Smt. Jashodaben H Patel, Sidhpur V. ITO Patan Ward-4, Patan

ITA 1920/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4094 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 23-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: BIREN SHAH
• Keywords: Unexplained investment
• Section: 271(1)(c); 274; 69

Judgement Text

, . . IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO. 1920/AHD/2017 ( / ASSESSMENT YEAR : 2010-11) SMT. JASHODABEN H PATEL PRABHAT SOCIETY RAJPUR SIDHPUR / VS. THE ITO PATAN WARD-4 UNJHA, PATAN ./ ./ PAN/GIR NO. : APDPP 7065 G ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI BIREN SHAH, AR / RESPONDENT BY : SHRI KAMLESH MAKWANA, SR.DR ! / DATE OF HEARING 11/03/2019 '#$% ! / DATE OF PRONOUNCEMENT 13/03/2019 / O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER : THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD.COMMISSIONER OF INCOME TAX(APPEALS), GANDHINAGAR , AHMEDABAD [CIT(A) IN SHORT] DATED 10/07/2017 PASSED FOR ASS ESSMENT YEAR (AY) 2010-11. ITA NO.1920/AHD /2017 SMT. JASHODABEN H PATEL VS. ITO ASST.YEAR 2010-11 - 2 - 2. THOUGH THE ASSESSEE HAS TAKEN THREE GROUNDS OF APPEAL, BUT HER GRIEVANCE REVOLVES AROUND A SINGLE ISSUE; NAMELY, L D.CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.89,305/- IMPOSED BY TH E ASSESSING OFFICER U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAF TER REFERRED TO AS 'THE ACT'). 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE H AS FILED HER RETURN OF INCOME ON 18/03/2011 DECLARING TOTAL INCOME AT RS.1 ,49,580/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT ASSESSEE WAS MAINTAINING TWO BANK ACCOUNTS WITH MEHSANA URBAN CO -OP. BANK, SIDHPUR AND KARUR VYSYA BANK, UNJHA. 4. A PERUSAL OF THOSE BANK ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT ASSESSEE HAS MADE DEPOSITS IN CASH ON VARIOUS DATES. THE ASSESSING OFFICER HAS CONFRONTED THE ASSESSEE TO SH OW THE SOURCE OF SUCH DEPOSITS. ACCORDING TO THE ASSESSING OFFICER, ASSE SSEE FAILED TO SHOW THE SOURCE OF DEPOSITS IN THESE BANKS. HENCE, HE MADE AN ADDITION OF RS.9,91,585/- WITH THE AID OF SECTION 69 OF THE ACT . SIMILARLY, THE ASSESSING OFFICER CONFRONTED THE ASSESSEE TO SUBMI T WORKING OF CAPITAL GAIN. THE ASSESSEE HAS DISCLOSED CAPITAL GAIN OF R S.90,797/- WHICH WAS NOT FURNISHED IN THE ORIGINAL RETURN OF INCOME. HE NCE, THE ASSESSING OFFICER HAS MADE ADDITION OF RS.90,797/-. THE INCO ME OF THE ASSESSEE IN ITA NO.1920/AHD /2017 SMT. JASHODABEN H PATEL VS. ITO ASST.YEAR 2010-11 - 3 - THIS WAY WAS DETERMINED AT RS.12,31,962/- AS AGAINS T RS.1,49,580/- RETURNED BY HER. THE ASSESSING OFFICER HAS INITIAT ED PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S.271(1)(C) OF THE ACT R.W.S . 274 OF THE ACT. IN RESPONSE TO THE SHOW-CAUSE NOTICE, ASSESSEE HAS CON TENDED THAT THIS ADDITION OF UNEXPLAINED INVESTMENT IN BANK DEPOSIT HAS BEEN REDUCED BY THE LD.CIT(A) TO RS.3,78,635/- AS AGAINST 9,91,585/ - MADE BY THE ASSESSING OFFICER. THEREFORE, THE LD.FIRST APPELL ATE AUTHORITY IN THE QUANTUM APPEAL HAS ACCEPTED THE STAND OF ASSESSEE A ND RESTRICTED THE ADDITION ON AN ESTIMATE BASIS. 5. AS FAR AS ADDITION ON ACCOUNT OF CAPITAL GAIN IS CONCERNED, THE ASSESSEE CONTENDED THAT IT WAS A BONA FIDE ERROR AN D, THEREFORE, NO PENALTY BE IMPOSED UPON HER. THE LD.AO WAS NOT SATISFIED W ITH THE EXPLANATION OF THE ASSESSEE AND IMPOSED A PENALTY OF RS.89,305/ - WHICH IS EQUIVALENT TO THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. 7. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 H AS DIRECT BEARING ON THE CONTROVERSY. THEREFORE, IT IS PERTINENT TO TAK E NOTE OF THIS SECTION WHICH READ AS UNDER: ITA NO.1920/AHD /2017 SMT. JASHODABEN H PATEL VS. ITO ASST.YEAR 2010-11 - 4 - '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT , IS SATISFIED THAT ANY PERSON (A) AND (B)** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHIC H SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME OR SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. ITA NO.1920/AHD /2017 SMT. JASHODABEN H PATEL VS. ITO ASST.YEAR 2010-11 - 5 - 7. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS B EFORE THEM SHOULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUA NTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UNDER THI S SECTION CAN RANGE IN BETWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHIN G INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FEATURES OF T HIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCOME. THE SEC TION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CON CEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERTAIN SITUAT ION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUTORY DEEMING FI CTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; ( A) FIRST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OF FER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND, (B) WHERE IN R ESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER T HE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE E XPLANATION AND THE ASSESSEE FAILS, TO PROVE THAT SUCH EXPLANATION IS B ONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO TH E SAME AND MATERIAL TO ITA NO.1920/AHD /2017 SMT. JASHODABEN H PATEL VS. ITO ASST.YEAR 2010-11 - 6 - THE COMPUTATION OF THE TOTAL INCOME. UNDER FIRST SI TUATION, THE DEEMING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED T O GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATIO N OF TOTAL INCOME OR BY ACTION OF THE ASSESSING OFFICER OR THE LEARNED CIT( APPEALS) BY GIVING A CATEGORICAL FINDING TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE HIS EXP LANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AN D IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSE E. THESE TWO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SE CTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALL OWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SEC TION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 8. IN THE LIGHT OF ABOVE, LET US CONSIDER THE FACTS OF THE PRESENT CASE. IT EMERGES FROM THE RECORD THAT IN ORDER TO EXPLAIN THE SOURCE OF DEPOSITS IN THE TWO BANK ACCOUNTS, THE ASSESSEE HAS SUBMITTE D A FUND FLOW STATEMENT. IT WAS CONTENDED THAT HER MOTHER-IN-LAW WAS HAVING AGRICULTURAL LAND WHICH WAS ACQUIRED BY GIDC IN SUR VEY NO.337/1 AT ITA NO.1920/AHD /2017 SMT. JASHODABEN H PATEL VS. ITO ASST.YEAR 2010-11 - 7 - VILLAGE GAGALASAN, DISTRICT SIDHPUR. SHE RECEIVED COMPENSATION APPROXIMATELY RS.3.56 LAKHS. IT WAS GIVEN TO THE A SSESSEE AND IT WAS DEPOSITED IN HER BANK ACCOUNT. SIMILARLY, THE MOT HER-IN-LAW WAS HAVING AGRICULTURAL INCOME AND A CLAIM AT RS.7,37,424/- WA S MADE. THE LD. FIRST APPELLATE AUTHORITY HAS OBSERVED THAT OUT OF THE AG RICULTURAL INCOME EARNED BY THE MOTHER-IN-LAW, THE OTHER BROTHERS OF ASSESSEES HUSBAND WOULD HAVE ALSO TAKEN SOME SHARES. HENCE, TO THE E XTENT OF RS.2,50,000/-, THE EXPLANATION OF ASSESSEE WAS ACCE PTED. IN OTHER WORDS, THE LD. FIRST APPELLATE AUTHORITY HAS ALSO OBSERVED THAT AT THE MOST OUT OF AGRICULTURAL INCOME EARNED BY THE MOTHER-IN-LAW, TH E ASSESSEES SHARE COULD BE RS.2,50,000/-. UNDER THESE CIRCUMSTANCES, THE ADDITION MADE AT RS.9,91,585/- WAS SCALED DOWN TO RS.3,78,635/-. T O OUR MIND, ASSESSEE HAS GIVEN AN EXPLANATION FOR THE DEPOSITS IN THE BA NK ACCOUNTS. HOWEVER, THAT EXPLANATION DID NOT MEET THE APPROVAL OF ASSES SING OFFICER AND ADDITION ON AN ESTIMATE BASIS HAS BEEN CONFIRMED BY THE CIT(A). THE EXPLANATION MADE BY THE ASSESSEE WAS NOT FOUND TO B E FALSE. THUS, ASSESSEE DOES NOT DESERVE TO BE VISITED WITH PENALT Y AS FAR AS QUANTUM ADDITION OF RS.3,78,635/- IS CONCERNED. 9. AS FAR AS ADDITION OF RS.90,797/- ON ACCOUNT OF CAPITAL GAIN IS CONCERNED, THERE IS NO EXPLANATION AT THE END OF AS SESSEE EITHER IN THE QUANTUM PROCEEDINGS OR IN THE PENALTY PROCEEDINGS. HENCE, ASSESSEE DESERVES TO BE VISITED WITH THE PENALTY ON THIS ADD ITION. ITA NO.1920/AHD /2017 SMT. JASHODABEN H PATEL VS. ITO ASST.YEAR 2010-11 - 8 - 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 13 TH MARCH-2019 AT AHMEDABAD. SD/- SD/- ( PRADIP KUMAR KEDIA) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13/ 03 /2019 (!.., .*../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. +,- . / CONCERNED CIT 4. . ( ) / THE CIT(A)-GANDHINAGAR, AHMEDABAD 5. 123 * *,- , ! ,-% , + / DR, ITAT, AHMEDABAD 6. 356 7 / GUARD FILE. / BY ORDER, 1 * //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..11.3.19 (DICTATION-PAD 11- P AGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..12.3.19 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.13.3.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.3.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER