SHAMIN A BAIG, MUMBAI V. ACIT 8(1), MUMBAI

ITSSA 45/MUM/2011

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9212 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-05-2013
• Assessment Year: misc
• Appeal Filed On: 30-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Keywords: Unexplained investment; Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPE LLATE TRIBUNAL MUMBAI E BENCH, MUM BAI BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER IT(SS) A. NO.45/MUM/2011 ASSESSMENT YEAR/BLOCK PERIOD: 01.04.1988 TO 04.02.1 999 SHAMIM A. BAIG ROOM NO.8, DHAVAL GANGA, 1, CARTER ROAD, BANDRA-WEST MUMBAI- 400050 PAN: AC4PB4453D VS. THE ASST. COMMISSIONER OF INCOME TAX 8(1) 2 ND FLOOR, AYAKAR BHAVAN, M.K. ROIAD, MUMBAI- 400020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARIDAS BHAT (AR) RESPONDENT BY : SHRI GIRIJA DAYAL (CIT-DR) DATE OF HEARING: 13.05.2013 DATE OF PRONOUNCEMENT : 13.05.2013 O R D E R PER B.R. MITTAL (JM): THE ASSESSEE HAS FILED THIS APPEAL AGAINST ORDER OF LD. CIT(A) DATED 10.03.2011 DISPUTING THE CONFIRMATION OF LEVY OF PE NALTY OF RS. 3,14,823/- U/S 158 BFA (2) OF INCOME TAX ACT, 1961, BEING TAX SOUGHT T O BE EVADED ON UNDISCLOSED INCOME OF THE BLOCK PERIOD I.E. 01.04.1988 TO 04.02.1999. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THERE W AS A SEARCH U/S 132 OF THE INCOME TAX ACT ON 04.02.1999 WHICH WAS FINALLY CONC LUDED ON 17.02.1999. THE ASSESSEE IS ONE OF THE DIRECTOR OF M/S GLOBAL AIRFREIGHT PVT . LTD. DURING THE COURSE OF SEARCH, CASH OF RS. 3,10,500/- WAS FOUND FROM HIS RESIDENCE AND RS. 1,30,000/- WAS FOUND FROM HIS LOCKER NO. 27A OF UNION BANK OF INDIA, TURNER ROAD, BANDRA. THE SAID CASH AGGREGATING TO RS. 4,40,800/- WAS TREATED AS UNEXPLAINED INCOME OF THE ASSESSEE FOR FINANCIAL YEAR 1998-99 RELEVANT TO AY 1999-2000. HOWEVER, THE TRIB UNAL STATED THAT THE CASH TO THE EXTENT OF RS. 50,000/- WAS REASONABLY EXPLAINED AND ACCORDINGLY, THE ADDITION OF RS. 3,90,500/- WAS FINALLY CONFIRMED BY THE TRIBUNAL BY ITS ORDER DATED 26.11.2008. BESIDES ABOVE, A SUM OF RS. 62,530/- WAS CONSIDERED AS UNDI SCLOSED/UNEXPLAINED INTEREST ON FIXED DEPOSITS, THE ADDITION OF WHICH WAS CONFIRMED BY LD. CIT(A). HOWEVER THE TRIBUNAL 2 IT(SS)A NO.45/MUM/2011 SHAMIM A. BAIG BY ITS AFORESAID ORDER DATED 26.11.2008, VIDE PARA 36, RESTORED THE ISSUE TO THE AO TO VERIFY THE FACT AS TO WHETHER, THE ASSESSEE OFFERED THE INTEREST ON RECEIPT BASIS AND IF THE AO FINDS THAT ASSESSEE HAD DULY ACCOUNTED FOR THE S AME THEN NO ADDITION WAS CALLED FOR. AN ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE FURNITURE OF RS. 47,950/- WAS MADE ON AN ESTIMATE BASIS AND THE TRIBUNAL ALSO CON FIRMED THE SAID ADDITION BY ITS AFORESAID ORDER. FURTHER, AN ADDITION OF RS. 23,725 /- WAS MADE ON ACCOUNT OF UNEXPLAINED SOURCE FOR PURCHASE OF FOREIGN CURRENCY I.E. RS. 18,000/- IN AY 1993-94, RS. 1,850/- FOR AY 1996-97, RS. 2000/- IN AY 1998-99 AN D RS. 1,875/- IN AY 1999-2000 AND THE TRIBUNAL HAS ALSO CONFIRMED THE SAME ON THE GRO UND THAT THE ASSESSEE COULD NOT EXPLAINED THE AVAILABILITY OF FUND WITH HIM FOR PUR CHASING THE SAID FOREIGN CURRENCY IN THE RELEVANT ASSESSMENT YEARS. IN VIEW OF THE ABOVE, TH E AO HAS LEVIED PENALTY ON THE AGGREGATE AMOUNT OF RS. 5,24,705 (RS. 3,90,500+ RS. 62,530 + RS. 47,950 + RS. 23,725) @ 100% OF THE TAX SOUGHT TO BE EVADED WHICH COMES TO RS. 3,14,823/-. IN THE FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED THE ACTI ON OF THE AO. HENCE THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING, THE LD. AR CONCEDED THA T A SUM OF RS. 3,90,500/- OUT OF THE CASH OF RS. 4,40,500/- FOUND DURING THE COURSE OF SEARCH WAS FINALLY CONFIRMED BY THE TRIBUNAL AS UNEXPLAINED INCOME IN THE HAND O F THE ASSESSEE AFTER REJECTING THE SUBMISSION OF THE ASSESSEE THAT A SUM OF RS. 3,00,0 00/- BELONGED TO THE COMPANY, IN WHICH THE ASSESSEE WAS A DIRECTOR. 4. THE LD. AR ALSO CONCEDED THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF PURCHASE OF FOREIGN CURRENCY OF RS. 23,725/- IN THE RESPECTIVE ASSESSMENT YEARS, AS MENTIONED HEREINABOVE. 5. IN RESPECT OF THE INTEREST ON FIXED DEPOSI TS OF RS. 62,530/- CONSIDERED AS UNDISCLOSED INCOME AND WAS ALSO CONSIDERED FOR LEVY OF PENALTY, THE LD. AR SUBMITTED THAT THE TRIBUNAL HAS RESTORED THE ISSUE TO THE AO. THEREFORE, LEVY OF PENALTY ON IT IS NOT JUSTIFIED. 6. THE LD. AR FURTHER SUBMITTED THAT AN ADDITI ON OF RS. 47,950/- AS UNEXPLAINED INVESTMENT IN FURNITURE HAS BEEN MADE O N AN ESTIMATE BASIS AND THEREFORE, LEVY OF PENALTY ON THE BASIS OF ESTIMATED ADDITION IS NOT JUSTIFIED. 3 IT(SS)A NO.45/MUM/2011 SHAMIM A. BAIG 7. THE LD. AR FURTHER SUBMITTED THAT THE LEVY OF PENALTY U/S 158 BFA(2) IS NOT MANDATORY AND REFERRED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DODSAL LTD. 312 ITR 112 AND ALSO THE DECISI ON OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SATYENDRA KUMAR DOSI 315 ITR 172 AND ALSO PLACED RELIANCE ON THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF D EPUTY COMMISSIONER OF INCOME TAX VS. KOTAX INFRASTRUCTURE LTD. 100 ITD 510. THE LD. AR ALSO FILED A LIST OF CASES. WE DO NOT CONSIDER IT RELEVANT TO MENTION THE DETAILS OF ALL THOSE CASES AS NO SPECIFIC SUBMISSIONS WERE MADE BY LD. AR AT THE TIME OF HEAR ING, SAVE AND EXCEPT STATING THAT LEVY OF PENALTY BE DELETED. 8. ON THE OTHER HAND, LD. DR SUPPORTED THE ORD ER OF LD. CIT(A) TO LEVY THE PENALTY BY THE AO AT THE RATE OF MINIMUM PENALTY OF 100% ON THE TAX SOUGHT TO BE EVADED ON THE UNDISCLOSED INCOME. 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIO NS OF THE LD. REPRESENTATIVE OF THE PARTIES AND THE ORDER OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE CASES FOR WHICH THE LD. AR FILED A LIST BEFORE US. WE MAY STATE THAT THE CASES CITED IN THE LIST ARE NOT RELEVANT TO THE FACTS OF THE CASE BEFORE US . THE LD. AR HAS NOT BEEN ABLE TO ESTABLISH AS TO HOW THE FACTS OF THOSE CASES MENTIO NED THEREIN ARE RELEVANT TO THE FACTS OF THE CASE OF THE ASSESSEE BEFORE US. WE OBSERVED THAT IN THE CASE OF DODSAL LTD. (SUPRA) IT WAS HELD THAT THE LEVY OF PENALTY IS DIR ECTORY AND NOT MANDATORY BUT LD. AR COULD NOT STATE AS TO HOW THE LEVY OF PENALTY IN TH E CASE OF THE ASSESSEE IS UNJUSTIFIED. WE ALSO OBSERVE THAT THE CASE OF THE HONBLE RAJAST HAN HIGH COURT AND THE CASE OF ITAT MUMBAI BENCH (SUPRA) ARE ALSO NOT APPLICABLE TO THE FACTS AS WELL AS ISSUE IN THE CASE BEFORE US. 10. WE OBSERVE THAT AS FAR AS THE ADDITION OF RS. 3,90, 500/- IS CONCERNED AS UNDISCLOSED INCOME ON ACCOUNT OF CASH FOUND AND THE ADDITION OF RS. 23,725/- ON ACCOUNT OF PURCHASE OF FOREIGN CURRENCY, THE ASSESS EE COULD NOT OFFERED ANY EXPLANATION OR ANY CORROBORATIVE EVIDENCE TO EXPLAIN THE SAME. THE TRIBUNAL HAS ALSO CONFIRMED THE SAID ADDITIONS AS UNDISCLOSED INCOME OF THE ASSESSE E. WE ARE OF THE CONSIDERED VIEW THAT THE LEVY OF PENALTY U/S 158BFA (2) @ 100% OF T HE TAX SOUGHT TO BE EVADED ON THE AFORESAID TWO ADDITIONS IS JUSTIFIED. ACCORDINGLY, NO INTERFERENCE IN THE ORDER OF THE LD. 4 IT(SS)A NO.45/MUM/2011 SHAMIM A. BAIG CIT(A) IN CONFIRMING THE LEVY OF PENALTY ON THE AFO RESAID TWO ADDITIONS OF RS. 3,19,500/- AND RS. 23,725/- IS CALLED FOR. 11. HOWEVER, IN RESPECT OF INTEREST ON FIXE D DEPOSITS OF RS. 62,530/-, WE OBSERVE THAT THE TRIBUNAL HAS RESTORED THIS ISSUE T O THE FILE OF THE AO FOR VERIFICATION AS TO WHETHER THE ASSESSEE HAS ACTUALLY OFFERED THE TA X ON RECEIPT BASIS AND IF SO, NO ADDITION IS CALLED FOR. AT THE TIME OF HEARING IT W AS INFORMED THAT AO HAS YET TO PASS THE CONSEQUENTIAL ORDER. HENCE, WE HOLD THAT LEVY OF PE NALTY ON THE SAID ADDITIONS OF RS. 62,530/- IS NOT JUSTIFIED. SIMILARLY IN RESPECT OF THE INVESTMENT IN FURNITURE OF RS. 47,950/- AS UNEXPLAINED INVESTMENT, WE OBSERVE THAT THE SAID ADDITION HAS BEEN MADE ON AN ESTIMATE BASIS. IN THE ABSENCE OF ANY OTHER C ORROBORATIVE EVIDENCE, WE HOLD THAT THE LEVY OF PENALTY IN THE BLOCK ASSESSMENT ON AN E STIMATE BASIS IS NOT JUSTIFIED. 12. IN VIEW OF ABOVE, WE MODIFY THE ORDERS OF THE AUTHORITIES BELOW BY CONFIRMING THE LEVY OF PENALTY @ 100% OF THE TAX SO UGHT TO BE EVADED ON RS. 3,90,500/- AND RS. 23,725/-, BUT DELETE THE LEVY ON PENALTY ON RS. 62,530/- AND RS. 47,950/-. THEREFORE, THE GROUND OF APPEAL TAKEN BY THE ASSESS EE IS ALLOWED IN PART AS INDICATED ABOVE. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT AFTER THE CONCLUSION OF THE HEARING ON 13 TH MAY 2013. SD/- SD/- (D. KARUNAKARA RAO) (B.R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : DATE : 13 TH MAY, 2013 SK COPY TO: 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE DCIT (E), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR MUMBAI, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBA I