DR SARITA MILIND DAVARE, MUMBAI V. ACIT CEN CIR 40, MUMBAI

ITA 2186/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2866 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 01-04-2014
• Court: TRIBUNAL
• Department Lawyers: CAPT PRADEEP ARYA
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Gift; Search and seizure
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 2182 /MUM/20 14 (ASSESSMENT YEAR 20 04 - 05 ) I.T.A. NO. 2186/MUM/2014 (ASSESSMENT YEAR 2008 - 09) DR. SARITA MILIND DAVARE FLAT NO. 501, SWAPNA APARTMENT, PARANJPE SCHEME B, VILE PARLE (EAST) MUMBAI - 400 057. VS. ACIT CC - 40 MUMBAI ( APPELLANT ) ( RESPONDENT ) PAN NO . AHVPD8632R ASSESSEE BY SHRI VIJAY KOTHARI DEPARTMENT BY CAPT. PRADEEP ARYA DATE OF HEARING 29.9 . 201 6 DATE OF PRONOUNC EMENT 05 . 10 . 201 6 O R D E R PER B.R. BASKARAN (AM) : - BOTH THE APPEALS HAVE BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDERS PASSED BY LEARNED CIT(A) - 38, MUMBAI AND THEY RELATE TO A.YS. 2004 - 05 & 2008 - 09 CONFIRMING THE PENALTY LEVIED U/S. 271(1)( C) OF THE ACT . 2. FIRST WE SHALL TAKE UP THE APPEAL FILED FOR A.Y. 2004 - 05. THE ASSESSEE WAS SUBJECTED TO SEARCH AND SEIZURE OPERATION U/S. 132(1) OF THE ACT. DURING THE COURSE OF SEARCH, NATIONAL SAVING CERTIFICATES WORTH ` 3,50,000/ - WAS FOUND IN THE J OINT NAME OF THE ASSESSEE AND HER FATHER/GRANDFATHER. BEFORE THE SEARCH OFFICIALS, THE ASSESSEE AGREED TO OFFER THE ABOVE SAID SUM OF ` 3,50,000/ - AS HER INCOME . ACCORDINGLY SHE FILED RETURN OF INCOME U/S. 153A OF THE ACT DECLARING AMOUNT OF ` 3,50,000/ - FOR THE YEAR UNDER CONSIDERATION . THE ASSESSING OFFICER ACCEPTED THE RETURN AND THEREAFTER LEVIED PENALTY U/S. 271(1)(C) OF THE ACT BY INVOKING EXPLANATION 5A TO SEC.271(1)(C) . LEARNED CIT(A) DR.SARITA MILIND DAVARE 2 ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS AP PEAL BEFORE US. 3. LEARNED AR SUBMITTED THAT THE ASSESSEE DID NOT INVEST AMOUNT OF ` 3,50,000/ - IN NATIONAL SAVINGS CERTIFICATE OUT OF HER OWN INCOME AND HAS RECEIVED THE SAME AS GIFT/ INHERIT ANCE FROM HER FATHER AND GRANDFATHER . THE ASSESSEE HAS OFFERED THE ABOVE SAID AMOUNT AS HER INCOME IN THE RETURN OF INCOME FILED U/S. 153A OF THE ACT , SINCE SHE HAS AGREED TO OFFER THE SAME IN THE STATEMENT TAKEN FROM HER DURING THE COURSE OF SEARCH . LEARNED AR SUBMITTED THAT EXPLANATION 5A TO SECTION 271(1)(C) SHALL BE APPLICABLE ONLY IF THE ASSESSEE IS FOUND TO BE THE OWNER OF THE ASSET AND THE ASSESSEE CLAIMS THAT THE SAME HAS BEEN ACQUIRED BY HIM BY UTILIZING ( WHOLLY OR IN PART ) HIS INCOME FOR ANY PREVIOUS YEAR. LEARNED AR SUBMITTED THAT THE ASSESSEE DID NOT HAVE ANY OTHER INCOME IN THE YEAR UNDER CONSIDERATION AND THE ASSESSING OFFICER HAS RECORDED SAID FACT IN PARA 3 OF THE ASSESSMENT ORDER. IN THE ABSENCE OF OWN INCOME, THE QUESTION OF INVOKING EXPLANATION 5A DOES NOT ARISE. HE SUBMITTED THAT THE ASSESSEE HAS A CQUIRED THESE NATIONAL SAVING CERTIFICATES BY WAY OF INHERITING/GIFT FROM HER FATHER/GRANDFATHER. ACCORDINGLY HE SUBMITTED THAT PROVISIONS OF EXPLANATION 5A TO SEC. 271(1)(C) HAS BEEN WRONGLY INVOKED BY THE AO. HE FURTHER SUBMITTED THAT EXPLANATION 5 AND E XPLANATION 5A HAS BEEN BROUGHT INTO SECTION 271(1)(C) AS DEEMING PROVISION WHERE THE ASSESSEE CLAIMS THAT UNDISCLOSED ASSETS HAVE BEEN ACQUIRED BY HIM OUT OF HIS INCOME. INTENTION FOR INSERTING EXPLANATION 5 HAS BEEN EXPLAINED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHERATON APPARELS VS. ACIT (2002) 256 ITR 20. LEARNED AR FURTHER SUBMITTED THAT THE ASSESSEE HAS OFFERED AN AMOUNT OF ` 3,50,000/ - AS HER INCOME IN THE RETURN OF INCOME FILED BY HER AND HENCE THE IMPUGNED PENALTY IS LIABLE TO BE DELETED. 4. ON THE CONTRARY LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE DID NOT FILE HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION PRIOR TO THE DATE OF SEARCH AND THE ASSESSEE HAS FILED HER RETURN OF INCOME FOR THE FIRST TIME U/S. 153A F OR THE YEAR UNDER CONSIDERATION , AS SHE AGREED TO OFFER DR.SARITA MILIND DAVARE 3 THE VALUE OF N ATIONAL SAVING CERTIFICATES AS HER INCOME IN THE STATEMENT RECORDED FROM HER DURING THE COURSE OF SEARCH. ACCORDINGLY LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE IMPUGNED INVE STMENT HAS BEEN DE TE CTED BY THE ASSESSING OFFICER DURING THE COURSE OF SEARCH AND HENCE ASSESSING OFFICER HAS RIGHTLY LEVIED PENALTY U/S. 271(1)(C) OF THE ACT. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICE THAT THE AO HAS INVOKED THE PROVISIONS OF EXPLANATION 5A TO SEC. 271(1)(C) TO IMPOSE PENALTY. WE NOTICE THAT THE AO HIMSELF HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE DID NOT DERIVE ANY INCOME DURING THE YEAR UNDER CONSIDERATION. FURTHER THE FACT THAT THE NSC WAS HELD IN THE JOINT NAME OF THE ASSESSEE AND HER FATHER/GRANDFATHER, IN A WAY SUPPORTS THE CASE OF THE ASSESSEE THAT THE INVESTMENTS WERE MADE BY THEM. HENCE WE ARE OF THE VIEW THAT THE EXPLANATION 5A WOULD NOT APPLY TO THE FACTS OF THE PRE SENT CASE. IN THIS VIEW OF MATTER AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE RETURN OF INCOME FILED BY THE ASSESSEE OFFERING THE AMOUNT OF RS.3,50,000/ - AS AGREED IN THE STATEMENT CANNOT BE CONSIDERED TO BE A CASE OF CONCEALMENT OF PARTICULARS OF INCOME. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. 6. WE SHALL NOW TAKE UP THE APPEAL FILED FOR AY 2008 - 09. THE ASSESSEE CLAIMED A SUM OF RS.48,500/ - AS RENT EXPENDITURE AND THE SAME WAS DISALLOWE D BY THE AO BY TREATING THE SAME AS NOT RELATED TO BUSINESS. THE AO LATER LEVIED PENALTY ON THE ABOVE SAID DISALLOWANCE AND THE SAME WAS ALSO CONFIRMED BY LD CIT(A). 7. WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICE THAT THE PE NALTY HAS BEEN LEVIED ON THE DISALLOWANCE OF RENTAL EXPENDITURE ON THE PRESUMPTION THAT THE SAME DOES NOT RELATE TO BUSINESS. THE FACT WHETHER THE PREMISES WAS USED OR NOT USED FOR PROFESSIONAL PURPOSES IS A DEBATABLE ONE AND HENCE THE ABOVE SAID DISALLOW ANCE SHOULD ALSO BE CONSIDERED TO BE A DEBATABLE ONE, IN WHICH CASE THE PENALTY U/S 271(1)(C) WILL NOT LIE. ACCORDINGLY DR.SARITA MILIND DAVARE 4 WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSE SSEE ARE ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 5 . 10 .2016 SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 05 / 10 / 20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI