CHARANJIT SINGH BHELA, MUMBAI V. DCIT 21(3), MUMBAI

ITA 4582/MUM/2008

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70833 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-07-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 07-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T ROUMUAN PAITE
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Loose papers; Retrospective amendment
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI , ! ! ! ! '! !, $ BEFORE SHRI SANJAY ARORA, A. M. AND SHRI VIJAY PAL RAO, J. M. ./ I.T.A. NO. 4582/MUM/2008 ( ' ( !)( ' ( !)( ' ( !)( ' ( !)( / / / / ASSESSMENT YEAR: 2003-04) CHARANJIT SINGH BHELA M/S. NIRMAL PROJECTS, MARUTI DARSHAN, NEAR IOC PETROL PUMP, OPP. IIT MAIN GATE, POWAI, MUMBAI-400 076 ' ' ' ' / VS. DY. CIT 21(3), IT OFFICES, BANDRA, MUMBAI-400 020 * ./ + ./ PAN/GIR NO. AACPB 7209 E ( *, / APPELLANT ) : ( -.*, / RESPONDENT ) *, / / APPELLANT BY : SHRI M. SUBRAMANIAN -.*, 0 / / RESPONDENT BY : SHRI T. ROUMUAN PAITE '! 0 12 / // / DATE OF HEARING : 03.07.2013 3) 0 12 / DATE OF PRONOUNCEMENT : 14.08.2013 4 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-XXI, MUMBAI (CIT(A) FOR S HORT) DATED 07.04.2008, CONFIRMING THE LEVY OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2003-04 IN ITS CASE BY THE ASSESSING OFFICER (A.O.) VIDE ORDER DATED 26.03.2007. 2 ITA NO.4582/MUM/2008 (A.Y. 2003-04) CHARANJIT SINGH BHELA VS. DY. CIT 2. THE APPEAL RAISES A SINGLE ISSUE, I.E., THE LEVY OF THE PENALTY IN THE SUM OF RS.10,86,750/-, SINCE CONFIRMED BY THE LD. CIT(A). THE ASSESSEE, AN INDIVIDUAL, IS A CIVIL CONTRACTOR ENGAGED PRIMARILY IN ROAD CONSTRUCTION. HE WAS SUBJECT TO SURVEY BY THE DEPARTMENT ON 13.01.2003, WHEREAT THREE LOOSE PAPER S WERE FOUND, ADDITIONS QUA WHICH WERE MADE ON ASSESSMENT FOR AN AGGREGATE OF RS.34.5 0 LACS. THE PRESENT APPEAL IS TOWARD PENALTY U/S. 271(1)(C) OF THE ACT ON THE SAID ADDIT IONS. 3.1 EXPLAINING THE BACKGROUND FACTS, IT WAS SUBMITT ED BY THE LD. AR, THE ASSESSEES COUNSEL, THAT THERE WAS A SURVEY AT THE ASSESSEES BUSINESS PREMISES ON 13.01.2003, WHEREAT THREE LOOSE PAPERS WERE FOUND (PB PGS.83-85 ). THE ASSESSEE, ON BEING QUESTIONED IN RESPECT OF THE SAME, ADMITTED UNDISCLOSED INCOME TO THE EXTENT OF RS.34.50 LACS VIDE HIS STATEMENT U/S.133A OF THE ACT. HOWEVER, AS NO I NCOME TOWARD THE SAME WAS OFFERED PER THE RETURN OF INCOME FILED SUBSEQUENTLY ON 28.1 1.2003, THE A.O. FINALIZED THE ASSESSMENT BY ADDING THE SAME. THE MATTER HAS SINCE ATTAINED FINALITY BY THE DECISION BY THE TRIBUNAL; IT UPHOLDING THE SAID ADDITION TO THE EXTENT OF RS.20 LACS (IN ITA NO.1265/MUM/2006 DATED 16.03.2011, PB PGS.66-77), T AKING US THROUGH THE RELEVANT PART OF ITS ORDER. PENALTY, HOWEVER, STANDS LEVIED AND C ONFIRMED ON THE TOTAL ADDITION OF RS.34.50 LACS, AS ORDERS BY BOTH THE REVENUE AUTHOR ITIES WERE PASSED PRIOR TO THE SAID ORDER BY THE TRIBUNAL. NO PENALTY WOULD OBVIOUSLY S URVIVE IN-SO-FAR AS THE DELETION FOR RS.14.50 LACS IS CONCERNED. AS REGARDS THE SUSTAINE D ADDITION OF RS.20 LACS, IT NEEDS TO BE APPRECIATED THAT THE ADDITION IS BASED SOLELY ON TH E STATEMENT U/S.133A, WHICH HAS NO EVIDENTIARY VALUE, BEING EVEN OTHERWISE SINCE RETRA CTED. ALSO, THE SAME IS ITSELF BASED ONLY ON LOOSE PAPERS, WHICH STOOD CONFRONTED TO THE ASSESSEE ONLY SUBSEQUENT TO THE FINALIZATION OF THE QUANTUM PROCEEDINGS. FURTHER, T HE ADDITION, WHICH IS ON ACCOUNT OF EXCESS WORK-IN-PROGRESS (WIP), I.E., AS EVIDENCED B Y ONE OF THE LOOSE PAPERS (PB PG.85), STATING THE VALUE THEREOF AS ON 10.01.2003 AT RS.96 .20 LACS, AS AGAINST ITS BOOK VALUE OF THE WIP AT RS.76.20 LACS AS ON 31/12/2002 (PB PG. 8 6), LEADING TO AN ADDITION OF RS. 20 LACS IN ITS RESPECT, IS ITSELF BASED ON INSUFFICIEN T INFORMATION. THE DATA FROM THE BRANCH OFFICES WAS YET TO BE RECEIVED AND, THEREFORE, FACT ORING IN THE SAID INFORMATION, INCREASED 3 ITA NO.4582/MUM/2008 (A.Y. 2003-04) CHARANJIT SINGH BHELA VS. DY. CIT THE VALUE OF WIP AS ON 10.01.2003 TO A FIGURE OF RS .117.96 LACS, I.E., MUCH BEYOND RS.96.20 LACS ASSESSED, AND ON WHICH BASIS THE ADDI TION OF RS.20 LACS HAS BEEN MADE. CONTENTIONS TO THIS EFFECT WERE MADE BEFORE THE A.O . BY THE ASSESSEE VIDE ITS LETTER DATED 24.01.2005, WHICH THOUGH HAVE NOT BEEN CONSIDERED E ITHER IN THE QUANTUM OR EVEN THE PENALTY PROCEEDINGS. REFERENCE WAS THEN MADE BY THE LD. AR TO THE RELEVANT SUBMISSIONS (PB PGS.241, 242) AS WELL AS ANNEXURE C TO THE SAID LETTER (PB PG.263). NO CASE FOR LEVY OF PENALTY IS, UNDER THE CIRCUMSTANCES, MADE OUT. I N ANY CASE, THE MATTER HAVING NOT BEEN EXAMINED BY THE AUTHORITIES BELOW, THE SAME MAY BE REMITTED BACK TO THE FILE OF THE A.O. FOR A FRESH CONSIDERATION THEREOF. 3.2 THE LD. DR, ON THE OTHER HAND, WOULD SUBMIT THA T THE ASSESSEE HAVING NOT SUBMITTED ANY FRESH EXPLANATION WITH REGARD TO THE ADDITION OF RS.20 LACS, SINCE SUSTAINED BY THE TRIBUNAL, THE FINAL FACT FINDING AUTHORITY, NO CASE FOR DELETION OF THE PENALTY OR OF ITS FRESH CONSIDERATION, IS MADE OUT. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 THE ADDITION IN RESPECT OF ADVANCE PAYMENTS TO LABOUR CONTRACTORS (AT RS.4.50 LACS) AND CASH EXPENSES (FOR RS.9.98 LACS), AS EVIDENCED BY TWO OF THE LOOSE PAPERS FOUND DURING SURVEY, AND IN RESPECT OF WHICH THE ASSESSEE OFFERED RS.14.50 LACS AS ADDITIONAL INCOME (IN SURVEY), HAVING BEEN SINCE DELETED, NO C ASE FOR LEVY OF PENALTY IN RESPECT OF THE ADDITION FOR THE SAID AMOUNT OBTAINS. 4.2 AS REGARDS THE SURVIVING ADDITION OF RS.20 LACS , I.E., ON ACCOUNT OF DIFFERENCE IN THE VALUE OF THE WIP, THE ASSESSEES ARGUMENT WITH REGARD TO THE ADDITION BEING MADE ON THE STRENGTH OF ONLY A LOOSE PAPER, AND ON THE BASI S OF THE STATEMENT U/S.133A, WHICH HAS NO EVIDENTIARY VALUE, IS MISCONCEIVED. SECTION 292C OF THE ACT, INSERTED ON STATUTE BY FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 01 .10.1975, PROVIDES FOR THE STATUTORY PRESUMPTION OF THE TRUTH, AMONG OTHERS, OF THE DOCU MENTS FOUND DURING SEARCH OR SURVEY. ACCORDINGLY, TO HOLD THAT THE ADDITION IS ONLY BASE D ON A LOOSE PAPER AND, THUS, NOT VALID, WOULD BE TO NO MOMENT. IT IS INCONCEIVABLE THAT THE ASSESSEE DEPOSED ADMITTING TO AN 4 ITA NO.4582/MUM/2008 (A.Y. 2003-04) CHARANJIT SINGH BHELA VS. DY. CIT ADDITIONAL INCOME OF RS. 20 LACS WITHOUT REFERENCE TO THE SAID LOOSE DOCUMENT, ONLY WITH REFERENCE TO WHICH IT WOULD HAVE BEEN QUESTIONED, A ND THE QUANTUM OF ADDITION IN FACT DETERMINED. FURTHER, EVEN AS ALSO OBSERVED BY THE T RIBUNAL, THE STATEMENT U/S. 133A STANDS ALSO SUBSEQUENTLY CONFIRMED BY THE ASSESSEE PER AN AFFIDAVIT DATED 15/1/2003. THE TRIBUNAL HAS ALSO REFERRED TO THE VERIFICATION OF T HE EXCESS BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS. ACCORDINGLY, TO STATE THAT THE ADDITION IS WITHOUT BASIS, IS ITSELF WITHOUT BASIS. 4.3 CONTINUING FURTHER, WE HAVE PERUSED THE ASSESSE ES COMMUNICATION DATED 24.01.2005 TO THE A.O. DURING THE ASSESSMENT PROCEE DINGS. THOUGH IT IS NOT CLEAR IF THE SAME WAS ALSO RELIED UPON IN THE PENALTY PROCEEDING S, THE SAME HAVING BEEN SO DURING THE ASSESSMENT PROCEEDINGS, WE CONSIDER IT TO BE RELEVA NT, SO THAT IT IS LIABLE TO BE CONSIDERED AS A PART OF THE ASSESSEES EXPLANATION IN THE PENA LTY PROCEEDINGS. THE ASSESSEES CONTENTIONS RAISED PER ITS SAID LETTER WERE FOUND N OT ACCEPTABLE BY THE A.O. AS THE SAME DID NOT SHOW THE DETAILS OF THE QUANTUM AND THE DIM ENSIONS OF WORK DONE OR UNDER REFERENCE. IN THE ABSENCE OF THE DETAILS OF THE NAT URE OF AND PARTICULARS IN RESPECT OF THE WORK DONE, IT WAS NOT POSSIBLE TO VERIFY THE VALUE OF THE WIP. THE SAME INFORMED THE DECISION BY THE APPELLATE AUTHORITIES AS WELL, AND CONTINUES TO GOVERN THE REVENUES DECISION INSOFAR AS THE PENALTY PROCEEDINGS ARE CON CERNED. THE ASSESSEE HAS EXPLAINED THEREBY THAT THE DETAILS IN RESPECT OF THE WORK DONE FOR GOVERNMENT DEPARTMENTS, VIZ. PWD, MSRDC, BMC, ETC. AND PUBLIC SECTOR CORPORATIONS, THE QUANTUM/DIMENSIONAL DETAILS OF THE WORK DONE IN THE FORM OF MEASUREMENT BOOK, COPY OF WHICH IS NOT AVAILABLE WITH HIM. BILLING TH ERETO IS DONE ON THE BASIS OF THE SAID MEASUREMENT BOOK, AND THE BALANCE (UNCERTIFIED) WOR K REPRESENTS THE WORK-IN-PROGRESS (WHICH STANDS SUBMITTED PER ANNEXURE A TO ITS LETTE R). AS REGARDS THE PRIVATE COMPANIES, VIZ. MAHINDRA AND MAHINDRA LTD., TATA POWER LTD., E TC., PROJECT-WISE DETAILS ARE MAINTAINED BY IT AND AVAILABLE, MARKING THE SAME AS ANNEXURE B TO HIS SAID LETTER. IN BOTH THE CASES, THE ENTIRE RECEIPT IS SUBJECT TO TDS. TH E TOTAL WIP AS PER THE ACCOUNTS AS ON 10.01.2003 , I.E., THE DATE FOR WHICH THE LOOSE PAPER FOR WIP WAS FOUND FROM ITS PREMISES, 5 ITA NO.4582/MUM/2008 (A.Y. 2003-04) CHARANJIT SINGH BHELA VS. DY. CIT IN FACT WORKS TO RS.117.96 LACS (ANNEXURE C). THE ASSESSEE CONTENTIONS HAVE NOT BE EN TESTED AT ANY STAGE. THE AVERMENTS MAY OR MAY NOT B E CORRECT, BUT THE SAME NEED TO BE SO, AND A DECISION QUA PENALTY COULD NOT POSSIBLY BE TAKEN WITHOUT VERIFI CATION AND CONSIDERING THE SAME ON MERITS. SEVERAL QUESTIONS A RISE. FIRSTLY, HOW, IN THE ABSENCE OF THE MEASUREMENT DETAILS QUA GOVT. PROJECTS, IS THE CLOSING WIP THEREON COMPUTE D? THEN, AGAIN, ARE THE ASSESSEES ACCOUNTS AND ITS DISCLOSU RE OF CLOSING WIP AS ON 31/3/2003 CONSISTENT WITH THE VALUE THEREOF AT RS. 117.96 LAC S AS ON 10/1/2003? FURTHER, HOW; NO DAY TO DAY STOCK RECORDS BEING OSTENSIBLY MAINTAINE D, WAS THE BOOK VALUE OF WIP AS ON 31/12/2002, AN INTERIM DATE DURING THE YEAR, DETERM INED AT RS. 76.20 LACS, AND WITH REFERENCE TO WHICH THE ADDITION OF RS. 20 LACS WAS MADE? DOES IT IN FACT REPRESENT THE WIP AS ON 31/12/2002 OR IS ONLY AT 01/04/2002? AGAI N, DOES THE SAME RECONCILE WITH THE YEAR-END VALUE? MOST IMPORTANTLY THOUGH IS THE VALI DATION OF THE BOOK VALUE OF THE STOCK AS ON 10/1/2003 AT RS. 117.96 LACS, OR AT LEAST IN A SUM OF RS. 96.20 LACS. IT IS THE SATISFACTORY OR OTHERWISE ANSWERS TO THESE QUESTION S ON WHICH THE ACCEPTABILITY OF THE ASSESSEES EXPLANATION AND, THUS, THE VALIDITY OF T HE IMPUGNED PENALTY ON THE ADDITION SUSTAINED IN ITS RESPECT, RESTS. CLEARLY, THEREFOR E, THE ONUS TO ESTABLISH THE CORRECTNESS OF THE SAME WOULD OF COURSE BE ON THE ASSESSEE, IN THE ABSENCE OF WHICH IT WOULD BE NO MORE THAN A BALD ASSERTION. THERE ARE OTHER ASPECTS TO THE MATTER AS WELL. THE ASSESSEE FILED ITS RETURN FOR THE RELEVANT YEAR ON 28/11/2003, I.E., EIGHT MONTHS AFT ER THE CLOSE OF THE YEAR. ALL THE FIGURES WOULD ONLY HAVE BEEN COMPILED WHILE FINALIZING THE ACCOUNTS AND PREPARING THE BALANCE SHEET (AS ON 31/3/2003), WHICH WOULD HAVE BEEN PRIO R THERETO. THE DIFFERENCES, IF ANY, THEREFORE, OUGHT TO HAVE BEEN BROUGHT TO THE NOTICE OF THE REVENUE AT THE FIRST POSSIBLE INSTANCE, WHILE WE FIND IT TO BE SO FOR THE FIRST T IME ONLY VIDE LETTER TO THE A.O. DATED 24.01.2005. FURTHER, THE AFFIDAVIT DATED 15.01.2003 IS NOT ON RECORD. THE CONTENTS THEREOF WOULD HAVE TO BE EXAMINED AND EXPLAINED INASMUCH AS THE ASSESSEE WOULD ONLY BE WELL AWARE OF THE FACTS AND THE STATUS OF ITS ACCOUNTS A T THE TIME OF DEPOSITION. WE SAY SO AS THE ASSESSEES CONDUCT AND BONA FIDES IS VERY RELEVANT AND MATERIAL TOWARD EXPLAINING IT S CASE IN THE PENALTY PROCEEDINGS. 6 ITA NO.4582/MUM/2008 (A.Y. 2003-04) CHARANJIT SINGH BHELA VS. DY. CIT 4.4 UNDER THE CIRCUMSTANCES, THEREFORE, WE ONLY CON SIDER IT FIT AND PROPER THAT THE MATTER IS RESTORED BACK TO THE A.O. TO ALLOW THE AS SESSEE AN OPPORTUNITY TO EXPLAIN ITS CASE WITH REFERENCE TO THE OBTAINING FACTS AND CIRCUMSTA NCES OF ITS CASE, TO WHICH WE HAVE ADVERTED TO, HIGHLIGHTING WHAT IS CONSIDERED PERTIN ENT VIDE PARA 4.3 SUPRA. THE A.O. SHALL DECIDE THE SAME AS PER LAW, ISSUING DEFINITE FINDIN GS OF FACT, EITHER IN ACCEPTANCE AND/OR REJECTION, I.E., WHERE IN PART, OF THE ASSESSEES C ASE ON MERITS. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 5 16 ' (51 0 70 89: ! ;1 0 1 <= ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 14, 20 13 SD/- SD/- (VIJAY PAL RAO) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; >' DATED : 14.08.2013 !.'. ./ ROSHANI , SR. PS 4 0 -1' ?')1 4 0 -1' ?')1 4 0 -1' ?')1 4 0 -1' ?')1/ COPY OF THE ORDER FORWARDED TO : 1. *, / THE APPELLANT 2. -.*, / THE RESPONDENT 3. @ ( ) / THE CIT(A) 4. @ / CIT CONCERNED 5. '!CD -1' , , / DR, ITAT, MUMBAI 6. DE( F / GUARD FILE 4' 4' 4' 4' / BY ORDER, 8 88 8/ // / < < < < (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI