Shri K.Boopathi Raja, CHENNAI V. ACIT, CHENNAI

ITSSA 8/CHNY/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1872 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 09-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHALJCIT
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Bogus purchase; Bogus loan
• Section: 143(3); 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T(SS)A.NO.8/MDS/2011 ( BLOCK PERIOD : 01.04.1996 TO 13.02.2003) MR. K.BOOPATHI RAJA, 14, ANDAVAR NAGAR II STREET, KODAMBAKKAM, CHENNAI-600 024. VS THE ASSISTANTCOMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III(1), CHENNAI. PAN:AAKPB7726Q ( # /APPELLANT) ( $%# /RESPONDENT) #& / APPELLANT BY : MR. A.S.SRIRAMAN, ADVOCATE $%#& /RESPONDENT BY : DR .B.NISCHAL, JCIT &. /DATE OF HEARING : 16 TH MARCH, 2016 &. /DATE OF PRONOUNCEMENT : 23 RD MAY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI DATED 20.12.2010 PASSED UNDE R SECTION 143(3) R.W.S.158BC/BFA(2) & 250(6) OF THE A CT . 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN THIS APPEAL, HOWEVER, THE CRUX OF THE ISSUE IS THAT:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN PARTLY SUSTAINING THE PENALTY LEVIED B Y THE 2 IT(SS)A NO.8/MDS/2011 LEARNED ASSESSING OFFICER UNDER SECTION 158BFA(2) O F THE ACT WITH RESPECT TO THE FOLLOWING ADDITIONS:- A) LOANS & ADVANCES EXTENDED TO: I) MR. JATHIK JALAL RS. 13,10,000 II) M/S.ELEGANT CONSTRUCTIONS & INTERIORS LTD. RS. 7,50,000 B) BOGUS PURCHASES (80HHC) RS. 44,693 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORTING OF GARMENTS. THERE WAS A SEARCH UNDER SEC TION 132 OF THE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE AT NO.3, CRESCENT PARK STREET, T.NAGAR, CHENNAI-17 FROM 17.1 2.2002 TO 13.02.2003. DURING THE COURSE OF SEARCH, SEVERAL INCRIMINATING DOCUMENTS WERE SEIZED. SUBSEQUENTLY, IN RESPONSE TO THE NOTICE UNDER SECTION 158BC OF THE A CT, THE ASSESSEE FILED FORM NO.2B ADMITTING UNDISCLOSED INC OME OF ` 33,20,662/- AND CLAIMING DEDUCTION UNDER SECTION 80 HHC ON THE SAID AMOUNT. THE ASSESSMENT WAS COMPLETED UNDE R SECTION 143(3) R.W.S 158BC OF THE ACT ON 28.02.2005 AND THEREAFTER PENALTY PROCEEDINGS UNDER SECTION 158BFA (2) WERE INITIATED, WHEREIN THE LEARNED ASSESSING OFFIC ER LEVIED PENALTY WITH RESPECT TO UNACCOUNTED LOANS AND ADVAN CES OF 3 IT(SS)A NO.8/MDS/2011 RS.27,51,000/-, BOGUS PURCHASES RS.44,693/- AND UNDISCLOSED INCOME FROM ACTING IN FILM RS.25,000/-. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) DELETED THE PENALTY WITH RESPECT TO INCOM E FROM FILM ACTING OF RS.25,000/- SINCE THE ADDITION WAS M ADE ON ESTIMATE BASIS AND FURTHER DELETED THE ADDITION WIT H RESPECT TO ACCRUED INTEREST OF RS.6,16,000/- AND RS.75,000/- B ECAUSE THE ADDITION ITSELF WAS DELETED BY THE TRIBUNAL. T HUS, THE PENALTY SUSTAINED BY THE LEARNED CIT (A) IS WITH RE SPECT TO THE GROUNDS RAISED IN THIS APPEAL MENTIONED HEREIN ABOVE. 5. THE LEARNED A.R., VEHEMENTLY ARGUED BY STATING T HAT THE ASSESSEE HAD AGREED FOR THE ADDITION ONLY TO AV OID PROLONGED LITIGATION AND THEREFORE PLEADED THAT THE PENALTY LEVIED BY THE REVENUE MAY BE DELETED. THE LEARNED D .R., ON THE OTHER HAND ARGUED IN SUPPORT OF THE ORDERS OF T HE REVENUE. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, W E FIND THE 4 IT(SS)A NO.8/MDS/2011 ADDITION ON ACCOUNT OF LOANS & ADVANCES RS.13,10,00 0/- AND RS.7,50,000/- ARE ONLY BASED ON SEIZED MATERIALS AN D NO FURTHER INVESTIGATION WAS CARRIED OUT BY THE REVENU E. THUS, IT CANNOT BE SAID THAT THE AFORESAID ADDITIONS ARE MAD E BASED ON CONCLUSIVE EVIDENCE. SIMILARLY, THE ADDITION OF RS.44,693/- IS ALSO MADE ONLY ON THE BASIS OF SEIZED MATERIALS. FURTHER, IT APPEARS THAT THE ASSESSEE HAD CONCEDED TO THE ADDIT ION IN ORDER TO AVOID PROTRACTED LITIGATION. FROM THESE FA CTS AND CIRCUMSTANCES OF THE CASE, WE FIND IT APPROPRIATE T O INVOKE OUR DISCRETIONARY POWERS EMANATING FROM THE PROVISI ONS OF SECTION 158BA (2) OF THE ACT, AND ACCORDINGLY, WE H EREBY DELETE THE PENALTY LEVIED BY THE REVENUE. FOR ARRIV ING AT THIS CONCLUSION, WE PLACE RELIANCE ON THE DECISIONS CITE D BY THE LEARNED AUTHORIZED REPRESENTATIVE IN THE CASE CIT V S. HARKARAN DAS VED PAL BY THE HONBLE HIGH COURT OF D ELHI REPORTED IN 336 ITR 8 AND THE DECISION OF HONBLE B OMBAY HIGH COURT IN THE CASE OF CIT VS. DODSAL LTD. REPOR TED IN 312 ITR 112, WHEREIN IT IS HELD THAT THE LEVY OF PENALT Y UNDER SECTION 158BFA IS DISCRETIONARY AND NOT MANDATORY. ACCORDINGLY, THE ASSESSEE SUCCEEDS IN THIS APPEAL. 5 IT(SS)A NO.8/MDS/2011 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 23 RD MAY, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) 56 8 / JUDICIAL MEMBER 8 / ACCOUNTANT MEMBER 5 /CHENNAI, ; /DATED 23 RD MAY, 2016 SOMU & $6=> ?> /COPY TO: 1. APPELLANT 2. RESPONDENT 3. @ () /CIT(A) 4. @ /CIT 5. > $66C /DR 6. F /GF