M/s. Vijay Cloth Centre, Ahmedabad V. The Income tax Officer,Ward-2(3), Ahmedabad

ITA 3534/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6283 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 12-05-2010
• Assessment Year: 1992-1993
• Appeal Filed On: 20-08-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: PAMIL H SHAH
• Keywords: Opportunity of being heard; Corroborative evidences; Documents seized; Set aside
• Section: 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) ITA NO.3534/AHD/2007 A. Y.: 1992-93 M/S. VIJAY CLOTH CENTRE, OUSIDE PREM DARWAJA, CLOTH MARKET, KALUPUR, AHMEDABAD PA NO. AABFV 1903 C VS THE INCOME TAX OFFICER, WARD-2(3), INSURANCE BUILDING AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI PAMIL H. SHAH, AR RESPONDENT BY SHRI C. K. MISHRA, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, AHMEDABAD DATED 22-06-2007 FOR ASSESSMENT YEAR 1992-93 CHALLENGING LEVY OF PENALTY LEVIED U/S 271 (1) ( C ) OF THE IT ACT. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,90,050/-. IN THE ORD ER U/S 143(3) DATED 11-01-2005, THE TOTAL INCOME WAS COMPUTED AT RS.8,8 9,678/- BY MAKING VARIOUS ADDITIONS. THESE ADDITIONS WERE MADE ON THE BASIS OF DOCUMENTS SEIZED IN THE COURSE OF SEARCH. CERTAIN TRANSACTION S LIKE PURCHASES NOTED IN THESE DOCUMENTS WERE NOT DISCLOSED IN THE REGULA R BOOKS OF ACCOUNT. IN APPEAL, THE LEARNED CIT(A) ALLOWED PART RELIEF V IDE ORDER DATED 29-03-1995. THE DEPARTMENT PREFERRED APPEAL BEFORE THE TRIBUNAL AND ITA NO.3534/AHD/2007 M/S. VIJAY CLOTH CENTRE VS ITO 2 THE TRIBUNAL VIDE ORDER DATED 30-04-2002 HAVE SET A SIDE THE ORDER AND RESTORED THE MATTER BACK TO THE AO FOR PASSING FRES H ORDER AFTER MAKING NECESSARY VERIFICATION. THE AO ACCORDINGLY PASSED T HE ORDER DATED 11-01-2005 AFTER MAKING CERTAIN ADDITIONS WHICH WER E PARTLY CONFIRMED BY THE LEARNED CIT(A) AS UNDER: SR. NO. DETAILS ADDITION MADE BY AO ADDITION CONFIRMED BY CIT(A) 1 INVESTMENT IN UNRECORDED PURCHASES AND PROFIT THEREOF 362,696 167,422 2 ADDITION ON ACCOUNT OF PROFIT ON UNRECORDED PURCHASES 207,889 207,889 3 UNRECORDED EXPENSES 2,021 2,021 4 UNEXPLAINED LOAN AND INTEREST 23,442 23,442 TOTAL 596,048 400,774 4. THE LEARNED CIT(A) ON MERIT, THEREFORE, CONFIRME D THE ADDITIONS TO THE EXTEND OF RS.4,00,774/-. THE AO VIDE SEPARATE O RDER IMPOSED PENALTY U/S 271(1) ( C ) OF THE IT ACT FOR A SUM OF RS.80,7 95/-. 5. THE PENALTY ORDER WAS CHALLENGED BEFORE THE LEAR NED CIT(A) AND THE ASSESSEE GAVE EXPLANATION ON THE SAME WHICH ARE REC ORDED IN THE IMPUGNED ORDER. THE LEARNED CIT(A) HOWEVER, CONFIRM ED THE PENALTY ORDER AND DISMISSED THE APPEAL OF THE ASSESSEE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FILED COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF THE SAME ASSESSEE IN ITA NO .2757/AHD/2005 FOR ASSESSMENT YEAR 1992-93 DATED 17-10-2008 WHERE THE APPEAL OF THE ASSESSEE WAS ALLOWED ON MERIT PARTLY. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL HAS DELETED TH E ENTIRE ADDITION OF RS.3,62,696/- ON ITEM NO.1. AS REGARDS ADDITION OF RS.2,07,889/-, THE TRIBUNAL CONFIRMED THE ADDITION BECAUSE THE ASSESSE E FAILED TO ESTABLISH THE FACT AND NO CONFIRMATION FROM SISTER CONCERNS H AS BEEN FILED. THE ITA NO.3534/AHD/2007 M/S. VIJAY CLOTH CENTRE VS ITO 3 LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO MADE THE ADDITION ON THE BASIS OF PAGE 42 OF ANNEXURE X-43 W HICH CONTAINS CERTAIN FIGURES WHICH ACCORDING TO THE ASSESSEE PER TAIN TO ASSESSMENT YEAR 1988-89 OF THE SISTER CONCERNS NAMELY M/S. BAN SIDHAR SELECTION AND M/S. BANSIDHAR, ASHRAM ROAD. HE HAS SUBMITTED T HAT THE FIGURES IN THE SEIZED PAPERS TALLY WITH THE BALANCE SHEET OF T HE ABOVE SISTER CONCERNS. HE HAS SUBMITTED THAT DUE TO BONA FIDE MI STAKE THE TRUE COPIES COULD NOT BE FILED BEFORE THE AUTHORITIES BE LOW WHICH ARE NOW FILED IN THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE I S ALSO IN A POSITION TO FILE CONFIRMATION BEFORE THE AUTHORITIES BELOW AND EXPLAINED THAT FIGURES MENTIONED IN THE SEIZED PAPERS BELONG TO THE SISTER CONCERNS AND NOT TO THE ASSESSEE. HE HAS SUBMITTED THAT QUANTUM AND PEN ALTY PROCEEDINGS ARE DIFFERENT PROCEEDINGS, THEREFORE, PENALTY SHOUL D NOT BE LEVIED ON SUCH ITEM. THE LEARNED COUNSEL WITH REGARD TO OTHER ADDI TIONS ON ACCOUNT OF UNRECORDED EXPENSES AND UNEXPLAINED LOAN AND INTERE ST RELIED UPON THE SUBMISSIONS MADE EARLIER AND SUBMITTED THAT THESE A RE SMALL AMOUNTS ON WHICH PENALTY SHOULD NOT BE LEVIED, DESPITE ON Q UANTUM ADDITIONS HAVE BEEN CONFIRMED. ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE SEIZED PAPERS WERE FOUND DURING THE COURSE OF SEARCH ON THE BASIS OF WHICH ABOVE ADDITIONS HAVE BEEN MADE. HE HAS SUBMITTED THAT EXC EPT ONE ADDITION ALL OTHER ADDITIONS HAVE BEEN CONFIRMED. THEREFORE, IT IS A FIT CASE OF CONCEALMENT OF INCOME AND PENALTY WAS, THEREFORE, R IGHTLY IMPOSED BY THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ADDITIONS HAVE BEEN MADE BY THE AO ON THE BASIS OF THE SEIZED MATERIALS FOUND DURING THE COURSE OF SEARCH. THE ADDITION OF RS.3,62,696/- WAS PARTLY MODIFIED BY THE LEARNED CIT(A) ON ACCOUNT OF INVESTMENT IN UNRE CORDED PURCHASES AND PROFIT THEREOF. THE TRIBUNAL HOWEVER, VIDE ORDE R DATED 17-10-2008 ITA NO.3534/AHD/2007 M/S. VIJAY CLOTH CENTRE VS ITO 4 DELETED THE ENTIRE ADDITION. SINCE ON QUANTUM ADDIT ION IS DELETED, THEREFORE, NO PENALTY COULD BE IMPOSED ON SUCH AMOU NT. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND C ANCEL THE PENALTY ON THE AMOUNT OF RS.3,62,696/- AS MODIFIED BY THE LEAR NED CIT(A) TO RS.1,67,422/-. THE APPEAL OF THE ASSESSEE TO THAT E XTENT IS ALLOWED. 7.1 AS REGARDS ADDITION OF RS.2,07,889/- MADE ON AC COUNT OF PROFIT ON UNRECORDED PURCHASES, THE AO NOTED IN THE PENALTY O RDER THAT SUCH ADDITION HAS BEEN MADE ON THE BASIS OF DETAILS CONT AINED IN THE SEIZED PAPERS ANNEXURE X-43 WHICH WAS NOT FOUND RECORDED I N THE BOOKS OF ACCOUNT OF THE ASSESSEE. THIS ISSUE WAS NOT EXPLAIN ED BY CONFIRMATION ETC. THEREFORE, AO LEVIED THE PENALTY U/S 271 (1) ( C ) OF THE IT ACT. THE AO HOWEVER, NOTED THAT THE ASSESSEE DID NOT FILE AN Y AUTHENTICATED COPIES OF TRADING ACCOUNT OF THE SISTER CONCERNS AN D NO CONFIRMATION WAS FILED. THEREFORE, PENALTY WAS IMPOSED IN THE ABSENC E OF CONCRETE EVIDENCE AS WELL AS SUPPORTING EVIDENCE. THE LEARNED CIT(A) CONFIRMED THE PENALTY BECAUSE THE MATERIAL FOUND DURING THE COURSE OF SEA RCH WAS NOT FOUND RECORDED IN THE BOOKS OF ACCOUNT. HOWEVER, WE FIND FROM THE DETAILS FILED IN THE PAPER BOOK THAT ANNEXURE X-43 BEING SEIZED M ATERIAL SHOWS THE FIGURE OF SALES AND PURCHASES. THE LEARNED COUNSEL FOR THE ASSESSEE EXPLAINED THAT SAME FIGURES BELONG TO THE SISTER CO NCERNS NAMELY M/S. BANSIDHAR SELECTION AND M/S. BANSIDHAR, ASHRAM ROAD . COPIES OF THEIR BALANCE SHEET AND TRADING AND PROFIT & LOSS ACCOUNT WERE FILED ALONG WITH THE ORDER U/S 143(1) SHOWING BOTH THE SISTER CONCER NS ARE ASSESSEES. THE AO NOTED IN THE PENALTY ORDER THAT THOUGH THE ASSES SEE CLAIMED THE FIGURES IN THE SEIZED PAPERS BELONG TO THE SISTER C ONCERNS, BUT NO AUTHENTICATED PHOTO COPIES OF TRADING ACCOUNT OF TH E SISTER CONCERNS HAVE BEEN FILED. IT IS SETTLED LAW THAT PENALTY AND QUAN TUM PROCEEDINGS ARE DIFFERENT PROCEEDINGS AND IF DOCUMENTS ARE FILED AT THE PENALTY STAGE TO EXPLAIN THE ADDITION, THE SAME SHOULD HAVE BEEN CON SIDERED FOR PROPER APPRECIATION OF THE FACTS ON RECORD. THE COPIES OF THE BALANCE SHEET OF THE ITA NO.3534/AHD/2007 M/S. VIJAY CLOTH CENTRE VS ITO 5 SISTER CONCERNS PRIMA FACIE SHOW THAT THE FIGURES O F THE SALES AND PURCHASES FOUND IN THE SEIZED PAPERS TALLIED WITH T HE FIGURES OF TRADING ACCOUNT AND BALANCE SHEET OF THE SISTER CONCERNS. B OTH THE SISTER CONCERNS ARE ASSESSED TO TAX. THEREFORE, THESE ARE PART OF THE RECORDS OF THE REVENUE DEPARTMENT. ONCE THE ASSESSEE RAISED CO NTENTION THAT THE FIGURES IN THE SEIZED PAPERS BELONG TO THE SISTER C ONCERNS, THE AO SHOULD HAVE VERIFIED THE DETAILS FROM THE RECORD WITH THE REVENUE DEPARTMENT. HOWEVER, THE AO HAS FAILED TO TAKE ANY STEP IN THE MATTER. SINCE THESE TRUE COPIES IN THE SIGNATURE OF THE SISTER CONCERNS ARE FILED IN THE PAPER BOOK FOR THE FIRST TIME, THEREFORE, WE ARE OF THE V IEW THAT THE MATTER REQUIRES VERIFICATION AT THE LEVEL OF THE AO. WE AC CORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND R ESTORE THE ISSUE TO THE FILE OF THE AO WITH DIRECTION TO VERIFY THE FIGURES CONTAINED IN THE SEIZED PAPERS TO THAT OF THE TRADING AND PROFIT & LOSS ACC OUNT AND BALANCE SHEET OF THE SISTER CONCERNS OF THE ASSESSEE. THE ASSESSE E IS DIRECTED TO FILE THE SAME COPIES OF THE AUTHENTICATED DOCUMENTS BEFORE T HE AO FOR THE PURPOSE OF VERIFICATION OF THE AO. THE AO ON VERIFI CATION OF THE MATERIALS OR FROM THE RECORD OF THE REVENUE DEPARTMENT MAY PA SS SPECIFIC ORDER AS TO WHETHER PENALTY MAY BE IMPOSED IN THE MATTER OR NOT. THE AO WILL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THIS REGARD. AS A RESULT, PART OF THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7.2 AS REGARD UNRECORDED EXPENSES AND UNEXPLAINED L OAN AND INTEREST, THE AO IN THE PENALTY ORDER NOTED THAT THE ABOVE FI GURES WERE FOUND FROM THE SEIZED MATERIAL WHICH WAS NOT RECORDED IN THE B OOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE ADMITTED AT THE PENALTY STAG E THAT THESE EXPENDITURE AND ENTRIES WERE NOT RECORDED IN THE BO OKS OF ACCOUNT. THE ASSESSEE, THEREFORE, ADMITTED INACCURATE PARTICULAR S WHICH WERE FOUND IN THE RETURN OF INCOME. NO EXPLANATION IS FILED WITH REGARD TO BOTH THE ITEMS AT THE PENALTY PROCEEDINGS. ITA NO.3534/AHD/2007 M/S. VIJAY CLOTH CENTRE VS ITO 6 7.3 HONBLE MADHYA PRADESH HIGH COURT IN THE CASE O F RUKMINIBAI VS CIT 276 ITR 650 AND IN THE CASE OF VIMAL GINNING AN D PRESSING FACTORY VS CIT 279 ITR 100 HELD THAT WHEN NO EXPLANATION OFFERED WHEN PENALTY PROCEEDINGS WERE INITIATED, IMPOSITION OF P ENALTY U/S 271 (1) ( C ) IS VALID. CONSIDERING THE ABOVE FACTS AND THAT THE ASSESSEE FAILED TO EXPLAIN BOTH THE ADDITIONS MADE ON THE BA SIS OF THE SEIZED MATERIALS, WE DO NOT FIND IT TO BE A FIT CASE FOR I NTERFERENCE. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO FAILED TO EXPLAIN BOT H THE ADDITIONS THROUGH ANY MATERIAL ON RECORD. THEREFORE, IT IS A FIT CASE OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOM E FOR A SUM OF RS.2,021/- AND RS.23,442/-. WE CONFIRM THE FINDINGS OF THE AUTHORITIES BELOW AND CONFIRM THE LEVY OF PENALTY ON THE ABOVE AMOUNTS. AS A RESULT, PART OF THIS GROUND OF APPEAL OF THE ASSESSEE IS DI SMISSED. 8. AS A RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED ON 14-05-2010 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 14-05-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD