M. Kariappan, Erode V. ACIT, Coimbatore

ITA 1874/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73646 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 22-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: S SRIDHAR
• Keywords: Search and seizure; Onus to prove
• Section: 143(3); 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ! '# $ , % & BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NOS. 1873 & 1874/MDS/2013 ( / ASSESSMENT YEARS : 2006-07 & 2007-08) MR. M.KARIAPPAN, C/O. MR.S.SRIDHAR, ADVOCATE, 112/1, PERIYAR STREET, ERODE-638 001. VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, RACE COURSE ROAD, COIMBATORE. PAN : ALIPK6482H ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. GURU BHASHYAM, JCIT / DATE OF HEARING : 31 ST DECEMBER, 2013 ! /DATE OF PRONOUNCEMENT : 30 TH JANUARY, 2014 ' / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS COMMISSIONER OF INCOME TAX (APPEALS), COIMBATORE DATED 29.08.2013 FOR THE ASSESSMENT YEAR S 2006-07 AND 2007-08 IN CONFIRMING PENALTY LEVIED UN DER SECTION 271(1)(C) OF THE ACT. ITA NOS. 1873 & 1874/MDS/2013 2 2. THE ASSESSEE IS AN INDIVIDUAL DOING BUSINESS OF REAL ESTATE I.E. PURCHASE AND SALE OF SMALL PORTIONS OF LAND. THE ASSESSEE ORIGINALLY FILED RETURNS OF INCOME FOR THE SE TWO ASSESSMENT YEARS DECLARING INCOME OF ` 3,56,330/- AND ` 3,69,800/- RESPECTIVELY. SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE ASSESSE ES CASE ON 12.02.2008. NOTICE UNDER SECTION 153A WAS ISSUE D ON 13.01.2009 AND IN RESPONSE TO THE SAID NOTICE, ASSE SSEE FILED RETURNS ON 16.04.2009 DECLARING INCOME OF ` 3,59,200/- AND ` 6,96,930/- FOR THE ASSESSMENT YEARS 2006-07 AND 200 7-08 RESPECTIVELY. THE ASSESSMENTS WERE COMPLETED UNDER SECTION 153A(A) READ WITH SECTION 143(3) OF THE ACT ON 30.12.2009 DETERMINING INCOME AT ` 6,71,450/- AND ` 20,54,130/- BY THE ASSESSING OFFICER. THE ASSESSIN G OFFICER WHILE COMPLETING ASSESSMENTS MADE ADDITION TOWARDS UNSECURED LOANS AND INTEREST ON LOANS FOR BOTH THE SE TWO ASSESSMENT YEARS. THE ASSESSING OFFICER INITIATED P ENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THESE TWO ADDITIONS AND ALSO FOR DIFFERENCE IN THE INCOME AS PER THE ORIGINAL RETURN AND THE RETURN FILED IN RES PONSE TO ITA NOS. 1873 & 1874/MDS/2013 3 SECTION 153A OF THE ACT AFTER THE SEARCH. THE ASSE SSING OFFICER IN THE COURSE OF PENALTY PROCEEDINGS REQUIR ED THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY UNDER SECTION 271(1)(C) OF THE ACT SHOULD NOT BE IMPOSED FOR THE ADDITIONS MADE IN THE ASSESSMENT ORDER AND THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN THE RETURNS FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT. THE ASSESSEE FILED REPLY S TATING THAT LOANS WERE TAKEN FROM VILLAGERS AND THEY ARE GENUI NE LOANS, CONFIRMATIONS FROM THE CREDITORS WERE ALSO SUBMIT TED BEFORE THE ASSESSING OFFICER AND IT WAS SUBMITTED THAT VI LLAGERS WERE AFRAID TO APPEAR BEFORE THE ASSESSING OFFICER TO CO NFIRM THE LOANS GIVEN BY THEM. IN RESPECT OF INTEREST ON LOA NS, THE ASSESSEE CONTENDED THAT HE HAS AGREED FOR THE ADDIT ION EVEN THOUGH THE BOOK SEIZED CONTAINING THE DETAILS OF L OANS SEIZED REPRESENTS LOANS TAKEN BY THE CUSTOMERS TO PURCHASE PLOTS FROM THE ASSESSEE AND THE LOANS WERE NOT TAKEN BY T HE ASSESSEE. IN RESPECT OF DIFFERENCE IN INCOME AS RET URNED IN THE ORIGINAL RETURN AND THE RETURN FILED IN RESPONS E TO NOTICE UNDER SECTION 153A OF THE ACT, THE ASSESSEE SUBMITT ED THAT THERE IS NO WILLFUL ATTEMPT TO CONCEAL INCOME AND P LEADED THAT ITA NOS. 1873 & 1874/MDS/2013 4 PENALTY PROCEEDINGS MAY BE DROPPED. THE ASSESSING OFFICER PASSED ORDER UNDER SECTION 271(1)(C) OF THE ACT LEV YING PENALTY FOR THE ADDITIONS MADE IN THE ASSESSMENT OR DER TOWARDS UNSECURED LOANS, INTEREST ON LOANS AND ON THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN THE RE TURN FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE PENALTY HOLDING THAT ADDITIONS WERE MADE ONLY DUE TO FAILUR E OF THE ASSESSEE TO PROVIDE CONFIRMATIONS FROM CREDITORS AN D HIS INABILITY TO PRODUCE THEM BEFORE TAX AUTHORITIES AN D THAT THE ASSESSEE AGREED TO THE ADDITION. THE COMMISSIONER O F INCOME TAX (APPEALS) WAS ALSO OF THE VIEW THAT BUT FOR THE SEARCH, THE ASSESSEE WOULD NOT HAVE DISCLOSED INCOM E. 3. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESS EE HAS PRODUCED CONFIRMATIONS BEFORE THE ASSESSING OFF ICER IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS THE SU BMISSION OF THE ASSESSEE THAT LOANS WERE OBTAINED FROM VILLA GERS AND THEY WERE AFRAID TO APPEAR BEFORE THE ASSESSING OFF ICER AND THEREFORE THE ASSESSEE AGREED FOR THE ADDITION. T HE COUNSEL ITA NOS. 1873 & 1874/MDS/2013 5 SUBMITS THAT THERE IS NO CONCEALMENT OF INCOME BY T HE ASSESSEE. THE LOANS WERE GENUINE AND BONAFIDE EXPLA NATION OF THE ASSESSEE WAS THAT CREDITORS WERE VILLAGERS A ND THEY COULD NOT APPEAR BEFORE THE DEPARTMENT DUE TO FEAR AND THE EXPLANATION OF THE ASSESSEE WAS NOT PROVED FALSE. THE COUNSEL SUBMITS THAT THE ASSESSING OFFICER ASKED TH E ASSESSEE TO GIVE DETAILS OF LOAN TAKEN WITH NAMES A ND ADDRESSES OF PARTIES VIDE LETTER DATED 21.08.2009 A ND IN TURN, THE ASSESSEE PRODUCED CONFIRMATION LETTERS FROM THE PARTIES FROM WHOM THE LOAN WAS TAKEN. THEREFORE, COUNSEL S UBMITS THAT INITIAL BURDEN TO PROVE THE LOAN WAS DISCHARGE D BY THE ASSESSEE. THE COUNSEL FOR THE ASSESSEE REITERATED T HE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. THE COUNSEL PLACES RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. MUSSADILAL RAM BHAROSE (60 CTR 34) FOR THE PROPOSITION THAT PRESUMPTION RAISED BY THE EXP LANATION TO SECTION 271(1)(C) ARE REBUTTABLE PRESUMPTIONS. THE INITIAL BURDEN OF DISCHARGING THE ONUS OF REBUTTAL IS ON TH E ASSESSEE. ONCE THAT INITIAL BURDEN IS DISCHARGED, THE ASSESSE E WOULD BE OUT OF THE MISCHIEF UNLESS FURTHER EVIDENCE WAS ADD UCED. ITA NOS. 1873 & 1874/MDS/2013 6 HE ALSO PLACES RELIANCE ON THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BARODA TIN WORKS (221 ITR 661). 4. THE DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORD ER OF THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOM E TAX (APPEALS) IN SUSTAINING THE PENALTY LEVIED UNDER SE CTION 271(1)(C) OF THE ACT. THE DEPARTMENTAL REPRESENTAT IVE SUBMITS THAT THERE IS CONCEALMENT OF INCOME BY THE ASSESSEE. THERE IS NO EXPLANATION AT ALL FOR THE ADDITIONAL I NCOME OFFERED BY THE ASSESSEE. 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF LOWER AUTHORITIES AND DECISIONS RELIED ON. IN RESPECT OF THE ADDITIONS MADE TOWARDS UNSECURED LOANS, THE ASSESSEE PRODUCED CONFIRMATION LETTERS FROM THE CREDITORS IN THE COUR SE OF ASSESSMENT PROCEEDINGS. IT WAS THE SUBMISSION OF TH E ASSESSEE THAT THE ASSESSEE HAS TAKEN LOANS FROM THE SE CREDITORS WHO ARE ALL VILLAGERS AND THEY ARE AFRA ID TO APPEAR BEFORE THE DEPARTMENT AND FINALLY THE ASSESSEE AGRE ED FOR THE ITA NOS. 1873 & 1874/MDS/2013 7 ADDITION IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE FURNISHED THE CONFIRMATIONS WITH ALL THE A DDRESSES OF THE CREDITORS. THE ASSESSEE ALSO BONAFIDELY SUBM ITTED THAT CREDITORS ARE ALL VILLAGERS AND ARE AFRAID TO APPE AR BEFORE THE ASSESSING OFFICER. THE ASSESSEE DISCHARGED INITIAL BURDEN OF PROVIDING CONFIRMATIONS FROM THE LOAN CREDITORS. IN SUCH CIRCUMSTANCES, THE ASSESSING OFFICER SHOULD HAVE IS SUED SUMMONS TO THE CREDITORS TO APPEAR, DEPOSE AND ASCE RTAIN WHETHER SUCH CREDITORS ARE GENUINE OR BOGUS. IN THE ABSENCE OF ANY SUCH EXERCISE, IT CANNOT BE HELD THAT CREDIT ORS ARE BOGUS AND THERE IS CONCEALMENT OF INCOME IN RESPECT OF UNSECURED LOANS. 6. IN RESPECT OF ADDITION MADE TOWARDS INTEREST ON LOANS, EXPLANATION OF THE ASSESSEE WAS THAT THE NOTE BOOK CONTAINING DETAILS OF LOANS REPRESENTS THE LOANS OB TAINED BY SMALL CUSTOMERS WHO PURCHASED PLOTS FROM THE ASSESS EE AND IT IS NOT THE ASSESSEE WHO OBTAINED LOANS. HOWEVER, THE ASSESSEE AGREED FOR ADDITION TOWARDS INTEREST ON LO ANS WHILE COMPLETION OF ASSESSMENT. THE ASSESSING OFFICER HA S NOT ITA NOS. 1873 & 1874/MDS/2013 8 MADE ANY ADDITION IN RESPECT OF LOANS SAID TO HAVE BEEN OBTAINED BY THE ASSESSEE BUT ONLY INTEREST WAS DISA LLOWED. THE ASSESSING OFFICER DID NOT PROVE THE EXPLANATION OF THE ASSESSEE AS FALSE OR CONTRARY. IN SUCH CIRCUMSTANCE S, SIMPLY BECAUSE ADDITION WAS MADE IT CANNOT BE HELD THAT TH ERE IS CONCEALMENT OF INCOME, THEREFORE PENALTY CANNOT BE IMPOSED ON THE ADDITIONS MADE TOWARDS UNSECURED LOANS AND I NTEREST ON LOANS. 7. HOWEVER, IN RESPECT OF ADDITIONAL INCOME OF ` 2,870/- AND ` 3,27,130/- ADMITTED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 RESPECTIVELY, IN THE RETURNS FILED AFTER SEARCH IN RESPONSE TO THE NOTIC E UNDER SECTION 153A OF THE ACT, THE ASSESSEE HAS NOT GIVEN ANY PROPER EXPLANATION AS TO WHY SUCH ADDITIONAL INCOME CANNOT BE TREATED AS CONCEALED INCOME EXCEPT STATING THAT ADDITIONAL INCOME WAS DECLARED IN THE RETURN FILED UNDER SECTI ON 153A AND THERE IS NO WILLFUL ATTEMPT TO CONCEAL THE INCO ME. IN THE ABSENCE OF ANY VALID AND BONAFIDE EXPLANATION FROM THE ASSESSEE IN RESPECT OF ADDITIONAL INCOME OF ` 2,870/- AND ITA NOS. 1873 & 1874/MDS/2013 9 ` 3,27,130/- RETURNED FOR THE ASSESSMENT YEARS 2006-0 7 & 2007-08, THE SAME HAS TO BE CONSIDERED AS CONCEALED INCOME FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE PENA LTY ONLY ON THE ADDITIONAL INCOME OF ` 2,870/- AND ` 3,27,130/- RETURNED BY THE ASSESSEE IN THE RETURN FILED FOR TH E ASSESSMENT YEARS 2006-07 AND 2007-08 RESPECTIVELY I N RESPONSE TO THE NOTICE UNDER SECTION 153A OF THE AC T. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, THE 30 TH DAY OF JANUARY, 2014 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY ) (CHAL LA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI. DATED THE 30 TH JANUARY, 2014. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.