Viswanadha Venkata Rao, Hyd, Hyderabad V. ITO, Ward-11(1), Hyderabad, Hyderabad

ITA 1434/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6327 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 23-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Keywords: Unexplained investment
• Section: 142(1); 69

Judgement Text

ITA NO 1434 OF 2015 VISWANADHA VENKAT RAO HYDERABAD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B (SMC) BENCH, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1434/HYD/2015 (ASSESSMENT YEAR: 2005-06) SHRI VISWANADHA VENKATA RAO HYDERABAD PAN: AHNPV 8854 H VS. INCOME TAX OFFICER WARD 11(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SMT. S. SANDHYA FOR REVENUE : SMT. U . MINICHANDRAN, DR DATE OF HEARING : 5.7.2016 DATE OF PRONOUNCEMENT : 29 .7.2016 O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2005-06 AGAIN ST THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE I.T. ACT AND CONFIRMED BY THE CIT (A). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, HAD DEPOSITED A SUM OF RS.15,05,000 IN HIS SYNDICAT E BANK SAVINGS A/C DURING THE FINANCIAL YEAR 2004-05 RELEV ANT TO THE A.Y 2005-06. ON RECEIPT OF THE INFORMATION, THE AO VERI FIED AND FOUND THAT THE ASSESSEE IS NOT ASSESSED TO INCOME T AX. THEREFORE, A NOTICE U/S 142(1) OF THE ACT, DATED 27.8.07, WAS ISSUED TO THE ASSESSEE CALLING FOR THE RETURN OF INCOME FOR THE A .Y 2005-06. ASSESSEE FILED THE RETURN OF INCOME ON 12.09.2007. IN RESPONSE TO THE NOTICE U/S 143(2) OF THE I.T. ACT, ASSESSEE FILED A LETTER STATING THAT THE AMOUNT DEPOSITED IN ASSESSEES BAN K A/C WAS ARRANGED BY THE CONSULTANTS M/S. VISHU CONSULTANTS LTD, HYDERABAD SO AS TO ENABLE THE ASSESSEES SON TO GET VISA TO USA ITA NO 1434 OF 2015 VISWANADHA VENKAT RAO HYDERABAD PAGE 2 OF 6 FOR PURSUING STUDIES IN USA. SINCE NO DOCUMENTARY E VIDENCE WAS FURNISHED IN SUPPORT OF THE CONTENTIONS MADE IN THE LETTER, THE ASSESSMENT WAS COMPLETED BY TREATING THE AMOUNT AS UNEXPLAINED INVESTMENT U/S 69 OF THE I.T. ACT. 3. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT. THE ASSESSEE WAS ASKED T O FILE THE REPLY AS TO WHY THE PENALTY U/S 271(1)(C) SHOULD NOT BE L EVIED. ASSESSEE DID NOT RESPOND TO THE PENALTY NOTICE AND THEREFORE THE AO LEVIED MINIMUM PENALTY ON THE AMOUNT OF TAX SOUG HT TO BE EVADED FOR CONCEALMENT OF INCOME BY INVESTING IN TH E BANK DEPOSITS. AGGRIEVED BY THE SAME, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) STATING THAT THE ASSESSEES SON MR. VISWANADHA VENKATA SOMAYAJULU WAS TRYING FOR ADMISSION IN VARI OUS UNIVERSITIES OUTSIDE THE COUNTRY AND FOR OBTAINING VISA, THE BANK BALANCE OF THE PARENTS WAS NECESSARY. THEREFORE, TH E ASSESSEE APPROACHED THE PROFESSIONALS AND GOT THE APPLICATIO N PREPARED AND THE PROFESSIONAL ALSO PROVIDED A BANK BALANCE F OR A VERY SHORT PERIOD FOR A CHARGE. ACCORDINGLY RS.15,05,000 WAS DEPOSITED IN HIS BANK A/C FOR A SHORT DURATION. IT WAS FURTHER SUBMITTED THAT SINCE THE VISHU CONSULTANTS HAD CLOS ED THEIR OPERATIONS IN HYDERABAD, THE ASSESSEE COULD NOT OBT AIN ANY CONFIRMATION FROM THEM. IT WAS THEREFORE, SUBMITTED THAT NO INCOME WAS DERIVED BY HIM AND THEREFORE, CANNOT BE TREATED AS INCOME OF THE ASSESSEE. HE PRAYED FOR DELETING THE PENALTY. THE CIT(A), HOWEVER, WAS NOT CONVINCED WITH THE ASSESSE ES CONTENTIONS AND OBSERVING THAT THE EXPLANATION OFFE RED BY THE ASSESSEE DID NOT APPEAR TO BE BONAFIDE EXPLANATION AS ALL MATERIAL FACTS WERE NOT BROUGHT ON RECORD, HE HELD THAT THE ASSESSEE FAILED TO PRODUCE THE MATERIAL FACTS ON RE CORD AND THE ITA NO 1434 OF 2015 VISWANADHA VENKAT RAO HYDERABAD PAGE 3 OF 6 ONUS IS UPON HIM TO OFFER AN EXPLANATION AND ALSO T O SUBSTANTIATE IT. THEREFORE, HE CONFIRMED THE PENALT Y LEVIED BY THE AO. ASSESSEE IS IN SECOND APPEAL BEFORE US. 4. IT IS NOTICED THAT THE APPEAL IS TIME BARRED BY A PERIOD OF 12 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAININ G THE REASONS FOR THE DELAY AND TAKING THE SAME INTO CONSIDERATIO N, WE ARE SATISFIED THAT THE DELAY IN FILING THE APPEAL IS NO T WILFUL. IN VIEW OF THE SAME, THE DELAY IS CONDONED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SMT. S. SAN DHYA, WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE A UTHORITIES BELOW, SUBMITTED THAT THE ASSESSEE HAS NO SOUCE OF INCOME WHATSOEVER, AND THAT THE CONSULTANTS WHO HAVE HELPE D HIS SON TO APPLY TO VARIOUS UNIVERSITIES OUTSIDE INDIA ALSO HELPED THE ASSESSEE IN MAKING DEPOSIT OF MONEY FOR A SHORT DU RATION TO ENABLE HIM TO OBTAIN A VISA TO USA. SHE SUBMITTED T HAT THE ASSESSEE WAS NOT EVEN AWARE OF THE BANK DETAILS AND EVEN THE AO HAS NOT EXAMINED THE BANK A/C OF THE ASSESSEE TO V ERIFY THE ASSESSEES CONTENTIONS THAT THE DEPOSIT WAS MADE BY THE CONSULTANTS FOR A VERY SHORT PERIOD. SHE SUBMITTED THAT FAILURE OF THE ASSESSEE TO SUBSTANTIATE THIS CLAIM HAS RESULTE D IN THE ADDITION, BUT CANNOT BE A GROUND FOR LEVYING PENALT Y AS NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AUTHORIT IES FOR THE WILFUL CONCEALMENT OR EVASION OF TAX. THEREFORE, AC CORDING TO HER, THE PENALTY IS NOT SUSTAINABLE. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT M/S VISU C ONSULTANTS LTD WAS VERY MUCH IN EXISTENCE IN HYDERABAD AND THE ASSESSEES ITA NO 1434 OF 2015 VISWANADHA VENKAT RAO HYDERABAD PAGE 4 OF 6 CONTENTION THAT IT HAS CLOSED ITS OPERATION IN HYDE RABAD IS NOT CORRECT. SHE HAS ALSO DRAWN OUR ATTENTION TO THE FA CT THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT THE VISU C ONSULTANTS HAVE, IN FACT, PROVIDED THE FUNDS FOR DEPOSIT INTO THE ASSESSEES BANK A/C, THEREFORE, ACCORDING TO HER, THE ASSESSEE HAS FAILED IN EXPLAINING THE SOURCE OF INVESTMENT AND HENCE THE P ENALTY IS JUSTIFIED. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE OR EXPLAIN THE SOURCE OF THE DEPOSITS IN HIS BANK A/C. THE CIT (A) ALSO CONFIRMED THE ADDITION. HOWEV ER, IT IS NOT OUT OF PLACE TO MENTION THAT IN A SERIES OF DECISIO NS, VARIOUS HIGH COURTS HAVE HELD THAT AN ADDITION MADE IN THE ASSES SMENT OF THE INCOME DOES NOT AUTOMATICALY ATTRACT THE LEVY OF PE NALTY. UNLESS AND UNTIL THE CONDITIONS FOR LEVY OF PENALTY ARE SA TISFIED/FULFILLED, THE AO CANNOT LEVY THE PENALTY U/S 271(1)(C) OF THE ACT. THE PENALTY U/S 271(1)(C) IS LEVIED FOR FURNISHING OF I NACCURATE PARTICULARS OR CONCEALMENT OF INCOME. IN THE CASE B EFORE US, THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME TILL TH E AO HAS CALLED FOR THE RETURN OF INCOME. THEREFORE, IT CANNOT BE S TATED TO BE A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INC OME. HOWEVER, AS REGARDS THE CONCEALMENT OF INCOME, SINCE THE ASS ESSEE HAS NOT FURNISHED ANY INFORMATION, IT MAY BE CONSIDERED AS A CASE OF CONCEALMENT OF INCOME. THE ASSESSEE HAD NOT FURNISH ED ANY EXPLANATION BEFORE THE AO AS TO WHY THE PENALTY SHO ULD NOT BE LEVIED. THE EXPLANATION WAS FILED ONLY BEFORE THE C IT (A). IN SUPPORT OF THE ASSESSEES CONTENTION THAT M/S VISHU CONSULTANTS HAD PROVIDED THE FUNDS, THE ASSESSEE HAS FILED ONLY A COPY OF THE LETTER ISSUED BY M/S VISHU CONSULTANTS CONGRAULATIN G THE ITA NO 1434 OF 2015 VISWANADHA VENKAT RAO HYDERABAD PAGE 5 OF 6 ASSESSEES SON ON GETTING ADMISSION AND HAS ALSO OF FERED TO TAKE THE DEMAND DRAFT FROM AN AUTHORISED BANK IN THE NAM E OF THE UNIVERSITY. IT IS ALSO A KNOWN FACT THAT FOR THE PU RPOSES OF GETTING A VISA, PARENTS ARE REQUIRED TO MAINTAIN CERTAIN CA SH BALANCE IN THE BANK A/C AND CONSULTANTS OR THE FRIENDS AND FAM ILY MEMBERS OF THE APPLICANT USUALLY HELP IN MAKING THE DEPOSIT FOR A SHORT DURATION IN ORDER TO HELP THE CANDIDATE TO GET THE VISA. THE AO AND THE CIT (A) HAVE NOT VERIFIED THE BANK A/C OF T HE ASSESSEE WHEREIN THE DEPOSIT WAS MADE, THE DURATION OF THE D EPOSIT AND HOW THE DEPOSIT HAS BEEN WITHDRAWN. THE FACT OF THE ASSESSEES SON GETTING ADMISSION AND ALSO GETTING A VISA IS NO T DISPUTED. THE CONTENTIONS OF THE ASSESSEE HAVE NOT BEEN DISPROVED BY THE AO. THEREFORE, WE AGREE WITH THE CONTENTIONS OF THE ASS ESSEE, THAT THOUGH THE ADDITION IS JUSTIFIED, IT IS NOT A FIT C ASE FOR LEVY OF PENALTY U/S 271 (1)(C). UNDER SIMILAR CIRCUMSTANCES , THE COORDINATE BENCH OF THIS TRIBUNAL AT DELHI IN THE C ASE OF INCOME TAX OFFICER VS. SHRI N. MOTILAL NALLURI IN ITA NO.3 88/DEL/2010 HAS DELETED THE PENALTY U/S 271(1)(C) OF THE ACT. I N VIEW OF THE SAME, I DELETE THE PENALTY LEVIED BY THE AO U/S 271 (1)(C) OF THE ACT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2016. S D/ - (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 29 TH JULY, 2016. VNODAN/SPS ITA NO 1434 OF 2015 VISWANADHA VENKAT RAO HYDERABAD PAGE 6 OF 6 COPY TO: 1. SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS E LEGANCE, 3-6-643, STREET NO.9, HIMAYATGNAGAR, HYDERABAD 5000 29 2. INCOME TAX OFFICER WARD 11(1) IT TOWERS, AC GUARDS, HYDERABAD 3. CIT(A) 5 HYDERABAD 4. PR. CIT 5 HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER