The ACIT,A'bad Circle-3, Ahmedabad V. M/s. Shree Saiya Industries, Ahmedabad

ITSSA 7/AHD/2011

• Counselvise Citation: [2014] 121 COUNSELVISE.COM (IT) 9978 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-01-2014
• Assessment Year: misc
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Reasonable cause; Block assessment
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER IT(SS)A NO.7/AHD/2011 ACIT, AHMEDABAD CIRCLE- 3, AHMEDABAD. V/S. M/S. SHREE SAIYA INDUSTRIES, 302 PHASE I, GIDC NARODA AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J.P. JHANGID, SR.D.R. ASSESSEE(S) BY : SHRI VIJAY RANJAN A.R. / DATE OF HEARING : 22/01/2014 / DATE OF PRONOUNCEMENT: 23/01/2014 O R D E R PER SHRI MUKUL KUMAR SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(A)-XVI, AHMEDABAD DATED 08.11.2010. THE MAIN GROUND OF THE REVENUE IS AS FOLLOWS: THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE PENALTY OF RS.4,80,000/- LEVIED U/S. 158BFA(2) OF THE IT ACT B Y THE AO. 2. AN ASSESSMENT WAS MADE U/S.158BC R.W.S. 143(3) & 145(3) OF THE IT ACT, DATED 31 ST OF JULY, 2000. OUR ATTENTION WAS DRAWN ON PARAS 2 & 3 OF THE SAID ASSESSMENT ORDER, WHEREIN IT WAS MENTIONED BY THE AO/DCIT CENTRAL CIRCLE-1(3) AHMEDABAD THAT IN RESPO NSE TO A NOTICE U/S.158BC THE ASSESSEE FIRM HAD FILED A RETURN OF T HE BLOCK PERIOD ON 11.4.2000 AND DECLARED THE UNDISCLOSED INCOME OF RS .8 LAC AS UNDER: TOTAL INCOME FOR BLOCK PERIOD INCLUDING : RS.9,16,276/- UNDISCLOSED INCOME LESS: RETURNED TOTAL INCOME IT(SS)A NO.7/AHD/2011 ACIT, AHMEDABAD CIRCLE-3, AHMEDABAD VS. M/S. SHREE SAIYA INDUSTRIES - 2 - OF A.Y.1998-99 LOSS(-) : RS.1,16,276/- TOTAL UNDISCLOSED INCOME : RS.8,00,000/- AND PAID TAX OF RS.4,80,000 U/S. 140A OF THE IT AC T. 3. WE HAVE PERUSED THE IMPUGNED PENALTY ORDER PASSE D U/S.158BFA(2), DATED 27.11.2009 WHEREIN THE REASON FOR LEVY OF PENALTY IN QUESTION WAS STATED AS UNDER: ORDER U/S.158BFA(2) OF THE IT ACT IN THIS CASE THE ASSESSEE HAS FILED BLOCK ASSESSMEN T RETURN ON 11.4.2000 DECLARING UNDISCLOSED INCOME OF RS.8 LACS. THE BLOC K ASSESSMENT U/S.158BC WAS FINALIZED ON 31.7.2000 ASSESSING THE TOTAL UNDISCLOSED INCOME AT RS.68,23,890/-. WHILE DECIDING THE APPEAL OF THE ASSESSEE, THE LD. CIT(A) DELETED CERTAIN ADDITIONS. THE UNDISCLOS ED INCOME REMAINED AT RS.14,83,490/- AFTER GIVING APPEAL EFFECT TO THE CI T(A)S ORDER VIDE APPEAL EFFECT ORDER DATED 6.9.2002. THE DEPARTMENT AS WELL AS THE ASSESSEE HAVE FILED FURTHER APPEALS BEFORE THE HONBLE ITAT, AHME DABAD WHICH HAS DECIDED THE SAID APPEALS VIDE ITS ORDER IN IT(SS)A NO.250 & 273/AHD/2002 DATED 24.4.2009. THE HONBLE ITAT HAS GRANTED FURTH ER RELIEF OF RS.6,83,490/- TO THE ASSESSEE IN RESPECT OF ADDITIO N ON ACCOUNT OF UNDISCLOSED PRODUCTION AND JOB WORK. THE FINAL UNDI SCLOSED INCOME ASSESSED IN THE CASE OF ASSESSEE IS RS.8 LACS AFTER GIVING EFFECT TO THE ITATS ORDER WHICH IS THE SAME AS DECLARED BY THE A SSESSEE IN HIS BLOCK RETURN. HOWEVER, AS PER PROVISO TO SECTION 158BFA(2 ) IF THE FOLLOWING CONDITIONS ARE FULFILLED THEN NO ORDER IMPOSING PEN ALTY U/S.158BFA(2) SHALL BE MADE. I). SUCH PERSON HAS FURNISHED A RETURN UNDER CLAUSE (A) OF SECTION 158BC; II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HAS BEEN PAID OR, IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSESSEE OFFERS THE MONEY SO SEIZED TO BE ADJUSTED AGAINST THE TAX PAYABLE; III) EVIDENCE OF TAX PAID IS FURNISHED ALONG WITH T HE RETURN; AND IV) AND APPEAL IS NOT FILED AGAINST THE ASSESSMENT OF THAT PART OF INCOME WHICH IS SHOWN IN THE RETURN. 3.1 ON THE BASIS OF THE ABOVE INFORMATION; VIDE PAR A 6, PENALTY WAS LEVIED AS UNDER: IN VIEW OF THE FACTS NARRATED ABOVE, I AM SATISFIE D THAT THE ASSESSEE IS LIABLE FOR PENALTY U/S. 158BFA(2) OF THE ACT, IN RE SPECT OF UNDISCLOSED INCOME TO THE EXTENT OF RS.8,00,000/- ON ACCOUNT OF FAILURE TO FILE THE BLOCK RETURN IN RESPONSE TO THE NOTICE ISSUED BY THE AO A ND FILING APPEAL AGAINST THE ASSESSED INCOME INCLUDING THE UNDISCLOSED RETUR NED INCOME OF RS.8,00,000/- CONSCIOUSLY AND FULLY AWARE OF THE CO NSEQUENCES. THEREFORE, THIS IS FIT CASE FOR LEVY OF PENALTY UNDER SECTION 158BFA(2) OF THE ACT. I, IT(SS)A NO.7/AHD/2011 ACIT, AHMEDABAD CIRCLE-3, AHMEDABAD VS. M/S. SHREE SAIYA INDUSTRIES - 3 - HEREBY ORDER TO LEVY PENALTY U/S.158BFA(2) OF THE A CT OF RS.4,80,000/- BEING 100% OF TAX SOUGHT TO BE EVADED AS AGAINST TH E MAXIMUM PENALTY LEVIABLE AT RS.14,40,000/- 3.2 AFTER CONSIDERING THOSE FACTS AND DETAILS, LEAR NED CIT(A) HAS DELETED THE PENALTY IN THE FOLLOWING MANNER: 2.1 THIS IS REGARDING LEVY OF PENALTY OF RS. 4.8 L AKH. IN THE PENALTY ORDER, THE AO HAS STATED THAT THE ASSESSEE HAD FILED BLOCK ASSESSMENT RETURN ON 11/04/2000 DECLARING UNDISCLOSED INCOME OF RS. 8 LA KHS. THE BLOCK ASSESSMENT UNDER SECTION 158BC WAS FINALIZED ON 31/ 07/2000 ASSESSING THE TOTAL UNDISCLOSED INCOME AT RS. 68,23,890/-,AFT ER THE DECISION OF HONORABLE CIT APPEAL AND HONORABLE ITA T. THE FINAL INCOME ASSESSED WAS RS. 8 LAKHS AFTER GIVING EFFECT TO THE ITAT'S O RDER. IN THIS CASE NOTICE UNDER SECTION 158 BC WAS ISSUED ON 08/04/1999 WHICH WAS SERVED ON THE SAME DAY. THEREFORE, THE ASSESSEE FIRM WAS REQUIRED TO FILE THE RETURN ON 28/04/1999. ANOTHER NOTICE UNDER SECTION 158 BC WAS ISSUED ON 03/12/1999 WHICH WAS SERVED ON 06/12/1999 AND THE A SSESSEE WAS REQUIRED TO FILE BLOCK RETURNED WITHIN 20 DAYS OF T HE SERVICE OF NOTICE. THE ASSESSEE FILED THE BLOCK RETURN WITHIN THE TIME SPE CIFIED GIVEN ON BOTH THE OCCASIONS AND FILED THE RETURN ONLY ON 11/04/2000/- . IN VIEW OF THE ABOVE REASON, THE PENALTY NOTICE WAS ISSUED UNDER SECTION 158BFA (2), BECAUSE THE ASSESSEE HAD NOT FULFILLED THE CONDITIONS OF FI LING THE RETURN WITHIN TIME AS PROVIDED UNDER CLAUSE (A) OF SECTION 158BC. THE ASSESSEE REPLIED THAT THE PENALTY SHOULD NOT BE LEVIED BECAUSE OF THE FOL LOWING REASONS:- 1. THE SEARCH WAS CARRIED OUT IN JUNE 1998 AND SEIZURE OF BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WERE MADE. THE ASSE SSEE HAD MADE DISCLOSURE OF RS. 8 LAKHS AND ON THAT AMOUNT. THE TAX PAYABLE WAS ALREADY DEPOSITED ON 11/04/2000. AFTER THE ORDER OF HONORABLE ITA T. THE UNDISCLOSED INCOME ASSESSED WAS AT THE SAME FIGURE AS DISCLOSURE MADE IN THE RETURN. I N VIEW OF THIS REASON, NOTHING CAN BE CALLED AS UNDISCLOSED I NCOME AND HENCE THERE IS NO JUSTIFICATION OF LEVY OF PENALTY. 2. THE ASSESSEE HAD REQUESTED FOR COPIES OF SEIZED MAT ERIAL FROM THE INVESTIGATION OFFICER SO AS TO FINALIZE THE ACC OUNTS AND FILED THE RETURNS. THE ASSESSEE WAS GIVEN XEROX COPIES IN DECEMBER 1999 ONLY AND THEREFORE THE RETURN WAS FILED ON 11. 04.2000. THIS MUCH TIME WAS REQUIRED TO PROCESS THE DATA AND PREPARE THE ACCOUNTS. . 2.3.2 IN VIEW OF THE PARA-11 AND 12 OF THE JUDGMENT OF THE HONBLE ITAT PUNE IN THE ABOVE MENTIONED CASE, NO PENALTY C AN BE LEVIED BECAUSE THERE IS REASONABLE CAUSE FOR FILING THE RE TURN LATE AND IN ANY CASE, ANY RETURN FILED WITHIN TIME OR BEYOND TI ME IS THE RETURN FILED U/S.158BC(A). THE APPELLANT HAS PAID THE FULL TAX. AS ADMITTED BY THE AO. IN VIEW OF THE ABOVE REASON, TH E PENALTY LEVIED IS DELETED. IT(SS)A NO.7/AHD/2011 ACIT, AHMEDABAD CIRCLE-3, AHMEDABAD VS. M/S. SHREE SAIYA INDUSTRIES - 4 - 4. WE HAVE HEARD THE SUBMISSION OF BOTH THE SIDES. WE HAVE ALSO CAREFULLY PERUSED THE ORDER OF THE AUTHORITIES BELO W AND SPECIALLY AN ORDER OF LEARNED CIT(A)-I AHMEDABAD, DATED 22 ND JULY, 2002 WHEREIN IN APPEAL NO.CIT(A)-I/CC.1(3)/116/2000-01 BLOCK ASS ESSMENT 13.10.1995 TO 30.6.1998, CERTAIN RELIEF WAS GRANTED WHEREIN THE UNDISCLOSED INCOME WAS CHALLENGED AS UNDER: II) THE DCIT, CENTRAL RANGE-1(3), AHMEDABAD HAS ER RED ON FACTS AND IN LAW IN DETERMINING THE UNDISCLOSED INCOME OF RS.69, 40,160/- BEING: A) INCOME ESTIMATED ON UNACCOUNTED PRODUCTION RS.12 ,83,400/- B) UNDISCLOSED INCOME FOR JOB WORK ESTIMATED @ RS.8 PER KG. ON 473,050 KGS RS.37,04,400/- WHEN NO ADDITION FOR THE UNDISCLOSED INCOME AS AFOR ESAID WAS CALLED FOR. THESE MAY BE DELETED. III) THE DCIT, CENTRAL RANGE-1(3), AHMEDABAD HAS ER RED ON FACTS AND IN LAW IN DISALLOWING RS.11,85,500/- INVOKING THE PROV ISIONS OF SEC.40A(3) OF THE INCOME TAX ACT WHEN NO SUCH EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH REGARDING CASH PURCHASE. THE DISALLOWANCE IS UNCALLED FOR. IT MAY BE DELETED. IV) THE DCIT, CENTRAL RANGE-1(3), AHMEDABAD HAS ERR ED ON FACTS AND IN LAW IN MAKING THE ADDITION OF RS.6,83,860/- BEING T HE ALLEGED UNDISCLOSED STOCK FOUND DURING THE COURSE OF SEARCH WHEN NO SUC H ADDITION IS CALLED FOR. 4.1 THEREAFTER APPEAL EFFECT WAS GIVEN AS MENTIONED IN THE PENALTY ORDER U/S.158BFA(2) (SUPRA), RELEVANT PORTION REPRO DUCED ABOVE, AND IN THAT PENALTY ORDER IT WAS ACKNOWLEDGED THAT AFTE R THE APPELLATE PROCEEDINGS AS WELL AS AFTER GIVING THE EFFECT OF T HE ITAT ORDER THE FINAL UNDISCLOSED INCOME REMAINED TO BE TAXED IN TH E HANDS OF THE ASSESSEE WAS RS.8 LACS. THE AO HAS ALSO MENTIONED T HAT THE SAID INCOME WAS THE SAME AS DECLARED BY THE ASSESSEE IN THE BLOCK RETURN. BECAUSE OF THE SPECIFIC FACTS OF THIS CASE AS DISCL OSED ABOVE, WE ARE OF THE VIEW THAT IN THE LIGHT OF THE PROVISIONS OF SEC TION 158BFA(2)- FIRST PROVISO THE ASSESSEE IS ENTITLED FOR THE BENEFIT GR ANTED UNDER THE SAID IT(SS)A NO.7/AHD/2011 ACIT, AHMEDABAD CIRCLE-3, AHMEDABAD VS. M/S. SHREE SAIYA INDUSTRIES - 5 - PROVISO WHICH SAYS THAT NO ORDER IMPOSING PENALTY S HALL BE MADE IN RESPECT OF A PERSON IF NO APPEAL HAS BEEN FILED AGA INST THE ASSESSMENT OF THAT PART OF INCOME WHICH IS SHOWN IN THE RETURN . SINCE IN THE PRESENT CASE, THE POSITION IS IDENTICAL AS MENTIONE D IN THE FIRST PROVISO OF THIS SUB SECTION; HENCE, WE HEREBY UPHOLD THE RE LIEF GRANTED BY LEARNED CIT(A). RESULTANTLY, WE FIND THAT NO FORCE IN THIS GROUND OF THE REVENUE. HENCE DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. SD/- SD/- (ANIL CHATURVEDI) (MUKU L KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 23/01/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD