The ITO, Ward-9(1), Surat V. Shri Anand Kantilal Chokshi,HUF, Surat

ITA 1286/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0314 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 23-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MADHUSUDAN SRDR
• Keywords: Competent authority
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1286/AHD/2010 [ASSTT.YEAR: 2001-02] INCOME TAX OFFICER -VS- SHRI ANAND KANTILAL CHO KSI (HUF) WARD-8(1), ROOM NO.415, 4, VISHVAKARMA SOCIETY, AAYKAR BHVAN, MAJAURA GATE, NR. PRIME BANK, KATA RGAM, SURAT SURAT PAN NO.AABHC5183M (APPELLANT) (RESPONDENT) REVENUE BY :SHRI K. MADHUSUDAN, SR-DR ASSESSEE BY: NONE O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-V, SURAT IN APPEAL NO.CAS-V/93 /2009-10 DATED 28-01-2010. THE ASSESSMENT WAS FRAMED BY ITO, WARD-9(1), SURAT U/S.143(3) R.W.S 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 30-10- 2006 FOR ASSESSMENT YEAR 2001-02. THE PENALTY UNDER DISPUTE WAS LEVIED BY ITO, WARD-9(1), SURAT U/S.271(1) OF THE ACT VIDE HIS OR DER DATED 30-03-2009. 2. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN DELETING THE LEVY OF PENALTY AT RS.3 LAKH U/S.271(1 )(C) MADE BY ASSESSING OFFICER. FOR THIS, REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUND :- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.3,00 ,000/- IGNORING THE FAT THAT THE ADDITION MADE IN THIS CASE HAS BEEN UPHELD BY T HE CIT(A) ON MERITS. ITA NO.1286/AHD/2010 A.Y. 2001-02 ITO WD-9(1), SRT V. SH..ANAND K CHOKSI (HUF) PAGE 2 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS AN ADMITTED POSITI ON THAT THE PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED ON PROTECTIVE ADDITION. THE BRIE F FACTS ARE THE ASSESSEE FILED RETURN OF INCOME SHOWING TOTAL INCOME OF 48,770/- C ONSEQUENT UPON A SURVEY CONDUCTED AT THE OFFICE PREMISES OF ONE SHRI PANKAJ DANAWALA, CHARTERED ACCOUNTANT BY THE INVESTIGATING WING, SURAT ON 11-0 3-2005 AND BASED ON MATERIAL AVAILABLE IN THAT SURVEY THE CASE OF THE ASSESSEE W AS REOPENED. IN THE ASSESSMENT, ADDITION OF RS.8,73,552/- WAS MADE INCLUDES CERTAIN INVESTMENTS AND LOWER HOUSEHOLD WITHDRAWALS. THE PENALTY WAS LEVIED BY TH E ASSESSING OFFICER. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE ASSESS EE IN HIS APPEAL MEMO HAS MENTIONED THAT THE IMPUGNED PENALTY IS BAD IN LAW A S IN THE CASE OF ASSESSEE THE PROTECTIVE ADDITIONS WERE MADE AND HENCE NO PENALTY CAN BE LEVIED IN RESPECT OF PROTECTIVE ADDITION. THE CIT(A) DELETED THE PENALTY BY GIVING FOLLOWING FINDING IN PARA-4 OF HIS APPELLATE ORDER:- 4. THIS PROTECTIVE ADDITION IN ASSESSMENT HAS BEEN UPHELD BY THE CIT(A). WHILE IT IS POSSIBLE TO HAVE PROTECTIVE ADDITION IN ASSESSMENT, THERE CANNOT BE A CASE FOR PENALTY UNDER SECTION 271(1)(C) OF THE A CT IN RESPECT OF SUCH PROTECTIVE ADDITION. THE PENALTY PRESUPPOSES SUBSTA NTIVE ADDITION IN ASSESSMENT. THE ASSESSING OFFICER WHILE MAKING AN A DDITION ON PROTECTIVE BASIS, CANNOT COME TO A FINDING THAT ASSESSEE HAS C ONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH ADDED INCO ME. IN VIEW OF THE ABOVE, LEVY OF PENALTY ON AN ADDITION MADE ON PROTECTIVE B ASIS IS BAD IN LAW. THIS VIEW HAS BEEN UPHELD IN THE FOLLOWING CASES:- (1) SHRI BANSILAL PYARELAL 141 ITR 32 (PANJ) (2) SUPER STEEL (SALES)CO. 178 ITR 451 (CAL) (3) ABHAY KUMAR VS. ACIT (1997) 63 ITD 15 (PAT) (4) K. DEEDAR AHMED VS. ITO (2005) 97 ITD 240 (HYD ) IN VIEW OF THE ABOVE I AGREE WITH THE APPELLANT FOR LEVY OF PENALTY IN THIS CASE AND REQUIRE TO BE ANNULLED. THE ASSESSING OFFICER I S DIRECTED TO DELETE THE PENALTY. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 4. WE FIND THAT IT IS AN ADMITTED FACT THAT THIS AD DITION IS PROTECTIVE ADDITION AND PENALTY LEVIED U/S.271(1) OF THE ACT IS ON PROTECT IVE ADDITIONS. WE FIND THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. SUPER STEEL (SALES) CO. (1989) 178 ITR 451 (CAL) HAS CATEGORICALLY HELD THAT THERE CAN BE PROTECTIVE ASSESSMENT BUT PENALTY U/S.271(1) CAN BE ONLY ON WHOM SUBSTANTIVE ASSESSMENT IS MADE. DISPUTE ITA NO.1286/AHD/2010 A.Y. 2001-02 ITO WD-9(1), SRT V. SH..ANAND K CHOKSI (HUF) PAGE 3 AS TO WHETHER INCOME ALLEGEDLY CONCEALED ASSESSABLE IN THE HANDS OF A OR B, UNLESS AND UNTIL THE SAME IS DETERMINED, CHARGE OF CONCEAL MENT CANNOT BE MADE AGAINST PERSON IN WHOSE HANDS INCOME IS ADDED ON PROTECTIVE BASIS. THE HONBLE HIGH COURT CONSIDERED THE FACTS THAT IN THIS CASE THE ASSESSME NT WAS MADE ON PROTECTIVE BASIS AND FOR THE LAST SEVERAL YEARS, THE INCOME HAD ACTU ALLY BEEN ASSESSED IN THE HANDS OF ONE MAHABIR PRASAD MODI AND NOT IN THE HANDS OF THE ASSESSEE. THERE CAN BE A PROTECTIVE ASSESSMENT BUT THERE CANNOT BE ANY PROTE CTIVE PENALTY. BEFORE ANY PENALTY CAN BE LEVIED, THE INCOME HAS TO BE ASSESSE D AS CONCEALED INCOME IN THE ASSESSMENT OF AN ASSESSEE. THEREAFTER, IN PENALTY P ROCEEDINGS, THE COMPETENT AUTHORITY HAS TO PROBE INTO AND DECIDE WHETHER THER E HAS BEEN ANY CONCEALMENT OF INCOME. BUT WHERE THERE IS A DISPUTE AS TO WHETHER SUCH INCOME ALLEGEDLY CONCEALED WOULD BE ASSESSED IN THE HANDS OF X OR Y, UNLESS TH E DETERMINATION IS MADE BY THE INCOME-TAX OFFICER, NO CHARGE OF CONCEALMENT CAN BE MADE AGAINST THE PERSONS IN WHOSE HANDS THE INCOME IS ADDED ON PROTECTIVE BASIS . HE IS LIABLE ONLY IF IT IS HIS INCOME WHICH HAS BEEN CONCEALED. IN OTHER WORDS, ON LY A PERSON UPON WHOM A SUBSTANTIVE ASSESSMENT IS MADE WOULD BE LIABLE FOR PENALTY PROVIDED THE CONDITIONS PRECEDENT FOR IMPOSITION OF THE PENALTY IS SATISFIE D. IT HAS BEEN STATED BY COUNSEL FOR THE REVENUE THAT THE DEPARTMENT DID NOT DISPUTE THE ASSESSMENT MADE IN THE HANDS OF THE SAID MAHABIR PROSAD MODI. IN EITHER VIEW OF THE MATTER, NO PENALTY CAN BE LEVIED IN THIS CASE. THE HONBLE HIGH COURT IN THE CASE OF SUPER STEEL (SALES) CO. (SUPRA), RELIED ON BY THE ASSESSEE, CLEARLY LAID DO WN THE PRINCIPLE THAT IN CASE OF PROTECTIVE ADDITION PENALTY U/S.271(1) OF THE ACT CANNOT BE LEVIED. RESPECTFULLY FOLLOWING HONBLE CALCUTTA HIGH COURT IN THE CASE OF SUPER STEEL (SALES) CO. (SUPRA), WE CONFIRM THE ORDER OF CIT(A) DELETING T HE PENALTY LEVIED BY ASSESSING OFFICER U/S.271(1)(C) OF THE ACT. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS DAY OF 13 TH AUG, 2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD, DATED : 13/08/2010 ITA NO.1286/AHD/2010 A.Y. 2001-02 ITO WD-9(1), SRT V. SH..ANAND K CHOKSI (HUF) PAGE 4 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-V, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD