Bachittar Singh S/o Mukhtiar Singh, Shahabad V. ITO, Kurukshetra

ITA 1380/CHANDI/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86153 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-02-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 03-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Unexplained investment; Retraction; Revised return
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 1380/CHD/2010 (ASSESSMENT YEAR :2003-04) BACHITTAR SINGH VS. THE INCOME TAX OFFICER, S/O MUKHTIAR SINGH, WARD-2, SHAHABAD. KURUKSHETRA. PAN: (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 16.02.2015 DATE OF PRONOUNCEMENT : 16.02.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS), KARNAL DATED 2.9.2010 FOR ASSESSMENT YEAR 2003-04, CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1 )(C) OF THE ACT. 2. EARLIER THIS APPEAL WAS DISMISSED IN DEFAULT VI DE ORDER DATED 11.5.2012. THE ASSESSEE, HOWEVER, MOVED MISCELLANEOUS APPLICATION EXPLAINING THE REASONS FO R NON APPEARANCE ON THE DATE OF HEARING, WHICH WAS ALLOWE D AND ACCORDINGLY, THE APPEAL WAS RE-FIXED FOR HEARING ON MERITS. 2 3. BRIEFLY, THE FACTS AS CONTAINED IN THE PENALTY ORDER ARE THAT IN THIS CASE SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON 21.3.2003 AT THE BUSINESS PREMISES OF THE ASSESSEE M/S LIBAS EMPORIUM, SHAHBAD. DURING THE COURSE OF SURVEY, THE STATEMENT OF THE ASSESSEE WAS RECORD ED IN THE PRESENCE OF HIS FATHER SHRI MUKHTIAR SINGH, BROTHER SHRI GURMEET SINGH AND COUNSEL FOR THE ASSESSEE SHRI A.D .GANDHI, CHARTERED ACCOUNTANT. DURING THE COURSE OF SURVEY , A DIARY CALLED GHATTA DIARY WAS FOUND. ON THE SAME DAY, T HE ASSESSEE MADE A SURRENDER OF RS.24 LACS IN HIS STAT EMENT WHICH INCLUDED RS.19 LACS ON ACCOUNT OF INVESTMENT IN THE SHOP AND BALANCE RS.5 LACS ON ACCOUNT OF EXCESS STO CK. THE ASSESSEE FILED RETURN OF INCOME DECLARING AN INCOME OF RS.6,67,690/- ON 21.7.2003. THE ASSESSING OFFICER RELYING ON THE STATEMENT OF THE ASSESSEE MADE DURING THE COURS E OF SURVEY MADE AN ADDITION OF RS.19 LACS ON ACCOUNT OF INVESTMENT IN SHOP BESIDES OTHER ADDITIONS TO THE D ECLARED INCOME ON 31.3.2006. THE ASSESSING OFFICER ALSO I NITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF THIS INCOME TO THE EXTENT OF RS.19 L ACS. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEA RNED CIT (APPEALS), KARNAL, WHO VIDE ORDER DATED 5.12.20 06 ACCEPTED THE APPEAL OF THE ASSESSEE. THE REVENUE BEING AGGRIEVED FILED SECOND APPEAL BEFORE THE I.T.A.T., CHANDIGARH BENCH AND THE TRIBUNAL VIDE ORDER IN ITA NO.224/CHD /2007 DATED 18.6.2008 ALLOWED THE DEPARTMENTAL APPEAL AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE ASSESSING OFFICER ASKED FOR THE EXPLANATION OF THE ASSESSEE A S TO WHY 3 PENALTY BE NOT IMPOSED ON THIS ADDITION. THE ASSE SSEE MERELY STATED THAT MISCELLANEOUS APPLICATION IS FILED BEFO RE THE TRIBUNAL, THEREFORE, PENALTY MATTER MAY BE KEPT PEN DING. THE ASSESSEE RELIED UPON CERTAIN DECISIONS IN SUPPORT T HAT THE PENALTY MAY NOT BE IMPOSED. THE ASSESSING OFFICER, HOWEVER, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE NOTED THAT THE ASSESSEE HIMSELF ADMITTED DURING THE COURS E OF SURVEY THAT HE HAS INVESTED RS.19 LACS IN PURCHASE OF THE SHOP, HOWEVER, THE ASSESSEE LATER ON RETRACTED FROM THE STATEMENT. THE STATEMENT WAS RECORDED IN THE PRESE NCE OF LEARNED COUNSEL FOR ASSESSEE AND HIS FAMILY MEMBERS AND STATEMENT WAS GIVEN WITHOUT DURESS, FEAR OR PRESSUR E. THEREFORE, THE ASSESSEE HAS DELIBERATELY CONCEALED THE PARTICULARS OF INCOME AND ACCORDINGLY, IMPOSED 200% PENALTY OF THE TAX SOUGHT TO BE EVADED. 5. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFOR E THE LEARNED CIT (APPEALS), WHO HAS VIDE IMPUGNED ORDER CONFIRMED THE LEVY OF PENALTY AND DISMISSED THE APPEAL OF THE ASSESSEE. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. 7. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT THE APPEAL OF THE ASSESSEE ON MERIT HAS BEEN DISMISSED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT AND THE DECISIO N IS REPORTED IN BACHITTAR SINGH VS. CIT & ANOTHER, 328 ITR 400 (P&H), IN WHICH THE HON'BLE HIGH COURT HAS HELD AS UNDER: 4 THE ASSESSEE IN THE COURSE OF SURVEY UNDER SECTION 133A OF THE INCOME-TAX ACT, 1961 GAVE A STATEMENT ON MARCH 21, 2003 SURRENDE RING FOR TAXATION A SUM OF RS. 19 LAKHS. HE STATED THAT HE HAD PURCHASED A SHOP FOR RS.24 LAKHS JOINTLY WITH HIS BROTHER AND THE SOURCE OF INVESTMEN T WAS NOT REFLECTED IN THE BOOKS OF ACCOUNT. LATER, THE ASSESSEE SOUGHT TO R ESILE FROM THE STATEMENT MADE TAKING THE STAND THAT HE HAD AGRICULTURAL INCOM E TO THAT EXTENT AND INVESTMENT WAS FROM THAT SOURCE. THE ASSESSING OFFI CER REJECTED THE CONTENTION OF THE ASSESSEE THAT HE HAD DONE POTATO BUSINESS WHICH WAS EVIDENCED BY ENTRIES IN A DIARY FOUND DURING THE SU RVEY HOLDING THAT THERE WAS A LONG GAP BETWEEN THE STATEMENT MADE ORIGINALLY ON MARCH 21, 2003 AND RETRACTION OF THE STATEMENT ON MAY 28, 2003 AND THE STAND TAKEN WAS AN AFTERTHOUGHT. THE COMMISSIONER (APPEALS) UPHELD THE PLEA OF THE ASSESSEE THAT THE EARLIER STATEMENT WAS INCORRECT A ND THE RESILED STATEMENT WAS SUPPORTED BY THE DIARY RECOVOEOREDO DURING THE SURVEY. THE TRIBUNAL REVERSED THE VIEW TAKEN BY THE COMMISSIONER (APPEALS ). ON APPEAL : HELD, DISMISSING THE APPEAL , THAT IT WAS NOT DISPUTED THAT THE STATEMENT WAS MADE BY THE ASSESSEE AT THE TIME OF SURVEY, WHIC H WAS RETRACTED ON MAY 28, 2003 AND HE DID NOT TAKE ANY FURTHER ACTION FOR A PERIOD OF MORE THAN TWO MONTHS. IN SUCH CIRCUMSTANCES, THE VIEW T AKEN BY THE TRIBUNAL THAT RETRACTION OF THE EARLIER STATEMENT WAS NOT PER MISSIBLE, WAS A POSSIBLE VIEW. THE MERE FACT THAT SOME ENTRIES WERE MADE IN A DIARY COULD NOT BE HELD TO BE SUFFICIENT AND CONCLUSIVE TO HOLD THAT T HE STATEMENT EARLIER MADE WAS FALSE. THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT WHICH MAY HAVE BEEN MAINTAINED DURING REGULAR COURSE OF BUSINE SS OR ANY OTHER AUTHENTIC CONTEMPORANEOUS EVIDENCE OF AGRICULTURAL IN COME. 8. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT THE ASSESSEE HAS A REASON FOR RETRACTING FROM THE STATE MENT THOUGH IT WAS NOT ACCEPTED BY THE AUTHORITIES. HE HAS, THEREFORE, SUBMITTED THAT THE LEVY OF PENALTY IS UN JUSTIFIED AND IN THE ALTERNATE CONTENTION, SUBMITTED THAT LEVY OF 200% PENALTY IS EXCESSIVE IN NATURE. 5 9. ON THE OTHER HAND, THE LEARNED D.R FOR THE REVE NUE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 10. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE FINDING OF FACT RECORDED BY THE HON'BLE PUNJAB & HA RYANA HIGH COURT, IT IS CLEAR THAT THE ADDITION OF RS.19 LACS HAS BEEN ULTIMATELY MAINTAINED AGAINST THE ASSESSEE AND THE APPEAL OF THE ASSESSEE HAS BEEN DISMISSED BY THE HON'BLE HIGH COURT ALSO. WHATEVER PLEA WAS TAKEN BY THE ASSESSEE FOR RETRACTING FROM THE SURRENDER MADE AT THE TIME OF SURVEY WAS N OT ACCEPTED. THEREFORE, THE FINDING OF FACT HAS REACH ED FINALITY AND ADDITION OF RS.19 LACS IS MAINTAINED. IT IS W ELL SETTLED LAW THAT THE FINDINGS GIVEN IN THE ASSESSMENT PROCE EDINGS ARE RELEVANT AND HAVE A PROBATIVE VALUE. THE ASSESSEE HAS NOT PRODUCED ANY FRESH EVIDENCE OR PRESENTS ANY ADDITIO NAL OR FRESH CIRCUMSTANCES IN THE PENALTY PROCEEDINGS. T HEREFORE, THE PENALTY SHALL HAVE TO BE CONFIRMED AGAINST THE ASSESSEE. WE RELY UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. HARPARSHAD & COMPANY LTD., 328 ITR 53 (DELHI) IN WHICH IT WAS HELD AS UNDER : HELD, THAT THE REASONS GIVEN BY THE TRIBUNAL FOR QUASH ING THE PENALTY PROCEEDINGS WERE IRRELEVANT, NOT GERMANE TO THE I SSUE AND THE TRIBUNAL HAD LOST SIGHT OF ASPECTS WHICH HAD BEEN CONCLUSIVELY ESTABLISHED IN THE QUANTUM PROCEEDINGS. THE TRIBUNAL HAD FAILED TO TAKE NOTE OF THE FACT THAT PART OF THE CLAIM AS COMMISSION WAS ALLOWED TO THE ASSESSEE NOT BECAUSE R HAD RENDERED ANY RENDERED ANY SERVICES BU T BECAUSE J HAD RENDERED SERVICES FOR WHICH IT WAS PAID 1 PER CENT. OF THE COMMISSION BY R OUT OF THE 3 PER CENT. RECEIVED BY HER. AS FAR AS COMMISSION TO R WAS CONCERNED, IT WAS ACCEPTED BY THE TRIBUNAL IN THE Q UANTUM PROCEEDINGS THAT SHE DID NOT RENDER ANY SERVICE AT ALL. THE ASSESSEE HAD FAILED TO OFFER 6 ANY EXPLANATION IN RESPECT OF THE ADDITION OF RS.1,8 3,078 AND IT COULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF, BY VIRTUE OF THIS EXP LANATION. THE TRIBUNAL WAS NOT JUSTIFIED IN DELETING THE PENALTY I MPOSED BY THE INCOME- TAX OFFICER UNDER SECTION 271(L)(C) OF THE ACT. THE FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RE LEVANT AND HAVE PROBATIVE VALUE. WHERE THE ASSESSEE PRODU CES NO FRESH EVIDENCE OR PRESENTS ANY. ADDITIONAL OR FRESH CIRCU MSTANCE IN PENALTY PROCEEDINGS, HE WOULD BE DEEMED TO HAVE FAILED TO D ISCHARGE THE ONUS PLACED ON HIM AND THE LEVY OF PENALTY COULD BE JUSTIFIED. EVEN IF THERE IS NO CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS, BUT ON THE BASIS THEREOF TH E CLAIM WHICH IS MADE IS EX FACIE BOGUS, IT MAY STILL ATTRACT PENALTY PROVISION. THE EXPLANATIONS APPENDED TO SECTION 271(L)(C) OF THE ACT ENTIRELY INDICATE THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING RETURN. THE OBJECT BEHIND ENACTMENT OF SECTION 271(L)(C) RE AD WITH THE EXPLANATIONS INDICATE THAT THE SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. WILFUL CONCEALMENT IS NOT AN ESSENT IAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MATTE R OF PROSECUTION UNDER SECTION 276C OF THE ACT. 11. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF JYOTI LAXMAN KONKAR VS. CIT, 292 ITR 163 (BOM) HELD AS UN DER : THE ASSESSEE HAD FILED A RETURN FOR THE ASSESSMEN T YEAR 1999-2000 DECLARING AN INCOME OF RS.7,40,510. NOT SATISFIED THEREWITH, THE ASSESSING OFFICER CARRIED OUT A SURVEY UNDER SECTION 133A OF THE INCOME-TAX ACT, 1961, AND DURING THE SURVEY FO UND THAT THERE WAS A DISCREPANCY IN STOCK TO THE TUNE OF RS.18,28,706 WHICH WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, AND THE ASSESSEE FILED A R EVISED RETURN DISCLOSING ADDITIONAL INCOME OF RS. 18,28,706. THE ASSESSING OFF ICER IMPOSED PENALTY UNDER SECTION 271(1 )(C) AND THIS WAS UPHE LD BY THE TRIBUNAL. ON APPEAL TO THE HIGH COURT: 7 HELD, DISMISSING THE APPEAL, THAT THE QUESTION WHET HER THERE IS CONCEALMENT OF INCOME OR NOT HAS TO BE DECIDED WITH RE FERENCE TO THE FACTS OF A GIVEN CASE AND THE FACT FINDING AUTHORITIES UNDER THE ACT HAVING COME TO THE CONCLUSION THAT IN THE FACTS OF THE CASE, THE AS SESSEE HAD CONCEALED THE INCOME INITIALLY WITH A VIEIW TO AVOID THE PAYMENT OF TAX, THE IMPOSITION OF PENALTY WAS VALID. 12. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF LMP PRECISUION ENGG. CO, LTD. VS. DY.CIT (ASSESSMENT),3 30 ITR 93 (GUJ) CONFIRMED THE LEVY OF PENALTY BECAUSE REVISED RETURN WAS FILED AFTER SURVEY OPERATION WHICH SHOWED CONCE ALMENT OF INCOME AND IT WAS HELD AS UNDER : HELD, THAT IT WAS ONLY AFTER THE STATEMENT OF THE CHAIRMA N AND MANAGING DIRECTOR WAS RECORDED BY THE DEPUTY DIRECTOR OF INC OME-TAX (INVESTIGATION), MUMBAI, THAT THE FIRST DISCLOSURE DATED OCTOBER 20, 1988, RS.54,71,463 WAS MADE ACCOMPANIED BY ANOTHER DISCLOSURE OF RS. 54 LA KHS IN A ROUND FIGURE BEING DIVIDED INTO THREE SEGMENTS OF RS. 18 LAKHS E ACH FOR ASSESSMENT YEARS 1986-87, 1987-88 AND 1988-89. THE REVISED RETURN DE CLARING A SUM OF RS. 78,56,613 CAME ABOUT AS A CONSEQUENCE OF FOLLOW-UP PROCEEDINGS UNDER-TAKEN BY THE DEPUTY DIRECTOR OF INCOME-TAX IN RELATION TO TH E OTHER THREE SUPPLIERS, VIZ., SC, NB AND NPST. THEREFORE, THE ASSESSEE COULD NOT BE STATED TO HAVE VOLUNTARILY COME FORWARD TO DISCLOSE INCOME WHICH H AD UNINTENTIONALLY BEEN OMITTED FROM THE ORIGINAL RETURN OF INCOME. THE IM POSITION OF PENALTY WAS VALID. 13. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF RAMESH CHANDER GUPTA VS. INCOME-TAX APPELL ATE TRIBUNAL & OTHERS, 344 ITR 320 (P&H) HELD AS UNDER : ON AUGUST 5,1994, A SURVEY WAS CARRIED OUT UNDER SEC TION 133A OF THE INCOME-TAX ACT, 1961, AT THE BUSINESS PREMISES OF THE ASSESSEE. EXCESS STOCK WAS DISCOVERED. AN ADDITION WAS MADE T O THE INCOME OF THE ASSESSEE. PENALTY WAS ALSO IMPOSED. THE TRIBUNAL UP HELD THE ORDER OF PENALTY. ON APPEAL TO HIGH COURT: 8 HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL CATEGORICALLY HELD THAT THE ADDITION HAD NOT BEEN MADE ON THE BASIS OF ESTIMATE AS RECORDED BY THE COMMISSIONER (APPEALS) BUT ON ACTUA L PHYSICAL VERIFICATION OF STOCK BY THE ASSESSING OFFICER DURING SURVEY. THE IMPOSITION OF PENALTY WAS VALID. 14. CONSIDERING THE FACTS OF THE CASE IN THE LIGH T OF THE ABOVE DECISIONS AND THE DECISION OF THE HON'BLE HIG H COURT IN THE CASE OF THE ASSESSEE HIMSELF, IT IS CLEAR THAT THE ASSESSEE MADE SURRENDER OF RS.19 LACS ON ACCOUNT OF UNEXPLAI NED INVESTMENT IN SHOP DURING THE COURSE OF SURVEY. T HE ADDITION IS ULTIMATELY MAINTAINED. THE ASSESSEE FAILED TO EXPLAIN THE UNEXPLAINED INVESTMENT AT EVERY STAGE AND, THEREFOR E, THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. IT IS INTERESTING TO NOTE HERE ALSO THAT THE ASSESSEE DES PITE MAKING SURRENDER DURING THE COURSE OF SURVEY HAS DELIBERAT ELY RETRACTED FROM HIS COMMITMENT AND DID NOT SHOW THE SURRENDERED AMOUNT IN THE RETURN OF INCOME FILED. THEREFORE, IT IS A CLEAR CASE OF DELIBERATELY CONCEALING THE P ARTICULARS OF INCOME WHICH WERE SURRENDERED DURING THE COURSE OF SURVEY. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORD ERS OF THE AUTHORITIES BELOW IN LEVYING AND CONFIRMING THE PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT. 14.1 HOWEVER, WE FIND THAT THE LEVY OF PENALTY AT 2 00% IS EXCESSIVE IN NATURE. THE ADDITION IS ULTIMATELY C ONFIRMED AGAINST THE ASSESSEE. THEREFORE, LEVY OF PENALTY AT 200% IS EXCESSIVE IN NATURE. WE, THEREFORE, MODIFY THE OR DERS OF THE AUTHORITIES BELOW IN LEVYING PENALTY AT 200% AND RE DUCE THE LEVY OF PENALTY UNDER SECTION 271(1)(C) TO 100%. THE ORDERS 9 OF THE AUTHORITIES BELOW TO THAT EXTENT ARE MODIFIE D ACCORDINGLY AND THE ASSESSING OFFICER IS DIRECTED T O LEVY PENALTY AT 100% OF THE TAX SOUGHT TO BE EVADED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF FEBRUARY, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH FEBRUARY, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARHHA