Bipinkumar Bhaktiram Nimavat, GONDAL V. The Income Tax Officer, Ward-3(3), RAJKOT-GUJARAT

ITA 237/RJT/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72641 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 21-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 13-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT B JHAVERI
• Assessee Lawyers: DR ADHIA
• Keywords: Business income; Salary income; Assessment record
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 237/RJT/2013 ASSESSMENT YEAR : 2008-09 BIPINKUMAR BHAKTIRAM NIMAVAT, VIMAL BERING CO., 24/3, BHOJPARA, GONDAL PAN : ADGPN 0828 C ( / APPELLANT) THE I.T.O., WARD 3(3), RAJKOT / RESPONDENT / ASSESSEE BY SHRI D R ADHIA, AR / REVENUE BY DR JAYANT B JHAVERI, DR / DATE OF HEARING 21.11.2013 !'# / DATE OF PRONOUNCEMENT 29.11.2013 / ORDER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 28.02.2013 OF CIT(A)- III, RAJKOT IN APPEAL NUMBER CIT(A)-III/0030/11-12, CONFIRMING THE PENALTY OF RS.37,105/- LEVIED BY THE ASSESSING OFFICER U/S 271 (1)(C) OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2008-09. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED RETURN OF INCOME ON 09. 02.2010 SHOWING SALARY INCOME OF RS.96,000/-. ON VERIFICATION OF BANK ACCOUNTS, T HE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEPOSITED CASH MANY TIMES AND WITH DREW THROUGH ATMS; THEREFORE THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE REASON FOR SUCH CASH DEPOSITS AND WITHDRAWALS. THE LD. AR OF THE ASSESS EE EXPLAINED THAT THE ASSESSEE WAS DOING BUSINESS OF MAMRA (RICE PRODUCT) ON WHICH THE ASSESSEE HAD TURNOVER OF RS.38,81,524/-. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED A SHOW-CAUSE NOTICE ASKING THE ASSESSEE TO EXPLAIN AS TO WHY SECTION 44 AF OF THE INCOME-TAX ACT SHOULD NOT BE APPLIED ON THE TURNOVER TO ARRIVE AT NET PRO FIT. IN THIS REGARD, THE AR OF THE ASSESSEE SUBMITTED DETAILS ON 20.12.2010 IN WHICH T HE AR OF THE ASSESSEE AGREED AND GIVE HIS CONSENT FOR APPLYING SECTION 44AF OF T HE INCOME-TAX ACT. THE ASSESSING OFFICER ACCORDINGLY BROUGHT TO TAX RS.1,94,076/- BE ING 5% OF RS.38,81,524/- U/S 44AF OF THE INCOME-TAX ACT AND ALSO INITIATED PENALTY PR OCEEDINGS U/S 271(1)(C). SUBSEQUENTLY, THE ASSESSING OFFICER LEVIED PENALTY OF RS.1,11,320/- U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 BEING 100% OF TAX SOUGHT T O BE EVADED ON CONCEALED 2 237-RJT-2013 - BIPINKUMAR BHAKTIRAM NIMAVAT (SMC) INCOME OF RS.1,94,076/-. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY OBSERVING THAT IN THIS CASE THE ASSESSE E HAS NEITHER DISCLOSED THE INCOME FROM BUSINESS CLAIMED TO HAVE BEEN UNDERTAKEN NOR M AINTAINED ANY BOOKS OF ACCOUNTS IN RESPECT OF THE BUSINESS CARRIED OUT. B ASED ON THE CASH TRANSACTIONS IN THE BANK ACCOUNT, THE ASSESSING OFFICER HAS DETERMI NED THE PROFIT AT 5% OF THE TOTAL TURNOVER TAKING RECOURSE TO SECTION 44AF OF THE INC OME-TAX ACT, 1961, BUT THE FACT REMAINS THAT THE PARTICULARS OF INCOME ARE CONCEALE D AS THE SAME IS NOT DISCLOSED IN RETURN OF INCOME FILED BY THE ASSESSEE. FAILURE TO FURNISH THE INCOME AND ORIGINAL RECORDS SHOWS THE INTENTION OF THE ASSESSEE TO CONC EAL THE INCOME. EXPLANATION (1) TO SECTION 271(C) RAISES A PRESUMPTION THAT AS AND WHEN ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME, THE SAME SHALL BE DEEMED OR REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED. THIS PROVISION OF LAW IS APPROVED BY HONBLE SUPREME COURT IN 251 ITR 99 BY AFFIRMING THE DECISION OF THE HONBLE KERALA HIGH COURT IN 246 ITR 218. HOWEVER, IN PARAGRAPH 6 OF THE IMPUGNED ORDER, THE LD. CIT(A) REDUCED THE PENALTY TO 100% O F TAX SOUGHT TO BE EVADED I.E. RS.37,105/-. THE PARAGRAPH 6 OF THE IMPUGNED ORDER READS AS UNDER:- 6. IN VIEW OF THE ABOVE DISCUSSION, IT CAN BE INFE RRED THAT THE APPELLANT THEREFORE DID NOT DISCHARGE THE ONUS OF EXPLAINING THE CASH TRANSACTIONS IN THE BANK ACCOUNT WHICH WERE KEPT HIDDEN FROM THE REVENU E. IN THE ABSENCE OF ANY BONAFIDE INFORMATION SUBSTANTIATING THE TRANSAC TIONS IN THE SECRET BANK ACCOUNT OF THE APPELLANT, TREATING THE CASH TRANSAC TIONS AS RECEIPTS FROM THE RETAIL BUSINESS, TAKING THE HELP OF SPECIAL PROVISI ONS U/S 44AF WHICH ENABLES COMPUTING PROFITS ON PRESUMPTIVE BASIS, THE ASSESSI NG OFFICER HAS DETERMINED THE PROFITS @ 5% ON THE TOTAL CASH RECEIPTS OF RS.3 881524/-. FROM THE ASSESSMENT RECORD IT IS NOTICED THAT THE ASSESSING OFFICER AFTER OBTAINING THE STATUTORY APPROVAL FROM ADDL. CIT ON 12/05/2011 U/S 274(2)(A) OF IT ACT 1961 THE PENALTY U/S 271(1)(C) HAS BEEN LEVIED. THEREFOR E, IN SO FAR AS LEVY OF PENALTY U/S 271(1)(C) IS CONCERNED, THE ACTION OF T HE ASSESSING OFFICER IS JUSTIFIED. HOWEVER, AS REGARDS TO THE QUANTUM OF PE NALTY LEVIED @ 300% OF TAX SOUGHT TO BE EVADED, THE SAME APPEARS TO BE ON A HI GHER SIDE. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE P ENALTY U/S 271(1)(C) @ 100%, BEING THE MINIMUM OF TAX SOUGHT TO BE EVADED. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 3. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E, SHRI D R ADHIA, AR APPEARED AND CONTENDED THAT THE ADDITION MADE IS PU RELY ON ESTIMATE BASIS APPLYING PROVISIONS OF SECTION 44AF AT 5% OF RS.1,94,076/-. SINCE THIS ADDITION ITSELF IS MADE 3 237-RJT-2013 - BIPINKUMAR BHAKTIRAM NIMAVAT (SMC) ON ESTIMATED BASIS, PENALTY U/S 271(1)(C) THEREON O UGHT NOT TO HAVE BEEN LEVIED. IN SUPPORT OF THIS, THE LD. AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS:- 1. 106 ITR 672 (ALL) CIT V/S MUSDILAL SING 2. 150 ITR 714 (P&H) CIT V/S METAL PRODUCTS OF IN DIA 3. 258 ITR 285 (P&H) HARIGOPAL V/S CIT 4. 140 ITR 943 (BOM) CIT V/S DEVENDAS PERUMAL & C O. 5. 120 ITR 752 (GUJ) CIT V/S VINAYCHAND HARILAL 6. 213 ITR 69 (GUJ) CIT V/S NAVNITLAL POCHALAL 7. 261 ITR 675 (GUJ) CIT V/S MILEX CABLE IND. FINALLY, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF THE ITAT, RAJKOT BENCH IN ITA NO.1317/RJT/2010 DATED 11.01.2013 IN T HE CASE OF VARIA NAVNEET MULJIBHAI V. ITO FOR THE ASSESSMENT YEAR 2002-03, W HEREIN THE TRIBUNAL HELD THAT NO PENALTY IS LEVIABLE WHEN INCOME IS ON ESTIMATED BAS IS. 4. ON THE OTHER HAND, DR. JAYANT B. JHAVERI, DR APP EARED ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A ). THE LD. DEPARTMENTAL REPRESENTATIVE POINTED THAT THE ASSESSEE FILED THE RETURN OF INCOME IN FORM NO.ITR-1 DECLARING ONLY SALARY INCOME. THE ASSESSEE HAS NOT DISCLOSED ANY OTHER INCOME UNDER ANY OTHER HEAD. NO TAXES WERE PAID. BASED ON THE ANNUAL INFORMATION RETURN FURNISHED BY ICICI BANK, THE ASSESSING OFFICER OBTA INED THE DETAILS OF THE TRANSACTIONS IN CASH OF THE APPELLANT FROM THE BANK U/S 133(6) OF THE INCOME-TAX ACT, 1961. AS PER THE INFORMATION OBTAINED FROM THE BANK , THE ASSESSEE HAS MADE CASH DEPOSITS TO THE TUNE OF RS.3881524/- IN THE SAVINGS ACCOUNT NO.624801510644 MAINTAINED WITH ICICI BANK. WHEN IT IS CONFRONTED W ITH THE ASSESSEE, THE ASSESSEE STATED THAT THE CASH TRANSACTIONS PERTAINED TO HIS BUSINESS OF MAMRA (RICE PRODUCT). CONSIDERING THESE CONSPICUOUS FACTS THAT THE ASSESS EE HAS NOT DISCLOSED THE SOURCE OF INCOME ON WHICH THE ASSESSING OFFICER LEVIED THE PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, THE VIEW TAKEN BY THE LD. CIT(A) BE UPHELD. 5. HAVING HEARD BOTH SIDES, I HAVE CAREFULLY GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THIS CASE THE ASSESSEE HAS NOT DISCLOSED THE SOURCE OF INCOME. IN THE RETURN OF IN COME FURNISHED BY HIM, HE HAS SHOWN ONLY SALARY INCOME AND NOT BUSINESS INCOME TH OUGH HE WAS DOING THE BUSINESS WHICH HE ADMITTED WHEN CONFRONTED ON THE B ASIS OF THE INFORMATION OBTAINED 4 237-RJT-2013 - BIPINKUMAR BHAKTIRAM NIMAVAT (SMC) FROM THE BANK U/S 133(6) OF THE INCOME-TAX ACT, 196 1. KEEPING IN VIEW OF THESE CONSPICUOUS FACTS OF THE CASE, I AM OF THE VIEW THA T THIS IS THE FIT CASE FOR LEVYING PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT. IN T HE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY ONLY TO THE EXTENT OF 100% OF TAX SOUGHT TO BE EVADED WHICH IN MY VIEW IS FAIR AND REASONABLE. NEEDS NO INTERFEREN CE. I, THEREFORE, DECLINE TO INTERFERE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 29.11.2013 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- BIPINKUMAR BHAKTIRAM NIMAVAT, VIMAL B ERING CO., 24/3, BHOJPARA, GONDAL 2. / RESPONDENT- THE I.T.O., WARD 3(3), RAJKOT 3. ,0,1 * * 2 / CONCERNED CIT-III, RAJKOT 4. * * 2- / CIT (A)-III, RAJKOT 5 . 567 1, * 1#, !$ / DR, ITAT, RAJKOT 6 . 79 :; / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT