A. NO.2618/MUM/2013 3 DAY AND ACCORDINGLY THE AO COMPUTED THE SUPPRESSION AT RS.50,98,320/-. THE LD CIT(A), IN THE APPELLATE PROCEEDINGS, REDUCED THE S AME TO RS.14,40,000/-, I.E., THE DIFFERENCE BETWEEN THE AMOUNT OF RS.20.00 LAKHS OFFERED IN THE STATEMENT TAKEN FROM THE ASSESSEE AND THE AMOUNT OF RS.5.60 L AKHS RELATING TO THE COST OF INVESTMENT IN BUFFALOES SUSTAINED BY HIM. THE ASSE SSEE HAS FURTHER SUBMITTED THAT THE AO HAS ACCEPTED THE YIELD AT 6 LITERS PER DAY PER ANIMAL FOR AY 2001-02 TO 2003-04, BUT MADE THE IMPUGNED ADDITION ONLY DUR ING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ASSESSEE SUBMITTED THAT THE ADDITION OF RS.14.40 LAKHS SUSTAINED BY THE LD CIT(A) IS ALSO ON ESTIMAT ED BASIS. CONSIDERING THE ABOVE SAID EXPLANATIONS, THE LD CIT (A) DELETED THE PENALTY BY FOLLOWING HOSTS OF DECISIONS REFERRED TO IN HIS ORDER. 6. A PERUSAL OF EXPLANATIONS OFFERED BY THE ASS ESSEE WOULD SHOW THAT THE AO HAS SIMPLY ADOPTED THE REPORT GIVEN BY THE SURVEY OFFIC IALS. IT IS A WELL SETTLED PROPOSITION THAT THE ADDITIONS MADE IN THE ASSESSMENT PROCEEDIN GS WOULD NOT AUTOMATICALLY GIVE RISE TO PENALTY. THE ASSESSING OFFICER, DURING THE COUR SE OF PENALTY PROCEEDINGS, IS REQUIRED TO REAPPRECIATE THE ENTIRE MATTER AFRESH BY EXAMINI NG THE FACTS AND CIRCUMSTANCES SURROUNDING THE ADDITION AND ALSO BY DULY CONSIDERI NG THE EXPLANATIONS FURNISHED BY THE ASSESSEE. IN THE INSTANT CASE, WE NOTICE THAT THE GROSS PROFIT ADDITION OF RS.34,810/- HAS BEEN MADE BY ADOPTING A HIGHER RATE OF N.P. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAS NOT FURNISHED ANY REASON FOR ADOPTING HIGHER RATE OF NET PROFIT. HENCE, AS CONTENDED BY THE ASSESSEE BEFORE LD CIT(A ), THIS ADDITION HAS BEEN MADE ON ESTIMATE BASIS WITHOUT ANY SUPPORTING MATERIALS. 7. WITH REGARD TO THE ADDITION OF RS.5,60,000/- RELATING TO THE COST OF INVESTMENT OF EXCESS BUFFALOES, WE NOTICE THAT THE AO HAS REJECTE D THE EXPLANATION OF THE ASSESSEE THAT THE BIRTHS AND DEATHS HAVE NOT BEEN PROPERLY A CCOUNTED. THE FACT REMAINS THAT THE CATTLE WOULD GIVE BIRTH TO NEW CALVES AND IT IS A N ATURAL PROCESS. THE SAID CLAIM OF THE ASSESSEE HAS NOT BEEN FOUND TO BE FALSE BY THE ASSE SSING OFFICER. FURTHER THE COST OF BUFFALOES AT RS.20,000/- PER ANIMAL HAS ALSO BEEN A DOPTED ON ESTIMATED BASIS ONLY. THUS, THIS ADDITION HAS ALSO BEEN MADE ON ESTIMATED BASIS WITHOUT PROVING THAT THE EXPLANATION FURNISHED BY THE ASSESSEE IS FALSE. 8. THE NEXT ADDITION PERTAINS TO THE SUPPRESSIO N OF VALUE OF MILK SALES. WE NOTICE THAT THE AO HAS ADOPTED THE YIELD PER ANIMAL AT 10 LITERS PER ANIMAL FOR THE YEAR UNDER CONSIDERATION, THAT TOO ON THE BASIS OF REPORT GIVE N BY THE SURVEY OFFICIALS. BUT THE FACT REMAINS THAT THE AO HAS ACCEPTED THE YIELD OF 6 LIT ERS PER ANIMAL FOR THE IMMEDIATELY PRECEDING THREE YEARS, MEANING THEREBY, THERE WAS N O MATERIAL TO SHOW THAT THE ASSESSEE WAS GETTING HIGHER YIELD IN THE INSTANT YE AR ALONE. FURTHER, THE ADDITION OF I.T.A. NO.2618/MUM/2013 4 RS.50.98 LAKHS MADE BY THE AO WAS REDUCED TO RS.14. 40 LAKHS BY LD CIT(A) IN THE QUANTUM APPEAL PROCEEDINGS. AS STATED EARLIER, THE ABOVE SAID AMOUNT OF RS.14.40 LAKHS WAS ARRIVED AT BY DEDUCTING THE ADDITION OF R S.5.60 LAKHS RELATING TO COST OF INVESTMENT OF BUFFALOES FROM THE AMOUNT OF RS.20.00 LAKHS OFFERED BY THE ASSESSEE BEFORE THE SURVEY OFFICIALS. THE FACT REMAINS THAT THE ASSESSEE HAD OFFERED THE ABOVE SAID SUM OF RS.20.00 LAKHS IN A JOINT DECLARATION T AKEN FROM THE ASSESSEE AND OTHER BUSINESSMEN TOGETHER AND ACCORDING TO THE ASSESSEE, THERE IS NO BASIS FOR DETERMINING THE ABOVE SAID AMOUNT OF RS.20.00 LAKHS. ANOTHER I MPORTANT FACTOR IS THAT THE ABOVE SAID DECLARATION WAS LATER RETRACTED BY THE ASSESSE E. THE FOREGOING DISCUSSIONS WOULD SHOW THAT THE ABOVE SAID ADDITION OF RS.14.40 LAKHS WAS ALSO MADE/SUSTAINED BY DRAWING CERTAIN INFERENCES AND ON ESTIMATED BASIS. THE ASSESSEE, IN HIS EXPLANATION, HAS DULY BROUGHT ON RECORD ABOVE SAID FACTS AND HIS EXPLANATIONS WERE NOT PROVED TO BE FALSE. 9. BEFORE US, THE LD DR PLACED RELIANCE ON FOLL OWING DECISIONS RENDERED BY HONBLE DELHI HIGH COURT: A) CIT V/S ZOOM COMMUNICATION PVT LTD (2010) 327 IT R 510; AND B) CIT V/S MORGAN FINVEST PVT. LTD(213 TAXMANN 23)( DEL) WE HAVE GONE THROUGH THE ABOVE DECISIONS AND WE AR E OF THE VIEW THAT THEY ARE NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. 10. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED THE ONUS PLACED UPON HIM UNDER EXPLANATI ON 1 TO SEC. 271(1)(C) OF THE ACT AND THE SAME HAS NOT BEEN REBUTTED BY THE AO. UNDE R THESE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, THE LD CIT(A) WAS JUSTIFIED IN DEL ETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORDINGLY, WE UPHOLD HIS DECISION. 11. IN THE RESULT, THE APPEAL FILED BY THE REVE NUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 9TH JULY, 2014. +, ( - ./ 0 1 9TH JULY, 2014 , ' 2 3 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER . ( MUMBAI: 9TH JULY,2014. . . ./ SRL , SR. PS I.T.A. NO.2618/MUM/2013 5 ! ' / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. ( 5) ( ) / THE CIT(A)- CONCERNED 4. ( 5) / CIT CONCERNED 5. 67 2 ')8 , * 8 , . ( / DR, ITAT, MUMBAI CONCERNED 6. 2 9 : / GUARD FILE. ; ( / BY ORDER, TRUE COPY < $ (ASSTT. REGISTRAR) * 8 , . ( /ITAT, MUMBAI