The ACIT, Circle-1,, Bhavnagar v. M/s. Mistry Builders Pvt.Ltd.,, Mahuva

ITA 1351/AHD/2010 | 1995-1996
Pronouncement Date: 07-01-2011 | Result: Dismissed

Appeal Details

RSA Number 135120514 RSA 2010
Assessee PAN AADFA4852D
Bench Ahmedabad
Appeal Number ITA 1351/AHD/2010
Duration Of Justice 8 month(s) 8 day(s)
Appellant The ACIT, Circle-1,, Bhavnagar
Respondent M/s. Mistry Builders Pvt.Ltd.,, Mahuva
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 07-01-2011
Assessment Year 1995-1996
Appeal Filed On 29-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL VP AND BHAVNESH SAINI JM) ITA NO.1351 AND 1352/AHD/2010 A. Y.: 1995-96 AND 1996-97 THE A. C. I. T. CIRCLE-1 JASHONATH CHOWK BHAVNAGAR 364 001 VS MISTRY BUILDERS PVT. LD. PARSIVAL PARA MAHUVA PA NO. AADFA 4852 D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ROBIN RAWAL SR. DR RESPONDENT BY SHRI S. N. SOPARKAR WITH SMT. URVASHI SODHAN ARS O R D E R PER BHAVNESH SAINI: BOTH THE APPEALS BY THE REVENUE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE LEARNED CI T(A)-XX AHMEDABAD DATED 04-01-2010 FOR ASSESSMENT YEARS 199 5-96 AND 1996-97 CHALLENGING THE ORDERS OF THE LEARNED CIT(A ) IN DELETING THE PENALTY U/S 271(1) ( C ) OF THE IT ACT. : 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. 3. THE FACTS OF THE CASE ARE THAT DURING THE COURS E OF SURVEY A STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY W AS RECORDED IN WHICH HE HAD ADMITTED ON MONEY RECEIPTS ON SALE OF OFFICES/SHOPS OF RS.9 36 000/- AND RS.5 59 000/-. HOWEVER IMMEDIATE LY AFTER THE ITA NO.1351 AND 1352/AHD/2010 ACIT CIRCLE-1 BHAVNAGAR VS MISTRY BUILDERS PVT. L TD. 2 SURVEY I.E. ON 25-07-1995 HE FILED AN AFFIDAVIT NA RRATING ALL THE FACTS AND CIRCUMSTANCES UNDER WHICH HE WAS MADE TO ADMIT THE AMOUNT OF ON MONEY AND THAT NO SUCH AMOUNT WAS RECEIVED. THE AO ASSESSED THE TOTAL INCOME VIDE ORDER U/S 143(3) OF THE IT AC T AND THE ABOVE AMOUNTS WERE ADDED ON THE GROUND THAT THE ASSESSEE HAD RECEIVED ON MONEY ON SALE OF OFFICES/SHOPS. THE LEARNED CIT( A) HOWEVER DELETED THE ADDITIONS MADE. THE REVENUE DEPARTMENT PREFERRED APPEAL BEFORE THE TRIBUNAL WHO VIDE ORDER DATED 23- 02-2007 REVERSED THE FINDINGS OF THE LEARNED CIT(A) AND ALLOWED THE APPEALS OF THE REVENUE. BEING AGGRIEVED BY THE ORDER OF THE TRIBUN AL THE ASSESSEE FILED APPEALS BEFORE THE HONBLE GUJARAT HIGH COURT AND THE SAME HAVE BEEN ADMITTED BY THE HONBLE HIGH COURT IN TAX APPEALS NO.644/2009 AND 645/2009. THE VIDE SEPARATE ORDERS OF PENALTY U/S 271 (1) (C) OF THE IT ACT LEVIED PENALTY. PENALTY ORDERS WERE CHALLENGED BEFORE THE LEARNED CIT(A) AND IT WAS SUB MITTED THAT ADDITION WAS MADE SOLELY ON THE BASIS OF STATEMENT IN WHICH THE DIRECTOR WAS MADE TO ADMIT RECEIPT OF ON MONEY AS D ISCUSSED ABOVE. APART FROM THE STATEMENT THERE WAS NO OTHER MATERIA L FOR MAKING THE ADDITION. ON 12-07-1995 SURVEY U/S 133A OF THE IT A CT WAS CARRIED OUT AT THE SITE OF MANGAL MURTY PROJECT. SHRI NAREN DRA MISTRY ONE OF THE DIRECTORS WAS PRESENT AND HIS STATEMENT WAS REC ORDED. THERE WAS NO INCRIMINATING EVIDENCE FOUND BY THE SURVEY PARTY AND THERE WAS NO ADMISSION OF ANY ON MONEY. THE ADIT (INVESTIGATION) RAJKOT WAS NOT AUTHORIZED FOR THE PURPOSE OF SURVEY WHO VISITED TH E PREMISES AT THAT TIME. SHRI VINODBHAI ANOTHER DIRECTOR GAVE A STATE MENT AND IN REPLY TO QUESTION NO.8 THERE WAS ADMISSION OF RECEIPT OF ON MONEY. IT IS VERY CLEAR FROM THE ABOVE TWO EVENTS THAT A STATEME NT OBTAINED BY AN ITA NO.1351 AND 1352/AHD/2010 ACIT CIRCLE-1 BHAVNAGAR VS MISTRY BUILDERS PVT. L TD. 3 OFFICER WHO WAS NOT EVEN AUTHORIZED HAS FORCED ADM ISSION. IT WAS THEREFORE NOT VOLUNTARY STATEMENT WHICH WAS RETRAC TED BY FILING AN AFFIDAVIT ON 25-07-1995 IN WHICH IT WAS CLEARLY STA TED THAT STATEMENT OBTAINED ON 21-07-1995 WAS UNDER THREAT AND DURESS. THEREFORE EARLIER STATEMENT IS RETRACTED. THE ADDITION WAS DE LETED BY THE LEARNED CIT(A) WHICH WAS HOWEVER RESTORED BY THE T RIBUNAL. IT IS STATED THAT IN FACT THERE IS NO CORRESPONDING PROVI SIONS OF SECTION 132(4) IN THE ACT TO MAKE ANY DISCLOSURE IN THE COU RSE OF SURVEY U/S 133A OF THE ACT. FINDING OF THE AO IS INCORRECT AND STATEMENT IS NOT ADMISSIBLE FOR MAKING THE ADDITION. SINCE SUBSTANTI AL QUESTION OF LAW HAVE BEEN ADMITTED BY THE HONBLE HIGH COURT THERE FORE NO PENALTY IS ATTRACTED U/S 271 (1) ( C ) OF THE IT ACT. RELIA NCE WAS ALSO PLACED UPON THE DECISION OF ITAT AHMEDABAD BENCH IN THE CA SE OF RUPAM MERCANTILE LTD. & ORS. VS DCIT 91 ITD 237 (AHD.) (T M). IT WAS FURTHER SUBMITTED THAT SINCE TWO OPINIONS ARE POSSIBLE ON T HE ISSUE THEREFORE THE DEPARTMENT HAS FAILED TO ESTABLISH T HAT THE ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PA RTICULARS OF INCOME. THEREFORE NO PENALTY IS IMPOSABLE IN THE M ATTER. THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND NOTED THAT SINCE ADDITION IS DELETED BY THE LEARNED CIT(A) BUT REVER SED BY THE TRIBUNAL AND ON THE SAME MATTER THE APPEAL IS ADMITTED BY TH E HONBLE GUJARAT HIGH COURT THEREFORE THE ASSESSEE PROVES BEYOND D OUBT THAT THERE EXISTS A SUBSTANTIAL QUESTION OF LAW INVOLVED IN TH E MATTER. THEREFORE THERE CANNOT BE A MALA FIDE INTENTION ON THE PART O F THE ASSESSEE IN CONCEALING ITS INCOME. THE LEARNED CIT(A) ALSO NOTE D HAT SINCE ADDITION IS MADE ON THE BASIS OF THE STATEMENT RECO RDED DURING THE COURSE OF SURVEY THEREFORE IT IS NOT CONCLUSIVE P ROOF THAT THE ITA NO.1351 AND 1352/AHD/2010 ACIT CIRCLE-1 BHAVNAGAR VS MISTRY BUILDERS PVT. L TD. 4 ASSESSEE HAS IN FACT CONCEALED THE PARTICULARS OF I TS INCOME WITH ANY CLINCHING EVIDENCE. THE LEARNED CIT(A) ACCORDINGLY FOUND MERIT IN THE APPEAL OF THE ASSESSEE AND HELD THAT PENALTY CA NNOT BE IMPOSED U/S 271 (1) ( C ) OF THE IT ACT BY FOLLOWING THE DE CISION IN THE CASE OF RUPAM MERCANTILE LTD. & ORS. (SUPRA). BOTH THE APPE ALS OF THE ASSESSEE WERE ACCORDINGLY ALLOWED. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE M ATTER AND THAT ADDITION IS CONFIRMED BY THE TRIBUNAL. THEREFORE T HE ASSESSEE FAILED TO OFFER ANY EXPLANATION AND EXPLANATION OF THE ASS ESSEE WAS NOT BONA FIDE. THEREFORE PENALTY WAS RIGHTLY LEVIED BY THE AO. 5. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND SUBMITTED THAT NO EVIDENCE WAS FOUND DURING THE COU RSE OF SURVEY TO PROVE THAT THE ASSESSEE CONCEALED PARTICULARS OF IN COME OR FILED INACCURATE PARTICULARS OF INCOME. THE ADDITION IS S OLELY MADE ON THE BASIS OF STATEMENT OF ONE OF THE DIRECTORS. HE HAS RELIED UPON THE ORDER OF THE ITAT AHMEDABAD B BENCH IN THE CASE O F SMT. BABIBEN R. PATEL DATED 16-07-2010 IN ITA NO.32 AND 33/AHD/2 004 IN WHICH IT WAS HELD THAT ENTIRE ADDITION WAS MADE JUST ON THE BASIS OF TH4E STATEMENT OF THE ASSESSEE AND OTHER MATERIAL. THERE FORE ADDITION WAS DELETED (COPY OF THE ORDER IS FILED ON RECORD). HE HAS ALSO RELIED UPON UNREPORTED DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS M/S. DHINGRA METAL WORKS IN ITA NO.1111/2 010 DATED 04-10-2010 IN WHICH ADDITION WAS DELETED BY THE TRI BUNAL WHICH WAS ITA NO.1351 AND 1352/AHD/2010 ACIT CIRCLE-1 BHAVNAGAR VS MISTRY BUILDERS PVT. L TD. 5 SOLELY BASED ON THE STATEMENT MADE ON BEHALF OF THE ASSESSEE DURING THE COURSE OF SURVEY AND DEPARTMENTAL APPEALS WERE DISMISSED. HE HAS RELIED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS S. KHADER KHAN 300 ITR 157 IN WHICH IT WAS HELD THAT THE MATERIAL COLLECTED AND STATEMENT RECORDED DURIN G THE COURSE OF SURVEY U/S 133A OF THE IT ACT ARE NOT CONCLUSIVE PI ECE OF EVIDENCE BY ITSELF. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE CHATTISGARH HIGH COURT IN THE CASE OF ITO VS VIJAY KUMAR KESAR 327 ITR 497 IN WHICH IT WAS HELD THAT CONFESSION MADE BY THE ASSES SEE DURING THE SURVEY PROCEEDINGS IS NOT CONCLUSIVE AND IT IS OPEN TO THE ASSESSEE TO ESTABLISH BY FILING COGENT EVIDENCES THAT THE SA ME WAS NOT TRUE AND CORRECT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. IT IS A FACT THAT ADDITION IN QUESTION ON WHICH PENALTY WAS IMPOSED HAVE BEEN MADE BY THE AO ON THE BASIS OF THE STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY I N WHICH HE HAS ADMITTED RECEIPT OF ON MONEY ON SALE OF OFFICES/SHO PS. THERE WAS NO OTHER MATERIAL OR EVIDENCE COLLECTED DURING THE COU RSE OF SURVEY TO PROVE THE STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY. THE DIRECTOR IMMEDIATELY AFTER CONCLUSION OF THE SURVEY RETRACTED FROM THE STATEMENT BY FILING AFFIDAVIT STATING THAT SUCH STA TEMENT WAS RECORDED UNDER DURESS AND THUS IT WAS NOT VOLUNTARY STATEMEN T. IT IS THEREFORE ESTABLISHED ON RECORD THAT PENALTY WAS IMPOSED SOLE LY ON THE BASIS OF ADMISSION MADE BY ONE OF THE DIRECTORS DURING THE C OURSE OF SURVEY REGARDING RECEIPT OF ON MONEY. NO FACTUAL EVIDENCE OF RECEIPT OF ON MONEY OR ITS AVAILABILITY WITH THE ASSESSEE WAS FOU ND DURING THE ITA NO.1351 AND 1352/AHD/2010 ACIT CIRCLE-1 BHAVNAGAR VS MISTRY BUILDERS PVT. L TD. 6 COURSE OF SURVEY. THE LEARNED COUNSEL FOR THE ASSES SEE CITED SOME OF THE DECISIONS AS NOTED ABOVE TO SHOW THAT THE AD DITION CANNOT BE MADE SOLELY ON THE BASIS OF STATEMENT RECORDED DURI NG THE COURSE OF SURVEY. THESE FACTS WOULD PROVE THAT THE ASSESSEE H AS AN ARGUABLE CASE TO SHOW THAT THE ASSESSEE BONAFIDELY DID NOT D ISCLOSE THE AMOUNT IN QUESTION IN THE RETURN OF INCOME WHICH WA S ADMITTED ON THE BASIS OF STATEMENT OF ONE OF THE DIRECTORS RECORDED DURING THE COURSE OF SURVEY. THE ISSUE IS THEREFORE DEBATABLE ONE A ND SUPPORT THE SUBMISSION OF THE ASSESSEE THAT THE ASSESSEE HAVING ARGUABLE CASE DID NOT DISCLOSED THE AMOUNT IN QUESTION IN THE RET URN OF INCOME SO FILED. THUS THE ASSESSEE FILED PROPER EXPLANATION BEFORE THE AUTHORITIES BELOW TO SHOW THAT ITS EXPLANATION IS N OT FALSE AND THAT THE ASSESSEE HAS FILED THE EXPLANATION BONA FIDE EXPLAI NING ALL THE RELEVANT FACTS LEADING TO THE ADDITION IN ISSUE. IT IS SETTLED LAW THAT PENALTY AND THE QUANTUM PROCEEDINGS ARE DIFFERENT P ROCEEDINGS AND THE ASSESSEE AT THE PENALTY STAGE COULD ALSO EXPLAI N THAT NO PENALTY IS LEVIABLE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE A SSESSEE DELETED THE ADDITION HOWEVER THE TRIBUNAL REVERSED THE OR DER OF THE LEARNED CIT(A) AND RESTORED THE ADDITION. THE MATTER IS SUB JUDICE BEFORE THE HONBLE GUJARAT HIGH COURT BECAUSE THE HONBLE GUJA RAT HIGH COURT ADMITTED BOTH THE APPEALS OF THE ASSESSEE ON SUBSTA NTIAL QUESTION OF LAW WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE AMOUNT IN QUESTION WA S UNEXPLAINED INCOME ONLY ON THE BASIS OF THE STATEMENT OF THE DI RECTOR WHICH IS RETRACTED THROUGH SUBSEQUENT AFFIDAVIT? THUS THE MATTER HAS NOT REACHED FINALITY AND THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THAT IT HAS ITA NO.1351 AND 1352/AHD/2010 ACIT CIRCLE-1 BHAVNAGAR VS MISTRY BUILDERS PVT. L TD. 7 AN ARGUABLE CASE. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS HARSHVARDHAN CHEMICALS AND MINERAL LTD. 259 ITR 212 HELD THAT IF ARGUABLE CLAIM OF DEDUCTION IS MADE OUT NO PEN ALTY US/ 271 (1) ( C ) OF SHOULD BE LEVIED. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS MUNIM 313 (ST) 30 DISMISSED THE DEPARTMENTAL APPEAL IN WHICH IT WAS OBSERVED THAT WHERE THE ASSE SSEE DOES NOT INCLUDE PARTICULAR ITEM IN THE TURNOVER UNDER BONA FIDE BELIEF THAT HE IS NOT LIABLE TO DO SO IT WOULD NOT BE RIGHT TO TREAT THE RETURN AS A FALSE RETURN INVITING PENALTY. THE HONBLE SUPREME COURT IN THE CASE OF M/S. RAJASTHAN SPINNING & WEAVING MILLS (2009) TI OL 63 HELD THAT ON EVERY DEMAND PENALTY IS NOT AUTOMATIC. THE LEARNED CIT(A) THEREFORE RIGHTLY RELIED UPON THE DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF RUPAM MERCANTILE LTD. & ORS. ( SUPRA). THE ABOVE FACTS WOULD PROVE THAT THE LEARNED CIT(A) ON PROPER APPRECIATIONS OF FACTS AND MATERIAL ON RECORD RIGHT LY CANCELLED THE PENALTY IN THE MATTER. WE CLARIFY HERE THAT ANY EXP RESSION OF OPINION IN THE ABOVE MATTER SHALL NOT TENTAMOUNT TO EXPRESS ION OF OPINION ON QUANTUM OF ADDITION ALREADY CONSIDERED SEPARATELY B Y THE TRIBUNAL ON WHICH THE MATTER IS PENDING BEFORE THE HONBLE GUJA RAT HIGH COURT. 7. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE WE DO NOT FIND IT TO BE A FIT CASE FOR IMPOSITION OF PENALTY. THE LEARNED CIT(A) WAS THEREFORE JUSTIFIED IN CANCELING THE SAME. WE ACCORDINGLY CONFIRM THE ORDERS OF THE AUTHORITIES BELOW AND DIS MISS THE DEPARTMENTAL APPEALS. ITA NO.1351 AND 1352/AHD/2010 ACIT CIRCLE-1 BHAVNAGAR VS MISTRY BUILDERS PVT. L TD. 8 8. IN THE RESULT BOTH THE DEPARTMENTAL APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-01-2011 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 07-01-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD