SUMMIT JEWELLERY, MUMBAI v. ACIT CEN CIR-21, MUMBAI

ITA 1023/MUM/2009 | 2006-2007
Pronouncement Date: 31-05-2010 | Result: Allowed

Appeal Details

RSA Number 102319914 RSA 2009
Assessee PAN AAGFS6991Q
Bench Mumbai
Appeal Number ITA 1023/MUM/2009
Duration Of Justice 1 year(s) 3 month(s) 16 day(s)
Appellant SUMMIT JEWELLERY, MUMBAI
Respondent ACIT CEN CIR-21, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 31-05-2010
Date Of Final Hearing 24-05-2010
Next Hearing Date 24-05-2010
Assessment Year 2006-2007
Appeal Filed On 13-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI P.M.JAGTAP ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 1023/MUM/2009 (ASSESSMENT YEARS: 2006-07) SUMMIT JEWELLERY 604.SUKHSAGAR CHS MUMBAI- PAN: AAGFS6991Q .APPELLANT V/S ACIT CEN CIR-21 AAYAKAR BHAVAN M K ROAD 4 TH FL. MUMBAI-400020 RESPONDENT ITA NO. 1025/MUM/2009 (ASSESSMENT YEARS: 2006-07) MILAN JEWELLERY 1002 PANCHARATNA OPERA HOUSE MUMBAI-400004 PAN: AAAFM7721J .APPELLANT V/S ACIT CEN CIR-21 AAYAKAR BHAVAN M K ROAD 4 TH FL. MUMBAI-400020 RESPONDENT APPELLANTS BY : SHRI M.REEPAL G TRAL SHAWALA RESPONDENT BY : S/SHRI M PITAMBAR DAS A ND S S RANA O R D E R PER VIJAY PAL RAO JM THESE APPEALS BY THE TWO ASSESSEES ARE DIRECTED AGAINST THE TWO DIFFERENT ORDERS DATED 20.1.2009 OF CIT(A)- ITA NO. 1023/MUM/2009 ITA NO. 1025/MUM/2009 (ASSESSMENT YEAR: 2006-07) 2 IV MUMBAI ARISING FROM RESPECTIVE ORDERS OF PENALT Y LEVIED U/S 271(1)(C ) OF THE INCOME TAX ACT 1961 FOR THE ASS ESSMENT YEAR 2006-07. 2. THE ASSESSEES HAVE RAISED VARIOUS GROUNDS IN TH ESE APPEALS. HOWEVER THE SOLITARY COMMON ISSUE ARISES FOR OUR CONSIDERATION AND ADJUDICATION IS WHETHER IN THE FA CTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS JUSTIFIED I N CONFIRMING THE ORDER OF LEVY OF PENALTY U/S 271(1)( C ) OF THE ACT. 3. THE ASSESSEES ARE THE MEMBERS OF TANVEERKUMAR GROUP OPERATING IN THE BUSINESS OF DIAMOND TRADING AND EXPORT. THE GROUP INCLUDING THE ASSESSEES WERE SUBJECTED TO SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCO ME TAX ACT 1961 ON 8.12.2005. THE DECLARATION OF UNDISCLO SED INCOME OF RS.3 CRORES WAS MADE BY SHRI TANVEERKUMA R CHOKSI THE DIRECTOR OF M/S TANVEERKUMAR DIAMONDS L TD AND ALSO THE HEAD OF THE ASSESSEES GROUP CONCERN. I N HIS STATEMENT U/S 132(4) DATED 04.02.2006 HE GAVE BIFU RCATION OF THE UNDISCLOSED INCOME EARNED DURING THE ASSESSMENT YEAR 2006-07 AS UNDER : M/S TANVEERKUMAR DIAMONDS LTD RS.50.00 LAKHS M/S MILAN JWELLERS RS.1 CRORE M/S SUMIT JEWELLERY RS.1.50 CRORES ITA NO. 1023/MUM/2009 ITA NO. 1025/MUM/2009 (ASSESSMENT YEAR: 2006-07) 3 4. THE AO PROCEEDED TO INITIATE PENALTY PROCEEDINGS U/S 271(1)( C) READ WITH EXPLANATION 5(2) OF THE ACT IN RESPECT OF THREE ASSESSEES CONCERN I.E. M/S TANVEERKUMAR DIAMO NDS LTD M/S MILAN JWELLERS AND M/S SUMIT JEWELLERY AND ACC ORDINGLY LEVIED THE PENALTY OF RS.50 49 000/- AND RS.33 66 000/- RESPECTIVELY IN RESPECT OF THESE TWO ASSESSEES BEFO RE US AND PENALTY OF RS.16 83 000/- IN RESPECT OF M/S TANVEER KUMAR DIAMONDS LTD.. 5. ON APPEAL THE CIT(A) HAS CONFIRMED THE PENALTY LEVIED IN RESPECT OF ALL THREE ASSESSEES GROUP CONCERN BY DIFFERENT ORDERS OF 20.1.2009. 6. WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEA RNED DR AND CONSIDERED THE RELEVANT RECORD. AT THE OUTS ET THE LEARNED AR HAS POINTED OUT THAT THE IDENTICAL ISSUE HAS ALREADY BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IN TAN VEERKUMAR DIAMONDS LTD V/S ACIT IN ITA NO.1024/MUM/2009 (AY 2 006- 07) ORDER DATED 16.6.2009. HE HAS FURTHER SUBMITT ED THAT THE FACTS IN ALL THESE CASES ARE IDENTICAL THEREFORE THE ISSUE INVOLVED IN ALL THESE APPEALS IS COVERED BY THE AB OVE MENTIONED DECISION OF THIS TRIBUNAL DATED 16.6.2006 . 7. THE LEARNED DR HAS SUBMITTED THAT THE ASSESSEE DISCLOSED THE UNDISCLOSED INCOME IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION U/S 132 BUT THE ASSESSEE DID NO T EXPLAIN THE SOURCE OF UNDISCLOSED INCOME. THEREFORE THE ASSESSEE ITA NO. 1023/MUM/2009 ITA NO. 1025/MUM/2009 (ASSESSMENT YEAR: 2006-07) 4 IS NOT ENTITLED TO IMMUNITY UNDER EXPLANATION 5(2) TO SECTION 271(1)( C ). HE HAS RELIED UPON THE ORDERS OF THE L OWER AUTHORITIES. 8. AFTER CONSIDERING THE RIVAL CONTENTIONS AND THE RELEVANT RECORD WE NOTE THAT THE FACTS AND CIRCUMSTANCES I N ALL THESE THREE CASES INCLUDING THE TWO CASES BEFORE US AND O NE IN THE CASE OF TANVIRKUMAR DIAMONDS LTD ARE IDENTICAL BE CAUSE THE PENALTY PROCEEDINGS WERE INITIATED IN CONSEQUENCE O F THE DISCLOSURE MADE BY SHRI TANVEER KUMAR CHOKSI IN THE STATEMENT RECORDED U/S 132(4) BY BIFURCATING THE TO TAL UNDISCLOSED INCOME IN THREE ASSESSEES GROUP CONCERN S. WE FURTHER NOTE THAT THE PENALTY ORDERS AS WELL AS THE ORDERS OF THE CIT(A) ARE ON SIMILAR LINES AND IDENTICAL REASONING S. THEREFORE WHEN THE FACTS AND CIRCUMSTANCES OF ALL THE THREE CASES ARE IDENTICAL THEN THE ORDER OF THIS TRIBUNAL IN THE CASE OF TANVIRKUMAR DIAMONDS LTD IN ITA NO.1024/MUM/2009 FOR AY 2006-07 DATED 16.6.2009 IS APPLICABLE IN THE CASES BEFORE US. THIS TRIBUNAL IN THE SAID CASE HAS DELETED THE PENA LTY AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGA INST THE REVENUE. THE RELEVANT PORTION OF THE ABOVE SAID OR DER IS REPRODUCED BELOW: 12. THUS IN CASE OF A SEARCH IF THE ASSESSEE ACCEPTS UNDISCLOSED INCOME AND PAYS TAX ON THE SAME PENALTY IS NOT LEVIABLE. THIS IS A BENEFIT OF FERED ITA NO. 1023/MUM/2009 ITA NO. 1025/MUM/2009 (ASSESSMENT YEAR: 2006-07) 5 TO THE ASSESSEE THEREFORE THIS EXPLANATION HAS TO BE INTERPRETED IN THE MANNER TO ACHIEVE THE PURPOSE AN D OBJECT OF INTRODUCING THIS EXPLANATION. THE ASSESS EE IS REQUIRED TO SPECIFY THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. A BROAD DESCRIPTION OF THE MANNER OF EARNING HAS BEEN EXPLAINED BY THE ASSESSEE. WE FIND THAT THE STATEMENT MADE U/S 132(4) IT HAS BEEN CLEARLY MENTIONED THAT THE PROF ITS HAS ARISEN ON ACCOUNT OF DISCREPANCY IN THE STOCK POSSIBLE DISCREPANCY IN THE EXPLANATION TO CIRCULAT ING CAPITAL WHICH MIGHT HAVE BEEN CONVERTED IN TO STOC K. IN OUR OPINION THIS EXPLANATION IS SPECIFIC ENOUGH TO SATISFY THE REQUIREMENTS OF EXPLANATION 5. IT IS NOT AS IF THAT THE AO HAS FOUND ANY PARTICULAR UNDISCLO SED INCOME WHICH IN HIS OPINION CANNOT BE COVERED BY THE ITEMS /TRANSACTION GIVEN IN THE EXPLANATION AND THEREFORE THERE IS A DOUBT AS TO THE SOURCE OF UNDISCLOSED INCOME OFFERED BY THE ASSESSEE IN THE STATEMENT. 13. IN OUR OPINION THE ASSESSEES CASE IS SQUARELY COVERED BY EXPLANATION 5(2) TO SEC.271(1)( C ) AND THEREFORE NO PENALTY LEVIABLE ON THE ADDITION WHICH HAS BEEN OFFERED BY THE ASSESSEE IN THE COURSE OF HIS STATEMENT AND ACCEPTED IN TOTO BY THE DEPARTMENT WITHOUT DEMUR. THE FIRST APPELLATE AUTHORITY HAS REFERRED TO THE DECISION OF APEX COURT IN THE CASE OF UOI AND ORS V/S DHARMENDRA TEXTILE PROCESSORS 306 ITR 277 MUMBAI TRIBUNAL HAD OCCASION TO CONSIDER THE RATIO OF THE DECISION OF APEX COURT IN THAT CASE AND THE APPLICABILITY OF THE SAME TO THE INCOME TAX PROCEEDINGS. THE SPECIAL BENCH DECISION OF MUMBAI TRIBUNAL IN ITA NO.S 4524 AND 4383/MUM/2006 FOR AY 2000-01 DATED 20 TH MARCH 2009 IN THE CASE OF ACIT V/S VIP INDUSTRIES LTD LAY S DOWN THE REQUIREMENTS FOR LEVY OF PENALTY U/S 271(1 ) ( C ) WE UPHOLD THAT THE ASSESSEE IS ENTITLED TO IMMUNITY UNDER EXPLANATION 5(2) TO SECTION 271(1) ( C). WE ALLOW THE ASSESSEES APPEAL AND DELETE TH E PENALTY OF RS.16 83 000/- LEVIED BY THE AO 9. RESPECTFULLY FOLLOWING THE ORDER OF A CO-ORDINA TE BENCH OF THIS TRIBUNAL IN THE CASE OF ASSESSEES GROUP C ONCERN WE DELETE THE PENALTY LEVIED UNDER SECTION 271(1)( C ) IN THE CASES OF ASSESSEES BEFORE US. ITA NO. 1023/MUM/2009 ITA NO. 1025/MUM/2009 (ASSESSMENT YEAR: 2006-07) 6 10. THE APPEALS OF THE ASSESSEES ARE ALLOWED. THE ORDER IS PRONOUNCED IN OPEN COURT ON 3 1.5.2101. SD SD (P.M.JAGTAP) (V IJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMB ER MUMBAI DATED 31ST MAY 2010 SRL:24510 COPY TO: 1. SUMMIT JEWELLERY 604.SUKHSAGAR CHS MUMBAI- 2. MILAN JEWELLERY 1002 PANCHARATNA OPERA HOUSE MUMBAI-400004 3. ACIT CEN CIR-21 AAYAKAR BHAVAN M K ROAD 4 TH FL. MUMBAI-400020 4.CCIT CENTRAL -II MUMBAI 5 CIT-CENT-II MUMBAI. 6. DR B BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI