Income Tax Appellate Tribunal - Mumbai
Anil T, Mehra, Mumbai vs Department Of Income Tax on 30 November, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH: MUMBAI
BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT
AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER
ITA No.3593/Mum/2009
(Assessment year: 2003-04)
ITO -20(1)(1),
Room No.702, 7th Floor,
Piramal Chamber, Parel,
Mumbai -400 012 ......... Appellant
Vs
Shri Anil T. Mehra,
Prop. of M/s. Ancons,
B-208, Ayushi Apartments,
J.B. Nagar, Andheri (East),
Mumbai -400 059 ........ Respondent
PAN: AAHPM 1904 A
Appellant by: Shri Ashin Kumar Modi
Respondent by: None
Date of Hearing: 30.11.2011
Date of Pronouncement: 28.12.2011
ORDER
PER R.S. PADVEKAR, JM
In this appeal the revenue has challenged the impugned order of the Ld. CIT (A) Mumbai dated 03.03.2009 for the A.Y. 2003-04. The revenue has taken the following grounds in the appeal:-
"I. The learned CIT (A) has erred on facts and in law and in the circumstances of the case in deleting the addition of ` 35 lakhs made by the AO as per the declaration made by the assessee at the time of Survey u/s.133A and confirmed on oath u/s.131 of the I.T. Act.
II. The learned CIT (A) has erred on facts and in law and in the circumstances of the case in not appreciating the facts
2 ITA 3593/Mum/2009 Shri Anil T. Mehra that the DEPB income has arising out of the export activity of the assessee and not from the manufacturing of production activity of the assessee and the said income is not derived from the Industrial Undertaking. Failed to appreciate the facts that the assessee in his statement on oath u/s.131 of the I.T. Act, accepted the inflation in expenses claimed and now reflected as liability on account of Sundry creditors for goods and expenses and offered additional income of ` 35 lakhs as per the provision of Sec.41(1) of the I.T. Act for the A.Y. 2002-03 and undertook to make necessary entries in his books to reduce the liability on account of Sundry creditors for goods and expenses as one the last day of survey.
III. The learned CIT (A) has erred on facts and in law and in the circumstances of the case in not appreciating the decision of Bombay High Court in the case of Shri Ramdas Motror Transport Ltd. (2002) 251 ITR 428 and decision of Hon'ble Supreme Court in the case of Union Singh Chabria vs. Union of India (1 SCC 508) which deal directly with the same issue.
IV. The appellant prays that the order of the CIT (A) on the above grounds be set aside and that of the AO be restored."
2. In this case, Ld. D.R. for the assessee is present and none is present for the assessee. It is seen that the notice has been properly served on the assessee. On the last date of the hearing i.e. 11.10.2001 none remained present for the assessee. We are, therefore, of the opinion that the assessee is not interested in defending his appeal, hence, we proceed to dispose off this appeal on 3 ITA 3593/Mum/2009 Shri Anil T. Mehra merit after hearing the Ld. D.R. and as per the material available on record.
3. The first issue is regarding the deletion of the addition made by the A.O. in respect of the disclosure made by the assessee in the survey action u/s.133A of ` 35 lakh.
4. Briefly stated facts which are revealed from the records as under. It appears that the assessee was not filing the regular returns. Assessment for the A.Y. 2003-04 was completed u/s.144 of the Act as the assessee did not respond to the various notices issued by the A.O. In the said assessment, the assessee's income was determined u/s.44AD as the assessee was engaged in the business of the civil construction. After calling the information from the bank where the assessee was maintaining his account. There was survey action against the assessee on 13.08.2002 u/s.133A of the Act and during the course of the survey the assessee had declared ` 35 lakhs as his additional income over and above the income for the A.Y. 2003-04. The Ld. CIT (A) Mumbai set aside the assessment order and directed the A.O. to reframe the assessment filed for the A.Y. 2003-04. As per the directions of the Ld. CIT (A) Mumbai the A.O. the A.O. proceeded to frame the fresh assessment in the light of the declaration made by the assessee in the survey action. The A.O. issued questionnaire to the assessee. The assessee contended that the declaration of income of ` 35 lakhs was obtained under coersion and force by the survey party.
5. The A.O. rejected the said plea of the assessee by noting that the survey was conducted in peaceful manner and no threat or coersion was used by the Survey Party. The A.O. has noted that during the survey proceedings the under statement of income was worked out by the Survey Party and on the basis of the said working the assessee made declaration. It was noticed by the Survey Party 4 ITA 3593/Mum/2009 Shri Anil T. Mehra that for the A.Y. 1996-97 to A.Y. 2001-02 the assessee has gross contract receipts of ` 9,93,56,249/- on which the assessee had declared the net profit at ` 38,50,458/-. In the opinion of the A.O. considering the provisions of sec.45AD of the Act, the assessee should have declared the net profit @ 8% i.e. ` 9,93,56,244/- which was worked at ` 79,48,499/- and the assessee has declared the profit of ` 38,50,458/- for above six assessment years. In the opinion of the A.O. there was sufficient material recovered by the Survey Party and hence, the assessee himself had made voluntary offered additional income. The assessee carried the matter before the Ld. CIT (A) raising the different grievances in respect of declaration/offer of income, how same was obtained during survey operation. Before the Ld. CIT (A) the assessee contended that no evidence or incriminating material was fond in the survey action to prove that the assessee has understated the income to the extent of ` 35 lakhs for the six assessment years and only on the estimate basis so called suppressed profit was determined. It was also pleaded that on the basis of the gross receipts of the preceding six years, the addition is made in the A.Y. 2003-04 and no where it is the case of the A.O. that to that extent the assessee has understated income for the A.Y. 2003-04. The Ld. CIT (A) accepted the plea of the assessee and deleted the entire addition and operative part of the order of the Ld. CIT (A) is as under:-
"4.3 I have carefully considered the assessment order and the arguments and submissions of the AR as discussed above for deciding this ground of appeal. It is noticed that the addition of Rs.35 lakhs declared by the appellant during the survey proceedings is worked out on the basis of difference between the estimation of the appellant's income @ 8% of the gross contract receipts found to be credited in his bank account, pertaining to the assessment years 1996-97 to 2001-02 and the net profit already disclosed by the appellant in his respective returns of income. This is evident from the relevant part of the assessment 5 ITA 3593/Mum/2009 Shri Anil T. Mehra order reproduced above, wherein the AO has computed estimated income of the appellant @ 8% of gross contract receipt of ` 79,48,499/- and reduced there from the net profit as per return of income already disclosed in the respective assessment years of ` 38,50,556/- and, accordingly worked out the difference as under
statement of income of ` 40,98,071/- of the appellant . The AO, therefore, taking into consideration, the declaration of the appellant made additions of ` 35 lacs instead of ` 40,98,041/- computed for this purpose, as discussed above. From the working as well as the manner of computation resorted to for the computation of understated income of the appellant, as noted above, it is clear that same is purely based on ad-hoc basis, without bringing any evidence on record. Even otherwise, if the said estimation is considered to be correct, the addition worked out should have been made in the respective assessment years and not in the present assessment year. It is a sett1ed law that as per the scheme of the Income-tax Act, the income of an assessee for a particular pervious year relevant to the concerned assessment year is only to be assessed in the relevant assessment year. The income pertaining to one year cannot be clubbed or assessed in another assessment year. If the AO had valid reasons or evidence that the appellant has concealed or not disclosed income of a particular assessment year, the various provisions of the Act require that the concerned assessment year should have been reopened and the income so found and not disclosed in the relevant assessment should have been re- assessed as pie law. However, from the facts as discussed above, the AO instead of following the required provisions of law, chosen to compute the entire such additional income pertaining to A.Yrs1996-97 to 2001-02, in the A.Y.2003-04. I find that same is not warranted since the same is found to be contrary to the basic provisions of the Act. The declaration or disclosure made by the appellant during' the survey based on above mentioned facts are 6 ITA 3593/Mum/2009 Shri Anil T. Mehra also found to he against the basic provisions of the Act. There is no material or evidences brought on record, which suggest that the appellant has earned the declared income in the previous year relevant to current assessment year. There is no evidence or findings brought on record by survey team or by the AO, in the assessment order that any undisclosed asset, cash or bullion was found during the survey, for making such an addition in the hands of the appellant in the relevant assessment year. On the contrary, from the assessment order, it is more than evident that the addition is made blindly following the declaration of the appellant worked out on the basis of difference between estimated income computed for the A.Yrs.1996-97 to 2001-02 and the net profit disclosed in the concerned assessment years as discussed above. There are no evidences or any incriminating material found in survey to suggest that the net profit shown in the current assessment years is understated by the appellant to the extent of ` 35 lakhs.
4.3.1 The income pertaining to the current assessment year as discussed above in the para 3 of this order is separately worked out @ 8% of his gross contract receipts credited in his bank account, in the absence of proper books of account maintained by the appellant. Therefore, based on these facts and aforesaid discussion, I am of the considered opinion that the AO is not justified in making such an addition of ` 35 lakhs in the ease of the appellant for the current assessment year. I also find that the declaration made by the appellant in the absence of supporting documentary evidences is of no use or help. If there is no evidence against the appellant to prove the above addition made, I am of the considered opinion that under the given circumstances, AO is not required to make the addition, just of the sake of making an addition. Nevertheless, even if it is construed that the AO is fair and reasonable to estimate net contract income 7 ITA 3593/Mum/2009 Shri Anil T. Mehra of the appellant @ 8% of gross contract receipts for the relevant assessment years, I find that the AO should have proceeded to re-assess the escaped income of relevant assessment years of the appellant, as per various provisions of the Act. His action to assess the income pertaining to A.Y. 1996-97 to 2001-02 in the A.Y. 2003-04, as discussed above, is found to be without any evidence or basis and therefore, I consider the same to be unjustified and unwarranted. Therefore, the AO is directed to delete the entire addition of ` 35 lakhs made on this account.
This ground of appeal is accordingly allowed."
5. Now, the revenue is in appeal before us.
6. We have heard the Ld. D.R. who strongly supported the order of the A.O. We have gone through the assessment order. We find that the A.O. has considered the assessment orders for A.Ys. 1996-97, 1997-98,1998-99,1999-2000,2000-2001 and 2001-02 for the alleged understatement of the income as per the working made by the A.O. If at all the income was understated by the assessee then the same should be in the preceding years and not in the A.Y. 2003-04. Nothing is there on record for the A.Y. 2003-04 to prove that the assessee has understated the income for the A.Y. 2003-04. We, therefore, concur with the view of the Ld. CIT (A) that the alleged understatement of the income has no relevance to the A.Y. 2003-04. In our opinion, the Ld. CIT (A) has rightly deleted the addition and we accordingly confirm the same.
7. The Ld. Counsel submits that the revenue has also declared ground on the DEPB which is by a mistake and has no relevance with the present assessee. He further submits that no issue is arising in respect of the addition u/s.41(1), hence, the ground on the said issue is wrongly taken. As the issue of the DEPB and addition u/s.41(1) 8 ITA 3593/Mum/2009 Shri Anil T. Mehra has no relevance with the assessment made by the A.O. the said grounds are infructuous and we dismiss the same.
8. In the result, revenue's appeal is dismissed.
Order pronounced in the open court on this day of 28th December, 2011.
Sd/- Sd/-
(G.E. VEERABHADRAPPA) (R.S. PADVEKAR)
PRESIDENT JUDICIAL MEMBER
Mumbai, Date: 28th December, 2011
Copy to:-
1) The Appellant.
2) The Respondent.
3) The CIT (A)-XX, Mumbai.
4) The CIT- 20, Mumbai.
5) The D.R. "A" Bench, Mumbai.
By Order
/ / True Copy / /
Asstt. Registrar
I.T.A.T., Mumbai
*Chavan
Order pronounced in the open court on 28.12.2011 Sd/- Sd/-
(JSR) (RSP)
9 ITA 3593/Mum/2009
Shri Anil T. Mehra
Sr.N. Concerned
Episode of an order Date Initials
1 Draft dictated on 07.12.2011 Sr.PS
2 Draft placed before author 13.12.2011 Sr.PS
3 Draft proposed & placed before the second Member JM/AM
4 Draft discussed/approved by Second Member JM/AM
5 Approved Draft comes to the Sr.PS/PS Sr.PS/PS
6 Kept for pronouncement on Sr.PS/PS
7 File sent to the Bench Clerk Sr.PS/PS
8 Date on which file goes to the Head Clerk
9 Date of dispatch of Order