ASST CIT CIR 21(1), MUMBAI V. EKTA EXPORTS, MUMBAI

ITSSA 27/MUM/2011

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8505 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-08-2012
• Assessment Year: misc
• Appeal Filed On: 13-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYA KUMAR
• Assessee Lawyers: AJAY R SINGH
• Keywords: Loose papers; Peak credit; Question of law; Block assessment
• Section: 132

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI .. , ! ' , # !, $ BEFORE SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM (&'( ) '*+, ) ./ IT(SS)A NO.27/MUM/2011 (BLOCK PERIOD: 01.04.1990 TO 14.11.2000) THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 21(1) MUMBAI. M/S.EKTA EXPORTS ARUNODAYA, BAPUBHAI VASHI ROAD VILE PARLE (WEST), MUMBAI 400 051. PAN : AAAFE7385A. ( /0 / // / APPELLANT) 1 1 1 1 / VS. ( 23/0/ RESPONDENT) /0 4 44 4 5 5 5 5 / APPELLANT BY : SHRI JAYAKUMAR (CIT-DR) 23/0 4 5 4 5 4 5 4 5 / RESPONDENT BY : SHRI AJAY R.SINGH 1 4 & / / / / DATE OF HEARING : 22.08.2012 678 4 & / DATE OF PRONOUNCEMENT : 24.08.2012 !( !( !( !( / / / / O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 28.01.2 011 DELETING PENALTY OF `8 ,82,884 IMPOSED BY THE ASSESSING OFFICER U/S 158BFA(2) OF THE ACT, IN RELATION TO THE BLOCK PERI OD 01.04.1990 TO 14.11.2000. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT A SEARCH ACTION WAS TAKEN U/S 132 IN CHOWDHARY GROUP OF CASES ON 14.11. 2000. THE ASSESSEE FIRM IS ONE OF THE GROUP CONCERNS WHICH WE RE SEARCHED. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS AND COMPUTER CD AND LOOSE PAPERS WERE FOUND AND SEIZED. THE A.O. ISSUED NOTICE U/S 158BC, IN RESPONSE TO WHICH THE ASSESSEE FILED RETU RN DECLARING IT(SS)A NO.27/MUM/2011 M/S.EKTA EXPORTS. 2 UNDISCLOSED INCOME OF ` 10 LAKH WITH THE NOTE THAT THE DECLARATION WAS BEING MADE TO COVER ANY DISCREPANCY IN THE BOOKS OF ACCOUNT. THE BLOCK ASSESSMENT ORDER WAS PASSED DETERMINING THE T OTAL UNDISCLOSED INCOME AT ` 38.32 LAKH. CERTAIN ADDITIONS WERE DELETED. THE ONL Y ADDITION WHICH SURVIVED IS THAT OF ` 13,13,816 AS UNEXPLAINED CASH RECEIPTS AS PER PAGE NO. 2 OF ANNEXURE-A4. THE ASSE SSEE WAS CARRYING ON ITS BUSINESS IN THE SAME PREMISES ALONG WITH ITS SISTER CONCERN NAMELY AWIN EXIM CO. AND MOST OF THE PARTNERS ARE C OMMON IN BOTH THE FIRMS. PAGE 2 OF ANNEXURE-A4, A COPY OF WHICH IS AVAILABLE IN THE PAPER BOOK AS HAS ALSO BEEN REPRODUCED IN THE P ENALTY ORDER, CONTAINS NOTING ON THE LEFT SIDE AS WELL AS RIGHT S IDE WITH AMOUNTS AND SOME NAMES AND INITIALS. LEFT SIDE STARTS WITH 37 6816C/FD. THE PEAK BALANCE OF THIS RECEIPT AND PAYMENT ACCOUNT CA ME TO ` 3,76,816. THE A.O. MADE ADDITION OF ` 13,13,816 REPRESENTING TOTAL OF RECEIPTS SIDE WHICH CAME TO BE UPHELD BY THE TRIBUNAL. THE A SSESSEES CONTENTION THAT THIS PAGE BELONGED TO ITS SISTER CO NCERN, NAMELY, AWIN EXIM CO. WAS NOT ACCEPTED DESPITE THE FACT THA T THE SAID SISTER CONCERN DISCLOSED A SUM OF ` 15 LAKH AS UNDISCLOSED INCOME. PURSUANT TO THE ADDITION SO MADE AND CONFIRMED BY THE TRIBUN AL, THE ASSESSEE WENT IN APPEAL BEFORE THE HONBLE BOMBAY HIGH COURT WHICH WAS ADMITTED BUT HAS NOT BEEN DISPOSED OF TILL DATE. TH E ASSESSING OFFICER IMPOSED PENALTY OF ` 8.82 LAKH TOWARDS THIS ADDITION OF ` 13.13 LAKH, WHICH CAME TO BE DELETED IN THE FIRST APPEAL. 3. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT THE ASSESSEE FILED ITS RETURN FOR IT(SS)A NO.27/MUM/2011 M/S.EKTA EXPORTS. 3 THE BLOCK PERIOD DISCLOSING UNDISCLOSED INCOME OF ` 10 LAKH, WHICH AMOUNT ADMITTEDLY HAS NO CO-RELATION WITH ANY SPECI FIC INCRIMINATING MATERIAL OR DOCUMENTS FOUND IN THE COURSE OF SEARCH . AWIN EXIM CO., THE SISTER CONCERN OF THE ASSESSEE, ALSO FILED ITS RETURN FOR THE BLOCK PERIOD DECLARING A SUM OF ` 15 LAKH AS UNDISCLOSED INCOME, AGAIN WITHOUT THERE BEING ANY CORRELATION WITH ANY INCRIM INATING MATERIAL FOUND DURING THE COURSE OF SEARCH. AWIN EXIM CO. CA TEGORICALLY MADE OUT A CASE THAT THE SAID PAGE, ON THE BASIS OF WHICH ADDITION HAS BEEN CONFIRMED BY THE TRIBUNAL IN THE HANDS OF THE ASSESSEE, BELONGED TO IT AND THE UNDISCLOSED INCOME OF ` 15 LAKH WAS RELATABLE TO SUCH PAGE ONLY. IT IS A MATTER OF FACT THAT THE INCOME S O OFFERED BY AWIN EXIM CO. AT ` 15 LAKH WAS ASSESSED AS SUCH BY THE A.O. AND THE TRIBUNAL ALSO UPHELD THE TREATMENT OF THIS AMOUNT A S UNDISCLOSED INCOME DESPITE THE ASSESSEES REQUEST THAT IF THE ADDITION OF ` 13.13 LAKH IS SOUGHT TO BE MADE IN THE HANDS OF EKTA EXPO RTS AND ALSO AWIN EXIM CO. AMOUNTING TO ` 15 LAKH, IT WOULD AMOUNT TO DOUBLE ADDITION FOR THE SAME AMOUNT. NOW THE POSITION WHICH EMERGE S BEFORE US IS THAT THE SUM OF ` 13.13 LAKH HAS BEEN INCLUDED IN THE TOTAL UNDISCLOS ED INCOME OF THE ASSESSEE ON THE BASIS OF STATEMENT OF SHRI SATISH, A COPY OF WHICH IS AVAILABLE ON PAGE 8 ONWARDS OF THE PAPER BOOK. IT IS INTERESTING TO NOTE THAT SHRI SATISH GAVE A STATEME NT IN THE CAPACITY OF PARTNER IN BOTH THE ASSESSEE FIRM AND ALSO AWIN EXI M CO. WHEN PAGE NO.2 OF ANNEXURE-A4 WAS SHOWN TO SHRI SATISH, HE AG REED THAT THE AMOUNT WAS NOT RECORDED IN THE REGULAR BOOKS OF ACC OUNT. THE IMPORTANT POINT WHICH REQUIRES OUR CONSIDERATION AT THIS STAGE IS THAT IT(SS)A NO.27/MUM/2011 M/S.EKTA EXPORTS. 4 HE DID NOT REFER TO BOOKS OF ACCOUNT OF EITHER THE ASSESSEE FIRM OR AWIN EXIM CO. IT WAS A COMBINED STATEMENT BY SHRI S ATISH ON BEHALF OF BOTH THE FIRMS. THE CASE OF THE ASSESSEE IS THAT THIS PAGE NO.2 OF ANNEXURE-A4 PERTAINED TO AWIN EXIM CO. WHICH OFFERE D A SUM OF ` 15 LAKH AS UNDISCLOSED INCOME BY CATEGORICALLY CO-R ELATING IT WITH THIS PAGE. 4. IT IS A SETTLED LAW THAT THE MERE FACT THAT AN A DDITION HAS BEEN CONFIRMED IN THE TRIBUNAL PER SE CANNOT BE A GROUND FOR IMPOSING OR SUSTAINING PENALTY U/S 158BFA. SINCE THE ASSESSMENT AND PENALTY PROCEEDINGS ARE DIFFERENT AND INDEPENDENT OF EACH O THER, IT IS OPEN TO THE ASSESSEE TO MAKE OUT A CASE THAT EVEN IF ADDITI ON HAS BEEN CONFIRMED IN QUANTUM PROCEEDINGS, BUT IT CANNOT BE A GOOD REASON TO IMPOSE PENALTY. IN THE PRESENT CIRCUMSTANCES WE ARE CONFRONTED WITH SUCH A SITUATION ONLY. ADMITTEDLY AWIN EXIM CO. OFF ERED ` 15 LAKH, WHICH DID NOT CO-RELATE TO ANY INCRIMINATING MATERI AL AND THAT ASSESSEE OWED PAGE NO.2 OF ANNEXURE-A4 BY CLAIMING TO BE PERTAIING TO IT. IT IS A STRONG REASON TO CONCLUDE THAT NO PE NALTY SHOULD BE IMPOSED IN THE HANDS OF THE ASSESSEE BECAUSE THE AM OUNT HAS ALREADY BEEN OFFERED AND ASSESSED IN THE HANDS OF THE SISTE R CONCERN. ON MERITS ALSO, WE FIND FROM PAGE NO.20 BEING PAGE NO .2 OF ANNEXURE- A4 THAT APART FROM THE AMOUNTS AND CERTAIN NAMES AN D INITIALS, THERE IS NO MENTION OF ANY DATE. THUS THERE IS NO REFEREN CE TO THE DATES ON WHICH SUCH ENTRIES WERE ALLEGEDLY RECORDED BY THE A SSESSEE AS REPRESENTING ITS UNDISCLOSED INCOME. THERE IS NO MATERIAL TO DISCLOSE IT(SS)A NO.27/MUM/2011 M/S.EKTA EXPORTS. 5 AS TO WHETHER SUCH ENTRIES RELATED TO THE PERIOD RE LEVANT TO THE BLOCK PERIOD. 5. FURTHER IT IS RELEVANT TO NOTE THAT THE HON BLE BOMBAY HIGH COURT HAS ADMITTED THE SUBSTANTIAL QUESTION OF LAW AGAINST THE ORDER PASSED BY THE TRIBUNAL SUSTAINING THE ADDITION OF ` 13.13 LAKH IN THE HANDS OF THE ASSESSEE. COPY OF SUCH JUDGMENT OF TH E HONBLE BOMBAY HIGH COURT IS AVAILABLE ON PAGE NOS. 108 AND 109 OF THE PAPER BOOK. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS PVT. LTD. V. ITO HAS HELD VIDE ITS ORDER DATED 18.03.2011 IN ITA NO.2379/MUM/2009 THAT WHERE A SUB STANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY THE HONBLE HI GH COURT AGAINST THE ADDITION CONFIRMED BY THE TRIBUNAL, THEN NO PEN ALTY CAN BE IMPOSED U/S 271(1)(C). IN REACHING THIS CONCLUSION, IT HAS PLACED STRONG RELIANCE ON THIRD MEMBER ORDER PASSED BY THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF ROOPAM MERCANTILE V. DCIT [(2004) 91 ITD 237] AND ANOTHER ORDER PASSED BY THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF SMT.RAMILA RATILAL SHAH V. ACIT [(1998) 60 TTJ (AHD) 171] . IN ALL THE CASES REFERRED TO ABOVE IT HAS BEEN HELD THAT THE ADMISSION OF SUBSTANTIAL QUESTIO N OF LAW BY THE HONBLE HIGH COURT LENDS CREDENCE TO THE BONA FIDES OF THE ASSESSEE. 6. IN VIEW OF THE FOREGOING DISCUSSION, WE AR E OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) WAS FULLY JUSTIFIED IN ORDERING THE DELETION OF PENALTY U/S 158BFA(2). IT(SS)A NO.27/MUM/2011 M/S.EKTA EXPORTS. 6 7. 9 &: ; 4 < 9; 4 ;& ,= IN THE RESULT, THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF AUGUST, 2012. !( 4 678 >!1: 7 4 ? SD/- SD/- (VIVEK VARMA) (R.S.SYAL) # ! # ! # ! # ! / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER MUMBAI ; >!1 DATED : 24 TH AUGUST, 2012. DEVDAS* !( 4 2#&'' +'8& !( 4 2#&'' +'8& !( 4 2#&'' +'8& !( 4 2#&'' +'8&/ COPY OF THE ORDER FORWARDED TO : 1. /0 / THE APPELLANT 2. 23/0 / THE RESPONDENT. 3. @ () / THE CIT(A)-XXXII, MUMBAI. 4. @ / CIT 5. '*? 2#
, , / DR, ITAT, MUMBAI 6. ?A B / GUARD FILE. !(1 !(1 !(1 !(1 / BY ORDER, 3'& 2#& //TRUE COPY// C C C C/ // /, ; , ; , ; , ; ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI