DCIT, CHENNAI V. Jenneys Residency Private Limited, CHENNAI

ITA 1235/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4584 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 04-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ITA NO.: 1235/MDS/2016 / ASSESSMENT YEARS: 2006-07 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(2), CHENNAI 34 V. M/S. JENNEYS RESIDENCY PRIVATE LIMITED , SOORYA FOUNDATION, I FLOOR, FLAT NO.A-1, NEW NO.152, OLD NO.104, HABIBULLAH ROAD, T.NAGAR, CHENNAI 17. PAN: AABCJ3735D ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI SUPRIYO PAL, JCIT /RESPONDENT BY : SHRI PHILIP GEORGE, ADVOCATE / DATE OF HEARING : 24.04.2017 / DATE OF PRONOUNCEMENT : 05.05.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER : THE APPEAL OF REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-6, CHENNAI DAT ED 29.02.2016 2 I.T.A. NO.1235/MDS/2016 PERTAINING TO ASSESSMENT YEAR 2006-07 PASSED UNDER SECTION 271(1)(C) OF THE ACT. 2. THE MAIN GRIEVANCE OF REVENUE IN ITS APPEAL IS WITH REGARD TO DELETION OF PENALTY LEVIED U/S. 271(1)(C) OF THE AC T BY THE LD.CIT(A). 3. THE FACTS OF THE CASE ARE THAT DURING THE COURS E OF ASSESSMENT , IT WAS FOUND BY THE AO THAT LEDGER ACCOUNT SHOWS LO T OF CASH RECEIPTS FROM VARIOUS PERSONS OF THE ASSESSEES GROUP. THE ASSESSEE IS NOT ABLE TO EXPLAIN THE SOURCE OF SUCH CASH RECEIPTS. BEING SO, THE ASSESSEE ITSELF OFFERED THE SAME AS ADDITIONAL INCOME AT ` 74,24,807/-. HOWEVER, THE ASSESSEE CHALLENGED THIS ADDITION BEFORE THE LD.CIT (A). THE LD.CIT(A) VIDE ORDER DATED 27.02.2013 IN THE ORDER NO.365/08- 09/A-III HAS CONFIRMED THIS ADDITION ON THE REASON THAT ADDITION WAS MADE ON THE STRENGTH OF OFFERED LETTER GIVEN BY THE ASSESSEE. AS THE ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF CASH RECEIPTS, CONS EQUENTLY, THE AO ISSUED SHOW CAUSE NOTICE SEEKING THE EXPLANATION OF ASSESSEE WHY THE PENALTY CANNOT BE LEVIED FOR THESE DISCREPANCIES. IN RESPONSE, THE ASSESSEE SUBMITTED THAT SINCE THE ADDITION WAS MADE PURELY ON MATERIAL AVAILABLE ON RECORD AND THERE IS NO CONCEALMENT OF INCOME AT ALL. THE AO HAS NOT AGREED WITH THE CONTENTION OF THE ASSESSEE AND LEVIED PENALTY AT 3 I.T.A. NO.1235/MDS/2016 ` 24,99,187/- BEING 100% OF THE AMOUNT TAX SOUGHT TO BE EVADED. AGAINST THIS, THE ASSESSEE CARRIED THE APPEAL BEFOR E THE LD.CIT(A). ON APPEAL, LD.CIT(A) DELETED THE PENALTY BY OBSERVING THAT IT WOULD BE A WRONG BASIS FOR DECIDING ON THE IMPOSITION OF PENAL TY THAT ONCE VOLUNTARY ADMISSION OR SURRENDER IS MADE OF ANY AMO UNT, THE ASSESSEE CAN AUTOMATICALLY BE PENALIZED WITHOUT THE AO BRING ING ADDITIONAL MATERIAL/EVIDENCE AND FURTHER PROOF ESTABLISHING TH E DISHONEST CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS . ACCORDINGLY, HE DELETED THE PENALTY. AGAINST THIS REVENUE IS IN APP EAL BEFORE US. 4. THE LD.D.R SUBMITTED THAT THOUGH THE ASSESSEE H AD ADMITTED THE CASH RECEIPTS, THE ASSESSEE PREFERRED APPEAL ON THI S ADDITION BEFORE THE LD.CIT(A) AND THE SAME WAS DISMISSED BY THE LD.CIT( A). FURTHER, LD.D.R SUBMITTED THAT THE ASSESSEE HAD NOT CONTESTED THE Q UANTUM ADDITION MADE OR NOT LEDGERISED THE RECEIPTS OR THE CIT(A) WAS NOT ABLE TO PROVE THE AMOUNT REPRESENTED WAS NOT THE CONCEALED INCOME . THE LD.D.R SUBMITTED THAT THE LD.CIT(A) RELIED UPON DECISIONS IN THE INSTANT CASE ARE DISTINGUISHABLE AS THE ASSESSEE WAS UNABLE TO EXPLA IN THE SOURCE OF THE CASH RECEIPTS, WHICH WAS SUBSEQUENTLY CONFIRMED. F URTHER, LD.D.R RELIED ON THE DECISION OF PUNE TRIBUNAL IN THE CASE OF SHI VRATAN R.TAPADIA VS. 4 I.T.A. NO.1235/MDS/2016 ACIT IN [2007] 11 SOT 15(PUNE)(URO) AND CHANDIGARH BENCH IN THE CASE OF KRISHNAN KUMAR PALTA IN 61 TAXMANN.COM 363 . 5. ON THE OTHER HAND, LD.A.R SUBMITTED THAT THE AS SESSEE HAS NOT RECEIVED ANY EXCESS CASH RECEIPTS FROM ANY PARTY AN D THE PENALTY WAS LEVIED BY THE AO ON WRONG PROPOSITION. FURTHER, HE SUBMITTED THAT THE TRIBUNAL BEING A FINAL FACT FINDING AUTHORITY MADE VACATE THE FINDING OF THE LOWER AUTHORITY AND REMITTED THE ISSUE IN DISPU TE TO THE FILE OF AO FOR RECORDING CORRECT FACTS OF THE CASE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, ADMITTEDLY AS RECORDED BY THE AO, THERE WAS AN EXCESS RECEIPT BY THE ASSESSEE AND ASSESSEE WAS NOT ABLE TO EXPLAIN THE SOURCE OF RECEIPT OF CASH RECEIPT. WHEN THE ASSESS EE QUESTIONED DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE OFFERED TH E SAID AMOUNT AS ADDITIONAL INCOME VIDE HIS LETTER DATED 15.11.2008. HOWEVER, THE ASSESSEE CHALLENGED THE ADDITION BEFORE TH ELCITA. THE LD.CIT(A) VIDE HIS ORDER CITED SUPRA CONFIRMED THE QUANTUM ADDITION. NOW THE CONTENTION OF LD.A.R IS THAT THE ASSESSEE HAS NOT RECEIVED THE EXCESS CASH RECEIPT AS ALLEGEDLY BY THE AO IN HIS ASSESSMENT ORDER DATED 2 2.12.2008 AS WELL AS PENALTY ORDER DATED 28.03.2014. LD.A.R HEREIN WANTE D TO BRING ON RECORD 5 I.T.A. NO.1235/MDS/2016 THE NEW FACTS TO THE CASE, WHICH WAS NOT RECORDED E ITHER BY THE AO OR BY LD.CIT(A). WHEN INVOKED THE PROVISIONS OF THE RULE 27,29 & 30 OF INCOME TAX (APPELLATE TRIBUNAL) RULES 1963. FURTHER, IT IS TO BE NOTED THAT THE FACTS RECORDED BY THE AO HAS REACHED FINALITY IN QU ANTUM APPEAL VIDE LD.CIT(A)S ORDER DATED 27.02.2013 CITED SUPRA, EVE N OTHERWISE THE ASSESSEE WAS NOT ABLE TO PLACE NECESSARY EVIDENCE C ONTRARY TO THE FACTS RECORDED BY THE AO, THE TRIBUNAL BEING A FINAL FACT FINDING AUTHORITY, WE HAVE NO HESITATION IN REJECTING THE ARGUMENT MADE B Y THE LD.A.R THAT FACTS RECORDED BY THE AO IS WRONG. ACCORDINGLY, WE ARE INCLINED TO CONSIDER THE FACTS RECORDED BY THE AO IN HIS ORDER FOR THE PURPOSE OF ADJUDICATION OF THIS APPEAL. 7. NOW COMING TO THE ARGUMENT OF LEVY OF PENALTY P ASSED UNDER SECTION 271(1)(C) OF THE ACT. THERE IS EXCESS CAS H RECEIPT OF ` 74,24,807/-. THE ASSESSEE OFFERED THE SAME AS ADDIT IONAL INCOME VIDE HIS LETTER DATED 15.11.2008. EVEN AT THE STAGE OF P ENALTY PROCEEDINGS, THE AO HAD GIVEN FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE TO EXPLAIN THE SOURCE OF CREDIT. AT THIS STAGE, THE ASSESSEE F AILED TO EXPLAIN THE SOURCE OF RECEIPT. THE ONLY EXPLANATION GIVEN BY TH E ASSESSEE IS THAT THE ADDITION WAS PURELY BASED ON MATERIAL ON RECORD PR OVIDED BY THE ASSESSEE. HENCE, THERE IS NO CONCEALMENT OF INCOME AT ALL. IN OUR 6 I.T.A. NO.1235/MDS/2016 OPINION, HAD IT BEEN NOSCRUTINY OF ASSESSMENT IN T HIS CASE U/S.143(3) OF THE ACT, THE ASSESSEE WOULD HAVE FAIRLY ESCAPED FRO M THE OFFERING OF ADDITIONAL INCOME. WHENEVER ANY MONEY RECEIVED BY T HE ASSESSEE, THE FULL KNOWLEDGE FROM WHOM IT IS RECEIVED AND FOR WHA T PURPOSE IT WAS RECEIVED, WAS WITHIN THE KNOWLEDGE OF THE ASSESSEE. THE ASSESSEE HAD DELIBERATELY KEPT THE INFORMATION REGARDING SOURCE OF RECEIPT OF MONEY BY NOT GIVING THE SAME TO THE AO. THE CONDUCT OF THE A SSESSEE IS THEREFORE, FOUND TO BE TOTALLY DISHONEST ONE AND ASSESSEES EX PLANATION CANNOT BE CONSIDERED AS A BONAFIDE AND HONEST ONE. THE ASSESS EE FAILED TO GIVE ANY EXPLANATION REGARDING THE SOURCE OF RECEIPT. TH E OFFER OF ADDITIONAL INCOME BY THE ASSESSEE WHICH WAS ONLY AFTER DEDUCTI ON BY THE ASSESSEE, HAD IT NOT DETECTED BY THE AO THERE CCOULD NOT BE A NY ADDITIONAL INCOME OFFERED BY THE ASSESSEE. THE ASSESSMENT PROCEEDING S AS WELL AS PENALTY PROCEEDINGS PROVIDE BEYOND DOUBT THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME SO AS TO AVOID THE TAX. IN OU R OPINION IT IS A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF TH E ACT. EVEN BEFORE US, THE LD.A.R INSTEAD OF GIVING BONAFIDE EXPLANATION R EGARDING SOURCE OF RECEIPT, IT WAS PLEADED BY THE LD.A.R THAT THE FACT S RECORDED BY THE LD. ASSESSING OFFICER ITSELF IS BAD IN LAW AND DELETION OF PNELATY BY THE LD.CIT(A) IS INCORRECT. IN OUR OPINION, IT IS ONLY DELAYED TACTICS, WHICH CANNOT BE APPRECIATED. ACCORDINGLY, IN OUR OPINION , DELETION OF PENALTY 7 I.T.A. NO.1235/MDS/2016 BY THE LD.CIT(A) CANNOT BE UPHELD ON THE REASON THA T THE ASSESSEE HAS OFFERED ADDITIONAL INCOME, ONLY IT WAS FOUND BY THE AO AND IT IS NOT VOLUNTARY OFFER BY THE ASSESSEE SO AS TO SAY THAT T HE ASSESSEE IS HONEST. ACCORDINGLY, WE ARE INCLINED TO REVERSE THE ORDER O F LD.CIT(A) ON THE DELETION OF PENALTY PASSED UNDER SECTION 271(1)(C) OF THE ACT AND RESTORE THE ORDER OF LD. ASSESSING OFFICER . 8. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED . ORDER PRONOUNCED ON 05 TH MAY, 2017 AT CHENNAI. SD/- SD/- ( . ) ( ) (G. PAVAN KUMAR) (CHANDRA POOJARI) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /CHENNAI, /DATED, THE 05 TH MAY, 2017. K S SUNDARAM. ! /COPY TO: 1. '#$ /APPELLANT 2. %&#$ /RESPONDENT 3. & & ' ( ' ) /CIT(A) 4. & & ' /CIT 5. ()'& *+ /DR 6. ),- . /GF.