VENKAT SURYAVANSHI, MUMBAI V. ACIT CIR 23(3), MUMBAI

ITSSA 88/MUM/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8476 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 10-03-2011
• Assessment Year: misc
• Appeal Filed On: 26-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: IN PERSON
• Keywords: Search and seizure; Opportunity of cross examination; Third party statement; Block assessment; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI J. SUDHAKA R REDDY (A.M.) IT(SS)A NO. 88/MUM /2009 BLOCK PERIOD 01.04.88 TO 20.08.98 M R. VENKAT SURYAVANSHI, T.G. NO. 119/6/9, SAMBHAJI NAGAR, LBS MARG, MULUND (W), MUMBAI 400 080. PAN : AAIPS 5893 J VS. ACIT CIRCLE 23(3), AAYAKAR BHAVAN, MUMBAI 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : IN PERSON RESPONDENT BY : SMT. ASHIMA GUPTA O R D E R PER D.K. AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 17.8.2009 PASSED BY THE LD. CIT (A) FOR THE B LOCK PERIOD 1.4.1988 TO 20.8.1998. 2. IT IS FOUND THAT THIS APPEAL FILED BY THE ASSES SEE IS DELAYED BY 15 DAYS. 3. IT WAS SUBMITTED BY THE ASSESSEE THAT HE MET WIT H A ROAD ACCIDENT AT HIS VILLAGE LATUR, SO HE COULD NOT FILE THE APPE AL WITHIN THE DUE DATE AND REQUESTED TO CONDONE THE DELAY, WHICH WAS NOT O BJECTED TO BY THE LD. D.R. 4. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND ALSO KEEPING IN VIEW THAT IT IT(SS)A NO . 88/MUM/2009 MR. VENKAT SURYAVANSHI 2 HAS BEEN CONSISTENTLY HELD BY THE HONBLE APEX COUR T THAT IN THE MATTER OF CONDONATION OF DELAY A LIBERAL AND PRAGMATIC VIE W SHOULD BE TAKEN, WE ARE OF THE VIEW THAT THE REASON GIVEN BY THE APPELL ANT FOR THE DELAY APPEARS TO BE SUFFICIENT CAUSE AND, ACCORDINGLY, TH E DELAY IS CONDONED. 5. BRIEFLY STATED FACTS OF THE CASE ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION ON 28 TH AUGUST, 1998 IN THE CASE OF SEVERAL CONCERNS OF THE DBC GROUP. SIMULTANEOUSLY, SEARCH ACTION U/S 1 32(1) WAS ALSO CONDUCTED IN THE CASE OF CONCERNS AND INDIVIDUALS B ELONGING TO TRANSPORTS WHO WERE ALLEGED TO HAVE GIVEN ACCOMMODA TION BILLS TO THE GROUP. THE ASSESSEE IS ONE OF THE PERSONS WHO ALON G WITH HIS EMPLOYER M/S MOTA TRANSPORT CORPORATION HAD GIVEN ACCOMMODAT ION BILLS TO DBC GROUPS AND OTHERS. A SEARCH U/S 132(1) WAS ALSO CAR RIED OUT IN THE CASE OF MOTA TRANSPORT CORPORATION AND A CORRESPONDING S EARCH WAS ALSO TAKEN IN THE CASE OF THE ASSESSEE. IT WAS FOUND TH AT PAYMENTS RECEIVED ON ACCOMMODATION BILLS WAS DEPOSITED IN THE BANK A ND CASH WAS WITHDRAWN IMMEDIATELY AFTER REALIZATION WHICH WAS G IVEN BACK TO THE PARTIES AFTER DEDUCTING COMMISSION AS PER THE INST RUCTION OF THE EMPLOYER. THE A.O. ESTIMATED THE COMMISSION @ 6% O F THE TOTAL RECEIPTS AND AFTER REDUCING 0.5% OF THE TOTAL ADJUSTMENT AS EXPENSES, ADDED 5.5% IN THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME AND THEREBY COMPLETED THE ASSESSMENT AT AN INCOME OF ` 20,21,540/- VIDE ORDER DATED 25.10.2000 PASSED U/S 158 BC R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). ON APPEAL, THE LD. CIT(A) DIS MISSED THE ASSESSEES APPEAL. ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL VIDE ITS ORDER IN IT(SS)A NO. 831/MUM/2003 DATED 31.10.2006 GRANTED RELIEF TO THE ASSESSEE TO THE EXTENT OF ` 17,88,823/-. IN OTHER WORDS, THE ASSESSEES INCOME WAS DETERMINED AFTER GIVING EFFEC T TO THE ITAT ORDER AT ` 2,32,720/-. IT(SS)A NO . 88/MUM/2009 MR. VENKAT SURYAVANSHI 3 6. WHILE MAKING THE ASSESSMENT, THE A.O. ALSO INITI ATED PENALTY PROCEEDING U/S 158BFA(2) AND ACCORDINGLY A NOTICE W AS ISSUED TO THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE IMPOSED. IN RESPONSE, THE ASSESSEE STATED THAT HE IS A VERY POO R PERSON EARNING ` 3000/- PER MONTH AND REQUESTED TO DROP THE PENALTY PROCEEDING. HOWEVER, THE A.O. WAS OF THE VIEW THAT THE POOR FIN ANCIAL CONDITION CANNOT BE AN EXCUSE WHICH ENTITLES THE ASSESSEE FOR IMMUNITY FROM THE PENALTY IN QUESTION AND ACCORDINGLY HE IMPOSED PENA LTY OF ` 1,60,577/- VIDE ORDER DATED 4.5.2007 PASSED U/S 158 BFA(2) OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE OBSERVING THAT THE TRIBUNAL HA S CONFIRMED THE ADDITION IN PRINCIPLE AS THE MODUS OPERANDI OF THE ISSUE OF BOGUS BILLS WAS ESTABLISHED, CONFIRMED THE PENALTY IMPOSED BY T HE A.O. 7. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF PENALTY IMPOSED BY THE A.O. U/S 158BFA(2) OF THE ACT. 8. AT THE TIME OF HEARING, THE ASSESSEE APPEARED IN PERSON AND SUBMITS THAT ON THE SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL HAS DELETED THE PENALTY IN THE CASE OF HIS WIFE MRS. RUKMINI SURYAVANSHI VS. ACIT IN IT(SS)A NO. 87/MUM/2009 VID E ORDER DATED 9 TH JULY, 2010, THEREFORE, THE PENALTY IMPOSED BY THE A .O. AND SUSTAINED BY THE LD. CIT(A) BE DELETED. 9. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING ON THE ORDER OF THE A.O. AND LD. CIT(A) SUBMITS THAT PART OF THE ADDITI ON IN THE QUANTUM PROCEEDING HAS BEEN SUSTAINED BY THE TRIBUNAL, THER EFORE, THE PENALTY IMPOSED BY THE A.O. BE UPHELD. RELIANCE WAS ALSO P LACED ON THE DECISION IN THE CASE OF JRD STOCK BROKERS (P) LTD VS. ACIT ( 2009) 124 TTJ (DEL) 566. IT(SS)A NO . 88/MUM/2009 MR. VENKAT SURYAVANSHI 4 10. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THERE IS NO DISPUTE THAT THE FACTS OF THE PRESENT CASE ARE SIMI LAR TO THE FACTS OF THE CASE OF MRS. RUKMINI SURYAVANSHI (SUPRA) WHEREIN TH E TRIBUNAL ON THE SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE HAS DEL ETED THE PENALTY VIDE ITS FINDINGS RECORDED IN PARA NO. 5 OF ITS ORDER DA TED 9 TH JULY 2010 WHICH ARE REPRODUCED AS UNDER:- WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE ORD ERS PASSED BY THE A.O. AND CONFIRMED BY THE ITAT THE PROCEEDINGS WERE INITIATED UNDER SECTION 158BD, EVEN THOUGH THERE IS NO SEIZED MATER IAL PERTAINING TO ASSESSEES BUSINESS CONCERN. THE BASIS FOR ESTIMATI NG 6% IS THE TDS CERTIFICATE ISSUED BY THE DBC GROUP ON WHICH RETURN S WERE FILED CLAIMING EXPENDITURE. IT WAS ON THE BASIS OF THE STATEMENT O F ONE MR. AVTAR KISHAN BHATT, WHO IS PART OF THE HAVALA OPERATIONS OF KANT IBHAI AND MANOJ BHANUSHALI AND MOTA TRANSPORT GROUP, THE ASSESSEE W AS VESTED WITH COMMISSION OF 6% OF THE TOTAL RECEIPTS BASED ON THE TDS CERTIFICATES ISSUED BY DBC GROUP CONCERNS. THIS COMMISSION WAS E STIMATED ON THIRD PARTY STATEMENT, EVENTHOUGH ASSESSEE HAS NOT ADMITT ED ANY COMMISSION RECEIPTS. ALL ALONG IT WAS THE CONTENTION THAT SHE WAS ILLITERATE AND HAS NOT DONE ANY BUSINESS AND HER HUSBAND WAS UTILISED BY THE EMPLOYER FOR PREPARATION OF BOGUS BILLS. THE MODUS OPERANDI WAS EXPLAINED BY HER HUSBAND. THE ORDER OF THE A.O. ALSO CONFIRMS THE MO DUS OPERANDI AND RELYING ON THE STATEMENT OF THIRD PARTY AND THE RET URNS FILED FOR CLAIMING TDS REFUND, THE COMMISSION WAS ESTIMATED. THE ITAT, TAKING INTO CONSIDERATION THE TOTAL FACTS OF THE CASE, HAS ESTI MATED THE RATE OF COMMISSION AT 1.5%. SINCE THE COMMISSION WAS CONFIR MED ON ESTIMATE BASIS AND SINCE THERE IS NO EVIDENCE OF RECEIPT OF ANY ACTUAL COMMISSION AND THERE IS NO OTHER INCRIMINATING MATERIAL EXCEPT THE FINDING OF MODUS OPERANDI IN THE GROUP CASES FOR WHICH THE ASSESSEE IS AN INNOCENT VICTIM, WE ARE OF THE OPINION THAT EXPLANATION GIVEN BY HER IS TO BE ACCEPTED AS A GENUINE EXPLANATION. IN THESE PECULIAR CIRCUMSTANCE S OF THE CASE, WE ARE OF THE VIEW THAT THERE IS NO NEED TO LEVY PENALTY U NDER SECTION 158BFA(2). AS SEEN FROM THE ORDER OF PENALTY ALSO THE ASSESSEE EXPLANATION WAS NOT REBUTTED AND WHAT IS STATED BY THE A.O. IS THAT HE WAS NOT SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE. THE EXPLANATION TH AT SHE WAS UTILISED BY HER HUSBANDS EMPLOYER WITHOUT HER KNOWLEDGE AND SHE BEING ILLITERATE AND POOR HAD NO REASON FOR EITHER EARNIN G THE INCOMES OR DOING BUSINESS IS A REASONABLE EXPLANATION, WHICH, IN OUR OPINION, HAS TO BE ACCEPTED AS GENUINE. MOREOVER THE INCOME WAS ONLY E STIMATION. ACCORDINGLY, PENALTY IS CANCELLED. IT(SS)A NO . 88/MUM/2009 MR. VENKAT SURYAVANSHI 5 11. IN JRD STOCK BROKERS (P) LTD VS. ACIT (SUPRA) R ELIED ON BY THE LD. D.R., IT HAS BEEN HELD AS UNDER:- EVIDENCE TO EFFECT THAT ASSESSEE HAD INCOME NOT RE CORDED IN THE BOOKS HAVING BEEN FOUND DURING SEARCH AND YET THE A SSESSEE HAVING FILED NIL RETURN FOR BLOCK ASSESSMENT, REV ENUE AUTHORITIES WERE JUSTIFIED IN LEVYING PENALTY UNDER S. 158BFA(2 ) ON THE INCOME ADDED ON ESTIMATE BASIS, EVEN IF IT IS ASSUMED THAT ALL INGREDIENTS OF S. 271(1)(C) APPLICABLE, AS THE RETURN FILED BY ASSESSEE WAS NOT BONA FIDE. WHEREAS IN THE CASE BEFORE US, IT HAS BEEN INTER AL IA OBSERVED BY THE TRIBUNAL IN PARA NO. 5 OF ITS ORDER DATED 9 TH JULY 2010 (SUPRA) THAT ........SINCE THE COMMISSION WAS CONFIRMED ON ESTI MATE BASIS AND SINCE THERE IS NO EVIDENCE OF RECEIPT OF ANY ACTUAL COMMI SSION AND THERE IS NO OTHER INCRIMINATING MATERIAL EXCEPT THE FINDING OF MODUS OPERANDI IN THE GROUP CASES FOR WHICH THE ASSESSEE IS AN INNOCENT V ICTIM, WE ARE OF THE OPINION THAT EXPLANATION GIVEN BY HER IS TO BE ACCE PTED AS A GENUINE EXPLANATION......, THEREFORE, THE DECISION RELIED ON BY THE LD. D.R. IS DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 12. IN THIS VIEW OF THE MATTER AND IN THE ABSENCE O F ANY DISTINGUISHABLE FEATURE BROUGHT ON RECORD BY THE REVENUE, WE RESPEC TFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF MRS. RUKMIN I SURYAVANSHI (SUPRA), DELETE THE PENALTY IMPOSED BY THE A.O. U/S 158BFA(2) AND SUSTAINED BY THE LD. CIT(A). THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, ALLOWED. 13. IN THE ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED ON THIS 25 TH OF MARCH, 2011. SD/ - (J. SUDHAKAR REDDY) ACCOUNTANT MEMBER SD/ - (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 25 TH MARCH, 2011. IT(SS)A NO . 88/MUM/2009 MR. VENKAT SURYAVANSHI 6 RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- XXIII, MU MBAI 4. COMMISSIONER OF INCOME TAX, 23, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH F, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI IT(SS)A NO . 88/MUM/2009 MR. VENKAT SURYAVANSHI 7 1 DRAFT DICTATED ON 22 .3.11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 23 .3.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS