JAYANTILAL D. MEHTA, MUMBAI v. ACIT 17(2), MUMBAI

ITSSA 120/MUM/2008 | misc
Pronouncement Date: 20-04-2010 | Result: Allowed

Appeal Details

RSA Number 12019916 RSA 2008
Assessee PAN AAJPM7355B
Bench Mumbai
Appeal Number ITSSA 120/MUM/2008
Duration Of Justice 1 year(s) 3 month(s) 19 day(s)
Appellant JAYANTILAL D. MEHTA, MUMBAI
Respondent ACIT 17(2), MUMBAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 20-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted J
Tribunal Order Date 20-04-2010
Date Of Final Hearing 08-04-2010
Next Hearing Date 08-04-2010
Assessment Year misc
Appeal Filed On 31-12-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI PRAMOD KUMAR ( AM ) IT (SS) A NO. 120/MUM/2008 ASSESSMENT YEAR : BLOCK PERIOD:1.4.1990 TO 7.2.2001 SHRI JAYANTILAL D. MEHTA 27 C KAILA SH MANSION TILAK ROAD GHATKOPAR(E) MUMBAI - 400 0 77 . ..( APPELLANT ) P.A. NO. ( AAJPM 7355 B) VS. ASSTT. COMMISSIONER OF INCOME TAX - 17(2) PIRAMAL CHAMBERS MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHRI M.P. MAKHIJA RESPONDENT BY : SHRI N.K. BALODIA O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 10.10.2008 PASSED BY THE LD. CIT(A) FOR THE BLOCK PERIOD 1.4.1990 TO 7.2.2001. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A SSESSEE IS A F O RMER M ANAGING D IRECTOR OF M/S. BINANI METAL LTD. THERE WAS A SEARCH AND SEIZURE ACTION U/S.132 OF THE I NCOME T AX ACT 1961 (THE ACT) ON IT (SS) A NO. 120/M/08 A.Y: BP 2 7.2.2001. DURING THE COURSE OF SEARCH GOLD JEWELLERY WEIGHING 3386.400GMS AND DIAMOND JEWELLERY VALUED AT RS.8 35 010/ - WAS FOUND. THE ASSESSEE CLAIMED THAT THE SAID JEWELLERY BELONGS TO HIMSELF AND HIS FAMILY MEMB ERS. AFTER CONSIDERING THE EXPLANATION FURNISHED BY THE ASSESSEE AND OTHER MEMBERS OF THE FAMILY DURING THE BLOCK ASSESSMENT PROCEEDING THE AO TREATED THE GOLD JEWELLERY TO THE EXTENT OF 2667.600 GMS AS EXPLAINED AND BALANCE 718.8 GMS WAS TREATED AS UNEXP LAINED. SIMILARLY OUT OF DIAMOND JEWELLERY OF RS.8 35 010 / - FOUND DURING COURSE OF SEARCH THE AO TREATED DIA MOND JEWELLERY O F RS.6 79 366/ - AS EXPL AI N E D AND THE REMAINING DIA MOND JEWELLERY OF RS.1 56 274/ - WAS TREATED AS UNEXPLAINED. ACCORDINGLY THE AO TAXED THE UNEXPLAINED JEW EL L E RY IN THE HANDS OF VARIOUS FAMILY MEMBERS OF THE ASSESSEE INCLUDING THE ASSESSEE WHEREIN HE ADDED GOLD JEW EL L E RY RS.1 84 387/ - AND DIAMOND JEWELLERY RS.33 705/ - AGGREGATING TO RS.2 18 092/ - AS UNDISCLOSED INCOME OF THE ASSES SEE . ON APPEAL THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. ON FURTHER APPEAL BEFORE THE TRIBUNAL THE TRIBUNAL WHILE DIRECTING THE AO TO DELETE THE ADDITION OF THE JEWELRY REC EIVED BY THE ASSESSEE FROM HIS TWO DAUGHTER VIZ RAKSHA AND MALA ON THE OCCASION OF HIS 50 TH WEDDING ANNIVERSARY CONFIRMED THE REMAINING ADDITION MADE BY THE AO. AFTER GIVING THE EFFECT OF THE ORDER OF T H E ITAT THE UNDISCLOSED INCOME OF THE ASSESSEE WAS DETERMINED BY THE AO AT RS.97 753/ - . WHILE MAKING THE IT (SS) A NO. 120/M/08 A.Y: BP 3 ASSESSMENT THE AO ALSO INITIATED PENALTY PROCEEDING U/S.158 BFA(2) OF THE ACT. IN RESPONSE TO SHOW CAUSE AS TO WHY PENALTY MAY NOT BE IMPOSED IT WAS INTERALIA SUBMITTED BY THE ASSESSEE THAT HE HAS NEITHER CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCO ME AND ADDITION WAS MADE ONLY FOR THE REASON THAT ASSESSEE S EXPLANATION WAS NOT ACCEPTED BY THE AO. THERE WAS NO DELIBERATE AND ULTERIOR MOTIVE TO DEFRAUD THE REV ENUE THEREFORE PENALTY MAY BE DROPPED. HOWEVER THE AO WAS OF THE VIEW THAT AS PER PROVISI ONS OF SECTION 158 BFA(2) PENALTY SHALL BE LEVIED IF THERE IS DIFFERENCE IN THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE AND ASSESSED BY THE DEP AR T MENT. SINCE IN THIS CASE THERE IS A DIFFERENCE OF RS.97 753/ - IN THE UNDISCLOSED INCOME AFTER GIVING EFFEC T TO THE ITAT ORDER THEREFORE IT IS A FIT CASE FOR LEVY OF PENALTY AND ACCORDINGLY HE IMPOSED PENALTY OF RS.65 690/ - VIDE ORDER DATED 29.6.2007 PASSED U/S.158 BFA(2) OF THE ACT. ON APPEAL THE LD. CIT(A) FOR THE SAME REASONS CONFIRMED THE PENALTY IMPOSED BY THE AO. 3. BEING AGGR IE V E D BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF PENALTY IMPOSED BY THE AO. IT (SS) A NO. 120/M/08 A.Y: BP 4 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERATING T HE SAME SUBMISSIONS AS SUBMITTED BEFORE THE LD. CIT(A) FURTHER SUBMITS THAT IT HAS BEEN INTERALIA OBSERVED BY THE TRIBUNAL THAT LARGE AMOUNT OF JEW ELLERY WAS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS AND THE ASSESSEE COULD NOT BE EXPECTED TO READILY EXPLAIN EACH AND EVERY ITEM UNDER THE ABNORMAL CIRCUMSTANCES OF SEARCH PROCEEDINGS ; THAT THE ADDITION WAS MADE ONLY FOR THE REASON THAT THE A SSESSEE'S EXPLANATION WAS NOT ACCEPTED BY THE AO; THE AO HAS IMPOSED PENALTY ON THE GROUND THAT AS PER PROVISION S OF SECTION 158 BFA(2) PENALTY SHALL BE LEVIED WHEREAS AS PER JUDGMENT OF HON BLE BOMBAY HIGH COURT IN CIT VS. DODSAL LTD. (2009) 312 ITR 1 1 2(BOM.) THE PENALTY IS DISCRETIONARY AND THEREFORE THE PENALTY IS NOT LEVI A BLE AND THE SAME BE DELETED. 5. ON T HE OTHER HAND THE LD. DR WHILE RELYING ON THE ORDER OF THE AO AND THE LD. C I T(A) FURTHER SUBMITS THAT SINCE THE ASSESSEE H AS FAILED TO PROVE THE IDENTITY CAPACITY AND CREDITWORTHINESS OF THE DONORS FROM WHOM THE ALLEGED GIFTS OF JEWE L L ER Y HAD BEEN RECEIV ED HENCE THE PENALTY IMPOSED BY THE AO AND SUSTAINED BY THE LD. C I T(A) BE UPHELD. IT (SS) A NO. 120/M/08 A.Y: BP 5 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE. IT IS ALSO N OT IN DISPUTE THAT ON THE OCCASION OF 75 TH BIRTHDAY AND 50 TH WEDDING ANNIVERSARY THE ASSESSEE THE ASSESSEE HAS REC EIVE D JEWELLERY FROM HIS FRIENDS AND RELATIVES. THE TRIBUNAL IN THE QUANTUM APPEAL HAS ACCEPTED THE A SSESSEE'S EXPLANATION OF HAVING REC EIV E D JEW ELLERY FROM HIS TWO DAUGHTERS VIZ . RAKSHA AND MALA ON THE OCCASION OF 50 TH WEDDING ANNIVERSARY . IT IS REPEATEDLY HELD BY THE COURTS THAT WHEN THE FACTS ARE CLEARLY DISCLOSED IN THE RETURN OF INCOME PENALTY CAN NOT BE LEVIED . M ERELY BECAUSE AN AMOU NT IS NOT ALLOWED OR TAXED TO INCOME IT CANNOT BE SAID THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OR CONCEALED ANY INCOME CHARGEABLE TO TAX. EVEN IF SOME DEDUCTION OR BENEFIT IS CLAIMED BY THE ASSESSEE WRONGLY BUT BONAFIDE AND NO MALAFIDE CAN BE ATTRIBUTED THE PENALTY WOULD NOT BE LEVIED. THIS BEING SO AND I N THE ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THAT THE A SSESSEE'S EXPLANATION WAS FOUND TO BE FALSE OR BOGUS OR THERE WAS NO SUCH OCCASION OF 50 TH WEDDING ANNIVERSARY AND 75 TH BIRTHDAY OF TH E ASSESSEE AND KEEPING IN VIEW THAT T H E AO HAS IMPOSED PENALTY ON THE WRONG ASSUMPTION OF LAW THAT THE PENALTY IS MANDATORY WHEREAS THEIR LORDSHIPS OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS DODSAL LTD. SUPRA HAVE HELD THAT PENALTY U/S. 158 BFA(2) IS DIRECTORY AND NOT MANDATORY WE ARE OF THE VIEW THAT UNDER IT (SS) A NO. 120/M/08 A.Y: BP 6 THE FACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY IS NOT LEVIABLE AND ACCORDINGLY THE SAME IS DELETED. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE ALLOWED. 7. IN THE RESULT A SSESSEE'S APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.4.2010. SD/ - SD/ - ( PRAMOD KUMAR ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 20.4. 20 10 . JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.