A.Mohamed Ayub Alias Salim, Ootacamund V. ACIT, Ooty

ITA 1463/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90501 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: J MURALI
• Keywords: Rectification of order
• Section: 263; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A. NOS.1463 & 1464/MDS/2013 ( / ASSESSMENT YEAR : 2009-2010) SHRI. A. MOHAMED AYUB ALIAS SALIM PLANTER PARADISE RESTAURANT, GLANTON HALL, COONOOR ROAD, OOTACAMUND, NILGIRIS. [PAN:AFCPA 8566Q] ( %& /APPELLANT) VS THE ACIT, CIRCLE I (1), OOTY ( '(%& /RESPONDENT) / APPELLANT BY : SHRI. J. MURALI, C.A / RESPONDENT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. /DATE OF HEARING : 21.05.2015 /DATE OF PRONOUNCEMENT : 19.06.2015 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THESE TWO APPE ALS AGAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- I, COIMBATORE, DATED 29.04.2013 FOR THE ASSESSMENT YEAR 2009-2010. I.T.A.NOS.1463 & 1464/MDS/2013 :- 2 -: 2. WE TAKE UP ITA NO.1463/MDS/2013 FOR ADJUDICATION. THE ASSESSEE HAS CONTESTED THE ADDITION OF D5 LAKHS BY THE CIT(A) WHICH WAS MADE BY ASSESSING OFFICER IN PROCEEDING U/S.154 OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT WAS COMPLETED IN THIS CASE FOR THE ASSESSMENT YEAR 2009-10 U/S.143(3 ) OF THE ACT. WHILE FRAMING ASSESSMENT, ADDITION OF D15,00,000/- WAS MADE ON THE REASON THAT AN AMOUNT OF D10,00,000/- DEPOSITED IN ICICI BANK, PRICOL BRANCH, COIMBATORE WAS NOT PROPERLY EXPLAINED. FUR THER, THERE WAS A DEPOSIT OF D10,00,000/- IN THE ACCOUNT WITH PUNJAB NATIONAL BANK, OOTACAMUND BRANCH, COONOOR. THOUGH THERE WAS DEPOS ITS OF D20,00,000/- IN TWO BANK ACCOUNTS, THE ASSESSING OF FICER CONSIDERED D10,00,000/- IN PNB BANK AND D5,00,000/- IN ICICI B ANK, PRICOL BRANCH. THUS, THE ASSESSING OFFICER MADE AN ADDIT ION OF D15,00,000/- AS UNEXPLAINED INCOME. LATER WHILE PROCEEDINGS U/S .154 DATED 21.06.2012, THE ASSESSING OFFICER RECTIFIED THIS MISTAKE BY MAK ING AN ADDITION OF D5,00,000/- AS UNEXPLAINED DEPOSIT IN I CICI BANK, PRICOL BRANCH, COIMBATORE. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THERE IS A I.T.A.NOS.1463 & 1464/MDS/2013 :- 3 -: MISTAKE APPARENT FROM RECORD SO AS TO RECTIFY THE S AME U/S.154 OF THE ACT. 5. ON THE OTHER HAND LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBMITTED THAT ASSESSING OFFICER DISCUSSED TWO DEPO SITS OF D10,00,000/- EACH IN ICICI AND PNB BANK. HOWEVER, WHILE FRAMING ASSESSMENT U/S.143(3), THE ASSESSING OFFICER ONLY A DDED A SUM OF D15,00,000/- INSTEAD OF D20,00,000/-. AS THIS IS A MISTAKE WHICH IS APPARENT FROM RECORD, HE MADE FURTHER ADDITION OF D5,00,000/-, WHILE RECTIFYING THIS MISTAKE U/S. 154 OF THE ACT. IN O UR OPINION, THE EXPRESSION USED IN SECTION 154 OF THE INCOME TAX A CT REGARDING MISTAKE APPARENT FROM THE RECORD WILL HAVE TO BE CO NSTRUED TO BE A MISTAKE WHICH IS VERY CLEAR, DISTINCT AND APPARENT. THE SAID MISTAKE SHOULD BE A MANIFEST AND COULD BE IDENTIFIED BY A M ERE LOOK AND WHICH DOES NOT NEED A LONG DRAWN OUT PROCESS OF REASONING . IT IS NO DOUBT TRUE THAT A MERE MISTAKE BY ITSELF CANNOT BE A GROU ND TO INVOKE SECTION 154 OF THE INCOME TAX ACT, 1961. IT IS ALSO TRUE T HAT AN ISSUE WHICH IS DEBATABLE ALSO CANNOT BE DECIDED UNDER SECTION 154 . HOWEVER, WHEN THE MISTAKE IS GLARING AND IN A CASE WHERE FACTS AR E NOT IN DISPUTE THEN THE SAID MISTAKE BEING ONE APPARENT ON THE FACE OF THE RECORD WILL HAVE TO BE RECTIFIED UNDER SECTION 154. I.T.A.NOS.1463 & 1464/MDS/2013 :- 4 -: 6. THE JURISDICTIONAL HIGH COURT IN THE CASE OF EXPRESS NEWSPAPERS LIMITED VS. DEPUTY CIT 320 ITR 12 , OBSERVED AS UNDER:- '9.THE SCOPE AND AMPLITUDE OF SECTION 254(2) AND THE ANALOGOUS PROVISION SECTION 154 OF THE ACT HAVE BEEN CONSIDERED BY CATENA OF DECISIONS OF THE APEX COURT AND OTHER HIGH COURTS. THE UNIFORM OPINION OF THE COURTS OF SUPERIOR JURISDICTION IS THAT A PATENT, MANIFEST AND SELF-EVIDENT ERROR WHICH DOES NOT REQUIRE ELABORATE DISCUSSION OF EVIDENCE OR ARGUMENT TO ESTABLISH IT, CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD AND CAN BE CORRECTED UNDER SECTION 254((2. AN ERROR CANNOT BE SAID TO BE APPARENT ON THE FACE OF THE RECORD IF ONE HAS TO TRAVEL BEYOND THE RECORD TO SEC WHETHER THE JUDGMENT IS CORRECT OR NOT. AN ERROR APPARENT ON THE RECORD MEANS AN ERROR WHICH STRIKES ONE ON MERE LOOKING AND DOES NOT NEED A LONG DRAWN OUT PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. THE ERROR SHOULD NOT REQUIRE ANY EXTRANEOUS MATTER TO SHOW ITS INCORRECTNESS. TO PUT IT DIFFERENTLY, IT SHOULD BE SO MANIFEST AND CLEAR THAT NO COURT WOULD PERMIT IT TO REMAIN ON RECORD. IF THE VIEW ACCEPTED BY THE COURT IN THE ORIGINAL JUDGMENT IS ONE OF POSSIBLE VIEWS, THE CASE CANNOT BE SAID TO BE COVERED BY AN ERROR APPARENT ON THE FACE OF THE RECORD. SEC. 254(2) SPECIFICALLY EMPOWERS THE TRIBUNAL TO AMEND AT ANY TIME WITHIN FOUR YEARS FROM THE DATE OF AN ORDER, ANY ORDER PASSED BY IT UNDER SECTION 254(1) WITH A VIEW TO RECTIFY ANY MISTAKE APPARENT FROM THE RECORD EITHER SUO MOTU OR ON AN APPLICATION. IN ORDER TO ATTRACT THE APPLICATION OF SECTION 254((2, THE MISTAKE MUST EXIST AND THE SAME MUST BE APPARENT FROM THE RECORD. THE EXPRESSION 'MISTAKE APPARENT FROM THE RECORDS' CONTAINED IN SECTIONS 154 AND 254(2) HAS WIDER CONTENT THAN THE EXPRESSION 'ERROR APPARENT ON THE FACE OF THE RECORD OCCURRING IN ORDER 47 R. 1 OF CPC. THE RESTRICTIONS ON THE POWER OF REVIEW UNDER ORDER 47 R. 1 OF CPC DO NOT I.T.A.NOS.1463 & 1464/MDS/2013 :- 5 -: HOLD GOOD IN THE CASES OF SECTIONS 254(2) AND 154 OF THE ACT. SEC. 254(2) DOES NOT CONFER POWER ON THE TRIBUNAL TO REVIEW ITS EARLIER ORDER. UNDER THE GARB OF RECTIFICATION OF MISTAKE IT IS NOT POSSIBLE FOR A PARTY TO TAKE FURTHER CHANCE OF REARGUING THE APPEAL ALREADY DECIDED. WHAT CAN BE RECTIFIED UNDER SECTION 254(2) IS A MISTAKE WHICH IS APPARENT AND PATENT. THE MISTAKE HAS TO BE SUCH FOR WHICH NO ELABORATE REASONS OR ENQUIRY IS NECESSARY. WHERE TWO OPINIONS ARE POSSIBLE THEN IT CANNOT BE SAID TO BE A MISTAKE APPARENT ON THE RECORD. WHEN PREJUDICE RESULTING FROM AN ORDER IS ATTRIBUTABLE TO THE TRIBUNAL'S MISTAKE, ERROR OR OMISSION, IT IS ITS BOUNDEN DUTY TO SET IT RIGHT. THE PURPOSE BEHIND THE ENACTMENT OF SECTION 254(2) OF THE ACT TO AMEND ANY ORDER PASSED UNDER SUB-SECTION (1), IF ANY MISTAKE APPARENT FROM THE RECORDS IS BROUGHT TO THE NOTICE OF THE TRIBUNAL, IS BASED ON THE FUNDAMENTAL PRINCIPLE THAT NO PARTY APPEARING BEFORE THE TRIBUNAL, BE IT AN ASSESSEE OR THE DEPARTMENT, SHOULD SUFFER ON ACCOUNT OF ANY MISTAKE COMMITTED BY THE TRIBUNAL. THIS FUNDAMENTAL PRINCIPLE HAS NOTHING TO DO WITH THE INHERENT POWER OF THE TRIBUNAL. IF PREJUDICE IS RESULTED TO THE PARTY, WHICH PREJUDICE IS ATTRIBUTABLE TO THE TRIBUNAL'S MISTAKE, ERROR OR OMISSION AND WHICH ERROR IS A MANIFEST ERROR, THEN THE TRIBUNAL WOULD BE JUSTIFIED IN RECTIFYING ITS MISTAKE. RECTIFICATION CAN BE MADE ONLY WHEN A GLARING MISTAKE OF FACT OR LAW COMMITTED BY THE OFFICER PASSING THE ORDER BECOMES APPARENT FROM THE RECORD. THE RECTIFICATION IS NOT POSSIBLE IF THE QUESTION IS DEBATABLE. A POINT WHICH WAS NOT EXAMINED ON FACTS OR IN LAW CANNOT BE DEALT WITH AS A MISTAKE APPARENT FROM THE RECORD. NO ERROR CAN BE SAID TO BE APPARENT ON THE FACE OF THE RECORD IF IT IS NOT MANIFEST OR SELF EVIDENT AND REQUIRES AN EXAMINATION OR ARGUMENT TO ESTABLISH IT. WHERE WITHOUT ANY ELABORATE ARGUMENT ONE COULD POINT TO THE ERROR AND SAY HERE IS A SUBSTANTIAL POINT OF LAW WHICH STARES ONE IN THE FACE, AND THERE COULD REASONABLY BE NO TWO OPINIONS ENTERTAINED ABOUT IT, IS A CLEAR I.T.A.NOS.1463 & 1464/MDS/2013 :- 6 -: CASE OF ERROR APPARENT ON THE FACE OF THE RECORD.' 7. IN THIS PRESENT CASE, IT IS OBSERVED THAT ISSUE INV OLVED IS NOT BEING A DEBATABLE ISSUE WHICH IS EVIDENT FROM THE ASSESSMENT ORDER. THE ASSESSING OFFICER DULY DISCUSSED DEPOSITS OF D1 0,00,000/- EACH IN TWO BANK ACCOUNTS NAMELY ICICI AND PNB BANK. HOWEV ER, WHILE MAKING ADDITION, HE MADE ONLY D10,00,000/- IN PNB B ANK AND D5,00,000/- IN ICICI BANK TOWARDS DEPOSITS. THUS, THERE WAS ERROR WHILE MAKING THE ADDITION BY ASSESSING OFFICER. TH E ASSESSING OFFICER HAS BROUGHT ON RECORD THE MATERIAL FACTS RELEVANT F OR THE ADDITION BUT THERE WAS A LAPSE ON HIS PART WHILE MAKING THE ADDI TION. IN OUR OPINION, THIS CANNOT BE SAID AS A DEBATABLE ISSUE SO AS TO REFRAIN FROM CORRECTING THE SAME. AS THE RECORDS PERTAINING TO THE ADDITION OF D5,00,000/- WERE AVAILABLE WITH THE ASSESSING OFFIC ER IN THE FORM OF EARLIER PROCEEDINGS. THE CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE THAT THE ISSUE IS DEBAT ABLE CANNOT BE ACCEPTED. 8. IN THE CASE OF CIT VS M.R.M. PLANTATION 240 ITR 660 (MAD), THE MADRAS HIGH COURT OBSERVED AS UNDER:- I.T.A.NOS.1463 & 1464/MDS/2013 :- 7 -: 'SEC. 154 OF THE ACT OPENS WITH THE WORDS 'WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD...' THE TERM 'RECORD' AS NOTICED EARLIER IS NOT DEFINED IN THE SECTION OR IN THE DEFINITION SECTION OF THE ACT. FOR DETERMINING THE TRUE SCOPE OF THIS PROVISION AND THE MEANING TO BE PROPERLY ASSIGNED TO THE TERM 'RECORD' IT IS NECESSARY TO KEEP IN VIEW THE OBJECT OF THE PROVISION AND THE NATURE OF THE POWER CONFERRED ON THE AUTHORITIES UNDER THAT PROVISION. THESE ARE THE CRITERIA WHICH THE SUPREME COURT ADOPTED WHILE CONSIDERING THE SCOPE AND EFFECT OF SECTION 263 OF THE ACT AND THE MEANING TO BE ASSIGNED TO THE WORD 'RECORD' USED IN THAT PROVISION, IN THE CASE OF CIT VS. SHREE MANJUNATHESWARE PACKING PRODUCTS & CAMPHOR WORKS (1997) 143 CTR (SC) 406 : (1998) 231 ITR 53 (SC). THE OBJECT WITH WHICH POWER IS CONFERRED BY SECTION 154 IS AS STATED IN THE MARGINAL HEADING 'RECTIFICATION OF MISTAKE'. THE PRINCIPAL CONDITION FOR EXERCISING THE POWER UNDER SECTION 154 OF THE ACT IS THE EXISTENCE OF A MISTAKE IN THE RECORD. THE MISTAKE IS NOT TO BE A MISTAKE WHICH REQUIRES IN-DEPTH PROBING TO DISCOVER, BUT IS A MISTAKE WHICH IS 'APPARENT' FROM THE RECORD. THE POWER CONFERRED BY THIS PROVISION IS ONLY TO ENABLE THE AUTHORITIES TO RECTIFY THE 'APPARENT' MISTAKES IN THE RECORD. THE RECORD REFERRED TO IS THE RECORD WHICH THE AUTHORITIES ARE REQUIRED TO EXAMINE FOR THE PURPOSE OF RECTIFYING THE MISTAKES IN THE ORDERS MENTIONED IN CLAUSES (A), (B) AND (C) OF SECTION 154(1) OF THE ACT. THE SECTION DOES NOT EITHER EXPRESSLY OR IMPLICITLY REQUIRE THAT THE AUTHORITIES EXERCISING POWER UNDER THIS PROVISION SHOULD LIMIT THEIR ATTENTION ONLY TO THE ORDER SOUGHT TO BE RECTIFIED. THE REQUIREMENT THAT THE MISTAKE IN THE RECORD BE 'APPARENT' DOES NOT IMPLY THAT NO OTHER RELEVANT DOCUMENT SHOULD BE LOOKED INTO. IF IN THE LIGHT OF OTHER LEGALLY VALID ORDERS IT IS FOUND THAT THE ORIGINAL ORDER CONTAINS MISTAKES WHICH ARE APPARENT, THE RECTIFICATION OF SUCH MISTAKES IS NOT BARRED UNDER SECTION 154. THE OBJECT OF THE PROVISION IS THE RECTIFICATION OF MISTAKES IN THE RECORD AND THAT OBJECT IS ILL SERVED IF THE AUTHORITIES ARE COMPELLED TO I.T.A.NOS.1463 & 1464/MDS/2013 :- 8 -: PRESERVE SUCH MISTAKES IN THE ORDER BY ASKING THEM TO WEAR BLINKERS AND NOT LOOK INTO RELEVANT UNIMPEACHABLE MATERIAL SUCH AS THE RECTIFIED ORDER OF ASSESSMENT FOR THE PERIOD PRECEDING THE ASSESSMENT YEAR IN THE LIGHT OF WHICH MISTAKES IN THE ORDER SOUGHT TO BE RECTIFIED ARE APPARENT. 9. IN VIEW OF THIS, WE ARE INCLINED TO CONFIRM THE A DDITION OF D5,00,000/- MADE BY ASSESSING OFFICER IN PROCEEDING U/S.154 OF THE ACT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IN IT A NO.1463/MDS/2013 IS DISMISSED. 10. IN ITA NO.1464/MDS/2013 THE ASSESSEE CONTESTED LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. IN THIS CASE, T HE ASSESSING OFFICER INVOKED PROVISIONS OF U/S.271(1)( C) OF THE ACT IN RESPECT OF ADDITION MADE BY ASSESSING OFFICER AT D22,40,000/-. THE AS SESSING OFFICER MADE AN ADDITION OF D20,00,000/- AS UNEXPLAINED DEP OSIT IN BANK ACCOUNT IN ICICI AND PNB BANK AS DISCUSSED EARLIER AND D2,40,000/- TOWARDS PAYMENT OF RENT WITHOUT DEDUCTING TDS U/S.4 0(A)(IA) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL B EFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSI ONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE ASS ESSING OFFICER. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFO RE US. I.T.A.NOS.1463 & 1464/MDS/2013 :- 9 -: 11. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBM ITTED THAT THE ORDER OF THE ASSESSING OFFICER IS AGAINST LAW, CIRCUMSTANCES, EVIDENCE AND FACTS OF THE CASE. THE ASSESSING OFF ICER INITIALLY MADE AN ADDITION OF D15,00,000/- BEING THE CASH DEPOSIT IN THE ICLCI BANK, PRICOL BRANCH OF COIMBATORE AND PUNJAB NATIONAL BAN K, OOTACAMUND BRANCH. THE ASSESSING OFFICER HAS MADE THIS ADDITIO N OF D15,00,000/- TO THE TAXABLE INCOME OF THE ASSESSEE AS UNEXPLAINE D INCOME. AS THESE TWO ACCOUNTS WERE NOT REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE SAME WAS AGREED BY THE ASSESSEE. THE ASSESSING OFFICER FURTHER MADE AN ADDITION OF D2,40,000/- TO THE TAXABLE INCOME. THE ASSESSING OFFICER HAS MENTIONED IN THE ORDER THAT THE ASSESSEE HAS CL AIMED D.2,40,000/- AS RENT PAID FOR THE PREMISES IN WHICH HE RUNS A RESTAURANT AND THAT AS NO TDS WAS DEDUCTED, THE ENT IRE AMOUNT OF D2,40,OOO/- IS DISALLOWED U/S 40(A)(IA) FOR THE NON -DEDUCTION OF TDS AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AS T HE ASSESSEE DID NOT DEDUCT TDS TOWARDS THE SHOP RENT PAID, THIS WAS ALSO ACCEPTED BY THE ASSESSEE. THE ASSESSING OFFICER HAS MADE A REV ISION U/S 154 OF THE INCOME TAX ACT ON 21.06.2012 AND HAS MADE A FUR THER ADDITION OF D5,00,000/-. HE HAS MENTIONED THAT IT WAS APPARENT FROM THE RECORDS THAT THE CASH DEPOSIT OF D10,00,000/- IN THE ICLCI BANK, PRICOL, I.T.A.NOS.1463 & 1464/MDS/2013 :- 10 -: COIMBATORE WAS NOT AT ALL BROUGHT INTO THE BOOKS OF ACCOUNT AND THE CASH FLOW STATEMENT SUBMITTED ON 15.12.2011 DID NOT SHOW ANY INFLOW OR OUTFLOW OF FUNDS FROM THIS BANK HE FURTHER STATES THAT HENCE THIS AMOUNT OF D5,00,000/-. IS ADDED TO THE TAXABLE INCOME. IN THIS REGARD, HE HAS FAILED TO NOTICE THAT THIS AMOUNT OF D5,00,000/-.RELATES TO THE INVESTMENT OF D5,00,000/-.IN ICLCI MUTUAL FU ND. THIS INVESTMENT OF D5,00,000/- IS VERY MUCH REFLECTED IN THE BALANCE SHEET AS ON 31.03.2012. HENCE, IT IS WRONG TO SAY THAT TH IS AMOUNT WAS NOT REFLECTED IN THE ACCOUNTS. AS THIS AMOUNT OF D5,00, 000/- IS REFLECTED IN THE BALANCE SHEET AS ON 31.03.2012, THIS ADDITION I S NOT JUSTIFIED AND IT WAS SUBMITTED THAT THIS ADDITION OF D5,00,000/- MAY BE DELETED. THE ASSESSEE HAS BEEN REGULARLY FILING HIS RETURNS FOR THE PAST SEVERAL YEARS AND HE HAS FULLY DISCLOSED ALL THE TRANSACTIO NS IN HIS RETURNS. HE HAS NEVER CONCEALED ANY PARTICULARS OR INCOME THESE YEARS. NEITHER HE HAS FURNISHED ANY INACCURATE PARTICULARS IN HIS RETURNS. THERE IS NO WILLFUL DEFAULT OF INTENTION TO EVADE TAX. HE HAS GIVEN GENUINE DETAILS IN HIS RETURNS AND THERE IS NO INTENTION TO EVADE T AX. BUT DURING THE ASSESSMENT YEAR 2009-10, THERE WAS GENUINE OMISSION REGARDING THE TRANSACTIONS OF DEPOSITS AMOUNTING TO D5,00,000/- I N HIS ICLCI BANK ACCOUNT AND RS.10 LACS IN PUNJAB NATIONAL BANK ACCO UNT. THE ASSESSING OFFICER HAS ADDED RS.20 LACS TOWARDS THE TAXABLE INCOME. I.T.A.NOS.1463 & 1464/MDS/2013 :- 11 -: IN THE ORDER U/S 154 THE ASSESSING OFFICER HAS MADE A FURTHER ADDITION OF D5,00,000/-. BUT VERY CLEARLY THIS AMO UNT RELATES TO THE INVESTMENT IN ICLCI PRUDENTIAL POLICY WHICH IS APPE ARING IN THE BALANCE SHEET AS ON 31..03,2009 AS FOLLOWS: BALANCE SHEET AS ON 31.03.2009. ASSETS ICICI PRUDENTIAL LIFE INSURANCE 15,00,000/- THIS AMOUNT INCLUDES D5,00,000/- INVESTED DURING TH E PREVIOUS YEAR AND THE BALANCE REPRESENTS THE AMOUNTS INVESTED DUR ING THE PREVIOUS YEARS. THIS AMOUNT WAS INVESTED FROM THE ICICI BANK ACCOUNT AND HENCE THERE IS NO SUPPRESSION OF INCOME IN THIS CAS E. IN THE ICLCI BANK ACCOUNT, THE FOLLOWING ENTRY IS FINDING A PLAC E FOR THE INVESTMENT OF D5,00,000/- TOWARDS ICLCI PRUDENT LIF E INSURANCE POLICY. HENCE, IT IS VERY CLEAR THAT THE AMOUNT OF D5,00,00 0/- IS REFLECTED IN THE ACCOUNTS AND IS APPEARING IN THE BALANCE SHEET AS ON 31.03.2009. HENCE, IT WAS PRAYED THAT THE PENALTY LEVIED ON TH IS ADDITION MAY BE DELETED. THE ASSESSEE REITERATED THAT THERE WAS NO WILLFUL INTENTION TO EVADE TAX. IN THIS REGARD, IT MAY BE CONSIDERED THA T THE ASSESSEE IS RUNNING A RESTAURANT IN A RENTAL BUILDING AND IT I S WITH MUCH DIFFICULTY THAT HE IS CARRYING ON HIS BUSINESS AND HE HAS BEEN REGULARLY PAYING HIS TAXES AND OVER THE YEARS THERE HAS BEEN NO DEF AULT IN THE PAYMENT I.T.A.NOS.1463 & 1464/MDS/2013 :- 12 -: OF TAXES. BASED UPON THE PAST RECORDS, IT MAY BE CO NSIDERED TO DROP THE ADDITIONS MADE WHICH ARE HUGE BY HIS STANDARDS. AS THE ASSESSEE HAS BEEN LAW ABIDING ALL THESE YEARS AND AS A GENUI NE MISTAKE HAS BEEN COMMITTED IN NOT DISCLOSING THE BANK ACCOUNTS, IT IS PRAYED THAT THE PENALTY MAY BE DROPPED AS THE ASSESSEE IS IN FI NANCIAL DIFFICULTIES. THE ASSESSEE HAS BEEN PAYING THE TAXES LEVIED IN SO ME INSTALMENTS AND HE HAS MADE A GENUINE EFFORT TO PAY THE TAXES L EVIED INSPITE OF HIS FINANCIAL DIFFICULTIES AND HENCE IT IS PRAYED AGAIN THAT A LENIENT VIEW MAY BE TAKEN TO DROP THE PENALTY LEVIED WHICH WILL BE A VERY HEAVY BURDEN ON HIM. 12. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS). 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, PENALTY LEVIED U/S.271(1) (C) TOWARDS UNEXPLAINED DEPOSIT OF D10,00,000/- EACH IN PNB BAN K AND ICICI BANK AND ALSO CONSIDERED DISALLOWANCE U/S.40(A)(IA) OF THE ACT OF D2,40,000/- FOR PAYMENT OF RENT WITHOUT DEDUCTING T DS. I.T.A.NOS.1463 & 1464/MDS/2013 :- 13 -: 14. IN OUR OPINION, ADMITTEDLY THERE WAS DEPOSITS OF D10,00,000/- EACH IN ICICI BANK AND PNB BANK. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE THEREOF. THE ASSESSEE FAILED TO EXPLAIN THE SOURCE FOR THE SAME. CONSIDERING THIS, THE ASSESSIN G OFFICER MADE AN ADDITION OF D20,00,000/- AS UNEXPLAINED INCOME. TH E ASSESSEE HAS NOT EXPLAINED THE SOURCES FOR THE SAID DEPOSIT AND NOT ABLE TO LEAD ANY EVIDENCE EVEN BEFORE THE ASSESSING OFFICER DURING THE COURSE OF PENALTY PROCEEDINGS. THE ASSESSEE FURNISHED INACCU RATE PARTICULARS OF INCOME AND ALSO CONCEALED THE INCOME . THE ASSESSEE WAS NOT ABLE TO ESTABLISH ANY INADVENT MISTAKE OR OMISSION ON HIS P ART WHEN THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY TO EX PLAIN THE SOURCE. WHEN THE ASSESSEE FAILED TO EXPLAIN THE SAID SOURCE OF BANK DEPOSITS, THEN TO THE EXTENT OF THE AMOUNT WHICH WAS TREATED AS INCOME TO BE CONSIDERED FOR LEVY OF PENALTY U/S.271(1) (C) OF TH E ACT . THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION WHATSOEVER TOWARDS SOURCE OF DEPOSIT AT ANY STAGE BEFORE THE LOWER AUTHORITIES OR EVEN BEFORE US. WE, THEREFORE HOLD THAT TO THE EXTENT OF DEPOSIT CONSID ERED AS INCOME BY ASSESSING OFFICER IS LIABLE FOR LEVY OF PENALTY. T HE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS INCOME AND THE INC OME OF ASSESSEE WAS FOUND TO BE MORE THAN AS ADMITTED BY THE ASSESS EE. WE, THEREFORE I.T.A.NOS.1463 & 1464/MDS/2013 :- 14 -: DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMI SSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND THE SAME IS CONFIRM ED. 15. REGARDING CONSIDERING THE DISALLOWANCE OF RENT PAYM ENT BY INVOKING PROVISIONS U/S.40(A)(IA) OF THE ACT FOR NO N DEDUCTION OF TDS, THIS CANNOT BE CONSIDERED FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT IN VIEW OF THE FACT THAT AMOUNT WAS ALREADY PAID BY THE ASSESSEE WITHOUT DEDUCTING TDS AND NO AMOUNT WAS OUTSTANDI NG DURING THE END OF THE CLOSE OF THE FINANCIAL YEAR. IN OUR OPIN ION, THE ISSUE RAISED BY THE ASSESSEE IS SQUARELY COVERED BY THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL (VIZAG) IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS VS. ACIT (2012) 136 ITD 23 (VISAKHAPATNAM) WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY TO THE EXPENSES THAT ARE PAYABLE AND OUTSTANDING AT THE END OF TH E CLOSE OF THE YEAR RELEVANT TO THE ASSESSMENT YEAR AND NOT TO THE AMOU NT ALREADY PAID. THE SAME VIEW WAS TAKEN BY THE HIGH COURT OF ALLAH ABAD IN THE CASE OF CIT VS. M/S. VECTOR SHIPPING SERVICES (P) LTD I N ITA NO.122 OF 2013 DATED 09.7.2013 BY HOLDING THAT SEC 40(A)(IA) IS NOT APPLICABLE WHEN THERE IS NO OUTSTANDING BALANCE AT THE END OF THE C LOSE OF THE YEAR RELEVANT TO THE ASSESSMENT YEAR AND SLP FILED BY TH E REVENUE IN SUPREME COURT OF INDIA IN CC NO.8068/2014 DATED 02 .07.2014 IS ALSO I.T.A.NOS.1463 & 1464/MDS/2013 :- 15 -: DISMISSED. BY RESPECTFULLY FOLLOWING THE DECISION O F ALLAHABAD HIGH COURT, WE ARE INCLINE TO DELETE THE PENALTY LEVIED IN RESPECT OF THIS ADDITION. BEING SO, IN RESPECT OF THIS DISALLOWANCE U/S.4 0(A)(IA), PENALTY U/S.271(1) (C) CANNOT BE LEVIED. 16. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO WORK OUT THE PENALTY IN RESPECT OF SUSTAINED ADDITION MADE TOWAR DS UNEXPLAINED DEPOSIT OF D20,00,000/-. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1463/MDS/2013 IS DISMISSED AND ITA NO.1464/MDS/ 2013 IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 19TH OF JUNE, 2015 , AT CHENNAI. SD/- SD/- ( . ! ) V. DURGA RAO ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' /CHENNAI. #$ /DATED:19.06.2015. KV $% &' (' /COPY TO: 1. ) APPELLANT 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF. I.T.A.NOS.1463 & 1464/MDS/2013 :- 16 -: