Shri Vasant Dattatray Varnekar, Pune V. DCIT, Circle-3, Pune

ITA 1594/PUN/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2246 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-10-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 22-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SUBHASH
• Keywords: Unexplained cash credit
• Section: 54F; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO. 1126 /PN/201 3 / ASSESSMENT YEAR: 200 3 - 04 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 3, PUNE . / APPELLANT CIRCLE 3, PUNE . / APPELLANT VS. SHRI VASANT DATTATRAY VARNEKA R, ASHWASHTHA, PLOT NO.8, S.NO.161, MODI BAUG, PUNE 411016 . / RESPONDENT PAN: AAOPV3457G . / ITA NO. 1 544 /PN/201 3 . / ITA NO. 1 544 /PN/201 3 / ASSESSMENT YEAR: 200 3 - 04 SHRI VASANT DATTATRAY VARNEKAR, ASHWASHTHA, PLOT NO.8, S.NO.161, MODI BAUG, PUNE 411016 . / APPELLANT PAN: AAOPV3457G VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 3, PUNE . / RESPONDENT ASSESSEE BY : SHRI NARESH KUMAR DEPARTMENT BY : DR. SUBHASH / DATE OF HEARING : 05 . 1 0.2015 / DATE OF P RONOUNCEMENT: 08 . 1 0.2015 ITA NO S. 1126 & 1 594 /PN/20 1 3 SHRI VASANT DATTATRAY VARNEKAR 2 / ORDER PER SUSHMA CHOWLA, J M : THE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE ARE AGAINST THE ORDER OF CIT ( A ) - I I , PUNE , DATED 23 .0 1 .201 3 REL ATING TO ASSESSMENT YEAR 200 3 - 04 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IN ITA NO. 1126 /PN/201 3 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN REDUCING THE PENALTY COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN REDUCING THE PENALTY IMPOSED U/S.271(1) (C) OF THE I.T. ACT BASED ON IRRELEVANT AND EXTRANEOUS CONSIDERATIONS UNSUSTAINABLE IN LAW. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND THE GROUND OF APPEAL. 4 . THE ASSESSEE IN ITA NO. 1 594 /PN/201 3 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE HON'BLE COMMISSIONER OF INCOME TA X (APPEALS) HAS ERRED IN PARTLY C ONFIRMING ORDER OF THE A.O. FOR LEVY OF PENALTY U/ S 271 (1) (C) OF INCOME TAX ACT, 1961 TO THE EXTENT OF RS.1,09,18,320 / - - ON THE ADDITION MADE OF RS.3,69,94,400 / - AS UNEXPLAINED CASH CREDITS WITHOUT CONSIDERING THE FACTS A ND CIRCUMSTANCES OF THE CASE. THE APPELLANT HAS DISCLOSED LONG TERM CAPITAL GAINS OF RS.3,23,68,890 / - (INCLUDED IN RETURNED INCOME OF RS.3,28,46,340 / - ) IN RESPECT OF SALE OF SHARES OF RASHEL AGROTECH LTD. THE LEARNED ASSESSING OFFICER HAS ERRED IN TREATING THE SALE PROCEEDS OF SALE OF SHARES OF RASHEL AGROTECH LTD. OF RS.3,63,94,400 / - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT , 1961 . THE APPELLANT HAS SUBMITTED FOLLOWING DOCUMENTS IN SUPPORT OF THE SUCH LONG TERM CAPITAL GAINS AS WELL AS RECEIP TS ON ACCOUNT OF SALE PROCEEDS A). BROKER NOTES AS ISSUED BY M / S. SPS SHARE BROKERS PVT. LTD. B ROKER REGISTERED WITH BOMBAY STOCK EXCHANGE. B). DEMAT ACCOUNT ENTRIES IN THE APPELLANT'S ACCOUNT HELD WITH UNITED WESTE RN BANK. C). ENTRIES IN THE BOOKS OF ACCOUNTS IN RESPECT OF THE CHEQUES RECEIVED AND BANK STATEMENTS OF THE APPELLANT. ITA NO S. 1126 & 1 594 /PN/20 1 3 SHRI VASANT DATTATRAY VARNEKAR 3 APPELLANT HAS SUBMITTED ALL THE SUPPORTING IN RESPECT OF THE RECEIPTS RECORDED IN THE BOOKS OF ACCOUNTS ALONG WITH SUPPORTING DOCUMENTS. IN VIEW OF THE ABOVE, QUESTION OF L EVYING PENALTY U/ S 271 (1) (C) OF INCOME TAX ACT, 1961 IN THE CASE OF APPELLANT'S DOES NOT ARISE. IN VIEW OF THE TAX ACT, 1961 IN THE CASE OF APPELLANT'S DOES NOT ARISE. IN VIEW OF THE ABOVE, IT IS PRAYED THAT PENALTY SHOULD BE DELETED. WITHOUT PREJUDICE TO ABOVE, WE WOULD LIKE TO STATE THAT HON'BLE CIT(A) HAS ALSO FAILED TO CONSIDER THE TAX PAID BY THE APPELLANT IN RESPECT OF LONG TERM CAPITAL GAINS WHILE CONFIRMING LEVY OF THE PENALTY U/ S 271(1)(C) OF THE INCOME TAX ACT, 1961. ACCORDINGLY, NECESSARY DIRECTION SHOULD BE GIVEN IN THIS REGARD. 2. YOUR APPELLANT CRAVES TO ADD, ALTER, OR AMEND ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEAL. 5 . FIRST, WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE. THE ONLY ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL IS AGAINST THE LEVY OF PENALTY UNDER SECTION BY THE ASSESSEE IN ITS APPEAL IS AGAINST THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS.1,09,18,320/ - ON AN ADDITION OF RS.3,69,94,400/ - . 6. THE APPEAL FILED BY THE ASSESSEE IS DELAYED BY 90 DAYS. THE ASSESSEE IN THIS REGARD HAS FILED AN AFFIDAVIT WHICH READS AS UNDER: - AFFIDAVIT I VASANT VARNEKAT S/O DATTATRAY VARNEKAR AN ADULT INDIAN INHABITANT, AGED 66 RESIDING AT ASHWASTHA, PLOT NO.8, S.NO.161, MODI BAUG, PUNE 411016 DO HEREBY SOLEMNLY AFFIRM AND STATE AS UNDER: HEREBY SOLEMNLY AFFIRM AND STATE AS UNDER: 2. I SAY THAT THE NOTICE OF DEMAND AS WELL AS ORDER U/S 250 OF INCOME TAX ACT, 1961 FOR MY CASE FOR A.Y. 2003 - 20 04 WAS SERVED AROUND 25.3.2013. THE APPEAL WAS REQUIRED TO BE FILED WITHIN 60 DAYS OF SERVICE OF THE NOTICE I.E. 24.5.2013. 3. I SAY THAT I HAVE SENT THE SAID ORDER TO M Y CHARTERED AC C OUNTANTS OFFI C E AT MU MBAI. IT IS HOWEVER TO STATE THAT DUE TO CHANGE O F CHARTERED ACCOUNT AN T S, THE IMPUGNED APPEAL REMAINED TO BE FILED. I T IS IN THE LAST WEEK , WHEN I WAS BEING CLARIFIED B Y MY NEW CHARTERED ACCOUNTANTS THAT THE APPE A L AGAINST THE S A ID ORDER HAS NOT BEEN FILED WITH THE INCOME TAX APPELLATE TRIBUNAL . I N VIE W OF THE LACK OF COMMUNI C ATIONS ON ACCOUNT OF CHANGE OF CHARTERED ACCOUNTANTS AND INADEQUATE KNOWLEDGE OF MINE, THERE IS A DELAY IN OUR PART TO FILE THE APPEAL IN TIME I . E. BY 24.5.2013. 4. THEREAFTE R , ALL NECESSAR Y STEPS LIKE PREPARATION OF FORM N O. 36 , GROUNDS O F APPEAL HAS BEEN CARRIED OUT . IT MA Y ALSO BE NOTED THAT THE CHALLAN OF APPEA L FEES ALSO HAS BEEN PAID ON 6.8.2013. WE ARE FILING HERE W ITH ORIGINAL CHALLAN WITH RELE VANT PAPERS IN RELATING TO FILING OF THE APPEAL . 5. IT IS SUBMITTED THAT D UE TO ABOVE MENTIONED UNAVOIDABLE CIRCUMSTANCES, THERE IS DELA Y IN FILING OF THE SAID APPEAL . DUE DATE FOR FILING OF APPEAL WOULD BE AROUND 24.5.2013 AS STATED ABOVE. ACCORDINGLY, CONSIDERING THE SERVI C E OF ORDER U/S 250 ON 25.3.2013 AS MENTIONED ABOVE AND APPEAL BEING FILED ON 13.8.2013, APPEAL FILING IS DELAYED BY 81 DAYS AND WE WOULD LIKE TO PRAY TO CONDONE DELAY OF FILING OF THE APPEAL. 6. I SAY THAT THE DEFAULT WAS UNINTENTIONAL AND DUE TO CIRCUMSTANCES AS DISCUSSED ABOVE, WHICH IS HEREBY PRAYED TO BE CONDONED. DISCUSSED ABOVE, WHICH IS HEREBY PRAYED TO BE CONDONED. SOLEMNLY AFFIRMED AT PUNE THIS 12 TH DAY OF AUGUST, 2013 SD/ - DEPONENT ITA NO S. 1126 & 1 594 /PN/20 1 3 SHRI VASANT DATTATRAY VARNEKAR 4 7. THE CASE OF THE ASSESSEE BEFORE US WAS THAT BECAUSE OF CHANGE IN THE COUNSEL , WHO WAS LOOKING AFTER THE INCOME - TAX MATTERS, THERE WAS DELAY IN FILING THE APPEAL BEF ORE THE TRIBUNAL, WHICH MERITS TO BE CONDONED. THE HONBLE BOMBAY HIGH COURT IN PRIMA PAPER & ENGINEERING PVT. LTD. VS. CIT IN ITA (L) NO.403 OF 2013, VIDE ORDER DATED 09.07.2013 HAS HELD THAT THE EXPRESSION SUFFICIENT CAUSE SHOULD RECEIVE A LIBERAL CON STRUCTION SO AS TO ADVANCE SUBSTANTIAL JUSTICE. FOLLOWING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN PRIMA PAPER & ENGINEERING PVT. LTD. VS. CIT (SUPRA) , WE CONDONE THE DELAY OF 90 DAYS AS THERE IS NO MATERIAL ON RECORD TO DOUBT THE BONAFIDES OF THE ASSESSEE. IN VIEW THEREOF, WE CONDONE THE DELAY IN FILING THE APPEAL LATE BEFORE THE TRIBUNAL AND PROCEED TO DECIDE THE ISSUE ON MERITS AFTER HEARING BOTH THE PARTIES. 8 . BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAD DISCLOSED LONG TERM CAPITAL GAINS ON SALE OF SHARES AT RS.3,23,68,890/ - . THE ASSESSEE HAD SOLD SHARES OF M/S. RASH EL AGROTECH LIMITED. HOWEVER, THE ASSESSING OFFICER HAD TREATED THE SALE PROCEEDS OF THE SAID SHARES AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT , IN TURN MAKING AN ADDITION OF RS.3,63,94,400 / - . THE CLAIM OF THE ASSESSEE THAT IT HAD PURCHASED AND SOLD THE SHARES THROUGH THE BROKER AND ALSO THE ENTRIES OF THE SAID SHARES BEING IN THE D - MAT ACCOUNT OF THE ASSESSEE, AGAINST WHICH, THE ASSESSEE HAD RE CEIVED CHEQUES AND DEPOSITED IN THE BANK ACCOUNT, WAS REJECTED BY THE ASSESSING OFFICER. THE CIT(A) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WHILE LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT NOTED THAT WHERE THE ASS ESSEES CLAIM OF SALE OF SHARES WAS NOT GENUINE AT ALL, CONSEQUENTLY, THE AMOUNTS INTRODUCED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT IN THE GARB OF SALE OF SHARES, WAS TREATED AS CREDITS IN THE BOOKS OF ACCOUNT, FOR WHICH, THE ASSESSEE HAD NO EXPLANATION. HENCE, THE AMOUNT OF RS.3.63 CRORES WAS TREATED AS CASH CREDITS WITHIN THE MEANING OF SECTION 68 OF THE ACT, AGAINST WHICH THE ASSESSEE WAS NOT ITA NO S. 1126 & 1 594 /PN/20 1 3 SHRI VASANT DATTATRAY VARNEKAR 5 ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. THE ASSESSING OFFICER HELD THE ASSESSEE TO HA VE FURNISHED INACCURATE PARTICULARS OF INCOME AND LEVIED PENALTY OF RS.2 CRORES AS AGAINST MINIMUM PENALTY @ 100% OF RS.1,09,18,320/ - AND MAXIMUM PENALTY @ 300% OF RS.3,27,54,960/ - . 9. THE CIT(A) UPHELD THE LEVY OF PENALTY. HOWEVER, THE QUANTUM OF PENALT Y TO BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT WAS REDUCED TO 100% ON THE TAX S OUGHT TO BE E V AD ED AS AGAINST 200% OF TAX EVADED LEVIED ON THE CONCEALED INCOME BY THE ASSESSING OFFICER. 10. THE ASSESSEE IS IN APPEAL AGAINST THE LEVY OF PENALTY UNDER SEC TION 271(1)(C) OF THE ACT. 11. THE REVENUE IS IN APPEAL AGAINST SCALING DOWN OF PENALTY FROM 200% TO 100%. 12. SHRI NARESH KUMAR APPEARED FOR THE ASSESSEE AND SHRI DR. SUBHASH APPEARED FOR THE REVENUE AND PUT FORWARD THEIR CONTENTIONS. 13. WE HAVE HEA RD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE CASE OF THE ASSESSEE BEFORE US IS THAT THE QUANTUM ADDITION MADE BY THE ASSESSING OFFICER WHICH IN TURN, WAS CONFIRMED BY THE CIT(A), HA D BEEN DELETED BY THE TRIBUNAL IN ASSESSEES HAND, CONSEQUENTLY, T HERE IS NO MERIT IN THE SAID LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE TRIBUNAL IN ITA NO.615/PN/2009 WITH CONSOLIDATED ORDER ALONG WITH ITA NO.1732/PN/2012 RELATING TO ASSESSMENT YEAR 2003 - 04, VIDE ORDER DATED 18.03.2015 HELD THAT THE INCOM E IS TO BE ASSESSED UNDER THE HEAD INCOME FROM LONG TERM CAPITAL GAINS AS DECLARED BY THE ASSESSEE. CONSEQUENT TO THE ORDER OF TRIBUNAL, UNDER WHICH NO ADDITION HAS BEEN MADE IN THE HANDS OF ASSESSEE, THE BASIS FOR LEVYING PENALTY UNDER SECTION 271(1)(C ) OF THE ACT DO NOT SURVIVE AND CONSEQUENTLY, NO PENALTY FOR CONCEALMENT ITA NO S. 1126 & 1 594 /PN/20 1 3 SHRI VASANT DATTATRAY VARNEKAR 6 CAN BE LEVIED IN THE HANDS OF ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE DEPARTMENT HAS FILED AN APPEAL AGAINST THE ORDER OF TRIBUNAL IN DELETING THE QUANTUM ADDITION AND CONSEQUENTLY, THE PENALTY FOR CONCEALMENT SURVIVES. WE FIND NO MERIT IN THE SAID CONTENTION OF THE REVENU E AND DISMISSING THE SAME, WE HOLD THAT THE ASSESSEE IS NOT LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT , IN THE ABSENCE OF ANY ADDITION MADE IN THE HANDS OF ASSESSEE . CONSEQUENTLY, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED AND THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 1 5 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER P RONOUNCED ON THIS 8 TH DAY OF OCTOBER , 201 5 . ORDER P RONOUNCED ON THIS 8 TH DAY OF OCTOBER , 201 5 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 8 TH OCTOBER , 2015 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I I, PUNE ; 4. / THE CIT - II , PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE