SUNRISE OPTICS, MUMBAI V. A.O WD 13(1)(2), MUMBAI

ITA 3525/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2536 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 29-07-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 03-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Keywords: Unexplained investment; Opportunity of being heard; Question of law
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH ES E , MUMBAI BEFORE SHRI RAJENDRA , HONBLE ACCOUNTANT MEMBER AND SHRI C.N. PRASAD , HONBLE JUDICIAL MEMBER ITA NO. 3525 / MUM /201 1 (ASST. YEAR : 200 2 - 0 3 ) M/S. SUNRISE OPTICS, 1 ST & 2 ND GROUND FLOOR, BLOCK - B, SUJAL MANSION, BHANGAWADI, KALBADEVI ROAD, MUMBAI. VS. ITO - 13(1)(2) , MUMBAI. PAN NO. AAGFS 8638 A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIPUL JOSHI ADV. DEPARTMENT BY : SHRI MANJUNATHA SWAMY - D R DATE OF HEARING : 2 5 / 0 7 /201 6 . DATE OF PRONOUNCEMENT : 21 / 1 0 /201 6 . O R D E R PER C.N. PRASAD , JUDICIAL MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 24 , MUMBAI , DATED 22 /0 3 /201 1 FOR THE ASSESSMENT YEAR 2002 - 03 IN SUSTAINING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN OPTICA L GOODS , FILED ITS RETURN OF INCOME ON 31/10/2012 DECLARING INCOME OF RS. 14,244/ - . THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 27/12/2004 ACCEPTING THE INCOME RETURNED. THIS ASSESSMENT WAS LATER SET ASIDE UNDER SECTION 263 OF THE ACT FOR MAKING FRESH ASSESSMENT . CONSEQUENT TO THE 263 PROCEEDINGS, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 2 ITA NO. 3525/MUM/2011 263 ON 06/12/2006 DETERMI NI NG THE INCOME OF THE ASSESSEE AT RS. 9,11,170/ - . IN THIS CASE, A SURVEY UNDER SECTION 133 A WAS CONDUCTED ON 17/01/2012 , AND IN THE COURSE OF SURVEY , DISCREPANCIES IN STOCK, EXPENSES ETC. W ERE FOUND . EXCESS STOCK W AS FOUND IN THE CASE OF THE ASSESSEE AND ITS SISTER CONCERNS. THE ASSESSEE APPEARS TO HAVE DISCLOSED ADDITIONAL INCOME OF RS. 8 LAKH & 20 LAKH IN ITS GOODS AND ITS SISTER CONCER N NAMELY TOP OPTIC AL S . THE ASSESSMENT WAS COMPLETED BY REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING THE GROSS PROFIT AT 30.4% . THE ASSESSING OFFICER NOTICED THAT TH ERE IS DRASTIC FALL IN GROSS PROFIT WHEN COMPARED TO LAST YEAR, T HEREFORE THE ASSESSEE HAS OFFERED ADDITIONAL INCOME IN THE COURSE OF SURVEY. THEREFORE , THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE WAS RECAST BY ESTIMATING GROSS PROFIT AND DETERMINING THE INCOME AT RS. 9,10,716/ - . THIS ASSESS MENT WAS CONFIRMED BY THE LD.CIT(A) AND THE TRIBUNAL AND THE HIGH COURT ALSO REFUSED TO ADMIT THE APPEAL/QUESTION OF LAW. PENALTY PROCEEDINGS WERE INITIATED UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME OR FURNISHING O F INACCURATE PARTICULA RS AS THERE WAS STEEP FALL IN GROSS PROFIT . TH E ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD INTENTIONALLY FURNISHED INACCURATE PARTICULARS OF INCOME. HE PASSED ORDER UNDER SECTION 271(1)(C) LEVYING PENALTY OF RS. 3,25,388/ - ON THE INCOME ESCAPED ASSESSMENT . 3 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) AND MADE ELABORATE SUBMISSIONS BEFORE THE LD.CIT(A). HOWEVER, THE LD.CIT(A) WITHOUT CONSIDERING THE SUBMISSIONS, SUSTAINED THE ORDER OF PENALTY. 4 . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT GROSS PROFIT WAS ESTIMATED IN ASSESSEES CASE IN QUANTUM PROCEEDINGS BY REJECTING THE BOOKS OF ACCOUNT . THERE WAS A SEARCH , DISCREPANCIES IN STOCK WERE FOUND AT THE TIME OF SURVEY, HOWEVER, THE ENTIRE STOCK WAS VALUED AT ONE RATE BY THE ASSESSING OFFICER. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT NO DEFECTS IN VOUCHERS, BOOKS WERE FOUND AND IN FACT 17% OF STOCK WAS SOLD AS SCRAP 3 ITA NO. 3525/MUM/2011 AND THE ASSESSEE HAS COLLECTED TAX ON SU CH SALES. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT IT IS ONLY AN ESTIMATION OF GROSS PROFIT BY REJECTION OF BOOKS OF ACCOUNT AND THERE IS NO CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME. HE FURTHER SUBMITTED THAT THE LD.CIT(A) IN A VERY CRYPTIC MANNER AND IN ONE PARAGRAPH SUSTAINED THE PENALTY WITHOUT DEAL ING WITH ANY OF THE SUBMISSIONS OF THE ASSESSEE. 5. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. ( 358 ITR 593). 6 . WE HAVE HEARD THE RIVALS SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW . WE FIND CONSIDERABLE FORCE IN THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THE LD.CIT(A) HAS NOT DEALT WITH THE ELABORATE SUBMISSIONS MADE BY THE ASSESSEE IN THE COURSE OF THE PROCEEDINGS BEFORE HIM . IN FACT, THE LD.CIT(A) HAS EXTRACTED THE SUBMISSIONS OF THE ASSESSEE WHICH ARE RUNNING INTO A LMOST 17 PAGES OF HIS ORDER AND FINALLY CONCLUDED IN PAGE NO. 18 DISMISS I NG THE APPEAL OF THE ASSESSEE AND CONFIRMED THE PENALTY OBSERVING AS UNDER: - 2.4 I HAVE CONSIDERED THE ABOVE SUBMISSIONS . HOWEVER, IT WOULD BE RELEVANT TO POINT OUT THAT IN THE APPEAL PROCEEDINGS RELATING TO THE ASSESSMENT FOR A.Y. 25002 - 03 IN THE APPELLATE ORDER PASSED ON 22/02/2011 THE FINDINGS OF THE ASSESSING OFFICER HAVE BEEN CONFIRMED AND ALSO THE PROTECTIVE ASSESSME NT MADE BY THE ASSESSING OFFICER AS REGARDS UNEXPLAINED INVESTMENT IN STOCK HAS ALSO BEEN HELD AS SUBSTANTIVE AND ASSESSING OFFICER HAS BEEN DIRECTED TO ADD BACK THE SAME AS UNEXPLAINED OF RS. 8/ - LAKHS ON THE DATE OF SURVEY FOR UNEXPLAINED INVESTMENT IN S TOCK AND UNEXPLAINED INVESTMENT/EXPENDITURE IN RENOVATION OF SHOP HAS BEEN CONFIRMED IN THE APPELLATE ORDER PASSED ON 22/02/2011. FURTHER ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT HAS BEEN CONFIRMED IN THE SAID APPELLATE ORDER AND ESTIMATION OF GP HAS ALSO BEEN UPHELD. THUS, AS ON DATE WHEN THE APPEAL IS BEING DECIDED RELATING TO PENALTY THE FINDINGS OF THE ASSESSING OFFICER IN THE ASSESSMENT 4 ITA NO. 3525/MUM/2011 ORDER STAND CONFIRMED IN THE CORRESPONDING APPELLATE ORDER RELATING TO THE ASSESSMENT AND SINCE ALL THE FIND IN GS RELATING TO REJECTION OF BOOKS, APPLICATION OF GP RATE, SURRENDER OF RS. 8/ - LAKHS MADE ON DATE OF SURVEY RELATING TO UNEXPLAINED INVESTMENT IN STOCK AND UNEXPLAINED INVESTMENT/EXPENDITURE IN RENOVATION OF SHOP STAND CONFIRMED HENCE PENALTY UNDER SECTION 271(1)(C) IS EXIGIBLE ON THE ENTIRE AMOUNT AND THEREFORE THE ACTION OF THE ASSESSING OFFICER IN IMPOSING PENALTY OF RS. 3,25,288/ - IS CONFIRMED. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 7 . ON A CAREFUL READING OF THE ORDER OF THE LD.CIT(A), WE FIND THAT THE LD.CIT(A) HAS PASSED A VERY CRYPTIC ORDER AND NONE OF THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN DEALT WITH BY LD.CIT(A) WITH REASONS. IN THESE CIRCUMSTANCES , WE ARE OF THE CONSIDERED VIEW THAT THE MATTER SHOULD GO BACK TO THE LD.CIT(A) FOR FRESH ADJUDICATION REASONS DEALING WITH THE SUBMISSIONS OF THE ASSESSEE. THUS, WE RESTORE THE APPEAL OF THE ASSESSEE TO THE FILE OF THE LD.CIT(A) FOR FRESH ADJUDICATION , AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATIS TI CAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2016 S D / - S D / - ( RAJENDRA ) ( C.N. PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 ST OCT. , 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., MUMBAI