Sh Balwinder Kumar, Phagwara V. The Income Tax Officer, Phagwara

ITA 177/ASR/2010

• Counselvise Citation: 17720914 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-12-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 31-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: ANIL MIGHLAN I
• Keywords: Ignorance of law
• Section: 69A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: AMRITSAR BENCH: AMRITSAR BEFORE SHRI H L KARWA, VP AND SHRI D K SRIVASTAVA, AM ITA NO.177/ASR/2010 AY 2002-03 BALWINDER KUMAR V. I.T.O. WARD 1, PHAGWARA SON OF SHRI KARNAIL SINGH MOHALLA PREMPURA, PHAGWARA PAN: AURPK 7208 D AND ITA NO.498/ASR/2010 AY 2002-03 BALIHAR CHAND ALIAS BILLA V. ITO, WARD 2, PH AGWARA SON OF DARSHAN LAL VILLAGE BACHOWAL, TEHSIL PHILLAUR APPELLANT BY: S/SHRI SUDHIR SEHGAL AND ANIL MIGHLAN I RESPONDENT BY: SHRI AMRIK CHAND DATE OF HEARING: 08/15.12.2011 DATE OF PRONOUNCEMENT: 16.12.2011 ORDER D K SRIVASTAVA : FACTS AS ALSO THE GROUNDS OF APPEAL IN BOTH THE A PPEALS ARE COMMON. WE THEREFORE FIND IT CONVENIENT TO DISPOSE OF BOTH OF THEM BY A CONSOLIDATED ORDER. 2. APPEAL BEARING ITA NO.177/ASR/2010 IS DIRECTED A GAINST THE ORDER PASSED BY THE LD. CIT(A) ON 27.1.2010, ON THE FOLLOWING GROUN DS:- 1. THAT THE ORDER OF THE LD. CIT(A) IS AGAINST LAW AND FACTS OF THE CASE. 2. THAT THE LD. CIT(A) GRAVELY ERRED IN SUSTAINING THE ADDITION OF RS. 4,00,000/- UNDER SECTION 69A OF THE I .T ACT IGNORI NG THE PROVISION OF LAW AND THE EXPLANATIONS OFFERED ABOUT THE NATURE AND SOURC E OF THE ACQUISITION OF THE BALWINDER KUMAR V. ITO ITA NO. 177/ASR/2010 2 MONEY WHICH COULD NOT BE BRUSHED ASIDE BASED ON FAC TS AND DOCUMENTARY EVIDENCE, WHICH IS NOT REBUTTED BY THE AO. 3. THAT THE LD. CIT(A) ERRED IN IGNORING THE ORDER OF ANOTHER CENTRAL GOVT. AUTHORITY THE DY. DIRECTOR OF FEMA WHO HAD HELD THAT THE MONEY WAS RECEIVED BY THE ASSESSEE SENT HIS BROTHER FROM OUTSIDE INDIA AND THE PENALTY UNDER FEMA COULD BE LEVIED ONLY BECAUSE THE SAID AMOUNT WA S RECEIVED FROM ABROAD, WHICH PROVISION IS NOT APPLICABLE TO INDIAN MONEY. 4. THAT WHILE MAKING THE ADDITION AS ABOVE, THE AO IGNORED THAT THE SOURCE OF ACQUISITION IS ACCEPTED BY THE ENFORCEMENT DIREC TORATE, GOVERNMENT OF INDIA, VIDE THEIR ORDER DATED 19.12.2001 WHEREBY THE SOURC E IS ESTABLISHED AND AS SUCH CANNOT BE CONSIDERED TO BE UNEXPLAINED MONEY A ND PROVISIONS OF SECTION 69A ARE NOT APPLICABLE. THE LD. CIT(A) WAS HELD THE MONEY RECEIVED FROM ABROAD AS BELONGING TO THE ASSESSEE. 5. THAT WHILE SUSTAINING THE ADDITION, THE AO ERRED IN NOT ACCEPTING THE AFFIDAVIT AS EVIDENCE FROM THE BROTHER OF THE ASSES SEE FILED BEFORE HIM CONFIRMING THAT THE AMOUNT OF RS. 4 LAKHS WAS SENT BY HIM FROM DUBAI. 6. THAT THE PENALTY LEVIED BY ENFORCEMENT DIRECTORAT E, FOREIGN EXCHANGE AT RS. 133000/- OUGHT TO HAVE BEEN CONSIDERED AS AN EX PENSE/DEDUCTION ADMISSIBLE, WHEREBY THE AMOUNT WAS ACCEPTED TO HAVE BEEN RECEIVED FROM A CERTAIN SOURCE. 7. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE RE-OP ENING OF ASSESSMENT U/S 147 OF THE INCOME-TAX ACT, 1961. 8 THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR A MEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. IT IS, THEREFORE, PRAYED THAT THE APPEAL BE ACCEPT ED AS SUBMITTED ABOVE. BALWINDER KUMAR V. ITO ITA NO. 177/ASR/2010 3 3. APPEAL BEARING ITA NO.498/ASR/2011 IS DIRECTED A GAINST THE ORDER PASSED BY THE LD. CIT(A) ON 14.06.2011, ON THE FOLLOWING GROU NDS:- 1. THAT THE ORDER OF THE LD. CIT(A) IS AGAINST LAW AND FACTS OF THE CASE. 2. THAT THE LD. CIT(A) GRAVELY ERRED IN SUSTAINING THE ADDITION OF RS. 4,00,000/- UNDER SECTION 69A OF THE I .T ACT IGNORI NG THE PROVISION OF LAW AND THE EXPLANATIONS OFFERED ABOUT THE NATURE AND SOURC E OF THE ACQUISITION OF THE MONEY WHICH COULD NOT BE BRUSHED ASIDE BASED ON FAC TS AND DOCUMENTARY EVIDENCE, WHICH IS NOT REBUTTED BY THE CIT(A). 3. THAT THE LD. CIT(A) ERRED IN IGNORING THE ORDER OF ANOTHER CENTRAL GOVT. AUTHORITY THE DY. DIRECTOR OF FEMA WHO HAD HELD THAT THE MONEY WAS RECEIVED BY THE ASSESSEE SENT HIS BROTHER FROM OUTSIDE INDIA AND THE PENALTY UNDER FEMA COULD BE LEVIED ONLY BECAUSE THE SAID AMOUNT WA S RECEIVED FROM ABROAD, WHICH PROVISION IS NOT APPLICABLE TO INDIAN MONEY. 4. THAT WHILE MAKING THE ADDITION AS ABOVE, THE AO IGNORED THAT THE SOURCE OF ACQUISITION IS ACCEPTED BY THE ENFORCEMENT DIREC TORATE, GOVERNMENT OF INDIA, VIDE THEIR ORDER DATED 7.11.2001 WHEREBY THE SOURCE IS ESTABLISHED AND AS SUCH CANNOT BE CONSIDERED TO BE UNEXPLAINED MONEY AND PR OVISIONS OF SECTION 69A ARE NOT APPLICABLE. THE LD. CIT(A) WAS HELD THE MON EY RECEIVED FROM ABROAD AS BELONGING TO THE ASSESSEE. 5. THAT WHILE SUSTAINING THE ADDITION, THE AO ERRED IN NOT ACCEPTING THE AFFIDAVIT AS EVIDENCE FROM THE BROTHER OF THE ASSES SEE FILED BEFORE HIM CONFIRMING THAT THE AMOUNT OF RS. 4 LAKHS WAS SENT BY HIM FROM DUBAI. 6. THAT THE PENALTY LEVIED BY ENFORCEMENT DIRECTORAT E, FOREIGN EXCHANGE AT RS. 133000/- OUGHT TO HAVE BEEN CONSIDERED AS AN EX PENSE/DEDUCTION ADMISSIBLE, WHEREBY THE AMOUNT WAS ACCEPTED TO HAVE BEEN RECEIVED FROM A CERTAIN SOURCE. BALWINDER KUMAR V. ITO ITA NO. 177/ASR/2010 4 7. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE RE-OP ENING OF ASSESSMENT U/S 147 OF THE INCOME-TAX ACT, 1961. 8 THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR A MEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. IT IS, THEREFORE, PRAYED THAT THE APPEAL BE ACCEPT ED AS SUBMITTED ABOVE. 4. GROUNDS NOS. 6 AND 7 IN BOTH THE APPEALS WERE NO T PRESSED AT THE TIME OF HEARING. THEY ARE THEREFORE DISMISSED AS NOT PRESSE D. GROUND NOS. 1 AND 8 ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SUM OF RS. 11,80,000/- WAS RECOVERED AND SEIZED IN CASH BY THE SHO, POLICE STA TION, SADAR, JALANDHAR FROM SHRI BALIHAR CHAND, SHRI BALWINDER KUMAR AND AVTAR SINGH DURING NAKABANDI. THE AFORESAID FACT WAS BROUGHT TO THE NOTICE OF THE ENFORCEMENT D IRECTORATE. PERUSAL OF THE ORDER DATED 7.11.2001 PASSED BY THE DY. DIRECTOR, ENFORCE MENT DIRECTORATE (ORDER NO. DD/41/JL/01/AKM/FM) SHOWS THAT BOTH THE ASSESSEES H AD CLAIMED TO HAVE RECEIVED A SUM OF RS.4 LAKHS EACH FROM THEIR BROTHERS RESIDING IN DUBAI. THE ENFORCEMENT DIRECTORATE HOWEVER EXAMINED THE MATTER AND RECORDE D THE FOLLOWING FINDINGS IN THE AFORESAID ORDER:- I HAVE CAREFULLY GONE THROUGH THE EVIDENCE ON RECO RD, THE WRITTEN REPLIES TO THE SHOW CAUSE NOTICE AND ORAL SUBMISSIONS MADE DUR ING THE COURSE OF PERSONAL HEARING, I FIND THAT THE NOTICEES HAVE REC EIVED THE PAYMENT OF RS. 4,00,000/- EACH AT THE INSTRUCTION OF THEIR BROTHER S RESIDING ABROAD IN VIOLATION OF THE PROVISIONS OF SECTION 3(C) OF THE SAID ACT. THIS FACT HAS BEEN ADMITTED BY THEM DURING THE COURSE OF INVESTIGATION AS WELL THE ADJUDICATION PROCEEDINGS. HOWEVER, THE LD ADVOCATE PLEADS FOR LENIENCY, AS HI S CLIENTS WERE NOT AWARE THAT RECEIVING MONEY IN THIS MANNER IS AN OFFENCE, THAT THEY ARE VERY POOR AND BACKWARD PEOPLE AND THAT THE MONEY WAS TO BE USED F OR PURCHASING TATA SUMO CARS WHICH THEY WOULD HAVE PLIED AS TAXIS TO EARN L IVELIHOOD AND SUSTAIN THEIR FAMILIES. THE CHARGE IS THUS ESTABLISHED AND AS SUC H I FIND THE NOTICEES GUILTY. I BALWINDER KUMAR V. ITO ITA NO. 177/ASR/2010 5 WOULD LIKE TO ADD HERE THAT IGNORANCE OF LAW IS NO EXCUSE, HOWEVER LOOKING INTO THE CIRCUMSTANCES OF THE CASE, I ALSO FIND THAT NO RACKETEERING IS INVOLVED IN THIS CASE AND IF THE ENTIRE AMOUNT IS CONFISCATED IT WIL L CAUSE ENORMOUS FINANCIAL HARDSHIP TO THE FAMILIES OF THE NOTICEES AS THEY WI LL LOOSE THEIR CHANCE TO EARN THE LIVELIHOOD. I THEREFORE, TAKE A LENIENT VIEW AN D IN EXERCISE OF THE POWERS CONFERRED UPON ME IN TERMS OF SUB SECTION 1 OF THE SECTION 16 OF THE SAID ACT, I IMPOSE A PENALTY OF RS. 1,33,000/- EACH(RUPEES ONE LAKH THIRTY THREE THOUSAND ONLY) AGAINST S/SHRI BALHAR CHAND ALIAS BI LLA, AVTAR SINGH ALIAS TARI AND BALWINDER KUMAR. THE TOTAL PENALTY OF RS. 3,99, 000/- (RUPEES THREE LAKH NINETY NINE THOUSAND ONLY) SHOULD BE DEDUCTED FROM THE SEIZED AMOUNT OF RS. 11,80,000/- AND THE BALANCE AMOUNT BE RELEASED TO T HE NOTICEES, WHICH I FEEL WILL MEET THE ENDS OF JUSTICE. 4. THE AO HOWEVER TREATED A SUM OF RS. 4 LAKHS AS U NEXPLAINED INCOME IN THE HANDS OF BOTH THE ASSESSEES. 5. AGGRIEVED BY THE ORDER PASSED BY THE AO, BOTH TH E ASSESSEES CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WITHOUT SUCC ESS. 6. BOTH THE ASSESSEES ARE NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL, IT WAS SUBMITTED BY THE LD. COUNSELS FOR TH E ASSESSEE THAT THE MONEY WAS RECEIVED BY BOTH THE ASSESSEES FROM THEIR REAL BROT HERS, WHO RESIDED IN DUBAI AT THE RELEVANT TIME. IT WAS ALSO SUBMITTED THAT THE AFFID AVITS OF THEIR BROTHERS ADMITTING THE REMITTANCE OF THE AFORESAID MONEY WERE ALSO FILED B EFORE THE DEPARTMENTAL AUTHORITIES. ACCORDING TO THEM, THE ENFORCEMENT DIRECTORATE HAS A LSO ACCEPTED THAT A SUM OF RS. 4 LAKHS WAS RECEIVED BY EACH OF BOTH THE ASSESSEES AS PER INSTRUCTIONS OF THEIR BROTHERS RESIDING ABROAD IN VIOLATION OF THE PROVISIONS OF S ECTION 3(C) OF THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999 FOR WHICH THE BOTH THE ASSESSE ES HAVE BEEN SEPARATELY PENALIZED. HE FURTHER SUBMITTED THAT THE ENFORCEMEN T DIRECTORATE HAS ALSO CERTIFIED THE RECEIPT OF MONEY BY BOTH THE ASSESSEES FROM THEIR B ROTHERS AND THEREFORE THE INCOME- TAX AUTHORITIES WERE NOT JUSTIFIED IN TREATING THE SAME AS UNEXPLAINED. BALWINDER KUMAR V. ITO ITA NO. 177/ASR/2010 6 7. IN REPLY, THE LD. DR SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. THE CASE OF THE DEPARTMENT IS THAT THE ASSESSEES HAVE F AILED TO SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF RS. 4 LAKHS FOUND IN THEIR POS SESSION. THE EXPLANATION OF THE ASSESSEES IS THAT THEY HAVE RECEIVED AFORESAID SUM FROM THEIR BROTHERS RESIDING IN DUBAI IN SUPPORT OF WHICH THEY HAVE ALSO FILED THE AFFIDAVITS OF THEIR BROTHERS IN WHICH THEY HAVE CONFIRMED THE REMITTANCE OF THE AFORESAID SUM OF MONEY TO THE ASSESSEES. THE ENFORCEMENT AUTHORITIES HAVE ALSO ACCEPTED THE F ACT THAT BOTH THE ASSESSEE HAVE RECEIVED A SUM OF RS. 4 LAKHS EACH HAVE RECEIVED TH E PAYMENT OF RS. 4,00,000/- EACH AT THE INSTRUCTION OF THEIR BROTHERS RESIDING ABROA D IN VIOLATION OF THE PROVISIONS OF SECTION 3(C) OF THE FOREIGN EXCHANGE MANAGEMENT ACT. IN FACT IT IS FOR THE VIOLATION OF SECTION 3(C) OF THE FOREIGN EXCHANGE MANAGEMENT ACT FOR WHICH PENALTY OF RS. 1,33,000/- HAS BEEN IMPOSED ON EACH OF BOTH THE ASS ESSEES. ONCE THE ENFORCEMENT AUTHORITIES HAVE CERTIFIED THE RECEIPT OF MONEY BY THE ASSESSEES AND ALSO PENALIZED THEM FOR RECEIVING THE MONEY IN CONTRAVENTION OF TH E PROVISIONS OF SECTION 3(C) OF THE FOREIGN EXCHANGE MANAGEMENT ACT, IT CANNOT BE SAID T HAT THE ASSESSEES HAVE NOT RECEIVED THE AFORESAID MONEY. IN THIS VIEW OF THE M ATTER, GROUND NOS. 2 TO 5 TAKEN BY THE ASSESSEE ARE ALLOWED. 9. APPEAL FILED BY BOTH THE ASSESSEES IS PARTLY ALL OWED. ORDER PRONOUNCED ON 16.12.2011 SD/- SD/- (H L KARWA) (D K SRIVASTAVA) VICE PRESIDENT ACCOUNTANT MEMBER AMRITSAR, 16.12.2011 SURESH COPY TO:- BALWINDER KUMAR V. ITO ITA NO. 177/ASR/2010 7 1. THE APPELLANT, SHRI BALWINDER KUMAR 2. THE RESPONDENT, I.T.O 3. THE CIT(A), JALANDHAR 4. THE LD. CIT, JALANDHAR 5. THE D.R., INCOME TAX DEPARTMENT, AMRITSAR