Mr. Gurinder Singh, Chandigarh V. ITO, W-5(5), Chandigarh

ITA 1109/CHANDI/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5325 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 29-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NARESH BATRA
• Section: 271(1)(c); 273B; 143(3); 68; 263; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH , !' #! $ % , &' BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.1109/CHD/2018 / ASSESSMENT YEAR : 2011-12 MR.GURINDER SINGH, H.NO.151, VILLAGE SARANGPUR, CHANDIGARH. THE INCOME TAX OFFICER, WARD 5(5), CHANDIGARH. ./ PAN NO.CFSPS9864M / APPELLANT / RESPONDENT /ASSESSEE BY : SHRI NARESH BATRA, ADV. ! / REVENUE BY : SMT.CHANDERKANTA, SR.DR '# $ /DATE OF HEARING : 17.01.2019 %&'(# /DATE OF PRONOUNCEMENT: 29.01.2019 &( /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, CHANDIGARH (IN SHORT CIT(A) DATED 31 .7.2018 PASSED U/S 250(6) OF THE INCOME TAX AT, 1961 (HEREI NAFTER REFERRED TO AS ACT), CONFIRMING THE PENALTY LEVIE D U/S 271(1)(C) OF THE ACT BY THE A.O. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS), WITHO UT APPRECIATING THE FACTS, CIRCUMSTANCES, EXPLANATION A ND EVIDENCE PLACED ON RECORDS, HAS GRAVELY ERRED IN SUSTAINING THE PENALTY OF RS.61,770/- U/S 271 (1) (C ) OF THE INCOME TAX ACT, 1961. THE PENALTY BE DROPPED. ITA NO.1109/CHD/2018 A.Y.2011-12 2 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL, BEFORE THE SAME IN TAK EN UP FOR FINAL DISPOSAL. 3. AT THE OUTSET ITSELF LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE ISSUES ON WHICH PENALTY HAD BEEN LEVIED IN THE PRESENT CASE HAD ALREADY BEEN CONSIDE RED EARLIER BY THE AO FOR THE PURPOSE OF LEVY OF PENALT Y AND THE PENALTY PROCEEDINGS HAD BEEN DROPPED AFTER CONSIDERING THE REPLY FILED BY THE ASSESSEE. DRAWIN G OUR ATTENTION TO THE FACTS OF THE CASE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAD RETURN ED INCOME OF RS.99,400/- PLUS AGRICULTURAL INCOME OF RS.60,000/- WHICH HAD BEEN FINALIZED, U/S 143(3) OF THE ACT VIDE ORDER DATED 17.10.2013, AT AN INCOME O F RS.6,34,730/-, BY MAKING ADDITION OF RS.4,75,333/- ,BEING ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT OF RS.2,70,000/- AND INTEREST INCOME OF RS.2,05,333/-. LATER ON, IT WAS POINTED OUT THAT THE LD.CIT-2, CHANDIGARH PASSED AN ORDER U/S 263 OF THE ACT ,DATE D 18.2.2016,HOLDING THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT ON 17.10.2013 AS CANCELLED WITH THE DIRECTIONS TO THE A.O. TO PASS AN ORDER AFRESH IN ACCORDANCE WITH LAW. KEEPING IN VIEW THE OBSERVATIO NS MADE IN THE SAID ORDER BY THE CIT, SUBSEQUENTLY, TH E A.O. FINALIZED THE ASSESSMENT PROCEEDINGS VIDE ORDE R DATED 06.12.2016 BY MAKING ADDITION OF RS.5,09,455/ - , BEING RS.2,70,000/- ON ACCOUNT OF UNEXPLAINED CAS H DEPOSITS AND RS.2,39,455/- ON ACCOUNT OF INTEREST INCOME EARNED. THUS THE LD. COUNSEL FOR ASSESSEE ITA NO.1109/CHD/2018 A.Y.2011-12 3 POINTED OUT THAT THE ONLY ADDITIONAL INCOME ADDED W AS ON ACCOUNT OF INTEREST INCOME AND THAT TOO TO THE EXTENT OF RS.34,122/- ONLY. THEREAFTER THE LD. COUN SEL FOR ASSESSEE DREW OUR ATTENTION TO THE REPLY FILED BY THE ASSESSEE DURING PENALTY PROCEEDINGS INITIATED I N THE FIRST ROUND, STATING THAT NO PENALTY WAS LEVIAB LE ON EITHER OF THE ADDITIONS MADE ON ACCOUNT OF INTEREST NOT DISCLOSED IN THE RETURN TO THE EXTENT OF RS.2,05,33 3/- AND ON ACCOUNT OF CASH DEPOSITS IN BANK REMAINING UNEXPLAINED TO THE EXTENT OF RS.2,70,000/- SINCE TH E NON DECLARATION OF INCOME WAS DUE TO WRONG ADVICE GIVEN TO HIM THAT THE INTEREST INCOME EARNED ON AGRICULTURAL RECEIPTS DEPOSITED IN BANK WAS IN THE NATURE OF AGRICULTURAL INCOME WHICH WAS EXEMPT FROM TAX AND BEING AN AGRICULTURIST HE BONAFIDELY BELIEV ED THE SAME AND THAT THE CASH DEPOSITS WERE ADDED TO T HE INCOME OF THE ASSESSEE SINCE HE COULD NOT PRODUCE J FORMS TO SUBSTANTIATE HIS EXPLANATION THAT THEY WER E SOURCED FROM AGRICULTURAL INCOME, DESPITE THE AO ACCEPTING THE FACT THAT THE ASSESSEE WAS AN AGRICULTURIST. THE LD. COUNSEL FOR ASSESSEE DREW OU R ATTENTION TO THE REPLY FILED IN THIS REGARD, REPROD UCED IN THE PAPER BOOK AT PAGES 11 TO 13 AS UNDER: TO INCOME TAX OFFICER WARD 5(4) CHANDIGARH SUBJECT: PENALTY PROCEEDINGS U/S 271(L)(C) OF THE INCOME TAX ACT IN THE CASE OF SH. GURINDER SINGH, H. NO. 151, VILLAGE SARANGPUR, CHANDIGARH PAN NO. CFSPS9864M, A.Y. 2011 -12. ITA NO.1109/CHD/2018 A.Y.2011-12 4 RESPECTED SIR, THE PROCEEDINGS CITED AS SUBJECT ABOVE HAVE BEEN FI XED FOR HEARING TODAY BEFORE YOUR GOODSELF THE BACKGROU ND OF THIS CASE IS THAT THE ASSESSMENT IN THE CASE OF THE ASSESSEE ABOVE CITED WAS COMPLETED U/S 143(3) OF THE ACT BY YOUR GOODSELF WHEREIN ADDITION ON 2 ISSU ES WERE MADE. IN RESPECT OF THESE 2 ISSUES, PENALTY PROCEEDINGS U/S 271(L)(C) WERE INITIATED. THE SAID PENALTY PROCEEDINGS HAVE BEEN FIXED FOR HEARING TOD AY. THE PENALTY U/S 271(L)(C ) IN RESPECT OF BOTH THE I SSUES IS NOT LEVIABLE DUE TO THE FOLLOWING REASONS : 1. ADDITIONS OF RS. 2,05,333/- ON ACCOUNT OF INTERE ST FROM SAVING BANK ACCOUNT: THE ASSESSEE WAS AN AGRICULTURIST AND HAD CERTAIN DEPOSITS IN SAVING BANK ACCOUNTS OUT OF SALE OF AGRICULTURAL LANDS AND ALSO OUT OF SALE OF AGRICULT URAL PRODUCE. THE ASSESSEE WAS ADVISED THAT AGRICULTURAL INCOME AS WELL AS ACCRETIONS TO SUCH INCOME IS EXEM PT FROM TAX U/S 10 OF THE INCOME TAX ACT. THE FACT OF DEPOSIT IN SAVING BANK ACCOUNT TO BE OUT OF SALE PROCEEDS OF AGRICULTURAL LAND AS WELL AS OUT OF AGRICULTURAL PRODUCE WAS ACCEPTED BY YOUR GOODSELF DURING ASSESSMENT PROCEEDINGS ALSO. HENCE, THE NON DECLARATION OF SAVING BANK INTEREST INCOME IN THE R ETURN OF INCOME FILED BY ASSESSEE WAS DUE TO WRONG ADVICE AND WRONG INTERPRETATION OF THE PROVISIONS OF THE A CT. THE NON-DECLARATION OF THIS INTEREST INCOME WAS WITHOUT ANY BAD MOTIVE, WAS BONAFIDE ACT AND WITHOUT ANY INTENT TO DEFRAUD REVENUE. HENCE, THERE EXISTED REASONABLE CA USE FOR THE FAILURE IN QUESTION FOR WHICH, IT IS PRAYED THAT THE ASSESSEE MAY NOT PLEASE BE LEVIED PENALTY U/S 271(L )(C |) OF THE INCOME TAX ACT KEEPING IN MIND THE PROVISION S OF SECTION 273B OF THE INCOME TAX ACT. 2. ADDITIONS OF RS. 2,7O,OOO/- ON ACCOUNT OF CASH DEPOSIT IN BANK ACCOUNT : (A) DURING ASSESSMENT, ASSESSEE STALED THAT THE SAID CASH DEPOSIT OF RS.2,70,000/- IS OUT OF SALE PROCEED OF AGRICULTURAL PRODUCE. IT IS AN UNDISPU TED FACT THAT NET AGRICULTURAL INCOME OF RS.6000 0/- AFTER MEETING AGRICULTURAL EXPENSES WAS DECLARED BY ASSESSEE IN THE RETURN OF INCOME AND WAS ASSESSED AS SUCH BY YOUR GOOD-SELF. HOWEVER, THE ADDITION ON ACCOUNT OF CASH DEPOSIT OF RS.2,70,000/- IN THE BANK ACCOUNT WAS MADE SINCE THE ASSESSEE COULD NOT PRODUCE THE J FORMS IN RESPECT OF SALE OF AGRICULTURAL PRODUCE FOR THE YEAR IN QUESTION. (B) THE ASSESSMENT WAS MADE ALMOST 3 YEARS AFTER THE END OF THE YEAR IN QUESTION. THE ASSESSEE WAS AN ILLITERATE AGRICULTURIST AND WAS NO T MAINTAINING PROPER RECORDS OF SALE PROCEEDS OF AGRICULTURAL PRODUCE IN THE FORM OF J FORMS. THE ACTUAL CARRYING OUT OF AGRICULTURAL OPERATIONS AND NET INCOME FROM AGRICULTURAL ACTIVITY WAS DULY ITA NO.1109/CHD/2018 A.Y.2011-12 5 ACCEPTED BY YOUR GOOD SELF DURING ASSESSMENT PROCEEDINGS. THE ADDITIONS OF RS.2,70,000 /- IN RESPECT OF CASH DEPOSIT IN BANK ACCOUNT BY REJECTING THE EXPLANATION OF ASSESSEE TO BE OUT OF SALE PROCEEDS OF AGRICULTURAL PRODUCE DUE TO NON PRODUCTION OF J FORMS, COULD BE A GOOD GROUND FOR ADDITIONS IN QUANTUM PROCEEDINGS BUT FOR THE SAID FAILURE, PENALTY U/S 271(L)(C ) IS NOT LEVIABLE. TH E EXPLANATION TENDERED BY THE ASSESSEE IN RESPECT OF SOURCE OF CASH DEPOSIT WAS NOT FOUND 10 BE FALSE. IT WAS ONLY FOUND TO BE NON- SATISFACTORY SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THE EXPLANATION OF SALE OF AGRICULTURAL PRODUCE WITH J FORMS. THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM EACH OTHER. THE MAKING OF ADDITION U/S 68 IN ASSESSMENT PROCEEDINGS DOES NOT AUTOMATICALLY LEND TO LEVY OF PENALTY U/S 271(L)(C J UNLESS IT IS A CASE OF NON TENDERING OF ANY EXPLANATION ABOUT THE SOURCE OR THE EXPLANATION OF THE ASSESSEE IS FOUND TO BE FALSE. IN THE PRESENT CASE, THE ASSESSEE HAS NEITHER CONCEALED ANY INCOME NOR HE WAS FOUND TO HAVE FURNISHED ANY INACCURATE PARTICULARS OF HIS INCOME. IT IS THEREFORE; PRAYED THAT PENALTY U/S 271(L.)(C ) ON THIS ISSUE MAY PLEASE BE DROPPED. WE SHALL BE HIGHLY OBLIGED. THANKING YOU, YOURS FAITHFULLY, SD/- (ASSESSEE) 4. THE LD. COUNSEL FOR ASSESSEE THEREAFTER DREW OUT ATTENTION TO THE ORDER PASSED BY THE A.O. DROPPING THE PENALTY PROCEEDINGS INITIATED, DATED 28-04-14 PLACE D AT PAPER BOOK PAGE NO.10, BY STATING AS UNDER: IN VIEW OF THE REPLY FILED BY THE ASSESSEE IN RESP ONSE TO SHOW CAUSE NOTICE U/S 271(1)(C) OF THE INCOME TA X ACT,1961, PENALTY PROCEEDINGS INITIATED IS HEREBY DROPPE D. 5. THE LD. COUNSEL FOR ASSESSEE STATED THAT IN THE SECOND ROUND THE A.O. HAD REITERATED THESE VERY SAM E ADDITIONS EXCEPT FOR A MINOR ADDITION OF RS.35,944/ - ON ACCOUNT OF INTEREST AND THE A.O. HAVING EARLIER ACCEPTED THE EXPLANATION OF THE ASSESSEE, COULD NOT NOW LEVY PENALTY ON THE SAME SET OF FACTS. ITA NO.1109/CHD/2018 A.Y.2011-12 6 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A) AT PARA 6.6 OF HIS ORDER AS UND ER: 6.6 IN THE PRESENT CASE, THERE WERE TWO ADDITIONS MAD E BY THE AO IN THE ORIGINAL ASSESSMENT ORDER DATED 17.10.2013. THESE WERE, ADDITION OF RS.2,05,333/- ON ACCOUNT OF INTEREST INCOME WHICH WAS NOT DECLARED IN THE RETURN OF INCOME AND THE SECOND ADDITION WAS OF RS 2,70,000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS. THE AO HAD INITIATED PENALTY PROCEEDINGS ON THESE ADDITIONS BUT FOR REASONS WHICH ARE NOT ON RECORD, H AD NOT IMPOSED THE PENALTY ON THESE ISSUES. THE ORIGINAL ASSESSMENT ORDER WAS CANCELLED BY THE LD. PR. CIT-2, CHANDIGARH AND THE AO WAS DIRECTED TO PASSED THE FRESH ORDER AFTER CONSIDERING THE OBSERVATIONS OF T HE PR. CIT IN THE ORDER U/S 263. IN THE SUBSEQUENT ORDER DA TED 06.12.2016 U/S 143(3) R.W.S. 263, THE AO, AFTER DETAILED ENQUIRIES OBSERVED THAT THE TOTAL INTEREST EARNING OF THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR WAS RS . 2,39,455/- WHICH WAS NOT DISCLOSED BY THE ASSESSEE AND THE SAME WAS ADMITTED BY THE ASSESSES TO BE CONCEALED INCOME. SIMILARLY NO SATISFACTORY EXPLANATION OF CASH DEPOSIT OF RS 2,70,000/- WAS PROVIDED AND THIS WAS ALSO TREATED AS UNEXPLAINED INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT PROVIDE ANY SATISFACTORY EXPLANATION FOR THESE CONCEALED INCOMES. DURING THE PENALTY PROCEEDINGS ALSO NO EXPLANATION WAS PROVIDED FOR THE CONCEALED INCOME EXCEPT FOR STATING THAT TH E ADDITIONS IN THE ORDER DATED 06.12.2016 WERE THE SAME AS THOSE MADE IN THE ORDER DATED 17.10.2013 EXCEPT FOR MINOR DIFFERENCE OF RS 34,122/- IN THE QUANTUM OF UNDISCLOSED INTEREST INCOME AND ON THESE ISSUES THE AO HAD NOT IMPOSED THE PENALTY EARLY. THIS EXPLANATION WAS NOT ACCEPTED BY THE AO AS HE WAS OF THE OPINION THAT THE SUBSEQUENT ORDER I.E. 0612.2016 WAS A FRESH ASSESSMENT AND HENCE THE CONTENTION OF THE ASSESSEE WAS NOT SUSTAINABLE. IN THE APPELLATE PROCEEDINGS ALSO SIMILAR SUBMISSION HAS BEEN MADE. IN MY CONSIDERED OPINION, THE FACT THAT PENALTY WAS NOT IMPOSED ON SAME ADDITIONS EARLIER WILL NOT BE SUFFICIENT EXPLANATION FOR CONCEALED INC OME DETECTED DURING THE ASSESSMENT PROCEEDINGS. THE PROVISIONS OF THE SECTION QUOTED ABOVE CLEARLY SHOW THAT THE ASSESSEE HAS TO OFFER A SATISFACTORY EXPLANATION FOR THE ADDITION MADE TO THE RETURNED INCOME. THE ORDER U/S 143(3) R.W.S. 263 IS A FRESH ORDER AND THEREFORE THE PENALTY WAS CORRECTLY INITI ATED IN THE SAID ORDER. THOUGH THE ISSUES REMAINED SAME, THE ASSESSEE WAS REQUIRED IN LAW TO GIVE EXPLANATIO N FOR THE ADDITIONS IN THE SAID ORDER AND THE AO HAD TO CONSIDER WHETHER THE SAID EXPLANATION WAS SATISFACTORY OR NOT. MERELY STATING THAT ON THE SAM E ISSUE PENALTY WAS NOT LEVIED EARLIER CAN NOT BE A ITA NO.1109/CHD/2018 A.Y.2011-12 7 SATISFACTORY EXPLANATION SPECIALLY WHEN THE ORIGINAL ASSESSMENT WAS CANCELLED. THE ASSESSEE FAILED TO DISCLOSE TAXABLE INCOME IN THE RETURN OF INCOME WHICH WAS DETECTED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THE EXPLANATION GIVEN WAS NOT BONAFIDE AND SUBSTANTIATED. THE AO HAS THUS CORRECTLY LEVIED THE PENALTY ON THIS ACCOUNT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE. ADMITTEDLY, PENALTY IN THE PRESENT CASE H AS BEEN LEVIED FOR CONCEALING/FURNISHING INACCURATE PARTICULARS RELATING TO THE FOLLOWING INCOMES: A) INTEREST INCOME RS 2, 39,455/- B) UNEXPLAINED CASH DEPOSIT IN BANK RS.2,70,000/ - 8. IT IS ALSO AN ADMITTED FACT THAT THE ABOVE ADDITIONS HAD BEEN MADE TO THE INCOME OF THE ASSESSEE EARLIER ALSO AND CONSIDERED FOR LEVY OF PE NALTY U/S 271(1)(C) OF THE ACT BY INITIATING THE SAID PROCEEDINGS, BUT HAD BEEN DROPPED ON FINDING MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE CONCEALMENT OF THE INTEREST INCOME WAS ON ACCOUNT OF BONAFIDE BELI EF THAT HAVING BEEN EARNED ON EXEMPT AGRICULTURAL INCO ME IT WAS NOT TAXABLE AND THAT THE CASH DEPOSITS WERE FROM AGRICULTURAL INCOME WHICH FACT THE A.O. HAD ACCEPTED THAT THE ASSESSEE WAS AN AGRICULTURIST, B UT THE ADDITION MADE MERELY ON ACCOUNT OF NON PRODUCTION OF J FORM. NO PERVERSITY IN THIS FINDI NG OF THE AO HAS BEEN BROUGHT TO OUR NOTICE BY THE LD.DR. MOREOVER ONCE AN ASSESSEE HAS GIVEN HIS EXPLANATION WHY PENALTY SHOULD NOT BE LEVIED AND THE AO FINDS MERIT IN THE SAME, HIS FINDING IN THIS REGARD ON TH E ITA NO.1109/CHD/2018 A.Y.2011-12 8 FACTS BEFORE HIM IS FINAL AND NEITHER IS THE ASSES SEE REQUIRED TO EXPLAIN AGAIN IN FRESH PROCEEDINGS WHY NO PENALTY IS LEVIABLE ON THE SAME IDENTICAL ISSUES NO R CAN THE AO REVISIT /REVISE HIS EARLIER FINDINGS ON THE SAME SET OF FACTS IN ANY SUBSEQUENT PROCEEDINGS. NO PROVISION OF LAW ALLOWING THE SAME HAS BEEN BROUGHT TO OUR NOTICE BY THE REVENUE. 9. IN VIEW OF THE SAME, WE AGREE WITH THE LD. COUNS EL FOR ASSESSEE THAT THE A.O. COULD NOT HAVE TAKEN ANOTHER VIEW WITHOUT ANY CHANGE IN THE SET OF FACTS TO LEVY PENALTY U/S 271(1) IN THE PRESENT CASE. THE PENALTY SO LEVIED AMOUNTING TO RS.61,770/- IS, THEREFORE, DIRECTED TO BE DELETED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ' #! $ % (SANJAY GARG ) (ANNAPURNA GUPTA) / JUDICIAL MEMBER &' / ACCOUNTANT MEMBER )' /DATED: 29 TH JANUARY, 2019 * ! * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - $ / CIT 4. - $ ( )/ THE CIT(A) 5. +./ 0 , #0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35' / GUARD FILE &) $ / BY ORDER, 6 ! / ASSISTANT REGISTRAR