Shri Sanjay Soni., Indore V. The I.T.O., Indore

ITA 143/IND/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2825 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 22-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: ANIL KAMAL GARD
• Keywords: Business income
• Section: 143(3); 142(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE SMC BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.143/IND/2010 AY: 2004-05 SHRI SANJAY SONI, HATOD (PAN AADCP 3277A) ..APPELLANT V/S. INCOME-TAX OFFICER, 1(1), INDORE ..RESPONDENT APPELLANT BY : SHRI ANIL KAMAL GARD, C.A. DEPARTMENT BY : SMT. APARNA KARAN, SR. DR ORDER THIS APPEAL IS BY THE ASSESSEE CHALLENGING THE OR DER OF THE LD. CIT(A) DATED 28.12.2009. THE SUM AND SUBSTANCE OF THE GROUND OF APPEAL IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY OF RS. 45,000/-LEVIED U/S 271(1)(C) OF THE ACT BY THE AO. 2. DURING HEARING OF THIS APPEAL, THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE IS THAT THE SALE DEED WAS PRODUCED BEFORE THE LEARNED CIT(A) AND THE AO DISBELIEVED THE CONTENTION OF THE ASSESSEE MERELY ON 2 ASSUMPTION, THEREFORE, THE PENALTY IMPOSED U/S 271( 1)(C) IS NOT JUSTIFIED. THE LD. COUNSEL FOR ASSESSEE PLACED RELI ANCE ON THE DECISION IN 103 TTJ 573 (CHD.); 195 ITR 902 (M.P.); 12 ITJ 5 72 (IND); 253 ITR 192 (GUJ) AND 275 ITR 319 (M.P.). IT WAS FURTHER CONTE NDED THAT ONUS IS ON THE DEPARTMENT TO PROVE THAT THE ASSESSEE CONCEALED ITS INCOME FOR WHICH THE LD. COUNSEL FOR ASSESSEE PLACED RELIANCE ON THE DECISION IN 7 TTJ 113 (CAL), 96 ITR 378 (MAD) AND 90 ITR 230 (ALL ). ON THE OTHER HAND, THE LEARNED SENIOR DR STRONGLY DEFENDED THE I MPUGNED ORDER ON THE GROUND THAT THE DEPARTMENT HAS PROVED ITS ONUS AND SECONDLY SINCE IT IS A CASE OF CONCEALMENT OF INCOME, THEREFORE, T HE PENALTY WAS RIGHTLY LEVIED. THE CASES RELIED UPON BY THE LEARN ED CIT(A) WERE REITERATED BY THE LD. SR. DR. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS ARE THAT THE ASSESS EE HAS BEEN CARRYING ON THE BUSINESS OF RETAIL TRADING OF JEWELLERY AT VILL AGE HATOD AND ALSO HAS AGRICULTURAL INCOME. THE ASSESSEE DECLARED INCOME OF RS.54,260/- FROM JEWELLERY BUSINESS AND RS.2,52,210/- AS AGRICU LTURAL INCOME IN ITS RETURN FILED ON 8.6.2004. DURING THE ASSESSMENT PR OCEEDINGS THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS WHEREIN CERTAIN DISCREPANCIES WERE NOTICED. IN REPLY, THE ASSESSEE CLAIMED THAT A S PER SECTION 44AA OF THE ACT, THE ASSESSEE IS NOT SUPPOSED TO MAINTAI N BOOKS OF ACCOUNTS 3 AND EVEN THE MANUAL BOOKS OF ACCOUNTS WERE MAINTAIN ED WITH THE HELP OF THE SEMI-SKILLED ACCOUNTANT. IT WAS CLAIMED THAT DUE TO NON- EXPERTISE OF THE ACCOUNTANT, CERTAIN DISCREPANCIES CREPT INTO AND THE BOOKS WERE GOT COMPUTERISED LATERON IN WHICH THE CL ERICAL MISTAKES WERE CLAIMED TO BE RECTIFIED. AS PER THE REVENUE, T HE ASSESSEE SHOWED A SUM OF RS.1,50,000/- IN CASH, RECEIVED AS ADVANCE , AGAINST THE SALE OF PIECE OF AGRICULTURAL LAND FROM ONE SANJAY MEENA . THE AO DOUBTED THE GENUINENESS OF THIS CASH RECEIPT WHICH WAS TREA TED AS UNEXPLAINED MONEY AND CONSEQUENTLY IMPOSED PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT. ON APPEAL, THE PENALTY ORDER WAS AFFIRMED BY THE LD.CIT(A) WHICH IS UNDER CHALLENGE BEFORE THE TRIBUNAL. 4. THE WHOLE ISSUE CENTRES ROUND THE CASH RECEIPT O F RS.1,50,000/- WHICH WAS CLAIMED TO BE RECEIVED AS ADVANCE ON THE SALE OF PIECE OF AGRICULTURAL LAND. IN SUPPORT OF CLAIM OF SALE OF LAND, THE ASSESSEE PRODUCED THE SALE DEED WHEREIN RS.1,43,000/- HAS BE EN SHOWN AS SALE CONSIDERATION. THE STAND OF THE REVENUE IS THAT SI NCE THE AMOUNT WAS CLAIMED TO BE RECEIVED ON 1.4.2003 AND THE SALE DEE D IS DATED 18.8.2004, THEREFORE, THE TIME GAP BETWEEN THE TWO RAISES DOUBT ABOUT THE GENUINENESS OF THE CLAIM OF THE ASSESSEE. IT IS SEEN THAT THE SALE DEED WAS EXECUTED ON 18.8.2004 WHEREAS THE ASS ESSMENT PROCEEDINGS WERE TAKEN UP WITH THE ISSUANCE OF NOTI CE U/S 142(1) ON 4 16.5.2006 WHEREAS THE ASSESSMENT ORDER WAS FRAMED O N 28.12.2006. IT IS PERTINENT TO MENTION HERE THAT THE ASSESSEE IS N OT A BIG TRADER IN JEWELLERY AND IS DOING A SMALL TIME TRADING THAT TO O IN A VILLAGE AND HAS ONLY SHOWED THE AMOUNT OF RS.54,260/- FROM NON-AGRI CULTURAL BUSINESS. THE ASSESSEE IS HAVING ABOUT 7 ACRES OF AGRICULTURA L LAND. THE ASSESSMENT WAS FRAMED U/S 143(3) ON 28.12.2006 BY D ETERMINING THE NON-AGRICULTURAL INCOME AT RS.2,04,260/- AGAINST TH E RETURNED INCOME OF RS.54,260/-, THEREBY MAKING ADDITION OF RS.1,50, 000/-IN THE INCOME OF THE ASSESSEE BY TRADING ADVANCE AGAINST SALE OF AGRICULTURAL LAND BY THE ASSESSEE AT RS.1,50,000/-. THE AO ACCEPTED THE AGRICULTURAL INCOME AT RS.2,52,210/-. SUBSEQUENTLY, SHOW CAUSE NOTICE WAS ISSUED UNDER SECTION 271(1)(C) OF THE ACT. FINALLY, THE EX PLANATION OF THE ASSESSEE WAS REJECTED AND A PENALTY OF RS.45,000/- WAS IMPOSED ON 21.3.2007. DURING THE ASSESSMENT PROCEEDINGS THE AS SESSEE COULD NOT PRODUCE ANY EVIDENCE FOR RECEIPT OF RS.1,50,000/- W HICH WAS SHOWN IN THE CASH BOOK. HOWEVER, IN ITS CASH BOOK FOR THE PE RIOD FROM 1.4.2003 TO 30.4.2003 THE ASSESSEE HAS DULY SHOWN THE AMOUNT OF RS.1,50,000/- (PAGE 11 OF THE PAPER BOOK)AS ADVANCE AGAINST SALE OF LAND. EVEN THE AMOUNT OF RS.1,43,000/- IS DULY MENTIONED IN THE SA LE DEED AGAINST THE SALE OF AGRICULTURAL LAND TO SHRI SANJAY. IT HAS BE EN SPECIFICALLY MENTIONED IN PARA 3 OF THE SALE DEED (INTERNAL PAGE 4 AND PAGE 15 OF 5 THE PAPER BOOK) THAT THE AMOUNT OF RS.1,43,000/- WA S DULY RECEIVED BY THE ASSESSEE. SINCE THE LEARNED AO HAS TAKEN INTO CONSIDERATION THE COMPUTERISED CASH BOOK FOR MAKING THE ADDITION OF R S.1,50,000/-, THEREFORE, THERE IS NO JUSTIFICATION FOR MAKING REF ERENCE TO THE MANUAL BOOKS AT THE TIME OF PASSING THE PENALTY ORDER. EVE N OTHERWISE, IF THE MANUAL AS WELL AS COMPUTERISED CASH BOOKS ARE CONSI DERED, STILL THE PEAK AMOUNT OF CASH CREDIT WORKS OUT TO RS.99,000/- ONLY. HOWEVER, SINCE THE SOURCE OF CREDIT OF RS.1,50,000/- WAS DUL Y EXPLAINED BY THE ASSESSEE AS DULY SHOWN IN THE COMPUTERISED BOOKS, T HEREFORE, NOTHING UNEXPLAINED REMAINED. EVEN OTHERWISE, THE AGRICULT URAL INCOME IS EXEMPT FROM TAXATION AND ONLY THE AMOUNT OF RS.54,2 60/- WAS NON- AGRICULTURAL INCOME. FOR IMPOSING PENALTY U/S 271( 1)(C) EITHER THERE MUST BE CONCEALMENT OF INCOME OR FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME. AT THE TIME FRAMING OF THE ASSESSME NT, SINCE THE COMPUTERISED BOOKS WERE MADE AVAILABLE AND WERE CON SIDERED BY THE AO, THEREFORE, NOTHING REMAINED UNEXPLAINED. PENALT Y PROCEEDINGS AND QUANTUM PROCEEDINGS ARE ALTOGETHER DIFFERENT AND FO R IMPOSING PENALTY, IT HAS TO BE CONSTRUED STRICTLY BECAUSE TH ERE MUST BE POSITIVE FINDING FOR CONCEALMENT OF INCOME. THE RATIO LAID D OWN BY HONBLE GUJARAT HIGH COURT IN CIT V. JALARAM OIL MILLS (253 ITR 192) WHEREIN IT WAS CLEARLY HELD THAT MERELY BECAUSE ADDITION HAS B EEN MADE BY 6 INVOKING THE PROVISIONS OF SECTION 68, PENALTY UNDE R SECTION 271(1)(C) WOULD NOT FOLLOW AS A NATURAL COROLLARY, DE HORSE T HE SAID PROVISION, IT CANNOT BE STATED WITH CERTAINTY THAT THE ASSESSEE F AILED TO RETURN THE CORRECT INCOME DUE TO ANY FRAUD OR GROSS NEGLIGENCE . THERE IS NO EVIDENCE ON RECORD ON BEHALF OF THE REVENUE THAT TH E ASSESSEE WAS HAVING BUSINESS INCOME OUTSIDE THE BOOKS OF ACCOUNT S IN THE PAST OR IN THE YEAR UNDER CONSIDERATION. IN THE ABSENCE OF SU CH A FINDING, THE DECISION FROM HONBLE JURISDICTIONAL HIGH COURT IN CIT V. DILIP KUMAR BHUSARI; 195 ITR 902 FURTHER FORTIFIES THE CASE OF THE ASSESSEE. THE DECISION IN CIT V. CHIRAG INGOTS PVT. LTD. (275 ITR 310) (M.P.) FURTHER FORTIFIES THE CASE OF THE ASSESSEE WHEREIN DECISION FROM HONBLE APEX COURT IN AGRAWAL G.C. V. CIT; 186 ITR 571 (SC) AND VENUGOPAL CHETTIAR (HV) V. CIT; 153 ITR 376 (MAD) W AS DULY CONSIDERED. IN THE PRESENT APPEAL, THE ASSESSEE NEITHER CONCEAL ED ITS INCOME NOR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AUT OMATICALLY DOES NOT COME UNDER THE PURVIEW OF SECTION 271(1)(C) OF THE ACT. FOR IMPOSING PENALTY UNDER SECTION 271(1))(C) DEFINITE FINDING A BOUT CONCEALMENT IS NECESSARY AS WAS HELD IN CIT V. K.R. CHINNI KRISHNA CHETTY ; 246 ITR 121 (MAD.). EVEN PENALTY IN THE CASES OF UNEXPLAINED C ASH CREDITS IS NOT LEVIABLE AS WAS HELD IN NATIONAL TEXTILES V. CIT; 2 49 ITR 125 (GUJ). IN THE PRESENT APPEAL, SINCE THE COMPUTERISED BOOKS OF ACCOUNTS WERE 7 CONSIDERED BY THE AO, THEREFORE, BOOKS OF ACCOUNTS REFER TO THOSE BOOKS OF ACCOUNTS WHICH WERE MAINTAINED FOR INCOME TAX PURPOSES AND NOT FOR OTHER PRIVATE RECORDS. IN THE COMPUTERISED BOOKS OF ACCOUNTS, THE AMOUNT OF RS.1,50,000/- WAS DULY RECORDED, THER EFORE, THE DECISION IN SHERATON APPARELS V. ACIT; 256 ITR 20 ( BOM) FURTHER FORTIFIES THE CASE OF THE ASSESSEE. THE HONBLE JUR ISDICTIONAL HIGH COURT IN CIT V. SKYLINE AUTO PRODUCTS PRIVATE LIMITED; 27 1 ITR 335 EVEN WENT TO THE EXTENT THAT WHEN MISTAKE IS BONAFIDE, NO PEN ALTY CAN BE IMPOSED UNDER SECTION 271(1)(C). IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, THE PENALTY OF RS.45,000/- IS DELET ED. RESULTANTLY, THIS APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 2.6.2010. SD/- (JOGINDER SINGH) JUDICIAL MEMBER DATED: 2.6.2010 D/- COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE