Shri Jayesh Kantilal Shah, Anand V. The Income Tax Officer, Ward-3, Anand

ITA 2178/AHD/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1195 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 1999-2000
• Appeal Filed On: 23-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D V SINGH
• Keywords: Unexplained cash credit
• Section: 143(3)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO.2178/AHD/2013 /BLOCK ASSTT. YEAR: 1999-2000 SHRI JAYESH KANTILAL SHAH 302,PADMAVATI COMPLEX NR. NARMADA VAS, NANA BAZAR VALLABH VIDHYANAGAR 388 120. ANAND. PAN : AOKPS 8450 C VS ITO, WARD - 3 ANAND. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI ASEEM THAKKAR REVENUE BY : SHRI D.V. SINGH, SR.DR / DATE OF HEARING : 13/08/2015 / DATE OF PRONOUNCEMENT: 21/08/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE LD.CIT(A)-VI, BARODA DATED 26.02.2013 FOR ASSTT.YEA R 1999-2000. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.53,546/- IMPOSED UN DER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 31.8.1999 DECLARING TOTAL INCOME RS.1,04, 959/-. THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) R. W.S. 147 OF THE INCOME TAX ACT ON 26.3.2003. THE LD.AO HAS MADE TH E FOLLOWING ADDITIONS: ITA NO.2178/AHD/2013 2 I) CAPITAL INTRODUCED IN M/S.SHAH PATEL & CO. : RS.1,0 0,000/- II) CAPITAL INTRODUCED IN PADMAVATI CONSTRUCTION : RS. 22,000/- III) CASH DEPOSITS IN SB A/C.15637 WITH VVC BANK : RS.5 ,47,700/- TOTAL ADDITION : RS.6,69,700/- 4. ON APPEAL, THE LD.CIT(A) HAS DELETED THE ADDITIO N OF RS,1,00,000/- , RS.22,000/- AND RS.3,54,200/- OUT OF RS.5,47,700/ -. THIS ORDER OF THE CIT(A) WAS SET ASIDE BY THE TRIBUNAL, AND THE ISSUE S WERE RESTORED TO THE FILE OF THE AO AND THE AO HAS PASSED FRESH ASSE SSMENT ORDER UNDER SECTION 143(3) R.W.S. SECTION 254 OF THE ACT ON 29. 12.2008. HE AGAIN MADE ADDITION OF RS.6,69,700/-. 5. ON APPEAL, THE LD.CIT(A) HAS DELETED THE ADDITIO N OF RS.1,00,000/- AS WELL AS RS.22,000/-. OUT OF ADDITION OF RS.5,47 ,700/-, THE LD.FIRST APPELLATE AUTHORITY AS AGAIN DELETED ADDITION OF RS .3,54,200/-. THE ASSESSEE HAS SHOWN SOURCE OF RS.46,000/- AS AGRICUL TURE INCOME. THIS WAS DISBELIEVED BY THE CIT(A), AND ADDITION OF RS.4 6,000/- WAS CONFIRMED. THE LD.AO ISSUED NOTICE UNDER SECTION 2 71(1)(C) R.W.S. 274 ON THE GROUND THAT UNEXPLAINED CASH CREDIT AGGREGAT ING TO RS.1,93,500/- REMAINED TO BE EXPLAINED BY THE ASSES SEE, FOR THIS ADDITION, IT IS TO BE TERMED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE INCOME, FOR WHICH, HE DESERVES TO BE VISITED WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE LEARNED AO AFTER HEARING THE ASSESSEE HAS IMPOSED P ENALTY OF RS.53,546/-. 6. THE APPEAL TO THE CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. 7. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV E, WE GONE THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 HAS DIRECT BEARING ON THE CONTROVERSY. THEREF ORE, IT IS PERTINENT TO TAKE NOTE OF THE SECTION. ITA NO.2178/AHD/2013 3 '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS 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 DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS 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 O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (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 MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE N, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O R SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 8. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T 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 ITA NO.2178/AHD/2013 4 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 I TO SECTION 271(1)(C) POSTULATE S 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 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 ITA NO.2178/AHD/2013 5 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. 9. IN THE LIGHT OF THE ABOVE, IF WE EXAMINE THE FAC TS AND CIRCUMSTANCES, THEN IT WILL REVEAL THAT THE ASSESSE E HAS GIVEN AN EXPLANATION WHICH REMAINED TO BE SUBSTANTIATED. BU T THE EXPLANATION WAS NOT FOUND TO BE FALSE. THE ADDITIONS HAVE BEEN MADE BY THE AO IN THE FIRST ROUND ON ACCOUNT OF UNEXPLAINED DEPOSITS IN THE BANK. MORE THAN 60% OF THE ADDITIONS WERE DELETED BY THE CIT(A ). THIS ORDER OF THE CIT(A) WAS ALSO SET ASIDE BY THE TRIBUNAL. THE AO HAS AGAIN MADE ADDITIONS, BUT THE CIT(A) HAS AGAIN DELETED. NO-ON E HAS CHALLENGED THIS ORDER OF THE CIT(A) IN FURTHER APPEAL. IT APPEARS THAT THE ASSESSEE COULD NOT SUBSTANTIATE HIS EXPLANATION ABOUT THE SO URCE OF DEPOSITS. SO FAR AS THE SOURCE OF RS.46,000/- IS CONCERNED, IT W AS STATED THAT THE ASSESSEE HAS AGRICULTURE INCOME, BUT THIS CLAIM WAS DISBELIEVED ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE SUPPORTI NG EVIDENCE. WE FIND THAT THE ASSESSEE HAS PRODUCED DETAILS OF AGRI CULTURE HOLDING, BUT DID NOT MAINTAIN ANY INCOME AND EXPENDITURE ACCOUNT WITH REGARD TO AGRICULTURE ACTIVITY. ONCE THE ASSESSEE HAS PRODU CED THE OWNERSHIP OF THE AGRICULTURE LAND, THEN SOME INCOME OUT OF THE A GRICULTURE INCOME CAN ALWAYS BE ESTIMATED. THEREFORE, LOOKING TO THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE DOES NOT DESERVE TO BE VISITED WITH PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT. WE ALLOW THE APPEAL OF THE ASSESSEE AND DELET E THE PENALTY. 10. IN THE RESULT OF THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 21 ST AUGUST, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 21/08/2015