M.P.Subramaniam, Erode V. DCIT, Coimbatore

ITA 2294/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9412 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 21-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: S SRIDHAR
• Keywords: Reasonable cause
• Section: 273B; 153A; 131; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.2294 & 2295/MDS/2015 ( )( / ASSESSMENT YEARS : 2004-05 & 2006-07 SHRI M.P. SUBRAMANIAM, C/O SHRI S. SRIDHAR, ADVOCATE, 112/1, PERIYAR STREET, ERODE-1. PAN : AMOPS 9561 J V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I, INCOME TAX OFFICE, RACE COURSE ROAD, COIMBATORE. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI A.B. KOLI, JCIT 1 / 2% / DATE OF HEARING : 02.03.2016 3') / 2% / DATE OF PRONOUNCEMENT : 29.04.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AG AINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, CBE, DATED 16.11.2015, FOR THE ASSESSMENT YEARS 200 4-05 AND 2006-07. SINCE COMMON ISSUE ARISES IN THESE APPEAL S, WE HEARD BOTH THE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.2294 & 2295/MDS/15 2. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE ASSESSING OFFICER LEVIED PENALTY UNDER SEC TION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). TH E LD. COUNSEL SUBMITTED THAT THERE WAS A SEARCH IN THE PREMISES O F THE ASSESSEE AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 153A OF THE ACT. THE ADDITION MADE BY THE ASSESSING OFFICER WITH REG ARD TO CASH CREDIT WAS CONFIRMED BY THIS TRIBUNAL. REFERRING T O THE ORDER OF THIS TRIBUNAL, THE LD. COUNSEL SUBMITTED THAT ALL THE CR EDITORS CONFIRMED THE ADVANCE MADE BY THEM. HOWEVER, THIS TRIBUNAL, BY APPLYING HUMAN PROBABILITIES, REJECTED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ORDERS OF THE LOWER AUTHORITIES. ACC ORDING TO THE LD. COUNSEL, THE PENALTY PROCEEDING IS DIFFERENT FROM A SSESSMENT PROCEEDING. WHEN THE CREDITORS CONFIRMED THE ADVAN CE MADE BY THEM, MERELY BECAUSE THE ADDITION WAS MADE IN THE A SSESSMENT PROCEEDING THAT CANNOT BE A REASON FOR LEVYING PENA LTY. THE ASSESSING OFFICER BY SIMPLY REFERRING TO THE OBSERV ATION MADE BY THIS TRIBUNAL, LEVIED PENALTY WITHOUT RE-APPRECIATI NG THE MATERIAL AVAILABLE ON RECORD. THEREFORE, THE PENALTY LEVIED BY THE ASSESSING OFFICER IS NOT CORRECT. 3 I.T.A. NOS.2294 & 2295/MDS/15 3. ON THE CONTRARY, SH. A.B. KOLI, THE LD. DEPARTME NTAL REPRESENTATIVE, SUBMITTED THAT THE QUANTUM ADDITION WAS CONFIRMED ON THE GROUND THAT THE CREDITORS BELONG TO LOW MIDD LE-CLASS FAMILY AND THEIR INCOME IS BELOW ` 10,000/- PER MONTH. THEREFORE, BY APPLYING THE HUMAN PROBABILITIES, THIS TRIBUNAL CON FIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. ONCE THE C ONFIRMATIONS MADE BY THE CREDITORS ARE REJECTED IN THE ASSESSMEN T PROCEEDING, ACCORDING TO THE LD. D.R., THE ASSESSEE NOW CANNOT CLAIM THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER IS NOT JUST IFIED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE CREDITORS WERE EXAMINED UNDER SECTION 131 OF THE ACT BY THE ASSESS ING OFFICER. ALL OF THEM ADMITTED THAT THEY ADVANCED MONEY. ONE SHRI P. MARIAPPAN, WHO WAS EXAMINED ON 20.11.2009 UNDER SEC TION 131 OF THE ACT, ADMITTED THAT HE ADVANCED A SUM OF ` 3,00,000/- TO THE ASSESSEE IN MARCH, 2003. THE SAID MARIAPPAN CLARIF IED THAT THE MONEY WAS ADVANCED FOR PURCHASING A LAND. THE SOUR CE FOR ` 3,00,000/- WAS SALE PROCEEDS OF SHRI MARIAPPANS HO USE IN UDUMALPET. SIMILARLY, SMT. ANBUMANI, WHO WAS ALSO EXAMINED 4 I.T.A. NOS.2294 & 2295/MDS/15 UNDER SECTION 131 OF THE ACT, CLARIFIED THAT A SUM OF ` 2,00,000/- WAS ADVANCED TO HER BROTHER-IN-LAW, THE ASSESSEE. ONE SHRI K. JAYARAMAN WAS ALSO EXAMINED ON 23.11.2009. HE ALSO ADMITTED THAT HE ADVANCED A SUM OF ` 5,00,000/- TO THE ASSESSEE. HE FURTHER EXPLAINED THAT ` 2,00,000/- WAS GIVEN TO THE ASSESSEE FROM HIS SAVINGS AND ` 1,00,000/- WAS FROM THE AMOUNT RECEIVED FROM HIS UNCLES WIFE. ANOTHER SUM OF ` 2,00,000/- WAS GIVEN OUT OF HIS SAVINGS. THEREFORE, IT IS OBVIOUS THAT THE CREDITO RS CONFIRMED THE FACT THAT THEY ADVANCED THE MONEY. THIS TRIBUNAL C ONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER IN THE ASSES SMENT PROCEEDING ON THE GROUND THAT THE CREDITORS HAVE VE RY MEAGRE INCOME. THIS TRIBUNAL BY APPLYING THE HUMAN PROBAB ILITIES, CONFIRMED THE ADDITION MADE UNDER SECTION 68 OF THE ACT. THE ASSESSING OFFICER LEVIED PENALTY OF ` 3,36,768/- FOR THE ASSESSMENT YEAR 2004-05 AND FOR THE ASSESSMENT YEAR 2006-07, T HE ASSESSING OFFICER LEVIED PENALTY OF ` 67,320/-. 5. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ASSESSMENT PROCEEDING AND THE PENALTY PROCEEDING AR E SEPARATE AND DISTINCT. THE ASSESSING OFFICER IS EXPECTED TO RE-APPRECIATE THE MATERIAL AVAILABLE ON RECORD DURING THE PENALTY PRO CEEDING. IN THE CASE BEFORE US, THE ASSESSING OFFICER INSTEAD OF RE -APPRECIATING THE 5 I.T.A. NOS.2294 & 2295/MDS/15 MATERIAL AVAILABLE ON RECORD, HAS SIMPLY REPRODUCED THE OBSERVATION MADE BY THIS TRIBUNAL IN THE APPEAL AGAINST THE ASS ESSMENT ORDER AND LEVIED PENALTY. THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT WHEN THE CREDITORS CONFIRMED THAT THEY ADVANCED MON EY AND THE ADDITION WAS MADE ONLY BY APPLYING HUMAN PROBABILIT IES, LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT J USTIFIED. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSEE HAS REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT. THEREFORE, THE ASSESSING OFFICER IS NOT CORRECT IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, T HE ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE PENALTY IS DELETE D FOR BOTH THE ASSESSMENT YEARS. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 29 TH APRIL, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 29 TH APRIL, 2016. KRI. 6 I.T.A. NOS.2294 & 2295/MDS/15 / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-3, COIMBATORE 4. PRINCIPAL CIT-3, COIMBATORE 5. 7: -2 /DR 6. ;( < /GF.