Late Shri Krishnamurthy Vishvanathan Through L/H Kala Krishnamurthy, Gandhinagar V. The ACIT, Circle-13, Now Circle-7(1), Ahmedabad

ITA 2188/AHD/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3895 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Assessee Lawyers: PF JAIN
• Keywords: Corroborative evidences
• Section: 271(1)(c); 143(2)

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT) BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT ITA NO.2188/AHD/2018 / ASSTT.YEAR : 2009-10 LATE SHRI KRISHNAMURTHY VISHVANATHAN THIRUVIDAIMARUTHUR THROUGH LEGAL HEIR KALA KRISHNAMURTHY PLOT NO.146, SECTOR-8 GANDHINAGAR. PAN : ABTPT 7611 E VS. ACIT, CIR.13 AHMEDABAD. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI P.F. JAIN, AR REVENUE BY : SHRI R.R.MAKWANA, SR.DR / DATE OF HEARING : 24/05/2021 / DATE OF PRONOUNCEMENT: 04/06/2021 !'/ O R D E R PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE A SSESSEE AGAINST CONFIRMATION OF LEVY OF PENALTY UNDER SECTION 271(1 )(C) OF THE INCOME TAX ACT, 1961 BY THE LD.CIT(A) VIDE ORDER DATED 4.9 .2018 FOR THE ASSTT.YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 7.7.2009 DECLARING TOTAL INCOME AT RS.6,1 2,050/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSES SEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASS ESSEE HAS DEPOSITED A CASH OF RS.7 LAKHS ON 2.9.2008 AND RS.7 LAKHS ON 3. 10.2008. HE DIRECTED THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEPOSITS IN THE CORPORATION BANK, SATELLITE ROAD, AHMEDABAD. IN RE SPONSE TO THE ITA NO.2188/AHD/2018 2 QUERY OF THE AO, IT WAS CONTENDED BY THE ASSESSEE T HAT HE WAS A RETIRED IAS HAVING PENSION AND INTEREST INCOME. HE HAS GIV EN CHEQUE OF RS.14,25,000/- TO T. RAMKRISHNA AND S. BHASKARA RAO FOR PURCHASE OF SOME IMMOVABLE PROPERTY AT CHENNAI. THEY HAVE RETU RNED THIS AMOUNT IN CASH AND REDEPOSITED. THE LD.AO WAS NOT SATISFIED WITH THE EXPLANATION. HE TERMED IT AS LOAN TAKEN BY THE ASS ESSEE, WHOSE SOURCES HAVE NOT BEEN EXPLAINED, THEREFORE, HE MADE AN ADDITION OF RS.14.00 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. IT WAS INFORMED TO ME THAT EVEN ADDITION WAS CONFIRMED AT THE LEVEL OF THE TRIBUNAL ALSO. THE LD.AO THEREAFTER INITIATED PENALTY PROCE EDING AGAINST THE ASSESSEE UNDER SECTION 271(1)(C) OF THE ACT. AFTER HEARING THE ASSESSEE HE IMPOSED PENALTY OF RS.6,74,150/-. DISSA TISFIED WITH THE PENALTY ORDER, THE ASSESSEE FILED APPEAL BEFORE THE LD.CIT(A). THE APPEAL HAS BEEN DISMISSED EX PARTE . 3. IT HAS BEEN BROUGHT TO MY NOTICE THAT DURING THE PENDENCY OF THE APPEAL, THE ASSESSEE HAS DIED. THEREFORE, NO ONE M ADE APPEARANCE BEFORE THE LD.CIT(A). THE LD.COUNSEL FOR THE ASSE SSEE THEREAFTER TOOK ME THROUGH PAGE NO.21 TO 23 WHEREIN THE BANK STATEM ENT OF CORPORATION BANK HAS BEEN PLACED ON RECORD. HE DRE W MY ATTENTION TOWARDS THREE ENTRIES DATED 2 ND APRIL, 2 ND APRIL AND 26 TH APRIL, 2008. IN THESE ENTRIES, IT HAS BEEN REFLECTED THAT VIDE C HEQUE NO.63241, 63239, 63240 AMOUNT OF RS.4,75,068/-, 4,75,066/- AN D RS.4,76,066/- WERE GIVEN AS ADVANCE TO SHRI T. RAMAKRISHNA AND S. BHASKARA RAO ETC. THESE AMOUNTS HAVE BEEN RE-DEPOSITED IN HIS A CCOUNT. ACCORDING TO THE ASSESSEE, HE HAS RECEIVED THIS AMOUNT IN CAS H AND SAME DEPOSITED ON 2 ND SEPTEMBER, AND 3 RD OCTOBER, 2008 DURING THIS VERY ITA NO.2188/AHD/2018 3 YEAR ITSELF. THUS, ACCORDING TO THE ASSESSEE, THE SOURCES OF THE DEPOSITS ARE THE RECEIPT OF MONEY, WHICH WERE RETURNED FROM THESE PERSONS. THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED B Y THE AO FOR WANT OF CONFIRMATION FROM THESE PERSONS. THEREFORE, ADD ITION WAS MADE; BUT IT IS NOT SUFFICIENT TO VISIT THE ASSESSEE WITH PENALTY ALSO. APART FROM THE ABOVE, THE LD.COUNSEL FOR THE ASSESSEE INV ITED MY ATTENTION TOWARDS TWO-THREE MORE DEFECTS. HE POINTED OUT THA T NOTICE DATED 21.01.2013 ISSUED UPON THE ASSESSEE UNDER SECTION 2 74 READ WITH SECTION 271(1)(C) OF THE ACT WAS FOR THE ASSTT.YEAR 2010-11. IN OTHER WORDS, THE ASSESSMENT YEAR WAS WRONGLY MENTIONED BY THE AO. THUS, THERE IS A DEFECT EVEN IN THE NOTICE ISSUED BY THE AO. HE ALSO POINTED OUT THAT THE AO HAS NOT SPECIFIED THE CHARGE AGAINS T THE ASSESSEE, WHERE HE INTENDED TO VISIT THE ASSESSEE WITH CONCEA LMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS WAY, THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSE SSEE DOES NOT DESERVE TO BE VISITED WITH PENALTY. ON THE OTHER H AND, THE LD.DR RELIED UPON ORDERS OF THE REVENUE AUTHORITIES. 4. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 HAS DIRECT BEARING ON THE CONTROVERSY. THEREFORE, IT I S PERTINENT TO TAKE NOTE OF THE SECTION. '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. ITA NO.2188/AHD/2018 4 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 TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULA RS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURA TE 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 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 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) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 5. 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) CON CEALED 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 INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTIC ULARS, IN CERTAIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO IND ICATE SO, STATUTORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INT O PLAY. THIS ITA NO.2188/AHD/2018 5 DEEMING FICTION, BY WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FIRST WHETHER IN RES PECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UND ER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND, (B) WHERE IN RESPECT OF A NY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVIS IONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATIO N AND THE ASSESSEE FAILS, TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME. UNDER FIRST SITUAT ION, THE DEEMING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED T O GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO TH E COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDING 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 INT O PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALL OWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RE SPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. ITA NO.2188/AHD/2018 6 6. IN THE LIGHT OF THE ABOVE, LET ME EXAMINE THE FA CTS OF THE PRESENT CASE. A PERUSAL OF THE RECORD WOULD INDICATE THAT THE LD.AO HAS VISITED THE ASSESSEE WITH PENALTY UNDER SECTION 271(1)(C) O F THE ACT FOR ADDITIONS VIZ. (A) RS.14 LAKHS AS UNEXPLAINED CASH DEPOSITED IN HIS BANK ACCOUNT AND NON-DISCLOSURE OF BANK INTEREST AM OUNTING TO RS.16,014/-. AS FAR AS UNEXPLAINED CASH DEPOSIT OF RS.14 LAKHS IS CONCERNED, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTE D THAT SOURCE OF THIS MONEY WAS THE ADVANCE GIVEN BY THE ASSESSEE HIMSELF DURING THE YEAR WHICH HAS BEEN RETURNED BACK. AS FAR AS NON-INCLUS ION OF INTEREST INCOME IS CONCERNED, IT WAS CONTENDED TO BE A BONA FIDE MISTAKE, AND THE ASSESSEE BEING A RETIRED EMPLOYEE MIGHT HAVE MI SSED THE MINOR AMOUNT FROM THE BANK STATEMENT WHILE FILING THE RET URN. IT WAS ALSO CONTENDED THAT THE ASSESSEE IS RETIRED LONG BACK AN D DIED DURING THE PENDENCY OF THE APPEAL BEFORE THE LD.CIT(A). I HAV E GONE THROUGH THE BANK STATEMENT. IT IS DULY REFLECTED THAT IN THE M ONTH OF APRIL, HE HAS GIVEN ADVANCE OF ROUGHLY RS.14 LAKHS. THEREAFTER, IN THE MONTH OF SEPTEMBER AND OCTOBER, RS.14 LAKHS HAS BEEN DEPOSIT ED IN HIS ACCOUNT. TO SOME EXTENT, THE EXPLANATION OF THE AS SESSEE IS PLAUSIBLE THAT HE HAS GIVEN ADVANCE FOR PURCHASE OF THE PROPE RTY WHICH WAS NOT MATERIALIZED AND RECEIVED BACK THE AMOUNT DURING TH E YEAR ITSELF. THE ONLY DEFICIENCY IN HIS EXPLANATION WAS THAT HE COUL D NOT BUTTRESS THIS EXPLANATION WITH SUPPORTING EVIDENCE I.E. CONFIRMAT ION FROM TWO PERSONS VIZ. T. RAMKRISHNA & S. BHASKARA RAO. TO MY MIND, HE FAILED TO EXPLAIN THE SOURCE WITH SUPPORT OF EVIDEN CE, BUT HIS EXPLANATION WAS NOT FOUND TO BE FALSE. THE LAPSE C OMMITTED AT HIS END MAY AUTHORISE THE AO TO MAKE ADDITION, BUT THAT WIL L NOT AUTHORISE THE AO TO VISIT THE ASSESSEE WITH PENALTY. THE EXPLANA TION OF THE ASSESSEE ITA NO.2188/AHD/2018 7 OUGHT TO HAVE BEEN FOUND AS FALSE BY THE AO. NOTHI NG THAT SORT OF EXERCISE HAS BEEN MADE OR ANY MATERIAL DISCERNIBLE FROM THE RECORD. AS FAR AS INTEREST PART IS CONCERNED, IT IS A VERY SMALL AMOUNT. THERE MIGHT HAVE SOME MINOR DISCREPANCY WHILE CALCULATING THE INTEREST AT THE TIME OF FILING OF THE RETURN. CONSIDERING ALL THESE ASPECTS, I AM OF THE VIEW THAT THE ASSESSEE DOES NOT DESERVE TO BE V ISITED WITH PENALTY. I ALLOW THIS APPEAL, AND DELETE THE IMPUGNED PENALT Y. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 4 TH JUNE, 2021 AT AHMEDABAD. S D / - (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED 04/06/2021