Shri Chirag Manibhai Shah, Baroda V. The Dy.CIT.,Cirlce-2(1), Baroda

ITA 135/AHD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4382 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-09-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 15-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Business income; Opportunity of being heard; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 135/AHD/2013 ASSESSMENT YEAR :2004-05 SHRI CHIRAG MANIBHAI SHAH 20, ANAND NAGAR SOCIETY, PRODUCTIVITY ROAD, BARODA-394220 V/S . DCIT, CIRCLE-2(1), BARODA. PAN NO. AFRPS0379E (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI VIJAY RANJAN, A.R. /BY RESPONDENT SHRI P. L. KUREEL, SR. D.R. /DATE OF HEARING 10.09.2013 /DATE OF PRONOUNCEMENT 18.10.2013 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE CIT(A)-II, BARODA, ORDER DATED 08.02.2012 FOR A.Y. 2004-05. T HE SOLE GROUND OF APPEAL IS AGAINST CONFIRMING PENALTY U/S. 271(1)(C) AT RS. 2,68,740/-. 2. THE ASSESSEE FILED SECOND APPEAL BELATED 60 DAYS . THE ASSESSEE FILED AFFIDAVIT AND EXPLAINED THE REASONS. THEREFORE, WE ALLOW THE APPEAL TO BE PROCEEDED TO CONSIDER ON MERIT. 3. THE A.O. OBSERVED THAT THE ASSESSEE IS A PARTNER IN VARIOUS FIRMS MAINLY ENGAGED IN THE BUSINESS OF BUILDER AND DEVEL OPER AND REALTOR. THE ASSESSEE FILED HIS RETURN OF INCOME ON 29.01.2004 D ECLARING TOTAL INCOME AT RS.9,38,000/-. THE ASSESSEE HAD ALSO SHOWN AGRICUL TURE INCOME OF ITA NO. 135/AHD/2013 A.Y. 04-05 PAGE 2 RS.3,62,630/-. THE ASSESSMENT U/S. 143(3) OF THE A CT WAS COMPLETED ON 27.12.2006 DETERMINING TOTAL INCOME AT RS.22,06,620 /- AND AGRICULTURE INCOME AT RS.42,930/- AS AGAINST RS. 3,62,630/- SHOWN IN T HE RETURN OF INCOME AND BALANCE OF RS.3,19,700/- TREATED AS INCOME FROM UND ISCLOSED SOURCES. PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE IT ACT WE RE ALSO INITIATED BY ISSUING NOTICE U/S. 274 OF THE IT ACT DATED 27.12.2006 FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE INCOME REVISED AT RS.18 ,86,920/- AND AGRICULTURAL INCOME AT RS.42,930/- BY GIVING EFFECT TO THE CIT(A )S ORDER DATED 05.03.2009. BEFORE IMPOSING PENALTY U/S. 271(1)(C), THE A.O. GA VE REASONABLE OPPORTUNITY OF BEING HEARD, WHICH WAS REPLIED BY THE ASSESSEE. THE ASSESSEE SUBMITTED BEFORE THE A.O. DURING THE COURSE OF PENALTY PROCEE DING THAT THE ADDITION WAS MADE ON ESTIMATE BASIS AND NO PENALTY CAN BE LEVIED ON ESTIMATE. BUT A.O. HELD THAT ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM OF AGRICULTURE INCOME AND INVESTMENT IN GANGADARSHAN SOCIETY WITH SUPPORTING EVIDENCE. THE ONUS ON THE ASSESSEE TO SUBSTANTIATE ALL THE ENTRIES IN HIS BOOKS. HE RELIED UPON VARIOUS CASE LAWS MENTIONED ON PAGE NO.3 OF THE PEN ALTY ORDER. THE ASSESSEE ALSO RELIED UPON VARIOUS CASE LAWS WHICH W ERE NOT FOUND IN FAVOUR OF THE ASSESSEE BY THE A.O. AFTER CONSIDERING THE HON BLE SUPREME COURT DECISION IN CASE OF DHARMENDRA TAXTILES PROCESSORS & OTHERS 306 ITR 277 (SC), HAS HELD THAT ASSESSEE HAD FURNISHED INACCURATE PAR TICULARS OF INCOME TO THE EXTENT OF RS. 8,14,367/- (RS.3,19,700/- + RS.4, 91,667/-). THUS, HE IMPOSED PENALTY AT RS. 2,68,740/- WHICH IS 100% OF TAX SOUGHT TO BE EVADED. ITA NO. 135/AHD/2013 A.Y. 04-05 PAGE 3 4. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD DISMISSED THE APPE AL BY OBSERVING AS UNDER:- 3.3.1. I HAVE CONSIDERED THE SUBMISSIONS OF THE LE ARNED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFIC ER. IT IS SEEN THAT PENALTY HAS BEEN LEVIED WITH RESPECT TO TWO ADDITIO NS VIZ. 1) TREATING AGRICULTURAL INCOME AS INCOME FROM UNDISCLOSED SOUR CES RS.3,19,700/- AND 2) TREATING CAPITAL LOSS AS BUSINESS INCOME FOR RS.4,91,667/-. 3.3.2. IN RESPECT OF CLAIM OF AGRICULTURAL INCOME, THE ASSESSEE HAS NOT BEEN ABLE TO ADDUCE ANY EVIDENCE TO SUPPORT AND SUB STANTIATE HIS CLAIM. BOTH THE ASSESSING OFFICER AND THE CIT(A) IN QUANTUM APPEAL, HAVE CLEARLY HELD THAT ASSESSEE HAS FAILED TO PROVI DE COMPLETE DETAILS OF AGRICULTURAL ACTIVITIES CARRIED OUT BY HIM DULY SUP PORTED BY REVENUE RECORDS AND CERTIFICATE FROM AGRICULTURE OFFICE. IN THE PRECEDING YEAR ALSO, THE ASSESSEE S CLAIM OF AGRICULTURAL INCOME WAS NOT ACCEPTED AND ADDITION WAS MADE TO THE TOTAL INCOME. THE IMPUGNED INCOME OF THE CURRENT YEAR HAS BEEN BROUGHT IN THE BOOKS TO EXPLA IN THE ADDITION TO CAPITAL. HENCE WITH RESPECT TO THE ADDITION MADE, T HE ASSESSEE HAS OFFERED AN EXPLANATION, WHICH HE HAD NOT BEEN ABLE TO SUBSTANTIATE. IN THAT VIEW OF THE MATTER, PENALTY IS CLEARLY LEVIABL E BY VIRTUE EXPLANATION-1 TO SECTION 271(1)(C), WHICH THE ASSESSING OFFICER H AS RIGHTLY DONE. THE ISSUE IS NOT DEBATABLE, AS CLAIMED BY THE AUTHORIZE D REPRESENTATIVE AND THE CASE LAWS CITED DO NOT APPLY AS THE FACTS A RE DIFFERENT. 3.3.3, IN RESPECT OF THE CAPITAL LOSS OF RS.57,954/ - ARISING OUT OF CANCELLATION OF RIGHTS IN GANGADARSHAN SOCIETY, IT IS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICER THAT THE ASSESSEE'S EX PLANATION IS NOT SUBSTANTIATED. NO DOCUMENTS RELATING TO PURCHASE AN D SALE OF RIGHTS ITA NO. 135/AHD/2013 A.Y. 04-05 PAGE 4 IN GANGADHARSHAN SOCIETY WERE FURNISHED BY THE ASSE SSEE. IT WAS ALSO NOTICED THAT THE ASSESSEE HAS NOT SHOWN THESE RIGHTS IN THE BALANCE SHEET OF EARLIER YEAR. EVEN THE DATE OF CAN CELLATION OF RIGHT AND THE AMOUNT RECEIVED STATED BY THE ASSESSEE, VAR IES FROM PLACE TO PLACE. ALL THIS CREATES SERIOUS DOUBT REGARDING THE EXPLANATION FURNISHED BY THE ASSESSEE. ON TOP OF ALL, THE CLAI M IS NOT SUBSTANTIATE BY DOCUMENTARY EVIDENCE AT ALL. IN TH ESE CIRCUMSTANCES, IT BECOMES CLEAR THAT PENALTY U/S. 2 71(1)(C) IS ATTRACTED, ESPECIALLY IN VIEW OF EXPLANATION-1. TH E ASSESSING OFFICER HAS RIGHTLY LEVIED THE PENALTY ON THIS ADDITION AS WELL. THE CASE LAWS CITED DO NOT APPLY TO THE FACTS OF THE PRESENT CASE . 3.3.4. IN VIEW OF ALL THE ABOVE, I AM OF THE CONSID ERED VIEW THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER IS JUSTIFIE D IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME IS UPHELD IN T OTO. 5. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE APPELLANT ARGUED THAT ASSESSEE HAS SHOWN AGRICULTURE INCOME IN COMPU TATION. THE APPELLANT HAD FURNISHED ALL THE BILL-VOUCHERS TO THE EXTEND T O RS.42,930/-. THE 7/12 EXTRACT FROM THE REVENUE RECORD SHOWED 3 HECTARES O F FERTILE AGRICULTURE LAND. THE ASSESSEE HAD SHOWN AGRICULTURE INCOME IN PREVIO US YEAR WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT AND PENALTY IMPOSED U/S. 271(1)(C) IN A.Y. 03-04 HAS BEEN DELETED BY THE CIT(A) ON THE BASIS OF PART (A) NOR PART (B) OF EXPLANATION 1 TO SECTION 271(1)(C) ENTITLED THE ASS ESSING OFFICER NOT TO LEVY THE PENALTY AS ASSESSEE HAS PROVIDED ALL THE DETAIL S OF AGRICULTURE DONE AND SALES MADE. FOR SECOND ADDITION, THE ASSESSEE HAD SHOWN THE LONG TERM CAPITAL GAIN AND CLAIMED LOSS ON LONG TERM CAPITAL GAIN AT RS.57,954/-. THE ITA NO. 135/AHD/2013 A.Y. 04-05 PAGE 5 ASSESSEE HAD ACQUIRED RIGHTS IN THE COMPLEX OF GANG ADARSHAN SOCIETY, BARODA ON 13 TH OCTOBER, 1998 FOR A SUM OF RS.4,16,667/- PAID BY C HEQUE. THE AFORESAID CHEQUE WAS PAID FROM THE ASSESSEES ACCOU NT IN THE BOOKS OF MAHALAXMI FINANCE AND THE SAME HAD BEEN REFLECTED I N THE COPY OF ACCOUNT IN ASSESSEES NAME IN THE BOOKS OF MAHALAXMI FINANCE. THESE RIGHTS WERE SOLD ON 26 TH JUNE, 2003 FOR A TOTAL CONSIDERATION OF RS. 4,67,1 67/-, WHICH WAS ALSO RECEIVED BY CHAEQUES FOR WHICH ASSESSEE HAS PLACED EVIDENCES DUE TO SOME INADVERTENT MISTAKE IN THE COMPUTATION OF LONG TERM CAPITAL GAIN THE CONSIDERATION WAS SHOW AT RS. 4,91,667/- BUT ACTUAL LY THE ASSESSEE RECEIVED RS.4,67,167/-, THIS WAS THE DIFFERENCE IN COMPUTATI ON OF CAPITAL GAIN. THE ASSESSEE HAS FURNISHED ALL THE PARTICULARS OF RIGHT S ACQUIRED IN THE SOCIETY. THE A.O. HAS ACCEPTED THE RECEIPTS AS GENUINE ON SA LE OF THESE RIGHTS IN THE YEAR UNDER CONSIDERATION. HE SIMPLY DISALLOWED THE CAPITAL GAIN LOSS ON ACCOUNT OF INDEXATION. AT THE OUTSET, LD. SR. D.R. RELIED UPON THE ORDER OF THE CIT(A) AND ARGUED THAT THESE RIGHTS WERE NOT DISCLO SED BY THE ASSESSEE AND NO EVIDENCE FOR AGRICULTURE INCOME FILED BEFORE THE A.O. PRINCIPLE TO RES JUDICATA IS NOT APPLICABLE IN THE CASE OF INCOME TAX ASSESSM ENT. THEREFORE, EACH YEAR IS SEPARATE AND IS TO BE DECIDED CASE TO CASE. HE PRAYED TO CONFIRM THE PENALTY. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS DISCLOSED THE AGRICULTURE INCOME IN COMPUTATION. BUT THE A.O. ASSESSED THIS AGRICULTURE INCOME LESS. SIMILARLY DISALLOWANCE ON ACCOUNT OF LOSS ON LONG TERM CAPITAL GAIN, HAD BEEN DISCLOSED BY THE ITA NO. 135/AHD/2013 A.Y. 04-05 PAGE 6 ASSESSEE AS THE LD. A.O. HIMSELF DISALLOWED ONLY RS .57,954/-, IT MEANS RECEIPTS OF SALE ON RIGHTS IN GANGADARSHAN SOCIETY AT RS.4,67,167/- HAS BEEN HELD GENUINE AS NO ADDITION WAS MADE BY THE A.O. IN INCOME. AFTER CONSIDERING THE CASE LAWS CITED BY THE ASSESSEE IN HIS SUBMISSION MADE BEFORE US, THE DEPARTMENT HAD NOT ESTABLISHED THAT THERE WAS A DEFAULT ON PAT OF THE ASSESSEE TO HAVE CONCEALED THE PARTICULARS O F INCOME OR TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORD INGLY, WE REVERSE THE ORDER OF THE CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 7. IN RESULTS, THE ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18.10.2013 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( ;