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Income Tax Appellate Tribunal, MUMBAI BENCH “ F ”, MUMBAI
आयकर अपील�य अ�धकरण मुंबई पीठ “ एफ़ ”,मुंबई �ी �वकास अव�थी, �या�यक सद�य एवं �ी एस. �रफौर रहमान, लेखाकार सद�य के सम� IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “ F ”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER& SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER आअसं.3349/मुं/2013 (�न.व. 2008-09) ITA NO.3349/MUM/2013(A.Y.2008-09) Mahesh K. Faria, 71/73, 4th Floor, Bazar Gate Street, Fort, Mumbai – 400 001 PAN: AAAPF-0587-F ...... अपीलाथ�/Appellant बनाम Vs. Deputy Commissioner of Income Tax, (OSD-II), Central Range - 7 Mumbai. .....��तवाद�/Respondent अपीलाथ� �वारा/ Appellant by : Ms. Hiral Sejpal ��तवाद� �वारा/Respondent by : Shri Achal Sharma, CIT –DR & Ms. Vranda U Matkari-Sr.AR सुनवाई क� �त�थ/ Date of hearing : 16/12/2022 घोषणा क� �त�थ/ Date of pronouncement : 09/03/2023 आदेश/ORDER PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-40, Mumbai [ in short ‘the CIT(A)’] dated 05/12/2011 for the assessment year 2008-09..
The appeal is time barred by 413 days. The assessee has filed an application praying for condonation of delay supported by an affidavit. After
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examining the detailed reason given in the application explaining reason for delay in filing of the appeal, we are satisfied that the delay in filing of the appeal is prima-facie for bonafide cause.
The Hon'ble Supreme Court of India in the case of Ram Nath Sao Alias Ram Nath Sahu & Ors. Vs. Gobardhan Sao & Ors.( (2002) 3 SCC 195) has held that acceptance of explanation furnished should be the rule and refusal, an exception. The Hon’ble Apex Court held:
"But one thing is clear that the courts should not proceed with the tendency of finding fault with the cause shown and reject the petition by a slipshod order in over- jubilation of disposal drive. Acceptance of explanation furnished should be the rule and refusal, an exception, more so when no negligence or inaction or want of bona fides can be imputed to the defaulting party. On the other hand, while considering the matter the courts should not lose sight of the fact that by not taking steps within the time prescribed a valuable right has accrued to the other party which should not be lightly defeated by condoning delay in a routine-like manner. However, by taking a pedantic and hypertechnical view of the matter the explanation furnished should not be rejected when stakes are high and/or arguable points of facts and law are involved in the case, causing enormous loss and irreparable injury to the party against whom the lis terminates, either by default or inaction and defeating valuable right of such a party to have the decision on merit. While considering the matter, courts have to strike a balance between resultant effect of the order it is going to pass upon the parties either way”. The Hon'ble Apex Court in the case of Collector Land Acquisition, vs Mst. Katiji & Ors., 167 ITR 471(SC) held that the explanation furnished by the assessee for seeking condonation should be accepted. The expression "sufficient cause" should be interpreted liberally.
Thus, for the reasons stated in application and in the light of law expounded by the Hon’ble Apex Court, delay in filing of appeal is condoned and the appeal is admitted for hearing on merits.
The brief facts of the case as emanating from records are: A search and seizure action u/s. 132(1) of the Income Tax Act, 1961 [ in short ‘the Act’] was
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carried out in the business and residential premises of Faria Group on 30/05/2008. The assessee is a proprietor of M/s. Regal Plywood Veneers engaged in trading of plywood and veneers. Notice u/s. 153A of the Act issued on 30/11/2009 was served on the assessee on 16/12/2009 asking the assessee to file return of income within 20 days of the service of notice. In response to the said notice the assessee filed return of income on 19/11/2010, i.e. almost after one year. In the mean time, the Assessing Officer vide letter dated 12/07/2010 again requested the assessee to file return of income, no compliance was made by the assessee in response to the said communication. Thereafter, the Assessing Officer issued notice u/s. 142(1) of the Act dated 27/10/2010 alongwith detailed questionnaire . The assessee did not respond to the said notice as well. Thereafter, the Assessing Officer vide letter dated 10/11/2010 informed the assessee that the assessment proceedings are being completed exparte u/s. 144 of the Act, and made following additions:
(i) Unaccounted expenses on foreign travel : Rs. 2,00,000/- (ii) Unexplained investment in jewellery : Rs.15,60,000/- (iii) Unaccounted stock : Rs.13,53,885/-. (iv) Unaccounted cash found during the search : Rs. 1,11,904/- (v) Unexplained sundry creditors : Rs.17,05,282/- Total : Rs.49,31,071/- Against the assessment order dated 29/12/2010 passed u/s. 153(A)/144 of the Act, the assessee field appeal before the CIT(A). The CIT(A) granted part relief to the assessee qua, unaccounted expenses on foreign travel, discrepancy in stock, discrepancy in the unaccounted cash, and deleted the entire addition with respect to stock found at the premises of M/s. Mayur Ply ‘N’ Veneers a proprietary concern of Vinod K. Faria. Now, the assessee is in appeal against
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the findings of CIT(A) wherein additions have been confirmed. The gist of grounds raised in appeal is as under:
(i) Prayer to annul assessment order passed u/s. 144 r.w.s. 153A of the Act; being void-ab-initio. (ii) Against confirming addition in respect of foreign travel Rs.1,00,000/-; (iii) Against confirming addition on account of unexplained jewellery Rs.15,60,000/-; (iv) Against upholding addition in respect of unaccounted sales Rs.1,40,441/-;& (v) Against upholding addition on account unexplained sundry creditors Rs.17,05,282/-.
The assessee has also raised additional ground of appeal raising an alternate plea to the issues raised in ground No.4 & 5 i.e. the assessee was not required to maintain books of account as the assessee was following presumptive method of taxation u/s. 44AF of the Act.
Ms. Hiral Sejpal appearing on behalf of the assessee submits at the outset that in respect of ground No.1 her limited prayer is to consider the return of income filed by the assessee on 19/11/2010 in response to notice u/s. 153A of the Act as valid. The ld.Counsel for the assessee submits that there has been no change in the return of income filed in response to section 153A and the regular return filed on 19/01/2009. She further submits that the assessee had no information about change in jurisdiction of Assessing Officer, therefore, the assessee filed original return of income before the original Assessing Officer.
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4.1 In respect of ground No.2 relating to foreign travel expenses, the ld.Counsel for the assessee reiterated the submissions made before the CIT(A).
4.2 In respect of ground No.3 relating to addition on account of jewellery, the ld.Counsel for the assessee referring to the CBDT instructions dated 11/05/1994 at page 44 of the legal paper book submitted that the jewellery found during search may be allocated to family members of the assessee to the extent provided in the instructions. The ld.Counsel for the assessee prayed that no protective addition has been made in the hands of the family members. The ld.Counsel for the assessee prayed for giving the benefit of allocating the jewellery found at the premises of the assessee during search ( the details of jewellery are at page 37 of the Paper Book). In support of her submissions the ld.Counsel for the assessee placed reliance on following decisions:
(i) CIT vs. Ratanlal Vyaparilal Jain,339 ITR 351 (Guj)
(ii) CIT vs. Satyanarayan Patni,366 ITR 325 (Raj)
4.3 In respect of ground No.4, the ld. Counsel for the assessee submits that addition on account of difference in stock has been made merely on the presumption that the assessee has under reported the sales.
4.4 In respect of ground No.5 the ld. Counsel for the assessee submits that list of Sr. Creditors as on 31/03/2088 is given at page 5 of the paper book and the total sales is at page -4 of the paper book. The ld. Counsel for the assessee reiterated the submissions made before the CIT(A), qua, both the above mentioned grounds.
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4.5 The ld. Counsel for the assessee made an alternate plea raised by way of additional ground that the Assessing Officer could not have made addition in respect of unaccounted stock and unexplained sundry creditors as the assessee was not required to maintain books of account. As the assessee is following presumptive method of taxation u/s. 44AF of the Act.
Per contra, Shri Achal Sharma representing the Department vehemently defended the impugned order. The ld. Departmental Representative submits that the assessee is recalcitrant. The assessee did not co-operate with the Assessing Officer and failed to furnish return of income in response to notice dated 30/11/2009 issued u/s. 153A of the Act in time. Objecting to the additional ground raised by the assessee, the ld. Departmental Representative submits that the assessee has never followed presumptive method of taxation u/s. 44AF of the Act. The ld. Departmental Representative placed on record a copy of return of income filed on 19/11/2010 filed belatedly in response to notice u/s. 153A of the Act. The ld. Departmental Representative pointed that a specific question is asked in return of income i.e. “Are you liable to maintain accounts as per section 44A?”. The assessee has answered the said question as “Yes”. Hence, the additional ground raised by the assessee that the assessee is not liable to maintain books of accounts as the assessee is maintaining presumptive method of taxation u/s. 44AF of the Act is an after thought. The ld. Departmental Representative submits that the assessee has not been able to give details of foreign travel despite that the CIT(A) has granted part relief to the assessee. The CIT(A) has been considerate and liberal in granting relief to the assessee . Similarly, in respect of unaccounted sales/difference in stock, the CIT(A) after examining the documents on record had granted relief and has restricted the addition to Rs.1,40,441/- only, i.e. to
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the extent, assessee was unable to explain the deficit stock. The ld. Departmental Representative supported the findings of CIT(A) in confirming the addition on account of unexplained sundry creditors. The ld. Departmental Representative submits that no documentary evidence was produced by the assessee in support of his contention with respect unexplained sundry creditors. Hence, the CIT(A) confirmed the same. The ld. Departmental Representative prayed for upholding the impugned order and dismissing the appeal of assessee.
We have heard the submissions made by rival sides and have examined the orders of authorities below. A search action was carried out in the case of Vinod K. Faria / Milan Dalal Group. Consequent to the search action, notice u/s. 153A of the Act was also issued to the assessee on 30/11/2009. As per the said notice, the assessee was required to file return of income within 20 days from the date of service of notice. Undisputedly, the notice was served on assessee on 16/12/2009. The assessee failed to respond to the said notice. Thereafter, the Assessing Officer issued another letter dated 12/07/2010 asking the assessee to file return of income. The assessee defied second notice as well and filed return of income on 19/11/2010. The assessee returned the same income as was disclosed by the assessee in the original return for the impugned assessment year. The Assessing Officer completed the assessment on the basis of original return of income. As is evident from the records the assessee neither cooperated with the Assessing Officer nor furnished the details as sought by the Assessing Officer during assessment proceedings. The Assessing Officer was constrained to complete assessment u/s. 144 of the Act. Thus, in view of unrebutted facts of the case, we find no merit in ground No.1 of the appeal, hence, the same is dismissed.
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In ground No.2 of appeal, the assessee has assailed addition in respect of foreign travel. The assessee had claimed expenditure of Rs.2,00,000/- on account of overseas travel. In the absence of any details, the same were disallowed by the Assessing Officer. Before the CIT(A), the assessee furnished partial details. On the basis of information provided by the assessee, the CIT(A) granted part relief and restricted the addition to Rs.1,00,000/-. No further information / details were furnished by the assessee before the Tribunal. Hence, we see no reason to interfere with the findings of CIT(A). Ergo, ground No.2 of the appeal is dismissed.
The ground No.3 of appeal is against addition of Rs.15,60,000/- on account of unexplained jewellery. A perusal of Panchnama at page 37 of the Paper Book shows that gold jewellery aggregating to 1378 grams was seized. The prayer of the assessee is that the jewellery found and seized during search was the personal jewellery of the family members and was within permissible limit specified vide CBDT Instructions 1994. We find that the aforesaid CBDT Instructions are in respect of seizure of jewellery but at the time of drawing Panchnama the aforesaid instructions were not apparently followed. We, therefore, deem it fit to restore this issue back to the file of Assessing Officer with a direction to grant the benefit of aforesaid CBDT Instructions dated 11/05/1994 and restrict the addition to the surplus jewellery, if any, after allocating jewellery and ornaments seized to the family members in accordance with the said Instructions. Ground No.3 of appeal is thus, allowed for statistical purpose in the terms aforesaid.
In ground No.4 of appeal, the assessee has assailed addition of Rs.1,40,441/- on account of undisclosed sales. No material has been placed before us by the assessee to controvert the findings of the CIT(A) confirming
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the said addition. Hence, ground No.4 of the appeal is dismissed being without any merit.
In ground No.5 of appeal, the assessee has assailed the addition on account of sundry creditors Rs.17,05,282/- The ld.Counsel for the assessee has drawn our attention to the list of sundry creditors at page 5 of the paper book and also quantum of sale in trading account for the year ended 31/03/2008 at page -4 of Paper Book. The ld.Counsel for the assessee submitted that as against sales of Rs.33.79 lacs there are sundry creditors of Rs.17.05 lacs. The figures mentioned by the ld.Counsel for the assessee are unsubstantiated. No plausible evidence was furnished before the authorities below or before the Tribunal to substantiate sundry creditors. In the absence of any clinching evidence, we find no reason to interfere with the findings of CIT(A) on this issue. Hence, ground No.5 of appeal is dismissed.
The assessee has raised additional ground vide letter dated 24/07/2022. By way of additional ground, the assessee has raised a plea that the assessee was not required to maintain books of accounts as the assessee was following presumptive method of taxation u/s. 44AF of the Act. The ld.Counsel for the assessee submitted that no additional documents are required to be filed for adjudication of additional ground. The additional ground is only an extension of the ground already raised in the appeal. The ld.Counsel for the assessee placed reliance on the decision in the case of NTPC vs. CIT, 229 ITR 383(SC) for admitting additional ground raised.
After examining the documents on record we find that the additional ground raised by the assessee, even if, admitted would not support the cause of assessee. The claim of assessee in additional ground is that the assessee is
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not required to maintain books of account, as the assessee is following presumptive method of taxation u/s. 44AF. This please of the assessee is not tenable as in the return of income filed on 19/11/2010 the assessee hasadmitted the fact that the assessee is liable to maintain accounts as per section 44AA of the Act. Further, if the assessee was not maintaining books of accounts and was following presumptive method of taxation u/s. 44AF of the Act, the assessee has not raised this plea either before the Assessing Officer or the CIT(A). The fresh plea raised by the assessee is contrary to the documents on record. The plea raised by way of additional ground of appeal is an after thought and a desperate attempt to wriggle out of the additions made by the Assessing Officer and confirmed by the CIT(A) . We find no merit in the additional grounds raised, hence, the same is dismissed.
In the result, appeal by the assessee is partly allowed for statistical purpose.
Order pronounced in the open court on Thursday the 09th day of March, 2023. Sd/- Sd/- (SHRI S.RIFAUR RAHMAN) (VIKAS AWASTHY) लेखाकार सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER मुंबई/ Mumbai, �दनांक/Dated 09/03/2023 Vm, Sr. PS(O/S)
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��त�ल�प अ�े�षतCopy of the Order forwarded to :
अपीलाथ�/The Appellant , 2. ��तवाद�/ The Respondent. 3. आयकर आयु�तCIT 4.. �वभागीय ��त�न�ध, आय.अपी.अ�ध., मुबंई/DR, ITAT, Mumbai 5.. गाड� फाइल/Guard file.
BY ORDER, //True Copy// (Dy./Asstt.Registrar) ITAT, Mumbai