Javed Karimkhan Patel (L/H of Late-Karim Khan Shahnoorkhan Patel), Aurangabad V. Income-tax Officer, Ward 2(2), Aurangabad

ITA 1402/PUN/2015

AI Insights

The case involves Karimkhan Shahnoorkhan Patel, who appealed against the penalties imposed by the Income Tax Officer, Ward-2(2), Aurangabad, which were confirmed by the Commissioner of Income Tax (Appeals)-2, Aurangabad. The penalties were for concealment of income amounting to Rs.6,00,000 under section 68 for unexplained cash deposits and Rs.13,85,000 for short term capital gains. The assessee had declared a total income significantly lower than what was reflected in his bank transactions, which included substantial cash deposits and unexplained capital gains from property transactions. The Tribunal found that the assessee did not adequately respond to the scrutiny notices and failed to provide necessary documentation to support his claims, leading to the confirmation of the penalties.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127128 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Assessee
• Order Result: DismissedDismissed
• Bench Allotted: A
• Next Hearing Date: 28-08-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 28-10-2015
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Gift; Cost of acquisition; Corroborative evidences; Capital Gains
• Section: 271(1)(c); 50C; 142(1); 143(1)

Judgement Text

आयकर अपीऱीय अधिकरण “ए” न्यायपीठ प ु णे म ें । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपीऱ सं. / ITA No.1402/PUN/2015 नििाारण वषा / Assessment Year : 2009-10 Karimkhan Shahnoorkhan Patel, H. No. 5-1-45, Near Post Office, Osmanpura, Aurangabad, Pin – 431005 PAN : AFAPP4482N .......अऩीऱाथी / Appellant बिाम / V/s. The Income Tax Officer, Ward – 2(2), Aurangabad ......प्रत्यथी / Respondent Assessee by : Shri Pramod Shingte Revenue by : Shri S.P. Walimbe स ु नवाई की तारीख / Date of Hearing : 21-01-2020 घोषणा की तारीख / Date of Pronouncement : 05-03-2020 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 07-09-2015 passed by the Commissioner of Income Tax (Appeals)-2, Aurangabad [„CIT(A)‟] for assessment year 2009-10 wherein he confirmed the penalty u/s. 271(1)(c) of the Act. 2 ITA No. 1402/PUN/2015, A.Y. 2009-10 2. Ground No. 1 raised by the assessee challenging the action of CIT(A) in confirming the penalty imposed for concealment of income of Rs.6,00,000/- u/s. 68 of the Act and Rs.13,85,000/- on account of short term capital gains. 3. The brief facts of the case as emanating from the record are that the assessee is an individual filed its return of income declaring a total income of Rs.1,18,880/- and the same was processed u/s. 143(1) of the Act. The return filed by the assessee was selected for scrutiny to examine the source of cash deposits in its saving bank account. Accordingly, notices u/s. 143(2) and 142(1) of the Act were issued. According to AO, there was no response from the assessee in response to above said notices. Further, to examine the source of cash deposits, the AO issued notice to United Bank of India. On verification of statement given by the Bank Manager, the AO found that the assessee deposited a cash of Rs.52,00,000/-. The assessee was requested to furnish the details of cash deposits and source of such deposits. The assessee, in reply filed copies of return of income for the A.Ys. 2009-10 and 2010-11, copies of purchase dated 24-06-2008 regarding property at Gut No. 161, Village-Balapur, Taluka-Aurangabad and copies of sale agreement dated 26-08-2008. According to the AO the assessee received cheque for Rs.35,00,000/- but Rs.45,00,000/- reflected in the bank account. The assessee explained that his four sons given gift each Rs.5,00,000/-. The AO disbelieved the said version and rejected the contention of assessee in the absence of any supporting evidence such as financial statements, balance sheet, copies of bank pass books and return of income of his sons. The AO recorded its satisfaction that the assessee concealed the income to an extent of Rs.12,00,000/-. 3 ITA No. 1402/PUN/2015, A.Y. 2009-10 4. Further, the AO computed short term capital gains to an extent of Rs.92,76,800/- (Rs.1,13,91,800/- and Rs.21,15,000/-) being valuation of land as per Government Valuation and cost of acquisition, respectively and for not disclosing the transaction of purchase of land and sale by the assessee in the return of income and recorded satisfaction that the assessee concealed the income on short term capital gains. 5. In pursuance of satisfaction recorded in assessment proceedings, the AO initiated penalty proceedings for concealment of income on account of unexplained cash deposits and short term capital gains by issuing a notice under relevant provisions but however the AO confined to Rs.6,00,000/- u/s. 68 of the Act taking into consideration the part relief given by the CIT(A) in quantum proceedings. Regarding initiation of penalty proceedings for concealment of income of Rs.6,00,000/- the assessee reiterated the same submissions as made before the AO in assessment proceedings and requested the drop the same that the penalty proceedings is not maintainable on ad hoc addition. Regarding initiation of penalty proceedings for not disclosing short term capital gains the AO observed that no relief has been given by the CIT(A) in quantum proceedings and no appeal preferred by the assessee against such order. Treating the same acceptance by the assessee the AO imposed penalty of Rs.29,85,790/- vide his order dated 27-05-2014 on unexplained cash deposit and short term capital gain. 6. Aggrieved by the above said order the assessee filed an appeal before the CIT(A) contending the penalty levied taking recourse to section 50C of the Act without bringing anything on record to suggest the actual consideration received was more than the amount shown by the assessee 4 ITA No. 1402/PUN/2015, A.Y. 2009-10 received and placed reliance on the orders of Tribunal to that effect. The CIT(A) considering the facts and circumstances and the orders of Tribunal proceeded to decide the issue in respect of short term capital gains in respect of actual consideration received by the assessee to an extent of Rs.35,00,000/- only and considering the cost of acquisition of Rs.21,15,000/- (Rs.35,00,000/- - Rs.21,15,000/-) the CIT(A) restricted the penalty to an extent of Rs.13,85,000/- on short term capital gain and confirmed in respect of unexplained cash deposits vide its order dated 07-09-2015. 7. Before us, the ld. AR submits that regarding imposing of penalty on account of unexplained cash credits by referring to cash summary and submitted that the assessee has opening cash balance of Rs.7,45,750/- and got Rs.5,00,000/- each from his sons as gift. The assessee has cash balance in his hand of Rs.28,45,750/- at the time of purchase of land and argued the assessee has sufficient balance in its account on the date of purchase of land on 24-06-2008. We find the assessee raised his contention that his four sons giving Rs.5,00,000/- each to him under gift and the AO examined the same and did not accept the contention of giving gift by his four sons for not furnishing any evidence supporting the capacity of his four sons to an extent of Rs.12,00,000/-. It is clear the AO has allowed Rs.8,00,000/- and disallowed only Rs.12,00,000/- for not providing his supporting evidence such as financial statements, balance sheet, copies of bank pass books and return of income of his four sons. It is also on record during the course of penalty proceedings the AO proceeded to impose penalty only on Rs.6,00,000/- being part relief given by the CIT(A) in quantum proceedings. It is also on record that the assessee challenged the action of CIT(A) in restricting the addition to an 5 ITA No. 1402/PUN/2015, A.Y. 2009-10 extent of Rs.6,00,000/- before this Tribunal. While adjudicating the said issue in assessee‟s own case in ITA No. 2272/PUN/2014 for A.Y. 2009-10 the Tribunal held that the assessee failed to controvert the findings of CIT(A) in respect of Rs.6,00,000/- and confirmed the order of CIT(A) vide its order dated 08-10-2018. Therefore, it is clear the assessee failed to justify the gift of Rs.6,00,000/- from his four sons before the Tribunal in quantum proceedings before this Tribunal. Therefore, the order of CIT(A) in confirming the imposition of penalty to an extent of Rs.6,00,000/- on account of unexplained cash credit is liable to be confirmed. 8. Regarding imposition of penalty on account of short term capital gains as the AO proceeded to taking recourse to deemed value as determined by the Government Valuation Authority but however the CIT(A) taking into consideration the orders of Tribunal that no penalty is maintainable on deemed value determined by the Government Stamp Authority restricted the penalty on actual consideration. We find that admittedly, the assessee did not disclose the transactions of purchase and sale of capital gains thereon in his return of income and therefore it clearly shows the concealment of gain from sale of property. Before us, the assessee failed to bring on record any justifiable contention for not disclosing the same in the return of income. Therefore, we find no infirmity in the order of CIT(A) in confining quantum of penalty to an extent of Rs.13,85,000/- (Rs.35,00,000/- sale consideration - Rs.21,15,000/- cost of acquisition). Thus, ground No. 1 raised by the assessee is dismissed. 9. Ground No. 2 raised by the assessee challenging the action of CIT(A) in confirming the view of AO in invoking Explanation 1 of section 271(1) of 6 ITA No. 1402/PUN/2015, A.Y. 2009-10 the Act, in our opinion becomes academic in view of our decision in ground No. 1 in the aforementioned paragraphs, thus, ground No. 2 raised by the assessee is dismissed. 10. Ground Nos. 3 and 4 are general in nature, hence, require no adjudication. 11. In the result, the appeal of assessee is dismissed. Order pronounced in the open court on 05 th March, 2020. Sd/- Sd/- (D. Karunakara Rao) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER ऩ ु णे / Pune; ददनाांक / Dated : 05 th March, 2020 RK आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : 1. अऩीऱाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The CIT(A)-2, Aurangabad 4. The Pr. CIT-2, Aurangabad 5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, “ए” बेंच, ऩ ु णे / DR, ITAT, “A” Bench, Pune. 6. गार्ड फ़ाइऱ / Guard File. //सत्यावऩत प्रतत// True copy // आदेशान ु सार / BY ORDER, तनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩ ु णे / ITAT, Pune