Shri Mahendra Shivabhai Savani,HUF, Surat V. The Income tax Officer, Ward-9(4), Surat

ITA 1247/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9754 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-09-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 21-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JHA
• Keywords: Principle of natural justice; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER DATE OF HEARING : 14/09/2010 DRAFTED ON: 15/09/2010 ITA NO.1247/AHD/2010 ASSESSMENT YEAR : 2004-05 SHIVABHAI R.SAVANI (HUF) A-2, HANS SOCIETY VARACHHA ROAD SURAT VS. THE INCOME TAX OFFICER WARD-9(4) SURAT PAN/GIR NO. : AAHHS 1400 F ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI HARDIK VORA RESPONDENT BY: SHRI S.K. JHA, SR.D.R. O R D E R THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -II, SURAT DATED 11/02/2010 PASSED FOR ASSESSMENT YEAR 2004-05. TH E APPELLANT IS AGGRIEVED BY THE CONFIRMATION OF PENALTY OF RS.47,5 73/- LEVIED U/S.271(1)(C) OF THE I.T. ACT, 1961. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT, 1961 DATED 3 0/03/2009 AND THE ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATED 29/09/2006 THAT THE ASSESSEE IN THE STATUS OF HUF H AS FILED THE RETURN OF INCOME AT RS.87,299/- AND ALSO DISCLOSED AGRICULTUR AL INCOME OF RS.3,30,500/-. IT WAS NOTICED BY THE ASSESSING OFF ICER THAT THE ASSESSEE HAD SHOWN TWO RECEIPTS; NAMELY, SHREE CHALTHAN VIBH AG KHAND UDYOG SAHAKARI MANDALI LTD. AND AMBUJA GINNING PRESSING & OIL COMPANY ITA NO.1247/AHD /2010 SHIVABHAI R.SAVANI (HUF) VS. ITO ASST.YEAR - 2004-05 - 2 - PVT.LTD. RESPECTIVELY AMOUNTING TO RS.1,50,761/- AN D RS.73,280/-. THE ASSESSEE HAS SHOWN SALES OF BANANA AND GRASS OF RS. 2,73,885/-. THE ALLEGATION OF THE ASSESSING OFFICER WAS THAT THE SA LE OF BANANA AND SALE OF GRASS WAS NOT DULY SUPPORTED BY PROPER BILLS. AS PER THE ASSESSING OFFICER, ONLY SELF MADE VOUCHERS WERE PRODUCED. I T HAS ALSO BEEN NOTED BY THE ASSESSING OFFICER THAT AS PER THE 7/12 EXTRA CT AT COLUMN NO.7, THE CROP OF BANANA WAS NOT MENTIONED. BECAUSE OF THOS E TWO REASONS, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE HAD NO T GROWN BANANA CROP ON THE LAND OWNED BY HIM. THE ASSESSING OFFICER HA S CONCLUDED THAT THE CLAIM OF THE ASSESSEE IN RESPECT OF THE AGRICULTURA L RECEIPTS TO THE TUNE OF RS.2,73,885/- REMAINED UNEXPLAINED, WITH THE RESULT THE SAID AMOUNT WAS TREATED AS INCOME FROM OTHER SOURCES AND BROUGHT TO TAX ACCORDINGLY. THAT ACTION OF THE ASSESSING OFFICER WAS CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY WHO HAS GRANTED RELIEF TO THE E XTENT OF RS.1,25,000/- AND THE BALANCE AMOUNT OF RS.1,48,885/- WAS CONFIRM ED. FURTHER, THERE WAS ONE MORE ADDITION OF RS.9,692/- ON ACCOUNT OF T HE FACT THAT THE APPELLANT HAD SHOWN THE INTEREST INCOME OF RS.87,22 9/- STATED TO BE RECEIVED FROM M/S. MAHAVIRDHAM ASSOCIATION. ON PE RUSAL OF THE AMOUNT OF THE SAID CONCERN, IT WAS FOUND THAT THE I NTEREST INCOME SHOWN WAS RS.96,921/-. THE EXPLANATION WAS THAT THE INTE REST INCOME WAS DISCLOSED AFTER DEDUCTING THE TDS OF RS.9,692/-, WH EREAS LATER ON, IN THE CAPITAL ACCOUNT THE GROSS INTEREST INCOME WAS CREDI TED AND CORRESPONDING DEBIT ENTRIES OF TDS WAS MADE. DUE TO THIS DIFFER ENCE OF TDS AMOUNT, THE INTEREST AS DISCLOSED BY THE ASSESSEE WAS HELD AS UNDERSTATED INCOME AND THE DIFFERENCE OF RS.9,692/- WAS TAXED. IN A PPEAL, THE FIRST APPELLATE AUTHORITY HAS AFFIRMED THE ADDITION, SINCE THE SAME WAS NOT PRESSED. ITA NO.1247/AHD /2010 SHIVABHAI R.SAVANI (HUF) VS. ITO ASST.YEAR - 2004-05 - 3 - 3. AFTER NARRATING THESE FACTS IN THE PENALTY PROCE EDINGS, THE ASSESSING OFFICER HAS HELD THAT IN RESPECT OF THE SAID TWO INCOME, I.E. SUPPRESSED AGRICULTURAL AND INTEREST INCOME BOTH WE RE DELIBERATELY CONCEALED BY THE ASSESSEE AND THEREUPON IMPOSED THE CONCEALMENT PENALTY. 4. THE FIRST APPELLATE AUTHORITY HAS AFFIRMED THE L EVY OF PENALTY PRIMARILY ON THE GROUND THAT THE APPELLANT HAD NOT PROVED THE SOURCE OF THE AGRICULTURAL INCOME. IN HIS OPINION, THE ASSE SSEE HAS UNDISCLOSED INCOME WHICH WAS GIVEN A COLOUR OF AGRICULTURAL INC OME AND DISCLOSED THE SAME AS EXEMPTED INCOME WITH THE MOTIVE OF CONC EALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS, THEREFORE, TH E ACTION OF THE ASSESSING OFFICER WAS AFFIRMED. 5. WITH THIS BRIEF FACTUAL BACKGROUND, I HAVE HEARD BOTH THE SIDES. WHILE IMPOSING THE CONCEALMENT PENALTY, IT IS NECES SARY THAT THE REVENUE AUTHORITIES SHOULD KEEP IN MIND THE MAIN PROVISIONS OF SECTION 271(1)(C) OF THE I.T.ACT, 1961. TO BE READ WITH THE EXPLANATI ON-1 OF THE SECTION SAYS WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPU TATION OF THE TOTAL INCOME OF ANY PERSON AND SUCH PERSONS FAILS TO OFFE R AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSI NG OFFICER TO BE FALSE, THEN THE AMOUNT DISALLOWED OR ADDED IN COMPUTING TH E TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL BE DEEMED TO BE THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IT IS WORTH TO NOTE THAT EXPLANATION-1 HAS PART (B) ACCORDING TO WHICH WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE FACTS OF THE TOTAL INCOME, SU CH PERSON OFFERS AN ITA NO.1247/AHD /2010 SHIVABHAI R.SAVANI (HUF) VS. ITO ASST.YEAR - 2004-05 - 4 - EXPLANATION WHICH IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS REL ATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM THEN THE AMOUNT ADDED SHALL DEEMED TO BE THE IN COME FOR WHICH PARTICULARS HAVE BEEN CONCEALED. AFTER PROPERLY ANALYZING THESE TWO CLAUSES OF EXPLANATION-1 IN THE LIGHT OF THE MATERI AL FACTS OF THE CASE, IT IS EVIDENT THAT THE ASSESSEE HAS OFFERED AN EXPLANATIO N ABOUT THE NATURE AND SOURCE OF INCOME. UNDISPUTEDLY THE APPELLANT HAD S HOWN AGRICULTURAL INCOME OF RS.3,30,500/- OUT OF WHICH A SUM OF RS.2, 73,885/- WAS NOT HELD AS AGRICULTURAL INCOME. ONLY THE BALANCE WAS HELD AS AGRICULTURAL INCOME. WHEN THE MATTER HAD GONE IN APPEAL A RELI EF OF RS.2,5,000/- WAS GRANTED. THEREFORE, THE ASSESSMENT MADE BY THE AS SESSING OFFICER AND LEARNED CIT(APPEALS) RESPECTIVELY HAD DIFFERENCE OF OPINION THAT TOO IN RESPECT OF THE ASSESSMENT OF THE QUANTUM OF AGRICUL TURAL INCOME AS FAR AS THE BASIC CONTENTION OF THE ASSESSEE THAT AGRICU LTURAL INCOME HAD ACTUALLY BEEN EARNED BY HIM WAS NOT DOUBTED OR DISP UTED. THE DOUBT WAS IN RESPECT OF BANANA AND GRASS INCOME WHETHER C ORRECTLY SHOWN BY THE ASSESSEE OR NOT. IN RESPECT OF THE BANANA AND GRASS INCOME, THE APPELLANT HAD MADE ONLY SELF-MADE VOUCHERS. ONLY TO THAT EXTENT, THE LEARNED CIT(APPEALS) HAS HELD THAT AN AMOUNT OF RS. 1,48,885/- IS TO BE CONFIRMED PERTAINING TO THE AGRICULTURAL RECEIPTS O N SALE OF BANANA AND GRASS. IF I CONSIDER THE EVIDENCES PLACED DURING T HE COURSE OF ASSESSMENT PROCEEDINGS AND THE EXPLANATION OFFERED BY THE ASSE SSEE IN THEIR TOTALITY, THEN A CONCLUSION CAN BE DRAWN THAT THE APPELLANT H AD IN POSSESSION OF 7/12 EXTRACT, HOWEVER, THE CULTIVATION OF THE CROP WAS NOT CORRECTLY MENTIONED, BUT THE EXISTENCE OF THE AGRICULTURAL LA ND IN THE OWNERSHIP OF ITA NO.1247/AHD /2010 SHIVABHAI R.SAVANI (HUF) VS. ITO ASST.YEAR - 2004-05 - 5 - THE ASSESSEE WAS NOT AT ALL DISPUTED. EVEN THE INC OME EARNED THEREON FROM GRASS AND BANANA HAS ALSO NOT BEEN DOUBTED. THE DOUBT WAS ONLY IN RESPECT OF THE CORRECT QUANTUM OF THE AGRICULTU RAL EARNING, WHICH MEANS THAT THE ASSESSEE HAD OFFERED AN EXPLANATION AND ALSO FURNISHED CERTAIN EVIDENCES TO SUBSTANTIATE SUCH EXPLANATION. THOSE EVIDENCES AND EXPLANATION WAS NOT REJECTED IN TOTO BUT PARTLY ACC EPTED. HENCE, IT CANNOT BE HELD THAT THE APPELLANT HAD FAILED TO OFF ER AN EXPLANATION. FURTHER IT CAN ALSO NOT BE HELD THAT THE EXPLANATIO N AS OFFERED BY THE ASSESSEE WAS ALTOGETHER A FALSE EXPLANATION. IN T HE ABSENCE OF ANY CONTRARY EVIDENCE IN POSSESSION OF THE REVENUE DEPA RTMENT THAT THE APPELLANT HAD ACTUALLY EARNED UNEXPLAINED INCOME FR OM OTHER SOURCES IT IS AGAINST THE NATURAL JUSTICE TO DEEM THAT THE ASSESS EE HAS FURNISHED THE INACCURATE PARTICULARS SO AS TO CONCEAL THE TAXABLE INCOME. I ACCORDINGLY HOLD THAT THIS IS NOT A FIT CASE FOR LEVY OF CONCEA LMENT PENALTY. WITH THE RESULT, THE GROUND RAISED BY THE ASSESSEE IS HEREBY ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 17/09/2010. SD/- ( MUKUL KR. SHRAWAT ) JUDICIAL MEMBER AHMEDABAD; DATED 17/ 09 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DE PARTMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT( APPEALS)-V, SURAT 5. THE DR, AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD ITA NO.1247/AHD /2010 SHIVABHAI R.SAVANI (HUF) VS. ITO ASST.YEAR - 2004-05 - 6 - 1. DATE OF DICTATION..14/09/2010 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16/09/2010. 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17/09/2010 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER