Aries Hotels Limited, Baroda V. The ACIT, Circle-1(2), Baroda

ITSSA 334/AHD/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3440 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 28-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D K PARIKH
• Keywords: Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ARIES HOTELS LIMITED, A/3, VANDEMATRAM APPTS. 42, ARUNADAYA SOCIETY, ALKAPURI, VADODARA - 390005 PAN: AABCA6743N (APPELLANT) VS THE ACIT, CIRCLE - 1(2), BARODA (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL , SR. D . R. ASSESSEE BY: S H RI D.K. PARIKH , A.R. DATE OF HEARING : 13 - 09 - 2 017 DATE OF PRONOUNCEMENT : 10 - 10 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THESE TWO ASSESSEE S APPEAL S FOR A.Y. 2005 - 06 & 2006 - 07 , AR ISE FROM ORDER OF THE CIT(A) - I, BARODA DATED 20 - 06 - 2014 , IN PROCEEDINGS UNDER SECT ION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T (SS) A NO S. 334 & 335 / A HD/20 14 A .Y. 200 5 - 06 & 2006 - 07 I.T(SS). A NO S . 334 & 335 /AHD/20 14 A.Y. 2005 - 06 & 2006 - 07 PAGE NO ARIES HOTELS LIMITED VS. ACIT 2 2. AS THE FACTS IN BOTH THE APPEALS ARE SIMILA R, SO, WE TAKE IT(SS)A NO. 334/AHD/2014 AS THE LEAD CASE AND DECIDE BOTH THE APPEALS FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - IT(SS)A NO. 334/AHD/2014 THE ID. CIT(A) - I, BARODA HAS ERRED IN LAW AND FACTS IN CO NFIRMING THE PENALTY OF RS. 3.73,800/ - LEVIED BY THE ID. AO. THE ID CIT(A) HAS FAILED TO APPRECIATE THAT THE ADDITION OF THE SAID AMOUNT WAS MORE ON ACCOUNT OF THE COMPANY'S INABILITY TO EXPLAIN CERTAIN DOCUMENTS SEIZED DURING THE SEARCH PROCEEDINGS CARRIE D OUT AT THE PREMISES OF M/S SAYAJI HOTELS LTD. THE ID. CIT(A) HAS FAILED TO APPRECIATE ON ACCOUNT OF THE UNFORTUNATE DEMISE OF MR. SAJID DHANANI, DIRECTOR OF THE COMPANY PRIOR TO THE COMMENCEMENT OF THE ASSESSMENT PROCEEDINGS AND WHO HAD DIRECT KNOWLEDGE REGARDING THE LAND PURCHASE BY THE COMPANY, THE COMPANY WAS UNABLE TO EXPLAIN THE DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS AND WAS HENCE FORCED TO ACCEPT THE ADDITION. THE ADDITION WAS AGREED TO BY THE COMPANY TO BUY PEACE OF MIND RATHER THAN AS AN ACCE PTANCE OF GUILT. THE PENALTY CONFIRMED BY THE ID. CIT(A) - I, BARODA IS WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE PREVAILING LAW AND JUDICIAL DECISIONS ON THE MATTER. 4. IN THIS CASE, SEARCH ACTION U/S. 132 OF THE ACT WAS CONDUCTED IN THE CASE OF TRANSWORLD FURTICHEM GROUP AND OTHERS ON 11 TH FEB, 2011. OFFICE PREMISES OF SAYAJI HOTELS SITUATED AT INDORE AND BARODA WERE ALSO COVERED U/S. 132 OF THE ACT. DURING THE COURSE OF SEARCH ACTION , CERTAIN DOCUMENT S PERTAINING TO THE ASSESSEE WERE SEIZED. ON THE VERIFICATION OF ANNEXURE A - 2, FROM THE SEIZED DOCUMENT, IT WAS NOTICED THAT CERTAIN PAYMENTS WERE MADE IN CASH FOR PURCHASE OF LAND AS UNDER: - DATE AMOUNT 04 - 03 - 2004 86000/ - 14 - 05 - 2004 21294/ - I.T(SS). A NO S . 334 & 335 /AHD/20 14 A.Y. 2005 - 06 & 2006 - 07 PAGE NO ARIES HOTELS LIMITED VS. ACIT 3 FURTHER ON VERIFICATION OF PAGE 68 TO 70 OF ANNE X URE A - 2, HAND WRITTEN NOTING OF PAYMENT MADE IN CASH AND BY CHEQUE WERE FOUND AS UNDER: - DATE AMOUNT 08 - 02 - 2005 RS. 5,00,000/ - 09 - 02 - 2005 RS. 5,00,000/ - 13 - 07 - 2005 RS. 2 ,00,000/ - 21 - 03 - 2006 RS. 2 ,00,000/ - 26 - 05 - 2005 6 RS. 6,0 00 / - DURING THE COURSE OF SEARCH PROCEEDINGS, THE DIRECTOR OF THE COMPANY MR. SHAJID DHANANI WAS CONFRONTED WITH THESE SEIZED INCRIMINATING MATERIAL BUT HE FAILED TO PROVIDE ANY JUSTIFICATION AND SOURCE OF UNACCOUNTED PAYMENTS MADE TOWARDS PURCHASE OF LAND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE ALSO FAILED TO SUBSTANTIATE THE SOURCES OF AFORESAID PAYMENTS MADE TOWARDS PURCHASE OF LAND AT GADK H OL , ANKLESHWAR, BHARUCH . CONSEQUENTLY, ADDITION OF RS. 10 LACS WAS MADE TO THE TOTAL INCO ME OF THE ASSESSEE ON WHICH PENALTY PROCEEDINGS WERE ALSO INITIATED BY THE ASSESSING OFFICER . THERE AFTER , A PENALTY OF RS. 3,73,800/ - WAS LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME . 5. AGGRIEVED AGAINST THE DECISION OF THE ASSESSING OFFICER, THE ASESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A)HAS SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 5. THE PENALTY ORDER U/S 271(1)(C) OF THE ACT OF THE AO AS WELL AS ABOVE SUBMISSION OF AR OF THE APPELLANT H AVE BEEN CONSIDERED. THE GROUND OF APPEAL OF THE APPELLANT IS THAT THE LD. ACIT HAS I.T(SS). A NO S . 334 & 335 /AHD/20 14 A.Y. 2005 - 06 & 2006 - 07 PAGE NO ARIES HOTELS LIMITED VS. ACIT 4 ERRED IN CONCLUDING THAT THE ASSESSEE HAD CONCEALED INCOME OF RS. 12,21,294/ - UNDER SECTION 271(1)(C) ON THE GROUNDS THAT THE ASSESSEE HAD KNOWINGLY CONCEALED THE AMOUNT OF INVESTMENT MADE AND THEREBY HAS ERRED IN LEVYING PENALTY OF RS. 3,73,800/ - . AS PER THIS GROUND OF APPEAL THE LD. ACIT HAS FAILED TO APPRECIATE THAT THE ADDITION OF THE SAID AMOUNT WAS MORE ON ACCOUNT OF THE COMPANY'S LIABILITY TO EXPLAIN CERTAIN DOCUMENTS SEIZED DURING THE SEARCH PROCEEDINGS CARRIED OUT AT THE PREMISES OF M/S. SAYAJI HOTELS LTD. AS PER THIS GROUND OF APPEAL THE ID AO HAS FAILED TO APPRECIATE ON ACCOUNT OF THE UNFORTUNATE DEMISE OF MR. SAJID DHANANI, DIRECTOR OF THE COMPANY PRIOR TO THE COM MENCEMENT OF THE ASSESSMENT PROCEEDINGS AND WHO HAD DIRECT KNOWLEDGE REGARDING THE LAND PURCHASED BY THE COMPANY, THE COMPANY WAS UNABLE TO EXPLAIN THE DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS AND WAS HENCE FORCED TO ACCEPT THE ADDITION. AS PER THIS GRO UND OF APPEAL THE ADDITION WAS AGREED TO BY THE COMPANY TO BUY PEACE OF MIND RATHER THAN AS AN ACCEPTANCE OF GUILT. AS PER THIS GROUND OF THIS APPEAL THE PENALTY IMPOSED BY THE LEARNED ACIT IS WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE PREVAILING L AW AND JUDICIAL DECISIONS ON THE MATTER. THE SUBMISSION OF THE APPELLANT WITH REGARD TO THIS GROUND OF APPEAL AS MADE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO AS MADE THROUGH ITS AUTHORIZED REPRESENTATIVE VIDE LETTER DATED 18/06/2 014 AS FILED DURING THE COURSE OF APPELLATE PROCEEDINGS ARE NOT FOUND TO BE ACCEPTABLE. THE AR OF THE APPELLANT VIDE THIS SUBMISSION DATED 18/06/2014 HAS MAINLY STATED THAT ADDITION WAS ACCEPTED BY THE APPELLANT ON ACCOUNT OF NON - AVAILABILITY OF INFORMATIO N AND NO APPEAL WAS THUS PREFERRED WITH REFERENCE TO THE SAID ASSESSMENT ORDER. AS PER THE AR THEREAFTER, PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED AND THE ID, AO VIDE HIS ORDER DT. 27.09.2013 IMPOSED A PENALTY OF RS. 3,73,800/ - . ON THE ISSUE REGARD ING PENALTY U/S 271(L)(C), THE AR HAS INVITED ATTENTION TO THE LEGAL POSITION AS EXPOUNDED BY THE HON. SUPREME COURT ON THE SUBJECT MATTER. AS PER THE AR THE HON. SUPREME COURT IN SUCCESSIVE JUDGMENTS HAS ALWAYS HELD THAT WILLFUL CONCEALMENT OR WILLFUL FUR NISHING OF INACCURATE PARTICULARS ARE AN ESSENTIAL INGREDIENTS FOR ATTRACTING PENALTY UNDER ANY PENALTY PROVISIONS. AS PER THE AR SUCH A VIEW IS CLEARLY EXPOUNDED BY THE HON. SUPREME COURT IN HINDUSTAN STEEL LTD. V. STATE OF ORISSA (1972) 83 ITR 27, D. M. MANSAVI V. CIT (1972) 86 ITR 557 AND ANANTHARAM VEERASINGHAIAH & CO. V. CIT (1980) 123 ITR 457. AS PER THE AR IN THE PRESENT CASE, THERE ARE TWO ISSUES ON WHICH PENALTY HAS BEEN IMPOSED ON ACCOUNT OF UNEXPLAINED CASH PAYMENTS OF RS. 10,21,294/ - . AS PER THE AR THE ABOVE MATTER PERTAINS TO A SUM OF RS. 10,21,294/ - , WHICH THE COMPANY HAS ACCEPTED AS AN ADDITION DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153C R.W.S. 143(3). AS PER THE AR THE COMPANY SUBMITS THAT DURING THE COURSE OF SEARCH ACTION, CERTAIN HAND WRITTEN NOTES WERE FOUND FROM THE PREMISES OF M/S SAYAJI HOTELS LTD., BARODA, WHICH INDICATED THAT CERTAIN CASH PAYMENTS WERE MADE ON ACCOUNT OF PURCHASE OF LAND IN THE NAME OF THE COMPANY. AS PER THE AR THE SAID DOCUMENTS WERE PART OF THE DOCUMENTS S EIZED DURING THE COURSE OF THE SEARCH PROCEEDINGS. AS PER THE AR HOWEVER, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, WHEN THE EXPLANATION FOR THE SAID PAPERS WAS TO BE SUBMITTED, MR. SAJID DHANANI, DIRECTOR OF THE COMPANY, WHO HAD DIRECT KNOWLEDGE OF THE LAND DEAL HAD EXPIRED AND THE OTHER DIRECTORS OF THE COMPANY HAD NO KNOWLEDGE OF THE MATTER. AS PER THE AR IN VIEW OF UNAVAILABILITY OF ANY CLARIFICATION FROM THE PERSON, WHO HAD FULL KNOWLEDGE OF THE MATTER ON ACCOUNT OF DEATH, THE COMPANY WAS NOT IN A POSITION TO SUBMIT ANY EXPLANATION/CLARIFICATIONS ON THE PAPERS FOUND AND HENCE ACCEPTED THE ADDITIONS ON THE SAID ACCOUNT. IT IS SUBMITTED THAT THE ADDITIONS WERE ACCEPTED BY THE COMPANY MORE ON ACCOUNT OF THE FACT THAT IT WAS NOT IN A POSITION TO CLAR IFY THE PAPERS IN ABSENCE OF THE PERSON WHO HAD DIRECTLY DEALING OF THE MATTER RATHER ON ACCOUNT OF ACCEPTANCE OF THE FACT THAT CASH WAS INDEED PAID FOR THE LAND, WHICH WAS NOT RECORDED IN ITS BOOKS. IT IS PLEADED BY THE AR THAT THE ADDITION WAS AGREED UPO N BY THE COMPANY TO BUY PEACE OF MIND RATHER AS AN ACCEPTANCE OF GUILT IN THE MATTER. IT IS FURTHER PLEADED BY THE AR THAT SUCH AN ADDITION, WHICH BASED ON SUSPICIONS RATHER THAN PROOF CANNOT LEAD TO LEVY OF PENALTY. THE APPELLANT HENCE REQUESTS YOUR HONOU R TO DELETE THE PENALTY LEVIED ON THE SAID COUNT. 5.1 AS STATED ABOVE THAT THE ENTIRE SUBMISSION OF THE AR IS NOT IN RIGHT CONTEXT AND HENCE THE SAME IS NOT ACCEPTABLE. THE FACT IS THAT SUCH ACTION U/S 132 OF THE IT ACT WAS CARRIED OUT BY THE DEPARTMENT I N THE CASE OF APPELLANT AND DURING THE COURSE OF SEARCH ACTION INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. ACCORDINGLY PROCEEDINGS U/S 153C OF THE IT ACT WAS INITIATED BY THE AO. IN RESPONSE TO THE NOTICE U/S 153C, THE APPELLANT FILED RETURN OF INCOME O N 13/02/2013 DECLARING TOTAL INCOME AT RS. NIL. IT MAY BE MENTIONED THAT DURING SEARCH ASSESSMENT PROCEEDINGS, ON VERIFYING THE SEIZED MATERIAL IT WAS NOTICED BY THE DEPARTMENT THAT AS PER ANNEXURE A - 2 AT PAGE NO. 68 TO 70 SEIZED FROM THE OFFICE PREMISE OF THE APPELLANT, THE APPELLANT HAD MADE PAYMENT OF RS. 10,00,000/ - IN CASH. DURING THE ASSESSMENT PROCEEDINGS, WHEN THE DETAILS OF THE SAME WERE CALLED FOR BY THE AO FROM THE APPELLANT, THE APPELLANT VIDE ITS SUBMISSION DATED 18/03/2013 SUBMITTED THAT THESE PAYMENTS WERE CONSIDERATION PAID FOR PURCHASE OF LAND AT ANKLESHWARA, BHARUCH. THE FACT IS THAT THE PAYMENT FOR PURCHASE OF LAND WAS MADE IN CASH AND ONUS WAS HEAVILY I.T(SS). A NO S . 334 & 335 /AHD/20 14 A.Y. 2005 - 06 & 2006 - 07 PAGE NO ARIES HOTELS LIMITED VS. ACIT 5 LYING ON THE APPELLANT TO EXPLAIN THE SOURCES OF SUCH CASH AMOUNT OF RS. 10,00,000/ - WHI CH APPELLANT FAILED TO DO. THE MAIN PLEA OF THE APPELLANT IS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEN THE EXPLANATION FOR CASH AMOUNT OF RS. 10,00,000/ - WAS TO BE SUBMITTED, SHRI SAJID DHANANI, DIRECTOR OF THE COMPANY WHO HAD DIRECT KNOWLEDGE OF THE LAND DEAL HAD EXPIRED AND OTHER DIRECTORS OF THE COMPANY HAD NO KNOWLEDGE OF THE MATTER. BUT THIS PLEA OF THE APPELLANT IS NOT ACCEPTABLE. THE FACT IS THAT SHRI SAJID DHANANI WAS ALIVE AT THE TIME OF SEARCH ACTION AND SUBSEQUENTLY DURING THE COURSE OF PROCEEDINGS BEFORE THE INVESTIGATION WING WHEN THE APPRAISAL REPORT WAS BEING PREPARED. HOWEVER, LATE SHRI SAJID DHANANI HAS NOT OFFERED ANY EXPLANATION AND EVIDENCES TO EXPLAIN THE SOURCES OF ABOVE CASH PAYMENT OF RS. 10,00,000/ - . IN MY OPINION EVEN OT HERWISE ALSO THE ONUS WAS ON THE OTHER DIRECTORS OF THE APPELLANT COMPANY TO EXPLAIN THE SOURCES OF CASH PAYMENT OF RS. 10,00,000/ - AT THE TIME OF ASSESSMENT PROCEEDINGS. THE APPELLANT CANNOT TAKE THE PLEA THAT THE ADDITIONS WERE ACCEPTED BY IT MORE ON ACC OUNT, OF THE FACT THAT IT WAS NOT IN A POSITION TO CLARIFY THE PAPER/INCRIMINATING DOCUMENTS IN ABSENCE OF THE PERSON WHO WAS DIRECTLY DEALING THE MATTER. ANOTHER POINT TO BE CONSIDERED IS THAT CASH PAYMENT OF RS. 10,00,000/ - FOR PURCHASE OF LAND CAME TO T HE NOTICE OF THE DEPARTMENT ONLY AS A RESULT OF SEARCH ACTION. THE FACT IS THAT ONUS CAST UPON THE APPELLANT WAS TO BE DISCHARGED WITH REGARD TO SOURCES OF CASH PAYMENT OF RS. 10,00,000/ - AS MADE FOR PURCHASE OF LAND. CONSIDERING ALL THESE FACTS, IT IS HEL D THAT THE AO HAS CORRECTLY LEVIED THE PENALTY U/S 271(1)(C) ON ADDITION OF RS. 10,00,000/ - AS THE APPELLANT HAS FAILED TO DISCHARGE THE ONUS CAST UPON IT AS PER EXPLANATION 1 TO SECTION 271(1)(C) OF THE IT ACT. IN VIEW OF THIS THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT ON ADDITION OF RS. 10,00,000/ - IS HEREBY CONFIRMED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MARITAL ON RECORD. WE OBSERVED THAT DURING THE COURSE OF SEARCH ACTION THE DIRECTOR OF THE COMPANY LATE MR. SHAJID D H A NANI WAS NOT ABLE TO EXPLAIN THE SEIZED INCRIMINATING DOCUMENT S RELATING TO ALLEGED UNACCOUNTED CASH PAYMENT FOR INVESTMENT IN LAND . EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE SOURCE OF THE CASH PAYMENT MADE FOR THE PURCHASE OF LAND WAS NOT EXP LAINED . THE CONTENTION OF THE ASSESSEE THAT T HE DIRECTOR OF THE COMPANY MR. SHAJID DALANI WHO HAD DIRECT KNOWLEDGE OF THE LAND DEAL HAD EXPIRED AND THE OTHER DIRECTORS OF THE COMPANY HAD NO KNOWLEDGE OF THE MATTER IS NOT ADEQUATE BECAUSE THE AFORESAID DIRECTOR OF THE COMPANY WHO WAS ALIVE AT THE TIME OF SEARCH AND ASSESSMENT PROCEEDINGS HA D NEITHER EXPLAINED THE IMPUGNED UNACCOUNTED TRANSACTIONS NOR FURNISHED AND SUPPORTING EVIDE NC ES. IN VIEW OF THE ABOVE FACTS AND FINDINGS WE UPHOLD THE DECISION OF LD.CIT(A) THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CAST UPON IT AS PER EXPLANATION 1 TO SECTION I.T(SS). A NO S . 334 & 335 /AHD/20 14 A.Y. 2005 - 06 & 2006 - 07 PAGE NO ARIES HOTELS LIMITED VS. ACIT 6 271(1)(C) OF THE IT ACT. T HEREFORE, THE APPEAL OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE IT(SS)A NOS. 334 & 335/AHD/2014 ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 10 - 10 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 10 /10 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,