A.V.Elango, Tiruppur V. ITO, Tiruppur

ITA 1768/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64589 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 26-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BASHYAM IRS
• Assessee Lawyers: T BANUSEKAR
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NOS.1768 TO 1770(MDS)/2012 ASSESSMENT YEARS : 2006-07 TO 2008-09 SHRI A.V.ELANGO, 8/17, BOYAMPALAYAM PIRIVRU (NORTH), P.N.RD., PULUVAPATTI TIRUPUR-641 602. PAN AAHPE6912C. VS. THE INCOME-TAX OFFICER, WARD I(3), TIRUPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.BANUS EKAR, C.A. RESPONDENT BY : SHRI GURU BASHYA M, IRS, JCIT DATE OF HEARING : 26 TH NOVEMBER, 2012 DATE OF PRONOUNCEMENT : 26 TH NOVEMBER, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE PRESIDENT THESE THREE APPEALS ARE FILED BY THE ASSESSEE. T HE RELEVANT ASSESSMENT YEARS ARE 2006-07, 2007-08 AND 2008-09. THE FIRST TWO APPEALS RELATING TO THE ASSESSMENT YE ARS 2006-07 AND 2007-08 ARE PENALTY APPEALS UNDER SECTION 271(1 )(C) OF THE - - ITA 1768 TO 1770 OF 2012 2 INCOME-TAX ACT, 1961. THE THIRD APPEAL FOR THE ASS ESSMENT YEAR 2008-09 IS A PENALTY APPEAL UNDER SECTION 271A OF T HE ACT. 2. FIRST WE WILL CONSIDER THE TWO APPEALS RELATING TO PENALTIES LEVIED UNDER SECTION 271(1)(C) OF THE ACT . 3. THE ASSESSEE IS ENGAGED IN REAL ESTATE BUSINESS . THERE WAS A SEARCH ACTION UNDER SECTION 132 ON 12-2 -2008. SUBSEQUENTLY, NOTICES UNDER SECTION 153A WERE ISSUE D TO THE ASSESSEE. IN RESPONSE TO THE NOTICES, RETURNS WERE FILED BY THE ASSESSEE. THE ASSESSMENTS WERE COMPLETED THEREAFTE R, ALMOST ACCEPTING THE INCOMES RETURNED BY THE ASSESSEE FOR THE TWO ASSESSMENT YEARS 2006-07 AND 2007-08. EVEN THOUGH THE INCOMES RETURNED BY THE ASSESSEE IN THE SUBSEQUENT RETURNS WERE MORE OR LESS ACCEPTED BY THE ASSESSING AUTHORI TY, PENALTY PROCEEDINGS WERE INITIATED UNDER SECTION 271(1)(C) ON THE GROUND OF LAW STATED IN EXPLANATION 5A TO SECTION 271(1)(C ). ACCORDINGLY, THE ASSESSING OFFICER ADOPTED THE DIFF ERENCE BETWEEN THE INCOMES RETURNED AS PER THE ORIGINAL RE TURNS AND AS PER THE SUBSEQUENT RETURNS, AS THE INCOME CONCEALED BY THE - - ITA 1768 TO 1770 OF 2012 3 ASSESSEE AND LEVIED PENALTIES. HE HAS LEVIED A PEN ALTY OF ` 35,000/- FOR THE ASSESSMENT YEAR 2006-07 AND A PEN ALTY OF ` 84,041/- FOR THE ASSESSMENT YEAR 2007-08. THESE P ENALTIES WERE CONFIRMED IN FIRST APPEAL. 4. WE HEARD BOTH SIDES ON THIS ISSUE. THE ASSESSE E ARGUED THAT EXPLANATION 5 TO SECTION 271(1)(C) ALON E WILL APPLY TO HIS CASE, WHEREAS THE REVENUE TOOK THE STAND THAT E XPLANATION 5A WOULD APPLY. AS FAR AS THE APPLICABILITY OF THE EXPLANATION IS CONCERNED, WE AGREE WITH THE REVENUE THAT EXPLANATI ON 5A TO SECTION 271(1)(C) IS TO BE RELIED ON IN THESE CASES , IF NECESSITY SO ARISES. WE FIND THAT WHILE DISCUSSING THE DISPUTE AS TO WHETHER EXPLANATION 5 WOULD APPLY OR EXPLANATION 5A WOULD A PPLY, THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS NOT GONE IN TO THE MERITS OF THE CASE. EVEN, EXPLANATION 5A HAS NO MA NDATE TO BE APPLIED AUTOMATICALLY. PENALTY UNDER SECTION 271 (1)(C) ALWAYS ARISES OUT OF CONCEALMENT OF INCOME OR OF FURNISHIN G OF INACCURATE PARTICULARS RELATING TO THE INCOME. IT IS IN ORDER TO EXPLAIN THE POSITION OF LAW THAT EXPLANATION 5A HAS BEEN PROVIDED UNDER SECTION 271(1)(C). BUT THAT EXPLANA TION BY ITSELF - - ITA 1768 TO 1770 OF 2012 4 DOES NOT MAKE OUT AN AUTOMATIC CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. EXPLANATION 5A CASTS A DUTY ON THE ASSESSEE TO RECONCILE THE DIFFERENCE BETWEEN THE FIRST RETURN AND THE SUBSEQUENT RETURN. 5. IN THE PRESENT CASE THE DIFFERENTIAL AMOUNT OF INCOME DECLARED IN THE SUBSEQUENT RETURN WAS WORKED OUT ON THE BASIS OF CASH FLOW STATEMENT FILED BY THE ASSESSEE. THE DIFFERENCE CANNOT BE ATTRIBUTED TO ANY SINGLE ITEM. THEREFORE, A CASE OF CONCEALMENT IS NOT DISCERNIBLE FROM THE REC ORDS. IT IS EQUALLY TRUE TO SAY THAT ALL THE PARTICULARS HAVE B EEN FURNISHED BY THE ASSESSEE, WHICH IS ALSO DISCERNIBLE FROM THE RE CORDS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT TH E LOWER AUTHORITIES HAVE NOT MADE OUT A FACTUAL CASE TO APP LY EXPLANATION 5A AS PROVIDED UNDER SECTION 271(1)(C). IN THESE CIRCUMSTANCES THERE IS NO JUSTIFICATION TO LEVY PEN ALTY UNDER SECTION 271(1)(C). THE PENALTIES IMPOSED UNDER SEC TION 271(1)(C) FOR THE ASSESSMENT YEARS 2006-07 AND 2007 -08 ARE HEREBY DELETED. - - ITA 1768 TO 1770 OF 2012 5 6. NOW, COMING TO THE ASSESSMENT YEAR 2008-09 WE HAVE TO CONSIDER THE LEVY OF PENALTY OF ` 25,000/- UNDER SECTION 271A OF THE ACT. IT IS SEEN THAT THE ASSESSEE HAS FILED BALANCE- SHEET ALONGWITH THE RETURN OF INCOME AND ALSO CASH FLOW STATEMENT ALONGWITH THE SUBSEQUENT RETURN. THE ASS ESSEE IS NOT CARRYING ON ANY ORGANIZED BUSINESS. HE IS ACTING A S A REAL ESTATE BROKER, AS A SODA FACTORY OWNER, AS A TRANSP ORT OPERATOR, BUT ALL THE ACTIVITIES IN A VERY NOMINAL WAY. THE PARTICULARS FURNISHED BY WAY OF BALANCE-SHEET AND CASH FLOW STA TEMENT WOULD BE ALMOST SUFFICIENT TO ASSESS THE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. THEREFORE, THIS IS NOT A H ARD CASE WHERE LEVY OF PENALTY UNDER SECTION 271A IS JUSTIFI ED. ACCORDINGLY, THE SAID PENALTY IS DELETED FOR THE AS SESSMENT YEAR 2008-09. 7. ACCORDINGLY, THE PENALTIES LEVIED FOR ALL THE T HREE IMPUGNED ASSESSMENT YEARS ARE DELETED AND THE APPEA LS FILED BY THE ASSESSEE ARE ALLOWED. - - ITA 1768 TO 1770 OF 2012 6 ORDERS PRONOUNCED ON MONDAY, THE 26 TH OF NOVEMBER, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) ( DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 26 TH NOVEMBER, 2012. V.A.P. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.