Sonalank Investments & Trading Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-8(2), Ahmedabad

ITA 2/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 6681 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-05-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 01-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Unexplained investment; Reasonable cause; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI D. K. TYAGI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 02/ AHD/2009 (BLOCK PERIOD 1.4.1995 TO 20.09.2001) SMT. BHARTIBEN S SHAH, SUBHAM SHYAM GOKUL SOCIETY, OPP. HARNI AIRPORT, BARODA VS. ACIT, CIRCLE 5, BARODA PAN/GIR NO. : AFOPS8896R (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI SAMIR PARIKH, AR RESPONDENT BY: SHRI B L YADAV, SR. DR DATE OF HEARING: 24.04.2012 DATE OF PRONOUNCEMENT: 24.04.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) V, BARODA DATED 12.11.2008 FOR THE BLOCK PERIOD 01. 04.1995 TO 20.09.2001. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: ALL THE GROUNDS OF APPEAL IN THIS APPEAL ARE MUTUA LLY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. 1. THE LEARNED CIT(A) ERRED IN FACT AND IN L AW IN CONFIRMING ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY OF RS. 7,45,000 U/S 158BFA(2) OF THE INCOME TAX ACT, 1961. 1.1 THE LEARNED CIT(A) ERRED IN FACT AND IN L AW IN CONFORMING PENALTY EVEN ON THE INCOME RETURNED BY THE APPELLAN T FOR THE BLOCK PERIOD. I.T.A.NO. 02/AHD/2009 2 2. YOUR APPELLANT CRAVES A RIGHT TO ADD TO O R AMEND, ALTER, SUBSTITUTE, DELETE OR WITHDRAW ALL OR ANY OF THE GR OUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE NOTED BY THE A.O . IN THE PENALTY ORDER THAT THE ASSESSEE FILED RETURN OF INCOME ON 2 0.06.2002 DECLARING TOTAL UNDISCLOSED INCOME OF RS.7,39,216/- AND THE A SSESSMENT WAS COMPLETED U/S 158BC READ WITH SECTION 158BG AT UNDI SCLOSED INCOME OF RS.12,40,420/-. THE A.O. INITIATED PENALTY PROCEED INGS U/S 158BFA(2) AND IMPOSED PENALTY OF RS.7,45,000/- ON THE ENTIRE INCOME ASSESSED OF RS.12,40,420/-. IT IS WORTHWHILE TO MENTION THAT IN THE QUANTUM PROCEEDINGS, THE ADDITION WAS UPHELD BY LD. CIT(A) AS WELL AS BY THE TRIBUNAL ALSO. BEING AGGRIEVED, THE ASSESSEE CARRI ED THE MATTER IN APPEAL BEFORE LD. CIT(A) IN PENALTY PROCEEDING BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT WAS SUBMITTED BY THE LD. A.R. BEFORE US THAT AS PER THE PROVISIONS OF SECTION 158BFA(2), PENALTY IS IMPOSAB LE ON THE ADDITION MADE BY THE A.O. IN THE BLOCK ASSESSMENT OVER AND A BOVE THE INCOME DECLARED BY THE ASSESSEE IN THE BLOCK RETURN OF IN COME AND THEREFORE, A.O. WAS NOT CORRECT IN IMPOSING PENALTY ON THE ENT IRE ASSESSED INCOME OF RS.12,40,416/- AND THE PENALTY CAN BE IMPOSED AT TH E MAXIMUM AMOUNT OF INCOME OF RS.5,01,200/- BEING ADDITION MADE BY T HE A.O. IN THE BLOCK ASSESSMENT. 5. REGARDING THIS ADDITION OF RS.5,01,200/-, IT WAS SUBMITTED THAT PENALTY IS NOT JUSTIFIED EVEN ON THIS AMOUNT BECAUS E OUT OF TOTAL AMOUNT, ADDITION OF RS.1200/- WAS ON THE BASIS OF WRONG COM PUTATION OF DEDUCTION U/S 24(1) FOR THE ASSESSMENT YEAR 1999-20 00 AND IF THIS AMOUNT IS EXCLUDED, NET ADDITION IS ONLY RS.5 LACS. REGAR DING THIS ADDITION OF RS.5 LACS, IT WAS SUBMITTED THAT THE ASSESSEE CLAIM ED THE BENEFIT OF I.T.A.NO. 02/AHD/2009 3 TELESCOPYING OF OTHER INCOME DISCLOSED IN THE BLOCK RETURN AGAINST THE INVESTMENT IN HOUSE PROPERTY ON ACCOUNT OF RENOVATI ON AND FURNITURE AND THE TELESCOPYING WAS NOT ALLOWED BY THE A.O. AND FO R SUCH AN ADDITION, PENALTY IS NOT JUSTIFIED. HE SUBMITTED THAT AS PER THE TRIBUNAL DECISION RENDERED IN THE CASE OF MALA DAYANITHI AS REPORTED IN 270 ITR 56 (AT) BANGALORE, IT WAS HELD THAT PENALTY U/S 158 BFA(2) SHOULD NOT BE IMPOSED IF A REASONABLE CAUSE IS DEMONSTRATED FOR N ON INCLUSION OF A PARTICULAR INCOME IN THE BLOCK RETURN. HE ALSO PLA CED RELIANCE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI VS CIT AS REPORTED IN 2008 TIOL 472 WHEREIN IT WAS HELD THAT THERE WAS ABSOLUTELY NO BA SIS FOR MAKING ADDITION FOR UNACCOUNTED INVESTMENT IN THE HOUSE PROPERTY ON THE BASIS OF ALLEGED DISCLOSURE MADE BY THE ASSESSEE IN THE STATEMENT U/ S 132(4) WHEN IN SUPPORT OF THE STATEMENT, THE REVENUE HAS NOT BROUG HT OUT ANY EVIDENCE WHATSOEVER WHICH WOULD ESTABLISH THAT ASSESSEE HAS IN FACT INCURRED AN AMOUNT OF RS.4 LACS ON THE CONSTRUCTION OF FIRST FL OOR AND THE AMOUNT WAS INVESTED OUT OF UNDISCLOSED INCOME. IT WAS SUBMITT ED THAT IN THE PRESENT CASE ALSO, THE ADDITION IS MADE MERELY ON DISCLOSUR E BY THE ASSESSEE AND NO CORROBORATIVE MATERIAL WAS BROUGHT OUT ON RECORD BY THE REVENUE AND HENCE, ADDITION ITSELF IS NOT JUSTIFIED AS PER THE JUDGEMENT OF HONBLE HIGH COURT AND, THEREFORE, AT LEAST PENALTY ON SUCH ADDITION SHOULD BE DELETED. 6. LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. WE FIND THAT THIS IS COMING OUT FORM TH E PENALTY ORDER ITSELF THAT IN THE BLOCK RETURN FILED BY THE ASSESSEE, AN UNDISCLOSED INCOME OF RS.7,39,216/- WAS DECLARED BY THE ASSESSEE AND THE BLOCK ASSESSMENT WAS I.T.A.NO. 02/AHD/2009 4 COMPLETED AT A FIGURE OF RS.12,40,420/- AND HENCE, THERE IS EFFECTIVE ADDITION OF RS.5,01,200/- ONLY ON WHICH PENALTY U/S 158BFA(2) CAN BE IMPOSED. TO THIS EXTENT, THE PENALTY IS DELETED BE CAUSE THE SAME IS NOT AS PER THE PROVISIONS OF SECTION 158BFA(2). 8. REGARDING THE PENALTY IMPOSED BY THE A.O. ON THE ADDITION AMOUNTING TO RS.5,01,2000/-, IT WAS SUBMITTED BY TH E ASSESSEE BEFORE US THAT OUT OF THIS AMOUNT, ADDITION OF RS.1200/- WAS ON ACCOUNT OF WRONG COMPUTATION OF DEDUCTION ALLOWABLE U/S 24(1). LD. D.R. COULD NOT CONTROVERT THIS SUBMISSION OF THE LD. A.R. AND HENC E, FOR THIS ADDITION ALSO, PENALTY IS NOT JUSTIFIED AND THE SAME IS ALSO DELETED. 9. NOW, FOR THE 3 RD AMOUNT OF RS.5 LASS, WE FIND THAT THE ASSESSEE DECLARED IN THE STATEMENT RECORDED U/S 132(4) THAT AN INVESTMENT OF RS.5 LACS WAS MADE BY HIM OUT OF UNDISCLOSED INCOME AND THE ASSESSEE HAS NOT GONE BACK FOR THIS DISCLOSURE AND HIS SIMPLE CLAIM IS THIS THAT WHATEVER HAS BEEN DISCLOSED BY THE ASSESSEE IN THE BLOCK RET URN IN RESPECT OF VARIOUS UNDISCLOSED INCOME, TELESCOPYING SHOULD BE ALLOWED AGAINST THE INVESTMENT OF RS.5 LACS AND IF THIS IS DONE, NO ADD ITION IS CALLED FOR IN RESPECT OF THIS INVESTMENT IN HOUSE PROPERTY ON ACC OUNT OF RENOVATION AND FURNITURE. THIS CONTENTION OF ASSESSEE WAS NOT AC CEPTED BY THE A.O. AS WELL AS BY LD. CIT(A) AND BY THE TRIBUNAL BUT STILL THE FACT REMAINS THAT EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE AND THIS COULD NOT BE DISPROVED BY THE REVENUE ALTHOUGH NOT ACCEPTED. UN DER THESE FACTS, IN OUR CONSIDERED OPINION, THE TRIBUNAL DECISION RENDERED IN THE CASE OF SMT. MALA DYANIDHI (SUPRA) IS APPLICABLE AND IN THE LIGH T OF THIS DECISION OF THE TRIBUNAL, WE FEEL THAT IN THE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE, PENALTY IS NOT JUSTIFIED EVEN FOR THIS ADDITION OF RS.5 LACS. BY RESPECTFULLY I.T.A.NO. 02/AHD/2009 5 FOLLOWING THE TRIBUNAL DECISION, WE DELETE THIS PEN ALTY ALSO. IN THIS MANNER, THE ENTIRE PENALTY IS DELETED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 11. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (D. K. TYAGI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION30/4. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER30/4.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 24/4 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.30/4 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30 /4/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .