The ACIT, Circle-5, RAJKOT-GUJARAT V. M/s Panchratna Jewellers, RAJKOT-GUJARAT

ITSSA 7/RJT/2009

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9371 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2013
• Assessment Year: misc
• Appeal Filed On: 11-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANKUR GARG
• Keywords: Unexplained investment; Difference of opinion; Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM IT (SS) A NO. 07 /RJ T/20 0 9 BLOCK PERIOD 01.04.1995 TO 30.10.2001 ACIT, CIRCLE - 5 , RAJKOT V. M/S. PANCHRATNA JEWELERS, SONI BAZAR, RA JKOT PAN : AAEFP 4507 B DATE OF HEARING : 2 5 .0 7 .2013 DATE OF PRONOUNCEMENT : 31 .0 7 .2013 REVENUE BY : SHRI ANKUR GARG , DR ASSESSEE BY : SHRI SANJAY R SHAH, CA ORDER D K SRIVASTAVA : THIS ORDER IS BEING PASSED IN COMPLIANCE W ITH THE FOLLOWING DIRECTIONS GIVEN BY THE HONBLE J URISDICTIONAL HIGH COURT IN ITS ORDER DATED 30.12.2011 IN CIT V. M/S. PANCHRATHNA JEWELLERS, TAX APPEAL NO. 1333 OF 2010: - THUS, AS CAN BE SEEN FROM THE ORDER, ONLY ON THE GROUND OF ADMISSION OF APPEAL B Y THE HIGH COURT, ORDER OF PENALTY IS QUASHED. AS IS CANDIDLY POINTED OUT TO US BY THE LEARNED COUNSEL FOR THE REVENUE, THIS COURT WHILE DECIDING TAX APPEAL NO.606 OF 2010, DECIDED IDENTICAL QUESTION DELETING THE ORDER OF IMPOSITION OF PENALTY BY THE TRIBU NAL ON THE GROUND OF ADMISSION OF APPEAL BY REMANDING THE MATTER BACK TO THE TRIBUNAL FOR FRESH CONSIDERATION. THE ISSUE INVOLVED BEING IDENTICAL HERE, WITHOUT GIVING ANY INDEPENDENT FINDINGS, THE REASONINGS GIVEN EARLIER IN TAX APPEAL NO.606 OF 2010 ARE N EED TO BE REPRODUCED, WHICH ARE AS FOLLOW : - 11. WE ARE OF THE OPINION THAT THE TRIBUNAL ERRED IN DELETING THE PENALTY ON THIS SOLE GROUND. ADMISSION OF A TAX APPEAL BY THE HIGH COURT, IN MAJORITY CASES, IS EX - PARTE AND WITHOUT RECORDING EVEN PRIMA FACIE REASONS. WHETHER EX - PARTE OR AFTER BY - PARTE HEARING, UNLESS SOME OTHER INTENTION CLEARLY EMERGES FROM THE ORDER ITSELF, ADMISSION OF A TAX APPEAL BY THE HIGH COURT ONLY INDICATES THE COURTS OPINION THAT THE ISSUE PRESENTED BEFORE IT REQUIRED FURTHER CONSI DERATION. IT IS AN INDICATION OF THE OPINION OF THE HIGH COURT THAT THERE IS A PRIMA FACIE CASE MADE OUT AND QUESTIONS ARE REQUIRED TO BE DECIDED AFTER 2 IT(SS) 7 - RJT - 2009 - PANCHRATNA JEWELLERS ADMISSION. MERE ADMISSION OF AN APPEAL BY THE HIGH COURT CANNOT WITHOUT THERE BEING ANYTHING FURTHER, BE AN INDICATION THAT THE ISSUE IS DEBATABLE ONE SO AS TO DELETE THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT EVEN IF THERE ARE INDEPENDENT GROUNDS AND REASONS TO BELIEVE THAT THE ASSESSEES CASE WOULD FALL UNDER THE MISCHIEF ENVISAGED IN THE SAID CLAUSE ( C) OF SUB - SECTION (1) OF SECTION 271 OF THE ACT. IN OTHER WORDS, UNLESS THERE IS ANY INDICATION IN THE ORDER OF ADMISSION PASSED BY THE HIGH COURT SIMPLY BECAUSE THE TAX APPEAL IS ADMITTED, WOULD GIVE RISE TO THE PRESUMPTION THAT THE ISSUE IS DEBATABLE AND THAT THEREFORE, PENALTY SHOULD BE DELETED. 12. THIS IS NOT TO SUGGEST THAT NO SUCH INTENTION CAN BE GATHERED FROM THE ORDER OF COURT EVEN IF SO EXPRESSED EITHER EXPLICITLY OR IN IMPLIED TERMS. THIS IS ALSO NOT TO SUGGEST THAT IN NO CASE, ADMISSION OF A T AX APPEAL WOULD BE RELEVANT FACTOR FOR THE PURPOSE OF DECIDING VALIDITY OF A PENALTY ORDER. THIS IS ONLY TO PUT THE RECORD STRAIGHT INSOFAR AS THE OPINION THAT THE TRIBUNAL AS EXPRESSED IN THE PRESENT IMPUGNED ORDER VIZ. THAT UPON MERE ADMISSION OF A TAX A PPEAL ON QUANTUM ADDITIONS, IS AN INDICATION THAT THE ISSUE IS DEBATABLE ONE AND THAT THEREFORE, PENALTY SHOULD AUTOMATICALLY BE DELETED WITHOUT ANY FURTHER REASONS OR GROUNDS EMERGING FROM THE RECORD. 13. THIS IS PRECISELY WHAT HAS BEEN DONE BY THE TRIBU NAL IN THE PRESENT CASE. ORDER OF THE TRIBUNAL, THEREFORE, CANNOT BE SUSTAINED. QUESTION FRAMED IS ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. ORDER OF THE TRIBUNAL IS REVERSED. SINCE APPARENTLY THE ASSESSEE HAD RAISED OTHER CONTENTIONS AL SO IN SUPPORT OF THE APPEAL BEFORE THE TRIBUNAL, THE PROCEEDINGS ARE REMANDED BEFORE THE TRIBUNAL FOR FRESH CONSIDERATION AND DISPOSAL IN ACCORDANCE WITH LAW. TAX APPEAL IS DISPOSED OF ACCORDINGLY. ON THE SIMILAR GROUNDS, THIS TAX APPEAL IS ALSO ALLOWED SETTING ASIDE THE ORDER OF THE TRIBUNAL. PROCEEDINGS ARE REMANDED TO THE TRIBUNAL FOR FRESH 3 IT(SS) 7 - RJT - 2009 - PANCHRATNA JEWELLERS CONSIDERATION. IT IS ALSO REQUIRED TO BE MENTIONED HERE THAT THERE ARE OTHER QUESTIONS PROPOSED IN THIS TAX APPEAL. AS ON THE FIRST ISSUE MATTER IS REMANDED, WE DO NOT EXPRESS ANY OPINION ON OTHER TWO QUESTIONS PROPOSED WHICH ARE INTERTWINED. BOTH THE PARTIES SHALL BE AT LIBERTY TO RAISE THOSE ISSUES AND MAKE THEIR SUBMISSIONS THEREON, AND THE TRIBUNAL SHALL ADJUDICATE UPON THE SAME WITHOUT BEING INFLUENCED BY THE O UTCOME OF THIS TAX APPEAL. 2. THE ASSESSEE IS A FIRM. IT IS ENGAGED IN THE BUSINESS OF JEWELL E RY. SEARCH OPERATIONS U/S 132 OF THE INCOME - TAX ACT WERE CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 30.10.2001 WHICH LED TO RECOVERY OF 6,479.55 G MS OF GOLD JEWELL E RY OUT OF WHICH JEWELL E RY WEIGHING 2,735.50 GMS WAS SEIZED. PURSUANT TO THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 158BC OF THE INCOME - TAX ACT, THE ASSESSEE FILED ITS BLOCK RETURN ON 31.01.2002 RETURNING UNDISCLOSED INCOME AT RS. NIL . DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS, THE ASSESSEE SOUGHT TO RECONCILE THE GOLD JEWELL E RY AS PHYSICALLY FOUND AT THE TIME OF SEARCH WITH THE GOLD JEWELL E RY AS RECORDED IN THE BOOKS OF ACCOUNT. IT WAS CLAIMED THAT GOLD ORNAMENTS WEIGHING 509. 010 GMS, 905.040 GMS AND 299.960 GMS WERE RECEIVED FROM SMT. JAYSHREEBEN M. RADHANPURA, SHRI ASHOKBHAI D. RADHANPURA AND MIRAZ BENGALI RESPECTIVELY. THE AFORESAID EXPLANATION WAS NOT ACCEPTED BY THE ASSESSING OFFICER IN THE BLOCK ASSESSMENT PROCEEDINGS W IT H THE RESULT THAT CORRESPONDING VALUE OF THE AFORESAID JEWELLARY WAS BROUGHT TO TAX AS UNEXPLAINED INVESTMENT . D ETAILED REASONS FOR NOT ACCEPTING THE AFORESAID EXPLANATION OF THE ASSESSEE IN THIS BEHALF HAVE BEEN GIVEN IN THE BLOCK ASSESSMENT ORDER . ON APP EAL BY THE ASSESSEE , THE AFORESAID ADDITION WAS CONFIRMED BY THE LD . CIT(A). ON FURTHER APPEAL BY THE ASSESSEE BEFORE THIS TRIBUNAL, THE ORDER PASSED BY THE LD . CIT(A) IN HIS BEHALF WAS CONFIRMED. IT IS WITH REFERENCE TO THE AFORESAID THREE ADDITIONS THAT THE IMPUGNED PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER VIDE HIS ORDER DATED 23.05.2006 PASSED U/S 158BFA, WITH THE FOLLOWING OBSERVATIONS: - 3. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE ASSESSEE AND THE SAME IS NOT ACCEPTABLE IN VIEW OF THE FACT THAT THE ORDER OF THE HON.ITAT RECEIVED IN THE OFFICE OF THE HON. CIT - III, RAJKOT ON 30/11/2005 AS SUCH AS 4 IT(SS) 7 - RJT - 2009 - PANCHRATNA JEWELLERS PER THE PROVISIONS OF SECTION 158BFA(3)(C) , THE PENALTY PROCEEDINGS TO BE COMPLETED WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE ITAT IS RECEIVED BY THE CHIEF CIT OR CIT. THE HON. ITAT WAS CONFIRMED THE ADDITION TO THE EXTENT OF 1977.19 GRAMS OF GOLD ORNAMENTS VALUING RS.858390/ - . FURTHER, LD CIT(A) AS WELL AS THE HON.ITAT HAS UPHELD THE FINDINGS OF THE ASSESSING OF FICER IN TREATING THE GOLD ORNAMENTS FOUND DURING THE COURSE OF THE SEARCH AS UNEXPLAINED ASSETS OF THE ASSESSEE. IT ALSO APPEARS THAT THE ASSESSEE HAS NOTHING TO SAY WITH REGARD TO THE ADDITION MADE BY THE A.O. ON ACCOUNT OF UNACCOUNTED VALUE OF GOLD ORNA MENTS WHICH HAS BEEN CONFIRMED BY THE APPELLATE AUTHORITIES. 4. FROM THE ABOVE, IT IS VERY CLEAR THAT THE ASSESSEE HAS FURNISHED INACCURATE THE PARTICULARS OF INCOME AND THERE BY CONCEALED INCOME OF RS.858390/ - . I AM, THEREFORE, SATISFIED THAT THIS IS A F IT CASE FOR PENALTY U/S 158BFA OF THE I.T. ACT, 1961 OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME OF RS.858390/ - . THEREFORE, PENALTY U/S 158BFA OF THE ACT IS WORKED OUT TO A MINIMUM OF RS.5,25,335, 100% OF TAX SOUGHT TO EVADED AND MAXIMUM OF IT WORKED OUT TO RS.15,46,005, 300% OF THE TAX SOUGHT TO BE EVADED. ADOPTING A JUDICIOUS APPROACH, PENALTY U/S 158BFA OF THE ACT IS LEVIED AT A MINIMUM OF 100% OF THE TAX SOUGHT TO BE EVADED AND THE SAME IS LEVIED AS RS.5,25,335/ - . 3. IT IS QUITE EVIDENT ON PERUSAL OF THE AFORESAID ORDER OF PENALTY THAT THE ADDITIONS ON THE BASIS OF WHICH THE IMPUGNED PENALTY HAS BEEN LEVIED STAND CONFIRMED NOT ONLY BY THE LD . CIT(A) BUT ALSO BY THIS TRIBUNAL. AT THE TIME OF HEARING, IT WAS STATED BY THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ADDITIONS WITH REGARD TO UNDISCLOSED INVESTMENT IN GOLD ORNAMENTS WEIGHING 509.010 GMS AND 905.040 GMS HAVE ATTAINED FINALITY IN AS MUCH AS THE HONBLE HIGH COURT HAS ALSO REFUSED TO ENTERTAIN APPEAL WITH REGARD TO THE AFORESAID ADDITIONS. IT WAS FURTHER SUBMITTED THAT THE HONBLE HIGH COURT HAS ADMITTED APPEAL WITH REGARD TO ADDITION RELATING TO UNEXPLAINED INVESTMENT IN 299.960 GMS OF GOLD ORNAMENTS WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE B EEN RECEIVED BACK FROM 5 IT(SS) 7 - RJT - 2009 - PANCHRATNA JEWELLERS MIRZA BENGALI. THE FACT HOWEVER REMAINS THAT ALL THE AFORESAID ADDITIONS STAND CONFIRMED BY THIS TRIBUNAL AND THAT NONE OF THE AFORESAID THREE ADDITIONS HAS BEEN REDUCED OR DELETED BY ANY SUPERIOR FORUM . 4. ON APPEAL, THE LD . CIT(A ) HAS CANCEL L ED THE IMPUGNED PENALTY FOR THE REASONS GIVEN BY HIM IN PARAGRAPH 6 OF HIS APPELLATE ORDER. ACCORDING TO HIM {I.E., THE CIT(A)} , THE ASSESSING OFFICER HAS SIMPLY RELIED ON THE FINDING GIVEN IN THE ASSESSMENT ORDER WITHOUT CARRY ING OUT ANY INDE PENDENT VERIFICATION AND WITHOUT EXAMINING THE PERSONS FROM WHOM THE GOLD ORNAMENTS WERE CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE, NAMELY , SMT.JAYSHREEBEN M. RADHANPURA, SHRI ASHOKBHAI D. RADHANPURA AND MIRAZ BENGALI. IT IS ALSO THE VIEW OF THE LD. CI T(A) THAT THE ASSESSING OFFICER HAS LEVIED THE IMPUGNED PENALTY MECHANICALLY WITHOUT POINTING OUT AS TO HOW THE UNDISCLOSED INVESTMENTS IN GOLD ORNAMENTS AND JEWELLARY WAS E X IGIBLE TO PENALTY U/S 158BFA. 5 . AGGRIEVED BY THE AFORESAID ORDER PASSED BY THE LD . CIT(A) ON 12.05.2009, THE REVENUE FILED APPEAL BEFORE THIS TRIBUNAL, WHICH WAS DISPOSED OF BY THIS TRIBUNAL ON 01.01.2010 BY WHICH THE ORDER PASSED BY THE LD CIT(A) CANCELLING THE IMPUGNED PENALTY WAS CONFIRMED. 6 . AGGRIEVED BY THE AFORESAID ORDER PA SSED BY THIS TRIBUNAL ON 01.01.2010, THE REVENUE FILED APPEAL BEFORE THE HON BLE HIGH COURT UPON WHICH THE HONBLE HIGH COURT HAS RESTORED THE MATTER TO THE FILE OF THIS TRIBUNAL WITH THE OBSERVATIONS AS REPRODUCED EARLIER IN THIS ORDER. THE MATTER WAS ACC ORDINGLY HEARD AFRESH. 7 . IN SUPPORT OF APPEAL, THE LD . DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER. HE ALSO FILED A COPY OF JUDGMENT OF THE HONBLE J URISDICTIONAL HIGH COURT IN KANDOI BHOGILAL MULCHAND V. DCIT, 341 IT R 271 (GUJ) AND COPY OF ANOTHER JUDGMENT OF THE HONBLE J URISDICTIONAL HIGH COURT IN CIT V. BECHARBHAI P PARMAR, 341 ITR 499 (GUJ.) . HE SUBMITTED THAT THE AFORESAID JUDGMENTS WERE AUTHORITY FOR T HREE PROPOSITIONS , NAMELY , (1) FINDINGS RECORDED IN QUANTUM A DDITION CANNOT BE RE - OPENED IN PENALTY PROCEEDINGS ; (2) THE CONCEPT OF THE ONUS ON THE REVENUE TO PROVE CONCEALMENT OF INCOME CANNOT BE IMPORTED WHILE 6 IT(SS) 7 - RJT - 2009 - PANCHRATNA JEWELLERS CONSIDERING THE QUESTION OF PENALTY U/S 158BFA(2) ; AND (III) PENALTY U/S 158BFA(2) IS PROVIDED WHERE THE AO COMPUTES INCOME IN EXCESS OF WHAT IS DECLARED BY THE ASSESSEE FOR THE BLOCK PERIOD . HE FURTHER CONTENTED THAT THE ADDITION WITH REFERENCE TO WHICH THE IMPUGNED PENALTY HAS BEEN LEVIED HAS ALREADY BEEN CONFIRMED NOT ONLY BY THE LD . CIT(A) BUT ALSO BY THI S TRIBUNAL AND THEREFORE THE ASSESSING OFFICER WAS JUSTIFIED IN TREATING THOSE ADDITIONS BEING UNDISCLOSED INVESTMENT IN GOLD ORNAMENTS AS THE BASIS FOR LEVY OF THE IMPUGNED PENALTY. 8 . IN REPLY, THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUPPORT ED THE ORDER PASSED BY THE LD CIT(A). HE SUBMITTED THAT THE ASSESSING OFFICER SHOULD NOT HAVE LEVIED THE IMPUGNED PENALTY ON THE FACTS OF THE CASE. ACCORDING TO HIM , THE IMPUGNED ADDITIONS MADE BY THE ASSESSING OFFICER WERE SUBJECT MATTER OF APPEAL FIRSTLY BEFORE THE LD . CIT(A) AND THEREAFTER BEFORE THIS TRIBUNAL. IT WAS SUBMITTED THAT APPEAL AGAINST THE ADDITIONS MADE BY THE ASSESSING OFFICER WITH REGARD TO THE UNEXPLAINED INVESTMENT IN 299.960 GMS OF GOLD ORNAMENTS ALLEGEDLY RECEIVED FROM MIRAZ BENGALI IS STILL PENDING BEFORE THE HONBLE HIGH COURT. HE SUBMITTED THAT ALL THE IMPUGNED ADDITIONS WERE SUBJECT MATTER OF DISPUTE. HE CONTENDED THAT DIFFERENCE OF OPINION WITH REGARD TO TAXABILITY OF ITEMS CANNOT GIVE RISE TO PENALTY. 9 . WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS INCLUDING THE AUTHORITIES REFERRED TO BY THEM. WE HAVE ALSO PERUSED BOTH THE JUDGMENTS REFERRED TO BY THE LD . DEPARTMENTAL REPRESENTATIVE AT THE TIME OF HEARING, NAMELY , KANDOI BHOGILAL MULCHAND V. DCIT (S UPRA) AND CIT V. BECHARBHAI P PARMAR (SUPRA). THE ADDITIONS WITH REFERENCE TO WHICH THE IMPUGNED PENALTY HAS BEEN LEVIED STAND CONFIRMED NOT ONLY BY THE LD . CIT(A) BUT ALSO BY THIS TRIBUNAL. FINDINGS RECORDED IN THIS BEHALF IN THE ORDER OF THE LD . CIT(A) A ND THIS TRIBUNAL CANNOT BE REOPENED. THE ADDITIONS MADE BY THE ASSESSING OFFICER AND CONFIRMED THE LD . CIT(A) AND THIS TRIBUNAL REPRESENT UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE IN ACQUISITION OF GOLD ORNAMENTS. THE ONUS IS NOT ON THE REVENUE TO PROVE THE CONCEALMENT OF INCOME WITH REFERENCE TO WHICH THE PENALTY HAS BEEN LEVIED. SECTION 158BFA(2) DOES NOT PLACE ANY SUCH ONUS ON THE REVENUE. THE ACTION OF THE ASSESSING OFFICER IN LEVYING THE IMPUGNED PENALTY IS IN CONFORMITY WITH THE 7 IT(SS) 7 - RJT - 2009 - PANCHRATNA JEWELLERS PROVISIONS OF SUB - SE CTION (2) OF SECTION 158BFA. THE CASE OF THE ASSESSEE IS NOT COVERED BY THE PROVISO TO SUB - SECTION (2) OF SECTION 158BFA. APART FROM THE FACT THAT THE CASE OF THE ASSESSEE IS NOT COVERED BY THE PROVISO TO SECTION 158BFA(2), THE ASSESSEE HAS PLACED NO SATIS FACTORY EXPLANATION TO ESCAPE THE PENALTY LEVIABLE U/S 158BFA(2). THE EXPLANATIONS FURNISHED BY THE ASSESSEE ARE THOSE VERY EXPLANATIONS WHICH HAVE BEEN CONSIDERED AND REJECTED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE JUDGMENTS CITED BY THE LD. CIT - DR. IN THIS VIEW OF THE MATTER, THE IMPUGNED PENALTY LEVIED BY THE AO IS RESTORED. RESULTANTLY, THE APPEAL FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED ON 31 . 0 7 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCO UNTANT MEMBER RAJKOT: 31 .0 7 .2013 B T COPY OF ORDER FORWARDED TO: - 1 . APPELLANT ACIT, CIRCLE - 5, RAJKOT 2 . RESPONDENT - M/S. PANCHRATNA JEWELERS, SONI BAZAR, RAJKOT 3 . CONCERNED CIT - III , RAJKOT 4 . CIT(A) - IV, RAJKOT 5 . DR, ITAT, RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT