S.N.Vadivelu, CHENNAI V. ACIT, CHENNAI

ITA 1112/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8428 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 26-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 12-05-2015
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Income from undisclosed sources; Condonation of delay
• Section: 143(3); 142(1); 153A; 132; 139

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 1 1 12 /MDS/201 5 / ASSESSMENT YEAR :20 0 9 - 1 0 SHRI S.N. VADIVELU, NO. 4, VEDAVALLI STREET, SALIGRAMAM, CHENNAI 600 0 93 . [PAN: AA BPV6001H ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, MEDIA CIR CLE I I, CHENNAI. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI S. SRIDHAR , ADVOCATE / RESPONDENT BY : SHRI SUPRIYO PAL , J CIT / DATE OF HEARING : 26 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 23 . 0 9 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX ( APPEALS ) IV , CHENNAI , DATED 3 0 . 1 0 .20 1 4 RELE VANT TO THE ASSESSMENT YEAR 2009 - 1 0. THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . I.T.A. NO . 1 1 12 /M/ 15 2 2. THE APPE AL OF THE ASSESSEE IS FOUND TO HAVE BEEN FILED LATE BY 92 DAYS. THE LD. COUNSEL FOR THE ASSESSEE HAS FILED A PETITION FOR CONDONATION OF DELAY IN SUPPORT OF AN AFFIDAVIT OF THE ASSESSEE. BY REFERRING TO THE PETITION FILED, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PETITIONER S C.A. FELL ILL IN THE MONTH OF JANUARY, 2015 AND COULD ABLE TO RECOVER FROM HIS ILLNESS ONLY IN THE MONTH OF MAY, 2015 AND DUE TO THIS REASON, FILING OF APPEAL BEFORE THE TRIBUNAL AGAINST THE FIRST APPELLATE ORDER WAS ESC APED HIS ATTENTION AND THEREAFTER, IMMEDIATELY THE APPEAL WAS FILED ON 12.05.2015. THEREFORE, HE HAS PLEADED THAT THE DELAY IN FILING THE APPEAL IS NEITHER WANTON NOR WILFUL AND PRAYED THAT THE DELAY MAY BE CONDONED AND THE APPEAL IS ADMITTED FOR HEARING. ON THE OTHER HAND, THE LD. DR DID NOT SERIOUSLY OBJECT TO THE ABOVE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. WE ARE OF THE CONSIDERED OPINION THAT SINCE THE ASSESSEE HAS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITHIN THE STIPULATED TIME, THE DEL AY IN FILING THE APPEAL IS CONDONED AND ADMITTED THE APPEAL FOR HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS FILM ACTOR. A SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON 19.10.2010 IN ASSESSEE S RESIDENTIAL PREMISES AT CHENNAI AND MADURAI. DURING THE COURSE OF SEARCH, CASH TO THE TUNE OF .1.3 LAKHS FOUND AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AT MADURAI WHICH WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS AND THE SAME WAS TREATED AS UNACCOUNTED INCOME. FROM THE MATERIALS COLLECTED I.T.A. NO . 1 1 12 /M/ 15 3 DURING THE COURSE OF SEARCH, THE ASSESSMENT WAS REOPENED FROM THE ASSESSMENT YEARS 2004 - 05 TO 2010 - 11 AND CONSEQUENTLY NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED HIS RETURN OF INCOME UNDE R SECTION 153A ON 30.09.2011 ADMITTING AN INCOME OF .1,19,45,089/ - BELATEDLY AFTER SEARCH OPERATIONS. FURTHER NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT DATED 21.11.2011 WERE ISSUED TO THE ASSESSEE. AFTER CONSIDERING THE DETAILS AND VERIFYING THE RECORDS, THE ASSESSING OFFICER HAS COMPLETED THE ASS ESSMENT UNDER SECTION 153A R.W.S. 143(3) OF THE ACT ON 30.12.2011 BY MAKING ADDITION OF .60,00,000/ - ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PROPERTY, .54,000/ - ON ACCOUNT OF DISALLOWANCE ON SALARIES AND WAGES AND .3,32,150/ - ON ACCOUNT OF DISALLOWANCE OF EXPENSES INCURRED ON STORY WRITING . IN VIEW OF THE ABOVE, THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 3.1 DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSEE HAS FILED HIS SUBMISSIONS DATED 18.06.2012 ON 21.06.2012. IN HIS REPLY, THE ASSESSEE HAS SUBMITTED THAT OUT OF THE THREE ADDITIONS MADE, THE ASSESSEE HAS AGREED FOR THE ADDITION MADE ON UNEXPLAINED INVESTMENT TO THE TUNE OF .60 LAKHS TO HAVE AMICABLY SETTLED WITH THE DEPARTMENT. IT WAS FURTHER SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE SALARY AND WAGES AND STORY DISCUSSION I.T.A. NO . 1 1 12 /M/ 15 4 EXPENSES ARE INEVITABLE EXPENSES TO BE INCURRED BY A LEADING COMEDIAN IN THE CINE FIELD. 3.2 AFT ER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 ONLY AFTER THE SEARCH OPERATION AND ALSO NOT GONE ON APPEAL BEFORE THE FIRST APPELLATE AUTHO RITY ON THE ADDITIONS MADE BY THE ASSESSING OFFICER. THE SUBMISSION OF INACCURATE PARTICULARS BY THE ASSESSEE WOULD NOT HAVE BEEN DETECTED AT ALL IF THE SEARCH HAD NOT BEEN CONDUCTED AND NOT TAKEN UP FOR FURTHER SCRUTINY AND THEREFORE, HE HELD THAT IN THE CASE OF THE ASSESSEE, PENALTY IS CLEARLY ATTRACTED UNDER SECTION 271)(1)(C) OF THE ACT AND LEVIED MINIMUM PENALTY OF .61,23,153/ - . 4. AGAINST THE PENALTY ORDER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED THAT THERE WAS NOTHING VOLUNTARY ON THE PART OF THE ASSESSEE TO DISCLOSE HIS TRUE INCOME WHICH HE WAS COMPELLED TO ADMIT FOLLOWING SEARCH ACTION ON HIM. THE ASSESSEE DID NOT OFFER ANY CREDIBLE AND COGENT EXPLANATION FOR NOT OFFERING THE INCOME IN THE FORM OF UNEXPLAINED INVESTMENT IN PROPERTY PERTAINING TO PREVIOUS YEARS ENDING BEFORE THE SEARCH AND BROUGHT TO LIGHT ONLY DURING THE SEARCH WHICH WOULD THEREFORE BE DEEMED TO BE CONCEALMENT OF PARTICULARS OF INCOME WITHIN THE MEANING OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. HOWEVER, THE LD. CIT(A) HAS I.T.A. NO . 1 1 12 /M/ 15 5 OBSERVED THAT THE ASSESSING OFFICER HAS INCLUDED DISALLOWANCES MADE ON ACCOUNT OF SALARIES AND WAGES OF .54,000/ - AND .3,32,150/ - ON ACCOUNT OF STORY WRITING EXPENSES TO THE UNDISCLOSED INVESTMENT IN PROPERTY OF .60 LAKHS FOR LEVY OF PENALTY WHICH WAS UN JUSTIFIED SINCE IT IS SETTLED LAW THAT MERELY BECAUSE ASSESSEE RAISED CLAIMS WHICH WERE EVENTUALLY DISALLOWED IN THE INSTANT CASE, IN AN ADHOC MANNER BY THE ASSESSING OFFICER DOES NOT MEAN THAT INGREDIENTS OF CLAUSE (C) TO SECTION 271(1) WERE SATISFIED SO AS TO JUSTIFY IMPOSITION OF PENALTY. THEREFORE, BY SUSTAINING THE PENALTY LEVIED TOWARDS UNDISCLOSED INVESTMENTS, THE LD. CIT(A) HAS DELETED THE PENA LTY LEVIED WITH REGARD TO EXPENSES TOWARDS SALARIES AND WAGES AND STORY WRITING AND PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE . 5. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE DISCLOSURE OF THE INVESTMENT IN PROPERTY IN THE SEARCH ASSESSMENT PROCEEDINGS WAS EXPLAINED ON ACCEPTABLE LEGAL TERMS/PERCEPTION BEFORE THE LD. CIT(A) AND THEREFORE, THE LD. CIT(A) WAS NOT RIGHT IN SUSTAINING THE PENALTY LEVIED UNDER SECTION 271( 1)(C) OF THE ACT ON ACCOUNT OF UNDISCLOSED INVESTMENTS. THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE HAS PLEADED THAT THE PENALTY SUSTAINED BY THE LD. CIT(A) SHOULD BE DELETED. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELO W. I.T.A. NO . 1 1 12 /M/ 15 6 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS NOT VOLUNTARILY ADMITTED HIS TRUE PARTICULARS OF INCOME . EVEN, THE ASSESSEE HAS NOT FILED HIS RETURN OF INCOME UNDER SECTION 139 OF THE ACT. ONLY AFTER CONDUCT OF SEARCH OPERATION UNDER SECTION 132 OF THE ACT AND AFTER ISSUING NOTICE UNDER SECTION 153A OF THE ACT, THE ASSESSEE HAS COME FORWARD TO FILE HIS BELATED RETURN OF INCOME. AFTER SCRUTINY OF SEIZED MATERIALS AND VERIFICATION OF PARTICULARS FILED BY THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS MADE UNDISCLOSED INVESTMENTS. DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSEE HAS SIMPLY STATED THAT OUT OF THE THREE ADDITION S MADE, THE ASSESSEE HAS AGREED FOR THE ADDITION MADE ON UNEXPLAINED INVESTMENT TO THE TUNE OF .60 LAKHS TO HAVE AMICABLY SETTLED WITH THE DEPARTMENT. THE ASSESSEE DID NOT HAVE ANY CREDIBLE AND COGENT EXPLANATION FOR NOT OFFERING THE INCOME IN THE FORM OF UNEXPLAINED INVESTMENT IN PROPERTY BEFORE THE SEARCH OPERATION; HE WAS BOUND TO AGREE FOR THE QUANTUM ADDITION AND NOT PREFERRED ANY APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AGAINST VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER. JUST BECAUSE THE ASSESSEE HAS AGREED FOR ADDITION OF UNDISCLOSED INVESTMENT IN PROPERTY, HE CANNOT BE ESCAPED FROM L EVY OF PENALTY. FACTUALLY, THE ASSESSEE HAS NO VALID REASON FOR CONCEALMENT AND FURNISHING INACCURATE PARTICULARS IN THE BELATED RETURN FILED AGAINST THE NOTICE UNDER SECTION 153A OF THE ACT. IN THIS CASE, NEITHER THE ASSESSEE FILED HIS RETURN BEFORE DUE DATE I.T.A. NO . 1 1 12 /M/ 15 7 OF FILING OF RETURN OF INCOME NOR FURNISHED COMPLETE PARTICULARS OF INCOME OR EVEN AFTER SERVICE OF NOTICE UNDER SECTION 153A OF THE ACT, THE ASSESSEE HAS FURNISHED COMPLETE AND TRUE PARTICULARS OF INCOME. FURNISHING OF INACCURATE PARTICULARS BY THE A SSESSEE WOULD NOT HAVE DETECTED AT ALL IF THE SEARCH OPERATION HAD NOT BEEN CONDUCTED BY THE DEPARTMENT AND THE CASE NOT TAKEN UP SUBSEQUENTLY FOR FURTHER SCRUTINY. SINCE THE ASSESSEE HAS NO VALID REASON FOR CONCEALMENT OF INCOME AND FURNISHING OF INACCURA TE PARTICULARS, PENALTY UNDER SECTION 271(1)(C) OF THE ACT CLEARLY ATTRACTS IN THIS CASE . THEREFORE, WE ARE OF THE OPINION THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER WAS RIGHTLY CONFIRMED BY THE LD. CIT(A) AND WE FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT(A). THUS, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED ON THE 23 RD SEPTEMBER, 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 23 . 0 9 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.