Shri Narendra Sharma, Kanpur V. Joint Commissioner of Income Tax (OSD), Kanpur

ITA 450/LKW/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4848 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 17-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINGH
• Keywords: Question of law; Revised return
• Section: 260A; 139(5)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.450/LKW/2013 ASSESSMENT YEAR:2008-09 SHRI NARENDRA SHARMA, (PROP. MAA KAMAKHYA DARBAR FRAGRANCES) 129/9-L, 40, SHOP KIDWAI NAGAR, KANPUR. PAN:AIWPS6695R VS. JT.CIT (OSD), KANPUR (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY SHRI AJIT KUMAR SINGH, CIT, D. R. DATE OF HEARING 05/11/2015 DATE OF PRONOUNCEMENT 01 / 01 /201 6 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE OR DER OF LEARNED CIT(A)-II, KANPUR DATED 25/03/2013 FOR THE ASSESSME NT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED AS MANY AS 12 GROUNDS O F APPEAL BUT THE ONLY GRIEVANCE OF THE ASSESSEE IS REGARDING CONFIRM ING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT A ND THE DIRECTION OF THE CIT(A) TO THE ASSESSING OFFICER TO RECOMPUTE THE PE NALTY ON CONCEALED INCOME OF RS.3,56,74,816/- AS AGAINST PENALTY COMPU TED BY THE ASSESSING OFFICER IN THE PENALTY ORDER ON UNDISCLOSED INCOME OF RS.1,51,91,669/-. 3. IN COURSE OF HEARING BEFORE US, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE APPEAL EFFECT ORDER PASSED BY THE ASSESSING OFFICER ON 17/11/2014 TO GIVE EFFECT TO THE FINDING OF THE TRIBUNAL IN QUANTUM 2 PROCEEDINGS IS AVAILABLE ON PAGE NO. 28 & 29 OF THE PAPER BOOK FILED ON 26/07/2015. HE POINTED OUT THAT AS PER THIS APPEAL EFFECT ORDER, THE INCOME HAS BEEN COMPUTED BY THE ASSESSING OFFICER A T RS.1,83,45,070/- AS AGAINST RETURNED INCOME AS PER REVISED RETURN OF IN COME OF RS.1,30,45,590/-. HE FURTHER SUBMITTED THAT ORIGIN AL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 30/09/2008 SHOWING AN INCO ME OF RS.14,25,590/- AND THIS RETURN WAS FILED WITHIN THE DUE DATE PRESC RIBED U/S 139(1) AND THEREFORE, THE ASSESSEE WAS ELIGIBLE TO REVISE HIS RETURN OF INCOME U/S 139(5) ON OR BEFORE 30/03/2010. THE ASSESSEE HAS F ILED THE SECOND AND LAST REVISED RETURN ON 18/01/2010 AND IN THE SAME, THE ASSESSEE HAS DECLARED HIS INCOME AT RS.1,30,45,590/- AND THIS IS NOT THE CASE OF THE ASSESSING OFFICER THAT THIS REVISED RETURN IS NOT V ALID AND IN FACT, IN THE APPEAL EFFECT ORDER PASSED BY THE ASSESSING OFFICER ON 17/11/2014, THE ASSESSING OFFICER HAS ACCEPTED THE REVISED INCOME A T RS.1,30,45,590/-. HE SUBMITTED THAT THEREFORE, IN ANY CASE, PENALTY CAN BE IMPOSED FOR THE ULTIMATE DIFFERENCE IN THE FINALLY ASSESSED INCOME OF RS.1,83,45,070 RS.1,30,45,590=RS.52,99,480/-. REGARDING PENALTY O N THIS INCREASE IN THE ASSESSED INCOME ALSO, IT WAS SUBMITTED THAT THE ASS ESSEE HAS FILED APPEAL BEFORE HON'BLE ALLAHABAD HIGH COURT U/S 260A OF THE ACT AND THIS APPEAL OF THE ASSESSEE HAS BEEN ADMITTED BY HON'BLE ALLAHABAD HIGH COURT IN INCOME TAX APPEAL NO. 9 OF 2015 DATED 30/01/2015 ON SUBSTA NTIAL QUESTION OF LAW NO. 1, WHICH IS AVAILABLE ON PAGE NO. 10 OF THE PAP ER BOOK FILED ON 29/07/2015. HE POINTED OUT THAT THIS SUBSTANTIAL Q UESTION OF LAW NO. 1 IS REGARDING THIS GRIEVANCE OF THE ASSESSEE THAT DEDUC TION SHOULD BE ALLOWED IN RESPECT OF PROPORTIONATE INDIRECT EXPENSES WHILE ASSESSING THE ESTIMATED INCOME OF ESTIMATED SUPPRESSED SALES. HE FURTHER S UBMITTED THAT AS PER VARIOUS TRIBUNAL ORDERS, COPY SUBMITTED BY HIM, WHE RE HON'BLE HIGH COURT HAS ADMITTED SUBSTANTIAL QUESTION OF LAW, THE ISSUE IN DISPUTE BECOMES 3 DEBATABLE AND PENALTY CANNOT BE IMPOSED ON SUCH DEB ATABLE ISSUE. THE TRIBUNAL DECISIONS CITED BY HIM ARE AS UNDER: (I) YUGAL KISHORE JAJOO VS. DCIT IN I.T.A. NO.272/IND/2 011 DATED 12/02/2013 (II) JHPL HOLDING (P) LTD. VS. ACIT IN I.T.A. NO.6472/DE L/2012 DATED 04/07/2014 (III) SCHRADER DUNCAN LIMITED VS. ADDL.CIT IN I.T.A. NO.8223/MUM/2010 DATED 01/01/2015 HE SUBMITTED COPY OF ALL THESE THREE TRIBUNAL ORDER S. 3.1 ONE MORE CONTENTION WAS RAISED BY HIM THAT IN R ESPECT OF ESTIMATED ADDITION, PENALTY IS NOT JUSTIFIED AND IN SUPPORT O F THIS CONTENTION, RELIANCE WAS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS : (I) ORBIT TEXTILES SURAT VS. ACIT, I.T.A. NO.304/AHD/20 07 DATED 31/03/2010 (II) BOPARAI METALS (P) LTD. VS INCOME TAX OFFICER, I.T. A. NO.1013/CHD/2010, DATED 18/10/2010 (III) DCIT VS. RISHABH IMPEX, I.T.A. NO.93/MUM/2011, DATE D 10/04/2015 (IV) DISHMAN PHARMACEUTICALS & CHEMICALS LTD. VS. ACIT ( OSD), I.T.A. NO.1138/AHD/2011 DATED 20/02/2015 (V) NARESH CHAND AGARWAL VS. CIT, INCOME TAX APPEAL NO. 79 OF 2008 OF HON'BLE ALLAHABAD HIGH COURT 4. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUP PORTED THE ORDER OF LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER TH AT THE ASSESSEE FILED ORIGINAL RETURN OF INCOME ON 30 TH SEPT 2008 DECLARING TOTAL INCOME OF RS.14,25,590/-, WHICH IS IN TIME AND THEREAFTER, TH E ASSESSEE FILED TWO REVISED RETURNS ON 05/01/2010 AND AGAIN ON 18/01/20 10 AND IN THE SAME, THE ASSESSEE HAS DISCLOSED EXTRA INCOME OF RS.116.2 0 LAC AND THE RETURN FILED WAS ON TOTAL INCOME OF RS.1,30,40,590/-. IT IS NOTED BY THE TRIBUNAL 4 IN PARA 5 THAT A SURVEY WAS CARRIED OUT IN THE PREM ISES OF THE ASSESSEE ON 02/11/2007. IT IS ALSO NOTED BY THE TRIBUNAL THAT IN COURSE OF SURVEY, THE ASSESSEE SURRENDERED RS.1.50 CRORE BUT HAS FILED TH E RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 SHOWING HIS SURRENDERED INC OME ONLY AT RS.1,16,20,000/-. HENCE, IT IS SEEN THAT THE ADDIT IONAL INCOME OFFERED BY THE ASSESSEE IN THE REVISED RETURN OF INCOME IS ON THE BASIS OF VARIOUS OBJECTIONS OF THE DEPARTMENT NOTED IN COURSE OF SUR VEY. WE ALSO FIND THAT THE ASSESSING OFFICER HAS EARLIER COMPUTED THE TOTA L INCOME OF THE ASSESSEE AT RS.3,71,00,410/- AND IT INCLUDED THE INCOME DECL ARED BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME OF RS.14,25,590/- AND THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN THE REVISED RETURN OF IN COME OF RS.116.20 LAC AND INCOME ESTIMATED BY THE ASSESSING OFFICER ON AC COUNT OF SUPPRESSED SALES OF RS.2,53,30,983/- AND RS.1,03,43,833/- BEIN G THE DIFFERENCE IN OPENING BALANCE OF CASH IN HAND AS PER COMPUTER PRI NTOUT FOUND IN SURVEY AND AS PER REGULAR CASH BOOK OF THE ASSESSEE. THE A.O. ALLOWED CREDIT OF EXTRA INCOME OFFERED IN THE REVISED RETURN RS. 116. 20 LACS FROM THE ADDITIONS MADE BY HIM OF RS.2,53,30,983/- AND RS.1, 03,43,833/- AND IN THIS MANNER, FINAL ASSESSED INCOME WAS RS.3,71,00,410/- . HENCE, IT IS SEEN THAT THE EXTRA INCOME OF RS.1,03,43,833/- ON ACCOUN T OF EXTRA CASH IN HAND AS PER THE COMPUTER PRINTOUT FOUND IN SURVEY MAY BE CONSIDERED AS EXTRA INCOME WITHOUT ANY ESTIMATION BUT ANY FURTHER ADDIT ION MADE BY THE ASSESSING OFFICER AND ULTIMATELY UPHELD BY THE TRIB UNAL IS ON ACCOUNT OF ESTIMATED INCOME IN RESPECT OF SUPPRESSED SALES. S INCE AN AMOUNT OF RS.116.20 LAC HAS ALREADY BEEN INCLUDED BY THE ASSE SSEE IN THE REVISED RETURN OF INCOME WHICH IS MORE THAN THIS DIFFERENCE OF RS.1,03,40,833/- IN CASH, THE ULTIMATE ADDITION UPHELD BY ITAT OF RS.52 ,99,480/-. IS IN RESPECT OF ESTIMATED INCOME IN RESPECT OF SUPPRESSED SALES. AGAINST THIS ADDITION OF ESTIMATED INCOME IN RESPECT OF SUPPRESSED SALES, SU BSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY HON'BLE ALLAHABAD HIGH COU RT IN THE CASE OF THE 5 ASSESSEE AS PER ITS JUDGMENT IN INCOME TAX APPEAL N O. 9 OF 2015 DATED 30/01/2015 AND THIS SUBSTANTIAL QUESTION OF LAW IS IN RESPECT OF QUANTIFICATION OF INCOME IN RESPECT OF SUPPRESSED S ALES BECAUSE THIS IS THE CLAIM OF THE ASSESSEE THAT INDIRECT EXPENSES SHOULD BE ALLOWED ON ESTIMATE BASIS AND IF THE SAME IS ALLOWED, THE REMAINING INC OME WILL BE NEGLIGIBLE. HENCE, THE CASE OF THE ASSESSEE IS SUPPORTED BY VAR IOUS TRIBUNAL DECISIONS CITED BY LEARNED A.R. OF THE ASSESSEE IN SUPPORT OF ITS CONTENTION THAT ONCE THE SUBSTANTIAL QUESTION OF LAW IS ADMITTED BY HON' BLE HIGH COURT, THE ISSUE BECOMES DEBATABLE AND PENALTY IS NOT JUSTIFIED. EV EN IF SOME INCOME IS LEFT AFTER ALLOWING THE CLAIM OF THE ASSESSEE IN RESPECT OF INDIRECT EXPENSES, THE SAME IS AGAIN AN ESTIMATED ADDITION ONLY AND ON THI S ASPECT ALSO, THE CASE OF THE ASSESSEE IS SUPPORTED BY VARIOUS TRIBUNAL OR DERS CITED BY LEARNED A.R. OF THE ASSESSEE AS NOTED ABOVE. 5.1 REGARDING THE THREE TRIBUNAL DECISIONS IN SUPPO RT OF CONTENTION OF LEARNED A.R. OF THE ASSESSEE THAT ONCE SUBSTANTIAL QUESTION OF LAW IS ADMITTED BY HON'BLE HIGH COURT, PENALTY IS NOT JUST IFIED, WE FIND THAT IN THE CASE OF YUGAL KISHORE JAJOO (SUPRA), THE TRIBUNAL H AS FOLLOWED A JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS. LIQUID INVESTMENT LIMITED, I.T.A. NO.240/2009 DATED 05/10/ 2010 WHEREIN IT WAS HELD BY HON'BLE DELHI HIGH COURT THAT WHERE HIGH CO URT HAS ACCEPTED SUBSTANTIAL QUESTION OF LAW U/S 260A, THIS ITSELF S HOWS THAT THE ISSUE IS DEBATABLE AND THEREFORE, NO PENALTY WAS IMPOSABLE U /S 271(1)(C) OF THE ACT. AFTER FOLLOWING THIS JUDGMENT, INDORE BENCH O F THE TRIBUNAL IN THAT CASE HELD THAT SINCE HON'BLE M.P. HIGH COURT IN THA T CASE HAS ADMITTED SUBSTANTIAL QUESTION OF LAW, PENALTY IS NOT LEVIABL E AND THE PENALTY WAS CANCELLED. IN THE PRESENT CASE ALSO, HON'BLE ALLA HABAD HIGH COURT HAS ADMITTED SUBSTANTIAL QUESTION OF LAW NO. 1, WHICH I S AS UNDER: 1. WHETHER, IN ABSENCE OF A FINDING THAT THE ASSE SSEE APPELLANT HAD CLAIMED / DISCLOSED INFLATED DETAILS IN HIS BOOKS 6 OF ACCOUNT TO THE ESTIMATED INCOME OF THE APPELLANT WITHOUT MAKING ANY ALLOWANCE FOR AND WITHOUT REDUCING SUCH ESTIMATED SUPPRESSED SALES RECEIPTS BY PROPORTIONAT E INDIRECT EXPENSES (ON ESTIMATE BASIS), ESPECIALLY W HEN THE ENHANCEMENT MADE IS OF ALMOST TWICE OF THE DISCLOSE D INCOME, THE TRIBUNAL WAS JUSTIFIED IN MAKING ADDITI ON RENDERING THE ENHANCEMENT OF INCOME WHOLLY ARBITRAR Y, EXCESSIVE AND UNREASONABLE? 5.2 HENCE, IT IS SEEN THAT SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY HON'BLE ALLAHABAD HIGH COURT REGARDING ESTIMATIO N OF INCOME IN RESPECT OF ESTIMATED SUPPRESSED SALES AND THEREFORE, IN VIE W OF THIS TRIBUNAL DECISION OF INDORE BENCH, IN WHICH THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HON'BLE DELHI HIGH COURT, PENALTY IS NOT JUSTIFI ED. RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION, WE DIRECT THE ASSESSING OFF ICER TO CANCEL THE PENALTY IN THE PRESENT CASE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODI A ) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED:01/01/2016 SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGIST RAR