SHRI PITAMBER WADHWANI, Indore V. THE ACIT CIRCLE 3(1), Indore

ITSSA 284/IND/2014

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2372 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-02-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 18-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHANEY
• Assessee Lawyers: K C AGRAWAL
• Keywords: Business expenditure
• Section: 133A; 153A; 37; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER SHRI PITAMBER WADHWANI, 73, CHANDRALOK COLONY, INDORE. PAN: AACPW6714B VS. ACIT, CIRCLE 3(1), INDORE. APPELLANT RESPONDENT APPELLANT BY SHRI K.C.AGRAWAL, CA RESPONDENT BY SHRI RAJEEV VARSHANEY, CIT DR DATE OF HEARING 01.08.2016 DATE OF PRONOUNCEMENT 01.08.2016 O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAIN ST THE CONSOLIDATED ORDER OF LD. COMMISSIONER OF INCOME-TA X (APPEALS)-I, INDORE [HEREINAFTER REFERRED TO AS THE CIT(A)] DATE D 20.08.2014 AND PERTAINS TO ASSESSMENT YEAR 2001-02, 2002-03 AND 20 03-04 AS AGAINST APPEALS DECIDED IN ORDER U/S 153A R.W.S. 14 3(3) OF INCOME- TAX ACT, 1961, DATED 28.12 2007 OF ACIT, 3(1), INDO RE[HEREINAFTER REFERRED TO AS THE AO]. I.T.(SS)A.NOS.282 TO 284/IND/2014 A.YS. :2001-02 TO 2003-04 SHRI PITAMBER WADHWANI VS. ACIT, CIRCLE 3(1), INDORE, I. T.A.NOS. 282 TO 284/IND/2014 A.YS. 2001-02 TO 200 3-04 PAGE 2 OF 9 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THESE APP EALS :- I.T.(SS)A.NO. 282/IND/2014 A.Y. 2001-02 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-II, INDORE, HAS ERRED IN MAINTAINING THE ADDITION MADE ON ACCOUNT OF INVESTMENT IN FDRS AND INTEREST THEREUPON AT RS. 44,190/- AND RS. 5,219/- RESPECTIVELY, BY TREATING THE SAME AS UNEXPLAINED, WHEREAS ALL THE FDRS WERE IN THE NAME OF FAMILY MEMBERS OF THE APPELLANT AND HENCE, IT IS PRAYED TH AT THE AMOUNT MAY KINDLY BE DIRECTED TO BE DELETED. I.T.(SS)A.NO. 283/IND/2014 A.Y. 2002-03 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-II, INDORE, HAS ERRED IN MAINTAINING THE ADDITION MADE ON ACCOUNT OF INVESTMENT IN FDRS AND INTEREST THEREUPON AT RS. 1,00,867/- AND RS. 5,037/ - RESPECTIVELY, BY TREATING THE SAME AS UNEXPLAINED, WHEREAS ALL THE FDRS WERE IN THE NAME OF FAMILY MEMBERS OF THE APPELLANT AND HENCE, IT IS PRAYED TH AT THE AMOUNT MAY KINDLY BE DIRECTED TO BE DELETED. I.T.(SS)A.NO. 284/IND/2014 A.Y. 2003-04 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-II, INDORE, HAS ERRED IN MAINTAINING THE ADDITION MADE ON ACCOUNT OF ESTIMATED ACCRUED INTER EST INVESTMENT ON FDRS AT RS. 17,101/- BY TREATING THE SAME AS UNEXPLAINED, WHEREAS ALL THE FDRS WERE IN THE NAME OF FAMILY MEMBERS OF THE APPELLANT AND HENCE, IT IS PRAYED THAT THE AMOUNT MAY KINDLY BE DIRECTED TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIA(A)-II, INDORE, ERRED IN MAINTAINING THE DISALLOWANCE OF LEVY OF PENALTY AT RS. 5,000/-,WHICH WAS LEVIED BY THE PRINCIPAL M/S. HINDUSTAN PETROLEUM CORPORATION LIMITED FOR SOME VIOLATION OF THEIR NOR MS, WHICH WAS A ROUTINE BUSINESS EXPENDITURE AND THUS, IT SHRI PITAMBER WADHWANI VS. ACIT, CIRCLE 3(1), INDORE, I. T.A.NOS. 282 TO 284/IND/2014 A.YS. 2001-02 TO 200 3-04 PAGE 3 OF 9 IS PRAYED THAT THE DISALLOWANCE SO MADE MAY KINDLY B E DIRECTED TO BE ALLOWED IN FULL. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SE ARCH U/S 132 OF THE INCOME-TAX ACT, 1961, WAS CARRIED OUT ON 25 TH AUGUST, 2005, ON THE ASSESSEE AND GROUP. ACCORDINGLY, NOTIC E U/S 153A HAS BEEN ISSUED ON 08.08.2006 FOR THE ASSESSMENT YEARS 2001-02, 2002-03 AND 2003-04 RESPECTIVELY, IN RESPONSE TO WHI CH THE RETURNS OF INCOME WERE FILED AND CASES WERE SELECTED UNDER SCRUTINY BY ISSUING STATUTORY NOTICE U/S 143(2) OF THE ACT. THE ASSESSEE DERIVES INCOME FROM RENTAL INCOME, INCOME FROM PROP RIETORY-SHIP CONCERN M/S. SUPER DIESELS AND SHARE INCOME FROM TWO PARTNERSHIP FIRMS, NAMELY, M/S. MANISH CONSTRUCTION , M/S. ISHAN CONSTRUCTIONS AND M/S.SURYA BUILDERS & INTEREST INC OME FROM DEPOSITS WITH BANK AND OTHERS. SURVEY U/S 133A WAS A LSO CARRIED OUT SIMULTANEOUSLY ALOGNWITH SEARCH AT THE BUSINESS PREMISES OF THE ASSESSEE GROUP, WHEREIN SOME FDRS WERE FOUND OF WHI CH PHOTOCOPIES WERE IMPOUNDED FROM THE BUSINESS PREMISE S OF M/S. ALANKAR ENTERPRISES AND SAAKAR INFRASTRUCTURE PRIVA TE LIMITED VIDE PAGE NOS. 70 TO 76 OF BS-4. THE FINDINGS OF AO WITH REGARD TO SUCH FDRS WITH REFERENCE TO RELEVANT ASSESSMENT YEAR IS RE PRODUCED AS UNDER :- SHRI PITAMBER WADHWANI VS. ACIT, CIRCLE 3(1), INDORE, I. T.A.NOS. 282 TO 284/IND/2014 A.YS. 2001-02 TO 200 3-04 PAGE 4 OF 9 A.Y. 2001-02 : SR. NAME OF HOLDER DATE AMOUNT 1. PITAMBAR WADHWANI & MISS CHARU 02-02.2001 18,453/- 2. PITAMBAR WADHWANI & BEGRAJ WADHWANI 02-02.2001 25,834/- 3. PITAMBAR WADHWANI, BEGRAJ WADHWANI AND AMARLAL 02-02-2001 18,356/- TOTAL 62,643/- A.Y. 2002-03 : SR. NAME OF HOLDER DATE AMOUNT 1. PITAMBAR WADHWANI & MISS CHARU 02-02.2001 18,453/- 2. PITAMBAR WADHWANI & BEGRAJ WADHWANI 02-02.2001 25,834/- 3. PITAMBAR WADHWANI, BEGRAJ WADHWANI AND AMARLAL 02-02-2001 18,356/- 4. PITAMBER WADHWANI & MISS CHARU 08-10-2001 47,685/- 5. PITAMBER WADHWANI & MISS CHARU 09-10-2001 28,215/- 6. PITAMBER WADHWANI AND AMARLAL 08-10-2001 24,967/- TOTAL 1,63,510/- A.Y. 2003-04 : SR. NAME OF HOLDER DATE AMOUNT 1. PITAMBAR WADHWANI & MISS CHARU 02-02.2001 18,453/- 2. PITAMBAR WADHWANI & BEGRAJ WADHWANI 02-02.2001 25,834/- 3. PITAMBAR WADHWANI, BEGRAJ WADHWANI AND AMARLAL 02-02-2001 18,356/- 4. PITAMBER WADHWANI & MISS CHARU 08-10-2001 47,685/- 5. PITAMBER WADHWANI & MISS CHARU 09-10-2001 28,215/- 6. PITAMBER WADHWANI AND AMARLAL 08-10-2001 24,967/- TOTAL 1,63,510/- ABOVE MENTIONED FDRS COULD NOT BE VERIFIED AND OUT OF THESE FDRS AT SR. NO. 2 & 3 ARE NOT RECORDED THEY ARE ALSO NOT RECORDED IN REGULAR BOOKS OF ACCOUNTS OR STATEMENT OF AFFAIRS, THEREFORE, THIS AMOUNT OF RS.44,190 / - IS HEREBY ADDED U/S 68. SHRI PITAMBER WADHWANI VS. ACIT, CIRCLE 3(1), INDORE, I. T.A.NOS. 282 TO 284/IND/2014 A.YS. 2001-02 TO 200 3-04 PAGE 5 OF 9 ABOVE MENTIONED FDRS ARE CLAIMED TO HAVE BEEN MADE OUT OF UNDISCLOSED INCOME OF THE ASSESSEE, WHICH HAS BEEN ACCOUNTED FOR IN HIS REGULAR BOOKS OF ACCOUNTS. KEEPING IN VIEW T HESE FACTS AN AMOUNT OF INTEREST @120/0 FOR SIX MONTH = RS.6.052/- IS ADDED IN THE INCOME OF THE ASSESSEE. SIMILARLY AN AMOUNT OF RS.7,517/- RS.2.480/- (AS SHOWN IN STATEMENT OF AFFAIRS) = RS. 5,037/- @ 12% ON FDRS PURCHASED DURING THE AY 2001-02. TOTAL ADDI TION ON THIS ACCOUNT IS RS.13,569/-. ABOVE MENTIONED FDRS ARE CLAIMED TO HAVE BEEN MADE OUT OF UNDISCLOSED INCOME OF THE ASSESSEE, WHICH HAS NOT B EEN ACCOUNTED FOR IN HIS REGULAR BOOKS OF ACCOUNT. KEEPING IN VIE W THESE FACTS AN AMOUNT OF INTEREST @120/0 FOR TWO MONTHS = RS.7,518 /- LESS RS.2,299/-(SHOWN IN STATEMENT OF AFFAIRS) = RS.5,219 / - IS ADDED IN THE INCOME OF THE ASSESSEE. TOTAL ADDITION IN THIS HEAD IS RS.49,409/-. AS IS EVIDENT FROM THE ABOVE TABLE OF FDRS THAT FDR S TOTALING TO RS.L,00,867/- ARE MADE DURING THE AY 2002-03. THERE FORE THIS AMOUNT OF RS.L,00,867/- IS ADDED TO THE INCOME OF THE ASSESSEE. THIS ADDITION HAS BEEN MADE AS MISS CHARU WADHWANI IS DAUGHTER OF THE ASSESSEE AND APPARENTLY DOES NOT HAS ANY SOU RCE OF INCOME WHICH MEANS THAT SOURCE FOR MAKING THESE FDRS IS FR OM THE INCOME OF THE ASSESSEE. THESE FDRS ARE NOT ACCOUNTED FOR I N THE REGULAR BOOKS OF THE ASSESSEE INCLUDING STATEMENT OF AFFAIR S FILED IN THE RECORDS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES A ND PROVISIONS OF SECTION 68, THIS AMOUNT OF RS.L,00,867/- IS HEREBY ADDED TO THE INCOME OF THE ASSESSEE. ABOVE MENTIONED FDRS ARE CLAIMED TO HAVE BEEN MADE OUT OF UNDISCLOSED INCOME OF THE ASSESSEE, WHICH HAS NOT B EEN ACCOUNTED FOR IN HIS REGULAR BOOKS OF ACCOUNTS. KEEPING IN VI EW THESE FACTS AN AMOUNT OF INTEREST @ 12% FOR TWELVE MONTHS = 19,621 /- - RS. 2,520/- = RS. 17,101/- IS ADDED IN THE INCOME OF TH E ASSESSEE. 4. AGGRIEVED WITH THE ABOVE ADDITIONS, THE ASSESSEE FIL ED APPEAL BEFORE THE CIT(A). THE LD. CIT(A) NOTED THAT THE FDRS ARE STANDING IN THE NAME OF ASSESSEE, HIS FATHER BEGRAJ WADHWANI AND HIS CHILDREN. THE FDRS STANDING IN THE NAME OF BEGRA J WADHWANI DO NOT BEAR THE SAME FDR NUMBER NOR IT IS OF SUCH AM OUNT. HENCE, SHRI PITAMBER WADHWANI VS. ACIT, CIRCLE 3(1), INDORE, I. T.A.NOS. 282 TO 284/IND/2014 A.YS. 2001-02 TO 200 3-04 PAGE 6 OF 9 THE FDRS DISCLOSED BY SHRI BEGRAJ WADHWANI WAS DIFFERE NT AND DO NOT EXPLAIN THESE FDRS. THE ASSESSEE HAS ALSO FAILED TO PROVE THE SAME WHETHER THESE FDRS WERE DULY REFLECTED IN THE RET URN OF THE ASSESSEE OR HIS FAMILY MEMBERS. THE LD. CIT(A) FURT HER OBSERVED THAT THE ASSESSEE IS THE ACTIVE EARNING MEMBER OF T HE THREE HOLDERS OF FDRS, HENCE, THE ADDITION OF SUCH UNACCOUNTED INV ESTMENT IS CORRECTLY MADE IN THE ASSESSEES HANDS. ACCORDINGLY , THE ADDITIONS OF FDR WAS RS. 44,190/- AND INTEREST THEREON OF RS. 5 ,219/- FOR ASSESSMENT YEAR 2001-02, FDR OF RS. 1,00,867/- AND I NTEREST THEREON OF RS. 5037/- FOR ASSESSMENT YEAR 2002-03 A ND FDR INTEREST THEREON OF RS. 5037/- FOR ASSESSMENT YEAR 2002-03 AND FDR INTEREST OF RS. 17,101/- ON FDR FOR ASSESSMENT YE AR 2003-04 WERE CONFIRMED. 5. THE LD. COUNSEL OF THE ASSESSEE REPEATED THE SAME ARGUMENTS AS TAKEN BEFORE THE LD. CIT(A) AND SUBMIT TED THAT THE FDRS STANDING IN THE NAME OF VARIOUS RESPECTIVE FAMI LY MEMBERS ARE DISCLOSED BY THE RESPECTIVE FAMILY MEMBERS AND HENCE THE SAME CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. WE FIND THAT THE LD. CIT(A) HAS VERIFIED T HE CLAIM OF THE ASSESSEE AND FOUND THAT THE FDRS DISCLOSED BY THE F AMILY SHRI PITAMBER WADHWANI VS. ACIT, CIRCLE 3(1), INDORE, I. T.A.NOS. 282 TO 284/IND/2014 A.YS. 2001-02 TO 200 3-04 PAGE 7 OF 9 MEMBERS AND AS FOUND DURING THE COURSE OF SURVEY WER E NOT MATCHING. AS THE NUMBERS AS WELL AMOUNT MENTIONED I N THE FDRS WERE DIFFERENT, NOR THE ASSESSEE WAS ABLE TO GET VERI FIED THE SAME WITH DOCUMENTARY EVIDENCE DURING THE COURSE OF APPEL LATE PROCEEDINGS BEFORE THE LD. CIT(A). 7. BEFORE US ALSO, THE LD. AUTHORIZED REPRESENTATIVE O F THE ASSESSEE COULD NOT CONTROVERT THE FINDINGS RECORDED BY THE LOWER AUTHORITIES. IT IS ALSO SEEN FROM THE SUBMISSION OF THE ASSESSEE THAT THE NAME OF THE ASSESSEE IS ALSO APPEARING AS SECON D AND THIRD BENEFICIARIES IN RESPECT OF THESE FDRS. THE ASSESSEE IS ONLY ACTIVE AND EFFECTIVE MEMBER OF HIS FAMILY. IN VIEW OF THES E FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES. HENCE, THE APPEALS OF THE ASSESSE E FOR ALL THE THREE ASSESSMENT YEARS ON THIS GROUND IS REJECTED. 8. GROUND NO.2 FOR ASSESSMENT YEAR 2003-04 RELATES TO MAINTAINING THE DISALLOWANCE OF LEVY OF PENALTY OF R S. 5,000/-, WHICH WAS LEVIED BY THE PRINCIPAL, M/S. HINDUSTAN PE TROLEUM CORPORATION LIMITED FOR VIOLATION OF THEIR NORMS. 9. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. WE FIND THAT THE LD. CIT(A) HAS CONFIRMED THE SAID ADDITION OF PENALTY ON THE GROUND THAT THE ASSESSEE HAS FAIL ED TO PRODUCE SHRI PITAMBER WADHWANI VS. ACIT, CIRCLE 3(1), INDORE, I. T.A.NOS. 282 TO 284/IND/2014 A.YS. 2001-02 TO 200 3-04 PAGE 8 OF 9 RELEVANT VOUCHERS OF SUCH PENALTY AND HENCE EXACT N ATURE OF SUCH PENALTY COULD NOT BE ASCERTAINED WHETHER IT WAS FOR I NFRACTION OF ANY LAW, THEREFORE, THE SAME WAS CONFIRMED. 10. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE PENALTY WAS LEVIED BY M/S. HINDUS TAN PETROLEUM CORPORATION LIMITED FOR NON-FULFILLMENT S OME DEALERSHIP CONDITION AND THE SAME HAVE BEEN DEBITED TO PROFIT AND LOSS ACCOUNT AS BUSINESS EXPENSES, WHICH IS ALLOWABLE AS B USINESS EXPENDITURE, AS THE PENALTY SO LEVIED IS NOT IN THE NATURE OF VIOLATION OF ANY LAW, THUS, IS AN ALLOWABLE BUSINESS EXPENDITURE, HENCE, THE SAME BE ALLOWED AS BUSINESS EXPENDITURE. 11. WE HAVE CONSIDERED THE FACTS AND FIND THAT THE ASSE SSEE IS DEALING IN PETROLEUM PRODUCTS. SINCE THE PENALTY IS LEVIED BY HPCL FOR NON-FULFILLMENT OF SOME DEALERSHIP CONDITION FA LLS WITHIN THE PURVIEW OF BUSINESS EXPENDITURE, HENCE THE SAME IS A LLOWABLE EXPENDITURE U/S 37 OF THE INCOME-TAX ACT, 1961. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS ALSO PLACED RELI ANCE IN THIS REGARD IN THE CASE OF GOLD CREST CAPITAL MARKETS LI MITED VS. ITO, (2010) 36 ITR 177, WHEREIN THE MUMBAI TRIBUNAL HAS D ECIDED THAT FINE OR PENALTY IMPOSED BY NSE TO ITS MEMBERS IS RE GULATED BY THEIR IN HOUSE LAWS AND COULD NOT BE TERMED AS VIOLATION O F STATUTORY SHRI PITAMBER WADHWANI VS. ACIT, CIRCLE 3(1), INDORE, I. T.A.NOS. 282 TO 284/IND/2014 A.YS. 2001-02 TO 200 3-04 PAGE 9 OF 9 LAWS AND HENCE, CANNOT BE DISALLOWED. RESPECTFULLY F OLLOWING THE ABOVE FINDINGS OF MUMBAI, I.T.A.T., WE DELETE THE LE VY OF PENALTY OF RS. 5,000/-. THIS GROUND IS, THEREFORE, ALLOWED. 12. IN THE RESULT, THE APPEALS FOR ASSESSMENT YEARS 200 1-02 AND 2002-03 ARE DISMISSED AND APPEAL FOR ASSESSMENT YEAR 2003- 04 IS PARTLY ALLOWED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COUR T ON THE 1 ST AUGUST, 2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED : 1 ST AUGUST, 2016. CPU* COPY OF THE ORDER FORWARDED TO : THE ASSESSEE/ PCIT- INDORE/ CIT(A)-I, INDORE, AO/ D R- INDORE BENCH/ GUARD FILE BY ORDER ASSISTANT REGISTRAR OF ITAT, INDORE BENCH