DR. UMESH SHAMJI SHANGOI, MUMBAI V. ITO 11(3)(4), MUMBAI

ITA 2297/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93215 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILIMA NADKARNI
• Keywords: Unexplained investment; Capital receipt; Revised return
• Section: 143(3); 139(5); 148

Judgement Text

DR. U MESH SHAMJI SHANGOI ITA NO. 22 9 7 /M/201 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F , MUMBAI . . , , BEFORE SHRI G S PANNU , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIA L MEMBERITA ITA NO. : 2 2 97 /MUM/20 1 3 (ASSESSMENT YEAR: 200 6 - 0 7 ) DR. UMESH SHAMJI SHANGOI , 44 - 6, SILVER GOLD APARTMENT, S V P ROAD, NEAR ZARIWALA LABORATORIES, BORIVALI(WEST), MUMBAI - 400 0 9 2 .: PAN : A AP P S 3494 K VS IT O - 11 ( 3 ) ( 4 ) , 304, 3 RD FL OOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI - 400 0 1 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PAVAN VED RESPONDENT BY : MS NILIMA NADKARNI /DATE OF HEARING : 11 - 05 - 20 15 / DATE OF PRONOUNCEMENT : 17 - 07 - 2015 ORDER PER AMIT SHUKLA , J.M. : TH E AFORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 1 5 . 01 .201 3 PASSED BY CIT(A) - II , MUMBAI IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR THE ASSESSMENT YEAR 2006 - 07. THE ASSESSEE IS MAINLY AGGRIEVED BY LEVY OF PENALTY U/S 271(1)(C) FOR SUM OF RS. 15,62,000/ - . 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS AN INDIVIDUAL WHO HAD FILED HIS RETURN OF INCOME U/S 139(1) ON 23.10.2006, DECLARING TOTAL INCOME AT RS. 5, 3 8,073/ - . THE SAID RETURN OF INCOME WAS DULY PROCESSED U/S 143(1). THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME WITHIN THE AMBIT AND DUE DATE OF 139(5) ON 18.02.2008 DECLARING TOTAL INCOME OF R S. 50 ,56,700/ - , WHICH INCLUDED AMOUNT OF RS. 45.1 8 LAKHS , CONTENDED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM THE ESTATE OF HIS LATE GRAND - MOTHER AND ALSO PAID THE TAXES THEREON. THEREAFTER, NO NOTICE U/S 143(2) DR. U MESH SHAMJI SHANGOI ITA NO. 22 9 7 /M/201 3 2 WAS ISSUED FOR SCRUTINIZING THE REVISED RETURN A ND AS SUCH THE REVISED RETURN STOOD ACCEPTED. LATER ON, THE ASSESSEES CASE WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 DATED 28.09.2010. WHAT W ERE THE REASON S RECORDED FOR REOPENING THE CASE U/S 148 H AS NEITHER BEEN MENTIONED IN THE ASSESSMENT ORDER NOR IN THE IMPUGNED PENALTY ORDERS IN EXACT TERMS . IN PURSUANCE OF NOTICE U/S 148 ASSESSMENT ORDER WAS PASSED U/S 143(3) R.W.S. 147 DATED 19.08.2011 O N THE SAME INCOME SHOWN IN THE REVISED RETURN OF INCOME. HOWEVER, IN THE ASSESSMENT ORDER THE ASSESSING OFFICE R HAS OBSERVED AND NOTED THAT THE CASE OF THE ASSES S EE WAS REOPENED ON THE BASIS OF CERTAIN INFORMATION THAT ASSESSEE HAD MADE CASH PAYMENT OF RS. 15.30 LAKHS DURING THE FINANCIAL YEAR 2005 - 06 IN RESPECT OF 34 DIFFERENT POLICIES WITH HDFC STANDARD LIFE INS URANCE CO LTD., UNDER CUSTOMER ID NO. 51090374. F URTHER , THE ASSESSEE HAS ALSO INVESTED AN AMOUNT OF RS. 23.94 LAKHS WITH POST OFFICE TIME DEPOSIT AN D AN AMOUNT OF RS. 5.94 LAKHS HAS BEEN KEPT AS CASH IN HAND. IN RESPONSE TO THE SHOW CAUSE TO EXPLAIN THE SOURCE OF INVESTMENT, THE ASSESSEE SUBMITTED THAT AN AMOUNT OF RS. 4 5. 18 LAKHS WAS RECEIVED BY HIM FROM THE ESTATE OF HIS LATE GRAND - MOTHER . HOWEVER, THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTION ON THE FOLLOWING REASONS: A. T HERE IS NO DOCUME NTARY EVIDENCE TO SUBSTANTIATE THE CLAIM THAT THE MONEY WAS INVESTED OUT OF THE ESTATE RECEIVED FROM THIS LATE GRANDMOTHER; B. T HE SAME WAS NOT INCLUDED IN THE ORIGINAL RETURN IN HIS CAPITAL ACCOUNT AND BALANCE SHEET; C. T HE REVISED RETURN WAS FILED ON 18/02/2008 I.E. ONLY AFTER RECEIVING INFORMATION FROM FIU DATED 04/01/2008. ACCORDINGLY, THE ASSESSMENT WAS COMPLETED ON THE BASIS OF TOTAL INCOME COMPUTED AS PER THE REVISED RETURN, WHICH FACT HAS BEEN MENTIONED IN PARA 7 OF THE ASSESSMENT ORDER. DR. U MESH SHAMJI SHANGOI ITA NO. 22 9 7 /M/201 3 3 3 . THEREAFTER, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) , DURING THE COURSE OF WHICH, THE ASSESSEE STATED AS UNDER: (I) THE ASSESSEE IS A PRACTICING DOCTOR AND HAS BEEN REGULARLY FILING HIS RETURN OF INCOME. HIS GRANDMOTHER SMT . PANBAI RAMBHAI, AGED 81 YEARS AND SHE WAS HAVING HER STRIDHAN AND LEGACY OF HER HUSBAND. SHE HAD ACCUMULATED SUBSTANTIAL SAVINGS; (II ) SHE BEQUEATHED ALL HER ESTATE VALUING APPROXIMATELY 45,18,000/ - TO HER GRANDSON DR. UMESH SHANGOI BY AN ORAL WILL ON A ROUND JAN 2000 IN PRESENCE OF DR. PRADIP MARU. AFFIDA VIT IS ATTACHED; (III) SINCE THE AMOUNT BEQUEATHED WAS CAPITAL RECEIPT, THE SAME WAS NOT INCLUDED IN RETURN OF INCOME FILED ON 23 RD OCT, 2006 FOR AY 2006 - 07. ACCORDINGLY ASSE S SEE FILED REVISED RETURN OF INCOME FOR AY 2006 - 07 ON 05/02/2008 DECLARING THE LEGACY RECEIPT FROM HIS GRANDMOTHER AS ADDITIONAL INCOME. (IV) THE ASSESSEE RECEIVED NOTICE FROM UNIT V(2) OF INVESTIGATION WING FOR AN AMOUNT OF RS. 15,30,000/ - FO R INVESTMENT IN HDFC STANDARD LIFE. THI S AMOUNT WAS INVESTED OUT OF .. PROTRACTED LITIGATION AND TO BUY PEACH OF MIND. HOWEVER, IN SPITE OF DECLARING AMOUNT MENTIONED IN NOTICE, THE ASSESSEE DECLARED ENTIRE LEGACY OF RS. 45,18,000/ - AS INCOME AND PAID TAXES FULLY; (V) SINCE THIS ACT OF THE ASSESSEE IS VOLUNTARY AND HE HAS PAID FULL TAX BEFORE FILING OF THE RETURN AND ALSO FULLY CO - OPERATED WITH THE DEPARTMENT IN SCRUTINY ASSESSMENT. BESIDE THERE IS NOT FILING OF ANY INACCURATE INFORMATION OR CONCEALMENT OF INCOME AS ENVISAGED IN SECTION 27( 1)(C). HOWEVER, THE AO REJECTED THE ASSESSEES EXPLANATION ON THE GROUND THAT; FIRSTLY, ASSESSEE COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM THAT THE MONEY WAS INVESTED FROM THE ASSET RECEIVED FROM HIS LATE GRAND - MOTHER; SECONDL Y, THE PLEA OF HIS ORAL WILL AND THE AFFIDAVIT OF THE ASSESSEE AND DR. PRADEEP MARU DATED 23.09.2011 ARE ONLY AFTER THOUGHT; THIRDLY, NEITHER THE ASSESSEE NOR DR. MARU APPEARED FOR THE CROSS EXAMINATION; AND DR. U MESH SHAMJI SHANGOI ITA NO. 22 9 7 /M/201 3 4 LASTLY, THE ASSESSEE HAS FILED THE REVISED R ETURN ONLY AFTER THE INFORMATION WAS SENT BY DDI UNIT. ACCORDINGLY, THE AO LEVIED PENALTY OF RS. 15,62,000/ - , BEING 100% OF THE TAX SOUGHT TO BE EVADED FOR CONCEALMENT OF INCOME U/S 271(1)(C). 4. THE LD. CIT(A) NOTED THAT INFORMATION FROM THE INVESTIGATIO N WING WAS RECEIVED BY THE DEPARTMENT ON 14.01.2008 AND SUMMONS WERE ISSUED TO THE ASSESSEE ON 28.01.2008. IT WAS IN PURSUANCE TO THIS SUMMON THAT THE ASSESSEE HAD FILED REVISED RETURN OF INCOME ON 18.02.2008. THE ASSES S EES LETTER BEFORE THE ASSESSING OFF ICER FOR FILING OF REVISED RETURN HAS BEEN INCORPORATED BY THE CIT(A) AT PAGES 7 & 8 OF THE APPELLATE ORDER. THE LD. CIT(A) AFTER DISCUSSING THE ISSUE ON MERITS REJECTED THE ASSESSEES EXPLANATION AND THE SOURCE OF INVESTMENT, WHICH HAS BEEN DISCUSSED FROM PAGES 8 TO 11 OF THE APPELLATE ORDER. ACCORDINGLY, HE CONFIRMED THE PENALTY AFTER OBSERVING AND HOLDING AS UNDER: 3.13 I AM OF THE VIEW THAT THE APPELLANT HAS MADE UNACCOUNTED INVESTMENTS AND SUBSEQUENTLY ADMITTED THE UNDISCLOSED INVESTMENTS IN THE REV ISED RETURN ONLY DUE TO THE INFORMATION RECEIVED BY THE DEPARTMENT FROM FIU AND THE DUE TO THE INVESTIGATIONS STARTED BY THE INVESTIGATION WING. 3.14 I AM OF THE VIEW THAT THE DISCLOSURE OF INCOME IN THE REVISED RETURN IS NOT VOLUNTARY. I AM OF THE VIEW T HAT THE EXPLANATION OFFERED WITH REGARD TO ADDITIONAL INCOME OFFERED IN THE REVISED RETURN IS NOT BONA FIDE. I AM OF THE VIEW THAT THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME AND THE APPELLANTS CASE IS ALSO COVERED BY EXPLANATION (B) TO SECTION 271(1)(C) OF THE INCOME - TAX ACT. IN VIEW OF THIS, I HOLD THAT PENALTY IS LEVIABLE U/S 271(1)(C) OF THE INCOME - TAX ACT. MY DECISION IS ALSO SUPPORTED BY THE FOLLOWING DECISIONS: ( I ) HONBLE DELHI HIGH COURTS DECISION IN THE CASE OF CIT V MAK DATA LTD. ITA N O. 415/2012 ORD. DT. 22.01.13. ( II ) CHARUDUTT H DANGAT V ITO [2011] 132 TTJ (MUM) 687 THE AOS ORDER IS UPHELD. DR. U MESH SHAMJI SHANGOI ITA NO. 22 9 7 /M/201 3 5 5. BEFORE US, LD. COUNSEL . SHRI PAVAN VED SUBMITTED THAT , HERE IN THIS CASE, ORIGINAL RETURN WAS FILED U/ S 139(1), WHICH HAS BEEN REVISED WITHIN THE TIME LIMIT PRESCRIBED U/S 139(5). THEREAFTER, CASE HAS BEEN REOPENED U/S 148 WITHOUT EVEN RE CO RDING THE REASONS , BECAUSE NO SUCH REASONS HAVE BEEN SUPPLIED T O THE ASSESSEE. IF THE ASSESSEE HAD ALREADY DISCLOSED THE INCOME IN THE REVISED RETURN, THEN REOPENING THE CASE U/S 148 FOR THE SAME INCOME CANNOT BE HELD TO BE VALID . ULTIMATELY, IN THIS CASE, ASSESSMENT IN PURSUANCE OF NOTICE U/S 148 HAVE BEEN COMPLETED ON THE BASIS OF REVISED RETURN ONLY , SO WHERE IS THE QUESTION OF ANY CONCEALMENT OF INCOME. T HUS, THERE IS NO INCOME, WHICH CAN BE SAID TO HAVE ESCAPED ASSESSMENT OR THERE IS A N Y CONCEALMENT OF INCOME WHICH HAS BEEN SOUGHT TO BE EVADED BY THE ASSESSEE WITHIN THE MEANING OF SECTION 271(1)(C). ON MERITS ALSO, HE MADE HIS DETAILED SUBMISSIONS. 6. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT NEITHER THE VALIDITY OF REOPENING U/S 148 NOR THE LEGAL GROUND RAISED BY THE ASSESSEE CAN BE ENTERTAINED IN THE PENALTY PROCEEDINGS AS NOWHERE THE ASSESSEE HAS RAISED THIS ISSUE EITHER BEFORE THE AO OR BEFORE THE CIT(A). THE FINDING OF FACT RECORDED BY THE AO IN THE PENALTY ORDER AS WELL AS THE REASONING GIVEN BY THE CIT(A) , SHOULD BE UPHELD AS THERE IS NO REBUTTAL FROM THE SIDE OF THE ASSESSEE ON THE BASIS OF ANY EVIDENCE OR MATERIAL ON RECORD. THE ASSESSEE COULD NOT SUBSTANTIATE THE SOURCE OF INVESTMENT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. HERE IN THIS CASE, IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS FILED ORIGINAL RETURN OF INCOME U/S 139(1) ON 23.10.2006, WHICH HA S BEEN DULY ACCEPTED AND PROCESSED U/S 143 (1). SUCH A RETURN OF INCOME HAS BEEN REVISED U/S 139(5) I.E., WITHIN THE TIME PERIOD PRESCRIBED THEREIN AND ADDITIONAL INCOME OF RS. 45.18 LAKHS WAS DISCLOSED AND ACCORDINGLY THE REVISED RETURN WAS SHOWN AT A TOTAL INCOME OF RS. 50,56, 07 3/ - . SUCH A REVISED RETURN HAS NOT BEEN DISTURBED BY THE DEPARTMENT AS NO NOTICE U/S DR. U MESH SHAMJI SHANGOI ITA NO. 22 9 7 /M/201 3 6 143(2) WAS ISSUED FOR SCRUTINIZING THE SAID RETURN. AFTER THE EXPIRY OF MORE THAN TWO YEAR S FROM THE DATE OF THE FILING OF THE REVISED RET URN, A NOTICE U/S 148 HAS BEEN ISSUED ON 28.09.2010 FOR REOPENING THE CASE. N O REASONS RECORDED ARE AVAILABLE ON RECORD NOR HAS BEEN INCORPORATED IN THE ASSESSMENT ORDER OR PENALTY ORDER. I N THE ASSESSMENT ORDER IT HAS BEEN STATED THAT THE CASE OF THE AS SESSEE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION UNIT THAT ASSESSEE HAS MADE CERTAIN INVESTMENTS IN HDFC STANDARD LIFE INSURANCE CO. LTD. AND IN POST OFFICE TIME DEPOSIT IN CASH. ULTIMATELY, THE ASSESSEES REVISED RETURN FILED ON 18.08.2008 HAS BEEN MADE THE BASIS OF ASSESSMENT INASMUCH AS THE SAME HAS BEEN ASSESSED ON THE INCOME DECLARED IN REVISED RETURN ONLY. THUS THERE IS NO DIFFERENCE BETWEEN THE RETURNED INCOME AND THE ASSESSED INCOME. 8. NOW I F THE ASSE S SEE HAD ALREADY FI LED THE REVISED RETURN U/S 139(5) WHICH HAS NOT BEEN DISTURBED OR REJECTED BY THE DEPARTMENT , THEN REOPENING THE CASE U/S 148 FOR TAXING THE SAME INCOME ( AS DECLARED IN THE REVISED INCOME ) PRIMA FACIE CANNOT BE HELD TO BE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 147 R.W.S. 148. HERE THE SUBJECT MATTER OF PENALTY IS ONLY THE INCOME SHOWN IN THE REVISED RETURN FILED MUCH PRIOR TO COMMENCEMENT OF THE PROCEEDINGS U/S 148, IN SUCH A SITUATION, WE ARE UNABLE TO APPRECIATE AS TO HOW THERE IS A N Y CONCEALMENT OF INCOME. THE INCOME SHOWN IN THE REVISED RETURN COULD HAVE BEEN SUBJECT MATTER OF PENALTY U/S 271(1)(C) ONLY WHEN SUCH A REVISED RETURN IS HELD TO BE NOT VALID OR NOT FILED IN ACCORDANCE WITH THE PROVISION OF S 139(5) . ON THE CONTRARY, T HE ASSESSING OFFICE R HAS ACCEPTED THE REVISED RETURN AND EVEN THE INCOME HAS BEEN ASSESSED BY HIM ON THE BASIS OF REVISED RETURN ONLY. IN SUCH A CIRCUMSTANCE, PENALTY FOR CONCEALMENT OF INCOME U/S 271(1)(C) CANNOT BE LEVIED. IN SO FAR AS THE REVENUES CASE THAT SUCH A REVISE D RETURN WAS FILED ONLY AFTER RECEIVING THE INFORMATION FROM THE INVESTIGATION WING AND, THEREFORE, ASSESSEE IS LIABLE FOR CONCEALMENT OF INCOME . W E FIND IT DR. U MESH SHAMJI SHANGOI ITA NO. 22 9 7 /M/201 3 7 DIFFICULT TO ACCEPT THIS PROPOSITION HERE, BECAUSE THERE HAS TO BE CATEGORICAL FINDING OF FACT TH A T THE REVISED RETURN FILED BY THE ASSESSEE WAS NOT VOLUNTARY AND THE SAME SHOULD HAVE BEEN REJECTED BY THE AO. NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HAVE GIVEN ANY FINDING TO THE EFFECT THAT THE REVISED RETURN U/S 139(5) IS INVALID IN LAW AND THEREFO RE , THE INCOME SHOWN THEREIN TANTAMOUNT TO CONCEALMENT OF INCOME. SO LONG AS REVISED RETURN U/S 139(5) IS A VALID RETURN AND HAS BEEN ACCEPTED BY THE DEPARTMENT, THEN INCOME SHOWN THEREIN CANNOT BE SUBJECT MATTER OF CONCEALMENT OF INCOME FOR THE PURPOSE OF LEVYING THE PENALTY U/S 271(1)(C) ON TH E AMOUNT DECLARED. WE, THEREFORE, DELETE THE PENALTY LEVIED BY THE ASSESSING OFFICER AND S ET ASIDE THE ORDER OF THE CIT(A). 9 . IN VIEW OF OUR AFORESAID FINDING, WE ARE NOT DECIDING THE ISSUE ON MERITS AS DISCUSSED B Y THE ASSESSING OFFICER AND CIT(A) AS THEY HAVE BECOME PURELY ACADEMIC. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 10 . IN THE RESULT, T HE APPEAL OF THE ASSES S EE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JU LY , 2015. SD/ - SD/ - ( . . ) ( ) ( G S PANNU ) ( AMIT S HUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 17 TH JU LY , 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 2 , MUMBAI 4 ) THE CIT 1 1 , MUMBAI . 5 ) , , / THE D.R. F BENCH, MUMBAI. 6 ) DR. U MESH SHAMJI SHANGOI ITA NO. 22 9 7 /M/201 3 8 COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMB AI * . . *CHAVAN, SR.PS