M/S JAYARAM K. SHETTY, MUMBAI V. ACIT, CENTRAL CIRCLE - 24 & 26, MUMBAI

ITA 4513/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88274 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 15-01-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 05-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S D SHRIVASTAVA; AKHILENDRA YADAV
• Assessee Lawyers: ASHOK K PATIL
• Keywords: Retraction; Reason to believe
• Section: 153A; 131; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI , , . , BEFORE SHRI VIJAY PAL RAO , JM AND SHRI D. KARUNAKARA RAO, AM ./I.T.A. NO.4513/MUM/2013 ( / ASSESSMENT YEAR : 2004-05 ) M/S. JAYARAM K. SHETTY 215, BCI SHED AMOROLIWALA COMPOUND N.M. JOSHI MARG MUMBAI-400 013. / VS. ACIT CENTRAL CIRCLE - 24 & 26 AAYAKAR BHAVAN MUMBAI. ./ ./PAN/GIR NO. : AADPS 5939 D ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI ASHOK K. PATIL ! / RESPONDENT BY : SHRI S.D. SHRIVASTAVA AND SHRI AKHILENDRA YADAV '#$ ! % / DATE OF HEARING : 03/02/2015 &'( ! % / DATE OF PRONOUNCEMENT : 13/02/2015 ) / O R D E R PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 13/03/2013 OF CIT(A) ARISING FROM PENALTY ORDER PASSED UNDER SECT ION 271(1)(C) OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 2004-05. THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AS SESSING OFFICER HAS ERRED IN IMPOSING PENALTY SECTION. 271(1) (C) OF THE IT. ACT . 1961 FOR AY 2004-2005 SINCE AO 2 ITA NO.4513/M/13 ERRED IN TREATING AN AMOUNT OF RS 6623000/ BEING A PROPOSAL AMOUNT TO ARCHITECT AS AN INCOME WITHOUT APPRECIATING THE FACTS OF THE CASE I N ITS PROPER PERSPECTIVE. AN APPEAL HAD BEEN FILED WITH TRIBUNAL AGAINST THE ADDITION OF RS 6623000/. TRIBUNAL HAD CONSIDERED THE FACTS AND ALLOWED PARTLY FOR STA TISTICAL PURPOSE THE APPEAL . HOWEVER THE CIT (A) INTERPRETED THE ORDER AS PARTLY ALLOWED AND ACCORDINGLY ALLOWED THE PENALTY ORDER PARTLY WHICH IS CONTRARY TO THE FACTS OF THE CASE. THE CIT ( A) HAD CONFIRMED PENALTY ON ADDITION OF RS 16.23 LACS RELATING TO ASHOK PANDIT WHO AFFIRMED IN HIS AFFIDAVIT THAT HE DID NOT RECEIVE THE SAID AMOUNT . THEREFORE PENALTY SHOULD NOT BE IMPOSED ON RS 16.23 LACS. 2. A SEARCH UNDER SECTION 132 OF THE ACT WAS CARRI ED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 11/9/2007. DURING THE COURSE OF SEARCH INCRIMINATING MATERIAL WAS FOUND AND ACCORDINGLY SOME PAPER AND DIARY WERE SEI ZED. ONE OF THE SEIZED PAPERS CONTAINS THE ENTRIES OF PAYMENT OF RS.66,23,000/- A S PER PAGE NO.16 OF THE SEIZED DIARY. THE ASSESSEE IN HIS STATEMENT UNDER SECTION 131 RECORDED ON 5/11/2007 ADMITTED THE SAID PAYMENT OF RS.66,23,000/- FOUND RECORDED IN THE SEIZED DIARY. HOWEVER, VIDE LETTER DATED 31/12/2007 THE ASSESSEE RETRACTED ITS STATEMENT AND STATED THAT THE AMOUNT OF RS.66,23,000/- MENTIONED IN THE DIARY WAS ONLY A PAYMENT SUPPOSED TO BE MADE AND WAS NOT ACTUALLY PAID. 2.1 IN THE ASSESSMENT FRAMED UNDER SECTION 153A THE AO MADE ADDITION OF RS.66,23,000/- AS UNDISCLOSED INCOME OF THE ASSESSE E. THE SAID ADDITION WAS CONFIRMED BY CIT(A) AND ON FURTHER APPEAL THE TRIBUNAL CONFIR MED PART ADDITION TO THE EXTENT OF RS.16,23,000/- SHOWN AS PAYMENT MADE TO MR. ASHOK P UNDIT. HOWEVER, THE TRIBUNAL REMANDED THE ISSUE TO THE EXTENT OF PAYMENT OF RS.5 0,00,000/- SHOWN AS MADE TO MHADA TO THE RECORD OF AO FOR VERIFICATION FROM MHA DA WHETHER THE SAID PAYMENT WAS ACTUALLY MADE BY THE ASSESSEE . IN THE MEANTIME THE AO INITIATED PENALTY UNDER SECTION 271(1)(C) AND LEVIED PENALTY OF RS.21,98,199/- BEIN G 100% OF TAX SOUGHT TO BE EVADED IN RESPECT OF ADDITION OF RS.66,23,000/-. IN THE SE T ASIDE PROCEEDINGS THE AO FOUND THAT PAYMENT OF RS.50.00 LACS WAS NOT RECEIVED BY MHADA FROM ASSESSEE DURING THE PERIOD UNDER CONSIDERATION. ACCORDINGLY THE AO GRANTED REL IEF OF THE SAID AMOUNT TO THE ASSESSEE WHILE PASSING THE ORDER DATED 20/11/2013. AGAINST THE LEVY OF PENALTY, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). CIT(A) HAS RESTRICTED THE PENALTY TO THE EXTENT 3 ITA NO.4513/M/13 OF ADDITION OF RS.16,23,000/- AS CONFIRMED BY THE TRIBUNAL WHILE PASSING THE QUANTUM ORDER. THUS, THE GRIEVANCE OF THE ASSESSEE BEFORE U S IS ONLY IN RESPECT OF THE PENALTY LEVIED AGAINST THE ADDITION TO THE EXTENT OF RS.16, 23,000/- WHICH WAS CONFIRMED BY THIS TRIBUNAL IN THE QUANTUM APPEAL. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT THE DIARY SEIZED DURING THE SEARCH CARRIED OUT, CONTAINS THE AMOUNT OF RS. 16,23,000/- TO BE PAID TO ONE MR. ASHOK PANDIT WHICH WAS NOT ACTUALLY PAID BY THE ASS ESSEE ON 29/03/2004, BUT THE ASSESSEE MADE THE PAYMENT OF RS.30.00 LACS TO SHRI ASHOK PANDIT ON 30/4/2004 WHICH WAS OFFERED BY THE ASSESSEE TO TAX IN THE ASSESSMEN T YEAR 2005-06. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE RETRACTED THE STATEMENT RECORDED ON 05/11/2007 BY FILING LETTER DATED 31/12/2007 AND CLARIFIED THAT THE WRIT ING IN THE DIARY REGARDING PAYMENT OF RS.16,23,000/- TO SHRI ASHOK PANDIT WAS WRONGLY INT ERPRETED AS PAID ON 29.03.2004 WHEREAS IT WAS ONLY AN ESTIMATE AND THE SAID PAYMEN T WAS TO BE MADE BY THE ASSESSEE WHICH WAS ACTUALLY PAID ON 30/4/2004 FOR RS.20.00 LACS TO THE CONTRACTOR AND RS.10.00 LACS TO MR. ASHOK PANDIT. THE LD. AR HAS FURTHER SU BMITTED THAT OUT OF THE TOTAL AMOUNT OF RS.66,23,000/-, THE AO HAS ALLOWED THE RELIEF OF RS.50.00 LACS SHOWN AS PAYMENT TO MHADA WHICH SHOWS THAT THE ENTRIES IN THE DIARY SHO WN AS PAYMENT ON 29/3/2004 WERE NOT THE ACTUAL PAYMENTS. THOUGH, THE TRIBUNAL HAS C ONFIRMED THE ADDITION REGARDING THE BALANCE AMOUNT OF RS.16,23,000/-, HOWEVER, WHEN THE ASSESSEE HAS EXPLAINED BEFORE THE AO THAT THIS AMOUNT WAS NOT THE ACTUAL PAYMENT THEN THE PENALTY U/S.271(C) IS NOT ATTRACTED ON SUCH DISALLOWANCE. THE LD. AR HAS FURT HER SUBMITTED THAT PART OF THE ENTRIES IN THE DIARY SEIZED DURING THE SEARCH WAS A CCEPTED BY THE AO AS NOT ACTUAL PAYMENT THEN THE REST OF THE PAYMENT OF RS.16,23,00 0/- CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE . HE HAS PLEADED THAT THE PENALTY LEVIED IN RESPECT OF THE AMOUNT OF RS.16,23,000/- SHOWN IN THE SAID P APER SHOULD BE DELETED. 3.1 ON THE OTHER HAND THE LD. DR HAS SUBMITTED THAT APART FROM THE SEIZED PAPER FROM THE BUSINESS PREMISES OF THE ASSESSEE, THE ASS ESSEE IN ITS STATEMENT RECORDED ON 05/11/2007 HAS ADMITTED THE SAID AMOUNT AS UNDISCLO SED INCOME. FURTHER, IT WAS NOT A 4 ITA NO.4513/M/13 STATEMENT RECORDED ON THE DATE OF SEARCH OR IMMEDIA TELY AFTER SEARCH BUT THE STATEMENT WAS RECORDED AFTER 55 DAYS FROM THE DATE OF SEARCH. THEREFORE, THERE IS NO SCOPE OF ANY MISUNDERSTANDING OR CONFUSION IN THE M IND OF THE ASSESSEE REGARDING THE UNDISCLOSED INCOME ADMITTED IN THE STATEMENT RECORD ED UNDER SECTION 131. THE RETRACTION OF THE STATEMENT IS NOTHING BUT AN AFTER THOUGHT AS HELD BY THIS TRIBUNAL IN THE QUANTUM APPEAL. THE ADDITION IS BASED ON SEIZED MAT ERIAL AS WELL AS THE STATEMENT OF THE ASSESSEE BEING UNDISCLOSED INCOME OF THE ASSESS EE. THEREFORE, THE ASSESSEE IS GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF I NCOME AS WELL AS CONCEALMENT OF INCOME ATTRACTING PENALTY PROVISIONS OF SECTION 271(1)(C). HE HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT DURING THE COURSE OF SEARC H ACTION ON 11/9/2007 APART FROM THE OTHER MATERIAL A DIARY WAS FOUND AND SEIZED CONTAI NING THE ENTRIES. THE ENGLISH TRANSLATION OF THE ENTRIES AS SUBMITTED BY THE ASSE SSEE ARE AS UNDER :- PAGE-16:FY 2003-04 RS.50 LACS MHADA RS.5 LACS MR. PANDIT RS.8 LACS 60 THOUSAND MR. PANDIT RS.2 LACS MR. PANDIT RS.18 THOUSAND MR. PANDIT RS.20 THOUSAND MR. PANDIT 29-03-2004 RS.25 THOUSAND MR. PANDIT PAGE- 4: F.Y. 2004-05 PAID TO CONTRACTOR ON 30.04.2004 RS.20,00,000/- PAID TO MR. PANDIT RS.10,00,000/- 30-04-2004 4.1 FOR THE YEAR UNDER CONSIDERATION THE ENTRIES OF FIRST PART OF RS.66,23,000/- IS RELEVANT AND THE AO MADE THE ADDITION OF THE SAID A MOUNT OF RS.66,23,000/- AS 5 ITA NO.4513/M/13 UNDISCLOSED INCOME OF THE ASSESSEE. WE FURTHER NOTE THAT IN THE STATEMENT RECORDED ON 5/11/2007 UNDER SECTION 131 THE ASSESSEE HAS ADMITT ED THAT THE SAID AMOUNT WAS PAID BY THE ASSESSEE TO THE PARTIES MENTIONED IN THE DIA RY. THOUGH THE ASSESSEE HAS RETRACTED THE STATEMENT VIDE LETTER DATED 31/12/200 7, HOWEVER, IN THE ABSENCE OF ANY PLAUSIBLE EXPLANATION AND PARTICULARLY IN VIEW OF T HE FACT THAT THE ORIGINAL STATEMENT WAS RECORDED AFTER A GAP OF 55 DAYS FROM THE DATE OF SE ARCH, THE RETRACTION OF THE ASSESSEE CANNOT BE ACCEPTED AS THERE IS NO REASON TO BELIEVE THAT IN A STATEMENT GIVEN BY THE ASSESSEE AFTER A GAP OF 55 DAYS OF THE SEARCH WAS U NDER ANY DURESS OR COERCION OR UNDER ANY DISTURBED STATE OF MIND. THE TRIBUNAL IN THE QUANTUM APPEAL CONFIRMED THE ADDITION TO THE EXTENT OF RS.16,23,000/- REPRESENTI NG THE PAYMENT TO MR. ASHOK PANDIT WRITTEN AS MR. PUNDIT IN THE DIARY. SINCE THE REMAI NING PAYMENT OF RS.50.00 LACS WAS SHOWN TO MHADA THE TRIBUNAL IN THE QUANTUM APPEAL R EMITTED THE ISSUE TO THE RECORD OF THE AO FOR VERIFICATION OF THE SAID PAYMENT FROM MHADA. THUS, THE LIMITED ISSUE BEFORE US IS REGARDING THE PENALTY IN RESPECT OF TH E ADDITION OF RS.16,23,000/- TO MR. ASHOK PANDIT AS UNDISCLOSED INCOME. THE LD. AR OF T HE ASSESSEE HAS GIVEN MUCH STRESS ON THE FACT THAT THE PAYMENT OF RS.30.00 LACS SHOWN IN THE SAID DIARY AS ON 30/4/2004 WAS ACTUALLY MADE BY THE ASSESSEE TO MR. ASHOK PAND IT, AND THE SAME HAS BEEN OFFERED TO TAX FOR THE ASSESSMENT YEAR 2005-06 AS THE SAID PAYMENT WAS RETURNED TO THE ASSESSEE. IT IS PERTINENT TO NOTE THAT AS PER THE E NTRY IN THE DIARY THE AMOUNT OF RS.20.00 LACS WAS SHOWN AS PAID TO CONTRACTOR AND R S.10.00 LACS TO MR. PANDIT ON 30/4/2004. WHEREAS IN THE AFFIDAVIT OF MR. ASHOK PA NDIT IT IS STATED THAT HE RECEIVED A SUM OF RS.30.00 LACS ON 30/4/2004 WHICH WAS RETURNE D TO THE ASSESSEE ON 2/5/2004. THIS STATEMENT OF MR. ASHOK PUNDIT IS CONTRARY TO T HE ADMITTED ENTRIES OF THE DIARY WHEREIN OUT OF RS.30,00,000/- RS.20.00 LACS HAS BEE N SHOWN AS PAID TO CONTRACTOR AND RS.10.00 LACS SHOWN AS PAID TO MR. ASHOK PANDIT ON 30/4/2004. FURTHER IF THE AMOUNT WAS RETURNED TO THE ASSESSEE ON 2/5/2004 THEN AT TH E TIME OF STATEMENT ON 5/11/2007 THIS FACT SHOULD HAVE BEEN EXPLAINED BY THE ASSESSE E. FURTHER, IN THE RETRACTION LETTER DATED 31/12/2007, AGAIN THIS FACT WAS NOT DISCLOSED BY THE ASSESSEE THAT THE AMOUNT WAS RECEIVED BACK BY THE ASSESSEE AND THE ASSESSEE HAS STATED THAT ONLY RS.30.00 LACS 6 ITA NO.4513/M/13 WAS PAID ON 30/4/2004. WE FURTHER NOTE THAT THE ASS ESSEE HAS NOT EXPLAINED THE PURPOSE FOR WHICH THE AMOUNT OF RS.50.00 LAS WAS TO BE PAID TO MHADA. SINCE PAYMENT WAS TO BE MADE OUT OF THE ACCOUNTS THEREFORE, THE P OSSIBILITY OF MAKING THE SAID PAYMENT AS ILLICIT MONEY IS NOT RULED OUT AND THERE FORE, THERE IS NO QUESTION OF THE SAID PAYMENT COULD BE VERIFIED FROM THE RECORD OF MHADA. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE DO NOT FIND ANY MERITS AND SUBSTANCE IN THE EXPLANATION OF THE ASSESSEE. SINCE THE AMOUNT WAS NOT DISCLOSED IN THE BOOKS OF ACCOUNT AND IT WAS ASSESSED AS UNDISCLOSED INCOME OF THE ASSESSEE WHIC H HAS BEEN CONFIRMED BY THIS TRIBUNAL IN THE QUANTUM APPEAL, THEREFORE, IT IS A CASE OF CONCEALMENT OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY WE ARE OF THE VIEW THAT THE PENALTY LEVIED UNDER SECTION 271(1)(C) IS JUSTI FIED IN THE CASE OF THE ASSESSEE. 5. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH FEBRUARY, 2015. ) ! &'( ' * +# , 13/02/2015 ' ! -$ SD/- SD/- (D. KARUNAKARA RAO) (VIJAY PAL RAO ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER '.$ MUMBAI; +# DATED 13/02 /2015 . # . ./ JV, SR. PS / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI.