ITO, Ward-15(4), Hyd, Hyderabad V. Pericharla Shiva Kumar, Hyd, Hyderabad

ITA 1345/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5878 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 07-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RAMAKRISHNA
• Assessee Lawyers: K J RAO
• Keywords: Earning of tax free income
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1345/HYD/2015 ASSESSMENT YEAR: 2009-10 INCOME-TAX OFFICER, WARD 15(4), HYDERABAD. VS. PERICHERLA SHIVA KUMAR RAJU, HYDERABAD. PAN AEWPP 0982J (APPELLANT ) (RESPONDENT) REVENUE BY : SHRI K.J. RAO REVENUE BY : SHRI P. RAMA KRISHNA DATE OF HEARING : 21-12-2016 DATE OF PRONOUNCEMENT 30-12-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A) - 7, HYDERABAD DATED 11/09/2015 FOR AY 20 09-10. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL DERIVING INCOME FROM CONSULTANCY ON SALE AND PURCHASE OF LANDS. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 12.01.2010 BY ADMITTING TOTAL INCOM E OF RS.29,705/- AND THE AGRICULTURAL INCOME OF RS.10,86,000/- WHICH THE ASSESSEE CLAIMED AS EXEMPT INCOME. THIS CASE HAS BEEN SELECT ED FOR SCRUTINY UNDER 'CASS', TO EXAMINE THE CLAIM OF LARGE EXEMPTE D INCOME I.E. AGRICULTURAL INCOME IN THE RETURNS OF INCOME FILED BY THE ASSESSEE. 2 ITA NO. 1345/H/15 PERICHERLA SHIVA KUMAR RAJU 2.1 DURING THE COURSE OF SCRUTINY PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE HAS SHOWN UNSECURED LOANS TO THE TUNE OF R S.40,60,000/- FOR THE FINANCIAL YEAR RELEVANT TO THE A. Y2009-10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF THE SAID UNSECURED LOANS AND WAS ASKED T O PROVE THE GENUINENESS OF THE TRANSACTIONS IN TERMS OF IDENTIT Y, CREDITWORTHINESS AND GENUINENESS OF THE LOAN CREDITORS. AS THE ASSE SSEE COULD NOT PROVE THE CREDIT WORTHINESS OF THE CREDITORS AND AL SO COULD NOT DISCHARGE THE ONUS CAST ON HIM, THE ASSESSMENT WAS COMPLETED U/S.143(3) BY MAKING ADDITIONS TO THE RETURNED INCO ME UNDER THE HEAD UNEXPLAINED CASH OF RS.40,60,000/-. ON APPEAL, BOTH THE CIT(A) AND ITAT HAVE CONFIRMED THE ADDITION MADE BY THE AO. 3. THEREAFTER, THE AO INITIATED THE PENALTY PROCEED INGS U/S 271(1)(C) ON THE GROUND THAT THE ASSESSEE HAS CONC EALED TRUE AND CORRECT PARTICULARS OF INCOME. ACCORDINGLY, THE AO ISSUED NOTICE U/S 271(1)(C) TO SHOW CAUSE AS TO WHY PENALTY U/S 271(1 )(C) SHOULD NOT BE LEVIED FOR CONCEALMENT OF INCOME IN THE RETURN. IN REPLY, THE ASSESSEE STATED THAT HE HAS PROVED WITH EVIDENCE THE GENUINE NESS OF THE CREDITORS AND ALSO THE FACT THAT THEY HAD LENT MONE YS. THE ASSESSEE RELYING ON THE DECISIONS OF HONBLE SUPREME COURT I N THE CASE OF SUDARSHAN SILKS & SAREES VS. CIT, KARNATAKA [2008] 300 ITR 205 (SC) AND CIT VS. RELIANCE PETROCHEMICALS [2010] 32 2 ITR 158 (SC), SUBMITTED THAT MERE ASSESSMENT OF AN INCOME DOES NO T MEAN THAT PENALTY CAN BE IMPOSED. 3.1 THE AO REJECTED THE SUBMISSIONS OF THE ASSESSEE , LEVIED THE MINIMUM PENALTY OF RS. 13,20,851/- RELYING ON THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ATUL M OHAN BINDAL [2009] 317 ITR 001 (SC). 4. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT(A) AND CONTENDED THAT THE PEN ALTY IS NOT 3 ITA NO. 1345/H/15 PERICHERLA SHIVA KUMAR RAJU LEVIABLE AS THE ASSESSEE HAD FURNISHED CONFIRMATION , PRODUCED CREDITORS BEFORE THE AO AND FURTHER SUBMITTED THAT THE LEVY OF PENALTY NEEDS AFFIRMATIVE FINDINGS AS TO CONCEALMENT NOT JUST BEING SATISFIED WITH CREDITWORTHINESS/GENUINENESS OF THE TRANSACTIO NS. THE ELABORATE SUBMISSIONS OF THE ASSESSEE WERE EXTRACTED BY THE C IT(A) AT PAGES 4 TO 8 OF HIS ORDER. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) DELETED THE PENALTY LEVIED BY THE AO BY OBSERVING A S UNDER: 6. THE FACTUAL POSITION EMANATING THE ASSESSMENT O RDER, THE PENALTY ORDER UNDER APPEAL AND THE SUBMISSIONS OF T HE APPELLANT ARE CONSIDERED. IT IS SEEN FROM THE ASSESSMENT ORDE R AND THE MATERIAL PLACED BEFORE ME THAT THE APPELLANT HAS GI VEN NAMES AND ADDRESSES OF ALL THE ALLEGED CREDITORS, FILED C ONFIRMATION LETTERS DULY SIGNED BY THEM, PRODUCED THE CREDITORS BEFORE ASSESSING OFFICER FOR EXAMINATION AND ALL OF THEM A CCEPTED THAT THEY HAVE ADVANCED LOANS TO THE APPELLANT. THE ASSE SSING OFFICER CONFRONTED THE APPELLANT WITH THE INADEQUAC IES IN THEIR STATEMENT AND AFTER CONSIDERING THE REPLY OF APPELL ANT HELD THAT THE CREDITORS ARE NOT PROVED IN AS MUCH AS THE CRED IT WORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS ARE REMAIN UNPROVED. 6.1 THE PENALTY PROCEEDINGS ARE SEPARATE AND DISTIN CT FROM THE ASSESSMENT PROCEEDINGS, WHILE ADDITION U/S 68 IS JU STIFIED, THE SAME DOES NOT LEAD TO LEVY OF PENALTY AUTOMATICALLY . TO LEVY PENALTY THE ASSESSING OFFICER HAS TO GO BEYOND NON- ACCEPTANCE OF APPELLANT'S EXPLANATION TO LEVY PENALTY. IN THE PRESENT CASE, THE APPELLANT COULD NOT SUBSTANTIATE THE CREDIT WOR THINESS AND GENUINENESS OF TRANSACTIONS THROUGH ANY FURTHER EVI DENCE, AFTER THE ASSESSING OFFICER EXPRESSED SERIOUS DOUBTS ABOU T THE CREDITORS AFTER RECORDING THEIR STATEMENTS. THE ASS ESSING OFFICER GAVE INSTANCES OF INCONSISTENCIES IN THE STATEMENT OF CREDITORS. BUT THE QUESTION IS WHETHER THE FACTS ON RECORD ARE SUFFICIENT FOR LEVY OF PENALTY. THE APPELLANT HAS GIVEN COMPLETE D ETAILS AND PRODUCED CREDITORS BEFORE THE ASSESSING OFFICER WHO ACCEPTED THAT THEY GAVE LOANS TO THE APPELLANT AND THE ASSE SSING OFFICER HAS EXAMINED THE CREDITORS. IT CAN BE SAID THAT TH E ASSESSING OFFICER HAS NOT DISPROVED THE VERSION OF THE APPELL ANT BUT UNPROVED LEADING TO THE ADDITION. RELYING ON THE RA TIO LAID DOWN BY GUJARAT HIGH COURT IN CASE REPORTED AT 245 ITR 1 25 AND IN CASE OF DHIRUBHAI GAJERA VS ITO IN ITA NO.1147/AHD/ 2009, IT IS HELD THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALT Y. ACCORDINGLY, THE PENALTY LEVIED IS SET ASIDE. 4 ITA NO. 1345/H/15 PERICHERLA SHIVA KUMAR RAJU 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.13,20,851/- IMPOSED ON THE ASSESSEE U/S 271(1)(C) OF THE I.T.ACT,1961 ON T HE ADDITION MADE UNDER THE HEAD 'UNEXPLAINED CASH' WITHOUT APPR ECIATING THE FACT THAT THE AO HAD BROUGHT ON RECORD MATERIAL EVIDENCE TO PROVE THAT THE UNSECURED LOANS SHOWN BY THE ASSESSE E IN THE BALANCE SHEET FOR THE YEAR ENDED 31.03.2009 ARE NOT GENUINE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.13,20,851/- IMPOSED ON THE ASSESSEE U/S 271(1)(C) OF THE I.T.ACT,1961 ON T HE ADDITION MADE UNDER THE HEAD 'UNEXPLAINED CASH' WITHOUT APPR ECIATING THE FACT THAT THE ASSESSEE MISERABLY FAILED IN PROV ING THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S OF THE LOAN CREDITORS DURING THE ASSESSMENT PROCEEDINGS AS WELL AS DURING THE PENALTY PROCEEDINGS BY PRODUCING ANY CLINCHING EVIDENCE. 7. LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT PROVE D THE CREDITWORTHINESS OF THE CREDITORS AND AO HAS RIGHTL Y IMPOSED PENALTY. HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA P. LTD., 358 ITR 593. 8. LD. AR SUBMITTED THAT THE AO HAS BROUGHT ON REC ORD ALL THE DETAILS RELATING TO LOAN CREDITORS AND ASSESSEE HAS BROUGHT ALL THOSE CREDITORS BEFORE THE AO. THE CREDITORS WERE ALSO CO NFIRMED BEFORE THE AO THAT THEY HAVE LENT MONEY TO THE ASSESSEE. HE, T HEREFORE, SUBMITTED THAT THERE IS NO CONCEALMENT OF INCOME AN D RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. RELIANCE PETROPRODUCTS PVT. LTD., [2010] 233 ITR 158. 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE ASSESSEE HAS BROUGHT ON RECORD THE D ETAILS OF LOAN CREDITORS AND DURING THE ASSESSMENT PROCEEDINGS PRO DUCED BEFORE THE AO ALL THE CREDITORS, EVEN THE CREDITORS HAVE CONFI RMED THE AMOUNT LENT TO THE ASSESSEE. SUBSEQUENTLY, AO HAS BROUGHT ON RECORD THAT THE CREDITWORTHINESS OF THE CREDITORS ARE NOT GENUI NE, IT IS QUESTIONABLE. THE AO LEVIED THE PENALTY AND JUSTIFI ED HIS ACTION BY 5 ITA NO. 1345/H/15 PERICHERLA SHIVA KUMAR RAJU GIVING FINDINGS IN THE ASSESSMENT ORDER. IN OUR VIE W, THE ASSESSEE ALL ALONG DECLARED THE DETAILS OF THE LOAN AND CREDITOR S IN THE RETURN AND PRODUCED THE CREDITORS BEFORE THE AO. THE HONBLE S UPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA ) LAID DOWN A RATIO THAT THERE HAS TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASSESSEE AND THE ASSESSEE MUST HAVE FURNISHED INACC URATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF T HE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT B E INVOKED. THERE CAN BE NO DISPU TE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH TH E PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE I NACCURATE, THE LIABILITY WOULD ARISE. WHERE THERE IS NO FINDING TH AT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION INVITING PE NALTY U/S 271(1)(C). IN THE GIVEN CASE, THE ASSESSEE HAS FURNISHED ALL T HE DETAILS AND FOUND TO BE CORRECT. ONLY THE CREDITWORTHINESS OF T HE CREDITORS WAS NOT PROVED. AS FAR AS THE PARTICULARS ARE CONCERNED, AL L THE DETAILS ARE FULLY FURNISHED AND ALSO THE CREDITORS HAVE SUBMITT ED THEIR CONFIRMATION. HENCE, IN OUR VIEW, THERE IS NO CONCE ALMENT OF ANY PARTICULARS OF INCOME IN THE RETURN. AO HAD FOUND T HAT THE CREDITWORTHINESS OF THE CREDITORS ARE NOT GENUINE, IT MAY BE A GOOD CASE TO MAKE ADDITION U/S 68, BUT, CANNOT BE A CASE FOR LEVYING PENALTY AS ALL THE PARTICULARS OF INCOME AND DETAIL S OF LOAN ARE FULLY DISCLOSED IN THE RETURN OF INCOME. THEREFORE, THIS IS NOT A FIT CASE TO LEVY PENALTY U/S 271(1)(C) OF THE ACT AND THE CIT(A ) IS JUSTIFIED IN DELETING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) . ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROU NDS RAISED BY THE REVENUE. 6 ITA NO. 1345/H/15 PERICHERLA SHIVA KUMAR RAJU 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 30 TH DECEMBER, 2016 KV COPY TO:- 1) ITO, WARD 15(4), B-BLOCK, 1 ST FLOOR, IT TOWERS, AC GUARDS, HYDERABAD. 2) SHRI PERICHERLA SHIVA KUMAR RAJU, H. NO. 4-37/1, NEAR UPPAL BUS DEPOT, HYDERABAD, RR DIST. 3) CIT(A) 7, HYDERABAD 4 PR. CIT 7, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE