Appeal details
Counselvise Citation
[2011] 124 COUNSELVISE.COM (IT) 7920 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 7 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
09-12-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Next Hearing Date
08-12-2011
Assessment Year
misc
Appeal Filed On
08-05-2009
Judgement Text
-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI D K TYAGI JUDICIAL MEMBER & SHRI B P JAIN - ACCOUNTANT MEMBER IT(SS)A NO.28/AHD/2009 BLOCK PERIOD:- 01-04-1989 TO 18-02-2000 M/S JAYANTILAL KRISHNAVALLABHDAS CHOKSHI, STATION ROAD, BHARUCH V/S THE DEPUTY COMMISSIONER OF INCOME-TAX, BHARUCH CIRCLE, BHARUCH PAN: AADFM 1226 B [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI VIJAY RANJAN, AR RESPONDENT BY:- SHRI R K VOHRA, DR DATE OF HEARING:- 08-12-2011 DATE OF PRONOUNCEMENT:- 09-12-2011 O R D E R PER B P JAIN (ACCOUNTANT MEMBER) :- THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LEARNED CIT(A )-VI, BARODA, DATED 24-02-2009 FOR THE BLOCK PERIOD 01-04-1989 TO 18-02-2000. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- [1] THE ORDER U/S 158BFA(2) CONFIRMED BY THE CIT(A) , BARODA IS BAD IN LAW AND MAY BE QUASHED. [2] IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF TH E APPELLANTS CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALT Y U/S 158BFA(2) OF RS.95,350/- ON THE ADDITION TO THE EXT ENT OF RS.1,58,917/- RETAINED BY THE LD. CIT(A) ON ESTIMAT ED BASIS. THE ESTIMATE OF INCOME CANNOT BE REGARDED AS CONCEA LMENT OF INCOME AND PENALTY U/S 158BFA(2) LEVIED AT RS.95,35 0/- DESERVES TO BE DELETED. 2 [3] APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A LL OR ANY OF THE GROUND OR GROUNDS EITHER BEFORE OR AT THE TIME OF A PPEAL HEARING. 2 IN THIS CASE, SEARCH OPERATION U/S 132 OF THE INC OME-TAX ACT WAS CONDUCTED ON 18-02-2000 AND THE ASSESSEE FILED BLOCK ASSESSMENT RETURN ON 16-11-2000 DECLARING TOTAL UND ISCLOSED INCOME OF RS.41,57,658/-. SUBSEQUENTLY, ASSESSMENT U/S 158BC WAS COMPLETED ON TOTAL INCOME AT RS.50,21,930/- WHE REIN FOLLOWING ADDITIONS WERE MADE: UNDISCLOSED EXPENDITURE RS.5,04,762/- UNACCOUNTED INVESTMENT IN SHARES RS.3,28,590/- UNACCOUNTED SALES RS. 30,920/- PENALTY PROCEEDINGS U/S 158BFA(2) WERE ALSO INITIAT ED ON THE ABOVE ADDITIONS. 3 AGGRIEVED WITH THE ORDER, THE ASSESSEE WENT IN AP PEAL AND THE LEARNED CIT(A) VIDE ORDER NO.CIT(A)-VI/CC.2.B/2 69/01-02 DATED 26-05-2003 HAD PARTLY CONFIRMED THE ADDITION OF UNDISCLOSED EXPENDITURE TO THE EXTENT OF RS.1,58,91 7/- AND DELETED THE ADDITIONS ON ACCOUNT OF UNACCOUNTED INV ESTMENT IN SHARES AND UNACCOUNTED SALES. AGAINST THE ORDER OF CIT(A), DEPARTMENT AS WELL AS ASSESSEE PURSUED THE MATTER B EFORE ITAT. THE ITAT VIDE ITS ORDER DATED 22-10-2007 DISMISSED BOTH THE APPEALS. 4 BRIEFLY THE FACTS ARE THAT AS PER ANNEXURE A-1 OF THE SEIZED MATERIAL, EXCESS CASH EXPENSES OF RS.5,04,762/- WER E NOTICED. 3 THE ASSESSEE HAD REPLIED THAT THERE WAS SOME SALE O N THE LAST DAY OF ACCOUNTING YEAR I.E. 31-03-98 AND THE SAME WAS L EFT TO BE RECORDED AND THUS THERE WAS A SHORTFALL OF RS.5,04, 762/- IN THE CASH BOOK. IT WAS FURTHER STATED THAT THE SAME MAY BE TREATED AS UNRECORDED SALES AND THAT THE G.P. DECLARED FOR THE BLOCK PERIOD WAS ADEQUATE TO COVER THE MISTAKE. 5 THE AO HOWEVER DID NOT AGREE WITH THE CONTENTION AND OBSERVED THAT THERE WAS NOTHING IN THE SEIZED MATER IAL OR DETAILS PRODUCED DURING THE ASSESSMENT PROCEEDINGS WHICH PR OVE THAT SOME UNACCOUNTED SALES HAD BEEN MADE ON 31-03-97 AN D WERE NOT RECORDED IN THE CASH BOOK. IT WAS ALSO OBSERVED BY AO THAT THE ASSESSEE HAD NOT PRODUCED ANY QUANTITATIVE OR OTHER DETAILS OF PURCHASES AND SALES FROM WHICH IT CAN BE INFERRED T HAT SOME SALES WERE INDEED UNRECORDED. THEREFORE, THE A.O. TREATED RS.5,04,762/- AS UNEXPLAINED EXPENDITURE AND ADDED TO THE INCOME OF THE ASSESSEE. 6 IN APPEAL, THE LEARNED CIT(A) DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE THAT THE ADDITION SHOUL D BE DELETED ON ACCOUNT OF HIGHER GP RATE DECLARED FOR THE BLOCK PE RIOD. HOWEVER, THE LEARNED CIT(A) AGREED TO THE CONTENTIO N THAT DISCLOSURE OF RS.3,45,845/- MADE ON ACCOUNT OF MISC ELLANEOUS ADVANCES / EXPENDITURE / INVESTMENT ETC. MAY BE SET OFF AGAINST THE UNACCOUNTED EXPENDITURE AND THE ADDITION TO THE EXTENT OF RS.1,58,917/- WAS SUSTAINED. THE ITAT UPHELD THE DE CISION OF THE LEARNED CIT(A). 4 7 SUBSEQUENTLY, AN OPPORTUNITY WAS PROVIDED TO THE ASSESSEE U/S 158BFA(2) ON 10-10-08 IN RESPECT OF ADDITION CO NFIRMED IN ITAT. THE A.O. WAS NOT SATISFIED WITH THE EXPLANATI ON OF THE ASSESSEE. THE AO WAS OF THE OPINION THAT CASH EXPEN DITURE TO THE EXTENT OF RS.1,58,917/- WAS NOT EXPLAINED AND THUS IT REPRESENTS AS UNDISCLOSED INCOME AND ACCORDINGLY A PENALTY OF RS.95,350/- WAS LEVIED. 8 THE LEARNED CIT(A) VIDE PARA 5.1 OF HIS ORDER OBS ERVED THAT THE CIT(A) IN THE QUANTUM APPEAL HAS ALLOWED SET OF F OF RS.3,45,845/- ON ACCOUNT OF MISCELLANEOUS ADVANCES / EXPENDITURE / INVESTMENT, BY ALLOWING SETTING OFF. THEREFORE UNEXPLAINED NATURE OF THE EXPENDITURE HAD NOT ALTER ED AND, THEREFORE, THE UNEXPLAINED EXPENDITURE WHICH IS UND ISPUTED IS SUBJECT MATTER OF LEVYING THE PENALTY U/S 158BFA(2) OF THE ACT. HE ACCORDINGLY CONFIRMED THE ACTION OF THE A.O. W.R .T. PENALTY LEVIABLE ON CONCEALED INCOME OF RS.1,58,917/-. 9 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. THE LEARNED DR MR. R K VOHRA, HAD MAIN LY RELIED UPON THE ORDER OF THE LEARNED CIT(A) AND HAS ARGUED THAT THE MATTER HAVING BEEN CONFIRMED IN QUANTUM APPEAL BY T HE ITAT, THE LEARNED CIT(A) HAS RIGHTLY ALLOWED THE SET OFF OF RS.3,45,845/-, THEREFORE, THE PENALTY U/S 158BFA(2) HAS RIGHTLY BEEN CONFIRMED BY THE LEARNED CIT(A) ON AN AMOUNT O F RS.1,58,917/-. 5 10 THE LEARNED COUNSEL FOR THE ASSESSEE, MR. VIJAY RANJAN, INVITED OUR ATTENTION TO THE ASSESSMENT ORDER AT PA GE 3 WHERE HE HAS SUBMITTED THE EXPLANATION THAT THE TOTAL EARNIN G DISCLOSED AT RS.30.25 LACS IS INCLUSIVE OF WORKING CAPITAL OF RS .4,12,223/-. INADVERTENTLY THE ASSESSEE DID NOT RECORD THE SALES OF RS.5,04,762/- WHICH EVEN IF TREATED AS UNRECORDED S ALES, CAN IN NO WAY, FORMS PART OF THE INCOME FROM UNDISCLOSED S OURCES SINCE THE ASSESSEE HAD ALREADY DISCLOSED SUBSTANTIALLY A HIGHER GP AS COMPARED TO REGULAR BUSINESS AND INDUSTRIAL NORMS. MOREOVER, THE DISCLOSURE OF RS.30.25 LACS COVERS MORE THAN ADEQUA TELY THE MISTAKE OF UNRECORDED SALES OF RS.5,04,762/-. THERE FORE, NO PENALTY U/S 158BFA(2) CAN BE LEVIED IN SUCH CIRCUMS TANCES AND FACTS OF THE CASE. 11 THERE IS NO DISPUTE TO THE FACT THAT THERE WAS A SHORTFALL OF RS.5,04,762/- FOUND IN ANNEXURE A-1 WITH REGARD TO THE UNRECORDED SALES. IN RESPONSE TO SHOW CAUSE DATED 1 4-02-2002 GIVEN BY THE AO, THE ASSESSEE VIDE LETTER DATED 25- 02-2002 HAD SUBMITTED THE EXPLANATION THAT SUCH UNRECORDED SALE S ARE PART OF THE TOTAL DISCLOSURE OF RS.30.25 LACS AND THE ASSES SEE HAD DECLARED A HIGHER GP AS COMPARED TO THE REGULAR BUS INESS AND INDUSTRIAL NORMS. THEREFORE, THE AO WHILE LEVYING T HE PENALTY SHOULD HAVE CONSIDERED THIS EXPLANATION GIVEN BY TH E ASSESSEE WHICH HAS NOT BEEN CONSIDERED. THEREFORE, IN THE CI RCUMSTANCES AND FACTS OF THE CASE, THE AO IS NOT JUSTIFIED IN L EVYING THE PENALTY U/S 158BFA(2) AND THE ORDER OF THE LEARNED CIT(A) IS REVERSED ACCORDINGLY. THUS, GROUND NOS. 1 AND 2 OF THE APPEAL ARE ALLOWED. 6 12 GROUND NO.3 IS GENERAL IN NATURE AND DOES NOT RE QUIRE ANY ADJUDICATION. 13 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 09-12-2011 SD/- SD/- (D K TYAGI) JUDICIAL MEMBER (B PJAIN) ACCOUNTANT MEMBER DATE : 09-12-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S JAYANTILAL KRISHNAVALLABHDAS CHOKSHI, STATIO N ROAD, BHARUCH 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, BHARUCH CIRCLE, BHARUCH 3. CIT CONCERNED 4. CIT(A)-VI, BARODA 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR
