P.Marimuthu, CHENNAI V. DCIT, CHENNAI

ITA 2181/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9626 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 20-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: PHILIP P GEORGE
• Keywords: Gift; Business income; Revised return; Reassessment proceedings
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2181/MDS/2015 ( / ASSESSMENT YEAR: 2006-07) MR. P.MARIMUTHU, 54, DEFENCE OFFICERS COLONY, EKKATTUTHANGAL, CHENNAI-600 097. VS THE DEPUTY COMMISSIONER OF INCOME TAX , COMPANY CIRCLE-I(1), CHENNAI-600 034. PAN:AANPM5361M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.PHILIP P.GEORGE, ADVOCATE /RESPONDENT BY : MR. A.B.KOLI, JCIT /DATE OF HEARING : 9 TH FEBRUARY, 2016 /DATE OF PRONOUNCEMENT : 6 TH APRIL, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 1, CHENNAI DATED 21.08.2015 IN NEW ITA NO.162/CIT(A )- 1/2010-11 PASSED UNDER SECTION 271(1)(C) R.W.S 250 OF THE ACT. 2. THE ONLY GROUND RAISED BY ASSESSEE IN THIS A PPEAL IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED BY CONFIRMING THE PENALTY LEVIED BY THE LEARN ED ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE AC T. 2 ITA NO.2181 /MDS/2015 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND THE MANAGING DIRECTOR OF M/S.ARUN PL ASTO MOULDERS (INDIA) PVT. LTD., FILED HIS ORIGINAL RETU RN OF INCOME ON 31.10.2005 ADMITTING INCOME OF ` 29,90,021/-. SUBSEQUENTLY, THE RETURN WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S 147 OF THE ACT ON 11.12.2009, WHEREIN THE LEARNED ASSESSIN G OFFICER MADE ADDITION OF BUSINESS INCOME AMOUNTING TO RS.29,90,021/- ALONG WITH CERTAIN OTHER ADDITIONS. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LEARNED ASSESSING OFFICER THAT THE ASSESSEE HAD INT RODUCED CASH AS SHARE APPLICATION MONEY FOR RS.14,85,000/- ON VARIOUS DATES. WHEN QUERIED, THE ASSESSEE SUBMIT TED AS FOLLOWS VIDE HIS LETTER DATED 01.12.2009:- REASON FOR FILING THE REVISED RETURN FOR THE ASSES SMENT YEAR 2006-07 IS THAT SHRI MARIMUTHU HAS INVESTED RS.14.8 LAKHS IN THE SHARE CAPITAL OF M/S.ARUN PLAS TO MOULDERS INDIA PVT.LTD. OUT OF THE FUNDS HE GOT AS GIFT FROM VARIOUS RELATIVES. BUT AS THE RECEIPTS OF GIFT S WERE NOT PROPERLY DOCUMENTED HE COULD NOT PROVE THE SOUR CE DURING THE ASSESSMENT OF THE COMPANY FOR THE SAID ASSESSMENT YEAR IN ORDER TO BUY PEACE WITH THE DEPARTMENT, HE HAD OFFERED THE SAME AS INCOME FROM OTHER SOURCES AND PAID THE TAX WITH INTEREST. 3 ITA NO.2181 /MDS/2015 DISBELIEVING THE THEORY OF GIFT THE LEARNED ASSESSI NG OFFICER TREATED THE AMOUNT OF RS.14,85,000/- AS THE UNDISCL OSED BUSINESS INCOME OF THE ASSESSEE. SUBSEQUENTLY, PENA LTY PROCEEDINGS WERE INITIATED. DURING THE COURSE OF PE NALTY PROCEEDINGS, THE ASSESSEE HAD FILED CONFIRMATION LE TTERS FROM ALL THE SEVEN PARTIES WHO ARE THE RELATIVES OF THE ASSESSEE WHEREIN IT WAS STATED THAT GIFTS WERE GIVEN OUT OF LOVE & AFFECTION TO THE ASSESSEE. THE AGGREGATE AMOUNT OF SUCH GIFTS WAS STATED AS RS.14,85,000/- BEING THE SOURC E OF INTRODUCTION OF SHARE APPLICATION MONEY IN THE COMP ANY. HOWEVER, THE LEARNED ASSESSING OFFICER WAS OF THE O PINION THAT THE CREDITWORTHINESS OF THE DONORS WERE NOT PR OVED AND THEREFORE LEVIED MINIMUM PENALTY OF RS.4,99,851/- B EING 100% OF THE TAX SOUGHT TO BE EVADED. 4. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- 3. CONSEQUENT TO THE ASSESSMENT ORDER PENALTY PROC EEDING U/S 271 (1 )(C) WERE ALSO INITIATED SEPARATELY. THE SE PROCEEDINGS WERE TAKEN UP AND WERE ATTENDED TO BY T HE APPELLANT. IN THESE PROCEEDINGS THE APPELLANT PLEAD ED BEFORE 4 ITA NO.2181 /MDS/2015 THE AO VIDE LETTER DATED 24.,6.2010 'THAT 'MOST OF THE DONORS WERE FARMERS NOT HAVING ACCESS TO BANKING SYSTEM AN D HAVE GIFTED CASH TO THE APPELLANT WITHOUT PROPERLY DOCUM ENTING THE GIFTS. THE APPELLANT ALSO FILED CONFIRMATION LETTER S FROM SEVEN SUCH PERSONS WHICH ARE LISTED IN PARA 5 OF THE ORDE R DATED 30.6.2010. IT MAY BE NOTED THAT THE INDIVIDUALS WER E ALSO RELATIVES OF THE APPELLANT. THE AO EXAMINING THE EV IDENCE FOUND THEM BALD AND ROT ACCEPTABLE AS THE APPELLANT HAD NOT PROVEN THE CREDITWORTHINESS OF THE CREDITORS AS ALS O GENUINENESS OF THE CLAIM MADE. THE AO NOTED THAT EA CH OF THE LETTERS WERE STEREOTYPED SAYING 'THE SOURCE OF THIS GIFT IS FROM MY SAVINGS OUT OF AGRICULTURAL INCOME. AS MY E ARNINGS ARE NOT TAXABLE, I AM NOT ASSESSED TO TAX AND HENCE I DO NOT HOLD A PAN.' THE AO REJECTED THE EVIDENCE RELIED UP ON BY THE APPELLANT. BESIDES OTHER REASONS MENTIONED IN T HE ORDER THE AO INVOKED THE RATIO OF HON'BLE SUPREME COURT I N K.P. MADHUSUDHANAN V. CIT 251 ITR 99, UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS 306 ITR 277 AMONGST O THERS TO HOLD THAT THE APPELLANT WAS LIABLE FOR PENALTY U /S 271 (1 )(C) AND LEVIED THE SAME AT RSA,99,851 BEING 100% O F THE TAX SOUGHT TO BE EVADED. 4. AT THE APPELLATE STAGE THE ID.AR FOR THE APPELLA NT HAD NO FRESH OR CREDIBLE MATERIAL TO ADD TO SUPPORT ITS PL EA MADE IN THE GROUNDS OF APPEAL CONTESTING THE LEVY OF PENALT Y BUT FOR FURNISHING THE CONFIRMATION LETTERS IN RESPECT OF T HE PERSONS WHO HAD PURPORTEDLY GIFTED THE IMPUGNED SUMS. THE APPELLANT ALSO RELIED ON THE RATIO OF THE JURISDICT IONAL COURT IN CIT V. GEM GRANITES IN TCA NO.504 OF 2009 DATED 12 TH NOVEMBER,2013. 5. I HAVE CAREFULLY CONSIDERED THE FACTS IN ISSUE, THE VIEW TAKEN BY THE AO, THE ARGUMENTS ADVANCED BY THE APPE LLANT AND MATERIAL ON RECORD. AT THE OUTSET I HAVE MENTIO NED IN THE FOREGOING THAT THIS IS CASE WHERE THE CASH CREDITS WERE ACCEPTED AND OFFERED AS INCOME IN THE REVISED RETUR N FILED WHICH WAS ACCEPTED AS SUCH. IN THE PENALTY PROCEEDI NGS ALSO THE APPELLANT MADE A FEEBLE ATTEMPT TO EXPLAIN AWAY THE CASH CREDITS OFFERED AS INCOME. IT WAS A CASE WHERE THE APPELLANT WAS RESORTING TO PROBATE AND APPROBATE IN RESPECT OF THE SAME INCOME. THE EVIDENCES FILED IN THE APPE LLATE STAGE WERE WELL CONSIDERED AND REJECTED BY THE AO L EVYING THE PENALTY FOR VALID AND CREDIBLE REASONS. I ALSO FIND THAT THE RATIO RELIED UPON BY THE APPELLANT IS OF NO AVAIL T O HIM. ON THE CONTRARY IT CEMENTS THE ORDER OF THE AO IN AS MUCH IT REAFFIRMS THE SHIFTING ONUS FROM THE APPELLANT TO T HE AO IF IN CASE DISCHARGED BY THE APPELLANT. IN THIS CASE THE ONUS 5 ITA NO.2181 /MDS/2015 RESTED ON THE APPELLANT AND WAS NEVER DISCHARGED. T AKING THE CONSPECTUS OF CASE INTO ACCOUNT AND THE TOTALIT Y OF FACTS BEFORE ME I HAD NO HESITATION IN CONFIRMING THE ORD ER OF THE AO LEVYING THE PENALTY U/S 271 (1 )(C) OF THE ACT. IN THE RESULT THE APPEAL IS DISMISSED. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD FILED CONFIRMATION LETTERS FROM HIS RELATIVES WITH RESPECT TO THE GIFTS RECEIV ED BY THE ASSESSEE FROM THEM AND THEREFORE THE ONUS NOW SHIFT S ON THE REVENUE TO ESTABLISH THE FACTS TO BE OTHERWISE. IT WAS FURTHER SUBMITTED THAT THE LEARNED ASSESSING OFFICER WITHOU T VERIFYING THE EXPLANATION OFFERED BY THE ASSESSEE HAD SIMPLY LEVIED PENALTY ON THE ADDITIONS MADE. IT WAS THEREFORE PLE ADED THAT THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER MAY BE DELETED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED I N SUPPORT OF THE ORDERS OF THE REVENUE BY REITERATING THE FINDINGS MADE BY THE REVENUE. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. IT IS EVIDENT FR OM THE ORDER OF THE LEARNED ASSESSING OFFICER THAT HE HAS DISBEL IEVED THE 6 ITA NO.2181 /MDS/2015 CREDITWORTHINESS OF THE DONORS BECAUSE THE DONORS H AVE STATED IN THEIR CONFIRMATION LETTERS THAT THEIR SOU RCES OF INCOME WERE FROM AGRICULTURAL ACTIVITIES. HOWEVER WE FIND THAT THE LEARNED ASSESSING OFFICER HAS NOT MADE ANY EFFORT T O ASCERTAIN THE GENUINENESS OF THE CONFIRMATION LETTE RS FILED BY THE ASSESSEE. IT IS ALSO REVEALED THAT THE ASSESSEE HAS FURNISHED THE PHOTO IDENTITY CARDS OF THE SEVEN CRE DITORS ALONG WITH THE CONFIRMATION STATEMENTS TO THE LEARNED ASS ESSING OFFICER. IN THESE CIRCUMSTANCES, WE ARE OF THE CONS IDERED VIEW THAT THE PENALTY LEVIED BY THE LEARNED ASSESSI NG OFFICER HURRIEDLY WITHOUT CONDUCTING ANY ENQUIRY ON THE EVI DENCE FURNISHED BY THE ASSESSEE IS NOT APPROPRIATE AND NO T APPRECIABLE. FOR LEVY OF PENALTY UNDER SECTION 271( 1)(C) OF THE ACT, THERE SHOULD BE A CONCRETE FINDING BY THE REVE NUE THAT THE ASSESSEE HAS CONCEALED HIS PARTICULARS OF INCOM E OR FURNISHED INACCURATE PARTICULARS OF INCOME. PENALTY CANNOT BE LEVIED ON THE ADDITIONS MADE BASED ON SURMISES AND CONJECTURES. FURTHER, THE RELIANCE PLACED BY THE LE ARNED DEPARTMENTAL REPRESENTATIVE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF R.PADMAN ABHAN VS. DCIT REPORTED IN 371 ITR 211(MAD) WILL NOT COME T O THE AID 7 ITA NO.2181 /MDS/2015 OF THE REVENUE BECAUSE THE ASSESSEE THOUGH HAD OFFE RED THE AMOUNT AS HIS INCOME FROM UNDISCLOSED SOURCE TO BUY PEACE WITH THE DEPARTMENT, HAS SUBSTANTIATED THE SO URCE OF INCOME BEFORE THE LEARNED ASSESSING OFFICER IN THE PENALTY PROCEEDINGS WITH DOCUMENTARY EVIDENCE, WHICH THE RE VENUE HAS FAILED TO EXAMINE. HENCE WE DO NOT FIND ANY MER IT IN THE PENALTY ORDERS OF THE REVENUE AND THEREFORE DIRECT THE LEARNED ASSESSING OFFICER TO DELETE THE LEVY OF PEN ALTY OF RS.4,99,850/-. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 6 TH APRIL, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 6 TH APRIL, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF