ITO 20(1)(1), MUMBAI V. ANIL T, MEHRA, MUMBAI

ITA 3593/MUM/2009

• Counselvise Citation: 359319914 RSA 2009
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-06-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 02-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIN KUMAR MODI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: MUMBAI BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.3593/MUM/2009 (ASSESSMENT YEAR: 2003-04) ITO 20(1)(1), ROOM NO.702, 7TH FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI -400 012 ...... APPELLANT VS SHRI ANIL T. MEHRA, PROP. OF M/S. ANCONS, B-208, AYUSHI APARTMENTS, J.B. NAGAR, ANDHERI (EAST), MUMBAI -400 059 ..... RESPONDENT PAN: AAHPM 1904 A APPELLANT BY: SHRI ASHIN KUMAR MODI RESPONDENT BY: NONE DATE OF HEARING: 30.11.2011 DATE OF PRONOUNCEMENT: 28.12.2011 O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A) MUMBAI DATED 03.03.2009 FOR THE A.Y . 2003-04. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPE AL:- I. THE LEARNED CIT (A) HAS ERRED ON FACTS AND IN L AW AND IN THE CIRCUMSTANCES OF THE CASE IN DELETING THE ADDIT ION OF ` 35 LAKHS MADE BY THE AO AS PER THE DECLARATION MADE BY THE ASSESSEE AT THE TIME OF SURVEY U/S.133A AND CON FIRMED ON OATH U/S.131 OF THE I.T. ACT. II. THE LEARNED CIT (A) HAS ERRED ON FACTS AND IN LAW A ND IN THE CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING T HE FACTS ITA 3593/MUM/2009 SHRI ANIL T. MEHRA 2 THAT THE DEPB INCOME HAS ARISING OUT OF THE EXPORT ACTIVITY OF THE ASSESSEE AND NOT FROM THE MANUFACTURING OF PRODUCTION ACTIVITY OF THE ASSESSEE AND THE SAID IN COME IS NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING. FAILE D TO APPRECIATE THE FACTS THAT THE ASSESSEE IN HIS STATE MENT ON OATH U/S.131 OF THE I.T. ACT, ACCEPTED THE INFLATIO N IN EXPENSES CLAIMED AND NOW REFLECTED AS LIABILITY ON ACCOUNT OF SUNDRY CREDITORS FOR GOODS AND EXPENSES AND OFFE RED ADDITIONAL INCOME OF ` 35 LAKHS AS PER THE PROVISION OF SEC.41(1) OF THE I.T. ACT FOR THE A.Y. 2002-03 AND UNDERTOOK TO MAKE NECESSARY ENTRIES IN HIS BOOKS TO REDUCE TH E LIABILITY ON ACCOUNT OF SUNDRY CREDITORS FOR GOODS AND EXPENSES AS ONE THE LAST DAY OF SURVEY. III. THE LEARNED CIT (A) HAS ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING T HE DECISION OF BOMBAY HIGH COURT IN THE CASE OF SHRI R AMDAS MOTROR TRANSPORT LTD. (2002) 251 ITR 428 AND DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF UNION SINGH CH ABRIA VS. UNION OF INDIA (1 SCC 508) WHICH DEAL DIRECTLY WITH THE SAME ISSUE. IV. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT ( A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. IN THIS CASE, LD. D.R. FOR THE ASSESSEE IS PRESE NT AND NONE IS PRESENT FOR THE ASSESSEE. IT IS SEEN THAT THE NOTI CE HAS BEEN PROPERLY SERVED ON THE ASSESSEE. ON THE LAST DATE OF THE HE ARING I.E. 11.10.2001 NONE REMAINED PRESENT FOR THE ASSESSEE. WE ARE, THEREFORE, OF THE OPINION THAT THE ASSESSEE IS NOT INTERESTED IN DEFENDING HIS APPEAL, HENCE, WE PROCEED TO DISPOSE OFF THIS APPEAL ON ITA 3593/MUM/2009 SHRI ANIL T. MEHRA 3 MERIT AFTER HEARING THE LD. D.R. AND AS PER THE MAT ERIAL AVAILABLE ON RECORD. 3. THE FIRST ISSUE IS REGARDING THE DELETION OF THE ADDITION MADE BY THE A.O. IN RESPECT OF THE DISCLOSURE MADE BY THE A SSESSEE IN THE SURVEY ACTION U/S.133A OF ` 35 LAKH. 4. BRIEFLY STATED FACTS WHICH ARE REVEALED FROM THE RECORDS AS UNDER. IT APPEARS THAT THE ASSESSEE WAS NOT FILING THE REGULAR RETURNS. ASSESSMENT FOR THE A.Y. 2003-04 WAS COMPLETED U/S.1 44 OF THE ACT AS THE ASSESSEE DID NOT RESPOND TO THE VARIOUS NOTICES ISSUED BY THE A.O. IN THE SAID ASSESSMENT, THE ASSESSEES INCOME WAS D ETERMINED U/S.44AD AS THE ASSESSEE WAS ENGAGED IN THE BUSINES S OF THE CIVIL CONSTRUCTION. AFTER CALLING THE INFORMATION FROM T HE BANK WHERE THE ASSESSEE WAS MAINTAINING HIS ACCOUNT. THERE WAS SU RVEY ACTION AGAINST THE ASSESSEE ON 13.08.2002 U/S.133A OF THE ACT AND DURING THE COURSE OF THE SURVEY THE ASSESSEE HAD DECLARED ` 35 LAKHS AS HIS ADDITIONAL INCOME OVER AND ABOVE THE INCOME FOR THE A.Y. 2003-04. THE LD. CIT (A) MUMBAI SET ASIDE THE ASSESSMENT ORD ER AND DIRECTED THE A.O. TO REFRAME THE ASSESSMENT FILED FOR THE A. Y. 2003-04. AS PER THE DIRECTIONS OF THE LD. CIT (A) MUMBAI THE A.O. T HE A.O. PROCEEDED TO FRAME THE FRESH ASSESSMENT IN THE LIGHT OF THE D ECLARATION MADE BY THE ASSESSEE IN THE SURVEY ACTION. THE A.O. ISSUED QUESTIONNAIRE TO THE ASSESSEE. THE ASSESSEE CONTENDED THAT THE DECL ARATION OF INCOME OF ` 35 LAKHS WAS OBTAINED UNDER COERSION AND FORCE BY THE SURVEY PARTY. 5. THE A.O. REJECTED THE SAID PLEA OF THE ASSESSE E BY NOTING THAT THE SURVEY WAS CONDUCTED IN PEACEFUL MANNER AND NO THREAT OR COERSION WAS USED BY THE SURVEY PARTY. THE A.O. HA S NOTED THAT DURING THE SURVEY PROCEEDINGS THE UNDER STATEMENT O F INCOME WAS WORKED OUT BY THE SURVEY PARTY AND ON THE BASIS OF THE SAID WORKING THE ASSESSEE MADE DECLARATION. IT WAS NOTICED BY T HE SURVEY PARTY ITA 3593/MUM/2009 SHRI ANIL T. MEHRA 4 THAT FOR THE A.Y. 1996-97 TO A.Y. 2001-02 THE ASSES SEE HAS GROSS CONTRACT RECEIPTS OF ` 9,93,56,249/- ON WHICH THE ASSESSEE HAD DECLARED THE NET PROFIT AT ` 38,50,458/-. IN THE OPINION OF THE A.O. CONSIDERING THE PROVISIONS OF SEC.45AD OF THE ACT, THE ASSESSEE SHOULD HAVE DECLARED THE NET PROFIT @ 8% I.E. ` 9,93,56,244/- WHICH WAS WORKED AT ` 79,48,499/- AND THE ASSESSEE HAS DECLARED THE PROF IT OF ` 38,50,458/- FOR ABOVE SIX ASSESSMENT YEARS. IN THE OPINION OF THE A.O. THERE WAS SUFFICIENT MATERIAL RECOVERED BY THE SURVEY PARTY AND HENCE, THE ASSESSEE HIMSELF HAD MADE VOLUNTARY OFFE RED ADDITIONAL INCOME. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A) RAISING THE DIFFERENT GRIEVANCES IN RESPECT OF DECLARATION/ OFFER OF INCOME, HOW SAME WAS OBTAINED DURING SURVEY OPERATION. BEFORE THE LD. CIT (A) THE ASSESSEE CONTENDED THAT NO EVIDENCE OR INCRIMIN ATING MATERIAL WAS FOND IN THE SURVEY ACTION TO PROVE THAT THE ASSESSE E HAS UNDERSTATED THE INCOME TO THE EXTENT OF ` 35 LAKHS FOR THE SIX ASSESSMENT YEARS AND ONLY ON THE ESTIMATE BASIS SO CALLED SUPPRESSED PROFIT WAS DETERMINED. IT WAS ALSO PLEADED THAT ON THE BASIS OF THE GROSS RECEIPTS OF THE PRECEDING SIX YEARS, THE ADDITION IS MADE IN THE A.Y. 2003-04 AND NO WHERE IT IS THE CASE OF THE A.O. THAT TO THA T EXTENT THE ASSESSEE HAS UNDERSTATED INCOME FOR THE A.Y. 2003-04. THE L D. CIT (A) ACCEPTED THE PLEA OF THE ASSESSEE AND DELETED THE E NTIRE ADDITION AND OPERATIVE PART OF THE ORDER OF THE LD. CIT (A) IS A S UNDER:- 4.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND THE ARGUMENTS AND SUBMISSIONS OF THE AR AS DISCUSSED AB OVE FOR DECIDING THIS GROUND OF APPEAL. IT IS NOTICED THAT THE ADDITION OF RS.35 LAKHS DECLARED BY THE APPELLANT DURING THE SU RVEY PROCEEDINGS IS WORKED OUT ON THE BASIS OF DIFFERENC E BETWEEN THE ESTIMATION OF THE APPELLANTS INCOME @ 8% OF THE GR OSS CONTRACT RECEIPTS FOUND TO BE CREDITED IN HIS BANK ACCOUNT, PERTAINING TO THE ASSESSMENT YEARS 1996-97 TO 2001-02 AND THE NET PROFIT ALREADY DISCLOSED BY THE APPELLANT IN HIS RESPECTIV E RETURNS OF INCOME. THIS IS EVIDENT FROM THE RELEVANT PART OF THE ASSESSMENT ITA 3593/MUM/2009 SHRI ANIL T. MEHRA 5 ORDER REPRODUCED ABOVE, WHEREIN THE AO HAS COMPUTED ESTIMATED INCOME OF THE APPELLANT @ 8% OF GROSS CONTRACT RECE IPT OF ` 79,48,499/- AND REDUCED THERE FROM THE NET PROFIT A S PER RETURN OF INCOME ALREADY DISCLOSED IN THE RESPECTIVE ASSESSME NT YEARS OF ` 38,50,556/- AND, ACCORDINGLY WORKED OUT THE DIFFERE NCE AS UNDER STATEMENT OF INCOME OF ` 40,98,071/- OF THE APPELLANT . THE AO, THEREFORE, TAKING INTO CONSIDERATION, THE DECLARATI ON OF THE APPELLANT MADE ADDITIONS OF ` 35 LACS INSTEAD OF ` 40,98,041/- COMPUTED FOR THIS PURPOSE, AS DISCUSSED ABOVE. FRO M THE WORKING AS WELL AS THE MANNER OF COMPUTATION RESORT ED TO FOR THE COMPUTATION OF UNDERSTATED INCOME OF THE APPELLANT, AS NOTED ABOVE, IT IS CLEAR THAT SAME IS PURELY BASED ON AD- HOC BASIS, WITHOUT BRINGING ANY EVIDENCE ON RECORD. EVEN OTHER WISE, IF THE SAID ESTIMATION IS CONSIDERED TO BE CORRECT, THE AD DITION WORKED OUT SHOULD HAVE BEEN MADE IN THE RESPECTIVE ASSESSM ENT YEARS AND NOT IN THE PRESENT ASSESSMENT YEAR. IT IS A SET T1ED LAW THAT AS PER THE SCHEME OF THE INCOME-TAX ACT, THE INCOME OF AN ASSESSEE FOR A PARTICULAR PERVIOUS YEAR RELEVANT TO THE CONCERNED ASSESSMENT YEAR IS ONLY TO BE ASSESSED IN THE RELEV ANT ASSESSMENT YEAR. THE INCOME PERTAINING TO ONE YEAR CANNOT BE CLUBBED OR ASSESSED IN ANOTHER ASSESSMENT YEAR. IF THE AO HAD VALID REASONS OR EVIDENCE THAT THE APPELLANT HAS CO NCEALED OR NOT DISCLOSED INCOME OF A PARTICULAR ASSESSMENT YEAR, T HE VARIOUS PROVISIONS OF THE ACT REQUIRE THAT THE CONCERNED AS SESSMENT YEAR SHOULD HAVE BEEN REOPENED AND THE INCOME SO FOUND A ND NOT DISCLOSED IN THE RELEVANT ASSESSMENT SHOULD HAVE BE EN RE- ASSESSED AS PIE LAW. HOWEVER, FROM THE FACTS AS DIS CUSSED ABOVE, THE AO INSTEAD OF FOLLOWING THE REQUIRED PRO VISIONS OF LAW, CHOSEN TO COMPUTE THE ENTIRE SUCH ADDITIONAL INCOME PERTAINING TO A.YRS1996-97 TO 2001-02, IN THE A.Y.2003-04. I FIND THAT SAME IS NOT WARRANTED SINCE THE SAME IS FOUND TO BE CONTRAR Y TO THE BASIC PROVISIONS OF THE ACT. THE DECLARATION OR DISCLOSUR E MADE BY THE APPELLANT DURING THE SURVEY BASED ON ABOVE MENTION ED FACTS ARE ITA 3593/MUM/2009 SHRI ANIL T. MEHRA 6 ALSO FOUND TO HE AGAINST THE BASIC PROVISIONS OF TH E ACT. THERE IS NO MATERIAL OR EVIDENCES BROUGHT ON RECORD, WHICH S UGGEST THAT THE APPELLANT HAS EARNED THE DECLARED INCOME IN THE PREVIOUS YEAR RELEVANT TO CURRENT ASSESSMENT YEAR. THERE IS NO EVIDENCE OR FINDINGS BROUGHT ON RECORD BY SURVEY TEAM OR BY THE AO, IN THE ASSESSMENT ORDER THAT ANY UNDISCLOSED ASSET, CASH O R BULLION WAS FOUND DURING THE SURVEY, FOR MAKING SUCH AN ADD ITION IN THE HANDS OF THE APPELLANT IN THE RELEVANT ASSESSMENT Y EAR. ON THE CONTRARY, FROM THE ASSESSMENT ORDER, IT IS MORE THA N EVIDENT THAT THE ADDITION IS MADE BLINDLY FOLLOWING THE DECLARAT ION OF THE APPELLANT WORKED OUT ON THE BASIS OF DIFFERENCE BET WEEN ESTIMATED INCOME COMPUTED FOR THE A.YRS.1996-97 TO 2001-02 AND THE NET PROFIT DISCLOSED IN THE CONCERNED ASSESSMEN T YEARS AS DISCUSSED ABOVE. THERE ARE NO EVIDENCES OR ANY INCR IMINATING MATERIAL FOUND IN SURVEY TO SUGGEST THAT THE NET PR OFIT SHOWN IN THE CURRENT ASSESSMENT YEARS IS UNDERSTATED BY THE APPELLANT TO THE EXTENT OF ` 35 LAKHS. 4.3.1 THE INCOME PERTAINING TO THE CURRENT ASSESSM ENT YEAR AS DISCUSSED ABOVE IN THE PARA 3 OF THIS ORDER IS SEPA RATELY WORKED OUT @ 8% OF HIS GROSS CONTRACT RECEIPTS CREDITED IN HIS BANK ACCOUNT, IN THE ABSENCE OF PROPER BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT. THEREFORE, BASED ON THESE FACTS AND AFORESAID DISCUSSION, I AM OF THE CONSIDERED OPINION THAT THE AO IS NOT JUSTIFIED IN MAKING SUCH AN ADDITION OF ` 35 LAKHS IN THE EASE OF THE APPELLANT FOR THE CURRENT ASSESSMENT YEAR. I AL SO FIND THAT THE DECLARATION MADE BY THE APPELLANT IN THE ABSENCE OF SUPPORTING DOCUMENTARY EVIDENCES IS OF NO USE OR HELP. IF THER E IS NO EVIDENCE AGAINST THE APPELLANT TO PROVE THE ABOVE A DDITION MADE, I AM OF THE CONSIDERED OPINION THAT UNDER THE GIVEN CIRCUMSTANCES, AO IS NOT REQUIRED TO MAKE THE ADDIT ION, JUST OF THE SAKE OF MAKING AN ADDITION. NEVERTHELESS, EVEN IF I T IS CONSTRUED THAT THE AO IS FAIR AND REASONABLE TO ESTIMATE NET CONTRACT INCOME ITA 3593/MUM/2009 SHRI ANIL T. MEHRA 7 OF THE APPELLANT @ 8% OF GROSS CONTRACT RECEIPTS FO R THE RELEVANT ASSESSMENT YEARS, I FIND THAT THE AO SHOULD HAVE PR OCEEDED TO RE-ASSESS THE ESCAPED INCOME OF RELEVANT ASSESSMENT YEARS OF THE APPELLANT, AS PER VARIOUS PROVISIONS OF THE ACT. HI S ACTION TO ASSESS THE INCOME PERTAINING TO A.Y. 1996-97 TO 200 1-02 IN THE A.Y. 2003-04, AS DISCUSSED ABOVE, IS FOUND TO BE WI THOUT ANY EVIDENCE OR BASIS AND THEREFORE, I CONSIDER THE SAM E TO BE UNJUSTIFIED AND UNWARRANTED. THEREFORE, THE AO IS DIRECTED TO DELETE THE ENTIRE ADDITION OF ` 35 LAKHS MADE ON THIS ACCOUNT. THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 5. NOW, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE LD. D.R. WHO STRONGLY SUPPORTE D THE ORDER OF THE A.O. WE HAVE GONE THROUGH THE ASSESSMENT ORDER . WE FIND THAT THE A.O. HAS CONSIDERED THE ASSESSMENT ORDERS FOR A .YS. 1996-97, 1997-98,1998-99,1999-2000,2000-2001 AND 2001-02 FOR THE ALLEGED UNDERSTATEMENT OF THE INCOME AS PER THE WORKING MAD E BY THE A.O. IF AT ALL THE INCOME WAS UNDERSTATED BY THE ASSESSEE T HEN THE SAME SHOULD BE IN THE PRECEDING YEARS AND NOT IN THE A.Y . 2003-04. NOTHING IS THERE ON RECORD FOR THE A.Y. 2003-04 TO PROVE THAT THE ASSESSEE HAS UNDERSTATED THE INCOME FOR THE A.Y. 20 03-04. WE, THEREFORE, CONCUR WITH THE VIEW OF THE LD. CIT (A) THAT THE ALLEGED UNDERSTATEMENT OF THE INCOME HAS NO RELEVANCE TO TH E A.Y. 2003-04. IN OUR OPINION, THE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION AND WE ACCORDINGLY CONFIRM THE SAME. 7. THE LD. COUNSEL SUBMITS THAT THE REVENUE HAS ALS O DECLARED GROUND ON THE DEPB WHICH IS BY A MISTAKE AND HAS NO RELEVANCE WITH THE PRESENT ASSESSEE. HE FURTHER SUBMITS THAT NO I SSUE IS ARISING IN RESPECT OF THE ADDITION U/S.41(1), HENCE, THE GROUN D ON THE SAID ISSUE IS WRONGLY TAKEN. AS THE ISSUE OF THE DEPB AND ADD ITION U/S.41(1) ITA 3593/MUM/2009 SHRI ANIL T. MEHRA 8 HAS NO RELEVANCE WITH THE ASSESSMENT MADE BY THE A. O. THE SAID GROUNDS ARE INFRUCTUOUS AND WE DISMISS THE SAME. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 8TH DECEMBER, 2011. SD/- SD/- ( G.E. VEERABHADRAPPA ) PRESIDENT ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE : 28TH DECEMBER, 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-XX, MUMBAI. 4) THE CIT- 20, MUMBAI. 5) THE D.R. A BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ORDER PRONOUNCED IN THE OPEN COURT ON 28.12.2011 SD/- SD/- (JSR) (RSP) ITA 3593/MUM/2009 SHRI ANIL T. MEHRA 9 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 07.12.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 13.12.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER