Om Prakash lohiya, JODHPUR V. DCIT, JODHPUR

ITA 120/JODH/2013

• Counselvise Citation: 12023314 RSA 2013
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 06-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SEHGALCIT
• Assessee Lawyers: SHAILENDRA BARADIA
• Keywords: Unexplained investment
• Section: 143(3); 153A; 132; 154

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 120/JODH/2013 (A.Y. 2007-08) OM PRAKASH LOHIYA, VS DCIT, CENTRAL CIRCLE-1, B-136, KAMLA NEHRU NAGAR, JODHPUR. JODHPUR. PAN NO. AADPL3222C (APPELLANT) (RESPONDENT) ASSESSEE BY : SH.SHAILENDRA BARADIA. DEPARTMENT BY : SH. DEEPAK SEHGAL-CIT- DR. DATE OF HEARING : 06/09/2013. DATE OF PRONOUNCEMENT : 20/09/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE, FOR A.Y. 2007-08, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), CENTRAL, JAIPUR, DATED 02/ 01/2013 AND HAS EMANATED FROM THE PENALTY ORDER OF DCIT, CENTRAL CI RCLE-1, JODHPUR, PASSED U/S 271(1)(C) OF INCOME TAX ACT, 1961, [THE ACT FOR SHORT,], DATED 30/12/2008. 2 2. THE RELEVANT FACTS, IN BRIEF, LEADING TO THIS AP PEAL ARE THAT THE ASSESSEE DERIVED HIS INCOME FROM BUSINESS, FROM HOU SE PROPERTY AND FROM INTEREST. A SEARCH U/S 132 OF THE ACT WAS CARR IED OUT AT HIS RESIDENTIAL / BUSINESS PREMISES ON 18/01/2007. DURI NG THIS SEARCH VARIOUS INCRIMINATING EVIDENCE / DOCUMENTS, CASH AN D JEWELLERY WERE FOUND. IN RESPONSE TO NOTICE ISSUED, IN CONSEQUENCE OF SEARCH, U/S 132(1) OF THE ACT, THE ASSESSEE FILED RETURN DECLAR ING TOTAL INCOME OF RS. 14,95,730/- FOR A.Y. 2007-08, ON 30/09/2008. TH E ASSESSMENT WAS COMPLETED U/S 153A R.W.S. 143(3) ON 30/12/2008 AT A TOTAL INCOME OF RS.1 5,08 ,690/-. A NOTICE U/S 271(1)(C) R.W.S. 274 OF THE ACT WAS ISSUED ON 30/12/2008 FOR CONCEALING THE PARTICULAR OF INCOME. THIS NOTICE ALONG WITH A COPY OF ASSESSMENT ORDER WAS SE RVED ON THE ASSESSEE ON 31/12/2008. THE ASSESSEE FILED AN APPLI CATION U/S 154 OF THE ACT AND THE ASSESSMENT ORDER WAS RECTIFIED BY A MENDING THE TOTAL INCOME AT RS. 15,05,890/- ON 05/03/2009. THE ASSESS EE DID NOT FILE ANY APPEAL AGAINST THE ASSESSMENT ORDER. IN COMPLIANCE OF NOTICE U/S 271(1)(C) DATED 30/12/2008 AND SUBSEQUENT NOTICE DA TED 13/05/2009, THE LD. AR OF THE ASSESSEE FILED WRITTEN SUBMISSION ON 16/06/2009, STATING THEREIN THAT THE ASSESSEE HAS NOT CONCEALED ANY PARTICULAR OF INCOME OR HAS NOT FURNISHED INACCURATE PARTICULARS OF HIS INCOME. HOWEVER, THE A.O. HAS FOUND THAT THE THEN A.O. WHIL E COMPLETING 3 ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT ON 30/ 12/2008, HAS MADE THE FOLLOWING ADDITIONS :- (I) ADDITION ON ACCOUNT OF UNEXPLAINED JEWELLERY OVER AND ABOVE RS. 3,26,236/- SURRENDERED DURING THE COURSE OF SEARCH IN THE STATEMENT WHICH WAS COVERED BY EXPLANATION (5) TO SECTION 271(1)(C) OF THE ACT. RS. 3,18,950/- (II) ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT FOR PAYMENT OF CASH TO SHRI OMA RAM TOWARDS ADVANCE FOR THE PURCHASE OF PROPERTY AT KAKANI AS PER THE SEIZED ANNEXURE A-8 PAGE 81 TO 83 AND 84 TO 86. RS. 3,00,000/- TOTAL RS. 6,18,950/ THE A.O. HAS ALSO MADE SAME ADDITION ON ACCOUNT OF DISALLOWANCE. THE A.O. HAS FOUND THAT THE ASSESSEE HAS CONCEALED THE PARTICULAR OF HIS INCOME TO THE EXTENT OF RS. 6,18,950/-. THUS, THE A .O. HAS IMPOSED A PENALTY OF RS. 2,30,380/- @ 100% OF THE TAX SOUGHT TO BE EVADED BY HIM. 2.1 THE LD. CIT(A) HAS REDUCED PENALTY TO RS. 1,69, 350/-. NOW THE ASSESSEE IS FURTHER AGGRIEVED AND HAS FILED THIS SE COND APPEAL. 4 2.2 BOTH THE PARTIES HAVE REITERATED THEIR EARLIER ARGUMENTS. AFTER CONSIDERING RIVAL SUBMISSIONS, PERUSAL OF THE RECOR DS AND THE PAPER BOOKS WE ARE OF THE CONSIDERED OPINION THAT THIS IS NOT FIT CASE FOR IMPOSITION OF A PENALTY U/S 271(1)(C) OF THE ACT. B EFORE WE CONSIDER THE FACTUAL MATRIX OF THIS CASE TO ASCERTAIN AS TO WHETHER IN THE EYES OF THE PROVISIONS OF THE ACT AS EXPLAINED BY NUMEROUS JUDICIAL PRONOUNCEMENTS, PENALTY CAN BE LEVIED IN THIS CASE OR NOT, WE WOULD LIKE TO DISCUSS IN NUT SHELL THE RELEVANT LEGAL POS ITION REGARDING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND AS TO HOW AND WHEN SUCH PENALTY CAN BE LEVIED UNDER THIS SECTION. THERE ARE NO TWO OPINIONS ABOUT THE SETTLED POSITION OF LAW THAT REGULAR ASSESSMENT PR OCEEDINGS AND PENALTY PROCEEDINGS ARE TWO ENTIRELY DIFFERENT SUBJ ECTS WHICH OPERATE IN DISTINCT AND SEPARATE SPHERES SO MUCH SO THAT E NTIRELY DIFFERENT PARAMETERS ARE APPLICABLE FOR MAKING QUANTUM ADDITI ON AND FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THERE C AN BE NO DISPUTE WITH REGARD TO THE POSITION OF LAW THAT UNDER SECTI ON 271(1)(C) PENALTY CAN BE LEVIED ONLY IF EITHER THE ACT OF 'CONCEALME NT OF PARTICULARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS O F INCOME' IS FOUND TO HAVE BEEN COMMITTED BY THE ASSESSEE. THESE ARE TWO DIFFERENT OMISSIONS OR DEFAULTS ALBEIT THEY REFER TO DELIBERA TE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD N OT CONSTITUTE A 5 DELIBERATE ACT OF EITHER SUPPRESSIO VERI OR SUGGEST IO FALSY. BY THE MERE REASON OF SUCH CONCEALMENT OR OF FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASSESSEE DOES NOT, IPSO FACT O, BECOME LIABLE TO A PENALTY. IMPOSITION OF PENALTY IS NOT AT ALL AUTOM ATIC. MEANING THEREBY, ANY ADDITION IN QUANTUM WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISH ING OF INACCURATE PARTICULARS OF INCOME. NOT ONLY IS THE LEVY OF PENA LTY DISCRETIONARY IN NATURE BUT THE DISCRETION HAS TO BE EXERCISED KEEPI NG THE RELEVANT FACTORS IN MIND AND THE APPROACH OF THE TAXMAN MUST BE FAIR AND OBJECTIVE. THIS SUBJECT HAS BEEN A MATTER OF GREAT CONTROVERSY. FINALLY, AFTER REFERRING TO THE DECISIONS IN THE CA SE OF DILIP N. SHROFF VS JCIT & ANOTHER, 291 ITR 519, UNION OF INDIA VS. DH ARMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369, AS WELL AS UNION OF I NDIA VS RAJASTHAN SPG. & WVG. MILLS [2009] 13 SCC 448, THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD, 322 ITR 158, HAS RECENTLY HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO 6 INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASS ESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRE TCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271 (1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. 2.3 ADVERTING THE FACTS OF THIS CASE, WHEN WE APPLY THE ABOVE LAW TO THE FACTS OF THIS CASE WE ARE OF THE CONSIDERED OPI NION THAT NO PENALTY U/S 271(1)(C) CAN SURVIVE. THE ASSESSEE HAS MADE CE RTAIN CLAIMS WHICH 7 COULD NOT BE FOUND TO BE PLAUSIBLE AND ADDITIONS HA VE BEEN MADE. BUT LEVY OF PENALTY U/S 271(1)(C) IS NOT AUTOMATIC. IN FACT THE ASSESSEE HAS NOT CONCEALED ANY PARTICULAR OF INCOME AS HAS BEEN ALLEGED. THEREFORE, WE CANNOT SUSTAIN THE IMPUGNED PENALTY AND THUS, HO LD THAT THIS PENALTY CANNOT SURVIVE AND HAS TO BE DELETED. WE OR DER THE DELETION OF THIS PENALTY. THEREFORE, WE ALLOW THIS APPEAL. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 20 TH SEPTEMBER, 2013. SD/- SD/- (N.K.SAINI) [HARI OM MARATH A] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH SEPTEMBER, 2013. VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR