AHMED ALIJI & CO., MUMBAI V. DCIT 24(3), MUMBAI

ITSSA 32/MUM/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8180 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-03-2010
• Assessment Year: misc
• Appeal Filed On: 09-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: B V JAHVERI
• Keywords: Block assessment

Judgement Text

1 IT(SS) NO.31 & 32/MUM/2009 (BLOCK PERIOD 1.4.91 TO 9.1.2001 ) IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI A AA A BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI R S SYAL, R S SYAL, R S SYAL, R S SYAL, AM AMAM AM & SHRI & SHRI & SHRI & SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM IT ITIT IT(SS) NO.31 &32/MUM/2009 (SS) NO.31 &32/MUM/2009 (SS) NO.31 &32/MUM/2009 (SS) NO.31 &32/MUM/2009 ( (( (BLOCK PERIOD 1.4.91 TO 9.1.2001 BLOCK PERIOD 1.4.91 TO 9.1.2001 BLOCK PERIOD 1.4.91 TO 9.1.2001 BLOCK PERIOD 1.4.91 TO 9.1.2001 ) )) ) M/S AHMED ALIJI &CO UNIT NO. 19 AAREY MILK COLONY GOREGAON (E) MUMBAI VS THE DY COMMR OF INCOME TAX 24(3), MUMBAI ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. AAAFA0609H AAAFA0609H AAAFA0609H AAAFA0609H A SSESSEE BY SHRI B V JAHVERI REVENUE BY SHRI P DAS PER PER PER PER VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO, , , , JM JMJM JM BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST THE COMPOSITE ORDER OF THE CIT(A) DATED 16.12.2008. AP PEAL IN IT(SS) NO. 31MUM/ 2009 IS ARISING FROM THE PENALTY ORDER U/S 158BFA( 2) WHEREAS THE APPEAL IN IT(SS) 32/M/209 IS ARISING FROM THE ORDER PASSED BY THE ASSESSING OFFICER GIVING APPEAL EFFECT TO THE ORDER OF THE CIT(A) DATED 8.3. 2007. 2 FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PART NERSHIP FIRM ENGAGED IN THE BUSINESS OF DIARY FARMING. A SEARCH AND SEIZUR E ACTION WAS CARRIED OUT AT THE PREMISES OF THE PARTNER OF THE ASSESSEE FIRM ON 9.1 .2001. THE ASSESSING OFFICER PASSED THE ORDER U/S 158BD DT 30.9.2005 BY DETERMIN ING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD AT RS. 42,46,490/-. THE ASSES SEE FILED APPEAL BEFORE THE CIT(A) CHALLENGING THE JURISDICTION OF THE ASSESSIN G OFFICER TO ISSUE NOTICE U/S 158BD. THE CIT(A) REJECTED THE GROUND OF THE ASSESS EE CHALLENGING THE VALIDITY OF THE PROCEEDINGS INITIATED U/S 158BD. THE ASSESSEE C ARRIED THE MATTER BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE CIT(A) AND THE TR IBUNAL WHILE DISPOSING THE APPEAL OF THE ASSESSEE SET ASIDE THE ISSUE TO THE FILE OF THE CIT(A) VIDE ORDER 2 IT(SS) NO.31 & 32/MUM/2009 (BLOCK PERIOD 1.4.91 TO 9.1.2001 ) DATED 30.4.2010 FOR EXAMINING WHETHER THE REQUISITE CONDITIONS LAID DOWN U/S 158BD HAVE BEEN COMPLIED WITH OR NOT. 2.1 IN THE MEANWHILE, THE ASSESSING OFFICER PASSED ORDER DT 8.7.2008 GIVING EFFECT TO THE ORDER OF THE CIT(A) DT 8.3 2007. THE ASSESSING OFFICER HAS ALSO PASSED AN ORDER FOR LEVYING PENALTY U/S 258BFA(2) ON 28.11.2007.THE ASSESSEE CHALLENGED THE SAID ORDER OF GIVING EFFECT BEFORE THE CIT(A), MAINLY ON THE GROUND THAT THE ASSESSING OFFICER HAS TAKEN AN INC ORRECT FIGURE OF TURNOVER WHILE DETERMINING THE PROFIT AT 5% OF THE TURNOVER. THE ASSESSEE ALSO CHALLENGED THE ORDER PASSED U/S 158BFA(2). THE CIT(A) DISMISSED T HE APPEAL OF THE ASSESSEE AGAINST GIVEN EFFECT ORDER ON TECHNICAL GROUND THA T IN THE ORIGINAL APPEAL, ADJUDICATED BY THE CIT(A), THIS ISSUE WAS NOT RAISE D AND THE ASSESSING OFFICER WAS JUSTIFIED IN ADOPTING THE SAID FIGURE AS IN TH E ORIGINAL ASSESSMENT ORDER. THE CIT(A) NOT ONLY DISMISSED THE APPEAL OF THE ASSESS EE IN RESPECT OF THE GIVING EFFECT ORDER BUT HAS PASSED ENHANCEMENT ORDER WITH RESPECT TO THE DEDUCTION OF RS. 10,53,814/- ON ACCOUNT OF INTEREST AND REMUNERA TION TO THE PARTNER WHICH WAS ALLOWED BY THE ASSESSING OFFICER IN THE GIVING EFFECT ORDER. 2.2 AS REGARDS THE PENALTY LEVIED U/S 158BFA(2), TH E CIT(A) CONFIRMED THE LEVY OF PENALTY WHILE PASSING THE IMPUGNED ORDER. 3 BEFORE US THE LD AR OF THE ASSESSEE HAS POINTED O UT THAT IN THE ORIGINAL BLOCK ASSESSMENT ORDER, THE ASSESSING OFFICER HAS REPRODUCED THE DETAILS OF THE TURNOVER AS PER THE SEIZED MATERIAL AND THE FIGURE S GIVEN BY THE ASSESSING OFFICER AT PARA 2.1 OF THE SAID ORDER ARE RS. 14, 36,523/-; 43,04,580/- AND RS. 33,70,167/- TOTAL RS. 1,4,06,800/-. HE HAS FU RTHER POINTED OUT THAT THE ASSESSING OFFICER, IN THE ORIGINAL ASSESSMENT AGAIN RECORDED THE QUANTITY OF MILK AND THE TURNOVER OF THE SAME FIGURE AS RECORDED IN PARA 2.1; BUT AT THE END OF THE AMOUNT, HE HAS TOOK /- AS AN EXTRA DIGIT OF FI GURE AS 7. HE HAS THEN 3 IT(SS) NO.31 & 32/MUM/2009 (BLOCK PERIOD 1.4.91 TO 9.1.2001 ) SUBMITTED THAT IT IS APPARENT FROM THE ORIGINAL ASS ESSMENT ORDER ITSELF THAT THE ASSESSING OFFICER HAS TAKEN A WRONG FIGURE BY ADDIN G ONE DIGIT TO EACH AMOUNT OF THE TURNOVER AND IN THAT WAY, THE AMOUNT OF LACS HA S BEEN TREATED AS CRORES WHILE PASSING THE GIVING EFFECT APPEAL ORDER. THE CIT(A) HAS NOT ENTERTAINED THE GROUND OF THE ASSESSEE ON TECHNICAL REASONS THAT SI NCE THIS FIGURE IS COMING FROM THE ORIGINAL ASSESSMENT AND NOT FROM THE GIVING EFF ECT ORDER. 3.1 THE LD DR HAS RELIED THE ORDERS OF THE AUTHORIT IES BELOW. 4 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERU SED THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER HAS REPR ODUCED THE DETAILS OF THE QUANTITY OF THE MILK IN LITTER AS WELL AS THE AMOUN T OF TURNOVER AS PER SEIZED MATERIAL IN PARA 2. AS UNDER: PAGE NO. PAGE NO. PAGE NO. PAGE NO. PERIOD PERIOD PERIOD PERIOD QTY OF MILK(LTR) QTY OF MILK(LTR) QTY OF MILK(LTR) QTY OF MILK(LTR) AMOUNT AMOUNT AMOUNT AMOUNT 1 TO 10 06.09.98 TO 31.03.09 79052 14,36,523/- 11 TO 37 01.04.99 TO 31.03.2000 222578 43,04,580/ - 37 TO 57 01.4.2000 TO 06.01.2001 164804 33,70,167/- 4.1 IT HAS CLEAR FROM THE ABOVE DETAILS THAT THE TU RNOVER FIGURE WERE RS 14,36,523/-; 43,04,580/- AND RS. 33,70,167/-. TH E ASSESSING OFFICER , WHILE RECORDING THE WORKING OF THE COLLECTION OF THE PROD UCED MILK TOOK THIS FIGURE AS UNDER: PAGE NO. PAGE NO. PAGE NO. PAGE NO. PERIOD PERIOD PERIOD PERIOD QTY OF MILK(LTR) QTY OF MILK(LTR) QTY OF MILK(LTR) QTY OF MILK(LTR) AMOUNT AMOUNT AMOUNT AMOUNT 1 TO 10 06.09.98 TO 31.03.09 79052 14,36,5237- 11 TO 37 01.04.99 TO 31.03.2000 222578 43,04,5807- 37 TO 57 01.4.2000 TO 06.01.2001 164804 33,70,1677- 4.2 IT IS MANIFEST AND APPARENT FROM THESE TWO SET OF DETAILS AS RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT IN THE SUBSEQUENT TABLE 4 IT(SS) NO.31 & 32/MUM/2009 (BLOCK PERIOD 1.4.91 TO 9.1.2001 ) DETAILS, THE ASSESSING OFFICER ADDED THE NUMERICAL NO.7 AS AN ADDITIONAL DIGIT IN EACH OF THE 3 TURNOVER FIGURES. IT APPEARS THAT TH IS MISTAKE HAS BEEN CREPT BY TREATING /- BUT AT THE END OF EACH AMOUNT AS NO.7 . SINCE THE TURNOVER WAS NOT RELEVANT IN THE ORIGINAL ASSESSMENT ORDER WHILE MAK ING THE DISALLOWANCE BY THE ASSESSING OFFICER AND THEREFORE, THE ASSESSEE HAS N OT BROUGHT THIS MISTAKE IN THE NOTICE OF THE CIT(A) IN THE FIRST ROUND OF THE LITI GATION; BUT, WHILE GIVING EFFECT TO THE ORDER OF THE CIT(A), THE ASSESSING OFFICER TOO K WRONG AND INCORRECT FIGURE OF THE TURNOVER FOR COMPUTING THE INCOME @ 5%. THEREF ORE, IN OUR CONSIDERED OPINION, THERE IS APPARENT AND MANIFEST MISTAKE CRE PT, IN THE ORDER GIVING EFFECT TO THE ORDER OF THE CIT(A), WHICH REQUIRES TO BE RE CTIFIED. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RECTIFY THE MISTAK E IN THE FIGURE OF THE TURNOVER AND THEN COMPUTE THE INCOME OF THE ASSESSEE AS PER THE DIRECTION OF THE CIT(A). 5 NEXT GROUND OF THE ASSESSEE IS REGARDING THE ENHA NCEMENT MADE BY THE CIT(A), ON ACCOUNT OF DISALLOWANCE OF THE EXPENDITU RE OF INTEREST AND REMUNERATION, WHICH WAS ALLOWED BY THE ASSESSING OF FICER WHILE PASSING GIVING EFFECT ORDER OF THE CIT(A). 6 WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERUS ED THE RELEVANT MATERIAL ON RECORD. THE CIT(A) HAS DECIDED THE ISS UE IN THE FIRST ROUND OF LITIGATION VIDE HIS ORDER ( PAGE 90 OF THE PAPER BO OK.) THUS, IT IS CLEAR FROM THE ORDER OF THE CIT(A) THAT HE HAS FOLLOWED THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO CALCULATE THE PROFIT ON THE BASIS OF 5% OF TURNOVER. 6.1 IT IS TO BE NOTED THAT WHEN THE INCOME OF THE A SSESSEE HAS TO BE ESTIMATED AND COMPUTED AT 5% OF THE TURNOVER THEN THE CLAIM O F INTEREST AND REMUNERATION GIVEN TO THE PARTNER IS NOT ALLOWABLE. IT IS THE P ROFIT/INCOME TO BE COMPUTED @ 5% OF TURNOVER AND NOT THE GP RATE; THEREFORE, NO F URTHER DEDUCTION ON ACCOUNT 5 IT(SS) NO.31 & 32/MUM/2009 (BLOCK PERIOD 1.4.91 TO 9.1.2001 ) OF EXPENDITURE IS ALLOWABLE. ACCORDINGLY, WE DO NOT FIND ANY SUBSTANCE IN THE CLAIM OF THE ASSESSEE ON ACCOUNT OF INTEREST AND RE MUNERATION TO THE PARTNER AND THEREFORE, TO THAT EXTENT THE ORDER OF THE CIT(A) I S UPHELD. 7 HOWEVER, WE MAKE IT CLEAR THAT SINCE THE TRIBUNAL HAS ALREADY SET ASIDE THE ISSUE OF JURISDICTION OF THE ASSESSING OFFICER U/S 158BD TO THE RECORD OF THE CIT(A); THEREFORE, THE GIVING EFFECT ORDER IS SUBJE CT TO THE OUTCOME OF THE ISSUE OF JURISDICTION TO BE DECIDED BY THE CIT(A) IN THE S ET ASIDE PROCEEDINGS. 8 SINCE THE ORDER OF THE CIT(A) HAS BEEN SET ASIDE BY THE TRIBUNAL FOR DECIDING THE ISSUE AFRESH ON THE POINT OF JURISDICT ION OF THE ASSESSING OFFICER U/S 158BD; THEREFORE, SET ASIDE THE ORDER OF THE PENALTY U/S 158BFA(2) TO THE RECORD OF THE ASSESSING OFFICER WITH A LIBERTY TO PASS AN APPROPRIATE ORDER AS PER THE OUTCOME OF THE SET ASIDE PROCEEDINGS BEFORE THE CIT(A). FURTHER, THE ASSESSING OFFICER HAS ALSO TO CONSIDER THE EFFECT O F THE RECTIFICATION OF THE TURNOVER FIGURE WHILE PASSING ANY CONSEQUENT ORDER U/S 158BFA(2). 9 IN THE RESULT, THE APPEAL IN IT(SS) 31/M/2009 IS PARTLY ALLOWED WHEREAS THE IT(A) 32/MUM/2009 IS ALLOWED FOR STATISTICAL PURPOS E. ORDER PRONOUNCED ON THE 30 TH , DAY OF JUNE 2011. SD/- SD/- ( (( ( R S SYAL R S SYAL R S SYAL R S SYAL ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH , JUNE 2011 RAJ* 6 IT(SS) NO.31 & 32/MUM/2009 (BLOCK PERIOD 1.4.91 TO 9.1.2001 ) COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI