J.S.Housing Development, CHENNAI V. DCIT, CHENNAI

ITA 198/CHNY/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1154 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-02-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 09-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G NARAYANASAMY
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NOS. 198 & 199/MDS/2011 (ASSESSMENT YEARS : 1998-99 & 2003-04) M/S J.S. HOUSING DEVELOPMENT, 18, BALAMUTHUKRISHNAN STREET, T. NAGAR, CHENNAI - 600 017. PAN : AACFJ 6511 D (APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME TAX / THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(2), CHENNAI - 600 034. (RESPONDENT) APPELLANT BY :SHRI G. NARAYANASAMY, CA RESPONDENT BY :SHRI RAMASAMY.K, SR. STANDING COUNS EL DATE OF HEARING : 20.02.2013 DATE OF PRONOUNCEMENT : 07.03.2013 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY THE ASSESSEE, DIRECTED AGAINST ORDERS DATED 12.11.2010 OF COMMISSIONER OF INCOME TAX (APP EALS)-II, CHENNAI. 2. APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 1998- 99 IS FIRST TAKEN UP FOR DISPOSAL. ASSESSEE, THROUGH THIS APPEAL CHA LLENGES THE ADDITION OF ` 3 LAKHS MADE. 2 I.T.A. NOS. 198 & 199/MDS/11 3. FACTS APROPOS ARE THAT ASSESSEE WAS REQUIRED BY NOTICE DATED 25.11.1998, TO FILE RETURN FOR THE IMPUGNED ASSESSM ENT YEAR. THERE WAS NO COMPLIANCE. ASSESSING OFFICER COMPLETED THE ASS ESSMENT UNDER SECTION 144 OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') FIXING A TOTAL INCOME OF ` 3 LAKHS. THIS WAS CONFIRMED BY THE CIT(APPEALS) O N AN APPEAL FILED BY THE ASSESSEE. THEREAFTER, ASSESSEE MOVED IN APPEAL BEFORE THIS TRIBUNAL AND THIS TRIBUNAL, VIDE ITS OR DER DATED 21.2.2005 IN I.T.A. NO. 2384/MDS/2004, REMITTED THE CASE BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-EXAMINATION OF THE ADDITIO N WITH REFERENCE TO BOOKS OF ACCOUNTS. 4. ASSESSMENT WAS ONCE AGAIN TAKEN UP BY THE ASSESS ING OFFICER IN PURSUANT TO SUCH DIRECTIONS. ASSESSEE WAS REQUIRED TO PRODUCE BOOKS OF ACCOUNTS AND EVIDENCE IN SUPPORT OF THE SOURCE OF R ECEIPT OF ` 3 LAKHS. ASSESSEE HAD CLAIMED SUCH AMOUNT TO HAVE BEEN RECEI VED FROM ONE M/S METAL KING. EXPLANATION OF THE ASSESSEE WAS TH AT BALANCE SHEET AS ON 31.3.98 OF M/S METAL KING CLEARLY SHOWED THAT A SUM OF ` 3 LAKHS WAS GIVEN AS ADVANCE TO THE ASSESSEE. AS PER ASSESSEE, M/S METAL KING WAS A PROPRIETORSHIP CONCERN OF ONE SMT. V.K. SASIK ALA, WHO WAS A SEPARATE AND INDEPENDENT ASSESSEE. ASSESSEE ALSO F URNISHED COPY OF ACCOUNTS OF THE ASSESSEE IN THE BOOKS OF M/S METAL KING. AS PER THE ASSESSEE, A SUM OF ` 5 LAKHS WAS DUE FROM ONE SHRI R. KRISHNAN TO M/S 3 I.T.A. NOS. 198 & 199/MDS/11 METAL KING AS ON 1.4.97, OUT OF WHICH, A SUM OF ` 3 LAKHS WAS PAID BY SHRI R. KRISHNAN ON 20.1.98. ACCORDING TO THE ASSE SSEE, M/S METAL KING HAD GIVEN THE SUM OF ` 3 LAKHS ON 27.1.98 TO ASSESSEE OUT OF SUCH PAYMENTS RECEIVED FROM SHRI R. KRISHNAN. HOWEVER, ASSESSING OFFICER WAS NOT IMPRESSED. ACCORDING TO HIM, ASSESSEE COUL D NOT SHOW THE PURPOSE FOR WHICH ADVANCE WAS GIVEN TO SHRI R. KRIS HNAN AND FOR THE RECEIPTS FROM HIM. AS PER THE A.O., ASSESSEE HAD N OT FILED A CONFIRMATION FROM SHRI R. KRISHNAN. ASSESSEE ALSO FAILED TO PRODUCED BOOKS FOR VERIFICATION. HENCE, HE CONSIDERED THE E XPLANATION OF THE ASSESSEE TO BE AN AFTERTHOUGHT AND REJECTED IT. AN ADDITION OF ` 3 LAKHS WAS MADE RELYING ON THE DECISION OF HON'BLE APEX CO URT IN THE CASE OF CIT V. DURGA PRASAD MORE (82 ITR 540). 5. APPEAL OF THE ASSESSEE BEFORE CIT(APPEALS) DID N OT MEET WITH ANY SUCCESS. ACCORDING TO HIM, ASSESSEE COULD NOT ESTA BLISH THE SOURCE OF THE CASH DEPOSIT OF ` 3 LAKHS. IN THIS VIEW OF THE MATTER, HE CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 6. NOW BEFORE US, LEARNED A.R. SUBMITTED THAT ASSES SEE WAS A PARTNERSHIP FIRM, WHEREAS, M/S METAL KING WAS PROPR IETORSHIP CONCERN. ASSESSEE HAD PRODUCED BALANCE SHEET OF M/S METAL KI NG WHICH CLEARLY SHOWED THE SUM OF ` 3 LAKHS GIVEN AS ADVANCE TO ASSESSEE. MRS. 4 I.T.A. NOS. 198 & 199/MDS/11 V.S. SASIKALA, WHO WAS PROPRIETRIX OF M/S METAL KIN G, WAS A SEPARATE ASSESSEE. ASSESSEE CANNOT BE FORCED TO PRODUCE EVI DENCE WITH REGARD TO TRANSACTIONS OF M/S METAL KING. AS FAR AS THE A SSESSEE IS CONCERNED, THE SUM WAS RECEIVED FROM M/S METAL KING AND IT WAS DULY REFLECTED IN THE BOOKS OF M/S METAL KING. THEREFORE, ACCORDING TO HIM, THE ADDITION WAS INCORRECTLY MADE AND SUSTAINED BY THE CIT(APPEA LS). 7. PER CONTRA, LEARNED D.R. SUPPORTED THE ORDER OF CIT(APPEALS). 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. FACTS OF THE CASE HAD BEEN CLEARLY ENUNCIATED BY TH IS TRIBUNAL IN ITS EARLIER ORDER DATED 21.2.2005, WHEN THE MATTER WAS SET ASIDE TO THE FILE OF THE A.O. FOR CONSIDERATION AFRESH. THERE WAS A DEPOSIT OF ` 3 LAKHS ON 28.1.98 IN THE INDIAN BANK ACCOUNT OF THE ASSESSEE. ADDITION WAS ORIGINALLY MADE FOR A REASON THAT ON VERIFICATION O F BALANCE SHEET OF M/S METAL KING, THERE WAS NO ENTRY PERTAINING TO THE AD VANCE GIVEN TO ASSESSEE. RELEVANT PARA OF TRIBUNAL ORDER DATED 21 .2.2005 IS REPRODUCED HEREUNDER:- 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THERE WAS A DEPOSIT OF ` 3 LAKHS ON 28.1.98 IN THE INDIAN BANK ACCOUNT, ABIRAMAPURAM, CHENNAI. THE ASSESSING OFFI CER CALLED FOR EXPLANATION FOR WHICH THE ASSESSEE HAS SUBMITTED THA T THE AMOUNT WAS RECEIVED FROM M/S METAL KING AND THE SAME COULD BE VERIFIED FROM THE BALANCE SHEET OF M/S METAL KING WHICH WAS AVAILABLE WITH 5 I.T.A. NOS. 198 & 199/MDS/11 THE ASSESSING OFFICER. ON VERIFICATION OF THE BALA NCE SHEET OF M/S METAL KING, THE ASSESSING OFFICER FOUND THAT THERE WAS NO SUCH ENTRY PERTAINING TO THE ADVANCE IN THE BALANCE SHEE T OF M/S METAL KING. THE ASSESSING OFFICER ALSO PERUSED THE BANK A CCOUNT OF M/S METAL KING WITH CANARA BANK, GUINDY BRANCH AND CANARA BANK, MYLAPORE BRANCH AND NO SUCH RELEVANT ENTRY WAS NOTIC ED. IN VIEW OF THIS, THE ASSESSING OFFICER ADDED THIS AMOUNT AS IN COME FROM OTHER SOURCES. AGGRIEVED, THE ASSESSEE WENT IN APP EAL BEFORE THE CIT(APPEALS) AND REITERATED THE SUBMISSIONS MADE BE FORE THE ASSESSING OFFICER. 9. HOWEVER, IN THE FRESH PROCEEDINGS, ASSESSING OFF ICER HAS NOT POINTED ANY FAILURE SIMILAR TO ONE MENTIONED BY HIM IN THE ORIGINAL ASSESSMENT. ONLY LACUNA NOTED BY THE ASSESSING OFF ICER IS THAT ASSESSEE COULD NOT PRODUCE DETAILS REGARDING ADVANC E GIVEN BY SHRI R. KRISHNAN, NOR HAD IT FURNISHED A CONFIRMATION FROM SHRI R. KRISHNAN. WHAT WE SPECIFICALLY NOTICE IS THAT ASSESSEE IS A P ARTNERSHIP FIRM AND IT HAD SHOWN THE RECEIPT OF ` 3 LAKHS FROM M/S METAL KING, WHICH IS A PROPRIETORSHIP CONCERN OF ONE SMT. V.S. SASIKALA. IT IS NOT DISPUTED BY THE DEPARTMENT THAT SMT. V.S. SASIKALA IS A SEPARAT E ASSESSEE. BALANCE SHEET OF M/S METAL KING AS ON 31.3.98 CLEAR LY SHOWS AN ADVANCE OF ` 3 LAKHS GIVEN TO M/S J.S. HOUSING DEVELOPMENT (PAP ER- BOOK PAGE 3). IN OUR OPINION, ASSESSEE CANNOT BE A SKED TO PRODUCE EVIDENCE FOR THE CREDITS RECEIVED BY M/S METAL KING . MAY IT WAS TRUE THAT M/S METAL KING HAD SHOWN A SUM OF ` 3 LAKHS, AS RECEIVED FROM SHRI R. KRISHNAN OUT OF AN EARLIER ADVANCE OF ` 5 LAKHS. HOWEVER, INSOFAR AS ASSESSEE IS CONCERNED, WE ARE OF THE OPINION THAT O NUS RESTING ON IT WAS 6 I.T.A. NOS. 198 & 199/MDS/11 DISCHARGED. IT HAD FILED THE BALANCE SHEET OF M/S METAL KING, WHICH WAS A SEPARATE ASSESSEE, IN WHICH ADVANCE WAS CLEARLY S HOWN. TRIAL BALANCE OF M/S METAL KING ALSO SHOW THE TRANSACTION . THEREFORE, THE CONCLUSION OF THE ASSESSING OFFICER THAT EVIDENCE P RODUCED BY THE ASSESSEE WAS SELF SERVING, CANNOT BE ACCEPTED. IT MIGHT BE TRUE THAT PROPRIETRIX OF M/S METAL KING IS A PARTNER OF THE A SSESSEE-FIRM. FOR THIS REASON ALONE, WE CANNOT SAY THAT EXPLANATION GIVEN BY THE ASSESSEE WAS A MAKE-BELIEVE ONE, ESPECIALLY, WHEN THE SAID P ROPRIETRIX WAS AN INDEPENDENT ASSESSEE. LEARNED A.R. HAS CERTIFIED T HAT THE BALANCE SHEET PRODUCED BY HIM AS A PART OF THE PAPER-BOOK F ILED BY THE ASSESSEE BEFORE US, WAS AVAILABLE BEFORE ASSESSING AUTHORITY . THIS HAS NOT BEEN REBUTTED BY THE LEARNED D.R. IN SUCH A SITUATION, WE ARE OF THE OPINION THAT THE ADDITION WAS NOT CALLED FOR. SUCH ADDITIO N IS DELETED. 10. APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 1998 -99 IS ALLOWED. 11. NOW WE TAKE UP APPEAL OF THE ASSESSEE IN I.T.A. NO. 199/MDS/2011. 12. IN THIS APPEAL, GRIEVANCE OF THE ASSESSEE IS TH AT A PENALTY OF ` 10,000/- WAS LEVIED ON IT UNDER SECTION 271(1)(B) O F THE ACT AND THIS WAS CONFIRMED BY THE LD. CIT(APPEALS). 7 I.T.A. NOS. 198 & 199/MDS/11 14. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AS SESSING OFFICER HAD ISSUED NOTICE UNDER SECTION 142(1) REQUIRING TH E ASSESSEE TO FURNISH DETAILS OF BANK ACCOUNTS, DETAILS OF IMMOVABLE PROP ERTIES, NAME AND ADDRESS OF TENANTS, DETAILS OF RENT RECEIVABLE, REN TAL AGREEMENTS AND DETAILS OF CONSTRUCTION OF A BUILDING AT NO.1, MURP HY STREET, AKKARAI. NO SUCH DETAILS WERE EVER FILED BY THE ASSESSEE. SINC E THERE WAS NO COMPLIANCE TO THIS STATUTORY NOTICE, ASSESSING OFFI CER WAS OF THE OPINION THAT A PENALTY UNDER SECTION 271(1)(B) WAS WARRANTE D. A SHOW CAUSE NOTICE WAS ISSUED. REPLY OF THE ASSESSEE WAS THAT THERE WAS NO DEFAULT SINCE THE ASSESSMENT ORDER NOR THE PENALTY NOTICE C LEARLY BROUGHT OUT WHAT WAS THE NON-COMPLIANCE ON ITS PART. HOWEVER, ASSESSING OFFICER WAS NOT IMPRESSED. HE LEVIED A PENALTY OF ` 10,000/- UNDER SECTION 271(1)(B) OF THE ACT. 15. IN ITS APPEAL BEFORE CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT INCOME RETURNED WAS ACCEPTED AS SUCH BY THE AS SESSING OFFICER WITHOUT ANY ADDITION. THEREFORE, ACCORDING TO ASSE SSEE, PENALTY UNDER SECTION 271(1)(B) WAS NOT WARRANTED AT ALL. AS PER ASSESSEE, IF AT ALL IT HAD NOT FURNISHED ANY DETAILS, ASSESSING OFFICER WO ULD HAVE MADE SOME ADDITION. THEREFORE, THE LEVY OF PENALTY WAS ONLY TECHNICAL. HOWEVER, THIS PLEA WAS NOT ACCEPTED BY THE LD. CIT(APPEALS). HE CONFIRMED THE LEVY OF PENALTY. 8 I.T.A. NOS. 198 & 199/MDS/11 16. NOW BEFORE US, LEARNED A.R., STRONGLY ASSAILING THE ORDER OF CIT(APPEALS), SUBMITTED THAT RETURNED INCOME WAS AC CEPTED AND THERE WAS NOTHING ON RECORD TO SHOW WHAT WAS SPECIFICALLY ASKED FROM THE ASSESSEE OR WHAT SPECIFICALLY WAS THE FAILURE. UNL ESS DETAILS REGARDING NON-COMPLIANCE WERE BROUGHT TO THE NOTICE OF THE AS SESSEE, A MEANINGFUL REPLY COULD NEVER BE GIVEN. ACCORDING T O HIM, THERE BEING NO SPECIFIC NON-COMPLIANCE, LEVY OF PENALTY WAS NOT WA RRANTED. 17. PER CONTRA, LEARNED D.R. SUPPORTED THE ORDER OF CIT(APPEALS). 18. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. A LOOK AT THE ASSESSMENT ORDER CLEARLY SHOWS THAT NOT ICE UNDER SECTION 142(1) WAS ISSUED TO ASSESSEE ON 23.1.2004 CALLING FOR RETURN OF INCOME. ASSESSEE HAD NOT FILED RETURN OF INCOME. THEREAFTE R, NOTICES UNDER SECTION 143(2) AND 142(1) WERE ISSUED REQUIRING ATT ENDANCE AND INFORMATION. THOUGH ASSESSEES AUTHORIZED REPRESEN TATIVE SHRI G. NARAYANASWAMY APPEARED BEFORE ASSESSING OFFICER, IT IS CLEAR FROM THE ASSESSMENT ORDER, THAT NO DETAILS WHATSOEVER WERE F URNISHED. ASSESSING OFFICER HAS CLEARLY MENTIONED IN HIS SHOW CAUSE NOTICE THAT ASSESSEE WAS REQUIRED TO FURNISH DETAILS OF BANK AC COUNT ALONG WITH STATEMENTS, DETAILS OF IMMOVABLE PROPERTIES, DETAIL S OF TENANTS, DETAILS OF RENT RECEIVABLE AND DETAILS ON CONSTRUCTION OF A BU ILDING AT NO.1, MURPHY 9 I.T.A. NOS. 198 & 199/MDS/11 STREET, AKKARAI, WITH DATE OF COMPLETION OF CONSTRU CTION. DETAILS OF BUSINESS ACTIVITIES WERE ALSO CALLED FOR. ASSESSEE DID NOT CARE TO FILE ANY DETAILS. IT DID NOT EVEN MENTION ANYTHING REGARDIN G CONSTRUCTION OF ANY BUILDING AT NO.1, MURPHY STREET, AKKARAI, SPECIFICA LLY NOTED BY THE ASSESSING OFFICER. IN THE FACE OF SUCH A FACTUAL S CENARIO, THE CONTENTION OF THE LEARNED A.R. THAT ASSESSING OFFICER WAS UNAB LE TO SHOW SPECIFIC NON-COMPLIANCE FALLS FLAT. ASSESSEE HAD NOT COMPLI ED WITH STATUTORY NOTICE ISSUED BY THE ASSESSING OFFICER, NOR DID IT FILE THE DETAILS CALLED FOR. JUST BECAUSE RETURNED INCOME WAS ACCEPTED WO ULD NOT MEAN THAT THERE WAS SUFFICIENT COMPLIANCE TO THE NOTICES ISSU ED. ON THE OTHER HAND, THE ASSESSING OFFICER WAS DISABLED FROM MAKIN G ANY EFFECTIVE ENQUIRIES DUE TO ASSESSEES NON-COOPERATION, RESULT ING IN A COMPELLED ACCEPTANCE OF THE RETURNED INCOME. SECTION 271(1)( B) CLEARLY MENTIONS THAT IF AN ASSESSING OFFICER, IN THE COURSE OF ASSE SSMENT PROCEEDINGS, IS SATISFIED THAT ASSESSEE HAD FAILED TO COMPLY WITH N OTICE UNDER SECTION 142(1) OF THE ACT, THEN HE CAN LEVY PENALTY OF ` 10,000/- IN ADDITION TO TAX WHICH IS PAYABLE. WE ARE OF THE OPINION THAT IN TH E FACTS AND CIRCUMSTANCES, LEVY OF PENALTY WAS RIGHTLY DONE. W E DO NOT FIND ANY REASON TO INTERFERE. 19. APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2003 -04 IS DISMISSED. 10 I.T.A. NOS. 198 & 199/MDS/11 20. TO SUMMARIZE THE RESULT, APPEAL OF THE ASSESSEE IN I.T.A. NO. 198/MDS/2011 IS ALLOWED, WHEREAS, IN I.T.A. NO. 199 /MDS/2011 IS DISMISSED. ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 7 TH OF MARCH, 2013, AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 7 TH MARCH, 2013. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-II, CHENNAI/ CIT, CENTRAL-II, CHENNAI/D.R./GUARD FILE