Smt. ANITA SHETTY, MUMBAI V. DCIT CENT. CIR. - 42, MUMBAI

ITA 5642/MUM/2006

• Counselvise Citation: 564219914 RSA 2006
• Duration Of Justice: 4 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 27-10-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: USHA NAIR
• Assessee Lawyers: F V IRANI
• Keywords: Loose papers; Document seized; Initiation of penalty proceedings; Documents seized
• Section: 37(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI D. MANMOHAN, HONBLE VICE PRESIDENT AND SHRI R.K. PANDA, A.M. ITA NO.5642/MUM/2006 ASSESSMENT YEAR : 2004-05 SMT. ANITA SHETTY ISMAIL MANSION, DR. A.B. ROAD, DADAR (E), MUMBAI-400 020 PAN NO: AKJPS0550M VS. THE D.C.I.T., CENT. CIR. 42, OLD CGO BUILDING, M.K. ROAD, MUMBAI-400 020 (APPELLANT) (RESPONDENT) & ITA NO.5808/MUM/2006 ASSESSMENT YEAR : 2004-05 THE A.C.I.T., CENT. CIR. 42, R. NO.655, 6 TH FLOOR, AAYAKAR BHAVAN, M.P. ROAD, MUMBAI-400 020 VS. SMT. ANITA SHETTY ISMAIL MANSION, DR. A.B. ROAD, DADAR (E), MUMBAI-400 020 PAN NO: AKJPS0550M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI F. V. IRANI DEPARTMENT BY : SMT. USHA NAIR DATE OF HEARING 23.6.2011 DATE OF PRONOUNCEMENT 21.9.2011 O R D E R PER R.K. PANDA, A.M. THESE ARE CROSS APPEALS, THE FIRST ONE FILED BY THE ASSESSEE AND THE SECOND ONE FILED BY THE REVENUE AND ARE DIRECTED AG AINST THE ORDER DATED 18.08.2006 PASSED BY THE CIT(A) CENTRAL-III, MUMBAI RELATING TO THE ITA NO: 5642 & 5808/MUM/2006 SMT. ANITA SHETTY 2 ASSESSMENT YEAR 2004-05. FOR THE SAKE AND CONVENIEN CE THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER. 2. THE GROUNDS OF APPEAL NO.1 BY THE REVENUE AND T HE GROUNDS OF APPEAL NO. 1.A), B) AND C) BY THE ASSESSEE RELATE TO THE P ART RELIEF GIVEN BY THE LD. CIT(A) OUT OF ADDITION OF ` 10,18,372/- MADE BY THE AO. 2.1. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSE SSEE IS ENGAGED IN RUNNING THE BUSINESS OF BAR & RESTAURANT UNDER THE NAME M/ S. BAYWATCH RESTAURANT & BAR AS A PROPRIETOR. A SEARCH U/S.132 OF THE I.T. ACT WAS CARRIED OUT BY THE DEPARTMENT ON 23.01.2004 AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE. DURING THE CO URSE OF SEARCH, CERTAIN LOOSE PAPERS MARKED AS ANNEXURE-A-2 WERE FOUND, I NDICATING UNDISCLOSED INCOME FROM DANCE BAR ACTIVITIES, ON THE BASIS OF W HICH THE ASSESSEE HAD DECLARED UNDISCLOSED INCOME OF ` 70,00,000/- IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE U/S.153A. THE A.O. CONFRO NTED THE ASSESSEE ABOUT THE NOTINGS IN THE 2 LOOSE PAPERS I.E. PAGE 2 OF A- 2 WHICH CONTAIN DETAILS OF AMOUNT RECEIVED AND EXPENDED FOR PERIOD 30.06.2003 TO 31.07.2003; & (II) PAGE 53 OF A-2 WHICH CONTAINS THE SUMMARY OF COLLEC TION FOR THE PERIOD FROM APRIL, 2003 TO NOVEMBER, 2003. RELYING ON THE STATE MENT OF SHRI ASHOK SHETTY, HUSBAND OF THE ASSESSEE, THE AO REJECTED TH E CONTENTION OF THE ASSESSEE THAT TOTAL RECEIPTS OF ` 34,63,920/- FOR THE PERIOD 30.6.2003 TO 31.7.2003 REFLECTED ON PAGE 2 OF A-2 WAS INCLUDED I N THE SUMMARY OF COLLECTION CONTAINED ON PAGE 53 OF A-2 FOR THE PERI OD APRIL 2003 TO NOVEMBER, 2003. HE ACCORDINGLY ESTIMATED 35% OF ` 34,63,920/- I.E. ` 12,12,372/- AS INCOME FROM DANCE BAR ACTIVITIES. 2.3 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE AO ASSESSED THE UNDISCLOSED INCOME AS ABOVE ON THE BASIS OF THE NOT INGS ON PAGE 2 OF A-2, FOR THE PERIOD OF 30.06.2003 TO 31.07.2003 WHICH WE RE ALREADY INCLUDED IN THE SUMMARY OF THE NOTINGS OF COLLECTION ON PAGE 53 OF A-2 AND THERE WAS NO BASIS FOR MAKING A SEPARATE ADDITION. ITA NO: 5642 & 5808/MUM/2006 SMT. ANITA SHETTY 3 2.4 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE , THE LD. CIT(A) GAVE A RELIEF OF ` 5,67,502/- AND CONFIRMED THE ADDITION OF ` 4,50,870/- OUT OF THE ADDITION OF ` 10,18,372/- MADE BY THE AO BY HOLDING AS UNDER : I HAVE PERUSED PAGE 2 AS WELL AS PAGE 53 OF A-2. PAGE 2 OF A-2 CONTAINS NOTINGS OF BOTH CASH RECEIPTS AND CASH EXPENSES. IT IS SEEN THAT THE CASH RECEIPTS AND CASH EXPENSES ARE MENTIONED AGAINST CERTAIN NAMES, WHICH WERE EXPLAIN ED BY THE A.R. TO BE THE NAMES OF DANCE BAR GIRLS. PAGE 53 CO NTAINS DETAILS OF ONLY RECEIPTS AGAINST CERTAIN NUMBERS, WHICH WAS EXPLAINED BY THE A.R. TO BE BOX NUMBERS OF DANCE BAR GIRLS. THE A.R. WAS REQUIRED TO SUBSTANTIATE THE CONTENTION THAT THE RE CEIPTS ON PAGE 2 WERE INCLUDED IN THE RECEIPTS NOTED ON PAGE 53 BY MAKING A CORRELATION WITH THE NAMES OF DANCE BAR GIRLS TO TH ESE RESPECTIVE BOX NUMBERS ON PAGE 53. THE A.R. OF THE APPELLANT H AS FAILED TO CORRELATE OF THE SAME AND THEREFORE, THE CONTENTION OF THE A.R. THAT THE EARNINGS REFLECTED ON PAGE 2 OF A-2 ARE INCLUDED IN THE EARNINGS REFLECTED ON PAGE 53 OF A-2 DOES NOT MER IT ANY CONSIDERATION. THE AO HOWEVER, HAS CONFINED HIMSELF ONLY TO THE RECEIPTS CONTAINED ON PAGE 2 WHILE COMPUTING THE PR OFIT AND COMPLETELY IGNORED THE TOTAL EXPENSES NOTED ON THE SAID PAPER OF ` 30,13,050/-. IT IS A SETTLED PREPOSITION OF LAW TH AT IF RECEIPTS IN THE DOCUMENTS ARE CONSIDERED AS INCOME THEN EXPENSE S RECORDED AGAINST HOSE RECEIPTS ARE ALSO TO BE CONSIDERED AT FACE VALUE. RELIANCE FOR THIS PREPOSITION IS PLACED ON THE DECI SION IN THE CASE OF SMT. USHA TRIPATHI VS. ACIT (66 TTJ 508). A HARM ONIOUS INTERPRETATION OF THE NOTINGS ON PAGE 2 CAN ONLY BE MADE IF THE NET FIGURE IS TAKEN INTO CONSIDERATION FOR THE PURP OSE OF CALCULATION OF PROFIT. IT IS THEREFORE, CLEAR THAT THE NET FIGURE I.E. INCOME LESS EXPENSES IS TO BE TAKEN AS THE PROFIT F OR THE PERIOD 30.06.2003 TO 31.07.2003 (I.E. ` 34,63,920-RS.30,13,050 = ` 4,50,870). DURING THE COURSE OF APPEAL PROCEEDINGS, IT WAS CONTENDED THAT 35% OF NET EARNINGS BE TAKEN AS PROF IT. THIS CONTENTION DOES NOT MERIT CONSIDERATION AS ALLOWANC E FOR EXPENSES HAS ALREADY BEEN MADE. THE AO THEREFORE, I S DIRECTED TO TAKE THE PROFIT AS PER PAGE 2 OF A-2 AT ` 4,50,870/-. 2.5 AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) BOT H THE ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PER THE NOTINGS OF THE SEIZED DOCUMENTS AND FINDINGS THAT OF THE A.O. 65% OF THE COLLECTION GOES TO THE BAR GIRLS AND 35% GOES TO THE OWNER. R EFERRING TO PARA 7.1 OF THE ASSESSMENT ORDER HE SUBMITTED THAT THE ASSESSEE HAS MADE DISCLOSURE OF ` ITA NO: 5642 & 5808/MUM/2006 SMT. ANITA SHETTY 4 70 LACS. REFERRING TO THE ANSWER GIVEN BY THE ASSE SSEE IN RESPONSE TO QUESTION NO. 6 RECORDED U/S 132(4) OF THE ACT (COPY OF WHICH IS PLACED AT PAPER BOOK PAGE 31) THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE HAS SUBMITTED THAT PAGE NO. 53 TO ANNE. II IS A SUMMARY OF COLLECTION OF PERFORMANCES FOR THE PERIOD APRIL 200 3 TO NOVEMBER, 2003 AND THE SAME IS NOT RECORDED IN THE BOOKS OF ACCOUNT. HE SUBMITTED THAT THE A.O. THEREAFTER HAS NOT ASKED ANY QUESTION TO THE A SSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IF YOU RELY UPON TH E STATEMENT OF THE ASSESSEE, YOU CANNOT MAKE FURTHER ADDITION. REFERRI NG TO PAGE 52 & 53 OF THE PAPER BOOK, HE SUBMITTED THAT THE A.O. AND THE LD. CIT(A) HAVE PROCEEDED ON THE FOOTING THAT THE SAME RELATE TO AP RIL TO NOVEMBER WHICH IS NOT CORRECT. REFERRING TO PAGE 8 OF THE ASSESSMENT ORDER, THE LD. COUNSEL FOR THE ASSESSE DREW THE ATTENTION OF THE BENCH TO PARA 7.11 OF THE ORDER, WHICH IS AS UNDER:- APRIL TO NOVEMBER, 2003 ` 31,55,000/- JUNE 30 TO JULY 31, 2003 ` 12,12,372 DECEMBER 2003 ` 23,25,000 JANUARY, 2004 ` 13,26,000 =========== ` 80,18,372 REFERRING TO THE ABOVE TABLE, HE SUBMITTED THAT THE RE IS NO DISPUTE ABOUT THE ABOVE FIGURE EXCEPT THE AMOUNT OF ` 12,12,372/- RELATING TO THE PERIOD JUNE 30 TO JULY 31, 2003. HE SUBMITTED THAT AS AGAINST THE TOTAL AMOUNT OF ` 80,18,372/- DETERMINED BY THE A.O. FROM DANCING PER FORMANCE AS PER THE LOOSE PAPER, THE ASSESSEE HAS DISCLOSED ` 70 LACS AS AGAINST THE UNDISCLOSED INCOME LEAVING DIFFERENCE OF ` 10,18,372/-. HE SUBMITTED THAT THE AMOUNT OF ` 12,03,372/- IS ALREADY INCLUDED IN THE FIGURE OF A PRIL TO NOVEMBER, 2003 AND THEREFORE SEPARATELY MAKING ADDITION OF ` 12,12,372/- WILL MAKE THE ADDITION TWICE. HE ACCORDINGLY SUBMITTED THAT NO P ART OF THE ADDITION OUT OF ` 10,18,372/- SHOULD BE SUSTAINED. ITA NO: 5642 & 5808/MUM/2006 SMT. ANITA SHETTY 5 4. THE LD. D.R., ON THE OTHER HAND, WHILE SUPPORTIN G THE ORDER OF THE LD. A.O. DREW THE ATTENTION OF THE BENCH TO PAGE 8 OF T HE ASSESSMENT ORDER AND SUBMITTED THAT THE A.O. HAD CLEARLY GIVEN A FINDING THAT DURING THE COURSE OF SEARCH ACTION, NO BOOKS OF ACCOUNT HAVE BEEN FOUND AND WHATEVER MATERIAL PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSES SMENT PROCEEDINGS DOES NOT REPRESENT THE CORRECT AND RELIABLE VERSION OF T HE BUSINESS AFFAIRS AS THE ASSESSEE GROUP HAS CONCEALED RECEIPTS FROM DANCE PE RFORMANCES. REFERRING TO QUESTION NO. 5 ON THE STATEMENT RECORDED U/S 132 (4) (PAPER BOOK PAGE 31), SHE DREW THE ATTENTION OF THE BENCH TO THE CRY PTIC REPLY GIVEN BY THE ASSESSEE. REFERRING TO PAPER BOOK PAGE NO. 50, SHE SUBMITTED THAT THE DAILY PERFORMANCE AND DETAILS OF BAYWATCH RESTAURANT AND BAR ARE RECORDED FOR THE PERIOD 30 TH JUNE TO 31 ST JULY. REFERRING TO THE ORDER OF THE LD. CIT(A), SHE DREW THE ATTENTION OF THE BENCH TO PAGE 3 OF TH E APPELLATE ORDER AND SUBMITTED THAT THE LD. CIT(A) HAS GIVEN A CATEGORIC AL FINDING THAT THE A.R. OF THE ASSESSEE FAILED TO CO-RELATE THE RECEIPTS NOTED ON PAGE 53. SHE SUBMITTED THAT SINCE THE DEPARTMENT HAS TAKEN ONLY 35% OF THE COLLECTION, THEREFORE, THE QUESTION OF FURTHER DEDUCTION DOES N OT ARISE AND IF THE SAME IS ALLOWED THEN INCOME WILL GO DOWN BELOW THE RETURNED INCOME. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE A.O. AND THE LD. CIT(A) A ND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BY BOTH THE SIDES. WE FIND THE A.O. ON THE BASIS O F NOTINGS OF PAGE 2 TO ANN. II DETERMINED THE INCOME FROM DANCING AT ` 80,18,372/- FOR THE PERIOD FROM APRIL 2003 TO JANUARY,2004. AFTER DEDUCTING ` 70 LACS DISCLOSED BY THE ASSESSEE, THE A.O. MADE ADDITION OF ` 10,18,372/- BEING INCOME ON ACCOUNT OF SUPPRESSED COLLECTION. WE FIND THE LD. CIT(A) AF TER REDUCING THE EXPENDITURE OF ` 30,13,050/- OUT OF ` 34,63,920/- SUSTAINED THE ADDITION OF ` 4,50,870/- AND GAVE RELIEF OF ` 5,67,502/-. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT OF ` 12,12,372/- DETERMINED BY THE A.O. FOR THE PERIOD FROM 30 TH JUNE TO 31 ST JULY, 2003 IS ALREADY INCLUDED IN THE FIGURE OF ` 31,55,000/-DETERMINED BY THE A.O. FOR THE PERIOD A PRIL TO ITA NO: 5642 & 5808/MUM/2006 SMT. ANITA SHETTY 6 NOVEMBER, 2003. WE FIND THE ASSESSEE IN HER REPLY T O QUESTION NO. 6 RECORDED U/S 132(4) ON 17.2.04 HAS STATED AS UNDER: - Q. NO. 6. I AM SHOWING YOU PAGE NO. 53 OF THE ABOV E ANNEXURE -A2. KINDLY EXPLAIN THE CONTENTS OF THE SAME. ANS: THE PAGE IS A SUMMARY OF COLLECTIONS OF THE PE RFORMERS FOR THE PERIOD APRIL TO NOVEMBER, 2003. THE SAME IS NOT RE CORDED IN THE BOOKS OF ACCOUNTS. 6.1 FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE I N HER REPLY HAS CATEGORICALLY STATED THAT PAGE 53 OF ANN. A-2 CONTA INED SUMMARY OF COLLECTIONS FOR THE PERIOD APRIL TO NOVEMBER, 2003. IT IS AN ADMITTED FACT THAT NO FURTHER QUESTION WAS ASKED BY THE A.O. TO T HE ASSESSEE ON THIS ACCOUNT. THEREFORE, WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF YOU RELY UPON THE STATEMENT OF THE ASSESSEE TO MAKE THE ADDITION YOU CANNOT MAKE FURTHER ADDITION. WE, THER EFORE, FIND SUFFICIENT FORCE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT OF ` 12,12,372/- DETERMINED BY THE A.O. BEING INCOME FR OM DANCE PERFORMANCES FROM 30 JUNE TO 31 ST JULY, 2003 IS ALREADY A PART OF THE INCOME DETERMINED BY HIM AT ` 31,55,000/- FOR THE PERIOD APRIL TO NOV. 2003. THEREFORE, NO PART OF THE ADDITION OF ` 10,18,372/- MADE BY THE A.O. CAN BE SUSTAINED SINCE THE ASSESSEE HAS ALREADY DIS CLOSED ` 70 LACS AS SUPPRESSED INCOME FROM DANCE ACTIVITIES. THE APPREH ENSION OF THE LD. D.R. THAT FURTHER RELIEF ON THIS ACCOUNT WILL REDUCE THE INCOME BELOW THE RETURNED INCOME IS ALSO UNFOUNDED AND WITHOUT ANY MERIT SINC E THE ASSESSEE HAS DISCLOSED ` 70 LACS . IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND HOLD THAT NO PART OF THE ADDITION OF ` 10,18,372/- MADE BY THE A.O. CAN BE SUSTAINED. GROUNDS OF APPEAL NO. 1(A), 1(B) & 1(C) BY THE ASSESSEE ARE ACCORDINGLY ALLOWED AND GROUND OF APPE AL NO. 1 BY THE REVENUE IS DISMISSED. 7. THE GROUND OF APPEAL NO. 1.(D) RAISED BY THE ASS ESSEE READS AS UNDER:- 1.D) IN ANY CASE THE LD. CIT(A) ERRED IN NOT ALLOW ING DEDUCTION OF ` 22,28,568/- IN RESPECT OF EXPENSES ON ITA NO: 5642 & 5808/MUM/2006 SMT. ANITA SHETTY 7 REPAIRS AND RENOVATION TO THE SHOP PREMISES AS PER SEIZED PAPER ON RECORD. 7.1. BOTH THE PARTIES FAIRLY CONCEDED THAT THIS GRO UND HAS NOT BEEN DECIDED BY THE LD. CIT(A) FOR WHICH IT HAS TO GO BA CK TO THE FILE OF THE LD. CIT(A) FOR ADJUDICATION. PERUSAL OF FORM NO. 35 AN D THE ORDER OF THE LD. CIT(A) SHOW THAT THE ABOVE GROUND HAS NOT BEEN DECI DED BY THE LD. CIT(A). WE, THEREFORE, RESTORE THIS GROUND TO THE FILE OF T HE LD. CIT(A) FOR ADJUDICATION OF THE ISSUE IN ACCORDANCE WITH LAW. THIS GROUND IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 8. THE GROUND OF APPEAL NO. 2 RAISED BY THE REVENUE AND GROUND NO. 2 BY THE ASSESSEE RELATE TO PART RELIEF GIVEN BY THE LD. CIT(A) OUT OF THE ADDITION OF ` 187500/- MADE BY THE A.O. THE GROUND NO. 2 RAISED BY THE REVENUE IS AS UNDER :- 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING TO ALLOW ILLE GAL EXPENSES OF ` 1,57,050/- AS THE SAME IS NOT ADMISSIBLE UNDER EXPL ANATION TO SECTION 37(1) OF THE I.T. ACT. 8.1 THE GROUND NO. 2 RAISED BY THE ASSESSEE IS AS U NDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF ` 30,000/- MADE BY THE ASSESSING OFFICER TO THE INCOM E OF THE APPELLANT ON ACCOUNT OF SO CALLED SPEED MONEY. 8.2 FACTS OF THE CASE, IN BRIEF, ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS THE AO EXAMINED SEVERAL SEIZED DOCUMENT S AND FOUND THAT LOOSE PAPERS AS MENTIONED ON PAGE 12 OF HIS ORDER C ONTAINED DETAILS OF ILLEGAL PAYMENT TOTALING TO ` 1,87,500/-. RESORTING TO PROVISO TO SECTION 37(1) WHICH SPECIFICALLY PROHIBITS THE ALLOWANCE OF SUCH EXPENSES, THE AO MADE THE ADDITION OF ` 1,87,500/-. 8.3 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE AO HAD TAXED 35% OF THE TOTAL COLLECTION WITHOUT ALLOWING DEDUCTION OF SUCH EXPENSES. THEREFORE, ITA NO: 5642 & 5808/MUM/2006 SMT. ANITA SHETTY 8 THERE COULD NOT BE ANY QUESTION OF DISALLOWING SUCH EXPENSES BY INVOKING THE PROVISO TO SECTION 37(1). 8.4 BASED ON THE ARGUMENTS ADVANCED BEFORE HIM, THE LD. CIT(A) GAVE A RELIEF OF ` 1,57,500/- AND CONFIRMED THE ADDITIONS OF ` 30,000/- BY HOLDING AS UNDER :- I HAVE GONE THROUGH THE FACTS AND I FIND THAT THE QUESTION OF INVOKING PROVISO TO SECTION 37(1) ARISES ONLY WHEN A DEDUCTION FOR SUCH EXPENSES HAS BEEN ALLOWED IN COMPUTING SUCH IN COME. THOUGH, IT IS A FACT THAT THE AO DID NOT ALLOW ANY EXPENSES IN HIS ASSESSMENT ORDER, I HAVE, WHILE ADJUDICATING GROUND NO.2 ABOVE, ALLOWED EXPENSES OF ` 30,13,050/-, NOTED ON PAGE 2 OF A-2, FOR REASONS DISCUSSED THEREIN. ON GOING THROUGH ILLEGAL PAYMENTS MADE DETAILED ON PAGE 12 OF THE ASSESSMENT ORDER, I T IS SEEN THAT PAGE 24 OF ANNEXURE-A-1 CONTAINS SHOWN PAYMENT OF ` 30,000/- AND HAS NO DATE MENTIONED AGAINST IT. THE APPELLANT FAILED TO PROVE THAT THIS PAYMENT OF ` 30,000/- WAS NOT INCLUDED IN THE EXPENSES ALLOWED OF ` 30,13,050/-. THEREFORE, THE ADDITIONS TO THE EXTENT OF ` 30,000/- IS CONFIRMED AND THE BALANCE OF ` 1,57,500/- IS DELETED AS BECAUSE THESE ILLEGAL PAYM ENTS HAVE BEEN MADE AFTER JULY, 2003, FOR WHICH PERIOD NO SUC H EXPENSES HAVE BEEN ALLOWED BY THE AO WHILE COMPUTING THE PRO FITS. 8.5 AGGRIEVED WITH SUCH PART RELIEF GIVEN BY THE LD . CIT(A) THE REVENUE AS WELL AS THE ASSESSEE ARE IN APPEAL BEFORE US. 9 . THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 12 OF THE ASSESSMENT ORDER SUBMITTED THAT THE A.O. HAS MADE THE ADDITION OF ` 1,87,500/- ON ACCOUNT OF SPEED MONEY PAID. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE A.O. HAS TAXED 35% OF THE TOTAL RECEIPTS ONLY. THEREFORE, EVEN IF THERE IS AN ILLEGAL EXPENDITURE, THE SAME CANNOT BE DISALLOW ED WHEN NO PART OF THE SAME HAS BEEN CLAIMED. REFERRING TO THE ORDER OF TH E LD. CIT(A), HE SUBMITTED THAT THE SUSTENANCE OF ` 30,000/- IS COMPLETELY BASELESS. 10. THE LD. D.R., ON THE OTHER HAND, SUPPORTED THE ORDER OF THE LD. CIT(A). 11. THE LD. COUNSEL FOR THE ASSESSEE, IN THE REJOIN DER, REFERRING TO THE DECISION OF PUNE BENCH OF ITAT IN THE CASE OF DHANV ARSHA BUILDERS & ITA NO: 5642 & 5808/MUM/2006 SMT. ANITA SHETTY 9 DEVELOPERS (P.) LTD. VS. DCIT REPORTED IN 102 ITD 3 75 SUBMITTED THAT THE SEIZED PAPERS HAVE TO BE CONSIDERED AS A WHOLE. IF INCOME IS CONSIDERED, THEN EXPENDITURE HAS ALSO TO BE CONSIDERED. 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MAD E BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O. AND THE LD. CIT(A) A ND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE LD. CIT(A) SUST AINED THE ADDITION OF ` 30,000/- ON THE GROUND THAT HE HAS ALLOWED THE EXPE NDITURE OF ` 30,13,050/- OUT OF THE UNACCOUNTED RECEIPT OF ` 34,63,920/- WHICH IS THE RECEIPT FOR THE PERIOD JUNE 30 TO JULY 31, 2003. W HILE DECIDING THE GROUNDS OF APPEAL NO. 1(A), TO 1 (C) OF THE ASSESSEE AND TH E GROUND OF APPEAL NO. 1 BY THE REVENUE, WE HAVE DISAPPROVED SUCH ACTION OF THE LD. CIT(A) AND HAVE CONSIDERED THE AMOUNT TO BE A PART OF RECEIPTS FOR APRIL TO NOVEMBER, 2003. THEREFORE, THE EXERCISE DONE BY THE LD. CIT(A) BECO MES REDUNDANT. SINCE, ADMITTEDLY, THE INCOME OF THE ASSESSEE HAS BEEN EST IMATED AT 35% OF THE TOTAL RECEIPT AND SINCE THE ASSESSEE HAS NOT CLAIME D ANY EXPENDITURE ON ACCOUNT OF SPEED MONEY, THEREFORE, NO PART OF THE S AME, IN OUR OPINION, COULD HAVE BEEN ADDED. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE AD DITION. GROUND OF APPEAL NO. 2 BY THE REVENUE IS ACCORDINGLY DISMISSED AND G ROUND OF APPEAL NO. 2 BY THE ASSESSEE IS ALLOWED. 13. THE GROUND OF APPEAL NO. 3 RAISED BY THE ASSESS EE READS AS UNDER:- 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE GROUND RAISED AGAINST INITIATION OF PENALTY PROCEEDINGS U/ S. 271(1)(C) OF THE INCOME TAX ACT, 1961 IS PREMATURE. THE APPELLANT DENIES ITS LIABILITY FOR SUCH PENALTY. 14. AFTER HEARING BOTH THE SIDES, WE ARE OF THE OPI NION THAT THIS GROUND IS PREMATURE IN NATURE AT THIS STAGE AND ACCORDINGLY T HE SAME IS DISMISSED. ITA NO: 5642 & 5808/MUM/2006 SMT. ANITA SHETTY 10 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL FILED BY THE RE VENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 21ST DAY OF SEPTEMBER, 201 1. SD/- ( D. MANMOHAN ) VICE PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED : 21.9.2011. COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, A - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI/RK ITA NO: 5642 & 5808/MUM/2006 SMT. ANITA SHETTY 11 DATE INITIALS DRAFT DICTATED ON 29/06/2011,13.9.11, 19.9.11 DRAFT PLACED BEFORE THE AUTHOR 30/06/2011,13.9.11, 19.9.11 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER AM/JM DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM APPROVED DRAFT COMES TO THE SR. PS KEPT FOR PRONOUNCEMENT ON. FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK DATE ON WHICH FILE GOES TO THE AR DATE OF DISPATCH