Income Tax Appellate Tribunal - Chandigarh
Dcit, Cc-Ii, Chandigarh vs M/S Ind Swift Laboratories Ltd,, ... on 30 April, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'A' , CHANDIGARH
ी संजय गग , याय क सद य एवं ीमती अ नपण
ू ा गु%ता, लेखा सद य
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.739/Chd/2016
नधा रण वष / Assessment Year : 2011-12
The A.C.I.T., बनाम M/s Halcyon Life Sciences Pvt.
Central Circle-II, Ltd., SCO 849, Shivalik
Chandigarh. Enclave, NAC, Manimajra,
Chandigarh.
थायी लेखा सं./PAN NO: AADCK4208J
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Ved Jain, CA
राज व क ओर से/ Revenue by : Smt. Chanderkanta, Sr. DR
आ यकर अपील सं./ ITA No.1266/Chd/2017
नधा रण वष / Assessment Year : 2012-13
M/s Ind Swift Laboratories बनाम The A.C.I.T.,
Ltd., SCO 850, Shivalik Central Circle-II,
Enclave, NAC, Manimajra, Chandigarh.
Chandigarh.
थायी लेखा सं./PAN NO: AAACI6306G
अपीलाथ /Appellant यथ /Respondent
&
आ यकर अपील सं./ ITA No.1304/Chd/2017
नधा रण वष / Assessment Year : 2012-13
The D.C.I.T., बनाम M/s Ind Swift Laboratories
Central Circle-II, Ltd., SCO 850, Shivalik
Chandigarh. Enclave, NAC, Manimajra,
Chandigarh.
2
थायी लेखा सं./PAN NO: AAACI6306G
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Ved Jain, CA
राज व क ओर से/ Revenue by : Dr.Ashish Gupta, Sr. DR
सन
ु वाई क तार$ख/Date of Hearing : 30.04.2019
उदघोषणा क तार$ख/Date of Pronouncement : 30.04.2019
आदे श/ORDER
Sanjay Garg, Judicial Member :
Th e s e t h r e e a p p e a l s pe r t a i n t o t h e d i f f e r e n t a s s e s se e s. Th e a p p e a l i n I TA N o . 7 3 9 / C h d / 2 0 1 6 h a s b e e n p r e f e r r e d b y t he D e p a r t m e nt a ga ins t t he or de r of th e C o mmis si on e r of I n come Ta x ( Ap p e a l s) -3 , G u rg a on [ i n sho rt C I T( A) ] da t e d 2 8. 3 .2 0 16 up h ol di n g the pen a l ty le vie d u /s 2 71 A AA of t he I nco me Ta x A ct, 1 9 61 ( in sho rt ' Act '). , th e ap p e a l in I TA N os. 1 2 66 & 1 3 04 /C h d /20 1 7 a re the cr os s a p pe a ls a ga i ns t th e or d e r of t he C om mi ss ion e r of I nc ome Ta x ( A pp e a ls )-3 , G urga on d ate d 1 9 .6 . 20 1 7 a g a in st.
2. Si nc e the f a ct s a n d the i ssu e s invol v e d in a l l the a p p e a l s, a r e ide n ti ca l , be i ng the le v y of p e n a l ty u /s 2 7 1 AA A o f t he I n co me Ta x Ac t , 1 9 61 (i n s hor t 'th e Act '), the se a p pe a l s, th e re f ore , ha ve b ee n he a r d toge the r a nd a r e be i n g d is p ose d off b y thi s co nso li d a te d or de r f or t he s a ke of c on ve n ien ce . 3
2. In all the se a pp e a l s, the i ss ue i nv olve d is re gar d i ng va l i d ity of l e vy of p e n a lt y und e r the pr ov is ions o f se cti on 2 7 1A AA of the A ct.
ITA N o .7 3 9/C h d /2 01 6 :
3. Fi r st we ta k e u p th e a p pe a l of th e D e p a r tme nt in th e c a se of H a l cyon Li f e S ci e n ce s P v t. Ltd i n I TA N o. 7 3 9 /C h d /20 1 6 a s l e a d c a se f or the p ur p ose n a r r a ti on of th e fa c ts.
4. B r i e f fa c ts re lev a nt to th e i ssu e a re t ha t a se ar c h a n d se iz ure ope r a tion u/s 132 of the A ct was ca r r i e d o ut on 2 6 .5 . 20 1 1 on t he b us ine s s a n d r e s ide nti a l p remi se s of I n d- S wi f t G r oup of c a se s, w he re i n th e a s se s se e w a s a l so cov e re d. D ur i ng se a rc h a cti on , the a sse s see su r re nde re d a d d iti on a l i nc ome of Rs. 5 ,5 7 ,2 4 , 40 0 /- as i ts b us in e s s in come . The a ss e s see the re a fte r f ile d re t ur n u/s 1 3 9 ( 1) of th e Ac t, w h i ch i nc lu d e d the a for e sa i d i n come a ls o. Th e A. O . a c ce p te d t he r e tu r ne d in co me i n the a s se s sme nt p r oc ee d i ng s c a r r ie d out u/s 1 5 3A o f the A ct i ncl u di n g t he su r r e n de re d i n come . How e ve r , t he A. O . the re a f te r l ev ie d the p e n a l ty u/s 27 1 A A A of t he Ac t o n t he gr ou nd tha t th e a sse ssee ha d not a cc ounte d for thi s su r r e nde re d i ncome i n hi s b ook s of a c cou nt on th e d a te of se a r ch and f ur th e r the a sse sse e ha s f a i le d to s pe ci fy the 4 ma n ne r in w h ic h s uc h i n come ha s b ee n de ri ve d a nd e ve n f a i le d to su b sta n ti a te su ch ma n ne r.
5. Th e Ld . C I T( A) a l s o c onf ir me d the p e na l ty , s o le vied b y t he A. O .
6. We ha ve he a r d th e r i va l s ubmi ssi on s and a l so go ne th r oug h the or de rs of the l owe r auth or i tie s.
7. Th e Ld . D R h a s r e l ie d up on th e f in d in gs of the CIT( A) a n d has su b mit te d th a t si n ce the a sse ssee ha d f a il e d to su b sta n ti a te t he ma nn e r i n w h i ch the su rre nde re d in come of Rs .5 , 57 , 24 , 4 00 /- w a s e a r ne d, he n ce th e pe n a lty w a s r i ght ly l e vie d by the A .O . a nd f ur th e r r igh tl y co nf ir me d by t he Ld .C I T(A ).
8. How e ve r , on the ot he r h a nd , the Ld . cou ns e l f or a ss e ssee h a s in vi te d our atte n ti on to p a ge 3 of t he i mp ugn ed or de r of the C I T( A ), wherein th e st a te me nt of S hr i Nav Ra tta n Mun ja l , P r omote r a n d D i re cto r of the a s se sse e comp a n y in th e for m of q u e sti on s a nd a n sw e rs was r e co rde d, w he re b y he h ad su r r e nde re d the a f or e sa i d a d d i tiona l in come .
9. Qu e st ion N os. 6 t o 1 1 of th e sta t e me n t a r e r e le v a nt , wh i ch f or th e sa ke of c onv e n ie nce a re re pr od u ce d a s un de r : 5
"Q-6 There are certain sheets marked as A-11/1,2,3,4. Please see these explain the entries contained therein. A-6 These sheets contain trading of CMO (Methol Oil). Q-7 Please explain the details of these transactions. A-7 These sheets contain datewise sale/purchase of CMO. Q-8 To which concern do these transaction pertain? A-8 These pertain to M/s Ind Swift Ltd & M/s. Halycon Life Sciences Ltd. a mentioned in title.
Q-9 Where are these entries accounted for in the books of the above companies?
A-9 These transactions are not accounted for in the regular books of accounts.
Q-10 Whether these transactions are by cheque or by cash? A-10 These are speculative transactions. We had purchased CMO from U,P through brokers. The payment was to be made on delivery, However we sold these lots further without taking delivery. The profit was realized in cash. This cash is not recorded in books of accounts."
Q-11 What is the explanation that you would like to give in respect of these unaccounted transactions. Please give reply after consulting other promoters and relevant employees.
A-11 I have consulted with other promoters and directors and infact we have no explanation to offer in this regard. To cover this discrepancy we hereby admit undisclosed income as under:-
F.Y 10-11 F.Y 11-12 Total
Ind Swift Ltd. 10,85,34,600/- 13, 64,04,000 /- 24,49, 38,600 /-
Halycon 5,5724,400/- - 5,57,24,400/-
Lifesciences P. Ltd.
Ind Swift Ltd. Nil 12,73,41,000/- 12,73,41,000/-
42,80,04,000/-
6
T h u s an a mou n t of Rs.4 2 , 8 0, 0 4 ,0 0 0 /- rou n ded of f to Rs. 4 3 c rore s i s h er eb y su rre nd er e d f or F .Y . 1 0 -11 & 11 - 12 to war d u n ac cou n te d c a sh pr of i t e arn ed f r om un ac cou n ted tr an sac ti on in CM O."
10. A p e r u sa l of the a b ov e q ue s tio ns a nd a nsw e r s re vea l s tha t n o s uch in come i n a ny f or m of c a s h or oth e r v a lu a ble i te ms w a s f oun d du r in g t he cou rse of se a r ch a cti on , ra t he r ce r ta i n d ocu me n ts w e re se ize d , w he re in ce r ta i n u na c cou nte d tr a n sa ct ion s w e re re cor de d . Th e q u e st ion s we re p ut t o S hr i N av Ra tt a n Mu n ja l r e ga r d i ng un a ccoun te d tr a n sa c ti ons a nd in a n sw e r s to tho se q ue sti on , a s re pro du ce d a b ove , the D i re ctor of th e comp a n y e xp l a in e d tha t th e se tr a ns a cti on s con ta i ne d tr a d i ng of C MO ( C r ud e Me n th ol O i l) a nd it w a s a l so e x pl a i ne d th a t th e tr a n sa c tio ns r e cor d e d wer e d a te - w ise d a ta of sa l e a n d p ur c ha se t ra n sac ti ons of C MO. I t wa s a l so e x pl a i ne d th a t t he a f or e sa i d C r ude Me n th ol O i l w a s p ur c ha s e d fr om U .P . t hr ou gh b r ok e r s, w hi ch w a s f ur th e r so ld w i tho ut ta ki n g d e l ive r y. The p r ofi t w a s re a li ze d i n c a sh a nd th a t th e c a sh wa s n ot r e co rde d i n th e b ook s of a ccou n t. The a sse sse e d ul y su r r e nde re d t he i nc ome e a r ne d in r e spe ct of the a for e sa i d tr a n sa ct ion s, w h i ch w e re n ot re cor ded i n t he bo ok s of a cc oun t. A pe r us a l of t he a f or e sa i d st a teme nt its e l f s how s th a t th e a sse sse e d u ly sp e ci fie d and sub st a nti a te d the ma nn e r of e a rni n g of t he a f or e sa i d a d d it ion a l i nco me , off er e d for ta xa ti on. I t i s a c a se w he re i n the se i ze d d ocume nt s, th e a f ore s a id tr a nsac ti ons w ere 7 r e c or de d , w h ic h w he n be i n g c onf r ont e d to the a ss e s see , he e x pl a i ne d a b ou t th e mod e a n d ma n ne r o f e a rn i ng of su ch i nc ome , w h i ch d ul y st ood s ub s t a nti a te d i n th e sh a p e of t he d ocu me n ts fo un d d ur i ng s e a r ch ac ti on. I t i s not a ca s e w he re a n y u na c cou nt e d i nc ome in t he sh a p e o f ca sh o r oth e r w i se , w a s f oun d , of w hi ch the a sse s see c ould n ot e xp l a in t he so ur ce , or to sa y , s p e ci f y th e mo de a nd ma n n e r of th e e a rn i ng. I n v ie w of th is , a s p e r the p r ovi si on s of s e cti on 2 7 1 AAA of th e A ct, the a ss e s see 's c a se sq ua r e ly fa l ls w ithi n t he e xce p ti ona l cl a u se s of su b -se c ti on ( 2) of se c ti on 2 71 A AA of the Ac t. Th e asse s see i n th e cou rse of se a r ch ha s ma d e a s ta te me nt a n d h a s a dmi tte d th e u nd i sc lo se d i n come and als o s pe ci fie d the ma n ne r of e a r n in g of i nc ome , w h ic h a ls o stood su bs ta n tia t e d f r om t he d ocu me n ts se i zed a nd h a s a l so pa i d t he d ue ta xe s toge the r w i th i nte re st i n re s pe ct of the un d is close d i nc ome . I n vi e w of th i s, th e a cti on of t he l owe r a u th or itie s i n le v yi ng th e imp u gne d p e n a lt y c a nn ot be he l d to be ju st if ie d . Th e sa me is a cc or d in gl y, or d e re d to be de le te d .
Th e a p p e a l of t he Re ve n ue i s d is mis se d.
11. N ow c omi ng to t h e cr oss a pp e a ls i n th e ca s e of M /s I nd . S wi f t La b or a tor i e s Lt d. i n I TA N o. 1 2 66 /C h d /20 1 7 (a s se sse e 's a p p e a l ) a nd i n I TA N o. 1 30 4 /C h d / 2 0 1 7 (D e pa r tme nt 's a p p e a l ) , a 8 p e r us a l of t he imp u gn e d or d e r of the CI T( A) r ev e a l s th a t t he Ld .C I T(A ) re ly in g u p on the a fo re sa i d sta te me n t of S hr i N a v Ra tt a n Mu nj a l, Pr omo te r Di r e c tor of I n d. Sw i ft G r oup of C omp a n ie s, has note d th a t the p a re n t comp a n y had su r r e nde re d an i nc ome of R s. 1 4 , 50 , 4 1, 0 0 0/- to c ove r all d is cr e p a n cie s in se ize d d oc ume n ts , i nv e n tor ie s, e tc. He fu r the r ob se r ve d tha t w ith r e ga r d t o se i ze d d ocu me nt s, an amou nt o f Rs .1 2 ,7 3 ,4 1 , 00 0 /- w a s su rr e nd e re d a s u na c cou nte d ca s h p r of it e a r ne d fr om th e tr a d i ng f r om C r u d e Me nth ol Oi l . H ow e ve r , the r e ma i ni n g a mou nt of Rs .1 , 77 , 00, 0 00 /- was s ur r e n de re d in or d e r to cov e r di sc r e p a nc y, if a n y, f oun d in t he s e ize d d ocu me n ts. Th e Ld . C I T( A) th ou gh de le te d the pe n al ty in r e s pe ct of th e a mo un t, w hi ch ta l l ie d w ith t he tr a ns a cti on s of tr a d in g i n C r ud e M e nt hol O il r e c or de d i n the se i ze d do cume nt s, h ow e ve r, he con fi r me d th e pe n a lty on th e su r re n de re d a moun t of Rs .1 , 77 , 00 , 0 00 /- on th e gr ound t ha t th e same was not r e p re se n te d b y a n y sp e c i fi c a s se t , n or w ith a n y e n tr y i n t he b ook s of a ccou nt o r ot he r d ocu me n ts or tr a ns a ction s f oun d i n th e co ur se o f se a r ch a nd he nce , doe s n ot fu l fi ll th e con d it io ns f or ge tti ng i mmu n it y f r om pe na l ty u/s 2 7 1 AA A of t h e A ct.
12. Th e Re ve nue ha s a gi ta te d t he a cti on of th e C I T(A ) i n d e le ti n g the pen a lty in r e spe c t of pa r t of th e su r re nde re d i nc ome of Rs .1 2 ,7 3 ,4 1 , 00 0 /-, r e l a te d to the se i ze d d oc ume n ts . 9
13. On th e othe r ha nd , th e a s se s se e ha s p r e fe r re d the p r e se nt a p p e a l a gi ta ti n g th e a c ti on of the CI T( A) i n c on fi r min g t he p e n a lt y le vie d on t he re ma in i ng sur r e n de re d a mo un t of Rs .1 , 77 , 00 , 0 00 /- .
14. We h a ve h e a r d the r iv a l co nte nt ion s a n d a l so gon e thr ou gh th e f in d in gs of t he lowe r a u th or it ie s. Ad mit te d l y, no c a sh o r oth e r va l u a ble i te ms , w h ic h ma y c ons ti tute a s un d is cl ose d i nc ome of the a ss e ssee , w a s f ou nd d ur i ng the cour se of se a r ch a ct ion e xce p t the se i ze d d oc ume nts , w he re i n th e a fore sa i d un a cc oun te d t ra ns a cti on s w e re re cor de d . The a sse ssee su r r e nde re d a tota l s um of Rs .1 4 , 5 0 ,4 1 , 00 0 /- o n a cco un t of t he a f or e sa i d d i sc re pa nc ie s/un a cc oun te d tr a n sa ct ion s fo un d d ur i ng se a r ch a ct io n. The Ld . C I T( A) d e l e te d th e pe n a lty i n r e s pe ct of th e in co me sur r e n de re d in r e spe ct of u na c cou nte d tr a n sa ct ion s, ho we ve r, ha s con fir me d th e pe na lty in re spe c t of w hi c h e ve n no d ocume nt /e vi d e n ce of any u na c cou nte d tr a n sa ct ion w a s foun d . Th e a sse sse e , h owe ve r , ha s su r re nde re d th e a f ore sa i d in co me to co ve r up f ur th e r d is cre p an ci e s , i f a n y, f oun d in th e se i ze d d ocu me n ts. How e ve r , i t i s not a c a se w he re a n y, oth e r w i se , und i sc lo se d in come w a s fo un d d ur ing se a r ch , of w hi c h th e a sse s see cou ld n ot spec if y or su b sta n ti a te the mod e & ma nn e r of e a rn i ng . I n the a bse n ce of the se i zed d ocu me nt s, th e re is n oth in g on th e re cor d f r om w h ic h it cou l d b e c ons tr ue d 10 th a t the a fore sa i d a mou nt o f Rs .1 ,7 7 , 00 , 0 00 /- w oul d fa l l w i thi n th e de fi niti on of u nd i scl os e d i nc ome , a s de f ine d u nde r th e pr ov i si ons of se c tio n 2 71 A AA of t he Ac t a s un de r :
"(a) "undisclosed income" means--
(i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has--
(A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner before the date of search; or
(ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted;"
15. A p e r us a l o f the a b ov e de f in i tion of un d is cl ose d in come w oul d sh ow tha t t he re mu st b e some i nco me fou nd d ur i ng t he co ur se of se a r ch a ct ion e i the r i n t he f or m of mone y, bu l li on or j e we l le r y or ot he r i te ms or the re mus t be s ome tr a n sa ct ion or e n tr y e i the r n ot re cor de d in the b ook s of a cco un t or in t he fo rm of e xpe nd i ture or a n e n tr y of an y e xpe n di tu re , e tc. , w hi ch i s f oun d to be f a lse . H owe ve r , we fi nd tha t in the ca se of su r r e nde r of Rs. 1 ,7 7 ,0 0 , 00 0 /- e xce pt the se i ze d d ocu me nt s, oth e r w i se n oth i ng w a s fou nd d ur i n g th e se a r ch a cti on wh i ch 11 w oul d con str u e un di s cl ose d i nc ome of th e a sse ssee a s de fi ne d un d e r the p r ovi si on s of se cti on 27 1 AA A of th e Ac t. Th ou gh t he a ss e s see ha s h on or e d it s com mi t me nt a n d ha s d u ly o ff e re d f or ta xa t ion th e tot al s ur r e n de re d i nc ome . How e ve r , in vi e w of our f in d in gs gi ve n a bo ve , i t i s no t a ca s e of le v y o f pe na l ty e i the r i n th e ca se of th e sur r e n de re d a mo un t, t he mod e a n d ma n ne r of r e ma i ni n g of w h i ch ha s b ee n stood sp e c if ie d a n d su b sta n ti a te d , a s h e l d b y th e CI T(A ), nor i n r e s pe ct of the re ma in i ng a mou nt of Rs .1 ,7 7 , 00 , 0 00 /-, w hi ch w ou ld ot he rw i se , n ot fa l l w ith i n t he d e f in i tio n of un d iscl ose d i nc ome .
I n v ie w of th i s, t he a p pe a l of the Re ve n ue is h e re by d is mi sse d, wh e re th e a p pe a l of the a sse s see i s he re b y a ll owe d .
16. I n the re su lt ;
i) Th e appeal of th e De pa rt me nt in ITA
N o.7 3 9 /C hd /2 0 1 6 is d i smi ss e d .
ii ) Th e a p p e a l of a s s e ssee i n I TA N o .1 2 6 6/C h d /2 01 7 is
a ll ow e d a nd the a p pe a l of th e Re ve n ue in I TA
N o.1 3 0 4 /C hd /2 0 1 7 is d i smi sse d .
O r d e r p r on o u n ce d i n t h e O p e n C o u r t o n 3 0 . 0 4 . 2 0 1 9 .
Sd/- Sd/-
अ नपण
ू ा ग%ु ता संजय गग
(ANNAPURNA GUPTA) (SANJAY GARG)
लेखा सद य/ Accountant Member याय क सद य/ Judicial Member
)दनांक /Dated: 30th April, 2019
*रती*
12
आ दे श क त*ल+प अ,े+षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आ यकर आ यु-त/ CIT
4. आ यकर आ यु-त (अपील)/ The CIT(A)
5. +वभागीय त न0ध, आ यकर अपील$य आ 0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आ दे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar