THAKKAR POPATLAL VELJI SALES LTD., PANVEL V. DCIT, CENTRAL CIRCLE 25, MUMBAI

ITA 5795/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3555 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 26-09-2013
• Court: TRIBUNAL
• Department Lawyers: B D NAIK
• Assessee Lawyers: MANISH SANGHVI
• Keywords: Search and seizure; Loose papers; Difference of opinion
• Section: 132

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.5795/MUM/2013 ASSESSMENT YEAR: 2006-07 M/S THAKKAR POPATLAL VELJI SALES LTD. OFFICE NO.2, NEEL PRESIDENCY, OPP. TELEPHONE EXCHANGE, PANVEL, RAIGAD, MAHARASHTRA-410206 / VS. ACIT, CENTRAL CIRCLE-25, 4 TH FLOOR, AAYAKAR BHAVAN, DR. M. K. ROAD, MUMBAI-400020 ( ! ' /ASSESSEE) ( # / REVENUE) PAN. NO . AABCT7939D ! ' / ASSESSEE BY SHRI MANISH SANGHVI # / REVENUE BY SHRI B.D. NAIK - DR $ #% & ' ' / DATE OF HEARING : 25/08/2016 & ' ' / DATE OF ORDER: 06/09/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE BY THE IMPUGNED OR DER DATED 20/06/2013 OF THE LD. FIRST APPELLATE AUTHORI TY, ITA NO.5795/MUM/2013 THAKKAR POPATLAL VELJI SALES LTD. 2 MUMBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTA INS TO PENALTY IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT , 1961 (HEREINAFTER THE ACT) ON THE REDUCED TURNOVER OF RS.1,07,395/- ON ESTIMATE BASIS. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI MANISH SANGHAVI, EXPLAINED THAT THE ADDITION O F RS.95,53.800/-, ON ACCOUNT OF SUPPRESSED PROFIT WAS REDUCED TO RS.6,44,368/- BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND FURTHER TO RS.1,07,395/- BY THE T RIBUNAL. RELIANCE WAS PLACED UPON THE DECISION IN CIT VS RAJ BANS SINGH 276 ITR 351 AND THE DECISION OF THE TRIBUNAL IN ITA NO.1875/MUM/2012 FOR ASSESSMENT YEAR 2008-09 IN THE CASE OF ASSESSEE ITSELF. ON THE OTHER HAND, THE LD. DR, SHRI B.D. NAIK, DEFENDED THE ADDITION/PENALTY. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE A DVERTING FURTHER, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSES SEE (ITA NO.5743/MUM/2010, ETC.) AND ITA NO.1875/MUM/2012 ORDER DATED 08/05/2013 FOR ASSESSMENT YEAR 2008-09 (INTERNAL PAGE 17 AND PAPER BOOK PAGE 50) FOR READY REFERENCE AND ANALYSIS:- 23. NOW, WE WILL TAKE UP THE APPEAL OF THE ASSESSE E LISTED UNDER ITA NO.1875/M/2012, WHICH IS IN RESPECT TO PENALTY LEVI ED UNDER SECTION 271AAA, RELATING TO ASSESSMENT YEAR 2008-09. 24. THE AO LEVIED PENALTY OF RS.1,79,860/- UNDER SE CTION 271AAA ON THE ESTIMATED PROFIT OF RS.15,87,500/- AS THE SAME WAS NOT DISCLOSED BY THE ASSESSEE. IN APPEAL BEFORE THE CIT(A), THE ACTION O F THE AO WAS CONFIRMED. ITA NO.5795/MUM/2013 THAKKAR POPATLAL VELJI SALES LTD. 3 25. AFTER CONSIDERING THE RIVAL SUBMISSIONS OF THE PARTIES, WE FOUND THAT ON ESTIMATION OF PROFIT, PENALTY CANNOT BE LEVIED. WE HAVE ALSO DISPOSED OF THE APPEAL OF THE ASSESSEE ON MERIT, WHEREIN WE HAVE HE LD THAT THE TURNOVER CANNOT BE ESTIMATED AS ONLY ADDITION CAN BE MADE ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH. THE TRIBUNAL IN THE CASE OF M/S SHREEJI TRADERS VS. DCIT, DECIDED IN ITA NOS.281 TO 285/MUM /2010, VIDE ORDER DATED 13-1-2012 FOR THE ASSESSMENT YEARS 2002-03 TO 2006-07, HAS HELD THAT ON ESTIMATED TURNOVER THE PENALTY CANNOT BE LEVIED. COPY OF THE ORDER WAS ALSO FILED. THEREFORE, FOLLOWING THE ORDER OF THE T RIBUNAL AND TAKING INTO CONSIDERATION THAT WE HAVE ALSO DISAPPROVED THE ACT ION OF THE AO, NO TURNOVER CAN BE ESTIMATED WITHOUT ANY MATERIAL, WE CANCEL THE LEVY OF PENALTY. 2.2. NOW, WE SHALL ANALYZE THE FACTS OF THE PRESEN T APPEAL. IT IS NOTED THAT A SEARCH AND SEIZURE ACTI ON U/S 132 OF THE ACT WAS CARRIED OUT ON 05/06/2007 AT THE RESIDENTIAL/BUSINESS PREMISES OF METRO GROUP OF CAS ES. THE ASSESSEE WAS ALSO COVERED IN THE SEARCH OPERATION. DURING THE COURSE OF SEARCH, CERTAIN LOOSE PAPERS WERE DIS COVERED. ON PERUSAL OF DOCUMENTS, IT WAS FOUND THAT SOME OF THE PAPERS WERE TALLYING WITH THE BOOKS OF ACCOUNTS. TH E LD. ASSESSING OFFICER ESTIMATED THE TURNOVER OF THE ASS ESSEE AND THE AMOUNT OF RS.95,23,800/- WAS ADDED TO THE TOTAL INCOME. ON APPEAL, BEFORE THE LD. COMMISSIONER OF I NCOME TAX (APPEALS), THE ADDITION WAS REDUCED TO RS.6,44, 368/-, BEING ON ESTIMATE BASIS. ON FURTHER APPEAL BY THE ASSESSEE THE ADDITION WAS REDUCED TO RS.1,07,395/- BY THE TR IBUNAL. NOW, QUESTION ARISES, WHETHER PENALTY WILL SUSTAIN, WHEREIN, THE ADDITION WAS ON ESTIMATE BASIS. IN OUR VIEW, M ERE ADDITION ON ESTIMATE BASIS DOES NOT CONCLUSIVELY ES TABLISH THE CONCEALMENT. THE RATIO LAID DOWN IN CIT VS DEV ANDAS PERUMAL & CO. 140 ITR 943 (BOM.), CIT VS AARKAY SAR EE ITA NO.5795/MUM/2013 THAKKAR POPATLAL VELJI SALES LTD. 4 MUSEUM 187 ITR 147(BOM), LAXMINARAIN RAMAVATAR VS I TO (31 TTJ 478)(JP), ITO VS DR. K.V.R. KRISHNAJI (40 T AXMAN 222) (HYD), NATIONAL TEXTILES VS CIT 249 ITR 125 (G UJ.), CIT VS P.K. NARAYANAN (238 ITR 905) (KER.), SUPPORTS OU R VIEW. 2.3. IT IS AN ACCEPTED PRINCIPLE OF LAW THAT IF TH ERE IS DIFFERENCE OF OPINION ON A PARTICULAR ISSUE, THEN I T CANNOT BE A CASE OF CONCEALMENT FOR WHICH THE RATIO LAID DOWN IN CIT VS GARG ENGINEERING COMPANY (235 ITR 452, 454)(ALL.) A ND CEMENT MARKETING OF INDIA LTD. VS ASST. CST (124 IT R 15, 18)(SC) SUPPORTS OUR VIEW. EVEN OTHERWISE, WHEN TWO VIEWS ARE POSSIBLE, WHICH FAVOURS THE ASSESSEE HAS TO BE ADOPTED. THIS PROPOSITION IS SUPPORTED BY THE RATIO LAID DOW N IN CIT VS VEGETABLE PRODUCTS LTD. 88 ITR 192 (SC), CIT VS KOHINOOR FLOUR MILLS (99 ITR 54, 65-66)(GUJ.), ADDL. CIT VS BIHAR TEXTILES (100 ITR 253, 257)(PAT.) AND HARIGOPAL SIN GH V CIT (2002)258 ITR 85(PUNJ & HAR), SUPPORTS OUR VIEW . FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF HEARING ON 25/08/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SING H) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 06/09/2016 F{X~{T? P.S / # ITA NO.5795/MUM/2013 THAKKAR POPATLAL VELJI SALES LTD. 5 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 $ 1' ( *+ ) / THE CIT (TDS), MUMBAI. 4. 0 0 $ 1' / CIT(A)-14, MUMBAI 5. 3#4 .' , 0 *+' * 5 , $ % / DR, ITAT, MUMBAI 6. 6 7% / GUARD FILE. / BY ORDER, /3+' .' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI