Assistant Commissioner Of Income tax Circle - 1, Bellary V. M/s Auro Minerals , Hospet

ITA 1543/BANG/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9801 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 11-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B S N PRASAD
• Assessee Lawyers: SIDDAPPAJI JT BENGALURU
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI A.K. GARODIA , ACCOUNTANT MEMBER I TA NO .1543/BANG/2014 & 1373/BANG/2018 ASSESSMENT YEAR : 2008 - 09 SMT. B.C. PRATIMA, # 2708, NEAR CITB CHOULTRY, HEBBAL 2 ND STAGE, MYSORE 570 016. PAN: AQGPP 4368L VS. THE INCOME TAX OFFICER, WARD 1(3), MYSORE. APPELLANT RESPONDENT APPELLANT BY : SHRI B.S.N. PRASAD, ADVOCATE RE SPONDENT BY : SHRI SIDDAPPAJI, JT.CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 23 .0 8 .201 8 DATE OF PRONOUNCEMENT : 14 .09.2018 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER BOTH THE AFORESAID APPEALS ARE BY THE ASSESSEE A GAINST THE ORDER DATED 06.06.2014 AND DATED 05.05.2016 OF CIT(A), MY SORE, RELATING TO ASSESSMENT YEAR 2008-09. ITA NO.1543/B/17 IS AN AP PEAL AGAINST THE ADDITION OF RS.2,50,000/- MADE TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 OF THE INCOME TAX ACT, 1961 (THE ACT). ITA NO.1373 /B/18 IS AN APPEAL AGAINST THE ORDER IMPOSING PENALTY U/S.271(1)(C) OF THE ACT ON THE ASSESSEE IN RESPECT OF THE ADDITION OF RS.2,50,000/-. ITA NOS. 1543/BANG/2014 & 1373/BANG/2018 PAGE 2 OF 6 2. THE ASSESSEE IS AN INDIVIDUAL. SHE IS ENGAGED IN THE BUSINESS OF CARRYING OUT JOB WORK OF COIL WINDING FOR TRANSFORM ERS. AY 2008-09 WAS THE FIRST YEAR IN WHICH SHE FILED HER RETURN OF INCOME. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED BALANCE SHEET AS ON 31.3.2008 IN WHICH SHE DECLARED CAPITAL OF THE BUSI NESS AT RS.5,67,720/-. THE AO ACCEPTED THE EXPLANATION OF THE ASSESSEE WIT H REGARD TO SOURCE OF CAPITAL INTRODUCED IN THE BUSINESS, EXCEPT TO THE E XTENT OF RS.2,50,000/- WHICH WAS EXPLAINED BY THE ASSESSEE AS A LOAN RECEI VED FROM HER MOTHER- IN-LAW. IT WAS CLAIMED THAT THE ASSESSEES FATHER- IN-LAW RETIRED FROM GOVERNMENT SERVICE AND HIS RETIREMENT BENEFITS WERE GIVEN TO THE MOTHER- IN-LAW, WHO IN TURN GAVE A SUM OF RS.2.5 LACS TO TH E ASSESSEE. THE AMOUNT WAS CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE B Y WAY OF A CHEQUE MAINTAINED BY THE MOTHER-IN-LAW WITH VIJAYA BANK. THE AO ON ENQUIRY FOUND THAT ON 5.7.2007, A CHEQUE FOR RS.2.5 LACS WA S RETURNED WITHOUT CLEARANCE. THE AO THEREFORE HELD THAT THE ASSESSEE HAS FAILED TO SATISFACTORILY EXPLAIN CREDIT TO THE EXTENT OF RS.2 .5 LACS AND ADDED THE SAID SUM TO THE TOTAL INCOME OF THE ASSESSEE U/S.68 OF T HE ACT. 3. BEFORE CIT(A), IT WAS SUBMITTED THAT SHE DID NOT MAINTAIN ANY BOOKS OF ACCOUNTS AND WAS DECLARING INCOME ON PRESUMPTIVE BASIS U/S.44AD OF THE ACT. THEREFORE, THERE WAS NO QUESTION OF EXAMI NING ANY CREDIT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR APPLYING THE PROVISIONS OF SEC.68 OF THE ACT. THE ASSESSEE SUBMITTED THAT HER HUSBAND W AS DRAWING SALARY FOR THE PAST 15 YEARS AND SHE HAD SUFFICIENT FUNDS. TH E CIT(A) HOWEVER DID NOT AGREE WITH THE CLAIM OF THE ASSESSEE AS SUFFICI ENT EVIDENCE WAS NOT LET IN TO SHOW EXISTENCE OF OWN FUNDS. 4. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSE E IS IN APPEAL BEFORE THE TRIBUNAL. ITA NOS. 1543/BANG/2014 & 1373/BANG/2018 PAGE 3 OF 6 5. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE P OINTED OUT THAT THE ASSESSEE WAS NOT GUIDED BY ANY PROFESSIONAL IN THE PROCEEDINGS BEFORE THE AO AND THAT THE CAPITAL SHOWN OF RS.5,67,720 WA S WRONGLY SHOWN AS PERTAINING TO AY 2007-08 WHEREAS THE ACTUAL CAPITAL CONTRIBUTION OF RS.2,60,000 WAS IN AY 2008-09. THE ASSESSEE POINTE D OUT THIS FACT IN REPLY TO THE PENALTY PROCEEDINGS U/S.271(1)(C) OF T HE ACT THAT HER SOURCE OF CAPITAL OF RS.2,60,000/- AS FOLLOWS:- S. NO. NAME OF THE PERSON FROM WHOM THE MONEY HAD BEEN BORROWED PAN NO. OF THE PERSON FROM WHOM THE MONEY HAD BEEN BORROWED DATE ON WHICH MONEY BORROWED AMOUNT OF MONEY BORROWED TOTAL AMOUNT OF MONEY BORROWED 1 MADHU H R AHRPM 78041 05 - 04 - 2008 18000 69,000 17-06-2008 15000 19-07-2008 18000 04-10-2008 18000 2 H RAMACHANDRA BHAT BZQPR3049Q 20-05-2008 18000 54000 13-10-2008 18000 05-12-2008 18000 3 GOPIKUMAR AJRPK931OR 15 - 06 - 2008 17000 35000 25-08-2008 18000 4 RAHUL CHDPK6812J 17-04-2008 15000 33000 14-07-2008 18000 5 RAVI PRAKASH AFKPR9858.1 09-05-2008 15000 33000 , 07-07-2008 18000 6 R VENKATESH AEJPV95210 12 - 0 9 - 2008 18000 36000 22-11-2008 18000 TOTAL 260000 6. THE ASSESSEE IN THE PROCEEDINGS BEFORE THE CIT(A ) AGAINST THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT POINTED OUT THE ABOVE ASPECT. THE ABOVE ASPECT WAS CONFRONTED BY THE CIT(A) TO THE AO . THE AO IN HIS RESPONSE POINTED OUT THAT THIS WAS A NEW PLEA NEVER PUT FORTH IN THE QUANTUM PROCEEDINGS. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR ITA NOS. 1543/BANG/2014 & 1373/BANG/2018 PAGE 4 OF 6 THE ASSESSEE THAT THE ISSUE REQUIRES EXAMINATION ES PECIALLY IN THE LIGHT OF THE FACT THAT THE ASSESSEE WAS NOT REQUIRED TO MAIN TAIN BOOKS OF ACCOUNTS AND WAS ENTITLED TO AND HAD IN FACT DECLARED PRESUM PTIVE INCOME U/S.44AD OF THE ACT. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ARE OF THE VIEW THAT THE ISSUE REQUIRES FRESH LOOK BY THE CIT(A). ADMIT TEDLY, THE ASSESSEE HAD DECLARED INCOME AS PER PROVISIONS OF SEC.44AD OF TH E ACT AND IN SUCH A SCENARIO THERE WAS NO OCCASION TO MAINTAIN ANY BOOK S OF ACCOUNTS. THE ASSESSEE WAS NOT REPRESENTED BY ANY PROFESSIONAL AN D THIS FACT IS EVIDENT FROM THE ASSESSMENT ORDER WHICH SAYS THAT THE ASSES SEE HERSELF APPEARED IN THE PROCEEDINGS BEFORE THE AO. IN SUCH A SCENAR IO THERE IS FORCE IN THE CONTENTION OF THE ASSESSEE THAT THE ISSUE REQUIRES TO BE LOOKED AFRESH BY THE CIT(A) IN THE LIGHT OF THE CONTENTION OF THE AS SESSEE THAT THERE WAS NO CREDIT ENTRY IN THE BOOKS OF ACCOUNTS FOR AY 2008-0 9 AND THEREFORE NO ADDITION CAN BE MADE U/S.68 OF THE ACT FOR AY 2008- 09. THE CIT(A) WILL DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE CONTENT ION PUT FORTH BY THE ASSESSEE ABOVE AFTER AFFORDING ASSESSEE OPPORTUNITY OF BEING HEARD AND AFTER CONFRONTING THE AO WITH THE CONTENTION OF THE ASSESSEE. 8. FOR STATISTICAL PURPOSE THE APPEAL OF THE ASSESS EE ITA NO.1543/BANG/14 IS ALLOWED. ITA 1373/BANG/2018 9. THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) CONFIRMING THE ORDER OF THE AO IMPOSING PENALTY ON THE ASSESSEE. 10. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEF ORE US THAT THE SHOW CAUSE NOTICE ISSUED U/S 274 OF THE ACT BEFORE IMPOS ING PENALTY DOES NOT CONTAIN THE SPECIFIC CHARGE AGAINST THE ASSESSEE NA MELY AS TO WHETHER THE ITA NOS. 1543/BANG/2014 & 1373/BANG/2018 PAGE 5 OF 6 ASSESSEE WAS GUILTY OF HAVING CONCEALED PARTICULARS OF INCOME OR HAVING FURNISHED INACCURATE PARTICULARS OF INCOME. A COPY OF THE SHOW CAUSE NOTICE U/S 274 OF THE ACT WAS FILED BEFORE US AND PERUSAL OF THE SAME REVEALS THAT THE AO HAS NOT STRUCK OUT THE IRRELEVANT PORTION IN THE SHOW CAUSE NOTICE AND THEREFORE THE SHOW CAUSE NOTICE DOES NOT SPECIF Y THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER THE CHARGE IS OF CONCEAL MENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. 11. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTEN TION TO THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS IN ITA NO.380 OF 2015 DATED 23.11.2015 WHEREIN THE HONBLE KARNATAKA HIGH COURT FOLLOWING ITS OWN DECISION IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 IT R 565 TOOK A VIEW THAT IMPOSING OF PENALTY U/S 271(1)(C) OF THE ACT I S BAD IN LAW AND INVALID FOR THE REASON THAT THE SHOW CAUSE NOTICE U/S 274 OF TH E ACT DOES NOT SPECIFY THE CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT IS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE LD. COUNSEL FURTHER BROUGHT TO OUR NOTICE THAT AS A GAINST THE DECISION OF THE HONBLE KARNATAKA HIGH COURT THE REVENUE PREFERRED AN APPEAL IN SLP IN CC NO.11485 OF 2016 AND THE HONBLE SUPREME COURT BY ITS ORDER DATED 05.08.2016 DISMISSED THE SLP PREFERRED BY THE DEPAR TMENT. 12. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED CO UNSEL FOR THE ASSESSEE AND ARE OF THE VIEW THAT THE SHOW CAUSE NO TICE ISSUED IN THE PRESENT CASE U/S 274 OF THE ACT DOES NOT SPECIFY TH E CHARGE AGAINST THE ASSESSEE AS TO WHETHER IT IS FOR CONCEALING PARTICU LARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE SH OW CAUSE NOTICE U/S 274 OF THE ACT DOES NOT STRIKE OUT THE INAPPROPRIATE WO RDS. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT IMPOSITION O F PENALTY CANNOT BE SUSTAINED. THE PLEA OF THE LD. COUNSEL FOR THE ASSE SSEE THAT IN SUCH ITA NOS. 1543/BANG/2014 & 1373/BANG/2018 PAGE 6 OF 6 CIRCUMSTANCES PENALTY U/S.271(1)(C) OF THE ACT CANN OT BE IMPOSED HAS TO BE ACCEPTED AS SUCH A PLEA IS BASED ON THE DECISION S REFERRED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE. WE THEREFORE HOLD THAT IMPOSITION OF PENALTY IN THE PRESENT CASE CANNOT BE SUSTAINED AND THE SAME IS DIRECTED TO BE CANCELLED. THE APPEAL BEING ITA NO.1373/BANG/ 2018 IS ALLOWED. 13. IN THE RESULT, ITA NO.1543/BANG/2014 IS ALLOWED FOR STATISTICAL PURPOSE WHILE ITA NO.1373/BANG/2018 IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF SEPTEMBER, 2018. SD/- SD/- ( A.K. GARODIA) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 14 TH SEPTEMBER, 2018. / D ESAI S MURTHY / COPY TO: 1. THE APP ELL ANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.