Dr. S.V.Krishna Reddy, Nellore V. ACIT, Cir-1, Nellore

ITA 215/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53686 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 10-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MYTHLI RANI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.215/HYD/11 : ASSTT. Y EARS 2003-04 ITA NO.216/HYD/11 : ASSTT. Y EARS 2004-05 ITA NO.217/HYD/11 : ASSTT. Y EARS 2005-06 DR.S.V. KRISHNA REDDY, NELLORE. ( PAN - AIQPS 3714 H ) V/S. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE-1, NELLORE (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V.RAGHU RAM DEPARTMENT BY : S MT. K.MYTHLI RANI DATE OF HEARING 29.9.2011 DATE OF PRONOUNCEMENT 4.10.2011 O R D E R PER G.C.GUPTA, VICE PRESIDENT: THESE THREE APPEALS BY THE ASSESSEE FOR THE ASSES SMENT YEARS 2003-04, 2004-05 AND 2005-06 ARE DIRECTED AGAINST T HE ORDERS OF THE CIT(A). SINCE IDENTICAL ISSUE IS INVOLVED IN ALL TH ESE THREE APPEALS, THESE ARE BEING DISPOSED OFF WITH THIS CONSOLIDATED ORDER. 2. THE ONLY ISSUE IN THESE APPEALS PREFERRED BY TH E ASSESSEE IS REGARDING VALIDITY OF THE PENALTY LEVIED UNDER S.27 1(1)(C) OF THE ACT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE HYDERABAD BENCH OF THE TRIBUNAL, WHILE DISPOSING O FF THE QUANTUM APPEALS OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS , VIZ. 2003-04 TO 2005- 06, BESIDES APPEAL FOR ASSESSMENT YEAR 2006-07, IN ITA NO.514 TO 516/HYD/2009; 587 AND 867/HYD/2009, ALONGWITH APPE ALS OF THE OTHER ITA NO.215 TO 217/HYD/2011 DR. S.V.KRISHNA REDDY, NELLORE. 2 GROUP MEMBERS OF THE ASSESSEE, VIDE ORDER DATED 2 9.10.2010, HAS DELETED ALL THE ADDITIONS MADE BY THE ASSESSING OFFICER, EX CEPT AN ADDITION OF RS.2,03,184 WHICH HAS BEEN SUSTAINED AND ALSO THE R EJECTION OF THE CLAIM OF THE ASSESSEE FOR EXEMPTION MADE UNDER S.54F OF THE ACT WHICH HAS BEEN CONFIRMED. HE SUBMITTED THAT THE ADDITION OF RS.2, 03,184 PERTAINING TO ASSESSMENT YEAR 2005-06, HAS BEEN SUSTAINED BY THE TRIBUNAL, VIDE PARA 13 OF ORDER DATED 29.10.2010 IN ITA NO.217/HYD/2010, O BSERVING THAT AT THE BEST AN ADDITION OF RS.2,03,184 MAY BE JUSTIFIED. HE S UBMITTED THAT THIS ADDITION OF RS.2,03,184 HAS BEEN SUSTAINED ON PREDO MINANCE OF PROBABILITIES ONLY, AND AS SUCH, IT CANNOT JUSTIFY IMPOSITION OF PENALTY UNDER S.271(1)(C) OF THE ACT. MOREOVER, THE CONSTRUCTION OF THE PROP ERTY WAS GOING ON DURING THE RELEVANT PERIOD AND THEREFORE, PRESUMPTION OF T HE DEPARTMENT THAT THE VOUCHER FOR RS.2,03,184 FOUND DURING THE COURSE OF SEARCH WOULD NOT BE DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME T HAT MAY BE FILED, WAS UNFOUNDED. REGARDING THE CLAIM OF EXEMPTION UNDER S .54F OF THE ACT, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E EXEMPTION WAS DENIED TO THE ASSESSEE SINCE THE ASSESSEE HAS MADE THE BUI LDING IN THE FORM OF A HOSTEL AND NOT A RESIDENTIAL HOUSE. HE SUBMITTED T HAT ALL THE MATERIAL FACTS WERE DISCLOSED AND THE EXPLANATION OF THE ASSESSEE WAS BONA FIDE. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPP OSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE . HE SUBMITTED THAT TO THE EXTENT ADDITIONS HAVE BEEN CONFIRMED BY THE HIG HEST FACT FINDING BODY, I.E. THE TRIBUNAL, PENALTY UNDER S.271(1)(C) OF THE ACT MAY BE SUSTAINED. HE SUBMITTED THAT THE VOUCHER OF R.2,03,184 WAS FOU ND AS A RESULT OF SEARCH AND THERE IS NO EVIDENCE WITH THE ASSESSEE TO SUGGE ST THAT HE WOULD HAVE DISCLOSED THE SAME IN THE RETURN OF INCOME TO BE FI LED. AS FOR THE CLAIM FOR EXEMPTION UNDER S.54F OF THE ACT, LEARNED DEPARTMEN TAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS BUILT A HOSTEL BUI LDING, AND THEREFORE, THE ITA NO.215 TO 217/HYD/2011 DR. S.V.KRISHNA REDDY, NELLORE. 3 SAME BEING CLEARLY OUTSIDE THE PURVIEW OF S.54F, T HE ASSESSEE WAS NOT ENTITLED TO EXEMPTION AND HENCE, ASSESSEE WAS LIABL E TO PENALTY UNDER S.271(1)(C) OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND HAVE PERUSED THE ORDER OF THE HYDERABAD BENCH OF THE TRI BUNAL IN THE QUANTUM APPEALS IN THE GROUP CASES OF THE ASSESSEE, DATED 2 9.10.2010 NOTED ABOVE. WE FIND THAT ALL THE MAJOR ADDITIONS MADE IN THE AS SESSMENT OF THE ASSESSEE WITH REGARD TO UNRECORDED CHIT TRANSACTIONS AND THE ADDITIONS ON ACCOUNT OF THE COST OF CONSTRUCTION OF THE PROPERTY HAVE BEEN DELETED IN APPEAL BY THE TRIBUNAL, AND THEREFORE, THERE REMAINS NO BASIS FOR IMPOSITION OF PENALTY UNDER S.271(1)(C) OF THE ACT ON THE ISSUES IN REL ATION TO WHICH ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL IN THE QUANTUM AP PEALS OF THE ASSESSEE. WE DIRECT ACCORDINGLY. 6. WITH REGARD TO THE PENALTY IMPOSED ON THE AMOUN T OF VOUCHER OF RS.2,03,184 FOUND AT THE TIME OF SEARCH AND NOT RECORDED IN THE BOOKS OF ACCOUNT, WE FIND THAT THE RETURN OF INCOME FOR TH E RELEVANT PERIOD WAS NOT DUE ON THE DATE OF SEARCH, AND THERE IS NO PRESUMPT ION THAT THE ASSESSEE SHALL NOT DISCLOSE ALL THE VOUCHERS, AT THE TIME OF FILING OF HIS RETURN OF INCOME. FACTS OF THE CASE MAY JUSTIFY THE ADDITION OF THE AMOUNT OF VOUCHER AS MADE BY THE ASSESSING OFFICER, BUT DO NOT JUSTIF Y IMPOSITION OF PENALTY ON THE AMOUNT OF VOUCHER WITHOUT ANY INCRIMINATING MAT ERIAL BROUGHT ON RECORD. ACCORDINGLY, THE PENALTY UNDER S.271(1)(C) IMPOSED ON THE AMOUNT OF VOUCHER OF RS.2,03,184 IS CANCELLED. EVEN WITH R EGARD TO THE PENALTY IMPOSED ON THE BASIS OF REJECTION OF THE ASSESSEES CLAIM FOR EXEMPTION UNDER S.54F OF THE ACT, WE FIND THAT THE ASSESSEE H AS CLAIMED EXEMPTION UNDER S.54F IN RESPECT OF HOSTEL BUILDING. THE TRI BUNAL IN ITS ORDER DATED 29.10.2010 NOTED ABOVE, IN THE QUANTUM APPEAL OF TH E ASSESSEE HAS ITA NO.215 TO 217/HYD/2011 DR. S.V.KRISHNA REDDY, NELLORE. 4 RECORDED THAT IT IS NOT THE CASE OF THE ASSESSEE T HAT ANY RESIDENTIAL HOUSE WAS CONSTRUCTED . THUS, WE FIND THAT THE ASSESSEE HAS DISCLOSED AL L MATERIAL FACTS RELATING TO ITS ASSESSMENT TRULY AND CORRECT LY AND THERE IS NO ATTEMPT ON THE PART OF THE ASSESSEE TO MISLEAD THE DEPARTME NT. THE EXPLANATION OF THE ASSESSEE SEEMS TO BE BONA FIDE. THIS IS A CASE OF HONEST DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT REG ARDING THE APPLICABILITY OF A BENEFICIAL PROVISION OF LAW, VIZ . S.54F. ALTHOUGH THE PROVISION OF EXEMPTION UNDER S.54F OF THE ACT DOES NOT APPLY TO THE CONSTRUCTION OF A HOSTEL BUILDING, THE FACTS OF THE CASE LEAD TO THE CONCLUSION THAT THE CONDUCT OF THE ASSESSEE IN CLAIMING THE BE NEFIT UNDER S.54F OF THE ACT, WAS BONA FIDE AND HE HAS DISCLOSED ALL THE FAC TS TRULY AND CORRECTLY. MERELY BECAUSE A CLAIM OF DEDUCTION WAS NOT ALLOWAB LE IN ACCORDANCE WITH THE SCHEME OF THE ACT, IT DOES NOT FOLLOW THAT THE ASSESSEE WOULD BE LIABLE TO IMPOSITION OF PENALTY UNDER S.271(1)(C) OF THE A CT, WITHOUT ANY MATERIAL BROUGHT ON RECORD TO JUSTIFY THE PENALTY. IN THESE FACTS OF THE CASE, WE HOLD THAT THE ASSESSEE IS NOT LIABLE FOR PENALTY UNDER S .271(1)(C) OF THE ACT EVEN IN RESPECT OF REJECTION OF ITS CLAIM FOR EXEMPTION UNDER S.54F OF THE ACT. WE ACCORDINGLY CANCEL THE PENALTIES LEVIED UNDER S.271 (1)(C) OF THE ACT FOR ALL THE THREE ASSESSMENT YEARS, VIZ. 2003-04, 2004-05 A ND 2005-06 AND CONSEQUENTLY, THE GROUNDS OF APPEAL OF THE ASSESSEE IN THESE APPEALS ARE ALLOWED. 7. IN THE RESULT, ALL THE THREE APPEALS OF THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 4.10.2011 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 4TH OCTOBER, 2011 ITA NO.215 TO 217/HYD/2011 DR. S.V.KRISHNA REDDY, NELLORE. 5 COPY FORWARDED TO: 1. DR.S.V. KRISHNA REDDY, 16/1727, RAMAMURTHY NAGAR, POGATHOTA, NELLORE DISTRICT. 2. ASST COMMISSIONER OF INCOME - TAX, CIRCLE - I , NELLORE 3. COMMISSIONER OF INCOME - TAX(APPEALS) GUNTUR 4. COMMISSIONER OF INCOME TAX , GUNTUR 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.