ACIT, CHENNAI V. Shri P.Ravi, CHENNAI

ITA 1361/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64317 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-09-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 18-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N DEVANATHAN
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 1360 TO 1365/MDS/2012 ASST. YEARS : 1999-2000 TO 2004-05 THE ASST.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I(3), CHENNAI. (APPELLANT) V. SHRI P. RAVI, NO.4&5, PRAKASAM STREET, JANAKI NAGAR, VALASARAVAKKAM, CHENNAI 600 087. PAN : AABPR7984F. (RESPONDENT) APPELLANT BY : SHRI KEB RANGARAJAN JR. STANDING C OUNSEL RESPONDENT BY : SHRI N. DEVANATHAN DATE OF HEARING : 11 SEPT. 2012 DATE OF PRONOUNCEMENT : 20 TH SEPT. 2012 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : ALL THESE APPEALS ARE FILED BY THE REVENUE AGAINS T THE COMMON ORDER OF THE CIT(APPEALS)-I, CHENNAI DATED 1 4.3.2012 IN ITA NOS.328 TO 333/10-11 FOR THE ASST. YEARS 1999-2000 TO 2004-05. AGAINST DELETION OF PENALTY LEVIED UNDER SEC.271(1) (C) OF THE I.T. ACT. I.T.A. NO.1360-1365/MDS/12 2 COMMON GROUND IN ALL THESE APPEALS OF THE REVENUE I S DELETION OF PENALTY ON AGRICULTURAL INCOME ASSESSED AS INCOME F ROM OTHER SOURCES BY THE ASSESSING OFFICER. IN RESPECT OF AS ST. YEAR 2001-02 AND 2004-05, THE CIT(APPEALS) DELETED PENALTY ON TH E ADDITIONS MADE TOWARDS GIFTS RECEIVED BY THE ASSESSEE. 2. THE FACTS OF THE CASE ARE THAT SEARCH UNDER SEC .132 OF THE ACT WAS CONDUCTED ON 12.8.2004 IN THE CASE OF SRM G ROUP OF INSTITUTIONS AND THE RESIDENCES OF THE DIRECTORS IN CLUDING THE RESIDENCE OF THE ASSESSEE WHO IS A PRO-CHANCELLOR O F SRM INSTITUTE OF SCIENCE & TECHNOLOGY. CONSEQUENT TO THE SEARCH PRO CEEDINGS UNDER SEC.153C READ WITH SEC.153A OF THE ACT, ASSESSMENT PROCEEDINGS WERE INITIATED AND ASSESSMENTS WERE COMPLETED FOR T HE ASST. YEARS 1999-2000 TO 2004-05. THE ASSESSEE FILED RETURNS F OR ALL THESE ASST. YEARS DECLARING AGRICULTURAL INCOME FROM THE LANDS IN GUDALUR VILLAGE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE CONTENDED THAT HE OWNS 5 ACRES OF LAND AND HE ALSO TOOK 22.17 HECTORS OF LAND ON LEASE AND CULTIVATED THESE LANDS AND DERIVED AGRICULTURAL INCOME. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING I.T.A. NO.1360-1365/MDS/12 3 OFFICER THAT THE LAND WAS TAKEN ON LEASE FROM SHRI TRS ANBU VIDE LEASE AGREEMENT DATED 03.5.1995 FOR A PERIOD OF 10 YEARS. AS PER LEASE DEED, 75% OF THE PRODUCE SHOULD GO TO THE ASS ESSEE (LESSEE) AND THE BALANCE 25% TO THE LESSOR. THE ASSESSEE AL SO PRODUCED ADANGAL EXTRACTS TO SHOW THAT THERE WAS AGRICULTURA L INCOME FROM THESE LANDS. HOWEVER, THE ASSESSMENTS WERE COMPLET ED BY THE ASSESSING OFFICER ASSESSING THE AGRICULTURAL INCOME OFFERED BY THE ASSESSEE IN THE RETURNS OF INCOME AS INCOME FROM OT HER SOURCES DISBELIEVING THE SUBMISSIONS AND THE EVIDENCE PRODU CED BY THE ASSESSEE. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE CIT(APPEALS) AND ALSO TO THIS TRIBUNAL. THE CIT(AP PEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE EA RNED AGRICULTURAL INCOME FROM THESE LANDS. HOWEVER, SINCE THE ASSESSE E IS NOT MAINTAINING BOOKS OF ACCOUNTS FOR THE INCOME EARNED AND EXPENDITURE INCURRED ON THE AGRICULTURAL OPERATIONS , THE CIT(APPEALS) CONSIDERED THE PROBABLE NET AGRICULTURAL INCOME EA RNED FROM THESE LANDS AT H. 25,000/- PER ANNUM. IN OTHER WORDS, TH E CIT(APPEALS) I.T.A. NO.1360-1365/MDS/12 4 ADMITTED THE AGRICULTURAL INCOME AT H 25,000/- PER ANNUM FROM ALL THE LANDS CULTIVATED BY THE ASSESSEE. THIS VIEW OF THE CIT(APPEALS) WAS UPHELD BY THIS TRIBUNAL BY ORDER DATED 30.6.201 0 IN ITA NOS.1513 TO 1518/MDS/2007. 4. THE ASSESSING OFFICER INITIATED PENALTY PROCEED INGS UNDER SEC.271(1)(C) AND PASSED ORDER UNDER SEC.271(1)(C) OF THE ACT ON THE ADDITION MADE TOWARDS AGRICULTURAL INCOME HOLDING T HAT THE ASSESSEE DID NOT PRODUCE ANY DETAILS IN RESPECT OF AGRICULTU RAL INCOME SHOWN AND, THEREFORE, THE ASSESSEE FURNISHED INACCURATE P ARTICULARS AGRICULTURAL INCOME. THE CIT(APPEALS) BY HIS COMMO N ORDER DELETED FOR ALL THE YEARS THE PENALTY LEVIED ON ADDITION MA DE TOWARDS AGRICULTURAL INCOME. THE CONTENTION OF THE ASSESSE E BEFORE CIT(APPEALS) WAS THAT THE AGRICULTURAL INCOME OFFER ED BY THE ASSESSEE AND TREATED AS INCOME FROM OTHER SOURCES I S NOT ON ACCOUNT OF THE ASSESSEE FURNISHING INACCURATE PARTICULARS O R CONCEALING ANY INCOME. IT IS ONLY ON ACCOUNT OF THE DIFFERENTIAL TREATMENT OF THE ASSESSING OFFICER BY CHANGING THE INCOME FROM ONE H EAD TO ANOTHER HEAD AND THUS THE ADDITION CAME TO BE MADE . THERE FORE, IT DOES NOT I.T.A. NO.1360-1365/MDS/12 5 INVOLVE ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSEE ALSO CONTENDED THAT THE FACT THAT THE CIT(APPEALS) HAS DIRECTED TO CONSIDER A PORTION OF THE INCOME THOUGH ON ESTIMATE BASIS AS AGRICULTURAL INCOME WOULD SHOW THAT THE ASSESSEE HAD, IN FACT, EARNED AGRICULTURAL INCOME F ROM THE LAND. IT WAS ALSO CONTENDED THAT NO CONCEALMENT HAD BEEN EST ABLISHED BY THE DEPARTMENT, IN AS-MUCH-AS THE ACTION OF THE ASSESSI NG OFFICER IN TREATING THE AGRICULTURAL INCOME AS INCOME FROM OTH ER SOURCES HAS NOT BEEN FULLY CONFIRMED BY THE APPELLATE AUTHORITIES. IT WAS SUBMITTED BEFORE THE CIT(APPEALS) THAT THE CLAIM OF THE ASSES SEE HAS NOT BEEN ACCEPTED ON THE BASIS OF PROBABILITY AND NOT ON FAC TS. LESSOR HAS NOT BEEN EXAMINED AND THE LEASE DEED HAS NOT BEEN PROVE D TO BE FALSE. IT WAS CONTENDED THAT THE ADDITION CAME TO BE MADE ON DISBELIEVING THE EVIDENCE AND EXPLANATION SUBMITTED BY THE ASSES SEE AND THIS CANNOT LEAD TO CONCLUSIVE PROOF THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. CONSIDERING ALL THESE SUBMISSIONS, THE CIT(APPEALS) DELETED THE PENALTY HOLDING THAT T HERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS BY THE ASSESSEE. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US. I.T.A. NO.1360-1365/MDS/12 6 5. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDERS OF THE ASSESSING OFFICER IN LEVYING PENALTY UNDER SEC. 271(1)(C) OF THE ACT AND THE COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(APPEALS). 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW. TH E CIT(APPEALS) IS OF THE OPINION THAT FOR LEVY OF PENALTY THE ELEMENT OF CONCEALMENT, APART FROM PROOF OF FURNISHING INACCURATE PARTICULA RS OF INCOME HAVE TO BE EXISTED. IN THIS CASE, THERE IS NO CONCEALME NT. THE PARTICULARS HAVE NOT BEEN PROVED TO BE INACCURATE BUT ONLY DISB ELIEVED. LEVY OF PENALTY CANNOT SURVIVE BASED ON DISBELIEF. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THERE IS NO CONCEALMENT OR FUR NISHING OF INACCURATE PARTICULARS BY THE ASSESSEE IN SUPPORT O F THE AGRICULTURAL INCOME OFFERED BY HIM IN THE RETURNS. SIMPLY BECAU SE THE ASSESSEE DID NOT PRODUCE ACCOUNTS FOR INCOME AND EXPENDITURE OF AGRICULTURAL OPERATIONS AND SIMPLY BECAUSE THE EXPLANATION OFFER ED BY THE ASSESSEE IS REJECTED AND TREATED THE SAID AGRICULTU RAL INCOME AS INCOME FROM OTHER SOURCES ALONE CANNOT LEAD TO FURN ISHING OF I.T.A. NO.1360-1365/MDS/12 7 INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. T HEREFORE, WE SUSTAIN THE ORDER OF THE CIT(APPEALS) IN DELETING T HE PENALTY ON THE ADDITIONS MADE TOWARDS AGRICULTURAL INCOME UNDER TH E HEAD INCOME FROM OTHER SOURCES. 7. IN RESPECT OF PENALTY ON THE ADDITION MADE ON G IFTS FOR THE ASST. YEAR 2001-02, THE CIT(APPEALS) AT PARA 18 OF HIS ORDER, DELETED THE PENALTY HOLDING AS UNDER :- I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES AND IN MY OPINION, BASED ON SEIZED MATERIAL, RECONCILIATION WAS MADE BY THE APPELLANT AS WELL AS THE INDIVIDUALS CONCERNED. IN THEIR RECEIPTS AND PAYMENTS ACCOUNT, FILED ALONG WITH THE RETURN OF INCOME U/S.153C, THE GIFTS MADE AND RECEIVED WERE REFLECTED. IT IS NOT A CASE WHETHER THE SOURCE FOR INVESTMENT VIZ. GIFT OF H 5,00,000/- IS NOT EXPLAIN ED AT ALL OR HAS BEEN CONCEALED. THE SOURCE HAS BEEN EXPLAINED, AND MAJOR PART OF SUCH TRANSACTIONS HAS BEEN ACCEPTED AND THE ADDITION MADE DELETED BY THE CIT(APPEALS). MERELY BECAUSE FOR REASONS OF HI S OWN THAT THE APPELLANT HAD NOT PREFERRED APPEAL I.T.A. NO.1360-1365/MDS/12 8 AGAINST THIS, IT WOULD NOT LEAD TO ACCEPTANCE OF CONCEALMENT AND LEVY OF PENALTY U/S 271(1)(C). THEREFORE, IN MY OPINION, THERE IS NO STRONG CASE F OR LEVY OF PENALTY AND PENALTY LEVIED ON THIS ACCOUNT IS HEREBY DIRECTED TO BE DELETED. ON GOING THROUGH THE ORDER OF THE CIT(APPEALS) WE S EE THAT BASED ON THE SEIZED MATERIAL A RECONCILIATION WAS MADE BY THE ASSESSEE AS WELL AS THE INDIVIDUALS CONCERNED WITH REGARD TO GI FTS. ALL THESE GIFTS RECEIVED BY THE ASSESSEE WERE REFLECTED IN THE RECE IPTS AND PAYMENTS ACCOUNT FILED ALONG WITH THE RETURN OF INCOME UNDER SEC.153C OF THE ACT. THE CIT(APPEALS) OBSERVED THAT IT IS NOT A CA SE WHERE THE SOURCE FOR INVESTMENT OF GIFT IS NOT EXPLAINED AT A LL OR HAS BEEN CONCEALED. THE SOURCE HAS BEEN EXPLAINED AND MAJOR PART OF TRANSACTION HAS BEEN ACCEPTED AND HENCE THE ADDITIO N MADE IS DELETED BY THE CIT(APPEALS). THERE IS NO CONCLUSIV E FINDING BY THE ASSESSING OFFICER THAT THE GIFTS ARE FALSE. IN THE CIRCUMSTANCES, WE UPHOLD THE ORDER OF CIT(APPEALS) DELETING THE PENAL TY LEVIED ON THE GIFT RECEIVED BY THE ASSESSEE FOR THE ASST. YEAR 20 01-02. I.T.A. NO.1360-1365/MDS/12 9 8. WITH REGARD TO THE ADDITION MADE ON THE GIFTS R ECEIVED IN THE ASST. YEAR 2004-05, WE SEE THAT THE ASSESSEE ST ATED THAT HE HAS RECEIVED GIFTS OF H 15 LAKHS AND H 5 LAKHS FROM TR PACHAMUTHU AND P. SATHYANARAYANA RESPECTIVELY. WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DETAILS OF GIFTS, VIZ., DAT E OF GIFT, MODE, PURPOSE ETC., IN THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSEE FAILED TO FILE ANY EVIDENCE TO PROVE THAT THE GIFTS ARE RECEIVED FROM THE SAID PARTIES. THEREFORE, THE ASSESSING OFFICER ADDED THESE GIFTS AS UNDISCLOSED INCOME OF THE ASSESSEE IN THE ABSENC E OF ANY EVIDENCE PRODUCED BY THE ASSESSEE FOR THE GIFTS REC EIVED. THIS ADDITION WAS CONFIRMED BY THE CIT(APPEALS) AS WELL AS THIS TRIBUNAL BY ORDER DATED 30.6.2010 IN ITA NO.1518/MDS/2007. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND PASSED OR DER UNDER SEC.271(1)(C) OF THE ACT LEVYING PENALTY ON THE GIF TS RECEIVED STATING THAT THE TRIBUNAL HAS CONFIRMED THE ADDITION MADE D URING ASSESSMENT PROCEEDINGS UNDER SEC.143(3) OF THE ACT AND, THEREF ORE, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN R ESPECT OF ADDITION MADE TOWARDS GIFTS. THE CIT(APPEALS), BY HIS COMMO N ORDER HELD I.T.A. NO.1360-1365/MDS/12 10 THAT THOUGH THE ADDITION HAS BEEN SUSTAINED BY THE CIT(APPEALS) AND THE TRIBUNAL, IT IS NOT A CASE FOR LEVY OF PENALTY FOR CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. IT WAS CONTE NDED BEFORE THE CIT(APPEALS) THAT THE ASSESSING OFFICER ADDED THIS AMOUNT AS UNDISCLOSED INCOME OF THE ASSESSEE FOR WANT OF DETA ILS. IT WAS CONTENDED THAT IDENTICAL PAYMENTS AND RECEIPTS HAVE BEEN ADMITTED BY THE PARTNERS AND RECONCILIATION HAD BEEN MADE BE TWEEN VARIOUS INDIVIDUALS, THE PAYMENTS AND RECEIPTS ARE ADMITTED IN THE RECEIPTS AND PAYMENTS ACCOUNT OF BOTH THE DONOR AND DONEE. THEREFORE, THERE CANNOT BE ANY ADDITION ON ACCOUNT OF GIFTS. IT WAS CONTENDED THAT MERE FACT THAT THE ASSESSEE COULD NOT FURNISH SUFFICIENT PROOF OR SUBMIT DETAILS WHICH HAD LED THE ASSESSING OFFICER TO TREAT THE GIFTS AS INCOME FROM OTHER SOURCES AND THAT SHOULD BE CON STRUED AS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. GIFTS ARE REFLECTED IN THE BOOKS OF ACCOUNTS OF BOT H THE DONOR AND DONE. CONSIDERING ALL THESE SUBMISSIONS, THE CIT(A PPEALS) DELETED THE ADDITION HOLDING THAT THERE IS NO CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS IN RESPECT OF GIFTS SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME. I.T.A. NO.1360-1365/MDS/12 11 9. ON GOING THROUGH THE ORDER OF THE LOWER AUTHORI TIES WE FIND THAT THE ASSESSING OFFICER LEVIED PENALTY UNDE R SEC.271(1)(C) IN RESPECT OF ADDITION MADE TOWARDS GIFTS SOLELY ON TH E BASIS OF ADDITION SUSTAINED BY THE CIT(APPEALS) AND THE TRIBUNAL. IN THE PENALTY ORDER, THE ASSESSING OFFICER DID NOT ESTABLISH THAT THERE IS EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF SUCH INCOME IN RESPECT OF GIFTS. THEREFORE, THE ASSESSI NG OFFICER DID NOT CONCLUSIVELY PROVE THAT THERE IS CONCEALMENT OF INC OME OR FURNISHING OF INACCURATE PARTICULARS FOR LEVY OF PENALTY EXCEP T RELYING ON THE ORDER OF THE TRIBUNAL TO SUSTAIN THE ADDITION ON AC COUNT OF GIFTS RECEIVED BY THE ASSESSEE. IN OUR VIEW, WHEN THE AS SESSEE HAS REFLECTED THESE GIFTS IN ITS ACCOUNTS AND IN THE RE TURN OF INCOME AND THE VERY SAME GIFTS ARE REFLECTED IN THE BOOKS OF T HE DONOR, IT CANNOT BE CONSTRUED THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SIMPLY BECAUSE THE ASSESSEE DID NOT PRODUCE ANY DETAILS OR EXPLAINED THE GIFTS IN THE C OURSE OF ASSESSMENT PROCEEDINGS. IN THE CIRCUMSTANCES, WE S USTAIN THE ORDER I.T.A. NO.1360-1365/MDS/12 12 OF THE CIT(APPEALS) IN DELETING THE PENALTY LEVIED UNDER SEC.27(1)(C) OF THE ACT ON THIS ADDITION. 10. IN THE RESULT ALL THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT AFTER HEARI NG ON THURSDAY, THE 20 TH DAY OF SEPTEMBER 2012. SD/- SD/- (DR. O.K. NARAYANAN) (CHALLA NAGENDRA PR ASAD) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED : 20 TH SEPTEMBER 2012 JLS. COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT(A)-II, COIMBATORE (4) CIT-III, COIMBATORE (5) D.R., (6) GUARD FILE