Srinivas Reddy Chendram , Medak V. Income Tax Officer, Ward-1, Siddipet

ITA 1657/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0717 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 08-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEEJU GUPTA
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 271(1)(c); 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH SMC, HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.1657/HYD/2018 ASSESSMENT YEAR: 2014 - 15 SRINIVAS REDDY CHENDRAM, CHEGUNTA, MEDAK DISTRICT. PAN: AIPPC 1848 K VS. INCOME TAX OFFICER, WARD - 1, SIDDIPET. (APPELLANT) (RESPONDENT) ASSESSEE BY: NONE REVENUE BY: SMT. NEEJU GUPTA, DR DATE OF HEARING: 18/07/2019 DATE OF PRONOUNCEMENT: 26 /07/2019 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 7, HYDERABAD DATED 12/06/2018 IN APPEAL NO. 02/CIT(A) - 7/2017 - 18 PASSED U/S. 271(1)(C) R.W.S 250(6) OF THE ACT FOR THE ASSESSMENT YEAR 2014 - 15. 2. ASSESSED HAS RAISED SEVERAL GROUNDS IN THIS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD. CIT (A) HAS ERRED IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S. 271(1)(C) OF THE ACT FOR RS. 1,51,326/ - . 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF RUNNING A MEDICAL SHOP AND SUPPLY OF MATERIALS FILED HIS E - RETURN OF INCOME ON 27/7/2014 FOR THE ASSESSMENT YEAR 2014 - 15. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED ON 31/8/2016 WHEREIN THE LD. AO MADE ADDITION OF RS. 6,41,00 0/ - TOWARDS UNEXPLAINED CASH CREDITS . 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LD. AO THAT THE ASSESSEE HAD MADE CASH DEPOSITS AMOUNTING TO RS. 52,47,500/ - AGAINST WHICH SOURCE FOR RS. 55,70,000/ - WAS EXPLAINED. WHEN CONFRONTED WITH, THE ASSESSEE CONCEDED STATING THAT THE BALANCE UNEXPLAINED CASH DEPOSITS OF R S. 11,90,000/ - MAY BE TREATED AS HIS BUSINESS TURNOVER AND PROFIT ARISING OUT OF THE SAME MAY BE ESTIMATED. HOWEVER, THE LD. AO TREATED RS. 5,49,000 / - AS THE BUSINESS TURNOVER OF THE ASSESSEE AND THE BALANCE AMOUNT OF RS. 6,41,000/ - AS THE UNEXPLAINED INVES TMENTS AND BROUGHT IT TO TAX U/S. 69 OF THE ACT. THEREAFTER, THE LD. AO INITIATED THE PENALTY PROCEEDINGS IN THE CASE OF THE ASSESSEE U/S. 271(1)(C) OF THE ACT. IN THE PENALTY PROCEEDINGS, THE LD. AO WAS OF THE VIEW THAT SINCE HE HAD TREATED THE AMOUNT OF RS. 6,41,000 / - AS UNEXPLAINED CASH DEPOSITS, IT WAS A CASE OF CONCEALMENT OF INCOME AND THE PROVISIONS OF SECTION 271(1)(C) WOULD BE ATTRACTED. HENCE, HE LEVIED PENALTY OF RS. 1,15,326/ - BEING THE MINIMUM PENALTY LEVIABLE UNDER THE PROVISIONS OF THE AC T. 3 5. ON APPEAL, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY OBSERVING AS FOLLOWS: 4.2. I HAVE CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER IN THE PENALTY ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT CAREFULLY. THE ASSESSING OFFICER LEVIE D PENALTY OF RS. 1,15,326/ - ON THE UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT TO THE TUNE OF RS. 6,41,000/ - AND UNACCOUNTED INTEREST OF SB ACCOUNTS TO THE TUNE OF RS. 56,362/ - . DURING THE COURSE OF PENALTY PROCEEDINGS, THE APPELLANT REQUESTED THE ASSES SING OFFICER TO TREAT CASH DEPOSITS OF RS. 6,41,000/ - AS BUSINESS TURNOVER AND ADOPT APPROPRIATE PROFIT AND DID NOT FURNISH ANY EXPLANATION ON THE UNACCOUNTED INTEREST. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT STATED THAT THE CA SH DEPOSIT OF RS. 6,41,000/ - REPRESENTS ADVANCES FROM HIS CLOSE RELATIVES AND FRIENDS WITHOUT ANY EVIDENCE. THE CLAIM OF THE APPELLANT THAT UNEXPLAINED CASH DEPOSIT OF RS. 6,41,000/ - REPRESENTS ADVANCES FOR PURCHASE OF MEDICINES IS NOT SUBSTANTIATED WITH ANY DOCUMENTARY EVIDENCE. THE APPELLANT DID NOT FURNISH ANY EXPLANATION ON THE FINDINGS OF THE ASSESSING OFFICER THAT THE INTEREST FROM SAVINGS BANK ACCOUNT WAS NOT OFFERED FOR TAX PURPOSES IN THE ORIGINAL RETURN OF INCOME AND HENCE, FORMS PART OF THE CON CEALMENT OF THE INCOME. HENCE, I AM CONVINCED WITH THE VIEW OF THE ASSESSING OFFICER FOR LEVY OF PENALTY. 6. BEFORE US THE LD. AR SUBMITTED THAT THE AMOUNT OF RS. 11,90,000/ - WAS AN INADVERTENT OMISSION ON THE PART OF THE ASSESSEE TO ACCOUNT IT AS TURNOVER AND THE SAME WAS CONCEDED BEFORE THE LD . AO AND THE LD. AO HAD ACCEPTED THE SUBMISSION OF THE ASSESSEE HOWEVER, HE TREATED THE AMOUNT OF RS. 5,49,000/ - AS THE OMISSION OF TURNOVER AND THE BALANCE AMOUN T OF RS. 6,41,000/ - AS UNEXPLAINED CASH CREDIT IN AN ARBITRARY MANNER. THE LD. AR FURTHER SUBMITTED THAT WHEN THE LD. AO WAS CONVINCED A PORTION OF THE OMISSION TO BE THE ASSESSEES TURNOVER THERE WAS NO REASON FOR HIM TO HOLD THE REST OF THE PORTION OF T HE OMISSION AS UNACCOUNTED INVESTMENT. THE LD. AR FURTHER PLEADED THAT AN INADVERTENT MISTAKE COMMITTED BY THE ASSESSEE CANNOT ATTRACT THE PENAL PROVISION OF SECTION 271(1)(C) OF THE ACT. IT WAS THEREFORE 4 PLEADED THAT THE PENALTY LEVIED BY THE LD. AO WHI CH WAS FURTHER SUSTAINED BY THE LD. CIT (A) MAY BE DELETED. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE LD. REVENUE AUTHORITIES. 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE ASSESSEE HAD OMITTED TO ACCOUNT RS. 11,90,000/ - AS HIS REVENUE. THE ASSESSEE HAS EXPLAINED BEFORE THE LD. REVENUE AUTHORI TIES THAT THE SAME MAY BE TREATED AS HIS TURNOVER AND THE INCOME MAY BE ESTIMATED. THE LD. AO AFTER EXAMINING THE FACTS AND CIRCUMSTANCES OF THE CASE AGREED WITH THE ASSESSEE THAT THERE WAS CERTAIN OMISSION TO ACCOUNT THE TURNOVER BUT ARBITRARILY TREATED AN AMOUNT OF RS. 6,41,000/ - AS UNEXPLAINED INVESTMENT WITHOUT STATING ANY REASON. THIS ARBITRARY TREATMENT OF THE LD. REVENUE AUTHORITIES CANNOT BE APPRECIATED. WHEN THERE IS A BONAFIDE REASON THAT DUE TO OVERSIGHT CERTAIN TURNOVER WAS ERRONEOUSLY OMI TTED BY THE ASSESSEE WHILE DRAWING HIS STATEMENT OF AFFAIRS THEN THERE MAY NOT BE ANY MERIT TO TREAT A PORTION OF THE SAME AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT IN AN ARBITRARY MANNER. FURTHER W HEN THERE AN INADVERTENT OMISSION IT WOULD NOT BE NECESSAR Y TO INVOKE THE PENAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT . ON THIS PROPOSITION I PLACE RELIANCE IN THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF PRICE WATER HOUSE COOPERS PVT LTD VS. CIT & OTHERS REPORTED IN 348 ITR 306 (SC). CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE 5 I AM OF THE VIEW THAT IT WOULD NOT BE APPROPRIATE TO INVOKE THE PENAL PROVISION OF SECTION 271(1)(C ) OF THE ACT. THEREFOR I HEREBY DIRECT THE LD. AO TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT WHICH WAS FURTHER UPHELD BY THE LD. CIT (A). 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 26 TH JULY, 2019. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED: 26 TH JULY , 2019 OKK COPY TO: - 1) SRINIVAS REDDY CHENDRAM C/O. T. CHAITANYAKUMAR, ADVOCATE, FLAT NO. 102, GOURI APARTMENT, URDULANE, HIMAYATNAGAR, HYDERABAD. 2) INCOME TAX OFFICER, WARD - 1, SIDDIPET. 3) THE CIT(A) - 7, HYDERABAD 4) THE PR. CIT - 7, HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE