MAHENDRA J. SHAH (HUF), MUMBAI V. ITO WD 16(3)(1), MUMBAI

ITA 1727/MUM/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6054 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Peak credit; Reasonable cause
• Section: 142(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 1727 / MUM/ 20 14 ( / ASSESSMENT YEAR: 20 0 5 - 06 ) MAHENDRA J. SHAH (HUF) 9, GROUND FLOOR, MANGESH BUILDING, AVANTIKA BAI GOKHALE ROAD, OPERA HOUSE, MUMBAI - 400004 . / VS. ITO, WARD - 16(3)(1), MUMBAI. ./ ./ PAN/GIR NO. : AACHM 6978 D ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 02 .0 4 .201 8 / DATE OF PRONOUNCEMENT : 02. 07 . 2018 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAI NST THE ORDER DATED 25 . 07 .201 3 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 28 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 05 - 06 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE APPELLANT PREFERS AN APPEAL AGAI NST AN ORDER DATED 25/07/2013 PASSED BY LD. COMMISSIONER OF INCOME TAX OFFICER (APPEAL) 28, MUMBAI ON FOLLOWING AMONGST OTHER GROUNDS EACH OF WHICH ARE WITHOUT PREJUDICE T O ANY OTHER: - ASSESSEE BY : SHRI ABHISHEK JHUNJHUNWALA (AR) REVENUE BY: SHRI S UMAN KUMAR ( DR ) ITA. NO.1727 /M/201 4 A.Y. 2005 - 06 2 1.0 A HUMBLE PRAYER IS MADE TO CONDONE THE DELAY 165 DAYS IN FILIN G THE APPEAL BEING CAUSED UNDER BONAFIDE REASONS AND COMPELLING CIRCUMSTANCE BEYOND CONTROL OF THE APPELLANT; SINCE KARTA OF APPELLANT HUF HAD DIED AND OTHER COPARCENERS DID NOT HAVE KNOWLEDGE OF THE PENALTY ORDER; 2.0 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(L)(C) OF RS1,63 ,528/ - IN RESPECT OF THE ADDITION U/S 68 SUSTAINED ON ESTIMATION BASIS FOLLOWING PEAK OF CASH CREDITS 3.0 THE LD. C1T(A) FAILED TO APPRECIATE THAT LEVY OF PENA LTY IS NOT AUTOMATIC AND PRESENT APPEAL INVOLVES DEBATABLE ISSUES; SINCE CASH DEPOSITS MADE IN BANK ACCOUNT HELD IN NAME OF MR. MAHENDRA J. SHAH (KARTA) IS BROUGHT TO TAX IN HANDS OF THE APPELLANT HUF; 4.0 THE US. CIT(A), BEFORE CONFIRMING THE HARSH PE NALTY U/S 271(1X0, OUGHT TO HAVE APPRECIATED THE BONAFIDE EXPLANATION AND REASONABLE CAUSE PRESCRIBED U/S 271 B UNDER WHICH CIRCUMSTANCES THE LEVY OF PENALTY IS UNJUSTIFIED. THE APPELLANT CRAVES LEAVE LO ADD, AMEND, ALTER, AND/OR WITHDRAW ANY OF THE GROUND S OF APPEAL AL THE LIME OF HEARING. 3 . THE BRIEF FACTS O F THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 22 .0 8 .200 5 DECLARING TOTAL INCOME TO THE TUNE OF RS.69,750 / - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT DETERMINING THE REFUND OF RS.4110/ - . THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND NOTICE U/S 143(2) OF THE ACT DATED 27.07.2006 AND NOTICE U/S 142(1) OF THE ACT DATED 21.06.2007 WERE ISSUED AND SERVED UPON THE ASSESSEE. THE AMOUNT TO THE TUNE OF RS.11,47,000/ - WAS FOUND TO B E DEPO SITED IN HIS ACCOUNT LIES AT PUNJAB & SINDH BANK, OPERA HOUSE, MUMBAI WHICH WAS NOT SHOWED IN THE RETURN OF INCOME . THE ASSESSEE DID NOT FURNISH ANY EVIDENCE, THEREFORE, THE SAID AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE AND THE PENALTY WAS INIT IATED. THEREAFTER, THE ASSESSEE FILED AN APPEAL ITA. NO.1727 /M/201 4 A.Y. 2005 - 06 3 BEFORE THE CIT (A) AGAINST THE ASSESSMENT ORDER AND THE CIT(A) CONFIRMED THE PEAK CREDIT OF RS.4,73,324/ - . THEREAFTER, THE AO INITIATED THE PENALT Y BY ISSUANCE OF NOTICE AND LEVIED THE PENALTY TO THE TUNE OF RS.1,63,528/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE SAID ORDER , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1: - 4. UNDER THIS ISSUE THE ASSESSEE HAS REQUESTED TO CONDONE THE DELAY OF 165 DAYS. THE REASON HAS BEEN EXPLAINED THAT THE MR. MAHENDRA J. SHAH DIED ON 23.09.2013 AND NEW KARTA SMT. JYOTI MAHENDRA SHAH WAS NOT AWARE OF THIS FACTS BEING SENIOR CITIZEN. THE SON OF LAW MAHENDRA SHAH DID NOT CO - OPERATE IN THE MATTER OF (HUF). TH E JYOTI MAHENDRA SHAH WAS ALSO SUFFERING FROM SERIOUS ILLNESS OF KNEE DISPLACEMENT, THYROID AND F LUCTUATING BLOOD PRESSURE ETC. T HE APPLICATION HAS BEEN SUPPORTED BY AFFIDAVIT ALSO, THEREFORE, ON SEEING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE C ONDONE THE DELAY BEING THE CASE IS ALSO REQUIRED TO BE DECIDED ON MERITS. ISSUE NO. 2 TO 4: - 5. UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ORDER OF THE AO BY THE CIT(A) IN WHICH THE PENALTY TO THE TUNE OF RS.1,63,528/ - HAS BEEN CONFIRMED. IT IS CONTENDED THAT THE AMOUNT WAS FOUND DEPOSITED IN THE ACCOUNT OF MAHENDRA J. SHAH BUT ASSESSED ITA. NO.1727 /M/201 4 A.Y. 2005 - 06 4 IN THE HANDS OF MAHENDRA J. SHAH (HUF) WHICH IS NOT JUSTIFIABLE, THEREFORE, NO PENALTY IS LEVIABLE IN ACCORDANCE WITH LAW. IT IS ALSO ARGUED THA T THE AO CONFIRMED THE TOTAL DEPOSIT TO THE TUNE OF RS.11,47,000/ - WHICH WAS REDUCED BY THE CIT(A) TO THE EXTENT OF PEAK CREDIT AMOUNT OF RS.4,73,324/ - ON ESTIMATION BASIS, THEREFORE, NO PENALTY IS LEVIABLE. IN SUPPORT OF THESE CONTENTION THE LD. REPRESENT ATIVE OF THE ASSESSEE HAS RELIED UPON THE LAW SETTLED IN MURARILAL RATANLAL AGARWAL VS. ACIT IT (SS) A. NO. 573 & 615/AHD)2012, OJAS ASHOKBHAI VS. ITO ITA. NO.296 & 297/AHD/2013, CIT VS. MAHENDRA SINGH KHEDLA 252 CTR 453 (RAJ - HIGH COURT), CIT VS. KRISHI TY RE RETRADING & RUBBER INDUSTRIES 360 ITR 580 (RAJ - HIGH COURT) & CIT VS. RAVAIL SINGH & CO. 254 ITR 191 (P&H - HIGH COURT) . HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTIO N. COPY OF BANK STATEMENT OF (HUF) ON RECORD WHICH LIES AT PAGE NO. 1 TO 2 OF THE PAPER BOOK. IN THE SAID ACCOUNT , THERE IS NO DEPOSIT OF AN AMOUNT OF RS.11,47,000/ - . COPY OF BANK - STATEMENT OF SHRI MAHENDRA J. SHAH INDIVIDUAL IS ALSO LYING ON RECORD WHICH LIES AT PAGE NO.2 TO 5 OF THE PAPER BOOK IN WHICH THE SAID AMOUNT WAS FOUND TO BE DEPOSITED. HOWEVER, THERE ARE NUMBER OF DEPOSITED AND WITHDRAWALS IN THE STATEMENT. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO PASSED THE ORDER DATED 10.06.2009 IN WH ICH THE ADDITION WAS RESTRICTED TO THE PEAK AMOUNT OF RS.4,73,324/ - ON ESTIMATION BASIS. HOWEVER, NOTHING ITA. NO.1727 /M/201 4 A.Y. 2005 - 06 5 CAN BE SAID ON QUANTUM BECAUSE TREATING THE ADDITION TO THE EXTENT OF PEAK CREDIT IN THE ASSESSMENT ORDER IS NOT BEFORE US FOR ADJUDICATION. UNDOUBTED LY, WE FIND THAT THE AMOUNT DEPOSITED WITH INDIVIDUAL HAS BEEN ADDED WITH (HUF) WHICH DOES NOT SEEMS TO BE JUSTIFIABLE. THE INCOME HAS BEEN ESTIMATED ON THE PEAK CREDIT WORK - OUT BASIS. IN VIEW OF THE LAW SETTLED IN MURARILAL RATANLAL AGARWAL VS. ACIT IT (S S) A. NO. 573 & 615/AHD)2012, OJAS ASHOKBHAI VS. ITO ITA. NO.296 & 297/AHD/2013, CIT VS. MAHENDRA SINGH KHEDLA 252 CTR 453 (RAJ - HIGH COURT), CIT VS. KRISHI TYRE RETRADING & RUBBER INDUSTRIES 360 ITR 580 (RAJ - HIGH COURT) & CIT VS. RAVAIL SINGH & CO. 254 ITR 191 (P&H - HIGH COURT). WE ARE OF THE VIEW THAT THE PENALTY IS NOT LIABLE TO BE SUSTAINABLE IN ACCORDANCE WITH LAW. TAKING INTO ACCOUNT, ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS WHICH IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW, T HEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THESE ISSUES AND DELETE THE PENALTY. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE A LLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 02. 07 . 201 8 . SD/ - SD/ - ( RAJENDRA ) ( AMARJIT SINGH ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 02 .07. 201 8 VIJAY ITA. NO.1727 /M/201 4 A.Y. 2005 - 06 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI