Vegamamba Cold Storage Private Limited, Vijayawada V. Assistant Commissioner of Income Tax, Central Circle, , Vijayawada

ITSSA 1/VIZ/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9395 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 11-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Unexplained investment; Unexplained expenditure; Business income; Search and seizure; Reasonable cause
• Section: 158BC; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER IT (SS) A NO. 01 / VIZ /201 8 ( BLOCK PERIOD FROM 01/04/1990 TO 24/10/2000 ) M/S. VEGAMAMBA COLD STORAGE PVT. LTD., D.NO. 14 - 11 - 17, HANUMANPET, VIJAYAWADA. V S . A CIT, CENTRAL CIRCLE, VIJAYAWADA . PAN NO. AABCV 7296 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C . SUBRAHMANYAM, FCA DEPARTMENT BY : SMT. SUMAN MALIK SR. DR DATE OF HEARING : 30 / 1 2 /201 9 . DATE OF PRONOUNCEMENT : 08 / 01 /20 20 . O R D E R PER V. DURGA RAO , JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 3 , VISAKHAPATNAM , DATED 1 6 /0 2 /201 8 FOR THE BLOCK PERIOD FROM 01/04/1990 TO 24/10/2000. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF RUNNING COLD STORAGE PLANT AT ANKIREDDY PALEM, GUNTUR. A SEARCH AND SEIZURE OPERATION U/SEC. 132 WAS CONDUCTED IN THE BUSINESS/RESIDENTIAL PREMISES OF THE COMPANY AND ITS DIRECTORS ON 24/10/2000 . SEARCH RESULTED IN A 2 IT (SS) A NO. 01/VIZ/2018 ( M/S. VEGAMAMBA COLD STORAGE PVT. LTD. ) FINDING THAT THE COMPANY HAS SUPPRESSED BUSINESS RECEIPTS AND INFLATED THE EXPENDITURE. AS SUCH, A NOTICE U/SEC. 158BC WAS ISSUED TO THE ASSESSEE ON 04/06/2001 FOR THE BLOCK PERIOD FROM 01/04/1990 TO 24/10/2000. SUBSEQUENTLY, THE ASSESSEE - COMPANY FILED ITS RETURN OF INCOME DECLARING UNDISCLOSED INCOME AS NIL. THE ASSESSING OFFICER HAS MADE THE ADDITIONS BASED ON THE SEIZED MATERIAL DURING THE SEARCH AS UNDER: - 1) BUSINESS RECEIPTS BY WAY OF STORAGE CHARGES FROM 24/02/1999 TO 31/03/199 RS. 1,18,020/ - 2) UNEXPLAINED INSURANCE RECEIPTS RS. 12,520/ - 3) EXPENDITURE NOT RELATING TO THE YEAR IN RESPECT OF INSURANCE RS. 1,12,997/ - 4) E XPENDITURE REPRESENTING PRE - OPERATIVE EXPENSES RS.59,310/ - 5) UNEXPLAINED INVESTMENT IN THE COST OF CONSTRUCTION RS. 2,48,13,353/ - SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY ON THE GR O UND THAT EVEN AFTER THE SEARCH IN SPITE OF INCRIMINATING MATERIAL , THE ASSESSEE HAS FILED THE RETURN OF INCOME BY DECLARING NIL INCOME. THE RELEVANT PORTION OF THE ORDER DATED 08/06/2010 IS EXTRACTED AS UNDER: - 4. IN THIS CASE THE ASSESSEE FILED A NIL RETURN AND THUS THE IMMUNITY AS PER THE PROVISO TO SEC.158BFA(2) ARE NOT AVAILABLE TO 3 IT (SS) A NO. 01/VIZ/2018 ( M/S. VEGAMAMBA COLD STORAGE PVT. LTD. ) THE ASSESSEE - COMPANY. THE ASSESSEE COMPANY TRIED TO EXPLAIN THAT THE ENTRIES IN THE SEIZED MA TERIAL AT ITEM NO.2 OF 36 OF ANNEXURE 'A' OF LIST OF BOOKS SEIZED WERE VOLUNTARILY BROUGHT TO THE NOTICE OF THE AO BY IT IS NOT A RELEVANT FACT FOR CONSIDERATION THE PENALTY U/S.158BFA(2). THE COMPANY DID THE BUSINESS DURING THE BLOCK PERIOD. IT HAD CERTAI N BUSINESS RECEIPTS. EVEN AFTER THE SEARCH IT DID NOT DISCLOSE THE RECEIPTS IN THE RETURN FILED. THEREFORE, CONCEALMENT IS CLEARLY ESTABLISHED. THE ASSESSEE'S PLEA THAT A LENIENT VIEW MAY BE TAKEN WITH REGARD TO PENALTY SINCE ITS CO OPERATED IN THE ASSESSM ENT PROCEEDINGS BY BRINGING TO THE NOTICE OF THE AU THE UNACCOUNTED BUSINESS RECEIPTS FOR WHICH EVIDENCE IS AVAILABLE IN THE SEIZED MATERIAL IS THEREFORE NOT ACCEPTABLE. IF THE INTENTION OF THE ASSESSEE WAS HONOURABLE AND FAIR IT WOULD HAVE DISCLOSED ITS T RUE UNDISCLOSED INCOME IN THE RETURN FILED WHICH WAS SPECIFICALLY MEANT TO DECLARE THE UNACCOUNTED PORTION OF ITS INCOME. THE ASSESSEE - COMPANY FAILED TO DECLARE ITS UNDISCLOSED INCOME IN THE RETURN FILED AND THEREFORE, ADDITION WAS RIGHTLY MADE IN THE ASSE SSMENT ORDER BASING ON THE EVIDENCE IN THE SEIZED MATERIAL. FURTHER, THE ASSESSEE CONTESTED THE ADDITION BEFORE THE CIT(A) AND SINCE IT HAD ABSOLUTELY NO DEFENSE AGAINST THE ADDITION MADE, IT CONCEDED THE POINT BEFORE THE CIT(A). THE PRESENT CLAIM OF THE A SSESSEE THAT IT HAD VOLUNTARILY ACCEPTED THE ADDITION DURING ASSESSMENT PROCEEDINGS IS NOT THEREFORE SUPPORTED BY FACTS AND EVIDENCE AVAILABLE ON RECORD. THIS VIEW FINDS SUPPORT FROM THE ORDER OF CIT(A) AS THE CIT(A) HAD CLEARLY STATED AT PAGE 31 PARA NO.2 OF HIS ORDER THAT THE ASSESSEE RAISED SEVERAL ISSUES IN THE GROUNDS OF APPEAL BUT CONCEDED THE ADDITIONS ON THE FOLLOWING ISSUES VIDE ORDER SHEET NOTING DATED 29 - 3 - 2004: 1) BUSINESS RECEIPT BY WAY OF STORAGE CHARGES FOR THE PERIOD RS.1,18,020 2 - 4 - 1999 TO 31 - 3 - 1999 2) UNEXPLAINED EXPENDITURE U/S.69C RELATING TO INSURANCE RS.12,520 PAYMENT . 3) EXPENDITURE NOT RELATING TO THE YEAR IN RESPECT OF INSURANCE PAYMENTS RS. 1,20,997 3) EXPENDITURE REPRESENTING PRE - OPERATIVE EXPENSES RS. 59,310 5. THEREFORE, I AM SATISFIED THAT THIS IS A FIT CASE FOR LEVY U/S. 158BFA(2) OF THE INCOME TAX ACT, 1961. THE UNDISCLOSED INCOME ULTIMATELY SUSTAINED IS RS.3,10,847/ - WHEREAS THE INCOME RETURNED WAS RS.NIL. AS PER PROVISO TO SEC.158BFA(2) 'PENALTY SHALL BE IM POSED ON THAT PORTION OF UNDISCLOSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN.' THE ASSESSEE - COMPANY COULD NOT 4 IT (SS) A NO. 01/VIZ/2018 ( M/S. VEGAMAMBA COLD STORAGE PVT. LTD. ) EXPLAIN REASONABLE CAUSE FOR ITS FAILURE. THE MINIMUM PENALTY LEVIABLE U/S.158BFA(2) IS RS.2, 10,754/ - . THE MAXIMUM PENALTY LEVIABLE IS RS.6,32,262/ - . CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, I LEVY A PENALTY OF RS.2,10,800/ - U/S.158BFA(2) OF I.T.ACT. THIS SHOULD BE PAID AS PER THE DEMAND NOTICE AND CHALLAN ENCLOSED. 3 . ON APPEAL, L D. CIT(A) CONFIRMED THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER. 4 . AGGRI E VED BY THE ORDER OF THE LD. CIT(A), ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 5. LD.AR RELIED ON THE GROUNDS OF APPEAL, WHEREAS LD.DR STRONGLY SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER. 6 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDER OF THE ASSESSING OFFICER. 7 . IN THIS CASE, THERE WAS A SEARCH AND DURING THE COURSE OF SEARCH, SOME INCRIMINATING MATERIAL WAS FOND. SUBSEQUENTLY, THE ASSESSEE HAS FILED ITS RETURN OF INCOME NOT DISCLOSING ANY BUSINESS RECEIPTS FOR THE BLOCK PERIOD FROM 01/04/1990 TO 24/10/2000. WE FIND THAT THERE IS A CLEAR CASE FOR CONCEALMENT OF INCOME ESTABLISHED B Y THE ASSESSING OFFICER. EVEN BEFORE TH E ASSESSING OFFICER AND EVEN BEFORE THE LD. CIT(A), NO EXPLANATION HAS BEEN OFFERED WHY THE ASSESSEE HAS FILED NIL RETURN OF INCOME IN SPITE OF BUSINESS RECEIPTS. THE ONLY EXPLANATION GIVEN BY THE ASSESSEE WAS A LENIENT VIEW MAY BE TAKEN. EVEN BEFORE US ASSESSEE HAS NOT 5 IT (SS) A NO. 01/VIZ/2018 ( M/S. VEGAMAMBA COLD STORAGE PVT. LTD. ) GIVEN ANY EXPLANATION AND ANY MATERIAL FILED TO SHOW THAT ASSESSEE HAS NOT CONCEALED THE INCOME. THE LD. CIT(A) HAS DISCUSSED T HE ISSUE BY CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN DETAIL. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - I HAVE CAREFULLY CONSIDERED THE GROUNDS OF APPEAL, FACTS OF THE CASE AND THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER. THE APPELLANT HAS RAISED (6) GROUNDS IN THE APPEAL. GROUND NOS.(1) 8 (6) ARE GENERAL IN NATURE, HENCE, NOT ADJUDICATED. GROUND NOS.(2) TO (5) ARE WITH REGARD TO LEVY OF THE PENALTY U/S.158BFA(2). NONE APPEARED IN THE CASE DESPITE THE NOTICES ISSUED. THEREFORE, THE APPEAL IS DISPOSED OFF BASED ON THE MATERIAL AVAILABLE ON RECORD. THIS IS A PENALTY ORDER PASSED BY THE ASSESSING OFFICER U/S.158BFA(2) FOR THE PERIOD FALLING IN THE ASSESSMENT YEAR 1999 - 2000. T H E BRIEF FACTS ABOUT THE CASE ARE THAT THE APPELLANT WAS COVERED ULS.132 OF THE ACT ON 24.10.2010. DURING THE C O URSE OF SEARCH, SUPPRESSION OF BUSINESS RECEIPTS AND ALSO INFLATION OF EXPENDITURE WERE NOTICED. FOR THE ASSESSMENT YEAR 1999 - 2000, THE APPELLANT HAS NOT FILED ANY RETURN OF INCOME. IT IS AN UNDISPUTED FACT THAT THE APPELLANT HAD COMMENCED ITS OPERATION DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1999 - 2000 AND IT IS ALSO A FACT THAT THE FARMERS HAVE DEPOSITED 28,325 BAGS OF CHI LL IES DU RING THE PERIOD 24.02.1999 TO 31.03.1999. THE ASSESSING OFFICER HAS MADE THE ADDITIONS BASED ON THE MATERIAL SEIZED DURING THE SEARCH, AS UNDER. 1) BUSINESS RECEIPTS BYWAY OF STORAGE CHARGES - FROM 24.02.1999 TO 31.03.1999 - RS.1,18,020/ - 2) UNEXPLAINED INSURANC E RECEIPTS - RS.12,520/ - 3) EXPENDITURE NOT RELATING TO THE YEAR IN RESPECT OF INSURANCE - 1,12,997/ - 4) EXPENDITURE REPRESENTING PRE - OPERATIVE EXPENSES - RS59,310/ - 5) UNEXPLAINED INVESTMENT IN THE COST OF CONSTRUCTION - RS.2,48,13,3531 - 6 IT (SS) A NO. 01/VIZ/2018 ( M/S. VEGAMAMBA COLD STORAGE PVT. LTD. ) AGGRIEVED WITH THE ADDITION, THE APPELLANT PREFERRED AN APPEAL BEFORE CIT(APPEALS). THE CIT(APPEALS) GRANTED RELIEF ON THE POINT OF UNEXPLAINED INVESTMENT AND THE APPELLANT CONCEDED THE ADDITION O N ACCOUNT OF BUSINESS RECEIPTS. FURTHER, THE DEPARTMENT FILED AN APPEAL AGAINST THE ORDER OF THE CIT(APPEALS) AND THE HON'BLE TRIBUNAL VIDE ITS ORDER IN IT(SS)A NO. 46/VIZAG/2004 DATED 24/02/2010 DISMISSED THE APPEAL OF THE REVENUE AND CONFIRMED THE ORDER OF THE CT(APPEALS). AFTER RECEIPT OF THE TRIBUNAL'S ORDER AND AFTER GIVING ADEQ UATE OPPORTUNITY TO THE APPELLANT, THE ASSESSING OFFICER HAS LEVIED THE PENALTY ON THE ITEMS OF STORAGE CHARGES OF RS.1,18,020/ - , UNEXPLAINED INSURANCE, EXPENDITURE NOT RELATING TO THE YEAR, EXPENDITURE REPRESENTING PRE - OPERATIVE EXPENSES BY ANALYSING THE PROVISO TO SECTION I58BFA(2) OF THE ACT. (I) SUCH PERSON HAS FURNISHED A RETURN UNDER CLAUSE (A) OF SEC. 1588C; (II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HAS BEEN PAID OR IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSESSEE OFFERS THE MONEY SO SEIZED TO BE ADJUSTED AGAINST TAX PAYABLE; (III) EVIDENCE OF TAX PAID IS FURNISHED ALONG WITH THE RETURN; AND (IV) AN APPEAL IS NOT FILED AGAINST THE ASSESSMENT OF THAT PART OF INCOME WHICH IS SHOWN IN THE RETURN. THE CIRCUMSTANCES STATED IN (I) TO (IV) ABOVE ARE CUMULATIVE IN NATURE AND EACH ONE OF THEM HAVE TO BE SATISFIED FOR AVAILING THE BENEFIT UNDER THE FIRST PROVISO TO SECTION 158BFA(2). IT IS RELEVANT TO SEE WHETHER THE APPELLANT'S CASE FALLS UNDER THE PROVISO OR NOT. THE FOLLOWING FACTS REVEAL THAT THE APPELLANT'S CASE IS NOT COVERED UNDER THE PROVISO. 1. THE APPELLANT HAS FILED THE RETURN OF INCOME WITH NIL INCOME. CONTRARY TO THIS FACT, THE ASSESSING OFFICER HAS DETECTED BUSINESS RECEIPTS AND BROUGHT TO TAX. T HIS ADDITION STOOD FOR THE T EST OF APPEAL BOTH AT CIT(APPEAL S) & ALSO BEFORE THE HON'BLE ITAT. THE APPELLANT'S ASSERTION THAT THE INFORMATION WAS VOLUNTARILY BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER IS NOT CORRECT. IT IS THE SEARCH THAT HAS REVEALED THE FACTS LEADING TO BUSINESS INCOME. 2. THE CONCEALMENT OF INCOME WAS CLEARLY ESTABLISHED BY THE ASSESSING OFFICER AS THE INTENTION OF THE APPELLANT WAS NOT 7 IT (SS) A NO. 01/VIZ/2018 ( M/S. VEGAMAMBA COLD STORAGE PVT. LTD. ) TO DISCLOSE THE TRUE BUSINESS PROFITS THOUGH IT IS NOT PERTAINING I O THE WHOLE YEAR BUT FOR THE PART OF THE YEAR. TO THIS EXTENT, THE APPELLANT HAS FAILED TO DECLARE ITS TRUE INCOME. DUE TO THESE FACTS, THE UNDISCLOSED INCOME SUSTAINED AT RS.3,10,847 / - AS AGAINST THE NIL RETURN FILED BY THE APPELLANT N+ THE ASSESSING OFFICER HAS IMPOSED THE, PENALTY OF RS.2,10,7541 - BEING THE MINIMUM PENALTY U / S.158BFA(2) OF THE ACT. I HAVE CAREFULLY EXAMINED THE FAT E AND FIND THAT THE ORDER PASSED BY THE ASSESSING OFFICER HAS CLEARLY BROUGHT OUT THE CONCEALED INCOME AND THE SAME WAS STOOD FOR THE TEST OF APPEAL. HENCE, I DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION OF THE ASSESSING OFFICER. THEREFORE, THE PENALTY IMPOSED BY THE ASSESSING OFFICER IS CONFIRMED. 8 . FROM THE ABOVE , WE FIND THAT IT IS A CLEAR CASE OF CONCEALMENT OF INCOME . THE ASSESSING OFFICER AS WELL AS LD. CIT(A) RIGHTLY IMPOSED PENALTY U/SEC. 258 BFA(2) OF THE ACT. WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). THUS, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 8 T H DAY OF JANUARY , 2020 . S D / - S D / - (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 8 T H JANUARY , 20 20 . VR/ - 8 IT (SS) A NO. 01/VIZ/2018 ( M/S. VEGAMAMBA COLD STORAGE PVT. LTD. ) COPY TO: 1. THE ASSESSEE - M/S. VEGAMAMBA COLD STORAGE PVT. LTD., D.NO. 14 - 11 - 17, HANUMANPET, VIJAYAWADA. 2. THE REVENUE ACIT, CENTRAL CIRCLE, VIJAYAWADA. 3. THE CIT 4. THE CIT(A) - 3, VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.