Virjibhai L.Parmar, Surat V. The ACIT.,Circle-2, Surat

ITSSA 3/AHD/2008

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9248 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-05-2010
• Assessment Year: misc
• Appeal Filed On: 08-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK BALSR
• Assessee Lawyers: RASESH SHAH; SAPNESH SHETH
• Keywords: Retrospective amendment; Block assessment
• Section: 132

Judgement Text

IT(SS) A.NO.03/AHD/08. 1 IN THE INCOME_TAX APPELLATE TRIBUNAL D BENCH, A HMEDABAD BEFORE SHRI T.K. SHARMA AND SHRI D.C. AGRAWAL (SURAT CAMP) IT(SS).A. NO.03/AHD/2008 (BLOCK PERIOD 1997-98 ) VIRJIBHAI L. PARMAR, PROP. JANTA TEXTILE, VIGNESHWAR ESTATE,TIMALIAWAD, NANPURA, SURAT. VS ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-2, AAYAKAR BHAVAN, MAJURA GATE, SURAT. (APPELLANT) (RESPONDENT) PAN: ABTPP6830H APPELLANT BY : SHRI RASESH SHAH & SAPNESH SHETH. RESPONDENT BY : SHRI ASHOK BAL,SR.D.R. ( (( ( )/ )/)/ )/ ORDER PER SHRI D.C. AGRAWAL. THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING THE FOL LOWING GROUNDS :- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL A S LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF TH E ASSESSING OFFICER IN MAKING THE ADDITION OF RS.8,20,457/- FOR ALLEGED UNDISCLOSED COMMISSION INCOME. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED C.I.T.(A) HAS ERRED IN CONFIRM ING THE ACTION OF THE A.O. IN MAKING THE ADDITION OF RS.1,36,270/- U/ S. 158BB(1)(C)OF THE ACT FOR ALLEGED REGULAR INCOME DISCLOSED IN RET URN OF INCOME FILED AFTER SEARCH. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED C.I.T.(A) HAS ERRED IN CONFIRM ING THE ACTION OF THE A.O. IN NOT TELESCOPING THE MULTIPLE ADDITION O F RS 8,20,457/- AND RS.1,50,690/- SUSTAINED BY TRIBUNAL. IT(SS) A.NO.03/AHD/08. 2 4. IT IS THEREFORE PRAYED THAT ABOVE ADDITIONS MADE BY THE A.O. AND CONFIRMED BY CIT(A) MAY PLEASE BE DELETED. 5. IT IS ALSO PRAYED THAT THE ADDITION OF COMMISSIO N INCOME AND ADDITION OF AGRICULTURAL INCOME MAY PLEASE BE INTERPOLATED/TELESCOPED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ACTING AS A COMMISSION AGENT FOR SALE OF MACHINERIES MANUFACTURED BY HARIS H TEXTILE ENGINEERING LTD.,(IN BRIEF HTEL) AND BY SEVERAL OTHER CONCERNS. THE PRE MISES OF HTEL WAS SEARCHED U/S. 132 OF THE ACT ON 12-09-1996. THE PRE MISES OF THE ASSESSEE WAS ALSO SEARCHED AT THE SAME TIME. IN THE BLOCK RETURN ASSESSEE DISCLOSED A SUM OF RS.1,56,690/- WHICH WAS CLAIMED AS AGRICULTURAL INC OME AND HENCE NO TAX WAS PAID. HOWEVER, THE A.O. DETERMINED THE UNDISCLOSED INCOME AT RS.29,69,791/- MAKING THE FOLLOWING 3 ADDITIONS TO THE DECLARED IN COME. THE 3 FURTHER ADDITIONS WERE AS UNDER :- I) ON ACCOUNT OF UNDISCLOSED COMMISSION INCOME . . RS. 25,82,831 II) ON ACCOUNT OF UNACCOUNTED MARRIAGE EXPS. .. RS. 1,00,000 III) ADDITION MADE U/S.158BB(1)(C ) .. RS. 1 ,36,270 ------------------ TOTAL. .. RS.29,69,791 =========== THIS BLOCK ASSESSMENT ORDER WAS DATED 29-10-1997. T HE MATTER TRAVELED TO THE ITAT WHICH SET ASIDE THE ADDITION OF RS.25,82,831/- AND OF RS.1,36,270/- FOR FRESH ADJUDICATION. THE A.O. THEREAFTER, CARRIED OUT INQU IRIES AND MADE THE ADDITION OF RS.8,20,457/- ON ACCOUNT OF UNACCOUNTED COMMISSION AND OF RS.1,36,270/- BEING ADDITION U/S. 158BB(1)(C). 2.1. THE LEARNED C.I.T.(A) CONFIRMED BOTH THE ADDIT IONS BY DISMISSING THE APPEAL OF THE ASSESSEE AND HENCE ASSESSEE HAS FILED THE APPEAL RAISING THE GROUNDS AS ABOVE. IT(SS) A.NO.03/AHD/08. 3 GROUND NO.1 RELATING TO ADDITION OF RS.8,20,457/- . 2.2. IT WAS ALLEGED IN THE ORIGINAL BLOCK ASSESSMEN T ORDER THAT ASSESSEE IS RECEIVING UNDISCLOSED COMMISSION ON SALE OF MACHINE RIES. THE TRIBUNAL HELD THAT WHAT IS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE IS UNDISCLOSED INCOME IN THE FORM OF COMMISSION AND IT WOULD BE 2% OF THE AMOUNT RECEIVED BY HTEL AS ON MONEY ON SALE OF MACHINERIES. THE AMOUNT WAS DETER MINED AS ON MONEY IN THE HANDS OF HTEL WAS RS.4,10,22,595/-. SINCE THE INCOM E IN THE CASE OF THE ASSESSEE WOULD BE 2% OF THE TOTAL ON MONEY FINAL LY ASSESSED IN THE HANDS OF HTEL, NO FURTHER DISPUTE SURVIVES EXCEPT FINDING O UT ABOUT FINALLY SETTLED ON MONEY INCOME IN THE CASE OF HTEL. SINCE BOTH THE PARTIES HAVE FAILED TO PRODUCE THE RELEVANT EVIDENCE BEFORE US WE RESTORE THE MATTER TO THE FILE OF THE LD. C.I.T.(A) AND DIRECT THE ASSESSEE TO FURNISH NE CESSARY EVIDENCE AS TO THE FINAL INCOME OF ON MONEY ASSESSED IN THE CASE OF HTEL. THE DEPARTMENT WILL ALSO MAKE SERIOUS EFFORTS TO FIND OUT FINALLY ASSESSED I NCOME OF ON MONEY ON WHICH THE ASSESSEE WILL BE TAXED AT 2% AS HELD BY THE TRI BUNAL IN THEIR ORDER DATED 10- 3-2005 IN THE CASE OF THE ASSESSEE. ACCORDINGLY TH IS ISSUE IS SET ASIDE TO THE FILE OF THE LD. CIT(A) AND ACCORDINGLY ALLOWED FOR STATI STICAL PURPOSES. GROUND NO.2 ADDITION OF RS.1,36,270/- 3. THE A.O. HAS OBSERVED THAT ASSESSEE HAD FILED TH E RETURN OF INCOME AFTER DUE DATE OF 31-8-1996 FOR THE ASSESSMENT YEAR 1996- 97. THIS RETURN WAS FILED ON 30-11-1996. ACCORDINGLY AS PER THE PROVISIONS OF SE CTION 158BB(1)(C) AS AMENDED BY THE FINANCE ACT,2002 WITH RETROSPECTIVE EFFECT FROM 1-7-1995 THIS AMOUNT WOULD BE TREATED AS UNDISCLOSED INCOME. 3.1. THE LD. C.I.T.(A) CONFIRMED THE ADDITION BY OB SERVING AS UNDER :- IT(SS) A.NO.03/AHD/08. 4 11. I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS . SEC. 158BB PROVIDES THE METHOD OF COMPUTATION OF UNDISCLOSED INCOME FOR THE BLOCK-PERIOD. AS PER SUB-SEC. (1),THE UNDISCLOSED INCOME FOR THE BLO CK-PERIOD, IS TO BE THE AGGREGATE OF THE TOTAL INCOME OF THE PREVIOUS YEARS FALLING WITHIN THE BLOCK PERIOD AS DETERMINED ON THE BASIS OF THE EVIDENCE F OUND AS A RESULT OF THE SEARCH OR THE REQUISITION OF BOOKS OF ACCOUNT ETC. AND SUCH OTHER MATERIAL OR INFORMATION WHICH ARE AVAILABLE WITH THE A.O., A ND ARE RELATABLE TO THE EVIDENCE FOUND. THE UNDISCLOSED INCOME SO DETERMINE D IS TO BE REDUCED BY THE AGGREGATE OF THE TOTAL INCOME(S) OR INCREASE D BY THE AGGREGATE LOSS(ES) OF SUCH PREVIOUS YEARS AS DETERMINED UNDER CLAUSES (A) TO (F) TO THE SAID SECTION. THE AO APPLIED THE PROVISIONS OF CLAUSE (C). THIS CLAUSE DEALS WITH CASES WHERE THE DUE DATE FOR FILING A RE TURN OF INCOME HAS EXPIRED, BUT NO RETURN HAS BEEN FILED. IN SUCH CASE S, IT PRESCRIBES THAT THE UNDISCLOSED INCOME IS TO BE ADJUSTED ON THE BASIS O F THE ENTRIES RECORDED IN THE BOOKS OF ACCOUNT AND DOCUMENTS MADE PRIOR TO THE DATE OF SEARCH WHERE SUCH ENTRIES RESULT IN THE COMPUTATION OF LOS S FOR ANY PREVIOUS YEAR FALLING WITHIN THE BLOCK PERIOD. CLAUSE (B) PRESCRI BED THAT THE UNDISCLOSED INCOME IS TO BE ADJUSTED ON THE BASIS OF THE ENTRIE S MADE IN THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS MADE PRIOR TO THE DATE OF SEARCH WHERE SUCH INCOME DOES NOT EXCEED THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX FOR THE RELEVANT PREVIOUS YEAR. APPLYING SUCH PROVI SIONS TO THE CASE OF THE ASSESSEE, IT IS SEEN THAT THE RETURN FOR THE A.Y. 1 996-97 HAD NOT BEEN FILED BY THE DUE DATE, AND THEREFORE, THE PROVISIONS OF C LAUSE (C) TO SECTION 158BB(1) WAS CLEARLY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. THE AO ANALYSED THE PROVISIONS AND OBSERVED THAT THE AS SESSEE HAD NOT BEEN ABLE TO SHOW THAT THE INCOME OF RS.1,36,270/- HAD B EEN RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN T HE NORMAL COURSE OF THE ASSESSEES BUSINESS, NOR WAS IT SHOWN THAT THE SAID SUM DID NOT EXCEED THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX FOR THE RELEVANT ASSESSMENT YEAR. 11.1 ON HIS PART THE AR HAS COMPLETELY MISSED THE P OINT. HE HAS ONLY ARGUED THAT THE SUM OF RS.1,36,270/- WAS TAKEN DIRE CTLY FROM THE RETURN OF INCOME AND WAS NOT DETECTED OR UNEARTHED IN COURSE OF THE SEARCH, NOR WAS IT ESTABLISHED TO BE THE UNDISCLOSED INCOME OF THE ASSESSEE. ACCORDING TO HIM, SIMPLY BECAUSE THE RETURN FOR THE SAID ASSESSMENT YEAR WAS FILED AFTER THE DUE DATE, DID NOT MEAN THAT THE SUM OF RS.1,36,270 REPRESENTED UNDISCLOSED INCOME. WHAT THE AR HAS NOT APPRECIATED IS THAT, THE ADJUSTMENTS UNDER CLAUSES (A) TO (F) ARE TO BE MADE ON THE BASIS OF THE POSITION OBTAINED IN THE ASSESSMENT YEARS COVERED B Y THE BLOCK PERIOD. THESE ADJUSTMENTS ARE TO BE MADE AFTER THE UNDISCLO SED INCOME IS DETERMINED AND COMPUTED UNDER SUB-SEC. (1) TO 158BB ON THE BASIS OF EVIDENCE FOUND IN COURSE OF THE SEARCH. IN OTHER WO RDS, IT WAS NOT NECESSARY FOR THE AO TO ESTABLISH THAT THE INCOME D ECLARED IN THE RETURN OF IT(SS) A.NO.03/AHD/08. 5 INCOME FOR THE A.Y. 1996-97 WAS EITHER UNDISCLOSED OR WAS DETECTED IN COURSE OF THE SEARCH. CLAUSE (C) TO THE SAID SECTIO N SPECIFICALLY DEALS WITH THE SITUATION WHERE THE RETURN OF INCOME FOR A PART ICULAR ASSESSMENT YEAR COVERED BY THE BLOCK-PERIOD IS FILED AFTER THE DUE DATE. IT SPECIFIES TRHE ADJUSTMENT THAT IS TO BE MADE TO THE UNDISCLOSED IN COME, IN SUCH A SITUATION. IT IS NOT WHAT THE AR HAS UNDERSTOOD, TH AT SIMPLY BECAUSE THE RETURN OF INCOME WAS FILED AFTER THE DUE DATE, THE INCOME DECLARED THEREIN WAS TREATED AS UNDISCLOSED INCOME. 11.2. THERE IS THUS ABSOLUTELY NO MERIT IN THE CONT ENTION OF THE A.R. WITH REGARD TO THE ADDITION MADE BY THE A.O. OF THE SUM OF RS.1,36,270, UNDER THE PROVISIONS OF SEC. 158BB(1)(C) OF THE I.T. ACT. THE SAID ADDITION THEREFORE, WILL STAND CONFIRMED. 3.2. WE HAVE HEARD THE PARTIES. WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW THAN WHAT THE LD. CIT(A) HAS TAKEN. THE VIEW T AKEN BY THE LD. C.I.T.(A) IS ACCORDING TO THE CORRECT INTERPRETATION OF LAW AND THEREFORE, IS CONFIRMED. 4. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 04/06/2010. SD/- SD/- ( T.K. SHARMA) ( D.C. AGRAWAL) JUDICIAL MEMBER ACCCOUNTANT MEMBER. AHMEDABAD. DATED: 04 /06 /2010. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNED. 5. THE DR.,ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD .