DCIT, CHENNAI V. R.Revathy, CHENNAI

ITA 1450/CHNY/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3998 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: JHARNA B HAWLAL
• Keywords: Unexplained investment; Gift; Search and seizure; Revised return
• Section: 142(1); 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , . . ' #$ , % &' ( [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T.A.NO.1450/MDS/2016 & C.O.NO.150/MDS/2016 / ASSESSMENT YEAR: 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(2), CHENNAI 600 034. VS. SMT. R.REVATHY , NO.14, RAMANANTHAN STREET, T.NAGAR, CHENNAI 600 034. [PAN: AAA PR 5272 R] ( /APPELLANT) (RESPONDENT /CROSS OBJECTOR ) DEPARTMENT BY : SHRI SHIVA SRINIVAS , JCIT ASSESSEE BY : SMT. JHARNA B.HAWLAL, CA / DATE OF HEARING : 27.10 .2016 / DATE OF PRONOUNCEMENT : 23 . 11.2016 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS-18), CHENNAI, C HALLENGING THE DELETION OF PENALTY UNDER SECTION 271(1)(C) OF INCOME TAX AC T (IN SHORT THE ACT). ALL THE GROUNDS OF APPEAL ARE RELATED TO THE LEVY OF PE NALTY U/S 271(1)(C) OF THE ACT. 2. THE ASSESSEE IS AN INDIVIDUAL BELONGS TO SARVANA GROUP OF CONCERNS. A SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT WAS CO NDUCTED IN SARAVAN GROUP ON :: 2 :: ITA NO.1450/MDS/2016 18.08.2011. THE ASSESSEE IS MOTHER OF SHRI R.SABAPA THY AND WIFE OF SHRI S.RAJA RATHINAM BELONGING TO THE SARAVANA GROUP. DURING TH E COURSE OF SEARCH PROCEEDINGS AT THE RESIDENTIAL PREMISES OF SHRI R.SABAPATHY SI TUATED AT NO.10, LAKSHMAN STREET T.NAGAR, CHENNAI, GOLD AND JEWELLERY BELONGING TO T HE ASSESSEE SMT. R.REVATHY FOUND AND SEIZED AS PER ANNEXURE-ANN/PMS/GOLD/S-1 D ATED 18.08.2011. THE VALUE OF THE GOLD WAS VALUED AT RS.47,37,496/-. 3. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTI ON 153(C) OF THE ACT AND THE ASSESSEE FILED THE RETURN OF INCOME DECLARING T HE TOTAL INCOME OF RS.24,90,170/-. THE ASSESSEE HAS NOT INCLUDED THE VALUE OF GOLD JEW ELLERY FOUND AT THE TIME OF SEARCH IN THE RETURN OF INCOME. THE ASSESSING OFFI CER ISSUED NOTICE UNDER SECTION 142(1) ON 25.02.2013 DIRECTING THE ASSESSEE TO EXPL AIN AS TO WHY THE JEWELLERY WAS FOUND AND SEIZED SHOULD NOT BE TREATED AS UNACCOUNT ED INVESTMENT? IN RESPONSE TO THE NOTICE ISSUED, THE ASSESSEE FILED REVISED MEMO OF INCOME FOR TOTAL INCOME OF RS.75,11,844/- INCLUDING THE VALUE OF GOLD AND JEWE LLERY FOUND AT THE TIME OF SEARCH. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT MAKI NG ADDITION OF RS.47,37,496/- RELATING TO THE JEWELLERY FOUND DURING THE SEARCH PROCEEDINGS AND INITIATED PENALTY U/S.271(1)(C) OF THE ACT. 4. THE ASSESSING OFFICER ISSUED PENALTY NOTICE AND IN RESPONSE TO THE PENALTY NOTICE, THE ASSESSEE EXPLAINED THAT THE JEWELLERY F OUND AT THE TIME OF SEARCH WAS PURCHASED FROM THE PERSONAL SAVINGS DRAWINGS FROM THE FIRMS AND GIFTS ON VARIOUS OCCASIONS. THE ASSESSING OFFICER CONSIDERED THE SUB MISSION MADE BY THE ASSESSEE AND NOT BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE LEVIED PENALTY OF RS.14,51,713/- BEING 100% OF TAX UNDER SECTION 271( 1)(C) OF THE ACT. THE ASSESSING :: 3 :: ITA NO.1450/MDS/2016 OFFICER ALSO RELIED ON THE JUDGMENT OF HONBLE SUPR EME COURT IN THE CASE OF MAK DATA PVT. LTD. VS CIT-II (38 TAXMANN.COM 448). 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFF ICER, THE ASSESSEE FILED APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE AS SESSEE HAS TAKEN A PLEA THAT MOST OF THE JEWELLERY FOUND IN COURSE OF SEARCH WAS DECLARED UNDER VDIS AND ACQUIRED OVER A PERIOD OF TIME BY WAY OF STHREEDHAN AND GIFTS ON VARIOUS OCCASIONS. THE ASSESSEE ARGUED BEFORE THE CIT(A) THAT THE ADDI TION WAS NOT DISPUTED TO BUY PEACE. THE LD.CIT(A) CONSIDERED THE SUBMISSIONS M ADE BY THE ASSESSEE AND CANCELLED THE PENALTY IMPOSED BY THE ASSESSING OFF ICER. 5.1 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. APPEARING FOR THE REVENUE, MR. SHIVA SRINIVAS, THE LD.DR ARGUED THAT THERE WAS A SEARCH AND SEIZURE ACTION CARRIED OUT I N THE ASSESSEES RESIDENTIAL PREMISES AND FOUND GOLD JEWELLERY WORTH RS.47,37,496/-. THOUGH, THERE WAS NO EVIDENCE AND PROOF FOR PURCHAS E OF JEWELLERY FROM THE ACCOUNTED SOURCES, THE ASSESSEE HAS NEITHER DEC LARED THE VALUE OF JEWELLERY U/S.132(4) NOR IN THE RETURN OF INCOME FI LED IN RESPONSE TO THE NOTICE U/S.153(C) OF THE ACT. THE ASSESSEE HAS ADM ITTED UNCOUNTED INVESTMENT IN JEWELLERY ONLY DURING THE COURSE OF A SSESSMENT PROCEEDINGS AFTER ISSUE OF NOTICE U/S.142(1). SINCE, THERE WAS NO EXPLANATION WHATSOEVER TO EXPLAIN THE SOURCES FOR ACQUIRING THE JEWELLERY. BUT FOR SEARCH ACTION AND SUBSEQUENT ASSESSMENT PROCEEDINGS , THE ASSESSEE WOULD NOT HAVE DECLARED THE UNEXPLAINED INVESTMENT. THEREFORE, LD.DR ARGUED THAT IT IS A CLEAR CASE OF CONCEALMENT OF I NCOME WHICH ATTRACTS :: 4 :: ITA NO.1450/MDS/2016 PENALTY U/S.271(1)(C) OF THE ACT. THE LD.DR ALSO R ELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD. VS. CITII (38 TAXMANN.COM448) . 5.2 ON THE OTHER HAND, THE LD.AR ARGUED THAT THE AS SESSEE HAS ADMITTED THE INCOME DURING THE COURSE OF SEARCH ASS ESSMENT PROCEEDINGS TO BUY PEACE AND TO AVOID PROTRACTED LITIGATION. I N FACT, THE ASSESSEE HAS ADMITTED UNDISCLOSED INCOME UNDER VDIS SCHEME IN 19 97. THE GOLD AND JEWELLERY WEIGHING ABOUT 1,01,442.500 GRAMS FOR A V ALUE OF RS.2,23,17,350/- AND CASH BALANCE OF RS.3.00 CROR ES WAS ADMITTED IN VDIS SCHEME AND PAID THE TAXES THEREON. THE A.R. SU BMITTED THAT MOST OF THE JEWELLERY FOUND DURING THE COURSE OF SEARCH WAS BROUGHT FORWARD FROM THE GOLD AND JEWELLERY DECLARED UNDER VDIS SCH EME. THE LD.AR ALSO FURNISHED THE COPY OF CERTIFICATE ISSUED BY CIT U/S .68(2) OF THE VOLUNTARY DISCLOSURE OF INCOME SCHEME, 1997 EVIDENCE IN THE D ECLARATION. THE LD.AR, FURTHER, SUBMITTED THAT IT IS COMMON PRACTIC E IN SOUTH INDIA TO GET GIFTS ON VARIOUS OCCASIONS IN THE FORM OF GOLD AND JEWELLERY. THEREFORE, THE LD.AR VEHEMENTLY ARGUED THAT THE GOLD JEWELLERY FOUND DURING THE COURSE OF SEARCH WAS CLEARLY EXPLAINED AND THERE IS NO CASE FOR PENALTY U/S.271(1)(C). FOR A QUERY FROM THE BENCH, THE LD. AR REPLIED THAT THE ASSESSEE HAS NOT FILED THE WEALTH TAX DETAILS. 6. IN THE REJOINDER, THE LD.DR SUBMITTED THAT THE A SSESSEE HAS NOT DECLARED THE JEWELLERY VALUING ABOUT RS.47.37 LAKHS IN THE WEALTH TAX RETURNS. IN FACT, IT IS FOUND THAT NO WEALTH TAX R ETURNS ARE FILED BY :: 5 :: ITA NO.1450/MDS/2016 ASSESSEE, EVEN THOUGH THE GOLD JEWELLERY ATTRACTS W EALTH TAX. THE GOLD JEWELLERY FOUND DURING THE COURSE OF SEARCH WAS OVE R AND ABOVE THE EXEMPTION OF WEALTH TAX. THEREFORE, THE LD.DR CONT ENDED THAT THE ASSESSEE CANNOT TAKE TWO CONTRARY STANDS FOR WEALTH TAX PURPOSE AND FOR THE PURPOSE OF INCOME TAX. THEREFORE, HE CONTENDED THAT THIS IS A CLEAR CASE OF PENALTY U/S.271(1)(C) OF INCOME TAX ACT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS A ND PERUSED MATERIAL PLACED ON RECORD. SEARCH U/S 132 WAS CONDUCTED IN THE RESIDE NTIAL PREMISES OF SHRI R.SABHAPATHY OF SARAVANA GROUP AND DURING THE COURS E OF SEARCH, GOLD AND JEWELLERY WORTH OF RS.47,37,496/- WAS FOUND AND S EIZED BY THE INCOME TAX DEPARTMENT. DURING THE COURSE OF SEARCH, THE ASSES SEE HAS NOT EXPLAINED THE SOURCE OF INVESTMENT AND DID NOT DISCLOSE THE UNEX PLAINED INVESTMENT IN A STATEMENT U/S132(4). THE ASSESSEE HAS NOT ADMITTED THE INCOME IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE ISSUED UND ER SECTION 153(C) OF THE ACT, THOUGH THE GOLD AND JEWELLERY WAS FOUND AT THE TIM E OF SEARCH ON 18.08.2011. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE U NDER SECTION 142(1) AND CALLED FOR EXPLANATION OF THE ASSESSEE AS TO WHY THE GOLD JEWELLERY FOUND AND SEIZED DURING THE SEARCH SHOULD NOT BE TREATED AS UNACCOUNTED IN VESTMENT IN THE JEWELLERY, THEN ONLY THE ASSESSEE HAS FILED REVISED COMPUTATION OF INCOME ADMITTING UNEXPLAINED INVESTMENT IN GOLD JEWELLERY. THE ACT OF THE ASSES SEE CLEARLY SHOWS THAT THE ASSESSEE HAS NO EXPLANATION WHATSOEVER TO EXPLAIN T HE SOURCE OF THE INVESTMENT, HENCE, SHE HAS ACCEPTED INVESTMENT IN JEWELLERY AS UNDISCLOSED INCOME. DURING APPEAL THE ASSESSEE HAS TAKEN A SHELTER UNDER THE VDIS AND FILED COPY OF CERTIFICATE U/S68(2)OF VDIS TO EXPLAIN THE SOURCE OF INVESTMEN T WAS FROM THE VDIS, GIFT AND :: 6 :: ITA NO.1450/MDS/2016 STRIDHAN ETC. THOUGH THE ASSESSEE ADMITTED JEWELLE RY OF RS.2.23 CRORES AND THE CASH OF 3.00 CRORES UNDER VDIS, SHE HAS NOT FILED THE WEALTH TAX RETURNS WHICH IMPLIES THAT THE WEALTH DECLARED UNDER VDIS HAS BEE N EXHAUSTED AND NOTHING IS CARRIED FORWARD FOR SUBSEQUENT YEAR. THE ASSESSEE I S FROM THE EDUCATED AND FROM AFFLUENT FAMILY, ASSISTED BY THE LEGAL COUNSELS AND AWARE OF THE WEALTH TAX PROVISIONS. IN THE ABSENCE OF ANY EVIDENCE FOR PURC HASE OF JEWELLERY FROM THE EXPLAINED SOURCES, AND IN THE ABSENCE OF WEALTH TAX RETURNS, WE ARE UNABLE TO ACCEPT THE A.RS ARGUMENT THAT THE SOURCE OF JEWELLERY WAS FROM EXPLAINED SOURCES/VDIS. THE ASSESSEE CANNOT TAKE AN ADVANTAGE OF VDIS DISCL OSURE FOR EXPLAINING THE SOURCE OF INVESTMENT IN JEWELLERY BY EVADING WEALTH TAX. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE EXPLANATION OF INVESTME NT OUT OF VDIS AND STRIDHAN, GIFTS IS NOTHING BUT AN AFTERTHOUGHT. EVEN IF THE A SSESSEE ACQUIRES THE GOLD FROM VDIS, AND GIFTS SHE IS BOUND TO DECLARE IN WEALTH T AX RETURNS AND PAY WEALTH TAX FAILING WHICH IT REMAINS UNACCOUNTED. THEREFORE, W E HOLD THAT THIS IS CLEAR CASE OF PENALTY UNDER SECTION 271(1)(C) OF ACT. 7.1 THE ASSESSEE RELIED ON THE DECISION OF SIR SHADILAL SUGAR AND GENERAL VS CIT 168 AR 705 REGARDING MENS REA THIS ASPECT HAS BEEN CONSIDERED BY THE HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. DHA RMENDRA TEXTILES PROCESSORS 306 ITR 277 HELD THAT PENALTY UNDER SECTION 271(1)(C) I S CIVIL LIABILITY AND FOR ATTRACTING SUCH CIVIL LIABILITY, WILFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT AS IS CASE IN MATTER OF PROSECUTION UNDER SECTION. THE ASSESSEE ALSO RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL [251 ITR 9]. IN THE CASE RELIED UP ON BY THE ASSESSEE, THE ASSESSEE HAS REVISED RETURN OF INCOME UNDER SECTION 148 OF THE ACT SHOWING MORE INCOME. THEREAFTER ORDERS OF THE :: 7 :: ITA NO.1450/MDS/2016 REASSESSMENT WERE PASSED WITHOUT RAISING ANY OBJECT ION. THEREFORE THE FACTS OF THE CASE ARE CLEARLY DISTINGUISHABLE. IN THE CASE OF TH E ASSESSEE THE REVENUE HAS CLEARLY SHIFTED THE BURDEN ON THE ASSESSEE AND THE ASSESSEE HAS NOT DISCHARGED HER BURDEN OF EXPLAINING THE SOURCE WITH PLAUSIBLE EVIDENCE. T HE FACTS OF THE ASSESSEES CASE ARE SQUARELY COVERED BY HONBLE SUPREME COURT JUDGEMEN T IN THE CASE OF MAK DATA (P) LTD. VS. CITII (38 TAXMANN.COM448) AND THIS IS A C LEAR CASE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY WE SET A SIDE THE ORDER OF THE LD.CIT(A) AND CONFIRM THE PENALTY LEVIED BY THE ASSESSING OFF ICER AND DISMISS THE CROSS OBJECTIONS FILED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED AND THE CROSS OBJECTIONS FILED BY THE ASSESSE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . . ' #$ ) (D.S. SUNDER SINGH) % / ACCOUNTANT MEMBER ! / CHENNAI '# / DATED: 23 RD NOVEMBER, 2016. TLN # $ % &' ( ' / COPY TO: 1 . / APPELLANT 3. ) () / CIT(A) 5. '+, % - / DR 2. %. / RESPONDENT 4. ) / CIT 6. ,/ 0 / GF