Smt. Indramati C. pandey Widow & L/H of late Chandrabhan R. Pandey, Baroda V. The DCIT, Circle-2(1), Now Circle-1(2), Baroda

CO 32/AHD/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6208 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 14-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIDHUT TRIVEDI
• Assessee Lawyers: JIGNESH KUMAR PARIKH
• Keywords: Tax effect
• Section: 271(1)(c); 268A; 143(2); 68; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, HONBLE JUDICIAL MEMBER AND SHRI WASEEM AHMED HONBLE ACCOUNTANT MEMBER ITA.NO.2142/AHD/2015 WITH CROSS OBJECTION NO.32/AHD/2018 / ASSTT.YEAR : 2007-08 DCIT, CIR.1(2) BARODA. VS SMT.INDRAMATI C.PANDEY WIDOW & L.H. OF LATE SHRI CHANDRABHAN R PANDEY PROP: M/S.SHEKTI ENTERPRISE 807, DWARKESH COMPLEX R.C. DUTT ROAD, ALKAPURI BARODA 390 005 PAN : AEYPP 9644 P (PAN OF THE DECEASED ASSESSEE) ITA.NO.445/AHD/2015 / ASSTT.YEAR : 2007-08 SMT.INDRAMATI C.PANDEY WIDOW & L.H. OF LATE SHRI CHANDRABHAN R PANDEY PROP: M/S.SHEKTI ENTERPRISE 807, DWARKESH COMPLEX R.C. DUTT ROAD, ALKAPURI BARODA 390 005 PAN : AEYPP 9644 P (PAN OF THE DECEASED ASSESSEE) VS DCIT, CIR.1(2) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI JIGNESHKUMAR PARIKH, AR REVENUE BY : SHRI VIDHUT TRIVEDI, SR.DR ITA NO.2142/AHD/2015 WITH CO ITA NO.445/AHD/2015 2 / DATE OF HEARING : 18/11/2019 / DATE OF PRONOUNCEMENT: 19/11/2019 !'/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER ITA NO.2142/AHD/2015 IS REVENUES APPEAL FILED AGAI NST ORDER OF THE LD.CIT(A)-II, BARODA DATED 20.1.2011 PASSED FOR THE ASSTT.YEAR 2007-08. ON RECEIPT OF NOTICE ON THIS REVENUES APPEAL, ASSESSE E HAS FILED CROSS OBJECTION BEARING NO.32/AHD/20187. ASSESSEE IS ALSO IN APPE AL AGAINST ORDER OF LD.CIT(A)-II, BARODA DATED 12.11.2014 CHALLENGING C ONFIRMATION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ALL THESE APPE ALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE ITA NO.2142/AHD/2014 ALONG WITH CO NO.32/AHD/2018. REGISTRY HAS POINTED OUT THAT CO FILED BY THE ASSES SEE IS TIME BARRED BY 1030 DAYS. REVENUE IN ITS APPEAL CHALLENGED DELETION OF ADDITION AS SET OUT IN THE GROUNDS OF APPEAL. 3. THE LD.COUNSEL FOR THE ASSESSEE AT THE OUTSET SU BMITTED THAT TAX EFFECT BY WAY OF RELIEF GIVEN BY THE LD.CIT(A) IS L ESS THAN RS.50 LAKHS. HE SUBMITTED THAT BY VIRTUE OF RECENT CBDT CIRCULAR NO.17 OF 2019 DATED 8.8.2019, DEPARTMENT HAS BEEN INSTRUCTED NOT TO FILE APPEAL BEFORE THE TRIBUNAL WHERE TAX EFFECT IS BELOW RS.50 LAKHS. THIS INSTRUCTION IS APPLICABLE TO THE PENDING CASES ALSO. THEREFORE, T HE PRESENT APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED AT THE THRESHOLD. HE FILED A CALCULATION SHEET DEMONSTRATING TAX EFFECT ON THE A DDITION CONFIRMED BY THE LD.CIT(A) IS LESS THAN RS.50 LAKHS. IT READS A S UNDER: ITA NO.2142/AHD/2015 WITH CO ITA NO.445/AHD/2015 3 ASSESSED INCOME U/S.143(3) 1,34,63,480/- TAX ON ASSESSED INCOME RS.39,79,044/- SURCHARGE 3,97,904/- E-CESS 87,538/- TOTAL RS.44,64,486/- PER CONTRA, THE LD.DR DID NOT DISPUTE APPLICABILITY OF THE ABOVE CBDT CIRCULAR AND THE TAX CALCULATION SHOWN BY THE LD.CO UNSEL. HE LEFT THE ISSUE TO THE TRIBUNAL TO PASS APPROPRIATE ORDER IN ACCORDANCE WITH THE LAW. 4. AFTER HEARING BOTH THE SIDES AND AFTER PERUSAL O F THE ABOVE CBDT INSTRUCTION, WE ARE OF THE VIEW THAT THE PRESENT AP PEAL OF THE REVENUE FALLS WITHIN THE PURVIEW OF THE CBDT INSTRUCTION CI TED (SUPRA). WE HAVE NOTED THAT THE QUANTUM OF PENALTY DISPUTED BY THE REVENUE IS LESS THAN RS.50 LAKHS, AND THEREFORE, KEEPING IN VIEW TH E ABOVE CBDT CIRCULAR AND PROVISIONS OF SECTION 268A OF THE INCO ME TAX ACT, WE ARE OF THE VIEW THAT THE PRESENT APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. IT IS DISMISSED. HOWEVER, IT IS OBSERVED THAT IN CASE ON RE-VERIFICA TION AT THE END OF THE AO IT CAN BE DEMONSTRATED THAT THE TAX EFFECT I S MORE, OR REVENUES CASE FALLS WITHIN THE AMBIT OF EXCEPTIONS PROVIDED IN THE CIRCULAR, THEN THE DEPARTMENT WILL BE AT LIBERTY TO APPROACH THE T RIBUNAL FOR RECALL OF THIS ORDER. SUCH APPLICATION SHOULD BE FILED WITHI N THE TIME PERIOD PRESCRIBED IN THE ACT. IN VIEW OF THE ABOVE, THE A PPEAL OF THE REVENUE IS DISMISSED DUE TO LOW TAX EFFECT. ITA NO.2142/AHD/2015 WITH CO ITA NO.445/AHD/2015 4 5. THE LD.COUNSEL FOR THE ASSESSEE DID NOT PRESS HE R CO, HENCE, APPEAL OF THE REVENUE IS DISMISSED DUE TO LOW TAX EFFECT, THE CO OF THE ASSESSEE IS DISMISSED FOR WANT OF PROSECUTION. 6. NOW WE TAKE ITA NO.445/AHD/2015. 7. IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED CONF IRMATION OF PENALTY AMOUNTING TO RS.2,76,012/- LEVIED BY THE AO UNDER S ECTION 271(1)(C) OF THE ACT. 8. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HER RETURN OF INCOME ELECTRONICALLY ON 30.10.2017 DECLARING TOTAL INCOME AT RS.8,19,930/-. RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOT ICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. THE AO H AS CONFRONTED THE ASSESSEE THAT AIR WING HAS TRANSMITTED AN INFORMATI ON THAT THE ASSESSEE HAS DEPOSITED A SUM OF RS.11,20,000/- IN CASH IN SAVING BANK ACCOUNT NO.20855 WITH PUNJAB NATIONAL BANK. HE DIRECTED ASSESSEE T O EXPLAIN THE SOURCE OF DEPOSITS. IT WAS CONTENDED BY THE ASSESSEE THAT TH IS BANK ACCOUNT BELONGED TO HUF, AND OUT OF AGRICULTURE INCOME, THE CASH WAS DE POSITED IN HUF ACCOUNT. THE LD.AO ACCEPTED THE EXPLANATION OF THE ASSESSEE OF THE SOURCE OF INCOME TO THE EXTENT OF RS.3 LAKHS, AND MADE ADDITION OF RS.8 ,20,000/- UNDER SECTION 68 OF THE ACT. 9. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. THE ASSESSEE THEREAFTER DID NOT CHALLENGE THIS ADDITION , BUT FILED CO IN THE APPEAL OF THE REVENUE CHALLENGING THIS ADDITION. THE CO I S TIME BARRED BY 1030 DAYS, AND THEREFORE, IT WAS NOT PRESSED. HENCE, AD DITION STANDS CONFIRMED. 10. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT CONFIRMATION OF ADDITION DOES NOT DENUE THE ASSESSEE FROM RIGHT TO AVER PENA LTY IS NOT IMPOSABLE ITA NO.2142/AHD/2015 WITH CO ITA NO.445/AHD/2015 5 BECAUSE ADDITION IN THE HANDS OF THE ASSESSEE WAS N OT SUSTAINABLE. ACCORDING TO HIM, PENALTY PROCEEDING IS AN INDEPENDENT PROCEE DINGS, AND IN ORDER TO ABSOLVE HERSELF THE ASSESSEE IS ENTITLED TO RAISE A NY PLEA. HE TOOK US THROUGH BANK STATEMENT AVAILABLE ON PAGE NO.69 OF THE PAPER BOOK. THE LD.DR ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE REVEN UE AUTHORITIES. 11. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND G ONE THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 HAS DIRECT BEARING ON THE CONTROVERSY. THEREFORE, IT IS PERTI NENT TO TAKE NOTE OF THE SECTION. '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B)** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE N, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O R SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- ITA NO.2142/AHD/2015 WITH CO ITA NO.445/AHD/2015 6 SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 12. A BARE PERUSAL OF THIS SECTION WOULD REVEAL TH AT FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM SH OULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100 % TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OT HER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CON CEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUTORY DEEM ING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FI RST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCO ME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE AS SESSEE FAILS, TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF THE TOTAL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD CO ME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE ITA NO.2142/AHD/2015 WITH CO ITA NO.445/AHD/2015 7 DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSE E IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAV E BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANAT ION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMIN G FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE I NCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 13. IN THE LIGHT OF THE ABOVE, LET US CONSIDER FACT S OF THE PRESENT CASE. NO DOUBT THE ADDITION ON ACCOUNT OF UNEXPLAINED CREDI T FOUND DEPOSITED IN THE BANK ACCOUNT WITH PUNJAB NATIONAL BANK, HAS BEEN MA DE AT RS.8,20,000/-. THIS ADDITION STAND CONFIRMED AT THE END OF THE LD. CIT(A), AND THEREAFTER, THE ASSESSEE DID NOT PRESS CO BEFORE US. QUESTION IS, IF AN ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE ON THE WRONG PREMISE, CAN THAT BE USED AGAINST THE ASSESSEE IN THE PENALTY PROCEEDINGS ALSO ? THE BAN K ACCOUNT IS IN THE NAME OF HUF, AND THE HUF IS A SEPARATE TAXABLE INDEPENDENT ENTITY. IF AN ACCOUNT IS BEING MAINTAINED BY THE HUF, THEN THE ASSESSMENT IN THE HANDS OF HUF OUGHT TO HAVE BEEN MADE. IN THE PRESENT CASE THAT HAS NO T BEEN DONE. SINCE THE QUANTUM IS NOT OPEN BEFORE US, WE CANNOT TOUCH IT. THE ASSESSEE HAS TO PAY TAX ON THE ADDITION MADE BY THE AO. BUT PENALTY IS A SEPARATE PROCEEDINGS, AND ON ACCOUNT OF ANY TECHNICAL ISSUE, IF AN ASSESS EE CAN ABSOLVE HIMSELF FROM VISITING WITH PENALTY, THEN, ALL THOSE PLEA ARE AVA ILABLE WITH THE ASSESSEE. SINCE THE ADDITION ITSELF OUGHT NOT HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE, BECAUSE THIS BANK ACCOUNT DID NOT BELONG TO THE ASSESSEE, RATHER IT BELONGED TO HUF, THEREFORE, FOR THE PURPOSE OF PENA LTY, WE ARE SATISFIED THAT ITA NO.2142/AHD/2015 WITH CO ITA NO.445/AHD/2015 8 THE ASSESSEE DOES NOT DESERVES TO BE VISITED WITH P ENALTY IN THESE CIRCUMSTANCES. WE ALLOW THE APPEAL OF THE ASSESSEE , AND DELETE PENALTY OF RS.2,76,012/-. 14. IN THE RESULT, ITA NO.2142/AHD/2015 AND CO NO.3 2/AHD/2018 ARE DISMISSED, AND ITA NO.445/AHD/2015 IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19 TH NOVEMBER, 2019 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER