Dr. D. Ramesh, Secunderabad V. ACIT, Cir-1(3), Hyderabad

ITA 1450/HYD/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7189 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1998-1999
• Appeal Filed On: 11-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: V SRINIVAS
• Keywords: Gift; Search and seizure; Onus to prove
• Section: 5(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.1450/HYD/2011 ASSESSMENT YEAR 1998-99 DR. D. RAMESH, SECUNDERABAD. (PAN ACGPD 0814K) VS THE A CIT, CIRCLE 1(3), HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVAS RESPONDENT BY : SHRI T. DIWAKAR PRASAD DATE OF HEARING : 1.12.2011 DATE OF PRONOUNCEMENT : 9 .12.2011 ORDER PER BENCH: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) II, HYDERABAD DATE D 12.5.2011 AND PERTAINS TO THE ASSESSMENT YEAR 1998-99. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) IS ERRONEOUS AND BAD IN LAW ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) ERRED IN UPHOLDING THE PENALTY OF RS. 55,000/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF 19 61. 3. THE CIT(A) OUGHT TO HAVE TAKEN COGNISANCE OF THE EXPLANATION GIVEN BY THE ASSESSEE FOR THE SOURCE OF IMPUGNED INVESTMENT MADE DURING THE YEAR. ITA NO.1450/H/2011 DR. D. RAMESH, S. BAD 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE MEDICAL PROFESSION AND FILED HIS RETURN OF INCO ME FOR THE ASSESSMENT YEAR 1998-99 ON 7.10.1998 DECLARING TOTA L INCOME OF RS.2,87,290/-. A SEARCH AND SEIZURE OPERATION WA S CONDUCTED AT THE ASSESSEES RESIDENTIAL PREMISES ON 3.11.2004 AND CERTAIN DOCUMENTS WERE SEIZED RELATING TO PAYME NTS MADE TOWARDS PURCHASE OF PROPERTY IN DISPUTE. IT IS ALS O NOTICED BY THE ASSESSING OFFICER THAT AS PER THE AFFIDAVIT FIL ED BY THE ASSESSEE WITH DDIT(INV.), HYDERABAD ON 31.12.2004 F OR THE INVESTMENT MADE BY THE ASSESSEE IN THE DISPUTED PR OPERTY IS RS.4,37,180/- WHEREAS THE ASSESSEE HAD DISCLOSED RS.2,70,000/- IN HIS RETURN OF INCOME. THE ASSESSI NG OFFICER LEVIED PENALTY VIDE ITS ORDER DATED 24.4.2008. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO VIDE IMPUGNED ORDER DATED 12.5.2011, DISMISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ORDER OF THE ASSESSING OFFICER. AGGR IEVED BY THE IMPUGNED ORDER, THE ASSESSEE FILED THE PRESENT APPE AL BEFORE US. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE RELIED ON HIS GROUNDS OF APPEAL AND ALSO FILED WRIT TEN SUBMISSION IN WHICH HE HAS CITED VARIOUS DECISIONS TO SUPPORT THE CASE OF THE ASSESSEE. 6. ON THE CONTRARY THE LEARNED DR RELIED ON THE IM PUGNED ORDER. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD ESPECIALLY THE IMPUGN ED ORDERS PASSED BY THE ASSESSING OFFICER IN WHICH THE PENAL TY WAS LEVIED AT RS.55,000/-, FOR THE REASON THAT THE AMOUNT DIF FERENTIAL OF INVESTMENT IN CONSTRUCTION HAS BEEN OFFERED ONLY AF TER SEARCH ITA NO.1450/H/2011 DR. D. RAMESH, S. BAD OPERATION CONDUCTED AT THE PREMISES OF THE ASSESSEE . THE ADDITION HAS BEEN MADE AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE REASONS THAT IN SPITE OF ISSUE OF NOTICE U /S 148, THE ASSESSEE HAS NOT OFFERED THE AMOUNT OF RS.1,67,180/ - WHICH WAS ALREADY REFLECTS THE UNDISCLOSED INVESTMENT IN PURCHASE OF PROPERTY IN THE ASSESSMENT YEAR 1998-99. MORESO, T HE ADDITION HAS BEEN CONFIRMED BY THE TRIBUNAL VIDE ITS ORDER D ATED 18.5.2007 IN ITA NO.1239/HYD/2006. 8. THE ADDITION WAS BASED ON THE BASIS OF STATEMEN T MADE U/S 132(4) AND AFFIDAVIT FILED BY THE ASSESSEE. TH E ASSESSEE EXPLAINED THE SOURCE OF INVESTMENT IN THE PROPERTY AS FOLLOWS: A) AMOUNT RECEIVED FROM ASSESSEES SISTER IN LAW SMT. G. SARADA OUT OF WITHDRAWAL FROM HER SB A/ ANDHRA BANK RS.70,000 B) GIFT FROM ASSESSEES FIL SRI J. SAMBASIVA RAO, OUT OF WITHDRAWAL FROM HIS SB A/C RS.20,000 C) LOAN FROM ASSESSEES FIL SRI S. RAO OUT OF WITHDRAWAL FROM HIS SB A/C RS.15,000 9. THE ASSESSMENT WAS COMPLETED ON THE BASIS OF AS SESSEES ADMISSION U/S 132(4) IN THE COURSE OF SEARCH PROCEE DINGS. THE ASSESSEE DID NOT CONTEST IN THE QUANTUM PROCEEDINGS TO AVOID PROTRACTED LITIGATION. THE ASSESSING OFFICER IN TH E COURSE OF PENALTY PROCEEDINGS WITHOUT LEADING ANY EVIDENCE OF CONCEALMENT OR WITHOUT ANY INDEPENDENT FINDING PROC EEDED TO LEVY THE PENALTY BY MERELY STATING THAT THE ASSESS EES ARGUMENT HAS NO SUBSTANCE AS THE ASSESSEE HAS REPEATED HIS E ARLIER STAND AND THE ASSESSEES CONTENTION IS NOT REASONABLE AS UPHELD BY THE APPELLATE AUTHORITIES. ITA NO.1450/H/2011 DR. D. RAMESH, S. BAD 10. THE ASSESSING OFFICER MERELY RELIED ON THE ASS ESSMENT PROCEEDINGS FOR THE PURPOSE OF LEVY OF PENALTY. TH E ASSESSMENT PROCEEDINGS BY ITSELF WAS BASED ON THE ASSESSEES O WN ADMISSION U/S 132(4). THERE IS NO MATERIAL ON RECO RD BOTH IN THE ASSESSMENT PROCEEDINGS AND IN THE PENALTY PROCE EDINGS TO SHOW THAT THERE HAS BEEN DETENTION OF CONCEALMENT O F INCOME AS CONTEMPLATED U/S 271(1)(C) OF THE ACT. 11. IN THE CASE OF CIT VS. ANWAR ALI (76 ITR 696) (SC), THE HONBLE SC HAS OBSERVED THAT PENALTY CANNOT BE LEVI ED SOLELY BECAUSE OF REASONS GIVEN IN THE ORIGINAL ORDER OF A SSESSMENT. IN THE CASE OF RATANLAL RAMPRASAD VS. CIT (139 ITR 64) (MP), THE HONBLE HC THAT IN PENALTY PROCEEDINGS THE AUTHORIT IES ARE EXPECTED TO CONSIDER AFRESH ALL THE MATERIAL AVAILA BLE INCLUDING THOSE AVAILABLE AT THE ASSESSMENT STAGE OR THOSE AD DUCED LATER AND CONSIDERATION OF ALL SUCH CIRCUMSTANCES SHOULD LEAD TO A CONCLUSION AND IN A FINDING THAT THE ASSESSEE IS GU ILTY OF CONSCIOUS CONCEALMENT OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE ASSESSING OFFICER HAS NOT CARRIED O UT THE OBSERVATIONS OF THE HONBLE HC WHILE PROCEEDING TO LEVY THE PENALTY U/S 271(1)(C) AND HE DID NOT ENQUIRE INTO T HE CLAIM OF THE ASSESSEE WITH REGARD TO AVAILABILITY OF SOURCES FOR INVESTMENT PURPOSE. 12. IN THE CASE OF T. ASHOK PAI VS. CIT (292 ITR 1 1) IT WAS HELD THAT: THE ORDER IMPOSING PENALTY IS QUASI CRIMINAL IN NAT URE AND, THUS, THE BURDEN LIES ON THE DEPARTMENT TO ESTABLIS H THAT THE ASSESSEE HAS CONCEALED HIS INCOME. SINCE, THE BURDEN OF PROOF IN PENALTY PROCEEDINGS VARIES FROM THAT IN THE ASSESSMENT PROCEEDINGS, A FINDING IN AN ASSESSMENT PROCEEDING THAT A PARTICULAR RECEIPT IS INCOME CANN OT ITA NO.1450/H/2011 DR. D. RAMESH, S. BAD AUTOMATICALLY BE ADOPTED, THOUGH A FINDING IN THE ASSESSMENT PROCEEDING CONSTITUTES GOOD EVIDENCE IN THE PENALTY PROCEEDINGS. IN THE PENALTY PROCEEDINGS, T HUS THE AUTHORITIES MUST CONSIDER THE MATTER AFRESH AS THE QUESTION HAS TO BE CONSIDERED FROM DIFFERENT ANGLE. 13. THE HONBLE SC IN THE CASE OF DILIP N. SHROFF V. JOINT VS. CIT (2007) 291 ITR 519 FOR ASSESSMENT YEAR 1998-99, HAS HELD THAT: CLAUSE (C) OF SECTION 271(1) OF THE ACT CATEGORICA LLY STATES THAT PENALTY WOULD BE LEVIABLE IF THE ASSESSEE CONCEALS PARTICULARS OF INCOME OR FURNISHES INACCURATE PARTICULARS THEREOF. BUT BY REASON OF SUCH CONCEALMENT OR FURNISHING OF INACCUR ATE PARTICULARS ALONE, THE ASSESSEE DOES NOT IPSO FACTO BECOMES LIABLE FOR PENALTY. IMPOSITION OF PENALTY IS NOT A UTOMATIC. NOT ONLY IS THE LEVY OF PENALTY DISCRETIONARY IN NATURE BUT THE DISCRETION IS ALSO REQUIRED TO BE EXERCISED ON THE PART OF THE ASSESSING OFFICER KEEPING THE RELEVANT FACTORS IN M IND. SOME OF THOSE FACTORS, APART FROM BEING INHERENT IN THE NAT URE OF PENALTY PROCEEDINGS, INHERE ON THE FACT OF THE STATUTORY PR OVISIONS. PENAL PROCEEDINGS ARE NOT TO BE INITIATED MERELY TO HARAS S THE ASSESSEE. THE APPROACH OF THE ASSESSING OFFICER IN THIS BEHALF MUST BE FAIR AND OBJECTIVE. THE SUPREME COURT FURT HER OBSERVED THAT THE ASSESSING OFFICER HAS TO RECORD A FINDING THAT THE EXPLANATION OFFERED BY THE ASSESSEE IN THE EVENT HE OFFERS ONE WAS FALSE. HE MUST BE FOUND TO HAVE FAILED TO PROV E THAT SUCH EXPLANATION IS NOT ONLY NOT BONA FIDE ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE INCOME WERE NOT DISCLOSED BY HIM. THE ABOVE RULING WAS SQUARELY FOLLOWED BY THE HONBLE M ADRAS HC IN CIT VS. CAFCO SYNDICATE SHIPPING CO.(2007) 294 ITR 134). 14. IN THE PRESENT CASE, THE ASSESSMENT OF UNDISCL OSED INVESTMENT OF RS.1,67,180/- INCOME IS BASED ON ASSE SSEES OWN ITA NO.1450/H/2011 DR. D. RAMESH, S. BAD ADMISSION U/S 132(4). THE ASSESSEE IS THEREFORE, E NTITLED TO THE IMMUNITY UNDER EXPLANATION 5(2) TO SEC.271(1)(C) OR IN THE ALTERNATIVE, THE PENALTY IS LIABLE TO BE DELETED DU E TO THE LACK OF ANY OTHER EVIDENCE OR FINDING, OR DETECTION OF CON CEALMENT OF INCOME. THE ASSESSING OFFICER MADE NO EFFORTS TO C ONSIDER THE SOURCE EXPLAINED BY THE ASSESSEE FOR THE INVESTMENT MADE BY HIM, INDEPENDENTLY EVEN IN THE PENALTY PROCEEDINGS , WITHOUT GIVING CREDENCE TO THE LEGAL PROPOSITIONS LAID DOWN BY THE HONBLE SUPREME COURT. HE FURTHER FAILED TO APPREC IATE THAT THE ASSESSEE MADE DECLARATION U/S 132(4), DESPITE HAVI NG SOURCES FOR THE SAID INCOME. IN VIEW OF THE ABOVE DISCUSSI ON, THE PENALTY IS DELETED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON: 9. 12.2011 SD/- SD/- (CHANDRA POOJARI) ( (H.S. SIDHU) ACCOUNTANT MEMBER J UDICIAL M EMBER DATED THE 9 TH DECEMBER, 2011 COPY FORWARDED TO: 1. DR. D. RAMESH, PLOT NO.6, ROAD NO.10, DHANALAKSHMI HOUSING SOCIETY, EAST MAREDPALLY, SBAD. 26 2. THE ACIT, CIRCLE 1(3), HYDERABAD 3. THE CIT(A) II, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/