D.C.I.T. CIR-2, KALYAN V. PRAKASH B NAGRANI, ULHASNAGAR

ITSSA 24/MUM/2011

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8274 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-06-2012
• Assessment Year: misc
• Appeal Filed On: 07-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURALI
• Keywords: Search and seizure; Opportunity of being heard; Bad and doubtful debts; Difference of opinion; Block assessment
• Section: 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI RAJENDRA (A.M.) IT(SS)A NO. 24/MUM/2011 BLOCK PERIOD 1-4-95 TO 27-9-2001 INCOME TAX OFFICER- WARD -2(2), KALYAN INCOME TAX OFFICE, RANI MANSION, MURBAD ROAD, KALYAN. VS. SHRI PRAKASH B. NAGRANI, FLAT NO. 202, SAI KUNJ, NEAR AMAN TALKIES, ULHASNAGAR 2. PAN : ABMPN9891R (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M. MURALI ASSESSEE BY : NONE DATE OF HEARING 11.06.2012 DATE OF PRONOUNCEMENT 15-06-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DATED 14-12-2010 PASSED BY THE LD. CIT (A) - 1, THA NE FOR THE BLOCK PERIOD 01-04-95 TO 27-09-2001 CANCELLING THE PENALT Y OF RS. 3,02,261/- IMPOSED BY THE A.O. U/S 158 BFA(2) OF THE INCOME TA X ACT, 1961 (THE ACT). 2. AT THE TIME OF HEARING, NONE ATTENDED ON BEHALF OF THE ASSESSEE NOR FILED ANY APPLICATION FOR THE ADJOURNMENT OF THE CA SE, THEREFORE, IT WAS DECIDED TO DISPOSE OF THE APPEAL EX PARTE, QUA THE ASSESSEE, ON MERITS, AFTER HEARING THE LD. D.R. IT(SS)A NO. 24/MUM/2011 2 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT IN THI S CASE A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT O N 27-9-2001. THE ASSESSEE FILED RETURN OF INCOME FOR THE BLOCK PERIO D DECLARING UNDISCLOSED INCOME OF RS. 55 LACS. HOWEVER, THE ASSESSMENT WAS COMPLETED ON 30-10- 2003 DETERMINING THE TOTAL UNDISCLOSED INCOME AT RS . 82,43,348/- WHEREBY ADDITIONS OF RS. 30,96,639/- ON ACCOUNT OF NEGATIVE CASH BALANCE RS. 4,00,000/-, ON ACCOUNT OF BAD DEBTS AND RS. 75,500/- AND ON ACCOUNT OF LOSS ON SALE OF MACHINERY WERE MADE. ON SECOND APPEAL, THE TRIBUNAL IN IT(SS)A NO. 75/MUM/2006 DTD. 31-12- 2007, SET ASIDE THE ISSUE OF NEGATIVE CASH BALANCE AND RESTORED THE SAME BACK TO THE FILE OF THE A.O. TO DECIDE AFRESH AFTER AFFORDING REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THE SET ASIDE ASSESSMENT WAS COMPLETED ON 31-12-2008 DETERMINING THE TOTAL UNDIS CLOSED INCOME OF THE ASSESSEE AT RS. 60,03,679/-. WHILE MAKING THE A SSESSMENT, THE A.O. HAS ALSO INITIATED PENALTY PROCEEDING U/S 158BFA(2) OF THE ACT. IN RESPONSE TO SHOW CAUSE NOTICE AS TO WHY PENALTY U/S 158 BFA(2) SHOULD NOT BE IMPOSED, THE ASSESSEE WHILE EXPLAINING THE V ARIATION IN THE CLAIM OF OPENING CASH IN HAND AND ADDITION ON ACCOUNT OF LOSS ON MACHINERY SUBMITTED THAT THE DIFFERENCE IN RETURNED INCOME AN D ASSESSED INCOME IS ONLY RS. 5,03,270/- WHICH IS NOT EVEN10% OF THE RET URNED INCOME WHICH IS DUE TO DIFFERENCE OF OPINION, THEREFORE, THE PEN ALTY IS NOT LEVIABLE. IN SUPPORT, THE RELIANCE WAS ALSO PLACED ON VARIOUS DE CISIONS. HOWEVER, THE A.O. DID NOT ACCEPT THE ASSESSEES EXPLANATION. HE WAS OF THE VIEW THAT IT(SS)A NO. 24/MUM/2011 3 UNDISCLOSED INCOME DETERMINED BY THE A.O. IS IN EXC ESS OF THE INCOME SHOWN IN THE RETURN FILED BY THE ASSESSEE, THEREFOR E, THE ASSESSEE IS LIABLE TO PENALTY AND ACCORDINGLY HE IMPOSED PENALTY OF RS . 3,02,261/- VIDE ORDER DTD. 26-6-2009 PASSED U/S 158 BFA (2) OF THE ACT. 4. ON THE SAME DATE I.E. 26-6-2009, THE ASSESSEE HA S FILED AN APPLICATION U/S 154 WHEREIN IT WAS POINTED OUT THAT THERE WAS A MISTAKE IN THE COMPUTATION IN THE TOTAL INCOME. AS PER THE ASSESSEE, THE A.O. WRONGLY STARTED THE COMPUTATION PART WITH RETURNED UNDISCLOSED INCOME AS AGAINST NET PROFIT AS PER PROFIT/LOSS ACCOUNT AS PER ORIGINAL BLOCK ASSESSMENT ORDER. HOWEVER, THE A.O. WAS OF THE VIE WS THAT SINCE THE ASSESSEE HIMSELF ADMITTED THE UNDISCLOSED INCOME OF RS. 55 LACS, THERE IS NO MISTAKE APPARENT FROM THE RECORD AND, HENCE, SHE REJECTED THE APPLICATION FILED BY THE ASSESSEE VIDE ORDER DTD. 2 7-7-2009 PASSED U/S 154 OF THE ACT. ON APPEAL AGAINST THE ORDER PASSED U/S 154, THE LD. CIT(A) AFTER EXAMINING THE RECORD HELD VIDE PARA 19 OF HIS ORDER DTD. 6-8- 2010 THAT THERE IS CLEARLY A MISTAKE APPARENT FROM RECORD WHICH RESULTED IN THE OVER ASSESSMENT AND DIRECTED THE A.O. TO TAK E THE RETURNED INCOME OF THE APPELLANT AS PER ORIGINAL ASSESSMENT ORDER A T RS. 46,71,209/- AND RECOMPUTE THE UNDISCLOSED INCOME ACCORDINGLY. HE FU RTHER DIRECTED THAT IF THE TOTAL UNDISCLOSED INCOME COMES BELOW THE RET URNED UNDISCLOSED INCOME OF RS. 55 LACS, THEN THE ASSESSED UNDISCLOSE D INCOME OF THE BLOCK PERIOD WOULD BE RESTRICTED TO THE RETURNED UNDISCLO SED INCOME OF RS. 55 IT(SS)A NO. 24/MUM/2011 4 LACS AS SHOWN BY THE ASSESSEE IN THE ORIGINAL RETUR N OF UNDISCLOSED RETURN FILED ON 9-1-2003 AND ACCORDINGLY ALLOWED TH E APPEAL. 5. ON AN APPEAL FILED AGAINST THE IMPOSITION OF PEN ALTY U/S 158 BFA(2) OF THE ACT, THE LD. CIT(A) HELD THAT SINCE A S PER THE APPELLATE ORDER DTD. 6-8-2010 THE UNDISCLOSED INCOME OF THE ASSESSE E WAS DETERMINED AT RS. 55 LACS AS RETURNED BY THE ASSESSEE AND KEEPING IN VIEW THAT THE IMPOSITION OF PENALTY IS DISCRETIONARY VIDE CIT VS. SATYENDRA KUMAR DOSHI (2009) 315 ITR 172 (RAJ.) HELD THAT THE PENAL TY IS NOT LEVIABLE AND ACCORDINGLY CANCELLED THE PENALTY IMPOSED BY THE A. O. 6. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN BOTH THE GROUNDS TH E DELETION OF PENALTY IMPOSED BY THE A.O. 7. AT THE TIME OF HEARING THE LD. D.R. SUPPORTS THE ORDER OF THE A.O. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. D.R. AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT AFTER GIVING EFFECT TO THE ORDER DTD. 6-8-2010 OF THE LD. CIT(A) PASSED AGAINS T THE APPEAL FILED BY THE ASSESSEE U/S 154 OF THE ACT, THE FINAL UNDISCLO SED INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS. 55 LACS AS DIS CLOSED BY THE ASSESSEE IN THE RETURN. EVEN OTHERWISE, THE DIFFER ENCE BETWEEN THE INCOME RETURNED AND ASSESSED BY THE A.O. IS DUE TO DIFFERENCE OF OPINION, AND, HENCE NOT A CASE OF CONCEALMENT. IN THIS VIEW OF THE MATTER AND IN IT(SS)A NO. 24/MUM/2011 5 ABSENCE OF ANY CONTRARY MATERIAL PLACED ON RECORD B Y THE REVENUE, WE ARE OF THE VIEW THAT THERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE AND ACCORDINGLY THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE SAME. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, RE JECTED. 9. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 15-6-2012. SD/- (RAJENDRA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 15 TH JUNE, 2012. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. COMMISSIONER OF INCOME TAX (A) 1, THANE 5. DEPARTMENTAL REPRESENTATIVE, BENCH C, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI IT(SS)A NO. 24/MUM/2011 6 1 DRAFT DICTATED ON 11.06.12 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 12.06.12 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS IT(SS)A NO. 24/MUM/2011 7