Shri Dahyabhai V.Patel, Nani Daman V. The Addl. CIT, Vapi Range, Vapi

ITA 1467/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8979 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 08-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 17-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Capital asset; Salary income; Cost of acquisition
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 274; 143(2)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.1467/AHD/2013 / ASSTT. YEAR: 2007-2008 DAHYABHAI V. PATEL SOMNATH BUS STOP NANI DAMAN 396 210. PAN : ACCPP 2846 H VS. ADDL. CIT, VAPI RANGE VAPI. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI RASESH SHAH REVENUE BY : SHRI ABHINAY TIRKEY, SR.DR ! / DATE OF HEARING : 08/03/2017 '#$ ! / DATE OF PRONOUNCEMENT: 21/03/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A), VALSAD DATED 30.12.2012 PASSED FOR THE A SSTT.YEAR 2007-08. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING PENALTY OF RS.2,59,214/- IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 31.3.2008 DECLARING TOTAL INCOME OF RS.1, 04,76,295/-. THE ITA NO.1467/AHD/2013 2 CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. AFTER AN ANALYSIS OF DETAILS, THE LD.AO HAS DETERMINED TA XABLE INCOME OF THE ASSESSEE AT RS.1,19,44,960/-. THE AO HAS MADE VARI OUS ADDITIONS TO THE TOTAL INCOME OF THE ASSESSEE. SUCH ADDITIONS A RE SUMMARIZED IN PENALTY ORDER. THEY READ AS UNDER: 1. SALARY INCOME AS AN M.P. : RS.1,66,267/- 2. AGRICULTURE INCOME HELD AS INCOME FROM OTHER SOU RES IN ABSENCE OF EVIDENCES : RS.1,90,000/- 3. CASH DIFFERENCE : RS.74,696/- 4. COST OF ACQUISITION OF RS.2,80,150/- AND COST OF IMPROVEMENT OF RS.91,000/- CLAIMED BY THE ASSESSEE, WHILE ARRIVING AT THE SHORT TERM CAPITAL GAIN OF RS.11,88 ,850/-, WERE DISALLOWED FOR WANT OF DOCUMENTARY EVIDENCES O F SUCH EXPENSES. 5. COST OF IMPROVEMENT OF RS.7,83,420/- CLAIMED BY THE ASSESSEE, WHILE ARRIVING AT THE LONG TERM CAPITAL G AIN OF RS.91,70,580/- WERE DISALLOWED FOR WANT OF DOCUMENT ARY EVIDENCES OF SUCH EXPENSES. 4. THE LD.AO HAS INITIATED PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) OF THE ACT AND ISSUED SHOW CAUSE NOTICE U NDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT. ACCORDING TO THE ASSE SSEE DID NOT FILE ANY SATISFACTORY EXPLANATION, AND THEREFORE, HE IMPOSED PENALTY OF RS.2,59,214/-. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT THE ASSESSEE HAS GIVEN EXPLANATION QUA EACH ADDITION WHICH HAS BEEN REPRODUCED BY THE LD.CIT(A) IN PARA 4.2. HE DREW O UR ATTENTION TOWARDS SUCH EXPLANATION. IT READS SUNDER: 4.2 SUBMISSION OF THE A.R. :- THE APPELLANT S UBMITTED AS UNDER :- ITA NO.1467/AHD/2013 3 1. AN ADDITION OF RS. 1,66,267 WAS ON THE BASIS O F FORM-16 ATTACHED AND SHOWN IN RETURN OF INCOME TAX, WHICH W AS CLEARLY SHOWN IN RETURN OF INCOME. NOTHING WAS CONCEALED. 2. AN ADDITION OF RS.1,90,000 WAS AGAINST AGRICULT URE INCOME IN ABSENCE OF EVIDENCE. THE ORDER ITSELF SAYS THERE WA S NO CONCEALMENT. AGRICULTURE INCOME WAS SHOWN IN ALL TH E YEARS AND I WAS HAVING EVIDENCE FOR ALL THESE YEARS, SHOWN TO A .O ONLY THE EVIDENCE WAS MISPLACED EVEN RECEIPTS FRO THE NEXT Y EAR WAS SHOWN, PAYMENTS RECEIVED FOR THE YEAR WAS REFLECTED IN BANK STATEMENT ALSO. THIS ADDITION ITSELF IS HARSH TO ME PENALTY ON THIS AMOUNT IS UNWARRANTED. 3. AN ADDITION FOR CASH DIFF OF RS. 74,996 WAS MA DE. THIS WAS EXPLAINED TO THE LD A.O. THAT THIS ADDITION IS NOT CORRECT AS IT WAS DUE TO JUST THE DIFF OF DATE MENTIONED IN VOUCHER A ND ENTERED IN THE COMPUTER, ENTRIES ON VOUCHERS WERE CORRECT AND THERE WAS NEGATIVE CASH BALANCE BECAUSE OF WRONG DATE AT THE TIME OF ENTRY IN SOFTWARE, CHANGE OF DATE WAS NOT DONE, WHICH RES ULTED NEGATIVE CASH ON A PARTICULAR DATE IT WAS NOT ACCEPTED BY LD A.O. AS THIS ADDITION ITSELF WAS HARSH PENALTY ON THIS IS NOT WA RRANTED AT ALL. 4. AN ADDITIONS FOR COST OF IMPROVEMENT OF RS. 91, 000 FOR WANT OF EVIDENCE, THIS ORDER ITSELF SAYS NOTHING WAS CONCEA LED. EVEN DISALLOWANCE OF THIS EXPENSE WERE ON THE BASIS OF S UPPORTS WHICH WERE NOT ACCEPTED BY THE LD. A.O. EVEN THIS EXPENSE S WAS NOT ACCEPTED BY LD AO, THE, THE PENALTY ON THIS IS HARS H TO ME AND NOT CORRECT EVEN THE CAPITAL GAIN WITHOUT ANY COST OF ACQUISITION IS VERY HARSH ADDITION TO ME. 5. AN ADDITION OF COST OF IMPROVEMENT OF RS. 7, 83 ,420 IS NOT ALLOWED. THERE WAS CAPITAL GAIN SALE AND THE PROPER TY WAS ACQUIRED LONG BACK. ANY PROPERTY NEEDS IMPROVEMENT FOR UP KEEPING BOUNDARY & ROOM CONSTRUCTION ETC TO MAKE IT SALEABLE. AND SUPPORTING FOR OLD DAYS WERE SHOWN BUT NOT ACCE PTED BY ID A.O. THIS ADDITION WAS HARSH, THE PENALTY ON THIS I S NOT WARRANTED. 6. ON THE CONDITIONS MENTIONED ABOVE I REQUEST YOU TO WAIVE THE PENALTIES LEVIED. 6. THE LD.COUNSEL FOR THE ASSESSEE, ON THE STRENGTH OF THE ABOVE EXPLANATION, SUBMITTED THAT THE ASSESSEE DOES NOT D ESERVES TO BE VISITED WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT, BECAUSE HE HAS NOT FURNISHED ANY INACCURATE PARTICULARS. ON THE O THER HAND, THE LD.DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES B ELOW. ITA NO.1467/AHD/2013 4 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1 961 HAS DIRECT BEARING ON THE CONTROVERSY. THEREFORE, IT IS PERTI NENT TO TAKE NOTE OF THE SECTION. '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B)** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE N, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O R SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 7. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED ITA NO.1467/AHD/2013 5 CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS B EFORE THEM SHOULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UN DER THIS SECTION CAN RANGE IN BETWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FE ATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCO ME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HA S CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUT ORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEE MING FICTION, BY WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATE S TWO SITUATIONS; (A) FIRST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO T HE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE A SSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE AS SESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEA L); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS, TO PROVE THAT S UCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL T HE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOT AL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF THE TOTAL ITA NO.1467/AHD/2013 6 INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. THESE T WO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWAN CE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SEC TION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 8. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE FA CTS OF THE ASSESSEES CASE. WITH REGARD TO THE ADDITION OF RS .1,90,000/- CLAIMED BY THE ASSESSEE AS AGRICULTURE INCOME IS CONCERNED, THE CASE OF THE AO IS THAT THE ASSESSEE FAILED TO FURNISH EVIDENCE SHO WING GENERATION OF AGRICULTURE INCOME. THE EXPLANATION OF THE ASSESSE E IS THAT HE WAS HAVING EVIDENCE FOR ALL THESE YEARS AND SHOWN TO TH E AO IN SUBSEQUENT YEARS, MEANING THEREBY, THE ASSESSEE WAS HAVING AGR ICULTURE LAND. HE FAILED TO PRODUCE BILLS AND VOUCHERS FOR THE EXPEND ITURE INCURRED IN CONNECTION WITH THE AGRICULTURE ACTIVITIES OR BILLS EXHIBITING SALE OF AGRICULTURE PRODUCE. BUT IT IS PERTINENT TO KEEP I N MIND THAT A PERSON HAS BEEN CLAIMING AGRICULTURE INCOME IN THE PAST AN D IN SUBSEQUENT YEARS AND HAVING AGRICULTURE LAND, THEN THE ADDITIO N TO HIS INCOME FOR NOT SHOWING EXACT DETAILS OF AGRICULTURE INCOME CAN BE JUSTIFIED, BUT IT CANNOT BE SAID THAT CLAIM MADE WAS FALSE. IT COULD BE APPRECIATED THAT A PARTICULAR QUANTITY OF LAND CAN GENERATE AN INCOM E FROM AGRICULTURE ACTIVITY. SUCH INCOME COULD BE ESTIMATED IF LAND H OLDING IS THERE. THE AO FAILED TO BRING ANY EVIDENCE ON RECORD WHICH CAN EXHIBIT THAT THIS CLAIM WAS FALSE AND THE ASSESSEE HAS FURNISHED INAC CURATE PARTICULARS WITH REGARD TO THIS CLAIM. SIMILARLY, WITH REGARD TO THE ADDITION OF RS.74,696 /- IT WAS SUBMITTED THAT BY THE ASSESSEE THAT DUE TO DIFFEREN CE OF DATE MENTIONED IN THE VOUCHERS AND ENTERED INTO COMPUTER A NEGATIV E CASH BALANCE HAS OCCURRED. THIS WAS RESULT OF A WRONG DATE MENTIONE D AT THE TIME OF ENTRY IN THE SOFTWARE. OTHERWISE, THIS ADDITION IT SELF SHOULD NOT HAVE ITA NO.1467/AHD/2013 7 BEEN MADE IN THE INCOME OF THE ASSESSEE. THE AO AG AIN DID NOT PROVE THAT A FALSE ASSERTION WAS MADE BY THE ASSESSEE. WITH REGARD TO THE NEXT ADDITION, IT IS OBSERVED TH AT THE ASSESSEE HAS PURCHASED CAPITAL ASSETS IN WHICH HE HAS MADE C ERTAIN IMPROVEMENT. COST OF THIS IMPROVEMENT WAS NOT ALLO WED TO THE ASSESSEE WHILE COMPUTING THE CAPITAL GAIN. THE AO HAS ALLEGED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS FOR V ISITING THE ASSESSEE WITH PENALTY. BUT HE FAILED TO DEMONSTRATE WHICH P ARTICULAR WAS INACCURATE. IT IS A CLAIM MADE BY THE ASSESSEE, WH ICH CANNOT BE SUBSTANTIATED WITH DOCUMENTARY EVIDENCE, THEREFORE, IT WAS DISALLOWED. BUT HOW THE CLAIM WAS INACCURATE, IS NOT DISCERNIBL E. THUS, NO PENALTY IS IMPOSABLE ON THIS COUNT ALSO. WITH REGARD TO THE SALARY INCOME AS PER THE ASSESSE E, HE HAS DISCLOSED THE INCOME AS PER FORM NO.16. THE ASSESS EE WAS OF THE OPINION THAT THE EXPENDITURE I.E. CONSTITUENCY ALLO WANCE, OFFICE EXPENDITURE ARE EXEMPT BEING MEMBER OF PARLIAMENT. HE HARBOURED A BELIEF THAT HIS SALARY INCOME IS ALSO EXEMPT. TO O UR MIND THE ASSESSEE FAILED TO GIVE ANY PLAUSIBLE EXPLANATION FOR NON-IN CLUSION OF HIS SALARY AS MEMBER OF PARLIAMENT. THERE CANNOT BE ANY REASON T O HABOUR SUCH A BELIEF, MORE SO, IT WAS NOT BROUGHT OUR NOTICE THAT THIS WAS THE FIRST YEAR OF RECEIPT OF SALARY AS AN MEMBER OF PARLIAMENT. TH EREFORE, THE LD.AO WAS JUSTIFIED IN VISITING THE ASSESSEE WITH PENALTY QUA THE ADDITION OF SALARY INCOME AMOUNTING TO RS.1,66,276/-. THE APPE AL OF THE ASSESSEE IS PARTLY ALLOWED AND LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT QUA THE ADDITION OF RS.1,66,267/- IS CONFIRMED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 21 ST MARCH, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 21/03/2017