Shri Ashokbhai B.Chokshi, Ahmedabad v. The Income tax Officer,Ward-3(2),, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND MUKUL KUMAR SHRAWAT JUDICIAL MEMBER) ITA NO.2777/AHD/2010 [ASSTT. YEAR : 2005-2006] ASHOKBHAI B. CHOKSHI PROP: M/S.ASHOK BULLION TRADERS 2342/1 MANEK CHOWK AHMEDABAD 380 001. PAN ABUPC 9625 L. VS. ITO WARD-3(2) AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI N.C. AMIN REVENUE BY : DR. RAJA RAM SAH O R D E R PER BENCH: THIS APPEAL IS AT THE BEHEST OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF THE CIT(A) GANDHINAGAR DATED 23. 08.2006 AGAINST THE CONFIRMATION OF PENALTY LEVIED UNDER SECTION 271(1 )(C) OF THE INCOME TAX ACT 1961 OF RS.83 773/- . 2. THE FACTS IN BRIEF AS EMERGED FROM THE IMPUGNED PENALTY ORDER PASSED UNDER SECTION 271(1)(C) DATED 19.2.2009 AND CORRESP ONDING ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 20.12.2007 WERE T HAT THE ASSESSEE IN HIS INDIVIDUAL CAPACITY IS IN THE BUSINESS OF TRADING IN SILVER BARS AND GOLD ON WHOLESALE BASIS. A SURVEY PROCEEDINGS UNDER SECTION 133A WAS CARRI ED OUT AT THE BUSINESS PREMISES AND FOUND CERTAIN DISCREPANCI ES AND IMPOUNDED CERTAIN DOCUMENTS. A NOTE BOOK WAS ALSO IMPOUNDED. THE ASSE SSEE VIDE A STATEMENT RECORDED AND THROUGH A WRITTEN SUBMISSIONS ADMITTE D UNDISCLOSED PROFIT IN THE RANGE OF RS.1.50 LAKHS TO RS.2.00 LAKHS APPROX. CON SIDERING THE SAID STATEMENT AN ADDITION OF RS.2 LAKHS WAS MADE IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM UNDISCLOSED SOURCES. FURTHER IT HAS B EEN DETECTED ON EXAMINATION OF DOCUMENTS MARKED AS A/8 TO A/12&A/21 THAT THE ASSESSEE HAD EARNED COMMISSION OF 3 60 433/- THEREFORE AFTER G IVING THE REBATE OF THE SAID ITA NO.2777/AHD/2010 -2- DISCLOSURE BALANCE OF RS.1 60 433/-+RS.16 151/(UN-E XPLAINED CASH)-=1 76 584/- WAS ALSO TAXED AS UN-DISCLOSED INCOME IN THE HAND S OF THE ASSESSEE. 3. DURING THE PENALTY PROCEEDINGS THE AO HAS HELD THAT SINCE THE ASSESSEE HAS DISCLOSED THE ENTIRE UN-DISCLOSED INCOME ONLY AFTER DETECTION OF THE CONCEALMENT BY DEPARTMENT WHEN THE SURVEY WAS COND UCTED THEREFORE THE SAID AMOUNT WAS NOTHING BUT CONCEALED INCOME OF THE ASSESSEE. ACCORDINGLY ON THE IMPUGNED AMOUNT OF RS.2 00 000/-+RS.1 60 433 /=(RS.3 60 433/-)LAKHS A PENALTY OF RS.83 773/- WAS IMPOSED. 4. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY IT WAS CONTESTED THAT A DISCLOSURE OF RS.1 60 443.- WAS VO LUNTARILY MADE HENCE THERE SHOULD BE NO REASON FOR LEVY OF PENALTY. IT HAS ALSO BEEN CONTESTED THAT A SUM OF RS.3 60 433/- WAS DISCLOSED BY THE ASSESSEE WHIC H HAD INCLUDED THE SAID OFFER AMOUNT OF RS.2.00 LAKHS AND CONSEQUENTLY AS W ELL MADE A VOLUNTARY DISCLOSURE OF RS.1 60 433/-. THE LEARNED CIT(A) HA S CONSIDERED THE SAID ARGUMENTS AND OBSERVED THAT THE IMPUGNED AMOUNT OF RS.2 LAKHS WAS DISCLOSED AS PER RETURN AS THE COMMISSION INCOME AND PAID TAX THEREON. ASSIGNING AFORESAID REASON THE PENALTY IN RESPECT OF RS.2 LA KHS WAS DELETED. HOWEVER IN RESPECT OF THE ADDITION MADE OF RS.1 60 433/- THE LEVY OF CONCEALMENT PENALTY WAS CONFIRMED. 5. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. ON E OF THE PRELIMINAY OBJECTIONS OF THE APPELLANT WAS THAT A REPLY WAS FU RNISHED IN COMPLIANCE OF SHOW CAUSE NOTICE OF PENALTY WHICH WAS DULY RECEIVE D BY THE REVENUE ON 2-12- 2008 BUT THE AO HAS NOT CONSIDERED THE REPLY. HAD THE AO CONSIDERED THE SAID EXPLANATION THERE WOULD NOT HAVE BEEN ANY OCCASION TO LEVY THE CONCEALMENT PENALTY. WE FIND NO FORCE IN THIS ARGUMENT BECAUSE NOT ONLY THE A.O. HAS DISCUSSED THE ISSUE AT CONSIDERABLE LENGTH BUT THE FIRST APPELLATE AUTHORITY HAS ALSO OBTAINED A REMAND REPORT FROM THE A.O. IN OUR OPINION THE GRIEVANCE OF THE ASSESSEE HAS ALREADY BEEN REDRESSED BECAUSE WHA TEVER WAS HIS SUBMISSION ITA NO.2777/AHD/2010 -3- HAD BEEN DULY CONSIDERED AT THE STAGE OF APPEAL. GR OUNDS RAISED IN THIS REGARD ARE HEREBY REJECTED. 5.1) ON MERITS IT WAS ARGUED THAT THE DISCLOSU RE OF RS. 2 LAKHS WAS VOLUNTARY MADE DURING THE COURSE OF SURVEY ACTION. SINCE THE ASSESSEE HAS DISCLOSED THE SAID AMOUNT AS PER THE RETURN AND PAID TAX THEREON VOLUNTARILY THEREFORE IN RESPECT OF REST OF THE AMOUNT NO PENALTY SHOULD HAV E BEEN IMPOSED. EVEN THIS PLEA IS NOT CONVINCING. FACTS OF THE CASE HAVE REVE ALED THAT AT THE TIME OF SURVEY U/S133A ON 7.3.2005 CERTAIN INCRIMINATING DOCUMENTS WERE DETECTED VIZ. A NOTE-BOOK AND DOCUMENTS MARKED AS A/8TOA/12 AND A/2 1. ON THAT BASIS AT THAT TIME AN OFFER OF UNDISCLOSED INCOME OF RS.1.5 LAKHS TO 2LAKHS WAS MADE. LATER ON A RETURN HAS ALSO BEEN FILED AND UNDISPUTEDLY TH E SAID DISCLOSED AMOUNT OF RS.2 00 000/- WAS DECLARED. THIS FACTUAL POSITION W AS DULY APPRECIATED BY LD.CIT(A) AND PART RELIEF WAS GRANTED AS FOLLOWS : 7. I HAVE CONSIDERED THE CONTENTIONS OF THE ASSESS EE AS WELL AS THE PENALTY ORDER. THE FIRST 4 GROUNDS OF APPEAL ARE TH AT HIS SUBMISSIONS WERE NOT CONSIDERED BEFORE LEVYING THE PENALTY. THE AO HAS ON THE OTHER HAND STATED THAT PENALTY ORDER WAS PASSED AFTER GIV ING DUE OPPORTUNITY OF HEARING AND IT IS NOT AN EX-PARTE ORDER AND ASSE SSEE'S EXPLANATION WAS CONSIDERED. FURTHER THE ASSESSEE'S SUBMISSION IN LETTER DATED 2/12/2008 ARE BEING CONSIDERED WHILE DECIDING THE I SSUE DURING THE APPELLATE PROCEEDINGS. THE RATIO OF DECISION I.E. A SIT R. SHAH VS. WTO (1990) 38 TTJ (AHD) 258 CITED BY APPELLANT IS NOT A PPLICABLE IN ASSESSEE'S CASE. IN THE ABOVE MENTIONED CASE ASSES SEE HAD FILED EXPLANATIONS I.E. BONA-FIDE BELIEF OF NON-TAXABILIT Y OF JEWELLERY WHICH WAS REASON FOR NOT FILING THE W.T. RETURN. IN THE C ASE OF THE ASSESSEE THERE IS SUCH EXPLANATION AND BONA-FIDE BELIEF TO T HAT EFFECT. IN SUBMISSION BEFORE A.O. APPELLANT CONTENDED THAT PE NALTY WAS NOT PROPERLY INITIATED WHILE A.O. HAS SPECIFICALLY MEN TIONED IN PARA.8 (PAGE-4) OF ASSESSMENT ORDER REGARDING INITIATION O F PENALTY FOR CONCEALMENT OF INCOME. APPELLANT SUBMITTED THAT RS. 2 LAC WERE DISCLOSED IN RETURN ITSELF WHILE FURTHER ADDITION O F RS.1 60 433/- WAS ON ESTIMATE BASIS. IT IS SEEN THAT PS. 2 LAC WERE IN F ACT OFFERED IN ORIGINAL RETURN FILED IN REGULAR COURSE AND RS.1 60 433/- WE RE OFFERED ONLY DURING ASSESSMENT PROCEEDINGS AND THEY WERE ADDED O N THE BASIS OF SPECIFIC DOCUMENTS FOUND DURING SURVEY THIS ISSUE H AS FURTHER BEEN DEALT ON MERITS LATER ON. ACCORDINGLY FIRST 4 GROUNDS ARE DISMISSED. ITA NO.2777/AHD/2010 -4- .... IT IS SEEN THAT ASSESSEE HIMSELF HAS ADMITTED THE I NCOME OF RS.2 00 000/- IS A COMMISSION INCOME AND DISCLOSED THE SAME IN RETURN OF INCOME AND PAID TAXES THEREON. THE AO HAS IN FAC T TREATED THIS INCOME OF RS.2 00 000/- AS INCOME FROM OTHER SOURCE S AND TREATED IT AS CONCEALED INCOME WHILE LEVYING PENALTY. THE ASSESSE E HAS FILED RETURN OF INCOME ON 26/10/2005 FOR A.Y. 2005-06 WHICH IS WITH IN PRESCRIBED TIME FOR FILING RETURN AFTER SURVEY ON 7/3/2005. AS THIS INCOME WAS SHOWN IN THE RETURN OF INCOME IN VIEW OF EXPLANATION (4) TO SECTION 271(1)(C) WHICH DEFINES THE `TAX SOUGHT TO BE EVADED' THIS AMOUNT CANNOT BE CONSIDERED FOR PENALTY AND TO THAT EXTENT APPELLANT 'S CONTENTION IS ACCEPTABLE. SO NO PENALTY IS LEVIABLE FOR THE AMOU NT OF RS. 2 LACS. HOWEVER ADDITIONAL INCOME OF RS.1 60 433/- HAS BEE N TAXED BY THE AO BASED ON ANNEXURE A-8 TO A-12 AND A-21. FOR THIS AD DITIONAL INCOME PENALTY IS LEVIABLE IN THE CASE OF THE ASSESSEE AS HE HAS NOT FURNISHED ANY EXPLANATION AS TO WHY IT WAS NOT SHOWN IN THE RETUR N OF INCOME. IT WAS ONLY DUE TO THE VERIFICATION OF THE IMPOUNDED MATER IALS THAT AO MADE THE ADDITION OF RS.1 60 433/- APPELLANT 'S CONTENT ION THAT THE AMOUNT WAS OFFERED VOLUNTARILY ON 12/12/2007 IN CONTINUATI ON OF DISCLOSURE OF PS 2 LACS DURING ASSESSMENT PROCEEDINGS IS NOT ACCE PTABLE AS HAD THAT BEEN THE CASE APPELLANT WOULD HAVE OFFERED THE SAM E IN RETURN OF INCOME AND NOT 2 YEARS AFTER FILING RETURN. 5.2) WE FIND NO FALLACY IN THE ORDER OF LD.CI T(A) BECAUSE OF THE REASON THAT THE IMPUGNED OFFER OF RS.2 00 000/- WAS MADE AT THE TIME OF SURVEY AND DULY HONOURED BY DISCLOSING IN THE INCOME TAX RETURN. CO NSIDERING THE BONA FIDES AND IN OUR OPINION FOLLOWING THE RATIO OF CIT VS. S URESH CHAND MITTAL 251 ITR 9 (SC) THE VIEW OF THE CIT(A) IS HEREBY AFFIRMED. A S FAR AS THE REST OF THE ADDITION OF RS.1 60 433/- IS CONCERNED WE HAVE NO TICED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. HAD GIVEN A NOTI CE ON DETECTION OF CERTAIN DISCREPANCY FOUND IN THE INCRIMINATING MATERIAL RELEVANT PORTION IS REPRODUCED : 5. ON SCRUTINY OF THE DOCUMENTS IMPOUNDED DURING T HE SURVEY IT WAS NOTICED THAT THE DOCUMENTS IMPOUNDED & MARKED A T A/8 TO A/12 & A/21 ARE THE KACHCHA BOOK WHICH CONTAINED SAUDA STO CK-CASH BOOK OF GOLD & SILVER WHICH ARE NOT RECORDED IN THE BOOKS O F ACCOUNTS OF THE ASSESSEE. ON VERIFICATION IT WAS ASCERTAINED THAT THE ASSESSEE HAS EARNED COMMISSION OF RS.3 60 433/- FROM GOLD & SILV ER DURING THE ITA NO.2777/AHD/2010 -5- PERIOD FROM 15.5.04 TO 7.3.05 THE DATE OF SURVEY. AS PER THE SAID DOCUMENTS SALES OF RS.55.99 CRORES OF GOLD WEIGHIN G 917611-566 & RS.7.35 CRORES OF SILVER WEIGHING 7409.180 WERE EFF ECTED LEAVING NO STOCK. CASH BALANCE OF RS.16 151/- & RS.5 15 630/- AS ON DT.15.5.04 & DT.7.3.05 ARE ALSO FOUND FROM THESE DOCUMENTS. THE REFORE ASSESSEE VIDE LETTER DATED 11.12.007 HAS BEEN REQUESTED TO SHOW C AUSE AS TO WHY THE TURNOVER OF RS.6334.79 LAKH & CASH OF RS.51 25 630/ - SHOULD NOT BE CONSIDERED AS UNEXPLAINED INCOME FROM UNDISCLOSED S OURCE & WHY THE SAME SHOULD NOT BE ADDED TO THE INCOME OF THE ASSES SEE AS UNEXPLAINED INCOME. THEREFORE IT WAS WRONG ON THE PART OF THE ASSESSEE TO CLAIM THAT THE OFFER WAS MADE VOLUNTARY OR BEFORE ANY DETECTION BY REVENUE. AS IS APPARENT THE ASSESSEE HAD LEFT WITH NO OPTION BUT TO ACCEPT THE FACT OF EARNING OF UN- ACCOUNTED COMMISSION AS RECORDED IN THE INCRIMINATI NG DOCUMENTS. IT WAS THE SAID UNACCOUNTED INCOME WHICH WAS UNEARTHED BY THE REVENUE DEPARTMENT. THIS AMOUNT OF RS. 1 60 433/- HAD NEVER BEEN DISCLO SED IN THE RETURN. HOWEVER LATER ON IT WAS TAXED BY THE A.O. AS PER THE ASSES SMENT ORDER. DUE TO THIS REASON THE CASE LAW OF SURESH CHAND MITTAL (SUPRA) DO NOT APPLY ON THIS PORTION OF THE ASSESSED INCOME. REST OF THE CASE LA WS ARE ALSO MISPLACED BECAUSE THE DECISION OF ASIT R.SHAH 38 TTJ 258 WAS ON REASONABLE CAUSE FOR THE DELAY IN FILING OF RETURNS. LIKEWISE CIT VS. SU RESH CHAND BANSAL 329 ITR 330 ( CAL) WAS THE DECISION ON ESTIMATED ADDITION W ITH OUT DISCUSSION ON THE DOCUMENTS . AS AGAINST THAT THE AUTHORITIES BELOW H AVE MADE A DETAILED DISCUSSION ON THE DOCUMENTS GATHERED AND SEIZED CON SEQUENCE UPON THE SURVEY AND THERE WAS NO ESTIMATED ADDITION BUT THE FIGURES WERE NOTED ACCURATELY AS IS EVIDENT FROM THE PARAGRAPHS REPRODUCED HEREINABOVE. CONSIDERING THE TOTALITY OF CASE AND THE DISCUSSION MADE WE HEREBY CONFIRM T HE FINDINGS OF THE CIT(A) THAT THE IMPUGNED SUM OF RS.2 LAKHS SHOULD NOT BE T HE SUBJECT MATTER OF LEVY OF CONCEALMENT PENALTY AND HAS NO BEARING IN RESPECT O F THE OTHER ADDITION WHICH WAS CHOSEN FOR LEVY OF PENALTY. IN THE RESULT SO F AR AS THE ADDITION OF ITA NO.2777/AHD/2010 -6- RS.1 60 433/- WAS CONCERNED THE PENALTY ON THE SAID ADDITION WAS RIGHTLY CONFIRMED. RESULTANTLY REST OF THE GROUNDS IN THIS REGARD ARE ALSO DISMISSED. 6. IN THE RESULT ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28 TH FEBRUARY 2011. SD/- SD/- (G.D. AGARWAL) VICE-PRESIDENT (MUKUL KR. SHRAWAT) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 28-02-2011 COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD