ITO, Kollam V. Sri.I.Philip, Kollam

ITA 15/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64704 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-08-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VENI RAJ
• Assessee Lawyers: R KRIHNAN
• Keywords: Unexplained investment; Bonafide belief

Judgement Text

1 ITA NO. 06 & 15/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 06/COCH/2011 (ASSESSMENT YEAR 2003-04) I PHILIP VS THE ITO, WD.2 M/S HIMA TOURIST HOME KOLLAM SAKTHIKULANGARA PO KOLLAM 691 581 PAN : AABPI9678M (APPELLANT) (RESPONDENT) I.T.A NO.15/COCH/2011 (ASSESSMENT YEAR 2003-04) ITO, WD.2 VS SHRI I PHILIP KOLLAM PARTNER IN HIMA TOURIST HOME SAKTHIKULANGARA PO, KOLLAM (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R KRIHNAN REVENUE BY : SMT. VENI RAJ DATE OF HEARING : 06-08-2012 DATE OF PRONOUNCEMENT : 10-08-2012 O R D E R PER N.R.S. GANESAN (JM) THESE CROSS APPEALS ARE FILED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM DATED 14-10-2010 FOR THE A SSESSMENT YEAR 2003-04 2 ITA NO. 06 & 15/COCH/2011 PARTIALLY CONFIRMING THE PENALTY LEVIED U/S 271(1)( C) OF THE ACT. THE ASSESSEE IS AGGRIEVED AGAINST CONFIRMATION OF THE PENALTY TO TH E EXTENT OF RS. 53,355 WHERE AS THE REVENUE IS AGGRIEVED IN COMMISSIONER OF INCO ME-TAX(A) REDUCING THE PENALTY TO RS.53,355 FROM RS. 1,00,000 LEVIED BY TH E ASSESSING OFFICER. 2. SHRI R KRISHNAN, THE LD.REPRESENTATIVE FOR THE AS SESSEE SUBMITTED THAT THE ASSESSING OFFICER LEVIED PENALTY OF RS.1 LAKH ON THE GROUND THAT HALF SHARE OF THE UNEXPLAINED INVESTMENT MADE IN IMMOVABLE PROPERTY W AS NOT DISCLOSED TO THE DEPARTMENT. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE INVESTMENT WAS MADE EQUALLY BY THE ASSESSEE AND HIS WIFE. A SIMIL AR PENALTY WAS LEVIED BY THE ASSESSING OFFICER IN THE CASE OF ASSESSEES WIFE. THIS TRIBUNAL, AFTER CONSIDERING AN IDENTICAL CIRCUMSTANCE IN ASSESSEES WIFES CASE DE LETED THE PENALTY LEVIED. THE FACTS ARE IDENTICAL IN THE CASE OF ASSESSEES WIFE. THEREFORE, THERE IS NO QUESTION OF ANY LEVY OF PENALTY IN THIS CASE. WE HEARD SMT. VEJI RAJ, THE LD.DR ALSO. 3. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND ALSO PERUSED THE RECORD. THE FACT REMAINS IS THAT THE ASSESSEE AND HIS WIFE INVESTED IN THE PROPERTY EQUALLY. 50% OF THE INVESTMENT WAS MADE I N THE NAME OF THE ASSESSEE AND THE REMAINING 50% WAS MADE IN THE NAME OF ASSES SEES WIFE. A SIMILAR PENALTY WAS LEVIED IN THE CASE OF ASSESSEES WIFE W HICH WAS DELETED BY THIS TRIBUNAL IN ITA NO.566/COCH/2010 DATED 27-04-2012. I N FACT, THE TRIBUNAL AT PARAGRAPH 5 OF ITS ORDER HAS OBSERVED AS FOLLOWS: 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY PERUSED THE RECORD. IN OUR VIEW, THE EXPLANATION 1 GIVEN I N S.271(1) GOVERNS THE ISSUE UNDER CONSIDERATION. ACCORDING TO CLAUSE (A) OF THE SAID EXPLANATION, THE AMOUNT ADDED OR DISALLOWED IN COMP UTING THE TOTAL INCOME OF A PERSON, SHALL BE DEEMED TO REPRES ENT INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED IF SUCH A PERSON 3 ITA NO. 06 & 15/COCH/2011 FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANAT ION WHICH FOUND TO BE FALSE. IN THE INSTANT CASE, THE ASSESSEE HAS OF FERED FOLLOWING EXPLANATIONS DURING THE COURSE OF PENALTY PROCEEDIN GS:- I) THAT AN INADVERTENT ERROR WAS CREPT IN WHILE DRAWING UP THE CASH FLOW STATEMENT BY THE ACCOUNTANT FOR THE FINANCIAL YEARS 2001-02 TO 2005-06 IN CONNECTION WITH THE ASSESSMENT IN THE CASE OF THE ASSESSEES HUSBAND SHRI I. PHILIP FOR THE ASSESSMENT YEAR 2006-07 IN NOT INCLUDING HALF SHARE OF THE INVESTMENT IN THE LAND AT NEENDAKARA JO INTLY PURCHASED WITH THE ASSESSEES HUSBAND ON THE BONAFIDE BELIEF THAT THE LAND IN QUESTION BELONGS TO M/S HIMA T OURIST HOME AS A BUILDING OF THE FIRM WAS BEING CONSTRUCTED IN THE SAID LAND. II. THAT THE OMISSION WAS ACCIDENTAL AND UNINTENTIONAL WITHOUT ANY ULTERIOR MOTIVE TO DEFRAUD THE REVENUE. THE VERY FACT THAT THE ASSESSEE HAD TO FILE CASH FL OW STATEMENT SHOWED THAT THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNTS . THUS IT IS NOT THE CASE WHERE THE ASSESSEE HAS OMITTED TO RECORD THE I NVESTMENT IN THE REGULAR BOOKS OF ACCOUNTS BUT IT IS ONLY A CASE OF O MISSION TO DISCLOSE THE SAID INVESTMENT IN THE CASH FLOW STATEMENT. THE EX PLANATION OF THE ASSESSEE THAT THE ACCOUNTANT OF THE ASSESSEE WAS UN DER BONAFIED BELIEF THAT THE LAND BELONGED TO THE PARTNERSHIP FIRM AND HENCE DID NOT INCLUDE THE SAME IN THE CASH FLOW STATEMENT WAS NOT FOUND T O BE FALSE. HENCE, IN OUR VIEW, NO PENALTY IS REQUIRED TO BE LEVIED IN VI EW OF THE EXPLANATION (1) TO S.271(1)(C) REFERRED SUPRA. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELET E THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 4. SINCE THE FACTS ARE IDENTICAL TO THAT OF THE ASS ESSEES WIFE, THIS TRIBUNAL IS OF THE OPINION THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND TO BE FALSE. THEREFORE, THERE IS NO QUESTION OF ANY LEVY OF PENALTY. ACCORDINGLY THE ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE P ENALTY IS DELETED. 4 ITA NO. 06 & 15/COCH/2011 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH AUGUST, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 10 TH AUGUST, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH