Income-tax Officer, V. M R V Associates,

ITA 224/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0313 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 05-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAVAN
• Keywords: Unexplained expenditure
• Section: 69C; 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , ! ' , # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.224/PUN/2015 & & / ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER, WARD - 6(3), PUNE. . / APPELLANT V/S MRV ASSOCIATES, 678, SHUKRAWAR PETH, PUNE 411002. PAN : AAKFM9081F. . / RESPONDENT / APPELLANT BY : SHRI B.Y. CHAVAN / RESPONDENT BY : SHRI NIKHIL PATHAK ' / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE ORDERS OF COMMISSIONER OF INCOME TAX (A) 4, PUNE DT.17 .12.2014 FOR THE ASSESSMENT YEAR 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- / DATE OF HEARING :08.12.2016 / DATE OF PRONOUNCEMENT: 21.12.2016 2 ITA NO.224/PUN/2015 AY.NO.2005-06 2.1 ASSESSEE IS A PARTNERSHIP FIRM WHO IS STATED TO BE IN THE BUSINESS OF HIRING AND LETTING OF PREMISES. ASSESSEE FILED ITS R ETURN OF INCOME FOR A.Y. 2005-06 ON 29.07.2005 DECLARING TOTAL LOSS OF RS.9,22,070/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND TH EREAFTER ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DT.05.12.2007 AND THE TOTAL INCOME WAS DETERMINED AT RS.31,77,930/- BY MAKING AD DITION OF RS.41,00,000/- AS AN UNEXPLAINED EXPENDITURE U/S 69C ON A CCOUNT OF PURCHASE OF SHOPS. ON THE AFORESAID ADDITION OF RS.41,00,00 0/- AO VIDE ORDER DT.05.12.2007 HELD THAT ASSESSEE WAS LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT AND ACCORDINGLY LEVIED PENALTY OF RS.2,76,767/- U/S 271(1)(C) OF THE ACT. AGGRIEVED BY THE PENALTY ORDER OF AO , ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A), WHO VIDE ORDER DT.17.1 2.2014 (IN APPEAL NO. PN/CIT(A)-4/ACIT, CIR-5/64/2013-14/43) DELETED THE PENALTY BY HOLDING AS UNDER: I HAVE CONSIDERED THE SUBMISSION AND PERUSED THE HO N'BLE ITAT ORDER IN THE IMPUGNED MATTER. THE ITAT HAS OBS ERVED THAT IN HIS STATEMENT DURING THE SURVEY, SHRI GANES H SRIKRISHNA SATHE, BROTHER OF ONE OF THE PARTNERS OF THE APPELLANT FIRM, HAD CATEGORICALLY STATED THAT THE A MOUNT OF 'RS.41,00,000/- CASH' WRITTEN ON THE IMPOUNDED PAPE R IS AN APPROXIMATE OF EXPENSES FOR INTERIOR WORK AT THE NE W SHOWROOM AT CAMP. THUS FROM THE VERY BEGINNING, THE APPELLANT HAD BEEN DENYING TO HAVE MADE ANY PAYMENT OTHER THAN THE AMOUNT OF RS.1.10 CRORE PAID BY CHEQ UE TOWARDS THE PURCHASE OF PROPERTY. NO ADDITION HAVE BEEN MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NOTINGS MADE IN THE IMPOUNDED DOCUMENTS OTHER THAN THE AMOUNT OF RS.41,00,000/- CASH. THE SELLERS MS. MOHINI SUDHI R SABLE AND PALLAVI SUDHIR HAVE NEITHER BEEN SUMMONED NOR A NY EXPLANATION CALLED FROM THEM TOWARDS RECEIPT OF ANY EXTRA MONEY OVER AND ABOVE THE AMOUNT OF RS.1.10 CRORE. T HERE IS NO CORROBORATIVE EVIDENCE BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SUBSTANTIATE THAT ASSESSEE HAD PAID THE ALLEGED RS.41,00,000/- IN CASH TO THE SELLERS TOWARDS PURCH ASE OF THE SAID PROPERTY. REGARDING THE OBSERVATION OF THE ASSESSING OFFICER THAT UNLESS AND UNTIL THE TRANSAC TION FOR PURCHASE OF SHOP IS OVER, THE ASSESSEE CANNOT THINK OF ANY EXPENDITURE OF RENOVATION, FROM THE NOTINGS ON THE LEDGER 3 ITA NO.224/PUN/2015 AY.NO.2005-06 ACCOUNT THAT WAS IMPOUNDED, THE ITAT FOUND THAT IT WAS CLEAR THAT THE SAME WAS WRITTEN ON OR AFTER 15.10.2 004 (SINCE THE NOTINGS RELATE TO GROUP SUMMARY FOR THE PERIOD 01.04.2004 TO 15.10.2004) AND THEREFORE SINCE IT IS MUCH AFTER THE SALE AGREEMENT DATED 02.09.2004, THE FIND ING OF THE ASSESSING OFFICER IS FACTUALLY INCORRECT. THE I TAT ALSO PLACED RELIANCE ON DELHI HIGH COURT DECISION IN THE CASE OF CIT VS VED PRAKASH CHAUDHARY (305 ITR 245) WHEREIN IT WAS HELD THAT THE ABSENCE OF ANY CORROBORATIVE EVID ENCE THAT THE ASSESSEE HAD TRANSFERRED MONEY TO THE OTHER PAR TY AND SINCE THE OTHER PARTY DENIED RECEIPT OF ANY MONEY F ROM THE ASSESSEE, THE ADDITION WAS NOT JUSTIFIED. IT WAS HE LD THAT SINCE THE DEEMING PROVISION OF THE SECTION 69C HAD BEEN APPLIED, THE CONDITIONS PRECEDENT FOR INVOKING SUCH PROVISIONS ARE REQUIRED TO BE STRICTLY CONSTRUED AN D THE FACTS AND CIRCUMSTANCES GIVING RISE TO THE PRESUMPTION HA VE TO BE ESTABLISHED WITH REASONABLE CERTAINTY. SINCE IN THE INSTANT CASE, NO CORROBORATIVE EVIDENCE/MATERIAL HAS BEEN F OUND TO PROVE THAT THE ASSESSEE, HAS PAID AN AMOUNT OF RS.41,00,OOO/- TO THE SELLER AND SINCE THE SELLERS HAVE NEITHER BEEN EXAMINED NOR STATED TO HAVE RECEIVED T HE AMOUNT OF RS.41,00,000/- IN CASH AND SINCE THE ASSE SSEE, FROM THE VERY BEGINNING HAD DENIED THE PAYMENT OF A NY SUCH CASH TO THE SELLERS, THE ADDITION MADE U/S 69C WAS NOT JUSTIFIED. 5.1 COMING TO THE CONTENTION OF THE APPELLANT THAT THE PENALTY NO LONGER SURVIVES, I FIND THAT THE VERY IS SUE ON WHICH THE PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER NAMELY, THE UNEXPLAINED EXPENDITURE U/S 69C, THE HO N'BLE ITAT PUNE BENCH HAS DELETED THE ADDITION. THEREFORE THE VERY GROUND ON THE BASIS ON WHICH PENALTY HAS BEEN LEVIED, STANDS CANCELLED. THEREFORE, AS HELD BY THE VARIOUS BENCHES OF THE TRIBUNAL QUOTED HEREIN BELOW, AND BY THE CAL CUTTA HIGH COURT IN THE CASE OF CIT VS. BHAGWAN LTD. (168 ITR 846), IT IS HELD THAT THE ORDER OF PENALTY ALSO HAS TO BE CANCELLED: M/S. CONCEPT PHARMACEUTICALS LIMITED VS. ACIT MUMBAI ITAT IN ITA NO.5765/MUM/2007 (ORDER DATED 14 MAY 2009); M/S. VIRTUAL SOFTWARE & TRAINING PVT. LTD. VS ITO ( 2008) TIOL 359 (DEL); NEW MITHARWAL CONSTRUCTIONS CO. VS. ITO (2008) 8 DT R (JD) (TRIB) 369; 5.1.1. IN VIEW OF THE ABOVE DISCUSSION, THE PENALT Y LEVIED U/S 271(1)(C) IS HELD TO BE CANCELLED. GROUND 1 TO 5 A RE ALLOWED. 3. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN A PPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 4 ITA NO.224/PUN/2015 AY.NO.2005-06 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APP EALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) H AS ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE I.T.ACT WITH RESPECT TO UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT, IGNORING THE FACT THAT THE SAID TRANSACTIO N REPRESENTING CASH COMPONENT PAID BY THE ASSESSEE FO R PURCHASE OF SHOP WAS DETECTED BY THE REVENUE ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING SURVEY ACTION. 3. FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LD. DIT(LA) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING TH E COURSE OF APPELLATE PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 4. BEFORE US, AT THE OUTSET, THE LD. AR SUBMITTED THAT AG AINST THE QUANTUM ADDITION OF RS.41,00,000/- THAT WAS MADE BY AO MA TTER WAS CARRIED BY THE ASSESSEE BEFORE THE TRIBUNAL. THE TRIBUNA L VIDE ORDER DT. 26.11.2014 (IN APPEAL NO.ITA NO.860/PN/2013) HAS DELETED THE ADDITION. HE THEREFORE SUBMITTED THAT SINCE THE ADDITION ITSELF HAS BEEN DELETED, THE PENALTY FOR CONCEALMENT OF INCOME ON SUC H ADDITION DOES NOT SURVIVE. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION IN QUANTUM PROCEEDINGS. HE THEREFORE SUBMITTED T HAT THE PRESENT APPEAL OF THE REVENUE NEEDS TO BE DISMISSED. LD . DR ON THE OTHER HAND SUPPORTED THE ORDER OF AO. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT T O LEVY OF PENALTY U/S 271(1)(C) ON THE ADDITION OF UNEXPLAINED EXPENDITURE OF RS.49,00,000/- MADE U/S 69C OF THE ACT. WE FIND THAT THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ITA 860/PN/2013 DT.26.11 .2014 HAS DELETED THE QUANTUM ADDITION ON WHICH THE IMPUGNED P ENALTY HAS BEEN LEVIED. WE ARE OF THE VIEW THAT SINCE THE QUANTUM A DDITION ITSELF 5 ITA NO.224/PUN/2015 AY.NO.2005-06 HAS BEEN DELETED, THE QUESTION OF LEVY OF PENALTY ON ACCOU NT OF CONCEALMENT OF INCOME OF SUCH ADDITION DOES NOT SURVIVE. WE THEREFOR E FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS, THE GROUNDS OF THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 21 ST DAY OF DECEMBER, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE; ! DATED : 21 ST DECEMBER, 2016. YAMINI ' ( )!*+ ,+! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. THE CIT-3, PUNE #$% &&'( , ) '( , / DR, ITAT, B PUNE; %*+ , / GUARD FILE ' / BY ORDER , /// // TRUE COPY // / // TRUE COPY / //// // //T -./ &0 '1 / SR. PRIVATE SECRETARY ) '( , / ITAT, PUNE