Rajnikant Ghelabhai Vekaria, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-5(1), RAJKOT-GUJARAT

ITA 177/RJT/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0235 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Peak credit
• Section: 271(1)(c); 143(3); 201; 274; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT , , BEFORE SHRI RAJPAL YADAV , JUDICIAL MEMBER & SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ I.T.A. NO .177/RJT/2016 ( / ASSESSMENT YEAR : 2000 - 0 1 ) RAJNIKANT GHELABHAI VEKARIA , JADESHWAR INDUSTRIES , 1 - PARSANA SOCIETY , JUNGLESHWAR ROAD, RAJKOT. / VS. ITO , WARD - 5 (1) , RAJKOT. ./ ./ PAN/GIR NO. : A BQPV4377C ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : WRITTEN SUBMISSION / RESPONDENT BY : SHRI ANIL KUMAR , SR. D . R / DATE OF HEARING 19 /09 /201 9 / DATE OF PRONOUNCEMENT 20 / 0 9 /201 9 / O R D E R PER WASEEM AHMED ACCOUNTANT M EMBER : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) - 3 , AHMEDABAD [ LD. CIT(A) IN SHORT] OF DATED 01/03/2016 , ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER R EFERRED TO AS 'THE ACT') DAT ED 19/02 /2013 RELEVANT TO ASSESSMENT YEAR S (A . Y . ) 2000 - 0 1 . ITA NO. 177 /RJT / 201 6 A.Y. S 20 0 0 - 0 1 - 2 - THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT( A) HAS ERRED IN LAW AND FACTS IN CONFIRMING PENALTY VIS. 271(1)(C) OFRS. 39,7561 - . THE PENALTY NEEDS DELETION. 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING PENALTYU/S. 271(1)(C) OFRS. 39,7561 - IN RESPECT OF ADDITION MADE ON PEAK CREDIT BASIS ON WHICH NO PENALTY IS CONFIRM. THE PENALTY NEEDS DELETION. 3. THE LD. CIT(A ) HAS ERRED IN LAW AND FACTS IN CONFIRMING PENALTY VIS. 271(1)(C) OF RS. 39,7561 - ON ADDITION MADE ON WITHOUT PROPER VERIFICATION AND SETTLED LAW. THE PENALTY NEEDS DELETION. 4. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING PENALTY VIS. 271(1)( C) OF RS. 39,7561 - GIVING IN ADEQUATE TIME AND OPPORTUNITY. THE PENALTY NEEDS DELETION. 5. THE LD. CIT(A) HAS ERRED IN NOT BRINGING ANY COGENT MATERIAL JUSTIFYING LEVY OF PENALTY. THE PENALTY NEEDS DELETION. 6. THE LD. CIT(A) HAS ERRED IN NOT GIVING P ROPER AND ADEQUATE OPPORTUNITY. THE PENALTY ORDER BEING BAD IN LAW NEEDS CANCELLATION. 7. THE PENALTY ORDER BEING BAD IN LAW NEEDS CANCELLATION. 8. TAKING INTO CONSIDERING THE LEGAL POSITION, STATUTORY ASPECTS AND FACTS OF THE CASE NO PENALTY OUGHT TO HAVE BEEN CONFIRMED. THE SAME DESERVES CANCELLATION. 9. THE APPELLANT CRAVES LEAVE TO ADD I ALTER I AMEND AND I OR SUBSTITUTE ANY OR ALL GROUNDS OF APPEAL BEFORE THE ACTUAL HEARING TAKE PLACE. THE ASSESSEE HAS RAISED AS MANY AS 9 GROUNDS OF APPEAL BUT THE EFFECTIVE ISSUE RAISED IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE AO FOR 39,756.00 UNDER SECTION 271(1)(C) OF THE ACT. 2. THE FACTS IN BRIEF ARE THAT THE ASSE SSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND DRAWING INCOME BY WAY OF SALARY AND SHARE OF ITA NO. 177 /RJT / 201 6 A.Y. S 20 0 0 - 0 1 - 3 - PROFIT/INTEREST FROM THE PARTNERSHIP FIRM. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION CLAIMED TO HAVE DONE THE RETAIL BUSINESS OF IMITATION JEWELLERY WHICH WAS NOT DISCLOSED IN THE INCOME TAX RETURN. THE DEPOSITS IN THE BANK ACCOUNTS AMOUNTING TO 37,90,956.00 REPRESENT THE SALE PROCEEDS. THE ASSESSEE FURTHER CLAIMED THAT THE ENTIRE AMOUNT OF DEPOSITS IN THE BANK CANNOT BE TREATED AS INCOME AND ACCORDINGLY OFFERED 5 % OF THE TURNOVER AS PROVIDED UNDER SECTION 44AF OF THE ACT. HOWEVER, THE AO HAS TAKEN THE PEAK CREDIT IN THE BANK ACCOUNT AMOUNTING TO 3 , 37 , 296 .00 AS UNEXPLAINED INCOME UNDER SECTION 69 OF THE ACT IN THE ASSESSMENT FRAMED UNDER SECTION 143 ( 3 ) OF THE ACT V IDE ORDER DATED 19 TH FEBRUARY 2013. 3. THE AO SIMULTANEOUSLY ISSUED NOTICE UNDER SECTION 274 READ WITH SECTION 271 (1)(C) OF THE ACT FOR INITIATING THE PENALTY. HOWEVER, THE ASSESSEE DID NOT MAKE ANY REPLY TO SUCH NOTICE ISSUED BY THE AO. THEREFORE, THE AO IN THE ABSENCE OF ANY REPLY FROM THE SIDE OF THE AS SESSEE LEVIED THE PENALTY OF 3 9 , 756 .00 BEING 100% OF THE AMOUNT OF T AX SOUGHT TO BE EVADED. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A). 4 . THE ASSESSEE BEFORE THE LEARNED CIT (A) SUBMITTED THAT THERE CANNOT BE ANY PENALTY UNDER SECTION 271 (1)(C) OF THE ACT AS THE ADDITION WAS MADE ON ACCOUNT OF THE P EAK CREDIT BALANCE LYING IN THE BANK ACCOUNT. ITA NO. 177 /RJT / 201 6 A.Y. S 20 0 0 - 0 1 - 4 - 5 . HOWEVER, THE LEARNED CIT (A) DISREGARDED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE AO BY OBSERVING THE ASSESSEE FAILED TO FURNISH ANY COGENT REASON FOR NOT DISCLOSING THE TRANSACTIONS CARRIED OUT IN THE BANK. THE INFORMATION ABOUT THE BANK ACCOUNTS HELD BY THE ASSESSEE WAS COLLECTED THROUGH THE AIR. 6 . THE CASE OF THE ASSESSEE IS NOT RELATED TO THE ADDITION OF THE GROSS PROFIT RATE WHERE THE PARTIAL INCOME IS ACCEPTED BY THE ASSESSEE . AS SUCH, THERE WAS NO INCOME OFFERED TO TAX BY THE ASSESSEE FOR THE BUSINESS CARRIED ON BY HIM. IN VIEW OF THE ABOVE THE LEARNED CIT(A) CONFIRMED THE ORDER OF THE AO. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEFOR E US. 7 . THE LEARNED AR BEFORE US FILED THE WRITTEN SUBMISSIONS STATING THAT THERE CANNOT BE ANY PENALTY ON ACCOUNT OF THE ADDITION BASED ON THE PEAK CREDIT. 8 . ON THE OTHER, THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 9 . WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE NOTE THAT THE PENALTY HAS BEEN IMPOSED BY THE AO U/S 271 (1)(C) WITHOUT MENTIONING THE SPECIFIC CHARGE IN ITS PENALTY ORDER DATED 20/8/2013, WHETHER, IT WAS LEVIED ON ACCOUNT OF CONCEALMENT ITA NO. 177 /RJT / 201 6 A.Y. S 20 0 0 - 0 1 - 5 - OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE RELEVANT EXTRACT OF THE PENALTY ORDER IS REPRODUCED AS UNDER: I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND HAS CONCEALED THE INCOME TO THE ABOVE EXTENT. 9 .1 ON PERUSAL OF ABOVE, IT IS CLEAR THAT THE AO HAS NOT LEVIED THE PENALTY ON THE SPECIFIC CHARGE AS MANDATED U/S 271 (1)(C) OF THE ACT. IN SUCH FACTS AND CIRCUMSTANCE THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SNITA TRANSPORT PVT. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX REPORTED IN 42 TAXMANN.COM 54 HAS HELD THAT PENALTY CANNOT BE IMPOSED WITHOUT MENTIONING THE SPECIFIC CHARGE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: 9. REGARDING THE CONTENTION THAT THE ASSESSING OFFICER WAS AMBIVALENT REGARDING UNDER WHICH HEAD THE PENALTY WAS BEING IMPOSED NAMELY FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS, WE MAY RECORD THAT THOUGH IN THE ASSESSMENT ORDER THE ASSESS ING OFFICER DID ORDER INITIATION OF PENALTY ON BOTH COUNTS, IN THE ULTIMATE ORDER OF PENALTY THAT HE PASSED, HE CLEARLY HELD THAT LEVY OF PENALTY IS SUSTAINED IN VIEW OF THE FACT THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME. THUS INSOFAR AS FI NAL ORDER OF PENALTY WAS CONCERNED, THE ASSESSING OFFICER WAS CLEAR AND PENALTY WAS IMPOSED FOR CONCEALING PARTICULARS OF INCOME. IN LIGHT OF THIS, WE MAY PERUSE THE DECISION OF THIS COURT IN CASE OF MANU ENGINEERING WORKS ( SUPRA ). IN THE SAID DECISION, TH E DIVISION BENCH CAME TO THE CONCLUSION THAT LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE FOR PENALTY, BUT IT WAS INCUMBENT UPON THE ASSESSING AUTHORITY TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE O R WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THEM. IF NO SUCH CLEAR CUT FINDING IS REACHED BY THE AUTHORITY , PENALTY CANNOT BE LEVIED . IT WAS A CASE IN WHICH IN FINAL CONCLUSION THE AUTHORITY HAD RECORDED THAT 'I AM OF THE OPIN ION THAT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' IT WAS IN THIS RESPECT THE BENCH OBSERVED THAT 'NOW THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI - CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUC H INCOME HAD BEEN FURNISHED BY THE ASSESSEE. ITA NO. 177 /RJT / 201 6 A.Y. S 20 0 0 - 0 1 - 6 - NO SUCH CLEAR CUT FINDING WAS REACHED BY THE IAC AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS LIABLE TO BE STRUCK DOWN.' 9 .2 THE PRINCIPLES LAID DOWN BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE ABOVE CASE ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE ON HAND. THE AO HAS NOT MENTIONED THE SPECIFIC CHARGE IN ITS PENALTY ORDER WHETHER IT WAS LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFO RE, IN OUR CONSIDERED VIEW, THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LEARNED CIT (A) IS NOT SUSTAINABLE. 9 .3 AS WE HAVE DELETED THE PENALTY IMPOSED BY THE AO & CONFIRMED BY THE LD. CIT - A ON THE TECHNICAL GROUND, I.E. NO SPECIFIC CHARGE HAS BEEN INVOKED AS DISCUSSED ABOVE. T HEREFORE, WE ARE INCLINED TO REFRAIN OURSELVES FROM ADJUDICATING THE GROUNDS OF APPEAL OF ASSESSEE RAISED ON MERITS. 10 . IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PR ONOUNCED IN OPEN COURT ON 20 / 0 9 /201 9 - SD - - SD - ( ) ( ) (RAJPAL YADAV) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) DATED 20 /09 /201 9 MANISH