Sh. Ajay Goel, Shimla V. DCIT, CC-II, Chandigarh

ITA 395/CHANDI/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6405 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 02-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUR ALYA
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Search and seizure; Document seized; Documents seized
• Section: 271(1)(c); 143(3); 50C; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH , !' #! $ % , &' BEFORE: SHRI SANJAY GARG, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NOS.395 TO 397/CHD/2018 / ASSESSMENT YEARS : 2010-11 & 2011-12 SH.AJAY GOEL, GOEL PLAZA, RAM BAZAR, SHIMLA. THE D.C.I.T., CENTRAL CIRCLE-I1, CHANDIGARH. ./PAN NO: ABHPG6306K /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADV. ! / REVENUE BY : SHRI ANKUR ALYA, SR. DR '# $ /DATE OF HEARING : 15.11.2018 %&'(# /DATE OF PRONOUNCEMENT: 18.01.2019 &( /ORDER PER ANNAPURNA GUPTA, AM : ALL THE ABOVE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, GURGAON (IN SHORT CIT(A) DATED 16. 2.2018, 25.1.2018 AND 25.1.2018 RELATING TO ASSESSMENT YEAR S 2010- 11, 2010-11 AND 2011-12 PASSED U/S 250 (6) OF THE I NCOME TAX ACT, 1961 (IN SHORT REFERRED TO AS ACT), CONF IRMING THE LEVY OF PENALTY U/S 271AAA, U/S 271(1)(C) AND U/S 2 71(1)(C) OF THE ACT RESPECTIVELY. 2. SINCE ALL THE APPEALS RELATE TO THE SAME ASSESSE E AND INVOLVE COMMON ISSUES ALSO, THEY WERE TAKEN UP TOGE THER FOR ITA NOS.395 TO 397/CHD/2018 A.YS.2010-11 & 2011-12 2 HEARING AND ARE DISPOSED OFF BY THIS COMMON CONSOLI DATED ORDER. WE SHALL FIRST BE TAKING UP THE ASSESSEES APPEAL IN ITA NO.395/CHD/2018 PERTAINING TO ASSESSMENT YEAR 2010- 11 CHALLENGING THE ACTION OF THE LD.CIT(A) IN CONFIRMI NG PENALTY LEVIED U/S 271AAA OF THE ACT VIDE HIS ORDER DATED 1 6.2.2018. ITA NO.395/CHD/2018(A.Y.2010-11): 3. AT THE OUTSET LD. COUNSEL FOR ASSESSEE STATED T HAT THE ADDITIONS ON WHICH PENALTY HAD BEEN LEVIED IN THE P RESENT CASE HAD BEEN RESTORED BACK TO THE ASSESSING OFFICE R (IN SHORT AO) BY THE I.T.A.T. IN THE APPEAL FILED BY THE ASSESSEE IN QUANTUM PROCEEDINGS VIDE ITS ORDER DATE D 13.6.2018 IN ITA NO.136/CHD/2015. 4. DRAWING OUR ATTENTION TO THE FACTS AS STATED IN THE ORDER OF THE CIT(A) AT PARA 4, IT WAS POINTED OUT T HAT THE PENALTY IN THE PRESENT CASE HAD BEEN LEVIED U/S 271 AAA OF THE ACT ON THE FOLLOWING ADDITIONS MADE BY THE A.O. IN ASSESSMENT COMPLETED U/S 153B(1)(B) R.W.S. 143(3) O F THE ACT IN PURSUANCE TO SEARCH AND SEIZURE OPERATION U/ S 132(1) OF THE ACT CONDUCTED ON THE GOEL GROUP OF CA SES ON 8.10.2010 AS UNDER: A) RS.99,96,580/- ON ACCOUNT OF BOGUS LIABILITY ON ACCOUNT OF LABOUR CHARGES. B) RS.1,72,20,000/- ON THE BASIS OF SEIZED DOCUMENTS ON ACCOUNT OF UNACCOUNTED SALES TRANSACTION. ITA NOS.395 TO 397/CHD/2018 A.YS.2010-11 & 2011-12 3 5. IT WAS POINTED OUT THAT SHRI AJAY GOEL WAS PROPR IETOR OF SHIMLA GOEL PROPERTIES AND SHIMLA GOEL BUILDWELL PVT. LTD. AND DURING SEARCH CONDUCTED ON HIM A SURRENDE R OF RS.50 LAKHS HAD BEEN MADE TO COVER UP LABOUR EXPEN SES SHOWN AS PAYABLE AND BOOKED IN EXPENSES ON DEVELOPM ENT OF LAND SOLD AT VILLAGE SARGEEN. THE A.O. NOTED THA T THE TOTAL DEVELOPMENT COST INCURRED DURING THE IMPUGNED YEAR INCLUDED LABOUR CHARGES PAYABLE OF RS.99,96,580/- A S AT THE END OF THE YEAR AND SINCE AS PER THE SURRENDER MADE BY THE ASSESSEE THE ENTIRE OUTSTANDING LIABILITY ON ACCOUN T OF LABOUR CHARGES WAS BOGUS, HE FOUND THE SURRENDER MA DE BY THE ASSESSEE INADEQUATE AND ADDED THE DIFFERENCE AMOUNTING TO RS.49,96,580/- TO THE INCOME OF THE AS SESSEE. HOWEVER PENALTY PROCEEDINGS WERE INITIATED U/S 271A AA OF THE ACT ON THE ENTIRE AMOUNT OF LABOUR CHARGES ADMI TTED BY THE ASSESSEE AS BOGUS OF RS.99,96,580/-AND PENALTY LEVIED ON THE SAME. THE LD.CIT(A) DELETED THE PENALTY LEVI ED ON THE LABOUR CHARGES SURRENDERED BY THE ASSESSEE TO THE E XTENT OF RS50 LAKHS, HOLDING THAT NO PENALTY WAS LEVIABLE SI NCE THE ASSESSEE HAD SURRENDERED THE SAME IN HIS STATEMENT U/S 132(4) OF THE ACT. HOWEVER HE UPHELD PENALTY LEVIED ON THE BALANCE AMOUNT OF RS. 49,96,580/- 6. THE LD. COUNSEL FOR ASSESSEE THEREAFTER POINTED OUT THAT THE I.T.A.T. HAD DECIDED THE QUANTUM APPEAL FI LED BY THE ASSESSEE FOR THE IMPUGNED YEAR BEFORE IT RESTOR ING THE IMPUGNED ISSUE BACK TO THE FILE OF THE A.O. COPY OF THE ORDER WAS PLACED BEFORE US. OUR ATTENTION WAS DRAWN TO THE ITA NOS.395 TO 397/CHD/2018 A.YS.2010-11 & 2011-12 4 FINDINGS OF THE I.T.A.T. AT PARAS 4 AND 4.1 OF THE ORDER AS UNDER: 4. GROUND NO. 3 RELATES TO ADDITION OF RS. 49,96,580 /- ON ACCOUNT OF LABOUR CHARGES. 4.1 BEFORE US THE LD. AR ARGUED THAT THE AMOUNT HA S BEEN SURRENDERED DURING THE SEARCH STANDS ACCEPTED AND TAXED FOR THE A.Y. 2011-12 HENCE THE ISSUE IS REFERRED TO THE FILE OF ASSESSING OFFICER TO EXAMIN E IF THIS AMOUNT HAS BEEN SURRENDERED AND OFFERED TO FAX IN TH E A.Y. 2011-12 AND IF FOUND CORRECT THE ADDITION STAN DS DELETED FOR THE A.Y. 2010-11. 7. IT WAS, THEREFORE, CONTENDED THAT THE ADDITION H AD BEEN RESTORED BACK TO THE A.O AND NO LONGER SURVIVED, TH EREFORE THE PENALTY LEVIED U/S 271AAA OF THE ACT ALSO DID N OT SURVIVE AND NEEDED TO BE DELETED. 8. VIS--VIS THE PENALTY LEVIED ON THE ADDITION MAD E OF RS.1,72,20,000/- THE LD. COUNSEL FOR ASSESSEE POINT ED OUT FROM THE ORDER OF THE CIT(A) THAT THE ADDITION HAD BEEN MADE ON ACCOUNT OF THE FACT THAT ON THE BASIS OF DO CUMENTS SEIZED FROM THE RESIDENCE OF THE ASSESSEE, BEING A SALE DEED OF A PROPERTY SOLD BY THE ASSESSEE AT SIDHOWAL RIDG E, SHIMLA,IT WAS NOTED THAT WHILE THE SALE CONSIDERATI ON MENTIONED THEREIN WAS RS.42 LACS, THE MARKET VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY HAD BEEN TAKEN AT RS.2,18,20,000/-. THE A.O., IT WAS POINTED OUT, HAD MADE ADDITION OF THE DIFFERENCE AS UNDISCLOSED SALE PROF ITS OF THE ASSESSEE, WHICH WAS CONFIRMED BY THE CIT(A) AND PEN ALTY HAD BEEN LEVIED ON THE SAME. THE LD. COUNSEL FOR AS SESSEE POINTED OUT THAT THIS ADDITION HAD ALSO BEEN RESTOR ED BACK TO THE A.O. BY THE I.T.A.T. VIDE ITS ORDER IN ITA NO.136/CHD/2015 AT PARAS 7 TO 7.5 AS UNDER: ITA NOS.395 TO 397/CHD/2018 A.YS.2010-11 & 2011-12 5 7. GROUND NO. 6 RELATES TO ADDITION OF RS. 1,72 / 20,000/- ON ACCOUNT OF LAND DEAL. 7.1 DURING THE SEARCH, A SALE DEED DT. 31/08/2009 ENTERED BETWEEN THE ASSESSEE AND ONE SMT. PAVIT KAUR OF SHIMLA. AS PER THE SALE DEED THE ASSESSEE SOLD PROPERTY COMPRISING OF LAND AND BUILDING FOR A CONSIDERATION OF RS.42,00,000/- WHEREAS THE MARKET VALUE OF THE PROPERTY AS PER REGISTRATION AUTHORITI ES WAS RS. 2,18,20,000/- HENCE THE ASSESSING OFFICER HAS BROUGHT THE DIFFERENCE OF AMOUNT BETWEEN THE SALE A ND THE VALUE DETERMINED AS PER THE STAMP DUTY AUTHORITIES TO TAX AS UNDISCLOSED INCOME. 7.2 THE LD. CIT(A) HAS CONFIRMED THE ADDITION INVOKI NG THE PROVISIONS OF SECTION 50C, HENCE NOW THE QUESTION FOR ADJUDICATION, STANDS WHETHER THE PROVISIONS OF SECTION 50C ARE APPLICABLE IN CASE OF S ALE OF ASSET WHICH WAS STOCK IN TRADE. 7.3 BEFORE US, LD. AR REITERATED THE PLEAS TAKEN BEF ORE THE LOWER AUTHORITIES AND LD. DR RELIED ON THE ORDERS OF THE LD. CIT(A). 7.4 THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND SUMMED UP THE ISSUES VIDE LETTER DT. 24/05/2018. 7.5 WE HAVE HEARD AND PERUSED THE RECORDS. WE HEREB Y LAY DOWN THAT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE FOR THE SALE OF ASSETS WHICH ARE PART OF STOCK IN TRADE AND REMAND THE MATTER BACK TO THE FIFE OF ASSESSING OFFICER FOR THE LIMITED ISSUE TO EXAMINE I F THE ASSET IN QUESTION HAS BEEN SHOWN/REFLECTED AS STOCK I N TRADE OR IN CLOSING STOCK IN THE REGULAR RETURNS FI LED BY THE ASSESSEE AND TAKE A DECISION IN ACCORDANCE WITH LAW LAID DOWN. 9. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, CONTEND ED THAT PENALTY ON THE IMPUGNED ADDITION ALSO DID NOT SURVI VE. 10. THE LD. DR FAIRLY CONCEDED THAT BOTH THE ADDITI ONS ON WHICH PENALTY U/S 271AAA HAD BEEN LEVIED HAD BEEN RESTORED BACK BY THE I.T.A.T. TO THE A.O. VIDE ITS ORDER DATED 13.6.2018. 11. IN VIEW OF THE ABOVE, SINCE IT IS AN ADMITTED F ACT THAT ADDITIONS ON WHICH PENALTY HAD BEEN LEVIED IN THE P RESENT ITA NOS.395 TO 397/CHD/2018 A.YS.2010-11 & 2011-12 6 CASE ON ACCOUNT OF BOGUS LABOUR CHARGES AND ON ACCO UNT OF UNACCOUNTED SALE TRANSACTIONS HAVE BEEN RESTORED BA CK TO THE A.O. BY THE I.T.A.T. VIDE ITS ORDER IN ITA NO.136/CHD/2015 DATED 13.6.2018, THE ADDITIONS NO L ONGER SURVIVE AND, THEREFORE, THE BASIS FOR LEVY OF PENAL TY U/S 271AAA OF THE ACT ALSO DOES NOT SURVIVE. THE PENAL TY SO LEVIED TO THE TUNE OF RS.22,27,660/- IS, THEREFORE, DIRECTED TO BE DELETED. THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ITA NO.396/CHD/2018(A.Y. 20190-11): 12. IN THE IMPUGNED CASE THE ASSESSEE HAS CHALLENGE D THE ACTION OF THE LD.CIT(A) IN CONFIRMING THE PENALTY L EVIED U/S 271(1)(C) OF THE ACT. 13. AT THE OUTSET, THE LD. COUNSEL FOR ASSESSEE STA TED THAT THE ADDITION ON WHICH PENALTY HAD BEEN LEVIED IN TH E PRESENT CASE HAD BEEN DELETED BY THE I.T.A.T. IN TH E APPEAL FILED BY THE ASSESSEE IN QUANTUM PROCEEDINGS VIDE I TS ORDER DATED 13.6.2018 IN ITA NO.136/CHD/2015. THE LD. COU NSEL FOR ASSESSEE POINTED OUT FROM THE ORDER OF THE AUTH ORITIES BELOW THAT THE PENALTY U/S 271(1)(C) HAD BEEN LEVIE D ON AN ADDITION MADE OF RS.6,46,000/- ON ACCOUNT OF UNACCO UNTED RECEIPTS OF THE ASSESSEE FROM RUNNING OF THE RESORT M/S SHIMLA BRITISH RESORT. IT WAS POINTED OUT THAT THE SAID RESORT WAS A GUEST HOUSE RUN BY THE ASSESSEE AND TH E ASSESSEE HAD NOT SHOWN ANY INCOME FROM THAT RESORT. ON THE BASIS OF A REGISTER IMPOUNDED DURING SURVEY OPE RATION ITA NOS.395 TO 397/CHD/2018 A.YS.2010-11 & 2011-12 7 AT THE RESORT IDENTIFIED AS A-1 THE A.O. HAD NOTED THAT THE ROOFS OF THE GUEST HOUSE HAD BEEN ACTUALLY LET OUT. AS PER THE SAID REGISTER THE ASSESSEE HAD RECEIVED LODGING CHARGES OF RS.1,61,500/- FOR THE PERIOD 6.6.2009 TO 2.8.200 9. BASED ON THE NOTINGS OF THE SAID DOCUMENT THE A.O. HAD CO MPUTED UNACCOUNTED RECEIPTS OF THE ASSESSEE FROM THAT RESO RT FOR THE ENTIRE PERIOD AND ACCORDINGLY, MADE AN ADDITION OF RS.6,46,000/- AS UNACCOUNTED RECEIPTS OF THE ASSESS EE FROM THE RUNNING OF THE SAID RESORT. THE SAID ADDITION, IT WAS POINTED OUT, HAD BEEN CONFIRMED THE CIT(A) IN QUANT UM PROCEEDINGS. THEREAFTER OUR ATTENTION WAS DRAWN TO THE ORDER OF THE I.T.A.T. IN THE QUANTUM PROCEEDINGS IN ITA NO.136/CHD/2015 AT PARAS 6 TO 6.5 OF THE ORDER POIN TING OUT THEREFROM THAT THE IMPUGNED ADDITION HAD BEEN D ELETED AS UNDER: 6. GROUND NO. 5 RELATES TO ADDITION OF RS. 6,46,000 /- ON ACCOUNT OF RECEIPT FROM RESORT OPERATION. 6.1 DURING THE SEARCH DOCUMENTS MARKED A-L WAS IMPOUNDED FROM THE PREMISES OF M/S SHIMLA BRITISH RESORT, A GUEST HOUSE RUN BY THE ASSESSEE SHOWING RECEIPTS OF RS.1,61,500/- FOR THE PERIOD OF 06/06/2009 TO 02/08/2009. THE ASSESSING OFFICER HAS EXTRAPOLATED THIS AMOUNT FOR THE ENTIRE YEA R TO RS.6,40,000/- BASED ON THE DECISION OF ITAT HYDERABAD WHICH HELD THAT WHERE A REGULAR PATTERN OF SUPPRESSION IS ESTABLISHED THE LAWFUL PRESUMPTION IS THAT THERE IS SUPPRESSION OF WHOLE OF THE ASSESSMEN T YEAR BUT SUBJECT TO ADJUSTMENT OF SPECIAL FACTORS. 6.2 BEFORE US, IT WAS ARGUED BY THE LD. AR THAT IF W AS A TRIAL RUN MADE ON THE BASIS FOR THE PURPOSE OF SELLIN G OUT THE RESORT. SECONDLY, IF IT IS ASSUMED THAT THE RE SORT HAS BEEN RUN FOR THE ENTIRE YEAR, THEN THE ASSESSEE WOULD BE ENTITLED FOR THE EXPENDITURE INVOLVED IN RUNNING THE RESORT. THIRDLY, IT WAS ARGUED THAT THIS RESORT HAS BEEN ALREADY REFLECTED IN THE FIXED ASSET S AT RS.1,69,09,621/- AND IF THE RESORT IS TAKEN AS RUNNING BUSINESS ENTERPRISE THEN THE ASSESSEE WOULD BE ELIGI BLE ITA NOS.395 TO 397/CHD/2018 A.YS.2010-11 & 2011-12 8 FOR DEPRECIATION @10% WHICH WOULD RESULT INTO RS. 17,00,000/- FOR THE YEAR. 6.3 THE ID. DR SUPPORTED THE ORDERS OF THE TOWER AUTHORITIES AND SUMMED UP THE ISSUES VIDE LETTER DT. 24/05/2018. 6.4 BASED ON THE FACTS AND ARGUMENTS WE FIND THAT IT IS A NEUTRAL PREPOSITION TO CONFIRM THE ADDITION AND ALLOW EXPENDITURE AND THE DEPRECIATION. 6.5 IN VIEW OF THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION MADE BY THE ASSESSING OFFICER IS LIABLE TO BE DELETED. 14. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, STATED THAT SINCE THE ADDITION HAD BEEN DELETED, NO PENALTY WAS LEVIABLE. 15. THE LD. DR FAIRLY CONCEDED TO THE AFORESAID FAC T THAT THE ADDITION ON WHICH PENALTY HAD BEEN LEVIED HAD B EEN DELETED BY THE I.T.A.T. IN QUANTUM PROCEEDINGS. 16. IN VIEW OF THE ABOVE, WE FIND NO REASON TO UPHO LD THE LEVY OF PENALTY LEVIED IN THE PRESENT CASE U/S 271( 1)(C) OF THE ACT. THE PENALTY SO LEVIED AMOUNTING TO RS.1,99 ,614/- IS, THEREFORE, DIRECTED TO BE DELETED. THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.397/CHD/201811 (A.Y.2011-12): 17. THE FACTS AND CIRCUMSTANCES LEADING TO THE LEVY OF PENALTY IN THE PRESENT CASE U/S 271(1)(C) OF THE AC T, IT WERE POINTED OUT, WAS IDENTICAL TO THAT IN ASSESSMENT YE AR 2010- 11 IN ITA NO.395/CHD/2018 BEING ON ACCOUNT OF UNACCOUNTED RECEIPTS FROM RESORT OWNED BY THE ASSES SEE AMOUNTING TO RS.6,46,000/-. IT WAS POINTED OUT THAT THE I.T.A.T. VIDE ITS ORDER DATED 13.6.2018 IN QUANTUM ITA NOS.395 TO 397/CHD/2018 A.YS.2010-11 & 2011-12 9 PROCEEDINGS IN ITA NO.137/CHD/2015 HAD DELETED THE IMPUGNED ADDITION. IN VIEW OF THE SAME SINCE IT IS AN ADMITTED FACT THAT THE ADDITION ON WHICH PENALTY HA D BEEN LEVIED HAS BEEN DELETED, THERE REMAINS NO CASE FOR LEVY OF PENALTY. THE PENALTY SO LEVIED IN THE RESENT CASE A LSO IS DIRECTED TO BE DELETED. THE APPEAL OF THE ASSESSEE IS ALLOWED. 18. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE ASSESSEE, THEREFORE, STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ' #! $ % (SANJAY GARG ) (ANNAPURNA GUPTA) / JUDICIAL MEMBER &' / ACCOUNTANT MEMBER )' /DATED: 18 TH JANUARY, 2019 * ! * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - $ / CIT 4. - $ ( )/ THE CIT(A) 5. +./ 0 , #0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35' / GUARD FILE &) $ / BY ORDER, 6 ! / ASSISTANT REGISTRAR ITA NOS.395 TO 397/CHD/2018 A.YS.2010-11 & 2011-12 10