M/s. Alankar Radio Eqipments, Delhi V. ACIT, New Delhi

ITSSA 2/DEL/2013

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2356 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-05-2016
• Assessment Year: misc
• Appeal Filed On: 15-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Keywords: Block assessment

Judgement Text

IT(SS)A NO. 2/D/13 M/S ALANKAR RADIO & EQUIPMENTS PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE VICE PRESIDENT & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER IT(SS)A NO.-2/DEL/2013 ( BLOCK PERIOD: 01.04.1988 TO 24.09.1998) M/S ALANKAR RADIO & EQUIPMENTS 288-289, OLD LAJPAT RAI MARKET, DELHI 10006 AADFA1473C VS ACIT CIRCLE 30(1) NEW DELHI. ASSESSEE BY SH. HIREN MEHTA, CA REVENUE BY SH. RAVI JAIN, CIT DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 30/10/2012 PASSED BY THE LD. COMMISSION ER OF INCOME TAX (APPEALS)-19, NEW DELHI FOR THE BLOCK PERIOD 01/04/ 1998 TO 24/09/1998. DATE OF HEARING 04.05.2016 DATE OF PRONOUNCEMENT 04.08.2016 IT(SS)A NO. 2/D/13 M/S ALANKAR RADIO & EQUIPMENTS PAGE 2 OF 7 2. THE FACTS OF THE CASE ARE THAT IN THE QUANTUM PR OCEEDINGS THE BLOCK ASSESSMENT WAS COMPLETED ON TOTAL UNDISCLOSED INCOM E OF RS. 5,029,110/- AS AGAINST UNDISCLOSED INCOME DECLARED IN THE BLOCK RETURN AT RS. 1,326,380/-. THE DIFFERENCE BETWEEN THE ASSESSED A ND THE RETURNED INCOME WAS MAINLY ON ACCOUNT OF THE FOLLOWING ADDITIONS: A) ADDITION OF RS. 1,592,601/- ON ACCOUNT OF UNDISCLOS ED INVESTMENT IN THE PURCHASES MADE BY THE ASSESSEE FROM M/S SUPER C ASETTES INDUSTRIES LTD. B) ADDITION OF RS. 1,110,134/- AS ENHANCEMENT IN GROSS PROFIT RATE TO 2.5% ON THE UNDISCLOSED INCOMEAND ALSO DISALLOWANCE OF INCIDENTAL EXPENSES AGAINST EARNING OF UNDISCLOSED INCOME. C) ADDITION OF RS. 753,953/- ON ACCOUNT OF INVESTMENT OUT OF UNDISCLOSED FUNDS FOR MAKING PURCHASES. D) ADDITION OF RS. 246,047/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN STOCK. 3. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE LD. CIT(APPEALS) WHO GAVE THE ASSESSEE A SUBSTANTIAL RE LIEF BY DELETING ADDITIONS OF RS. 3,195,817/- UNDER VARIOUS HEADS. 4. SUBSEQUENTLY THE DEPARTMENT APPROACHED THE ITAT AGAINST THE IT(SS)A NO. 2/D/13 M/S ALANKAR RADIO & EQUIPMENTS PAGE 3 OF 7 DELETION OF THE ADDITIONS BY THE LD. CIT (APPEALS) AND THE COORDINATE G BENCH OF THE ITAT IN IT (SS) A NO. 389/DEL/2003 DAT ED 10/08/06 DECIDED THE QUANTUM ADDITIONS AS UNDER: I. IN RESPECT OF THE UNDISCLOSED PROFITS FROM SALE AND PURCHASE, THE ADDITION CONFIRMED WAS RS. 129,931/- II. IN RESPECT OF UNDISCLOSED INVESTMENT IN PURCHASE, T HE ADDITION CONFIRMED WAS RS. 376,977/- AND III. IN RESPECT OF DISALLOWANCE OF EXPENDITURE IN EARNIN G UNDISCLOSED INCOME, THE ADDITION CONFIRMED WAS RS. 265,481/-. THUS, THE FINAL QUANTUM ADDITIONS AS UPHELD BY THE ITAT AMOUNTED TO RS. 772,389/-. 5. IN THE PENALTY PROCEEDINGS U/S 158BFA(2), THE AO HELD THAT SINCE THE ASSESSEE HAD A CONFIRMED ADDITIONAL UNDISCLOSED INCOME OF RS. 772,389/- AS DECIDED BY THE ITAT, THE ASSESSEE HAD COMMITTED DEFAULT U/S 158BFA(2) AND HE ACCORDINGLY IMPOSED A PENALTY OF R S. 463,433/-. THIS PENALTY WAS CONFIRMED BY THE LD. CIT (A) AND NOW TH E ASSESSEE HAS APPROACHED THE TRIBUNAL AND HAS CHALLENGED THE CONF IRMATION OF PENALTY BY THE LD. CIT (APPEALS). 6. THE LD. AR SUBMITTED THAT IN THIS CASE, ADDITION HAS NOT BEEN MADE IT(SS)A NO. 2/D/13 M/S ALANKAR RADIO & EQUIPMENTS PAGE 4 OF 7 ON THE BASIS OF ANY SEIZED MATERIAL BUT ONLY ON THE BASIS OF AN ESTIMATE. IT WAS SUBMITTED THAT SINCE THE ADDITION HAS BEEN MADE ON ESTIMATION, ERROR IN ESTIMATION CANNOT BE RULED OUT. IT WAS SUBMITTE D THAT THE ASSESSEE HAS NOT ACTED DELIBERATELY IN DEFIANCE OF LAW AND NOR W AS IT GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST AND HENCE THE PENALTY COU LD NOT BE LEVIED. IT WAS FURTHER CONTENDED THAT THE INTENTION OF THE LEG ISLATURE IN ENACTING SECTION 158BFA (2) WAS NOT TO IMPOSE PENALTY ON EVE RY FINALLY SUSTAINED ADDITION IN THE UNDISCLOSED INCOME. IT WAS SUBMITT ED THAT PENALTY PROVISIONS U/S 158BFA (2) ARE IN PARI MATERIA TO PROVISIONS OF SEC. 271(1)(C) OF THE ACT AND, THEREFORE, WHAT WAS APPLICABLE FOR LEVY OF PENALTY U/S 271(1)(C) IN PRINCIPLE APPLIED TO PENALTY U/S 158BF A(2) AS WELL. IT WAS ALSO SUBMITTED THAT PENALTY U/S 158BFA (2) WAS DIRECTORY AND NOT MANDATORY. THE LD. AR RELIED ON THE FOLLOWING OF DECISIONS IN SUPPORT OF HIS CONTENTIONS: 1. MALA DAYANITHI VS. DCIT, 91 ITD 46; 2. DCIT VS. KOATEX INFRASTRUCTURE LTD., 100 ITD 510 (M UM.); 3. ACIT VS. SHANTI KUMAR CHABARA, 32 SOT 21 (JAIPUR); 4. SUPER METAL IND. VS. DCIT,119 ITD 153; IT(SS)A NO. 2/D/13 M/S ALANKAR RADIO & EQUIPMENTS PAGE 5 OF 7 5. DR. HAKEEM SAYEED VS. ACIT, 120 ITD 1 (CHEN.); 6. SURESH REDDY VS. ACIT, 120 ITD 428 (CHEN.); 7. SALUJA HIRE PURCHASE LTD. VS. ACIT, 120 ITD 394 (LU CK.); 8. CIT VS. HAR KAREN DAS VED PAL (DEL.) 177 TAXMAN 398 ; 9. CIT VS. SATYENDRA KUMAR DOSHI, 222 CTR 258 (RAJ.); 10. CIT VS. DODSAL LTD. 2 DTLONLINE 317 (BOM.); 11. SADHU RAM GOYAL VS. DCIT, 128 ITD 436 (JAIPUR); 12. SMT. BITOLI DEVI VS. ACIT, 31 SOT 30 (LUCK.); 13. CIT VS. GIRIRAJ AGGARWAL, 33 TAXMAN.COM 536 (RAJ.). 7. THE LD. DR SUBMITTED THAT THE PROVISIONS OF BLOC K ASSESSMENT PROCEEDINGS WERE A COMPLETE CODE IN ITSELF AND THAT THE PROVISIONS OF SECTION 158BFA (2) WERE MANDATORY. THE LD. DR ALSO PLACED HEAVY RELIANCE ON THE ORDER OF THE LD. CIT (APPEALS) AND SUBMITTED THAT THE PENALTY HAD BEEN CORRECTLY IMPOSED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT DOCUMENTS ON RECORD. IT IS UNDISPUTED THAT THE ADD ITIONS WHICH HAVE FINALLY BEEN SUSTAINED BY THE ITAT HAVE BEEN MADE O N ESTIMATES. THE IT(SS)A NO. 2/D/13 M/S ALANKAR RADIO & EQUIPMENTS PAGE 6 OF 7 HONBLE HIGH COURT OF RAJASTHAN IN CIT VS. SATYENDR A KUMAR DOSHI, 222 CTR 258 (RAJ.) HAS HELD THAT FROM A PLAIN READING O F SEC. 158BFA (2), IT DOES NOT APPEAR THAT IN ALL CASES WHERE THE UNDISCL OSED INCOME IS DETERMINED BY THE AO UNDER CLAUSE (C) OF SEC. 158BC , IMPOSITION OF PENALTY AS A SPECIFIED U/S 158BFA SHALL FOLLOW AS A NATURAL CONSEQUENCES THEREOF. THE HONBLE RAJASTHAN HIGH COURT HAS FURT HER OBSERVED THAT IN TERMS OF SECTION 158BFA, DISCRETION IS VESTED WITH THE AO TO LEVY THE PENALTY IN RESPECT OF THE UNDISCLOSED INCOME AND FU RTHER THAT IT CANNOT BE INFERRED FROM THE SAID PROVISION THAT THE LIABILITY FOR PENALTY IS AUTOMATIC. IN ACIT VS. SHANTI KUMAR CHHABARA, 32 SOT 21 (JAIPU R) THE ITAT JAIPUR BENCH HELD THAT ADMITTEDLY IT WAS NOT THE IN TENTION OF THE LEGISLATURE TO IMPOSE PENALTY UNDER THE SAID PROVIS ION I.E. SECTION 158BFA (2) ON EVERY FINALLY SUSTAINED ADDITION IN UNDISCLO SED INCOME AND THE CONDITION PRECEDENT FOR IMPOSING PENALTY U/S 158BFA (2) IS THAT THERE MUST BE A CONCEALMENT OR SEPARATION OF INCOME ON TH E PART OF THE ASSESSEE TO AVOID PAYMENT OF TAX THEREON. IN THE ABSENCE OF A POSITIVE FINDING IN THIS REGARD, THE AO WAS NOT JUSTIFIED IN IMPOSING T HE PENALTY. FURTHER THE HONBLE HIGH COURT OF RAJASTHAN HAS HELD IN CIT VS. DR. GIRIRAJ AGGARWAL (2013) 33 TAXMAN.COM 536 (JAIPUR) THAT NO PENALTY WAS LEVIABLE U/S 158BFA, WHERE THE ALLEGED UNDISCLOSED INCOME WA S COMPUTED ON THE IT(SS)A NO. 2/D/13 M/S ALANKAR RADIO & EQUIPMENTS PAGE 7 OF 7 BASIS OF AN ESTIMATION. 9. HAVING REGARD TO THE OVERALL FACTUAL MATRIX OF T HE CASE AND THE RELEVANT RECORD BEFORE US AS WELL AS APPLYING THE R ATIO OF THE JUDGMENTS AS AFOREMENTIONED, WE HAVE NO HESITATION IN HOLDING T HAT IN THE ASSESSEES CASE PENALTY U/S 158BFA(2) CANNOT BE UPHELD. WE SE T ASIDE THE ORDER OF THE LD. CIT (A) AND DIRECT THE AO TO DELETE THE PEN ALTY. ORDER IS PRONOUNCED IN THE OPEN COURT ON 04.08.2016 SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA ) VICE PRESIDENT JUDICIAL MEMBER DATED: 04.08.2016 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI