Jayeshkumar Nandlal Vaidhya, Patan V. ITO, Ward-1, Patan

ITA 242/AHD/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3254 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 08-04-2020
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S SHUKLA
• Keywords: Unexplained investment; Reasonable cause; Procedural lapse; Set aside
• Section: 271(1)(c); 143(3); 133A; 263; 2

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT) BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT ITA NO.242/AHD/2018 / ASSTT.YEAR : 2007-08 JAYESHKUMAR NADLAL VAIDHYA 80, BHAGWATINAGAR SOCIETY BUS STAND ROAD PATAN 384 4265. PAN : AAQPV 1078 H VS. ITO, WARD - 1 PATAN. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI PRITESH SHAH, CA REVENUE BY : SHRI S.S. SHUKLA, SR.DR / DATE OF HEARING : 27/05/2021 / DATE OF PRONOUNCEMENT: 15/06/2021 !'/ O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A), GANDHINAGAR DATED 4.12.2017 PASSED FOR T HE ASSTT.YEAR 2007-08. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.92,746/- WHICH WAS IMP OSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 31.3.2008 DECLARING TOTAL INCOME AT RS.3, 57,680/-. AN ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) ON 30.12.2009, WHEREBY THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.6,40,200/-. THE AO HAS MADE AN ADDITION OF RS.2,82,535/- ON ACC OUNT OF UNACCOUNTED FEES RECEIPTS. THE ASSESSMENT WAS SET ASIDE BY THE LD.COMMISSIONER UNDER SECTION 263 OF THE ACT. A FR ESH ASSESSMENT ITA NO.242/AHD/2018 2 ORDER UNDER SECTION 143(3) R.W.S. 263 OF THE ACT WA S PASSED ON 11.03.2013 AT THE TOTAL ASSESSED INCOME OF RS.14,32 ,116/- BY MAKING VARIOUS ADDITIONS/DISALLOWANCE. AGAINST THESE ADD ITIONS, ASSESSEE PREFERRED APPEAL BEFORE THE LD.CIT(A), WHO GAVE PAR TIAL RELIEF, AND CONFIRMED THE FOLLOWING ADDITIONS/DISALLOWANCES: I) ADDITION INCOME DISCLOSED DURING SURVEY PROCEEDINGS TO THE 4EXTENT OF CONFIRMED BY LD.CIT(A) RS.15,366/- II) ADDITION OF UNEXPLAINED INVESTMENT RS.1,25,000/ - III) ADDITION OF UNEXPLAINED INVESTMENT IN HOUSE RS.2,00,000/- IV) DISALLOWANCE OF INTEREST EXPENSES ON HOUSING LOAN RS.29,396/- TOTAL ADDITION OF WHICH PENALTY IS TO BE LEVIED RS.3,69,762/- THEREAFTER, THE LD.AO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PART ICULARS OF HIS INCOME OR CONCEALMENT OF INCOME, AND ISSUED SHOW CAUSE NOT ICE IN THIS BEHALF. IT WAS EXPLAINED BY THE ASSESSEE THAT THE ASSESSEE HAS NOT MADE ANY CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHED I NACCURATE PARTICULARS THEREOF, AND ALL DETAILS WERE FURNISHED IN THE RETURN OF INCOME. HOWEVER, THE LD.AO DID NOT ACCEPT THE EXP LANATION OF THE ASSESSEE AND LEVIED THE IMPUGNED PENALTY. 4. AGGRIEVED BY THE ACTION OF THE LD.AO, THE ASSESS EE WENT IN APPEAL BEFORE THE LD.FIRST APPELLATE AUTHORITY, BUT HE COULD NOT SUCCEED. HENCE, THE ASSESSEE IS NOW BEFORE THE TRIBUNAL. ITA NO.242/AHD/2018 3 5. BEFORE ME, THE LD.COUNSEL FOR THE ASSESSEE ASSAI LED BOTH THE ORDERS OF THE REVENUE, AND REITERATED SUBMISSIONS M ADE BEFORE THEM. FURTHER, RELYING ON THE JUDGMENT OF THE HONBLE GUJ ARAT HIGH COURT IN THE CASE OF SNITA TRANSPORT P.LTD. VS. ACIT, 42 TAX MANN.COM 54 (GUJ), THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED TH AT IF THE AO FAILED TO RECORD A CONCLUSIVE FINDING ON THE CHARGE FOR WHICH PENALTY IS BEING IMPOSED, THEN SUCH PENALTY ORDER IS NOT SUSTAINABLE . IN OTHER WORDS, THE AO HAS TO RECORD A FINDING WHETHER THE ASSESSEE IS BEING VISITED WITH PENALTY FOR FURNISHING INACCURATE PARTICULARS OR FOR CONCEALMENT OF INCOME. IN THE PENALTY ORDER, THE LD.AO CANNOT USE THE EXPRESSION OR IN BETWEEN BOTH THESE CHARGES I.E. PENALTY IS BEING IMPOSED FOR INACCURATE PARTICULARS/CONCEALMENT OF INCOME. HE H AS TO RECORD A FIRM FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCO ME BY THE ASSESSEE OR ANY INACCURATE PARTICULARS OF INCOME HA D BEEN FURNISHED BY THE ASSESSEE. NO SUCH FINDING HAS BEEN MADE IN THE INSTANT CASE. BOTH THESE TERMS CANNOT BE USED TOGETHER IN HIS FINAL CO NCLUSION. THE LD.COUNSEL FOR THE ASSESSEE ALSO MADE RELIANCE UPON A LARGE NUMBER OF DECISION, OUT OF THEM, TWO ARE AUTHORED BY ME WHILE SITTING IN THE DIVISION BENCH. ON THE OTHER HAND, THE LD.DR SUPPO RTED ORDERS OF THE REVENUE AUTHORITIES. 6. I HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE THR OUGH THE IMPUGNED ORDERS AND THE MATERIAL AVAILABLE ON RECOR D. THE CASE OF THE ASSESSEE IS THAT WHILE IMPOSING PENALTY UNDER S ECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, THE LD.AO DID NOT ARRIVE AT FINAL CONCLUSION AS TO WHETHER THERE WAS A CONCEALMENT OF INCOME OR ANY INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE, AND THEREFOR E, THERE IS A FLIP-FLOP ON THE PART OF THE AO IN DECIDING THE TYPE OF DEFAU LT COMMITTED BY THE ITA NO.242/AHD/2018 4 ASSESSEE, AND THEREFORE THE IMPUGNED ORDER IS BAD I N LAW. THE LD.COUNSEL FOR THE ASSESSEE, AMONGST OTHER, RELIED ON THE ORDER OF THE ITAT IN THE CASE OF SHARAD BACHUBHAI VYAS VS. DCIT, IN IT(SS)A.NO.349/AHD/2014 VIDE ORDER DATED 16.11.2018 . THE LD.COUNSEL PLACED ON RECORD A COPY OF THIS ORDER. I TAKE NOTE OF THE FINDING IN THE ABOVE ORDER OF THE ITAT. IT READS A S UNDER: 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. HONBLE GUJARAT HIGH COURT HAS CO NSIDERED THIS ASPECT IN THE CASE OF SNITA TRANSPORT (SUPRA). REFERENCE T O PARA 9 OF THIS JUDGMENT IS WORTH TO NOTE. IT READS AS UNDER: 9. REGARDING THE CONTENTION THAT THE ASSESSING OFF ICER WAS AMBIVALENT REGARDING UNDER WHICH HEAD THE PENALTY W AS BEING IMPOSED NAMELY FOR CONCEALING THE PARTICULARS OF IN COME OR FURNISHING INACCURATE PARTICULARS, WE MAY RECORD TH AT THOUGH IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DID ORDER IN ITIATION OF PENALTY ON BOTH COUNTS, IN THE ULTIMATE ORDER OF PE NALTY THAT HE PASSED, HE CLEARLY HELD THAT LEVY OF PENALTY IS SUS TAINED IN VIEW OF THE FACT THAT THE ASSESSEE HAD CONCEALED THE PARTIC ULARS OF INCOME. THUS INSOFAR AS FINAL ORDER OF PENALTY WAS CONCERNE D, THE ASSESSING OFFICER WAS CLEAR AND PENALTY WAS IMPOSED FOR CONCE ALING PARTICULARS OF INCOME. IN LIGHT OF THIS, WE MAY PER USE THE DECISION OF THIS COURT IN CASE OF MANU ENGINEERING WORKS (SU PRA). IN THE SAID DECISION, THE DIVISION BENCH CAME TO THE CONCL USION THAT LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOT ICE FOR PENALTY, BUT IT WAS INCUMBENT UPON THE ASSESSING AUTHORITY T O COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMEN T OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THEM. IF NO SUCH CLEAR CUT FI NDING IS REACHED BY THE AUTHORITY, PENALTY CANNOT BE LEVIED. IT WAS A CASE IN WHICH IN FINAL CONCLUSION THE AUTHORITY HAD RECORDED THAT 'I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSES SEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' IT WAS IN THIS RESPECT THE BENCH OBSE RVED THAT 'NOW THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CA SE OR A QUASICRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE I AC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMEN T OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR C UT FINDING WAS REACHED BY THE IAC AND, ON THAT GROUND ALONE, THE O RDER OF PENALTY PASSED BY THE IAC WAS LIABLE TO BE STRUCK DOWN.' ITA NO.242/AHD/2018 5 6. A PERUSAL OF THE ABOVE PARAGRAPH WOULD INDICATE THAT THE HONBLE HIGH COURT FOUND THAT AS USER OF EXPRESSION AND/OR IN BETWEEN CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS WHILE INVITING EXPLANATION OF THE ASSESSEE, MAY NOT BE AN Y PROCEDURAL IRREGULARITY OR FATAL TO THE PROCEEDINGS, BUT IF TH E AO FAILED TO RECORD A FINDING, WHILE VISITING THE ASSESSEE WITH PENALTY, THEN THAT WOULD BE FATAL TO THE PROCEEDINGS ITSELF. IN OTHER WORDS, WHILE PA SSING FINAL ORDER, THE AO HAS TO RECORD A SPECIFIC FINDING ACCEPTING THE FACT THAT PENALTY IS BEING IMPOSED FOR FURNISHING INACCURATE PARTICULARS OR CO NCEALMENT OF INCOME. IN THE LIGHT OF THE ABOVE, LET US TAKE NOTE OF RELE VANT PARA-8 OF THE PENALTY ORDER, WHICH READS AS UNDER: 8. THUS, AFTER CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE COMPANYS CASE, I AM SATISFIED THAT THE ASSESSEE COMPANY HAS COMMITTED THE DEFAULT IN CONCEALING ITS INCOME AND FURNISHING INACCURATE PARTICULARS OF ITS WITHOUT AN Y REASONABLE CAUSE AND THEREFORE LIABLE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961. 7. A PERUSAL OF THE ABOVE FINDING WOULD INDICATE TH AT, HE WISHED TO IMPOSE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF IN COME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. BOTH THESE SITUAT IONS CONTRADICTORY TO EACH OTHER IN THE ABOVE ORDER. THEREFORE, THIS ORDE R IS NOT SUSTAINABLE IN VIEW OF DECISION OF HONBLE GUJARAT HIGH COURT CITE D SUPRA. IN VIEW OF THE ABOVE DISCUSSION, PENALTY IS NOT SUSTAINABLE. WE AL LOW GROUND OF APPEAL, AND CANCEL PENALTY IMPOSED BY THE AO. 7. IN THE ABOVE GROUND, LET ME PERUSE THE IMPUGNED ORDER OF THE LD.AO WHICH READS AS UNDER: 4. THE SUBMISSION OF THE ASSESSEE IS PERUSED CAREF ULLY AND FOUND THAT THE ASSESSEE HAS NARRATED ERRONEOUS FACTS IN H IS REPLY. THE ASSESSEE HAD DISCLOSED ONLY RS. 5 LAKH DURING THE S URVEY PROCEEDINGS AS AGAINST THIS IT IS NARRATED IN THE REPLY OF PENA LTY SHOW CAUSE DIAL 81 LAKH DISCLOSED DURING THE SURVEY PROCEEDINGS. FU RTHER, PENALTY PROCEEDINGS INITIATED AGAINST THE ADDITION OF THE I NCOME OVER AND ABOVE THE DISCLOSURE MADE DURING THE COURSE OF SURV EY PROCEEDINGS AND WHICH THE LD. C1T(A) HAS ALSO CONFIRMED IN HIS ORDER. THEREFORE, THE CASE OF THE ASSESSEE FALLS WITHIN TH E AMBIT OF EXPLANATION 'TO SECTION 271 (1) (C) OF THE L.T. ACT WHICH IS BEING INVOKED IN THIS CASE, ASSESSEE HIMSELF NOT COME FOR WARD AND DISCLOSED THE INCOME, IF THE SURVEY PROCEEDINGS U/S . 133A HAD NOT BEEN CARRIED OUT ON THE BUSINESS PREMISES OF THE AS SESSED AND THE ASSESSMENT U/S. 143(3) HAD NOT BEEN COMPLETED IN TH E CASE OF THE ASSESSEE, THE SAID UNEXPLAINED INVESTMENT OF RS. 3. 25,000/- AND ITA NO.242/AHD/2018 6 INTEREST EXPENSES OF RS, 29396 AND RS, 15,366/- SHO RT DISCLOSED INCOME DURING THE COURSE OF SURVEY AGGREGATING TO R S. 3.69J62/- WOULD HAVE ESCAPED ASSESSMENT RESULTING INTO LOSS O F REVENUE. THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HI S INCOME FOR THE YEAR UNDER CONSIDERATION AND NO BONALLDE CAUSE FOR SUCH FAILURE HAS BEEN ESTABLISHED BY THE ASSESSEE. 1 AM, THEREFORE, SATISFIED THAT EXPLANATION-1 OF SECTION 271(L)(C) IS CLEARLY APPLI CABLE IN THIS EASE AND THEREFORE, PENALTY U/S. 271(L)(C) IS LEVIABLE. 5. SINCE THE ASSESSEE HAS FURNISHED INACCURATE PART ICULARS OF HIS INCOME AT RS.3,69,762/- AND THEREFORE, THE QUANTUM OF INCOME FOR WHICH INACCURATE PARTICULARS/CONCEALMENT HAVE BEEN FURNISHED AMOUNTS TO RS. RS.3,69,762/-. 6. AS SUCH TOTAL AMOUNT FOR WHICH THE INACCURATE P ARTICULARS HAVE BEEN FURNISHED IS AT RS.3,69,762/- ON WHICH TH E PENALTY LEVIABLE AT MAXIMUM RATE @ 300% OF THE TAX SOUGHT TO BE EVAD ED COMES TO RS.2,78,238/- AND THE MINIMUM PENALTY AT THE RATE O F 100% OF THE TAX SOUGHT TO BE EVADED BY CONCEALED INCOME COMES TO RS . 92,746/-. 8. A PERUSAL OF THE ABOVE ORDER WOULD INDICATE THAT THE AO HAS RECORDED A FIRM FINDING THAT THE ASSESSEE IS BEING VISITED WITH PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. T HERE IS NO CONFUSION IN THE MIND OF THE AO. THEREFORE, HE CANNOT DRAW A NY SUPPORT FROM THESE DECISIONS. APART FROM THE PROPOSITION RELIE D ON BY THE ASSESSEE, NO OTHER POINT WAS ARGUED BY THE LD.COUNSEL FOR THE ASSESSEE FOR ABSOLVING THE ASSESSEE FROM LEVY OF PENALTY. HENCE , THIS APPEAL IS DEVOID OF MERIT. ACCORDINGLY, IT STANDS DISMISSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 15 TH JUNE, 2021 AT AHMEDABAD. S D / - (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED 15/06/2021