DCIT CEN. CIR. - 40, MUMBAI v. M/s. DOLPHIN OFFSHORE ENTERPRISES LTD., MUMBAI

ITSSA 680/MUM/2003 | misc
Pronouncement Date: 23-12-2011 | Result: Allowed

Appeal Details

RSA Number 68019916 RSA 2003
Assessee PAN AAACD0522D
Bench Mumbai
Appeal Number ITSSA 680/MUM/2003
Duration Of Justice 8 year(s) 3 month(s) 3 day(s)
Appellant DCIT CEN. CIR. - 40, MUMBAI
Respondent M/s. DOLPHIN OFFSHORE ENTERPRISES LTD., MUMBAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 23-12-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 23-12-2011
Date Of Final Hearing 08-12-2011
Next Hearing Date 08-12-2011
Assessment Year misc
Appeal Filed On 19-09-2003
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH MUMBAI BEFORE SHRI J. SUDHAKAR REDDY JUDICIAL MEMBER AND SHRI V. DURGA RAO JUDICIAL MEMBER IT(SS)A NO. 680/MUM./2003 (BLOCK PERIOD : FROM 1.4.1990 TO 16.1.2001 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-40 OLD CGO BLDG. ANNEXE R.NO.606 M.K. ROAD MUMBAI 400 020 .. APPELLANT V/S M/S. DOLPHIN OFFSHORE ENTERPRISES INDIA LTD. 1001 RAHEJA CENTRE 214 NARIMAN POINT MUMBAI 400 021 PAN AAACD0522D .... RESPONDENT REVENUE BY : DR. B. SENTHIL KUMAR ASSESSEE BY : NONE DATE OF HEARING 08.12.2011 DATE OF ORDER 23.12.2011 O R D E R PER J. SUDHAKAR REDDY A.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 23 RD JULY 2003 PASSED BY THE COMMISSIONER (APPEALS)-VIII MUMBAI FOR THE BLOCK PERIOD FROM 1 ST APRIL 1990 TO 16 TH JANUARY 2001. THE GROUNDS RAISED BY THE REVENUE RE ADS AS FOLLOWS:- 2 1) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF 75 LAKHS MADE FOR THE A.Y. 1998-99 COVERED IN THE BLOCK ASSESSMENT CONSID ERING THE FACTS THAT THE REASONS FOR WHICH HE HAS CONFIRMED THE SIM ILAR DISALLOWANCE OF THE INCRIMINATING NATURE OF ENTRIES PERTAINING TO R S.30 LAKHS THE SAME EQUALLY HOLDS GOOD FOR INCRIMINATING NATURE OF ENTR IES OF RS.75 LAKHS ALSO. THERE IS NO NECESSITY OF INVOKING PROVISO TO SEC.69 C TO SUSTAIN THE ADDITIONS THE MAIN SEC.69C IS SUFFICIENT TO SU PPORT THE ADDITIONS. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN DELETING ADDITION OF RS.1 37 68 229/- WHICH WERE BASED ON THE ENTRIES FOUND IN THE DIARY SEIZED DURI NG THE COURSE OF SEARCH ACTION AND CONSIDERING THE FACTS THAT PLEA T AKEN BY THE ASSESSEE BEFORE THE LD.CIT(A) WAS AFTER THOUGHT AND DIFFERENT THEN STATING DURING THE COURSE OF THE SEARCH WHEREIN IT WAS EXPLAINED THAT THE ENTRIES MENTIONED IN THE DIARY ARE COVERED UNDE R DISCLOSURE OF RS.3 CRORES MADE BY THEM. FURTHER THE ASSESSEE HAS FAILE D TO PRODUCE THE EVIDENCE TO PROVE THE CONTENTION THAT THE PAYMENTS WERE MADE BY WAY OF ADVANCES AND NO SUCH EXPENDITURE WAS DONE A LTHOUGH THE TERMS USED IN THE DIARY ARE RECEIPT & PAYMENTS. T HE ASSESSEE NEITHER COULD PROVE THE SOURCE OF RECEIPT NOR COULD THEY PROVE THE GENUINENESS OF THE EXPENSES. 2. THIS APPEAL WAS FILED ON 19 TH SEPTEMBER 2003. THE CASE HAS BEEN COMING UP FOR HEARING REGULARLY FROM THAT DATE. NON E APPEARED ON BEHALF OF THE ASSESSEE ON ANY OF THE DATES OF HEARING. THE TR IBUNAL HAS BEEN SENDING NOTICES THROUGH REGISTERED POST WITH ACKNOWLEDGEMEN T CARD TO THE ASSESSEE INFORMING HIM ABOUT THE DATE OF HEARING. NONE FILED VAKALATNAMA. 3. ON 28 TH AUGUST 2007 30 TH MARCH 2011 AND 26 TH JULY 2011 THE TRIBUNAL HAS ORDERED THE INCOME TAX DEPARTMENT TO SERVE NOTI CE ON THE ASSESSEE. 4. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIVE DR. B. SENTHIL KUMAR ON BEHALF OF THE REVENUE HAS PRODUCED EVIDE NCE THAT NOTICE HAS BEEN SERVED ON THE ASSESSEE. DESPITE THE SAME NONE APPEARED ON THIS DATE ALSO. UNDER THESE CIRCUMSTANCES WE ARE OF THE OPIN ION THAT NO FURTHER ADJOURNMENTS SHOULD BE GRANTED IN THIS CASE. THUS AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE WE PROCEED TO DISPOSE OFF THE REVENUES APPEAL EX-PARTE ON MERITS QUA THE RESPONDENT ASSES SEE. 5. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE AND HAVE PERUSED THE MATERIAL AVAILABLE BEFORE US. 3 6. BRIEF FACTS OF THE CASE AS BROUGHT OUT BY THE COMM ISSIONER (APPEALS) IN PARA-2 OF THE IMPUGNED ORDER READS AS FOLLOWS:- 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVI DING SERVICES MAINLY TO THE OFFSHORE OIL AND GAS RIGS. IT HAD SHI PPING AND OTHER MARITIME ACTIVITIES ALSO. SEARCH AND SEIZURE OPERAT ION U/S. 132 OF THE INCOME TAX ACT WAS CONDUCTED IN THE ASSESSEES BUSI NESS PREMISES AND RESIDENTIAL PREMISES OF ITS DIRECTORS ON 16.01. 2001. NOTICE U/S. 158BC WAS ISSUED ON 27.04.2001 AND ASSESSEE COMPANY FURNISHED RETURN OF INCOME ON 31.10.2001 DECLARING UNDISCLOSE D INCOME OF RS.36 86 867/- FOR THE BLOCK PERIOD. THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS.2 96 14 220/- . 7. THE SUBMISSIONS MADE BY THE LEARNED DEPARTMENTAL RE PRESENTATIVE READ AS FOLLOWS:- THERE WAS AN ACTION U/S 132 OF I.T. ACT. IN THE CA SE OF THE ASSESSEE AND ITS GROUP COMPANIES AND ALSO IN THE RESIDENTIAL PREMISES OF DIRECTORS ON 16.1.2001. VARIOUS INCRIMINATING DOCU MENTS CASH AND JEWELLERY WERE SEIZED. THE ASSESSEE COMPANY MADE A DISCLOSURE OF RS.3 CRORES DURING THE COURSE OF SEARCH ITSELF OUT OF WHICH RS.2.6 CRORES WERE OFFERED IN THE HAND OS THE COMPANY AND BALANCE RS.40 LAKHS IN THE 6 DIRECTORS HAND. THE ASSESSEE FILED A BLOCK RETURN ADMITTING UNDISCLOSED INCOME OF RS.36 86 867. 2. A.O. MADE AN ADDITION OF RS. 30 LAKHS AND 75 LAK HS U/S 69C TOWARDS UNEXPLAINED EXPENDITURE INCURRED UNDER THE HEAD MISCELLANEOUS EXPENDITURE BASED ON 2 INCRIMINATING DOCUMENTS PAGE NO.63 & PAGE NO.61 OF SEIZED DOCUMENTS ANN.A-3. THE SEIZED SHEET OF PAPER CLEARLY INDICATED THAT ALL THE OTHER EXPEN DITURE NOTED WERE ACTUAL AND HAS BEEN ACCOUNTED FOR IN THE BOOKS OF A CCOUNT EXCEPT THE EXPENDITURE TOWARDS MISCELLANEOUS EXPENSES. FURTHER THE A.O. MADE AN ADDITION BASED ON THE STATEMENT RECORDED SHRI SA TPAL SINGH DIRECTOR LOOKING AFTER THE OPERATIONS U/S 132(4). THOUGH THE ASSESSEE RETRACTED THE STATEMENT BUT IT WAS NOT CORROBORATED WITH EVIDENCES. THE CIT(A) IN PARA 6.20 OF HIS ORDER HAS GIVEN A CL EAR FINDING THAT MISCELLANEOUS EXPENDITURE IS NOTHING BUT A KIND OF PAYOFF INCURRED BY THE ASSESSEE IN EXECUTING THE CONTRACT SAMUDRA SARV EKSHAK CARRIED OUT FOR ONGC. 3. THOUGH IN PRINCIPLE THE CIT(A) HAS UPHELD THE AD DITION MADE BY AO U/S 69C IN RESPECT OF RS.30 LAKHS BUT GAVE A RE LIEF OF 75 LAKHS INVOKING THE PROVISO TO SECTION 69C WHICH WAS INSER TED BY FINANCE ACT 1998 WITH EFFECT FROM 1.4.1999. THE AO HAS MADE AN ADDITION OF THE MISCELLANEOUS EXPENDITURE AS DEEMED INCOME INVOKING THE SUBSTANTIVE PROVISION OF SECTION 69C. THE CIT(A) HAS NOT GIVEN ANY FINDING THAT RS.75 LAKHS INCURRED IS NOT A DEEMED INCOME. THERE FORE THE FINDING OF THE CIT(A) IS CONTRARY TO THE FACTS OF THE ASSES SEES CASE. THE 4 PROVISO BARS THE ASSESSEE FROM CLAIMING THE DEDUCTI ON OF SUCH DEEMED INCOME UNDER ANY OTHER HEAD OF INCOME WHICH IS NOT THERE IN ASSESSEES CASE. 4. WITH REGARD TO THE SECOND GROUND OF APPEAL OF AD DITION OF RS.1 37 68 299 WHICH IS BASED ON THE NOTINGS MADE I N THE DIARY SEIZED DURING THE COURSE OF SEARCH HAS BEEN DISCUSS ED IN DETAIL BY THE AO IN PAGE 8 PARA 6 (VII) OF HIS ORDER. THOUGH THE RE WERE ALTERNATE DEBIT AND CREDIT ENTRIES BUT STILL IN THE ABSENCE O F ANY EVIDENCE TO PROVE THE AO DID NOT ACCEPT THE CLAIM OF THE ASSESS EE THAT THE PAYMENTS MADE WERE ADVANCES GIVEN TO THE CREW OF TH E SHIPS TO MEET THEIR OFFSHORE EXPENDITURE. IN ADDITION TO THE ABO VE THE RECEIPT OF MONEY FROM VARIOUS PERSONS FOR EXAMPLE THE RECEIP T FROM SHRI NAVPREET SINGH OF RS.13290460 THE SOURCE OF RECEIP T OF MONEY HAS NOT BEEN PROVED/EXPLAINED. THUS BOTH THE RECEIPT A S WELL AS THE PAYMENT HAS NOT BEEN SUBSTANTIATED. IN VIEW OF THI S THE AO HAS MADE THE ADDITION. HOWEVER WITHOUT APPRECIATING T HIS FACT THE CIT(A) HAS ACCEPTED THE PEAK NEGATIVE BALANCE OFFER ED BY THE ASSESSEE. IN THE ABSENCE OF ANY MATERIAL TO ESTABL ISH SUCH RECEIPTS AND PAYMENTS THE CIT(A) SHOULD NOT HAVE ACCEPTED T HE ASSESSEES CONTENTION. 5. IN VIEW OF THE SUBMISSION IT IS PREYED THAT TH E ACTION OF AO MAY BE UPHELD AND THE ACTION OF CIT(A) MAY BE SET-A SIDE. 8. WE ARE IN AGREEMENT WITH THE AFORESAID SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. IN THE ABSENCE OF ANY ARGUMENTS / SUBMISSION ON BEHALF OF THE ASSESSEE WE ALLOW THE GROUNDS RAI SED BY THE REVENUE. 9. IN THE RESULT REVENUES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER 2011 SD/- V. DURGA RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI DATED: 23 RD DECEMBER 2011 5 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A) MUMBAI CONCERNED; (4) THE CIT MUMBAI CITY CONCERNED; (5) THE DR D BENCH ITAT MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT MUMBAI BENCHES MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 8.12.2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 9-14.12.11 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 14.12.2011 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 14.12.2011 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 14.12.2011 SR.PS 6. DATE OF PRONOUNCEMENT 23.12.2011 SR.PS 7. FILE SENT TO THE BENCH CLERK 29.12.2011 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER