Aditya Medisales Limited, Baroda V. The Dy.CIT.,Circle-1(1), Baroda

ITSSA 320/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0798 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-07-2015
• Assessment Year: misc
• Appeal Filed On: 04-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JANGID
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business expenditure
• Section: 15

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ IT(SS)A NO.320/AHD/2011 /BLOCK ASSTT. YEAR: 1988-89 TO 7.12.1998 ADITYA MEDISALES LTD. 402, 4 TH FLOOR, R.K. CENTRE FATEHGUNJ, BARODA. PAN : VS DCIT, CIR.1(1) BARODA. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR REVENUE BY : SHRI J.P. JANGID / DATE OF HEARING : 08/07/2015 / DATE OF PRONOUNCEMENT: 17/07/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(A)-I, BARODA DATED 4.1.2001 PASSED FOR THE BLOCK PERIOD STARTING FROM 1988-89 TO 7.12.1998 . 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE LD.CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.3.00 LAKHS UNDER SECTION 158BFA(2) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 7.12.1 998 UNDER SECTION IT(SS)A NO.320/AHD/2011 2 132 OF THE ACT. IN RESPONSE TO THE NOTICE RECEIVED UNDER SECTION 158BC, THE ASSESSEE FILED ITS RETURN ON 14.5.1999 DECLARIN G UNDISCLOSED INCOME OF RS.39,33,900/-. THE ASSESSMENT UNDER SECTION 15 8BFA(B) OF THE INCOME TAX ACT, 1961 WAS FINALIZED ON 29.12.2000. DURING THE COURSE OF SEARCH A LOOSE PAPER EXHIBITING PAYMENT OF RS.5. 00 LAKHS TO ANDHRA PRADESH LEGISLATIVE PARTY (CPI) ELECTION FUND WAS F OUND. WHILE FILING RETURN FOR THE BLOCK PERIOD, THE ASSESSEE DID NOT I NCLUDE THIS AMOUNT IN THE UNDISCLOSED INCOME. THE LEARNED AO HAS MADE AD DITION OF THIS AMOUNT ON THE GROUND THAT IT IS NOT ALLOWABLE DEDUC TION TO THE ASSESSEE. THE ADDITION STANDS CONFIRMED UPTO THE T RIBUNAL, VIDE IT(SS)A.NO.71/AHD/2001. THE LEARNED AO HAS INITIAT ED PENALTY PROCEEDINGS UNDER SECTION 158BFA(2), AND AFTER HEAR ING THE ASSESSEE IMPOSED PENALTY OF RS.3.00 LAKHS, WHICH IS EQUIVALE NT TO TAX SOUGHT TO BE EVADED BY THE ASSESSEE BY NOT INCLUDING THE ALLE GED SUM OF RS.5.00 LAKHS IN THE UNDISCLOSED INCOME. 4. THE APPEAL TO THE CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. 5. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV E, WE HAVE GONE THROUGH THE RECORD CAREFULLY. 6. ON VISUALIZATION OF THE SCHEME OF BLOCK ASSESSME NT UNDER CHAPTER XIV-B OF THE INCOME TAX ACT, IT IS PERTINENT TO MEN TION THAT THE INCOME FOR THE BLOCK PERIOD IS TO BE DETERMINED ON THE BAS IS OF SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THE SEIZED MATE RIAL IS TO BE SUPPLIED TO THE ASSESSEE, AND OUT OF THAT SEIZED MATERIAL TH E ASSESSEE HAS TO COMPUTE ITS TRUE UNDISCLOSED INCOME. THE INCOME I N THE ASSESSMENT ORDER HAS BEEN DETERMINED ON A HIGHER FIGURE THAN T HE ONE DISCLOSED BY THE ASSESSEE. THUS, FOR THE PURPOSE OF VISITING TH E ASSESSEE WITH PENALTY UNDER SECTION 158BFA(2), THE CHARGE AGAINST THE ASSESSEE CAN BE, WHY IT FAILED TO COMPUTE TRUE UNDISCLOSED INCOM E FROM THE SEIZED MATERIAL SUPPLIED BY THE AO ALONG WITH NOTICE. IT IS NOT A QUESTION OF CONCEALED INCOME, BECAUSE, THE AO HAS TO DETERMINE THE INCOME FOR THE IT(SS)A NO.320/AHD/2011 3 BLOCK PERIOD FROM THE SEIZED MATERIAL ONLY. THE MA TERIAL CONSIDERED IS COMMON FOR THE ASSESSEE AS WELL AS THE AO. THE ASS ESSEE IS COMPUTING A DIFFERENT FIGURE WHILE FILING THE RETURN, WHEREAS THE AO IS COMPUTING ALTOGETHER DIFFERENT INCOME. WE FIND IN THE PRESEN T CASE THAT THE ASSESSEE HAD BEEN GIVING SUCH DONATIONS FOR THE PAS T FOR CREATING CONDUCIVE BUSINESS ENVIRONMENT NEAR ITS PLANT. IT REMAINED UNDER AN IMPRESSION THAT IT IS A BUSINESS EXPENDITURE WHICH WOULD HARMONIZE ITS RELATIONS WITH THE LOCAL POLITICIANS, WHICH COULD E NABLE IT TO CONDUCT THE BUSINESS SMOOTHLY. BECAUSE OF THIS REASON, THE ASS ESSEE MIGHT HAVE NOT INCLUDED THIS AMOUNT IN TRUE UNDISCLOSED INCOME IN RESPECT OF AVAILABILITY OF SEIZED MATERIAL REPRESENTING THIS A MOUNT. IN OUR OPINION, THERE IS NO DELIBERATE ATTEMPT AT THE END OF THE AS SESSEE FOR COMPUTING INCORRECT UNDISCLOSED INCOME. PROBABLY, IT IS A PE RCEPTIONAL DIFFERENCE BETWEEN THE ASSESSEE AND THE AO QUA A PARTICULAR NATURE OF EXPENDITURE. THEREFORE, LOOKING TO THE FACTS AND C IRCUMSTANCES OF THE CASE, THE ASSESSEE DOES NOT DESERVE TO BE VISITED W ITH PENALTY. WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE PEN ALTY. 7. IN THE RESULT OF THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY 17 TH DAY OF JULY, 2015 AT AHMEDABAD. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER