The ITO, Ward-9(4), Surat V. Shri Yogesh Nagjibhai Patel,HUF, Surat

ITA 1285/AHD/2010

• Counselvise Citation: 128520514 RSA 2010
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-05-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 23-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P SHAH
• Keywords: Gift; Earning of tax free income; Revised return
• Section: 143(3); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 1285/AHD/2010 ASSESSMENT YEAR :2002-03 THE INCOME-TAX OFFICER, WARD.9(4), SURAT V/S . SHRI YOGESH NAGJIBHAI PATEL, (HUF) A-12 TRIKAMNAGAR SOCIETY, L.H.ROAD, SURAT PAN NO. AAA HY1476J (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI NIMESH YADAV, SR. D.R /BY RESPONDENT SHRI J.P.SHAH, A.R. /DATE OF HEARING 31.05.2012 /DATE OF PRONOUNCEMENT 15.06.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS REVENUES APPEAL ARISES OUT OF ORDER OF CI T(A)-V,SURAT, ORDER DATED 28.01.2010 FOR ASSESSMENT YEAR 2002-03. 2. THE FACT OF THE CASE IS THAT THE ASSESSEE HAD RE VISED RETURN OF INCOME IN PURSUANCE TO NOTICE U/S 148 FOR A.Y. 02-03 DECLARIN G TOTAL INCOME OF RS.15,94,450/- ON 30.09.2005 WHEREBY CAPITAL JUMP O F RS.15,00,000/- HAS BEEN OFFERED BY THE ASSESSEE FOR TAXATION AS INCOME FROM OTHER SOURCES. THE ORIGINAL RETURN IN THIS CASE WAS FILED ON 11.07.200 2 DECLARING TOTAL INCOME OF RS. 94,450/- AND AGRICULTURE INCOME OF RS. 14,400/- WHICH WAS ACCEPTED U/S ITA NO. 1285/AHD/2010 A.Y.2002-03 PAGE 2 143(1) OF THE IT ACT AS IT IS BY THE A.O. FURTHER , LD. A.O. BROUGHT ON RECORD THAT THE SURVEY U/S 133A OF THE IT ACT, 1961 WAS CA RRIED OUT IN THE CASE OF ONE SHRI PANKAJ DANAWALA BY THE D.D.I.T. (INV)-II, SURA T ON 11.03.2005. SHRI PANKAJ DANAWALA IS A PRACTICING CHARTERED ACCOUNTAN T. DURING THE COURSE OF SURVEY, HE WAS FOUND TO HAVE CREATED LARGE NUMBER O F CAPITAL BUILD UP CASES. THE MODUS OPERANDI ADOPTED WAS FOUND TO BE FRAUDULE NT AND INVOLVED MAINLY OF TWO CATEGORIES. THE FIRST CATEGORY IS INFLATION OF OPENING BALANCE OF CAPITAL SUBSTANTIALLY, E.G. THE CLOSING BALANCE OF CAPITAL AT RS. 1 LAC APPEARING IN THE CAPITAL ACCOUNT AS ON 31.03.2001 FOR THE FINANCIAL YEAR 2000-01 RELEVANT TO A.Y. A.Y.2001-02 WAS INCREASED AND SHOWN AT RS. 16 LACS AS THE OPENING CAPITAL BALANCE AT THE BEGINNING OF THE FINANCIAL Y EAR 2001-02 I.E. AS ON 01.04.2001. THUS, THE CAPITAL BALANCE HAS BEEN INF LATED BY RS. 15LACS WITHOUT ANY BASIS THEREOF. THE SECOND CATEGORY OF SHRI PAN KAJ DANAWALA THAT HE HAD PREPARED PROFIT & LOSS ACCOUNT, CAPITAL ACCOUNT AND BALANCE SHEET WITH EXEMPT INCOME LIKE AGRICULTURE INCOME, SMALL GIFTS AND INC OME FROM INTEREST, BROKERAGE, COMMISSION, ETC. FOR MANY YEARS, THUS CR EATING SUBSTANTIAL CAPITAL ON PAPER AND FINALLY FILED THE RETURN OF INCOME PAY ING MINIMUM AMOUNT OF TAX. SHRI DANAWALA HAD ADMITTED THIS PRACTICE U/S 133A O F THE IT ACT DURING THE COURSE OF SURVEY. THE A.O. ACCEPTED THE REVISED RE TURN IN SCRUTINY ASSESSMENT PASSED U/S 143(3) READ WITH 147 OF THE I T ACT EXCEPT MINOR ADDITION OF RS.21,503/- ON ACCOUNT OF UNEXPLAINED A GRICULTURE RECEIPT. THE A.O. ISSUED THE SHOW CAUSE NOTICE TO THE ASSESSEE AT THE TIME OF IMPOSING PENALTY U/S 271(1)(C). THE ASSESSEE ALSO FILED APP EAL AGAINST QUANTUM ITA NO. 1285/AHD/2010 A.Y.2002-03 PAGE 3 ADDITION OF RS. 15LAC WHICH WAS DISMISSED BY THE CI T(A)-V, SURAT VIDE HIS ORDER DATED 19.03.2008. THE RELIEF TO THE EXTENT O F RS. 21,503/- WAS ALLOWED BY HIM. THE EXPLANATION FILED BY THE ASSESSEE WAS NOT FOUND CONVINCING TO THE A.O. THEREFORE, HE LEVIED PENALTY U/S 271(1)(C ) AT RS. 4,53,434/-. 3. THE CIT(A) VIDE HIS ORDER DATED 28.01.2010 DELET ED THIS PENALTY IN PARAGRAPH NO.6.2 WHICH IS REPRODUCED AS UNDER:- THE AO HAS NOT SPELT OUT GROUNDS FOR LEVYING THE P ENALTY. HE HAS NOT BROUGHT OUT THAT THE ASSESSEE HAS CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. DISCLOSURE OF INCOME PURSUANT TO NOTICE ISSUED U/S 148 AS SUCH CANNOT BE HELD AS A G ROUND FOR LEVY OF PENALTY. IT IS MENTIONED IN THE ORDER THAT THE ASS ESSEE HAS OFFERED THIS INCOME TO BUY PEACE AND AVOID LITIGATION. IT HAS B EEN HELD BY SUPREME COURT IN THE CASE OF CIT VS SURESH CHANDRA MITTAL ( 251 ITR 9) THAT IN RESPECT OF HIGHER INCOME FILED IN REVISED RETURN U/ S 148 TO BUY PEACE OF MIND, PENALTY CANNOT BE LEVIED AS BURDEN OF PROVING CONCEALMENT IS NOT DISCHARGED . IN THIS CASE ALSO THE BURDEN HAS NOT BEEN DISCHARGED. RESPECTFULLY FOLLOWING THIS DECISION THE PENALTY LE VIED IS DELETED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. LD. D.R . VEHEMENTLY ARGUED THAT THE A.O. HAD ISSUED NOTICE U/S 148 ON 14.09.20 05 AFTER RECORDING THE PROPER REASON FOR RE-OPENING THE CASE. IN RESPONSE TO THIS NOTICE, THE APPELLANT HAD REVISED ITS RETURN ON 30.09.2005 AND INFLATION IN CAPITAL ACCOUNT OF RS. 15,00,000/- HAD BEEN RETURNED AS INCOME AS I NCOME FROM OTHER SOURCES. THE APPELLANT HAD FURNISHED INACCURATE PA RTICULARS OF INCOME. THEREFORE, IT SHOULD BE CONFIRMED. ITA NO. 1285/AHD/2010 A.Y.2002-03 PAGE 4 5. FROM THE ASSESSEE SIDE, SHRI J.P. SHAH ARGUED TH AT THE DEPARTMENT HAD FOUND NOTHING CONCEAL INCOME. THIS CAPITAL HAD ALREADY BEEN DISCLOSED BY THE APPELLANT IN PRECEDING YEAR AS ON 01.04.2002 AS OPENING CAPITAL. FURTHER, HE ALSO HAS DRAWN OUR ATTENTION ON PENALTY ORDER WHERE LD. A.O. HAD HELD THAT THE ASSESSEE HAS FILED INACCURATE PARTICU LARS/CONCEALED INCOME AS PER THE PROVISION OF SECTION 271(1)(C) READ WITH EX PLANATION 1 OF THE INCOME TAX ACT 1961. THE ARGUMENT OF THE LEARNED COUNSEL WAS THAT THE A.O. WAS NOT SURE WHETHER IN THIS CASE EITHER INACCURATE PAR TICULARS WERE FOUND OR CONCEALMENT INCOME. EVEN THEN THE A.O. LEVIED PENA LTY U/S 271(1)(C). HE ALSO RELIED UPON IN CASE OF CIT, GUJARAT-1, AHMEDABAD VS. SHRI BANKIM J. SHAH, INCOME TAX REFERENCE NO. 117 OF 1979 ORDER DATED 18 TH JULY , 1991 IN WHICH THE PENALTY U/S 271(1)(C ) WAS CHALLENGED WHERE ASSESSMENT WAS MADE AS PROTECTIVE BASIS . THE HONBLE GUJARAT HIGH COURT HAS HELD THAT INITIA TION OF PENALTY PROCEED AGAINST THE ASSESSEE WAS BAD IN LAW . HE FURTHER RELIED ON NEW SORATHIA ENGINEERING CO. V. CIT [2006] 282 ITR 0642 WHERE HONBLE GUJARAT HIGH COURT HAS HELD THAT ORDER OF PENALTY M UST CLEARLY STATE WHETHER IS FOR CONCEALMENT OR FOR FURNISHING INACCURATE PARTIC ULARS. ACCORDING TO LEARNED COUNSEL, THE PENALTY IS NOT JUSTIFIED AND DESERVE T O BE DELETED. 6. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW AND GONE THROUGH THE FACTS OF THE CASE. THE ASSESSEE HAD REVISED TH E RETURN IMMEDIATELY IN RESPONSE TO NOTICE U/S 148. THIS CAPITAL BALANCE H AD ALREADY BEEN SHOWN IN THE BOOKS OF ACCOUNT. THE ASSESSEE OFFERED THIS AM OUNT FOR TAX TO BUY PEACE AND AVOID PROTECTED LITIGATION. FOLLOWING THE DECI SIONS OF HONBLE GUJARAT HIGH ITA NO. 1285/AHD/2010 A.Y.2002-03 PAGE 5 COURT IN CASE OF NEW SORATHIA ENGINEERING CO. (SUP RA). THERE IS NO CLEAR CUT FINDING OF THE A.O. IN PENALTY ORDER WHETHER PENALT Y IMPOSED FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. TH EREFORE, WE CONFIRM THE ORDER OF LD. CIT (A) AND DISMISS THE REVENUES APPE AL. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ; STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 08.06.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 11.06.2012 4) DATE OF CORRECTION ,, ,, 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 15.06.2012 7) ORDER UPLOADED ON ,, ,, 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 15.06.2012 ITA NO. 1285/AHD/2010 A.Y.2002-03 PAGE 6