Shri Yogesh Kirchand Shah, Ahmedabad V. The Dy.CIT, Circle-3, Ahmedabad

ITSSA 392/AHD/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3381 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 04-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Unexplained expenditure; Speculative transactions
• Section: 6; 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 SHRI YOGESH K. SHAH, 14 - B, STHANAKVASI JAIN SOCIETY, NARANPURA, AHMEDABAD - 380013 PAN: AEDPS4653L (APPELLANT) VS THE D CIT, CIRCLE - 3 , AHMEDABAD (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL , SR. D . R. ASSESSEE BY: MS. ARTI SHAH, A.R. DATE OF HEARING : 08 - 04 - 2 019 DATE OF PRONOUNCEMENT : 24 - 04 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THE SOLITARY G ROUND OF APPEAL OF THE ASSESSEE IS AGAINST THE DECISION OF CIT(A) - XX, AHMEDABAD IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY OF RS. 13 , 70 , 854/ - U/S. 158BFA(2) OF THE ACT . 2. THE BRIEF FACT OF THE CASE IS THAT A SEARCH U/S. 132 HAD BE EN CONDUCTED IN THE CASE OF THE ASSESSEE ON 25 TH MAY, 20001. THEREAFTER, A NOTICE U/S. 158BC WAS ISSUED ON 3 RD SEP, 2001. THE ASSESSEE HAD FI L E D RETURN OF INCOME I T (SS) A NO . 392 / A HD/20 14 BLOCK P ERIOD 1.4.1992 TO 25.5.2001 I.T (SS) .A NO. 392 /AHD/20 14 A.Y. BLOCK PERIOD PAGE NO SHRI YOGESH K. SHAH VS. D CIT 2 ON 22 ND OCTOBER, 2001 SHOWING THE NIL INCOME. DURING THE COURSE ASSES SMENT, THE ASSESSING O FFICER NOTI CED THAT AS PER SEIZED RECORD THAT ASSESSEE SHRI YOG ESH K SHAH WAS MANAGING ALL THE AFFAIRS OF THE GROUP . I N HIS STATEMENT RECORDED U/S. 132(4) OF THE ACT, T HE ASSESSEE HAS OWNED UP ALL THE UNDISCLOSED AND UNRECORDED INCOME. TH E ASSESSING OFFI CER HAS ST ATED THAT ASSESSEE IN HIS RELY HAD N OT OBJECTED TO TAXING OF THE ENTIRE UNDISCLOSED INCOME IN HIS HAND. THE ASSESSING OFFICER HAS COMPUTED THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE SUMMARIZED AS UNDER: - INCOMES ON THE BASIS OF UNDISCLOSED EAR NINGS INCOMES ON THE BASIS OF UNDISCLOSED EXPENDITURES AND INVESTMENTS UNACCOUNTED PROFIT FROM SILVER BUSINESS (PARA 8 OF THIS ORDER) 52,82,600 UNACCOUNTED INVESTMENT IN SILVER STOCK (PARA 7 OF THIS ORDER) 3, 8 4,943 UNACCOUNTED PROFIT FROM UNDISCLOSED SPECULATIVE TRANSACTIONS (PARA 11 - OF THIS ORDER) 50,00,000 UNACCOUNTED INVESTMENT IN REAL ESTATES AND CONSTRUCTION ACTIVITY (PARA 9 OF THIS ORDER) 15,00,000 UN ACCOUNTED INVESTMENT IN SHARES (PARA 10 OF THIS ORDER) 7,91,555 UNACCOUNTED INVESTMENT/EXPENDITURE IN RESIDENTIAL PROPERTY (PARA 12 OF THIS ORDER) 15,00.000 UNACCOUNTED CASH (PARA 13 OF THIS ORDER) 5,50,000/ - TOTAL 1,02,82, 600 TOTAL 47,26,498/ - THE ASSESSING OFFICER HAS STATED THAT UNDISCLOSED INVESTMENT AND UNDISCLOSED EXPENDITURE AS COMPUTED A BOVE WERE MET FROM THE UNDISCLOSED INCOME QUANTIFIED ABOVE, THEREFORE , AFTER TAKING A JUDICIOUS VIEW THE TOTAL UNDI SCLOSED INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 1 , 02 , 8 2, 600/ - . THE I.T (SS) .A NO. 392 /AHD/20 14 A.Y. BLOCK PERIOD PAGE NO SHRI YOGESH K. SHAH VS. D CIT 3 ASSESSING OFFICER H AS ALSO I NIT I A T ED PENALTY PROCEEDINGS U/S. 158BFA(2) OF THE ACT AND NOTICED U/S. 158B FA(3) WAS ISSUED. DURING THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER HAS STA TED THAT SETTLEMENT COMMISSION HAS REJECTED THE APPLICATION FILED BY THE ASSESSEE. ACCORDINGLY , THE ASSESSMENT U/S. 158BC R.W.S. 158BE WAS COMPLETED ON 25 TH APRIL, 2016 DETERMINING TOTAL INCOME AS CITED ABOVE TO THE AMOUNT OF RS. 1 , 02 , 8 2, 600. T HE TOTAL UN DISCLOSED INCOME OF RS. 1 , 02 , 82 , 600/ - WAS COMPRISED OF UNACCOUNTED PROFIT FROM SILVER BUSINESS AMOUNTING TO RS. 52 , 82 , 600/ - AND UNACCOUNTED PROFIT OF RS. 50 LACS ON ACCOUNT OF SPECULATIVE TRANSACTION. THE ASSESSING OFFICER HAS ALSO MADE ALTERNATIVE ADDITI ON ON ACCOUNT OF UNEXPLAINED EXPENDITURE ON ACCOUNT OF UNEXPLAINED EXPENDITURE AND INVESTMENT TO THE AMOUNT OF RS. 47 , 26 , 498/ - . IN THE APPEAL, THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 1 , 02 , 82 , 600/ - . HOWEVER, THE LD. CIT(A) HAS CONFIRMED THE ADDITIO N MADE ON ALTERNATIVE BASIS ON ACCOUNT OF UNDISCLOSED INVESTMENT AND EXPENDITURE TO THE EXTENT OF R S. 39 , 05 , 566/ - AS UNDER: - (A) UNACCOUNTED STOCK OF SILVER OF 83.5 KG RS. 3,84,943/ - (B) UNACCOUNTED INVESTMENT, IN SHARES AS ADMITTED BEFORE TH E SETTLEMENT COMMISSION RS. 7,62,625/ - (C) UNACCOUNTED PROFIT FROM SPECULATION RS. 2,04,533/ - (D) UNACCOUNTED INVESTMENT (ANN. A - 64 PAGES 41 TO 45) RS. 11,50,000/ - (E) UNACCOUNTED CASH FOUND RS. 5,50,000 / - (F) UNACCOUNTED INVES TMENT (ANN. A - 64 PA.GES 92) RS.1,85,017/ - (G) UNACCOUNTED PURCHASE OF MATERIAL FOR RENOVATION . ' RS . 68,448/ - , TOTAL RS. 39,05,566/ - THE ITAT AHMEDABAD VIDE ITA NO. 76/AHD/2008 AND ITA NO S . 5 & 6 /AHD/2009 DA TED 14 - 1 2 - 2012 HAS ALSO UPHELD THE ORDER OF LD. CIT(A) IN I.T (SS) .A NO. 392 /AHD/20 14 A.Y. BLOCK PERIOD PAGE NO SHRI YOGESH K. SHAH VS. D CIT 4 CONFIRMING THE ADDITION MADE ON ALTERNATIVE BASIS TO THE AMOUNT OF RS. 39 , 05 , 566/ - . IN RESPONSE TO THE PENALTY SHOW CAUSE NOTICE, THE ASS ESSEE HAS SUBMITTED THAT ADDITION S WERE MADE ON PRESUMPTION BASIS A ND IT CANNOT BE HELD THAT THERE WAS CONCEALMENT OF INCOME FOR THE PURPOSE OF IMPOSING PENALTY UNDER AFORESAID SECTION. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLAN ATION OF THE ASSESSEE AND REFERRED PROVISION OF SECTION 158BFA(2) OF THE ACT STATING T HAT TO LEVY PENALTY UNDER THE AFORESAID SECTION , IT IS IMPERATIVE THAT THE CONDITION LAID DOWN UNDER THE SAID SECTION ARE FULFILLED. THE RELEVANT PART OF THE SECTION IS AS UNDER: - '15SBFA. LEVY OF INTEREST AND PENALTY IN PERTAIN CASES - . . . - (2) THE ASSES SING OFFICER' OR THE COMMISSIONER (APPEALS), IN THE COURSE OF ANY PROCEEDINGS UNDER THIS CHAPTER, MAY DIRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED T HREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCL OSED INCOME DETERMINED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 158BC: ... . ' PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MADE IN R ESPECT OF A PERSON IF - (I) SUCH PERSON HAS FURNISHED A RETURN UNDER CLAUSE (A) OF SECTION 158BC; (II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HAS BEEN PAID OR, IF THE ASSETS - SEIZED CONSIST OF MONEY, THE ASSESSEE OFFERS THE MONEY SO SEIZED TO BE ADJUSTED AGAINST THE TAX PAYABLE; (III) EVIDENCE OF TA X PAID IS FURNISHED ALONG WITH THE RETURN; AND (IV) AN APPEAL IS NOT FILED AGAINST THE ASSESSMENT OF THAT PART OF INCOME WHICH IS SHOWN IN THE RETURN PROVIDED FURTHER THAT THE PROVISIONS OF THE PRECEDING PROVISO SHALL NOT AP PLY WHERE TH E UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN AND IN SUCH CASES THE PENALTY SHALL BE IMPOSED ON THAT PORTION OF - UNDISCLOSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMO UNT OF UNDISCLO SED INCOME, SHO WN IN THE RETURN.' AFTER REFERRING THE AFORESAID SE CTION, THE ASSESSING OFFICER STATED THAT PENALTY CAN BE LEVIED IN A CASE WHERE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER IS IN EXCESS OF THE INCOME RETURNED. THE ASSESS ING OFF ICER HAS STATED THAT INITIALLY DURING THE COURSE OF SEARCH , THE ASSESS EE HAS DISCLOSED RS. 1.05 CORES, H OWEVER, HE HAS SHOWN NIL INCOME IN THE RETURN OF INCOME FILED AFTER SEARCH ACT ION. THE ASSESSING OFFICER HAS FINALIZED THE ASSESSMENT U/S. 158BC R.W.S . 158BE ON 25/04/2006 AND MADE AN ADDITION OF R S. 1 , 02 , 82 , 600/ - AND THE LD. CIT(A) AND ITAT HAS CONFIRMED THE ADDITION TO THE EXTENT OF RS. 39 , 05 , 566/ - AS MENTIONED SUPRA IN THIS ORDER. IN THE PENALTY I.T (SS) .A NO. 392 /AHD/20 14 A.Y. BLOCK PERIOD PAGE NO SHRI YOGESH K. SHAH VS. D CIT 5 ORDER, THE ASSESSING OFFICER HAS ELABORATELY DISCUSSED THE ISSUES EMANATING FROM THE SEIZED MATERIAL ON THE BASIS OF WHICH ADDITIONS WERE MADE AND SUSTAINED TO THE EXTENT OF RS. 3905 5 56/ - IN THE APPEAL. AFTER CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER HAS LEVIED MINIM UM PENALTY OF RS. 39 , 05 , 566 U/S. 158BFA(2) OF THE ACT. 3. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER STATING THAT ASSESSEE HAS FAILED TO OFFER THE UNDISCLOSED INCOM E IN HIS BLOCK RETURN OF INCOME. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS SUBMITTED PAPER BOOK CONTAINING DETAIL OF SUBMISSION MADE BEFORE ASSESSING OFFICER AND LD. CIT(A) DURING THE COURSE OF ASSESSMENT AND APPELLATE PROCEEDINGS. SHE HAS ALSO CONTENDED THAT ASSESSEE HAS DISCLOSED INCOME BEFORE THE SETTLEMENT COMMISSION THEREFORE NO PENALTY IN THE CASE OF THE ASSESSEE SHOULD BE LEVIED. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A) AND SUBMITTED THAT ASSESSEE HAS FAILED TO OFFER THE UNDISCLOSED INCOME IN HIS BLOCK RETURN AND THE ASSESSING OFFICER HAS RIGHTLY IMPOSED PENALTY U/S. 158BFA(2) OF THE ACT. THE LD. DEPARTMENTAL REPRESENTATIVE HAS ALSO PLACED RELIANCE O N THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KONDOI BHOGILAL MULCHAND VS. DCIT (2012) 21 TAXMAN.COM 153 (GUJ) DATED 8 TH NOV, 2011. I.T (SS) .A NO. 392 /AHD/20 14 A.Y. BLOCK PERIOD PAGE NO SHRI YOGESH K. SHAH VS. D CIT 6 5 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IN THIS CASE, THE ASS ESSING OFFICER HAS LEVIED PENALTY U/S. 158BCA(2) ON THE AFORESAID ADDITION OF RS. 390556 6 / - WHICH HAVE BEEN CONFIRMED BY T H E LD. CIT(A) IN THE APPELLATE PROCEEDINGS AND SUBSEQUENTLY ALSO SUSTAINED BY THE HON BLE ITAT AHMEDABAD IN APPELLATE ORDER AS MENTIONED ABOVE IN THIS ORDER. THE LD. REPRESENTATIVE HAS ALSO BROUGHT TO OUR NOTICE THAT HON BLE GUJARAT HIGH COURT HAS ALSO DISMISSED THE APPEAL OF THE ASSESSEE FILED AGAINST THE DECISION OF THE ITAT IN SUSTAINING THE QUANTUM ADDITION IN THIS CASE. IN THE CASE OF THE ASSESS EE SEARCH ACTION WAS TAKEN PLACE ON 25 TH MAY, 2001 AND IN RESPONSE TO NOTICE U/S. 158BC THE ASSSESSEE HAS FILED ITS BLOCK RETURN FOR THE BLOCK PERIOD ON 22 ND OC TOBER, 2001 SHOWING NIL INCOME, HOWEVER, DURING THE COURSE OF SEARCH ACTION THE ASSESSEE HAS DIS CLOSED INCOME OF RS. 1,05 CRORES. THE ASSESSEE HAS ALSO FILED AN APPLICATION BEFORE THE SETTLEMENT COMMISSION AND OFFER UNDISCLOSED INCOME TO THE AMOUNT OF RS. 3,06,7066/ - . THE APPLICATION FILED BY THE ASSSESSEE BEFORE SETTLEMENT COMMISSION ON 31 ST MARCH, 2003 WAS REJECTED FOR WANT OF TRUE AND FULL DISCLOSURE OF THE UNDISCLOSED INCOM E . T HE ASSESSING OFFICER HAS ASSESSED TOTAL UNDISCLOSED INCOME AT RS. 1 ,02, 82 , 600/ - U/S. 158BC R.W.S. 158BE OF THE ACT ON 25TH APRIL, 2006 . IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AND ITAT HAS CONFIRMED THE ADDITION TO THE TU NE OF 3905366/ - AS STATED SUPRA IN THIS ORDER. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES, THE ASSESSING OFFICER HAS LEVIED PENALTY OF R S. 1370854/ - U/S . 158BFA(2) OF THE ACT AS THE ASSESSEE HAS FAILED TO OFFER THE UNDISCLOSED INCOME IN HIS BLOCK RETURN OF INCOME. AFTER PERUSAL OF THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE HAS FAILED TO ESTABLISH THAT IT HAS NEITHER CONCEALED HIS PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME . UNDER I.T (SS) .A NO. 392 /AHD/20 14 A.Y. BLOCK PERIOD PAGE NO SHRI YOGESH K. SHAH VS. D CIT 7 THE CIRCUMSTANCES, IT IS VERY CLEAR FROM THE PENALTY PROVISIONS U/S. 158BFA(2) THAT IF THE ASSESSED INCOME FOR THE BLOCK PERIOD IS IN EXCESS OF THE INCOME RETURNED BY THE ASSESSEE IN RESPONSE TO THE NOTICE U/S. 158BC, THE PENALTY SHALL HAVE TO BE LEVIED. THE CONTENTION OF THE LD. COUNSEL THAT PENALTY SHALL NOT BE LEVIED AS THE ASSESSEE HAS MADE OFFER BEFORE THE SETTLEMENT COMMISSION IS NOT APPROPRIATE AND COHERENT UNDER THE FACTS AND CIRCUMSTANCES EXISTED IN THE CASE OF T HE ASSESSEE. THE SETTLEMENT COMMISSION HAS REJECTED THE PETITION OF THE ASSESSEE FOR THE REASONS STATED ABOVE IN THIS ORDER. HOWEVER, THE ASSESSEE HAS FAILED TO OFFER THE UNDISCLOSED INCOME IN HIS BLOCK OF RETURN OF INCOME AND IT IS SUBSTANTIATED FROM TH E MATERIAL FACTS AS ELABORATED IN HIS ORDER T HAT PENALTY U/S. 188BFA(2) WAS A PPOSITELY LEVIED. AFTER CONSIDERING THE MATERIAL ON RECORD, WE FIND THAT LD. CIT(A) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED U/S. 158BFA AS THE ASSESSING OFFICER HAS COMPUTED I NCOME IN EXCESS ON WHAT WAS DECLARED BY THE ASSESSEE FOR BLOCK PERIOD. WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A) IN CONFIRMING THE PENALTY IMPOSED BY THE ASSESSING OFFICER AS PROVIDED IN SUB - SECTION 2 OF SECTION 158BFA, THEREFORE, THIS AP PEAL OF THE ASSESSSEE IS DISMISSED. 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 24 - 04 - 201 9 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 24 /04 /2019 I.T (SS) .A NO. 392 /AHD/20 14 A.Y. BLOCK PERIOD PAGE NO SHRI YOGESH K. SHAH VS. D CIT 8 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,