Shri Jayantbhai R. Pandya, Anand V. The Income Tax Officer, Ward-3, Anand

ITA 2159/AHD/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1265 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 22-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.2159/AHD/2015 / ASSTT. YEAR: 2011-2012 SHRI JAYANTBHAI R. PANDYA C-44, VAISHNAV TOWNSHIP BAKROL V.V. NAGAR ROAD BAKROL 388 315. PAN : AERPP 3057 M VS ITO, WARD-3 ANAND. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SMT. ARTI N. SHAH REVENUE BY : SMT. SMITI SAMANT, SR.DR ! / DATE OF HEARING : 21/09/2015 '#$ ! / DATE OF PRONOUNCEMENT: 24/09/2015 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE CIT(A)-4, VADODARA DATED 28.4.2015 PASSED FOR THE A SSTT.YEAR 2011-12. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE LD.CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.48,610/- IMPO SED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. HE HAS FILED HIS RETURN OF INCOME ELECTRONICALLY ON 15 .9.2011 DECLARING TOTAL ITA NO.2159/AHD/2015 2 INCOME OF RS.1,60,350/-. THE CASE OF THE ASSESSEE W AS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 1.8.2012. THE AO HAD RECEIVED INFORMATIO N FROM ANNUAL INFORMATION REPORT WING EXHIBITING THAT THE ASSESSE E HAS DEPOSITED A SUM OF RS.45,55,500/- IN THE BANK ACCOUNT WITH AXIS BANK. WHEN THE AO HAS CONFRONTED THE ASSESSEE WITH REGARD TO SOURC E OF THIS CASH DEPOSIT, THE LD.AUTHORISED REPRESENTATIVE OF THE AS SESSEE HAD SUBMITTED THAT THESE WERE CONSTRUCTION RECEIPTS AND OFFERED F OR TAXATION AT THE RATE 8%. LD.AO MADE FOLLOWING OBSERVATIONS, WHILE WORKING OUT INCOME AT 9% OF THESE RECEIPTS: 3. HOWEVER, CONSIDERING THE CREDIT DEPOSIT IN THE RELEVANT BANK ACCOUNT AND TAKING IN CONSIDERATION, CONSTRUCTION O F RS.14,50,500/- AND INCOME FROM OTHER SOURCES RS.1,7 6,272/- WHICH IS SHOWN AS INCOME IN THE RETURN OF INCOME, 9 % OF THE BALANCE CREDIT DEPOSIT IS TREATED AS UNDISCLOSED BU SINESS INCOME WHICH REQUIRES TO BE ADDED IN THE INCOME OF THE REL EVANT YEAR THEREFORE, RS.4,05,613 BEING 9% OF RS.45,06,812 IS ADDED AS UNDISCLOSED BUSINESS INCOME. (ISSUE PENALTY NOTICE U/S.271(1)(C) ON THIS ISSUE). 4. THE AO HAD ISSUED NOTICE UNDER SECTION 274 R.W.S . 271(1)(C) OF THE ACT. IN RESPONSE TO THE NOTICE, THE ASSESSEE H AS GIVEN FOLLOWING EXPLANATION WITH REGARD TO THE DEPOSIT MADE IN THE BANK: DURING THE ASSESSMENT PROCEEDING COMPLETE DETAILS OF DEPOSITS MADE IN AXIS BANK ACCOUNT NO.522816 WAS FURNISHED. IT WAS EXPLAINED VIDE LETTER DT.17.12.2013, THE CASH WITHD RAWAL & DEPOSIT IN AXIS BANK A/C. STATEMENT TO JUSTIFY THE CASH TRANSACTION IS BUSINESS. THE TOTAL DEPOSIT IS EXPLAINED AS UNDER: 1. TOTAL DEPOSIT (AS PER STATEMENT) RS.61,33,084 TOTAL DEPOSIT AMOUNT 2. AMONGST ABOVE A. CONSTRUCTION RECEIPT RS.14,50,000 CONSTRUCTION INCOME AS ROI B. CASH DEPOSIT RS.27,49,200 TOTAL CASH ITA NO.2159/AHD/2015 3 WITHDRAWN FROM BANK RS.2891236/- USE FOR DEPOSIT C. SUNDRY RS.19,34,000 COPY OF ACCOUNT & PROOFS WERE FURNISHED RS.61,33,200 3. IT MAY BE OBSERVED FROM ABOVE STATEMENT THAT THE DEPOSITS CONSISTING CASH & CHEQUES. CASH IS DEPOSI TED OUT OF CASH WITHDRAWAL MADE FROM ACCOUNTS. 5. THE LD.AO HAS REJECTED THE EXPLANATION OF THE AS SESSEE AND CONCLUDED THAT THE ASSESSEE FAILED TO OFFER ANY PLA USIBLE EXPLANATION. HE HAS CONCEALED THE PARTICULARS OF INCOME SO AS TO EVADE THE PAYMENT OF TAX. HE IMPOSED PENALTY OF RS.48,610/- WHICH I S EQUIVALENT TO THE TAX SOUGHT TO BE EVADED. 6. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 7. THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT D EPOSITS IN THE BANK ACCOUNT WAS EXPLAINED BY THE ASSESSEE HE HAS SHOWN TOTAL WITHDRAWAL OF RS.28,91,236/- WHICH WAS DEPOSITED IN CASH IN THE BANK ACCOUNT. SHE TOOK US THROUGH THE EXPLANATION GIVEN TO THE AO AND CONTENDED THAT THE AO HAS REJECTED THIS EXPLANATION SUMMARILY. SHE FURTHER CONTENDED THAT THE ADDITION HAS BEEN MADE B Y ESTIMATING THE INCOME AT 9% OF THE ALLEGED RECEIPT. THE AO HAS AC CEPTED THE CONTENTIONS THAT THE DEPOSITS IN THE BANK WERE THE CONSTRUCTION RECEIPTS. ACCORDING TO THE ASSESSEE, IN CASE OF ES TIMATION OF INCOME NO PENALTY DESERVES TO BE IMPOSED UPON THE ASSESSEE. SHE RELIED UPON THE FOLLOWING DECISIONS: 1. VIKRAM PLASTICS VS. ITO, 22 TAXMANN.COM 16 (AHD )(TM); 2. CIT VS. GUJARAT INSECTICIDES LTD., 35 TAXMANN.CO M 313 (GUJ); 3. CIT VS. STANDARD AGRO ENGINEERS, 35 TAXMANN.COM 213 (GUJ); 4. ACIT VS. MANISH ORGANICS INDIA LTD., 17 TAXMANN. COM 25 (AHD); 5. CIT VS. SAMBHAV MEDIA LTD., 32 TAXMANN.COM 371 ( GUJ) ITA NO.2159/AHD/2015 4 8. THE LD.DR, ON THE OTHER HAND, CONTENDED THAT THE SE DETAILS WERE NOT GIVEN EITHER ALONG WITH RETURN OR DURING THE AS SESSMENT PROCEEDINGS. THE INFORMATION CAME TO THE AO IS FRO M ANNUAL INFORMATION REPORT WING. THE ASSESSEE HAS NOT DISC LOSED THIS ASPECT HIMSELF. 9. SECTION 271(1)(C) OF THE ACT HAS A DIRECT BEARIN G ON THE CONTROVERSY WHICH READS AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE C OMMISSIONER (APPEALS) OR THE CIT IN THE OF COURSE OF ANY PROCEE DINGS 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 DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL N OT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULA RS 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 OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (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) ITA NO.2159/AHD/2015 5 OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 10. A BARE PERUSAL OF THIS SECTION WOULD REVEAL TH AT 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 QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UN DER THIS 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 FURNISHING INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FE ATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCO ME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HA S CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUT ORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEE MING FICTION, BY WAY OF EXPLANATION-1 TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A ) FIRST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO T HE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE A SSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE AS SESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEA L); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS, TO PROVE THAT S UCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL T HE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOT AL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT ITA NO.2159/AHD/2015 6 EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND 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 COMP UTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. THESE T WO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 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 DISALLOWAN CE 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. 11. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE F ACTS OF THE PRESENT CASE. WE DO HAVE DISPUTE WITH REGARD TO THE PROPOS ITION THAT THE PENALTY PROCEEDINGS IS AN INDEPENDENT PROCEEDINGS A ND THE ASSESSEE CAN TAKE ALTOGETHER INDEPENDENT PLEA IN ORDER TO EX PLAIN THE POSITION AS TO WHY THE PENALTY SHOULD NOT BE IMPOSED UPON HIM. A BARE PERUSAL OF THE ASSESSMENT ORDER IN LIGHT OF ABOVE DETAILS WOUL D INDICATE THAT IN A WAY THE ASSESSEE HAS TAKEN CONTRADICTORY STANDS. I N THE ASSESSMENT ORDER THE ASSESSEE HAS AGREED THAT THE AMOUNTS DEPO SITED IN THE BANK REPRESENTS AS CONSTRUCTION RECEIPTS. IN THE PENALT Y PROCEEDINGS HE GAVE AN EXPLANATION THAT HE HAS TAKEN ADVANCES FROM DIFF ERENT FAMILY MEMBERS FOR CONSTRUCTION PURPOSE, AND THESE AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT. THE ASSESSEE FAILED TO SUBMIT THE DETAILS, WHEN THE ADVANCES WERE TAKEN FROM THE FAMILY MEMBERS. W HETHER THOSE ADVANCES WERE INCURRED IN THE CONSTRUCTION ? AND LA TER ON REALIZATION OF THE CONSTRUCTION CHARGES, THESE WERE DEPOSITED IN T HE BANK. THE ASSESSEE HAS ALLEGED THAT ADVANCES WERE TAKEN FROM THE FAMILY MEMBERS, WHICH WERE ALSO DEPOSITED IN THE ACCOUNT. THE LIST OF SUCH ITA NO.2159/AHD/2015 7 PERSONS IS PLACED ON PAGE 9 OF THE PAPER BOOK. THE FIRST NAME IS JAYMIN PANDYA. A SUM OF RS.1,51,000/- HAS BEEN SHO WN AGAINST THIS NAME. A DEPOSIT OF RS.1,51,000/- WAS SHOWN ON 4.5. 2010 BUT IT IS TO BE APPRECIATED THAT ON 22.4.2010, ASSESSEE HAD PAID THIS PERSON AN AMOUNT OF RS.1,98,000/- VIDE CHEQUE NO.74841. WHAT IS THE CO-RELATION OF THIS TRANSACTION. THE ASSESSEE HAS NOT DISCLOSE D THIS ACCOUNT IN RETURN. SIMILARLY, THE ASSESSEE HAS ALLEGED TAKING OF RS.2.50 LAKHS FROM SMITABEN, BUT HE FIRST PAID RS.40,000/- THROUGH CHE QUE BEING NO.74854 ON 29.6.2010. SO IT IS NOT DISCERNIBLE FROM THE RE CORD THAT ASSESSEE HAD TAKEN ADVANCE ONLY FROM THE FAMILY MEMBERS WHIC H WAS USED FOR CONSTRUCTION AND ON REALIZATION, THE AMOUNTS WERE D EPOSITED IN THE BANK. THERE IS NO CO-RELATION TO THIS EFFECT. NO FLOW CHART OF FUND WAS PREPARED OR SUBMITTED BEFORE THE AO DURING THE ASSE SSMENT PROCEEDINGS. THIS EXPLANATION IS AN AFTER-THOUGHT, AND THERE IS NO MATERIAL TO SUBSTANTIATE THIS EXPLANATION. THE EM PHASIS OF THE LD.COUNSEL FOR THE ASSESSEE WAS THAT WHERE THE ADDI TION HAS BEEN MADE BY ESTIMATING THE INCOME, THEN, THERE SHOULD NOT BE ANY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IF THE ASSESSEE HAS SUBMITTED DETAILS AND THE AO WAS UNABLE TO DEDUCE THE TRUE INCOME FROM TH OSE DETAILS, THEN HE WOULD ESTIMATE THE INCOME. FOR SUCH AN ESTIMATI ON, THE PENALTY MAY NOT BE IMPOSABLE, BECAUSE, HE HAS NOT RECORDED A FINDING THAT DETAILS SUBMITTED BY THE ASSESSEE WERE FALSE AND FA BRICATED. BUT, IN CASE WHERE THE ASSESSEE DOES NOT HAVE ANY DETAILS, THE MOMENT HE WAS CONFRONTED WITH REGARD TO THE CASH DEPOSITS IN BANK , AND HE ADMITS AND THESE ARE FROM UNEXPLAINED CONTRACT RECEIPTS AND IN COME BE ESTIMATED FROM THEM, THEN IT IS NOT THE SIMPLE ESTIMATION OF INCOME. IT IS ONLY MODE OF COMPUTATION OF INCOME FROM THESE UNDISCLOSE D RECEIPTS. THE ASSESSEE CANNOT BE ABSOLVED FROM THE PENALTY ON SUC H TYPE OF ESTIMATION. THEREFORE, THE JUDGMENTS REFERRED BY T HE LD.COUNSEL OF THE ITA NO.2159/AHD/2015 8 ASSESSEE ARE OF NO HELP TO THE ASSESSEE. WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. IT IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 24 TH SEPTEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER