C Girija, Balasore V. DCIT, Berhampur

ITA 106/CTK/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52442 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 28-11-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 21-02-2011
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: G NAIKR KAR ARS
• Keywords: Unexplained investment; Depreciation; Salary income
• Section: 68; 148; 10; 139; 143(3)

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 106,107 AND 108/CTK/2011 (ASSESSMENT YEAR S 2002 - 03, 2003 - 0 AND 200 - 05) SMT.C.GIRIJA, PROP. GANJAM GAS, C/O. ECPINDUSTRIES LTD., 27, INDUSTRIAL ESTATE, BALASORE, ORISSA 756 001 PAN: ABXPC 2599 N VERSUS DCIT, BERHAMPUR CIRCLE,BERHAMPUR, GANJAM. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI G.NAIK/R.KAR, ARS FOR THE RESPONDENT SHRI S.C.MOHANTY, DR DATE OF HEARING : 28.11.2011 DATE OF PRONOUNCEMENT : 16.12.2011 ORDER SHRI K.S.S.PRASAD RAO, JM : ALL THESE APPEALS ARE FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2002 - 03, 2003 - 0 AND 200 - 05. 2. THE ASSESSEE HAS FILED ALL THESE APPEALS HAVING BEEN AGGRIEVED BY THE ORDERS OF THE COMMISSIONER OF INCOME - TAX (APPEALS). IN ALL THESE THREE YEARS THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN ITS APPEALS AS DETAILED HEREUNDER. ITA NO.106/CTK/2011 : THE LEARNED CIT(A) ERRED IN FACT AS WELL AS LAW TO CONFIRM THE PENALTY OF 75,300 IMPOSED U/S.271(1)(C) OF THE INCOME - TAX ACT,1961 AGAINST THE ASSESSEE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.107/CTK/2011 : (I) THE LEARNED CIT(A) ERRED IN FACT AS WELL AS LAW TO UPHOLD THE PROCEEDINGS U/S.147 AND ISSUE OF NOTICE U/S .148 AS VALID IN LAW ON THE FACTS AND CIRCUMSTANCES OF THE CASE. (II) THE COMPLETION OF ASSESSMENT IN ABSENCE OF SERVICE OF VALID NOTICE U/S.143(2) OF THE ACT IS ILLEGAL AND LIABLE TO BE QUASHED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.108/CTK/2 011 : (1) THE LEARNED CIT(A) SHOULD NOT HAVE CONFIRMED THE FOLLOWING ADDITIONS CLAIMED AS EXEMPTION U/S.10 OF THE INCOME - TAX ACT,1961 UNDER THE HEAD OF INCOME FROM SALARY ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.106,107 AND 108/CTK/2011 2 SL.NO. HEAD OF ADDITION AMOUNT IN 1. HOUSE RENT 36,000 2. MEDICAL EXPENSES 15,000 3. LUNCH EXPENSES 14,400 4. CAR EXPENSES 21,600 5. NEWS PAPER 6,000 6. CHILD EDUCATION 1,000 TOTAL: 96,000 (2) THE LEARNED CIT(A) SHOULD NOT HAVE CONFIRMED THE ADDITION OF 30,000 CLAIMED AS STA NDARD DEDUCTION U/S.16(1) OF THE INCOME - TAX ACT,1961 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. (3) THE LEARNED CIT(A) ERRED IN ALLOWING DEPRECIATION @20% ON VEHICLE GIVEN ON HIRE AGAINST THE CLAIM OF THE ASSESSEE @40% ON THE FACTS AND CIRCUMSTANC ES OF THE CASE. (4) THE LEARNED CIT(A) SHOULD NOT HAVE CONFIRMED THE FOLLOWING CLAIM OF EXPENSES AS MADE BY THE ASSESSING OFFICER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. SL.NO. HEAD OF ADDITION AMOUNT IN 1. VEHICLE RUNNING & MAINTENANCE 30,000 2. REPAIR 25,000 3. PUJA EXPENSES 10,130 4. DONATION 3,260 TOTAL: 68,3980 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES AND LEGAL IMPLICATION THEREOF. 4. THE ASSESSEE VEHEMENTLY ARGUED ASSAILING THE ORDERS OF THE DEPARTMENTAL AUTHORITIES CONTENDING THAT THE ORDERS OF THE DEPARTMENTAL AUTHORITIES ARE NOT SUSTAINABLE FOR LEGAL SCRUTINY ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEREBY THE PENALTY IMPOSED AS WELL AS THE ADDITIONS MADE IN THE RESPEC TIVE ASSESSMENT YEARS ARE NOT SUSTAINABLE FOR LEGAL SCRUTINY AND ARE LIABLE TO BE DELETED. 5. ON THE OTHER HAND, THE LEARNED DR ARGUED SUPPORTING THE ORDERS OF THE DEPARTMENTAL AUTHORITIES CONTENDING INTERALIA THAT THE ASSESSEE HAS MADE UNSUSTAINABLE CLAIM S AND HENCE, AFTER THOROUGH VERIFICATION OF THE FACTS AS WELL AS LAW, THE DEPARTMENTAL AUTHORITIES HAVE NOT ACCEPTED THE CLAIMS OF THE ITA NO.106,107 AND 108/CTK/2011 3 ASSESSEE AND PASSED THE IMPUGNED ORDERS. HENCE, THE ORDERS OF THE DEPARTMENTAL AUTHORITIES ARE WELL REASONED AND SUSTAINA BLE FOR LEGAL SCRUTINY. HENCE, HE SOUGHT FOR UPHOLDING THE SAME. ITA NO.106/CTK/2011 : 6. THE FACTS RELATING TO THE ISSUE IN THIS APPEAL ARE THAT THE ASSESSEE DERIVES INCOME FROM REMUNERATION AS A DIRECTOR OF ECP INDUSTRIES LTD., BALASORE, PROFITS FROM BUS INESS IN SALE OF COOKING GAS IN THE TRADE NAME OF GANJAM GAS, BERHAMPUR AND INTEREST ON BANK DEPOSITS ETC. THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002 - 03 U/S 139 ON 31 .10.2002 DISCLOSING TOTAL INCOME AT 8.02,600 . THE ASSESSMENT WAS COMPLET ED U/S 143(1] ON 23.12.2002. THEREAFTER, IN ORDER TO ENSURE THAT I NCOME DISCLOSED IN THE RETURN FILED U/S 139 HAS NOT BEEN UNDER STATED I N THE MANN ER, NOTICE U/S 143(2) WAS ISSUED AND THEREAFTER THE ASSESSMENT COMPLETED . SUBSEQUENTLY, IT WAS FOUND TH AT WHILE COMPUTING THE TOTAL INCOME RETURNED U/S . 139 THE ASSESSEE HAS DEDUCTED A SUM OF 96,000 AND 25,000 TOWARDS EXEMPTION U/S . 10 AND STANDARD DEDUCTION U/S 16 RESPECTIVELY OUT OF THE DIRECTORS REMUNERATION OF 3,60,000, THEREFORE, THE DEPARTMENT ISSUED NOTICE U/S . 148 REOPENING THE ASSESSMENT. IN RESPONSE TO THE SAID NOTICE, THE ASS ESSEE SUBMITTED A PETITION DT. 21.3.2005 WITH A REQUEST TO TREAT THE RETURN FILED U/S 139 AS ONE FILED IN RESPONSE TO NOTICE U/S 148. THE ASSESSEE HAS OBJECTED TO THE ISSUE OF NOTICE U/S 148. THE ASSESSING OFFICER WITHOUT ISSUING NOTICE U/S.143(2) HAS COMP LETED THE ASSESSMENT U/S . 143(3) /147 ON 30.12.2005 DETERMINING THE TOTAL INCOME AT 10,48,600 . THIS RESULTED IN AN AGGREGATE ADDITION OF 2,46,000 TO THE INCOME RETURNED U/S . 148. TH IS ADDITION CONSISTS OF (A) DISALLOWANCE OF 96,000 OUT OF DIRECTORS REMUNERATION OF RS.3,60,000/ - CLAIMED AS EXEMPT U/S 10, (B) DISALLOWANCE OF 25,000 FROM THE AFORESAID REMUNERATION CLAIMED AS STANDARD DEDUCTION U/S ITA NO.106,107 AND 108/CTK/2011 4 16(1) , AND (C) ADDITION OF 1.25,000 U/S 68 AS ASSESSEES UNEX P LAINED INVESTMENT IN COOKING GAS BUSINESS. LATER ON THE ASSESSING OFFICER INITIATED THE PROCEEDINGS FOR LEVY OF PENALTY U/S.2 71(1)(C) AS ADDITION AGGREGATED TO SUM OF 2,46,000 AS STATED SUPRA. THE ASSESSEE PRESENTED AN APPEAL BEFORE THE CIT(A) AND DISPUTED THE ADDITION OF 2,46,000 BUT IS UNSUCCESSFUL. THEREAFTER THE ASSESSING OFFICER PROCEEDED TO LEVY PENALTY U/S.271(1)(C). H E ISSUED NOTICE ON 24.1.2006 IN CONTINUATION TO THE PENALTY SHOW - CAUSE NOTICE ISSUED BY HIM ALONG WITH THE ASSESSMENT ORDER DATED 30.12.2005 AND DIRECTED THE ASSESSEE TO FURNISH A REPLY ON 13.08.2007 . THE ASSESSEE COULD NOT FURNISH A REPLY AS THE ASSESSEE S REPRESENTATIVE AS WELL AS THE ASSESSEE WERE ABSENT FROM THE HEAD QUARTERS . THE ASSESSING OFFICER THEREFORE PASSED AN EX - PARTE PENALTY ORDER ON 2.8.2007 LEVYING PENALTY OF 75,000 . 7. AGGRIEVED BY THIS PENALTY ORDER, THE ASSESSEE APPROACHED THE CIT(A) WHO HAS CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER HOLDING THAT THE ITAT WHICH IS HIGHEST FACT FINDING BODY HAS UPHELD THE ADDITION OF 2,46,000 MADE BY THE ASSESS ING OFFICER. 8. AGGRIEVED BY THAT ORDER, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 9. THE ADDITION OF 1,25,000 AS MADE BY THE ASSESSING OFFICER HOLDING THAT THIS IS UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE IN ITS BUSINESS IN GAS U /S.68 OF THE ACT. WHILE IMPOSING PENALTY U/S.271(1)(C), THE ASSESSING OFFICER HAS CONSIDERED THIS ADDITION AS ASSESSEES CONCEALED INCOME. 10. IN THE PENALTY ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT ON PERUSAL OF THE CAPITAL ACCOUNT HE NOTICED THAT T HE ASSESSEE HAS SHOWN TO HAVE INTRODUCED FRESH CAPITAL OF 1,25,000 BUT THE SOURCE OF SUCH INVESTMENT HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOME. APART FROM THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND BY THE ASSESSING OFFICER THAT ITA NO.106,107 AND 108/CTK/2011 5 THE ASSESSEE HAS CLAIMED THAT SHE HAS INTRODUCED IN THE BUSI NESS OF GAS OF 1,25,000 OUT OF HER TAXABLE INCOME BUT SHE COULD NOT SHOW THE AVAILABILITY OF FUNDS WITH HER ON THE DATE THE FRESH CAPITAL INTRODUCED BY HER IN THE GAS BUSINESS. HENCE, THE ASSESSING OFFICER HELD INVESTMENT OF 1,25,000 AS UNEXPLAINED INVES TMENT U/S.68 OF THE INCOME - TAX ACT,1961. THESE ADDITIONS ARE SUSTAINED BY THE LEARNED CIT(A) AS WELL AS THE TRIBUNAL AND THE ASSESSING OFFICER HAS IMPOSED PENALTY OF 75,300 AGAINST THE ASSESSEE U/S.271(1)(C) OF THE INCOME - TAX ACT,1961 FOR THE CONCEALMENT OF INVESTMENT OF 1,25,000. 11. ON CAREFUL CONSIDERATION OF THE MATERIALS MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE ASSESSIN G OFFICER OF 1,25,000 IS MADE AS UNEXPLAINED INVESTMENT U/S.68 OF THE I.T.ACT. SECTION 68 OF THE I.T.ACT IS ONLY A DEEMING PROVISION AND THE ADDITION MADE UNDER SUCH DEEMING PROVISION CANNOT BE TAKEN AS POSITIVE CONCEALMENT OF INCOME INVITING PENALTY U/S. 271(1)(C) OF THE ACT. SECTION271(1)(C) OF THE ACT CLEARLY AND CATEGORICALLY MENTIONS THAT ANY CONCEALMENT OF INCOME BUT HERE THE ADDITION MADE BY THE ASSESSING OFFICER IS U/S.68 ON ACCOUNT OF UNEXPLAINED INVESTMENT , WHICH INVESTMENT CAN NEVER BE TREATE D AS CONCEALED INCOME MORE SO IN THE LIGHT OF THE EXPLANATION TO SECTION 271(1)(C) OF THE ACT THAT THE ASSESSEE WAS HAVING SUFFICIENT FUND AT THE RELEVANT DATES ON WHICH THE CAPITAL WAS INTRODUCED BY HER IN THE GAS BUSINESS. ADMITTEDLY THE ASSESSEE WAS HA VING INCOME FROM SALARY AND ALSO DERIVING INCOME ON INTEREST ON BANK DEPOSITS ETC., BESIDES CARRYING ON BUSINESS AS A GAS DEALER . THE ASSESSING OFFICER HAS NOT CONSIDERED THE POSSIBILITY OF THE ASSESSEE HAVING SUFFICIENT MEANS FOR INTRODUCTION OF CAPITAL O F 1,25,000 IN THE GAS BUSINESS. THE ASSESSEE BEING TAXED ON THREE DIFFERENT CAPACITIES (I) AS AN EMPLOYEE, (II) AS TRADER IN GAS (III) IN TEREST FROM BANK ITA NO.106,107 AND 108/CTK/2011 6 DEPOSITS ETC., AND ALL THESE INCOMES ARE DULY RETURNED BY THE ASSESSEE AND THEY WERE ACCORDINGLY ASSE SSED BY THE ASSESSING OFFICER. BUT AT THE SAME TIME, THE ASSESSING OFFICER IS NOT ABLE TO ESTABLISH THAT THE ASSESSEE HAS NO SUFFICIENT FUNDS ON THE DATES OF INTRODUCTION OF CAPITAL IN GAS DEALERSHIP BUSINESS CARRIED OUT BY HER TO THE TUNE OF 1,25,000. MO RE SO, THE ADDITION OF 1,25,000 MADE BY THE ASSESSING OFFICER IS ONLY AS UNEXPLAINED INVESTMENT BUT NOT ON ACCOUNT OF ANY CONCEALED INCOME. THEREFORE, SUCH ADDITION WILL NOT ATTRACT LEVY OF PENALT Y U/S.271(1)(C) OF THE I.T.ACT IN THE LIGHT OF THE DECISONO F THE HONBLE APEX COURT RENDERED IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD [322 ITR 158 (SC)]. I N THAT WAY, WE ARE OF THE CONSIDERED VIEW THAT LEVY OF PENALTY BY THE ASSESSING OFFICER AS UPHELD BY THE LEARNED CIT(A) OF 75,300 IS HEREBY FOUND AS UNSUSTAINABLE FOR LEGAL SCRUTINY AND HENCE, THE SAME IS HEREBY CANCELLED BY ALLOWING THE APPEAL OF THE ASSESSEE. 12. IN THE RESULT ITA NO.106/CTK/2011 OF THE ASSESSEE IS ALLOWED. ITA NOS.107 AND 108/CTK/2010: 13. THE GROUNDS RAISED BY THE ASSESSEE MOOTS TWO ISSUES NEO IS CHALLENGING THE REOPENING U/S.147 AND THE NON - ISSUE OF NOTICE U/S.143(2) AND OTHER IS ON MERITS OF THE ADDITIONS. 14. ON GOING THROUGH THE ORDERS OF THE DEPARTMENTAL AUTHORITIES IT IS FOUND THAT WHILE CONSIDERING THE ISSUES ON MERITS, TH EY HAVE NOT TAKEN INTO CONSIDERATION THE INCOME OF THE ASSESSEE AS EMPLOYEE AND THE INTEREST EARNED BY HER ON BANK DEPOSITS AND OTHERS. THEY SIMPLY OBSERVED THAT THE ASSESSEE IS NOT ABLE TO EXPLAIN THE INVESTMENTS MADE IN GANJAM GAS COMPANY BY THE ASSESSEE. APA RT FROM THAT THE DEPARTMENT IS ALSO DISPUTING THE CLAIM OF THE ASSESSEE REGARDING CLAIM OF DEPRECIATION AND EXPENSES ON THE VEHICLES THE ASSESSEE IS PLYING FOR RENT BUT AT THE SAME TIME, THE DEPARTMENTAL AUTHORITIES ARE SILENT ABOUT WHETHER THE VEHICLE WAS REGISTERED ITA NO.106,107 AND 108/CTK/2011 7 AS A TOURIST VEHICLE OR PERSONAL VEHICLE BECAUSE THE DEPRECIATION VARIES ACCORDINGLY. SINCE THE LOWER AUTHORITIES HAVE PASSED THE ORDERS WITHOUT ADVERTING TO THESE MATERIAL FACTS STATED SUPRA, WE ARE OF THE CONSIDERED VIEW THAT THIS IS A FIT CA SE TO BE RESTORED TO THE FILE O F THE ASSESSING OFFICER FOR THR A SHING OUT THE IMPORTANT FACTUAL ASPECT S STATED SUPRA WHICH HAVE BEARING ON THE ULTIMATE DECISION ON THE ISSUES RAISED BY THE ASSESSEE. THEREFORE, THESE TWO APPEALS OF THE ASSESSEE ARE ALLOWED FO R STATISTICAL PURPOSES WITH THE DIRECTION TO THE ASSESSING OFFICER TO DE NOVO CONSIDER THE ISSUES. 15. IN THE RESULT, ITA NOS.107 AND 108/CTK/2011 ARE ALLOWED FOR STATISTICAL PURPOSES. S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S. PRASAD RAO) JUDICIAL MEMBER DATE: 16.12.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SMT.C.GIRIJA, PROP. GANJAM GAS, C/O. ECPINDUSTRIES LTD., 27, INDUSTRIAL ESTATE, BA LASORE, ORISSA 756 001 2. THE RESPONDENT: DCIT, BERHAMPUR CIRCLE,BERHAMPUR, GANJAM. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.