Jt. CIT (OSD), Central, Circle-2, Vadodara V. M/s. Shreedhar Associates, Baroda

ITA 719/AHD/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3408 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-03-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 22-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Income from undisclosed sources; Set aside
• Section: 143(3); 139(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./I.T.A. NO. 719/AHD/2018 ( / ASSESSMENT YEAR : 2013-14) THE JT.CIT (OSD) CEN.CIR-2 VADODARA / VS. M/S.SHREEDHAR ASSOCIATES PROJE: SHREEDHAR RESIDENCY B/S. SUN PHARMA ROAD BARODA ./ ./PAN/GIR NO. : ABTFS 4740 B ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SAMIR TEKRIWAL, CIT-DR / RESPONDENT BY : SHRI MANISH SHAH, AR /DATE OF HEARING 05/03/2020 / DATE OF PRONOUNCEMENT 05 / 0 3 /20 20 / O R D E R PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTAN CE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS)12, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-1 2/629/CC-2/16-17 DATED 08/01/2018 RELEVANT TO ASSESSMENT YEAR (AY) 2013-14. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD.CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING THE PENALT Y LEVIED U/S.271(1)(C) OF THE ACT, OF RS.1,18,00,000/- DESPITE THE FACT TH AT THE DISCLOSURE OF ON- ITA NO.719/AHD/2018 JT. CIT (OSD) VS. M/S.SHREEDHAR ASSOCIATES ASST.YEAR 2013-14 - 2 - MONEY INCOME WAS MADE ONLY DUE TO THE SURVEY ACTION BY THE DEPARTMENT AND THE ON-MONEY INCOME WAS NOT ACCOUNTE D FOR IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE ON THE DAT E OF SURVEY. 2. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD.C IT(A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO TH E ABOVE EXTENT. 3. BRIEF FACTS OF THE CASE ARE THAT SURVEY U/S.131 (1A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WA S CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 09/01/2013. THE CASE W AS SELECTED FOR SCRUTINY AND SERVING A STATUTORY NOTICE AND AFTER SEEKING RE PLY OF THE ASSESSEE, ASSESSMENT ORDER U/S.143(3) OF THE ACT WAS FINALIZE D DETERMINING TOTAL INCOME OF RS.4,26,92,360/-. PENALTY PROCEEDINGS U /S.271(1)(C) WAS ALSO INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME. 3.1. AFTER SERVING NOTICES AND SEEKING REPLY TO THE ASSESSEE, ORDER OF PENALTY U/S.271(1)(C) OF THE ACT WAS PASSED ON 29/0 6/2016 THEREBY IMPOSING PENALTY OF RS.1,18,00,000/- U/S.271(1)(C) OF THE A CT FOR CONCEALING PARTICULARS OF INCOME THEREBY LEADING TO CONCEALMEN T OF INCOME. 4. AGGRIEVED BY THE ORDER OF THE PENALTY, ASSE SSEE PREFERRED APPEAL BEFORE LD.CIT(A), WHO AFTER CONSIDERING THE CASE OF BOTH THE PARTIES, ALLOWED THE ASSESSEES APPEAL AND DELETED THE PENALTY. 5. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE REVENUE IS IN APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREINABOVE. T HE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN DELETI NG THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. ITA NO.719/AHD/2018 JT. CIT (OSD) VS. M/S.SHREEDHAR ASSOCIATES ASST.YEAR 2013-14 - 3 - 6. THE LD.DR RELIED UPON THE ASSESSMENT ORDER AS WE LL AS THE ORDER OF PENALTY AND SUBMITTED THAT THE DISCLOSURE OF ONMON EY INCOME WAS MADE ONLY DUE TO THE SURVEY ACTION BY THE DEPARTMENT AND ONMONEY INCOME WAS NOT ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE ON THE DATE OF SURVEY, THEREFORE LD.CIT(A) HAS COMMITTED I LLEGALITY BY DELETING PENALTY. 9. ON THE OTHER HAND, LD.AR RELIED UPON THE ORDER P ASSED BY THE LD.CIT(A) AND ALSO THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. R UMEDBHAI JEWELLERS PVT.LTD. IN TAX APPEAL NO.549 OF 2016, DATED 22/08/2016. 10. WE HAVE HEARD THE LEARNED REPRESENTATIVES FOR B OTH THE PARTIES. WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. BEFORE WE DECIDE THIS ISSUE ON MERITS, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY THE LD.C IT(A) WHILE DECIDING THIS GROUND. THE LD.CIT(A) HAS DEALT WITH THIS GROUND I N PARAGRAPH NOS.4 & 5 OF HIS ORDER, HOWEVER, THE RELEVANT PORTION CONTAINED IN PARAGRAPH NO.5 TO 5.4 OF HIS ORDER IS REPRODUCED HEREUNDER: 5. I HAVE PERUSED THE ASSESSMENT ORDER AND CONSI DERED THE APPELLANT'S SUBMISSION. THERE IS NO DISPUTE TO THE FACTS THAT T HE APPELLANT MADE A DISCLOSURE OF RS.3.8 CRORES DURING THE SURVEY OPERATION FOR THE C URRENT YEAR, INCLUDED THE ON- MONEY RECEIPTS' IN THE BOOKS OF ACCOUNT, PAID TAX D UE, SHOWED IT IN ITS RETURN OF INCOME U/S 139(1) AND THE ASSESSMENT U/S 143(3) WAS COMPLETED WITHOUT ANY ADDITION BEING MADE TO THE RETURNED INCOME. I AM OF THE CONSIDERED VIEW THAT AS THERE WAS NO ADDITION MADE TO THE RETURNED INCOME T HERE WAS 110 CASE OF INITIATION ITA NO.719/AHD/2018 JT. CIT (OSD) VS. M/S.SHREEDHAR ASSOCIATES ASST.YEAR 2013-14 - 4 - OF PENALTY PROCEEDINGS U/S 271(L)(C) AS THERE WAS N EITHER ANY CONCEALMENT OF INCOME NOR ANY FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. IT IS WELL SETTLED PRINCIPLE ON PENALTY PROCEEDINGS U/S 271(L)(C THAT A CASE OF CONCEALMENT OF INCOME OR OF FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME HAS TO BE MADE OUT BY THE AO ON THE BASIS OF THE RETURN OF INCOME AND NOT OTH ERWISE. I ALSO HOLD THAT 'IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT' FOR PENAL TY MEANS THE ASSESSMENT PROCEEDINGS AND NOT SURVEY PER SE. BUT HOWEVER, I F IND THAT NONETHELESS THE AO INITIATED THE PENALTY PROCEEDINGS U/S 271(L)(C). 5.1 DURING THE PENALTY PROCEEDING IT WAS SUBMI TTED BY THE ASSESSEE THAT THE AMOUNT OFFERED AS ADDITIONAL BUSINESS INCOME PURSUA NT TO SURVEY OPERATION WAS FOR THE ONGOING YEAR WHICH WAS DULLY INCORPORATED IN TH E BOOKS OF ACCOUNTS AND IN THE REGULAR RETURN OF INCOME WITH TAXES DULY PAID. HOWE VER, THE AO WAS OF THE VIEW THAT THE 'UNACCOUNTED INCOME OF RS.3.8 CRORE OFFERED TO TAX CAME TO THE SURFACE ONLY BECAUSE OF SURVEY, THAT HAD THERE BEEN NO SURVEY TH AT AMOUNT COULD NOT