Raj Kumar, Khanna V. ITO, Khanna

ITA 229/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5407 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: RAJEEV DUTTA
• Keywords: Additional evidence
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS. 229 & 230/CHD/2011 ASSESSMENT YEARS: 2003-04 & 2004-05 SHRI RAJ KUMAR, VS. THE ITO, WARD-III, S/O SHRI AMAR NATH, KHANNA KHANNA PAN NO. ACYPK9517A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJEEV DUTTA RESPONDENT BY: SMT. JAISHREE SHARMA ORDER THESE TWO APPEALS BY THE ASSESSEE ARE AGAINST THE ORDER OF CIT(A)- II, LUDHIANA RELATING TO ASSESSMENT YEARS 2003-04 & 2004-05 AGAINST THE ORDER LEVYING PENALTY U/S 271 (1)(C) OF THE I.T. AC T. 2. THE ONLY ISSUE RAISED IN BOTH THE APPEALS IS AGA INST THE PENALTY LEVIED U/S 271 (1)(C) OF THE ACT AMOUNTING TO RS. 3 2,887/- IN ASSESSMENT YEAR 2003-04 AND RS. 29,564/- IN ASSESSMENT YEAR 20 04-05. 3. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSMENT IN THE CASE WAS PICKED UP FOR SCRUTINY BECAUSE OF CERTAIN DEPOSITS IN BANK ACCOUNT. THE ASSESSING OFFICER ISSUED NOTICES U/S 148 OF THE INCOME TAX ACT AFTER RECORDING REASONS FOR REOPENING, IN RESPO NSE TO WHICH THE ASSESSEE FURNISHED RETURN OF INCOME DECLARING INCOM E OF RS. 78,610/- FOR THE ASSESSMENT YEAR 2003-04 AND RS. 76,640/- FOR AS SESSMENT YEAR 2004- 05. THE ASSESSEE WAS REQUISITIONED TO EXPLAIN THE SOURCES OF DEPOSITS IN 2 HIS BANK ACCOUNT. THE ASSESSEE EXPLAINED TO HAVE R ECEIVED CERTAIN SUMS FROM SHRI ANIL KUMAR, RESIDENT OF MANDI GOBINDGARH IN LIEU OF IVPS IN BOTH THE YEARS UNDER APPEAL. THE STATEMENT OF THE SAID PERSONS WAS RECORDED BY THE ASSESSING OFFICER IN WHICH HE CATEG ORICALLY DENIED OF HAVING MADE ANY PAYMENTS TO THE ASSESSEE OR HIS WIF E SMT. CHANDER BALA IN LIEU OF THE IVPS. ON BEING CONFRONTED WITH THE SAME, THE ASSESSEE SURRENDERED THE SAID AMOUNT OF RS. 1,28,200/- IN AS SESSMENT YEAR 2003-04 AND RS. 1,23,000/- IN ASSESSMENT YEAR 2004-05 AS HI S ADDITIONAL INCOME TO BUY PIECE OF MIND, SUBJECT TO NO PENAL ACTION UNDE R THE INCOME TAX ACT. THE REPLY OF THE ASSESSEE WAS NOT ACCEPTED BY THE A SSESSING OFFICER AND THE SAID AMOUNTS WERE INCLUDED AS UNDISCLOSED INCOM E OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS. PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT WERE INITIATED AGAINST THE ASSESSEE FOR BOTH TH E CAPTIONED ASSESSMENT YEARS. THE ASSESSEE FILED NO APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER. IN THE PENALTY PROCEEDINGS, THE PLEA OF THE ASSESSEE IN THE CONTEXT OF THE SURRENDER MADE SUBJECT TO NO PENALTY WAS REJECTED BY THE ASSESSING OFFICER, AS THE SAID ADDITION WAS MADE ON THE INFORMATION RECEIVED BY THE DEPARTMENT AND IN THE ABSENCE OF AN Y EXPLANATION GIVEN BY THE ASSESSEE, THE ASSESSEE WAS HELD TO HAVE DELI BERATELY AND CONSCIOUSLY CONCEALED THE PARTICULARS OF INCOME AMO UNTING TO RS. 1,28,200/- IN ASSESSMENT YEAR 2003-04 AND RS. 1,23, 000/- IN ASSESSMENT YEAR 2004-05. THE ASSESSING OFFICER LEVIED PENALTY OF RS. 32,887/- IN ASSESSMENT YEAR 2003-04 AND RS. 29,564/- IN ASSESSM ENT YEAR 2004-05. BEFORE THE CIT(A), NONE ATTENDED ON BEHALF OF THE A SSESSEE. HOWEVER, THE APPEALS WERE DECIDED ON THE BASIS OF THE REPLY ALRE ADY FILED WITH HIS OFFICE BY DIARY NOS. 432 AND 433 DATED 20.0.2010. THE CIT(A) UPHELD THE LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT OBSER VING THAT THE PLEA OF THE ASSESSEE COULD NOT BE ACCEPTED AT THIS JUNCTURE. T HE ASSESSEE HAD PLEADED 3 THAT DUE TO MENTAL ILL HEALTH HE WAS NOT ABLE TO PR ODUCE THE DOCUMENTS IN SUPPORT OF THE AMOUNTS IN DISPUTE. THE CIT(A) ALSO NOTED THE ASSESSEE HAD NOT FILED ANY EVIDENCE BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS OR IN THE PENALTY PROCEEDINGS. HENCE, THE PENALTY LEVIED U/S 271 (1)(C) OF THE ACT WAS UPHELD BY THE CIT(A) IN B OTH THE CAPTIONED ASSESSMENT YEARS. THE ASSESSEE IS IN APPEAL AGAINS T THE SAME. 4. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE ADDITIONAL INCOME WAS OFFERED FOR BOTH THE ASSESSMENT YEARS SUBJECT T O NO PENAL ACTION. THOUGH THE ASSESSING OFFICER ASSESSED THE AMOUNT AS ADDITIONAL EVIDENCE BUT PENALTY NOTICE U/S 271 (1)(C) WAS ISSUED TO THE ASSESSEE. THE LD. AR FURTHER POINTED OUT THAT THOUGH THE DEPOSITS IN THE BANK WERE HIGHER BUT THE ADDITIONS IN BOTH THE YEARS WERE MADE OF LOWER AMOUNTS. THE EXPLANATION OF THE ASSESSEE WITH REGARD TO THE DEPO SITS IN ASSESSMENT YEAR 2003-04 WERE THAT IT HAD RECEIVED LOANS AGAINST THE KVPS FORM ONE SHRI ANIL KUMAR. THE SAID KVPS MATURED IN ASSESSMENT Y EAR 2004-05 WHICH PROVES THE CASE OF THE ASSESSEE. THE LD. AR POIN TED OUT THAT AS SHRI ANIL KUMAR HAD REFUSED TO ACKNOWLEDGE THE ADVANCEME NT OF THE LOAN, AGAINST THE KVPS HELD BY THE ASSESSEE OR HIS FAMILY MEMBERS, THE ADDITIONAL INCOME WAS SURRENDERED BY THE ASSESSEE T O BUY PEACE. THE LD. AR POINTED OUT THAT DUE TO LACK OF EVIDENCE AVAILAB LE WITH THE ASSESSEE THE SAID ADDITION WAS MADE IN THE HANDS OF THE ASSE SSEE WHICH COULD NOT FORM THE BASIS FOR LEVY OF PENALTY U/S 271 (1)(C) O F THE ACT. THE LD. AR FOR THE ASSESSEE FURTHER POINTED OUT THAT THE SAID KVPS WERE ENCASHED IN ASSESSMENT YEAR 2004-05 AS IS EVIDENT FROM THE CERT IFICATE ISSUED BY THE POST OFFICE PLACED AT PAGES 6 TO 10 OF THE PAPER BO OK FILED FOR ASSESSMENT YEAR 2004-05. THE LD. AR FOR THE ASSESSEE ALSO DR EW OUR ATTENTION TO THE WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A) IN WHIC H THE ABOVE STAND WAS 4 EXPLAINED BUT THE SAME HAS NOT BEEN CONSIDERED BY T HE CIT(A). RELIANCE WAS PLACED ON THE RATIO LAID DOWN IN SIR SHADILAL S UGAR AND GENERAL MILLS LTD AND ANOTHER VS. CIT [168 ITR 705 (SC)]. 5. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE RELIANCE PLACED UPON THE ABOVE SAID EVIDENCE IS MISPLACED AS THESE DOCUMENTS WERE NEITHER BEFORE THE ASSESSING OFFICER NOR THERE IS A MENTION OF THE SAID DOCUMENTS IN THE ORDER PASSED BY THE CIT(A). THE L D. AR FOR THE ASSESSEE IN REJOINDER SUBMITTED THAT ADMITTEDLY NO DOCUMENTS WERE FILED BEFORE THE ASSESSING OFFICER AS THE ASSESSEE HAD RE TIRED AND HAD SHIFTED HIS RESIDENCE AND THE SAID DOCUMENTS WERE NOT AVAIL ABLE. 6. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE RECORDS THE ISSUE RAISED IN THE PRESENT APPEALS ARE AGAINST THE LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT WHICH IS ATTRACTED WHERE THE ASSE SSEE HAS EITHER CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME. HOWEVER, IN EACH CASE OF ADDITION BEING MADE IN THE HANDS OF THE ASSESSEE THERE IS NO MERIT IN UPHOLDING THE SAME AS A CASE O F CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME MAKING THE ASSESSEE LIABLE FOR LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAD SURRENDERED C ERTAIN INCOME IN CONNECTION WITH THE DEPOSITS IN HIS BANK ACCOUNT FO R WHICH EXPLANATION WITH EVIDENCE COULD NOT BE FURNISHED BY THE ASSESSE E DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE SAID ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE AS CONCEALED INCOME BECAUSE OF THE INFORMA TION COLLECTED BY THE DEPARTMENT AGAINST THE ASSESSEE. THE ASSESSEE ADMI TTEDLY DID NOT FILE ANY APPEAL AGAINST THE SAID ADDITIONAL INCOME BEING ASS ESSED IN HIS HANDS THOUGH THERE WAS A MENTION IN THE ASSESSMENT ORDER THAT PENALTY 5 PROCEEDINGS U/S 271 (1)(C) OF THE ACT HAVE BEEN INI TIATED. THE ASSESSEE CLAIMS THAT SURRENDER WAS MADE BY HIM SUBJECT TO NO PENAL ACTION. THE ASSESSEE FAILED TO PRODUCE ANY ADDITIONAL EVIDENCE DURING THE PENALTY PROCEEDINGS BEFORE THE ASSESSING OFFICER. HOWEVER, ALONG WITH WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A), THE ASSESSEE TRIED TO ESTABLISH THE BONAFIDES OF HIS CLAIM IN RESPECT OF THE AVAILABILI TY OF THE MONEY WHICH IN TURN WAS DEPOSITED IN THE BANK ACCOUNT. THE ASSESS EE HAS PLACED ON RECORD THE EVIDENCE OF HOLDING THE IVPS / KVPS, WHI CH WERE HELD IN THE NAME OF THE ASSESSEE AND HIS FAMILY MEMBERS AND WER E ENCASHED IN ASSESSMENT YEAR 2004-05. THE EXPLANATION OF THE ASSESSEE REGARDING THE DEPOSITS IN THE BANK ACCOUNT IN ASSESSMENT YEAR 200 3-04 WAS THAT IT HAD RECEIVED LOAN FORM A CERTAIN PARTY AGAINST THE SAID KVPS WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER AS THE SAID PERSO NS HAD NOT ADMITTED TO THE SAID ADVANCEMENTS OF LOANS IN RESPECT OF THE DE POSITS. IN ASSESSMENT YEAR 2004-05, THE CLAIM OF THE ASSESSEE WAS PARTIAL LY OUT OF ENCASHMENT OF THE SAID KVPS FOR WHICH NECESSARY EVIDENCE WAS FIEL D BEFORE THE CIT(A) DURING THE APPELLATE PROCEEDINGS. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WHERE THE ASSESSE E HAD NOT BEEN ABLE TO FULLY ESTABLISH WITH EVIDENCE HIS CLAIM VIS-A-VIS T HE DEPOSITS IN THE BANK ACCOUNT THOUGH CIRCUMSTANTIAL EVIDENCE IN RESPECT T HEREOF HAS BEEN PLACED ON RECORD BY THE ASSESSEE, DOES NOT JUSTIFY THE LEV Y OF PENALTY U/S 271 (1)(C) OF THE ACT. MERE REJECTION OF THE CLAIM / E XPLANATION OF THE ASSESSEE DOES NOT TANTAMOUNT TO CONCEALMENT OF INCO ME MAKING THE ASSESSEE EXIGIBLE TO LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. ACCORDINGLY, I HOLD THAT THERE IS NO MERIT IN THE L EVY OF PENALTY U/S 271 (1)(C) OF THE ACT IN THE CAPTIONED ASSESSMENT YEARS . ACCORDINGLY, I DELETE THE PENALTY LEVIED U/S 271 (1)(C) OF THE ACT AMOUNT ING TO RS. 32,887/- FOR 6 ASSESSMENT YEAR 2003-04 AND RS. 29,564/-FOR ASSESSM ENT YEAR 2004-05. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE TH US ALLOWED. 7. IN THE RESULT, APPEALS OF THE ASSESSES ARE ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY, 2011. SD/- (SUSHMA CHOWLA) JUDICIAL MEMBER DATED : 31 ST MAY, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR