Shri H. Narayanlal, CHENNAI V. The Joint CIT, CHENNAI

ITA 1930/CHNY/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9360 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS VIJAYALAKSHMI
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Document seized; Documents seized
• Section: 143(3); 153A; 68; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NOS.1924 TO 1930/MDS/2013 ( / ASSESSMENT YEARS: 2001-02 TO 2007-08) MR. H.NARAYANLAL 4/28, BAZAAR STREET, VIRINJIPURAM, VELLORE. VS JOINT COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE-IV(1), CHENNAI. PAN: ACHPN3211F ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MRS. VIJAYALAKSHMI, CIT DR /DATE OF HEARING : 1 ST MARCH, 2016 /DATE OF PRONOUNCEMENT : 10 TH MAY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE SEVEN APPEALS ARE FILED BY THE ASSESSEE AGGRIEVED BY THE SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS (CENTRAL)-I, CH ENNAI ALL DATED 30.08.2013 IN ITA NOS. 17 TO 22/ 2012-13 PASSED UNDER SECTION 271(1)(C) R.W.S. 250(6) OF THE ACT FO R THE ASSESSMENT YEARS 2001-02 TO 2007-08. SINCE THE ISSU ES INVOLVED IN ALL THESE APPEALS ARE COMMON, THEY ARE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS.1924 TO 1930/MDS/2013 2. THE ASSESSEE IN THESE SEVEN APPEALS HAS RAISED SEVERAL ELABORATE GROUNDS. HOWEVER, THE CRUXES OF T HE IDENTICAL ISSUES IN THESE APPEALS ARE THAT THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE LEVY OF PENALTY UNDER SECTION 271(1) (C) OF THE ACT MADE BY THE LEARNED ASSESSING OFFICER. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN PAWN BROKING BUSINESS BY OBTA INING LICENSE ALONG WITH HIS WIFE SMT. MEERADEVI FROM THE YEAR 2000 ONWARDS. THE ASSESSEE IS ALSO AN EMPLOYEE OF M /S. S/SHRI SARJANRAJ & BAWARILAL PAWN BROKERS. SEARCH & SEIZURE OPERATIONS UNDER SECTION 132 WERE CONDUCTED IN THE RESIDENCE CUM BUSINESS PREMISES OF THE ASSESSEE ON 29.08.2006. PRIOR TO THE DATE OF SEARCH, THE ASSES SEE FILED HIS RETURNS UPTO THE ASSESSMENT YEAR 2005-06 AND TH E RETURNS FOR THE ASSESSMENT YEARS 2006-07 & 2007-08 WERE FILED POST SEARCH AND THE ASSESSMENTS WERE COMPLET ED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 153A R. W.S 143(3) / 143(3) OF THE ACT ON 30.12.2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FAILED TO PROVE 3 ITA NOS.1924 TO 1930/MDS/2013 THE GENUINENESS OF CERTAIN TRANSACTIONS AND CREDIT WORTHINESS OF THE ALLEGED CREDITORS BY FURNISHING NAMES, COMPL ETE ADDRESSES, DATE OF TRANSACTION AND MODE OF PAYMENT, AND CONFIRMATION STATEMENTS. WHEN THE LEARNED ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHY THE LOAN CREDITS SHOUL D NOT BE TREATED AS UNEXPLAINED CREDITS, THE ASSESSEE SUBMIT TED THAT THE EVIDENCES ARE IN THE FORM OF COUNTERFOILS OF PR O-NOTES IN THE SEIZED DOCUMENTS WHICH ARE IN THE POSSESSION OF THE DEPARTMENT. ON VERIFICATION OF THE SAME, THE LEARNE D ASSESSING OFFICER OBSERVED THAT SOME LOAN CREDITORS REFLECTED IN THE RETURNS WERE NOT SUPPORTED BY SEIZED MATERIA LS IN NATURE OF PRO-NOTES AND THEREFORE TREATED THE SAME AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT. SUB SEQUENTLY, THE LEARNED ASSESSING OFFICER INITIATED PENALTY PRO CEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND VIDE ORDER DATED 26.03.2014 LEVIED PENALTY FOR THE ASSESSMENT YEARS 2001-02 TO 2007-08. 4. THE LEARNED ASSESSING OFFICER HAD LEVIED PENALT Y FOR THE RELEVANT ASSESSMENT YEARS HEREIN BELOW FOR THE FOLLOWING REASONS:- 4 ITA NOS.1924 TO 1930/MDS/2013 ASSESS MENT YEAR REASONS FOR MAKING ADDITION AMT. OF ADDITION RS. 100% OF TAX SOUGHT TO BE EVADED IS LEVIED AS PENALTY RS. 2001-02 I)UN-EXPLAINED LOAN II)INCORRECT CLAIM OF AGRICULTURAL INCOME 35,84,039 23,765 36,07,804 12,66,369 2002-03 I)UN-EXPLAINED LOAN II)INCORRECT CLAIM OF AGRICULTURAL INCOME 50,48,650 22,221 50,70,871 15,51,686 2003-04 I)UN-EXPLAINED LOAN II)INCORRECT CLAIM OF AGRICULTURAL INCOME III) UNRECORDED BOND LOAN 31,91,005 26,675 3,28,030 35,45,710 11,16,898 2004-05 I)UN-EXPLAINED LOAN II)INCORRECT CLAIM OF AGRICULTURAL INCOME III) UNRECORDED BOND LOAN 13,23,325 28,150 3,05,675 16,57,150 5,46,860 2005-06 I)UN-EXPLAINED LOAN II)INCORRECT CLAIM OF AGRICULTURAL INCOME III) UNRECORDED BOND LOAN IV) INVESTMENT IN PURCHASE OF LAND. V) UNRECORDED INVESTMENT IN M/S. RAM DEV JEWELLERS AS CAPITAL VI)UNEXPLAINED INVESTMENT IN UNREDEEMED PAWN ITEM 4,10,860 26,150 7,63,745 3,20,000 50,000 20,27,745 35,98,500 11,87,505 2006-07 I)UN-EXPLAINED LOAN II)INCORRECT CLAIM OF AGRICULTURAL INCOME III) UNRECORDED BOND LOAN IV)INVESTMENT FOR WHICH SOURCE IS NOT PROVED 33,89,572 26,150 15,21,465 6,37,883 55,75,070 18,76,568 2007-08 I)UN-EXPLAINED LOAN II)INCORRECT CLAIM OF AGRICULTURAL INCOME III) UNRECORDED BOND LOAN IV)INVESTMENT FOR WHICH SOURCE IS NOT PROVED 43,74,452 27,875 13,25,440 13,26,173 70,55,940 23,75,029 UNEXPLAINED LOANS:- 4.1 FOR ALL THE RELEVANT ASSESSMENT YEARS MENTION ED HEREIN ABOVE, ADDITIONS WERE MADE TOWARDS UNEXPLAINED LOAN S 5 ITA NOS.1924 TO 1930/MDS/2013 BASED ON THE LOAN CREDITORS FROM WHOM PRO-NOTES WE RE NOT MADE AVAILABLE AND DID NOT FORM PART OF THE SEIZED MATERIALS AS EXPLAINED IN PARA 3. FURTHER THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION BY FURNISH ING THE NAME OF THE CREDITORS, THEIR COMPLETE ADDRESS AND D ATE OF TRANSACTION, MODE OF PAYMENT, CONFIRMATION STATEMEN TS AND CREDITWORTHINESS OF THE CREDITORS. EVEN DURING THE PENALTY PROCEEDINGS THE ASSESSEE COULD NOT EXPLAIN THE GENU INESS OF THE LOAN TRANSACTIONS WHICH CEMENTED THE FACT THAT THERE IS CONCEALMENT OF INCOME. INCORRECT CLAIM OF AGRICULTURAL INCOME: 4.2 FOR ALL THE ASSESSMENT YEARS MENTIONED HEREIN A BOVE, THE LEARNED ASSESSING OFFICER HAD MADE ADDITIONS DISBELIEVING THE CLAIM OF THE ASSESSEE THAT HE HAD RECEIVED AGRICULTURAL INCOME ONLY FOR THE REASONS THAT NO AG RICULTURAL INCOME WAS DECLARED BY THE ASSESSEES WIFE SMT.MEER A DEVI, WHO HAD AGRICULTURAL LANDS ADJACENT TO THE LA ND OWNED BY THE ASSESSEE. FURTHER THE LEARNED ASSESSING OFFI CER OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED ANY EV IDENCE TO EXPLAIN THE CLAIM OF AGRICULTURAL INCOME. HENCE HE OPINED 6 ITA NOS.1924 TO 1930/MDS/2013 THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME. UNRECORDED BOND LOANS:- 4.3 FOR THE ASSESSMENT YEARS 2004-05 TO 2007-08, T HE ASSESSEE HAD MAINTAINED BOND BOOKS WHEREIN HE HAD RECORDED THE AMOUNT RECEIVABLE FROM THE BORROWERS T OWARDS CASH LOANS OR THE OUTSTANDING AMOUNT RECEIVABLES IN RESPECT OF SALE OF GOLD JEWELLERY. IT IS THE PRACTICE OF TH E ASSESSEE TO STRIKE OUT THE ENTRY WHENEVER THE AMOUNT IS RECEIVE D. THE ENTRIES WHICH WERE NOT STRUCK OFF THE REGISTER REPR ESENTED THE AMOUNT NOT RECEIVED BY THE ASSESSEE. BASED ON THIS SEIZED MATERIALS, THE LEARNED ASSESSING OFFICER MADE THE A DDITION BECAUSE THE ASSESSEE CONCEDED THAT ENTRIES WHICH WE RE NOT STRUCK OFF THE REGISTER REPRESENT UNACCOUNTED MONEY . CONSEQUENTLY PENALTY WAS LEVIED. INVESTMENT IN PURCHASE OF LAND : 4.4 DURING THE ASSESSMENT YEAR 2005-06, THE ASSESS EE HAD PURCHASED TWO ACRES OF LAND IN SURVEY NO.564 & 565 IN SETHUVALAI VILLAGE FOR THE REGISTERED VALUE OF RS.1 ,12,000/- ON 24.12.2004 WHICH WAS NOT DISCLOSED IN THE RETURN OF INCOME. 7 ITA NOS.1924 TO 1930/MDS/2013 THE LEARNED ASSESSING OFFICER FURTHER OPINED THAT T HE ASSESSEE HAD PAID ON-MONEY OF RS.2,08,000/- BECAUSE THE ASSESSEE HAD ACCEPTED THE SAME IN HIS SWORN STATED DATED 29.08.2006. FOR THE ABOVE STATED REASONS THE ASSESS ING OFFICER HAD MADE ADDITION OF RS.3,20,000/- IN THE H ANDS OF THE ASSESSEE BECAUSE THE SOURCE OF INVESTMENT WAS N OT ESTABLISHED. PENALTY WAS ALSO LEVIED FOR THE SAME R EASON. INVESTMENT IN RAMDEV JEWELLERY: 4.5 DURING THE ASSESSMENT YEAR 2005-06, THE ASSESSE E HAD INVESTED IN M/S.RAMDEV JEWELLERY RS. 50,000/- B Y INTRODUCING CASH AS HIS CAPITAL. THE SOURCE OF INVE STMENT OF CASH COULD NOT BE EXPLAINED BY THE ASSESSEE. THEREF ORE, THE LEARNED ASSESSING OFFICER MADE THE ADDITION AND LEV IED PENALTY. UNEXPLAINED INVESTMENT IN UNREDEEMED PAWN ITEM :- 4.6 DURING THE ASSESSMENT YEAR 2005-06, THE ASSESSE E HAS UNREDEEMED PAWN ITEMS WHICH HAS AN INCREASE BY RS.20,27,745/- COMPARED TO THE EARLIER YEAR. SINCE THE 8 ITA NOS.1924 TO 1930/MDS/2013 ASSESSEE COULD NOT EXPLAIN THE SOURCE FOR THIS INVE STMENT ADDITIONS WERE MADE AND PENALTY WAS LEVIED. INVESTMENT FOR WHICH SOURCE IS NOT PROVED : 4.7 DURING THE RELEVANT ASSESSMENT YEARS 2006-07 & 2007- 08, IT WAS OBSERVED BY THE LEARNED ASSESSING OFFIC ER THAT THE ASSESSEE HAD MADE INVESTMENTS FOR WHICH SOURCE COUL D NOT BE PROVED AS FOLLOWS:- ASSESSMENT YEAR : 2006-07: DETAILS OF INVESTMENT MADE IN THE ASSESSMENT YEAR 2006-07 AMOUNT OF INVESTMENT UNREDEEMED PAWNED ITEMS RS 34,18,605 GOLD JEWELLERY RS.7,00,000 SILVER RS.2,35,000 UNRECORDED BOND LOANS RS.15,21,465 INADEQUATE DRAWINGS RS.94,623 TOTAL - A RS.59,69,693 SOURCE OF INVESTMENT AMOUNT RS INCREASE IN LOAN CREDITS 33,89,572 AGRICULTURAL INCOME NOT PROVED 26,150 INADEQUATE DRAWING RS,.94,623 UNRECORDED BOND ITEMS RS 15,21,465 TOTAL -B RS 50,31,810 DIFFERENCE BETWEEN A B = RS.6,37,883/- BEING INVE STMENTS FOR WHICH SOURCES ARE NOT ESTABLISHED. ASSESSMENT YEAR : 2007-08 : DETAILS OF INVESTMENT MADE IN THE ASSESSMENT YEAR 2006-07 AMOUNT OF INVESTMENT UNREDEEMED PAWNED ITEMS RS 40,20,000 GOLD JEWELLERY RS.17,05,000 C ASH IN HAND RS.5,500 UNRECORDED BOND LOANS RS.13,25,440 9 ITA NOS.1924 TO 1930/MDS/2013 INADEQUATE DRAWINGS RS.1,32,988 TOTAL - A RS.71,88,928 SOURCE OF INVESTMENT AMOUNT RS INCREASE IN LOAN CREDITS 43,74,452 AGRICULTURAL INCOME NOT PROVED 29,875 INADEQUATE DRAWING RS,.1,32,988 UNRECORDED BOND ITEMS RS 13,25,440 TOTAL -B RS 58,62,755 DIFFERENCE BETWEEN A B = RS. 13,26,173/- BEING INVESTMENTS FOR WHICH SOURCES ARE NOT ESTABLISHED. SINCE THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE T O ESTABLISH HIS SOURCE FOR INVESTMENT IN ALL THESE AS SESSMENT YEARS MENTIONED HEREIN ABOVE WHICH WAS CONCEDED BY THE ASSESSEE AS WELL AND FURTHER FOR THE REASON THAT TH E ASSESSEE EVEN AFTER THE SEARCH PROCEEDINGS DID NOT DISCLOSE HIS TRUE INCOME, THE LEARNED ASSESSING OFFICER LEVIED MINIMU M PENALTY @ 100% OF TAX ON THE INCOME SOUGHT TO BE EV ADED. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY STATING THAT LEVY OF PENALTY FOR CONCEAL MENT OF INCOME IS APPROPRIATE IN THESE CASES BECAUSE THE AS SESSEE HAD FAILED TO OFFER ANY EXPLANATION TO THE ADDITION S MADE 10 ITA NOS.1924 TO 1930/MDS/2013 WHICH WERE BASED ON MATERIALS FOUND DURING THE COUR SE OF SEARCH. 6. BEFORE US ALSO THE ASSESSEE HAS NOT PRODUCED ANY MATERIALS TO JUSTIFY HIS STAND THAT THE PENALTY IS NOT WARRANTED IN ALL THESE CASES. THE ASSESSEE HAS ALSO NOT FURN ISHED THE NAMES AND COMPLETE ADDRESSES OF PERSONS FROM WHOM H E RECEIVED THE LOANS, THE DATE OF TRANSACTION AND MOD E OF PAYMENT, CONFIRMATION STATEMENTS OR ANY OTHER RELEV ANT MATERIALS TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS. IN THE ABSENCE OF THESE DETAILS, IT IS NOT POSSIBLE FO R THE REVENUE TO MAKE ANY ENQUIRIES OF ITS OWN TO FIND TH E GENUINENESS OF THE TRANSACTIONS. IN THE CASE OF UNR ECORDED BONDED LOANS, THE ASSESSEE HIMSELF HAS CONCEDED THA T THIS AMOUNT REPRESENTS UNACCOUNTED INCOME OF THE ASSESSE E. THE ASSESSEE ALSO COULD NOT EXPLAIN THE SOURCE OF I NVESTMENT MADE TOWARDS UNREDEEMED PAWN ITEMS. FOR THE ASSESSM ENT YEARS 2006-07 & 2007-08 SOURCE OF INVESTMENT OF RS. 6,37,883/- AND RS. 13,26,173/- COULD ALSO NOT BE ES TABLISHED. FOR THE ABOVE MENTIONED WE DO NOT HAVE ANY OTHER OP TIONS BUT TO CONFIRM THE PENALTY LEVIED ON ALL THESE COUN TS. 11 ITA NOS.1924 TO 1930/MDS/2013 ACCORDINGLY PENALTY LEVIED ON ALL THESE COUNTS ARE HEREBY CONFIRMED. 7. HOWEVER, WE ARE NOT CONVINCED WITH THE ACTION O F THE LEARNED ASSESSING OFFICER FOR LEVYING PENALTY IN RE GARD TO ADDITION MADE ON ACCOUNT OF AGRICULTURAL INCOME, IN VESTMENT MADE IN PURCHASE OF LAND TO THE EXTENT OF RS.2,08,0 00/- AND INVESTMENT MADE IN M/S.RAMDEV JEWELLERY FOR RS.50,0 00/-. AS REGARDS THE AGRICULTURAL INCOME, IT IS NOT DISPU TED THAT THE ASSESSEE DOES NOT OWN AGRICULTURAL LAND. THE LEARNE D ASSESSING OFFICER HAS MADE ADDITION ONLY FOR THE RE ASON THAT THE ASSESSEES WIFE DID NOT DECLARE ANY AGRICULTURA L INCOME IN HER RETURN OF INCOME WITH RESPECT TO THE ADJACENT A GRICULTURAL LAND OWNED BY HER. THE QUANTUM OF AGRICULTURAL INC OME DECLARED BY THE ASSESSEE IS ALSO MINIMAL AND THERE IS NO SUBSTANTIAL REASON TO DISBELIEVE THE CLAIM OF THE A SSESSEE. THE REVENUE HAS ALSO NOT BROUGHT ANY EVIDENCE TO SH OW THAT THE ASSESSEE WAS NOT INDULGING IN AGRICULTURAL ACTI VITIES. SIMILARLY, ADDITION TOWARDS PURCHASE OF LAND TO THE EXTENT OF RS.2,08,000/- IS MADE BECAUSE THE LEARNED ASSESSING OFFICER OPINED THAT THE ASSESSEE HAD PAID ON-MONEY. HOWEVER , OTHER 12 ITA NOS.1924 TO 1930/MDS/2013 THAN ORAL STATEMENTS, NO OTHER MATERIALS OR PERSONS WERE EXAMINED TO CONCLUSIVELY PROVE THAT THE ASSESSEE HA D RECEIVED ON-MONEY. FURTHER, INVESTMENT IN RAMDEV JE WELLERY FOR RS.50,000/- IS A NOMINAL AMOUNT AND THERE CAN BE A PRESUMPTION THAT THE ASSESSEE COULD POSSESS SUCH AM OUNT FROM HIS TAX PAID INCOME. FOR THE AFORESAID REASONS, WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO DELE TE THE PENALTY MADE ON ACCOUNT OF THE INCORRECT CLAIM OF AGRICULTURAL INCOME FOR ALL THE RELEVANT ASSESSMENT YEAR, INVESTMENT IN PURCHASE OF LAND TO THE EXTENT OF RS.2,08,000/- AND INVESTMENT IN RAMDEV JEWELLERY F OR RS.50,000/- FOR THE ASSESSMENT YEAR 2005-06. 8. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH MAY, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 10 TH MAY, 2016 SOMU 13 ITA NOS.1924 TO 1930/MDS/2013 *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF