Shri Rakesh P. Rajdev, RAJKOT-GUJARAT V. The Asstt. Commr. Income Tax, Circle-1, RAJKOT-GUJARAT

ITSSA 4/RJT/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0441 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Peak credit; Block assessment
• Section: 271(1)(c)

Judgement Text

RAKESH P. RAJDEV VS. ACIT, CIRCLE-1, RAJKOT/IT(SS)A NO.04/RJT/2014/BLOCK PERIOD: 01/04/87 TO 06/08/97 PAGE 1 OF 6 , , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./I.T(SS).A. NO.04/RJT/2014 BLOCK PERIOD : 01.04.1987 TO 06.08.1997 SHRI RAKESH P RAJDEV, 3-GUNDAWADI, RAJKOT. [PAN: ABJPR 3970 Q] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, RAJKOT. APPELLANT /RESPONDENT /ASSESSEE BY SHRI VIMAL DESAI S.R. /REVENUE BY SHRI JITENDER KUMAR CIT - DR / DATE OF HEARING: 2 7 .11. 2018 /PRONOUNCEMENT ON 30 . 1 1 .2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), JAMNAGAR(IN SHORT THE CIT (A)) DATED 13.03.2014 PERTAINING TO BLOCK PERIOD 01.04.1987 TO 06.08.1997 2. GROUND NO.1 TO 4 RELATES TO CONFIRMING THE PENALTY OF RS.11,23,070/- LEVIED U/S.158B FA (2) OF THE ACT OF PEAK AMOUNT OF BANK DEPOSITS AND OTHER 3 ADDITIONS BEING UNEXPLAINED CASH, RAKESH P. RAJDEV VS. ACIT, CIRCLE-1, RAJKOT/IT(SS)A NO.04/RJT/2014/BLOCK PERIOD: 01/04/87 TO 06/08/97 PAGE 2 OF 6 ESTIMATION PROFIT OF SALE OF LOTTERIES AND ESTIMATION OF TURNOVER ON PROFIT. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT A SURVY OPERATION U/S.132 OF THE ACT WAS CARRIED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 06.08.1997 IN BLOCK ASSESSMENT PROCEEDINGS. THE AO ASSED TOTAL INCOME OF THE ASSESSEE AT RS.60,49,824/- BY MAKING VARIOUS ADDITION / DISALLOWANCE. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) WHO DELETED MOST OF THE ADDITIONS OF APPEAL BY THE DEPARTMENT. THE ITAT HAS SET-ASIDE THE SEVERAL ISSUES TO THE FILE OF THE AO FOR DECISION AFRESH. SUBSEQUENT TO THE ITAT DECISION, THE AO INITIATED THE PENALTY PROCEEDINGS AND LEVIED A PENALTY OF RS.11,23,070/- U/S.158BFA(2) OF THE ACT IN RESPECT OF ADDITIONS OF RS.18,71,780/- WHICH WAS CONFIRMED BY THE CIT(A) AS WELL AS BY THE ITAT. 5. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) WHEREIN IT WAS CONTENDED THAT THE PENALTY LEVIED IS BAD IN LAW AS THE AO LEVIED THE PENALTY WITHOUT MENTIONING ANY SPECIFIC CHARGE AS PER PARA 6 OF THE ORDER THE AO MENTIONED THAT I AM CONVINCED WITH THIS IS A FIT CASE FOR LEVY OF PENALTY U/S.158BFA OF THE ACT CONCEALMENT AND FURNISHING IN ACCURATE PARTICULARS OF INCOME. THUS, IN THE PENALTY ORDER, ALSO NO CLEAR RAKESH P. RAJDEV VS. ACIT, CIRCLE-1, RAJKOT/IT(SS)A NO.04/RJT/2014/BLOCK PERIOD: 01/04/87 TO 06/08/97 PAGE 3 OF 6 CHARGE IS MENTIONED AND THE AO HAS USED MIXTURE BOTH THE CHARGES. THE ASSESSEE HAS ALSO SUPPORTED IS VIEW BY PLACING RELIANCE IN THE CASE OF NEW SORATHIA ENGINEERING COMPANY VS. CIT 282 ITR 642 (GUJ). WITH REGARD ADDITION ON ACCOUNT OF BANK DEPOSITS OF RS.17,47,188/- THE CIT(A) HAS DIRECTED IN THE APPEAL TO VERIFY THE PEAK DEPOSIT AND RESTRICT THE ADDITION TO THAT EXTENT ONLY. THE PEAK AMOUNT AS PER APPELLANT WAS RS.3,84,494/-. HOWEVER, THE AO WITHOUT MAKING ANY FURTHER VERIFICATION RETAINED THE ADDITION AS SUCH IN THE APPEAL EFFECT ORDER. AFTER CONSIDERING THE FACTS THE CIT(A) OBSERVED THAT AS FAR AS TECHNICAL OBJECTION OF THE APPELLANT THAT THE CHARGE IS NOT SPECIFIC, HE WAS OF THE VIEW THAT THE PENALTY U/S.158BFA IS LEVIED ON UNDISCLOSED INCOME FOUND AS A RESULT OF SEARCH AND THEREFORE IRRESPECTIVE OF THE CHARGE MENTIONED BY THE AO PENALTY BECOMES LEVIABLE. WITH REGARD ADDITION OF BANK DEPOSIT OF RS.17,47,188/- THE CIT(A) OBSERVED THAT THE CIT(A) HAS DIRECTED TO CONSIDER THE PEAK AMOUNT OF RS.3,84,494/- WHICH HAS BECOME FINAL AS THE AO HAS NOT COMPLETED THE SAME BEFORE THE ITAT. THEREFORE, THE AO WAS DIRECTED TO RE-CALCULATE THE PENALTY ON UNDISCLOSED INCOME BY TAKING THE PEAK AMOUNT WITH REGARD TO ADDITION OF UNEXPLAINED CASH OF RS.12,920/- AND ESTIMATED PROFIT ON SALE OF LOTTERIES RAKESH P. RAJDEV VS. ACIT, CIRCLE-1, RAJKOT/IT(SS)A NO.04/RJT/2014/BLOCK PERIOD: 01/04/87 TO 06/08/97 PAGE 4 OF 6 OFRS.93,594/- AND ESTIMATED NET PROFIT OF RS.18,078/- THE ADDITION WAS MADE ON THE BASIS OF FINDINGS OF THE SEARCH AND THE APPELLANT AS FAILED TO FURNISH ANY RETURN OF INCOME AND DISCLOSED THESE ITEMS, THEREFORE THE PENALTY LEVIED IN RESPECT OF THESE ADDITIONS WAS CONFIRMED. 6. BEING AGGRIEVED, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTY WAS CONFIRMED ON THE ESTIMATED PROFIT ON SALE OF LOTTERIES OF RS.93,594/- AND ESTIMATED TURNOVER AND NET PROFIT OF RS.18,078/- THESE WERE AN ADHOC ADDITIONS ON ESTIMATED BASIS AND PENALTY IS NOT LEVIABLE WHICH IS COVERED BY THE DECISION OF CHANDIGARH ITAT IN THE CASE OF DR.HAKEEM S.A.SYED SATHAR 120 ITD 1 CHENNAI. SIMILARLY THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH OF RS.12,920/- WAS MADE ON ACCOUNT OF THE SMALL DIFFERENCE, HENCE PENALTY IS NOT LEVIABLE. SIMILARLY, THE AO HAS LEVIED PENALTY OF BANK DEPOSIT OF RS.17,47,188/- WHICH WAS RESTRICTED BY THE CIT(A) ON THE PEAK AMOUNT OF RS.3,84,494/- THEREFORE PENALTY OF IMPUGNED ADDITION IS ERRONEOUS AND FREE MAJOR AND SAME CANNOT BE TREATED AS CONCEALMENT OF INCOME. FURTHER, IT WAS CONTENDED THAT PENALTY WAS LEVIED WITHOUT POINTING OUT SPECIFIC CHARGES WHICH IS NOT PERMISSIBLE IN THE LIGHT OF DECISION IN THE CASE OF NEW RAKESH P. RAJDEV VS. ACIT, CIRCLE-1, RAJKOT/IT(SS)A NO.04/RJT/2014/BLOCK PERIOD: 01/04/87 TO 06/08/97 PAGE 5 OF 6 SORATHIA ENGINEERING COMPANY (SUP) OF HONBLE GUJARAT HIGH COURT THE PROVISIONS OF SECTION 158BFA (2) ARE AKIN TO THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. THEREFORE, THE CASE LAWS RELEVANT FOR SECTION 271(1)(C) ARE APPLICABLE TO THE PENALTY PROVISIONS OF SECTION 158BFA (2) ALSO. 7. PER CONTRA, THE LD.CIT-DR SUPPORTED THE ORDERS OF CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE ARE OF THE VIEW THAT IMPOSITION OF PENALTY IS NOT AUTOMATIC IN THE EVENTUALITY OF ESTIMATED INCOME. WE FIND THAT PENALTY FOR RS.93,594/- & RS.18078/- HAS BEEN LEVIED ON ESTIMATION OF PROFIT ON SALE OF LOTTERIES AND TURNOVER IT IS MADE ON ESTIMATE BASIS, THEREFORE THE SAME CANNOT BE TREATED AS CONCEALMENT OF INCOME. SIMILARLY, THE PENALTY RESTRICTED IN RESPECT OF PEAK AMOUNT OF RS.3,84,494/- OF BANK DEOSITS AND UNEXPLAINED CASH OF RS.12,920/- IS ALSO WITHOUT ANY POSITIVE CONCEALMENT OF INCOME AS THE ADDITION SUSTAINED IS ON THE BASIS OF PEAK ONLY. THEREFORE, IT MUST BE BEYOND THE SHADOW DUE THAT THERE WAS ACTUALLY INCOME AND FURTHER THAT INCOME WAS NOT DISCLOSED. THE MERE FACT OF ADDITIONS OF ESTIMATE BASIS PARTICULARLY WHEN THE ASSESSMENT IS MADE ON THE ENTRIES SUPPLYING FROM THE INABILITY OF THE ASSESSEE TO ESTABLISH THE CASE PLEADED BY RAKESH P. RAJDEV VS. ACIT, CIRCLE-1, RAJKOT/IT(SS)A NO.04/RJT/2014/BLOCK PERIOD: 01/04/87 TO 06/08/97 PAGE 6 OF 6 HIM, WILL NOT BE SUFFICIENT FOR THE PURPOSE OF IMPOSITION OF PENALTY. BESIDES ADDITION ON THE BASIS OF ESTIMATE DOES NOT IPSO- FACTO SUPPLY EVIDENCES OF CONCEALMENT SO AS TO JUSTIFY PENALTY. IN THE PRESENT CASE, THE FACTUM OF CONCEALMENT WAS NOT PROVED BEYOND THE SHADOW OF DOUBT AND THE ADDITIONS WERE MADE SURELY ON THE BASIS OF ESTIMATION OF RECEIPTS, THEREFORE THE SAME ARE NOT SUFFICIENT MATERIAL FOR THE LEVY OF PENALTY. THE PROVISIONS OF 158BF (2) AND 271(1)(C) REQUIRE INDEPENDENT APPRAISAL OF THE ADDITIONS AND DOCUMENTS. THEREFORE, CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT LOWER AUTHORITIES ARE NOT JUSTIFIED IN CONFIRMING THE PENALTY ON ADDITION MADE ESTIMATE AND PEAK CREDIT BASIS, THEREFORE, SAME IS DIRECTED TO BE DELETED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 10. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2018. SD/- SD/- ( .. /C.M. GARG) ( .. / O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / RAJKOT, DATED : 30 TH NOVEMBER , 2018/ S.GANGADHARA RAO, SR.PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, RAJKOT