The DCIT, 3(1), V. M/s Shalimar Housing & Financ Ltd.,

ITA 32/IND/2005

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2457 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 12-01-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K CHAUDHARY
• Keywords: Search and seizure; Block assessment; Documents seized
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM, AND SHRI V.K. GUPTA , AM ITA NO.32/IND/2005 A.Y. 2001-02 DCIT-3(1), BHOPAL .....APPELLANT V/S. M/S. SHALIMAR HOUSING & FINANCE LTD., SHALIMAR HOUSE, 6, MALVIYA NAGAR, BHOPAL (PAN AAACS 6732 N) ....RESPONDENT DEPARTMENT BY : SHRI R.K. CHAUDHARY, CIT, DR ASSESSEE BY : SHRI AJAY TULSIYAN, CA ORDER PER JOGINDER SINGH, JM THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-II, BHOPAL, DATED 20.10.2004, O N THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN DIRECTING TO EXCLUDE THE INCOME OF RS.1,15,58,098/- FROM THE TAXABLE INCOME OF THE YEAR UNDER APPEAL ON THE GROU ND THAT IT HAS ALREADY BEEN ASSESSED IN BLOCK ASSESSMENT. 2 2. DURING THE HEARING OF THE APPEAL, WE HAVE HEARD SHRI R.K. CHAUDHARY, LD. CIT, DR AND SHRI AJAY TULSIYAN, LD. COUNSEL FOR THE ASSESSEE. MR. CHAUDHARY STRONGLY DE FENDED THE ASSESSMENT ORDER BY CONTENDING THAT THE LD. FIR ST APPELLATE AUTHORITY HAS MECHANICALLY DISPOSED OF TH E ISSUE IGNORING THE TRUE FACT AS IDENTICAL ISSUE WAS ADJUD ICATED UPON BY THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF VIDE IT(SS)A NO.152 & 155/IND/2005 FOR WHICH OUR SPECIFIC ATTENT ION WAS INVITED TO PARA 81 AND 82. IT WAS PLEADED THAT THE LD. CIT(A) HAS TAKEN ALTOGETHER CONTRARY STAND IN THE IMPUGNED APPEAL AS THE GROUND TAKEN HAS NOTHING TO DO WITH THE BLOC K ASSESSMENT. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE THOUGH DEFENDED THE IMPUGNED ORDER BUT DID NOT CONTROVERT THE ASSERTION OF THE REVENUE BEING FACTU ALLY CORRECT. HOWEVER, IT WAS PLEADED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE IMPUGNED APPEAL MAY BE REMANDED B ACK TO THE FILE OF THE LD. CIT(A). 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BEFORE COMING TO ANY CONCLUSIO N, THE RELEVANT PORTION OF THE AFORESAID ORDER FOR THE BLO CK PERIOD FROM 1.4.95 TO 27.2.2002 IS REPRODUCED HEREUNDER: 3 76. GROUND NO.21 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN D ELETING THE ADDITION ON ACCOUNT OF INCOME ASSESSED U/S 143( 3) OF AY 2001-02 AMOUNTING TO RS.1,15,08,440/-. 77. THE AO DISCUSSED THIS ADDITION IN PARA 39 ON PA GE 92 OF HIS ASSESSMENT ORDER. AO OBSERVED THAT REGULA R ASSESSMENT FOR AY 2001-02 WAS COMPLETED U/S 143(3) ON 24.3.4. AS AGAINST RETURNED INCOME OF RS.49,660/-, THE INCOME WAS ASSESSED AT RS.1,15,58,100/-. THE DIFFER ENCE BETWEEN RETURNED INCOME AND ASSESSED INCOME WAS ADD ED IN THE BLOCK ASSESSMENT PROCEEDINGS. 78. THE ASSESSEE EXPLAINED BEFORE LD. CIT(A) THAT TH E SEARCH TOOK PLACE ON 21.2.2002. THE BLOCK PERIOD THEREFORE WAS FROM 1.4.95 TO 21.2.2002. I.E. FOR A. Y. 96-97 TO 2001-02 & FROM 1.4.2001 TO 21.2.2002. WHEN THE BLOCK ASSESSMENT PROCEEDINGS WERE PENDING, THE A.O. ALSO SELECTED THE ASSESSEES ASSESSMENT FOR A.Y. 2001-02 FOR SCRUTINY. THE SCRUTINY ASSESSMENT WAS COMPLETED U/ S. 143(3) ON 24.3.2004 I.E., BEFORE COMPLETING THE BLO CK ASSESSMENT. THE DATE OF BLOCK ASSESSMENT ORDER I S 17.9.2004. IN THE SCRUTINY ASSESSMENT DT. 24.3.2004 THE A.O. APPLIED THE PROVISIONS OF SECTION 145(3), AND MADE THE ADDITIONS AS UNDER: S.NO . NATURE OF ADDITION AMOUNT OF ADDITION 1 ADDITION FOR THE ESTIMATED 10% PROFIT ON SALES 79,64,883 2 RECEIPTS FOR PARKING CHARGES, SERVICE CHARGES, INTEREST RECEIPTS, RENT RECEIPTS TAXED OVER AND ABOVE 10% I.E., 100% OF RECEIPTS OF FY 20,42,872 3 ELECTRICITY EXPENSES NOT ATTRIBUTABLE TO THE ASSESSEE COMPANY LUMP SUM ADDITION 8,00,000 4 ESTIMATED INCOME FROM BILLIARD CLUB 7,00,000 5 DISALLOWANCE ON VEHICLES FOR THE ALLEGED PERSONAL USER 1,00,000 TOTAL ADDITION: 1,16,07,755 LESS: INCOME SHOWN IN THE RETURN 49,657 4 TOTAL INCOME 1,15,58,098 ROUNDED OFF: 1,15,58,100 THE A.O. HOWEVER TAKES IT TO BE 1,15,08,440 THE ASSESSEE SUBMITTED THAT IN THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS, THAT THE A.O. HAS ANALYSED ALL THE SEIZED PAPERS, AND ASSESSED THE TOTAL UNDISCLOSED I NCOME WHICH INCLUDED THE INCOME OF F.Y. 2000-01 (A.Y. 200 1-02). IN THE BLOCK ASSESSMENT, THE SALES AND EXPENDITURE HAVE BEEN VERIFIED. ON THE RELATED ISSUES, DETAILED EXPLANATIONS HAVE BEEN GIVEN, AND IN THE SAID EXPLANATIONS, THE ASSESSEE HAD SUBMITTED THAT THE S ALES AND THE EXPENSES HAVE BEEN TRULY AND CORRECTLY RECO RDED. THEREFORE THERE WAS NO QUESTION OF MAKING AN ADDITI ON OF RS. 79,64,883/-. SO FAR AS OTHER INCOME OF RS. 20 ,42,872/- IS CONCERNED, IT WAS FULLY ACCOUNTED, AND DULY REFL ECTED IN THE PROFIT & LOSS ACCOUNT FURNISHED WITH THE RETURN . IN THE SEARCH NO MATERIAL WAS FOUND SHOWING ANY FALSIFIC ATION IN THE DISCLOSED INCOME. SO FAR AS THE OTHER ADDITION S WERE CONCERNED THEY WERE SIMPLY ESTIMATIONS, AND WITHOUT REFERENCE OF ANY SEARCH MATERIAL SHOWING THEREIN TH AT THEY WERE EARNED, WITHOUT INCURRING THE EXPENSES FOR EAR NING THEM. ALL THE EXPENDITURE DEBITED IN THE ACCOUNT BO OKS IN THE FINANCIAL YEAR WERE GENUINE, THE SAME WERE ACTU ALLY INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS, AND THEREFORE THE ADDITION OF RS. 16,00,0 00/- (RS. 8,00,000/- + RS. 7,00,000/- + RS. 1,00,000/-) WAS UNLAWFUL AND WARRANTS DELETION. THEREFORE THE ADD ITION OF RS. 1,15,08,440/- WAS NOT JUSTIFIED AND UNLAWFUL , AND THEREFORE BE DELETED IN VIEW OF EXPLANATION BELOW T O SECTION 158BA(2) BECAUSE THE ASSESSMENT WAS MADE U/ S. 143(3) ON 24.3.04 FOR ASSESSMENT YEAR 2001-02. THE LD AR ALSO REFERES TO DECISION OF CALCUTTA HIGH COURT IN TH E CASE OF ASHIM K MONDAL 270 ITR 160 (CAL) WHEREIN IT IS SAID THAT ASSESSMENT & COMPUTATION HAVE DISTINCT MEANING . SECTION 158BC REFERS COMPUTATION AND NOT ASSESSMEN T. 79. THE ASSESSEE CONTENTED THAT THE AO HAS ALREADY COMPLETED ASSESSMENT FOR THE A.Y. 2001-02 U/S. 143(3) ON 24.3.2004 DETERMINING THE INCOME O F RS. 1,15,58,100/- AND OUT OF THIS DETERMINED INCOME HE HAS ADDED RS.1,15,08,100/-. IN THE BLOCK ASSESSMENT ORD ER DATED 17.9.2004 PASSED SUBSEQUENTLY AFTER THE COMPL ETION OF ASSESSMENT ORDER DATED 24.3.2004. THE ASSESSEE P LEADED THAT THE AO MADE ADDITION IN VIOLATION OF THE CLEA R PROVISIONS OF SECTION 158BA(2) EXPLANATION (B) REPR ODUCED HERE-IN-UNDER:- 5 THE TOTAL UNDISCLOSED INCOME RELATING TO THE BLOC K PERIOD SHALL NOT INCLUDE THE INCOME ASSESSED IN AN Y REGULAR ASSESSMENT AS INCOME OF SUCH BLOCK PERIOD. THE ASSESSEE HAS ALSO PRODUCED COPY OF MEMORANDUM EXPLAINING THE PROVISION IN FINANCE(2) B ILL 1998 REPORTED IN 231ITR (STATUS) OF 256 TO 257 CONT AINING THE CLARIFACTORY AMENDMENT IN PROCEDURE FOR BLOCK ASSESSMENT REPRODUCED HEREINDER :- TO SET AT REST THE CONTROVERSY AS TO WHETHER BLOC K ASSESSMENT SUBSUMES THE REGULAR ASSESSMENTS OR INDEPENDENT OF THE LATTER, THE BILL PPROPOSES TO CLARIFY THAT BLOCK ASSESSMENT SHALL BE MADE IN ADDITION TO THE REGULAR ASSESSMENT OF PREVIOUS YEARS INCLUDED IN THE BLOCK PERIOD. FURTHER, IT PROPOSES TO PROVIDED THAT INCOME ASSESSED IN REGULAR ASSESSMENT SHALL NOT BE INCLUDED IN THE BLOCK PERIOD AND INCOME ASSESSMENT IN THE BLOCK PERIOD SHALL NOT BE INCLUDED IN THE REGULAR ASSESSMENT. THE CLARIFACTORY AMENDMENT IS PROPOSED TO BE INSERTED RETROSPECTIVELY FROM 1 ST DY OF JULY, 1995. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF ASHIM K. MONDAL 270 ITR 160. THE RELEVANT PORTION OF THE JUDGEMENT IS REPRODUCED BELOW:- THE PRINCIPLE THAT HAS BEEN LAID DOWN FOR THE PURPOSE OF MAKING ASSESSMENT ARE SETTLED PROPOSITION AS WAS REFERRED TO BY THE LEARNED TRIBUNAL IN THE CASE OF SUNDER AGENCIES V. DEPUTY COMMISSIONER OF INCOME-TAX (1997) 63 ITD 245 ( MUMBAI); T.S. KUMARASAMY V. ASSTT. CTI[1998] 65 ITD 188 (MAD) AT PAGE 206 AND INDORE CONSTRUCTION (P) LTD. V. ASSTT.CIT[1999] 71 ITD 128 (INDORE) WHEREIN THE MUMBAI BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL , THE MADRAS BENCH BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL AND THE INDORE BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL, RESPECTIVELY, HAD HELD THAT THE INCOME FOR BLOCK ASSESSMENT UNDER SEARCH AND SEIZURE PROCEDURE IS TO BE COMPUTED STRICTLY ON THE BASIS OF THE DOCUMENTS SEIZED; AND IT CANNOT PROCEED ON CONJECTURE AND / OR SURMISES AND ARRIVE AT AN ESTIMATION INSTEAD OF COMPUTATION. THE WORD COMPUTATION CONNOTES A DIFFERENT MEANING THAN ESTIMATION OR APPRAISAL. COMPUTATION PRESUPPOSES A CALCULATION ON THE BASIS OF THE MATERIALS, WHICH IS SOMETHING DIFFERENT FROM ESTIMATION OR APPRAISAL AND IT MUST BE BASED ON METHODICAL CALCULATION WITH SOME AMOUNT OF APPROXIMITY TO M,ATHEMETICAL PROCESS ON THE MATERIALS AVAILABLE ON SEARCH AND SEIZURE. 6 80. THE LD. CIT(A) CONSIDERING RELEVANT PROVISION OF THE LAW AS MENTIONED ABOVE DELETED THE ENTIRE ADDITION. HIS FINDINGS ARE REPRODUCED AS UNDER: - THE CONTENTION OF THE LD. AR IS BASED ON THE PROVISIONS OF THE ACT AS WELL AS THE JUDICIAL PRONOUNCEMENTS REFERRED TO ABOVE. THE A.O. WAS SPECIFICALLY ASKED TO OFFER HIS COMMENT ON THE ADDITION OF RS. 1,15,08,440/- MADE IN A. Y. 2001 02 VIDE MY LETTER DATED 13.5.2005 BUT IT COULD NOT ELICIT ANY RESPONSE FROM THE A.O. TILL THE DATE OF THIS APPELLATE ORDER. I THEREFORE DELETE THE ADDITION. 81. LD. DR SUBMITTED THAT LD. CIT(A) HAS NOT GIVEN ANY SPECIFIC FINDING ON THIS ISSUE. HE HAS SUBMITTE D THAT LD. CIT(A) SHOULD PASS SPEAKING ORDER . ON THE OTHER HAND, LD. COUNSEL FOR ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT NO SEIZ ED PAPER WAS RECOVERED TO INDICATE AS TO HOW THE DIFFE RENCE IN RETURNED INCOME AND ASSESSED INCOME WAS TREATED AS UNDISCLOSED INCOME. HE HAS SUBMITTED INCOME ASSESSED IN THE REGULAR ASSESSMENT CANNOT BE TREATED AS UNDISCL OSED INCOME IN THE BLOCK PERIOD . 82. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE A RE OF THE VIEW THAT THERE IS NO MERIT IN THE DEPARTMENTAL APPEAL. THE RETURN FOR AY 2001-02 WAS FILED UPON WH ICH REGULAR ASSESSMENTS HAVE BEEN MADE U/S 143(3) AND A S SUCH THE SAME CANNOT BE SUBJECT MATTER OF THE BLOCK ASSE SSMENT AS PER EXPLANATION (B) TO SECTION 158BA(2) OF THE I T ACT AS REPRODUCED ABOVE. MORESO, NO SEIZED MATERIAL IS PRO DUCED BEFORE US TO INDICATE AS TO HOW THE ASSESSED INCOME WAS TREATED AS UNDISCLOSED INCOME. THE CASE ON THE ASSE SSEE IS SQUARELY COVERED BY THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF ASHIM K MONDAL (SUPRA). THOUGH, THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE ARE NOT EL ABORATE BUT LD. CIT(A) RECORDED ALL THE FACTS AND RELEVANT PROVISION OF LAW WHILE DECIDING THE ISSUE AND RIGHT LY FOLLOWED THE PROVISION OF LAW FOR DELETING THE ADDI TION. THERE IS NO MERIT IN DEPARTMENTAL APPEAL ON THIS ISSUE. SAME IS ACCORDINGLY DISMISSED. 4. IN THE LIGHT OF THE FACTUAL FINDING (HIGHLIGHTED PORTION OF PARAS 81 & 82 OF THE AFORESAID ORDER), THIS APPEAL REQUIRES TO BE SENT BACK TO THE FILE OF THE LD. FIRST APPELLATE AUTHORITY FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION HERE THAT DUE OPPORTUNITY BE PROVIDED TO TH E 7 ASSESSEE. THE ASSESSEE IS ALSO AT LIBERTY TO FURNIS H EVIDENCE, IF ANY, TO SUBSTANTIATE ITS CLAIM, CONSEQUENTLY, TH IS APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES ONL Y. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLU SION OF THE HEARING ON 7 TH DECEMBER, 2009. SD SD/- (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7.12.2009 {VYAS} COPY TO: APPELLANTS/RESPONDENTS/CIT/ CIT(A)/DR