The ITO, Ward-7(4), Ahmedabad V. Smt. Chandrikaben Arvind Patel, Ahmedabad

ITA 2333/AHD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67798 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Bonafide belief; Revised return
• Section: 143(3); 142(1); 139

Judgement Text

ITA NO 2333 /AHD/2012 . A.Y. 2008- 09 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M. & SHRI ANIL CHATURVE DI, A.M.) I.T. A. NO.2333/AHD/2012 (ASSESSMENT YEAR:2008-09) THE I.T.O WARD-7(4), AHMEDABAD (APPELLANT) VS. SMT. CHANDRIKABEN ARVIND PATEL, 8/B, SANGITA SOCIETY, NR. ANKUR CROSS ROAD, NARANPURA, AHMEDABAD (RESPONDENT) PAN: ABVPP9551P APPELLANT BY : SHRI O.P. BATHEJA, SR. D.R . RESPONDENT BY : SHRI M.K. PATEL. A.R. ( )/ ORDER DATE OF HEARING : 20-09-201 3 DATE OF PRONOUNCEMENT : 04-10-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A) DATED 21.08.2012 WHEREBY THE PENALTY OF RS. 6,83,700/- LEVIED BY ASSESSING OFFICER U/S. 271(1)(C) VIDE ORDER DATED 2 3 RD MAY, 2011 WAS DELETED. 2. THE FACTS AS CULLED OUT FROM THE ORDER OF LOWER AUT HORITIES ARE AS UNDER. ITA NO 2333 /AHD/2012 . A.Y. 2008- 09 2 3. ASSESSEE IS AN INDIVIDUAL WHO FILED HER RETURN OF I NCOME FOR A.Y. 2008- 09 ON 19.11.2008 DECLARING TOTAL INCOME OF RS. 37,5 34/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 7.12.2010 AND THE T OTAL INCOME WAS DETERMINED AT RS. 21,92,890/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS ING OFFICER NOTICED THAT ASSESSEE HAD PURCHASED AN IMMOVABLE PROPERTY O N 15.12.2006 AND WAS REGISTERED ON 03.04.2007. THE SAID PROPERTY WA S SOLD ON 01.10.2007 THAT IS WITHIN 1 YEAR OF ITS PURCHASE AND THE CAPIT AL GAIN ARISING ON ITS SALE WAS NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. THE A.O. ACCORDINGLY CONSIDERED RS. 21,55,360/- AS UNDISCLOS ED INCOME OF THE ASSESSEE AND ON THE AFORESAID ADDITION, ASSESSING O FFICER VIDE PENALTY ORDER DATED 23 RD MAY, 2011 LEVIED PENALTY OF RS. 6,83,700/- U/S 271 (1)(C). AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESS EE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 21.08.2012 D ELETED THE PENALTY BY HOLDING AS UNDER: 2.3 I HAVE CAREFULLY CONSIDERED THE PENALTY ORDER AND T HE SUBMISSION MADE BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDING S. THE PENALTY HAS BEEN IMPOSED BY THE A. O. AS THE APPELLANT DID NOT DISCL OSE THE CAPITAL GAIN ON SALE OF PROPERTY IN THE RETURN OF INCOME. THE APPELLANT HAS SUBMITTED THAT SHE IS A NON - RESIDENT AND HER AFFAIRS ARE BEING LOOKED AFTER BY HER POWER OF ATTORNEY HOLDER. THE RETURN WAS FILED BY THE POWER OF ATTORNEY HOLDE R ON HER BEHALF. THE MISTAKE WAS COMMITTED BY HIM INADVERTENTLY AND AS SOON AS T HE APPELLANT CAME TO KNOW ABOUT THE OMISSION, THE REVISED STATEMENT OF INCOME WAS FILED AND TAX WAS ALSO PAID. FURTHER, THE POWER OF ATTORNEY HOLDER WAS REL EASED FROM HER DUTIES. FURTHER, THE APPELLANT HAS SUBMITTED THAT THE CAPIT AL GAIN HAS BEEN DISCLOSED BEFORE DETECTION BY THE A. O. AND, THEREFORE, PENAL TY SHOULD NOT BE IMPOSED. AFTER CONSIDERATION OF ALL THE FACTS, IT IS NOTED T HAT THE A. O. HAD ISSUED A NOTICE U/S. 142(1) ON 26/07/2010 FIXING THE DATE OF COMPLI ANCE TO 25/08/2010, THE ITA NO 2333 /AHD/2012 . A.Y. 2008- 09 3 APPELLANT WAS ASKED TO FURNISH DETAILS REGARDING IN VESTMENT AND SOURCE IN RESPECT OF THE AIR INFORMATION. ON RECEIPT OF THAT INFORMATION, THE APPELLANT REVISED THE RETURN ON 04/09/2010. A PERUSAL OF THE PENALTY ORDER SHOW THAT NO NOTICE WAS ISSUED DURING THE COURSE OF ASSESSMENT P ROCEEDING SHOW CAUSING THE APPELLANT ABOUT THE FACT THAT THE CAPITAL GAIN HAS NOT BEEN SHOWN IN THE RETURN AND, THEREFORE, SHE WAS LIABLE FOR PENAL ACTION. TH E APPELLANT HIMSELF HAD ACKNOWLEDGED BEFORE THE A. O. IN RESPONSE TO THE NO TICE DATED 26/07/2010 VIDE REPLY DATED 25/08/2010 THAT SHE HAD INVESTED RS.35, 00,000/- IN PURCHASE OF PROPERTY OUT OF SALE PROCEEDS OF LAND AT SHELA VILL AGE. SUBSEQUENTLY, THE RETURN WAS REVISED ON 04/09/2010. IT IS THEREFORE CLEAR FROM ABOVE FACTS THAT THE APP ELLANT HAS SUO-MOTO REVISED THE RETURN OF INCOME AND OFFERED THE CAPITAL GAIN ON TH E SALE OF THE PROPERTY BEFORE ANY SPECIFIC SHOW CAUSE WHICH WAS ISSUED BY THE A. O. THE PENALTY ORDER DOES NOT SHOW THAT THIS DEFAULT WAS DETECTED AND NOTIFIE D TO THE APPELLANT BY THE A. O. BEFORE FILING OF REVISED RETURN. FURTHER, THE APPEL LANT IS A NON-RESIDENT AND WAS REPRESENTED BY A POWER OF ATTORNEY WHO HAD FILED TH E RETURN. IN THESE CIRCUMSTANCES, THE PENALTY U/S. 271(L)(C) IS NOT EX IGIBLE ON THE APPELLANT. THE PENALTY IS, THEREFORE, DIRECTED TO BE DELETED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NO W IN APPEAL BEFORE US. 6. BEFORE US, THE LEARNED D.R. SUBMITTED THAT ON THE B ASIS OF AIR INFORMATION RECEIVED BY THE ASSESSING OFFICER. IT C AME TO THE KNOWLEDGE OF ASSESSING OFFICER THAT ASSESSEE HAD SOLD IMMOVAB LE PROPERTY FOR RS. 35,36,735/- AND THE ASSESSEE WAS THEREFORE ASKED TO FURNISH THE DETAILS IN SUPPORT OF THE TRANSACTION. ASSESSEE INTERALIA SUB MITTED THAT SHE WAS OUT OF INDIA AND SHE HAS GIVEN THE POWER OF ATTORNEY TO SHRI BALDEVBHAI PATEL AND THE POWER OF ATTORNEY HOLDER HAD SOLD THE PROPERTY AND FILED THE RETURN OF INCOME WITHOUT DISCLOSING THE CAPITAL GAIN ARISING OUT OF SALE OF PROPERTY AND THE OMISSION TO DISCLOSE THE CAPITA L GAIN WAS DUE TO OVER SIGHT. HOWEVER, ON RECEIVING THE AIR INFORMATION SH E NOTICED THAT THE CAPITAL GAIN EARNED ON SALE OF PROPERTY REMAINED TO BE SHOWN IN HER ITA NO 2333 /AHD/2012 . A.Y. 2008- 09 4 RETURN OF INCOME AND SHE THEREFORE FURNISHED REVISE D STATEMENT OF INCOME AND OFFERED THE SHORT TERM CAPITAL GAIN OF RS. 21,5 5,360/- FOR TAX. THE LEARNED D.R. FURTHER SUBMITTED THAT IF THE DETAILS WOULD NOT HAVE BEEN CALLED FOR FROM THE ASSESSEE, THE SHORT TERM CAPITA L GAIN ARISING WOULD NOT HAVE BEEN TAXED. HE FURTHER SUBMITTED THAT THE ACT OF POWER OF ATTORNEY HOLDER WAS BINDING ON THE PERSON GIVING POWER OF AT TORNEY. HE THUS SUPPORTED THE ORDER OF ASSESSING OFFICER. HE ALSO P LACED RELIANCE ON THE DECISION OF AHMEDABAD TRIBUNAL IN THE CASE OF KAILA SHBHAI AMBALAL SHAH VS. ITO (2011) 129 ITD 135 (AHD). HE ALSO PLAC ED ON RECORD THE COPY OF THE AFORESAID ORDER. THE LD. A.R. ON THE O THER HAND SUBMITTED THAT THE RETURN OF INCOME WAS FILED BY THE POWER OF ATTORNEY HOLDER AND WHEN THE ASSESSEE CAME TO KNOW ABOUT THE NON DISCLO SURE OF CAPITAL GAINS IN THE RETURN, SHE IMMEDIATELY FILED THE REVI SED THE COMPUTATION AND THE TAXES WERE ALSO PAID. HE FURTHER SUBMITTED THAT THE DECISION IN THE CASE OF KAILASHBHAI AMBALAL SHAH (SUPRA) WHICH WAS RELIED UPON BY D.R. WAS DISTINGUISHABLE AND FOR WHICH A CHART DISTINGUI SHING THE FACTS OF THE ASSESSEES CASE AND THAT RELIED BY LD. D.R. WAS SUB MITTED. THE RELEVANT PORTION OF WHICH IS AS UNDER:- SR. NO. FACTS AND FINDINGS IN THE CASE OF KAILASHBHAI AMBALAL SHAH FACTS AND FINDINGS IN THE APPELLANTS CASE 1 ON RECEIPT OF AIR FROM BANK THE AO ISSUED SPECIFIC SHOW CAUSE NOTICE AS TO WHY INTEREST INCOME SHOULD NOT BE BROUGHT TO TAX ON RECEIPT OF AIR, THE AO ISSUED MERELY A SIMPLE NOTICE ASKING FOR VARIOUS DETAILS WHICH INTERALIA INCLUDED DETAILS OF INVESTMENT IN MOVABLE AND IMMOVABLE PROPERTIES IN A GENERAL MANNER WHICH CANNOT BE TERMED AS A SPECIFIC SHOW CAUSE NOTICE INFORMING CONCEALMENT OF ITA NO 2333 /AHD/2012 . A.Y. 2008- 09 5 INCOME. MERE ISSUANCE OF A GENERAL NOTICE REQUIRING CERTAIN DETAILS CANNOT BE TERMED AS DETECTION OF CONCEALMENT BY THE AO. THE RECEIPT OF AIR INFORMATION WAS MERELY OF INVESTMENT AND SALE OF PROPERTY WHICH COULD NOT LEAD TO A PRIMA FACIE BELIEF AS TO CONCEALMENT AS THE CONTENTS, PURPORT AND THE IMPLICATIONS OF THE DOCUMENTS WERE YET TO BE GONE INTO. THEREFORE, AT THE POINT OF TIME THE REVISED RETURN WAS FILED BY THE APPELLANT AND TAXES WERE PAID, THE ASSESSING OFFICER ADMITTEDLY HAD NO IDEA AS TO WHETHER THE AIR INFORMATION WOULD REVEAL ANY CONCEALMENT. RELIANCE PLACED ON THE FOLLOWING DECISIONS: CIT V. SHANKERLAL NEBHUMAL UTTAMCHANDANI [20091 311 ITR 327 [GUJARAT] JAYSUKH M. PARMAR V. ASSISTANT COMMISSIONER OF INCOME-TAX [2013] 33 TAXMANN.COM 422 (AHMEDABAD - TRIB.) DEPUTY COMMISSIONER OF INCOME- TAX V. SATISH B. GUPTA (2010) 42 SOT 48 (AHD.) SHANKARLAL NATHUMAL UTTAMCHANDANI VS. DCIT (1997) 91 TAXMANN 222 (AHD.) (MAG.) ACIT V. ASHOK RAJ NATH (2013) 33 TAXMANN. COM 588 (DELHI-TRIB.) 2 THE AO ON RECEIPT OF AIR CARRIED OUT ENQUIRY FROM BANK THE AO ON RECEIPT OF AIR HAS NOT CARRIED OUT ANY ENQUIRY FROM THE ITA NO 2333 /AHD/2012 . A.Y. 2008- 09 6 REGISTRAR OR THE CONCERNED AUTHORITIES. 3 IN THIS CASE, THE POWER OF ATTORNEY HOLDER IS THE SON OF THE APPELLANT AND HENCE KNOWLEDGE OF ALL ACTIVITIES OF THE POA IS GENERALLY BELIEVED TO BE KNOWN TO THE APPELLANT MORE PARTICULARLY WHEN THE APPELLANT WAS IN THE SAME CITY. IN THIS CASE, THE POWER OF ATTORNEY HOLDER IS NOT A RELATIVE OF THE APPELLANT AND MORE OVER THE APPELLANT WAS THOUSANDS OF MILES AWAY IN USA AT THE TIME OF TRANSACTION RESULTING IN CAPITAL GAIN. HENCE, THE EXPLANATION THAT THE APPELLANT WAS UNDER A BONAFIDE BELIEF THAT THE POA MUST HAVE DECLARED THE TRUE STATE OF AFFAIRS SHOULD NOT BE DOUBTED. 4 THE DEPOSITS IN BANK WERE MADE BY THE APPELLANT. THUS, IT IS A DEFAULT ON PART OF THE APPELLANT IN N OT INFORMING THE POA ABOUT THE ACTS CARRIED TRANSACTION CARRIED OUT BY HIM. THE TRANSACTION OF SALE OF PROPERTY LEADING TO DEPOSIT OF SALE CONSIDERATION IN THE BANK ACCOUNT AND ARISING OF CAPITAL GAIN WAS CARRIED OUT BY THE POA AND NOT THE APPELLANT. THE ACT OF THE POA IN INADVERTENTLY OMITTING TO OFFER CAPITAL GAIN CANNOT BE ATTRIBUTED TO ANY MALAFIDES ON PART OF THE APPELLANT STAYING IN USA AS IT IS NOT THE CASE OF THE AO THAT THERE WAS ANY COLLUSION WITH THE POA . REFERENCE IS INVITED TO DECISION OF P & H HIGH COURT IN 274 ITR 603 5 THERE WAS DEFINITE INFORMATION IN POSSESSION WITH THE AO ON ENQUIRIES MADE AND WHICH WAS CONFRONTED TO THE APPELLANT AFTER WHICH THE REVISED RETURN WAS FILED. HENCE, THE RETURN WAS NOT TREATED AS VOLUNTARY. THERE WAS NO DEFINITE INFORMATION WITH THE AO EXCEPT THE FACT THAT THE APPELLANT HAD SOLD A PROPERTY DURING THE YEAR AND NO ENQUIRIES WERE CARRIED OUT TO LEAD TO A CONCLUSION THAT THE APPELLANT HAD IN FACT CONCEALED HER INCOME. THE RETURN FILED THUS REQUIRES TO BE TREATED AS VOLUNTARY AS IT BEFORE THE ACTUAL ITA NO 2333 /AHD/2012 . A.Y. 2008- 09 7 DETECTION BY THE A.O. 6 IN THIS CASE, THE APPELLANT WAS IN KNOWLEDGE OF TDS BY THE BANK AS INTIMATED BY THE BANK IN THIS CASE, THE APPELLANT HAD NO KNOWLEDGE ABOUT THE FACT THAT THE POA HAS NOT OFFERED THE CORRECT INCOME INCLUDING THE CAPITAL GAIN. HENCE, SHE COULD NOT BE CHARGED FOR ANY CONTUMACIOUS CONDUCT. 7 THE APPELLANT WAS ACTIVELY INVOLVED IN BUSINESS THE APPELLANT WAS A HOUSEWIFE AND WAS STAYING IN USA AT THE RELEVANT TIME OF TRANSACTION OF SALE OF PROPERTY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD EARN ED SHORT TERM CAPITAL GAIN ON SALE OF IMMOVABLE PROPERTY, THE CAPITAL GAI NS WAS NOT DISCLOSED IN THE RETURN OF INCOME. IT IS ALSO AN UNDISPUTED F ACT THAT THE RETURN OF INCOME OF THE ASSESSEE WAS FILED BY THE POWER OF AT TORNEY HOLDER OF THE ASSESSEE. 8. IN THE CASE OF KAILASHBHAI AMBALAL (SUPRA), THE CO- ORDINATE BENCH OF TRIBUNAL HAS HELD THAT EVEN IF THE RETURN OF INCOME IS FILED BY AGENT OR POWER OF ATTORNEY HOLDER OR GUARDIAN, THE ASSESSEE HAS TO BEAR THE CONSEQUENCES OF AN UNTRUE RETURN UNLESS THERE ARE S ATISFACTORY REASONS. IT HAS BEEN FURTHER HELD THAT THE RETURN FILED AFTER E NQUIRIES MADE OR DISCOVERY OF CONCEALMENT MADE BY THE DEPARTMENT WOU LD NOT BE VOLUNTARY. IT HAS BEEN FURTHER HELD THAT FOR EXPLA NATION TO BE SATISFACTORY, IT HAS TO BE SHOWN THAT EVERY DETAL OF INFORMATION RELEVANT TO THE EXPLANATION AND IN POSSESSION OF THE ASSESSEE HAD B EEN DISCLOSED DURING THE ASSESSMENT PROCEEDINGS. SECONDLY, CIRCUMSTANCE S SURROUNDING THE ITA NO 2333 /AHD/2012 . A.Y. 2008- 09 8 EXPLANATION MUST SHOWN THAT WHAT IS STATED IN THE E XPLANATION COULD BE REASONABLE ACCEPTED AS HAPPENED. FURTHER THE HEAD NOTE IN THE CASE OF KAILASHBHAI AMBALAL SHAH (SUPRA) READS AS UNDER: SECTION 271(I)(C) OF THE INCOME-TAX ACT, 1961 - P ENALTY - FOR CONCEALMENT OF INCOME - ASSESSMENT YEAR 2006-07 -ASSESSEE WAS EARN ING INCOME FROM INTEREST AND SHARE FROM PARTNERSHIP FIRM - HE FILED RETURN SHOWI NG INTEREST INCOME OF RS. 129 ONLY - SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMAT ION FROM 'B' BANK AS A PART OF ROUTINE ANNUAL INFORMATION RETURN (AIR) FILED BY BA NK FOR FINANCIAL YEAR 2005-06 WHEREIN IT WAS FOUND THAT ASSESSEE HAD RECEIVED INT EREST INCOME OF OVER RS. FOUR LAKHS DURING RELEVANT YEAR - ON BASIS OF ANNUAL INFORMATI ON RETURN RECEIVED FROM 'B' BANK, ASSESSING OFFICER ISSUED A SHOW-CAUSE NOTICE TO ASS ESSEE ON 12-5-2008 - IN RESPONSE TO NOTICE, ASSESSEE SUBMITTED A RETURN ON THAT DATE ITSELF ENCLOSING THEREWITH A CHALLAN OF RS. 11.54 LAKHS BEING TAXES PAID ON 4-6-2008 AND ALSO DECLARING THEREIN INCOME OF RS. 22.78 LAKHS BEING INVESTMENT IN FDRS - ASSESSIN G OFFICER DID NOT ACCEPT SAID RETURN AS REVISED RETURN ON GROUND THAT IT WAS FILE D BEYOND STATUTORY TIME- LIMIT PRESCRIBED UNDER SECTION 139 - FURTHER, HE HELD THA T RETURN SO FILED WAS NOT VOLUNTARY AS DEPARTMENT HAD ALREADY DETECTED CONCEALMENT - TH US, ASSESSING OFFICER PROPOSED AN ADDITION OF UNACCOUNTED INTEREST INCOME AND UNDI SCLOSED INVESTMENT IN FD - HE ALSO IMPOSED PENALTY UNDER SECTION 271(L)(C) WHICH WAS CONFIRMED BY COMMISSIONER (APPEALS) - WHETHER ON FACTS, IT WAS APPARENT THAT ASSESSEE HAD CONCEALED PARTICULARS OF INCOME BY NOT DECLARING UNACCOUNTED INVESTMENT I N BANK AND BY NOT DECLARING INTEREST INCOME THEREON AT TIME OF FILING RETURN AN D, THEREFORE, IMPUGNED PENALTY ORDER PASSED BY AUTHORITIES BELOW WAS TO BE UPHELD- HELD, YES. 9. CONSIDERING THE FACT THAT THE CAPITAL GAIN EARNED B Y THE ASSESSEE WAS DISCLOSED ONLY ON BEING CONFRONTED BY THE DEPARTMEN T. THE ASSESSEE HAS NOT BROUGHT ANY CLINCHING MATERIAL IN SUPPORT OF TH E STATEMENT THAT SHE WAS NOT AWARE OF THE DETAILS OF THE RETURN OF INCOM E FILED BY THE POWER OF ATTORNEY HOLDER AND FURTHER IN THE ABSENCE OF ANY E VIDENCE HAS BEEN BROUGHT ON RECORD TO DEMONSTRATE THAT THE RETURN OF INCOME WAS FILED WITHOUT THE KNOWLEDGE OF THE ASSESSEE. WE ARE OF TH E VIEW THAT THE RATIO OF THE AFORESAID DECISION OF THE CO-ORDINATE BENCH OF TRIBUNAL ARE APPLICABLE TO THE FACTS OF THIS CASE. WE THEREFORE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS FULLY JUSTIFIED LEVIED THE PE NALTY IN THE PRESENT ITA NO 2333 /AHD/2012 . A.Y. 2008- 09 9 CASE AND THUS THE ORDER OF CIT(A) IS SET ASIDE AND THUS THIS GROUND OF REVENUE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED ORDER PRONOUNCED IN OPEN COURT ON 04 -10- 2013. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.RE GISTRAR ITAT,AHMEDABAD