Shri R Om Prakash, Hyderabad V. ITO,Ward -8(2), Hyderabad

ITA 1818/HYD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6362 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 27-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital asset; Search and seizure; Source of fund; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER A ND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1817/HYD/2013 : ASSESSMENT YEAR 2004-05 ITA NO.1818/HYD/2013 : ASSESSMENT YEAR 2005-0 6 SHRI R.OM PRAKASH (HUF) , HYDERABAD (PAN - AFLPM 8914 P) V/S INCOME TAX OFFICER WARD 8(2), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RESPONDENT BY : SHRI B.KURMI NAIDU DR DATE OF HEARING 4.5.2016 DATE OF PRONOUNCEMENT 01.08.2016 O R D E R PER P.MADHAVI DEVI, JUDICIAL MEMBER : BOTH ARE ASSESSEES APPEALS FOR ASSESSMENT YEARS 2003- 04 AND 2004-05 RESPECTIVELY, AGAINST THE PENALTIES LEVIED UNDER S.271(1)(C) OF THE INCOME TAX ACT,1961. ITA NO.1817/HYD/2013 : ASSESSMENT YEAR 2004-05 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A HUF, WHOSE KARTA IS SHRI R. OMPRAKASH. HE IS ALSO A PAR TNER IN M/S. OM R.S. WINES, MIYAPUR. A SEARCH AND SEIZURE OPERATION UNDER S.132 OF THE INCOME TAX ACT,1961 WAS CONDUCTED ON 12.4.2005 AND DETAILS OF THE BANK ACCOUNT MAINTAINED BY THE AFORESAID FIRM WITH SYNDICATE BANK, KUKATPALLY, HYDERABAD WERE OBTAINED. FROM THE SEIZED MATERIAL, IT WAS NOTICED THAT THERE WERE DEPOSITS TO THE EXTE NT OF RS.21,32,000 IN THE SAID ACCOUNT. ON ENQUIRY, SHRI R.OM PRAKASH EXPLAINED THE SOURCES AS THE CASH LOAN AMOUNTING TORS.15,75,000 T AKEN FROM M/S. R.OM PRAKASH HUF. HE ALSO STATED THAT THE AMOUNT O F RS.15,75,000 ITA NO.1817-1818/HYD/2013 SHRI R.OM PRAKASH (HUF), HYDERABAD 2 WAS UNACCOUNTED AND HE WOULD PAY TAXES AND FILE THE INCOME-TAX RETURN. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE UNDER S.153A READ WITH S.153C ON 15.3.2007. IN RESPONSE TO THE SAME, THE ASSESSEE FILED RETURN OF INCOME ON 28.3.2007 DECLAR ING TOTAL INCOME OF RS.1,98,687 ALONGWITH A COPY OF THE ORIGINAL RETURN OF INCOME FILED ON 24.5.2005. 3. DURING THE ASSESSMENT PROCEEDINGS UNDER S.143 (3) READ WITH S.153C OF THE ACT, THE ASSESSING OFFICER ISSUE D VARIOUS NOTICES AND CALLED FOR VARIOUS DETAILS. AFTER VERIFICATION OF THE DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE-HUF HAD PURCHASED 0.20 GUNTAS OF LAND IN SURVEY NOS.72, 73 AND 74 AT MIYAPUR, SERI LINGAMPALLY IN THE NAME OF SMT.R.SAI RANI (KARTAS WIFE), ALONG WITH THREE OTHER PERSONS. HE ALSO OBS ERVED THAT THE ASSESSEES SHARE IN THE LAND IS 10% OF THE TOTAL EX TENT OF LAND, AND ON THE DATE OF PURCHASE ITSELF, I.E. 15.12.2003, ASSES SEE THROUGH SM.R.SAI RANI ALONG WITH OTHER CO-OWNERS OF LAND EN TERED INTO A DEVELOPMENT AGREEMENT WITH M/S. B.R. CONSTRUCTIONS, THE BUILDER. AS PER THIS AGREEMENT, THE DEVELOPER HAS TO CONSTRUCT A BUILDING ON THE LAND AND AFTER CONSTRUCTION OF THE COMPLEX, THE BU ILDER HAS TO HAND OVER 33% OF THE TOTAL BUILT UP AREA TO THE LAND OW NERS. THE BUILDER IS ENTITLED TO SELL THE REMAINING SHARE OF 67% OF THE TOTAL AREA. LATER ON, THE LAND OWNERS AND THE BUILDERS ENTERED INTO A SUPPLEMENTAL AGREEMENT ON 8.3.2004 FOR DIVIDING THE SHARE OF BUI LT UP AREA ALONGWITH THE LAND OWNERS, AS PER WHICH THE ASSESSE E HAS TO RECEIVE FLAT NO.301 OF 1415 SQ. FT. AND FLAT NO.508 OF 1000 SQ. FT. THEREAFTER, THE ASSESSING OFFICER ALSO OBSERVED FROM THE COMPUT ATION OF TOTAL INCOME FILED ALONGWITH THE RETURN, THAT THE ASSESSE E HAS NOT ADMITTED CAPITAL GAINS ARISING ON TRANSFER OF UNDIVIDED SHAR E OF LAND TO THE BUILDER IN LIEU OF THE BUILT UP AREA RECEIVED FROM THE BUILDER. THE ITA NO.1817-1818/HYD/2013 SHRI R.OM PRAKASH (HUF), HYDERABAD 3 ASSESSEES EXPLANATION WAS CALLED FOR. IN RESPONSE , THE ASSESSEE VIDE LETTER DATED 29.11.2007 STATED THAT THE CONSIDERATI ON FOR 33% OF THE LAND WAS THE COST OF CONSTRUCTION OF 67% OF THE BUI LT UP AREA, AS HELD BY THE TRIBUNAL IN THE CASE OF SMT.VASAVI PRATAP CH AND V/S. DCIT (89 ITD 73) AND THAT THE CONSIDERATION OF THE LAND BEI NG BUILT UP AREA, THERE IS NO CAPITAL GAINS. THE AUTHORISED REPRESENT ATIVE ALSO ARGUED THAT THERE IS NO TRANSFER IN THE TRANSACTION AND CI TED VARIOUS CASE-LAWS DEFINING TRANSFER. THE ASSESSING OFFICER, HOWEV ER, HELD THAT THERE IS A TRANSFER OF LAND BY VIRTUE OF DEVELOPMENT AGREEME NT AND THE CAPITAL GAINS AROSE ON THE ASSESSEE RECEIVING THE BUILT UP AREA. HE ALSO HELD THAT THE YEAR OF TAXATION IS THE YEAR IN WHICH THE BUILT UP AREA WAS HANDED OVER BY THE BUILDER TO THE ASSESSEE AND SINC E IN THE CASE OF THE ASSESSEE, THE BUILT UP AREA WAS RECEIVED ON 8.3.20 04, HE BROUGHT THE CAPITAL GAINS TO TAX IN THE ASSESSMENT YEAR 2004-05 . ACCORDINGLY, HE ALSO INITIATED PENALTY PROCEEDINGS UNDER S.271(1)(C ) OF THE ACT. 4. MEANWHILE, THE ASSESSEE PREFERRED AN APPEAL BE FORE THE CIT(A), WHO CONFIRMED THE ORDER OF THE ASSESSING OF FICER, AND THEREAFTER TO THE ITAT, WHICH ALSO CONFIRMED THE O RDER OF THE ASSESSING OFFICER. 5. DURING THE PENALTY PROCEEDINGS, A SHOW CAUSE N OTICE WAS ISSUED TO THE ASSESSEE. THE ASSESSEE FILED HIS EX PLANATION STATING THAT THE ADDITIONS MADE TO THE INCOME RETURNED WAS ONLY ON ACCOUNT OF DIFFERENCE OF OPINION AND THERE IS NO CONCEALMENT A S SUCH FOR LEVY OF PENALTY UNDER S.271(1)(C) OF THE ACT. THE ASSESSING OFFICER, HOWEVER, WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSES SEE AND HELD THAT BUT FOR THE SEARCH AND SEIZURE OPERATION, THE INCOM E WOULD NOT HAVE BEEN OFFERED TO TAX BY THE ASSESSEE, AND THEREFORE, IT IS A CASE OF CONCEALMENT OF INCOME AND THAT THE PENALTY IS LEVIA BLE. ITA NO.1817-1818/HYD/2013 SHRI R.OM PRAKASH (HUF), HYDERABAD 4 6. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BE FORE THE CIT(A), TAKING A GROUND THAT THE LAND DID NOT BELON G TO THE HUF, BUT IT BELONGED TO SMT. R.SAI RANI AND THEREFORE, CIT(A) C OULD NOT HAVE BROUGHT TO TAX THE CAPITAL GAINS IN THE HANDS OF TH E ASSESSEE. THE CIT(A) HELD THAT THIS IS A GROUND TO BE TAKEN DURI NG THE QUANTUM PROCEEDINGS, AND NOT DURING THE PENALTY PROCEEDINGS . AS REGARDS THE LEVY OF PENALTY, HE CONFIRMED THE ORDER OF THE ASSE SSING OFFICER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 7. LEARNED COUNSEL FOR THE ASSESSEE, WHILE REITER ATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORI TIES BELOW, SUBMITTED THAT THE ASSESSING OFFICER, THOUGH, HAS H ELD THAT THE CAPITAL GAINS IS CHARGEABLE TO TAX IN THE YEAR IN WHICH TH E BUILT UP AREA WAS RECEIVED BY THE ASSESSEE, HE HAS BROUGHT CAPITAL T O TAX IN THE YEAR WHEN THE SUPPLEMENTAL AGREEMENT WAS ENTERED INTO. HE SUBMITTED THAT THE DEVELOPMENT AGREEMENT ITSELF WAS ENTERED I NTO ON 15.12.2003, WHILE THE SUPPLEMENTAL AGREEMENT WAS DA TED 8.3.2004, AND IT IS NOT POSSIBLE FOR ANY BUILDER TO HAVE CONS TRUCTED THE BUILDING WITHIN SUCH A SHORT PERIOD OF THREE MONTHS. FURTHER , HE ALSO SUBMITTED THE REASON WHY THE ASSESSEE HAD OFFERED THE CAPITAL GAINS IN THE YEAR OF SALE OF FLAT AND HE DREW OUR ATTENTION TO THE CO MPUTATION OF INCOME FURNISHED AT PAGE 4 OF THE PAPER-BOOK FILED BY THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAD CLEARLY REFLECTED T HE SAID TRANSACTIONS IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YE AR 2004-05 FILED ON 24 TH MAY, 2005, WHEREIN AT THE END OF THE COMPUTATION, IT HAS BEEN STATED THAT ON 15.12.2003, THE HUF HAD INVESTED RS. 1,20,000 FOR 10% SHARE IN PURCHASE OF LAND IN SY. NOS.72 TO 74 ADME ASURING 20 GUNTAS OF LAND AND REGISTRATION CHARGES PAID OF RS.15,000 AND THE SAID LAND IS GIVEN FOR DEVELOPMENT ON 15.12.2003 FOR WHICH THE A SSESSEE HAS RECEIVED RS.10,000 AS ADVANCE FROM BR CONSTRUCTIONS . HE SUBMITTED ITA NO.1817-1818/HYD/2013 SHRI R.OM PRAKASH (HUF), HYDERABAD 5 THAT THE ASSESSEE HAS NOT OFFERED THE CAPITAL GAINS TO TAX IN THE RELEVANT ASSESSMENT YEAR AS THE LEGAL POSITION WAS NOT CLEAR AT THAT POINT OF TIME. HE SUBMITTED THAT EVERY ADDITION WI LL NOT AUTOMATICALLY ATTRACT LEVY OF PENALTY, AND THEREFORE, THE PENALTY LEVIED BY THE ASSESSING OFFICER AND THE CIT(A) IS NOT SUSTAINABLE . 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE ALSO THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 24.5.2005, DECLARING INCOME OF RS.1,98,687, WHEREAS THE THERE WAS A SEARCH AND SEIZURE OPERATION IN THE CASE OF M/S. OM R.S. WINES ON 12.4.2005. EVEN BEFORE THE ISSUANCE OF NOTICE UNDER S.153C OF THE ACT, THE ASSESSEE HAS DECLARED THE SAID TRANSACTION IN THE COMPUTATION OF INCOME. THE ASSESSEE HAS NEVER TAKEN THE GROUND THAT THE SAID LAND DOES NOT BELONG TO THE ASSESSEE HEREIN, THOUGH IT H AS RAISED SUCH A GROUND BEFORE THE CIT(A) IN THE FIRST APPEAL PREF ERRED AGAINST THE PENALTY ORDER OF THE ASSESSING OFFICER. THUS, IT IS SEEN THAT THE LAND BELONGS TO THE ASSESSEE AND THE TRANSACTION OF DEVE LOPMENT AGREEMENT AND SUPPLEMENTAL AGREEMENT WAS DISCLOSED BY THE ASSESSEE TO THE REVENUE AUTHORITIES. THEREFORE, THE RE CANNOT BE A CASE OF CONCEALMENT OF INCOME. AS REGARDS FURNISHING OF INACCURATE PARTICULARS OF INCOME, IT HAS BEEN THE STAND OF TH E ASSESSEE THAT THE CAPITAL GAINS IS CHARGEABLE TO TAX IN THE YEAR IN W HICH THE DEVELOPER HAS GIVEN THE POSSESSION OF THE DEVELOPED AREA TO THE ASSESSEE. THOUGH THE ASSESSING OFFICER HAS RECORDED THAT THE ASSESSEE HAS FILED A LETTER STATING THAT THE BUILT UP AREA HAS BEEN HA NDED OVER TO THE ASSESSEE ON 8.3.2004, IT IS NOT UNDERSTANDABLE AS T O HOW A BUILDING COULD HAVE BEEN COMPLETED WITHIN A PERIOD OF THREE MONTHS OF ENTERING ITA NO.1817-1818/HYD/2013 SHRI R.OM PRAKASH (HUF), HYDERABAD 6 INTO THE DEVELOPMENT AGREEMENT. IT APPEARS THAT TH E ASSESSING OFFICER HAS TAKEN THE SUPPLEMENTAL AGREEMENT INTO CONSIDERA TION FOR PRESUMING THAT THE BUILT UP AREA HAS BEEN APPORTION ED TO THE ASSESSEE ON 8.3.2004, AS THE SUPPLEMENTAL AGREEMENT IS ENTER ED FOR APPORTIONING THE DEVELOPED AREA. SUPPLEMENTAL AGR EEMENT ALONE CANNOT BE TAKEN AS THE PROOF OF HANDING OVER OF THE BUILT UP AREA TO THE ASSESSEE. THE ASSESSING OFFICER HAS ACCEPTED T HE ASSESSEES CONTENTION THAT THE CAPITAL GAINS IS CHARGEABLE TO TAX IN THE YEAR OF HANDING OVER OF POSSESSION TO THE ASSESSEE. THE AS SESSING OFFICER HAS COME TO THE CONCLUSION THAT CAPITAL GAINS HAVE ARISEN IN THIS YEAR WITHOUT PROPER VERIFICATION OF FACTS. SINCE THE AS SESSEE HAS DISCLOSED ALL THE RELEVANT FACTS TO THE REVENUE AUTHORITIES I N IS COMPUTATION OF INCOME, WE ARE OF THE OPINION THAT THERE IS NO FURN ISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OR INCOME. IN THE RESULT, PENALTY LEVIED UNDER S.271(1)(C) IS NOT SUSTAINABL E AND THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2004-05 IS ALLOWED. ITA NO.1818/HYD/2013 : ASSESSMENT YEAR 2005-06 10. AS REGARDS THE APPEAL FOR ASSESSMENT YEAR 2005 -06, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HA S ADVANCED A LOAN OF RS.15,75,000 TO M/S. OM R.S.WINES. DURING THE AS SESSMENT PROCEEDINGS UNDER S.143(3) READ WITH S.153C OF THE ACT, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCES FOR SUCH ADVANCING OF LOAN IN THE FORM OF CASH. THE ASSESSING OFFICER ALSO OBSERVED THAT DURING THE SEARCH PROCEEDINGS, THE STATEMENT OF SHRI R.OM PRAK ASH WAS RECORDED UNDER S.132 OF THE ACT, WHEREIN HE HAS STATED THAT THE AMOUNT OF RS.15,75,0000 WAS UNACCOUNTED AND THAT HE WOULD PA Y TAXES AND FILE INCOME TAX RETURN IMMEDIATELY. HOWEVER, ON VERIFIC ATION OF THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER S.153C OF THE ACT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NO T OFFERED TO TAX THE ITA NO.1817-1818/HYD/2013 SHRI R.OM PRAKASH (HUF), HYDERABAD 7 SUM OF RS.15,75,000. THEREFORE, A SHOW CAUSE NOTI CE WAS ISSUED TO THE ASSESSEE. 11. THE ASSESSEE FILED A LETTER DATED 3.12.2007 S TATING THAT THE ASSESSEE, WHILE DEPOSING UNDER S.132 OF THE ACT HAD HE STATED THAT THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR W AS NOT FILED AND NEVER MEANT THAT THIS AMOUNT WAS UNDISCLOSED INCOME . ACCORDING TO HIM, IT WAS MEANT THAT THE TAXES WOULD BE PAID ON S UCH FILING OF RETURN AND THE TAXES COMPUTED ACCORDINGLY. THE ASSESSING OFFICER HOWEVER WAS NOT SATISFIED WITH THE ASSESSEES CONTENTION AN D HELD THAT THE DEPOSITION MADE BY THE ASSESSEE UNDER S.132 CARRIE S SUFFICIENT SIGNIFICANCE AND ALSO EVIDENCE FOR ANY ASSESSMENT PROCEEDINGS. HE ALSO PROCEEDED TO CONSIDER THE RECEIPTS AND PAYMENT S ACCOUNT FOR ASSESSMENT YEARS 2001-02 TO 2005-06 AND OBSERVED T HAT IN THE RELEVANT FINANCIAL YEAR, THE ASSESSEE HAD OPENING BALANCE OF RS.19,44,561 RECEIPTS FROM PROPERTY INCOME OF RS.3, 21,000, RECEIPT FROM CECON BUILDERS OF RS.1,25,000 AND CASH LOAN RE PAYMENT BY SMT.R.SAI RANI OF RS.4,00,000, WHICH WAS UTIIISED F OR ADVANCING THE CASH LOAN AMOUNTING TO RS.15,75,000 TO THE FIRM, M/ S. OM R.S. WINES. THE ASSESSING OFFICER HOWEVER OBSERVED THAT THE REC EIPTS & PAYMENTS ACCOUNT IS NOT PREPARED DATE-WISE AND ONLY THE GROS S RECEIPTS AND GROSS PAYMENTS ARE SHOWN AND THEREFORE, THE AUTHEN TICITY OF THE STATEMENT CANNOT BE VERIFIED AND ASCERTAINED. HE TH EREAFTER PROCEEDED TO EXAMINE THE CREDITWORTHINESS OF SMT.R.SAI RANI A ND ALSO AVAILABILITY OF FUNDS WITH THE ASSESSEE OVER A PERIOD OF TIME. H E OBSERVED THAT SMT.SAI RANI IS NOT MAINTAINING ANY BOOKS OF ACCOUN T NOR HAS THE ASSESSEE FILED ANY RECEIPTS AND PAYMENTS ACCOUNT OF HER, AND THEREFORE, THE SAME CANNOT BE TREATED AS EXPLAINED. AS REGARDS THE AVAILABILITY OF CASH WITH THE HUF, HE OBSERVED THAT THE SAVINGS OF THE HUF IN EARLIER YEARS IS ONLY RS.57,000 PER YEAR WH ICH COULD BE ITA NO.1817-1818/HYD/2013 SHRI R.OM PRAKASH (HUF), HYDERABAD 8 PRESUMED TO BE THE SOURCE TO ACCUMULATE RS.15,75,00 0 ONLY, IF THE ASSESSEE IS BELIEVED HAVE SAVED THE ENTIRE INCOME A PPROXIMATELY FOR FOUR YEARS. HE ALSO OBSERVED THAT THE HOUSEHOLD EXP ENSES SHOWN BY THE ASSESSEE ARE VERY LOW AND THEREFORE, THE AVAILA BILITY OF FUNDS WITH THE ASSESSEE IS NOT ACCEPTABLE. HE FURTHER OBSERVE D THAT THE ASSESSEE HAS PURCHASED A FIAT CAR WORTH RS.3,25,000 FROM M/S . SATYA KALYAN CONSTRUCTIONS PVT. LTD., AND THEREFORE, THE INDI VIDUAL ALSO DOES NOT HAVE THE CAPACITY TO ADVANCE SUCH FUND. HE THER EFORE, BROUGHT TO TAX THE ENTIRE AMOUNT OF RS.15,75,000, TREATING THE SAME AS UNEXPLAINED. THE SAID ADDITION WAS CONFIRMED BY ITA T IN APPEAL. 12. MEANWHILE, THE ASSESSING OFFICER INITIATED P ENALTY PROCEEDINGS UNDER S.271(1)(C) OF THE ACT, AND AFTER CONSIDERING THE ASSESSEES CONTENTIONS AT LENGTH, LEVIED MINIMUM PE NALTY, COMPUTED AT 100% OF THE TAX SOUGHT TO BE EVADED. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRME D THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER, AND HENCE, THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 13. THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE R EITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, HAS DRAWN OUR ATTENTION TO THE RETURN OF INCOME FILED BY THE ASS ESSEE FOR THE RELEVANT ASSESSMENT YEAR ON 24 TH MAY, 2005, WHEREIN THE ASSESSEE HAS DISCLOSED THE LOAN OF RS.15,75,000 TO M/S. OM R.S.W INES. HE ALSO HAS DRAWN OUR ATTENTION TO THE RECEIPTS AND PAYMENT S ACCOUNT FOR THE YEAR ENDING ON 31.3.2001 TO SHOW THAT THE ASSESSEE HAS SOLD SOME FLATS IN THE SAID YEAR AND THE ASSESSEE HAD CASH BA LANCE OF RS.18,75,722 WAS A SUFFICIENT SOURCE FOR THE LOAN TO M/S. OM R.S.WINES OF RS.15,75,000 ON 31.3.2005. THEREFORE, ACCORDING TO HIM, THE ASSESSEE HAD SUFFICIENT FUNDS TO EXPLAIN THE SO URCE FOR THE LOAN ITA NO.1817-1818/HYD/2013 SHRI R.OM PRAKASH (HUF), HYDERABAD 9 ADVANCED TO M/S. OM R.S. WINES, THOUGH AT THE TIME OF SEARCH, THE ASSESSEE WAS CONFUSED AND HAD ACCORDINGLY OFFERED T HE SAME AS UNDISCLOSED INCOME. HE SUBMITTED THAT THOUGH THE A DDITION HAS BEEN CONFIRMED BY ITAT, THE PENALTY PROCEEDINGS BEING IN DEPENDENT PROCEEDINGS, THE EVIDENCE FILED BY THE ASSESSEE HAS TO BE CONSIDERED INDEPENDENTLY AND VALID EXPLANATION HAS TO BE ACCEP TED FOR DELETION OF PENALTY. 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE, SUPP ORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE COULD NOT EXPLAIN THE AVAILABILITY OF FUNDS FOR THE ADVAN CING OF LOANS EITHER DURING THE ASSESSMENT PROCEEDINGS OR DURING THE P ENALTY PROCEEDINGS, AND THEREFORE, EXPLANATION 1(B) UNDER S.271(1)(C) OF THE ACT IS ATTRACTED. 15. HAVING REGARD TO THE RIVAL CONTENTIONS AND T HE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS DISCLOSED THE FACT OF ADVANCING OF LOAN TO M/S. OM R.S. WINES IN HIS RETURN OF INCOME FILED PRIOR TO ISSUANCE OF NOTICE UNDER S.153C OF THE ACT. FURTHE R, THE ASSESSEE HAS ALSO EXPLAINED THE AVAILABILITY OF FUNDS OF RS.18, 75,022 FOR ASSESSMENT YEAR ENDING ON 31.3.2003 WHICH FACT HAS BEEN CONSID ERED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ONLY PRESUMED THE PROPERTY INCOME TO BE RS.57,000 PER YEAR WITHOUT TA KING INTO CONSIDERATION THE OTHER SOURCES OF INCOME. SINCE T HE ASSESSEE HAS DISCLOSED THE LOAN IN THE COMPUTATION OF INCOME FOR THE RELEVANT ASSESSMENT YEAR, IT IS CLEAR THAT THERE IS NO CONCE ALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH ERE ARE CATINA OF DECISIONS RENDERED BY HON'BLE HIGH COURTS AND SUPRE ME COURT, INCLUDING IN THE CASE OF CIT V/S. RELIANCE PETRO-PR ODUCTS PVT. LTD. (322 ITR 158), WHEREIN IT HAS BEEN HELD THAT EVERY ADDI TION MADE IN ITA NO.1817-1818/HYD/2013 SHRI R.OM PRAKASH (HUF), HYDERABAD 10 ASSESSMENT CANNOT AUTOMATICALLY ATTRACT THE LEVY O F PENALTY. SINCE IT HAS NOT BEEN PROVED THAT THE ASSESSEE HAS EITHER FU RNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED HIS INCOME, THE IMPUGNED PENALTY IMPOSED BY THE ASSESSING OFFICER IS NOT SUSTAINABLE . IT IS ACCORDINGLY CANCELLED, ALLOWING ASSESSEES APPEAL FOR ASSESSMEN T YEAR 2005-06. 16. TO SUM UP, BOTH THE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 01 ST AUGUST, 2016. SD/-/- SD/- (S.RIFAUR RAHMAN) (P.MADHAVI DEVI) ACCOUNTANT MEMBER. JUDICIAL M EMBER DT/- 01 ST AUGUST, 2016 COPY FORWARDED TO: 1. SHRI R.OM PRAKASH (HUF), C/O. SHRI T.CHAITANYA K UMAR, FLAT NO.409, METRO RESIDENCY, RAJ BHAVAN ROAD, SOMAJIGUD A, HYDERABAD 2. INCOME TAX OFFICER WARD 8(2), HYDERABAD 3. COMMISSIONER OF INCOME-TAX(APPEALS) III HYDERAB AD 4. COMMISSIONER OF INCOME - TAX II , HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERAB AD B.V.S.