PRAKASH VASANT AJGAONKAR, MUMBAI V. ACIT CEN CIR-8, MUMBAI

ITA 6236/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48453 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 30-03-2011
• Assessment Year: misc
• Appeal Filed On: 02-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Keywords: Search and seizure; Loose papers
• Section: 153A; 132

Judgement Text

1 ITA NOS. 6236 TO 6239/MUM/2009 ASSTT.YEARS:2003-04 TO 2006-07. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO, JUDICIAL MEMBER. S.NO. I.T.A. NO. ASSTT. YEAR 1. 6236/MUM/2009 2003-04 2. 6237/MUM/2009 2004-05 3. 6238/MUM/2009 2005-06 4. 6239/MUM/2009 2006-07. MR. PRAKASH VASANT AJGAONKAR, ASSTT. COMMISSIONER OF 801, BLOSSOM, JAHANGIR VIMAL VS. INCOME-TAX, DALA MARG, PARSI COLONY, DADAR, CENTRAL CIRCLE-8, MUMBAI. MUMBAI 400 014. PANADQPA7524C APPELLANT. RESPONDENT. APPELLANT BY : SHRI VIJ AY MEHTA. RESPONDENT BY: S HRI SUMEET KUMAR. O R D E R PER J. SUDHAKAR REDDY : ALL THESE APPEALS ARE FILED BY THE ASSESSEE DIRECT ED AGAINST THE COMMON ORDER PASSED BY THE CIT(APPEALS)-37, MUMBAI DATED 30-09 -2009 FOR THE ASSESSMENT YEARS 2003-04 TO 2006-07, WHEREIN HE HAS CONFIRMED THE PENALTIES LEVIED U/S 271(1)(C) OF THE ACT BY THE AO. 2 ITA NOS. 6236 TO 6239/MUM/2009 ASSTT.YEARS:2003-04 TO 2006-07. 2. FACTS IN BRIEF: THE ASSESSEE IS A DIRECTOR IN VARIOUS COMPANIES OF SHIVALIK GROUP. SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED O UT ON THE ASSESSEE ON 4-10-2006. UNEXPLAINED CASH, FIXED DEPOSITS, COMPUTER BACKUP I N ONE CD WAS SEIZED IN ADDITION TO JEWELLERY, GAZETTES ETC. THE ASSESSEE E XPLAINED THAT THE INVESTMENT IN HOUSEHOLD AND ELECTRONIC ITEMS WERE MADE OUT OF BR OKERAGE COMMISSION INCOME, THE DETAILS OF WHICH WERE RECORDED IN THE SEIZED LO OSE PAPERS FILED MARKED AS ANNEXURE A OF PANCHANAMA DATED 14-11-2006. THE W ORKING OF SUCH COMMISSION INCOME WAS ADMITTED BY THE ASSESSEE AT R S.25,000/- FOR THE ASSESSMENT YEAR 2004-05, AT RS.1 LAKH FOR THE ASSESSMENT YEAR 2005-06 AND AT RS.9 LAKH FOR THE ASSESSMENT YEAR 2006-07. THE ASSESSEE IN HIS STATEM ENT U/S 132(4), ADMITTED THAT SALE PROCEEDS OF PENNY STOCK OF DATABASE FINANCE L TD. WERE WRONGLY CLAIMED AS LONG TERM CAPITAL GAINS IN THE ORIGINAL RETURN OF I NCOME. IN THE ORIGINAL RETURN THE ASSESSEE ALSO CLAIMED EXEMPTION U/S 54F. WHEN A NOT ICE U/S 153A WAS ISSUED, THE ASSESSEE FURNISHED A RETURN OF INCOME DISCLOSING TO TAL INCOME OF RS.50,80,570/- ON 3 RD MAY, 2007. HE DISCLOSED AN AMOUNT OF RS.47,97,170/ - AS INCOME FROM OTHER SOURCES, THOUGH, IN THE EARLIER RETURN OF INCOME, T HIS WAS CLAIMED AS LONG TERM CAPITAL GAIN. THE ASSESSMENT FOR THE ASSESSMENT YEA R 2003-04 WAS PASSED DETERMINING TOTAL INCOME AT RS.50,80,570/-. FOR THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07, THE ASSESSEE DISCLOSED FURTHER INCOME OF RS.25,000/-, RS.1 LAKH AND RS.9 LAKH ON ACCOUNT OF BROKERAGE COMMISSI ON INCOME THE DETAILS OF WHICH WERE GIVEN IN SEIZED PAPER NO. 75 OF LOOSE PA PERS FILED, SEIZED AS PER ANNEXURE A OF PANCHANAMA DATED 14-11-2006. THE AO SIMULTANEOUSLY INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). AFTER CONSIDERIN G THE EXPLANATION GIVEN BY THE ASSESSEE, THE AO PASSED AN ORDER U/S 271(1)(C) FOR ALL THE YEARS. AGGRIEVED, THE 3 ITA NOS. 6236 TO 6239/MUM/2009 ASSTT.YEARS:2003-04 TO 2006-07. ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST AP PELLATE AUTHORITY CONFIRMED THE PENALTIES. FURTHER AGGRIEVED, THE ASSESSEE IS IN AP PEAL BEFORE US. 3. WE HAVE HEARD MR. VIJAY MEHTA, LEARNED COUNSEL FOR THE ASSESSEE AND MR. SUMEET KUMAR, THE LEARNED DR. 4. WE FIRST TAKE THE APPEAL FOR ASSESSMENT YEAR 200 3-04 IN ITA NO. 6236/MUM/2009. THE ASSESSEE FILED MODIFIED GROUNDS WHICH READ AS FOLLOWS: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT S IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ISSUING THE NOTI CE U/S 271(1)(C) OF THE ACT. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN NOT HOLDING THAT THE ASSESSING OFFICER HAS PASSED THE ORDER U/S 271( 1)(C) OF THE ACT IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTIC E. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE LEVY OF PENALTY OF RS.15,10,479/- IN RESPECT OF INCOME D ECLARED BY THE APPELLANT IN THE RETURN OF INCOME FILED IN PURSUANC E TO NOTICE U/S 153A OF THE ACT. 5. GROUND NOS. 1 AND 2 ARE DISMISSED AS NOT PRESS ED. 6. COMING TO GROUND NO. 3, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE D-BENCH OF THE TRIBUNAL IN THE CASE OF RAMAKANT R. JADHAV IN ITA NO. 6241/MUM/09, ORDER DATED 8 TH OCT., 2010. THE LEARNED DR AGREED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE REFERRED TRIBUNAL ORDER. 7. IN VIEW OF THE ABOVE SUBMISSIONS, WE RESPECTFULL Y FOLLOW THE ORDER OF THE TRIBUNAL IN THE CASE OF MR. RAMAKANT R. JADHAV FOR THE ASSESSMENT YEAR 2003-04 WHEREIN IT IS HELD THAT THERE WAS NOTHING FOUND DUR ING THE COURSE OF SEARCH TO INDICATE THAT THE TRANSACTION IN THE PURCHASE AND SALE OF SHARES OF M/S DATABASE 4 ITA NOS. 6236 TO 6239/MUM/2009 ASSTT.YEARS:2003-04 TO 2006-07. FINANCE LTD. ENTERED INTO BY THE ASSESSEE WERE BOG US. IN THE ABSENCE OF SUCH MATERIAL, THE TRIBUNAL FOUND CREDENCE IN THE STAND TAKEN BY THE ASSESSEE THAT THE ADDITIONAL INCOME WAS OFFERED/SURRENDERED BY HIM ON LY TO BUY PEACE OF MIND AND TO AVOID ANY FURTHER LITIGATION. IT WAS ALSO NOTICE D THAT SIMILAR TRANSACTIONS WITH THE VERY SAME PARTY DONE BY THE ASSESSEE IN THE EARLIER YEARS, WERE ACCEPTED AS GENUINE BY THE AO. AS THE FACTS AND CIRCUMSTANCES ARE IDENT ICAL AND PERTAINED TO THE SAME SEARCH AND REFERRED TO THE SAME MATERIAL, WE RESPEC TFULLY FOLLOW THIS ORDER AND ALLOW GROUND NO. 3 OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. 9. ITA NO. 6237/MUM/2009 (A.Y. 2004-05) THE MODIFIED GROUNDS OF APPEAL READ AS FOLLOWS: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ISSUING THE NOTICE U/S 271(1)(C) OF THE ACT. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN NOT HOLDING THAT THE ASSESSING OFFICER HAS PASSED THE ORDER U/S 271(1)(C) OF THE ACT IN GROSS VIOLATION OF THE PRINCIPLES OF NAT URAL JUSTICE. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE LEVY OF PENALTY OF RS.8,400/- IN RESPECT OF INCOME DECLARED BY THE APPELLANT IN THE RETURN OF INCOME FILED IN PURS UANCE TO NOTICE U/S 153A OF THE ACT. 10. GROUND NOS. 1 AND 2 ARE DISMISSED AS NOT PRESSE D. 11. COMING TO GROUND NO.3, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT, THOUGH THE ASSESSEE IN HIS STATEMENT U/S 132(4) HAD AGREED THAT THE INCOME IN QUESTION I.E. BROKERAGE INCOME WAS UNACCOUNTED INCO ME EARNED BY HIM AND HAD FILED A RETURN OF INCOME OFFERING THE SAME AS INCOM E, THE ACTUAL FACT IS THAT THIS IS 5 ITA NOS. 6236 TO 6239/MUM/2009 ASSTT.YEARS:2003-04 TO 2006-07. NOT THE INCOME OF THE ASSESSEE. HE FILED A PAPER BO OK RUNNING INTO 10 PAGES AND DREW THE ATTENTION OF THE BENCH SPECIFICALLY TO PAG E 7, WHICH IS A TYPED SHEET OF PAPER CONTAINING 9 ENTRIES ON VARIOUS DATES AND ARG UED THAT A PERUSAL OF THIS PAPER SHOWS THAT IT IS A TYPED PAPER AND IT CANNOT BE CO NSIDERED THAT IT IS BROKERAGE INCOME. HE POINTED OUT THAT THE AMOUNTS ARE ROUNDED OF TO THE NEAREST THOUSAND. HE CONTENDED THAT COMMISSION IS NOT EARNED IN NEARE ST THOUSAND AND THAT THE DECLARATION WAS MADE MERELY TO BUY PEACE AND AVOID PROTRACTED LITIGATION. 12. THE LEARNED DR, MR. SUMEET KUMAR, ON THE OTHER HAND, OPPOSED THE CONTENTION AND SUBMITTED THAT THE ASSESSEE HAS MADE A CATEGORICAL STATEMENT IN RESPONSE TO QUESTION NO.2 IN SWORN STATEMENT RECOR DED AT THE TIME OF SEARCH, THAT THE AMOUNTS NOTED IN THIS SHEET OF PAPER I.E. NO. 75 IN LOOSE PAPERS FILED AS PER ANNEXURE A TO PANCHANAMA DATED 14-11-2006. HE REF ERRED TO THE STATEMENT WHEREIN THE ASSESSEE HAS STATED THAT THE AMOUNT RE CEIVED IS OVER AND ABOVE THE AMOUNT OF BROKERAGE RECEIVED IN CASH OF RS.49,02,41 0/- WHICH WAS FOUND IN THE FORM OF CASH. HE ALSO POINTED OUT THAT THE ASSESSEE HAD SPECIFIED THE MODES OF UTILIZATION OF THIS AMOUNT. HE SUBMITTED THAT THE A SSESSEES SUBMISSIONS HAVE NO BASIS AND HAVE TO BE REJECTED. 13. JOINING THE ISSUE, THE LEARNED COUNSEL FOR THE ASSESSEE, IN HIS REPLY, REITERATED THE POINT THAT THE SHEET OF PAPER IN QUESTION CANNO T BE CONSIDERED HIS INCOME. 14. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAP ERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITE D, WE HOLD AS FOLLOWS. 15. THE ISSUE OF UNACCOUNTED COMMISSIONS/BROKERAGE ARISES IN ALL THE THREE ASSESSMENT YEARS I.E. 2003-04, 2004-05 AND 2005-06. THE MODIFIED GROUND NOS. 1 AND 2 ARE DISMISSED AS NOT PRESSED. 6 ITA NOS. 6236 TO 6239/MUM/2009 ASSTT.YEARS:2003-04 TO 2006-07. 16. COMING TO MODIFIED GROUND NO. 3, THE ASSESSEE H AS IN REPLY TO A QUESTION CATEGORICALLY STATED THAT THE AMOUNTS RECORDED IN THIS SHEET OF PAPER IS UNACCOUNTED COMMISSION/BROKERAGE INCOME. HE ALSO INDICATED AS T O HOW THIS AMOUNT HAS BEEN UTILIZED. THE RETURN OF INCOME HAS BEEN FILED OFFER ING THIS AMOUNT TO TAX. BEFORE THE AO THE ASSESSEE HAS NOT CONTENDED THAT THE AMOUNTS RECORDED IN THIS SHEET OF PAPER ARE IN FACT NOT INCOME. HAD THE ASSESSEE TAKEN SUCH A STAND BEFORE THE AO, THE AO WOULD HAVE GOT AN OPPORTUNITY TO INVESTIGATE AND AR RIVE AT A PROPER CONCLUSION. BY ADMITTING THIS AS INCOME, SPECIFYING THE METHOD OF UTILIZATION AND BY FILING THE RETURN OF INCOME INCLUDING THIS AMOUNT AS INCOME, T HE ASSESSEE HAS ENSURE THAT THERE IS NO DISPUTE AND THAT THE AO NEED NOT INVEST IGATE AND COME TO A CONCLUSION ON THIS ISSUE. EVEN IN 271(1)(C) PROCEEDINGS IT WA S NOT THE CASE OF THE ASSESSEE THAT THE AMOUNT IN QUESTION IS NOT INCOME. WHILE SO, SUC H AN ARGUMENT IS RAISED BEFORE US FOR THE FIRST TIME. IN OUR CONSIDERED OPINION, T HIS ARGUMENT IS DEVOID OF MERIT AND HAS TO BE DISMISSED AS SUCH. NO OTHER ISSUE HAS BEEN ARGUED BEFORE US. 17. IN THE RESULT, WE DISMISS GROUND NO. 3 OF THE A SSESSEE AND UPHELD THE LEVY OF PENALTY U/S 271(1)(C). 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. 19. ITA NOS.6238&6239/MUM/2009 (A.Y. 2005-06 & 2006-07) . 20. AS ALREADY INDICATED, THE ISSUE ARISING IN THES E TWO YEARS ARE IDENTICAL TO THE ISSUE WHICH IS RAISED FOR THE ASSESSMENT YEAR 2004- 05. CONSISTENT WITH THE VIEW TAKEN IN ITA NO. 6237/MUM/2009 FOR THE ASSESSMENT Y EAR 2004-05, WE DISMISS BOTH THE APPEALS OF THE ASSESSEE. 7 ITA NOS. 6236 TO 6239/MUM/2009 ASSTT.YEARS:2003-04 TO 2006-07. 21. IN THE RESULT, THE APPEAL IN ITA NO. 6236/MUM/2 009 IS ALLOWED IN PART AND THE APPEALS IN ITA NOS.6237, 6238 & 6239/MUM/2009 A RE DISMISSED. ORDER PRONOUNCED ON THIS 8 TH DAY OF APRIL, 2011. SD/- SD/- (VIJAY PAL RAO) (J. SUDHAKAR RED DY) JUDICIAL MEMBER ACCOUNTA NT MEMBER MUMBAI, DATED: 8 TH APRIL, 2011. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, C-BENCH (TRUE COPY) BY ORDE R ASSTT. REGIST RAR, ITAT, MUMBAI BEN CHES