EALDOR RETAILS PVT. LTD., MUMBAI V. DCIT CIR 4(2), MUMBAI

ITA 4431/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1441 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 27-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Income from undisclosed sources; Accommodation entries
• Section: 271(1)(c); 143(3); 153C; 147; 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVANKUMAR GADALE ( JM) I.T.A. NO. 4431/MUM/2019 (ASSESSMENT YEAR 2010-11) EALDOR RETAILS PRIVATE LTD. (NOW MERGED WITH FLORENCE SECURITIES PRIVATE LIMITED) SH-4, RAJ TARANG, G-1 SHIV VALLABH CROSS ROAD DAHISAR EAST MUMBAI-400 068. PAN : AABCE9439P VS. DCIT, CIRCLE-4(2) CENTRAL RANGE-4 ROOM NO. 1918 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI-400 021. (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI VIJAY KUMAR MENON DATE OF HEARING 02.02.2021 DATE OF PRONOUNCEMENT 10.02.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) DATED 7.5.2019 AND PERTAINS TO ASSESSMENT YE AR 2010-11. 2. GROUNDS OF APPEAL READ AS UNDER :- THE LD.DCIT 4(2), MUMBAI IS NOT JUSTIFIED IN: 1) LEVYING PENALTY U/S 271(1) (C) OF THE ACT AMOUNTIN G TO RS. 2,32,305, WHEREAS AS PER FACTS AND CIRCUMSTANCES THE SAME SHOU LD NOT BE LEVIED. 2) WITHOUT PREJUDICE, CALCULATING THE TAX AT THE RATE OF 33.99%, BY INCLUDING SURCHARGE AT THE RATE OF 10%, WHEREAS AS PER FINANCE ACT SURCHARGE IS APPLICABLE IF INCOME EXCEEDS RS. 1 CRORE WHICH IS N OT THE CASE OF THE ASSESSEE, HENCE SURCHARGE IS NOT TO BE LEVIED. 3) WITHOUT PREJUDICE, LEVYING PENALTY OF 100% ON DI FFERENCE BETWEEN RETURNED INCOME OF RS. 8,27,9907- AND INCOME OF RS. 15,11,441 ASSESSED U/S 143(3) RWS 147, WHEREAS THE APPELLANT'S INCOME W AS ALREADY ASSESSED U/S 143(3) RWS 153C OF RS.14,34,370/- IN E ARLIER YEARS, HENCE PENALTY SHOULD BE LEVIED ON ADDITIONS MADE WRT TO INC OME ASSESSED U/S EALDOR RETAILS PRIVATE LTD. (NOW MERGED WITH FLORENCE SECURITIES PRIVATE LIMITE D) 2 143(3) RWS 153C (RS. 14,34,370/-) IN EARLIER YEARS AND INCOME ASSESSED U/S 143(3) RWS 147 OF THE ACT (15,11,441/-). 3. BRIEF FACTS OF THE CASE LEADING TO LEVY OF PENAL TY ARE AS UNDER :- THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME ON 02.10.2010 DECLARING A TOTAL INCOME OF RS. 8,27, 9907-. SUBSEQUENTLY, A SEARCH ACTION WAS CONDUCTED ON VAKRANGEE GROUP, WHE REIN THE ASSESSEE WAS ALSO COVERED AND THE ASSESSMENT U/S 143(3) R.W.S. 1 53C WAS COMPLETED ON 13.12.2010 AT AN ASSESSED INCOME OF RS 14,34,3707-. SUBSEQUENT TO THIS, INFORMATION WAS RECEIVED BY THE AO FROM DGIT(LNV), MUMBAI THAT THE EXPENSES CLAIMED BY THE ASSESSEE OF RS. 20.05 CRORES FOR THE RELEVANT YEAR ARE NOT SUPPORTED BY ANY THIRD PARTY DOCUMENTARY EVIDENCES. ON THE BASIS OF THIS INFORMATION, THE ASSESSMENT WAS RE-OPENED. THE RE-A SSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147 AFTER REJECTING THE BOOKS SIN CE, THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF EXPENSES FOR THE RELEVANT YEAR. THE INCOME OF THE ASSESSEE WAS THEREAFTER ESTIMATED BY THE AO AT RS. 15,11,441/- @ 0.75% OF THE GROSS RECEIPTS SHOWN OF RS 20,15,25,477/- AND T HE RE-ASSESSMENT COMPLETED ON 06.10.2017. THE AO, ALSO INITIATED PEN ALTY U/S 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. APP ARENTLY, THE ASSESSEE DID NOT CONTEST THE ACTION OF THE AO OF RE-ASSESSING IT S INCOME AT RS. 15,11,441/-. THEREAFTER THE AO HAS LEVIED PENALTY OF RS. 2,32,30 5/- VIDE ORDER U/S. 271(1)(C) DATED 27.04.2018. 4. UPON ASSESSEES APPEAL LEARNED CIT(A) CONFIRMED THE LEVY OF PENALTY BY OBSERVING AS UNDER :- 5.2 THE SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE HAVE BEEN DULY CONSIDERED. IN THE APPELLATE PROCEEDINGS, THE ASSESS EE HAS CONTENDED THAT THE AO HAS ESTIMATED ITS INCOME IN THE RE-ASSESSMENT ORDER AND THEREFORE THE ACTION OF THE AO OF LEVYING PENALTY IS NOT CORRECT. MOREOVER, THE ASSESSEE CONTENDS THAT THE AO HAS WRONGLY LEVIED PENALTY ON TH E DIFFERENCE BETWEEN THE INCOME COMPUTED AS PER RE-ASSESSMENT ORDER U/S 14 3(3) R.W.S. 147 AND THE INCOME AS SHOWN IN THE ORIGINAL RETURN OF INCOME A S AGAINST THE DIFFERENCE BETWEEN THE INCOME COMPUTED AS PER RE-ASS ESSMENT ORDER AND THE INCOME EARLIER DETERMINED U/S 143(3) R.W.S. 153C. EALDOR RETAILS PRIVATE LTD. (NOW MERGED WITH FLORENCE SECURITIES PRIVATE LIMITE D) 3 5.3 THE CONTENTIONS OF THE ASSESSEE HAVE BEEN DULY C ONSIDERED. THE ASSESSEE CONTENDS THAT THE AO HAS ESTIMATED ITS INCOME IN THE RE- ASSESSMENT ORDER AND THEREFORE THE ACTION OF THE AO OF L EVYING PENALTY IS NOT CORRECT. AS NOTED EARLIER, THERE IS NO DISPUTE THAT TH E ASSESSEE WAS NOT IN POSSESSION OF PROPER THIRD PARTY SUPPORTINGS OF EXPEN SES OF RS. 20.05 CRORES FOR THE RELEVANT YEAR AND THEREFORE THE AO RESORTED TO REJECTION OF THE BOOK RESULTS AND ESTIMATION OF INCOME BY APPLYING A RATE OF 0.75 % ON THE GROSS RECEIPTS. IT IS CLEAR THAT THE INTENTION OF THE ASSESSE E WAS TO TAKE A RISK AND DISCLOSE A LESSER INCOME THAN WHAT HE WAS ACTUALLY EA RNING. IN THIS CASE, THE QUANTUM OF EXPENSES CLAIMED WHICH DO NOT HAVE PROPER THIRD PARTY SUPPORTINGS OF RS. 20.05 CRORES HAVE NOT BEEN ESTIMATED BUT IT IS ONLY THE PROFIT/INCOME EARNED WHICH HAS BEEN ESTIMATED BY APPLY ING A RATE OF 0.75 % ON THE GROSS RECEIPTS SHOWN BY THE ASSESSEE. THEREFORE , THE BENEFIT OF NON LEVY OF PENALTY CANNOT BE EXTENDED TO THE ASSESSEE MOR E SO SINCE HUGE EXPENSES OF RS. 20.05 CRORES WERE FOUND TO BE NOT SUP PORTED BY PROPER THIRD PARTY EVIDENCES. IN SUPPORT OF THE VIEW THAT EVEN ON SU CH ESTIMATED ADDITIONS, CONCEALMENT PENALTY CAN BE LEVIED, RELIANC E IS PLACED ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF KALINDI RAIL NIRMAN ENGG. LTD. 51 TAXMANN.COM 523 (DELHI) WHEREIN LEVY O F PENALTY ON THE ADDITIONS MADE BY ESTIMATING THE INCOME OF THE ASSESS EE BY APPLYING RATE OF 11% (AGREED BY THE ASSESSEE) ON THE GROSS RECEIPTS WERE UPHELD. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT PENALTY IS NOT LEVI ABLE IN ITS CASE SINCE THE UNACCOUNTED INCOME HAS BEEN DETERMINED BY THE AO ON ESTIMATE BASIS IS REJECTED. 5.4 THE ASSESSEE HAS ALSO CONTENDED THAT THE AO HA S WRONGLY LEVIED PENALTY ON THE DIFFERENCE BETWEEN THE INCOME COMPUT ED AS PER RE-ASSESSMENT ORDER U/S. 143(3) RWS 147 AND THE INCOME AS SHOWN I N THE ORIGINAL RETURN OF INCOME AS AGAINST THE DIFFERENCE BETWEEN THE INCOME C OMPUTED AS PER RE- ASSESSMENT ORDER AND THE INCOME EARLIER DETERMINED U /S 143(3) R.W.S. 153C. ON THIS CONTENTION OF THE ASSESSEE, IT IS NOTED THAT IN RESPONSE TO NOTICE U/S 148 CALLING FOR A RETURN OF INCOME, THE ASSESSEE HA D INFORMED THE AO THAT THE ORIGINAL RETURN OF INCOME MAY BE TREATED AS A RETURN FILED IN RESPONSE TO THE NOTICE U/S 148. THUS THE AO HAS RIGHTLY LEVIED PENALT Y ON THE DIFFERENCE BETWEEN THE INCOME COMPUTED AS PER RE-ASSESSMENT ORD ER U/S 143(3) R.W.S. 147 AND THE INCOME AS SHOWN IN THE ORIGINAL RETURN OF INCOME. 5.5 IN VIEW OF THE AFORESAID DISCUSSION, NO INFIRMI TY IS FOUND IN THE ACTION OF THE AO OF LEVYING PENALTY OF RS. 2,32,305/- U/S 271( 1)(C) FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, THE GR OUNDS OF APPEAL OF THE ASSESSEE ARE DISMISSED. 5. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BE FORE US. NONE APPEARED ON BEHALF OF THE ASSESSEE. SEVERAL NOTICES WERE RET URNED UNSERVED AND HENCE WE ARE PROCEEDING TO DISPOSE OF THE APPEAL BY HEARI NG LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING RECORDS. WE NOTE THAT I N THIS CASE THE ASSESSEE WAS ENGAGING INTO BOGUS ACCOMMODATION ENTRIES. THE GROSS RECEIPT SHOWN AT EALDOR RETAILS PRIVATE LTD. (NOW MERGED WITH FLORENCE SECURITIES PRIVATE LIMITE D) 4 RS. 20.15 CRORES INCOME WAS ESTIMATED BY THE ASSESS ING OFFICER @ 0.75% FOR AMOUNT OF RS. 15,11,441/-. THE ASSESSEE DID NOT CON TEST QUANTUM. IN PENALTY AND APPELLATE PROCEEDINGS ALSO IT DID NOT MAKE CONV INCING SUBMISSION. IT IS NOTED THAT THE ISSUE IN DISPUTE WAS BOGUS EXPENSES TO THE TUNE OF RS. 20.05 CRORES. LEARNED CIT(A) HAS RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF KALINDI RAIL NIRMAN ENGINEERIN G LTD. (51 TAXAMNN.COM 523) FOR SUSTAINING LEVY OF PENALTY. IN OUR CONSIDE RED OPINION LEARNED CIT(A) HAS PASSED REASONABLE ORDER. IT DOES NOT NEED ANY I NTERFERENCE ON OUR PART. HENCE, WE UPHOLD THE ORDER OF LEARNED CIT(A). 6. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULE S BY PLACING THE RESULT ON NOTICE BOARD ON 10.2.2021. SD/- SD/- (PAVANKUMAR GADALE) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 10/02/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI