ACIT 19(3), MUMBAI V. VIKRAM SHARAD PHADNIS, MUMBAI

ITA 801/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3559 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 23-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SNEHAL R SHAH
• Keywords: Income from undisclosed sources; Tax effect
• Section: 143(3); 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' F ' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 801 /MUM/201 3 (ASSESSMENT YEAR: 20 09 - 10 ) D C I T - 19(3) VS. SHRI VIKRAM SHARAD PHADNIS ROOM NO. 305, 3 RD FLOOR PIRAMAL CHAMBERS, PAREL MUMBAI 400012 204, AASHNA APARTMENT OPP. REHEJA COLLEGE , ST. MATINS ROAD BANDRA (W) , MUMBAI 400050 PAN - AAFPP4629K APPELLANT RESPONDENT CO NO. 58 /MUM/201 4 (ASSESSMENT YEAR: 2009 - 10 ) SHRI VIKRAM SHARAD PHADNIS VS. D C I T - 19(3) 204, AASHNA APARTMENT OPP. REHEJA COLLEGE , ST. MATINS ROAD BANDRA (W) , MUMBAI 400050 ROOM NO. 305, 3 RD FLOOR PIRAMAL CHAMBERS, PAREL MUMBAI 400012 PAN - AAFPP4629K APPELLANT RESPONDENT REVENUE BY: SHRI JAVED AKHTAR ASSESSEE BY: SHRI SNEHAL R. SHAH DATE OF HEARING: 24 .02 .2016 DATE OF PRONOUNCEMENT: 02 .03 .2016 O R D E R PER JASON P. BOAZ, A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 30 , MUM BAI DATED 14 . 11 .201 2 FOR A.Y. 20 09 - 10 . THE ASSESSEE HAS ALSO PREFERRED CROSS OBJECTION (CO) IN RESPECT OF THIS ORDER OF THE LEARNED CIT(A). 2 . THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE, PROPRIETOR, M/S. DESIGN STUDIO, IS ENGAGED IN BUSINESS AS A FASHION DESIGNER, STYLING AND SELLING CLOTHES. A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') WAS CARRIED OUT AT THE ASSESSEES BUSINESS PREMISES ON 16.02.2009. IN THE COURSE OF SURVEY THE ASSESSEE, IN A STATEMENT UNDER SECTION 131 OF THE ACT, ADMITTED TO AND ITA 801/M /2013 & CO 58/M/2014 SHRI VIKRAM SHARAD PHADNIS 2 DECLARED ADDITIONAL INCOME OF ` 94,02,705/ - OVER AND ABOVE HIS REGULAR INCOME OF A.Y. 2009 - 10 TOWARDS UNACCOUNTED STOCK. ACCORDING TO THE ASSESSING OFFICER (AO), ON A PERUSAL OF THE ASSESSEES RETURN OF INCOME FILED FOR A.Y. 2009 - 10 ON 30.09.2009, IT WAS FOUND THAT THE UNACCOUNTED INCOME TOWARDS STOCK DECLARED THEREIN ON ACCOUNT OF SURVEY WAS ONLY ` 63,33,157/ - AND NOT ` 94,02,705/ - AS ADMITTED BY THE ASSESSEE ON 16.02.2009. THE AO SOUGHT THE ASSESSEES EXPLANATION IN RESPECT OF THE REDUCTION OF THE DISCLOSURE AMOUNTING TO ` 30,69,548/ - (I.E. ` 94,02,705/ - LESS ` 63,33,157/ - ). IN REPLY THERETO, THE ASSESSEE VIDE LETTER DATED 26.11.2011 SUBMITTED THAT IMMEDIATELY AFTER THE SURVEY ON 16.02.2009, THE ASSESSEE VIDE LETTER DATED 18.02.2009 H AD EXPLAINED THAT THE DISCLOSURE, TOWARDS STOCK DIFFERENCE OF ` 94,02,705/ - WAS WORKED OUT ON THE BASIS OF TAG PRICE WHICH WAS RE - WORKED AT ` 63,33,157/ - ON THE BASIS OF SELLING PRICE/REALIZED VALUE REFLECTED IN INVOICES. THE AO BRUSHED ASIDE THE ASSESSEE S EXPLANATION AS NOT VERIFIABLE AS THE SALE INVOICES DID NOT CARRY THE COMPLETE ADDRESS OF THE BUYERS AND ACCORDINGLY PROCEEDED TO BRING TO TAX IN THE ASSESSEES HANDS THE DIFFERENCE OF ` 30,69,548/ - . IN THIS MANNER, THE ORDER OF ASSESSMENT FOR A.Y. 2009 - 1 0 WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 30.12.2011 DETERMINING THE ASSESSEES INCOME AT ` 99,27,300/ - . 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 30.12.2011 FOR A.Y. 2009 - 10, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) - 30 , MUMBAI. THE LEARNED CIT(A) DISPOSED OFF THE APPEAL VIDE THE IMPUGNED ORDER DATED 14.11.2012 ALLOWING THE ASSESSEE PARTIAL RELIEF. IN DOING SO, THE LEARNED CIT(A) DELETED THE ADDITION OF ` 30,69,548/ - MADE BY THE AO ON ACCOUNT OF THE DIFFERENCE OF ADDITION AL INCOME ADMITTED DURING THE COURSE OF SURVEY. REVENUE APPEAL IN ITA NO. 801/MUM/2013 FOR A.Y. 2009 - 10 3 . AGGRIEVED BY THE ORDER OF THE CIT(A) - 30, MUMBAI DATED 14.11.2012 FOR A.Y. 2009 - 10, REVENUE HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS: - (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.30,69,5481 - MADE BY THE A.O. BEING UNDISCLOSED ADDITIONAL INCOME OFFERED DURING THE COURSE OF SURVEY ACTION WITHOUT APPRECIATING THE FACTS: - ITA 801/M /2013 & CO 58/M/2014 SHRI VIKRAM SHARAD PHADNIS 3 ( A ) STATEMENT GIVEN DURING THE COURSE OF SURVEY/SEARCH ACTION IS A VERY IMPORTANT PIECE OF EVIDENCE AND HAS A VERY HIGH RELIABLE EVIDENTIARY VALUE AS SUCH IN THE INSTANT CASE, THE ASSESSEE CATEGORICALLY ADMITTED THE DECLARATION AMOUNTING TO RS.94,02,7041 - OVER AND ABOVE THE REGULAR NORMAL INCOME OF THE BUSINESS OF THE CURRENT A.Y. 2009 - 10 ON ACCOUNT OF UNDISCLOSED STOCK IN THE STATEMENT RECORDED ON OATH DURING THE COURSE OF SURVEY. ( B ) DURING THE COURSE OF SURVEY, VOLUMINOUS DOCUMENTS AND RECORDS OR PAPERS FOUND AT THE TIME OF SURVEY WERE DULY EXAMINED AND VERIFIED BY THE ASSESSEE, AND THE DISCLOSURE WAS MADE AFTER SEEING THE DISCREPANCIES AND VARIOUS QUERIES ON THE IMPOUNDED DOCUMENTS AND RECORDS WERE RAISED BY THE DEPARTMENT, AND AFTER THE ASSES SEE WAS GIVEN SUFFICIENT OPPORTUNITIES TO GIVE EXPLANATION TO THE VARIOUS QUERIES RAISED BY THE DEPARTMENT. ( C ) WHEN NO EXPLANATION AS TO THE DISCREPANCIES IN ACCOUNT WAS GIVEN AT THE TIME OF THE SURVEY, THEY CANNOT NOW BE ALLOWED TO TURN AROUND AND URGE THAT SUCH DETERMINATION OF UNDISCLOSED INCOME OF RS.94,02,704/ - , IS INCORRECT, UNJUSTIFIED AND UNWARRANTED BY RETRACTING THEIR ADMISSION LATER ON IN THE COURSE OF ASSESSMENT PROCEEDINGS. ( D ) SINCE THE ASSESSEE FAILED TO SUBMIT ANY SATISFACTORY EXPLANATION REGARDING UNDISCLOSED ADDITIONAL INCOME OF RS.30,69,5481 - AS AGAINST OF RS.94,02,7041 - DECLARED DURING THE COURSE OF SURVEY ACTION, THE A.O. HAS RIGHTLY MADE ADDITION OF RS. 30,69,548/ - TO THE TOTAL INCOME. (2) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON T HE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. (3) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3.2 IN THE COURSE OF APPELLATE PROCEEDINGS, IT IS NOTICED FROM THE GROUND S RAISED (SUPRA) THAT THE ISSUE DISPUTED BY REVENUE IN THIS APPEAL IS ONLY FOR ` 30,69,548/ - AND THE TAX EFFECT THEREOF IS BELOW THE MONETARY LIMIT OF ` 10 LAKHS LAID DOWN AS PER THE CBDT CI RCULAR NO. 21 OF 2015 DATED 10.12.015. IN THIS CIRCULAR, THE MONETARY LIMIT FOR FILING OF APPEALS BY THE DEPARTMENT HAS BEEN ISSUED, WHEREBY THE TAX EFFECT FOR FILING OF APPEAL BEFORE THE ITAT HAS BEEN PRESCRIBED AT ` 10 LAKHS. IN THE SAID CIRCULAR, IT HAS BEEN SPECIFICALLY CLARIFIED THAT THE SAID INSTRUCTION WILL APPLY RETROSPECTIVELY TO ALL THE PENDING APPEALS. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND IS DISMISSED IN LIMINE. 4 . IN THE RESULT, REVENUES APPEAL FOR A.Y. 2009 - 10 IS D ISMISSED. ITA 801/M /2013 & CO 58/M/2014 SHRI VIKRAM SHARAD PHADNIS 4 ASSESSEE S CROSS O BJECTION IN CO NO. 58/MUM/2014 FOR A.Y. 2009 - 10 5 . THE ASSESSEE HAS ALSO RAISED THE FOLLOWING CROSS OBJECTIONS: - 1. THE LEARNED AO FAILED TO APPRECIATE THE FACT THAT THE RESPONDENT HAS IMMEDIATELY SUBMITTED LETTER DATED 19.02.2009 EXPLAINING VALUATION OF THE STOCK AT RS. 63,32,157/ - BY SUBMITTING DETAILED RECONCILIATION WITH THE SALES BILLS WITHIN FOUR DAYS OF THE DATE OF SURVEY. HENCE THE LD. AO HAS ERRED IN STATING THAT NO EXPLANATION AS TO THE DISCREPANCIES IN ACCOUNT WAS GIVEN AT THE TIME OF THE SURVEY. 2. THE RESPONDENT PRAYS THAT THE ORDER OF CIT(A) BE UPHELD ON THE ABOVE GROUND AND THE APPEAL OF DEPAR TMENT BE DISMISSED. 3. THE RESPONDENT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO THE CROSS OBJECTION OF APPEAL. 5.1 SINCE REVENUES APPEAL FOR A.Y. 2009 - 10 HAS BEEN DISMISSED AND THE CROSS OBJECTIONS RAISED BY THE ASSESSEE ARE SUPPORTIVE OF THE IMPUGNED ORDER OF THE CIT(A), THEY ARE RENDERED INFRUCTUOUS AND ARE ACCORDINGLY DISMISSED. 6 . IN THE RESULT, REVENUES APPEAL FOR A.Y. 2009 - 10 AND THE ASSESSEES CROSS OBJECTION S ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND MARCH , 2016 . SD/ - SD/ - ( SANDEEP GOSAIN ) ( JASON P. BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 2 ND MARCH , 2016 COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) 26 , MUMBAI 4 . THE CIT 15 MUMBAI 5 . THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.