Shri Vishwanath Agrawal, Harda V. The ACIT., Bhopal

ITSSA 33/IND/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8078 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-08-2011
• Assessment Year: misc
• Appeal Filed On: 25-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: H P VERMA
• Keywords: Loose papers; Block assessment

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER IT(SS)A NO.33/IND/2010 B.P. 1.4.1995 TO 27.11.2001 VISHWANATH AGRAWAL, HARDA PAN ACOPA 6235 B APPELLANT VS ACIT-3(1), BHOPAL RESPONDENT ASSESSEE BY : SHRI H.P. VERMA & SHRI ASHISH GOYAL DEPARTMENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 18.8.2011 DATE OF PRONOUNCEMENT : .9.2011 O R D E R PER JOGINDER SINGH THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER DA TED 12.10.2009 OF THE LEARNED CIT(A)-II, BHOPAL, ON THE GROUND THAT 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY ERRED IN CONFIRMING THE PENALTY OF RS. 55,000/-, IMPOSED U/S 158BFA(2) FOR CONCEALMENT OF INCOME ON THE ADDITION OF RS. 91,100/-, BEING INVESTMENT IN M ACHINERY, WITHOUT CONSIDERING THE EXPLANATION OF THE ASSESSEE . 2. DURING HEARING WE HAVE HEARD SHRI H.P.VERMA ALONGWITH SHRI ASHISH GOYAL, LD. COUNSEL FOR ASSESS EE AND SHRI ARUN DEWAN, LD.SR.DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE ADDITION WAS MADE PUREL Y ON ESTIMATE BASIS THAT TOO IN BLOCK ASSESSMENT, WHICH IS NOT PERMISSIBLE. IT WAS ALSO POINTED OUT THAT BEING THE AMOUNT WAS SMALL, THEREFORE, THE ASSESSEE DID NOT PREFER QUANT UM APPEAL BEFORE THE TRIBUNAL AND THE APPEAL OF THE REVENUE W AS DISMISSED BY THE TRIBUNAL. ON THE OTHER HAND, THE LD.SR.DR SHRI ARUN DEWAN, DEFENDED THE IMPOSITION OF PENALTY BY PLACING RELIANCE UPON THE IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3 4. BRIEF FACTS ARE THAT SEARCH WAS CONDUCTED ON 27.11.2001 AT THE PREMISES OF THE ASSESSEE, WHEREIN CERTAIN BOOKS OF ACCOUNT, LOOSE PAPERS AND CASH WAS SEIZED. THE SEARCH WAS AT THE PREMISES OF SHRI EKNATH AGRAWAL G ROUP AND THE IMPUGNED ASSESSEE AND THE OTHER GROUP CONCERNS WERE INCORPORATED. THE ASSESSEE IS AN INDIVIDUAL AND PRO PRIETOR OF M/S. VISHWANATH OILS AND M/S. VISHWANATH FLOUR INDU STRIES. THE ASSESSEE DERIVES INCOME FROM MANUFACTURING OF O IL AND FLOUR, SALARY FROM FIRMS BESIDES HOUSE PROPERTY INC OME. THE ASSESSEE IS ALSO PARTNER IN M/S. GANPAT PANNALAL AN D VISHWA VIVEK GINNING FACTORY. THE ASSESSEE IS ASSESSED TO TAX FOR THE LAST MANY YEARS AND CLAIMS MAINTAINING REGULAR BOOK S OF ACCOUNT. THE BLOCK ASSESSMENT WAS COMPLETED U/S 158 BC READ WITH SECTION 143(2) ON 28.11.2003 AT AN INCOME OF R S. 28,73,645/- AGAINST RETURNED UNDISCLOSED INCOME OF RS. 2,99,300/-. ON APPEAL, THE LD CIT(A) VIDE ORDER DAT ED 6.5.2004 DELETED THE ADDITIONS EXCEPT THE ADDITION OF RS. 91 ,000/-. AGAINST THAT ORDER THE LD CIT(A), THE DEPARTMENT AS WELL AS THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL WHERE IN THE 4 ADDITION OF RS. 91,000/-, BEING UNRECORDED INVESTM ENT IN MACHINERY, WAS CONFIRMED. THE VALUE OF THE MACHINER Y PERTAINING TO VISHWANATH FLOUR INDUSTRIES WAS ESTIM ATED AT RS. 1,39,100/- BY THE SEARCH PARTY. IN BLOCK ASSESSMENT PROCEEDINGS, THE ADDITION OF RS. 1,39,100/- WAS MAD E BEING UNRECORDED INVESTMENT IN MACHINERY OUT OF WHICH THE MACHINERY VALUING AT RS. 59,900/- WAS FOUND RECORDE D IN THE BOOKS OF ACCOUNT AND AS PER THE ASSESSEE THE REMAIN ING AMOUNT OF RS. 61,000/- WAS DECLARED AS UNDISCLOSED INCOME IN THE BLOCK RETURN. THE CLAIM OF THE ASSESSEE IS THAT THE DIFFERENCE OF RS. 91,100/- IS DUE TO ESTIMATION OF VALUE OF MACHINERY WHICH IS TOWARDS HIGHER SIDE. THE ASSESSI NG OFFICER LEVIED PENALTY OF RS. 55,000/- ON THE REMAINING ADD ITION OF RS. 91,100/- U/S 158BFA(2), WHICH WAS AFFIRMED BY THE L D. CIT(A) AND IS UNDER CHALLENGE BEFORE THIS TRIBUNAL. 5. BEFORE COMING TO ANY CONCLUSION, WE ARE SUMMARIZING HEREUNDER THE AMOUNT OF INVESTMENT IN T HE MACHINERY, SO THAT A FAIR CONCLUSION CAN BE ARRIVED AT. 5 DISCLOSED IN REGULAR RETURN FOUND UNDISCLOSED ITEM AMO UNT ITEM AMOUNT ITEM AMOUNT 1 GENERATOR ( 15 HP 39,400 3 GENERATORS ( TWO 8 HP & ONE 15 HP) ESTIMATED RS. 67,000 2 GENERATORS ( 8 HP) RS. 27,600 ( I) FIVE SHEETS CHAINA ( QTY 1) (II) ELEVATOR ( QTY 3) (III) FANS ( QTY 2) (IV) DESTONATOR (QTY2) 20,500 (I) FIVE SHEETS CHAINA (II) ELEVATOR (QTY 3) (III) FANS (QTY 2) (IV) DESTONATOR (QTY 2) (V) 5 HP MOTOR (QTY 1) (VI) 3 HP MOTOR (QTY 1) ESTIMATED RS. 1,35,000 (I) 5 HP MOTOR (QTY1) (II) 3 HP MOTOR (QTY1) RS. 1,14,500 59,500 2,02,000 1,42,100 6. IF THE AFORESAID TABLE IS ANALYZED, IT IS SEEN T HAT OUT OF THE DISCLOSED ITEMS/MACHINERY, THE ASSESSEE DECLARE D ONE GENERATOR OF 15 H.P. VALUING RS. 39,400/-, WHEREAS, IN FACT, THREE GENERATOR SETS WERE FOUND OUT OF TWO UNDISCLO SED GENERATORS (8 H.P. & 15 H.P.), THE VALUE WAS ESTIMA TED AT 6 RS.67,000/- RESULTING INTO UNDISCLOSED INCOME OF RS . 27,600/-. SO FAR AS THE REMAINING ITEM DISCLOSED AT RS.20,500 /-, THE ONLY UNDISCLOSED ITEMS REMAINED ARE TWO MOTORS OF 5 AND 3 H.P. RESPECTIVELY, WHICH WERE ESTIMATED AT RS.1,35,000/- INCLUDING OTHER ITEMS DISCLOSED IN THE REGULAR RETURN, WHICH RESULTED INTO THE DIFFERENCE OF RS. 1,14,500/-. NOW QUESTION ARI SES WHETHER THIS VALUATION IS CORRECT. THE REPLY IS OBVIOUS BUT SINCE THIS ISSUE IS NOT BEFORE US, JUDICIAL PROPRIETARY DEMAND S THAT WE SHOULD NOT COMMENT AND PROCEED FURTHER. THE ONLY IS SUE REMAINS FOR ADJUDICATION IS WHETHER PENALTY CAN BE IMPOSED ON ESTIMATED INCOME. THE OBVIOUS REPLY IS NO, BECAUSE PENALTY SHOULD NOT BE IMPOSED ON THE INCOME WHICH IS ON EST IMATION AND ESTIMATION DEPENDS FROM INDIVIDUAL PERCEPTION. THE RATIO LAID DOWN BY HON'BLE PUNJAB & HARYANA HIGH COURT IN HARIGOPAL SINGH VS. CIT, (258 ITR 85) SUPPORTS OUR VIEW. THOUGH THE DECISION IN HARIGOPAL SINGH IS ON PENALT Y IMPOSED U/S 271 OF THE ACT, BUT IN THE PRESENT APPEAL ALSO, THE PENALTY HAS BEEN IMPOSED ON VALUE OF UNDISCLOSED MACHINERY AND SUCH 7 VALUATION IS ON ESTIMATE BASIS. THEREFORE, WE FIND NO MERIT IN IMPOSING PENALTY ON THE ASSESSEE. THE SAME IS CANC ELLED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH SEPTEMBER, 2011. SD SD (R.C.SHARMA) (JOGINDER SI NGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15.9.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE CPU*