DEVJI PREMJI PUJARA &SONS, MUMBAI V. ITO 13(2)(2), MUMBAI

ITA 4900/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1378 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 24-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANU K AGGARWAL
• Keywords: Business income; Loose papers; Difference of opinion
• Section: 143(3); 133A; 12

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ./ I .T.A. NO. 4900 /MUM/201 4 ( / ASSESSMENT YEAR : 20 0 7 - 08 ) M/S DEVJI PREMJI PUJARA AND SONS, 113 NEW CHINCH BUNDER, SARASWATI SADAN, KESHVJI NAIK ROAD, MUMBAI - 400009 / VS. INCOME TAX OFFICER, 13(2)(2), ROOM NO.412, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400020 ./ PAN : AA C FD5693G / APPELLANT BY SHRI ANUJ KISHNADWALA / RESPONDENT BY S MT.ANU K AGGARWAL / DATE OF HEARING : 17 .11. 2016 / DATE OF PRONOUNCEMENT : 22.12 . 2016 / O R D E R PER RAJESH KUMAR , A M THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.3.2014 , PASSED BY THE CIT(A) - 24 , MUMBAI, FOR THE ASSESSMENT YEAR 20 09 - 10 CONFIRMING THE PENALTY OF RS.7,21,264 UNDER SECTION 271(1)( C ) OF THE INCOME TAX ACT, 1961. 2. FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS.8,93,960/ - . THE ASSESSMENT WAS COMPLETED ON 29.12.2009 U/S 143(3) OF THE ACT BY FRAMING ASSESSMENT AT 2 ITA NO. 4900/ / MUM/ 201 4 RS.2,34,55,598/ - ON THE GROUND THAT TH E SOME LOOSE PAPER S FOUND CONTAINING ENTRIES FOR THE PERIOD FROM 1 ST APRIL 2006 TO 29 TH JULY 2006 TOTALING TO RS.18,87,575/ - AND ANOTHER AMOUNT OF RS.1,95,40,372/ - WHICH DID NOT CONTAIN DATES OF ENTRY. SINCE THE IMPOUNDED DOCUMENTS WERE FOUND IN THE PO SSESSION OF THE ASSESSEE, THE AO CONCLUDED THAT THE ABOVE AMOUNT OF RS.2,14,27,947/ - WAS UNACCOUNTED RECEIPTS OF THE BUSINESS FROM CUSTOMS HOUSE AGENCY. THE AO ALSO FOUND THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.1,13,36,910/ - UNDER THE HEAD CA RGO HANDLING EXPENSES, CWC/MASERK/DOCK FEES, DOCUMENTATION CHARGES, LOADING AND UNLOADING CHARGES AND TRANSPORTATION CHARGES AND VARIOUS EXPENSES UNDER THE VARIOUS HEADS WHICH WERE NOT FULLY SUPPORTED BY THE BILLS AND VOUCHERS AND HENCE THE AO DISAL LOWED 10% OF THE SAME AMOUNTING TO RS.11,33,691/ - AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE ASSESSING THE TOTAL INCOME AT RS.2,34,55,598/ - . THEREAFTER, THE AO ISSUE SHOW CAUSE NOTICE UNDER SECTION 271(1)( C ) READ WITH SECTION 274 GIVING AN OPPOR TUNITY TO THE ASSESSEE TO EXPLAIN AS TO WHY THE PENALTY SHOULD NOT BE IMPOSED OF RS.21,42,785/ - AN AMOUNT OF ADDITION SUSTAINED BY THE LD.CIT(A) OUT OF TOTAL RS.2 , 14 , 27 , 947 / - AND THE AO AFTER CONSIDERING THE REPLY OF THE ASSESSEE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND CONSIDERING THE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1) ( C ) READ WITH EXPLANATION (1) TO SECTION 271(1)(C) OF THE ACT AND 3 ITA NO. 4900/ / MUM/ 201 4 LEVIED THE PENALTY OF RS.7,21,264/ - AT THE RATE OF 100% OF THE TAX SOUGHT TO BE EVADED VIDE ORDER DATED 15.3.2012 PASSED UNDER SECTION 271(1)( C ) OF THE ACT. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO VIDE PARA 4.3 .7 WHO ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER : 4.3.7 FIRST OF ALL THE CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCO ME AND CONCEALMENT IS ALREADY MADE IN THE PARE 6 OF ASSESSMENT ORDER VIS - A - VIS THE ADDITION OF RS. 2,14,27,947/ - REPRESENTING UNACCOUNTED BUSINES S RECEIPTS AND THE SAME RECEIPTS OF RS. 2,14,27,947/ - FORMED THE BASIS OF ESTIMATION OF INCOME OF RS. 21,42,795/- @ 10% OF RS. 2,14,27,947/ - AFTER TAKING INTO ACCOUNT THE EXPENSES W HICH THE ASSESSEE MAY HAVE INCURRED TO EARN THESE RECEIPTS, BY THE CIT(A) - 24, MUMBAI. MOREOVER, CIT(A) MUMBAI HAS CATEGORICALLY HELD THAT THE TOTAL RECEIPTS OF RS. 2,14,27,947/ - WERE NOT ACCOUNTED FOR BY THE ASSESSEE IN BOOKS OF ACCOUNT. THE SAME VIEW IS CONFIRMED BY THE ITAT, MUMBAI IN ITS ORDER DATED 15/3/2013 WHEREIN ITAT, MU MBAI HAS ELA BORATELY DISCUSSED EACH ONE OF THE ENTRIES IN THE IMPOUNDED DOCUMENTS. THUS, THE BASIS OF INITIATION OF PENALTY U/S. 271(1)(C) OF IT. ACT, 1961 AT THE TIME OF ASSESSMENT, WAS CLEARLY MENTIONED IN THE ASSESSMENT ORDER AND WHEN THE SECOND NOTICE WAS ISSUED BY THE ASSESSING OFFICER, THE PENALTY PROCEEDINGS STOOD REVIVED AND THE REVISED NOTICE HAD TO BE READ IN CONTINUATION OF THE OLD NOTICE AND THE ASSESSMENT ORDER. MOREOVER, THE ASSESSING OFFICER ALONGWITH THE PRINTED NOTICE HAD ALSO ISSUED A LET TER AND GAVE AN OPPORTUNITY TO THE ASSESSEE TO FILE ITS REPLY AND IF THE ASSESSEE CHOSE TO REMAIN SILENT AND MERELY FILED A COPY OF THE CIT(A)'S ORDER WITHOUT FILING A REJOINDER, THE FAULT LAYS WITH THE ASSESSEE AND NOT WITH THE ASSESSING OFFICER. IT HAS A LSO BEEN SUBMITTED THAT WHEN THE DEPARTMENT WAS IN APPEAL BEFORE ITAT, MUMBAI, ASSESSING OFFICER COULD HAVE WAITED TILL THE ORDER OF ITAT, MUMBAI, HOWEVER, THERE IS NO BAR IN INCOME TAX ACT 1961 TO THE LEVY OF PENALTY AFTER THE RECEIPT OF ORDERS OF CIT(A), MUMBAI AND THE ASSESSING OFFICERS NORMALLY WAIT FOR THE RECEIPT OF THE ORDERS OF THE CIT(A) TO ENSURE THAT ASSESSEE GETS A FAIR CHANCE TO REASONABLE OPPORTUNITY TO PRESENT ITS CASE AND EXPLAIN THE FACTS OF THE CASE AND THAT IS WHAT HAD HAPPENED IN THE CAS E. MOREOVER, EVEN IF ASSESSING OFFICER HAD WAITED TILL THE RECEIPT OF ITAT'S ORDER, THE EFFECT WOULD 4 ITA NO. 4900/ / MUM/ 201 4 HAVE BEEN THE SAME AND AS SUCH THE ORDER OF THE CIT(A) DATED 28/2/2011 IS FURTHER STRENGTHENED BY THE PASSING OF THE ORDER BY THE ITAT, MUMBAI. THUS, THE O BJECTION RAISED BY THE ASSESSEE IS REJECTED. HOWEVER, ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITIES IN PRESENT APPELLATE PROCEEDINGS TO FURNISH EXPLANATION AND ASSESSEE'S CA HAS ALREADY FURNISHED A 39 PAGE PAPER BOOK ON 1/11/2013 WHICH IS FULLY TAKEN INTO CO NSIDERATION WHILE DECIDING THE APPEAL. MOREOVER, IN ASSESSEE'S CASE, THE FURNISHING OF INACCURATE PARTICULARS OF INCOME AS WELL AS CONCEALMENT OF INCOME ARE BOTH APPLICABLE BECAUSE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF BUSINESS RECEIPTS OF RS. 2 ,14,27,947/ - BY EXCLUDING THE SAME FROM THE TURNOVER OF RECEIPTS AND EXPENSES SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME AND THEN CONCEALING INCOME OF, RS. 21,42,795/ - EVEN THOUGH THE DOCUMENTS WERE DETECTED AND IMPOUNDED DURING THE COURSE OF SURVEY U/S . 133A OF LT. ACT, 1961. THEREFORE, IT IS HELD THAT THE LEVY OF PENALTY OF RS. 21,42,795/ - @ 100% OF TAX SOUGHT TO BE EVADED IS FULLY JUSTIFIED IN - LIGHT OF THE ORDERS .OF ITAT, MUMBAI WHICH HAS FULLY CONFIRMED THE FINDINGS OF THE CIT(A) ABOUT THE UNACCOUN TED BUSINESS RECEIPTS AND INCOME OF RS.21,42,795/ - . IN NUTSHELL, LEVY OF PENALTY U/S. 271(1)(C) OF LT. ACT, 1961 IS FULLY JUSTIFIED IN FACTS AND IN LAW. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE THIS TR IBUNAL. 3 . THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT THE PREMISES OF THE ASSESSEE WAS SEARCHED BY THE SEARCH TEAM AND CERTAIN LOOSE / UNAUDITED PAPERS WERE FOUND AND THE ASSESSMENT WAS FRAMED BY THE AO BY MAKING AN ADDITION OF RS.2,14,27,947/ - IN RES PECT OF AMOUNT APPEARING ON THE SAID IMPOUNDED PAPERS . O N APPEAL BEFORE THE FIRST APPELLATE AUTHORITY , T HE LD. CIT(A) REDUCED THE ADDITION TO 10% OF THE TOTAL ADDITION I.E. RS.21,42,795/ - ON WHICH THE AO HAS LEVIED PENALTY. THEREAFTER THE ASSESSEE FILED APPEAL BEFORE FAA AND T HE APPEAL OF THE ASSESSEE WAS DISMISSED BY THE FAA. THE 5 ITA NO. 4900/ / MUM/ 201 4 ACTION OF THE LD. CIT(A) IN CONFIRMING THE PENALTY WHICH WAS IMPOSED BY THE AO BY INVOKING THE PROVISION OF EXPLANATION (1) TO SECTION 271(1)(C) OF THE ACT WAS TOTALLY WRO NG AND WITHOUT ANY BASIS. THE ASSESSEE HAS NOT CLAIMED ANY FALSE EXPENDITURE N OR HAS NOT OFFER ED ANY EXPLAN ATION WHICH WERE FOUND TO BE FALSE BY THE TAX AUTHORITIES. THE LD.AR SUBMITTED THAT THE CASE OF THE ASSESSEE WAS A CASE OF DIFFERENCE OF OPINION AN D THE ENTIRE ADDITION WAS BASED UPON THE ESTIMATION AND CONJECTURES WHICH WAS REDUCED SUBSTANTIALLY BY THE LD.CIT(A) AND THEREFORE , IT WAS A PATENT CASE OF DIFFERENCE OF OPINION AMONGST THE TAX AUTHORITIES AS REGARD TO THE AMOUNT OF ADDITION. THE LD. AR SUBMITTED THAT IT WAS TRITE LAW THAT NO PENALTY COULD BE LEVIED ON THE BASIS OF ADDITION WHICH WERE MADE ON ESTIMATION AND ON THE BASIS OF SURMISES AND CONJECTURE . THE LD. AR, THEREFORE, SUBMITTED THAT THE ORDER OF THE LD.CIT(A) BE SET ASIDE AND THE AO BE DIRECTED TO DELETED THE PENALTY. 4 . ON THE OTHER HAND, THE LD. DR HEAVILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT T HE ADDITION CONFIRMED BY THE LD. CIT(A) WAS BASED UPON THE PAPER IMPOUNDED DURING THE COURSE OF SURVEY ON THE A SSESSEE THOUGH THE ADDITION WAS REDUCED FROM RS.2,14,47,294 TO RS.2 1,42,795/ - THEREFORE, THE PENALTY WAS RIGHTLY LEVIED BY INVOKING THE EXPLANATION (1) OF SECTION 271(1 (C) OF THE ACT AS THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND PRAYED T HAT THE ORDER OF LD. CIT(A) BE CONFIRMED. 6 ITA NO. 4900/ / MUM/ 201 4 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELLOW. WE FIND THAT THE ADDITION OF RS.2,14,27,947/ - MADE BY THE AO ON THE BASIS OF LOOSE PA PERS WAS REDUCED TO 10% OF THE SAID ADDITION AND THUS THE ADDITION WHICH SURVIVED AT FAA LEVEL WAS RS.21,47,795/ - . WE FURTHER FIND THAT THE ADDITION WAS MADE BY THE AO ON THE BASIS OF IMPOUNDED DOCUMENTS WHICH CONTAINS ENTRIES WHICH THE ASSESSEE COU LD NOT EXPLAIN AND ADDED THE ENTIRE AMOUNT AS APPEARING IN THE SAID LOOSE PAPERS WHICH ACCORDING TO THE ASSESSEE WERE WORKING AND ESTIMATES. THE ASSESSEE USED TO CLAIM 90 TO 95% EXPENDITURE . WE ARE OF THE OPINION THAT THE PENALTY IN VIEW OF EXPLANATION (1) TO SECTION 271(1) OF THE ACT CAN ONLY BE IMPOSED WHERE THE ASSESSEE FAILED TO OFFER THE EXPLANATION OR OFFER AN EXPLANATION WHICH IS FOUND BY THE AO TO BE FALSE OR THE ASSESSEE OFFERED EXPLANATION WHICH IS NOT ABLE TO SUBSTANTIATE AND NOT OTHERWISE . IN THE PRESENT CASE, BOTH THESE CONDITIONS ARE NOT EXISTENCE AND WE THEREFORE, ARE NOT IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE TAX AUTHORITIES. ACCORDINGLY, WE DELETE THE PENALTY. 6 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 22. 12 . 2016. S D SD ( MAHAVIR SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMB ER MUMBAI ; DATED : 22. 12 . 2016 7 ITA NO. 4900/ / MUM/ 201 4 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORD ER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI