Sri.C.P.Abdurahiman, Malappuram V. ACIT, Tirur

ITSSA 3/COCH/2013

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9606 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-11-2013
• Assessment Year: misc
• Appeal Filed On: 09-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: C B M WARRIER
• Section: 15

Judgement Text

1 ITA NO. 03/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.(SS)A NO. 03/COCH/2013 (BLOCK PERIOD 1996-97 TO 2002-03) C.P. ABDURAHIMAN VS A.C.I.T., CIR.2(2) C/O THEYYAMPATTIL JEWELLERY TIRUR PUTHANATHANI, MALAPPURAM PAN : ACCPA2545R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.B.M. WARRIER RESPONDENT BY : SHRI K.K. JOHN DATE OF HEARING : 05-11-2013 DATE OF PRONOUNCEMENT : 13-11-2013 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A), KOZHIKODE DATED 27-02-2013 CONFIRMING THE PENALTY L EVIED U/S 158BFA(2) OF THE ACT. 2. SHRI C.B.M. WARRIER, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT IN RESPECT OF AMOUNT RECEIVABLE ON C REDIT SALES TO THE EXTENT OF RS.13,12,930 THE ASSESSING OFFICER FOUND THAT IT WAS CONCEALED INCOME OF THE ASSESSEE AND THEREFORE LEVIED PENALTY U/S 15 8BFA(2) OF THE ACT. 2 ITA NO. 03/COCH/2013 THE ASSESSING OFFICER MAINLY MADE ADDITION ON THE G ROUND THAT THE ASSESSEE HAS ADMITTED THAT IT IS UNDISCLOSED INCOME . ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE NEVER ADMITTED THAT IT IS UNDISCLOSED INCOME. WHAT WAS ADMITTED BEFORE THE ASSESSING OFFI CER WAS THAT IT WAS THE INCOME OF THE ASSESSEE. THEREFORE, IT HAS TO BE ASSESSED UNDER REGULAR ASSESSMENT AND NOT UNDER THE BLOCK ASSESSME NT. THE LD.REPRESENTATIVE SUBMITTED THAT A SIMILAR ARGUMENT WAS ADVANCED BEFORE THIS TRIBUNAL WHEN THE QUANTUM APPEAL WAS HEARD BY THE BENCH. HOWEVER, THIS TRIBUNAL ALSO HAS NOT ACCEPTED THE SUBMISSIONS OF THE LD.REPRESENTATIVE FOR THE ASSESSEE AND PROCEEDED ON THE BASIS THAT THE ASSESSEE HAS NOT OBJECTED TO THE ASSESSMENT OF THE AMOUNT AS UNDISCLOSED INCOME. ACCORDING TO THE LD.REPRESENTA TIVE, THE CASE OF THE ASSESSEE IS THAT IT IS NOT AN UNDISCLOSED INCOME, T HEREFORE, IT MAY NOT BE CORRECT TO SAY THAT THE ASSESSEE HAS NOT OBJECTED T O THE ASSESSMENT OF THE SAME AS UNDISCLOSED INCOME. 3. ACCORDING TO THE LD.REPRESENTATIVE, ASSESSMENT P ROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT, T HEREFORE, THE MATERIAL AVAILABLE ON RECORD NEEDS TO BE REAPPRECIATED BY TH E AUTHORITIES IN THE PENALTY PROCEEDINGS. THEREFORE, ACCORDING TO THE L D.REPRESENTATIVE, THE FINDING, IF ANY, RECORDED IN THE ASSESSMENT PROCEED INGS MAY NOT BE RELEVANT FOR THE PURPOSE OF LEVYING PENALTY. ACCOR DING TO THE 3 ITA NO. 03/COCH/2013 LD.REPRESENTATIVE, DURING THE ASSESSMENT YEAR 2002- 03 THE AMOUNT RECEIVABLE ON CREDIT SALE IS RS.13,12,390. THE SEA RCH WAS TAKEN PLACE ON 24-01-2002. THEREFORE, THE TIME LIMIT FOR FILING T HE RETURN OF INCOME U/S 139(1) HAS NOT EXPIRED. THE AMOUNT SHOWN AS RECEI VABLE FOR THE ASSESSMENT YEAR 2002-03 CANNOT BE TREATED AS UNDISC LOSED INCOME OF THE BLOCK YEAR. ON A QUERY FROM THE BENCH WHETHER THE CREDIT SALES WERE RECORDED IN THE BOOKS OF ACCOUNT, THE LD.REPRESENTA TIVE SUBMITTED THAT THE CREDIT SALES WERE NOT RECORDED IN THE BOOKS OF ACCO UNT. THE JEWELLERY SHOP WAS SITUATED IN A REMOTE VILLAGE WHERE THE JEWELLER IES ARE SOLD TO THE RELATIVES AND FRIENDS ON CREDIT. THOUGH IT WAS NOT RECORDED SEPARATELY, ACCORDING TO THE LD.REPRESENTATIVE, THE AMOUNT RECE IVABLE WAS RECORDED WHICH IS AVAILABLE AT PAGE 14 OF THE PAPER BOOK. W HEN IT WAS POINTED OUT TO THE LD.REPRESENTATIVE THAT THE COPIES OF THE SEI ZED MATERIAL IS AVAILABLE AT PAGE 14 OF THE PAPER BOOK WHICH DISCLOSES THE AMOUN T SHOWN AS RECEIVABLES, THE LD.REPRESENTATIVE CLARIFIED THAT I F THE TRANSACTION OR INCOME IS RECORDED IN THE BOOKS OF ACCOUNT REGULARLY MAINT AINED IN THE COURSE OF BUSINESS OR ANY OTHER DOCUMENT, THEN IT HAS TO BE E XCLUDED FROM THE COMPUTATION OF UNDISCLOSED INCOME. THE COPIES OF T HE SEIZED DOCUMENT WHICH IS AVAILABLE AT PAGE 14 IS A DOCUMENT MAINTAI NED IN THE REGULAR COURSE OF BUSINESS. THEREFORE, IT HAS TO BE TREATE D AS THE AMOUNT RECEIVABLE OR RECORDED IN THE DOCUMENT IN THE COURS E OF REGULAR BUSINESS. THEREFORE, IN VIEW OF SPECIFIC PROVISIONS OF SECTIO N 158BB(1)(D) OF THE ACT, 4 ITA NO. 03/COCH/2013 THE AMOUNT SHOWN AS RECEIVABLES HAS TO BE EXCLUDED. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THERE IS NO QUE STION OF LEVY OF ANY PENALTY. THE LD.REPRESENTATIVE FURTHER SUBMITTED T HAT THE ASSESSEE HAS ALREADY OFFERED AN AMOUNT OF RS.70,000 AS INCOME. THEREFORE, THIS AMOUNT OF RS.70,000 SHALL BE REDUCED FROM THE UNDIS CLOSED INCOME FOR THE PURPOSE OF COMPUTATION OF PENALTY. THE LD.REPRESEN TATIVE FURTHER SUBMITTED THAT LEVY OF PENALTY U/S 158BFA(2) IS ONLY DISCRETI ONARY AND NOT MANDATORY. THE ASSESSING OFFICER HAS EVERY DISCRETION TO LEVY PENALTY EITHER AT 100% OR UPTO 300%. IN THIS CASE, ACCORDING TO THE LD.REPRE SENTATIVE, THE ASSESSING OFFICER LEVIED PENALTY AT 200%. AT THE BEST, ACCOR DING TO THE LD.REPRESENTATIVE, PENALTY COULD BE LEVIED ONLY AT 100% AND NOT AT 200%. 4. ON THE CONTRARY, SHRI K.K. JOHN, THE LD.DR SUBMI TTED THAT THE ASSESSEE CLAIMED THAT GOLD JEWELLERY WAS SOLD ON CR EDIT AND THE AMOUNT WAS SHOWN AS RECEIVABLES. HOWEVER, THE CREDIT SALE S WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. DURING THE COURSE OF SEARCH O PERATION, THE AMOUNT SHOWN AS RECEIVABLES IN A PIECE OF PAPER WAS FOUND. SINCE THE CORRESPONDING SALES WERE NOT RECORDED IN THE BOOKS OF ACCOUNT, ACCORDING TO THE LD.DR, THE AMOUNT SHOWN AS RECEIVABLES ON A SHEET OF PAPER IS SUPPRESSED TURNOVER OF THE ASSESSEE. THEREFORE, IT WAS ADDED TO THE UNDISCLOSED INCOME OF THE ASSESSEE. ACCORDING TO T HE LD.REPRESENTATIVE, THE ASSESSEE HAS NOT OBJECTED TO TREAT THIS AMOUNT AS UNDISCLOSED INCOME 5 ITA NO. 03/COCH/2013 IN THE ASSESSMENT PROCEEDINGS. EVEN IN THE SECOND APPELLATE PROCEEDINGS BEFORE THIS TRIBUNAL, THE TRIBUNAL HAS OBSERVED THA T THE ASSESSEE HAS NOT OBJECTED TO TREAT THE AMOUNT AS UNDISCLOSED INCOME. ONCE THE ASSESSEE HAS NOT OBJECTED TO TREAT THIS AMOUNT AS UNDISCLOSE D INCOME, ACCORDING TO THE LD.DR, THE ASSESSING OFFICER HAS RIGHTLY LEVIED PENALTY. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE CLAIMS THAT GOLD JEWELLERY WAS SOLD ON CREDIT TO THE FRIENDS AND REL ATIVES AND THE AMOUNT RECEIVABLE WERE RECORDED AS RECEIVABLES. IT IS AN ADMITTED FACT THAT JEWELLERY SOLD ON CREDIT WAS NOT RECORDED IN THE BO OKS OF ACCOUNT. WHAT WAS FOUND DURING THE COURSE OF SEARCH OPERATION IS THE AMOUNT SHOWN AS RECEIVABLES. THEREFORE, IN THE ABSENCE OF CORRESPO NDING BOOKS OF ACCOUNT FOR THE SALE OF JEWELLERY IN THE REGULAR COURSE OF BUSINESS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE AMOUNT SHOWN AS REC EIVABLES HAS TO BE TREATED AS UNDISCLOSED INCOME. 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIO NS OF SECTION 158BB(1)(D) OF THE ACT. NO DOUBT, THIS SECTION MAK ES IT CLEAR THAT IF THE TIME LIMIT FOR FILING RETURN OF INCOME HAS NOT EXPI RED, THEN THE INCOME FROM THE TRANSACTIONS ENTERED IN THE BOOKS OF ACCOUNT OR ANY OTHER DOCUMENTS MAINTAINED IN THE REGULAR COURSE OF BUSINESS HAS TO BE EXCLUDED FROM THE 6 ITA NO. 03/COCH/2013 COMPUTATION OF INCOME. IN THIS CASE, WHAT WAS FOUN D DURING THE COURSE OF SEARCH OPERATION IS THE AMOUNT SHOWN AS RECEIVABLES . THOUGH THE ASSESSEE CLAIMS THAT THIS IS THE DOCUMENT MAINTAINE D IN THE REGULAR COURSE OF BUSINESS, THIS TRIBUNAL IS OF THE CONSIDERED OPI NION THAT THE AMOUNT SHOWN AS RECEIVABLES IN A PIECE OF PAPER CANNOT BE TREATED AS BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE OF BUSINES S IN THE ABSENCE OF A CORRESPONDING ENTRY IN RESPECT OF THE CREDIT SALES IN THE BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE OF BUSINESS. ADMI TTEDLY, THERE IS NO CORRESPONDING ENTRY IN THE REGULAR COURSE OF BUSINE SS FOR SALE OF JEWELLERY ON CREDIT. THEREFORE, WHAT WAS RECORDED IN A PIECE OF PAPER AS AMOUNT RECEIVABLE HAS TO BE TREATED AS TURNOVER OUTSIDE TH E BOOKS OF ACCOUNT. THEREFORE, THIS TRIBUNAL IS UNABLE TO ACCEPT THE CO NTENTIONS OF THE ASSESSEE THAT THE SEIZED DOCUMENT WHICH DISCLOSES T HE AMOUNT RECEIVABLES ON CREDIT SALE HAS TO BE TREATED AS DOC UMENT MAINTAINED IN THE REGULAR COURSE OF BUSINESS. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS R IGHTLY LEVIED PENALTY WHICH IS ALSO RIGHTLY CONFIRMED BY THE CIT(A). 7. NOW COMING TO THE QUANTUM OF PENALTY, NO DOUBT, A DISCRETION WAS GIVEN TO THE ASSESSING OFFICER TO LEVY PENALTY EITH ER AT 100% OR UPTO 300%. THE ASSESSING OFFICER HAS LEVIED PENALTY AT 200% OF THE TAX LEVIABLE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE F ACTS AND CIRCUMSTANCES OF 7 ITA NO. 03/COCH/2013 THIS CASE, LEVY OF PENALTY AT 100% WOULD MEET THE E NDS OF JUSTICE. ACCORDINGLY, THE PENALTY ORDER IS MODIFIED TO THIS EXTENT BY DIRECTING THE ASSESSING OFFICER TO LEVY PENALTY AT 100% OF THE TA X LEVIABLE INSTEAD OF 200% LEVIED BY THE ASSESSING OFFICER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH NOVEMBER, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 13 TH NOVEMBER, 2013 PK/- COPY TO: 1. C.P. ABDURAHIMAN, C/O THEYYAMPATTIL JEWELLERY, P UTHANATHANI, MALAPPURAM 2. A.C.I.T., CIR.2(2), TIRUR 3. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE 4. THE COMMISSIONER OF INCOME-TAX(A), KOZHIKODE 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH