P.Chinnappan, Tiruchengode V. ACIT, Coimbatore

ITSSA 127/CHNY/2007

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8820 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-11-2010
• Assessment Year: misc
• Appeal Filed On: 13-08-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Search and seizure; Salary income; Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, CHENNAI BEFORE SHRI U.B.S. BEDI, J.M. & SHRI SANJAY ARORA, A.M. I.T(SS)A. NO.125/MDS/2007 BLOCK ASSESSMENT PERIOD: 1990-91 TO 2000-01 M. PALANI GOUNDER, C/O SUGAJOTHI TEX, 134-A, SALEM ROAD, TIRUCHENGODE. [PAN:AHLPP2848R] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, COIMBATORE. I.T(SS)A. NO.126/MDS/2007 BLOCK ASSESSMENT PERIOD: 1990-91 TO 2000-01 P. RAMASAMY, C/O SUGAJOTHI TEX, 134-A, SALEM ROAD, TIRUCHENGODE. [PAN:AEHPR4634N] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, COIMBATORE. I.T(SS)A. NO.127/MDS/2007 BLOCK ASSESSMENT PERIOD: 1990-91 TO 2000-01 P.CHINNAPPAN , C/O SUGAJOTHI TEX, 134-A, SALEM ROAD, TIRUCHENGODE. [PAN:ADKPC3250D] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, COIMBATORE. I.T(SS)A. NO.128/MDS/2007 BLOCK ASSESSMENT PERIOD: 1990-91 TO 2000-01 C. PERIYASAMY, C/O SUGAJOTHI TEX, 134-A, SALEM ROAD, TIRUCHENGODE. [PAN:AHLPP2816M] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, COIMBATORE. I.T(SS)A. NO.129/MDS/2007 BLOCK ASSESSMENT PERIOD: 1990-91 TO 2000-01 K. KITTAPPAN, C/O SUGAJOTHI TEX, 134-A, SALEM ROAD, TIRUCHENGODE. [PAN:AHWPK4637J] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, COIMBATORE. (APPELLANT) (RESPONDENT) IT ITIT IT(SS) (SS) (SS) (SS)A NO A NO A NO A NOS SS S. .. . 125 125 125 125- -- -129/MDS/07 129/MDS/07 129/MDS/07 129/MDS/07 2 ASSESSEE BY : SHRI V.S. JAYAKUMAR REVENUE BY : SHRI SHAJI P. JACOB O R D E R PER U.B.S. BEDI, J.M. THESE FIVE APPEALS OF DIFFERENT ASSESSEES ARISES O UT OF SEPARATE ORDERS PASSED BY THE LD. CIT(A) II, COIMBATORE ALL DATED 1 1.06.2007 FOR THE BLOCK ASSESSMENT PERIOD 1990-91 TO 2000-01, WHEREBY CONFI RMATION OF PENALTIES OF ` .1,21,056/-, ` .1,56,324/-, ` .1,56,642/-, ` .1,53,498/- AND ` .1,52,322/- IMPOSED UNDER SECTION 158BFA(2) HAVE BEEN CHALLENGED. 1.1 SINCE COMMON ISSUE IS INVOLVED IN ALL THESE APP EALS AND THESE WERE HEARD TOGETHER, THEREFORE BEING DISPOSED OFF BY THIS SING LE ORDER FOR THE SAKE OF CONVENIENCE. 1.2 THESE APPEALS WERE EARLIER DISMISSED BY PASSING ORDER ON MERITS VIDE ORDER DATED 03.12.2008, WHICH AT THE INSTANCE OF TH E ASSESSEE CAME TO BE RECALLED VIDE ORDER DATED 07.08.2009. 2. COMMON FACTS ARE INVOLVED AND WE SHALL DISCUSS THE FACTS OF THE FIRST CASE, WHICH INDICATE THAT A SEARCH AND SEIZURE ACTION UND ER SECTION 132 OF THE INCOME TAX ACT WAS CONDUCTED AT THE RESIDENCE AND BUSINESS PREMISES OF SHRI P. SUBRAMANI AND HIS GROUP CONCERNS INCLUDING M/S. SUG AJOTHI TEX, TIRUCHENGODE ON 19.01.2000. THE ASSESSEE WAS FILING REGULAR RETU RNS OF INCOME UPTO THE ASSESSMENT YEAR 1994-95 AND FILED REGULAR RETURNS O F INCOME FOR THE ASSESSMENT YEAR 1995-96 TO 2000-01 COMPRISING BLOCK PERIOD ON 05.01.2001, I.E. AFTER THE DATE OF SEARCH. IN THESE REGULAR RETURNS OF INCOME, THE ASSESSEE DISCLOSED THE INCOME ON ACCOUNT OF SALARY AND INTEREST RECEIVED F ROM M/S. SUGAJOTHI TEX IN WHICH HE IS A PARTNER. (IT IS WORTH MENTIONING THAT SOME OF THESE REGULAR RETURNS IT ITIT IT(SS) (SS) (SS) (SS)A NO A NO A NO A NOS SS S. .. . 125 125 125 125- -- -129/MDS/07 129/MDS/07 129/MDS/07 129/MDS/07 3 WERE FILED EVEN AFTER THE TIME EXPIRED FOR FILING B ELATED RETURN AS PER THE PROVISIONS OF SECTION 139(4) OF THE ACT. THUS THEY MAY NOT BE CALLED EVEN VALID RETURNS.) A NOTICE UNDER SECTION 158BD READ WITH SE CTION 158BC OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER AND SERVED ON THE A SSESSEE TO FILE THE LOCK RETURN IN FORM 2B. THE ASSESSEE FILED BLOCK RETURN ON 23.07.2002 DECLARING NIL UNDISCLOSED INCOME. DURING THE BLOCK ASSESSMENT PRO CEEDINGS, IT WAS CLAIMED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT T HE ENTIRE INCOME FOR THESE ASSESSMENT YEARS CANNOT BE INCLUDED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD WHILE COMPLETING THE BLOCK ASSESSMENT ON THE PLEA T HAT THESE RETURNS HAVE BEEN FILED BEFORE THE ISSUANCE OF NOTICE UNDER SECTION 1 58BD OF THE ACT AND ALSO ON THE GROUND THAT THE FIRM FROM WHICH THE ASSESSEE HA S RECEIVED INTEREST AND SALARY INCOME HAS ALREADY FILED RETURN OF INCOME BE FORE THE DATE OF SEARCH FOR ALL THESE YEARS COMPRISED IN THE BLOCK PERIOD AND ALSO DISCLOSED THE INFORMATION RELATING PAYMENT OF SALARY AND INTEREST TO THE ASSE SSEE. THEREFORE, THE INCOME OF THE ASSESSEE WHICH IS COMPRISED ONLY OF SALARY AND INTEREST FROM M/S. SUGAJOTHI TEX, CANNOT BE TREATED AS UNDISCLOSED INCOME ASSESS ABLE UNDER BLOCK ASSESSMENT. 2.1 THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE PLEA OF THE ASSESSEE AND TREATED THE INTEREST AND SALARY INCOME RECEIVED FROM THE FIRM, AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD FOR THE ASSESSMENT YEAR 1995-96 TO 1999-2000, AS RETURNS WERE FILED AFTER THE DATE OF SEARCH IN VIEW OF THE PROVISIONS OF SECTION 158BB(CA) OF THE ACT. 2.2 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) II, COIMBATORE, WHO DI SMISSED THE APPEAL. IT ITIT IT(SS) (SS) (SS) (SS)A NO A NO A NO A NOS SS S. .. . 125 125 125 125- -- -129/MDS/07 129/MDS/07 129/MDS/07 129/MDS/07 4 2.3 AGAINST THE ORDER OF THE LD. CIT(A), THE ASSESS EE FILED APPEAL BEFORE THE ITAT AND ITAT D BENCH VIDE THEIR ORDER DATED 28.0 3.2005 HAS ALSO DISMISSED THE APPEAL WITH FOLLOWING OBSERVATION: ..7. THE SECOND ISSUE IS WITH REGARD TO FILING O F THE RETURNS OF INCOME BY THE FIRM DISCLOSING THE INTEREST AND SALARY PAID TO THE PARTNERS AND AS TO WHETHER IT CAN BE TREATED AS DISCLOSED IN THE HANDS OF THE PAR TNERS, THOUGH THE FIRM FILED ITS RETURN OF INCOME ON TIME DISCLOSING THE INTEREST AN D SALARY. HOWEVER, THE PARTNERS WERE FILED THE RETURNS BEYOND THE TIME LIMIT AS PRE SCRIBED UNDER SEC. 139(1) AND SEC. 139(4) OF THE ACT AFTER THE DATE OF SEARCH BUT BEFORE ISSUANCE OF NOTICES UNDER SECTION 158BD OF THE ACT. FIRST WE HAVE TO GO THROU GH THE PROVISIONS OF SEC. 158BB(CA) OF THE ACT WHICH READS AS UNDER: 158BB(CA): WHERE THE DUE DATE FOR FILING A RETURN OF INCOME HAS EXPIRED, BUT NO RETURN OF INCOME HAS BEEN FILED, AS NIL, IN CASES N OT FILING UNDER CLAUSE (C); IN THESE CASES THE ASSESSEES HAVE FILED BELATED RE TURNS AFTER THE DATE OF SEARCH. THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL , MADRAS BENCH A IN THE CASE OF L. SAROJA V. ASSISTANT COMMISSIONER (2001) 76 ITD 34 WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 9.2 IT IS ON RECORD THAT IN MANY CASES THE RETURN OF INCOME WAS NOT FILED WITHIN THE TIME ALLOWED UNDER SECTION 139(1) OR EVEN UNDER SECTION 139(4) PRIOR TO THE DATE OF SEARCH. SRI VENKATESANS ARGUMENT IS THAT A S THE ASSESSEES WERE ALL BORNE IN THE FILE OF THE ASSESSING OFFICER, THEIR EXISTEN CE WAS KNOWN TO THE DEPARTMENT AND IF THEY FAILED TO FILE THE RETURN OF INCOME ACT ION SHOULD BE TAKEN UNDER SECTION 147, BUT NOT UNDER SECTION 158BD. WE REJECT THE ARG UMENT. UNDISCLOSED INCOME MEANS THE INCOME WHICH IS LIABLE TO BE TAXE D BUT WHICH HAS NOT BEEN TAXED AS A RESULT OF NON DISCLOSURE BY THE ASSESSEE . THE DATE OF SEARCH IS THE CUT OFF DATE. NON DISCLOSURE WOULD CERTAINLY ARISE IF T HE RETURN WAS NOT FILED BEFORE THE DATE OF SEARCH WHETHER UNDER SECTION 139(1) OR UNDE R SECTION 139(4). RECOURSE OF FILING OF RETURN UNDER SECTION 139(4) ON OR AFTER T HE DATE OF SEARCH IS NOT CONTEMPLATED WITHIN THE MEANING OF UNDISCLOSED INC OME. THE ITAT HAS ALSO DEALT WITH THE CASE LAW RELIED UP ON BY THE ASSESSEE VIZ. THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE O F ACIT VS. M/S. A.R. ENTERPRISES [274 ITR 110] (IN TCA NO. 238 OF 2000) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHAMLAL BA LRAM GURBANI [249 ITR 501]. THEY HAVE DISTINGUISHED THE FACTS OF THE CASE AND ALSO THE ISSUES INVOLVED IN THE PRESENT CASE WITH THE FACTS AND ISSUES INVOL VED IN THESE CASES AND IT ITIT IT(SS) (SS) (SS) (SS)A NO A NO A NO A NOS SS S. .. . 125 125 125 125- -- -129/MDS/07 129/MDS/07 129/MDS/07 129/MDS/07 5 ACCORDINGLY HELD THAT THE DECISIONS OF THESE TWO CA SES ARE NOT APPLICABLE ON THE FACTS AND ISSUES OF THE PRESENT CASE. 2.4 THE ITAT, FURTHER DISMISSED THE MISCELLANEOUS P ETITION FILED BY THE ASSESSEE BY THEIR ORDER DATED 08.11.2005 HOLDING TH AT THERE IS NO MISTAKE APPARENT FROM RECORDS IN THEIR ORDER DATED 28.03.20 05. 3. THE ASSESSING OFFICER INITIATED PENALTY PROCEED INGS UNDER SECTION 158BFA(2) OF THE ACT DURING BLOCK ASSESSMENT PROCEE DINGS. AFTER THE RECEIPT OF ORDER FROM THE ITAT, THE ASSESSING OFFICER PROCEEDE D TO LEVY PENALTY BY CONSIDERING THE REPLY FILED BY THE ASSESSEE AGAINST THE OPPORTUNITY GIVEN TO HIM TO SUBMIT AS TO WHY PENALTY MAY NOT BE LEVIED. THE ASSESSEE HAS FILED ALMOST SAME REPLY AS WAS GIVEN IN THE ASSESSMENT PROCEEDIN GS CLAIMING THAT THERE IS NO UNDISCLOSED INCOME. THE ASSESSING OFFICER, HOWEVER OBSERVED THAT PENALTY UNDER SECTION 158BFA(2) IS MANDATORY. OPTION LEFT T O THE ASSESSEE IS TO EXHAUST APPELLATE REMEDIES UPTO THE LEVEL OF ITAT AS PER TH E SCHEME OF PENALTY PROVISION. ACCORDING TO HIM, AS THE TRIBUNAL HAS UPHELD THE BL OCK ASSESSMENT AND QUANTUM OF UNDISCLOSED INCOME, THE ASSESSEE HAVING AVAILED ALL THE OPPORTUNITIES BY WAY OF APPEALS AND ALSO HAVE NO EXPLANATION FOR THE NIL BLOCK RETURN, PENALTY IS LEVIABLE AND ACCORDINGLY HE LEVIED MINIMUM PENALTY UNDER SECTION 158BFA(2) OF THE ACT BEING 100% OF TAX ON DIFFERENCE BETWEEN THE ASSESSED UNDISCLOSED INCOME AND RETURNED UNDISCLOSED INCOME. FACTS BEING ALMOST SAME, SIMILAR TYPE OF PENALTIES HAVE BEEN IMPOSED FOR OTHER CASES WITH DIFFERENCE IN AMOUNTS OF SUCH PENALTIES AND IN ALL THESE CASES APPEALS WERE PREFERRED BEFORE THE FIRST APPELLATE AUTHORITY BY ALL THESE ASSESSEES AND THE LD. CIT(A) CONFIRMED SUCH ACTION OF THE ASSESSING OFFICER. IT ITIT IT(SS) (SS) (SS) (SS)A NO A NO A NO A NOS SS S. .. . 125 125 125 125- -- -129/MDS/07 129/MDS/07 129/MDS/07 129/MDS/07 6 4. AGGRIEVED BY THE PENALTY ORDERS IN ALL THESE CA SES, THE ASSESSEES HAVE PREFERRED APPEAL BEFORE ITAT. 5. AT THE VERY OUTSET, THE LD. DR SUBMITTED THAT T HE ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE IN VIEW OF THE DECISIONS REFER RED TO BY THE LD. CIT(A) IN HIS RESPECTIVE ORDERS. THEREFORE, PENALTIES ARE EXIGIBL E, WHICH HAVE RIGHTLY BEEN IMPOSED BY THE ASSESSING OFFICER AND JUSTIFIABLY BE EN CONFIRMED BY THE LD. CIT(A), AS SUCH, HE PLEADED FOR CONFIRMATION OF THE ORDER OF THE LD. CIT(A) IN THESE CASES OF ALL THE ASSESSEES AND APPEALS OF THE ASSESSEES ARE LIABLE TO BE DISMISSED, WHICH MAY KINDLY BE DISMISSED AND TO THI S MOVE OF THE LD. DR, THE LD. COUNSEL FOR THE ASSESSEE VERY FAIRLY SUBMITTED THAT IN ORDER TO KEEP THE ISSUE ALIVE CONCISED GROUNDS RAISED BY THE ASSESSEES SHOU LD BE CONSIDERED AND APPEALS MAY BE ACCORDINGLY DECIDED. OTHERWISE, HE H AS NOTHING TO SAY ABOUT THE ARGUMENTS ADVANCED BY THE LD. DR. 6. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MA TERIAL ON RECORD AND FIND THAT THE ASSESSES HAVE RAISED FOLLOWING IDENTICAL R ESPECTIVE CONCISED GROUNDS IN THESE CASES, WHICH READ AS UNDER: 1. THE ORDER OF THE CIT(A) IS CONTRARY TO THE LAW , FACTS AND CIRCUMSTANCES OF THE CASE IN SO FAR AS HE CONFIRMS THE PENALTY LEVIED UNDER SECTION 158BFA(2) OF THE ACT BY THE ACIT. 2. THE CIT(A) FAILED TO APPRECIATE THAT THE INTERE ST AND SALARY PAID TO THE APPELLANT IS NOT AN UNDISCLOSED INCOME. 3. THE CIT(A) OUGHT TO HAVE APPRECIATE THAT THE AP PELLANT HAS FILED THE RETURN OF INCOME AND PAID TAXES WELL BEFORE THE COM PLETION OF BLOCK ASSESSMENT SECTION 158BC OF THE FIRM. 4. THE CIT(A) OUGHT TO HAVE APPRECIATE THAT THE AP PELLANT HAS FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1995-96 TO 2000-01 AFTER THE SEARCH OF THE FIRM BUT BEFORE THE ISSUE OF NOTICE U NDER SECTION 158BD AND HAD PAID TAXES UNDER SECTION 140A. IT ITIT IT(SS) (SS) (SS) (SS)A NO A NO A NO A NOS SS S. .. . 125 125 125 125- -- -129/MDS/07 129/MDS/07 129/MDS/07 129/MDS/07 7 5. THERE IS NO SEIZED PAPER U/S 132 IN FIRM SUGAJO THI TEX AS WELL AS P. SUBRAMANI FILED ABOUT THE APPELLANT. 6. IN THE VIEW OF THE MATTER, THE PENALTY LEVIED I S NOT IN ACCORDANCE WITH THE LAW. 6.1 IT IS NOT IN DISPUTE THAT THE ISSUE RAISED BEFO RE THE FIRST APPELLATE AUTHORITY ARE SQUARELY COVERED BY VARIOUS DECISIONS RELIED UP ON BY THE LD. CIT(A) WHILE DISPOSING OF THE APPEALS OF THE ASSESSEES. THE LD. CIT(A) ELABORATELY DISCUSSED THE ISSUES IN THE LIGHT OF VARIOUS CASE LAW REFERRE D TO DISMISS THE APPEALS OF THE ASSESSEES, AGAINST WHICH THE ASSESSEES COUNSEL HAS NOT EITHER FILED ANY HIGHER COURTS DECISION OR OTHER MATERIAL TO SUPPORT THE P LEA RAISED IN THE APPEALS. AS SUCH, WHILE CONSIDERING THE ENTIRETY OF FACTS, CIRC UMSTANCES, MATERIAL ON RECORD AND CASE LAW RELIED UPON BY THE LD. CIT(A), WE UPHO LD THE ORDER OF THE LD. CIT(A) AND DISMISS ALL THE APPEALS OF THE ASSESSEES. 7. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED SOON AFTER THE CONCLUSION OF HEAR ING ON 29.11.2010. SD/- SD/- (SANJAY ARORA) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE 29.11.2010. VM/- COPY TO : APPELLANT/RESPONDENT/CIT(A)- /CIT, /DR