NEC Engineering Pvt. Ltd., New Delhi V. ITO, New Delhi

ITSSA 49/DEL/2009

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9163 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 01-06-2010
• Assessment Year: misc
• Appeal Filed On: 18-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Keywords: Block assessment

Judgement Text

I.T.A. NO. 49 /DEL/2009 1/6 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH F BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER IT(SS) NO. 49 /DEL/2009 (BLOCK PERIOD 01.04.1989 TO 25.11.1999) NEC ENGINEERING PVT. LD., VS. ITI, WARD 13(3), 75-76, 4 TH FLOOR, MANISHA BUILDING NEW DELHI NEHRU PLACE, NEW DELHI. (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAACN9754F APPELLANT BY: SHRI RAMESH GOEL, CA RESPONDENT BY: MISS ANUSHA KHURANA, SR. DR ORDER PER A. K. GARODIA, AM: 1. THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(A)-III, NEW DELHI DATED 02.02.2009 FOR THE BLOCK PERIOD 01.04.1989 TO 25.11.1999. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 1) THAT THE ORDER OF THE LD. A.O. AS WELL AS CIT(A) IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE, 2) THAT THE LD. A.O. AS WELL AS CIT(A) WAS NOT JUSTIFIED IN LEVYING PENALTY OF RS.3,05,580/-. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH WAS C ARRIED OUT ON 25.11.199 IN BSL GROUP OF CASES INCLUDING TH E I.T.A. NO. 49 /DEL/2009 2/6 ASSESSEE COMPANY AS WELL AS ITS DIRECTORS. IN THE COURSE OF SEARCH AT THE RESIDENCE OF SHRI S K GUPTA, FOREI GN CURRENCY WAS FOUND OF THE VALUE OF RS.4.63 LACS. I T WAS STATED BY MR. S K GUPTA THAT THIS FOREIGN CURRENCY BELONGS TO SHRI H R SHIV. WHEN MR. H R SHIV WAS CONFRONTED ON THIS ISSUE, HE FILED A LETTER OF THE ASSESSEE COMPANY STATING THAT THIS FOREIGN CURRENCY EQUIVALE NT TO RS.4.63 LACS FOUND AT THE TIME OF SEARCH AT THE RESIDENTIAL PREMISES OF SHRI S K GUPTA WAS HANDED O VER TO MR. H R SHIV THE DIRECTOR OF THE ASSESSEE COMPAN Y AND THE FOREIGN CURRENCY WAS PURCHASED BY THE ASSES SEE COMPANY AND IT BELONGS TO THE ASSESSEE COMPANY. IN THE COURSE OF BLOCK ASSESSMENT OF THE ASSESSEE COMPANY, IT WAS NOTED BY THE A.O. THAT THE ASSESSEE COMPANY COU LD NOT EXPLAIN THE SOURCE OF THIS FOREIGN CURRENCY AND HE MADE ADDITION OF THE SAME AND INITIATED PENALTY PROCEEDINGS U/S 158BFA(2). AFTER GRANTING HEARING TO THE ASSESSEE, THE A.O. IMPOSED PENALTY OF RS.3,05,5 80/- U/S 158BFA(2). BEING AGGRIEVED, THE ASSESSEE CARRI ED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL B EFORE US. 3. IT WAS SUBMITTED BY THE LD. A.R. THAT ON PAGE 32-34 OF THE PAPER BOOK IS DATE WISE DETAILS REGARDING ACQUISITION OF FOREIGN CURRENCY BY THE ASSESSEE COM PANY I.T.A. NO. 49 /DEL/2009 3/6 IN CONNECTION WITH VARIOUS FOREIGN TOURS UNDERTAKEN BY THE DIRECTORS OF THE ASSESSEE COMPANY AND THE FOREI GN CURRENCY FOUND IN THE COURSE OF SEARCH WAS THE LEFT OVER FOREIGN CURRENCY WITH THE DIRECTORS OF THE ASSESSEE COMPANY. IT IS SUBMITTED THAT THE DIRECTORS CONCERN ED DID NOT HAND OVER BACK THE FOREIGN CURRENCY TO THE ASSESSEE COMPANY AND FOR THIS REASON, THE SAME WAS NOT APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY. BUT SINCE THE SOURCE OF FOREIGN CURRENCY IS EXPLAINED, THE ADDITION IS NOT JUSTIFIED AND ALTHOU GH THE ADDITION IS MADE, THE PENALTY IS NOT JUSTIFIED. TH E LD. D.R. SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE AERIAL ON RECORD AND THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT AS PER THE EXPLANA TION OF THE ASSESSEE, THE FOREIGN CURRENCY IS THE LEFT O VER OF THE FOREIGN CURRENCY PURCHASED BY THE ASSESSEE COMPANY FOR THE FOREIGN TOURS OF THE DIRECTORS SINC E 21.11.1997 BUT IN THE ASSESSMENT ORDER, A CLEAR FIN DING IS GIVEN BY THE A.O. THAT AS PER THE BALANCE SHEET OF THE ASSESSEE COMPANY FOR THE YEARS ENDED 31.3.1998, 31.3.1999 AND 31.3.2000, NO FOREIGN COMPANY IS AVAILABLE IN THE HANDS OF THE ASSESSEE COMPANY. IN THE LIGHT OF THESE FACTS, WE FIND THAT EVEN IF THIS ARG UMENT OF THE ASSESSEE COMPANY IS ACCEPTED THAT THE FOREIGN I.T.A. NO. 49 /DEL/2009 4/6 CURRENCY FOUND IN THE COURSE OF SEARCH WAS LEFT OVE R FOREIGN CURRENCY WITH THE DIRECTOR OF THE ASSESSEE COMPANY BEING THE FOREIGN CURRENCY SAVED BY HIM OUT OF FOREIGN CURRENCY GIVEN TO HIM FOR VARIOUS FOREIG N TOURS IS SEEN THAT SUCH LEFT OVER FOREIGN CURRENCY WAS NOT ACCOUNTED FOR BY THE ASSESSEE COMPANY AND HENCE THE ENTIRE FOREIGN CURRENCY PURCHASED BY THE ASSESS EE COMPANY WAS CLAIMED AS EXPENSES BUT WHEN THE ENTIRE FOREIGN CURRENCY WAS NOT SPENT, THEN LEFT OVER FORE IGN CURRENCY WAS REQUIRED TO BE DEDUCTED FROM SUCH FORE IGN TRAVEL EXPENSES. SINCE THIS WAS NOT DONE, EVEN IN THIS SITUATION ALSO, THE FOREIGN CURRENCY FOUND IN THE C OURSE OF SEARCH HAS TO BE ASSESSED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY ON ACCOUNT OF EXTRA DEDUCTION CLAIMED BY THE ASSESSEE COMPANY FOR FOREIGN TRAVEL EXPENSES. REGARDING THIS CONTENTION OF THE ASSESSE E THAT THE DIRECTORS OF THE ASSESSEE COMPANY DID NOT RETUR N BACK THE LEFT OVER FOREIGN CURRENCY TO THE ASSESSEE COMPANY, AND HENCE THE ASSESSEE COMPANY WAS NOT AWARE ABOUT SUCH LEFT OVER FOREIGN CURRENCY AND HEN CE THE ASSESSEE COMPANYS ACTION WAS BONA FIDE IN NOT INCLUDING THIS AMOUNT IN THE UNDISCLOSED INCOME AS PER THE BLOCK RETURN FILED BY IT WE ARE NOT IN AGREEMEN T WITH THE LD. A.R. OF THE ASSESSEE ON THIS ASPECT. THIS IS SO BECAUSE THE COMPANY IS A JUDICIAL PERSON AND IT ACT S I.T.A. NO. 49 /DEL/2009 5/6 THROUGH ITS DIRECTORS ONLY AND WHEN THE MATTER WAS IN THE KNOWLEDGE OF THE DIRECTORS, THEN IT CANNOT BE S AID THAT THE COMPANY WAS NOT KNOWING ABOUT THE LEFTOVER FOREIGN CURRENCY PARTICULARLY AT THE TIME OF FILING OF THE BLOCK RETURN AFTER RECOVERY OF SUCH FOREIGN CURRENC Y IN SEARCH AND HENCE, THE ASSESSEE COMPANY WAS REQUIRED TO INCLUDE THE AMOUNT OF SUCH FOREIGN CURRENCY IN ITS UNDISCLOSED INCOME IN ITS BLOCK RETURN FILED BY IT. SINCE THIS WAS NOT DONE, WE ARE OF THE CONSIDERED OPINION THAT THE EXPLANATION OF THE ASSESSEE COMPANY CANNOT BE ACCEPTED AS BONA FIDE AND HENCE WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY WAS RIGHTLY IMP OSED BY THE A.O. AND CONFIRMED BY THE LD. CIT(A). WE, THEREFORE, DECLINE TO INTERFERE IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. 6. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 8 TH JUNE 2010. SD./- SD./- (RAJPAL YADAV) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:18 TH JUNE, 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT I.T.A. NO. 49 /DEL/2009 6/6 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI