Sh. Buta Singh, Kaithal V. ITO, Kaithal

ITA 16/CHANDI/2011

• Counselvise Citation: 1621514 RSA 2011
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 05-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: S K MUKHI
• Keywords: Income from undisclosed sources; Additional evidence
• Section: 147; 148; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 16/CHD/2011 ASSESSMENT YEAR: 2005-06 SHRI BUTA SINGH, VS. THE ITO, PROP. M/S H.P. FILLING STATION, WARD-3, SIWAN KARNAL PAN NO. AZOPS6171R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MUKHI RESPONDENT BY : SMT.JAISHREE SHARMA DATE OF HEARING : 23.8.2011 DATE OF PRONOUNCEMENT : ORDER THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A), KARNAL DATED 15.10.2010 RELATING TO ASSESSMENT YEAR 2005-0 6 AGAINST THE ORDER PASSED UNDER SECTION 271 (1)(C) OF THE I.T. ACT, 1 961. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEA L BUT THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST PENALTY LEV IED U/S 271 (1)(C) OF THE ACT AMOUNTING TO RS. 81,888/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD IN ITS RETURN OF INCOME DECLARED INCOME FROM PENSION, BUSINESS INCOM E AND ALSO AGRICULTURAL INCOME. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED U/S 143(1) OF THE ACT. ON PERUSAL OF THE ACCOUNT OF THE ASSESSEE 2 IN THE BOOKS OF M/S KISSAN TRADING COMPANY, SIWAN, IT TRANSPIRED THAT THE ASSESSEE HAD CREDITED RS. 1,95,238/- ON ACCOUNT OF AGRICULTURAL RECEIPTS DURING THE YEAR. NO WITHDRAWALS FOR AGRICULTURAL E XPENSES WERE SHOWN IN THE SAID ACCOUNT. THE ASSESSEE HAD DECLARED THE EN TIRE RECEIPTS AS HIS AGRICULTURAL INCOME IN THE RETURN OF INCOME. THE A SSESSING OFFICER AFTER RECORDING REASONS FOR REOPENING U/S 147 OF THE ACT ISSUED NOTICE U/S 148 OF THE ACT. IN COMPLIANCE THERETO, THE COUNSEL FOR THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS. THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S KISSAN TRADING COMPANY, WHERE HE WAS A PARTNER IS REPRODUCED AT PAGE 1 OF THE ASSESSMENT ORDER. AS P ER THE ENTRIES IN THE SAID CAPITAL ACCOUNT, THERE WAS A RECEIPT OF RS. 1, 95, 238/- ON 31.3.2005 ON ACCOUNT OF CROP. THE ASSESSEE HAD WITHDRAWN A S UM OF RS. 4,61,000/- FROM THE SAID CAPITAL ACCOUNTS WHICH WAS INTRODUCED AS CAPITAL IN HIS BUSINESS OF PETROL PUMP STARTED DURING THE YEAR. TH EREAFTER, THERE IS A WITHDRAWAL OF RS. 16,000/-. THE ASSESSEE CLAIMS TO HAVE RECEIVED PENSION OF RS. 54,000/- WHICH WAS UTILIZED FOR HOUSE HOLD E XPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURN ISHED THE AGRICULTURAL ACCOUNT WITH M/S KISSAN TRADING COMPANY UNDER WHICH WHEAT WAS SOLD FOR RS. 41,698/- ON 12.4.2004 AND PADDY WAS SOLD FO R RS. 1,05,021/- AND RS. 48,519/- ON 22.10.2004 AND 25.10.2010 RESPECTI VELY. IN SUPPORT OF THE SAME, THE COPY OF THE J FORM WAS FURNISHED BY THE ASSESSEE. THE ASSESSEE WAS ASKED TO JUSTIFY THE RECEIPTS VIS-A-VI S THE SIZE OF LAND HOLDING, DETAILS AND SOURCES OF AGRICULTURAL EXPEND ITURES THEREOF, LABOUR UTILIZED WITH ELECTRICITY FOR TUBE WELL / FERTILIZE RS / PURCHASES OF SEEDS ETC. THE COUNSEL FOR THE ASSESSEE ADMITTED THAT THERE WA S NO LAND OWNED BY THE ASSESSEE IN HIS OWN NAME AND FURNISHED THE COPY OF JAMABANDI OF LAND OWNED BY HIS FATHER SHRI KARTAR SINGH AND HIS BROTH ERS. THE FATHER OF THE ASSESSEE, SHRI KARTAR SINGH, OWNED ABOUT 4 ACRES AN D WAS ALSO PARTNER OF 3 M/S KISSAN TRADING COMPANY IN WHOSE NAME ALSO AGRIC ULTURAL PRODUCE HAD BEEN SOLD. THE ASSESSING OFFICER THUS HELD THA T THE SAME LAND COULD NOT BE CONSIDERED TO BE SOURCE OF AGRICULTURAL INCO ME FOR FATHER, THE ACTUAL OWNER OF THE LAND AND THE SON I.E THE ASSESSEE BEFO RE US. THE ASSESSING OFFICER REJECTED THE PLEA OF THE ASSESSEE THAT LAND OF FATHER MEASURING FOUR ACRES WAS USED TO CULTIVATE THE CROP SHOWN TO HAVE BEEN SOLD ON BEHALF OF THE ASSESSEE. SHRI KARTAR SINGH HAD SHOWN HIMSELF AS A CULTIVATOR IN THE GIRDAVRI. IN RESPONSE TO THE QUERY RAISED BY THE A SSESSING OFFICER, THE ASSESSEE FURNISHED AN AFFIDAVIT FROM ONE SHRI RAM K UMAR SON OF SHRI SORAN, RESIDENT OF MALILKPUR STATING THAT FOR THE Y EAR 2004-05 HE HAD GIVEN 4 ACRES OF LAND ON LEASE TO SHRI BUTA SINGH W HICH HAD BEEN TAKEN BACK AFTER THAT. THE PLEA OF THE ASSESSEE WAS THAT SAID LAND BELONGING TO SHRI RAM KUMAR WAS CULTIVATED DURING THE YEAR FROM WHICH WHEAT AND PADDY GROWN WAS SOLD. THE ASSESSING OFFICER REJECT ED THE EXPLANATION OF THE ASSESSEE AS THE AFFIDAVIT PURCHASED ON 18.9.200 7 WAS ATTESTED BY NOTARY ON 20.9.2007 ON THE WITNESS OF THIRD PERSON AND THE SIGNATURE OF THE DEPONENT WAS NOT MADE BEFORE THE NOTARY, SO THE RELIABILITY OF THE AFFIDAVIT WAS QUESTIONED. FURTHER IN THE SAID AFFI DAVIT, NO AMOUNT OR CONSIDERATION OF LEASE WAS MENTIONED. AS PER THE A FFIDAVIT LEASE WAS STATED TO BE FOR 2004-05 AND EVEN IF IT IS CONSIDER ED TO BE TRUE THEN THE WHEAT CROP GROWN IN OCTOBER 2004 WOULD BE HARVESTED IN APRIL 2005 THOUGH THE ASSESSEE HAD SOLD WHEAT IN APRIL 2004 AN D HENCE AS PER THE ASSESSING OFFICER THERE WAS CONTRADICTIONS OF FACTS . FURTHER, NO LEASE MONEY WAS PAID BY THE ASSESSEE. THE LEASE DEED WAS NOT REGISTERED WITH SUB-REGISTRAR AS IT IS MANDATORY TO GET A LEASE DEE D REGISTERED IF IT IS FOR A PERIOD EXCEEDING 11 MONTHS. THE ASSESSING OFFICER ALSO FOUND THAT SHRI RAM KUMAR HAS 1/3 RD SHARE IN THE LAND HOLDING OF 9 ACRES AS PER THE JAMABANDI AND DID NOT OWN 4 ACRES WHICH WAS SHOWN T O BE HAVE BEEN 4 GIVEN ON LEASE AS PER THE LEASE DEED. THE POSSESSI ON OF THE LAND OWNED BY SHRI RAM KUMAR WAS MENTIONED TO BE WITH SOME BHAG S INGH IN JAMABANDI AND IT WAS NOT CLEAR AS TO WHY THE SAME WAS LEASED TO THE ASSESSEE. THE ASSESSEE FURTHER FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE FOR AGRICULTURAL EXPENSES, ITS SOURCES, OWNERSHIP OF LA ND TO PROVE ITS CONTENTION NOR PRODUCE THE LESSOR SHRI RAM KUMAR FO R EXAMINATION. IN VIEW THEREOF THE INCOME OF RS. 1,95,238/- AS PER TH E ASSESSING OFFICER COULD NOT BE ACCEPTED TO BE AGRICULTURAL INCOME ON MERE ISSUE OF J FORM FROM SELF OWNED FOOD GAINS COMMISSION AGENT FIRM. T HE SAID AMOUNT WAS TREATED AS INCOME FROM UNDISCLOSED SOURCES AND PEN ALTY PROCEEDINGS U/S 271 (1)(C) WERE INITIATED. THE APPEAL OF THE ASSES SEE WAS DISMISSED BY CIT(A). THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME AND THUS PENALTY A MOUNTING TO RS. 81,888/- WAS IMPOSED U/S 271 (1)(C) OF THE ACT WHIC H WAS 150% OF THE TAX SOUGHT TO BE EVADED. DURING THE APPELLATE PROCEEDIN GS AGAINST THE ORDER LEVYING PENALTY U/S 271 (1)(C) OF THE ACT, THE ASSE SSEE FURNISHED ADDITIONAL EVIDENCE FOR ADMISSION UNDER RULE 46A OF THE I.T. RULES. THE SAID ADDITIONAL EVIDENCE WAS REJECTED BY THE CIT(A) AS NEITHER ANY REQUEST WAS MADE UNDER RULE 46A OF THE I.T. RULES N OR ANY JUSTIFICATION / REASONS WAS GIVEN FOR NON FILING OF THE SAME BEFOR E THE ASSESSING OFFICER DURING THE ASSESSMENT/ PENALTY PROCEEDINGS. THE C IT(A) REJECTED THE PLEA OF THE ASSESSEE THAT THE LAND WAS TAKEN FROM TWO BROTHERS NAMELY SHRI RAM KUMAR AND SHRI DHARAM PAL AND BY AN INADVE RTENT ERROR, OLD OWNERSHIP DOCUMENTS OF LESSOR WERE FURNISHED. THE CIT(A) OBSERVED THAT IT MEANS THAT THE APPELLANT FILED FALSE AFFID AVIT OF SHRI RAM KUMAR DURING APPELLATE PROCEEDINGS. IT WAS OBSERVED BY T HE CIT(A) THAT NO JUSTIFICATION OF NOT BRINGING THIS FACT IN THE NOTI CE OF THE CIT(A) DURING APPEAL PROCEEDINGS HAS BEEN BROUGHT ON RECORD. IT IS THEREFORE HELD THAT 5 THE APPELLANT HAS MADE AN ATTEMPT TO MAKE OVER THE VARIOUS DEFICIENCY POINTED OUT BY THE ASSESSING OFFICER IN HIS ORDER. PLEA OF THE APPELLANT IS, THEREFORE, NOT TENABLE AND HENCE IS REJECTED. FURTHER PLEA OF THE ASSESSEE THAT TOTAL FUNDS OF RS. 3,15,650/- WERE AVAILABLE F OR MEETING OF VARIOUS HOUSE HOLD EXPENSES AND EXPENSES IN CARRYING OUT AG RICULTURAL OPERATION WAS REJECTED BY THE CIT(A) AS NO SUCH ATTEMPT WAS MADE TO EXPLAIN THE AFORESAID EXPENDITURE ALONG WITH EVIDENCE. THE PLE A OF THE ASSESSEE THAT THE AGRICULTURE PRODUCE WAS SOLD TO GOVERNMENT AGEN CY IN SUPPORT OF WHICH J FORM FURNISHED WAS REJECTED BY THE CIT(A) AS THE SAID FORM DID NOT CONTAIN THE SIGNATURE OF THE ASSESSEE AND FURTH ER MERE FILING OF J FORM WAS NOT SUFFICIENT TO ESTABLISH THE GENUINENES S OF AGRICULTURAL INCOME ESPECIALLY WHERE THE SALE OF THE AGRICULTURA L PRODUCE WAS MADE THROUGH A CONCERN IN WHICH ASSESSEE AND HIS FATHER WERE THE PARTNERS. THE CIT(A) UPHELD THE LEVY OF PENALTY U/S 271 (1)(C ) OF THE ACT. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE CIT( A). 4. THE LD. AR FOR THE ASSESSEE AFTER TAKING US THR OUGH THE FACTS OF THE PRESENT CASE POINTED OUT THAT THE ASSESSEE HAD FURN ISHED A PLAUSIBLE EXPLANATION WHICH WAS BACKED WITH EVIDENCE IN EACH RESPECT. IT WAS FURTHER POINTED OUT BY THE LD. AR THAT THE TOTAL EX PENDITURE REQUIRED FOR AGRICULTURE OPERATION WAS RS. 40,000/- AND THE ASSE SSEE HAD THE MONEY AVAILABLE FOR MEETING THE SAID EXPENDITURE. WITHOU T PREJUDICE TO THE ABOVE, THE ALTERNATIVE PLEA RAISED BY THE LD. AR WA S THAT PENALTY LEVIED @ 150% WAS HIGHLY EXCESSIVE. 5. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF THE OWNERSHIP OF AGRICULTURA L LAND BOTH ON ACCOUNT OF OWNERSHIP BY THE FATHER AND ONE SHRI RAM KUMAR W AS FOUND TO BE 6 INCORRECT AS THE ASSESSEE HAD CHANGED ITS STAND BEF ORE THE ASSESSING OFFICER AND THEN BEFORE THE CIT(A). SUCH SHIFTING STANDS BY THE ASSESSEE DOES NOT MERIT CONSIDERATION AND RELIANCE WAS PLACE D ON THE ORDER OF CIT(A) IN THIS REGARD. THE LD. DR ALSO POINTED OUT THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE AVAILABILITY OF FUNDS FOR M EETING THE AGRICULTURE EXPENSES AND HENCE THE SAME MERITS TO BE REJECTED. 6. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T LEVY OF PENALTY U/S 271 (1)(C) OT THE ACT. PENALTY FOR CONCEALMENT U/S 271 (1)(C) OF THE ACT IS IMPOSABLE IN ALL SUCH CASES WHERE THE ASSESSEE H AD EITHER CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCO ME. EITHER OF THE TWO CONDITIONS ARE TO BE SATISFIED BEFORE PENALTY U/S 2 71(1)(C) OF THE ACT IS TO BE IMPOSED BY WAY OF EXPLANATION (1) TO SECTION 271 (1)(C) OF THE ACT, CERTAIN DEEMED PROVISIONS REGARDING CONCEALMENT OF INCOME ARE POSTULATED. ONE OF THE TWO SITUATIONS SO DEEMED IS IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER T HE PROVISIONS OF THE ACT, WHERE THE ASSESSEE FAILS TO OFFER AN EXPLANATI ON OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR THE CIT(A) AND SECOND IS WHERE IN RESPECT OF ANY FA CT 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 SUCH THE EXPLANATION IS BONAFIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOME HAD BEEN DISCLOSED. 7. IN THE FACTS OF THE PRESENT CASE, THE EXPLANATIO N OF THE ASSESSEE IN RELATION TO THE AGRICULTURAL INCOME DECLARED WAS FO UND TO BE INCORRECT AND FALSE. THE ASSESSEE MADE SHIFTING STANDS AND FORWA RDED THREE DIFFERENT 7 EXPLANATIONS ONE AFTER THE OTHER AS REFERRED TO BY ME IN THE PARAS HERE-IN- ABOVE. ONE EXPLANATION WAS FORWARDED BEFORE THE AS SESSING OFFICER AND WHEN THE SAME WAS REJECTED, ANOTHER EXPLANATION WAS FORWARDED BEFORE THE ASSESSING OFFICER ITSELF. WHEN THE ASSESSING OFFICER POINTED OUT THE DEFICIENCIES IN THE SAID EXPLANATION OF THE ASSESSE E, ANOTHER STAND WAS TAKEN BEFORE THE CIT(A) WHICH WAS IN TOTAL CONTRADI CTION TO THE EARLIER STAND OF THE ASSESSEE. THE ASSESSEE WAS UNABLE TO SUBSTANTIATE ANY OF ITS EXPLANATION AND WHEN CONFRONTED, THE ASSESSEE SHIF TED ITS STAND. THE ASSESSEE CLAIMS THAT IT HAD RENDERED EXPLANATION WH ICH WAS BACKED BY EVIDENCE. BUT THE SAID EVIDENCE HAS BEEN PROVED BY THE AUTHORITIES BELOW TO BE WANTING. THE ASSESSEE ADMITTEDLY DOES NOT OW N ANY AGRICULTURAL LAND AND IN VIEW OF THE ASSESSEE HAVING FAILED TO P ROVE THE STAND OF TAKING AGRICULTURAL LAND ON LEASE FOR CARRYING OUT AGRICUL TURAL OPERATIONS, NO RELIANCE CAN BE PLACED ON THE SO CALLED J' FORMS I SSUED BY FIRM IN WHICH ASSESSEE AND HIS FATHER WERE PARTNERS. IN THE ABOV E SAID FACTS AND CIRCUMSTANCES, THE ASSESSEE HAVING FURNISHED INACCU RATE PARTICULARS OF INCOME, LEVY OF PENALTY U/S 271 (1)(C) IS UPHELD. HOWEVER, WE RESTRICT THE LEVY OF PENALTY TO 100% OF THE TAX TO BE EVADED . THUS, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS _____ DAY OF AUGUST, 2011. (SUSHMA CHOWLA) JUDICIAL MEMBER DATED : AUGUST, 2011 RKK 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR