ITO, Nashik V. Shri Dhanraj Narsingdas Pallod, Latur

ITA 1611/PUN/2012

• Counselvise Citation: 161124514 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 26-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Depreciation; Revised return
• Section: 143(3); 133A; 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1611 /PN/201 2 ASSESSMENT YEAR : 2006 - 07 INCOME TAX OFFICER, (CENTRAL) - I, NA SHIK VS. SHRI DHANRAJ NARSINGDAS PALLOD, D - 40, B - MARKET YARD, LATUR (APPELLANT) (RESPONDENT) PAN NO. AINPP4574B APPELLANT BY: SHRI P.L. PATHADE RESPONDENT BY: SHRI M.K. KULKARNI DATE OF HEARING : 23 - 10 - 2013 DATE OF PRONOUNCEMENT : 29 - 10 - 2013 ORDER P ER R.S. PADVEKAR , JM : - THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A) - I, NASHIK DATED 23 - 05 - 2012 FOR THE A.Y. 2006 - 07 IN WHICH THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME - TAX A CT HAS BEEN DELETED. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) ERRED IN CANCELLING THE PENALTY LEVIED BY THE AO OF RS.4,98,360/ - U/S.271(1)(C) OF THE I. T. ACT. 2. ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT DISCLOSED THE SOURCE OF F D R IN THE ORIGINAL RETURN FILED U/S139(1) OF THE ACT AND THEREFORE, ATTRACT PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOM E. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) FAILED TO APPRECIATE THE SETTLED PROVISION OF LAW THAT ONCE THE DEPARTMENT IS IN POSSESSION INCRIMINATING MATERIAL, THE SUBSEQUENT OFFER OF ADDITIONAL INCOME MADE BY THE ASSESSEE ATTRACTS PENALTY U/S271(1)(C) OF THE ACT. 2 ITA NO. 1611/PN/2012, SHRI DHANRAJ NARSINGDAS PALLOD, LATUR 2. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE IS AN INDIVIDUAL AND DERIVING INCOME FROM THE BUSINESS OF COMMISSION AGENT AND CHEQUE DISCOUNTING. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2006 - 07 DECL ARING TOTAL INCOME OF RS.1,87,830/ - ON 19 - 01 - 2007. THERE WAS A SURVEY ACTION AGAINST THE ASSESSEE U/S. 133A ON 28 - 08 - 2008 . DURING THE COURSE OF SURVEY ACTION , THE ASSESSEE DECLARED AN ADDITIONAL INCOME OF RS.15,00,000/ - IN RESPECT OF THE FIXED DEPOSIT RE CEIPTS (FDRS) WHICH WAS IN THE NAME OF ASSESSEES FATHER SHRI NARSINGDAS PALLOD. THE ASSESSEE FILED REVISED RETURN OF INCOME BY DECLARING ADDITIONAL INCOME OF RS.15,00,000/ - AND DECLARED THE REVISED TOTAL INCOME OF RS.16,73,900/ - . T HE SAID RETURN WAS REG ULARIZED A S THE ASSESSING OFFICER ISSUED THE NOTICE U/S. 148 AND SUBSEQUENTLY COMPLETED THE ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE INCOME - TAX ACT. THE ASSESSING OFFICER ALSO IMPOSED THE PENALTY OF RS.4,98,360/ - ON THE ADDITIONAL INCOME OF RS.15,00,000/ - DECLARED BY THE ASSESSEE IN THE SURVEY. THE ASSESSEE CARRIED THE MATTER OF PENALTY BEFORE THE LD. CIT(A) AND THE LD. CIT(A) DELETED THE PENALTY. THE OPERATIVE PART OF THE FINDING OF LD. CIT(A) IS AS UNDER: 4.3.1. IT IS SETTLED POSITION OF LAW THAT THE RE CANNOT BE ANY CONCEALMENT PRIOR TO THE FILING OF THE RETURN OF INCOME. QUESTION OF CONSIDERING WHETHER ASSESSEE IS LIABLE FOR ACTION U/S 271(L)(C) WOULD ARISE ONLY WHEN RETURN OF INCOME IS SCRUTINIZED BY THE AO AND HE FINDS SOME MORE ITEMS OF INCOME OR ADDITIONAL INCOME OVER AND ABOVE WHAT IS DECLARED IN THE RETURN. IN FACT THE PROCEEDINGS AGAINST THE ASSESSEE WOULD START ONLY AFTER RETURN OF INCOME IS FILED BY THE ASSESSEE OR AFTER ISSUANCE OF STATUTORY NOTICE AGAINST HIM. CARRYING OUT A SURVEY U/S. 133 A DOES NOT AMOUNT TO COMMENCEMENT OF THE ASSESSMENT PROCEEDINGS. WHERE THE AO ACCEPTS THE INCOME DECLARED IN THE RETURN OF INCOME THEN, ASSESSEE CANNOT BE CHARGED FOR ANY CONTUMACIOUS CONDUCT AND THERE IS NO QUESTION OF PENALTY. IN THIS CASE, THERE WAS A S URVEY ACTION U/S 133A ON 28/08/2008 DURING WHICH THE INVESTMENT OF RS.15,00,000/ - IN THE FDRS IN THE NAME OF THE APPELLANT'S FATHER WERE FOUND. THE ASSESSEE OFFERED THE INVESTMENT IN THESE FDRS AND FILED A REVISED RETURN OL INCOME DECLARING TOTAL INCOME OF RS.16,73,900/ - ON 27/04/2009 AND PAID TAXES THEREON. IT IS AFTER THE FILING OF THE SAID REVISED RETURN, THE AO ISSUED A NOTICE U/S 148 ON 18/07/2009. IN RESPONSE TO WHICH THE 3 ITA NO. 1611/PN/2012, SHRI DHANRAJ NARSINGDAS PALLOD, LATUR ASSESSEE VIDE HIS LETTER DATED 31/07/2009 RECEIVED BY THE AO ON 03/08/2009, SUBM ITTED THAT THE REVISED RETURN ALREADY FILED BY HIM ON 27/04/2009 BE TREATED IN RESPONSE TO NOTICE U/S 148. THE AO ACCEPTED THE REVISED RETURN WITH A MINOR DISALLOWANCE OUT OF INTEREST, DEPRECIATION AND VEHICLE EXPENSES ALL TOTALING TO RS.7,545/ - AND ASSESS ED THE TOTAL INCOME AT RS.16,81,450/ - . THE AO'S ACTION IN INITIATING THE PROCEEDINGS U/S 271(L)(C) AT THE TIME OF FINALIZING THE ASSESSMENT U/S 143(3) R.W.S. 147 DATED 30/12/2010 IS, THEREFORE, NOT JUSTIFIED. 4.3.2. IN THE INSTANT CASE, THE APPELLANT HA S MAINTAINED IN THE RETURN OF INCOME THE DECLARATION OF RS.15,00,000/ - GIVEN BY IT ON A/C OF FDRS DURING THE SURVEY. THE ASSESSING OFFICER ALSO ACCEPTED THE RETURNED INCOME OF RS.16,81,450/ - . THE APPELLANT HAS OFFERED ADDITIONAL INCOME OF RS.L5,00,000/ - IN THE RETURN OF INCOME ON ACCOUNT OF FIXED DEPOSITS BELONGING TO HIS FATHER, WHICH HAS BEEN CREDITED ON MATURITY IN THE BOOKS OF ACCOUNT OF THE FATHER. FROM THE ABOVE FACTS, IT APPEARS THAT THE SAID FUNDS WERE ENJOYED AND BELONGED TO THE FATHER OF THE AP PELLANT AND THE APPELLANT HAS OWNED UP THE SAID FIXED DEPOSITS TO BUY PEACE OF MIND AND TO PROTECT THE PEACE OF MIND OF HIS AGED FATHER, NOT KEEPING GOOD HEALTH DUE TO OLD AGE. THEREFORE, IT CANNOT BE SAID WITH CERTAINTY AS TO WHETHER THE FUNDS INVESTED IN FDRS BELONGED TO THE APPELLANT AND NOT TO THE FATHER OF THE APPELLANT. IT IS SETTLED LAW THAT IN CASE WHERE TWO VIEWS ARE POSSIBLE PENALTY U/S 271 (1)(C) IS NOT LEVIABLE. IT IS ALSO A SETTLED LEGAL POSITION THAT WHERE THE OWNERSHIP OF THE UNDISCLOSED ASSE T IS DOUBTFUL AND ASSESSMENT OF UNDISCLOSED INVESTMENT IS LIKELY TO BE IN THE WRONG HANDS PENALTY U/S 271 (1)(C) IS NOT LEVIABLE. THIS PROPOSITION OF LAW IS SUPPORTED BY THE DECISION OF HON'BLE ITAT, PUNE IN THE CASE OF DILIP YASHWANT OAK VS. ACIT 55 DTK 113(PUNE.). THE FACTS OF THE SAID CASE ARE MORE OR LESS SIMILAR TO THE FACTS OF THE CASE UNDER APPEAL. THE AO HAS NOT PROVED THAT THE FUNDS INVESTED IN FIXED DEPOSITS BELONG TO THE APPELLANT AND NOT TO THE FATHER OF THE APPELLANT, WHO WAS THE LEGAL OWNER O F THE SAID FIXED DEPOSITS. NOW BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES. IN THIS CASE IT IS NOT IN DISPUTE THAT IN CONSEQUENCE OF THE SURVEY ACTION IN THE PREMISES OF THE ASSESSEE U/S. 4 ITA NO. 1611/PN/2012, SHRI DHANRAJ NARSINGDAS PALLOD, LATUR 133A ON 28 - 08 - 2008 , T H E F IXED DEPOSIT RECEIPTS (FDRS) W ERE FOUND WHICH W ERE IN THE NAME OF THE ASSESSEES FATHER WHICH DETAILS ARE AS UNDER: (I). FDRS DATED 11 - 05 - 2005 RS.8,00,000/ - (II). FDRS DATED 13 - 05 - 2005 RS.7,00,000/ - 4. THE ASSESSEE ACCEPTED THAT THE SAID INVESTMENT AND AGREED TO DISCLOSE THE AMOUNTS AS HIS ADDITIONAL INCOME FOR THE A. Y. 2006 - 07. THE ASSESSEE ALSO KEPT HIS COMMITMENT BY FILING THE REVISED RETURN FOR THE A.Y. 2006 - 07 IN WHICH THE ADDITIONAL INCOME DECLARED IN THE SURVEY ACTION OF RS.15,00,000/ - WAS I NCLUDED AND TAX WAS ALSO PAID. AS THE TIME LIMIT FOR FILING THE REVISED RETURN HAS EXPIRED , THE ASSESSING OFFICER ISSUED THE NOTICE U/S. 148 AND COMPLETED THE ASSESSMENT BY MAKING SMALL DISALLOWANCE S . THE MAIN PLANK OF THE ARGUMENT OF THE LD. DR IS THAT THE ASSESSEE CAME FORWARD DECLARING THE INVESTMENT IN THE FDRS ONLY AFTER THE SURVEY ACTION U/S. 133A , OTHERWISE THE SAID UNDISCLOSED INVESTMENT WOULD NOT HAVE BEEN DETECTED AND HENCE, THE ASSESSING OFFICER WAS JUSTIFIED LEAVING THE PENALTY U/S. 271(1)(C) OF THE ACT. PER CONTRA THE LEARNED COUNSEL ARGUES THAT THE FDRS WERE IN THE NAME OF THE ASSESSEES FATHER , WHO IS THE OLD PERSON AND FOR BUYING THE PEACE F ROM THE DEPARTMENT , T HE ASSESSEE ACCEPTED THE SAID INVESTMENT AS HIS INVESTMENT TO MAKE END OF THE M ATTER AND OFFERED THE SAID INCOME AS HIS INCOME BEFORE ISSUING THE NOTICE U/S. 148 BY FILING THE REVISED RETURN. 5. ADMITTEDLY, IN THIS CASE THE ASSESSEE FILED THE REVISED RETURN OF INCOME BEFORE ISSUING THE NOTICE TO HIM U/S. 148 AND THE ASSESSING OFFICE R HAS ALSO ACCEPTED THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE WHICH WAS IN RESPECT OF THE INVESTMENT IN THE FDRS. THERE IS NO PRESUMPTION IN LAW THAT IF THE INCOME HAS DECLARED IN CONSEQUENCE OF THE SURVEY ACTION BY SUO MOTU FI LING OF THE RETURN OF I NCOME WHICH HAS BEEN ACCEPTED THEN THE INCOME DECLARED IN THE REVISED RETURN IS TO BE 5 ITA NO. 1611/PN/2012, SHRI DHANRAJ NARSINGDAS PALLOD, LATUR TREATED AS A CONCEAL INCOME. WE HAVE GIVEN OUR ANXIOUS CONSIDERATION TO THE REASONS GIVEN BY THE LD. CIT(A) . W E FIND THAT THE LD. CIT(A) HAS RELIED ON THE DECISION OF T HE ITAT, PUNE IN THE CASE OF DILIP YASHWANT OAK VS. ACIT 55 DTR 113 . I N OUR OPINION, THE LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY AND NO INTERFERENCE IS CALLED FOR. ACCORDINGLY, ALL THE GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 6 . IN THE RESULT, T HE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 - 10 - 2013 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 29 TH OCTOBER, 20 1 3 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - I, NASHIK 4 THE CIT - I, NASHIK 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE