The DCIT, Circle-9,, Ahmedabad v. M/s. M.B. Shayani & Co.,, Ahmedabad

ITA 1527/AHD/2011 | 2001-2002
Pronouncement Date: 23-09-2011 | Result: Dismissed

Appeal Details

RSA Number 152720514 RSA 2011
Assessee PAN AACFM9772D
Bench Ahmedabad
Appeal Number ITA 1527/AHD/2011
Duration Of Justice 3 month(s) 24 day(s)
Appellant The DCIT, Circle-9,, Ahmedabad
Respondent M/s. M.B. Shayani & Co.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 23-09-2011
Assessment Year 2001-2002
Appeal Filed On 30-05-2011
Judgment Text
. .. . . .. . . .. . . .. .!'#$ !'#$ !'#$ !'#$ % % % % & & & & IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SHRI A.K.GARODIA A.M.) . ITA NO. 1527/AHD./2011 : ' ()- 2001-2002 D.C.I.T. CIRCLE-9 AHMEDABAD VS- M/S. M .B.SHAYANI & CO. AHMEDABAD (PAN : AACFM 9772D) ( - /APPELLANT) ( ./ - /RESPONDENT ) - 0 1 / APPELLANT BY : SHRI SAMIR TEKRIWAL SR.D.R. ./ - 0 1 / RESPONDENT BY : SHRI P.M.PATEL A.R. 2'3 0 4 % / DATE OF HEARING : 16/09/2011 5'( 0 4% / DATE OF PRONOUNCEMENT : /09/2011 / ORDER PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 18-03-2011 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XV AHM EDABAD CANCELLING THE PENALTY OF RS.9 79 999/- LEVIED BY THE AO UNDER SEC TION 271(1)(C) FOR THE ASSESSMENT YEAR 2001-2002. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE FIRM IS A CIVIL CONTRACTOR. DURING THE YEAR UNDER CONSIDERATION IT HAS CARRIED OUT CI VIL CONTRACT WORK OF VARIOUS ORGANISATIONS. FOR THE ASSESSMENT YEAR UNDER APPEAL IT FILED THE RETURN OF INCOME ON 30.10.2001 DECLARING TOTAL INCOME OF RS.4 44 169/-. A SURVEY ACTION UNDER SECTION 133A WAS CARRIED OUT ON 13.09.2002. SUBSEQUENT TO T HE SURVEY ACTION IT HAS FILED A REVISED RETURN OF INCOME ON 24.09.2002 DECLARING TO TAL INCOME OF RS.29 44 169/-. THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 22 .03.2004 AT A TOTAL INCOME OF RS.34 64 169/- WHEREIN HE INITIATED PENALTY PROCEE DINGS UNDER SECTION 271(1)(C) IN RESPECT OF UNACCOUNTED INCOME ADMITTED IN VIEW OF S TOCK DISCREPANCY FOUND DURING THE SURVEY AND RATIFIED BY WAY OF REVISED RETURN FI LED ON 24.09.2002. ITA NO. 1527-AHD-11 2 2.1 IN REPLY TO SHOW-CAUSE NOTICE ISSUED BEFORE LE VY OF PENALTY UNDER SECTION 271(1)(C) BEFORE THE AO THE ASSESSEE PLEADED THAT SINCE THE DISCLOSURE WAS VOLUNTARY ONE NO PENALTY IS LEVIABLE. VIDE LETTER DATED 22.0 2.2010 THE ASSESSEE ALSO FURNISHED DETAILED REPLY RAISING THE FOLLOWING CONTENTIONS: ' IN THIS CASE THE LEARNED AO MADE ADDITION ON TWO PO INTS MAINLY RS.25 00 000/- ON ACCOUNT OF DISCLOSURE IN SURVEY A ND SECOND RS.5 20 000/- ON ACCOUNT OF CASH CREDIT. THE AMOUNT OF RS.25 00 000/ - WAS DECLARED UNDER THE SURVEY PROCEEDINGS JUST TO BUY PEACE AND AVOID LITI GATIONS. NO DISCRIMINATORY EVIDENCES WERE FOUND DURING THE SURVEY BUT SAID RS. 25 00 000/- WAS INCLUDED IN THE REVISED RETURN FILED AS PROMISE GIVEN UNDER SUR VEY. THE LEARNED CIT(A) BY HIS ORDER DATED 23.08.2005 DELETED RS.5 20 000/- ON ACCOUNT OF CASH CREDIT AND HON'BLE ITAT ALSO DISMISSED THE APPEAL OF THE DEPAR TMENT BY THEIR ORDER DATED 12.06.2009. THE CAUSE OF CASH CREDIT DID NOT REMAIN IN FORCE REGARDING VOLUNTARY DISCLOSURE OF RS.25 00 000/- DURING THE S URVEY WAS MADE ONLY TO BUY PEACE AND TO AVOID UNDUE LONG LITIGATIONS. NOTHING WAS CONCEALED NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME. IN THE ASSESSMENT ORDER LEARNED AO HAS INCLUDED A PARTICULAR WHICH IS FAR F ROM THE TRUTH. HE HAS MENTIONED THE UNTRUE THINGS WHICH WERE NEVER UTTERE D BY MR. ASHVIN M PATEL (PARTNER OF THE FIRM). IN THE ASSESSMENT ORDER THE FOLLOWING SENTENCES HAVE BEEN MENTIONED WHICH ARE UNTRUE. 'DURING THE COURSE OF SURVEY ACTION A STATEMENT OF SHRI ASHWINBHAI PATE/ PARTNER OF THE ASSESSEE FIRM WAS RECORDED ON OATH. FURTHER THE DISCREPANCIES FOUND IN RESPECT OF MAINTENANCE OF QU ANTITATIVE RECORDS WERE ALSO BROUGHT TO THE NOTICE OF SHRI ASHWINBHAI AND HE WAS ALSO ASKED TO FURNISH THE DETAILED WORKING OF THE CLOSIN G STOCK OF RS.L 8 64 592/-REFLECTED IN THE FIRMS RETURN OF INCOME. IN HIS REPLY TO QUESTION NO. 10 OF STATEMENT RECORDED ON OATH ON 13 .09.2002 SHRI ASHWINBHAI ADMITTED THAT THERE ARE DISCREPANCIES IN MAINTENANCE OF QUANTITATIVE RECORD OF THE MATERIAL CONSUMED BY THE FIRM. FURTHER IN VIEW OF SUCH DISCREPANCIES SHRI ASHWINBHAI ALSO ADM ITTED UNACCOUNTED INCOME OF RS.25 LACS DURING THE YEAR UNDER CONSIDER ATION.' THE ABOVE MENTIONED FACTS ARE NOT CONSENTANEOUS WIT H STATEMENT OF SHRI ASHWINBHAI PATEL. WE HEREIN SUBMIT THE COPY OF STAT EMENT ON OATH RECORDED BY THE SURVEY PARTY. ON PERUSAL OF THE STATEMENT NOWHE RE IT IS WRITTEN THAT THERE WAS A DISCREPANCY IN MAINTENANCE OF STOCK. WHILE AS HWINBHAI CLEARLY TOLD THAT THE FIRM IS NOT MAINTAINING DAY TO DAY CONSUMPTION OR STOCK REGISTER. IF STOCK REGISTER IS NOT MAINTAINED AT ALL WHERE IS THE QUES TION OF DISCREPANCY IN STOCK BUT SAME WAS AS MENTIONED IN ANSWER W OF THE STATE MENT FOR PURCHASE OF PEACE AND AVOID LITIGATIONS. IN THIS CASE THERE WAS NEITHER CONCEALMENT NOR FURN ISHED INACCURATE PARTICULARS OF INCOME. IT IS THEREFORE REQUESTED TO DROP THE PE NALTY PROCEEDINGS AND OBLIGE' ITA NO. 1527-AHD-11 3 2.2 AFTER CONSIDERING THE AFORESAID REPLY THE AO IN THE PENALTY ORDER UNDER SECTION 271(1)(C) DATED 24.03.2010 OBSERVED THAT T HE ASSESSEE WAS NOT ABLE TO FURNISHED DETAILED WORKING OF CLOSING STOCK SHOWN I N THE RETURN OF INCOME. A PARTNER OF THE FIRM ADMITTED THAT THE FIRM DID NOT MAINTAIN ANY QUANTITATIVE DETAILS OF THE MATERIALS CONSUMED. HE ACCORDINGLY LEVIED THE PENAL TY OF RS.9 79 999/- BEING 100% OF TAX SOUGHT TO BE EVADED ON CONCEALED INCOME OF R S.25 LAKHS WHICH WAS DECLARED BY THE ASSESSEE IN THE REVISED RETURN OF INCOME FURNIS HED ON 24.09.2002. 3. ON APPEAL IN THE IMPUGNED ORDER THE LD. CIT(A) CANCELLED THE PENALTY FOR THE DETAILED REASONS GIVEN IN PARA 4 OF THE IMPUGNED OR DER THE RELEVANT PORTION OF WHICH READS AS UNDER: 4... WITH RESPECT TO PENALTY IMPOSED ON DISCLOSUR E DURING SURVEY OF RS.25 00 000 WHICH WAS INCLUDED IN THE RETURN FILE D BY THE APPELLANT CONSEQUENT TO THE SURVEY IT HAS BEEN STATED IN THE WRITTEN SUBMISSION THAT THE AMOUNT WAS SURRENDERED TO BUY PEACE OF MIND AND WAS NOT ON ACCOUNT OF ANY DISCREPANCY IN STOCK FOR THIS THE SURVEY STATEMENT OF THE PARTNER - SHRI ASHWINBHAI MANUBHAI PATEL DATED 13.9.2002 WAS RELIE D UPON WHICH WAS ENCLOSED IN THE PAPER BOOK. THIS SURVEY STATEMENT D OES NOT SHOW ANY DISCREPANCY IN STOCK CALCULATED BY THE DEPARTMENT O R THE APPELLANT WHILE DISCLOSING INCOME THEREFORE THERE IS NO CASE OF CO NCEALMENT OR INACCURATE PARTICULARS AND THE AO IS DIRECTED TO DELETE THE PE NALTY. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US ON BEHALF OF T HE REVENUE SHRI SAMIR TEKRIWAL APPEARED AND POINTED OUT THAT THE REVISED RETURN SHOWING ADDITIONAL INCOME OF RS.25 LAKHS FILED ON 24.09.2002 (WHICH IS AFTER THE SURVEY ACTION UNDER SECTION 133A ON 13.09.2002) WAS NOT VOLUNTARY. THIS ASPECT HAS BEEN COMPLETELY IGNORED BY THE LD. CIT(A) IN THE IMPUGNED ORDER WHILE CANCELL ING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE I.T. ACT. THE LD. D.R. REL IED ON THE DECISION DELIVERED ON 20.06.2011 BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF M/S.SENTHAMARAI ITA NO. 1527-AHD-11 4 CONSTRUCTIONS VS- CIT IN TAX CASE (APPEAL) NOS. 17 8 TO 180 OF 2005 & TCMP NOS.138 TO 140 OF 2005 WHEREIN ALMOST ON IDENTICA L FACTS IT WAS HELD THAT PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE WHEN AFTER THE SEARCH IN THE CASE OF MANAGING PARTNERS RESPONSE UNDISCLOSED CASH AND INVESTMENT S WERE FOUND AND THESE WERE DECLARED IN THE RETURN OF INCOME. THE LD. D.R. ALSO RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF K.P.MADHUSUDHA NAN VS- CIT REPORTED IN 251 ITR 99 RENDERED AFTER THE INTRODUCTION OF EXPLANAT ION TO SECTION 271(1)(C) OF THE I.T. ACT WHEREIN IT WAS HELD THAT WHEN CONCEALMENT OF T HE INCOME WAS WITH REFERENCE TO ORIGINAL RETURN AND THERE WAS NO EXPLANATION AT ALL AS REGARDS THE NON-DISCLOSURE THE MERE CLAIM THAT THE INCOME WAS OFFERED IN THE REVIS ED RETURN AS A MATTER OF PURCHASING PEACE BY ITSELF WOULD NOT EXONERATE THE ASSESSEE FROM THE CULPABILITY. THE LD. D.R. ALSO RELIED ON THE DECISION OF THE ITAT DELHIH B ENCH IN THE CASE OF TRIVIUM POWER ENGINEERS (P) LTD. VS- ITO REPORTED IN 133 TTJ (DE L) 438 WHEREIN PENALCY LEVIED UNDER SECTION 271(1)(C) IN RESPECT OF SURRENDER HAS BEEN CONFIRMED BY THE TRIBUNAL BECAUSE THE DISCLOSURE OF INCOME WAS NOT SURRENDERE D BY THE ASSESSEE VOLUNTARILY BUT BECAUSE OF DETECTION THEREON BY THE DEPARTMENT. THE LD. D.R. POINTED OUT THAT IN THIS CASE ALSO THE ASSESSEE HAS NOT DISCLOSED ANY REASO N IN THE ORIGINAL RETURN AND THAT THE REVISED RETURN WAS FILED ONLY AFTER THE SEARCH. THE REFORE THE LD. CIT(A) OUGHT TO HAVE CONFIRMED THE PENALTY OF RS. 9 79 999/- LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 6. ON THE OTHER HAND SHRI P.M.PATEL APPEARING ON BEHALF OF THE ASSESSEE DREW OUR ATTENTION TO QUESTION NO.10 AND ITS REPLY WHIC H READS AS UNDER: QUESTION NO. 10. AS YOU HAVE STATED IN ANSWER OF QUESTION NO. 7 THAT YOU DO NOT MAINTAIN CONSUMPTION REGISTER AS WELL AS STOCK REGISTER THEN HOW DO YOU SAY THAT CONSUMPTION IS RIGHTLY ENTERED IN THE BOOK S OF ACCOUNT AND MATERIAL ARE REALLY CONSUMED AND WHAT QUANTITY REMAIN IN THE STOCK IN THE END OF THE YEAR IS CORRECT. HOW CAN WE BELIEVE THAT INCOME SHO WN IN BOOKS AND SHOWN IN RETURN OF INCOME IS CORRECT PLEASE EXPLAIN?. ANSWER 10. IT IS CORRECT THAT WE DO NOT MAINTAIN CONSUMPTION REGISTER HOWEVER WE CORRECTLY DETERMINED THE CLOSING STOCK B Y TAKING PHYSICAL VERIFICATION AND DETERMINED THE CONSUMPTION OF THE GOODS. HOWEVER WE DO NOT INTEND TO ENTER OURSELVES IN LEGAL COMPLICATION AND WITH INTEND TO PURCHASE THE ITA NO. 1527-AHD-11 5 PEACE WE DECLARE THE FOLLOWING INCOME AS ADDITIONA L INCOME OVER AND ABOVE THE INCOME SHOWN IN THE BOOKS AS WELL AS RETURN OF INCOME. FINANCIAL YEAR ADDITIONAL INCOME DECLARED AMOUNT 2000-01 25 00 000.00 RS. TWENTY FIVE LACS ONLY 2001-02 15 00 000.00 RS. FIFTEEN LACS ONLY 2002-03 10 00 000.00 RS. TEN LACS ONLY AS SHOWN ABOVE WE DECLARE ADDITIONAL INCOME OF RS.5 0 00 000.00 AND WE AGREE FOR THE ADJUSTMENT OF SAID TAX AGAINST REFUND OF FINANCIAL YEAR 2000-01. ON ADJUSTING OF REFUND ANY BALANCE TAX OR ADVANCE T AX REMAINED UNPAID SAME SHALL BE PAID IMMEDIATELY AND WE WILL PRODUCE THE C HALLAN. 7. THE COUNSEL OF THE ASSESSEE AFTER REFERRING TO THE AFORESAID QUESTION POINTED OUT THAT IN THE ASSESSMENT YEAR UNDER APPEAL THE A SSESSEE DECLARED ADDITIONAL INCOME OF RS.25 LAKHS VOLUNTARILY AS SURVEY PARTY NEVER T OOK THE STOCK. THE SURVEY TOOK PLACE ONLY IN OFFICE. NO DISCREPANCY WHATSOEVER WAS WORKE D OUT BY THE SURVEY TEAM. IN REPLY TO QUESTION NO.10 ALSO THE PARTNER OF THE AS SESSEE FIRM HAS STATED THAT BECAUSE THE ASSESSEE FIRM DID NOT INTEND TO ENTER INTO ANY LEGAL COMPLICATION AND WITH INTENT TO PURCHASE THE PEACE THE ADDITIONAL INCOME HAS BEEN DECLARED. HE POINTED OUT THAT THE ENTIRE CONDUCT OF THE ASSESSEE DURING THE COURSE O F SURVEY AND SUBSEQUENTLY REVEALS THAT THE ADDITIONAL INCOME OF RS.25 LAKHS WAS DECLA RED IN THE REVISED RETURN OF INCOME VOLUNTARILY WITHOUT DETECTING CONCEALED INCOME AT THE TIME OF SEARCH UNDER SECTION 133A BY THE DEPARTMENT. THE COUNSEL OF THE ASSESSE E ALSO POINTED OUT THAT THE DECISION OF THE MADRAS HIGH COURT RELIED ON BY THE LD. D.R. IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE BECAUSE IN THAT CASE THE CONCEALED INCOME WAS DETECTED AT THE TIME OF SEARCH WHEREAS IN THE CASE OF THE ASSE SSEE A SURVEY WAS CONDUCTED AND NO CONCEALED INCOME WAS DETECTED BY THE SURVEY TEAM A S NO DISCREPANCY IN THE INVENTORY WAS FOUND. THE OTHER DECISION OF THE ITAT DELHI BE NCH IN THE CASE OF TRIVIUM POWER ENGINEERS (P) LTD. ( SUPRA ) RELIED ON BY THE LD. D.R. IS ALSO NOT APPLICABLE BECAUSE IN THAT CASE ALSO THE SURRENDER WAS NOT VOLUNTARY AND IT WAS MADE DUE TO DETECTION BY THE DEPARTMENT. THEREFORE THE ORDER OF THE LD. CIT(A) CANCELLING THE PENALTY OF RS.9 79 999/- BE UPHELD. ITA NO. 1527-AHD-11 6 8. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS BOTH THE DECISIONS REL IED ON BY THE LD. D.R. IN OUR CONSIDERED OPINION BOTH THESE DECISIONS ARE NOT AP PLICABLE TO THE FACTS OF ASSESSEES CASE. IN THE CASE OF M/S. SENTHAMARAI CONSTRUCTIONS ( SUPRA ) BEFORE THE HONBLE MADRAS HIGH COURT THERE WAS A SEARCH WHICH RESULT ED IN THE SEIZURE OF BANK DEPOSITS AND JEWELLERY. THE MANAGING PARTNER MR. R. SONAI A DMITTED THAT THE UNEXPLAINED INVESTMENTS WERE OUT OF THE UNDISCLOSED INCOME OF T HE FIRM. FOLLOWING THIS A REVISED RETURN WAS FILED. THIS DECISION INDICATES THAT AS A RESULT OF SEARCH IN THAT CASE THE DEPARTMENT SEIZED BANK DEPOSITS AND JEWELLERY. IN T HE PRESENT CASE EVEN NO INVENTORY OF STOCK WAS PREPARED THE DISCLOSURE WAS MADE IN T HE OFFICE PREMISES AND NOT IN THE STORE WHERE THE INVENTORY IS KEPT. THE OTHER DECISI ON IN THE CASE OF HONBLE ITAT DELHI IS ALSO NOT APPLICABLE TO THE ASSESSEES CASE BECAUSE IN THAT CASE ALSO THE SURRENDER WAS NOT VOLUNTARY AND IT WAS MADE ONLY AF TER DETECTION BY THE DEPARTMENT. 8.1 ADVERTING TO THE FACTS OF THE PRESENT CASE BEFO RE US AFTER GOING THROUGH THE QUESTION NO.10 AND ITS REPLY GIVEN BY SHRI ASHWINBH AI MANUBHAI PATEL PARTNER OF THE ASSESSEE FIRM IT CAN BE SEEN THAT ADDITIONAL INCOM E OF RS.25 LAKHS WAS DECLARED IN ORDER TO BUY PEACE WITHOUT DETECTION OF CONCEALED I NCOME BY THE DEPARTMENT. WE ARE THEREFORE OF THE VIEW THAT KEEPING IN VIEW OF THE TOTALITY OF THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) IS LEGALLY AND FACTUA LLY CORRECT IN CANCELLING THE PENALTY OF RS. 9 79 999/- LEVIED BY THE AO. WE THEREFORE INCLINE TO UPHOLD THE ORDER OF THE LD. CIT(A). 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. 6 0 5'( #' ) / 09 /2011 ' 7 0 !3 8 THIS ORDER PRONOUNCED IN COURT ON /09/2011. (A.K.GARODIA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : /09/2011 ITA NO. 1527-AHD-11 7 0 00 0 .49 .49 .49 .49 :9(4) :9(4) :9(4) :9(4)- -- - 1. - 2. ./ - 3. 4 2> 4. 2>- - 5. 9A! .4' 8 6. !$ C6 D/ F 8 TALUKDAR/ SR. P.S.