Shri Iqbal Abbas Shaikh, Dadra & Nagar Haveli V. The Dy.CIT.,Cent.Circle-3, Surat

ITSSA 606/AHD/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0264 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 04-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 13-12-2012
• Court: TRIBUNAL
• Department Lawyers: VIMALENDRA VERMA
• Assessee Lawyers: M K PATEL
• Keywords: Search and seizure; Corroborative evidences
• Section: 132

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , , , 0 00 0 0 00 0 ' ' ' ' , , , , #$ #$ #$ #$ # % # % # % # % BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER IT(SS)A NO. 606/AHD/2012 (ASSESSMENT YEAR 2009-10) SHRI IQBAL ABBAS SHAIKH PLOT NO. 25, VRINDAVAN SOCIETY, OPP. VISHAL APARTMENTS, SILVASSA-396230. PAN: BCRPS7387R VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, SURAT. &'/ APPELLANT )*&' / RESPONDENT REVENUE BY : SHRI VIMALENDRA VERMA, DR ASSESSEE(S) BY : SHRI M.K. PATEL, AR + , $/ // / DATE OF HEARING : 05/08/2014 -./ , $ / DATE OF PRONOUNCEMENT: 14/08/2014 #0 #0 #0 #0/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, AHMEDABAD DATED 23.10.2012. 2. GROUND NOS. 1 AND 2 OF THE APPEAL READ AS UNDER : 1. THE ORDER OF ASSESSMENT IS CONTRARY TO THE FACT S OF THE CASE AND PREJUDICIAL TO THE ASSESSEE. 2. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES O F THE CASE AND LAW, THE ADDITIONS MADE BY THE LEARNED ASSESSIN G IT(SS)A NO. 606/A/2012 SHRI IQBAL ABBAS SHAIKH, SILVASSA. AY 2009-10 - 2 - OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) ARE CONTRARY TO LAW AND BASED ON ERRONEOUS UNDERSTANDING OF THE FACTS. 3. AT THE TIME OF HEARING, THE AUTHORIZED REPRESEN TATIVE OF THE ASSESSEE SUBMITTED THAT THESE GROUNDS OF APPEAL ARE GENERAL IN NATURE AND THEREFORE, HE IS NOT PRESSING THESE GROUNDS. HENCE , THEY ARE DISMISSED. 4. GROUND NO. 3 OF THE APPEAL READS AS UNDER: ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF T HE CASE AND LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN MAKING ADDITION O THE TUNE OF RS 35,00,000/- ON ACC OUNT OF CASH SETTLEMENT OF BILLS EVEN THOUGH THE SAME WAS DISCLO SED BY THE APPELLANT IN THE RETURN OF INCOME FILED FOR AY 2010 -11. THE ACTION OF THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) IS CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DESERVES TO BE DELETED. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS PROPRIETOR OF R A SHAIKH CONSTRUCTIONS. THIS CONCERN HAD UNDERTA KEN CONSTRUCTION OF INDUSTRIAL SHEDS. AT THE TIME OF SEARCH, LOOSE PAP ERS WERE FOUND WHICH WERE INVENTORIZED AS LOOSE PAPER NO. 66 OF ANNEXURE BF 1 /1. THE ASSESSING OFFICER OBSERVED THAT ON THE LEFT BOTTOM SIDE OF TH IS, THE ASSESSEE HAD WRITTEN 3,45,85,491 AND AFTER REDUCING 2,64,34,581, A FIGURE OF 81,50,910 IS WRITTEN. THE ASSESSING OFFICER NOTED THAT DURING T HE POST-SEARCH INQUIRY, THE ASSESSEE WAS REQUIRED TO SUBMIT THE EXPLANATION FOR THE SAME. THE ASSESSEE SUBMITTED THAT DURING THE FINANCIAL YEAR 2 008-09, SHRI IQBAL A. SHAIKH, PROPRIETOR OF R A SHAIKH CONSTRUCTIONS HAD CONSTRUCTED INDUSTRIAL BUILDING FOR APS PACKAGING, SILVASSA. IN PAGE 66, AN EMPLOYEE OF R A SHAIKH CONSTRUCTIONS HAS NOTED SOME MAJOR EXPENSES FOR THE CONSTRUCTION OF THE SAID BUILDING. HE HAD ALSO WRITTEN ON LEFT BOT TOM SIDE OF PAGE NO. 66 APPROXIMATE PROFIT OF THE SAME AS RS 81,50,910/-. IT WAS SUBMITTED THAT THE HAND WRITTEN FIGURES WERE ONLY AN ESTIMATE AND NOT THE CORRECT PROFIT IT(SS)A NO. 606/A/2012 SHRI IQBAL ABBAS SHAIKH, SILVASSA. AY 2009-10 - 3 - DURING THE FINANCIAL YEAR 2008-09. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD EARNED ONLY PROFIT OF RS 38.92 LAKHS F ROM THE ABOVE PROJECT WHICH WAS SHOWN IN THE RETURN OF INCOME FOR ASSESSM ENT YEAR 2009-10. IT WAS ALSO SUBMITTED THAT AN AMOUNT OF RS 8.22 LAKHS RELATED TO INDIRECT EXPENSES HAD NOT BEEN WRITTEN IN THE SAID HAND WRIT TEN PAGE. IT WAS FURTHER SUBMITTED THAT IN THE FINANCIAL YEAR 2009-10 RELEVA NT TO THE ASSESSMENT YEAR 2010-11, THE ASSESSEE SETTLED THE ACCOUNTS WIT H THE PARTIES AND EARNED SOME CASH AMOUNTING TO RS 35 LAKHS AND THAT THE SAM E WAS OFFERED AS UNDISCLOSED INCOME FOR ASSESSMENT YEAR 2010-11 (81. 50 38.92 8.22) = 34.35. 6. THE ASSESSING OFFICER, AFTER CONSIDERING THE SA ID EXPLANATION OF THE ASSESSEE, OBSERVED THAT THE ASSESSEE HAS UNDERT AKEN THE WORK, RAISED BILLS AND RECEIVED PAYMENTS FROM APS PACKAGING DURI NG THE FINANCIAL YEAR 2008-09. THE ASSESSEES CLAIM THAT IT HAS RECEIVED CASH ON SETTLEMENT OF BILLS CANNOT BE ACCEPTED. OUT OF TOTAL PROFIT OF R S 81,50,910/-, THE ASSESSEE HAS DISCLOSED RS 38,92,000/- AS PROFIT IN ITS REGUL AR INCOME FOR ASSESSMENT YEAR 2009-10. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAS ALREADY BOOKED RS 8,22,764/- IN INDIRECT EXPENSES I N ITS REGULAR BOOKS OF ACCOUNT FOR ASSESSMENT YEAR 2009-10. REST OF THE A MOUNT OF RS 35 LAKHS HAS BEEN DISCLOSED BY THE ASSESSEE IN ASSESSMENT YE AR 2010-11. AS THE ASSESSEE HAS HIMSELF SHOWN REGULAR INCOME OF THIS P ROJECT IN ASSESSMENT YEAR 2009-10, REST OF THE INCOME ALSO BELONGS TO TH E ASSESSMENT YEAR 2009- 10. THEREFORE, THE REST OF THE AMOUNT OF RS 35 LAK HS IS ADDED AS INCOME FOR 2009-10. 7. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) HELD THAT FROM THE PERUSAL OF THE CONTENTS OF THE LOOSE PAPER NO. 66 OF ANNEXURE BF 1/1 AND THE EXPLANATION OF THE ASSESSEE, IT IS CLEA R THAT THE ASSESSEE HAD CONSTRUCTED AN INDUSTRIAL BUILDING FOR APS PACKAGIN G, SILVASSA DURING THE FINANCIAL YEAR 2008-09. TOTAL BILLS RAISED BY THE ASSESSEE WERE RS IT(SS)A NO. 606/A/2012 SHRI IQBAL ABBAS SHAIKH, SILVASSA. AY 2009-10 - 4 - 3,45,85,491/- AND EXPENDITURE OF RS 2,64,34,581/- W ERE INCURRED. THIS RESULTED IN PROFIT OF RS 81,50,910/-. THE COMMISSI ONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT FURTHER EXPENSES OF RS 8,22,764/- WERE TO BE REDUCED FROM THE PROFIT. SO THE PROFIT EARNED F OR THE CONSTRUCTION OF INDUSTRIAL BUILDING FOR APS PACKAGING COMES TO RS 7 3,28,146/-. OUT OF THIS PROFIT, THE PROFIT OF RS 38,92,000/- WAS DISCLOSED BY THE ASSESSEE AS PROFIT IN ITS REGULAR INCOME FOR ASSESSMENT YEAR 2009-10. TH US, IT IS CLEAR THAT THE ASSESSEE HAD NOT DISCLOSED NET PROFIT OF RS 34,36,1 46/- I.E. RS 35 LAKHS AS ADMITTED BY THE ASSESSEE IN SEARCH IN THE RETURN OF INCOME IN ASSESSMENT YEAR 2009-10. AS THE ASSESSEE CLAIMS AMOUNT OF RS 35 LAKHS HAS BEEN DECLARED IN ASSESSMENT YEAR 2010-11 AND TAX AND INT EREST HAS BEEN PAID ACCORDINGLY ON THE AMOUNT. THE ASSESSEES PLEA THA T ACCOUNTS WERE SETTLED WITH THE PARTIES DURING THE FINANCIAL YEAR 2009-10 RELEVANT TO ASSESSMENT YEAR 2010-11 SO THE INCOME WAS EARNED IN THE ACCOUN TING PERIOD RELEVANT TO THE ASSESSMENT YEAR 2010-11 CANNOT BE ACCEPTED AS I T IS CLEARLY ADMITTED BY THE ASSESSEE IN HIS WRITTEN SUBMISSION THAT THE ASS ESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. HE ALSO OBSERVED THAT THE ASSESSEE HAS NOT FILED ANY DETAILS THAT WHICH ACCOUNTS WERE SETT LED WITH THE PARTIES IN FINANCIAL YEAR 2009-10 RELEVANT TO ASSESSMENT YEAR 2010-11. THE ASSESSEE FOR THE SAKE OF ARGUMENT ONLY HAS TAKEN PLEA WITHOU T ANY SUPPORTING EVIDENCE ON ACCRUAL OF INCOME FOR ASSESSMENT YEAR 2 010-11. HE NOTED THAT IF THE ASSESSEE HAS OFFERED INCOME OF RS 35 LAKHS I N ASSESSMENT YEAR 2010- 11, THAT HAS BEEN DONE ONLY WITH AN INTENTION TO SA VE INTEREST AND PENALTY THEREON. THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING ADDIT ION OF RS 35 LAKHS AS INCOME ACCRUED AND EARNED DURING THE ASSESSMENT YEA R 2009-10 AS WORKED OUT ON THE BASIS OF APPELLANTS OWN LOOSE PAPER SEI ZED AS PAGE NO. 66 OF ANNEXURE BF 1/1. ACCORDINGLY, HE CONFIRMED THE ADD ITION OF RS 35 LAKHS. 8. AT THE TIME OF HEARING, THE AUTHORIZED REPRESEN TATIVE OF THE ASSESSEE FILED BEFORE US A COPY OF COMPUTATION OF I NCOME FOR ASSESSMENT IT(SS)A NO. 606/A/2012 SHRI IQBAL ABBAS SHAIKH, SILVASSA. AY 2009-10 - 5 - YEAR 2010-11 AND POINTED OUT THEREFROM THAT THE ASS ESSEE HAS INCLUDED RS 35 LAKHS AS ITS INCOME FOR ASSESSMENT YEAR 2010-11. FURTHER, THE ASSESSEE ALSO FILED COPY OF THE ASSESSMENT ORDER FOR ASSESSM ENT YEAR 2010-11 SHOWING THAT THE INCOME ASSESSED BY THE ASSESSING O FFICER WAS AT RS 74,56,857/- WHICH WAS THE INCOME SHOWN BY THE ASSES SEE IN ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 AFTER INCLUDING THE SAID SUM OF RS 35 LAKHS. HENCE, IT WAS HIS SUBMISSION THAT AS THE IN COME WAS ASSESSED IN ASSESSMENT YEAR 2010-11, THE SAME SHOULD BE DELETED DURING THE YEAR UNDER CONSIDERATION. IN THE ALTERNATIVE, IT WAS TH E SUBMISSION THAT IF THE ADDITION MADE IS CONFIRMED DURING THE YEAR UNDER CO NSIDERATION, THEN A DIRECTION MAY BE ISSUED TO THE ASSESSING OFFICER TO EXCLUDE THE INCOME FROM ASSESSMENT YEAR 2010-11. 9. THE DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, A SEARCH AND SEIZURE OPERATION WAS CONDUCTED U/S. 132 OF THE ACT ON 16.07.2009. DURING THE COURSE OF SEARCH, LOOSE PAP ERS WERE FOUND WHICH WERE INVENTORIZED AS LOOSE PAPER NO. 66 OF ANNEXURE BF 1/1. IN THE SAID LOOSE PAPER, THE ASSESSEE HAD WRITTEN RS 3,45,85,49 1/- AND AFTER REDUCING RS 2,64,34,581/-, FIGURE OF RS 81,50,910/- WAS WRIT TEN. BEFORE THE ASSESSING OFFICER, THE ASSESSEE EXPLAINED THAT DURI NG THE FINANCIAL YEAR 2008-09, THE ASSESSEE CONSTRUCTED INDUSTRIAL BUILDI NG FOR APS PACKAGING, SILVASSA AND THAT THE ASSESSEE HAD EARNED PROFIT OF RS 81,50,910/- AND THE ASSESSEE HAD DISCLOSED 38.92 LAKHS AS INCOME IN ASS ESSMENT YEAR 2009-10 AND THE BALANCE AMOUNT OF RS 35 LAKHS WAS SHOWN AS INCOME IN ASSESSMENT YEAR 2010-11 AS THE ACCOUNTS WERE SETTLED WITH THE PARTIES DURING THE FINANCIAL YEAR 2009-10 RELEVANT TO THE ASSESSMENT Y EAR 2010-11. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AS THE IT(SS)A NO. 606/A/2012 SHRI IQBAL ABBAS SHAIKH, SILVASSA. AY 2009-10 - 6 - ASSESSEE HIMSELF ADMITTED THAT IT WAS FOLLOWING MER CANTILE SYSTEM OF ACCOUNTING. ACCORDING TO THE ASSESSING OFFICER, AS THE ENTIRE PROFIT OF RS 81,50,910/- ON CONSTRUCTION OF INDUSTRIAL BUILDING FOR APS PACKAGING, SILVASSA WAS EARNED DURING THE ASSESSMENT YEAR 2009 -10, THEREFORE THE ENTIRE AMOUNT WAS TAXABLE IN THIS YEAR AND MADE ADD ITION OF RS 35 LAKHS. 11. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APP EALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON TH E GROUND THAT ADMITTEDLY THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACC OUNTING AND THEREFORE, THE INCOME OF RS 35 LAKHS WAS TO BE TAXED IN ASSESS MENT YEAR 2009-10 AND NOT IN THE SUBSEQUENT ASSESSMENT YEAR 2010-11. 12. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IT HAS SHOWN THE INCOME IN ASSESSMENT YEAR 2010-11 AND WHICH HAS BEEN ASSESSED TO TAX AND THEREFORE THE ASSESSMENT OF THE SAID AMOUNT OF RS 35 LAKHS WOULD AMOUNT TO DOUBLE TAXATION OF THE SAME. 13. THE DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED T HAT THE INCOME OF THE ASSESSEE IS TO BE TAXED ACCORDING TO THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. SINCE THE ASSESSEE IS FOLLOWING MERC ANTILE SYSTEM OF ACCOUNTING, THEREFORE THE INCOME ACCRUED DURING THE YEAR UNDER CONSIDERATION SHOULD BE TAXED IN THIS YEAR AND NOT WHEN THE ACCOUNTS WERE SETTLED WITH THE PARTIES. HENCE, THE SAME WAS RIGH TLY TAXED IN THE PRESENT YEAR. 14. WE FIND THAT IT IS NOT DISPUTED BY THE AUTHORI ZED REPRESENTATIVE OF THE ASSESSEE THAT THE METHOD OF ACCOUNTING FOLLO WED BY THE ASSESSEE WAS MERCANTILE. IT IS ALSO NOT IN DISPUTE THAT THE ENT IRE INCOME OF RS 81,50,910/- WAS ACCRUED TO THE ASSESSEE DURING THE YEAR UNDER A PPEAL AND THAT THE IT(SS)A NO. 606/A/2012 SHRI IQBAL ABBAS SHAIKH, SILVASSA. AY 2009-10 - 7 - ASSESSEE HAS DISCLOSED ONLY RS 38.92 LAKHS OUT OF T HE SAME DURING THE YEAR UNDER CONSIDERATION AND THE BALANCE AMOUNT OF RS 35 LAKHS WAS SHOWN IN THE ASSESSMENT YEAR 2010-11. IN THE ABOVE FACTS AN D CIRCUMSTANCES OF THE CASE, AS THE SYSTEM OF ACCOUNTING FOLLOWED BY THE A SSESSEE IS MERCANTILE, IN OUR CONSIDERED VIEW THE LOWER AUTHORITIES WERE JUST IFIED IN TAXING THE BALANCE AMOUNT OF RS 35 LAKHS AS INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. WE ARE IN AGREEMENT WITH THE CONTEN TION OF THE ASSESSEE THAT IF RS 35 LAKHS IS TAXED DURING THE YEAR CONSIDERATI ON, THEN IT WOULD AMOUNT TO DOUBLE TAXATION AS THE ASSESSEE HAS SHOWN THE VE RY SAME INCOME IN SUBSEQUENT ASSESSMENT YEAR 2010-11, WHICH HAS BEEN ACCORDINGLY TAXED. WE HOLD THAT THE ASSESSEE SHALL BE AT LIBERTY TO AP PROACH THE APPROPRIATE AUTHORITY IN THIS REGARD FOR DOING THE NEEDFUL IN T HE MATTER. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 14 TH OF AUGUST, 2014 AT AHMEDABAD. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 14/08/2014 GHANSHYAM MAURYA, SR. P.S. IT(SS)A NO. 606/A/2012 SHRI IQBAL ABBAS SHAIKH, SILVASSA. AY 2009-10 - 8 - TRUE COPY #0 , )1 2#1/ #0 , )1 2#1/ #0 , )1 2#1/ #0 , )1 2#1// COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. )*&' / THE RESPONDENT. 3. 3 / CONCERNED CIT 4. 3() / THE CIT(A)-III, AHMEDABAD 5. 167 ) , , / DR, ITAT, AHMEDABAD 6. 78 9+ / GUARD FILE. #0 #0 #0 #0 / BY ORDER, : :: :/ // / ; ; ; ; ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD