Shri Kanaiyalal D. Sopariwala,, Surat v. The Income tax Officer,Ward-2(4),, Surat

ITA 1411/AHD/2007 | 2001-2002
Pronouncement Date: 11-03-2011 | Result: Allowed

Appeal Details

RSA Number 141120514 RSA 2007
Assessee PAN ACXPS5492B
Bench Ahmedabad
Appeal Number ITA 1411/AHD/2007
Duration Of Justice 3 year(s) 11 month(s) 1 day(s)
Appellant Shri Kanaiyalal D. Sopariwala,, Surat
Respondent The Income tax Officer,Ward-2(4),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 11-03-2011
Date Of Final Hearing 04-03-2011
Next Hearing Date 04-03-2011
Assessment Year 2001-2002
Appeal Filed On 09-04-2007
Judgment Text
ITA NO.141 1/AHD/2007 ASSESSMENT YEAR 2001-02 1 N THE INCOME_TAX APPELLATE TRIBUNAL D BENCH A HMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT AND SHRI A.N. PAHUJ A ITA NO. 1411/AHD/2007 (ASSESSMENT YEAR: 2001-02) SHRI KANAIYALAL D. SOPARIWALA PROP. M/S.SHIV CRACKERS 2/3710 NAVASARI BAZAR MAIN ROAD SURAT. (APPELLANT) VS. INCOME TAX OFFICER WARD 2(4) ROOM NO.205 2 ND FLOOR AAYAKAR BHAVAN MAJURA GATE SURAT. (RESPONDENT) PAN: ACXPS 5492 B APPELLANT BY : SHRI J. P. SHAH ADV. RESPONDENT BY : SHRI ANIL KUMAR SR. D.R. ( (( ( )/ )/)/ )/ ORDER PER: SHRI MUKUL KUMAR SHRAWAT J.M. THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER OF THE LD C.I.T. (A) II SURAT DATED 18 -1-2007. 2. AS PER NUMBER OF GROUNDS OF APPEAL THE ONLY ISSU E IS LEVY OF PENALTY UNDER SECTION 271(1)(C ) OF THE ACT OF RS.1 25 000/-. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED UNDER SECTION 271(1)(C ) DATED 23-2-2006 AND THE A SSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 16-3-2004 WERE THAT THE ASSESSEE IN INDIVIDUAL STATUS HAS GOT BUSINESS OF TRADING OF CRACKERS ON W HOLESALE BASIS. A SURVEY WAS CONDUCTED BY THE SALES TAX DEPARTMENT AND IT WAS FO UND THAT THERE WAS AN ITA NO.141 1/AHD/2007 ASSESSMENT YEAR 2001-02 2 EXCESS STOCK OF CRACKERS AMOUNTING TO RS.4 04 127/- . HOWEVER AFTER DETAILED DISCUSSION THE ASSESSING OFFICER HAS THOUGHT IT PRO PER TO INVOKE THE PROVISIONS OF SECTION 69 OF THE ACT. ACCORDINGLY HE HAS HELD THA T THOUGH EXCESS STOCK WAS FOUND BY THE SALES TAX DEPARTMENT BUT AFTER THE ADJ USTMENT MADE IN THE ACCOUNTS BY THE ASSESSEE THE FACT REMAINED THAT THE ASSESSEE HAD MADE AN INVESTMENT TOWARDS PURCHASES TO THE TUNE OF RS.3 24 548/- . AS PER THE ASSESSING OFFICER THE SAID INVESTMENT IN PURCHASES REMAINED UNEXPLAINED WITHIN THE MEANING OF SECTION 69 OF THE ACT . ACCORDINGLY THE SAID ADDITION WAS MADE AND PENALTY PROCEEDINGS WERE INITIATED. 4. DURING THE PENALTY PROCEEDINGS IT WAS VEHEMENTLY CONTESTED THAT AS FAR AS THE PROCEEDINGS OF THE SALES TAX DEPARTMENT WERE CO NCERNED THEY WERE ALTOGETHER ON DIFFERENT FOOTINGS. IT WAS ALSO CONTE STED THAT THE PURCHASES HAVE BEEN MADE OUT OF THE AVAILABLE STOCK AND THERE WERE NO DISCREPANCIES IN THE BOOKS OF ACCOUNTS. HOWEVER THE ASSESSING OFFICER HAS LEVIED THE PENALTY OF RS.1 25 000/- WHICH WAS CHALLENGED. 5. BEFORE THE LD. C.I.T. (A) IT WAS REITERATED THAT THE CASH WAS DULY INTRODUCED IN THE BOOKS OF ACCOUNTS AND THE IMPUGNE D STOCK WAS PURCHASED OUT OF THE CASH AVAILABLE WITH THE ASSESSEE. THE EXCES S STOCK AS POINTED OUT BY THE SALES TAX DEPARTMENT WAS ON THE BASIS OF BILLS AVAI LABLE WITHOUT SALES TAX NUMBER OF THE SELLER. HOWEVER AS PER THE INCOME TA X ACT THE STOCK IS BEING TREATED AS EXCESS STOCK IF SOURCE OF INVESTMENT IS NOT EXPLAINED. THE ASSESSEE HAS CONTENDED THAT THE PURCHASES OF RS.3 24 548/- H AVE DULY BEEN ACCOUNTED FOR THEREFORE THE PENALTY MUST NOT HAVE BEEN LEVIED. 6. LD. C.I.T. (A) HAS MADE AN OBSERVATION THAT SINC E THE ADDITION WAS SOLELY ON THE BASIS OF THE FINDINGS OF THE SALES TAX DEPAR TMENT AND THAT WAS CHALLENGED BEFORE THE ASSESSING OFFICER THEREFORE EVEN THOUG H THE SALES TAX DEPARTMENT HAD DETERMINED THE EXCESS STOCK AT RS.4 04 127/- Y ET THE ASSESSING OFFICER HAS TAXED UNEXPLAINED INVESTMENT IN STOCK OF RS.3 24 54 8/- AND SINCE THE ASSESSEE ITA NO.141 1/AHD/2007 ASSESSMENT YEAR 2001-02 3 HAS NOT SUBSTANTIATED THE SOURCES THEREFORE THE A CTION OF LEVY OF PENALTY WAS AFFIRMED. 7. FROM THE SIDE OF THE LD. AUTHORISED REPRESENTATI VE SHRI J. P. SHAH ADVOCATE APPEARED. HIS FIRST CONTENTION WAS THAT TH E ENTIRE PROCEEDINGS FOR MAKING THE ASSESSMENT OF UNEXPLAINED INVESTMENT WER E BASED UPON CERTAIN CONFUSION WHICH REMAINED IN THE MIND OF THE ASSESSI NG OFFICER THROUGH OUT THE PROCEEDINGS. HE HAS EXPLAINED THAT THE ASSESSEE HA S MAINTAINED BOOKS OF ACCOUNTS AND AS PER THE COPY OF THE CASH BOOK PLAC ED ON PAGE-30 AND 31 OF THE COMPILATION FOR THE DATES 9 AND 10 TH OCTOBER 2000 THE LD. A.R. HAS DEMONSTRATED THAT SUFFICIENT CASH WAS AVAILABLE OUT OF WHICH THE SAID PURCHASES WERE MADE. AS PER THE COPY OF THE CASH BOOK THERE W AS AN OPENING BALANCE OF RS.9 .07 660/- OUT OF WHICH PURCHASES IN CASH WERE MADE AGAINST UNREGISTERED BILL OF RS.3 24 548/-. CONSEQUENTLY CASH IN HAND GO T REDUCED TO RS.5 97 847/-. HIS NEXT PLANK OF ARGUMENT WAS THAT THE AUDITOR HAS DULY REPORTED THE FACT ABOUT THE ADJUSTMENT IN THE BOOKS OF ACCOUNTS FOUND MADE AND IN THIS REGARD HE HAS DRAWN OUR ATTENTION ON THE REMARK OF THE CHARTERED ACCOUNTANT AS PER ANNEXURE- J (PASGE-29) OF THE COMPILATION WHEREIN HE HAS QUAL IFIED AS UNDER:- DURING THE SURVEY OF SALES TAX DEPARTMENT THE STO CK DIFFERENCE OF RS.4 04 127/- WAS FOUND OUT WHICH IS ADDED IN THE T OTAL SALES OF RS.1 44 42 496/- SIMILARLY THE DIFFERENCE OF RS.3 24 548/- WAS ADJUSTED IN THE TOTAL PURCHASE OF RS.1 03 66 902/-. HENCE THE J OURNAL ENTRIES FOR THE STOCK DIFFERENCE IS SHOWN IN SALES AND PURCHASE BO OK. 8. THE LD. AUTHORISED REPRESENTATIVE HAS THERE UPON DEMONSTRATED THAT CORRESPONDING ENTRIES HAVE BEEN MADE IN THE TRADING ACCOUNT FOR THE ACCOUNTING PERIOD ENDED ON 31-3-2001 RELEVANT FOR THE ASSESSME NT YEAR UNDER CONSIDERATION AND THE SALES AS WELL AS THE PURCHASES BOTH WERE I NCLUSIVE OF THE IMPUGNED FIGURES AS POINTED OUT DURING THE COURSE OF SALES TAX SURVEY PROCEEDINGS. ONCE IT WAS INCORPORATED IN THE BOOKS OF ACCOUNTS THEREF ORE ACCORDING TO HIS ARGUMENT THERE WAS NO CONCEALMENT OF FACTS. RELIAN CE WAS PLACED ON THE FOLLOWING DECISIONS :- ITA NO.141 1/AHD/2007 ASSESSMENT YEAR 2001-02 4 (1) CIT V/S. PAVAN KUMAR DALMIA (1987) 168 ITR-1 ( KER.) (2) DCIT V/S DR. SATISH B. GUPTA 42 SOT 48 (AHD) . 8.1) FROM THE SIDE OF THE REVENUE LD. DEPARTMENT AL REPRESENTATIVE SHRI ANIL KUMAR APPEARED AND SUPPORTED THE ORDERS OF THE AUTH ORITIES BELOW. HE HAS PLEADED THAT ONE OF THE GOVERNMENT DEPARTMENT HAS P OINTED OUT CERTAIN DISCREPANCIES WHICH HAVE RESULTED INTO ADDITION OF UNACCOUNTED INVESTMENT AND SINCE THE SAID DETECTION WAS MADE PRIOR TO THE FILI NG OF THE RETURN THEREFORE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME T HUS SUBJECT TO LEVY OF PENALTY OF CONCEALMENT. 9. WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED TH E ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO EXAMINED THE COMPIL ATION FILED BEFORE US IN THE LIGHT OF CASE LAWS CITED. AT THE OUTSET IT IS WORTH TO MENTION THAT WHILE DECIDING THE QUANTUM APPEAL LD. C.I.T. (A) II SURAT VIDE ORDER DATED 25-8-2004 HAS MADE AN OBSERVATION THAT THE IMPUGNED ADDITION WAS MAINLY B ASED UPON THE AUDITORS REPORT. RELEVANT PARAGRAPH-3 IS REPRODUCED BELOW :- I HAVE CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT. IN FACT THE EXCESS STOCK OF RS.4 04 127/- WAS FOUN D BY THE SURVEY PARTY OF THE SALES TAX DEPARTMENT. HOWEVER IT IS NOT KNOWN AS TO WHY THE SALES TAX DEPARTMENT HAS ASSESSED THE VALUE OF EXCESS STO CK FOUND AT RS.24 305/-. AFTER EXAMINING THE BOOKS OF ACCOUNTS AND BASED ON THE EXPLANATION OF THE ASSESSEE THE A.O. MADE ADDITION OF RS.3 24 548/- MAINLY BASED ON THE AUDITORS REPORT. FROM THE ACC OUNT OF THE APPELLANT IT IS FOUND THAT INSTEAD OF INCREASING THE STOCK IN TH E ACCOUNTS HE INTRODUCED CASH OF RS.4 04 127/- ON 11.10.2000. IT WAS SUBMITT ED THAT THE PAYMENT FOR PURCHASING THE UNACCOUNTED STOCK WAS MADE OUT O F THIS CASH THEREFORE THE STOCK DID NOT REMAIN UNACCOUNTED AT ALL. THE CONTENTION OF THE APPELLANT IS NOT ACCEPTABLE BECAUSE THE STOCK I N QUESTION HAS NOT BEEN TAKEN INTO CONSIDERATION FOR WORKING OUT THE P ROFIT OF THE YEAR. WHETHER IT IS UNACCOUNTED CASH OR UNACCOUNTED STOCK THAT HAS TO BE ADDED TO THE INCOME OF THE APPELLANT. THEREFORE FR OM ANY ANGLE THE ADDITION ON ACCOUNT OF EXCESS STOCK HAS TO BE MADE. THE A.O. HAS MENTIONED THAT HE HAS MADE ADDITION OF RS.3 24 548/ - BASED ON THE AUDITORS REPORT AND AFTER VERIFICATION OF THE ACCO UNTS. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION M ADE BY THE A.O. IS CONFIRMED. ITA NO.141 1/AHD/2007 ASSESSMENT YEAR 2001-02 5 10. IN THE CONTEXT OF THE SAID OBSERVATION OUR ATTE NTION WAS DRAWN ON THE AUDITORS REPORT FURNISHED U/S. 44AB AND AS PER THE OBSERVATION IN RESPECT OF ANNEXURE-J OF THE BALANCE SHEET THE LEARNED AUDITO R HAS QUALIFIED THAT DURING THE COURSE OF SURVEY OF SALES TAX DEPARTMENT A STOCK DI FFERENCE WAS FOUND WHICH WAS ADDED IN THE TOTAL SALES. THE AUDITOR HAS FURTH ER QUALIFIED THAT THE DIFFERENCE IN RESPECT OF PURCHASES HAVE ALSO BEEN ADJUSTED IN THE TOTAL PURCHASES AS PER THE BOOKS. 11. BEFORE US IT WAS PLEADED THAT THE PURCHASES SHO WN OF RS.1 03 66 902/- WERE INCLUSIVE OF THE IMPUGNED PURCHASES HELD AS UN EXPLAINED INVESTMENT AND CONCEALMENT PENALTY WAS LEVIED. IF WE CONSIDER ALL THESE PART OF THE ARGUMENT IN THE LIGHT OF THE BOOKS OF ACCOUNT AND THE AUDITORS REMARK WE CAN DISEMBARK ON THE CONCLUSION THAT THE AMOUNT IN QUESTION WAS NOT HIDDEN OR CONCEALED BY THE ASSESSEE SINCE IT WAS DULY INCORPORATED IN THE BOOK S OF ACCOUNTS. IN ADDITION TO THE ABOVE FINDING THAT THERE WAS NO SUPPRESSION OF THE FACTS ON THE PART OF THE ASSESSEE OUT ATTENTION HAS ALSO BEEN DRAWN ON THE COPIES OF THE CASH BOOK DATED 10-10-2000 THROUGH WHICH THE ASSESSEE HAS TRI ED TO DEMONSTRATE THAT THE SAID PURCHASES THOUGH UNREGISTERED CASH PURCHASE BUT OUT OF OPENING CASH BALANCE OF RS.9 07 660/-. THIS FACT DEFINITELY HAS DIRECT CONSEQUENCE ON THE QUESTION OF LEVY OF CONCEALMENT PENALTY. THIS FACT CAN ALSO NOT BE DENIED THAT AN OBSERVATION OF SALES TAX DEPARTMENT MADE DURING THE COURSE OF SURVEY HAS NO IMPLICATION ON THE PENALTY PROCEEDINGS AS PER INCOM E TAX ACT. IT WAS STATED BEFORE US THAT IN CASE OF BILLS WITHOUT SALES TAX N UMBER OF THE SELLER SUCH PURCHASES WERE HELD AS EXCESS STOCK BY THE SALES TA X DEPARTMENT. ON THE OTHER HAND AS PER INCOME TAX DEPARTMENT THE EXCESS PURCHA SE ARE THOSE IF THERE SOURCE IS NOT DEMONSTRATED OR EXPLAINED. WE FIND NO MISLEADING NOTION ABOUT THIS ARGUMENT OF THE LD. A.R MR. SHAH HENCE COMMEND THE SAME. ABOUT THE QUANTUM APPEAL THOUGH ON NUMBER OF OCCASIONS IT WAS ASKED TO CLARIFY AS NOTED IN THE ORDER SHEET WHETHER ANY APPEAL WAS FI LED BEFORE THE TRIBUNAL BUT NO DEFINITE ANSWER CAME THEREFORE WITHOUT KEEP ING THIS APPEAL PENDING ANY MORE CAUSING UNNECESSARY DELAY IN DISPOSAL WE HAV E DECIDED TO PROCEED WITH ITA NO.141 1/AHD/2007 ASSESSMENT YEAR 2001-02 6 THE CASE AND HEREBY DECIDED THE QUESTION OF JUSTIF ICATION OF LEVY OF CONCEALMENT PENALTY. WITH THESE REMARKS WE THEREFORE CONCLUDE THAT IN THE LIGHT OF THE JUDGMENT OF THE HONBLE KERALA HIGH COURT OF PAWAN KUMAR DALMIA (SUPRA) WE HEREBY HOLD THAT CONSIDERING THE CIRCUMSTANTIAL EVI DENCE AND THE CUMULATIVE EFFECT OF ALL THE FACTS AFTER DUE CONSIDERATION I T WAS NOT A FIT CASE FOR LEVYING THE CONCEALMENT PENALTY ON THE ASSESSEE. THE IMPUGNED P ENALTY IS HEREBY CANCELLED. GROUND OF APPEAL IS ALLOWED. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON 11/ 3 /2011. SD/- SD/- (A. N. PAHUJA) (MUKUL KUMA R SHRAWAT) ACCOUNTANT MEMBER. JUDICIAL MEMBE R. AHMEDABAD. DATED: 11/03/2011. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II SURAT. 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD.