Shri Dinesh Kumar Dhir, Sultanpur Lodhi V. The Income-tax Officer, Kapurthala

ITA 131/ASR/2011

• Counselvise Citation: 13120914 RSA 2011
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-03-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 19-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: Y K SUD
• Keywords: Income from undisclosed sources
• Section: 271(1)(c); 205; 250; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 131(ASR)/2011 ASSESSMENT YEAR:2003-04 PAN:AASPD4223J SH. DINESH KUMAR DHIR, VS. THE INCOME TAX OFFICER, SULTANPUR LODHI. KAPURTHALA-I, (APPELLANT) (RESPONDENT) APPELLANT BY: SH. Y.K. SUD, CA RESPONDENT BY: SH. AMRIK CHAND, DR DATE OF HEARING :22/03/2012 DATE OF PRONOUNCEMENT:28/03/2012 ORDER PER BENCH: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR, DATED 27.01.2011 FOR ASSESSMENT YEAR 200 3-04. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE PENALTY OF RS.96875/- OUT OF PENALTY OF RS.155000/- IMPOSED BY THE A.O. U/S 271(1)(C). 2. THAT BOTH CIT(A) AND A.O. FAILED TO APPRECIATE T HAT THE ASSESSEE HAD DULY DISCHARGED HIS OBLIGATION OF EXPLAINING TH E CASH CREDIT AND SIMPLY SUSTAINING THE ADDITION U/S 68 IN QUANTU M PROCEEDING IN NO GROUND FOR LEVYING PENALTY U/S 271 (1)(C). 3. THAT AT ANY RATE PENALTY SUSTAINED @ 12% OF THE ALLEGED TAX SOUGHT TO BE EVADED IS HIGHLY EXCESSIVE. 2 4. THAT ORDER OF CIT(A) AND A.O. IS AGAINST LAW AND FACTS OF THE CASE. 3. THE BRIEF FACTS AS APPEARING IN THE ORDER OF THE CIT(A) ARE AS UNDER: 2. THE FACTS RELATING TO THE AFORESAID GROUNDS OF APPEAL ARE THAT DURING THE ASSESSMENT PROCEEDINGS IN THE ASSES SEES CASE CERTAIN CREDITS IN THE ASSESSES ACCOUNT IN THE FIR M M/S. BHARA MAL RAM NATH WERE NOTICED BY THE AO, AND IT WAS FOU ND THAT THE DEPOSITS IN THE SAID ACCOUNT WERE TRANSFERS FRO M THE ASSESSEES ACCOUNT IN THE PUNJAB NATIONAL BANK. THE AO ASKED THE ASSESSEE TO SUPPLY THE SOURCE OF THE CREDITS IN HIS ACCOUNT WITH THE SAID BANK FOR MAKING THE DEPOSITS IN THE F IRM. THE ASSESSEE SOUGHT TIME, BUT LATER THE ASSESSEES COUN SEL STATED THAT NECESSARY INFORMATION WAS NOT BEING MADE AVAILABLE BY THE PUNJAB NATIONAL BANK. THE AO, THEREAFTER, CALLED FO R INFORMATION FROM THE BANK DIRECTLY AND ON NOTICING CERTAIN CREDITS IN THE BANK ACCOUNT TOTALING TO RS.2,46000/ - ASKED THE ASSESSEE TO STATE THE SOURCES THEREOF. THE ASSESSEE SUBMITTED THAT THESE CREDITS WERE ON ACCOUNT OF REMITTANCES R ECEIVED FROM ONE BALWINDER SINGH RESIDING IN THE UAE FOR A LAND WHICH WAS PROPOSED TO BE SOLD TO HIM. THE ASSESSEE SUBMITTED COPIES OF CHEQUES RECEIVED FROM SH. BALWINDER SINGH AND SUBMI TTED THAT BY PROVIDING THE SAME HE HAD DISCHARGED THE ONUS OF THE PROOF OF THE GENUINENESS OF THE CREDIT AND IDENTITY OF TH E SENDER. IT WAS SUBMITTED THAT HE HAD NOTHING FURTHER TO STATE IN THE MATTER. THE AO WAS NOT SATISFIED WITH THE SUBMISSION SINCE THE ASSESSEE HAD NOT SHOWN THAT THE AMOUNT WAS RECEIVED AGAINST SALE OF LAND. RELYING ON SECTION 34 OF THE EVIDENCE AT, THE AO HELD THAT IT WAS NECESSARY FOR THE PERSON RELYING O N ENTRIES IN THE BOOKS TO PROVE THAT THEY WERE IN ACCORDANCE WIT H THE FACTS. HE HELD THAT THE CREDITS OF RS.2,46,000/- WERE ASSE SSEES INCOME FROM UNDISCLOSED SOURCES PLOUGHED BACK THROU GH THE SAID DEPOSITS, AND ADDED THE SAME TO THE ASSESSEES TOTAL INCOME. THE ASSESSEES APPEAL BEFORE THE CIT(A) WAS DISMISSED. IN HIS APPELLATE ORDER DATED 29.03.2007 IN APPEAL NO.26/06-07/CIT(A)/JAL. THE LD. CIT(A) NOTED THAT T HE AO HAD DETECTED THE CREDIT ENTRIES FROM THE ASSESSEE ACCOU NT WITH M/S. BHARA MAL RAM NATH AND HAD OBTAINED THE ASSESSEES ACCOUNT IN PUNJAB NATIONAL BANK HIMSELF AFTER THE ASSESSE F AILED TO FURNISH THE INFORMATION. HE HELD THAT THE ASSESSEE FAILED TO 3 PRODUCE ANY EVIDENCE TO PROVE THE RECEIPTS OF SALE PROCEEDS AGAINST THE SALE OF LAND WITHOUT EVEN DISCLOSING AS TO FOR WHICH LAND THE AMOUNTS WERE RECEIVED. NO EVIDENCE TO SHOW THAN AN AGREEMENT WAS ENTERED INTO FOR THE SAID LAND WAS PR ODUCED BY THE ASSESSEE. THE LD. CIT(A) HELD THAT BY FILING TH E COPIES OF CHEQUES, THE ASSESSEE DID NOT DISCHARGE THE ONUS ON HIM AS THE PRIMARY ONUS WAS IDENTIFICATION OF LAND AND SALE AG REEMENT FOR THE SAID LAND WITH CONFIRMATION FROM THE PURCHASER HAVING ADVANCE THE AMOUNT. ON THE ASSESSEES FURTHER APPEA L BEFORE THE HONBLE ITAT, THE HONBLE TRIBUNAL IN THEIR ORDER I N ITA NO.304(ASR)/2007 DATED 07.12.2007 HELD THAT THE MER E RECEIPT OF THE MONEY FROM THE BANKING CHANNEL WAS NOT SUFFI CIENT TO DISCHARGE THE ONUS OF ESTABLISHING THE IDENTITY OF THE PERSON, HIS CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSAC TIONS. IT WAS NOTED BY THE HONBLE ITAT THAT THERE WAS NOT AN IOT A OF EVIDENCE ADDUCED BY THE ASSESSEE TO SHOW AS TO WHIC H LAND THE ASSESSEE HAD INTENDED TO SELL TO SH. BALWINDER SING H. IT WAS NOTICED THAT NO EVIDENCE ABOUT THE AREA OF LAND AGR EED TO BE SOLD, PLACE WHERE THE LAND WAS LOCATED, RATE AT WHI CH IT WAS SOLD AND WHAT EVENTUALLY HAPPENED TO THE DEAL WAS FURNIS HED. IT WAS HELD THAT THE MERE FACT THAT THE AMOUNT IN QUESTION HAD BEEN RECEIVED FROM ABROAD, BY ITSELF, DID NOT PROVE THE SOURCE AND GENUINENESS OF SUCH CREDITS. THE ADDITION OF RS.2,4 6,000/- WAS UPHELD. 2.3. IN THE PENALTY PROCEEDINGS BEFORE THE AO, THE ASSESSEE AGAIN SUBMITTED THAT BY SUBMITTING THE COPIES OF TH E CHEQUES RECEIVED FROM ONE SH. BALWINDER SINGH LIVING IN UAE AGAINST SALE OF LAND, THE ASSESSEE HAD DULY DISCHARGED HIS ONUS AND THERE WAS NO MATERIAL ON RECORD TO SUGGEST THAT THE CREDITS IN THE ASSESSEES BANK ACCOUNT WAS UNDISCLOSED INCOME OF T HE ASSESSEE. IT WAS SUBMITTED THAT THE ONUS WAS ON THE AO TO PLACE MATERIAL ON RECORD TO SUGGEST THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE I NCOME. IT WAS SUBMITTED THAT SINCE EVIDENCE REGARDING THE REM ITTANCE OF MONEY WAS PLACED ON RECORD, NO PENALTY U/S 271(1)(C ) COULD BE LEVIED. THE AO DID NOT ACCEPT THE APPELLANTS SUBMI SSION. REFERRING TO THE VARIOUS JUDGMENTS RELIED UPON BY T HE ASSESSEE, THE AO HELD THAT PENALTY WAS CANCELLED IN THOSE CAS ES ON SPECIFIC FACTS OF THE CASE. THE LD. AO PLACED RELIA NCE ON THE DECISION IN THE CASE OF CIT VS. GURBACHAN LAL 250 I TR 157 (DEL), IN WHICH IT WAS HELD THAT THE INITIAL BURDEN OF DISCHARGING 4 THE ONUS WAS ON THE ASSESSEE SINCE THE BASIC FACTS WERE WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE. IT WAS HELD IN THIS DECISION THAT THERE WAS NO DISCRETION CONFERRED ON THE AO TO INVOKE THE EXPLANATION TO SECTION 271(1)(C) OR NOT, SINCE IT AUTOMATICALLY CAME INTO OPERATION WHEN THE ASSESSEE FAILED TO OFFER ANY EXPLANATION IN RESPECT TO ANY FACT MATERI AL TO THE COMPUTATION OF TOTAL INCOME, OR THE EXPLANATION OFF ERED WAS NOT SUBSTANTIATED. IT WAS FURTHER HELD IN THIS DECI SION THAT THE EXPLANATION OF THE ASSESSEE FOR THE PURPOSE OF AVOI DANCE OF PENALTY MUST BE AN ACCEPTABLE ONE AND SHOULD NOT BE FANTASTIC AND FANCIFUL. THE LD. AO ALSO PLACED RELIANCE ON TH E JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. JEEWAN LAL SHAH 205 ITR 244 (SC). THE AO NOTED THAT TILL D ATE THE ASSESSEE HAD NOT FURNISHED ANY SALE DEED OR THE TOT AL SALE PRICE AGAINST THE FOREIGN REMITTANCES OF RS.2,46,000/- RE CEIVED. HE HELD THE EXPLANATION OF THE ASSESSEE TO BE FANTASTI C AND FANCIFUL AND UNSUBSTANTIATED. THE AO HELD THAT EXPLANATION T O SECTION 271(1)(C) WAS ATTRACTED IN THE CASE AND LEVIED THE IMPUGNED PENALTY @ 200% OF THE TAX SOUGHT TO BE EVADED. 4. BEFORE THE LD. CIT(A), THE LD. COUNSEL FOR THE A SSESSEE PLACED RELIANCE ON THE DECISIONS OF VARIOUS COURTS OF LAW AND SUBMITTED THE EXPLANATION THAT PENALTY U/S 271(1)(C) OF THE ACT, WAS NOT LEVIABLE. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSE E AND RELYING UPON THE DECISIONS OF VARIOUS COURTS OF LAW UPHELD THE ACTI ON OF THE A.O. IN LEVYING THE PENALTY BUT RESTRICTED THE SAME @ 125% OF THE T AX SOUGHT TO BE EVADED. 5. THE LD. COUNSEL FOR THE ASSESSEE, SH. Y.K. SUD, CA, ARGUED THAT ON TECHNICAL GROUND, THE PENALTY U/S 271(1)(C) OF THE ACT, IS NOT LEVIABLE FOR THE REASONS THAT THE A.O. IN THE ASSESSMENT ORDER HAS MENTIONED THAT PENALTY NOTICE U/S 271(1)(C) OF THE ACT, FOR FURNISHING UNT RUE PARTICULARS OF DEPOSITS AMOUNTING TO RS.2,46,000/- HAS SEPARATELY BEEN ISSU ED, WHEREAS IN PENALTY 5 ORDER, THE AO HAS IMPOSED PENALTY FOR CONCEALMENT O F PARTICULARS OF INCOME. HE RELIED UPON THE DECISION OF ITAT, LUCKNOW BENCH B IN THE CASE OF DCIT VS. B.J.D. PAPER PRODUCTS, (2012) 134 ITD 552, WHERE IT HAS BEEN HELD THAT SINCE THE AO WAS NOT CLEAR AS TO WHETHER THE A SSESSEE HAS CONCEALED PARTICULARS OF ITS INCOME OR HAD FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME, ORDER OF PENALTY PASSED BY THE A.O. WAS LIA BLE TO BE STRUCK DOWN. MR. Y.K. SUD, LD. COUNSEL FOR THE ASSESSEE FURTHER ARGUED ON FACTS THAT THE ASSESSEE SUBMITTED THE EXPLANATION WITH REGARD TO T HE SOURCE OF THE AMOUNT RECEIVED AS ADVANCE FOR SALE OF LAND, THE ASSESSEE FILED REQUIRED DETAILS IN THE SHAPE OF BANK ACCOUNT, COPIES OF CHEQUES RECEIVED F ROM SH BALWINDER SINGH FROM UAE. THE ASSESSEE, HOWEVER, COULD NOT FILE THE AGREEMENT FOR SALE OF LAND. THE EXPLANATION GIVEN BY THE ASSESSEE IN THE PENALTY PROCEEDINGS HAS NOT BEEN CONSIDERED. THE AO IN THE PENALTY PROCEEDI NGS HAS RELIED UPON THE ORDER OF THE ITAT IN THE QUANTUM PROCEEDINGS, WHICH IS NOT PERMITTED UNDER THE LAW, SINCE THE PENALTY PROCEEDINGS AND ASSESSME NT PROCEEDINGS ARE SEPARATE PROCEEDINGS AS IS HELD BY VARIOUS COURTS O F LAW. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF VARIOUS CO URTS OF LAW RELIED UPON BEFORE THE LD. CIT(A) AND FEW OTHER DECISIONS OF O THER COURTS OF LAW IN SUPPORT OF HIS ARGUMENTS. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 6 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE AO IN THE ASSESSMENT ORDER HAS MENTIONED AT PAG E 3 THAT THE PENALTY NOTICE IS BEING ISSUED FOR FURNISHING UNTRUE PARTIC ULARS OF DEPOSITS WHEREAS THE PENALTY WAS LEVIED FOR CONCEALMENT OF PARTICULA RS OF INCOME. THE ASSESSEE HAS SUBMITTED EXPLANATION DURING THE PENAL TY PROCEEDINGS, WHICH HAS NOT BEEN CONSIDERED BY THE A.O. IT IS SETTLED L AW THAT PENALTY PROCEEDINGS ARE SEPARATE FROM THE ASSESSMENT PROCEEDINGS. IN TH E PRESENT CASE, THE ASSESSEE HAVING SUBMITTED EXPLANATION IN THE PENALT Y PROCEEDINGS CANNOT BE SAID TO HAVE FURNISHED INACCURATE PARTICULARS OF IN COME OR CANNOT BE SAID TO HAVE CONCEALED PARTICULARS OF INCOME. MR. Y.K. SUD, CA, APPEARING FOR THE ASSESSEE RELIED UPON THE DECISIONS OF VARIOUS COURT S OF LAW AS UNDER: I) 107 TTJ 909 (ASR) II) 164 CTR 209 (GUJ.) III) 247 ITR 541 (KAR.) IV) 214 CTR 147(P&H) V) 253 ITR 192 (GUJ) VI) 265 ITR 25 (KOL) VII) 290 ITR 169 (KAR) VIII) 304 ITR 125 (P&H) IX) 333 ITR 119 (DEL) X) 341 ITR 235 (KAR.) XI) 314 ITR 150 (DEL) XII) 302 ITR 43 (P&H) 7.1. ON PERUSAL OF THE DECISIONS RELIED UPON AND TH E EXPLANATION SUBMITTED DURING PENALTY PROCEEDINGS AND MATERIAL AVAILABLE O N RECORD, WE ARE OF THE VIEW THAT THE AO HAS NOT CONSIDERED THE EXPLANATION GIVEN BY THE ASSESSEE 7 DURING PENALTY PROCEEDINGS AND, THEREFORE, THE AO I S NOT JUSTIFIED IN LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE A.O. SIMPLY CANNOT RELY UPON THE OUTCOME OF THE QUANTUM PROCEEDINGS WHEREAS HE HAS TO PROVE ON RECORD WHETHER THE ASSESSEE HAS CONCEALED THE PARTI CULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. TH E SAME HAS NOT BEEN DONE BY THE A.O. IN THE PENALTY PROCEEDINGS, WHICH ARE S EPARATE PROCEEDINGS THAN THE ASSESSMENT PROCEEDINGS. IN THE CIRCUMSTANCES AN D FACTS OF THE CASE, THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, BY THE A.O. IS DIRECTED TO BE CANCELLED AND THE ORDER OF THE LD. CIT(A) IS REV ERSED. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH MARCH, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28TH MARCH, 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE: SH. DINESH KUMAR DHIR, SULTANPUR LODH I. 2. THE ITO , KAPURTHALA. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, ASR. TRUE COPY BY ORDER