Smt.Sunita Shivhare, Betul V. Deputy Commissioner of Income Tax(central)-1, Bhopal

ITSSA 2/JAB/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 4365 (ITAT-JABALPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 26-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEERJA PRADHAN
• Keywords: Business income; Search and seizure; Document seized; Documents seized
• Section: 271(1)(c); 44AD; 143(3); 142(1); 153A; 201; 132; 154; 139

Judgement Text

SUNITA SHIVHARE V. DY. CIT IT(SS)A NO. 02/JAB/2019 (AY 2010 - 11 ) 1 | P A G E IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER I.T. (SS) A. NO. 02 /JAB/20 19 ASSESSMENT YEAR: 2010 - 11 SUNITA SHIVHARE CIVIL LINES, BETUL [PAN: BDGPS 4272Q] V S. DEPUTY COMMISSIONER OF INCOME TAX - 1, BHOPAL. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI DHIRAJ GHAI , C.A. RESPONDENT BY SMT. NEERJA PRADHAN , CIT - DR DATE OF HEARING 05/02/2021 DATE OF PRONOUNCEMENT 15 /02/2021 ORDER P ER S ANJAY ARORA , AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMIS SIONER OF INCOME TAX (APPEALS) - 3 , BHOPAL (CIT(A) FOR SHORT) DATED 22.02.2019 , DISMISSING THE ASSESSEES APPEAL CONTESTING HER ASSESSMENT UNDER SECTION 153A REA D WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 22.12.2017 FOR ASSESSMENT YEAR (AY) 2010 - 11 . THOUGH THE APPEAL RAISES AS MANY AS SIX GROUNDS, ONLY GD. 3 , I.E., TOWARD NON - COGNIZANCE OF THE RECTIFICATION DATED 10.01.2019, REVISING THE ASSESSEES BUSINESS INCOME , WAS PRESSED BEFORE US . 2. THE BACKGROUND FACTS OF THE CASE , TO THE EXTENT RELEVANT, ARE THAT THE ASSESSEE IS WIFE OF SHRI RANJEET SHIVHARE, A KE Y MEMBER OF THE SHIVHARE GROUP, WHICH ( I NCLUDING THE ASSESSEE) WAS SUBJECT TO SEARCH ACTION U/S. 132 OF THE ACT ON SUNITA SHIVHARE V. DY. CIT IT(SS)A NO. 02/JAB/2019 (AY 2010 - 11 ) 2 | P A G E 07.01.2016. I NCRIMINATING DOCUMENTS WERE FOUND AND SEIZED, AND THE ASSESSMENT FRAMED FOR AYS . 2010 - 11 TO 2015 - 16 (U/S. 153A) AND FOR AY 2016 - 17 ( U/S. 143(3) ON THE BASIS THEREOF. THE ASSESSEE FAILING TO PRODUCE THE BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS, HER LIQUOR BUSINESS INCOME WAS ESTIMATED BY THE ASSESSING OFFICER (AO) BY ADOPTING A NET PROFIT RATE OF 4% ON A TURNOVER OF RS. 11 ,76,50,385, I.E. , AT RS. 47,06,015 ( PARA 14.2 OF THE ASSESSMENT ORDER ) . 3. THE ASSESSEE APPEALED THER E - AGAINST BEFORE THE LD. CIT(A) ON 24.01.2018, AND DURING THE PENDENCY THEREOF, MOVED AN APPLICATION U/S. 154 WITH THE AO ON 10.12.2018, CLAIMING THE TURNOVER OF HE R LIQUOR BUSINESS TO BE IN F ACT AT RS. 1,05,71,935 , I.E. , AS PER THE AUDITED ACCOUNTS (PB PG . 3 0). THE SAME WAS ACCE PTED BY THE AO VIDE ORDER U/S. 154 DATED 10.01.2019 (PB PGS . 54 - 55), REVISING THE ESTIMATE OF THE BUSINESS INCOME TO RS . 4,22,877 , BEING 4% OF RS. 105.72 LA C S. THE SAME WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) BY THE ASSESSEE VIDE WRITTEN SUBMISSIONS DA TED 14.01.2019/ 25.01.2019, CONT E N D ING FOR THE SAID ESTIMATE BEING MADE WITH REFERENCE TO THE ADMITTED TURNOVER, I.E. , RS. 1,05,87,289, I.E., IN TERMS OF ITS GD. 2 BEFORE HIM. THE SAME WAS NOT ACCEPTED BY THE LD. CIT(A) WHO, AFTER RECORDING THE ASSESSEES CONTENTIONS, INCLUDING VIDE WRITTEN SUBMISSIONS DATED 14.01.2019/ 25.01.2019 (SUPRA) , AS WELL AS THE AOS FINDING, HELD AS UNDER: 4.1 GROUND NO . 1 TO 4 : THROUGH THESE GROUNDS OF APPEAL THE APPELLANT HAS CHALLENGED THE ADDITION OF RS. 43,25,223 / - ON ACCOUNT OF UNDISCLOSED NET PROFIT. ORDER U/S 153A R.W.S 143(3) HAS BEEN PASSED IN THE CASE OF ABOVE MENTIONED ASSESSEE ON 22.12.2017. THE ORDER U/S 153A R.W.S 143(3) HAS BEEN PASSED BECAUSE SEARCH AND SEIZURE ACTION U/S 132 HAS BEEN CARRIED OUT IN TH E CASE OF APPELLANT ON 07.01.2016. DURING THE COURSE OF SEARCH VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND ASSESSMENT HAS BEEN COMPLETED AFTER TAKING INTO ACCOUNT THE SEIZED MATERIAL AND OTHER INCRIMINATING DOCUMENTS FOUND DURING THE SEARCH. AS PER PARA 14.0 OF THE ASSESSMENT ORDER, A SHOW CAUSE WAS GIVEN TO THE ASSESSEE TO ADOPT NET PROFIT RATE @ 8% AND TO REJECT BOOKS OF ACCOUNT. AS PER PARA 14.2 NET PROFIT RATE @ 4% HAS BEEN ADOPTED AFTER REJECTING THE BOOKS OF ACCOUNT . THE BOOKS OF ACCOUNT HAS BEEN REJECTED AFTER DUE APPLICATION OF LAW. AFTER REJECTION OF THE BOOKS OF ACCOUNT, THE NET PROFIT HAS BEEN CALCULATED AFTER ESTIMATING THE TURNOVER AND NET PROFIT RATE. THE AO WHILE PASSING THE ORDER U/S 153A R.W.S 143(3) SUNITA SHIVHARE V. DY. CIT IT(SS)A NO. 02/JAB/2019 (AY 2010 - 11 ) 3 | P A G E ESTIMATED THE TURNOVER AT RS. 11,76,5 0,385/ - AND NET PROFIT RATE @ 4% AFTER TAKING INTO ACCOUNT THE SEIZED MATERIAL AND INCRIMINATING DOCUMENTS. THE AO ESTIMATED THE TURNOVER AND NET PROFIT AFTER DUE APPLICATION OF LAW AND REJECTING THE BOOKS OF ACCOUNT, AFTER TAKING INTO ACCOUNT THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT AND FOUND DURING THE COURSE OF SEARCH IS NOT REFLECTING THE CORRECT BUSINESS ACTIVITIES OF THE APPELLANT. SOME INCRIMINATING DOCUMENT S WERE FOUND AND THE TRANSACTIONS IN THESE INCRIMINATING DOCUMENTS WERE NOT ENTERED IN REGULAR BOOKS OF ACCOUNT. THE APPELLANT HAS NOT PRODUCED BOOKS OF ACCOUNT AND SUPPORTING BILLS AND VOUCHERS DURING THE COURSE OF ASSESSMENT PROC EED I N GS. THEREFORE, THE AO HAS NO OPTION BUT T O ESTIMATE THE TURNOVER AND NET PROFIT RATE AS PER THE MATERIAL AVAILABLE ON RECORD AND FOUND DURING THE COURSE OF SEARCH. THEREFORE, THE AO IS JUSTIFIED IN ESTIMATING THE NET PROFIT. THEREFORE, THE ADDITION MADE BY THE AO AMOUNTING TO RS. 43,25,223/ - IS C ONFIRMED. THEREFORE, THE APPEAL ON THESE GROUNDS IS D ISMISSED . (EMPHASIS, OURS) AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 4 . WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 4.1 THE BASIS OF TH E REJECTION OF THE ASSESSEES CASE BY THE LD. CIT(A) , I.E., FOR ADOPTING THE ADMITTED TURNOVER, AS AGAINST THAT PER THE ASSESSMENT ORDER, SINCE RECTIFIED U/S. 154, IS THAT REJECTING THE BOOKS OF ACCOUNT, THE AO HAD ESTIMATED THE TURNOVER AND N ET P ROFIT OF THE ASSESSEE S LIQUOR BUSINESS BASED ON INCRIMINATING DOCUMENTS. THE SAME, THEREFORE, CANNOT BE A SUBJECT MATTER OF SECTION 154. FURTHER, NO OTHER MATERIAL TOWARD R EDUCTION IN THE ESTIMATE D TURNOVER AND N ET P ROFIT RATE WAS ADDUCED BY THE ASSESSEE BEFORE HIM, SO THAT NO RELIEF WAS EXIGIBLE TO HER . THE ASSESSEES GRIEVANCE BEFORE US IS ONLY WITH REGARD TO THE TURNOVER AND NOT THE N ET P ROFIT RATE, ESTIMATED BY THE AO AT 4% AS AGAINST THE RETURNED 3.6%. 4 . 2 THE ONLY ISSUE QUA TURNOVER IS WHETHER THE SAME STANDS ESTIMATED BY THE AO, AND WHICH , WHERE SO, WOULD ONLY BE ON THE BASIS OF S O ME MATERIAL. WE FIND NO REFERENCE TO ANY MATERIAL, OR IN FACT ANY DISCUSSION QUA THE ESTIMATION OF THE SUNITA SHIVHARE V. DY. CIT IT(SS)A NO. 02/JAB/2019 (AY 2010 - 11 ) 4 | P A G E TURNOVER , IN THE ASSESSMENT ORDER, AND TOWARD WHICH WE HAVE PERUSED IT I N ITS ENTIRETY ; THE RELEVANT PART THEREOF READING AS UNDER: 14.0 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ISSUED NOTICES U/S. 142(1) OF THE ACT CALLING FOR BOOKS OF ACCOU NT FOR AY 2010 - 11 TO 2016 - 17. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT PERTAINING TO AY 2010 - 11 TO 2016 - 17. FINALLY, THE ASSESSEE WAS SHOW - CAUSED AS TO WHY THE NET PROFIT RATE SHALL NOT BE COMPUTED AT 8% AND THE BOOKS OF ACCOUNT SHALL N OT BE REJECTED. 14.1 IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT FOR THE AY 2010 - 11, 2015 - 16 & 2016 - 17 HAS GOT HER ACCOUNT S AUDITED UNDER SECTION 44AD OF THE ACT AND HAS SUBMITTED THE AUDIT REPORT. 14.2 THE REPLY SUBMITTED WAS UNACCEPTABLE AS THE ASSESSEE HAS NEVER PRODUCED BOOKS OF ACCOUNT AND SUPPORTING BILLS AND VOUCHERS . THE ATTITUDE OF NON - COMPLIANCE OF THE ASSESSEE IS ALREADY DISCUSSED. CONSIDERING THE FACT THAT NO DOCUMENTS SUPPORTING THE NET PROFIT OF THE ASSESSEE HAVE BEEN PRODUCED SO FAR, THEREFORE, THERE IS NO OPTION THAN TO ESTIMATE THE NET PROFIT OF THE ASSESSEE. THE ESTIMATION IS ON THE BASIS OF THE NET PROFIT I N LIQUOR BUSINESS WHICH IS 4%. AFTER COMPUTING THE NET PROFIT @ 4%, THE DIFFERENCE BETWEEN THE NET PROFIT @4% AND THE AMOUNT SHOWN IN P&L ACCOUNT IS ADDED BACK TO THE TOTAL INCOME OF ASSESSEE FOR RESPECTIVE ASSESSMENT YEAR. THE SAME IS TABULATED AS UNDER: A.Y. TOTAL TURNOVER NET PROFIT (4% OF TOTAL TURNOVER) NET PROFIT AS PER ROI DIFFERENCE 2010 - 11 11,76,,50,385/ - 47,06,015/ - 3,80,792/ - 43,25,223/ - 2015 - 16 3,19,51,800/ - 12,78,072/ - 3,28,004/ - 9,50,068/ - 2016 - 17 3,72,23,847/ - 14,88,953/ - 5,21,356/ - 9,67,597/ - I AM SATISFIED THAT ASSESSEE HAS CONCEALED HER TOTAL PROFIT BY CONCEALING THE ORIGINAL BOOKS. THE PENALTY PROCEEDINGS MUST BE INITIATED FOR CONCEALING INCOME DURING AY 2010 - 11, 2015 - 16 & 2016 - 17. HENCE, PENALTY PROCEEDINGS U/S 2 71(1)(C) IS HEREBY INITIATED FOR AY 2010 - 11, 2015 - 16 & U/S 271AAB FOR 2016 - 17. THE ROI FOR AY 2010 - 11, 2015 - 16 & 2016 - 17 WAS FILED BY THE ASSESSEE ON 14.03.2011, 02.1.22015 AND 21.10.2016 U/S . 139 OF THE ACT . I N THIS ROI THE ASSESSEE HAS NOT DISCLOSED AMOUNT OF RS. 43,25,223/ - , RS. 9,50,068/ - AND RS. 9,67,597/ - . HENCE, I AM SATISFIED THAT ASSESSEE HAS CONCEALED HIS INCOME AS MENTIONED IN INCRIMINATING DOCUMENT AS DISCUSSED ABOVE. THE PENALTY PROCEEDINGS MUST BE INITIATED FOR THE AMOUNT RS. 43,25,223/ - , RS. 9,50,068/ - AND RS. 9,67,597/ - CONCEALED DURING A.Y. 2010 - 11, 2015 - 16 & 2016 - 17. HENCE, PENALTY PROCEEINGS U/S 271(1)(C) IS HEREBY INITIATED FOR AY 2010 - 11, 2015 - 16 & U/S 271AAB FOR 2016 - 17 . (EMPHASIS, OURS) SUNITA SHIVHARE V. DY. CIT IT(SS)A NO. 02/JAB/2019 (AY 2010 - 11 ) 5 | P A G E 4 . 3 THE LD. CIT - DR, MS. NEERJA PRADHAN, O N BEING QUESTIONED IN THE MATTER BY THE B ENCH, F AIRLY CONCEDED THAT THE INCRIMINATING MATERIAL FOUND DURING SEARCH WAS IN RESPECT OF UNDISCLOSED INVESTMENT S AN D CASH, FOR WHICH SEPARATE ADDITIONS AND FOR OTHER YEARS, HAS BEEN MADE BY THE AO PER THE IMPUGNED ASSESSMENT ORDER , WHICH IS A COMBINED ONE FOR SEVEN YEARS. THIS IS INDEED THE CASE. IN FACT, THE SHOW CAUSE TO THE ASSESSEE BY THE AO, REFERRED TO AT PARA 1 4. 0 OF HIS ORDER, I S ONLY AS TO THE ESTIMATION OF THE NET PROFIT RATE, PROPOSED BY HIM AT 8% OF THE TURNOVER , AND NOT QUA TURNOVER, EVEN AS STATED AT PARA 4.1 OF THE IMPUGNED ORDER . THE LD. CIT(A) IS THUS CLEARLY IN THE WRONG WH EN HE SAYS, AT PARA 4 .1 OF HIS ORDER, THAT THE AO HAD ESTIMATED THE TURNOVER BASED ON SEIZED DOCUMENTS/MATERIAL. IN FACT, AS A M ATTER OF ABUNDANT CAUTION, THE B ENCH ASKED SH . GHAI TO PRODUCE THE AUDITED BALANCE - SHEET S FOR THE ACCOUNT YEARS RELEVANT TO AYS. 2015 - 16 & 2016 - 17, FOR WHI CH YEARS, AGAIN, THE NET PROFIT OF THE ASSESSEE S LIQUOR BUSINESS HAS BEEN UNIFORMLY ESTIMATED BY THE AO , AND WHICH WAS DONE BY HIM BY FILING A SUPPLEMENTARY PAPER - BOOK ON 04.02.2021, WHEREA T THE CASE WAS FIXED FOR HEARING, MAKING REFERENCE TO PAGES 25 AND 11 THEREOF FOR AYS. 201 5 - 1 6 & 201 6 - 1 7 RESPECTIVELY. THE ADOPTED FIGURES FOR THESE YEARS BY THE AO (AT PARA 14.2 OF THE ASSESSMENT ORDER) IS IN COMPLETE AGREEMENT WITH THAT AS PER THE ASSESSEES AUDITED ACCOUNTS, CLARIFYING THE BASIS O N WHICH THE AO HA S TAKEN THE TURNOVER FIGURES FOR ALL THE THREE YEARS, I.E., THE AUDITED ACCOUNTS FURNISHED BY THE ASSESSEE. THERE IS ACCORDINGLY NO MANNER OF ANY DOUBT THAT THE TURNOVER FOR AY 2010 - 11, AS STATED AT PARA 14.2 OF THE ASSESSMENT ORDER, HAS BEEN MISTAKENLY SO , AND RIGHTLY RECTIFIED BY THE AO ON BEING MOVED U/S. 154. IN FACT , W HERE N OT SO , THE SHARP AND QUANTUM REDUCTION IN THE TURNOVER FOR THE SUBSEQUENT TWO YEARS , I.E. , VIS - A - V IS AY 2010 - 11 , OUGHT TO HAVE ITSELF ENGAGED THE MIND OF THE R EVENUE AUTHORITIES, WHICH IS NOT THE CASE. CLEARLY, THE AO MADE NO ATTEMPT TO ESTIMATE THE TURNOVER FOR THE RELEVANT YEARS AND , AS IT APPEARS , BEING A LSO CONFIRMED BY THE LD. CIT - DR, THERE WA S NO MATERIAL WITH HIM FOR THE SAME. SUNITA SHIVHARE V. DY. CIT IT(SS)A NO. 02/JAB/2019 (AY 2010 - 11 ) 6 | P A G E 4.4 WE, THEREFORE, I.E., IN VIEW OF THE FOREGOING, HAVE NO HESITATION IN ALLOWING THE ASSESSEES GD. 3 BEFORE US FOR ADOPTION OF THE TURNOVER AT RS. 1,05,87,289 IN ESTIMATING THE ASSESSEES LIQUOR BUSINESS INCOME. WE ARE, WHEN WE DO SO, CONSCIOUS THAT THE TURNOVER AS PER THE ASSESSE ES AUDITED ACCOUNTS IS AT RS. 105.72 LACS . SO , HOWEVER, THE ADMITTED TURNOVER FOR THIS YEAR IS AT A MARGINALLY HIGHER FIGURE , WHICH WE FIND ALSO STATED IN THE SAME SUM AT GD. 2 BEFORE THE LD. CIT(A), SO THAT THE SAME IS HEREBY DIRECTED TO BE ADOPTED. WE D ECIDE ACCORDINGLY. 5 . NO OTHER PLEA OR ARGUMENT WAS RAISED OR MADE BY SH . GHAI DURING HEARING. THE OTHER GROUNDS OF APPEAL ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 6 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 15 , 2021 SD/ - SD/ D/ - SD/ - (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15 / 02 /202 1 / / T R U E C O P Y / /