C.Rakkappan, Chidambaram V. ITO, Cuddalore

ITA 1738/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8195 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 05-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTHJCIT
• Assessee Lawyers: G BASKAR ADVOCAE
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Gift; Source of fund; Cost of acquisition; Fair market value; Agreed addition
• Section: 50C; 69; 37; 6

Judgement Text

, B/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ I.T.A.NO.1738 /MDS./2016 ( / ASSESSMENT YEAR :2009-10 MR.C.RAKKAPPAN, NO.B-2,RASI FLATS, 44,EAST CAR ST., CHIDAMBARAM 608 001. VS. THE ITO, WARD-I(2), CUDDALORE. PAN AEPPC 8771 F ( / APPELLANT ) ( / RESPONDENT ) ! ' # / APPELLANT BY : MR.G.BASKAR, ADVOCAE $% ! ' # / RESPONDENT BY : MR.A.V.SREEKANTH,JCIT, D.R & ' ' ( ) / DATE OF HEARING : 07.12.2016 *+ ' ( ) /DATE OF PRONOUNCEMENT : 09.01.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), PUDUCHERRY DA TED 27.04.2016 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT ` 4,55,560/-. ITA NO. /MDS/2016 2 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL, WORKING AS PROFESSOR OF PHYSICS IN ANNAMALAI UNIVERSITY AND FOR ASSESSMENT YEAR 2009-10, ASSESSEE FILED THE RETURN OF INCOME ON 11. 01.2010 SHOWING A TOTAL INCOME OF ` 3,71,080/-.THE SAID RETURN WAS ORIGINALLY PROCESSED U/S.143(1) OF THE ACT ON 11.09.2010. LATER, THE CAS E WAS TAKEN UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS FRAMED U/ S.143(3) OF THE ACT ON 24.11.2011. WHILE COMPLETING THE ASSESSMENT, THE ASSESSEE VIDE LETTER DATED 02.11.2011 AGREED TO FOLLOWING ADDITIONS. A) DIFFERENCE IN VALUE OF PROPERTY PURCHASED AT CHE NNAI 8,49,500/- B) FEES RECEIVED FROM M/S.UNIVERSAL BUSINESS CENTR E 1,05,000/- C) NOTIONAL PROPERTY INCOME FROM CHENNAI PROPERTY 20,000/- D) INCOME AS POWER OF ATTORNEY OF T.SIVAKUMAR 3, 15,000/- E) UNEXPLAINEDSOURCE FOR THE ACQUISITION OF THE PRO PERTY 2,49,034/- TOTAL AMOUNT OFFERED 15,18,534 /- THE AO ACCEPTED THE OFFER MADE BY THE ASSESSEE AND M ADE AN ADDITION OF ` 15,18,534/-. AO INITIATED THE PENALTY PROCEEDINGS U /S.271(1)(C) OF THE ACT ALONG WITH THE ASSESSMENT ORDER . AFTER HEARING THE SUBMISSIONS OF THE ASSESSEE, THE AO LEVIED MINIMUM PENALTY OF ` 4,55,560/- U/S.271(1)(C) OF THE ACT. AGGRIEVED, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 3.1 ON APPEAL, T HE LD.CIT(A) OBSERVED THAT THE A0 HAS MADE THE ADDI TION OF RS. 15,18,534/- AS OFFERED BY THE ASSESSEE BASED ON THE MATERIALS AVAILABLE WITH ITA NO. /MDS/2016 3 THE DEPARTMENT AND PUT TO THE: ASSESSEE. THE AO HAS NOT GONE INTO THE DETAILS OF THE OFFER VERY SERIOUSLY AND ADDED AS THE ASSESS EE HAS AGREED FOR THE SAME. THOUGH THE DIFFERENCE IN THE GUIDELINE VALUE AND TH E APPARENT CONSIDERATION CANNOT BE TAKEN AS THE INCOME OF THE ASSESSEE, THE FACT THAT HE HAD OFFERED THE AMOUNT TOWARDS TAX WOULD SHOW THAT HE HAS REALLY PA ID CONSIDERATION TO THE SELLER OVER AND ABOVE THE AMOUNT PASSED ON UNDER TH E REGISTERED DOCUMENT. HENCE, IT CANNOT BE CONSIDERED AS A NOTIONAL ADDITI ON AS CONTENDED BY THE AR. ACCORDING TO LD.CIT(A), OTHER ADDITIONS ARE AGREED ADDITIONS CANNOT TAKE AWAY THE FACT THAT THE ASSESSEE HAD OMITTED TO DISCLOSE SUCH INBOME IN THE RETURN OF INCOME. BUT FOR THE VIGILANCE EXERCISED BY THE IN P UTTING THE MATERIALS COLLECTED AGAINST THE ASSESSEE, THE ADDITIONAL INCOME WOULD N OT HAVE BEEN BROUGHT TO TAX. THERE IS THUS CLEAR CONCEALMENT OF INCOME, ON THE P ART OF THE ASSESSEE WARRANTING LEVY OF PENALTY. AR HAS CLEARLY OBSERVED THAT THE ADDITIONAL INCOME OFFERED WAS UTILIZED BY THE ASSESSEE TO EXPLAIN HIS CASH FLOW, INVESTMENTS AND CREDIT CARD PAYMENTS MADE AND SO IT CLINCHES THE CO NCEALMENT. FURTHER, LD.CIT(A) OBSERVED THAT SIMPLY BECAUSE THE ASSESSEE HAS AGREED FOR THE ADDITIONS MADE WOULD NOT ABSOLVE HIM FROM THE LEVY OF PENALTY. ACCORDING TO LD.CIT(A), THE ASSESSEE HAS AGREED FOR THE ADDITION WOULD ONLY BE A MITIGATING CIRCUMSTANCE FOR DETERMINING TH QUANTUM OF LEVY OF PENALTY BUT WOULD NOT ABSOLVE HIM COMPLETELY FROM THE LEVY OF PENALTY. TH E CASE WOULD SQUARELY FALL WITHIN THE PROVISIONS OF SEC TON 271 (1)(C) READ WI TH EXPLANATION 1 TO THE SAID ITA NO. /MDS/2016 4 SECTION. THE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. V. CIT [2013] 358 ITR 593 (SC) HAS HELD THAT MERELY BECAUSE THE ASSES SEE CLAIMS THE ADMISSION TO BE VOLUNTARY BY USING SUCH PHRASES LIKE BUYING PEA CE, AVOID LITIGATION OR AMICABLE SETTLEMENT, THE ASSESSEES CONDUCT IN NO T OFFERING THE INCOME IN THE RETURN CANNOT BE EXPLAINED AWAY AND PENALTY IS EXIG IBLE. SINCE THE ASSESSEE HAD NOT GIVEN ANY VALID EXPLANATION AS TO WHY THE INCOM E WAS NOT OFFERED IN THE RETURN OF INCOME FILED, LEVYING OF PENALTY U/S.271(1)(C) OF THE ACT BY AO WAS JUSTIFIED. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE AO FIRSTLY CONSIDERED DIFFERENCE IN THE VALUE OF PROPERTY PURCHASED AT CHENNAI. DIFFERENCE IN VALUE OF PROPE RTY AS COMPARED TO THE SRO RATE AND GLV IS THE REASON FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. THE ASSESSEE PURCHASED A RESIDENTIAL FLAT NO.1 -D, ON THE FIRST FLOOR OF THE BUILDING, CENOTAPH COURT APARTMENT, 28,CENOTAPH ROAD, CHENNAI-18 FOR A VALUE OF ` 82.01 LAKHS. THE GUIDELINE VALUE (GLV) OF SAID PRO PERTY WAS ` ONE CRORE. THUS, THE AO WORKED OUT THE DIFFERENCE A T ` 16.99 LAKHS AND ASSESSEES SHARE WORKED AT ` 8,49,500/- TO MAKE ADDITIONS ON THIS COUNT. THE SAME WAS CONSIDERED FOR IMPOSING OF PENAL TY U/S.271(1)(C) OF ITA NO. /MDS/2016 5 THE ACT. IT IS TO BE NOTED THAT HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF THULASIMANI AMMAL VS. CIT IN [2000] 158 CTR 5 (MAD) HELD THAT IT IS WELL SETTLED THAT GUIDELINE VALUE OF THE REG ISTRATION DEPARTMENT REGARDING VALUATION OF THE PROPERTY HAS EVIDENTIARY VALUE AND THEY ARE ONLY INTENDED TO GIVE INFORMATION OR INSTRUCTION TO THE REGISTERING AUTHORITIES BUT THE GUIDELINES, AS SUCH, WOULD NOT ESTABLISH THE MA RKET VALUE OF THE LAND. HERE, THE CIT HAS NOT CONDUCTED ANY INDEPENDENT INV ESTIGATION ON THE QUESTION OF DETERMINATION OF THE MARKET VALUE OF TH E PROPERTY GIFTED BY COLLECTING NECESSARY MATERIALS FOR THE DETERMINATIO N OF THE SAME, DE HORS THE GUIDELINE VALUE. SINCE THE DETERMINATION OF THE MAR KET VALUE OF THE PROPERTY BY THE CIT IS NOT BASED ON RELEVANT MATERIALS AND T HE CIT HAS OVERLOOKED THE MATERIAL PRODUCED BY THE PETITIONER, THE MATTER MAY HAVE TO BE REMITTED TO THE CIT FOR FRESH DETERMINATION OF THE MARKET VALUE OF THE PROPERTY. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSMENT I S OF THE YEAR 1971-72 AND THE ORDER OF THE GTO WAS MADE AS EARLY AS 8TH A UG., 1979, INSTEAD OF REMITTING THE MATTER TO THE CIT, THE MARKET VALUE S HOWN BY THE PETITIONER, WHICH IS BASED ON THE VALUERS REPORT, VIZ., A SUM OF RS. 83,330 CAN BE TAKEN AS THE MARKET VALUE OF THE PROPERTY SO THAT FURTHER PROCEEDINGS ON THE DETERMINATION OF THE MARKET VALUE CAN BE AVOIDED. F URTHER, THE VALUE SHOWN BY THE PETITIONER IS BASED ON THE REPORT OF THE APP ROVED VALUER AND THERE ARE NO JUSTIFIABLE REASONS TO DISCARD THE SAME.M. PONN USAMY & ORS. VS. DISTRICT COLLECTOR, ERODE & ORS. 1999 (2) L.W. 231 FOLLOWED; RAMESH CHAND BANSAL VS. DISTRICT MAGISTRATE/COLLECTOR, GHAZIABAD AIR 19 99 SC 2126 RELIED ON. IN OUR CONSIDERED OPINION, IF THE AO PREFERS THE VA LUE OBTAINED FROM THE REGISTRAR OFFICE, IT CANNOT BE SAID THAT THE ASSESS EE IS GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME SO AS TO LEVY OF ITA NO. /MDS/2016 6 PENALTY U/S.271(1)(C) OF THE ACT. FURTHER, THE DEC ISION OF HON'BLE APEX COURT IN THE CASE OF UNION OF INDIA & ORS. VS. DHAR AMENDRA TEXTILE PROCESSORS & ORS. (2008) 306 ITR 277(SC) IS NOT APPL ICABLE ON THE FACTS OF THE CASE AND THE SAME IS APPLICABLE ONLY WHEN THERE IS FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT BY THE ASSESS EE WHICH LEADS TO ADDITION OF INCOME. 4.1 SIMILARLY, THE HON'BLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF CIT VS. RATTAN SINGH GREWAL (2008) 304 ITR 75(P&H.) RE LIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IS ALSO FOUND N OT APPLICABLE ON THE FACTS OF THE CASE. ON THE OTHER HAND, HON'BLE APEX COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS (P) LTD. (1992) 107 CTR (SC) 209: (1992) 198 ITR 297(SC) HAS HELD AS UNDER : 'IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OU T A WORD OR A SENTENCE FROM THE JUDGMENT OF THE SUPREME COURT DIVORCED FRO M THE CONTEXT OF THE QUESTION UNDER CONSIDERATION AND TREAT IT TO BE THE COMPLETE LAW DECLARED BY THE COURT. THE JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIONS FROM THE JUDGMENT HAVE TO BE CONSIDERED IN THE LIGH T OF THE QUESTIONS WHICH WERE BEFORE THE COURT. A DECISION OF THE SUPR EME COURT TAKES ITS COLOUR FROM THE QUESTIONS INVOLVED IN THE CASE IN W HICH IT IS RENDERED AND, WHILE APPLYING THE DECISION TO A LATER CASE, COURTS MUST CAREFULLY TRY TO ASCERTAIN THE TRUE PRINCIPLE LAID DOWN BY THE DECIS ION.' ITA NO. /MDS/2016 7 5. IN THIS CASE, THE ADDITION HAS BEEN ONLY BASED UPON THE ESTIMATES AND VALUES OBTAINED FROM SUB-REGISTRAR'S OFFICE. AS EVIDENT FROM THE HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THULAS IMANI AMMAL CASE CITED ABOVE (SUPRA), THE GUIDELINE VALUE IS NOT CONCLUSIV E PROOF. 6. FURTHER, THE REVENUE'S RELIANCE UPON S. 50C OF T HE IT ACT, 1961 IS ALSO MISPLACED. THE SAID SECTION READS AS UNDER:- '50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRU ING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING L AND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTH ORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUT Y IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL, F OR THE PURPOSES OF S. 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-S. ( 1), WHERE' (A) THE ASSESSEE CLAIMS BEFORE ANY AO THAT THE VALU E ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-S. (1) E XCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED BY THE STAMP V ALUATION AUTHORITY UNDER SUB-S. (1) HAS NOT BEEN DISPUTED IN ANY APPEA L OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE AO MAY REFER THE VALUATION OF THE CAPIT AL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE P ROVISIONS OF SUB-SS. (2), (3), (4), (5) AND (6) OF S. 16A, CL. (I) OF SU B-S. (1) AND SUB-SS. (6) AND (7) OF S. 23A, SUB-S. (5) OF S. 24, S. 34AA, S. 35 AND S. 37 OF THE WT ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATI ONS, APPLY IN RELATION TO ITA NO. /MDS/2016 8 SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFER ENCE MADE BY THE AO UNDER SUB-S. (1) OF S. 16A OF THAT ACT. EXPLANATION'FOR THE PURPOSES OF THIS SECTION, 'VALU ATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CL. (R) OF S. 2 OF THE WT AC T, 1957 (27 OF 1957). (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-S. ( 2), WHERE THE VALUE ASCERTAINED UNDER SUB-S. (2) EXCEEDS THE VALUE ADOP TED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-S. (1) , THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE TAKEN AS THE FU LL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER.' 7. A READING OF THE ABOVE MAKES IT CLEAR THAT THE SECTION IS APPLICABLE IN CASES WHERE STAMP DUTY HAS BEEN PAID FOR TRANSFER . MOREOVER, THIS SECTION ALSO POSTULATES THAT THE FAIR MARKET VALUE MAY BE DIFFERENT FROM THE VALUE ADOPTED BY THE REGISTRATION AUTHORITY AND IN SUCH CASES, PROCEDURE FOR REFERENCE TO VALUATION CELL IS PROVID ED. HENCE, THIS SECTION IS NEITHER APPLICABLE NOR IT IS THE CASE OF THE REVENU E THAT ANY REFERENCE TO VALUATION CELL HAS BEEN MADE OR THAT THE AO HAS OBT AINED INDEPENDENT INSTANCES OF COMPARABLE SALES IN THAT PERIOD, OF TH AT AREA. 8. UNDER SUCH CIRCUMSTANCES, IF THE ASSESSEE HAS A CCEPTED ADDITION, IT CANNOT BE SAID THAT THE ASSESSEE IS GUILTY OF FURNI SHING INACCURATE PARTICULARS OR CONCEALMENT. HENCE, IN OUR CONSIDERE D OPINION, PENALTY ITA NO. /MDS/2016 9 U/S.271(1)(C) OF THE ACT CANNOT BE LEVIED FOR THIS DISCREPANCY. ACCORDINGLY, WE ARE INCLINED TO DELETE THE PENALTY ON THIS ISSUE. 9 THE NEXT ITEM CONSIDERED FOR LEVY OF PENALTY IS WITH REGARD TO NOTIONAL PROPERTY INCOME FROM CHENNAI FLAT. THE SAI D PROPERTY WAS LET OUT DURING FEBRUARY AND MARCH 2009. THE ITO STATED THAT ONLY FOR ONE HOUSE (CHIDAMBARAM HOUSE) EXEMPTION WILL BE AVAILABLE AND FOR THE OTHER NOTIONAL VALUE WILL HAVE TO BE TREATED AS INCOME, EVEN IF NO T LET OUT FOR WHICH THE AR OF THE ASSESSED HAS AGREED FOR ADDITION. LATER, THE A SSESSING OFFICER LEVIED THE PENALTY FOR THE SAME. IN OUR CONSIDERED OPINION, IT IS ONLY A NOTIONAL ADDITION THERE IS NO CONCLUSIVE EVIDENCE FOR CONCEALING THE INCOME, OR FURNISHING THE INACCURATE PARTICULARS OF INCOME, AS SUCH IN OUR CO NSIDERED OPINION THIS ISSUE CANNOT BE CONSIDERED FOR LEVY OF PENALTY U/S.271(1) (C) OF THE ACT. 10. THE NEXT ISSUE, WHICH WAS CONSIDERED FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT IS WITH REGARD TO FEES RECEIVED FROM M/S.UN IVERSAL BUSINESS VENTURES, SHARJAH. 11. DURING THIS YEAR THE ASSESSEE VISITED DUBAI TH REE TIMES OR SO, WHICH WAS REFLECTED IN HIS BANK ACCOUNT BY WAY OF AIR TICKETS PAYMENT. THE COMPANY BELONGS TO HIS FRIEND AND HE HAD BORNE HIS AIR TRAV EL, STAY AND FOOD EXPENSES. IN SUPPORT OF HIS STATEMENT, HE HAD SHOWN THE LETTER O FFERED BY COMPANY TO ACT AS ITA NO. /MDS/2016 10 ITS HONORARY ADVISOR WITHOUT ANY PAY. EXCEPT REIMBUR SEMENT OF HIS AIR TRAVEL, STAY AND FOOD EXPENSES, HE WAS NOT PAID ANY REMUNER ATION NOR ANY SALARY. THE AO HOWEVER, MADE ADDITION OF ` 1,05,000/- ON THE ASSUMPTION THAT SOME REMUNERATION, THE ASSESSEE HAS GOT. THIS WAS ALSO O NLY AN AGREED ADDITION BY ASSESSEES AUDITOR AND NOT REAL INCOME. FURTHER, TH ERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF INCOME OR CONCEALED THE INCOME. 12. THE NEXT ISSUE, WHICH WAS CONSIDERED FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT IS WITH REGARD TO INCOME EARNED FROM AS P OWER OF ATTORNEY OF MR.T.SIVAKUMAR. HE IS ASSESSEES FRIEND WHO WANTED TO SELL HIS PROPERTY. AS HE WAS FAR AWAY AND COULDNT TRAVEL FREQUENTLY DUE TO SOME AILMENTS, HE HANDED OVER THE PROPERTY DOCUMENTS AND GAVE HIM POWER OF A TTORNEY TO NEGOTIATE WITH PROSPECTIVE BUYERS AS ASSESSEE WAS AVAILABLE AT CHE NNAI AT THAT POINT OF TIME. AFTER THE SALE WAS OVER THE AMOUNT WAS HANDED OVER TO HIM AND PROPER RECEIPT WAS RECEIVED AND SUCH RECEIPT WAS ALSO SUBMITTED TO THE AO. ON THE ASSUMPTION THAT THE ASSESSEE WOULD HAVE GOT SOMETHING MORE, TH E ASSESSING OFFICER ADDED A SUM OF RS.3,15,000/- TO THE INCOME OF THE ASSESSE E, WHICH WAS AGREED BY THE ASSESSEES AUDITOR. THIS WAS ALSO ONLY AN AGREED A DDITION BY ASSESSEES AUDITOR AND NOT REAL INCOME. FURTHER, THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCE ALED THE INCOME. IN OUR CONSIDERED OPINION, IT IS ONLY A NOTIONAL ADDITION THERE IS NO CONCLUSIVE EVIDENCE ITA NO. /MDS/2016 11 FOR CONCEALING THE INCOME, OR FURNISHING THE INACCU RATE PARTICULARS OF INCOME, AS SUCH IN OUR CONSIDERED OPINION THIS ISSUE CANNOT BE CONSIDERED FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. 13. THE NEXT ISSUE, WHICH WAS CONSIDERED FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT IS WITH REGARD TO UNEXPLAINED SOURCE TO MEE T COST OF ACQUISITION OF CHENNAI PROPERTY. THE PROPERTY WAS PURCHASED BY THE ASSESSEE HIMSELF AND BY HIS SPOUSE WHO IS SELF-EMPLOYED BUSINESS WOMAN. A H OUSING LOAN OF RS. 40 LACS WAS OBTAINED FROM INDIAN BANK ANNA NAGAR BRANCH BY HER. APART FROM HIS PAST SAVINGS, HE TOOK FINANCIAL HELP FROM HIS FRIENDS, H IS RELATIVES AND ALSO SOLD SOME OF OUR JEWELS. A STATEMENT DETAILING THE SOURCES WA S ALSO SUBMITTED BEFORE THE AO. THE AO WAS NOT FULLY CONVINCED WITH THE PAST SA VINGS AND HE CONCLUDED THERE WAS A DIFFERENCE IN THE BANK BALANCE AT THE T IME OF PURCHASE. BEING A SALARIED EMPLOYEE, ASSESSEE DIDNT MAINTAIN BOOKS O F ACCOUNTS AND HENCE HE COULDNT CONCLUSIVELY PROVE THE PAST SAVINGS. AS SU CH, THE ADDITION WAS MADE BY THE ASSESSING OFFICER AND LEVIED PENALTY FOR THE SA ME DISCREPANCIES. THIS IS A DEEMING ADDITION U/S.69 OF THE ACT. THE ADDITION U NDER SEC.69 OF THE ACT COULD BE CONSIDERED FOR LEVY OF PENALTY WHEN THE ASSESSIN G OFFICER DISPROVED THE CONTENTION OF THE ASSESSEE REGARDING THE SOURCE OF FUND. THE DEPARTMENT COULD NOT PRESUME THAT IT WAS DISPROVED ON THE REASON OF CONFIRMATION OF THE ADDITION IN QUANTUM APPEAL. THERE MUST INDEPENDENT FINDINGS IN THIS REGARD. THE ITA NO. /MDS/2016 12 ASSESSEE HAD EXPLAINED THE SOURCE OF INCOME. THEREF ORE, IT COULD NOT BE TAKEN THAT THERE WAS CONCEALMENT OF INCOME. MERE REJECTIO N OF EXPLANATION COULD NOT BE GROUND FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. THE SAME VIEW WAS TAKEN BY JURISDICTIONAL HIGH COURT IN THE CASE OF S.V. KALYANAM VS. CLT - 327 ITR 477 (MAD) WHEREIN HELD THAT:- (I) THAT SECTION 69 IS A DEEMING PROVISION AND IT C ONFERS A DISCRETION ON THE INCOME-TAX OFFICER IN THE MATTER OF TREATING TH E SOURCE OF INVESTMENT. THE WHOLE ENQUIRY HAD STARTED NOT AT THE INSTANCE O F THE DEPARTMENT BUT BECAUSE THE ASSESSEE HIMSELF HAD COME FORWARD FOR O BTAINING TAX CLEARANCE CERTIFICATE UNDER SECTION 230A . THE EXPL ANATION REGARDING INVESTMENT OFFERED BY THE ASSESSEE WAS REASONABLE. THE TRIBUNAL HAD NOT GIVEN ANY INDEPENDENT FINDING, BUT SIMPLY AFFIRMED THE ORDER OF THE COMMISSIONER (APPEALS). FURTHER, IN THE APPLICATION MADE BY THE ASSESSEE FOR OBTAINING TAX CLEARANCE CERTIFICATE UN DER SECTION 230A OF THE ACT, IT WAS STATED THAT THE PROPERTY OWNED JOINTLY BY THE ASSESSEE AS WELL AS HIS WIFE AND THE PROPERTY WAS PURCHASED IN THE J OINT NAMES. THERE WAS NO DISPUTE REGARDING THE SAME. THOUGH THE ISSUE OF JOINT OWNERSHIP WAS ARGUED, THE AUTHORITIES BELOW HAD NOT CONSIDERE D THE MATTER. THE TRIBUNAL WAS NOT RIGHT IN LAW IN SUSTAINING THE ENT IRE ADDITION AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE . (II) THAT THE ADDITION WAS MADE UNDER SECTION 69 OF THE ACT. SECTION 69 IS A DEEMING PROVISION AND IT CANNOT BE EXTENDED TO TH E PENALTY PROCEEDINGS. THE DEPARTMENT COULD NOT PRESUME THAT THERE WAS A CONCEALMENT. THERE MUST BE AN INDEPENDENT FINDING. FURTHER, THE ASSESSEE HAD EXPLAINED THE SOURCE OF INCOME AND THE REFORE, IT COULD NOT BE TAKEN THAT THERE WAS CONCEALMENT OF INCOME. MERE REJECTION OF EXPLANATION WOULD NOT BE A GROUND FOR LEVYING PENAL TY. ITA NO. /MDS/2016 13 IN VIEW OF THIS, WE ARE OF THE OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. 13.1 IN OUR CONSIDERED OPINION, IT IS ONLY A DEEMI NG ADDITION THERE IS NO CONCLUSIVE EVIDENCE FOR CONCEALING THE INCOME, OR F URNISHING THE INACCURATE PARTICULARS OF INCOME, AS SUCH IN OUR CONSIDERED OP INION THIS ISSUE CANNOT BE CONSIDERED FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. ACCORDINGLY, THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT IS DELETED. 14. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON 09 TH JANUARY, 2017 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 09 TH JANUARY, 2017 K S SUNDARAM. , ' $(-. /.( / COPY TO: 1 . ! / APPELLANT 3. & 0( () / CIT(A) 5. .3 4 $(5 / DR 2. $% ! / RESPONDENT 4. & 0( / CIT 6. 4 6 7 ' / GF