The ITO, Ward-4(1), Ahmedabad V. Gujarat Foils Ltd., Ahmedabad

ITSSA 48/AHD/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8683 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-01-2011
• Assessment Year: misc
• Appeal Filed On: 28-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY RAI
• Keywords: Rectification of order; Block assessment

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, A M INCOME-TAX OFFICER, WARD 4(1), AHMEDABAD. VS. GUJARAT FOILS LTD., 103,SHUGAM PALACE, 132 RING ROAD, SHIVRANJANI CROSS ROAD, SATELLITE, AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SANJAY RAI, SR.D.R. RESPONDENT BY:- NONE O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOL LOWING GROUND:- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CAN CELING THE PENALTY LEVIED OF RS.5,24,314/- LEVIED U/S 158BFA(2 ) OF THE IT ACT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF MANUFACTURING OF ALUMINIUM FOILS. A SEA RCH AND SEIZURE OPERATION UNDER SECTION 132 WAS CARRIED OUT AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE GROUP ON 9.9.2 008. THE RETURN OF INCOME U/S 158 BC WAS FILED AT RS.8,73,553/- WHEREA S UNDISCLOSED INCOME WAS DETERMINED AT RS.47,77,075/-. WHILE MAKI NG ASSESSMENT THE AO HAD MADE AN ADDITION OF RS.28,03,312/- ON ACCOUN T OF SUPPRESSION OF SALES OF FINISHED GOODS IN THE GARB OF SCRAP WHICH WAS CLAIMED AT 35% IT(SS)A NO.48/AHD/2009 BLOCK PERIOD 1988-89 TO 1999-2000 IT(SS)A NO.48/AHD/2009 BLOCK PERIOD 1988-89 TO 1999-2000 2 AND CONSIDERED VERY HIGH BY THE AO.THE OTHER ADDITI ONS MADE WERE IN RESPECT OF VARIATION BETWEEN BOOK STOCK AND PHYSICA L STOCK FOUND ON THE DATE OF SEARCH AND ON ACCOUNT OF DISALLOWANCE OF EX PENSES RECORDED IN THE CASH BOOK CONTAINING UNACCOUNTED ENTRIES AND WHICH WAS SEIZED AT THE TIME OF SEARCH. IN THE QUANTUM PROCEEDINGS THE MATT ER TRAVELLED TO THE TRIBUNAL WHICH UPHELD THE FOLLOWING ADDITIONS :- SL.NO. PARTICULARS AMOUNT 1. EXCESS GENERATION OF SCRAP IN EXCESS OF 20.77% ( PARA 13 OF ITATS REVISED ORDER DATED 14.3.2008 AND ITOS ORDE R DATED 31.12.2008 FOR GIVING EFFECT TO ITATS SECOND ORDER 2,78,023/- 2. UNDISCLOSED INCOME COMPUTED @ 5% OF THE OUTGOING OF RS.25,56,933/- (PARA 16 OF ITATS ORDER DATED 19/01/2007) ITOS ORDER DATED 5.10.2007 FOR GIVING EFFECT TO ITATS FIRST ORDER 1,28,000/- TOTAL UNDISCLOSED INCOME 4,06,023/- AS A RESULT, FINAL UNDISCLOSED INCOME WAS DETERMINE D FOR THE BLOCK PERIOD AT RS.12,78,657/- AS AGAINST RETURNED UNDISCLOSED I NCOME AT RS.8,73,553/- RESULTING IN NET DIFFERENCE OF RS.4,05,104/-. THE D IFFERENCE BETWEEN THIS FIGURE AND ADDITION SUSTAINED BY THE TRIBUNAL AT RS .4,06,023/- IS NOT EXPLAINED. NOTWITHSTANDING THE AO HAD INITIATED PEN ALTY PROCEEDINGS UNDER SECTION 158BFA(2). A DETAILED REPLY WAS FURNI SHED BEFORE THE AO WHICH IS REPRODUCED AT PARA 5 OF THE ORDER OF THE A O. THE AO, HOWEVER, LEVIED PENALTY ON ADDITION OF RS.8,73,857/- IGNORIN G THE RECTIFICATION ORDER PASSED BY THE TRIBUNAL WHEREIN THE ADDITION W AS REDUCED TO RS.4,06,023/-. 3. THE LD. CIT(A), HOWEVER, DELETED THE PENALTY ON THE GROUND THAT IMPUGNED ADDITION HAD BEEN SUSTAINED ON THE BASIS O F ESTIMATES ONLY. HIS ORDER IN THIS REGARD IS AS UNDER :- 5.13 THEREFORE, KEEPING IN VIEW OF THE FACTS ENCOM PASSING THE CASE AND THE LEGAL POSITION AS EXPLAINED ABOVE I DO NOT FIND ANY JUSTI FICATION FOR LEVYING THE PENALTY ON IT(SS)A NO.48/AHD/2009 BLOCK PERIOD 1988-89 TO 1999-2000 3 THE IMPUGNED ADDITION WHICH HAD BEEN SUSTAINED ON T HE BASIS OF ESTIMATES ONLY. IN VIEW OF THIS, THE AO IS DIRECTED TO DELETE THE PENA LTY ACCORDINGLY. 4. THE LD. DR SUBMITTED THAT ORDER PASSED BY THE LD . CIT(A) IN THIS REGARD IS CRYPTIC AND IT HAS NOT CONSIDERED THE ADD ITION IN THE UNDISCLOSED INCOME FINALLY SUSTAINED BY THE TRIBUNAL AND ALSO T HE SEIZED MATERIAL ON THE BASIS OF WHICH THE ADDITION WAS SUSTAINED. IT I S NOT A CASE OF PURE ESTIMATE REJECTING THE EXPLANATION OF THE ASSESSEE BUT ON ESTIMATE BASED ON EVIDENCE FOUND IN THE SEARCH. IN FACT NO ADDITIO N COULD BE MADE IN THE BLOCK ASSESSMENT WITHOUT THERE BEING ANY MATERIAL F OUND IN THE SEARCH. THE LD. DR ALSO SUBMITTED THAT LD. CIT(A) HAS CONSI DERED THE LEVY OF PENALTY IN RESPECT OF ENTIRE ASSESSED INCOME RATHER ON THE ADDITION TO UNDISCLOSED INCOME. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF SERVICE OF NOTICE. 6. WE HAVE CONSIDERED THE SUBMISSION MADE BY THE LD . DR AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE CANCELLATION OF PENALTY BY LD. CIT(A) IS NOT LEGALLY CORRECT. HE SHOULD HAVE CONSIDERED THE MATERIAL FOUND IN THE SEARCH AND REFERRED TO BY THE TRIBUNAL IN ITS ORDER WHILE SUSTAINING THE ADDITION. HE SHOULD ALSO HAVE REFERRED TO THE EXPLANATION FURNISHED BY THE ASSESSEE IN RESPECT OF PENALTY PROCEEDINGS AND GIVEN A FINDING WHETHER IT IS SATISFACTORY OR N OT. FURTHER HE SHOULD HAVE CONSIDERED THE LEVY OF PENALTY IN RESPECT OF A DDITION TO THE UNDISCLOSED INCOME ONLY NOT ON ENTIRE ASSESSED UNDI SCLOSED INCOME. AS A RESULT, WE RESTORE THE MATTER TO THE FILE OF LD. CI T(A) FOR DECIDING THE ISSUE AFRESH IN THE LIGHT OF ABOVE OBSERVATIONS. THE APPE AL FILED BY THE REVENUE IS ALLOWED BUT FOR STATISTICAL PURPOSES. IT(SS)A NO.48/AHD/2009 BLOCK PERIOD 1988-89 TO 1999-2000 4 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 21.1.11. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEM BER AHMEDABAD, DATED : 21.1.11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 13/1/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 17/1/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..