K.Meenakshisundaram, Pudukkottai V. ACIT, Trichy

ITSSA 27/CHNY/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8768 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-03-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-03-2013
• Assessment Year: misc
• Appeal Filed On: 22-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: K MEENAKSHISUNDHARAM ITP
• Keywords: Period of limitation; Difference of opinion; Block assessment; Time period of passing order
• Section: 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN,VICE-PRESID ENT AND SHRI VIKAS AWASTHY, JUDICIAL MEM BER IT(SS)A NO.27/MDS/2010 (BLOCK PERIOD : 1989-90 TO 2001-02) MR. K.MEENAKSHISUNDARAM, T.S.NO.4022, SOUTH 3 RD STREET, PUDUKOTTAI. PAN: AAKPM6257B VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE III, TIRUCHIRAPALLI. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. K.MEENAKSHISUNDHARA M, ITP RESPONDENT BY : MR. N.MADHAVAN, JCIT DATE OF HEARING : 12 TH MARCH, 2013 DATE OF PRONOUNCEMENT : 20 TH MARCH, 2013 O R D E R PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNING THE ORDER OF THE CIT(A) DATED 27.08.2010 WHEREBY TH E CIT(A) HAS CONFIRMED THE PENALTY ORDER OF THE ASSESSING OF FICER PASSED UNDER SECTION 158BFA(2) OF THE INCOME TAX AC T, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH OPER ATION WAS CARRIED OUT UNDER SECTION 132 OF THE ACT IN THE PREMISES OF THE ASSESSEE ON 29.12.1999. THE ASSESSEE IS CARR YING ON JEWELLERY BUSINESS. APART FROM THE JEWELLERY BUSINE SS, THE IT(SS)A NO.27/MDS/2010 2 ASSESSEE IS INVOLVED IN REAL ESTATE BUSINESS AND IS A PARTNER IN VARIOUS FIRMS. THE DETAILS OF BUSINESS CONCERNS ARE GIVEN HEREIN BELOW:- 1. ANJUGA JEWELLERY PORPANAYAN STREET PROPRIETORSHIP CONCERN 2. ANJUGA CHIT FUNDS P.LTD. EAST RAJA STREET MANAGING DIRECTOR 3. ANJUGA FINANCE & INVESTMENT (FIRM) PARTNER 4. EXCELLENT BOTTLERS (DING DONG SODA FACTORY) PARTNER 5. ANJUGA REAL ESTATE, PUDUKOTTAI PARTNER 6. JIL JIL WINES PROPRIETOR 7. VIRALIMALAI-AYYAPPA NAGAR PROJECT PARTNER THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 28.12.2001 DETERMINED THE UNDISCLOSED INCOME TO T HE TUNE OF ` 1,64,78,163/-. THE ASSESSEE PREFERRED AN APPEAL IMPUGNING THE ASSESSMENT ORDER BEFORE THE CIT(A). T HE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. STILL AGGRIEVED, THE ASSESSEE PREFERRED SECOND APPEAL BEF ORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 5.1.2009 IN IT(SS)A NO.118/MDS/2007 DISMISSED THE APPEAL OF THE ASSESS EE. THE REVENUE HAD ALSO FILED AN APPEAL IMPUGNING THE ORDE R OF THE CIT(A). THE TRIBUNAL VIDE SAME ORDER PARTLY ALLOWED THE APPEAL OF THE REVENUE I.E IT(SS)A NO.124/MDS/2007 A ND IT(SS)A NO.27/MDS/2010 3 RESTORED THE ADDITION OF ` 8,98,942/-. THEREFORE, THE NET ADDITION SUSTAINED BY THE TRIBUNAL WAS TO THE TUNE OF ` 70,12,271/-. 3. THE ASSISTANT COMMISSIONER OF INCOME TAX, TRICHY INITIATED PENALTY PROCEEDINGS UNDER SECTION 158BFA( 2) IN RESPECT OF THE ADDITIONS SUSTAINED BY THE TRIBUNAL AND LEVIED PENALTY OF ` 46,28,099/- BEING 100% OF THE TAX ON UNDISCLOSED INCOME. AGGRIEVED AGAINST THE PENALTY ORDER UNDER S ECTION 158BFA(2) DATED 28.8.2009, THE ASSESSEE PREFERRED A N APPEAL BEFORE THE CIT(A), TRICHY. THE CIT(A) CONFI RMED THE ORDER OF THE ACIT AND DISMISSED THE APPEAL OF THE A SSESSEE. THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL IMPUGNING THE ORDER OF THE CIT(A) CONFIRMI NG THE PENALTY LEVIED BY THE ASSISTANT COMMISSIONER OF INC OME TAX. 4. SHRI K.MEENAKSHISUNDHARAM APPEARING ON BEHALF OF THE ASSESSEE OBJECTED TO THE LEVY OF PENALTY ON THE FO LLOWING ADDITIONS:- I) PENALTY WITH RESPECT TO ADDITION OF ` 54,58,186/- II) PENALTY WITH RESPECT TO LOSS OF ` 6,55,143/- IT(SS)A NO.27/MDS/2010 4 III) PENALTY IN RESPECT OF UNEXPLAINED FAMILY EXPENDITURE OF ` 8,98,942/- THE AR CONTENDED THAT SUNDRY DEBTORS AMOUNTING TO ` 54,58,186/- HAS BECOME IRRECOVERABLE ON ACCOUNT OF EXPIRY OF LIMITATION PERIOD OF THREE YEARS. THE REVENUE HAS F AILED TO INVOKE THE PROVISIONS OF SECTION 226(3) WITHIN THE LIMITATION PERIOD DESPITE SPECIFIC SUBMISSIONS OF THE ASSESSEE TO INVOKE THE PROVISIONS OF SAID SECTION. THE LOANS HAD BECOM E BAD ON ACCOUNT OF FAILURE OF THE DEPARTMENT TO ACT VIGILAN TLY AND THEREFORE NO PENALTY IS LEVIABLE ON THE SAID AMOUNT . THE AR SUBMITTED THAT WITHOUT PREJUDICE TO THE EARLIER SUB MISSIONS MADE BY HIM OUT OF THE TOTAL SUM OF ` 54,58,186/-, THE ASSESSEE HAS ALREADY ADMITTED A SUM OF ` 5,00,000/- OUT OF SUNDRY DEBTORS IN THE BLOCK RETURN UNDER SECTION 15 8BC. THE ASSESSING OFFICER HAD ERRED IN LEVYING PENALTY IN R ESPECT OF THE SUM OF ` 5,00,000/-. THE AR FURTHER CONTENDED THAT A SUM OF ` 6,55,143/- IS THE AMOUNT OF LOSS SUFFERED BY THE ASSESSEE. THE AD DITION HAD ARISEN BECAUSE OF THE DIFFERENCE OF OPINION BET WEEN THE ASSESSEE AND THE DEPARTMENT. IN CASE OF LOSS RELAT ING IN ALL IT(SS)A NO.27/MDS/2010 5 THE BLOCK YEARS AGAINST INCOME OF THE OTHER BLOCK Y EARS, THE SAME SHOULD BE SET OFF. IN ORDER TO SUPPORT HIS CON TENTIONS, THE AR HAS RELIED ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF E.K.LINGAMURTHY & ANOTHER VS. SETTLEMENT COMMISSIONER REPORTED AS 314 ITR 305(SC) AND THE DECISION OF THE CO-ORDINATE BENCH OF THE TR IBUNAL IN THE CASE OF MR. P.SUNDARARAJAN VS. DCIT IN IT(SS)A NO.12/MDS/2000 DECIDED ON 17.5.2001. THE AR FURTHER ASSAILED THE PENALTY ORDER ON THE GROUND THAT THE CIT(A) HAS ERRED IN CONFIRMING THE PENALTY RELATING TO UNEXPLAINED FAMILY EXPENDITURE TO THE T UNE OF ` 8,98,942/- . THE AR SUBMITTED THAT THE CIT(A) HAS C ONFIRMED THE SAID ADDITION IN A MECHANICAL MANNER WITHOUT AP PRECIATING THE FACTS THAT THERE WERE NO EVIDENCE TO PROVE THE SUPPRESSION OF FAMILY EXPENDITURE. NO PENALTY SHOUL D HAVE BEEN LEVIED ON THE SAID ADDITION. THE TRIBUNAL HAD CONFIRMED THE ADDITION FOR THE REASON THAT THE ASSESSEE DID N OT REBUT THE SAME. THE AR FURTHER SUBMITTED THAT IT IS A WELL S ETTLED LAW THAT NO BLOCK ASSESSMENT CAN BE COMPLETED WITHOUT A NY EVIDENCE IN THE FORM OF SEIZED RECORDS AND THE PENA LTY LEVIED IT(SS)A NO.27/MDS/2010 6 IN RESPECT OF ` 8,98,942/- DESERVES TO BE CANCELLED AS THERE IS NO SEIZED MATERIAL IN RESPECT OF THIS ADDITION. 5. ON THE OTHER HAND, SHRI N.MADHAVAN APPEARING ON BEHALF OF THE REVENUE SUBMITTED THAT THE PENALTY OR DER IS WELL REASONED AND DETAILED ORDER. THE CIT(A) HAS CONFIR MED THE SAME AS THERE WAS NO MERIT IN THE GROUNDS TAKEN BY THE ASSESSEE. THE DR STRONGLY SUPPORTING THE ORDERS OF THE AUTHORITIES BELOW PRAYED FOR DISMISSAL OF THE APPEA L OF THE ASSESSEE. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES AND HAVE PERUSED THE ORDERS OF THE AUTHORIT IES BELOW AS WELL AS JUDGEMENTS/ORDERS CITED BY THE A.R. THE AR HAS CONTENDED THAT THE ASSESSEE HAS DISCLOSED INCOME OF ` 5.00 LAKHS IN ITS RETURN OF INCOME FILED UNDER SECTION 158BC OF THE ACT. AS REGARDS THE REMAINING AMOUNT OF SUNDRY CRED ITORS AND THE PLEA OF LIMITATION TAKEN BY THE AR, WE FIND THE RE IS NO FORCE IN THE SUBMISSIONS MADE BY THE AR. IT(SS)A NO.27/MDS/2010 7 7. THE SECOND GROUND ON WHICH THE ASSESSEE HAS ASSA ILED THE ORDER OF THE CIT(A) ON ACCOUNT OF LOSS TO THE T UNE OF ` 6,55,143/-, THE AR HAS RELIED ON THE ORDER OF THE C O-ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEE OF MR. P.SUND ARARAJAN VS.DCIT IN IT(SS)A NO.12/MDS/2000, WHEREIN THE TRIB UNAL HAS HELD AS UNDER:- WE MAY FURTHER OBSERVE THAT THE CLAIM OF LOSS FOR THE ASSESSMENT YEAR IN RESPECT OF WHICH THE RETURN HAS ALREADY BEEN FILED BY NOT ALLOWING THE SAME IN THE PRESENT ASSESSMENT PROCEEDINGS, IT COULD NOT AUTOMATICALLY BECOME THE UNDISCLOSED INCOME OF THE ASSESSEE. TO THIS EXTENT THE ASSESSMENT WOULD NEED MODIFICATION AND THE LOSS SO ADDED SHOULD BE EXCLUDED. 8. WE FIND THAT IN THE PRESENT CASE ALSO THE ASSESS EE HAS ALLEGED TO HAVE SUFFERED LOSS TO THE TUNE OF ` 6,55,143/- AND THE SAID AMOUNT HAS BEEN TAKEN INTO CONSIDERATION F OR LEVY OF PENALTY. IN VIEW OF THE ORDER OF THE CO-ORDINATE BE NCH OF THE TRIBUNAL CITED ABOVE, THE PENALTY ON THE SAID AMOUN T HAS TO BE WAIVED. IT(SS)A NO.27/MDS/2010 8 9. THE THIRD ADDITION ON WHICH THE ASSESSEE HAS ASS AILED THE LEVY OF PENALTY IS WITH RESPECT TO UNEXPLAINED FAMILY EXPENDITURE TO THE TUNE OF ` 8,98,942/-. WE FIND THAT THE TRIBUNAL VIDE ITS ORDER DATED 5 TH JANUARY, 2009 HAS UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUN D THAT THE ADDITIONS HAVE BEEN MADE BY THE ASSESSING OFFICER O N THE BASIS OF CERTAIN STATEMENT WHICH HAS NOT BEEN REBUT TED BY THE ASSESSEE. HOWEVER, NOTHING HAS COME ON RECORD TO SH OW THE ACTUAL FAMILY EXPENDITURE. IN VIEW OF ABOVE, IT WOU LD NOT BE APPROPRIATE TO LEVY PENALTY ON THE AMOUNT TOWARDS UNEXPLAINED FAMILY EXPENDITURE. WE THEREFORE DEEM I T APPROPRIATE TO DELETE THE PENALTY ON THE FOLLOWING AMOUNTS:- I) AN AMOUNT OF ` 5.00 LAKHS DISCLOSED BY THE ASSESSEE AS SUNDRY DEBTORS IN THE RETURN FILED UNDER THE PROVISIONS OF SECTION 158BC OF THE ACT; II) THE AMOUNT OF LOSS ` 6,55,143/- CLAIMED BY THE ASSESSEE; & III) AN AMOUNT OF ` 8,98,942/- IN RESPECT OF UNEXPLAINED FAMILY EXPENDITURE. IT(SS)A NO.27/MDS/2010 9 THE PENALTY ON THE ADDITION OF REMAINING AMOUNT O F SUNDRY DEBTORS ` 49,58,186/- ( ` 54,58,186 5,00,000) IS CONFIRMED. 10. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSE E IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY, THE 20 TH DAY OF MARCH, 2013 AT CHENNAI. SD/- SD/- ( DR. O.K.NARAYANAN ) (VIKAS AWASTHY) VICE-PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 20 TH MARCH, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.