HAVE BEEN BROUGHT TO TAX, THAT THE ON-MONEY RECEIVED WAS UNAC COUNTED INCOME WHICH WAS ADMITTED BY THE ASSESSEE WHEN IT WAS CONFRONTED WIT H, THE 'DIARY' DURING THE SURVEY. FOR THE PURPOSE OF 'PARTICULAR(S)' THE AO HAS RELIE D UPON KANBAY SOFTWARE INDIA (P) LTD. 122 TTJ 721 (PUNE) WHEREIN IT WAS HELD THAT THE EXP RESSION 'PARTICULAR' REFERS TO FACTS, DETAILS, SPECIFICS OR THE INFORMAT ION ABOUT SOMEONE OR SOMETHING AND THAT THE DETAILS OR INFORMATION ABOUT THE INCOME' C OULD DEAL WITH FACTUAL DETAILS OF INCOME'. WITH DUE RESPECT, I DO NOT FIND THAT THESE HELP THE CASE OF THE PENALTY. 5.2 I FURTHER NOTE THAT THE PENALTY HAS BEEN I MPOSED BY THE AO HOLDING THAT 'THE ASSESSEE HAD CONCEALED HIS INCOME FROM ON-MONEY REC EIPT IN HIS REGULAR BOOKS OF ACCOUNTS. 'PARTICULARS OF INCOME' INCLUDES BOOKS OF ACCOUNTS AND IN THE CASE OF THE ASSESSEE, THE ON-MONEY RECEIPT WAS NOT FINDING MENT IONED IN HIS REGULAR BOOKS OF ACCOUNTS'. I AM OF CONSIDERED OPINION THAT THE CONC LUSION OF THE AO THAT THE AMOUNT WAS NOT FINDING MENTION IN THE REGULAR BOOKS OF ACCOUNTS IS OVER SWEEPING OVER STATEMENT BECAUSE THE FACT REMAINS THAT THE BO OKS OF ACCOUNTS WERE NOT CLOSED THEN AS THE YEAR WAS YET NOT OVER. IT IS NOT THE CA SE THAT THE BOOKS WERE COMPLETED, ACCOUNTS WERE AUDITED AND RETURNS WERE FILED AND TH ERE AFTER ONLY THE UNACCOUNTED INCOME OF RS.3.8 CRORE CAME TO THE SURFACE BECAUSE OF THE SURVEY BY THE DEPARTMENT'. THIS IS THE INHERENT DISABILITY/CHALLE NGE IN ANY DISCLOSURE IF IT PERTAINS TO THE ONGOING FINANCIAL YEAR. THE YEAR IN THE CASE OF THE APPELLANT BEING THE FIRST YEAR OF OPERATION IT CANNOT EVEN BE IMPLIED THAT TH AT THE AMOUNT PERTAINED TO EARLIER YEAR(S) OF ITS BUSINESS. ITA NO.719/AHD/2018 JT. CIT (OSD) VS. M/S.SHREEDHAR ASSOCIATES ASST.YEAR 2013-14 - 5 - 5.3 I ALSO NOTE THAT THE APPELLANT'S CASE DOES N OT FALL UNDER ANY OF THE EXPLANATIONS TO SECTION 271(L)(C). I ALSO FIND THAT THE CASE IS SQUARELY COVERED BY CIT VS. R UMEDBHAI JEWELLERS PVT. LTD. RELIED UPON BY T HE APPELLANT. 5.4 IN VIEW OF THE FACTS OF THE CASE, THE PROVISION S OF SECTION 171(L)(C) AND THE CASE LAWS RELIED UPON BY THE APPELLANT, THE PENALTY IMPO SED BY THE AO CANNOT BE SUSTAINED. THE AO IS DIRECTED TO DELETE THE PENALTY IMPOSED OF RS. 1.18 CR. 11. AFTER HAVING GONE THROUGH THE FACTS OF THE PRES ENT CASE AND HEARING THE PARTIES AT LENGTH, WE FIND THAT THE ASSESSEE HA D OFFERED THE AMOUNT AS ADDITIONAL BUSINESS INCOME PURSUANT TO SURVEY OPERA TION FOR THE ONGOING YEAR, WHICH WAS DULY INCORPORATED IN THE BOOKS OF A CCOUNTS AND IN THE REGULAR RETURN OF INCOME WITH TAXES DULY PAID. SINCE THE A SSESSING OFFICER WAS OF THE VIEW THAT THE UNACCOUNTED INCOME OF RS.3.8 CRORES WAS OFFERED TO TAX BY THE ASSESSEE. AS THE SAME CAME TO THE SURFACE ONLY BECAUSE OF SURVEY AND THAT HAD THERE BEEN NO SURVEY, THEN THAT AMOUNT COU LD NOT HAVE BEEN BROUGHT TO TAX. THEREFORE, IT WAS HELD THAT THE ONMONEY RECEIVED WAS UNACCOUNTED INCOME WHICH WAS ADMITTED BY THE ASSESS EE WHEN IT WAS CONFRONTED WITH THE DIARY DURING THE SURVEY. HOW EVER, WE ARE OF THE VIEW THAT THE CONCLUSION OF THE ASSESSING OFFICER THAT AMOUNT WAS NOT FINDING MENTION IN THE REGULAR BOOKS OF ACCOUNTS IS OVER-SW EEPING OVER STATEMENT, BECAUSE THE FACT REMAINS THAT THE BOOKS OF ACCOUNTS WERE NOT CLOSED, THEN AS THE YEAR WAS YET NOT OVER. EVEN OTHERWISE, IT WAS NOT THE CASE OF THE REVENUE THAT THE BOOKS WERE COMPLETED, ACCOUNTS WER E AUDITED AND RETURNS WERE FILED AND THEREAFTER ONLY THE UNACCOUNTED IN COME OF RS.3.8 CRORES CAME TO THE SURFACE BECAUSE OF THE SURVEY BY THE DE PARTMENT. THIS PARTICULAR FACTS, ACCORDING TO US, IS THE INHERENT DISABILITY/CHALLENGE IN ANY DISCLOSURE IF IT PERTAINS TO THE ONGOING FINANCIAL YEAR. THE YEAR IN THE CASE ITA NO.719/AHD/2018 JT. CIT (OSD) VS. M/S.SHREEDHAR ASSOCIATES ASST.YEAR 2013-14 - 6 - OF THE ASSESSEE BEING THE FIRST YEAR OF OPERATION, IT CANNOT EVEN BE IMPLIED THAT THAT THE AMOUNT PERTAINED TO EARLIER YEAR(S) OF ITS BUSINESS. 11.1. WE ARE ALSO FOUND THAT THE HONBLE JURISDIC TIONAL HIGH COURT UNDER THE IDENTICAL CIRCUMSTANCES IN THE CASE OF CIT VS. R UM EDBHAI JEWELLERS PVT.LTD. IN ITA NOD.549 OF 2016 HELD THAT WHERE ASSESSEE HAVING FILED THE RETURN OF INCOME BY THE DUE DATE, IN WHICH DISCLOSED INCOME D URING THE SURVEY WAS ALSO OFFERED TO TAX AND NO FURTHER ADDITION HAS BEEN MAD E DURING THE ASSESSMENT, THE QUESTION OF ASSESSEE HAVING FURNISHED INACCURATE PA RTICULARS OF THE INCOME AND IMPOSING PENALTY THEREON WOULD NOT ARISE. [(2016) T AXCORP (DT) 66134 (HC- GUJARAT)]. 11.2. THE LD.CIT(A) HAD ALSO RELIED UPON THE DECISI ON OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. R UMEDBHAI JEWELL ERS PVT.LTD.(SUPRA) AND EVEN BEFORE US, NO NEW FACTS OR CIRCUMSTANCES HAVE BEEN PLACED ON RECORD AND THE ORDERS PASSED BY THE REVENUE AUTHORITIES HA VE ALSO GONE UNREBUTTED, THEREFORE, WE FIND NO REASON TO INTERFERE INTO OR T O DEVIATE FROM SUCH FINDINGS OF THE AUTHORITIES BELOW AND WE UPHOLD THE DECISION OF THE LD.CIT(A) AND REJECT THE GROUND RAISED BY THE REVENUE. 12. IN THE RESULT, REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 05 - 03 - 2020 AT AHMEDABAD SD/- SD/- ( AMARJIT SINGH) ( SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 05/ 03 /2020 # . . , . $ . ./ T.C. NAIR, SR. PS ITA NO.719/AHD/2018 JT. CIT (OSD) VS. M/S.SHREEDHAR ASSOCIATES ASST.YEAR 2013-14 - 7 - !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. %&' ( / CONCERNED CIT 4. ( ( ) / THE CIT(A)-12, AHMEDABAD 5. )* + $$&' , &' , % / DR, ITAT, AHMEDABAD 6. + ./ / GUARD FILE. / BY ORDER, ) $ //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 5.3.20 (DICTATION-PAD 12-P AGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..5.3.20 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.6.3.20 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6.3.20 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER