ALPHA LITE, MUMBAI V. ITO 14(2)(2), MUMBAI

ITA 4778/MUM/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6948 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 15-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N O MEHTA
• Assessee Lawyers: M C OMI NINGSHEN
• Section: 133A

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH MUMB AI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4778/MUM/2014 (ASSESSMENT YEAR 201 0-11 ) M/S ALPHA LITE SHOP NO. 63/64/65, 16, AMRIT NIWAS, K.M. SHARMA MARG, LOHAR CHAWL, MUMBAI-400002. PAN: AAIFA3819K VS. ITO- 14(2)(2), ROOM NO. 304, 3 RD FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400021. APPELLANT RESPONDENT APPELLANT BY : SHRI N.O. MEHTA (AR) RESPONDENT BY : SHRI M.C. OMI NINGSHEN (DR) DATE OF HEARING : 08.05.2018 DATE OF PRONOUNCEMEN T : 23.05.2018 ORDER UNDER SECTION (1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER ; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER O F INCOME-TAX (APPEALS)-25 [LD. CIT(A)], MUMBAI DATED 13.05.2014 IN CONFIRMING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT F OR ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS OF APPEAL: 1.00 UNDER THE FACTS AND IN LAW, THE LEARNED CIT(A) , ERRED IN CONFIRMING THE LEVY OF CONCEALMENT PENALTY OF RS. 1,275,802/- ON A CCOUNT OF INCOME ADDED DURING THE COURSE OF SURVEY AS REGARDS DIFFERENCE I N STOCK VALUATION. 1.01. THE LEANED CIT(A) FAILED TO CONSIDER THE WRIT TEN SUBMISSION MADE BEFORE HIM. 1.02 UNDER THE FACTS AND IN THE LAW, THE LEARNED CI T(A) FAILED TO APPRECIATE THE FACT THAT THERE IS NEITHER CONCEALMENT OF INCOME NO R FURNISHING INACCURATE PARTICULARS AS CONTEMPLATED U/S 271(1)(C) OF THE IN COME TAX ACT, 1961. 1.03 THE SUPREME COURT JUDGMENT IN CASE OF M/S MAK DATA PVT. LTD V. CIT RELIED ON BY CIT(A) IS NOT APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE. ITA NO.4778/M/14- M/S ALPHA LITE 2 1.04 THE LEARNED CIT(A) FAILED TO APPRECIATE THE FA CT THAT THE DIFFERENCE IN STOCK VALUATION AS OBSERVED DURING THE SURVEY WAS D ULY CONSIDERED IN THE RETURN OF INCOME FILED BY THE APPELLANT. 2.00 THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DE LETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT A SURVEY ACTION UN DER SECTION 133A WAS CARRIED AT THE PREMISES OF ASSESSEE ON 17.03.2010. THE ASSESSEE DISCLOSED DECLARATION OF INCOME OF RS. 40,01,181/- IN THE FORM OF STOCK FOUND DURING THE SURVEY. THE ASSESSEE FILED RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 13.10.2020 DECLARING TOT AL INCOME OF RS. 18,60,289/-. THE ASSESSMENT WAS COMPLETED ON 08.03. 2013 ASSESSING THE TOTAL INCOME AT RS. 19,87,917/-. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER INITIATED THE PENALTY UNDER SECTION 271(1)(C) ON ADDITION OF RS. 1,27,628/- ON ACCOUNT OF DIFFERENCE IN PURCHASES MADE FROM LEADER ELECTRICALS P. LTD. AND THE DECLARATION OF INCOME OF RS. 40,01,181/- IN THE FORM OF STOCK FOUN D DURING THE SURVEY UNDER SECTION 133A ON 17.03.2010. THE ASSESSING OFF ICER LEVIED THE PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED. THE ASSESSING OFFICER LEVIED THE PENALTY OF RS. 12,75,802/-. ON APPEAL BE FORE THE LD. CIT(A), THE PENALTY QUA THE ADDITION OF RS. 1,27,628/- WAS DELETED. HOWEVER, IT WAS CONFIRMED IN RESPECT OF DECLARATION OF INCOME O F RS. 40,01,181/- DURING THE SURVEY UNDER SECTION 133A. THEREFORE, AG GRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRE SENT APPEAL BEFORE US. ITA NO.4778/M/14- M/S ALPHA LITE 3 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASS ESSEE SUBMITS THAT THE ASSESSING OFFICER HAS WRONGLY HELD THAT ASSESSEE FU RNISHED INACCURATE PARTICULAR OR CONCEALED INCOME. A SURVEY WAS CONDUC TED ON 17.03.2010. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 WA S FILED ON 12.10.2010. THE ASSESSEE WHILE FILING RETURN OF INC OME INCREASED THE CLOSING STOCK BY RS. 40.00 LACKS - TO RS. 1,30,28,9 31/- RAISING GROSS PROFIT TO 14% AGAINST THE NORMAL GROSS PROFIT ON 5%. THE R ETURN OF INCOME WAS ACCEPTED BY ASSESSING OFFICER QUA THE CLOSING STOCK . THE ASSESSEE HAS PAID ADDITIONAL TAX DURING SURVEY ITSELF AND THE INCOME WAS INCORPORATED IN THE RETURN OF INCOME. THEREFORE, THERE IS NO OCCASION F OR ANY CONCEALMENT DURING THE PROCESS OF ASSESSMENT. NO INACCURATE PAR TICULAR WAS FURNISHED. THE ASSESSING OFFICER HAS NOT RECORDED HIS SATISFAC TION WHILE PASSING THE ASSESSMENT ORDER THAT ANY PARTICULAR FURNISHED BY A SSESSEE WAS INACCURATE OR ASSESSEE CONCEALED ANY PARTICULAR OF INCOME. THE ASSESSEE HAS MADE VOLUNTARY DISCLOSURE DURING THE SURVEY PROCEEDING. THEREFORE, THERE IS NO OCCASION FOR EVADING ANY TAX OR CONCEALING ANY INCO ME ASSESSED. THE ASSESSING OFFICER HAS NOT DISPUTED THE GROSS PROFIT DECLARED AT 14%. 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE SUBMI TS THAT ADMISSION OF ASSESSEE WAS IN CONSEQUENCE OF THE ACT OF SURVEY TE AM. THE ASSESSEE HAS ITA NO.4778/M/14- M/S ALPHA LITE 4 SUPPRESSED THE STOCK AND THE CIRCUMSTANCES OF THE R ESULT OF SURVEY LEADS TO ADMISSION BY THE ASSESSEE IN DISCLOSING STOCK. THE ASSESSEE DECLARED STOCK WHEN HE WAS CORNERED BY SURVEY TEAM. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THERE IS N O DISPUTE ABOUT THE SURVEY CARRIED AT THE PREMISES OF ASSESSEE ON 17.03 .2010. FURTHER, THERE IS NO DISPUTE THAT DURING THE COURSE OF SURVEY, THE AS SESSEE DECLARED STOCK OF RS. 40,01,181/- AFTER THE SURVEY, THE ASSESSEE FILE D HIS RETURN OF INCOME ON 17.10.2010. THE ASSESSING OFFICER ACCEPTED THE INCO ME WHILE THE ASSESSMENT, NO ADDITION QUA THE STOCK DECLARED BY A SSESSEE WAS MADE WHILE PASSING THE ASSESSMENT ORDER. THE ASSESSING O FFICER HAS NOT RECORDED HIS SATISFACTION WHETHER THE ADDITIONAL ST OCK DECLARED BY ASSESSEE FOR RS. 40,01,181/- WAS DISCLOSED IN THE RETURN OF INCOME OR NOT. THERE IS NO SATISFACTION RECORDED BY THE ASSESSING OFFICER , AT THE TIME OF PASSING ASSESSMENT ORDER THAT ASSESSEE FURNISHED ANY INACCU RATE PARTICULAR OR CONCEALED ANY INCOME. THE ASSESSING OFFICER SIMPLY NOTED WHILE PASSING THE ASSESSMENT ORDER PENALTY PROCEEDING UNDER SECT ION 271(1)(C) ARE BEING INITIATED SEPARATELY FOR CONCEALING OF INCOME . 6. DURING THE PENALTY PROCEEDING, THE ASSESSEE FILED R EPLY TO THE SHOW CAUSE VIDE ITS REPLY DATED 21.06.2013. IN THE REPLY, THE ASSESSEE CONTENDED THAT THEY HAVE NEITHER CONCEALED THEIR INCOME NOR FURNIS HED INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER LEVIED THE PENALTY @ 100% ITA NO.4778/M/14- M/S ALPHA LITE 5 OF THE TAX SOUGHT TO BE EVADED. BEFORE THE LD. CIT( A), THE ASSESSEE URGED THAT THE SAID STOCK HAS BEEN OFFERED TO TAX IN THE RETURN FILED BY THE ASSESSEE AND THE FACT HAS BEEN ACCEPTED BY ASSESSIN G OFFICER AS NO FURTHER ADDITION HAS BEEN MADE. THE LD. CIT(A) RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF MAK DATA PVT. LTD. VS CIT 355 ITR 593 (SC) HELD THAT THE DECISION SQUARELY APPLICABLE IN THE PRESENT CASE AND CONFIRMED THE PENALTY. WE HAVE NOTED THAT THE ASSES SING OFFICER LEVIED THE PENALTY ON ADDITION OF RS. 1,27,628/- AND THE A DDITIONAL INCOME OF RS. 40,01,181/- DECLARED IN THE FORM OF STOCK. THUS, TH E ASSESSING OFFICER LEVIED THE PENALTY TOTAL CONCEALED INCOME OF RS. 41 ,28,809/-, THE ASSESSING OFFICER WORKED OUT THE MINIMUM PENALTY @ 100% AT RS. 12,75,802/-. WE HAVE FURTHER NOTED THAT THE LD. CIT (A) DELETED THE PENALTY QUA THE ADDITION OF RS. 1,27,628/-. WE ARE SURPRISE THAT ONE THE PENALTY QUA THE ADDITION OF RS. 1,27,628/ WAS DELETED, THE LD. CIT(A) STILL CONFIRMED THE PENALTY OF RS. 12,75,802/-. AS WE HAVE ALREADY NOTED THAT THERE IS NO SATISFACTION OF ASSESSING OFFICER AT THE TIME OF PA SSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT RECORDED THE S ATISFACTION THAT THE RETURN OF INCOME WAS FOUND TO BE INCORRECT, ERRONEO US OR FALSE, THUS, IN ABSENCE OF SUCH SATISFACTION NO PENALTY IS LEVIABLE . THE HONBLE SUPREME COURT IN CASE OF CIT VS RELIANCE PETROPRODUCTS (P.) LTD. 322 ITR 158 HELD THAT IF THERE IS NO FINDING OF THE ASSESSING O FFICER TO RECALL THAT RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS THERE WOULD BE NO QUESTION OF ITA NO.4778/M/14- M/S ALPHA LITE 6 INVITING THE PENALTY UNDER SECTION 271(1)(C). AS AR GUED BY LD. AR OF THE ASSESSEE THAT THE ASSESSEE NEITHER CONCEALED ANY IN COME NOR ANY INACCURATE PARTICULAR WAS FURNISHED AS THERE IS NO ADDITION QU A THE INCOME OFFERED DURING THE SURVEY ACTION. FURTHER, THE REVENUE HAS NOT DISPUTED THE GROSS PROFIT DECLARED BY ASSESSEE. 7. THE HONBLE DELHI HIGH COURT IN CIT VS SAS PHARMACE UTICALS (2011) 11 TAXMANN.COM 207 (DEL.) HELD THAT SECTION 271(1)(C) IS A PENAL PROVISION AND AS SUCH A PROVISION HAS TO BE STRICTLY CONSTRUE D. UNLESS THE CASE FALSE WITHIN THE FOUR-CORNERS OF THE SAID PROVISION OF LA W, THE PENALTY CANNOT BE IMPOSED. SUB-SECTION (1) OF SECTION 271 STIPULATES CERTAIN CONTINGENCIES ON THE HAPPENING WHEREOF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) MAY DIRECT PAYMENT OF PENALTY BY THE ASSE SSEE. CLAUSE (C) OF SECTION 271(1) AUTHORIZES IMPOSITION OF PENALTY WHE N THE ASSESSING OFFICER IS SATISFIED THAT THE ASSESSEE HAS EITHER ( A) CONCEALED THE PARTICULARS OF HIS INCOME; OR (B) FURNISHED INACCURATE PARTICUL ARS OF SUCH INCOME. IT WAS NOT THE CASE OF FURNISHING INACCURATE PARTICULA RS OF INCOME, AS IN THE INCOME-TAX RETURN, PARTICULAR OF INCOME HAD BEEN DU LY FURNISHED AND THE SURRENDERED AMOUNT OF INCOME WAS DULY REFLECTED IN THE INCOME-TAX RETURN. THE QUESTION WAS WHETHER THE PARTICULARS OF INCOME WERE CONCEALED BY THE ASSESSEE NOT. IT WOULD DEPEND UPON THE ISSUE AS TO WHETHER CONCEALMENT HAD REFERENCE TO THE INCOME-TAX RETURN FILED BY THE ASSESSEE, VIZ., WHETHER CONCEALMENT WAS TO BE FOUND IN THE INCOME-TAX RETUR N. THE HONBLE DELHI ITA NO.4778/M/14- M/S ALPHA LITE 7 HIGH COURT FURTHER HELD THAT NO DOUBT, THE DISCREPA NCIES WERE FOUND DURING THE SURVEY. THIS HAS YIELDED INCOME FROM THE ASSESS EE IN THE FORM OF AMOUNT SURRENDERED BY THE ASSESSEE. PRESENTLY, WE A RE NOT CONCERNED WITH THE ASSESSMENT OF INCOME, BUT THE MOOT QUESTION IS TO WHETHER THIS WOULD ATTRACT PENALTY UPON THE ASSESSEE UNDER THE PROVISI ONS OF SECTION 271(1)(C) OF THE ACT. OBVIOUSLY, NO PENALTY CAN BE IMPOSED UN LESS THE CONDITIONS STIPULATED IN THE SAID PROVISIONS ARE DULY AND UNAM BIGUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING SURVEY, MAY B E, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAID SURVEY. HOWEV ER, THERE CANNOT BE ANY PENALTY ONLY ON SURMISES, CONJECTURES AND- POSS IBILITIES. SECTION 271(L)(C) OF THE ACT HAS TO BE CONSTRUED STRICTLY. UNLESS IT IS FOUND THAT THERE IS ACTUALLY A CONCEALMENT OR NON-DISCLOSURE O F THE PARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED. THERE IS NO SUCH CONCEALMENT OR NON- DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISC LOSURE N THE INCOME- TAX RETURN AND OFFERED THE SURRENDERED AMOUNT FOR T HE PURPOSES OF TAX. 8. IN VIEW OF THE ABOVE DISCUSSION, WE FOUND THAT IN A BSENCE OF ANY SATISFACTION RECORDED BY ASSESSING OFFICER WHILE PA SSING THE ASSESSMENT ORDER THAT THERE WAS NON-DISCLOSURE OF INCOME OFFER ED DURING THE SURVEY PROCEEDING, NO PENALTY FOR CONCEALED INCOME IS LEVI ABLE. THE RATION OF DECISION IN CASE OF MAK DATA (SUPRA) RELIED BY LD C IT(A) IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. THE SA ID CASE IS RELATED WITH THE SEARCH CARRIED UNDER SECTION 132; MOREOVER, THE ASS ESSEE SURRENDERED THE ITA NO.4778/M/14- M/S ALPHA LITE 8 INCOME WHILE IT WAS DETECTED BY ASSESSING OFFICER W HILE MAKING QUARRIES. HOWEVER, IN THY PRESENT CASE THE INCOME WAS INCLUDE D IN THE RETURN OF INCOME BY INCREASING THE CLOSING STOCK, WHICH RESUL TED, INCREASED OF GP TO 14%. HENCE, THE FACTS OF THE PRESENT CASE ARE QUITE DIFFERENT. CONSIDERING THE PECULIARITY OF THE PRESENT CASE THE PENALTY LEV IED BY ASSESSING OFFICER IS DELETED BY ACCEPTING THE GROUNDS OF APPEAL RAISE D BY THE ASSESSEE. 9. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.05.2018. SD/- SD/- B.R. BASKARAN PAWAN SINGH ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI, DATE: 23.05.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR A BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI