K.M.Mammen, CHENNAI V. JCIT, CHENNAI

ITA 1382/CHNY/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6077 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-07-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 19-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR U ANJANEYALU
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Unexplained investment
• Section: 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1882/MDS/2014 ' (' / ASSESSMENT YEAR : 2002-03 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE IV(1), CHENNAI - 600 034. V. SHRI K.M. MAMMEN, NO.17, BOAT CLUB ROAD 3 RD AVENUE, R.A. PURAM, CHENNAI - 600 028. PAN : AAEPM 0314 R (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NO.1382/MDS/2014 ' (' / ASSESSMENT YEAR : 2002-03 SHRI K.M. MAMMEN, NO.17, BOAT CLUB ROAD 3 RD AVENUE, R.A. PURAM, CHENNAI - 600 028. V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE IV(1), CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) . / /REVENUE BY : DR. U. ANJANEYALU, CIT '01 . / /ASSESSEE BY : SH. R. VIJAYARAGHAVAN, ADVOCATE 2 . 1# / DATE OF HEARING : 03.07.2017 34( . 1# / DATE OF PRONOUNCEMENT : 27.09.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE VERY SAME ORDER OF THE COMMISSIONER OF INCOME TAX 2 I.T.A. NO.1882/MDS/14 I.T.A. NO.1382/MDS/14 (APPEALS) I, CHENNAI, DATED 25.03.2014 CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1 )(C) OF THE ACT FOR ASSESSMENT YEAR 2002-03. THEREFORE, WE HEARD BO TH THE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON O RDER. 2. DR. U. ANJANEYALU, THE LD. DEPARTMENTAL REPRESEN TATIVE, SUBMITTED THAT ON THE BASIS OF INFORMATION RECEIVED FROM REVENUE AUTHORITIES, IT WAS FOUND THAT THE ASSESSEE HAS DEP OSITED / INVESTED IN FAVOUR OF WEBSTER FOUNDATION, VADUZ IN THE BANK ACCOUNT MAINTAINED WITH LGT BANK IN LIECHTENSTEIN, VADUZ. ACCORDING TO THE LD. D.R., THE QUANTUM ADDITION MADE BY THE ASSE SSING OFFICER TO THE EXTENT OF ` 2,26,38,372/- UNDER SECTION 69 OF THE INCOME-TAX AC T, 1961 (IN SHORT 'THE ACT') WAS CONFIRMED BY THIS TRI BUNAL. 3. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT THE ASSESSING OFFICER HAS ALSO INITIATED PENALTY PR OCEEDINGS. ACCORDING TO THE LD. D.R., THE ASSESSEE CLAIMED BEF ORE THE ASSESSING OFFICER THAT HE HAS NOTHING TO DO WITH TH E TRANSACTION. THE ASSESSEE HAS ALSO CLAIMED BEFORE THE ASSESSING OFFICER THAT THE INVESTMENT WAS NOT MADE DURING THE YEAR UNDER C ONSIDERATION, THEREFORE, THERE CANNOT BE ANY PENALTY IN THE YEAR UNDER CONSIDERATION. ACCORDING TO THE LD. D.R., THE ASSE SSING OFFICER 3 I.T.A. NO.1882/MDS/14 I.T.A. NO.1382/MDS/14 REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND TH AT THE SIGNATURE FOUND IN THE DECLARATION MADE IN CREATION OF ENDOWM ENT TALLIES WITH THE SIGNATURE OF THE ASSESSEE. IT WAS ALSO FOUND T HAT IT IS FOR THE ASSESSEE TO DEMONSTRATE HOW AND WHEN THE MONEY WAS DEPOSITED IN THE ACCOUNT OF WEBSTER FOUNDATION. ACCORDING TO THE LD. D.R., THE ASSESSEE HAS DEPOSITED MONEY IN THE FOREIGN BAN K AFTER CREATING A TRUST IN THE NAME OF WEBSTER FOUNDATION. THE DEPOSIT MADE BY THE ASSESSEE WAS NOT DISCLOSED TO THE REVEN UE AUTHORITIES AND TAXES WERE NOT PAID. AFTER RECEIVING INFORMATI ON FROM FOREIGN BANK, THE ASSESSMENT WAS REOPENED AND ADDITION WAS MADE UNDER SECTION 68 OF THE ACT FOR UNEXPLAINED INVESTMENT. ACCORDING TO THE LD. D.R., THE ASSESSEE IS THE BENEFICIARY OF THE AC COUNT. THIS WAS CONFIRMED BY THIS TRIBUNAL IN THE QUANTUM APPEAL IN I.T.A. NO.870/MDS/2011 DATED 25.02.2013. 4. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT THE BALANCE AMOUNT STANDING IN LGT BANK AS ON 31.12 .2001 IS ` 7,78,437.80 IN SWISS FRANC CURRENCY. 1 SWISS FRANC CURRENCY IS EQUAL TO ` 29.0818 INDIAN RUPEE AT THE RELEVANT POINT OF TIME. THEREFORE, BY APPLYING THE CURRENCY RATE APPLICABLE AS ON 31.12.2001, THE ASSESSING OFFICER ADDED AN AMOUNT O F 4 I.T.A. NO.1882/MDS/14 I.T.A. NO.1382/MDS/14 ` 2,26,38,372/-. THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDING, ACCEPTED AND PAID THE TAXES ALSO, THERE FORE, THE CIT(APPEALS) CONFIRMED THE PENALTY LEVIED BY THE AS SESSING OFFICER. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER LE VIED THE PENALTY AT THE RATE OF 300%. HOWEVER, THE CIT(APPEALS) RES TRICTED THE SAME TO 100%. ACCORDING TO THE LD. D.R., THE ASSESSEE T RANSFERRED THE FUNDS TO FOREIGN ACCOUNT AND DEPOSITED IN LGT BANK IN LIECHTENSTEIN AKTIENGESELLSCHAFT, VADUZ, THEREFORE, THIS IS A GRAVE/ WORST OFFENCE WHEREIN THE INDIAN ECONOMY WAS TRANSF ERRED TO FOREIGN COUNTRY IN AN ILLEGAL MANNER, HENCE, THE CI T(APPEALS) OUGHT TO HAVE LEVIED 300% PENALTY. ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN RESTRICTING THE PE NALTY TO 100%. THEREFORE, THE REVENUE HAS FILED THE APPEAL. 5. ON THE CONTRARY, SH. R. VIJAYARAGHAVAN, THE LD.C OUNSEL FOR THE ASSESSEE, SUBMITTED THAT DURING THE COURSE OF A SSESSMENT PROCEEDING, THE ASSESSEE CAME FORWARD TO PAY TAXES WITHOUT PREJUDICE TO HIS STAND THAT HE HAS NOTHING TO DO WI TH THE ACCOUNT MAINTAINED BY WEBSTER FOUNDATION. THE LD.COUNSEL F URTHER SUBMITTED THAT NO AMOUNT WAS INVESTED DURING THE YE AR UNDER CONSIDERATION. THE AMOUNT DEPOSITED IN LGT BANK IN LIECHTENSTEIN, 5 I.T.A. NO.1882/MDS/14 I.T.A. NO.1382/MDS/14 VADUZ, IN THE NAME OF WEBSTER FOUNDATION, FOUND TO BE DEPOSITED IN THE EARLIER ASSESSMENT YEAR, THEREFORE, AT THE B EST, THE PENALTY CAN BE LEVIED FOR THE EARLIER ASSESSMENT YEAR AND N OT DEFINITELY FOR THIS YEAR. ON A QUERY FROM THE BENCH, WHETHER THE ADDITION WAS MADE IN THE QUANTUM APPEAL DURING THE YEAR UNDER CO NSIDERATION OR EARLIER ASSESSMENT YEAR, THE LD.COUNSEL SUBMITTED T HAT THIS TRIBUNAL FOUND THAT THE ADDITION HAS TO BE MADE DURING THE Y EAR UNDER CONSIDERATION SINCE THE ASSESSEE COULD NOT EXPLAIN THE DATES OF ACTUAL DEPOSIT OF FUNDS IN THE WEBSTER FOUNDATION W ITH LGT BANK IN LIECHTENSTEIN, VADUZ. THE LD.COUNSEL FURTHER SUBMI TTED THAT THE PENALTY PROCEEDING BEING AN INDEPENDENT AND SEPARAT E PROCEEDING, THIS HAS TO BE RE-EXAMINED BY THE ASSESSING OFFICER WITH REGARD TO ACTUAL DATE OF DEPOSIT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ON THE BASIS OF INFORMATION SAID TO BE RECEIVED BY THE REVENUE AUTH ORITIES, IT WAS FOUND THAT THE ASSESSEE HAS DEPOSITED FUNDS IN THE NAME OF WEBSTER FOUNDATION AT LGT BANK IN LIECHTENSTEIN, VA DUZ, TO THE EXTENT OF ` 1.23 LAKH EURO CURRENCY. A DECLARATION OF ENDOWMEN T WAS SAID TO BE MADE BY THE ASSESSEE ON 24.03.2000. THE AMOUNT 6 I.T.A. NO.1882/MDS/14 I.T.A. NO.1382/MDS/14 WAS TRANSFERRED TO THE CREDIT OF WEBSTER FOUNDATION IN ACCOUNT NO.01635517AA MAINTAINED WITH LGT BANK IN LIECHTENS TEIN, VADUZ. THE ASSESSING OFFICER FOUND THAT THE DECLARA TION OF ENDOWMENT WAS SIGNED BY THE ASSESSEE. IN THE ASSES SMENT ORDER, THE ASSESSING OFFICER HAS REPRODUCED THE ENTIRE INF ORMATION SAID TO BE RECEIVED REGARDING THE DEPOSIT OF FUNDS IN THE N AME OF WEBSTER FOUNDATION WHERE THE ASSESSEE BEING A BENEFICIARY A ND THE EXAMINATION MADE BY THE ASSESSING OFFICER. 7. THOUGH THE ASSESSEE CLAIMED THAT HE HAS NOTHING TO DO WITH WEBSTER FOUNDATION AND THE ACCOUNT MAINTAINED BY IT IN LGT BANK IN LIECHTENSTEIN, VADUZ, THE ASSESSEE ULTIMATELY AG REED TO PAY THE TAXES. NO DOUBT, THE ASSESSEE AGREED TO PAY TAXES WITHOUT PREJUDICE TO HIS OTHER CONTENTIONS. ONE OF THE CON TENTIONS IS THAT THE MONEY WAS NOT DEPOSITED DURING THE YEAR UNDER CONSI DERATION. THE FACT REMAINS THAT THE BALANCE AS ON 31.12.2001IS ` 7,78,437.80 SWISS FRANC CURRENCY. THE ASSESSEE COULD NOT GIVE THE DETAILS OF DEPOSIT. IN OTHER WORDS, THE EXACT DATE ON WHICH T HE MONEY WAS DEPOSITED AND INVESTED IN LGT BANK IN LIECHTENSTEIN , VADUZ COULD NOT BE PRODUCED BY THE ASSESSEE EITHER BEFORE THE L OWER AUTHORITIES OR BEFORE THIS TRIBUNAL. WHEN THE BALANCE AMOUNT A S ON 7 I.T.A. NO.1882/MDS/14 I.T.A. NO.1382/MDS/14 31.12.2001 IS CONFIRMED IN THE ACCOUNT OF WEBSTER F OUNDATION WHERE THE ASSESSEE WAS SHOWN AS BENEFICIARY AND END OWMENT ITSELF WAS CREATED BY THE ASSESSEE, IT IS FOR THE A SSESSEE TO EXPLAIN WHEN THE MONEY WAS ACTUALLY DEPOSITED IN THE BANK A CCOUNT IF AT ALL THE ASSESSEE INTENDS TO HAVE THE ASSESSMENT FOR OTH ER ASSESSMENT YEAR. IN THE ABSENCE OF SUCH DETAILS, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE PRESUMPTION IS THAT THE DEPOSIT WAS MADE DURING THE YEAR UNDER CONSIDERATION. 8. IN FACT, IN THE QUANTUM APPEAL A SIMILAR CONTENT ION WAS RAISED BY THE ASSESSEE BEFORE THIS TRIBUNAL. THIS TRIBUNAL FOUND THAT IT IS FOR THE ASSESSEE TO ESTABLISH WHEN THE I NVESTMENT / DEPOSIT WAS MADE IN LGT BANK IN LIECHTENSTEIN AKTIENGESELLS CHAFT, VADUZ. ONCE THE ASSESSEE FURNISHED DETAILS, THEN THE BURDE N OF PROOF WILL BE SHIFTED ON THE SHOULDER OF REVENUE. SINCE THE A SSESSEE HAS NOT FURNISHED ANY DETAILS ABOUT THE DATE ON WHICH THE B ALANCE AMOUNT WAS DEPOSITED, THE PRESUMPTION IS IT WAS DEPOSITED IN THE YEAR IT WAS FOUND BY THE AUTHORITIES. THIS IS WHAT EXACTLY HELD BY THIS TRIBUNAL IN THE QUANTUM APPEAL IN I.T.A. NO.870/MDS /2011. 9. WE ARE CONSCIOUS THAT ASSESSMENT PROCEEDING AND PENALTY PROCEEDING ARE DIFFERENT AND INDEPENDENT. THE AUTH ORITIES ARE 8 I.T.A. NO.1882/MDS/14 I.T.A. NO.1382/MDS/14 EXPECTED TO RE-APPRECIATE THE MATERIAL AVAILABLE ON RECORD IN THE PENALTY PROCEEDING. MERE ADDITION MADE IN THE QUAN TUM ASSESSMENT PROCEEDING WOULD NOT RESULT IN LEVY OF P ENALTY UNDER SECTION 271(1)(C) OF THE ACT AUTOMATICALLY. IN OTH ER WORDS, EACH AND EVERY ADDITION MADE IN THE ASSESSMENT PROCEEDING, C ANNOT BE CONSTRUED TO BE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. HOWEVER, IN THIS CASE, THE ASSESSEE C LAIMS THAT THE MONEY WAS NOT DEPOSITED DURING THE YEAR UNDER CONSI DERATION. THE ASSESSEE HAS NOT PROVIDED THE DETAILS OF DEPOSIT OF MONEY IN THE ACCOUNT. IN THE ABSENCE OF ANY DETAILS WITH REGARD TO DEPOSIT OR INVESTMENT OF MONEY IN THE BANK ACCOUNT, WE DO NOT FIND ANY REASON TO FIND FAULT WITH THE AUTHORITIES BELOW THAT THE B ALANCE AS ON 31.12.2001 IS THE MONEY BELONGING TO THE ASSESSEE F OR THE YEAR UNDER CONSIDERATION. THEREFORE, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE PENALTY. 10. NOW COMING TO QUANTUM OF PENALTY, THE ASSESSING OFFICER LEVIED PENALTY AT 300%. HOWEVER, THE CIT(APPEALS) RESTRICTED THE SAME TO 100%. THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT LEVY OF PENALTY IS THE DISCRETION OF THE ASSESSING OFFIC ER. THE CIT(APPEALS) HAS ALSO POWER COTERMINOUS AS THAT OF ASSESSING 9 I.T.A. NO.1882/MDS/14 I.T.A. NO.1382/MDS/14 OFFICER. THEREFORE, WHEN THE LOWER AUTHORITY EXERC ISED HIS DISCRETION IN RESTRICTING THE PENALTY TO 100% INSTEAD OF 300% LEVIED BY THE ASSESSING OFFICER, THIS TRIBUNAL DO NOT FIND ANY RE ASON TO INTERFERE WITH THE DISCRETION EXERCISED BY THE LOWER AUTHORIT Y. THEREFORE, WE DO NOT FIND ANY REASON TO FIND FAULT WITH THE CIT(A PPEALS) IN RESTRICTING THE PENALTY TO 100%. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE AND ASSESSEE STAND DISMISSED. ORDER PRONOUNCED ON 27 TH SEPTEMBER, 2017 AT CHENNAI. SD/- SD/- ( ! ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 27 TH SEPTEMBER, 2017. KRI. . ,178 98(1 /COPY TO: 1. '01 /ASSESSEE 2. ,-*+ /RESPONDENT 3. 2 :1 () /CIT(A) (CENTRAL)-I, CHENNAI 4. CIT, CENTRAL- I, CHENNAI 5. 8; ,1 /DR 6. <' = /GF.