Sri. Basayya R. Nandegol, Vijayapur V. Asst.C.I.T., Bijapur

ITA 1117/BANG/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95426 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 30-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Business income
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1117/BANG/2015 ASSESSMENT YEAR : 2007-08 SRI BASAVAYYA R. NANDEGOL, CIVIL CONTRACTOR, SHASTRINAGAR, ATHANI ROAD, VIJAYAPURA. PAN: ABCPN 4441K VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, BIJAPUR. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVI SHANKAR, ADVOCATE RESPONDENT BY : DR. P.K. SRIHARI, ADDL. CIT(DR) DATE OF HEARING : 24.11.2015 DATE OF PRONOUNCEMENT : 28.12.2015 O R D E R PER ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 01.06.2015 OF THE CIT(APPEALS), BELAGAVI FOR THE AS SESSMENT YEAR 2007- 08. 2. THE ASSESSEE IS AN INDIVIDUAL AND A CIVIL CONTRA CTOR HAVING BUSINESS INCOME. THE ASSESSEE FILED HIS RETURN OF INCOME FO R THE IMPUGNED ASSESSMENT YEAR DECLARING INCOME FROM BUSINESS AT R S.40,94,690. THE ITA NO.1117/BANG/2015 PAGE 2 OF 5 CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND DETAILS WERE CALLED FOR BY THE AO. THE ASSESSING OFFICER CONCLUDED THE ASS ESSMENT U/S. 143(3) OF THE ACT DETERMINED BUSINESS INCOME AT RS.82,44,690. 3. THE AO MADE ADDITION OF RS.40 LAKHS U/S. 68 OF THE ACT BEING TWO LOANS RECEIVED TO THE EXTENT OF RS.20 LAKHS EACH ON THE GROUND THAT THE ASSESSEE WAS UNABLE TO DISCHARGE HIS ONUS OF PROVIN G THE GENUINENESS OF THE TRANSACTIONS, IDENTITY OF THE PARTIES, THEIR CR EDITWORTHINESS, ETC. 4. THE ASSESSEE, AGGRIEVED BY THE ORDER U/S. 143(3) OF THE AO PREFERRED APPEAL BEFORE THE CIT(APPEALS). THE CIT( APPEALS) CONFIRMED THE ORDER OF THE AO BY HIS IMPUGNED ORDER DATED 12.01.2 011. ON FURTHER APPEAL BY THE ASSESSEE, THE PANAJI BENCH OF THE TRI BUNAL VIDE ITS ORDER DATED 9.6.2014 IN ITA NO.89/PNJ/2011 PARTLY ALLOWED THE ASSESSEES APPEAL BY DELETING THE ADDITION OF RS.20 LAKHS WITH REGARD TO THE TRANSACTION OF SHRI S.G. SHAHAPUR AND CONFIRMED THE ADDITION A S REGARDS THE TRANSACTION WITH SRI PUNALIKA LAMBU PARASHURAM AMOU NTING TO RS.20 LAKHS. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEF ORE THE HONBLE HIGH COURT OF KARNATAKA AT DHARWAD. 5. THE AO, AFTER RECEIVING THE ORDER OF THE ITAT, P ANAJI, PROCEEDED TO SHOW CAUSE THE ASSESSEE AS TO WHY PENALTY U/S. 271( 1)(C) OF THE ACT SHOULD NOT BE LEVIED. HE CAME TO THE CONCLUSION THAT ASSE SSEE HAS CONCEALED THE PARTICULARS OF INCOME AND IMPOSED PENALTY OF RS.6, 73,200. ITA NO.1117/BANG/2015 PAGE 3 OF 5 6. ON APPEAL, THE CIT(APPEALS) BY HIS EX PARTE ORDER CONFIRMED THE PENALTY ORDER OF THE AO. AGGRIEVED BY THE IMPUGNED ORDER OF THE CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEA L BEFORE US. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE CIT(APPEALS) HAD PASSED EX PARTE ORDER AND HENCE THE ASSESSEE WAS NOT IN A POSITION TO SUBSTANTIATE HIS CASE. THE ASSESS EE WAS NOT GIVEN AN OPPORTUNITY TO ESTABLISH EXISTENCE OF REASONABLE CA USE WITH RESPECT TO EXPLANATION 1 TO SECTION 271(1)(C). 8. WE HAVE HEARD BOTH THE PARTIES. WE ARE OF THE OP INION THAT EXPLANATION 1 TO SECTION 271(1)(C) COMES INTO OPERA TION WHEN IN RESPECT OF FACTS MATERIAL TO COMPUTATION OF TOTAL INCOME OF AN Y PERSON, THERE IS FAILURE TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR THE EXPLANATION OFFERED IS NOT SUBSTANTIATED OR THE ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATION IS BO NAFIDE. IN SUCH A CASE ,THE AMOUNT ADDED OR DISALLOWED IN COMPUTATION OF T OTAL INCOME IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICU LARS HAVE BEEN CONCEALED. EXPLANATION 1 ENACTS THE RULE OF EVIDEN CE WHEREBY THE ONUS IS ON THE ASSESSEE AND IF HE FAILS TO DISCHARGE THE BU RDEN, THE PRESUMPTION AS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME C AN BE DRAWN. THE HONBLE SUPREME COURT IN THE CASE OF CIT V. K.R. SADAYAPPAN, 185 ITR 49 (SC) HAS HELD THAT SUCH PRESUMPTION IS TO BE DISCHARGED BY COGENT, RELIABLE AND RELEVANT MATERIALS. ITA NO.1117/BANG/2015 PAGE 4 OF 5 9. MERELY BECAUSE AN ASSESSEE IS NOT ABLE TO SUBSTA NTIATE HIS EXPLANATION, PENALTY MAY NOT BE IMPOSED IF SUCH EXP LANATION IS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. 10. IN THE PRESENT CASE, BEFORE THE CIT(APPEALS) NE ITHER DID THE ASSESSEE APPEAR IN PERSON OR THROUGH THE AR. THE A SSESSEE WAS NOT GIVEN AN OPPORTUNITY TO PRESENT HIS CASE. WE THER EFORE SET ASIDE THE ISSUE BACK TO THE FILE OF THE CIT(APPEALS), WHO SHALL DEC IDE THE ISSUE AFRESH, AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. TH E ASSESSEE SHALL ADDUCE EVIDENCE AND OFFER EXPLANATION AND SUBMIT OB JECTIONS AGAINST INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT BY THE REVENUE AUTHORITIES. 11. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF DECEMBER, 2015. SD/- SD/- ( INTURI RAMA RAO ) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 28 TH DECEMBER, 2015. /D S/ ITA NO.1117/BANG/2015 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.