PPP Associates, Ichalkaranji V. ACIT, Ichalkaranji Circle, Ichalkaranji

ITA 948/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56507 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 10-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY SINGH
• Keywords: Peak credit; Period of limitation; Tax effect; Time period of passing order
• Section: 133A; 139(5); 147; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES, A PUNE BEFORE SHRI I.C. SUDHIR JM AND SHRI D. KARUNAKARA RAO, AM I.T.A. NOS. 948, 950, 951 & 953/PN/2009 A.YS. 1999-00, 2000-01, 2001-02 AND 2002-03 PPP ASSOCIATES, 10/1220-21 KAGWADE MALA, ICHALKARANJI PAN AAAAP 4935 G APPELLANT VS. ASSTT. CIT ICHALKARANJI CIR . IACHAKARANJI RESPONDENT I.T.A. NOS. 1107 TO 1110/PN/2009 A.YS. 1999-00,2000-01, 2001-02 & 2002-03 DY. COMMISSIONER OF INCOME TAX , APPELLANT ICHALKARANJI CIRCLE, ICHALKARANJI DIST-KOLHAPUR VS. PPP ASSOCIATES, 10/1220-21 KAGWADE MALA, ICHALKARANJI PAN AAAAP 4935 G RESPONDENT ASSESSEE BY : SHRI M.K. KULKAR NI DEPARTMENTBY: S/ SHRI SANJAY SINGH & PANKAJ GARG DATE OF HEARING : 28.9.11 DATE OF PRONOUNCEMENT: 07.10.11 ORDER PER I.C. SUDHIR, JM THESE 8 APPEALS ARE BY THE ASSESSEE AGAI NST THE COMMON ORDER OF THE CIT(A) KOLHAPUR DATED 27-2-2009 FOR ALL THE YEA RS CONFIRMING THE PENALTY U/S 271(1)(C) PARTLY OR FULLY IN THE RESPEC TIVE YEARS. SINCE FACTS AND ISSUES ARE COMMON THEY ARE CONSIDERED TOGETHER AND DECIDED AS UNDER. ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 2 2. THE ASSESSEE RAISED THE GROUNDS COMMONLY IN ALL THE YEARS. FOR THE SAKE OF RECORD, THE GROUNDS RAISED IN APPEAL NO . 953/PN/2009 FOR A.Y. 1999-00 IS EXTRACTED AS UNDER: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE PENALTY UNDER SECTION 271(1)(C ) LEVIED BY A.O. AND CONFIRMED BY LD. C.I.T.(A) AS THERE IS NO FINDING IN THE ASSE SSMENT ORDER THAT THE ADDITION MADE TO TOTAL INCOME AND SUSTAINED BY HONBLE I.T.A.T. WHICH ADDITION WAS ONLY ON THE BASIS OF ES TIMATION OF INCOME @ 1.5% AS AGAINST ESTIMATED BY THE ASSESSEE WHILE FILING THE RETURN AS NO BOOKS OF ACCOUNT WERE MAINTAINED. THE PENALTY DESERVES TO BE CANCELLED. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW AND SINCE THE ADDITION TO TOTAL INCOME IS ON ESTIMA TION BASIS SUCH ADDITION HAS NOT BEEN ESTABLISHED OR CAN BE REASONA BLY INFERRED THAT IT WAS ON ACCOUNT OF CONTUMACIOUS CONDUCT OR C AN BE INFERRED OR ESTABLISHED THAT THE ASSESSEES EXPLANATION WAS N OT BONAFIDE. IN SUCH A SCENARIO NO PENALTY U/S. 271(1)(C ) WOULD BE SUSTAINED EVEN AFTER THE PRONOUNCEMENT OF THE JUDGMENT OF THE HONBL E SUPREME COURT IN DHARMENDRA TEXTILESS CASE. THE PENALTY BE QUASHED. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE PENALTY U/S. 271(1)(C ) HAS BEEN LEVIED BY A.O . AND CONFIRMED BY LD. C.I.T.(A) AS IF IT IS AN AUTOMATIC CONSEQUE NCE OF AN ADDITION MADE TO TOTAL INCOME. THE PENALTY THEREFORE, IS NO T SUSTAINABLE AND IT BE QUASHED. THE REVENUE, ON THE OTHER HAND, HAS QUESTIONED THE COMMON FIRST APPELLATE ORDER FOR THE A.YS. 1999-00 TO 2002-03 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A), KOLHAPUR ERRED IN DIRECTING TO LEVY PENALT Y U/S. 271(1)(C ) ON ADDITIONAL INCOME ASSESSED, OVER AND ABOVE THE R ETURNED INCOME, WHEN THE SAME WAS CORRECTLY LEVIED, TREATIN G THE ENTIRE ASSESSED INCOME AS CONCEALED. ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 3 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A), KOLHAPUR HAS ERRED IN NOT APPRECIATING THAT, A) THE ASSESSEE HAS FILED HIS RETURNS OF INCOME ONL Y ON BEING FORCED TO DO SO, IN CONSEQUENCE OF ACTION U/S . 133A, B) THE ASSESSEE IS NOT IN A HABIT OF FILING OF ITS RETURN OF INCOME REGULARLY & VOLUNTARILY, WHICH IS EVIDENT F ROM THE FACT THAT THE ASSESSEE HAS FILED ITS RETURN OF INCO ME FOR ALL THE IMPUGNED A.YS ON A SAME DATE I.E. 26-12-2005, C) NOTICE U/S. 148 WAS SERVED FOR ALL THE A.YS 199 9-2000 TO 2002-03 PRIOR TO THE DATE OF FILING OF RETURNS, AND THEREFORE, THIS IS NOT A CASE OF VOLUNTARY DISCLOSU RE OF INCOME, WITHIN MEANING OF SECTION 139(1) OR 139(4) OR 139(5) OF THE ACT, D) THE CONCEALMENT WAS DETECTED AND NOTICE U/S. 148 WAS SERVED PRIOR TO THE FIRST TIME ASSESSMENT FOR THE A.Y. 1998- 99, WHICH WAS COMPLETED ONLY ON 17-03-2006. E) THE AO HAD TO COMPLETE THE ASSESSMENT FOR AY 19 98- 99 ONLY FOR THE REASON THAT THE ASSESSMENT WAS GETT ING BARRED BY LIMITATION ON 31-03-2006, AND THIS CANNOT BE TREATED AS PREVIOUSLY ASSESSED TO TAX FOR THE IMP UGNED A.YS, CONSIDERING THAT THE ASSESSMENT PROCEEDINGS F OR THESE YEARS WERE ALREADY OPEN BY WAY OF NOTICE U/S. 148 O F THE ACT. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AN D IN LAW THE CIT(A), KOLHAPUR HAS ERRED IN NOT APPRECIATING THA T THE AOS ACTION OF LEVYING PENALTY U/S. 271(1)(C ) ON THE ASSESSED INCOME AS ASSESSEES INTENTION NOT TO PAY TAX IS ESTABLISHED. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS), KOLHAPUR BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2(A). AT THE OUTSET OF HEARING, THE LD. A.R. POINTE D OUT THAT THE TAX EFFECT IN SOME OF THE APPEALS PREFERRED BY THE DEPARTMENT ESPECIALLY IN THE A.YS. 2000-01, 2001-02 AND 2002-03 IS BELOW RS. 3 L AKH, HENCE AS PER ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 4 THE RECENT CBDT INSTRUCTION NO. 3 DATED 9.2.2011, THE PRESENT APPEALS FOR THESE A.YS. ARE NOT MAINTAINABLE. WE HEARD BOTH THE PARTIES ON THE ISSUE. UNDISPUTE DLY APPEALS BY THE REVENUE HAVE BEEN PREFERRED AGAINST THE COMPOSI TE FIRST APPELLATE ORDER FOR ALL THE A.YS. UNDER CONSIDERATION. IN SU CH A SITUATION, AS PER C.B.D.T. INSTRUCTION NO. 5 OF 2008 DATED 15.5.2008 (PARA NO.5) APPEAL SHALL BE FILED IN RESPECT OF ALL ASSESSMENT YEARS E VEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBED MANDATORY LIMITS IN ANY O F THE YEAR(S), IF IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) I N WHICH TAX EFFECT EXCEEDS THE MONETORY LIMIT PRESCRIBED. FOR A READY REFERENCE PARA NO. 5 OF THE SAID CBDT INSTRUCTION IS REPRODUCED HEREUNDE R : 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EF FECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTE D ISSUE IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPE AL SHALL BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHIC H THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUE EXCEEDS THE MONETA RY LIMIT SPECIFIED IN PARAGRAPH 3. NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARAGRAPH 3. IN OTHE R WORDS, HENCEFORTH, APPEALS WILL BE FILED ONLY WITH REFEREN CE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHI CH INVOLVES MORE THAN ONE YEAR, APPEAL SHALL BE FILED IN RESPEC T OF ALL ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS TH AN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DEC IDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. (EMPHASIS SUPPLIED) IN VIEW OF THE ABOVE DISCUSSION, THE PRELIMINARY OB JECTION RAISED BY THE LD. A.R. IS NOT TENABLE AND THE SAME IS REJECTED AS SUCH. ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 5 3. BRIEFLY STATED, THE A.O CONDUCTED SURVEY U/S 133 A ON 21 ST AND 22 ND FEBRUARY 2005 IN THE CASE OF PUSHPAK ARJUNDAS AGARW AL AND OTHERS OF ICHALKARANJI AND FOUND OUT THAT THE BUSINESS OF T RADING OF YARN CLOTH WAS BEING CONDUCTED IN THE NAME OF FIVE CONCERNS AN D THE BANK ACCOUNTS MAINTAINED IN JIVAJI SAHAKARI BANK LTD. WAS TAKEN AS BASIS AS THE BOOKS OF ACCOUNT WERE NOT MAINTAINED. ON THE BASIS OF INQ UIRIES AND SUBSEQUENT QUESTIONING THE ASSESSEE FILED RETURNS O N 21-3-2005 FOR A.Y. 1998-99 AND ON 26-12-2005 FOR OTHER YEARS. SINCE TH E RETURNS WERE NOT FILED EARLIER IN THE RESPECTIVE YEARS U/S 139 AND T HE INCOME HAD ESCAPED ASSESSMENT THE A.O INITIATED PROCEEDINGS U/S 147 ON 25-3-2005 FOR A.Y. 1998-99 AND ON 7-6-2005 FOR OTHER YEARS BY ISSUING NOTICE U/S 148. 3.1 THE STATUS OF THE ASSESSEE WAS DETERMINED AS AOP AS UNDER : THE ASSESSEE HAS SHOWN STATUS AS THAT OF AOP WITH T HE DETERMINATE SHARES OF PERSONS INTERESTED IN JOINT VE NTURE. THE RETURN FILED ACCOMPANIES INDENTURE OF AOP WHICH HAS BEEN MADE ON 1 ST APRIL 1998 WHEREAS THE ACCOUNTING PERIOD STARTS ON 1-4- 1997. THEREFORE, INDENTURE FOR AOP IS NOT RELEVANT FOR THE A.Y UNDER CONSIDERATION. ALSO THE ASSESSEE HAS NOT MAI NTAINED BOOKS OF ACCOUNTS. THEREFORE, THE SHARES OF THE BENEFICIA RIES ARE NOT DETERMINABLE. MORESO, IN THIS GROUP OF CASES SURVEY OPERATION WAS CONDUCTED ON 21 ST AND 22 ND OF FEBRUARY 2005. CONSEQUENT UPON SURVEY ACTION U/S 133A(1) SOME BENAMI BANK ACCOUNTS WERE DETECTED IN POST SURVEY ENQUIRIES DETAILED AS BELOW : CURRENT ACCOUNT NO. NAME OF THE BANK 1. KAMAL LAXMI WEAVING MILLS 7/292 JIVAJI SAHAKARI BANK LTD. ICHALKARANJI 2. KRISHNA WEAVING MILLS L30010/000566 - DO - 3. MAYUR MILLS L30010/000565 - DO - 4. PIYUSH TEXTILES L30010/000564 - DO - 5. SHYAM FABRICS L30010/000563 - DO - THE BOOKS OF ACCOUNT HAVE NOT BEEN MAINTAINED. THE TOTAL CREDITS IN VARIOUS BANK ACCOUNTS IN DIFFERENT NAMES OF M/S. KA MAL LAXMI TEXTILE MILLS, KRISHNA WEAVING MILLS, MAYUR MILLS, PIYUSH T EXTILES AND SHYAM FABRICS WAS TAKEN AS BASIS AND THE CREDITS/TURNOVER IN VARIOUS YEARS CONSIDERED BOTH BY THE ASSESSEE AND A.O IS AS UNDER : ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 6 FINANCIAL YEAR A.Y. TOTAL CREDITS (RS.) NET PROFIT % OF AGARWAL GROUP INCOME ESCAPED (RS.) 97 - 98 98 - 99 4,176,340 -- 1,041,760 98 - 99 99 - 00 88,894,920 0.19 168,898 99 - 00 00 - 01 32 ,798,920 0.34 111,516 00 - 01 01 - 02 25,712,875 0.71 182,561 01 - 02 02 - 03 47,204,510 0.66 311,549 02 - 03 03 - 04 83,209,114 0.4 332,836 03 - 04 04 - 05 126,280,134 0.21 265,188 04 - 05 05 - 06 70,591,417 -- RETURN NOT YET DUE 478867,377 -- 2,414,30 8 4.1 FOR THE A.Y. 1998-99 THE INCOME WAS OFFERED ON THE BASIS OF CASH CREDITS IN THE BANK ACCOUNT AT RS. 10,41,760/- WHER EAS FOR THE OTHER YEARS THE INCOME WAS OFFERED ON THE BASIS OF TURNOV ER OF TOTAL CREDITS IN THE BANK ACCOUNTS AND ESTIMATING THE PROFITS AT DIF FERENT PERCENTAGES AS CAN BE SEEN FROM THE ABOVE TABLE. 5. IN THE ASSESSMENT COMPLETED SUBSEQUENTLY THE A.O ESTIMATED THE PROFIT AT 1.5% OF THE TURNOVER AND ALSO ADDED THE P EAK CREDIT IN THE RESPECTIVE YEARS WHEREVER THE INCOME OFFERED SO FAR WAS SHORT OF PEAK CREDIT ARRIVED AT. THE LD. CIT(A) HAS REDUCED THE PROFIT TO 1% OF THE TURNOVER AND DELETED THE PEAK CREDITS AND THE ORDER S WERE ATTAINED FINALITY BEFORE THE ITAT. THE HONBLE HIGH COURT AL SO REJECTED THE DEPARTMENT APPEALS ON THE REASON THAT NO PRINCIPLE OF LAW WAS INVOLVED. THE INCOME DETERMINED HAS ATTAINED FINALITY. THE A .O HAS LEVIED THE PENALTY U/S 271(1)(C) IN VARIOUS YEARS. 6. THE CIT(A) KOLHAPUR AFTER EXAMINING THE ISSUES L EGALLY CONFIRMED / MODIFIED THE PENALTIES VIDE HIS COMMON ORDER IN PAR A 15 TO 18 AS UNDER. 15. IN VIEW OF THE ABOVE LEGAL PROVISIONS FOR THE A.Y. 1999-00 TO 2002-03, THE PROVISIONS OF EXPLANATION 3 TO SECTION 271 ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT. THIS BEIN G SO, PENALTY CAN ONLY BE LEVIED UPON THE APPELLANT U/S 271(1)(C) ONLY IN RESPECT OF ADDITIONAL INCOME ASSESSED OVER AND ABOVE THE INCOME RETURNED BY THE APPELLANT. ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 7 16. AS FAR AS A.Y. 1998-99 IS CONCERNED, HOWEVER, THE P OSITION WAS DIFFERENT THAT THE APPELLANT CAN BE SAID TO HAV E NOT PREVIOUSLY BEEN ASSESSED TO TAX WITH RESPECT TO A.Y . 1998-99. EXPLANATION 3 WOULD, THEREFORE, APPLY WITH FULL FOR CE TO THE APPELLANTS CASE. 17. AS FAR AS A.Y 2003-04 TO 2005-06 ARE CONCERNED, THE PHRASE (PERSON) WHO IS NOT PREVIOUSLY BEEN ASSESSED UNDER THIS ACT WAS OMITTED VIDE FINANCE ACT 2002, W.E.F. 1-4-2003. THE PROVISIONS OF EXPLANATION 3 THEREFORE, APPLY TO ANY PERSON, WHETHER AN OLD OR NEW ASSESSEE. IRRESPECTIVE OF TH E FACT THAT THE APPELLANT WAS PREVIOUSLY ASSESSED TO TAX, THE P ROVISIONS OF EXPLANATION 3 WOULD APPLICABLE. HOWEVER, IT IS SEEN FROM THE TABLE AT PARA NO. 13 ABOVE THAT TIME LIMIT WHIC H IS TWO YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME IS FIRST ASSESSABLE HAD NOT EXPIRED WHEN THE APPELLANT FILED ITS RETURN IN PURSUANCE OF NOTICE U /S 147 ISSUED BY THE A.O. THE NOTICES WERE ISSUED IN A.Y. 2003-04 AND THE RETURNS WERE FILED SUBSEQUENTLY, WHEREAS TH E TIME LIMIT FOR A.Y. 2003-04 WAS 31-3-2006 AND FOR A.Y. 2 004-05 AND 2005-06 WERE EVEN ALTER. AS SUCH, THE PROVISION S OF EXPLANATION 3 ALSO DO NOT APPLY TO THESE YEARS. 18. IN SUMMARY IT IS HELD AS UNDER: THE PROVISIONS OF EXPLANATION 3 ARE APPLICABLE ONLY IN RESPECT OF A.Y. 1998-99 AND NOT TO ANY OF THE SUBSE QUENT ASSESSMENT YEARS. THEREFORE, FOR THE A.Y. 1999-00 T O 205-06 PENALTY SHOULD BE REWORKED AND LEVIED ONLY ON THE A DDITIONAL INCOME BROUGHT TO TAX AS A RESULT OF ASSESSMENT OVE R AND ABOVE THE INCOME RETURNED. IN CASE OF A.Y. 1998-99 HOWEVER, THE PENALTY LEVIED U/S 271(1)(C) READ WITH EXPLANATION 3 IS JUSTIFIED AND THEREFORE CONFIRMED. THE ASSESSEE IS CONTESTING THE SAME. 7. THE LEARNED COUNSEL PLACED ON RECORD THE SYNOPSI S OF 11 PAGES AND ASSESSMENT ORDERS OF VARIOUS YEARS AT PAGES 12 TO 5 3, NOTICES ISSUED FROM PAGES 54 TO 71 AND VARIOUS COPIES OF JUDGMENTS FROM PAGES 72 ONWARDS IN THE PAPER BOOK. THE LEARNED COUNSELS AR GUMENTS ARE IN TWO FOLDS. ONE BEING THAT THE A.O DID NOT SPECIFY INVO KING EXPLANATION 3 TO SECTION 271(1)(C) AND THE SAID EXPLANATION WAS NOT APPLICABLE TO THE ASSESSEE. DETAILED WRITTEN SUBMISSIONS ARE MADE EX PLAINING THE HISTORY OF EXPLANATION 3 AND ITS ANALYSIS. THE OTHER BEING THAT THE INCOME WAS BEING DETERMINED ON THE BASIS OF ESTIMATION, HENCE PENALTY IS NOT LEVIABLE WHEN INCOME WAS ESTIMATED. THE FOLLOWING CASES WERE RELIED FOR THE ABOVE PROPOSITION. ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 8 1) CIT VS. SANGRUR VANASPATI MILLS LTD. SLP (CIVIL) NO. 31541 OF 2008 2) CIT VS. SANGRUR VANASPATI MILLS LTD. (2008) 303 ITR 53 (P & H) 3) CIT VS. RAVAIL SINGH CO. (2002) 254 ITR 191 P & H) 4) HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P & H) 5) CIT VS. DHILLON RICE MILLS (2002) 256 ITR 447 ( P & H) 6) SILVER PALACE VS. ITO (1999) 64 TTJ (PUNE) 120 7) R.B. SINGH VS. ACIT (2001) 71 TTJ (MUMBAI) 37 8) HARYANA DELHI TPT COMMISSION AGENCY VS. ACIT (20 01) 79 ITD 145 (AGRA) 9) NARENDRA KUMAR VS. ITO (2005) 94 TTJ (JD) 156 10) AVR PRASAD VS. ITO (2005) 97 ITD 325 (HYD) 11) ACIT VS ALLIED CONSTRUCTION (2007) 106 TTJ (D EL) 616 12) CIT VS. TRADERS & TRADERS (2000) 244 ITR 367 ( MAD) 13) CIT VS. SMT K MEENAKSHI KUTTY (2002) 258 ITR 4 94 (MAD) 14) CIT VS. RAJ BANS SINGH (2005) 276 ITR 351 (ALL) 15) ASHOK PAI VS. CIT (2007) 292 ITR 11 (SC) 16) ACIT VS. A. PARAMESWARAN NAIR (1995) 52 TTJ (C OCH) 247 17) CIT VS. SMT KAMLA JAIN (2006) 152 TAXMAN 329 ( ALL) 18) YESHWANT B. CHIGTERI VS. ACIT (2000) 75 ITD 37 7 (PUNE) 19) K.V. SRINIVASA RAO & ORS VS. ACIT (2009) 29 DT R (VISAKHA) (TRIB) 257 8. THE LEARNED DR REITERATED THE FACTS AND RELIED O N THE ORDERS OF A.O AND CIT(A). THE LD. DR HAS ALSO FILED WRITTEN SUB MISSIONS IN SUPPORT OF APPEALS PREFERRED BY THE REVENUE AND HAS PLACED REL IANCE ON THE FOLLOWING DECISIONS : 1. TIRUPATI CONSTRUCTIONS CO. VS. ITO, 39 TTJ (IND ) 244 2. ITO VS. D.C. RASTOGI, 49 TTJ (DEL.) 118 9. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH THE PAR TIES AND PERUSED THE RECORD. BEFORE CONSIDERING THE ARGUMENTS, TH E REASONING OF THE A.O TO JUSTIFY THE PENALTY IS NECESSARY TO CONSIDER. FO R THE SAKE OF CLARITY THE ORDER IN A.Y. 1999-00 PARA 6 IS EXTRACTED. 6. THE ASSESSEES REPLY IS DULY CONSIDERED. IT IS A FACT THAT THE ASSESSEES NET PROFIT WAS TAKEN ON ESTIMATED BASIS. HOWEVER, THE ESTIMATION IS ON ACCOUNT OF NON-MAINTENANCE OF BOOK S OF ACCOUNTS BY THE ASSESSEE, NON-FILING OF RETURN OF INCOME AND THERE IS NO WAY BUT TO DETERMINE THE NET PROFIT ON ESTIMATION BASIS . IT IS ALSO A FACT THAT SURVEY WAS CONDUCTED ON 23/24-2-2005, TILL THA T DATE THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE A.Y. 1999-2000. THUS THE INTENTION OF THE ASSESSEE WAS VERY MUCH CL EAR NOT TO PAY TAX ON INCOME EARNED BY THE AOP. AS SUCH CONCEALME NT OF INCOME ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 9 IS CRYSTAL CLEAR. THE ASSESSEE IN HIS REPLY HAS RE LIED UPON VARIOUS DECISIONS STATING THAT THE ADDITION TO THE INCOME A RE BEING PURELY ON ESTIMATED BASIS. THERE CANNOT BE ANY PENALTY LE VIABLE U/S 271(1)(C). ONE OF THE DECISIONS QUOTED BY THE ASSE SSEE IS IN THE CASE OF HARIGOPAL SINGH VS. CIT IN 258 ITR 85. THE FACTS OF THE CASE ARE NOT ALL APPLICABLE IN THE CASE OF ASSESSEE . IN THE SAID CASE (SUPRA) THE ASSESSEE WAS NOT MAINTAINING BOOKS OF A CCOUNTS AND THEREFORE, THE ASSESSEE HAS FILED HIS RETURN OF INC OME VOLUNTARILY ON ESTIMATE BASIS AND DECLARED HIS INCOME AT RS. 52,00 0/-. WHEREAS IN THE CASE OF THE ASSESSEE, THE RETURNS OF INCOME WAS NEVER FILED AND THE ASSESSEE NEVER INTENDED TO FILE RETURNS. T HE PRESENT RETURN IS FILED ONLY IN RESPONSE TO NOTICE ISSUED B Y THE DEPARTMENT. IN ORDER TO ATTRACT CLAUSE (C) OF SECTION 271(1) OF THE ACT, IT IS NECESSARY THAT THERE MUST BE CONCEALMENT BY THE ASS ESSEE OF THE PARTICULARS OF HIS INCOME OR IF HE FURNISHES INACCU RATE PARTICULARS OF SUCH INCOME. WHAT IS TO BE SEEN IS WHETHER THE ASSESSEE IN THE PRESENT CASE HAD CONCEALED HIS INCOME OR NOT. THE ANSWER TO THIS QUESTION IS YES. HAD THE DEPARTMENT NOT TAKEN ACTI ON U/S 133A THE ASSESSEE WOULD NOT HAVE FILED THE RETURN AND WO ULD HAVE ENJOYED THE INCOME EARNED WITHOUT PAYING TAX. AS SU CH CONCEALMENT IS VERY CLEAR. THE MENS-REA IS ALSO ES TABLISHED THAT ASSESSEE NEVER INTENDED TO FILE THE RETURN AND TO P AY TAX, THEREFORE, I AM SATISFIED TO LEVY PENALTY ON ASSESSED INCOME O F RS. 8,88,940/- WHICH BECAME THE FINAL ON RECEIPT OF ITATS ORDER. THEREFORE, PENALTY U/S 271(1)(C) IS LEVIED AT RS. 3,11,129/- W HICH AT 100% OF THE TAX SOUGHT TO BE EVADED BEING MINIMUM PENALTY. 9.1 SIMILAR REASONS HAVE BEEN GIVEN IN OTHER YEARS AS WELL BUT THE QUANTUM IS DIFFERENT. THE A.O HAS BASED ON FACT THAT ASSESSEE HAS NEVER FILED RETURNS TILL THE SURVEY U/S 133A WAS CO NDUCTED. THE ARGUMENTS THAT EXPLANATION 3 TO THE SECTION 271(1)( C) WAS INVOKED WAS RAISED BEFORE THE LD. CIT(A) AND AFTER DISCUSSION H E HAS ACCEPTED THE REASONING FOR SOME YEARS. WE DO NOT CONCUR WITH TH E ORDER OF THE CIT(A) ON THE APPLICABILITY OF EXPLANATION 3 AS THE FACT I S THAT THE ASSESSEE HAS NEVER BEEN ASSESSED AND TIME LIMITS US/ 153(1) HAD ALREADY EXPIRED FOR A.Y. 1998-99 TO 2002-03. SINCE IN ALL THE YEARS RE TURNS WERE FILED AT THE SAME TIME, JUST BECAUSE A.Y. 1998-99 ASSESSMENT WAS COMPLETED FIRST BY THE A.O. SINCE IT WAS GOING TO BE BARRED BY TIME LI MIT, IN OUR VIEW THE ASSESSEE COULD NOT BE TREATED AS ASSESSED TO TAX FO R THE SUBSEQUENT YEARS. THE REVENUE HAS QUESTIONED THE ABOVE ACTION OF THE LD. CIT(A). ARGUMENTS HAVE BEEN ADVANCED BY THE PARTIES AT LENG TH WHILE HEARING THESE APPEALS OF THE REVENUE. THE LD. D.R HAS ALSO FILED DETAILED WRITTEN ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 10 SUBMISSION. AT PAGE NO. 1 THEREOF FOLLOWING CHART HAS BEEN PRODUCED TO SUPPORT HIS ARGUMENT THAT ALL RETURNS WERE FILED FO R THE FIRST TIME AFTER THE SURVEY IN RESPONSE TO NOTICE U/S 148 AND THAT T HE TIME LIMIT U/S 139 AS WELL AS 153(1) HAD EXPIRED FOR A.YS. 1998-99 TO 2002-03 : A.Y. NOTICE U/S 148 RETURN OF INCOME FILED ON ASSESSED ON TIME LIMIT U/S 153(1) 1998 - 99 23 - 03 - 05 21 - 03 - 05 17 - 03 - 06 31 - 03 - 01 1999 - 00 07 - 06 - 05 26 - 12 - 05 29 - 12 - 06 31 - 03 - 02 2000 - 01 07 - 06 - 05 26 - 12 - 05 29 - 12 - 06 31 - 03 - 03 2001 - 02 27 - 04 - 05 26 - 12 - 05 29 - 12 - 06 31 - 03 - 04 2002 - 03 27 - 04 - 05 26 - 12 - 05 29 - 12 - 06 31 - 03 - 05 2003 - 04 27 - 04 - 05 26 - 12 - 05 29 - 12 - 06 31 - 03 - 06 2004 - 05 27 - 04 - 05 26 - 12 - 05 29 - 12 - 06 31 - 03 - 07 2005 - 06 27 - 04 - 05 26 - 12 - 05 29 - 12 - 06 31 - 03 - 08 WE THUS FULLY AGREE WITH THE CONTENTION OF THE LD. D.R. THAT RETURNS FOR THE A.YS. WERE NOT FILED AND NEVER INTENDED TO BE F ILED. WE ACCORDINGLY ALLOW THE GROUNDS OF APPEALS OF THE REVENUE FOR A.Y S. 1999-2000 TO 2002-03 WITH THIS FINDING THAT IN THESE YEARS PENAL TY IS ATTRACTED TO THE ENTIRE INCOME ASSESSED AS CONCEALED INCOME AS THER E WAS NO VOLUNTARY DISCLOSURE OF INCOME BY THE ASSESSEE AND ALL THE RE TURNS WERE FILED FOR THE FIRST TIME IN RESPONSE TO NOTICE U/S. 148 AND AFTER SURVEY. IN THE CASE OF TIRUPATI CONSTRUCTION CO. VS. ITO, 39 TTJ (INDORE) 224, CITED BY LD. D.R., IT HAS BEEN HELD THAT FILING OF RETURNS AFTER EXPIRY OF PERIOD SPECIFIED IN SECTION 153(1)(A)(III) IN PURSUANCE OF NOTICE U/ S. 148, THE ASSESSEE CANNOT CLAIM THAT HE IS PREVIOUSLY ASSESSED TO TAX AND EXPLANATION 3 TO SECTION 271(1)(C ) APPLIES. THE TRIBUNAL FURTHER H ELD THAT EVEN THE FACT ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 11 THAT TDS WAS DEDUCTED WAS NOT OF ANY HELP TO THE AS SESSEE. LIKEWISE IN THE CASE OF ITO VS. D.C. RASTOGI (SUPRA) DELHI BENC H OF THE TRIBUNAL HAS HELD THAT EXPLANATION 3 SAYS THAT A PERSON WHO WAS NOT ASSESSED AT THE TIME HE IS REQUIRED TO FILE RETURN WHICH IS SO ALL OWED TO BE FILED BEFORE EXPIRY OF PERIOD FOR FRAMING ASSESSMENT AND EVEN IF HE FILES THE RETURN AFTER EXPIRY OF LIMITATION PERIOD WHETHER IN PURSUA NCE OF NOTICE U/S. 148 OR WITHOUT ANY NOTICE, THEN HE SHALL BE DEEMED TO H AVE CONCEALED THE PARTICULARS OF INCOME. JUST BECAUSE ASSESSMENT FOR A.Y. 1998-99 WAS COMPLETED FIRST AS IT WAS GETTING BARRED BY LIMITA TION ON 31.3.2006, IT CAN NOT BE SAID THAT ASSESSEE WAS PREVIOUSLY ASSES SED TO TAX, AS HELD BY LD. CIT(A) IGNORING THE FACT THAT PROCEEDINGS U/ S. 148 WERE PENDING FOR ALL THE ASSESSMENT YEARS AT THE SAME TIME. THE FIRST APPELLATE ORDER TO THIS EXTENT IS THUS SET ASIDE AND PENALTY LEVIED ON THE ENTIRE ASSESSED INCOME IS RESTORED. THE GROUNDS RAISED IN THIS REGA RD BY THE REVENUE IN ITS APPEALS FOR THE A.YS. 1999-00 TO 2002-03 ARE T HUS ALLOWED. 9.2 THE OTHER ISSUE RAISED IN THE GROUNDS OF APPEA LS BY THE ASSESSEE IS ON ESTIMATION OF INCOME AND CONSEQUENT LEVY OF PENA LTY ON THE ESTIMATED INCOME. THE ENTIRE CASE LAW RELIED ON BY THE LD. C OUNSEL IS ON THE FACTS WHERE THE A.O IN THE COURSE OF REGULAR ASSESSMENT H AS REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INCOME/TURNOVER ETC. THE FACTS ARE DIFFERENT IN THIS CASE AND SO RELIANCE ON THE PRINC IPLES ESTABLISHED IN DIFFERENT SET OF FACTS CAN NOT BE CONSIDERED AS APP LICABLE. IN THIS CASE FIRST OF ALL THE ASSESSEE HAS NOT FILED RETURNS AT ALL FOR A.Y. 1998-99 TO A.Y. 2002-03 IN TIME AS PROVIDED. NO BONAFIDE EXPL ANATION WAS ON RECORD WHY THE RETURNS WERE NOT FILED. ONLY CONSE QUENT TO THE SURVEY U/S 133A AND UNEARTHING OF BANK ACCOUNTS WHICH WERE NOT DISCLOSED TO THE DEPARTMENT EARLIER, THE ASSESSEE HAD FILED RETU RNS OF INCOME IN RESPONSE TO NOTICES U/S 148, ACCEPTING THE CREDITS IN A.Y. 1998-99 AS ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 12 INCOME AND FOR OTHER YEARS TURNOVER AND ESTIMATION OF INCOME THEREON. EVEN THE ESTIMATION IS NOT UNIFORM. EVEN THOUGH TH E GROUNDS RAISED MENTION THE RATE OF ESTIMATION BY THE ASSESSEE AT 0 .19% THAT WAS ONLY IN A.Y. 1999-00 ON A TURNOVER OF RS. 8.88 CRORES. IN LATER YEARS, THE ASSESSEE ESTIMATED THE INCOME AT 0.34%, 0.71%, 0.66 %, 0.40%, 0.21% SO AS TO OFFER INCOME AT A LESSER RATE TO ALLOW THEM RELIEF WITH THIS FINDING BY THE LD. CIT(A) THAT EXPLANATION 3 TO SECTION 27 1(1)(C) IS NOT ATTRACTED FOR THE A.YS. 1999-00 TO 2002-03 AS THE ASSESSEE W AS PREVIOUSLY ASSESSED IN A.Y. 1998-99. SINCE THERE IS NO BASIS F OR ESTIMATING INCOME AT DIFFERENT RATES IN VARIOUS YEARS, THE A.O TOOK T HE RATE OF ESTIMATION AT 1.5% UNIFORMLY WHICH WAS HOWEVER RESTRICTED TO 1.0% ULTIMATELY. AS SEEN FROM THE FACTS, ONLY QUANTIFICATION OF INCOME WAS ON THE BASIS OF 1% ESTIMATION WHEREAS THERE IS NO DOUBT ABOUT THE ESCA PEMENT OF INCOME IN RESPECTIVE YEARS AS THE ASSESSEE HAS KEPT THE ENTIR E TRANSACTIONS OUTSIDE THE PURVIEW OF DEPARTMENT BY NOT FILING THE RETURNS IN TIME. THERE IS NO EXPLANATION WHY THE RETURNS WERE NOT FILED AND AS P ER EXPLANATION 1 TO THE PROVISIONS OF SECTION 271(1)(C, IF THERE IS NO BONAFIDE EXPLANATION, PENALTY PROCEEDINGS ARE ATTRACTED EVEN THOUGH THE I NCOME DETERMINED WAS ON ESTIMATION. WE ARE OF THE OPINION THAT THE ASSESSEE DESERVES PENALTY U/S 271(1)(C) AS THE PROCEEDINGS WERE INITI ATED FOR ESCAPEMENT OF INCOME U/S 147 AND ASSESSEE ADMITTED INCOMES CONSEQ UENT TO THOSE PROCEEDINGS. EVEN THOUGH THE AO LEVIED PENALTY ON THE WHOLE OF INCOME DETERMINED CORRECTLY, THE CIT(A) FOR A.YS. 1999-00 TO 2002-03 UNDER CONSIDERATION, IN OUR VIEW WAS NOT JUSTIFIED IN RED UCING IT ONLY TO ADDITIONAL INCOME BROUGHT TO TAX. WE THEREFORE RE STORE THE PENALTY LEVIED BY AO. THE GROUNDS RAISED IN THE APPEALS PR EFERRED BY THE ASSESSEE ARE THUS REJECTED AND RELATED APPEALS ARE D ISMISSED. ITA NO. 946 TO 953/PN/09 & 1107 TO 1110/PN/09 PPP ASSOCIATES 13 10. IN RESULT, ITA NOS. 948, 950, 951, 953/PN/20 09 PREFERRED BY THE ASSESSEE ARE THUS DISMISSED AND ITA NOS. 1107 TO 11 10/PN/2009 PREFERRED BY THE REVENUE ARE THUS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH DAY OF OCTOBE R 2011. SD/ - SD/ - (D. KARUNAKARA RAO) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 7TH OCTOBER, 2011 US COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT (A) I NASIK (4) CIT I NASIK (5) THE D.R. ITAT 'A' PUNE BENCH, PUNE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE