SHRI HEERA CHAND JAIN, Jaipur V. INCOME TAX OFFICER, WARD-1-3, Jaipur

ITA 964/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3732 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 17-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA ACIT
• Assessee Lawyers: S R SHARMA; RAJANI KANT BHATRA
• Keywords: Business income
• Section: 271(1)(c); 133A; 148; 2; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH JESK LH0 KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH. C. SHARMA, AM & SHRI VIJAY PA L RAO, JM VK;DJ VIHY LA- @ ITA NO. 964/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2003-04 SHRI HIRA CHAND JAIN PROP. M/S GAURAV JAIN STEEL CENTER, 113, TRIPOLIA BAZAR, JAIPUR. CUKE VS. THE ITO, WARD-1(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABXPJ 6901 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.R. SHARMA (C.A.) & SHRI RAJANI KANT BHATRA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (ACIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 23/04/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 30/04/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 11.06.2018 OF THE LD. CIT(A), JAIPUR ARISING FROM T HE PENALTY ORDER PASSED U/S 271(1)(C) OF THE IT ACT FOR THE ASSESSME NT YEAR 2003-04. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND AS UND ER:- 1. THAT THE LD. CIT(A) IS WRONG AND HAS ERRED IN L AW IN CONFIRMING PENALTY OF RS. 114525/- IMPOSED BY THE A SSESSING ITA NO. 964/JP/2018 SHRI HIRA CHAND JAIN VS. ITO 2 OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 I S WRONG AND BAD IN LAW IT DID NOT SPECIFY IN WHICH LIMB OF SEC. 271(1)(C) OF THE INCOME TAX ACT, 1961 THE PENALTY PROCEEDINGS HAS BE EN INITIATED, I.E. WHETHER FOR CONCEALMENT OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. 2. THAT WITHOUT PREJUDICE TO THE GROUND NO. (1) ABO VE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS WRONG, UNJUST AND HAS ERRED IN LAW IN CONFIRMING PE NALTY OF RS. 114525/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1 )(C) OF THE I.T. ACT, 1961. 2. THE ASSESSEE IS AN INDIVIDUAL AND CARRYING ON BU SINESS OF PURCHASE AND SALE OF UTENSILS IN THE NAME AND STYLE OF M/S GAURAVS JAIN STEEL CENTRE. THE ASSESSEE DID NOT FILED ANY RETURN OF INCOME U/S 139 OF THE ACT FOR THE YEAR UNDER CONSIDERATION. A SURVEY U/S 133A OF THE I.T. ACT WAS CARRIED OUT ON 13.02.2008 AT THE SHOP OF TH E ASSESSEE. IN THE COURSE OF SURVEY CERTAIN INCRIMINATING MATERIAL WAS FOUND AND IMPOUNDED DISCLOSING PURCHASE/ SALE AS WELL AS OTHE R VOUCHERS FOR THE FINANCIAL YEAR 2002-03 ONWARDS. THE STOCK OF UTENSI LS AT THE SHOP ON THE DATE OF SURVEY WAS ALSO INVENTORY AND VALUE BY THE SURVEY TEAM AT RS. 12,78,794/-. THE STATEMENT OF THE ASSESSEE WAS RECORDED U/S 133A OF THE ACT WHEREIN THE ASSESSEE SURRENDERED THE INC OME FOR THE ASSESSMENT YEARS 2003-04 TO 2007-08. THE ASSESSEE F ILED HIS RETURN OF ITA NO. 964/JP/2018 SHRI HIRA CHAND JAIN VS. ITO 3 INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DISCLOSING THE TOTAL INCOME OF RS. 1,14,913/- WHICH INCLUDED SURRENDERED INCOME ON ACCOUNT OF PURCHASE OF STOCK OF RS. 92,300/-. THE A O NOTED THAT DURING THE SURVEY THE ASSESSEE HAS SURRENDERED A TOTAL INC OME OF RS. 3,00,000/- FOR THE ASSESSMENT YEAR 2003-04 AND THER EFORE THE ASSESSEE HAS DECLARED SHORT INCOME IN THE RETURN OF INCOME. ACCORDINGLY, THE AO HAS MADE THE ADDITION OF RS. 3,00,000/- TO THE TOTA L INCOME OF THE ASSESSEE. THE ASSESSEE ACCEPTED THE ASSESSMENT AND DID NOT CHALLENGE THE ADDITION MADE BY THE AO. THE AO INITIATED THE P ENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVY THE PENALTY OF RS . 1,14,524/-. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT DURING THE COURSE OF SURVEY THE ALLEGED DOCUMENT IMPOUNDED BY THE DEPARTMENT DO NOT DISCLOSE ANY INCOME OF THE ASSESS EE EXCEPT ON ACCOUNT OF STOCK AS ON THE DATE OF SURVEY. THEREFOR E, THE ASSESSEE HAS ALREADY DECLARED THE ADDITIONAL INCOME OF RS. 92,30 0/- ON ACCOUNT OF PURCHASE FOR THE YEAR UNDER CONSIDERATION WHILE FIL ING THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 OF THE ACT. TH E AO HAS MADE THE ADDITION OF RS. 3,00,000/- WITHOUT HAVING ANY INCRI MINATING MATERIAL BUT BASED ON THE STATEMENT RECORDED U/S 131A OF THE ACT . THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT EVEN THE AO HAS NOT CON SIDERED THE ITA NO. 964/JP/2018 SHRI HIRA CHAND JAIN VS. ITO 4 INCOME DISCLOSED BY THE ASSESSEE IN THE RETURN OF I NCOME WHILE MAKING THE SAID ADDITION BUT THE ADDITION WAS MADE OVER AN D ABOVE THE INCOME DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. THOUGH THE ASSESSEE HAS NOT CHALLENGED THE ADDITION MADE BY THE AO BUT THE SAME WOULD NOT AUTOMATICALLY ATTRACTS THE PENALTY/S 271(1)(C) OF THE ACT WHEN THE SAID ADDITION IS NOT BASED ON ANY INCRIMINATING MAT ERIAL. IN SUPPORT OF HIS CONTENTIONS, HE HAS RELIED UPON THE VARIOUS DEC ISIONS INCLUDING THE DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS . S. KHADER KHAN SON 352 ITR 480 WHEREBY THE HONBLE SUPREME COURT H AS UPHELD THE DECISION OF HONBLE MADRAS HIGH COURT REPORTED 300 ITR 157. THE LD. AR HAS THUS SUBMITTED THAT THE STATEMENT RECORDED U/S 133A HAS NO EVIDENTIARY VALUE AND THEREFORE, THE ADDITION MADE BY THE AO ON THE BASIS OF THE SURRENDERED INCOME MADE U/S 133A OF TH E ACT CANNOT BE A BASIS FOR PENALTY U/S 271(I)(C) OF THE ACT. THE LD. AR HAS ALSO RELIED UPON THE DECISION HONBLE CULCUTTA HIGH COURT IN C ASE OF DURGA KAMAL RICE MILLS VS. CIT 265 ITR 25 AND SUBMITTED THAT WH EN THE ADDITION ITSELF IS DEBATABLE ISSUE THEN IT CANNOT BE SAID TH AT THE ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME. THE LD. AR HAS ALSO CHALLENGED THE VALIDITY OF INIT IATION OF PENALTY PROCEEDINGS ON THE GROUND THAT THE SHOW CAUSE NOTIC E ISSUED BY THE AO ITA NO. 964/JP/2018 SHRI HIRA CHAND JAIN VS. ITO 5 DOES NOT SPECIFIC THE LIMB WHETHER IT IS FOR CONCEA LMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THEREFORE, IN THE ABSENCE OF DEFAULT OF THE ASSESSEE SPECIFIED IN THE SHOW CAUSE NOTICE THE INITIATION OF PROCEEDING IS BAD IN LAW. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON A SERIES OF DECISIONS INCLUDING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 AS WELL AS THE DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS. SSAS EMERALD MEAD OWS 73 TAXMANN.COM 241. THUS, THE LD. AR OF THE ASSESSEE H AS SUBMITTED THAT THE PENALTY LEVIED BY THE AO IS NOT SUSTAINABLE IN LAW AND LIABLE TO BE DELETED. 4. ON OTHER HAND, LD. DR HAS SUBMITTED THAT THE ASS ESSEE DID NOT FILE ANY RETURN OF INCOME FOR THE YEAR UNDER CONSID ERATION PRIOR TO THE SURVEY CONDUCTED ON 13.02.2008. EVEN FOR THE OTHER SUBSEQUENT ASSESSMENT YEARS THE ASSESSEE DID NOT FILE ANY RETU RN OF INCOME. ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND DURING TH E SURVEY AS WELL AS THE STOCK AT THE SHOP OF THE ASSESSEE INVENTORIED B Y THE SURVEY PARTY THE ASSESSEE DISCLOSED AND SURRENDERED INCOME FOR V ARIOUS ASSESSMENT YEARS FROM 2003-04 TO 2008-09. THE ASSESSEE SURREND ERED THE INCOME OF RS. 3,00,000/- FOR THE ASSESSMENT YEAR UNDER CON SIDERATION. SINCE, ITA NO. 964/JP/2018 SHRI HIRA CHAND JAIN VS. ITO 6 THE ASSESSEE HAS NOT DISCLOSED INCOME IN THE RETURN OF INCOME, THEREFORE, THE AO HAS MADE THE ADDITION OF THE SAID AMOUNT. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT DURING THE COURSE OF SURVEY PROCEEDING THE STOCK OF UTENSILS AT THE SHOP OF THE ASSESSEE WAS INVENTORIED AND VALUE AT RS. 12,78,794/-. THE OTHER DOCUMENTS FOUND AND IMPOUNDED WERE ALSO IN RESPECT OF PURCHASE MADE BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2003-04 TO 2008-09. AS PER THE IMPOUNDED DOCUMENTS AND STOCK VALUATION THE UNACCOUNTED STOCK FOR THE ASSESSMENT YEAR 2003-04 WAS RS. 92,300/-. THE ASSES SEE IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 148 OF TH E ACT HAS DECLARED THE TOTAL INCOME OF RS. 1,14,913 COMPRISING OF BUSI NESS INCOME OF RS. 22,613/- AND THE INCOME SURRENDERED ON ACCOUNT OF U NACCOUNTED STOCK OF RS. 92,300/-. THE AO NOTED THAT THE ASSESSEE HAS NOT DECLARED THE INCOME OF RS. 3,00,000/- AS IT WAS SURRENDERED DURI NG THE COURSE OF SURVEY IN THE STATEMENT RECORDED 133A OF THE ACT. W E FIND THAT THE SURRENDERED MADE BY THE ASSESSEE OF RS. 3,00,000/- IN THE STATEMENT RECORDED U/S 133A OF THE ACT IS ON ACCOUNT OF THE S TOCK FOUND AT THE SHOP WHICH WAS VALUED AT RS. 12,78,794/-. THE STOCK WAS CONSIDERED AS ITA NO. 964/JP/2018 SHRI HIRA CHAND JAIN VS. ITO 7 PURCHASED DURING THE ASSESSMENT YEARS 2003-04 TO 20 08-09. THEREFORE, IT IS CLEAR THAT THE SURRENDERED WAS MADE BY THE AS SESSEE TO COVER THE UNACCOUNTED STOCK AS WELL AS BUSINESS INCOME FOR TH ESE ASSESSMENT YEARS INCLUDING THE ASSESSMENT YEAR UNDER CONSIDERA TION. HOWEVER, AS PER INVENTORIZATION OF THE STOCK THE UNACCOUNTED ST OCK FOR THE YEAR UNDER CONSIDERATION IS ONLY RS. 92,300/- WHICH WAS DULY DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS. 3,00,000/- SOLELY ON THE BASIS OF THE STATEMENT RECORDED U/S 133A OF THE ACT. WE FIND THAT THE SAID ADDITION IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND OR IMPOUN DED DURING THE SURVEY BUT IT WAS ONLY SURRENDERED MADE BY THE ASSE SSEE U/S 133A OF THE ACT. EVEN OTHERWISE ONCE THE ASSESSEE HAS DECLA RED THE INCOME OF RS. 1,14,913/- THEN THE SURRENDERED MADE BY THE ASS ESSEE INCLUDED THE BUSINESS INCOME AS WELL AS UNACCOUNTED STOCK FOR TH E YEAR UNDER CONSIDERATION. IN ANY CASE THE ADDITION COULD NOT B E MADE TO EXCEED SURRENDERED MADE BY THE ASSESSEE. THE ADDITION MADE BY THE AO OVER AND ABOVE OF THE RETURN OF INCOME IS NOT IN TERMS O F THE SURRENDERED MADE BY THE ASSESSEE IN THE STATEMENT RECORDED U/S 133A OF THE ACT BECAUSE THE ASSESSEE SURRENDERED AMOUNT OF RS. 3,00 ,000/- AS INCOME FOR THE YEAR UNDER CONSIDERATION. SINCE, THERE WAS NO RETURN OF INCOME ITA NO. 964/JP/2018 SHRI HIRA CHAND JAIN VS. ITO 8 FILED BY THE ASSESSEE, THEREFORE, THE SAID SURRENDE RED MADE BY THE ASSESSEE IN ANY CASE INCLUDES THE BUSINESS INCOME A S WELL AS UNACCOUNTED STOCK OF RS. 92,300/-. ONCE, THE ASSESS EE HAS DISCLOSED THE INCOME ON ACCOUNT OF UNACCOUNTED STOCK AS WELL AS BUSINESS INCOME FOR THE YEAR UNDER CONSIDERATION THEN THE ADDITION OF RS. 3,00,000/- MADE BY THE AO BASED ON THE STATEMENT OF THE ASSESS EE RECORDED U/S 133A OF THE ACT WOULD BE REGARDED AS WITHOUT ANY VA LID EVIDENCE DISCLOSING UNDISCLOSED INCOME OF THE ASSESSEE. THER EFORE, THE SAID ADDITION THOUGH ACCEPTED BY THE ASSESSEE WOULD NOT IPSO FACTO LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS CONCEALED PART ICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE AS SESSING OFFICER HAS NOT SUBSTANTIATED THE ADDITION BY MAKING REFERENCE TO ANY INCRIMINATING MATERIAL OR OTHER INFORMATION TO INDICATE SUCH UNDI SCLOSED INCOME. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE WHERE THE ADDITION MADE BY THE AO IS PURELY ON THE BASIS OF T HE STATEMENT RECORDED U/S 133A OF THE ACT THE SAME WOULD NOT ATT RACT THE PENALTY U/S 271(1)(C) OF THE ACT. HENCE, THE PENALTY LEVIED BY THE AO IS DELETED. SINCE WE HAVE DELETED THE PENALTY LEVIED BY THE AO ON MERITS, THEREFORE, WE DO NOT PROPOSE TO NOT INTO THE LEGAL GROUND RAISED BY THE ASSESSEE REGARDING VALIDITY OF INITIATION OF PENALT Y. ITA NO. 964/JP/2018 SHRI HIRA CHAND JAIN VS. ITO 9 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 30/04/2019 SD/- SD/- JESK LH0 KEKZ FOT; IKY JKO (RAMESH. C. SHARMA) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30/04/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HIRA CHAND JAIN, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-1(3), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 964/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR