Shyam Behari, Hisar v. ACIT (Investigation Circle), Hisar

ITA 1976/DEL/2010 | misc
Pronouncement Date: 08-10-2010 | Result: Dismissed

Appeal Details

RSA Number 197620114 RSA 2010
Assessee PAN ANLPB2159D
Bench Delhi
Appeal Number ITA 1976/DEL/2010
Duration Of Justice 5 month(s) 8 day(s)
Appellant Shyam Behari, Hisar
Respondent ACIT (Investigation Circle), Hisar
Appeal Type Income Tax Appeal
Pronouncement Date 08-10-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 08-10-2010
Date Of Final Hearing 28-09-2010
Next Hearing Date 28-09-2010
Assessment Year misc
Appeal Filed On 30-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI A.K. GARODIA I.T.A. NOS.1975 TO 1980/DEL/2010 ASSESSMENT YEARS: 1985-86 TO 90-91 SHYAM BEHARI VS. ASTT.COMMISSIONER OF IT C/O A.A. & CO. C.A. (INVESTIGATION CIRCLE) 22 GREEN PARK HISSAR (HARYANA) HISAR (PAN: ANLPB2159D) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SHYAM BEHARI ASSESSEE RESPONDENT BY: SHRI GAN ANAND MEENA CIT(DR) ORDER PER BENCH: THE PRESENT SIX APPEALS ARE DIRECTED AGAINST THE CO MMON ORDER PASSED BY THE LEARNED CIT(A) DATED 22 ND FEBRUARY 2010 FOR ASSESSMENT YEARS 1975- 76 TO 1990-91. THE GROUNDS OF APPEALS TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES THEY AR E DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF THE GRIEVANCE OF ASSESSEE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE PENALTY UN DER SECTION 271(1)(C) OF THE INCOME-TAX ACT 1961 IN RESPECT OF PROFIT COMPU TED ON AN ESTIMATE BASIS. 2. THESE APPEALS WERE FILED ON 30.4.2010. THEY WERE FIXED FOR IST OF JULY 2010. NO ONE HAS APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF SERVICE OF NOTICE. THE HEARING WAS ADJOURNED TO 28 TH SEPTEMBER 2010 AND THESE WERE LISTED WITH ITA NOS.506/DEL/08 WHICH IS A QUANTUM A PPEAL FOR OTHER 2 ASSESSMENT YEAR. THE LEARNED COUNSEL FOR THE ASSESS EE SENT A LETTER FOR AN ADJOURNMENT ON THE GROUND THAT HE IS BUSY IN TAX AU DIT WORK AND THEREFORE UNABLE TO ATTEND THE HEARING. THE LAST DATE FOR CAR RYING OUT TAX AUDIT HAS BEEN ENHANCED TO 15 TH OCTOBER 2010 THUS 30 TH OF SEPTEMBER DID NOT REMAIN AS THE LAST DATE FOR COMPLETING THE TAX AUDIT WORK. WE ADJ OURNED THE HEARING FOR 30 TH OF SEPTEMBER 2010 AND THE REGISTRY COMMUNICATED TH E HEARING TO THE ASSESSEE. IT WAS ALSO INFORMED THAT NO FURTHER ADJO URNMENT WILL BE GIVEN. ASSESSEE SHRI SHYAM BEHARI APPEARED IN PERSON AND S OUGHT THE ADJOURNMENT. WE FIND FROM THE STATEMENT OF FACTS SU BMITTED BY THE ASSESSEE THAT IN THE QUANTUM APPEAL A NUMBER OF ROUNDS HAVE TAKEN PLACE BEFORE THE LEARNED CIT(APPEALS) AND ITAT. CONSIDERING THE ASSE SSMENT YEARS INVOLVED HEREIN I.E. 1985-86 TO 1990-91 AND THE CON DUCT OF THE ASSESSEE OF NOT APPEARING BEFORE THE ITAT WE DID NOT SEE ANY R EASON TO GRANT FURTHER ADJOURNMENT TO THE ASSESSEE. WE HEARD THE APPEALS W ITH THE ASSISTANCE OF LEARNED DR IN THE PRESENCE OF THE ASSESSEE IN PERSO N. 3. THE FACTS AND CIRCUMSTANCES ARE COMMON IN ALL TH E ASSESSMENT YEARS. FOR THE FACILITY OF REFERENCE WE ARE TAKING UP THE FACTS FROM ASSESSMENT YEAR 1985-86. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SHRI SHYAM BEHARI WAS RUNNING A PROPRIETARYSHIP CONCERN IN THE NAME A ND STYLE OF M/S. ASHOK OIL & FLOORING MILLS GANDHI CHOWK HISAR WHERE HE WAS GRINDING GRAIN 3 AND EXPELLING OIL FROM MUSTARD ETC. HE DERIVED INCO ME ON SALE OF OIL AND OIL CAKE. HE HAD ALSO INTEREST INCOME FROM THE MONEY LE NDING ACTIVITY. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT HIS RESIDE NTIAL PREMISES AS WELL AS BUSINESS PREMISES ON 20.4.1993 UNDER SEC. 132(1) OF THE ACT. DURING THE COURSE OF SEARCH CERTAIN BOOKS OF ACCOUNT AND LOOS E PAPERS APART FROM CASH AND JEWELLERY WERE FOUND. ON PERUSAL OF THE DOCUMEN TS IT REVEALED THAT ASSESSEE HAD UNACCOUNTED TRANSACTIONS OVER THE PERI OD FROM 1.4.1984 TO 19.4.1993. ACCORDING TO THE ASSESSING OFFICER THES E DOCUMENTS WERE CALLED IN THE LOCAL AREA AS UNHAUTI OR NO.2 BOOKS OF AC COUNT THE TRANSACTIONS RECORDED IN THESE NO.2 BOOKS OF ACCOUNT WERE NOT AV AILABLE IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THE TR ANSACTIONS AVAILABLE IN SEIZED MATERIAL EXHIBITING CREDIT/CASH SALES AS WEL L AS EXPENSES FOR THE HOUSEHOLD PURPOSES. ASSESSING OFFICER HAS ESTIMATED THE PROFIT AT 10% ON THE SALE TRANSACTIONS RECORDED IN THESE NO.2 BOOKS OF ACCOUNT. LEARNED CIT(APPEALS) REDUCED THIS PROFIT TO 4%. ON FURTHER APPEAL ITAT HAS REDUCED THIS PROFIT TO 3% IN ALL THE ASSESSMENT YE ARS. THUS AN ESTIMATED ADDITION @ 3% ON THE TRANSACTIONS FOUND IN NO.2 BOO KS OF ACCOUNT HAVE BEEN CONFIRMED UP TO THE ITAT. 4. THE SHORT POINT INVOLVED IN ALL THESE APPEALS IS WHETHER PENALTY UNDER SEC. 271(1)(C) IS LEVIABLE ON THIS ALLEGED ESTIMATE D ADDITION OR NOT. 4 5. FROM PERUSAL OF THE LEARNED CIT(APPEALS)S ORDER WE FIND THAT ASSESSING OFFICER HAS LEVIED THE PENALTY ON THREE M ORE ITEMS I.E. HE MADE AN ADDITION ON ACCOUNT OF INITIAL INVESTMENT IN BUSINE SS. PENALTY HAS BEEN LEVIED ON THIS ADDITION. HE MADE AN ADDITION ON ACCOUNT OF PROFIT ELEMENT INVOLVED IN LOAN ACCOUNT AND RENTAL RECEIPT ETC. IN SOME OF THE YEARS THERE WAS ADDITION ON ACCOUNT OF HOUSEHOLD EXPENDITURE. ASSES SING OFFICER HAS LEVIED THE PENALTY ON THIS ADDITIONS ALSO. LEARNED CIT(APP EALS) HAS CONFIRMED THE PENALTY ONLY ON THE ADDITION WHICH WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT DURING THE COURSE OF SEARCH DOCUME NTARY EVIDENCE WAS FOUND EXHIBITING THE INVOLVEMENT OF ASSESSEE IN SEL LING THE GOODS OUT OF BOOKS AND RECORDING EXPENDITURE. HE IS KEEPING TWO SET OF BOOKS ONE WAS MEANT FOR INCOME-TAX PURPOSE AND ONE WAS MADE FOR H IMSELF ONLY. THE SECOND SET WAS ALSO FOUND BECAUSE OF SEARCH. FROM T HIS SECOND SET OF BOOKS PROFIT ELEMENT HAS BEEN WORKED OUT AND IT HAS BEEN ADDED AS INCOME OF THE ASSESSEE. LEARNED CIT(APPEALS) HAS CONFIRMED THE PE NALTY IN RESPECT OF THIS ADDITION IN ALL THE ASSESSMENT YEARS. 6. LEARNED DR HAS POINTED OUT THAT THE CASE OF THE ASSESSEE IS THAT THE ADDITION HAS BEEN MADE ON AN ESTIMATE BASIS AND TH EREFORE NO PENALTY IS IMPOSEABLE. HE SUBMITTED THAT IN THE PRESENT CASE A DDITION HAS NOT BEEN MADE ON AN ESTIMATE BASIS. IT IS THE BEST JUDGMENT OF THE ASSESSING OFFICER TO 5 WORK OUT THE PROFIT ELEMENT IN THE UNDISCLOSED ACTI VITIES OF THE ASSESSEE. THE TRANSACTIONS WERE NOT DISCLOSED TO THE DEPARTMENT. THEY COULD SEE THE LIGHT OF THE DAY ONLY BECAUSE OF THE SEARCH. THE INCOME H AS TO BE COMPUTED FROM THOSE TRANSACTIONS BY THE ASSESSING OFFICER AND IN THAT EXERCISE ASSESSING OFFICER HAS ESTIMATED THE PROFIT BECAUSE THERE IS N O OTHER METHOD. SO IT IS NOT THAT SIMPLICITOR ESTIMATED ADDITION WHERE IN THE A BSENCE OF COMPLETE DETAILS OR ON ACCOUNT OF INABILITY OF ASSESSEE TO LEAD EVID ENCE IN SUPPORT OF HIS CLAIM ADDITION WAS MADE. THE PRESENT APPEALS ARE QUITE DI STINGUISHABLE WITH THOSE CASES. ON THE OTHER HAND ASSESSEE WAS UNABLE TO CO NTROVERT THE FINDINGS RECORDED BY THE LEARNED CIT(APPEALS). 7. WE HAVE DULY CONSIDERED THE CONTENTIONS OF LEARN ED DR AND WITH HIS ASSISTANCE GONE THROUGH THE RECORD CAREFULLY. SECTI ON 271(1)(C) OF THE ACT HAS A DIRECT BEARING ON THE CONTROVERSY AND THEREF ORE IT IS SALUTARY UPON US TO TAKE NOTE OF THE RELEVANT PROVISIONS OF SECTION 271(1)(C) ALONG WITH EXPLANATION 1 WHICH READ AS UNDER: 271. FAILURE TO FURNISH RETURNS COMPLY WITH NOTIC ES CONCEALMENT OF INCOME ETC. (1). IF THE ASSESSING OFFICER OR THE COMMISSIONER ( APPEALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PERSON (A) AND (B)******** 6 (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I) AND (INCOME-TAX OFFICER )******** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D) IN ADDITION TO TAX IF ANY PAYABLE BY HIM A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1.- WHERE IN RESPECT OF ANY FACTS MATER IAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER(APPEALS) OR THE CIT TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THE N THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O F SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHI CH PARTICULARS HAVE BEEN CONCEALED. 8. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THAT FOR VISITING ANY ASSESSEE WITH THE PENALTY THE ASSESSING OFFICER OR THE LEARNED 7 CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS B EFORE THEM SHOULD BE SATISFIED THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUA NTIFICATION OF THE PENALTY IS CONCERNED THE PENALTY IMPOSED UNDER THIS SECTION C AN RANGE IN BETWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS IN CERTAIN SITUATION EVEN WITHOUT THERE BEING ANYTHIN G TO INDICATE SO STATUTORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INT O PLAY. THIS DEEMING FICTION BY WAY OF EXPLANATION I TO SECTION 271(1)( C) POSTULATES TWO SITUATIONS; (A) FIRST WHETHER IN RESPECT OF ANY FAC TS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISION S OF THE ACT THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OF FERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARN ED CIT(APPEALS); AND (B) WHERE IN RESPECT OF ANY FACT MATERIAL TO THE COMPU TATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT THE ASSESSEE IS NO T ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS TO PROVE THAT SU CH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS R ELATING TO THE SAME AND 8 MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME. UN DER FIRST SITUATION THE DEEMING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO TH E COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDING TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION THE DEE MING FICTION WOULD COME TO PLAY BY THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL IN COME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANA TION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. T HESE TWO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1 )(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN T HE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUT ING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCUR ATE PARTICULARS HAVE BEEN FURNISHED. 9. IT MAY BE RELEVANT TO REFER THE DECISION OF HON' BLE ORISSA HIGH COURT IN THE CASE OF CIT VS. INDIAN METAL & FRO ALLOYS RE PORTED IN 211 ITR 35 WHEREIN THE HON'BLE HIGH COURT HAS EXPLAINED THE ME ANING OF EXPRESSION 9 HAS BEEN CONCEALED THE PARTICULARS OF INCOME AND HAS FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDING TO THE HON'BLE HIGH COURT THESE EXPRESSIONS HAVE NOT BEEN DEFINED EITHER IN S ECTION 271(1)(C) OR ELSEWHERE IN THE ACT BUT PERUSAL OF THESE EXPRESSI ONS ONE THING IS CLEAR THAT THESE TWO CIRCUMSTANCES ARE NOT IDENTICAL IN DETAIL S ALTHOUGH THEY MAY LEAD TO THE SAME EFFECT NAMELY KEEPING OF A CERTAIN PO RTION OF INCOME FROM THE KNOWLEDGE OF THE DEPARTMENT. THE FORMER IS DIRECT A ND THE LATTER MAY BE INDIRECT IN ITS EXECUTION. ACCORDING TO THE HON'BLE HIGH COURT THE WORD CONCEALED IS DERIVED FROM THE LATIN CONCELARE W HICH EMPLIES TO HIDE. WEBSTER IN HIS NEW INTERNATIONAL DICTIONARY EQUATES ITS MEANING TO HIDE OR WITHDRAW FROM OBSERVATION TO COVER OR KEEP FROM SI GHT; TO PREVENT THE DISCOVERY; TO WITHHELD KNOWLEDGE. HON'BLE COURT HA S FURTHER OBSERVED THAT THE OFFENCE OF CONCEALMENT IS THUS A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF INCOME-T AX AUTHORITIES. IN FURNISHING ITS RETURN OF INCOME AN ASSESSEE IS REQ UIRED TO FURNISH PARTICULARS AND ACCOUNTS ON WHICH SUCH RETURNED INCOME HAS BEEN ARRIVED AT. THESE MAY BE PARTICULARS AS PER ITS BOOKS OF ACCOUNT IF IT I S MAINTAINED THEM OR ANY OTHER BASIS UPON WHICH IT HAD ARRIVED AT THE RETURN ED FIGURE OF INCOME. ANY INACCURACY MADE IN SUCH BOOKS OF ACCOUNT OR OTHERWI SE WHICH RESULTED IN 10 KEEPING OF OR HIDING A PORTION OF ITS INCOME IS PUN ISHABLE AS FURNISHING INACCURATE PARTICULARS OF ITS INCOME. 10. FROM PERUSAL OF THE ASSESSMENT ORDER AVAILABLE ON RECORD IT REVEALS THAT ASSESSEE WAS MAINTAINING TWO SETS OF BOOKS O NE WAS MEANT FOR SHOWING INCOME-TAX AUTHORITIES AND THE OTHER FOR HI MSELF. IN THE SECOND SET HE IS RECORDING SALES AND CERTAIN EXPENSES. ON THE BASIS OF THESE DOCUMENTARY EVIDENCE ADDITION HAS BEEN MADE WHICH HAS BEEN CONFIRMED UP TO THE ITAT. THIS MODUS OPERANDI DO INDICATE THA T IT IS NOT THE CASE OF SIMPLICITOR ESTIMATION OF THE INCOME BY DISBELIEVIN G THE BOOKS OF ACCOUNT OR OTHER DETAILS SUBMITTED BY AN ASSESSEE DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. IN THE PRESENT APPEALS THE DEPARTMENT WAS ABLE TO LAY ITS HANDS ON THE DOCUMENTARY EVIDENCE EXHIBITING THE CONDUCT OF ASSESSEE FOR AVOIDING TAX AND CARRYING OUT THE BUSINESS ACTIVITY OUT OF T HE REGULAR BOOKS. THEREFORE IN OUR OPINION LEARNED CIT(APPEALS) HAS RIGHTLY CONFIRMED THE PENALTY. 11. IN THE RESULT ALL THE APPEALS FILED BY THE ASS ESSEE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 08.10.2010 ( A.K. GARODIA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08/10/2010 MOHAN LAL 11 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR