Shri Manharlal V.Shah, Ahmedabad V. The Dy.CIT.,Circle-6, Ahmedabad

ITSSA 656/AHD/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1802 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-04-2016
• Assessment Year: misc
• Appeal Filed On: 13-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S SHARMA
• Assessee Lawyers: S N DIVETIA
• Keywords: Block assessment
• Section: 132; 15

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ IT(SS)A.NO.656/AHD/2011 [BLOCK PERIOD 1.4.1990 TO 8.12.2000] SHRI MANHARLAL V. SHAH D/10, BHAGWATI APARTMENT B/H. KAMAL SOCIETY MEMNAGAR AHMEDABAD. VS DCIT, CIR.VI, AHMEDABAD. ./ / (APPELLANT) 01 ./ / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA, AR REVENUE BY : SHRI C.S. SHARMA , SR.DR / DATE OF HEARING : 26/04/2016 / DATE OF PRONOUNCEMENT: 02/05/2016 23/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LD.CIT(A)-XI, AHMEDABAD DATED 25.8.2011 PASSED FOR THE BLOCK PERIOD STARTING FROM 1.4.1990 AND ENDING ON 8.12.2000. 2. THE REGISTRY HAS POINTED THAT THE APPEAL IS TIME BARRED BY 47 DAYS. IN ORDER TO EXPLAIN THE DELAY, THE ASSESSEE HAS FIL ED AN APPLICATION UNDER SECTION 253(5) OF THE INCOME TAX ACT AND PLEADED TH EREIN THAT THE ORDER IT(SS)A NO.656/AHD/2011 2 OF THE CIT(A) WAS COMMUNICATED TO THE APPELLANT ON 28.8.2011. THE APPEAL WAS TO BE FILED ON OR BEFORE 27.10.2011, HOW EVER, THE SAME WAS FILED ON 13.12.2011. HE FURTHER PLEADED THAT HE WA S SICK DUE TO MUSCULAR PAIN IN SPINE AND ADVISED BY HIS FAMILY DO CTOR TO TAKE REST. THE ASSESSEE HAS FILED HIS AFFIDAVIT AS WELL AS MED IAL CERTIFICATE TO THIS EFFECT. ON DUE CONSIDERATION OF ALL THESE FACTS, W E ARE OF THE VIEW THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT REASONS FO R NOT SUBMITTING THE APPEAL IN TIME. THEREFORE, WE CONDONE THE DELAY IN FILING THE APPEAL AND PROCEED TO DISPOSE OF THE APPEAL ON MERIT. 3. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE LD.CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.2,45,700/- IMPOSE D UNDER SECTION 158BFA(II) OF THE INCOME TAX ACT, 1961. 4. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION WAS CARRIED OUT UNDER SECTION 132 OF THE INCOME TAX ACT ON 8.12.2000 IN THE SHAH FINANCE GROUP OF CASES. DURING THE SEARCH A T THE PREMISES OF M/S.VIR FINANCE RS.3.00 LAKHS WAS FOUND WITH THE PE RSON NAMED SHRI MANHAR G. PATEL. SHRI MANHAR G. PATEL DISCLOSED TH AT THIS MONEY RELATED TO ASSESSEE WHO HAS HANDED OVER THIS MONEY FOR PURC HASE OF DRAFT FROM M/S.SHAH FINANCE. ACCORDINGLY, A NOTICE UNDER SECT ION 158BD WAS ISSUED TO THE ASSESSEE ON 10.12.2012. IN RESPONSE TO THE NOTICE, THE ASSESSEE HAS FILED A RETURN OF INCOME DISCLOSING RS .50,000/- AS UNDISCLOSED INCOME. THE LD.AO HAS PASSED AN ASSESS MENT ORDER UNDER SECTION 158BA OF THE INCOME TAX ACT ON 31.12.2004. HE MADE ADDITION OF RS.3.00 LAKHS ALLEGED TO HAVE BEEN FOUND AT THE PREMISES OF M/S.VIR FINANCE DURING THE COURSE OF SEARCH. THE LD.AO HAS ISSUED NOTICE UNDER IT(SS)A NO.656/AHD/2011 3 SECTION 158BFA OF THE INCOME TAX ACT AND INVITED TH E EXPLANATION OF THE ASSESSEE AS TO WHY THE PENALTY UNDER SECTION 15 8BFA(II) SHOULD NOT BE IMPOSED UPON THE ASSESSEE QUA THE ADDITION MADE BY THE AO TO THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BL OCK PERIOD. THE AO HAS IMPOSED A PENALTY OF RS.2,45,700/-. THE APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. ON VISUALIZATION OF THE SCHEME OF BLOCK ASSESSMENT UNDER CHAPTER XIV-B OF THE INCOME TAX AC T, IT IS PERTINENT TO MENTION THAT THE INCOME FOR THE BLOCK PERIOD IS TO BE DETERMINED ON THE BASIS OF SEIZED MATERIAL FOUND DURING THE COURS E OF SEARCH. THE SEIZED MATERIAL IS TO BE SUPPLIED TO THE ASSESSEE, AND OUT OF THAT SEIZED MATERIAL THE ASSESSEE HAS TO COMPUTE ITS TRUE UNDIS CLOSED INCOME. THE INCOME IN THE ASSESSMENT ORDER HAS BEEN DETERMINED ON A HIGHER FIGURE THAN THE ONE DISCLOSED BY THE ASSESSEE. THUS, FOR THE PURPOSE OF VISITING THE ASSESSEE WITH PENALTY UNDER SECTION 158BFA(2), THE CHARGE AGAINST THE ASSESSEE CAN BE, WHY IT FAILED TO COMPUTE TRUE UNDISCLOSED INCOME FROM THE SEIZED MATERIAL SUPPLIED BY THE AO ALONG W ITH NOTICE. IT IS NOT A QUESTION OF CONCEALED INCOME, BECAUSE, THE AO HAS TO DETERMINE THE INCOME FOR THE BLOCK PERIOD FROM THE SEIZED MATERIA L ONLY. THE MATERIAL CONSIDERED IS COMMON FOR THE ASSESSEE AS WELL AS TH E AO. THE ASSESSEE IS COMPUTING A DIFFERENT FIGURE WHILE FILING THE RE TURN, WHEREAS THE AO IS COMPUTING ALTOGETHER DIFFERENT INCOME. 6. WE FIND THAT IN THE PRESENT CASE, THE ASSESSEE HAS FILED A REGULAR RETURN UNDER SECTION 139(1) OF THE INCOME TAX ACT O F THE ASSTT.YEAR IT(SS)A NO.656/AHD/2011 4 2001-02 ON 30.10.2001. COPY OF THE RETURN ALONG WI TH COMPUTATION IS AVAILABLE AT PAGE NO.8 TO 11 OF THE PAPER BOOK. HE HAS APPENDED A NOTE AT THE END OF THE RETURN. IT READS AS UNDER: 1. DURING THE COURSE OF SEARCH AT M/S.VEER FINANCE , MADHUPURA, AHMEDABAD THE ASSESSEE WAS INSPECTED & C ASH AMOUNTING TO RS.300000/- (THREE LACS) WAS FOUND AT THAT TIME, THEREAFTER SURVEY WAS MADE AT THE ASSESSEES BUSINE SS PREMISES. AT THE TIME OF SURVEY THE ASSESSEE DECLARED ADDITIO NAL INCOME OF RS.300000/- AND THE SAME WAS SEIZED BY THE INCOME T AX OFFICIAL NAMELY DIT (INV.) UNIT-II(1), AHMEDABAD. THE SAID AMOUNT BE ADJUSTED AGAINST THE TAX PAYABLE IN RESPECT OF THE RETURNED INCOME OF THE A.Y.2001-02. THE BALANCE AMOUNT BE REFUNDED AS PER CALCULATION OF TAX AS SHOWN IN THE COMPUTATION SHEE T. THE STAND OF THE ASSESSEE IS THAT BEFORE SERVICE O F NOTICE UPON HIM, UNDER SECTION 158BD OF THE ACT HE RELEASED THAT HE COULD BE CALLED UPON TO EXPLAIN THE SOURCE OF RS.3.00 LAKHS. THEREFORE, HE HIMSELF HAS DISCLOSED THIS INCOME IN THE REGULAR RETURN. WHILE FILING THE BLOCK RETURN, THE ASSESSEE HAS AGAIN APPENDED A NOTE AND POINTED THAT HE HAS DISCLOSED A SUM OF RS.3.00 LAKHS IN THE REGULAR RETURN. THE RELEVANT PART OF THE NOTE READS AS UNDER: THE ASSESSEE HAS FILED RETURN OF INCOME FOR THE AS STT.YEAR 2001- 2002 ON 30.10.2001 VIDE R.NO.8890 WITH CIT, RANGE-8 . THE ASSESSEE WAS UNDER THE BELIEF THAT HE HAS DECLARED RS.3.00 LACS DURING THE ABOVE PROCEEDINGS TILL THE FILING OF THE RETURN OF INCOME FOR THE ASSTT.YEAR 2001-02 I.E. 30 TH OCT., 2001. HE HAS NOT RECEIVED STATEMENT RECORDED BEFORE THE DDI UNIT-2(I ), AHMEDABAD. THEREFORE, UNDER THIS IMPRESSION HE HAS OFFERED RS.3.00 LACS FOR TAX WHILE FILING THE RETURN AND HA S ALSO REQUESTED TO ADJUST THE TAX AGAINST THE CASH AMOUNT SEIZED OF RS.3.00 LACS. XEROX COPY OF RETURN FOR THE ASSTT.YEAR 2001-02 IS ATTACHED. IT(SS)A NO.656/AHD/2011 5 ON RECEIPT OF THE STATEMENT FROM YOUR OFFICE ON 27. 12.2002, THE ASSESSEE FIND THAT HE HAS DECLARED RS.350000/- INST EAD OF RS.300000/-. NOW HE OFFER RS.50,000/- FOR THE ASST T.YEAR 2001- 2002 IN BLOCK PERIOD. THUS, EXPLANATION OF THE ASSESSEE FOR NOT INCLUDIN G THIS AMOUNT OF RS.3.00 LAKHS FOR THE PURPOSE OF BLOCK ASSESSMENT W AS THAT HE HAS DISCLOSED THIS INCOME IN THE RETURN OF INCOME. ON DUE CONSIDERATION OF THESE ASPECTS, WE ARE OF THE VIEW THAT THE ASSESSEE WAS UNDER A BONA FIDE IMPRESSION THAT ONCE HE HAS RECOGNIZED THE ALLEGED INCOME OF RS.3.00 LAKHS IN THE REGULAR RETURN, HE WAS NOT SUPPOSED TO RE-DECLARE IT IN THE BLOCK PERIOD. IT IS DIFFERENT MATTER THAT THE AO H AS MADE AN ADDITION AND THAT ADDITION HAS BEEN UPHELD UPTO THE ITAT. THE Q UESTION BEFORE US IS WHETHER THE ASSESSEE HAS GIVEN AN EXPLANATION AS TO WHY HE FAILED TO DISCLOSE TRUE UNDISCLOSED INCOME FOR THE BLOCK PERI OD OR NOT. IN OUR UNDERSTANDING, THE ASSESSEE HAS GIVEN AN EXPLANATIO N WHICH IS A PLAUSIBLE ONE, AND THEREFORE, HE DOES NOT DESERVE T O BE VISITED WITH PENALTY UNDER SECTION 158BFA(II) OF THE INCOME TAX ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 2 ND MAY, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 02/05/2016