ITO CENRAL THANE, THANE V. JANARDHAN MORU MHATRE, PANVEL

ITA 4589/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84372 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 10-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LAV KUMAR
• Keywords: Search and seizure; Document seized; Documents seized
• Section: 69C; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.4589/MUM/2013 (A.Y.2008-09) THE INCOME TAX OFFICER, ASHAR IT PARK, 6 TH FLOOR, WAGLE INDUSTRIAL ESTATE, ROAD NO.16-Z, THANE 400 604(W) (APPELLANT ) VS. SHRI JANARDHAN MORU MHATRE, PLOT NO.21, MCCH, NEAR RUPALI CINEMA, PANVEL 410 206 PAN:AEHPM8108C (RESPONDENT) APPELLANT BY : SHRI LAV KUMAR RESPONDENT BY : NONE DATE OF HEARING : 10/12/2014 DATE OF PRONOUNCEMENT : 10 /12/2014 ORDER PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE REVENUE AND IT IS D IRECTED AGAINST ORDER PASSED BY LD. CIT(A)-1, MUMBAI DATED 14/02/2013 FOR ASSE SSMENT YEAR 2008-09. GROUNDS OF APPEAL READ AS UNDER: 1. WHETHER ON THE FACTS & CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) WAS JUSTIFIED IN CANCELING THE PENALTY LEVIED U/S. 271(1)(C) AT RS.4 ,13,875/-. 2. IN PURSUANCE TO SEARCH AND SEIZURE ACTION CONDUC TED UNDER SECTION 132 OF THE INCOME TAX ACT, 1961(THE ACT) ON 7/2/2008 THE IMPUG NED ASSESSMENT ORDER HAS BEEN FRAMED. IN THE IMPUGNED ASSESSMENT A SUM OF RS.12.00 LACS HAS BEEN ADDED TO THE RETURNED INCOME OF RS.3,46,815/-. ON THE A DDITION OF RS.12.00 LACS IMPUGNED PENALTY HAS BEEN LEVIED. THE BASIS OF ADDITION MA DE IS QUESTION NO.19 PUT TO THE ASSESSEE DURING THE COURSE OF SEARCH. THE QUESTION AND ANSWER HAVE BEEN ITA NO.4589/MUM/2013 (A.Y.2008-09) 2 REPRODUCED IN THE ORDER PASSED BY LD. CIT(A) AND FO R THE SAKE OF COMPLETENESS THE SAID QUESTION AND ANSWER IS REPRODUCED BELOW: Q.19 : TODAY DURING THE SEARCH IT CAME TO NOTICE T HAT IN YOUR RESIDENCE YOU HAVE MADE HUGE RENOVATION. KINDLY STATE TILL TODAY IN THE LA ST SIX YEARS HOW MUCH AMOUNT YOU HAVE SPENT? FROM WHERE IT SPENT? ANS: I HAVE ORIGINALLY CONSTRUCTED THE SAID HOUSE IN THE YEAR 1996. IN THE CURRENT YEAR CONSTRUCTION OF SECOND FLOOR WAS DONE. ON THE SAID CONSTRUCTION TILL TODAY I HAVE SPENT RS.10.00 TO 12.00 LAKHS. THE SAID EXPENDITURE WAS MADE FROM THE COMPANYS AMOUNT. I WILL FURNISH THE FULL INFORMATION IN THE OFFICE. 2.1 THE AO LEVIED PENALTY IN ABSENCE OF EXPLANATION FROM THE ASSESSEE. ACCORDING TO AO THE INCURRING OF EXPENDITURE WAS ADMITTED BY THE ASSESSEE IN THE STATEMENT DURING THE COURSE OF SEARCH PROCEEDINGS AND, THEREF ORE, THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME. THEREFORE, AO HAS L EVIED THE PENALTY. 3. BEFORE LD. CIT(A) IT WAS SUBMITTED THAT THE ADD ITION OF RS.12.00 LACS IS MADE MERELY ON THE BASIS OF SEARCH DATED 7/2/2008. DURI NG THE COURSE OF RECORDING THE STATEMENT THE ASSESSEE WAS ASKED A GENERAL QUESTI ON REGARDING RENOVATION COST OF RESIDENTIAL HOUSE IN THE LAST SIX YEARS AND ITS SOU RCE. IN RESPONSE THE ASSESSEE STATED THAT THE HOUSE WAS CONSTRUCTED IN 1996 AND DURING T HE CURRENT YEAR RS.10.00 TO RS.12.000 LAKHS MAY HAVE BEEN INCURRED FOR CONSTRU CTION OF SECOND FLOOR AND SAME WERE WITHDRAWN FROM THE VARIOUS BUSINESS CONCERNS. IT WAS SUBMITTED THAT AO HAS NOT DISAPPROVED THE STATEMENT OF THE ASSESSEE IN RE GARD TO SOURCE OF INVESTMENT/EXPENDITURE IN HIS ORDER AS PER REQUIREM ENT OF THE PENAL PROVISIONS READ WITH EXPLANATION THEREON. IT WAS SUBMITTED THAT TH E ADDITION IS ALSO NOT CORROBORATED BY ANY SEIZED DOCUMENTS AND ANY OTHER COGENT EVIDEN CE BROUGHT ON RECORD BY THE AO BEFORE LEVYING THE PENALTY. THUS, IT WAS SUBMITTED THAT THERE WAS PROPER EXPLANATION OF THE ASSESSEE ON THE RECORD OF AO WHICH WAS NOT F OUND TO BE FALSE BY HIM. REFERENCE WAS MADE TO THE DECISION OF HONBLE GUJAR AT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT, 114 TAXAMAN 203 (GUJ) T O CONTEND THAT UNDER EXPLANATION -1 TO SECTION 271(1)(C), AS IT STOOD AT RELEVANT TIME, ABSENCE OF PROOF ACCEPTABLE TO ITA NO.4589/MUM/2013 (A.Y.2008-09) 3 DEPARTMENT CANNOT BE EQUATED WITH FRAUD OR WILLFUL DEFAULT. BEFORE LD. CIT(A) THE ASSESSEE HAD SUBMITTED PERSONAL BALANCE SHEET OF TH E ASSESSEE AND CAPITAL OF HIS SONS IN THE FIRM M/S.J.M.MHATRE AND IT WAS SUBMITT ED THAT FROM THOSE DOCUMENTS IT IS EVIDENT THAT THERE WAS SUFFICIENT RESOURCE FO R APPROXIMATE INVESTMENT/ EXPENDITURE AS STATED BY THE ASSESSEE DURING THE SE ARCH. THUS, IT WAS SUBMITTED THAT PENALTY HAS WRONGLY BEEN LEVIED BY THE AO. 3.1 CONSIDERING THESE SUBMISSIONS OF THE ASSESSEE, LD. CIT(A) HAS OBSERVED THAT THE PERUSAL OF QUESTION NO.19 RECORDED DURING THE COURSE OF SEARCH WOULD REVEAL THAT IT WAS A GENERAL QUESTION REGARDING RENOVATION COST IN THE LAST SIX YEARS AND AS PER REPLY OF THE ASSESSEE IT HAD INCURRED RS.10.0 0 TO RS.12.00 LAKHS WHICH WAS WITHDRAWN FROM THE VARIOUS BUSINESS CONCERNS AND D ETAILS WILL BE SUBMITTED IN THE OFFICE. OBSERVING FROM THE SAID QUESTION, IT IS FO UND BY LD. CIT(A) THAT THERE WAS NO MENTION OF ANY SEIZED MATERIAL FOR THE IMPUGNED ADD ITIONS. THE QUESTION WAS GENERAL QUESTION AND ANSWER WAS ALSO GENERAL. THERE IS NO FACTUAL EVIDENCE REGARDING INCURRENCE OF EXPENDITURE. PROVISIONS OF SECTION 69C OF THE ACT CAN BE INVOKED ONLY IN A CASE WHERE THE ASSESSEE IS FOUND TO HAVE INCUR RED SOME EXPENDITURE AND SOURCE OR THE EXPLANATION OFFERED REGARDING SUCH EXPENDIT URE IS NOT SATISFACTORY. SECTION 69C OF THE ACT CANNOT BE INVOKED UNLESS IT HAS BEE N PROVED BY THE AO THAT THE EXPENDITURE IS ACTUALLY INCURRED BY THE ASSESSEE AN D THERE IS EVIDENCE FOR INCURRING OF SUCH EXPENDITURE. DURING THE COURSE OF ASSESSME NT PROCEEDINGS AO HAS PRESUMED ON THE BASIS OF GENERAL STATEMENT THAT THE ASSESSE E HAS INCURRED AN EXPENDITURE BUT AS PER LAW THE AO IS REQUIRED TO BE IN THE POSSESSI ON OF SOME MATERIAL/ DOCUMENTS TO PROVE THAT SUCH EXPENDITURE WAS ACTUALLY INCURRED. AS PER WELL SETTLED PROPOSITION OF LAW SUCH ADDITION IN SEARCH PROCEEDINGS CANNOT BE M ADE ON PRESUMPTION AND ASSUMPTIONS AND SHOULD BE BASED ON CREDIBLE EVIDE NCE SEIZED DURING THE SEARCH PROCEEDINGS. THE AO DID NOT MAKE ANY INDEPENDENT E NQUIRY TO PROVE THE INCURRENCE OF EXPENDITURE AND IN THIS MANNER LD. CIT(A) HAS DE LETED THE PENALTY. THE DEPARTMENT IS AGGRIEVED, HENCE, HAS RAISED AFOREMEN TIONED GROUNDS OF APPEAL. ITA NO.4589/MUM/2013 (A.Y.2008-09) 4 4. NOTICE OF HEARING WAS SENT TO THE ASSESSEE THROU GH RPAD AS ASSESSEE DID NOT APPEAR ON THE LAST FIXED DATE OF HEARING WHICH WAS 12/11/2014. ON THE FIXED DATE OF HEARING I.E. ON 10/12/2014 ALSO ASSESSEE DID NOT AP PEAR, THEREFORE, WE PROCEED TO DECIDE THE PRESENT APPEAL EX-PARTE QUA THE ASSESSEE AFTER CONSIDERING THE MATERIAL AVAILABLE ON OUR RECORD AND ALSO AFTER HEARING LD. DR. 5. LD. DR RELIED UPON THE PENALTY ORDER AND SUBMITT ED THAT ASSESSEE DID NOT SUBMIT EXPLANATION BEFORE AO AND IN ABSENCE OF ANY EXPLANATION PENALTY HAS WRONGLY BEEN DELETED BY LD. CIT(A). THUS, IT WAS S UBMITTED BY LD. DR THAT ORDER PASSED BY LD. CIT(A) SHOULD BE SET ASIDE AND THAT O F AO RESTORED. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. DR AND HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS PENALTY ORD ER AND THE ORDER PASSED BY LD. CIT(A). THE ADDITION OF RS.12.00 LAKHS HAS BEEN MA DE ON THE BASIS OF QUESTION AND ANSWER REPRODUCED IN THE ABOVE PART OF THIS ORDER. IN THE QUESTION THERE IS NO ADMISSION ON THE PART OF THE ASSESSEE REGARDING E XPENSES HAVING BEEN INCURRED FROM UNDISCLOSED INCOME. AS PER EXPLANATION SUBMIT TED BY THE ASSESSEE THE EXPENSES TO THE TUNE OF RS.10.00 TO RS. 12.00 LAKHS WERE MADE ON CONSTRUCTION WHICH WERE MADE FROM THE COMPANYS AMOUNT. THERE I S NO MATERIAL APART FROM THE AFOREMENTIONED QUESTION AND ANSWER, ACCORDING TO WH ICH IT CAN BE SAID THAT EXPENSES WERE NOT INCURRED BY THE ASSESSEE OUT OF COMPANYS AMOUNT AS IT WAS STATED IN THE STATEMENT. MOREOVER, IT APPEARS THAT BEFORE LD. CIT(A) BALANCE SHEETS WERE SUBMITTED ACCORDING TO WHICH THERE WAS SUFFICI ENT RESOURCES FOR INVESTMENT/ EXPENDITURE AS STATED BY THE ASSESSEE DURING TH E SEARCH. THOUGH, SUCH SUBMISSION OF THE ASSESSEE HAS BEEN RECORDED BY LD. CIT(A) IN PARA-4, BUT LD. CIT(A) DID NOT REST HIS FINDINGS ON THESE SUBMISSIONS OF T HE ASSESSEE BUT IT IS FACT THAT ADVERSE COMMENTS ARE ALSO NOT RECORDED ON THE SAID SUBMISSION OF THE ASSESSEE. TAKING THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THERE IS NO REASON FOR US TO INTERFERE IN THE RELI EF GRANTED BY LD. CIT(A) AS ADDITION HAS BEEN MADE BY AO UNDER SECTION 69C OF THE ACT A ND ACCORDING TO FACTS OF THE CASE THERE IS ABSENCE OF THE MATERIAL ON THE BASIS OF WH ICH IT CAN BE SAID THAT ADDITION ITA NO.4589/MUM/2013 (A.Y.2008-09) 5 UNDER SECTION 69C WAS JUSTIFIED. THEREFORE, WE DEC LINE TO INTERFERE IN THE ORDER PASSED BY LD. CIT(A) AND THE APPEAL FILED BY THE RE VENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/12/2014 ! ' #$ % &'( 10/12/2014 ' ) SD/- SD/- ( /SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; &' DATED 10/12/2014 ! ! ! ! ' '' ' *+, *+, *+, *+, -,$+ -,$+ -,$+ -,$+ / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. *0./ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. ,2) *+' , , / DR, ITAT, MUMBAI 6. )3 4 / GUARD FILE. !' !' !' !' / BY ORDER, 0,+ *+ //TRUE COPY// 5 55 5 / 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS