T.M. Patel Processing Pvt.Ltd., Surat V. The ACIT.,Cent.Circle-4, Surat

ITSSA 435/AHD/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2188 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-06-2016
• Assessment Year: misc
• Appeal Filed On: 23-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P CHAUDHARY
• Keywords: Unexplained expenditure; Income from undisclosed sources; Block assessment; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER T.M. PATEL PROCESSING PVT. LTD, X - 1147, SURAT TEXTILE MARKET, RING ROAD, SURAT PAN: (APPELLANT) VS THE ACIT, CENTRAL CIRCLE - 04, SURAT (RESPONDENT) REVENUE BY : S H RI O.P. CHAUDHARY , SR. D . R. ASSESSEE BY: S H RI HARDIK VORA , A.R. DATE OF HEARING : 02 - 06 - 2 016 DATE OF PRONOUNCEMENT : 29 - 06 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSES SEE S APPEAL FOR A.Y. 1990 - 91 TO 99 - 00 & UPTO 29 - 07 - 1999 , AR ISES FROM ORDER OF THE CIT(A) - II, AHMEDABAD DATED 31 - 03 - 2011 IN APPEAL NO. CIT(A) - II/CC - 4/5/2009 - 10 , CONFIRMING PENALTY OF RS. 3,11,911/ - , IN P ROCEEDINGS UNDER SECTION 158BFA(2) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T (SS) A NO . 435 / A HD/20 11 A Y 1990 - 91 TO 99 - 00 & UPTO 29 - 07 - 1999 I.T(SS) A NO. 435/AHD/2011 A.Y. BLOCK PERIOD PAGE NO T.M. PATEL PROCESSING PVT. LTD VS. ACIT 2 2. THE ASSESSEE COMPANY CARRIES OUT JOB WORKS IN THE BUSINESS OF DYEING OF GREY CLOTH. IT COMMENCED BUSINESS ON 01 - 04 - 1997. THE DEPARTMENT CARRIED OUT A SEARCH IN ITS CASE ON 29 - 07 - 1999. THE ASSESSEE FILED RETURN DECLARIN G TOTAL UNDISCLOSED INCOME OF RS. 63 LACS ON 29 - 11 - 1999. THE ASSESSING OFFICER COMPLETED A BLOCK ASSESSMENT ON 25 - 06 - 2001 COMPUTING TOTAL INCOME OF RS. 89,52,960/ - . THIS COMPUTATION INCLUDED SIX ADDITIONS OF UNACCOUNTED INCOME EARNED FROM UNACCOUNTED DYE ING JOB WORKS OF RS. 15,100/ - , UNACCOUNTED STOCK OF COLOUR AND CHEMICALS OF RS. 36,211/ - , UNDISCLOSED INCOME FROM VARIOUS UNACCOUNTED CONCERNS OF RS. 45,75,818/ - , UNDISCLOSED PROFITS FROM UNACCOUNTED JOB WORK OF RS. 38,40,220/ - , UNACCOUNTED CAPITAL EXPENDI TURE OF RS. 89,737/ - AND UNDISCLOSED EXPENDITURE/INVESTMENT AMOUNTING TO RS. 3,95,870/ - ; RESPECTIVELY. HE FURTHER INITIATED THE IMPUGNED SECTION 158BFA(2) PENALTY PROCEEDINGS AS WELL. 3. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) IN HIS ORDER DATED 01 - 03 - 2002 INTER ALIA CONFIRMED FIRST ADDITION, DELETED SECOND ONE, RESTRICTED THIRD AND FOURTH ONES OF RS. 45,75,818/ - AND RS. 38,40,220/ - TO RS. 39,07,054/ - AND RS. 14,39,839/ - ONLY, DELETED FIFTH ADDITION AND CONFIRMED THE LAST ONE; RESPECTIVELY. 4. I T TRANSPIRES THAT THE REVENUE FILED ITA 145/AHD/2002 AGAINST THE CI T(A) QUANTUM ORDER. A CO - ORDINATE BENCH OF THE TRIBUNAL IN ITS ORDER DATED 29 - 12 - 2008 PARTLY RESTRICTED THIRD ADD ITION OF RS. 45,75,818/ - TO R S. 42 ,64,064/ - (SUPRA). ALL OTHER CI T(A) S FI NDINGS I.T(SS) A NO. 435/AHD/2011 A.Y. BLOCK PERIOD PAGE NO T.M. PATEL PROCESSING PVT. LTD VS. ACIT 3 STOOD AFFIRMED. QUANTUM PROCEEDINGS ATTAINED FINALITY AT THIS STAGE. TH E ASSESSEE S INCOME STOOD COMPUTED AS RS. 68,19,859/ - AS AGAINST THAT DECLARED OF RS. 63 LACS. 5. THE ASSESSING OFFICER RESUMED WITH THE PENALTY PROCEEDINGS. HE PASSED IMP UGNED PENALTY ORDER ON 26 - 03 - 2009 INTER ALIA AFTER HOLDING THAT THE ASSESSEE HAD NOT FILED ANY JUSTIFICATION OF ITS UNDISCLOSED INCOME. IT HAD UNDERTAKEN UNACCOUNTED BUSINESS THROUGH SUPPRESSION THEREBY EARNING UNDISCLOSED INCOME WHICH WAS CONCEALED BY WA Y OF WILLFULLY FILING LOWER RETURN RESULTING IN THE ABOVE STATED QUANTUM ADDITIONS MODIFIED/CONFIRMED UPTO THE TRIBUNAL. HE ACCORDINGLY IMPOSED P ENALTY @ 100% OF THE TAX LEVIAB LE ON ABOVE STATED ENHANCED INCOME OF RS. 5,19,851/ - COMING TO RS. 3,11,911/ - . 6. T HE ASSESSEE PREFERRED APPEAL. THE CIT(A) DECLINES THE SAME BY HOLDING AS UNDER: - 4. I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS. I DO NOT AGREE WITH THE APPELLANT'S VIEWS. THE ADDITION IS NOT MADE ON CONJECTURES AND SURMISES BUT ARE MADE ON T HE BASIS OF DISCREPANCIES AND EVIDENCES FOUND OUT DURING THE SEARCH. THERE WAS DISCREPANCY IN THE STOCK FOR WHICH ADDITION OF RS. 15,100/ - IS MADE AND THERE WERE EVIDENCES .FOR UNEXPLAINED MISC. EXPENSES FOR WHICH ADDITION OF RS.89,737/ - IS MADE. DURING TH E SEARCH PROCEEDINGS, VARIOUS UNACCOUNTED BANK ACCOUNTS AS BELONGING TO THE APPELLANT COMPANY WERE FOUND AND SEIZED ON THE BASIS OF WHICH THE ASSESSING OFFICER MADE THE ADDITION OF RS.6,68,764/ - AND THE HON'BLE ITAT HAS CONFIRMED THIS TO THE EXTENT OF RS.4 ,15,040/ - . THUS, IT CANNOT BE SAID THAT THE ADDITIONS ARE MADE MERELY ON THE ESTIMATES, CONJECTURES AND SURMISES. THE CASE LAWS CITED BY THE APPELLANT ARE NOT APPLICABLE AS IN THISN CASE, THE PENALTY IS BASED ON THE EVIDENCES FOUND IN THE SEARCH. IN VIEW O F THIS, IT IS HELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING THE PENALTY WHICH IS CONFIRMED. I.T(SS) A NO. 435/AHD/2011 A.Y. BLOCK PERIOD PAGE NO T.M. PATEL PROCESSING PVT. LTD VS. ACIT 4 5. THE SECOND GROUND OF APPEAL IS THAT THE PENALTY U/S. 158BFA(2) IS ALSO TIME BARRED. THE APPELLANT HAS SUBMITTED THAT THE IMPUGNED PENALTY ORDER U/S. 158BFA(2) APPEARS TO BE TIME BARRED AS CAN BE APPRECIATED FROM THE FOLLOWING - AS PER THE PROVISIONS OF SECTION 158BFA(3) , AN ORDER LEVYING A PENALTY U/S.158BFA(2) HAS TO BE PASSED WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THEN ORDE R OF THE APPELLATE TRIBUNAL IS RECEIVED BY THE COMMISSIONER. IN THE PRESENT CASE, THE ORDER OF THE APPELLATE TRIBUNAL IS DATED 29.02.2008, THE ORDER GIVING EFFECT OF WHICH HAS BEEN PASSED BY THE ASSESSING OFFICER ON 19.09.2008. THE IMPUGNED PENALTY ORDER H AS BEEN PASSED ON 26.03.2009. FROM THE ABOVE DATES, IT CAN BE APPRECIATED THAT THE ORDER OF THE APPELLATE TRIBUNAL MUST HAVE BEEN RECEIVED BY THE HON'BLE CIT, AHMEDABAD LATEST BY IN THE MONTH OF AUGUST,2008 WHICH WAS THEN SENT TO THE ASSESSING OFFICER AT S URAT, ON THE BASIS OF WHICH THE ORDER GIVING EFFECT WAS PASSED BY THE ASSESSING OFFICER ON 19.09.2008. IN VIEW OF THESE FACTS, IT IS REQUESTED TO CALL FOR THE DETAILS OF THE DATE OF RECEIPT OF THE ORDER OF THE APPELLATE TRIBUNAL IN THE OFFICE OF THE CIT, A HMEDABAD SO AS TO DECIDE THE ISSUE AS REGARDS THE LIMITATION OF THE PASSING OF THE IMPUGNED PENALTY ORDER. 6. THE ASSESSING OFFICER WAS ASKED .TO INTIMATE THE DATE OF RECEIPT OF THE ITAT'S ORDER DATED 29.02.2008 AND THE PRESENT ASSESSING OFFICER ITO.,WARD 4(4), SURAT HAS INTIMATED VIDE HIS LETTER DATED 07.02.2011 THAT THE ITAT'S ORDER DATED 29.02.2008 WAS RECEIVED ON 09.09.2008 IN THE OFFICE OF THE COMMISSIONER OF INCOME TAX - L, SURAT. FROM THIS, IT IS CLEAR THAT THE LIMITATION FOR IMPOSING THE PENALTY WAS EXPIRING ON 31.03.2009 ( 6 MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE APPELLATE TRIBUNAL IS RECEIVED BY THE COMMISSIONER), WHEREAS THE PENALTY ORDER WAS PASSED ON 26.03.2009 WHICH IS IN TIME. IN VIEW OF THIS, THE APPELLANT'S GROUND IS REJEC TED. 7. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED. RELEVANT FACTS NARRATED IN PRECEDING PARAGRAPHS ARE NOT RE - ASSIMILATED IN ORDER TO AVOID REPETITION. THERE IS NO DISPUTE THAT BOTH THE LOWER AUTHORITIES PENALIZE THE ASSESSEE QUA ITS UNDISCLOS ED INCOME AS ASSESS ED OVER I.T(SS) A NO. 435/AHD/2011 A.Y. BLOCK PERIOD PAGE NO T.M. PATEL PROCESSING PVT. LTD VS. ACIT 5 AND ABOVE THAT DECLARED INVOLVING DIFFERENTIAL AMOUNT OF RS. 5,19,851/ - . HON BLE JURISDICTIONAL HIGH COURT IN (2012) 341 ITR 499 (GUJ) CIT VS. BECHARBHAI P. PARMAR MAKES IT VERY CLEAR THAT THE IMPUGNED SECTION 158BFA(2) PENALTY IS NOT MANDATORY. IT ALSO HOLDS THAT THE REVENUE HAS NO ONUS TO PROVE CONCEALMENT IN SUCH CASES. WE PROCEED ON THESE PRINCIPLES TO NOTICE THAT THE ASSESSING OFFICER HAD MADE SIX ADDITIONS. ONLY THIRD AND FOURTH AMONGST THEM WERE IN THE NATURE OF UNDISCL OSED INCOME FROM UNACCOUNTED CONCERNS AND UNDISCLOSED PROFITS FROM UNACCOUNTED JOB WORK. IT HAS COME ON RECORD THAT SECOND AND FIFTH ADDITION STOOD DELETED BEFORE THE CIT(A) . FIRST AND SIXTH ONE IN THE NA TURE OF UNACCOUNTED INCOME FROM UNACCOUNTED DYEING JOB WORK AND UNDISCLOSED EXPENDITURE/INVESTMENT STOOD CONFIRMED. THERE IS FURTHER NO ISSUE THAT THE TRIBUNAL PARTLY REVERSED THE ABOVE STATED FI N DING TO THE EXTENT INDICATED HEREINABOVE. IT IS THUS CLEAR THAT THE ASSESSING OFFICER S ACTION AS WELL THAT OF THE CIT(A) HAS BEEN REVERSED/RESTRICTED BY THIS TRIBUNAL (SUPRA). COMING TO FIRST AND SIXTH ADDITION , IT IS APPARENT T HAT THE FIRST ONE AMOUNTING TO R S. 15,100/ - (SUPRA) HAD BEEN MADE ON ESTIMATION BASIS BY ADOPTING 10% AVERAGE FORMULA E. LATTER ONE AROSE FROM UNEXPLAINED EXPENDITURE . THE ASSESSEE COULD EXPLAIN THE SAME ONLY TO THE TUNE OF RS. 2,32,966/ - LEAVING BEHIND THE REMAINING AMOUNT OF UNEXPLAINED EXPENDITURE OF R S. 3,27,733/ - . WE ARE OF THE VIEW IN THESE PECULIAR FACTS AND CIRCUMSTANCES THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN PENALIZING THE ASSESSEE QUA THE ABOVE STATED DIFFERENTIAL AMOUNT OF UNDISCLOSED INCOME IN QUESTION. T HE IMPUGNED PENALTY OF RS. 3,11 ,911/ - IS ACCORDINGLY DELETED. I.T(SS) A NO. 435/AHD/2011 A.Y. BLOCK PERIOD PAGE NO T.M. PATEL PROCESSING PVT. LTD VS. ACIT 6 8. THIS ASSSESSEE S APPEAL IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 29 - 06 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 29 /06 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,