Shri Champaklal J.Khamar, Ahmedabad V. The ACIT.,Circle-10, Ahmedabad

ITSSA 340/AHD/2011

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0157 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-04-2014
• Assessment Year: misc
• Appeal Filed On: 18-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Assessee Lawyers: MEHUL K PATEL
• Keywords: Unexplained investment; Search and seizure; Reasonable cause; Block assessment
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T.(SS) A. NO. 340/AHD/2011 (BLOCK PERIOD: 1-04 -1988 TO 17-11-1998) CHAMPAKLAL J. KHAMAR 23, VRUNDAVAN BUNGALOWS, 132 FT. RING ROAD, SATELLITE ROAD, AHMEDABAD V/S THE ACIT, CIRCLE-10, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ABMPK 8759 M APPELLANT BY : SHRI MEHUL K. PATEL RESPONDENT BY : SHRI OP. VAISHNAV, CIT D.R. ( )/ ORDER DATE OF HEARING : 07-04-2014 DATE OF PRONOUNCEMENT : 18 -06-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-XVI, AHMEDABAD DATED 07.02.2011 FOR BLOCK PERIOD 1.04.19 88 TO 31.03.1998 & 1.04.1998 TO 17.01.1998. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. IT(SS)A NO. 340/AHD/2011 . B.P. 1/04/19 88 TO 17/11/1998 2 3. IN THIS CASE SEARCH AND SEIZURE ACTION U/S 132 WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AND HIS TWO EM PLOYEES ON 17.11.1998. DURING THE COURSE OF SEARCH VARIOUS ART ICLES LIKE CASH, JEWELLERY, SHARES, BANK ACCOUNT ETC WERE FOUND BESI DES BOOKS OF ACCOUNTS/LOOSE PAPER FILE. CASH AMOUNTING TO RS 50, 000, LOOSE PAPER FILES AND BANK LOCKERS HELD IN THE NAME OF THE ASSESSEE A ND OTHER FAMILY MEMBERS WERE SEIZED. CONSEQUENT UPON THE SEARCH OPE RATION, BLOCK ASSESSMENT FOR BLOCK PERIOD WAS COMPLETED ON 29.12. 2000 AND THE TOTAL UNDISCLOSED INCOME WAS DETERMINED OF RS 21,75,900/- AS AGAINST THE UNDISCLOSED INCOME RETURNED FOR THE BLOCK PERIOD AT RS 1051/-. AGAINST THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED TH E MATTER BEFORE CIT(A) WHERE CERTAIN ADDITIONS WERE DELETED. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE PREFERRED APPEAL BEFORE HON'BLE ITAT WHERE CERTAIN ADDITIONS MADE BY THE AO WERE UPHELD. THE TABULAR POSITION OF THE ADDITIONS IS AS UNDER:- SR. NO. DESCRIPTION ADDITION BY A.O ADDITION DELETED BY CIT(A) AMOUNT CONFIRMED BY ITAT 1 INVESTMENT IN JEWELLERY 11,09,881 11,09,881 3,43, 318 2 CASH 50,820 50,820 24,020 3 INVESTMENT IN VALUABLE ARTICLES 19,2000 19,200 10,000 TOTAL 11,79,901 11,79,901 3,77,338 4. THUS AGAINST THE TOTAL ADDITION OF RS 11,79,901/- A S MADE BY THE AO, ITAT SUSTAINED THE ADDITION OF RS 3,77,338/-. ON TH E AFORESAID ADDITION WHICH WAS CONFIRMED BY HON'BLE ITAT, AO VIDE ORDER DATED 31.8.2010 LEVIED PENALTY OF RS 2,60,363/- U/S 158BFA(2) OF TH E ACT. AGGRIEVED BY IT(SS)A NO. 340/AHD/2011 . B.P. 1/04/19 88 TO 17/11/1998 3 THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 7.2.2011 CONFIRMED THE PENALTY BY HOLDI NG AS UNDER:- 5. I HAVE CONSIDERED THE SUBMISSION MADE BY THE APP ELLANT AND OBSERVATION OF THE AO. I DO NOT AGREE WITH THE APPELLANT THAT THE ADDITIONS ARE PURELY BA SED ON ESTIMATE. THE HONORABLE ITAT IS THE FINAL FACT-FINDING AUTHORITY AND THE ASSESSEE HAS BEEN UN ABLE TO GIVE ANY EXPLANATION WITH RESPECT TO THE JEWELRY, CASH AND OTHER VALUABLE ITEMS FOUND UNEXPL AINED BY THE ITAT. THE EXPLANATION GIVEN BY THE APPELLANT AT THE TIME OF STATEMENT RECORDED UNDER S ECTION 132(4), HAS BEEN CHANGED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AS WEL L AS DURING THE COURSE OF APPELLATE PROCEEDINGS. WHILE CONFIRMING THE ADDITION OF JEWELRY THE HONORA BLE ITAT HAS STATED THAT EXPLANATION IN RESPECT OF OTHER JEWELRY HAVING BEEN RECEIVED BY THE ASSESSEE FROM HIS SISTER AT NAIROBI CANNOT BE ACCEPTED BECAUSE THERE IS NO SUPPORTING DECLARATION FILED WI TH THE CUSTOMS/IMMIGRATION AUTHORITIES WHILE COMING FROM NAIROBI TO INDIA. IN VIEW OF THIS IT IS CLEAR THAT THE EXPLANATION GIVEN BY THE ASSESSEE H AS BEEN FOUND TO BE FALSE AND THEREFORE PENALTY HAS TO BE LEVIED. SIMILARLY W ITH RESPECT TO CASH AND OTHER ITEMS THE ASSESSEE'S EXPLANATION NOT SUPPORTED BY A NY DOCUMENTARY EVIDENCE AND HENCE THE INVESTMENT IS FULLY UNEXPLAINED. IN VIEW OF THE ABOVE THE EXPL ANATION GIVEN BY THE APPELLANT HAS BEEN FOUND TO BE FALSE. AND HENCE THE PENALTY LEVIED IS CORRECT. THE PENALTY LEVIED BY THE AO IS CONFIRMED AND THE GROUNDS OF APPEAL ARE DISMISSED. 5. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW I N APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS;- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS.2,60,363/- U/S, 158BFA(2) OF THE ACT LEVIED BY THE A.O. WITHOUT PRO PER CONSIDERATION AND APPRECIATION OF THE FACTS OF THE CASE AND RELYING UPON THE FACT THAT TH E HON'BLE ITAT HAS PARTLY CONFIRMED THE ADDITIONS AGGREGATING TO RS.3,77,338/- ON ACCOUNT O F UNEXPLAINED INVESTMENT IN JEWELLERY, UNDISCLOSED SOURCE OF CASH AND UNEXPLAINED INVESTME NT IN VALUABLE ARTICLES. IN VIEW OF ELABORATE FACTS, SUBMISSIONS AND LEGAL POSITION FILED BEFORE THE A.O. AND CIT(A) FOR NON-LEVY OF PENALTY, THE IMPUGNED PENALTY OF RS.2,60,363/- REQUIRES TO B E DELETED. 2. THE LEARNED CIT(A) FURTHER ERRED IN NOT APPRECIATIN G THE FACT THAT SINCE THE ADDITION/DISALLOWANCE IN QUESTION AS CONFIRMED BY T HE APPELLATE AUTHORITIES BEING BASED ON ESTIMATES AND ON MERE REJECTION OF PLAUSIBLE EXPLAN ATION FURNISHED BY THE APPELLANT, IT CANNOT BE SAID THAT THE APPELLANT HAD EITHER FURNISHED INACCU RATE PARTICULARS OF INCOME OR CONCEALED ITS INCOME. ACCORDINGLY, THE IMPUGNED PENALTY OF RS.2,6 0,363/- U/S. 158BFA(2) OF THE ACT REQUIRES TO BE DELETED. 6. BEFORE US, LD AR REITERATED THE SUBMISSIONS MADE BE FORE AO AND CIT(A). HE FURTHER SUBMITTED THAT OUT OF THE TOTAL ADDITIONS MADE, SUBSTANTIAL ADDITIONS HAVE BEEN DELETED AND THE ADD ITION WHICH HAVE BEEN SUSTAINED IN ON ACCOUNT OF ESTIMATION. HE FURTHER S UBMITTED THAT ALL THE EXPLANATIONS WERE FURNISHED BY THE ASSESSEE. HE ALS O PLACED RELIANCE ON THE DECISION OF THE AHMEDABAD BENCH IN THE CASE OF MAHENDRA VYAS (IT(SS)A NO 59/AHD/2010 ORDER DATED 21.2.2014) AND ALSO PLACED ON IT(SS)A NO. 340/AHD/2011 . B.P. 1/04/19 88 TO 17/11/1998 4 RECORD THE COPY OF THE AFORESAID DECISION. THE LD D R ON THE OTHER HAND RELIED ON THE ORDER OF THE AO AND CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON THE BASIS OF SUBMISSIONS MADE AND THE MATERIAL O N RECORD, THE FACTUAL POSITION THAT EMERGES IS THAT SEARCH U/S 132 WAS CA RRIED OUT AT THE RESIDENTIAL PREMISES OF ASSESSEE AND CERTAIN DOCUME NTS WERE FOUND AND SEIZED. CONSEQUENT TO SEARCH OPERATIONS BLOCK ASSES SMENT WAS COMPLETED AND THE TOTAL UNDISCLOSED INCOME WAS DETERMINED BY MAKING ADDITION OF RS 11,79,901/-. THE ADDITION MADE BY THE AO WAS DEL ETED BY CIT(A). AGAINST THE ORDER OF CIT(A), REVENUE PREFERRED APPE AL BEFORE ITAT. HON'BLE ITAT CONFIRMED THE ADDITION ONLY TO THE EXT ENT OF RS 3,77,338 AS AGAINST THE TOTAL ADDITION OF RS 11,79,901/- AS MAD E BY A.O. ON PERUSING THE ORDER OF TRIBUNAL, IT IS SEEN THAT THE ADDITION ON ACCOUNT OF CASH AND INVESTMENT IN ARTICLES WERE SUSTAINED ON ESTIMATED BASIS. WITH RESPECT TO THE ADDITION ON ACCOUNT OF INVESTMENT IN JEWELLERY IT IS SEEN THAT ASSESSEE HAD STATED TO HAVE RECEIVED THE JEWELLERY FROM HER SISTER IN NAIROBI BUT IN THE ABSENCE OF ANY SUPPORTING DECLARATION FILED BEF ORE CUSTOMS/ IMMIGRATION, ADDITION TO THE EXTENT OF 190 GMS OF J EWELLERY WAS SUSTAINED. IN THE PRESENT CASE THERE IS NOTHING TO SUGGEST THAT THE EXPLANATION OF THE ASSESSEE WAS FOUND TO BE UNTRUE. 8. IN THE CASE OF MAHENDRA VYAS (SUPRA), THE COORDINAT E BENCH HAS HELD AS UNDER:- 8. WE ALSO DO NOT AGREE WITH THE SUBMISSION OF REVE NUE THAT PENALTY U/S. 158BFA IS MANDATORY IN VIEW OF THE DECISION OF RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SATYENDARA KUMAR DOSI (2009) 315 ITR 172 WHERE THE HON'BLE HIGH COURT HAS HELD THAT LEVY OF PENALTY U/S. 158BFA(2) IS DISCRETIONARY AND NOT MANDATORY. 9. IN THE CASE OF CIT VS. BECHARBHAI PARMAR (SUPRA) THE HON'BLE GUJ. HIGH COURT HAS HELD AS UNDER:- 'SUB-SECTION (2) OF SECTION 158RFA MAKES II CLEAR T HAI IL IS WELL WITLIIN THE DISCRETION OF THE A.O, W HILE FRAMING THE ASSESSMENT FOR THE BLOCK PERIOD, WHETHE R OR NOT TO IMPOSE ANY PENALTY OR NOT. THE WORDS, 'MAY DIRECT' HAVE TO BE GIVEN ITS NORMAL MEANING, L EAVING DISCRETION TO THE OFFICER. IN ABSENCE OF ANY IT(SS)A NO. 340/AHD/2011 . B.P. 1/04/19 88 TO 17/11/1998 5 SPECIAL REASON THE WORD, 'MAY' CANNOT BE READ AS 'S HALL'. THE CONTENTION OF THE COUNSEL FOR THE REVENUE THAT ONLY UPON SATISFACTION OF THE CONDITIO NS CONTAINED IN PROVISO TO SUB-SECTION (2) THAT THE ASSESSES, IN CASE OF THE BLOCK ASSESSMENT CAN BE SP ARED OF THE PENALTY CANNOT BE ACCEPTED. IT IS, OF COURSE, TRUE THAT UPON SATISFYING SUCH CONDITIONS, THAT IN ASSESSEE WOULD GET IMMUNITY FROM PENALTY. NEVERTHELESS, THIS IS NOT A THING AS TO SUGGEST THA T IN NO OTHER CASE, OR ON NO OTHER GROUND, THE A.O. MAY AT HIS DISCRETION, NOT IMPOSE PENALTY THE MOMEN T ADDITIONS UNDER CLAUSE (C) OF SECTION I58BC ARE SUSTAINED. IN OTHER WORDS, THE PENALTY UNDER SECTIO N I58BFA(2) IS NOT MANDATORY IN NATURE. IT IS TRUE THAT SECTION 273B WHICH PROVIDES THAT PENALTY SHALL NOT BE IMPOSED IN CERTAIN CASES ON THE ASSESSEE PROVING THAT THERE WAS REASONABLE CAUSE FOR FAILURE TO PAY TAX REFERS TO SEVERAL PROVISIONS SUCH AS SECTIONS 271, 271A ETC., MAKES NO MENTION OF SECTIO N /58BFA(2). THIS STILL DOES NOT MEAN THAT PENALTY UNDER SECTION 58BFA(2) IS MANDATORY. ' 9. CONSIDERING THE TOTALITY OF THE FACTS MORE SO IN VI EW OF THE FACT THAT ADDITONS HAVE BEEN UPHELD ON ESTIMATION BASIS AND I N VIEW OF THE DECISION OF THE CO-ORDINATE BENCH CITED HEREINABOVE , WE ARE OF THE VIEW THAT NO PENALTY IS LEVIABLE IN THE PRESENT CASE. WE ACCORDINGLY DIRECT THE AO TO DELETE THE PENALTY. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED ORDER PRONOUNCED IN OPEN COURT ON 18 - 06 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT ,AHMEDABAD