Victory Tourist Home & Central Hotel and Bar, Kannur V. ACIT, Calicut

ITSSA 56/COCH/2008

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8143 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 25-04-2012
• Assessment Year: misc
• Appeal Filed On: 06-08-2008
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: N S RAJAGOPAL
• Keywords: Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.(SS)A. NO. 56/COCH/2008 ASSESSMENT YEAR : 2000-01 VICTORY TOURIST HOME & CENTRAL HOTEL AND BAR, SEENA NIVAS, DHARMASALA P.O., KANNUR DISTRICT. [PAN: AACFV 2397P] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, CALICUT. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) I.T.(SS)A. NO. 60/COCH/2008 BLOCK PERIOD: 1990-91 TO 2000-01 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, CALICUT. VS. VICTORY TOURIST HOME & CENTRAL HOTEL AND BAR, SEENA NIVAS, DHARMASALA P.O., KANNUR DISTRICT. [PAN: AACFV 2397P]. (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) ASSESSEE BY SHRI N.S.RAJAGOPAL, CA REVENUE BY SHRI S.R.SENAPATI, SR. DR DATE OF HEARING 25/04/2012 DATE OF PRONOUNCEMENT 08/06/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 03-04-2008 PASSED BY THE LD. CIT(A)-I, KOCHI AND THEY RELATE TO THE BLOC K PERIOD FROM 1990-91 TO 2000-01. 2. THE PENALTY LEVIED U/S 158BFA OF THE ACT, HAVING BEEN PARTIALLY CONFIRMED BY LD CIT(A), BOTH THE PARTIES ARE IN APPEAL BEFORE US AS SAILING THE SAID DECISION RENDERED BY LD. CIT(A). I.T.(SS)A NOS. 56 & 60/COCH/2008 2 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE-FIRM IS RUNNING A HOTEL AND BAR. THE DEPARTMENT CARRIED OUT SEARCH AN D SEIZURE OPERATIONS U/S. 132 OF THE ACT ON 29-07-1999 AND SEVERAL DOCUMENTS WERE FO UND AND SEIZED. IT WAS NOTICED THAT THE ASSESSEE IS SUPPRESSING SALES OF LIQUORS A ND FOOD. BESIDES THE ABOVE, THE DEPARTMENT ALSO FOUND EXCESS CASH COLLECTIONS ON TH E DATE OF SEARCH. THE ASSESSING OFFICER COMPLETED THE BLOCK ASSESSMENT ON AN INCOME OF RS.77,72,296/-. IN THE APPELLATE PROCEEDINGS, THE TRIBUNAL SUSTAINED THE A DDITION ONLY TO THE EXTENT OF RS.14,02,995/-. AFTER THE RECEIPT OF THE ORDER OF THE TRIBUNAL, THE ASSESSING OFFICER PASSED THE PENALTY ORDER UNDER SECTION 158BFA OF THE ACT. THE MAXIMUM AND MINIMUM PENALTY LEVIABLE ON THE INCOME DETERMINED B Y THE ITAT WORKED OUT TO RS.25,25,400/- AND RS. 8,41,800/-. THE ASSESSING O FFICER CHOSE TO LEVY PENALTY OF RS. 16,83,600/-, I.E., TWO TIMES OF THE TAX LEVIABLE. 4. THE ASSESSEE CHALLENGED THE PENALTY ORDER BE FORE THE LD. CIT(A). THE FIRST APPELLATE AUTHORITY PARTIALLY CONFIRMED THE PENALTY ; I.E., (A) HE DELETED THE PENALTY ON THE ADDITION PERTAINI NG TO EXCESS CASH ON THE GROUND THAT THE ASSESSEE HAS ACCOUNTED THE EXCESS C ASH IN ITS REGULAR BOOKS OF ACCOUNT. (B) WITH REGARD TO THE PENALTY RELATABLE TO THE SU PPRESSION OF LIQUOR SALES AND FOOD SALES, HE SUSTAINED THE PENALTY ON THE SUPPRES SION OF SALES NOTICED ON THE BASIS OF THE MATERIALS ACTUALLY FOUND, I.E. HE DELETED THE P ENALTY ON THE ESTIMATED PORTION. (C) THE LD. CIT(A) ALSO RESTRICTED THE PENALTY TO ONE TIME OF THE TAX LEVIABLE. ACCORDINGLY, THE LD. CIT(A) CONFIRMED THE PENALTY O NLY TO THE EXTENT OF RS. 6,48,242/-. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), BOTH THE PARTIES ARE IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. AS STATED EARLIER, THE TRIBUNAL HAS SUSTAINED THE ADDITION ON LY TO THE EXTENT OF RS. 14,02,995/-. THE BREAK-UP DETAILS OF THE ADDITIONS SUSTAINED BY THE TRIBUNAL ARE GIVEN BELOW:- I.T.(SS)A NOS. 56 & 60/COCH/2008 3 ISSUE AMOUNT SUSTAINED BY THE ITAT (IN RS.) 1) SALES SUPPRESSION OF LIQUOR 10,6 7,011 2) SALES SUPPRESSION OF FOOD 2 6,784 3) EXCESS CASH COLLECTION 3,09,200 TOTAL 14,02,99 5 WE NOTICE THAT THE LD. CIT(A) HAS SUSTAINED THE PEN ALTY ON THE SUPPRESSION OF LIQUOR SALES REFERRED ABOVE. IN RESPECT OF SUPPRESSION OF FOOD SALES, HE HAS SUSTAINED PENALTY ON AN AMOUNT OF RS. 13,392/- ONLY, AS THE BALANCE O F THE ADDITION HAD BEEN MADE ON ESTIMATED BASIS. WE ARE IN AGREEMENT WITH THE SAID DECISION OF THE LD. CIT(A), AS HE HAS SUSTAINED THE PENALTY ON THE INCOME RELATABLE T O THE MATERIALS FOUND DURING THE COURSE OF SEARCH. 6. HOWEVER, WE ARE NOT ABLE TO AGREE WITH THE LD. CIT(A) WITH REGARD TO THE EXCESS CASH COLLECTION. THE LD. CIT(A) DELETED THE PENALTY ON EXCESS CASH COLLECTION OF RS.3,09,200/- ON THE GROUND THAT THE EXCESS CASH FO UND HAS BEEN ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNT AND DECLARED IN THE REGULA R INCOME TAX RETURN FILED FOR THE ASSESSMENT YEAR 2000-01. IN OUR VIEW, THE SAID DE CISION IS NOT IN ACCORDANCE WITH THE SCHEME OF BLOCK ASSESSMENTS. IT IS WELL-SETTLED LA W THAT BLOCK ASSESSMENT RUNS PARALLEL TO THE REGULAR ASSESSMENT AND CHAPTER XIVB IS A COM PLETE CODE BY ITSELF. THE UNDISCLOSED INCOME UNDER CHAPTER XIV-B IS COMPUTED ONLY ON THE BASIS OF MATERIALS FOUND DURING THE COURSE OF SEARCH. ACCORDINGLY, WE ARE OF THE VIEW THAT THE CONDUCT OF THE ASSESSEE IN THE SUBSEQUENT REGULAR ASSESSMENT P ROCEEDINGS CANNOT BE TAKEN COGNIZANCE OF IN THE BLOCK ASSESSMENT PROCEEDINGS. IN THE INSTANT CASE, THE ASSESSEE HAS ACCOUNTED FOR THE EXCESS CASH COLLECTION IN THE REGULAR BOOKS OF ACCOUNTS ONLY AFTER THE DATE OF SEARCH AND HAS DECLARED IT IN THE REGUL AR ASSESSMENT PROCEEDINGS. IN VIEW OF THE FOREGOING DISCUSSIONS, IN OUR VIEW, ANY ACTI ON TAKEN BY THE ASSESSEE AFTER THE DATE OF SEARCH CANNOT EXONERATE HIM FROM THE LIABIL ITY OF PENALTY. WE NOTICE THAT THE ASSESSEE HAS NOT GIVEN ANY OTHER CREDIBLE EXPLANATI ON WITH REGARD TO THE EXCESS CASH FOUND. ACCORDINGLY WE ARE OF THE VIEW THAT THE AO W AS RIGHT IN LEVYING PENALTY ON THE EXCESS CASH NOTICED DURING THE COURSE OF SEARCH AND WHICH HAS BEEN SUSTAINED BY THE I.T.(SS)A NOS. 56 & 60/COCH/2008 4 TRIBUNAL. ACCORDINGLY, WE SET ASIDE THE ORDER OF T HE LD. CIT(A) WITH REGARD TO THE EXCESS CASH COLLECTION AND RESTORE THE PENALTY LEVI ED BY THE ASSESSING OFFICER ON THAT ACCOUNT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED AND THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY O N 08-06-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 8TH JUNE, 2012 GJ COPY TO: 1. VICTORY TOURIST HOME & CENTRAL HOTEL AND BAR, SE ENA NIVAS, DHARMASALA P.O., KANNUR DISTRICT. 2.THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, CALICUT. 3.THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, KOCHI. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN