DCIT CIR 13(3), MUMBAI v. R K CHEMICALS, MUMBAI

ITSSA 63/MUM/2009 | misc
Pronouncement Date: 25-02-2011 | Result: Partly Allowed

Appeal Details

RSA Number 6319916 RSA 2009
Assessee PAN AADFR3849P
Bench Mumbai
Appeal Number ITSSA 63/MUM/2009
Duration Of Justice 1 year(s) 8 month(s) 20 day(s)
Appellant DCIT CIR 13(3), MUMBAI
Respondent R K CHEMICALS, MUMBAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 25-02-2011
Date Of Final Hearing 12-04-2010
Next Hearing Date 12-04-2010
Assessment Year misc
Appeal Filed On 04-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI R.S.PADVEKAR JM IT(SS)A NO.63/MUM/2009 BLOCK PERIOD ASST.YEAR 1989-90 TO 1999-2000 THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 13(3) MUMBAI. VS. M/S.R.K.CHEMICALS 21 BALKRISHNA CHAMBERS 1/4 ISSAJI STREET OFF SAMUEL STREET VADGADI MUMBAI 400 003. PAN : AADFR3849P. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.PEERYA RESPONDENT BY : SHRI K.GOPAL O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED CIT(A) ON 12.03.2009 IN RELATION TO BLOCK P ERIOD STARTING FROM 1989-90 UP TO 1999-2000. 2. THE ONLY GRIEVANCE IN THIS APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.6 50 000 MADE BY THE ASSESSING OFFICER AS UNDIS CLOSED INCOME U/S.158BD OF THE ACT. BRIEFLY STATED THE FACTS OF THE CASE ARE T HAT A SEARCH AND SEIZURE ACTION WAS TAKEN ON THE BUSINESS AND RESIDENTIAL PREMISES OF M /S.R.K.MADHANI & CO. GROUP ON 17.12.1998. DURING THE COURSE OF SEARCH AND SEIZ URE OPERATIONS THE ASSESSEE- FIRM WAS ALSO COVERED U/S.133A OF THE ACT AS IT WAS CONNECTED WITH THE SAID GROUP. THEREAFTER AN INTIMATION WAS RECEIVED BY THE A.O. FROM ACIT MUMBAI WHO HAD FINALIZED THE ASSESSMENT PROCEEDINGS U/S.158BC IN THE CASE OF M/S.R.K.MADHANI & CO. AND ITS GROUP. SHRI GYANCHAND R.MADHANI PART NER OF M/S.R.K.MADHANI & CO. MADE A DISCLOSURE OF RS.46 LAKHS IN HIS GROUP O F CASES AS UNDER:- (A) RS.30 LAKHS IN THE HANDS OF M/S.R.K.MADHANI & CO. (B) RS.10 LAKHS IN THE HANDS OF M/S. GYAN CONSTRUC TION CO. (C) RS.6 LAKHS IN THE HANDS OF M/S.R.K.CHEMICALS. IT(SS)A NO.63/MUM/2009 M/S.R.K.CHEMICALS. 2 FURTHER DURING THE COURSE OF SEARCH ACTION AT THE RESIDENTIAL PREMISES OF SHRI GYANCHAND R.MADHANI SOME LOOSE PAPERS WERE FOUND WHICH RELATED TO THE ASSESSEE. SUCH PAPERS WERE INVENTORISED AT SR.NO.11 TO 10 AND 7 TO 1. ON THE BASIS OF INTIMATION RECEIVED FROM ACIT MUMBAI THE ASSES SING OFFICER ISSUED NOTICE U/S.158BD ON 1.11.2000. RETURN DECLARING NIL INCOME WAS FILED ON 16.11.2000. SUBSEQUENT NOTICES WERE ISSUED AND SERVED ON THE AS SESSEE. DURING THE COURSE OF SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE-FIR M SOME EVIDENCE WAS FOUND RELATING TO EXCESS CLAIM ON ACCOUNT OF SALARIES. SH RI VIPIN R.MADHANI THE PARTNER OF THE ASSESSEE-FIRM WAS QUESTIONED DURING THE COUR SE OF SURVEY WHO DENIED HAVING RECORDED ANY FICTITIOUS PAYMENT AGAINST SALARY TO I TS EMPLOYEES. THE ASSESSEE WAS GIVEN A SHOW CAUSE NOTICE ON 17.11.2000 MENTIONING THAT SHRI GYANCHAND R.MADHANI IN HIS STATEMENT DATED 18.12.1998 HAD DIS CLOSED UNACCOUNTED INCOME OF RS.6 LAKHS IN THE HANDS OF M/S. R.K.CHEMICALS WHI CH WAS NOT OFFERED FOR TAXATION. THE ASSESSEES ATTENTION WAS FURTHER INV ITED TOWARDS THE FACT THAT A SUM OF RS.50 000 WAS PAID TO HOTEL RANGSARDA WHICH WAS CLA IMED AS BUSINESS EXPENDITURE WHEREAS THIS EXPENDITURE ACTUALLY RELATED TO MARRIA GE EXPENSES. THE ASSESSEE IN REPLY TO THE ABOVE SHOW CAUSE NOTICE SUBMITTED VI DE ITS LETTER DATED 23.11.2000 THAT SHRI GYANCHAND R.MADHANI WAS IN NO WAY CONCERN ED WITH THE ASSESSEE-FIRM THOUGH HE WAS RELATIVE OF THE PARTNERS OF THE ASSES SEE-FIRM. AS REGARDS THE PAYMENT OF RS.50 000 MADE TO HOTEL RANGSARDA THE ASSESSEE REPLIED THAT IT WAS IN CONNECTION WITH THE FUNCTION OF DECADE CELEBRATION OF M/S.R.K.CHEMICALS AS WELL AS MARRIAGE OF ONE OF THE PARTNERS BROTHERS DAUGHT ER. THE ASSESSEE MENTIONED IN PARA 2 2 : HOWEVER TO AVOID THE LITIGATION AND TO BUY A PEACE OF MIND THE NECESSARY TAX THEREON WILL BE PAID WITHIN A WEEKS T IME THROUGH REVISING THE RETURN OF INCOME . THE ASSESSEE FURTHER VIDE ITS LETTER DATED 23.11 .2000 SUBMITTED THAT AT THE TIME OF SEARCH A GENERAL DISCLOSURE OF RS.6 LAK HS TOWARDS ASSESSEE-FIRM WAS MADE WITHOUT GOING THROUGH THE DETAILS OF THE BOOKS OF ACCOUNT AND ALSO AT THAT TIME RETURNS OF PARTNERS FOR FEW YEARS WERE PENDING FOR FILING. IT WAS FURTHER IT(SS)A NO.63/MUM/2009 M/S.R.K.CHEMICALS. 3 MENTIONED THAT THE PARTNERS HAVE FILED THEIR RETURN S SHOWING INCOME OF RS.3 57 628 AND RS.91 314 IN RESPECT OF SHRI VIPIN R.MADHANI AN D MRS.VIMALA G.MADHANI TOTALING TO RS.4 48 942. IN CONNECTION WITH THE PAY MENT OF RS.50 000 PAID TO HOTEL RANGSARDA THE ASSESSEE WROTE IN THIS LETTER THIS BEING THE BUSINESS PROMOTION EXPENSES IT WAS DEBITED TO PROFIT AND LOSS ACCOUNT. HOWEVER TO AVOID THE LITIGATION AND TO BUY PEACE OF MIND I AM READY TO PAY TAX ON T HE SAME . IT WAS THEREAFTER MENTIONED IN THE SAME LETTER THAT OUT OF TOTAL DISC LOSURE OF RS.6 LAKHS THE PARTNERS HAVE BEEN TAXED IN THEIR SEPARATE HANDS ON INCOME O F RS.4 48 942 AND ASSESSEE ALSO NOW OFFERED EXPENSES OF MARRIAGE AT RS.50 000 TOTAL ING TO RS.4 98 942. THE REMAINING GAP OF RS.1 01 058 WAS ALSO OFFERED BY TH E ASSESSEE AS UNDISCLOSED INCOME WITH THE OBSERVATIONS : NOW KEEPING BALANCE OF RS.1 01 058.00 AS UNDISCLOSED INCOME. TO BUY PEACE OF MIND AND AVOID THE LITIGATION AND IN ORDER TO COMPLETE THE OBLIGATION OF COMPLETE DISCLOSURE OF R S.6 LAKHS I AM PREPARED TO PAY THE 60% OF THE TAX ON RS.1 51 058.00 TAX AMOUNTING TO RS.90 635.00 . NOT CONVINCED WITH THE ASSESSEES REPLY THE A.O. MADE A DDITION OF RS.6.50 LAKHS BY CONSIDERING THE ADMISSION OF UNDISCLOSED INCOME AT RS.6 LAKHS DURING THE COURSE OF SURVEY AND FURTHER ADDITION OF RS.50 000 TOWARDS MA RRIAGE EXPENSES. THE LEARNED CIT(A) ORDERED FOR THE DELETION OF ADDITION OF RS.6 LAKHS AS WELL AS RS.50 000. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTICED THAT THE SURRENDER WAS MADE B Y SHRI GYANCHAND R.MADHANI AT THE TIME OF SEARCH ADMITTING TOTAL INCOME OF RS.46 LAKHS WHICH ALSO INCLUDED A SUM OF RS.6 LAKHS IN THE HANDS OF THE ASSESSEE-FIRM. DU RING THE COURSE OF SURVEY SHRI VIPIN R.MADHANI PARTNER OF THE ASSESSEE-FIRM OFFER ED ADDITIONAL INCOME OF RS.6 LAKHS TOWARDS CERTAIN DISCREPANCIES WHICH FACT IS BORNE OUT FROM PAGE 3 OF THE ASSESSMENT ORDER. AS THE SURRENDER MADE BY SHRI GYA NCHAND R.MADHANI AND SHRI VIPIN R.MADHANI WAS GENERAL IN NATURE THE PARTNERS OF THE ASSESSEE-FIRM FILED THEIR RETURNS DISCLOSING UNDISCLOSED INCOME OF RS.4 48 94 2. IN OUR CONSIDERED OPINION SUCH AMOUNT WAS RIGHTLY LIABLE TO BE CONSIDERED AS PART OF THE TOTAL DISCLOSURE SINCE IT(SS)A NO.63/MUM/2009 M/S.R.K.CHEMICALS. 4 SHRI GYANCHAND R.MADHANI OFFERED RS.6 LAKHS IN THE HANDS OF M/S.R.K.CHEMICALS WITHOUT MAKING ANY SEPARATE DISCLOSURE OF UNDISCLOS ED INCOME IN RESPECT OF THE PARTNERS OF THIS FIRM. TO THIS EXTENT WE ARE SATISF IED THAT THE DISCLOSURE STANDS MADE BY THE ASSESSEE THROUGH ITS PARTNERS. NOW COMING TO THE MARRIAGE EXPENSES OF RS.50 000 THE ASSESSEE DURING THE COURSE OF ASSES SMENT PROCEEDINGS FAIRLY ADMITTED VIDE ITS LETTER DATED 23.11.2000 THAT IT H AD NO OBJECTION IF THE MARRIAGE EXPENSES OF RS.50 000 WERE CONSIDERED AS ITS INCOME AND THE FURTHER REMAINING AMOUNT OF RS.1 01 058 WAS ALSO CONSIDERED AS UNDISC LOSED INCOME SO AS TO MAKE THE TOTAL UNDISCLOSED INCOME AT RS.6 LAKHS. WHEN PA RTICULAR AMOUNTS (RS.50 000 AND RS.1 01 058) WERE ADMITTED BY THE ASSESSEE TO B E ITS UNDISCLOSED INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS THERE WAS NO L OGIC FOR THE LEARNED CIT(A) TO KNOCK OUT THE SAID ADDITION. IN OUR CONSIDERED OPIN ION THE ADDITION OF RS.50 000 AND RS.1 01 058 WERE REQUIRED TO BE SUSTAINED. WE THEREFORE OVERTURN THE IMPUGNED ORDER ON THIS ISSUE AND RESTORE THE ADDITI ON OF RS.1 51 058 AS THE UNDISCLOSED INCOME OF THE ASSESSEE. 4. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 23 RD DAY OF FEBRUARY 2011. SD/- SD/- (R.S.PADVEKAR) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 23 RD FEBRUARY 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) XIII MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. IT(SS)A NO.63/MUM/2009 M/S.R.K.CHEMICALS. 5 TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.