P.S.Sekar, Kumbakonam V. Additional, Kumbakonam

ITA 1776/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64157 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 09-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 21-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Assessee Lawyers: V D GOPAL
• Keywords: Income from undisclosed sources; Source of fund; Revised return
• Section: 143(3); 133A; 148; 132

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI. BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NOS. 1775 AND 1776/MDS/2010 ASSESSMENT YEARS: 2005- 06 AND 06-07 SHRI P.S. SEKAR, NO. 66, UPPUKARA STREET, KUMBAKONAM. [PAN:AAMPS7050A] VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 3, KUMBAKONAM. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.D. GOPAL, ADVOCATE RESPONDENT BY : SHRI K.E.B. RENGARAJAN, JUNIOR STANDING COUNSEL DATE OF HEARING : 09.08.2012 DATE OF PRONOUNCEMENT : 09.08.2012 ORDER PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS), TIRUCHIRAPALLI BOTH DATED 18.08.2010 IN ITA NO. 84/08-09 AND 81/08-09 F OR THE ASSESSMENT YEARS 2005-06 AND 2006-07 RESPECTIVELY. SHRI V.D. G OPAL ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI K.E. B. RENGARAJAN, JUNIOR STANDING COUNSEL REPRESENTED ON BEHALF OF THE REVEN UE. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 1775 & 1776 1775 & 1776 1775 & 1776 1775 & 1776/M/1 /M/1 /M/1 /M/10 00 0 2 2. THE ONLY COMMON ISSUE IN THE GROUNDS OF BOTH TH E APPEALS IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTA INING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX AC T BY THE ASSESSING OFFICER. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE CARRYIN G ON BUSINESS OF PLYING BUSES, FILED RETURN OF INCOME FOR THE ASSESSMENT YE ARS 2005-06 AND 2006-07 ON 03.02.2006 AND 03.05.2007 DECLARING INCOME OF ` .2,91,890/- AND ` .29,25,340/- RESPECTIVELY. A SURVEY UNDER SECTION 1 33A OF THE ACT WAS CONDUCTED ON 24.09.2005 AT THE PREMISES OF THE ASSE SSEE. THE ASSESSMENTS FOR BOTH THE ASSESSMENT YEARS 2005-06 A ND 2006-07 WERE COMPLETED UNDER SECTION 143(3) OF THE ACT ON 31.12. 2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE OFFERED VOL UNTARILY ADDITIONAL INCOME OF ` .88,25,025/- AND ` . 36,40,000/- FOR THE ASSESSMENT YEARS 2005- 06 AND 2006-07 RESPECTIVELY BEING THE DEPOSITS/CRED ITS IN CAPITAL ACCOUNT. THE ASSESSING OFFICER WAS OF THE VIEW THAT BUT FOR THE SURVEY, THE ASSESSEE WOULD NOT HAVE DISCLOSED THE SAID UNACCOUNTED INVES TMENT MADE BY THE ASSESSEE AND THEREFORE IMPOSED PENALTY ON THE ADDIT IONAL INCOME OFFERED BY THE ASSESSEE. THE ASSESSING OFFICER ALSO LEVIED PEN ALTY ON THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT FOR INTERES T PAID BY THE ASSESSEE ON WHICH NO TAX WAS DEDUCTED FOR THE ASSESSMENT YEAR 2 005-06. FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER ALSO MADE ADDITION OF I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 1775 & 1776 1775 & 1776 1775 & 1776 1775 & 1776/M/1 /M/1 /M/1 /M/10 00 0 3 ` .24,05,000/- STATING THAT THE ASSESSEE DID NOT OFFE R EXPLANATION SATISFACTORILY FOR THE SOURCES FOR THE ADVANCES GIVEN BY THE FAMIL Y MEMBERS. 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER HOLDING THA T THE ASSESSEE HAS INTENTIONALLY CONCEALED THE PARTICULARS OF INCOME A ND THEREFORE PENALTY IS SUSTAINABLE. 5. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE A SSESSEE HAD VOLUNTARILY OFFERED ADDITIONAL INCOME AND PAID THE TAXES AND THEREFORE, THERE IS NO JUSTIFICATION IN LEVYING PENALTY UNDER SECTIO N 271(1)(C) ON THE SAID INCOME OFFERED BY THE ASSESSEE VOLUNTARILY. THE COU NSEL FURTHER SUBMITS THAT NO PENALTY CAN BE LEVIED ON THE DISALLOWANCE MADE U NDER SECTION 40(A)(IA) OF THE ACT SINCE THERE IS NEITHER CONCEALMENT OF IN COME NOR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME AND DISALLOWA NCE WAS MADE ONLY BY VIRTUE OF APPLICATION OF PROVISIONS OF SECTION 40(A )(IA) FOR NON-DEDUCTION OF TDS. THEREFORE, NO PENALTY IS ATTRACTED ON SUCH DIS ALLOWANCE. 6. WITH REGARD TO THE ADDITION MADE BY THE ASSESSI NG OFFICER FOR THE ASSESSMENT YEAR 2006-07 ON THE GROUND THAT NO PROPE R EXPLANATION WAS GIVEN BY THE ASSESSEE FOR THE SOURCES OF INCOME ADV ANCED BY THE FAMILY MEMBERS, HE SUBMITS THAT SUCH ADDITIONS WERE MADE O NLY ON THE GROUND THAT THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED THE S OURCES. THE ASSESSEE HAS I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 1775 & 1776 1775 & 1776 1775 & 1776 1775 & 1776/M/1 /M/1 /M/1 /M/10 00 0 4 EXPLAINED ALL THE SOURCES FOR THE INVESTMENTS MADE AND PARTICULARS OF THE LOANS TAKEN WERE REFLECTED IN THE RETURN OF INCOME THEREFORE, THERE IS NO JUSTIFICATION IN MAKING THE ADDITION AND LEVYING PE NALTY STATING THAT NO SATISFACTORY EXPLANATION WAS GIVEN BY THE ASSESSEE. THE ASSESSING OFFICER DID NOT DETECT ANY ESCAPEMENT OF INCOME WHICH IS NO T REFLECTED IN THE RETURNS OF INCOME. 7. THE COUNSEL FOR THE REVENUE SUPPORTED THE ORDER S OF LOWER AUTHORITIES. 8. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER PASSED PENALTY ORDER STATING THAT THE ASSESSEE HAD KNOWLEDGE OF POSSESSION OF UNACCOUNTED INCOME DURIN G THE COURSE OF SURVEY UNDER SECTION 133A. AS A RESULT OF SURVEY, T HE ASSESSEE HAS OFFERED CASH CREDITS OF ` .88,25,025/- FOR THE ASSESSMENT YEAR 2005-06 AND ` .34.60 LAKHS FOR THE ASSESSMENT YEAR 2006-07 AND FIELD RET URN OF INCOME. THE ASSESSING OFFICER STATED THAT THE ASSESSEE HAD INTE NTIONALLY CONCEALED HIS PARTICULARS OF INCOME AND FURNISHED INACCURATE PART ICULARS TO THE INCOME TAX DEPARTMENT. HE STATED THAT BUT FOR THE SURVEY CONDU CTED, THE ASSESSEE WOULD NOT HAVE DISCLOSED HIS TRUE INCOME AND PAID T AX THEREON. THEREFORE, HE LEVIED PENALTY UNDER SECTION 271(1)(C) FOR BOTH THE ASSESSMENT YEARS. THE COMMISSIONER OF INCOME TAX (APPEALS) AGREED WIT H THE VIEW OF THE ASSESSING OFFICER THAT BUT FOR THE SURVEY, THE ASSE SSEE WOULD NOT HAVE FILED I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 1775 & 1776 1775 & 1776 1775 & 1776 1775 & 1776/M/1 /M/1 /M/1 /M/10 00 0 5 RETURN AND OFFERED UNDISCLOSED INCOME. THEREFORE, T HE COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE PENALTY LEVIED B Y THE ASSESSING OFFICER. 9. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE VOLU NTARILY OFFERED ADDITIONAL INCOME OF ` .88,25,025/- AND ` .34.60 LAKHS FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 REPRESENTING CASH CREDITS INTO THE CAPI TAL ACCOUNT. THE REVENUE DID NOT PROVE THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME SO AS TO LEVY PENALTY SINCE THIS AMOUNT WAS VOLUNTARILY OFFERED BY THE ASSESSEE EVEN THOUGH AFTER THE SURVEY PROCEEDINGS UNDER SECTION 133A. THE HONBLE SUPREME COURT IN THE CASE OF CIT V. SURESH CHANDRA MITTAL [ 251 ITR 9] AFFIRMING THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CI T V. SURESH CHANDRA MITTAL [241 ITR 124], WHEREIN THEIR LORDSHIPS HELD THAT NO PENALTY COULD BE LEVIED FOR CONCEALMENT WHEN THE ASSESSEE HAD ORIGIN ALLY FILED RETURN OF INCOME SHOWING MEAGRE INCOME AND WHEN HIGHER INCOME WAS SHOWN IN THE REVISED RETURN FILED EVEN AFTER ACTION UNDER SECTIO N 132 OF THE ACT WAS TAKEN AND ASSESSMENT WAS COMPLETED ON ISSUE OF NOTICE UND ER SECTION 148 ON THE ASSESSEE. THEIR LORDSHIPS HELD THAT THE APPELLATE T RIBUNALS FINDING THAT THE DEPARTMENT HAD NOT DISCHARGED ITS BURDEN OF PROVING CONCEALMENT AND SIMPLY RESTED ITS CONCLUSION ON THE ACT OF VOLUNTAR Y SURRENDER DONE BY THE ASSESSEE IN GOOD FAITH IS NOT PROPER AND THAT THE P ENALTY COULD NOT BE LEVIED. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 1775 & 1776 1775 & 1776 1775 & 1776 1775 & 1776/M/1 /M/1 /M/1 /M/10 00 0 6 10. A SIMILAR SITUATION WAS CONSIDERED BY THE INDO RE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI RADHESHYAM SARDA & ORS V. ACIT IN I.T.A. NOS. 222 AND 223/IND/2012 BY ORDER DATED 18.07.2012. THE FACTS O F THE CASE BEFORE THE INDORE BENCH OF ITAT WAS THAT THE ASSESSEE INITIALL Y FILED RETURN OF INCOME SHOWING INCOME FROM LONG TERM CAPITAL GAINS ON SHAR ES. LATER, THERE WAS SURVEY UNDER SECTION 133A IN THE CASE OF SHARE BROK ERS DSP SHARES AND SECURITIES, WHEREIN STATEMENT OF THE CONCERN AUTHOR ITIES WERE RECORDED AND AN INQUIRY ON THE ASSESSEE WAS ALSO STARTED AND VAR IOUS DOCUMENTS WERE CALLED FOR FROM THE ASSESSEE. IN SUCH SITUATION, TH E ASSESSEE FILED A REVISED RETURN IN WHICH LONG TERM CAPITAL GAINS WAS OFFERED AS NORMAL INCOME AND PAID THE TAXES ACCORDINGLY. THE ASSESSING OFFICER L EVIED PENALTY UNDER SECTION 271(1)(C) WITH RESPECT TO THE AMOUNT OFFERE D IN THE REVISED RETURN, WHICH WAS CONFIRMED BY THE COMMISSIONER OF INCOME T AX (APPEALS). THE TRIBUNAL FOLLOWING ITS EARLIER ORDER IN THE CASE OF ASHOK KUMAR JAIN HUF IN ITA NO. 580/IND/2010 VIDE ORDER DATED 14.9.2011 HEL D THAT IT IS NOT A FIT CASE FOR LEVYING PENALTY UNDER SECTION 271(1)(C) AS THER E IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS BY T HE ASSESSEE SINCE THE INCOME WAS OFFERED BY THE ASSESSEE VOLUNTARILY IN T HE REVISED RETURN, WHICH WAS ACTED UPON BY THE DEPARTMENT. IN HOLDING SO, TH E ITAT RELIED ON THE DECISION OF THE HONBLE SUPREME COURTS DECISION IN THE CASE OF CIT V. SURESH CHANDRA MITTAL (SUPRA). I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 1775 & 1776 1775 & 1776 1775 & 1776 1775 & 1776/M/1 /M/1 /M/1 /M/10 00 0 7 11. IN THE PRESENT CASE ALSO, THE ASSESSEE OFFERED VOLUNTARILY THE ADDITIONAL INCOME AND FILED RETURN OF INCOME, WHICH WAS ACCEPTED. FURTHER, DISALLOWANCE WAS ALSO MADE UNDER SECTION 40(A)(IA) ONLY BY VIRTUE OF APPLYING THE PROVISIONS OF SECTION 40(A)(IA) FOR NO N-DEDUCTION OF TDS, WHICH IS NOT A GROUND FOR LEVYING PENALTY. IN THE FACTS A ND CIRCUMSTANCES OF THE CASE, WE HOLD THAT IT IS NOT A FIT CASE FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT AS THE REVENUE DID NOT PROVE T HAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F SUCH INCOME BY THE ASSESSEE. 12. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALL OWED FOR BOTH THE ASSESSMENT YEARS. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON THURSDAY, THE 9 TH AUGUST, 2012 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 09.08.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.