GULSAHN KUMAR STISH KUMAR, Kota V. ACIT, Kota

ITSSA 3/JPR/2011

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8077 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 14-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Block assessment
• Section: 273B; 15

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L. KALRA) ITSSA NO.3/JP/2011 ASSESSMENT YEAR : 01.04.1990 TO 07.04.2000 M/S. GULSHAN KUMAR SATISH KUMAR VS. A.C.I.T., KOTA CIRCLE-2, KOTA. (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING: 25.08.2011 DATE OF PRONOUNCEMENT: 09.09.2011 ORDER PER SHRI N.L. KALRA, A.M. 1. THE ASSESSEE HAS FILED AN APPEAL AGAINST AN ORDE R OF LD CIT (A) AJMER DATED 10.12.2010. 2. THE GRIEVANCE OF THE ASSESSEE IS AGAINST CONFIRM ATION OF PENALTY U/S 158 BFA (2) OF RS.76,250/- 3. THE APPEAL WAS ADJOURNED TO 25.08.2011 AT THE RE QUEST OF ASSESSEES A/R. THE ASSESSEES A/R FILED A PAPER BOOK DATED 20.8.2011. WHICH WAS RECEIVED THROUGH POST ON 23.8.2011. WE THEREFORE DECIDE THE APPEAL ON THE BA SIS OF PAPER BOOK. 2 4. SEARCH OPERATIONS WERE CONDUCTED ON 7.4.2000 AND BLOCK ASSESSMENT WAS MADE ON 30.5.2002. THE ASSESSEE SHOWED UNDISCLOSED INCOM E OF RS.1,25,000/- IN THE RETURN FILED IN PURSUANCE TO NOTICE U/S 158 BC. IN RESPECT OF THE FOLLOWING ADDITIONS, PENALTY U/S 158 BFA(2) HAS BEEN IMPOSED. ADDITION ON A/C OF UNDISCLOSED INVESTMENT IN DRAFT S = RS.77,082/-. ADDITION ON A/C OF SUPPRESSION OF SALES = RS.50,00 0/-. 5. DURING THE COURSE OF SEARCH DRAFTS FOR RS.77,082 /- WERE FOUND & THESE WERE ENCASHED BY THE ASSESSEE ON THE DAY OF SEARCH AND C ASH SO RECEIVED WAS INCLUDED IN THE CASH FOUND DURING SEARCH. THE LD. A.O. WHILE MAKING ADDITION OBSERVED AS UNDER: IN ADDITION TO ABOVE, DRAFTS FOR RS.77,082/- WAS AL SO FOUND ON THE DATE OF SEARCH. THESE DRAFTS WERE GOT ENCASHED AND AN AMOUN T OF RS.77,082/- WAS SEIZED AS ALREADY EXPLAINED EARLIER. THE ASSESSEE W AS ASKED TO EXPLAIN THE SOURCE OF RECEIPT OF THE DRAFTS. THE ASSESSEE VIDE ITS LETTER DATED 16.05.2002 HAS STATED AS FOLLOWS: THESE DD ARE TOWARDS PAYMENT OF GARLIC SENT FOR SALE OUTSIDE KOTA BY SHRI PARAS KUMAR. THE DRAFTS WER E SENT IN OUR NAME. THE SUBMISSIONS OF THE ASSESSEE WERE CONSIDERED. TH E ASSESSEE HAS GIVEN A VAGUE REPLY REGARDING THE AVAILABILITY OF THE DRAFT S. THE DRAFTS WERE IN THE NAME OF THE ASSESSEE, THEY HAVE BEEN RECEIVED BY TH E ASSESSEE FROM OUTSIDE PARTIES TO WHOM SALES HAVE BEEN MADE WHICH HAVE NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS. INSPITE OF A NUMBER OF OPPOR TUNITIES THE ASSESSEE HAS FAILED TO PROVE THE NAMES AND CONFIRMATION OF T HE PARTIES FROM WHOM THESE DRAFTS HAVE BEEN RECEIVED BY HIM. SINCE ASSES SEE HAS FAILED TO PROVE THE JUSTIFICATION REGARDING DRAFTS OF RS.77,082/-, THIS AMOUNT IS ALSO ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD AN ADDITION OF RS.1,38,677/- (RS.61585/- + RS.77,082/-) 6. THE DRAFTS WERE CLAIMED TO BE BELONGING TO SOME OTHER PERSON. DRAFTS WERE ENCASHED AT THE TIME OF SEARCH AND THERE IS NO EVID ENCE OF MAKING PAYMENT TO OTHERS. THE TRIBUNAL WHILE DECIDING THE QUANTUM APPEAL OBSERVED AS UNDER: 3 AFTER PERUSAL OF THE FACTS, WE FIND THAT THE ASSESS EES CASH BOOK WAS NOT COMPLETED FOR FEW DAYS WHICH WAS COMPLETED BY THE A SSESSEE FROM THE MATERIAL SEIZED I.E. UGAIS RECEIPTS REGISTER AND TH E CASH FOUND WAS TALLIED WITH THE CASH BOOK SO COMPLETED AND THE LD. CIT (A) , THEREFORE HAD RIGHTLY TREATED THE SAME CASH IN HAND OF RS.64,690/- AS EXP LAINED AND HAVE RIGHTLY DELETED THE ADDITION OF RS.61,585/-. THE ASSESSEE I S NOT IN APPEAL BEFORE US FOR BALANCE OF ADDITION OF RS.77,082/-. HENCE WE FI ND NO INFIRMITY IN THE ORDER OF LD. CIT (A). 7. IN THE REPLY TO THE SHOW CAUSE, THE ASSESSEE STA TED THAT LD. CIT (A) HAS COVERED THE ADDITION OF RS.77,082/- BY TELESCOPING IT TO UNDISC LOSED INCOME OF RS.1,75,000/-. 8. ANOTHER ADDITION WAS OF RS.50,000/- AND SUCH ADD ITION WAS TELESCOPED WITH ADDITION OF RS.77,082/-. THE A.O. HAS IMPOSED PENAL TY ON THE AFORESAID TWO ADDITIONS. 9. THE LD. CIT (A) AFTER CONSIDERING THE VARIOUS CA SE LAWS CITED BY THE LD. A/R HAS CONFIRMED THE PENALTY AFTER OBSERVING AS UNDER: WHEN THE PRESENT CASE IS EXAMINED IN VIEW OF THIS L EGAL POSITION, IT IS FOUND THAT APPELLANT WAS NOT SHOWING CORRECT INCOME FOR VARIOUS YEARS IN HIS RETURNS PRIOR TO SEARCH AT HIS PREMISES. SEARCH WAS CONDUCTED ON 7.4.2000 AT THE PREMISES OF APPELLANT. APPELLANT FI LED HIS RETURN ON 8.4.2002 DECLARING INCOME OF RS.1,25,000/- FOR THE BLOCK PERIOD. HOWEVER EVEN THE DISCLOSURE OF INCOME IN THIS RETURN WAS NO T TRUE AND FULL AND THE ASSESSMENT WAS COMPLETED BY MAKING VARIOUS ADDITION S AS MENTIONED EARLIER. ADDITIONS OF RS.1,27,082/- WERE ALSO CONFI RMED BY HONBLE ITAT. IN SUCH A SITUATION AO HAS RIGHTLY CONCLUDED THAT A PPELLANT FURNISHED INACCURATE PARTICULARS OF HIS INCOME, IN THE RETURN FILED BY HIM ON 8.4.2002. IN THIS CASE IT IS NOT ESTABLISHED THAT T HE CONDUCT AND EXPLANATION OF APPELLANT WAS BONAFIDE, THEREFORE THE CASE FALLS IN CATEGORY (B) OF PARA 4.15 AS MENTIONED ABOVE. THE LEVY OF PENALTY U/S 15 8 BFA(2) IS THEREFORE JUSTIFIED IN THIS CASE PURSUANT TO THE DECISION OF DHARMENDRA TEXTILES. MOREOVER, IN THE CASE OF SHRI DINA NATH JAIN, HONB LE ITAT, JAIPUR BENCH IN ITS ORDER DATED 29.08.2008 IN ITA NO. 08/J P/08 HAS MADE THE FOLLOWING OBSERVATION:- 4 SECTION 158 BFA PROVIDES THAT WHERE THE UNDISCLOSE D INCOME DETERMINED IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN, THE PENALTY SHALL BE LEVIABLE. IN THE INSTANT CASE, THE UNDISCLOSED INCO ME WHICH IS FINALLY DETERMINED AFTER THE OUTCOME OF THE ORDER OF THE TR IBUNAL DATED 28.07.2006 IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN, THEREFORE, WE REVERSE THE ORDER OF THE CIT (A) IN DELETING THE PE NALTY ON THOSE ADDITIONS WHICH HAVE BEEN HELD TO BE MADE ON ESTIMATION BASIS . IN LEVYING THE PENALTY U/S 158 BFA (2), THE ONLY REQUIREMENT IS TO SEE THAT WHETHER THE INCOME DETERMINED IS IN EXCESS OF INCOME SHOWN IN T HE RETURN OR NOT. IF THE INCOME DETERMINED IS IN EXCESS, THE PENALTY IS LEVI ABLE AND IF NOT THEN PENALTY IS NOT LEVIABLE. THERE IS NO QUESTION THAT PENALTY WILL NOT BE LEVIABLE IF THE ADDITIONS HAVE BEEN SUSTAINED ON ES TIMATION BASIS. RESPECTFULLY FOLLOWING THE ABOVE DECISION, I HOLD T HAT PENALTY U/S 158BFA (2) IS LEVIABLE IN THIS CASE. PENALTY OF RS.76,250/ - IS THEREFORE CONFIRMED. GROUND NO.1 IS THUS DISMISSED. 10. THE WRITTEN SUBMISSIONS OF THE ASSESSEE ARE AVA ILABLE AT PAGES 35 TO 42 OF THE PAPER BOOK. THE SUBMISSIONS IN BRIEF ARE AS UNDER: (I) TELESCOPING BENEFIT OF RS.50,000/- GIVEN IN COM PUTING UNDISCLOSED INCOME BUT NOT CONSIDERED IN PENALTY. (II) ADDITION OF RS.50,000/- IS ON ESTIMATE BASIS. (III) PENALTY U/S 158 BFA (2) IS NOT AUTOMATIC. (IV) NO PENALTY IN CASE ADDITION IS ON ESTIMATE BAS IS. (V) PENALTY CAN BE LEVIED IN CASE ASSESSEE HAS CONS CIOUSLY MADE THE CONCEALMENT OF INCOME. (VI) LD. CIT (A) HAS RELIED ON THE DECISION OF APEX COURT IN THE CASE OF DHARMENDAR TEXTILE PROCESSOR (306 ITR 277). THIS DECISION IS N OT APPLICABLE AS IT DOES NOT LAY THAT IMPOSITION OF PENALTY IS AUTOMATIC. (VIII) ON THE OTHER HAND THE LD D/R SUPPORTED THE O RDER OF LD CIT (A). 5 (IX) WE HAVE HEARD BOTH THE PARTIES PENALTY U/S 158 BFA (2) IS DISCRETIONARY. WE REPRODUCE OUR FINDING IN THE CASES OF ACIT U/S SHAN TI BAI YADAV ITSSA NO. 21/JP/2001 AS PER ORDER DATED 14.07.2011. WE HAVE HEARD BOTH THE PARTIES. THE FIRST ISSUE BEF ORE US IS TO DECIDE AS TO WHETHER PENALTY IMPOSABLE U/S 158BFA(2) IS DISCRETI ONARY OR NOT WE HAVE PERUSED THE DECISIONS RELIED UPON BY THE LD. DR WIT H RESPECT TO THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. THE REFORE, THESE CASE LAWS ARE OF NO HELP TO THE REVENUE IN DECIDING THE ISSUE BEFORE US AS PENALTY U/S 158 BFA (2) IS DIFFERENT FROM PENALTY U/S 271 (1) ( C) AS BOTH SECTIONS ARE DIFFERENTLY WORDED. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SATYENDER KUMAR DOSHI (SUPRA) HELD THAT IT C ANNOT BE INFERRED THAT ABSENCE OF THE CIRCUMSTANCES ENUMERATED IN THE PROVISIO TO SECTION 158BFA(2) WILL ATTRACT PENALTY AUTOMATICALLY. THERE IS NO PRESUMPTION THAT IMPOSITION OF PENALTY IS AUTOMATIC OR ANY FAIL URE OR VIOLATION IN RESPECT OF THE CASES OTHER THAN THOSE COVERED BY SE CTION 273B OF THE ACT. THE HONBLE DELHI HIGH COURT IN THE CASE CIT VS HAR KARAN DAS VED PAL, 222 CTR 438 HELD THAT LEVY OF PENALTY U/S 158 BFA ( 2) IS DISCRETIONARY AND NOT MANDATORY AND THEREFORE, HELD THAT PENALTY CANNOT BE IMPOSED IN CASE BLOCK ASSESSMENT IS MADE ON THE BASIS OF BENEF IT SURRENDERED BY THE ASSESSEE DEHORS ANY EVIDENCE OF UNDISCLOSED INCOME FOUND DURING SEARCH. THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS HEERA CONSTRUCTION CO. (P) LTD. 2011-TIOL-351-HC-KER HELD THAT IF ANY ADDITION IS MADE IN RESPECT OF UNDISCLOSED INCOME TO THE RETURNED INCOM E THEN PENALTY IS DISCRETIONARY. THERE ARE VARIOUS DECISIONS IN WHICH IT HAS BEEN HELD THAT PENALTY IS DISCRETIONARY. SINCE WE ARE HAVING THE B ENEFIT OF HONBLE JURISDICTIONAL HIGH COURT THEREFORE, WE ARE NOT REF ERRING TO OTHER DECISIONS OF THE TRIBUNALS. 11. THE A.O. AT PAGE 2 OF THE PENALTY ORDER HAS MEN TIONED THAT TOTAL UNDISCLOSED INCOME DETERMINED IS RS.2,02,085/- AS AGAINST RS.1, 25,000/-. HENCE ADDITION OF RS.50,000/- IS TELESCOPED, WHICH MEANS UNDISCLOSED INCOME IS RS.77,082/-. PENALTY IS TO BE LEVIED ON UNDISCLOSED INCOME DETERMINED U/S 158 BC (C) AS PER 158 BFA (2). PENALTY IS NOT LEVIABLE IN RESPECT OF UNDISCLOSED INCOME SH OWN IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 158 BC IN CASE THE ASSESSEE HAS PAID TAX ON THAT INCOME. HENCE PENALTY IS LEVIABLE ON UNDISCLOSED INCOME OF RS.77,082/-. IN R ESPECT OF DRAFT OF RS.77,082/-, THE 6 ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THAT PAY MENT WAS FOR ANOTHER PERSON. MERE SUBMISSION IS NOT SUFFICIENT. NO OTHER MATERIAL TO SHOW THAT PAYMENT HAS ACTUALLY BEEN MADE. WE THEREFORE FEEL THAT PENALTY U/S 158 BFA (2 ) IS LEVIABLE IN RESPECT OF UNDISCLOSED INCOME OF RS.77,082/- THE A.O. WILL COMPUTE THE MIN IMUM PENALTY. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN OPEN COURT ON 09.09.201 1 SD/- SD/- (R.K.GUPTA) (N.L.KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 09.09.2011 *S.KUMAR* COPY FORWARDED TO:- 1. M/S. GULSHAN KUMAR SATISH KUMAR,KOTA. 2. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTA 3. THE CIT 4. THE CIT(A), 5. THE D/R, ITAT, JAIPUR 6. THE GUARD FILE IN ITSSA NO.3/JP/2011 BY ORDER A.R., I.T.A.T., JAIPUR