Pushpa Gupta, Hyderabad V. Asst. Commissioner of Income Tax, Circle-6(1), Hyderabad

ITA 1412/Hyd/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0865 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 10-05-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 07-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARAYAN MURTHY NAIK
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Principle of natural justice; Question of law; Set aside
• Section: 271(1)(c); 274; 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO. 1412 /H/20 17 ASSESSMENT YEAR: 2 0 08 - 09 PUSHPA GUPTA, HYDERABAD. PAN AEEPG 6161N VS. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 6(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P. MURALI MOHAN RAO REVENUE BY: SHRI NARAYANMURTHY NAIK DATE OF HEARING: 1 0 /0 5 /2021 DATE OF PRONOUNCEMENT: 13 /0 7 /2021 O R D E R PER L.P. SAHU, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST CIT(A) 12 , HYDERABADS ORDER DATED 1 2 / 0 5 /20 17 FOR AY 20 08 - 09 INVOLVING PROCEEDINGS U/S 271AAA OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED ORIGINALLY 4 GROUNDS OF APPEAL. THEREAFTER, HE FILED TWO PETITIONS FOR ADMITTING ADDITIONAL GROUNDS, WHICH CONSIST 5 TO 32 GROUNDS. IN I TA NO. 1412 /HYD /20 17 PUSHPA GUPTA, HYD. : - 2 - : GROUND NO. 24, WHICH IS RAISED AS ADDITIONAL GROUND, THE ASSESSEE HAS RAISED A LEGAL GROUND THAT THE CIT(A) OUGHT TO HAVE HELD THAT THE AO HAS ISSUED AN INVALID SHOW CAUSE NOTICE U/S 274 RWS 271 OF THE ACT WHILE THE PENALTY IS LEVIED UNDER THE SPECIFIC SECTION 271AAA OF THE ACT. 2.1 AS THE SAID ADDITIONAL GROUNDS ARE LEGAL GROUNDS, WHEREIN, THE FACT S ARE ON RECORD AND FACTS DO NOT REQUIRE FRESH INVESTIGATION, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO., LIMITED VS. CIT 229 ITR 383 (SC), WE ADMIT THE SAID ADDITIONAL GROUNDS OF ASSESSEE. 3. BRIEFLY THE FA CTS OF THE CASE ARE THAT SEARCH AND SEIZURE OPERATIONS ULS, 132 OF THE LT. ACT WERE CONDUCTED IN THE PREMISES OF THE ASSESSEE ON 14.12.2007 AND NOTICE U/S.153A WAS ISSUED FOR THE A.Y. 2008 - 09. IN RESPONSE TO THIS NOTICE , THE ASSESSEE FILED RETURN OF INCOME ADMITTING TAXABLE INCOME OF RS.45,74,370/ - AND THE ASSESSMENT WAS COMPLETED U/S.143(3) DETERMINING THE TAXABLE INCOME AT RS.2,11,55,701/ - . 3.1 DURING THE COURSE OF SEARCH PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE ALONG WITH HER HUSBAND SRI ARUN GUPTA HAD ACQUIRED A HOUSE PROPERTY AT A - 158, JOURNALIST COLONY, JUBILEE HILLS, HYDERABAD FOR AN AMOUNT OF RS.2,OO,OO,OOO/ - IN ADDITION TO THIS, CERTAIN PAY - IN - SLIPS EVIDENCING CASH I TA NO. 1412 /HYD /20 17 PUSHPA GUPTA, HYD. : - 3 - : DEPOSITS WERE FOUND AND BOTH THE ASSESSEE AND HER HUSBAND DENIED HAVING MADE ANY SUCH CASH DEPOSITS. FURTHER, STATEMENTS WERE RECORDED U/S.132(4) AND BOTH OF THEM DENIED HAVING MADE ANY CASH PAYMENT/ON - MONEY FOR THE PURCHASE OF THE HOUSE PROPERTY. HOWEVER, DURING THE POST SEARCH ENQUIRIES CONDUCTED WITH THE UNION BANK OF INDIA, IT CAM E TO LIGHT THAT THE ASSESSEE AND HER HUSBAND HAD ENTERED INTO AN AGREEMENT OF SALE WITH REGARD TO THIS PROPERTY FOR A CONSIDERATION OF RS.3,79, 00,000 / - , A COPY OF WHICH WAS SUBMITTED TO THE BANK. WHEN CONFRONTED WITH THIS EVIDENCE, THE ASSESSEE ACCEPTED THAT THE TOTAL CONSIDERATION WAS IN FACT RS.3,79, 00,000 / - AND THAT THE PAYMENT OF RS. 1,59 , 00,000/ - WA S M ADE IN CASH. SUBSEQUENTLY, THE ASSESSEE AND HE R HUSBAND FILED THEIR RETURNS OF INCOME FOR THE AY 2008 - 09 AND OFFERED RS. 42,50,000/ - AND RS. 53,00,000/ - RESPECTIVELY AS INCOME FROM OTHER SOURCES. IN VIEW OF THE SAID ADMISSION OF THE ASSESSEE, THE AO WAS OF THE OPINION THAT IT IS ONLY BECAUSE OF THE D ETAILED ENQUIRIES AND INVESTIGATION CARRIED OUT, DURING THE COURSE OF POST SEARCH OPERATION, WHICH RESULTED IN UNEARTHING THE AGREEMENT OF SALE ENTERED INTO BY THE ASSESSEE FOR PURCHASE OF PROPERTY THAT THE ASSESSEE ADMITTED THE SAID INCOME. 3.2 THE AO M ADE ANOTHER ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE INCURRED FOR PERFORMING THE MARRIAGE OF ASSESSEES DAUGHTER AT RS. 1,30,00,000/ - AS I TA NO. 1412 /HYD /20 17 PUSHPA GUPTA, HYD. : - 4 - : AGAINST RS. 13,45,893/ - ADMITTED BY THE ASSESSEE AND HER HUSBAND. ON APPEAL, THE ITAT CONFIRMED THE MARRIAGE EXPE NSES AT RS. 30,00,000/ - AS AGAINST RS. 13,45,893/ - DISCLOSED BY THE ASSESSEE AND HER HUSBAND. THUS, AN ADDITION OF RS. 16,54,107/ - WAS CONFIRMED BY THE ITAT AND THEREFORE AN AMOUNT OF RS. 8,27,053/ - (50% OF RS. 16,54,107/ - WAS CONSIDERED AS UNEXPLAINED EXP ENDITURE IN THE HANDS OF THE ASSESSEE. 3.3 THE AO MADE ANOTHER ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SAREES AT RS. 57,01,189/ - , WHICH WAS RESTRICTED BY THE ITAT TO RS. 13,37,489/ - 3.4 THE AO THEREFORE A LEVIED PENALTY OF RS. 6,41,454/ - ON THE TOTAL UNDISCLOSED INCOME OF RS. 61,14,542/ - (RS. 42,50,000 + RS. 8,27,053 + 13,37,489). 4. WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE I TAT. 6. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUE OF A NOTICE U / S 274 R.W.S . 271 AAA ON 28/03/2012. HE SUBMITTED THAT W HILE ISSUING THE SAID NOTICE, THE ASSESSING OFFICER DID NOT M ENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR I TA NO. 1412 /HYD /20 17 PUSHPA GUPTA, HYD. : - 5 - : FOR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. THEREFORE, THE NOTICE IS NOT VALIDLY ISSUED. CONSEQUENTLY, THE ORDER PASSED U / S 271 AAA ALSO IS NOT VALID. FOR THIS PROPOSITION, HE RELIED O N THE FOLLOWING DECISIONS: 1. SMT. BAISETTY REVATHI 684 OF 2016 (AP & TELANGANA HC) 2. SRI VENKAT RAM MEKA, ITAT HYD. (ITA NO. 889/HYD/2016) 3. RAGHUVEER SINGH, ITAT HYD ( ITA NO. 522/HYD/2015 4. GILLCO DEVELOPERS & BUILDERS (P) LTD., ITAT CHANDIGARH, 85 TAXMANN.COM 339 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES AND FILED WRITTEN SUBMISSIONS WHICH ARE AS UNDER: 1. THE APPEAL IS AGAINST LEVY OF PENALTY U/S 271AAA FOR A.Y 2008 - 09. THIS IS A CASE WHERE SEARCH OPERATION TOOK PLACE AND IN HER STATEMENT U/S 132(4) ON 14/12/2007, THE ASSESSEE DENIED TO HAVE MADE PAYMENT OF UNACCOUNTED MONEY AND DID NOT DISCLOSE ANY UNAC COUNTED INCOME. EVEN DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME IS EARNED. 2. THE ASSESSING OFFICER LEVIED A PENALTY OF '6,41,454 @ 10% ON THE UNDISCLOSED INCOME ARISING OUT OF 3 ITEMS VIZ., INCOME OF ' 42,50,000 DISCLOSED UNDER THE HEAD OTHER SOURCES AS A RESULT OF ENQUIRES IN THE SEARCH PROCEEDINGS, UNEXPLAINED EXPENDITURE OF RS. 8,27,053/ - MET FOR THE MARRIAGE OF DAUGHTER OF THE ASSESSEE AND UNEXPLAINED INVESTMENT IN STOCK OF SHARES O F 13,37,489/ - . 3. IT IS SUBMITTED THAT THE DISCLOSURE OF INCOME OF ' 42,50,000 WAS ONLY AFTER ENQUIRES WERE MADE IN THE SEARCH PROCEEDINGS. AS THE ASSESSEE DID NOT DISCLOSE THE INCOME U/S 132(4) AND DID NOT SPECIFY OR SUBSTANTIATE THE MANNER IN WHICH SUC H INCOME IS EARNED, THE IMMUNITY FROM LEVY OF PENALTY CANNOT BE INVOKED IN THIS CASE. 4. THE ASSESSEE ALSO CONCEALED THE PARTICULARS OF UNACCOUNTED EXPENDITURE INCURRED FOR MARRIAGE OF HER DAUGHTER AS WELL AS INVESTMENT IN SAREES. THOUGH THE HON'BLE ITAT RESTRICTED THE ADDITIONS ON THESE AMOUNTS, THIS I TA NO. 1412 /HYD /20 17 PUSHPA GUPTA, HYD. : - 6 - : DOES NOT MEAN THAT THERE IS CONCEALMENT OF INCOME AS NO INCOME WAS OFFERED IN THE RETURNS ON THESE ISSUES. 5. THEREFORE, THE PROVISIONS OF SECTION 271AAA ARE RIGHTFULLY APPLIED BY THE AD AND THERE IS NO NE ED TO SPECIFY ANY CHARGE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS IN THE NOTICE U/S 271AAA AS THE CONCEALMENT IS DEEMED TO BE AUTOMATIC DEPENDING ON THE CONDITIONS LAID DOWN UNDER THE SAID SECTION. MERELY BECAUSE HON'BLE ITAT RESTRICTED SOME OF THE ADDITIONS, THIS DOES NOT MEAN THE CHARACTER OF THE CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS WOULD CHANGE. 6. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT MERE STRIKING OFF OF A LIMB IN THE PENALTY NOTICE WOULD NOT VITIATE THE P ROCEEDINGS. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF HON'BLE HIGH COURT OF MADRAS IN THE CASE OF SUNDARAM FINANCE LIMITED WHEREIN IT WAS HELD THAT 'BEFORE US, THE ASSESSEE SEEKS TO CONTEND THAT THE NOTICES ISSUED UNDER SECTION 274 R/W. SECTIO N 271 OF THE ACTARE VITIATED SINCE IT DID NOT SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271 (L)(C) OF THE ACT. 16. WE HAVE PERUSED THE NOTICES AND WE FIND THAT THE RELEVANT COLUMNS HAVE BEEN MARKED, MORE PARTICULARLY, WHEN THE CASE AGAINST THE ASSESSEE IS THAT THEY HAVE CONCEALED PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. THEREFORE, THE CONTENTION R AISED BY THE ASSESSEE IS LIABLE TO BE REJECTED ON FACTS. THAT APART, THIS ISSUE CAN NEVER BE A QUESTION OF LAW IN THE ASSESSEE'S CASE, AS IT IS PURELY A QUESTION OF FACT. APART FROM THAT, THE ASSESSEE HAD AT NO EARLIER POINT OF TIME RAISED THE PLEA THAT ON ACCOUNT OF A DEFECT IN THE NOTICE, THEY WERE PUTTO PREJUDICE. ALL VIOLATIONS WILL NOT RESULT IN NULLIFYING THE ORDERS PASSED BY STATUTORY AUTHORITIES. IF THE CASE OF THE ASSESSEE IS THAT THEY HAVE BEEN PUT TO PREJUDICE AND PRINCIPLES OF NATURAL JUSTICE WE RE VIOLATED ON ACCOUNT OF NO TBEING ABLE TO SUBMIT AN EFFECTIVE REPLY, IT WOULD BE A DIFFERENT MATTER'. 7. IT IS HUMBLY SUBMITTED THAT SLP AGAINST THIS DECISION WAS DISMISSED BY THE SUPREME COURT IN [2018] 99 TAXMANN.COM 152 ( SC) . IN LIGHT OF THE ABOVE , THE APPEAL OF THE ASSESSEE IS DEVOID OF MERIT AND HENCE MAY KINDLY BE DISMISSED. I TA NO. 1412 /HYD /20 17 PUSHPA GUPTA, HYD. : - 7 - : 8 . CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN WHICH, THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CA ME IN APPEAL AGAINST THE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A DECISION OF KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT NOTICE ISSUED BY ASSE SSING OFFICER U/S 274 READ WITH SECTION 271(1)(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. 8.1 IN THE CASE UNDER CONSIDERATION, ON PERUSAL OF THE SHOW CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S. 271AAA OF THE IT ACT, 1961, DATED 28/03/2012, WHICH IS PLACED ON RECORD OF PAPER BOOK, IT IS SEEN THAT THE ASSESSING OFFICER DID NOT MENT ION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, AS PER THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS, THE NOTICE ISSUED BY THE ASSESSING O FFICER IS NOT VALID AND CONSEQUENTLY, THE ORDER PASSED U/S 271AAA IS ALSO NOT VALID. HENCE, WE SET ASIDE THE ORDER OF THE CIT(A) AND QUASH THE ORDER PASSED BY THE ASSESSING OFFICER U/S 271AAA OF THE ACT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. I TA NO. 1412 /HYD /20 17 PUSHPA GUPTA, HYD. : - 8 - : 9. EVEN ON MERITS, THE ASSESSEES CASE IS COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES HUSBANDS CASE SRI ARUN GUPTA (HUF) IN ITA NO. 1538/HYD/2017 FOR AY 2005 - 06 WHEREIN ON SIMILAR FACTS, THE COORDINATE BENCH DIRECTED TH E AO TO DELETE THE PENALTY IMPOSED U/S 271(1)(C) BY OBSERVING AS UNDER: 6. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE PRESENT APPEALS BEFORE US, WE ARE OF THE CONSIDERED VIEW THAT THE RATIO LAID DOWN BY THE HON'BLE APEX COURT CITED HEREIN ABOVE IS SQUARELY APPLICABLE TO THE PRESENT CASES BEFORE US. IT IS QUITE NATURAL THAT WHEN INDIVIDUALS / HUF MAINTAIN FIXED DEPOSITS IN PIECEMEAL WITH VARIOUS BANKS, THE INTEREST EARNED ON THE FIXED DEPOSITS MIGHT BE LOST SIGHT OFF AS THE INTEREST GETS AU TOMATICALLY ACCUMULATED WITH THE DEPOSITS. THE NEED TO EVALUATE THOSE FIXED DEPOSITS WILL ARISE ONLY WHEN FUNDS ARE REQUIRED FOR A SPECIFIC PURPOSE. IN THE CASE OF THE ASSESSEE - HUF IT APPEARS - THAT THE ASSESSEE TOOK STOCK OF THE FIXED DEPOSITS WHEN THEY WER E IN THE PROCESS OF PURCHASING THE HOUSE PROPERTY AND THE INTEREST EARNED BY THOSE FIXED DEPOSIT WAS INADVERTENTLY OMITTED TO BE TAKEN INTO ACCOUNT. HENCE, WE ARE OF THE VIEW THAT IT IS ONLY AN UNINTENDED OMISSION ON THE PART OF THE ASSESSEE. IT IS PERTINE NT TO MENTION THAT THE DECISIONS RELIED ON BY THE LD. DR ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THESE CA SE S BEFORE US. THEREFORE, IN THE INTEREST OF JUSTICE, WE HEREBY SET ASIDE THE ORDERS OF THE LD. CIT (A) AND FURTHER DIRECT THE LD. AO TO D ELETE THE PENALTY IMPOSED ON THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 271(L)(C) OF THE ACT IN ALL THESE CASES FOR THE RELEVANT ASSESSMENT YEARS. 9.1 IN VIEW OF THE ABOVE DISCUSSION, WE DIRECT THE AO TO DELETE THE PENALTY OF RS. 6,41,454/ - LEV IED U/S 271AAA OF THE ACT. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ON LEGAL AS WELL AS MERITS ARE ALLOWED. I TA NO. 1412 /HYD /20 17 PUSHPA GUPTA, HYD. : - 9 - : 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 13 TH JU LY , 2021 . SD/ - SD/ - ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 13 TH JU LY , 20 2 1 . K V C OPY TO : 1 SMT. PUSHPA GUPTA, C/O P. MURALI & CO., CAS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82 2 AC IT , CIRCLE 6(1), HYDERABAD. 3 C I T(A) 12 , HYDERABAD. 4 PR. CIT - VI , HYDERABAD 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.