Jain Nilesh Shantilal, Pune V. Deputy Commissioner of Income-tax,

ITA 1671/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9388 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-12-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 21-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Sale consideration of property below Jantri Value; Difference of opinion
• Section: 143(3); 133A; 27

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1671/PUN/2015 / ASSESSMENT YEAR : 2010-11 JAIN NILESH SHANTILAL, PROP : MODERN JEWELLERS,, 3A, NEW BAZAR, M.G. ROAD, KIRKEE, PUNE 411003. PAN : AAQPJ2950C. . / APPELLANT V/S DY COMMISSIONER OF INCOME TAX, CIRCLE 8, PUNE. . / RESPONDENT ASSESSEE BY : SMT. DEEPA KHARE. REVENUE BY : SHRI MUKESH JHA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (A) 3, PUNE DT.20.10.2015 FO R THE ASSESSMENT YEAR 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. MODERN JEWELLERS ENGAGED IN TRADING ON GOLD AND SILVER ON RETAIL BASIS. A / DATE OF HEARING : 21.12.2017 / DATE OF PRONOUNCEMENT: 07.02.2018 2 SURVEY ACTION U/S 133A OF THE ACT WAS CONDUCTED IN ASS ESSEES CASE ON 09.10.2009. THE ASSESSEE DISCLOSED UNACCOUNTED INCOM E OF RS.90,00,000/- ON ACCOUNT OF EXCESS STOCK OF GOLD AND SILVE R. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2010-11 ON 26.09 .2011 DECLARING TOTAL INCOME OF RS.98,55,990/- INCLUDING THE INCOME DISCLOSED DURING THE COURSE OF SURVEY. THE CASE WAS TA KEN UP FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143 (3) OF THE ACT VIDE ORDER DT.28.12.2012 AND THE TOTAL INCOME WAS DETER MINED AT RS.1,76,73,902/- WHEREIN ADDITION ON ACCOUNT OF UNDER VALUAT ION OF EXCESS STOCK OF GOLD (OF RS.66,88,392/-) SILVER (RS.7,72,178/-), UNACCOUNTED DEBTORS (RS.3,49,480/-) AND DISALLOWANCE U/S 14 A OF THE ACT (RS.7,861/-). THUS, DISALLOWANCE AGGREGATING TO RS.1,77,52 ,357/- WAS MADE. ON THE ADDITION OF RS.74,60,570/- MADE ON ACCO UNT OF UNDER VALUATION OF EXCESS STOCK OF GOLD AND SILVER AND DIS ALLOWANCE OF RS.3,49,480/- MADE ON ACCOUNT OF UNACCOUNTED DEBTORS, AO VIDE ORDER DT.27.06.2013 LEVIED PENALTY OF RS.24,13,305/- U/S 27 1(1)(C) OF THE ACT. AGGRIEVED BY THE PENALTY ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.20.10.2015 (IN APP EAL NO.PN/CIT(A)-3/DCIT CIR-8,PN/788/2014-15) DISMISSED THE AP PEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESS EE IS NOW IN APPEAL BEFORE US, AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND : THE LEARNED CIT-A ERRED ON FACTS AND IN LAW IN MAK ING PENALTY OF RS.24,13,305/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFO RE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THE ADDITION MA DE BY THE AO IS BASICALLY ON ACCOUNT OF THE VALUATION OF STOCK. ASSE SSEE HAD 3 VALUED THE STOCK ON THE BASIS OF AVERAGE BASIS WHICH WAS THE METHOD BEING REGULARLY FOLLOWED BY HIM SINCE MANY YEARS BUT THE DEPARTMENT VALUED IT ON THE BASIS OF THE MARKET VALUE. SHE SUBMITTE D THAT TO THE EXTENT THE AMOUNT OF UNDISCLOSED INCOME ON ACCOUNT OF ST OCK THAT HAS BEEN ACCEPTED BY THE ASSESSEE IN THE RETURN OF INCOME, NO PENALTY HAS BEEN LEVIED BUT HAS ONLY BEEN LEVIED ON THE DIFFERENCE OF V ALUATION. LD.A.R. THEREFORE SUBMITTED THAT THE DIFFERENCE IN VALUATION IS ON ACCOUNT OF DIFFERENCE OF OPINION AND IN SUCH CASES, NO PENALT Y IS LEVIABLE. SHE ALSO PLACED RELIANCE ON THE DECISION IN THE CAS E OF ACIT VS. RITESH AGRAWAL REPORTED IN [2014] 50 TAXMANN.COM 93 (INDORE TRIB.). AS FAR AS THE ADDITION ON ACCOUNT OF UNACCOUNTED DEBTORS IS CONCERNED SHE SUBMITTED THAT THE AMOUNT WAS DUE FROM DEBTORS BUT SINCE ASSESSEE COULD NOT PRODUCE THE DEBTORS BEFORE AO , THE ASSESSEE OFFERED THE BALANCE OF DEBTORS AS INCOME. SHE FURTHER SUB MITTED THAT THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME AND THEREFORE THE PENALTY LEVIED BY THE AO BE DELETED. SHE FURTHER SUBMITTED THAT WHILE RECORDING SAT ISFACTION IN THE ASSESSMENT ORDER AO HAS RECORDED THAT ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME BUT IN THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT, AO HAS LEVIED PENALTY ON BOTH THE LIMBS NAMELY FILING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF IN COME. SHE THEREFORE RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY (ITA NO.1154 OF 20 14 ORDER DT.05.01.2017), SUBMITTED THAT NO PENALTY IS LEVIABLE. LD.D.R . ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 4 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO LEVY OF PENALTY FOR INACCURATE PARTICULARS OF INCOME AND CONCEAL ING THE INCOME. 5. IN THE PRESENT CASE, PENALTY HAS BEEN LEVIED FOR CON CEALING THE PARTICULARS OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PERUSAL OF ASSESSMENT ORDER PASSED U/S 143(3) OF THE A CT REVEALS THAT AO HAD INITIATED PENALTY FOR FURNISHING OF INACCU RATE PARTICULARS OF INCOME. THEREAFTER IN THE PENALTY ORDER PAS SED U/S 271(1)(C) OF THE ACT, AO HELD THAT ASSESSEE HAD FURNISHED IN ACCURATE PARTICULARS OF INCOME AND HAD CONCEALED THE INCOME U/S 27 1(1)(C) OF THE ACT. IT IS A SETTLED LAW THAT WHILE LEVYING PENALTY FO R CONCEALMENT, THE AO HAS TO RECORD SATISFACTION AND THER EAFTER COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPECIFIED UND ER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SA TISFACTION WHILE COMPLETING THE ASSESSMENT AS TO WHETHER THE ASSES SEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTICE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER THEREAFT ER HAS TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR NON-SATISFACTIO N OF EITHER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSIN G OFFICER HAS TO COME TO A FINDING AS TO WHETHER THE ASSESSEE HA S CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE HO NBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN IT A NO.1154 OF 2014 WITH OTHER ITA NOS.953 OF 2014, 1097 OF 2 014 AND 1226 OF 2014, VIDE JUDGMENT DATED 05.01.2017 HELD THAT WH ERE 5 INITIATION OF PENALTY IS ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 6. ON THE ISSUE OF LEVY OF PENALTY OF ACCOUNT OF VALUATION OF STOCK OF GOLD AND SILVER, THE ASSESSEES SUBMISSION THAT THE DIFFEREN CE HAS ARISEN ON ACCOUNT OF METHODOLOGY OF VALUATION OF STOCK AND NOT ON ACCOUNT OF QUANTITY DIFFERENCE HAS NOT BEEN CONTROVERTE D BY REVENUE. MORE SO, REVENUE HAS NOT LEVIED PENALTY ON THE AMOUNT OF INCOME OFFERED BY THE ASSESSEE. IN SUCH A SITUATION, WE ARE OF T HE VIEW THAT THE ADDITION OF ACCOUNT OF DIFFERENCE OF METHOD OF VALUATION, CANNOT BE A GROUND FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND T HEREFORE WE DIRECT THE DELETION OF PENALTY. 7. AS FAR AS THE ISSUE OF PENALTY ON ADDITION ON ACCOUNT O F DEBTORS IS CONCERNED, IT IS THE SUBMISSION OF THE ASSESSEE THAT SIN CE THE ASSESSEE COULD NOT PRODUCE THE DEBTORS BEFORE AO, IT HA D OFFERED THE AMOUNT REPRESENTING THE DEBTORS AS ITS INCOME. THE AFOR ESAID SUBMISSION OF THE ASSESSEE HAS NOT BEEN FOUND TO BE UNT RUE / FALSE. FURTHER NO MATERIAL HAS BEEN BROUGHT ON RECORD BY REV ENUE THAT THE DEBTORS ARE BOGUS AND FURTHER THE REVENUE HAS ACCEPT ED THE CORRESPONDING SALES AS INCOME. MERELY BECAUSE THE ASSE SSEE HAS OFFERED THE DEBTORS AS INCOME CANNOT BE GROUND FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT MORE SO WHEN IT IS A SETTLED LAW THAT PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE DISTINCT AND SEPARATE AND THAT FOR LEVY OF PENALTY, REVENUE HAS TO CONVINCINGLY PROVE THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS 6 OF INCOME. IN THE PRESENT CASE, THE AFORESAID REQUIREMENT FOR LEVY OF PENALTY IS MISSING. IN VIEW OF THE AFORESAID FACTS WE ARE OF THE VIEW THAT NO PENALTY IS LEVIABLE IN THE AMOUNT OF DEBTORS ADDED AS INCOME. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 7 TH DAY OF FEBRUARY, 2018. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 7 TH FEBRUARY, 2018. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-3, PUNE. PR. CIT-2, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.