Income Tax Appellate Tribunal - Mumbai
Rajendra Surendra Desai, Mumbai vs Acit Cir 4, Thane on 31 January, 2019
आयकर अपीलीय अधिकरण "D " न्यायपीठ मब
ुं ई में ।
IN THE INCOME TAX APPELLATE TRIBUNAL " D" BENCH, MUMBAI
श्री महावीर स हिं , न्याययक दस्य एविं श्री राजेश कुमार लेखा दस्य के मक्ष ।
BEFORE SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM
Aayakr ApIla saM . / ITA No. 2938/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2009-10)
Aayakr ApIla saM . / ITA No. 2939/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2010-11)
Aayakr ApIla saM . / ITA No. 2940/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2011-12)
Vastiben Mahesh Shah, The Commissioner of
302, Tower-C, 3oth Floor, Income Tax (Appeals) -3,
Kalpatru Towers, Opp. ESIS Vs. Thane
Hospital, Kandivali (East),
Mumbai-400 101
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
स्थायी ले खा िं . / PAN No. ASRPS1935M
Aayakr ApIla saM . / ITA No. 2941/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2009-10)
Aayakr ApIla saM . / ITA No. 2942/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2010-11)
Aayakr ApIla saM . / ITA No. 2943/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2011-12)
Mahesh Laxmichand Shah The Commissioner of
302, Tower-C, 30 t h Floor, Income Tax (Appeals) -3,
Kalpatru Towers, Opp. ESIS Vs. Thane
Hospital, Kandivali (East),
Mumbai-400 101
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
स्थायी ले खा िं . / PAN No. ALPPS1667P
2
Aayakr ApIla saM . / ITA No. 2944/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2009-10)
Aayakr ApIla saM . / ITA No. 2945/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2011-12)
Rajendra Surendra Desai The Commissioner of
302, Tower-C, 30 t h Floor, Income Tax (Appeals) -3,
Kalpatru Towers, Opp. ESIS Vs. Thane
Hospital, Kandivali (East),
Mumbai-400 101
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
स्थायी ले खा िं . / PAN No. ALPPS1667P
अपीलाथी की ओर े / Appellant by : Shri Kiran Pancholi, AR
प्रत्यथी की ओर े / Respondent by : Shri Tanya Anjaria, DR
ुनवाई की तारीख / Date of hearing: 15-11-2018
घोषणा की तारीख / Date of pronouncement : 31-01-2019
AadoSa / O R D E R
PER MAHAVIR SINGH, JM:
These appeals of three different assessee's are arising out of the different orders of Commissioner of Income Tax (Appeals)-3, Mumbai [in short CIT(A)], in Appeal No. 342,343,344,345,346,347-THN/2015-16, 02,03-THN/2016-17 vide even order dated 01/03/2017. The Assessments were framed by the Asst. Commissioner of Income Tax, Circle-4, Thane (in short 'ACIT'/'ITO'/ AO') for the A.Ys. 2009-10,2010-11,2011-12 vide orders dated 29.12.2011, 29.12.2011, 25.03.2013, 28.03.2013, 28.03.2014 under section 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act'). The penalties were levied under section 271(1)(c) of the 3 Act for AYs 2009-10,2010-11,2011-12 vide orders dated 25.03.2014, 25.09.2014, 16.03.2016, 23.09.2014 , 16.03.2016.
2. All these eight appeals contain same facts and issue is also be same. Hence, we will take the facts and issue from ITA No. 2938/Mum/2017 for AY 2009-10 in the case of Vastiben Mahesh Shah. The issue in this appeal is regarding levy of penalty by AO under section 271(1)(c) of the Act and confirmed by CIT(A) in respect to estimated income charged on cash deposit in bank accounts, which provided entries to various parties i.e. the loans or deposits. The relevant ground raised by the assessee reads as under : -
"The learned CIT(Appeals)-3, Thane erred in not appreciating the facts that the Assessee had fully discharged the onus of proving that there was neither any undisclosed income of the Assessee nor any inaccurate particulars filed by the Assessee by producing Mr. Naresh Shah in front of Assessee's own Assessing Officer at the relevant tax proceedings who had recorded Mr. Naresh Shah's Statement on Oath along with Mr. Naresh Shah's duly Noturized Affidavits taken on records of Income lax Department in which Mr. Naresh Shah had accepted unconditionally the turnover done by him in Assessee's name thru Assessee's bank accounts and CIT(Appeals)-3, Thane further erred in passing on to the Assessee the carelessness of the Income Tax Department for not recovering due income tax from Mr. Naresh Shah who had accepted in writing the turnover of transactions involved but just appealed on the ad-hoc income % charged on those transactions to levy income tax and accordingly 4 CIT(Appeal)-3, Thane wrongly confirmed the penalty u/sec. 271(1)(c) on the Assessee of Its. 8,59,616/-."
3. We have heard the rival contentions and gone through the facts and circumstances of the case. At the outset, we have gone through the penalty order of the AO under section 271(1)(c) of the Act for AY 2009-10 vide dated 25-03-2014, wherein the AO levied the penalty by observing as under: -
Aggrieved by the order of the AO, the assessee preferred an appeal with the CIT(A)-II, ......... who later on allowed the appeal to be withdrawn. Since, the appeal was withdrawn by the assessee, it implies that the assessee has agreed for the addition made while passing the assessment order under section 143(3) of the Act. However, in the interest of natural justice, one more letter issued to the assessee on 26.02.2014, in this regard to show cause as to why penalty under section 271(1)(c) of the IT Act should not be levied. The case is fixed for hearing on 06.03.2014. Nobody attended on the above date nor any details filed.
In the absence of any proof and satisfactory explanation for the sum of ₹ 24,79,768/- being 1% of the total credit receipts and 1% of the total deposits and ₹ 50,263/- being depreciation on asset disallowed for want to proof, I levy minimum penalty of ₹ 8,59,616/- (Rupees Eight lakh fifty nine thousand six hundred and sixteen only) under section 271(1)(c) of the IT Act, 1961.
4. Further, we have gone through the order of CIT(A) who has affirmed the action of the AO levying penalty under section 271(1)(c) of 5 the Act, we noticed that the CIT(A) also affirmed the penalty by observing as under: -
"(i) Considering the totality of the facts of the case, I am of the considered opinion that, the assessing officer has rightly imposed penalty for concealment of income u/s.271(1)(c) and I confirm the same on the following reasons as follows:
A) As already discussed in the facts of the case above, it is a known fact that, the appellant along with Mr. Naresh K. Shah are involved in providing accommodating bill entries to customers, for which (2+1)=3 bank accounts have been opened and operated in his name of the appellant only. The entire credit entries in the (2+1)=3 bank accounts have not been reflected in the books of accounts as the total turnover of the appellant, therefore, the AO worked out the undisclosed commission income for providing accommodation bills @ Rs.24,78,417/-
plus addition of Rs.50,263/- for filing inaccurate particular, being disallowance of depreciation in absence of documentary evidence.
b) In fact, the appellant has withdrawn the quantum appeal flied before the then CIT(A)-II, Thane. Here also, the appellant is giving a contradictory stands- first, he says that due to misleads made by the then C.A and on the other hand, appeal was voluntarily withdrawn to buy peace of mind.
c) The estimation @ 1% of undisclosed commission has been made on the basis of credit entries in (2+1)=3 bank accounts not reflected in the books of 6 accounts, therefore, the appellant cannot say that, on estimation of income, there cannot be concealment. The Hon'ble jurisdictional Tribunal has upheld commission income © t% of the turnover in the case of M/s.Saroj Anil Steel P. Ltd. vs. lTD Ward
-3(4), Thane in ITA No.8932/Mum/2010 A.Y.1996- 97; ITA No.8933/Mum/2010 A.y.1997-98 & ITA No.5853/Mum/2012 A.Y.1998-99 order dated 04.04.2014.
d) The notorized affidavits of the appellant and Mr.Naresh K. Shah by statin that, similar additions have been made in both the hands cannot be relied upon, because the complete details have not been provided as on what basis Mr.Naresh K. Shah has offered the same amount to tax, for which, it requires party wise details, which has been audited by the auditors u/s.44AB, however, such details were not furnished even at the time of assessment proceedings.
e) Mr.Naiesh K. Shah is assessed with ACIT Or 2, Thane, having PAN:BAQPS9096D. The ACIT Cir.2, Thane, vide letter No. THN/ACIT/C-2/2016-17/2330 dated 22.02.2017 has communicated that against the order passed for A.Y.2009-10, Mr. Naresh K. Shah has filed an appeal to the Hon'ble ITAT, Mumbai for A.Y.2009-10, vide appeal no.7659/Mum- 2016. It is further reported that Mr. Naresh K. Shah has not filed his return of income for A.Ys.2010-11 and 2011-12. Therefore, the affidavits are not reliable because Mr. Naresh K. Shah is still disputing the quantum appeal and for A.Ys.2010-11 7 & 2011-12, he has not filed the return income as reported by the ACIT Cir-2, Thane.
f) In the penalty proceedings, the appellant has not attended before the assessing officer, therefore, based on the findings in the assessment order and since the appellant has withdrawn the appeal, the AO imposed penalty for concealment of income. The appellant has never argued that, the addition made by the AO on account of undisclosed commission income does not tantamount to concealment of income in the penalty proceedings. The only argument of the appellant is that the same addition has been made in the hands of Mr. Naresh K. Shah, however, this contention of the appellant has been rebuted in the above Paras.
g) The undisclosed commission income was not a voluntary disclosure as the same was not reflected in the books of accounts of the appellant and the same was identified only after the verification of the (2+1)=3 bank accounts by the assessing officer. Therefore, it is a fit case to levy penalty for concealment u/s.271(1)(c) of the Act.
In view of the above stated facts, the appeal of the appellant on this ground is dismissed and the penalty imposed u/s.271(1)(c) by the assessing officer is confirmed."
5. We have also noticed that the Tribunal in the case of Naresh Kantilal Shah in ITA No. 7659/Mum/2016 for AY 2009-10 vide order dated 18.04.2018, has set aside the assessment to the file of the AO by observing as under: -
8"12. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We have deliberated on the contentions raised by the ld. A.R before us and are of the considered view that as observed by us hereinabove on the basis of the material placed on record, the assessee having being implicated in serious criminal cases lodged against him had thus remained mentally disturbed and engrossed in meeting out the same. We further find substantial force in the contentions of the ld. A.R that due to the ongoing serious criminal proceedings lodged against the assessee and mounting pressure and threats from the creditors for repayment of debts, bitter relations for the said reasons had emerged between the assessee and his brother Sh. Rajesh Shah, and as the assessee was compelled to shift his residence from his old house, viz. A-43 Pannalal Terrace, Third Floor, Dr. D.B. Marg, Grant Road (E), Mumbai to his mothers house at CTS No. 549 Memanwas, Dhanera, District Banskantha, Gujarat, therefore, he remained unaware of the notices/orders which were being served by affixture at his old address. Rather, we find that the fact that the assessee was compelled to leave his old house by his brother due to the suffering which the latter and his family were subjected to because of the criminal proceedings lodged against the assessee and the threats given to them by the creditors of the assessee is supported by the affidavit of Sh. Rajesh Shah (brother of the assessee), wherein he had admitted the said factual position. We are of the considered 9 view that in the backdrop of the aforesaid facts, the claim of the revenue of having served the assessment order along with the notice of demand on the assessee by affixture on 17/01/2012 at his aforesaid old address of the assessee has to be considered alongwith the fact that the assessee under the aforesaid compelling circumstances was not any more putting up at the said address. We though are not oblivious of the fact that in case of any change of address the assessee remains under a statutory obligation to intimate the department about the same, but however, as observed by us hereinabove, keeping in view the serious criminal cases slapped on the assessee at the relevant point of time, the said lapse on his part can fairly be comprehended in the backdrop of his disturbed state of mind and having remained engrossed in the multiple litigations. Be that as it may, we are of the considered view that for the afore stated reasons as had been deliberated upon by us at length hereinabove, it can safely be concluded that the assessee for bonafide reasons could not participate in the proceedings before the lower authorities. We thus are of the considered view that in order to do even ended justice on merits in preference to an approach which scuttles a decision on merits, the matter be restored to the file A.O for fresh adjudication. That as we have restored the case to the file of the A.O for fresh adjudication , therefore, we refrain from adverting to the contentions advanced before us on the merits of the case, which the assessee shall be at a liberty to raise before the A.O. Needless to say, the A.O shall while framing 10 the set aside assessment afford reasonable opportunity of being heard to the assessee who shall appear before the A.O during the course of the assessment proceedings."
6. In view of the above facts and chronology of events, it was argued by the learned Counsel that Shri Naresh Kantilal Shah was the man behind the entire deposits made in various bank accounts including all the assessee's mentioned above. We find that none of the authorities below i.e. the AO while levying the penalty and CIT(A) while confirming the penalty has not considered the facts at all as is apparent from the orders reproduced above, we have no alternative except to set aside these orders that of the AO and CIT(A) and remand the matter for levy of penalty under section 271(1)(c) of the Act back to the file of the AO. Needless to say, the AO will examine the facts after allowing reasonable opportunity of being heard to the assessee and after that will decide whether to levy penalty under section 271(1)(c) of the Act or not as per the provisions of the Act.
7. Since the facts and circumstances are exactly identical in all the eight appeals, the orders of the lower authorities in all these eight appeals are set aside and the matter is remanded back to the file of the AO.
8. In the result, the appeals of assessees' are allowed for statistical purposes.
Order pronounced in the open court on 31-01-2019.
Sd/- Sd/-
(राजेश कुमार / RAJESH KUMAR) (महावीर स ह
िं /MAHAVIR SINGH)
(लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER)
मिंब
ु ई, ददनािंक/ Mumbai, Dated: 31-01-2019. सदीप सरकार, व.निजी सधिव / Sudip Sarkar, Sr.PS 11 आदे श की प्रनिललपप अग्रेपिि/Copy of the Order forwarded to :
1. अपीलाथी / The Appellant
2. प्रत्यथी / The Respondent.
3. आयकर आयुक्त(अपील) / The CIT(A)
4. आयकर आयुक्त / CIT
5. ववभागीय प्रयतयनधि, आयकर अपीलीय अधिकरण, मुिंबई / DR, ITAT, Mumbai
6. गार्ड फाईल / Guard file.
आदे शािसार/ BY ORDER, त्यावपत प्रयत //True Copy// उप/सहायक पुंजीकार (Asstt. Registrar) आयकर अपीलीय अधिकरण, मुिंबई / ITAT, Mumbai