Income Tax Appellate Tribunal - Delhi
Vinod Raj & Co., New Delhi vs Department Of Income Tax on 10 March, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'H', NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI L.P. SAHU, ACCOUNTANT MEMBER
IT(SS)A Nos. 37 & 36/Del/2012
Block Period : 01.04.1996 to 25.02.2003
Assistant Commissioner of Income Tax vs. M/s Vinod Raj Co.
Circle 28(1), New Delhi 445, Katra Medigram Khari
Room No. 105, Drum Shape Building, Baloli,
IP Estate, New Delhi - 2 Delhi-6
(PAN:AAAFV0109R)
(APPELLANT) (RESPONDENT)
Department by : Mrs. Sulekha Verma, CIT(DR)
Assessee by : Sh. K. Sampath, Adv.
Date of Hearing : 11-02-2016
Date of Order : 10-3-2016
ORDER
PER H.S. SIDHU, J.M.
The Department has filed these Appeals against the impugned Orders both dated 08.05.2012 relating to deletion of addition of Rs. 21,36,111/- and relating to deletion of penalty of Rs. 43,42,100/- u/s. 158BFA(2) of the Income Tax Act, 1961 relevant to Block Period 01.04.1996 to 25.02.2003. Since the issues involved in both the appeals are inter-linked, therefore, the appeals were heard together and are being disposed of by this common order for the sake of convenience.
2. The grounds raised in IT(SS)A No. 37/Del/2012 read as under:-
"1. On the facts and law the Ld. CIT(A), New Delhi has erred in deleting the addition of Rs. 21,36,111/- made by the AO by ignoring the fact that addition made on the basis of GP rate and peak credit are separate and in addition to already undisclosed income of Rs. 65.78 lacs.IT(SS)A NOS.37 & 36/Del/2012 2
2. On the fact and law the Ld. CIT(A), New Delhi has erred in deleting the addition of Rs. 21,36,111/- made by the AO by ignoring the fact that addition made by the AO should be added to the income which has been returned by the assessee.
3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this hearing."
3. The grounds raised in IT(SS)A No. 36/Del/2012 read as under:-
1. On the facts and law the Ld. CIT(A), New Delhi has erred in deleting the entire concealment penalty of Rs. 43,42,100/- in spite of the fact that the quantum addition had been confirmed by the ITAT.
2. On the facts and law the Ld. CIT(A), New Delhi has erred in deleting the entire penalty despite the fact that the addition was made only after search operation, otherwise the assessee was deliberately concealing the facts and had filed inaccurate particulars of income.
3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this hearing."
IT(SS)A NO. 37/DEL/2012
4. The brief facts of the case are that the search and seizure operation was carried out at the business premises of the assessee. During the search proceedings, certain incriminating documents were found consisting of a bung of loose papers, a pocket diary, duplicate book, note book and ledger. A notice u/s. 158BC dated 27.5.2004 was issued and duly served on the assessee. The assessee filed a Return of income for the above mentioned block period declaring total undisclosed income at Rs. 21,36,111/-. The order u/s. 158BC dated 25.2.2005 was passed by the AO declaring the total undisclosed income at Rs. 2,92,43,457/- against the returned undisclosed income of Rs. 21,36,111/-. 4.1 Aggrieved with the Assessment order dated 25.2.2005, Assessee filed appeal before the Ld. CIT(A) who has held that the unaccounted cash balance IT(SS)A NOS.37 & 36/Del/2012 3 with the assessee at any point of time was not more than 6,76,393/- and accordingly confirmed the addition of Rs. 6,76,393/- only and deleted the balance addition of Rs. 2,35,65,207/-. Against which the Assessee as well as the Department was in appeal before the Tribunal and the Tribunal has upheld the estimated GP rate @4.4% which was taken by the AO and as such has revered the order of the CIT(A) which had upheld the GP rate addition @2.39% which was taken on the basis of seized books and documents. Regarding the addition of Rs. 2,42,41,600/- made by the AO under the head peak confirmed the addition of Rs. 6,76,393/- only as against the addition of Rs. 2,42,41,600/- made by the AO. Thereafter the AO had given the effect after the order of the Tribunal in the order dated 30.12.2007 and finally the addition of Rs. 65,78,933/- was made and as such the total income was assessed at Rs. 87,15,044/- which included the assessee's undisclosed block return income of Rs. 21,36,111/-. After that assessee filed petition u/s. 154 before the AO which was rejected by the AO vide order dated 20.6.2011 passed u/s. 154/254 read with Section 158BC of the I.T. Act, 1961 determining total income at Rs. 87,15,040/- as against the returned income of Rs. 21,36,111/- against which the assessee filed the Appeal before the Ld. CIT(A)-XXV, New Delhi who vide impugned order 08.5.2012 has allowed the appeal of the Assessee.
5. Aggrieved with the order of the Ld. CIT(A)'s, Revenue is in appeal before the Tribunal.
6. Ld. DR relied upon the order of the Assessing Officer and reiterated the contentions raised in the grounds of Appeal.
6.1 On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference and the same may be upheld.
7. We have heard both the parties and perused the records, especially the Order of the revenue authorities. The facts emerges from the order of the AO is that a search u/s 132(1) was conducted in this case on 25/02/2003 and various incriminating books of documents were seized during the course of search. The block assessment proceedings were initiated for the block period 1.4.1996 to 25.2.2003 and the AO had issued notice u/s. 158BC for filing of the block IT(SS)A NOS.37 & 36/Del/2012 4 return. The assessee had filed the block return and declared undisclosed income in the block return of Rs. 21,36,111/-. The AO had taken up the case for scrutiny and completed the block assessment at the total assessed income of Rs. 2,92,43,457/- as against the undisclosed block return income of Rs. 21,36,111/- and as such has made the addition of Rs. 2,71,07,346/- (Rs. 2,92,43,457 (-) Rs. 21,36,111) under the two different heads which are under the head estimated GP addition @ 4.4.% of Rs. 50,01,857/- on the ground of unaccounted purchase and sale and also under the peak credit of Rs. 2,42,41,600/- on the ground of capital investment in unaccounted purchases and sales. Thereafter, the assessee had filed appeal against the order of the AO and the then Ld. CITA(A) had held the AO could take the estimated GP @ 2.39% only which is on the basis of seized books and documents and the AO is not justified to take the estimated GP @ 4.4% which is on the basis of regular returns of income of the assessee. Regarding the addition of Rs 2,42,41,600/- under the head peak credit of the capital investments, the Ld.CIT(A) held that the unaccounted cash balance with the assessee at any point of time was not more than Rs 6,76,393/- and accordingly confirmed the addition of Rs. 6,76,393/- only and deleted the balance GP rate addition @ 2.39% which was taken on the basis of seized books and addition of Rs 2,35,65,207/- (Rs.2,42,41,600/- (-) Rs 6,76,393/-). Thereafter, the assessee as well as the Department was in appeal before the Tribunal and the Tribunal in the first round has upheld the estimated GP rate @ 4.4% which was taken by the AO and as such has reversed the order of the Ld.CIT(A) which had upheld the GP rate addition @2.39% which was taken on the basis of seized books and documents. Regarding the addition of Rs 2,42,41,600/- made by the AO under the head peak credit the Tribunal has confirmed the order of the Ld.CIT(A) which had confirmed the addition of Rs 6,76,393/- only as against the addition of Rs. 2,42,41,600/- made by the AO. The AO had given the appeal effect after the order of the Tribunal in the order dated 30/12/2007 and finally the addition of Rs. 65,78,933/- (GP of Rs. 59,02,540/) + peak credit of Rs. 6,76,393/- has been made and as such the total assessed income is Rs. 87,15,044/- which included the assessee's undisclosed block return income of Rs. 21,36,111/-.
IT(SS)A NOS.37 & 36/Del/2012 5The assessee had filed a petition u/s 154 before the AO and it was submitted that the AO was not justified to make the total assessment at Rs 87,15,044/- as the AO has also added the undisclosed block return income of Rs 21,36,111/- of the assessee which was filed during the course of block proceedings. It was submitted that the assessee has voluntarily offered the undisclosed income of Rs 21,36,111/- and the final assessed income as per the order of the Tribunal is Rs 65,78,933/- only (GP of Rs 59,02,540/-- (+) peak credit of Rs. 6,76,393/-) and as such the assessed income of the assessee should be Rs 65,78,933/- only as the undisclosed block income of Rs 21,36,111/- has already been offered by the assessee. The petition u/s 154 submitted by the assessee was rejected by the AO on the ground that the AO has made the correct assessment which has been upheld by the Tribunal.
7.1 The assessee was in appeal against the order of the rejection of petition u/s 154 by the AO and it was submitted that the AO was not justified to reject the petition u/s 154 of the assessee without any valid reasons. It was submitted that the assessee had already filed the undisclosed block return of Rs 21,36,111/- whereas the Tribunal has confirmed the undisclosed income of Rs 65,78,933/- only which included the undisclosed block return income of the assessee of Rs. 21,36,111/-. It was further submitted that the total undisclosed income of the assessee is Rs 65,78,933/- after the orders of the Ld.CIT(A) and the Tribunal and there is double addition of the undisclosed block income of Rs 21,36,111/- which has been offered by the assessee in the block return on the basis of seized books and documents etc. It was submitted that the final and total undisclosed income as per the order of the Ld.CIT(A) and the Tribunal is Rs 65,78,933/- which included the undisclosed block return income of Rs 21,36,111/- and as such the AO should only assess the total income of Rs 65,78,933/- only. The main submission of the assessee is that the assessee has filed the block return income of Rs 21,36,111/- on the basis of seized books of documents etc and the AO has also made the additions on the basis of same seized books of documents etc and finally the Ld.CIT(A) and the Tribunal has confirmed the total addition of Rs 65,78,933/- which includes the declared block return income of Rs. 21,36,111/- and as such the AO should not add the IT(SS)A NOS.37 & 36/Del/2012 6 block return income of Rs.21 ,36,111/- in addition to Rs 65,78,933/-) It was submitted that the AO did not make any separate addition of Rs 21,36,111/- in original order u/s 158BC dated 25/02/2005 in which the block return income of the assessee of Rs 21,36,111/- had been merged with the total assessed income and as such the AO is not justified to make the separate addition of Rs 21,36,111/- while giving the appeal effect to the order of the Tribunal. 7.2 We find that the AO was not justified to make the addition of Rs 65,78,933/- in addition to the undisclosed return income of Rs 21,36,111/- which was filed by the assessee during the course of block proceedings and as such the AO has ignored the block return income of Rs. 21,36,111/- which is the part of the total undisclosed income of the assessee of Rs. 65,78,933/-. It is apparent that the total undisclosed income as per the order of the Ld.CIT(A) and the Tribunal is Rs 65,78,933/- which included the undisclosed block return income of Rs 21,36,111/- and as such the AO should only assess the total income of Rs 65,78,933/- only. We find considerable cogency in the Ld. CIT(A) order wherein the observed that the Assessee has stated that that the AO has made double addition of Rs. 21,36,111/- which has already been offered by the assessee in the block return income and accordingly, the Ld. CIT(A) has rightly directed the AO to assess the total undisclosed income of Rs. 65,78,933/- only (Rs. 6,76,393/- + Rs. 59,02,540/-) after the order of the Tribunal and as such the appeal of the assesse was rightly allowed. Keeping in view of the facts and circumstances of the case, we do find any infirmity in the order of the Ld. CIT(A), which in our opinion, does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on the issue in dispute and dismiss the ground raised by the Revenue. As a result, the Revenue's appeal stands dismissed.
IT(SS) No. 36/Del/2012
8. The brief facts of the case are that the AO has passed the penalty order u/s. 158BFA(2) on 30.12.2009 imposing the penalty of Rs. 43,42,100/- against which the assessee has filed the Appeal on 27.1.2010 before the Ld. CIT(A), who vide impugned order 08.5.2012 has deleted the penalty in dispute and allowed the appeal of the assessee.
IT(SS)A NOS.37 & 36/Del/2012 79. Aggrieved with the order of the Ld. CIT(A) dated 8.5.2012, Revenue is in appeal before the Tribunal.
10. Ld. DR relied upon the order of the Assessing Officer and reiterated the contentions raised in the grounds of Appeal. In support of her contention, she filed a copy of the decision of the Hon'ble Delhi High Court in the case of CIT vs. Harkaran Das Ved Pal reported in 336 ITR 8 (Delhi) and stated that the present issue of penalty is fully covered by the said decision and hence, by following the same the appeal of the Revenue may be allowed.
11. On the other hand, Ld. Counsel of the assessee relied upon the order of the Ld. CIT(A) and stated that he has passed a well reasoned order which does not need any interference on our part, therefore, the same may be upheld. He further stated that the AO has levied the penalty on the estimated income and as such there is no proper justification for the levy of penalty on the estimated income, hence, the levy of penalty is not sustainable and accordingly be cancelled. In support of his contention he filed the copy of the following decisions wherein it was held that 'no penalty was leviable under section 158BFA where alleged undisclosed income was computed on the basis of estimation'.
- Rajasthan High Court Decision in the case of CIT vs. Dr. Giriraj Agarwal Giri reported in 346 ITR 152 (Rajasthan)
- ITAT Jaipur Bench in the case of ACIT vs. Shanti Kumar Chabra reported in (2009) 32 SOT (JP) (URO).
- ITAT, Jodhpur in the case of Anil Kumar Jain vs. ACIT reported in (2014) 49 Taxmann.com 139 (Jodhpur- Trib)
12. We have heard both the parties and perused the relevant records especially the orders of the revenue authorities and the case laws cited by both the parties. We find that after the order of the Tribunal the AO had initiated penalty proceedings u/s. 158BFA(2) and has levied penalty @ 100% of Rs. 43,42,100/- on the addition of Rs 65,78,933/-. Against which the Assessee IT(SS)A NOS.37 & 36/Del/2012 8 preferred an appeal before the Ld. CIT(A) and has submitted that the AO was not justified to levy the penalty without any valid reasons. It was submitted that the assessee had already filed the undisclosed block return of Rs 21,36,111/- whereas the Tribunal has confirmed the undisclosed income of Rs 65,78,933/- which included the undisclosed block return income of the assessee of Rs 21,36,111/-. It was submitted that the total undisclosed income of the assessee is Rs. 65,78,933/- after the orders of the Ld.CIT(A) and the Tribunal and there is double addition of the undisclosed block income of Rs 21,36,111/- which has been offered by the assessee in the block return on the basis of seized books and documents etc. It was further submitted that the final and total undisclosed income as per the order of the Ld.CIT(A) and the Tribunal is Rs 65,78,933/- which included the undisclosed block return income of Rs 21,36 111/- and as such the AO should only assess the total income of Rs 65,78,933/-. The main submission of the assessee was that the assessee has filed the block return income of Rs. 21,36,111/- on the basis of seized books of documents etc and the AO has also made the additions on the basis of same seized books of documents etc and finally the Ld.CIT(A) and the Tribunal has confirmed the total addition of Rs 65,78,933/- which includes the declared block return income of Rs 21,36,111/- and as such the AO should not add the block return income of Rs 21,36,111/- in addition to Rs 65,78,933/-. It is submitted that the AO did not make any separate addition of Rs 21,36,111/- in original order u/s 158BC dated 25/02/2005 in which the block return income of the assessee of Rs. 21,36,111/- had been merged with the total assessed income and as such the AO is not justified to make the separate addition of Rs 21,36,111/- while giving the appeal effect to the order of the Tribunal. It was further submitted that at the best the AO could levy the penalty on the extra addition of Rs44,42,822/- (Rs 65,78,933/- (-) Rs 21,36,111/-). It was further submitted before the Ld. CIT(A) that the AO was not justified to levy any penalty as the entire addition has been made on the estimated basis. It is submitted that the assessee had estimated and filed block return income of Rs 21,36,111/- on the basis of seized books of documents but the AO did not accept the block return income of the assessee and the AO estimated the unaccounted GP @ 4.4% of Rs 50,01,857/- on the IT(SS)A NOS.37 & 36/Del/2012 9 basis of GP of the regular returns of the assessee. But the Ld.CIT(A) had overturned the finding of the AO and had estimated the GP @2.39% which was on the basis of seized books and documents. The Tribunal has again reversed the finding of the Ld.CIT(A) and has estimated the GP @ 4.4%. It was submitted that the entire GP addition of Rs 50,01,857/- is on the basis of estimate only and as such the AO is not justified to levy the penalty on the basis of estimated income. It was submitted that the other estimated addition of Rs 2,42,41,600/- made by the AO in the original assessment under the head peak investment was overturned by the Ld.CIT(A) and the addition to the extent of Rs 6,76,393/- was only confirmed and the balance additions were deleted and the same finding of the Ld.CIT(A) has been upheld by the Tribunal. It is submitted that it is apparent that the income of the assessee has been estimated as there has been differences of opinion among the assessee, AO, the Ld.CIT(A) and the Tribunal regarding the undisclosed income/additions and as such the AO is not justified to levy the penalty on the estimated income. It is submitted that the levy of penalty is a discretionary in nature and it is not mandatory for the AO that the AO has to levy the penalty mandatorily even on the estimated income. It was submitted that all the above additions are on the basis of estimated income only and there is also differences of opinion and as' such the AO is not justified to levy the penalty on the basis of estimated income and the assessee also relied on various case laws on the issue that the penalty is not leviable in the case of estimated income/estimated addition and some of the case laws are :-
(i) ACIT Vs Shanti Kumar Chabara, [2009] 121 TTJ (Jaipur) 985
(ii) DCIT Vs Koatex Infrastructure Ltd, [2006] 102 TTJ (Mumbai) 737
(iii) Smt. Mala Dayanithi Vs DCIT, [2005] 92 TTJ (Bangalore) 270
(iv) CIT Vs Ravi Kant Jain, 250 ITR 141 (Del) [2001] 12.1 From the above, it was found that AO was not justified to make the addition of Rs 65,78,933/- in addition to the undisclosed return income of Rs.IT(SS)A NOS.37 & 36/Del/2012 10
21,36,111/- which was filed by the assessee during the course of block proceedings and as such the AO has ignored the block return income of Rs.
21,36,111/- which is the part of the total undisclosed income of the assessee of Rs. 65,78,933/-. It is apparent that the total undisclosed income as per the order of the Ld.CIT(A) and the Tribunal is Rs. 65,78,933/- which included the undisclosed block return income of Rs. 21,36,111/- and as such the AO should only assess the total income of Rs. 65,78,933/- only. Since the block return income of Rs. 21,36,111/- is included or inbuilt in the income of Rs.
65,78,933/- the AO at the best could have levied the penalty only on the additional income of Rs. 44,42,822/- (Rs. 65,78,933 (-) Rs. 21,36,111/-). We also find that it is apparent that there has been differences of opinions among the assessee, AO, Ld. CIT(A) and the Tribunal and as such there is also a variation of estimate of income at every stage and as such income of the assessee has been estimated at every stage and the AO was not justified to levy of penalty on estimate basis. We also find considerable cogency in the case laws cited by the Ld. Counsel of the assessee, as aforesaid, are applicable to the issue in hand wherein it has been held that 'no penalty was leviable under section 158BFA where alleged undisclosed income was computed on the basis of estimation'. However, we note that the case law cited by the Ld. DR is on the different facts and hence, is not applicable.
12.2 In the background of the aforesaid discussions and precedents relied upon, in the CIT(A)'s as well as case laws cited before us by the Ld. Counsel of the assessee, we are of the view that AO has levied the penalty on the estimated income and as such there is no proper justification for the levy of IT(SS)A NOS.37 & 36/Del/2012 11 penalty on the estimated, hence, the Ld. CIT(A) has rightly cancelled the penalty, which in our considered opinion does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on this issue on which he cancelled the penalty in dispute and dismiss the ground raised by the Revenue.
As a result, the appeal filed by the Revenue stands dismissed.
13. In the result, both the Revenue's Appeals stand dismissed.
Order pronounced in the Open Court on 10/03/2016.
Sd/- Sd/-
(L.P. SAHU) (H.S. SIDHU)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 10/03/2016
*SR BHATNAGAR*
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY By Order,
ASSITANT REGISTRAR