Income Tax Officer Ward-5, Margao V. Shri Ramchandra G. Halwai, Vasco

ITA 258/PAN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93558 (ITAT-PANAJI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 20-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND SHANKAR MARATHE
• Assessee Lawyers: PUNITA BANSAL
• Keywords: Gift
• Section: 143(3); 133A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 258 /PNJ/201 3 (ASST. YEAR : 200 5 - 0 6 ) ITO, WARD - 5, MARGAO, GOA. VS. SHRI RAMACHANDRA G. HALWAI, M/S. KASHI DAIRY & SWEETS, MB - 14, 2 ND FLOOR, HOUSING BOARD COLONY, BAINA ROAD, VASCO - DA - GAMA, GOA. PAN NO. AASPH 6408 LS (APPELLANT) (RESPONDENT) ASSESSEE BY : SMT. PUNITA BANSAL C A. DEPARTMENT BY : SHRI ANAND SHANKAR MARATHE - D R DATE OF HEARING : 1 6 / 0 7 /2015 . DATE OF PRONOUNCEMENT : 16 / 0 7 /201 5 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), PANAJI, DATED 1 0 /0 7 /201 3 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) I S OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE PENALTY MADE IN ADDITION OF RS. 18,14,758/ - AND RS. 50,000/ - STATING THAT THE ASSESSEE HAS OFFERED ALL THE FINDINGS OF DISPROPORTIONATE INCOME FOR TAX DURING THE COURSE OF SURVEY. 2 ITA NO. 258/PNJ/2013 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT CONSIDERING THE ABOVE FACTS. 4. THE APPELLANT CRAVES TO ADD, AMEND OR ALTER ANY OF THE GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 3 . FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 31/10/2005 FOR ASSESSMENT YEAR 2005 - 06 DECLARING TOTAL INCOME OF RS.3,91,250/ - . SUBSEQUENTLY, A SURVEY UNDER SEC. 133A OF THE ACT WAS CARRIED OUT ON 16/03/2007. DURING THE COURSE OF SURVEY , ASSESSEE COULD NOT EXPLAIN THE SOURCES OF THE F OLLOWING AMOUNTS : - 1. INTRODUCTION OF CAPITAL IN THE BOOKS OF ACCOUNTS RS. 18,14,758 2. INTRODUCTION OF GIFTS RS. 75,000 3. EXPENDITURE WRONGLY DEBITED TO P & L A/C RS. 50,000 TOTAL RS. 19,39,758/ - 4 . ACCORDINGLY, ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SEC. 143(3) OF THE ACT ADDING RS. 19,39,458/ - TO THE INCOME OF THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) OF THE ACT WHICH WERE DROPPED . S UBSEQUENTL Y , THE COMMISSIONER OF INCOME TAX , PANAJI VIDE ORDER PASSED UNDER SEC. 263 IN F.NO. CIT/PNJ/730(4)/263/2008 - 09/821 DATED 15/10/2008 HAS SET ASIDE THE ORDER OF THE ASSESSING OFFICER DROPPING THE PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) WITH A DIRECTION TO RE - EXAMINE THE LEVY OF PENALTY UNDER SEC. 271(1)(C) KEEPING IN VIEW THE FACTS AND CORRECT POSITION OF LAW . THEREAFTER, NOTICE UNDER SEC. 274 READ WITH SEC. 271 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 24/1 0 /2008 AND SERVED UPON THE ASSESSEE ON 30/10/2008 . IN THE PENALTY PROCEEDINGS , THE ASSESSEE SUBMITTED THAT THE ADDITION OF RS. 18,14,758/ - MADE TO THE CAPITAL ACCOUNT WAS OUT OF FIXED DEPOSITS INVESTED BY THE ASSESSEE. IT WAS SUBMITTED THAT DURING THE SURVEY , CHARTERED ACCOUNTANT ADVISED 3 ITA NO. 258/PNJ/2013 THE ASSESSEE THAT IT SHALL BE VERY DIFFICULT TO EXPLAIN THESE F IXED DEPOSITS TO THE FULL SATIS FACTION OF THE DEPARTMENT AS BEING VERY OLD AND RENEWED FROM YEAR TO YEAR AND FOR WHICH THE ASSESSEE WAS NOT IN A POSITION TO GET PROPER LINKAGE . THE CHARTERED ACCOUNTANT SUGGESTED THE ASSESSEE THAT THIS BEING THE PECULIARITY OF THE CASE, IT SHALL BE BETTER TO ACCEPT THE ADDITION OF THIS ACCOUNT AND THAT SHALL SAVE THE ASSESSEE FROM THE DISPUT ES WITH THE DEPARTMENT AND THAT THE ASSE SSEE SHALL BE ABLE TO BUY PEACE AND CORDIAL RELATIONSHIP WITH THE DEPARTMENT . 5. REGARDING THE ADDITION OF RS. 50,000/ - BEING THE INCOME TAX ASSESSMENT DUES , IT WAS SUBMITTED THAT THIS IS A MISTAKE ON THE PART OF THE ASSESSEE. THE INCOME TAX DUES PAID WERE DISCLOSED UNDER THE HEAD INCOME TAX ASSESSMENT DUES . THERE WAS NO INTENTION OR ANY PURPOSEFUL WRONG ACCOUNTING . IT WAS APPARENTLY CLEAR THAT THIS AMOUNT IS INCOME TAX DUES FROM THE FINAL ACCOUNTS FILED ALONG WITH THE RETURN OF INCOME AND THAT IT WA S INADVERTENT MISTAKE ON THE PART OF THE ASSESSEE NOT TO ADD THIS AMOUNT WHILE COMPUTING TAXABLE INCOME. IT WAS SUBMITTED THAT DURING THE SURVEY PROCEEDINGS ASSESSEE HAD COOPERATED WITH THE DEPARTMENT. EVEN VERBAL ASSURANCE WAS GIVEN FOR DROPPING OF PENALTY PROCEEDINGS , IF THE ASSESSEE COOPERATE AND DECLAR E THE INCOME ACCORDINGLY. BELIEVING THE SAME, ASSESSEE HAD ADMITTED WHATEVER INCOME/FINANCIAL FIGURES FOR WHICH TAX WAS DEMANDED AND PAID BY THE ASSESSEE. IT WAS THEREFORE, REQUESTED THAT THE PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) OF THE ACT MAY BE DROPPED. 6. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ABOVE EXPLANATION OF THE ASSESSEE AND LEVIED PENALTY UNDER SEC. 271(1)(C) OF THE ACT ON ACCOUNT OF FURNISHING INACCURATE PARTICULARS O F INCOME BY OBSERVING THAT THE ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE ONLY ON ACCOUNT OF SURVEY CONDUCTED BY THE DEPARTMENT , OTHERWISE, IT WOULD NOT HAVE BEEN OFFERED FOR TAXATION. 4 ITA NO. 258/PNJ/2013 7. ON APPEAL, COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE PENALTY OF RS. 18,14,758/ - BEING INTRODUCTION OF CAPITAL IN THE BOOKS OF ACCOUNTS BY OBSERVING AS UNDER: - ADMITTEDLY, THE APPELLANT HAD INTRODUCED THE ABOVE MENTIONED AMOUNT IN ITS CAPITAL ACCOUNT AND DURING THE COURSE OF SURVEY, HE WAS ASKED TO EXPLAIN THE SOURCE OF THIS INTRODUCTION. IN THE PENALTY ORDER, THE A.O. HAS REPRODUCED THE EXPLANATION OF THE ASSESSEE, WHICH IS REPRODUCED AS UNDER: - AS REGARDS THE ADDITION OF RS. 18,14,758/ - THE ASSESSEE HA S STATED THAT THE ADDITION TO CAPITAL ACCOUNT BEING THE FIXED DEPOSITS INVESTED BY THE ASSESSEE. DURING THE SURVEY PROCEEDINGS MY C HARTERED ACCOUNTANT ADVISED ME THAT IT SHALL BE VERY DIFFICULT TO EXPLAIN THESE FIXED DEPOSITS TO THE FULL SATISFACTION OF TH E DEPARTMENT AS THEY BEING VERY OLD AND RENEWED FROM YEAR TO YEAR AND FOR WHICH WE ARE NOT IN POSITION TO GET PROPER LINKAGE. HE EVEN SUGGESTED ME THAT THIS BEING THE PECULIARITY OF THE CASE, IT SHALL BE BETTER TO ACCEPT THIS ADDITION OF THIS ACCOUNT AND T HAT SHALL SAVE ME FROM THE DISPUTES WITH THE DEPARTMENT AND I SHALL BE ABLE TO BUY PEACE AND CORDIAL RELATIONSHIP WITH THE DEPARTMENT THIS SHALL EXPLAIN YOU THAT THIS ADDITION DOES NOT ACTUALLY REPRESENT MY INCOME AS SUCH BUT IN ORDER TO BUY PEACE AND AVOI D UNWARRANTED LITIGATIONS I AGREED FOR THE ADDITIONS. THE A.O. IN THE PENALTY ORDER HAS NOT TRIED TO PROVE THAT THE EXPLANATION GIVEN BY THE ASSESSEE IS EITHER FALSE OR NOT BONA - FIDE. HE HAS LEVIED PENALTY WITH THE REMARK THAT THE ASSESSEE WOULD NOT HAVE OFFERED THIS INCOME, HAD SURVEY NOT BEEN CARRIED OUT ON HIM. A.O. HAS ALSO NOT BROUGHT ANY NEW FACTS OR MATERIAL ON RECORD DURING PENALTY PROCEEDINGS. I FIND THIS ISSUE SQUARELY COVERED BY TH E DECISION IN THE CASE OF CIT VS. SURESH CHAND BANSAL AND DIRECT THE A.O. TO DELETE THE PENALTY LEVIED ON THIS AMOUNT OF ADDITION. 8. FURTHER, HE DELETED THE LEVY OF PENALTY ON ACCOUNT OF EXPENDITURE WRONGLY DEBITED TO PROFIT AND LOSS ACCOUNT OF RS. 50,000/ - BY OBSERVING AS UNDER: - IN THIS CASE, TAX PAYMENT WAS ERRONEOUSLY CLAIMED AS EXPENDITURE. IT IS CLEAR F R OM THE PENALTY ORDER AND EXPLANATION OF THE ASSESSEE THAT THIS WAS AN ACCOUNTING ERROR AND NO MOTIVE OF CONCEALMENT CAN BE ATTRIBUTED TO THE SAME. THEREFORE, THE A . O . IS DIRECTED TO DELETE THE PENALTY ON THIS AMOUNT. 5 ITA NO. 258/PNJ/2013 9. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 10. ON THE OTHER HAND, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 11. WE FIND THAT THE DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY SPECIFIC MISTAKE IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHILE DELET ING THE PENALTY OF RS. 18,14,758/ - . THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN CATEGORICAL FINDING THAT THE ASSESSING OFFICER IN THE PENALTY ORDER HAS NOT PROVED THAT THE EXPLANATION GIVEN BY THE ASSESSEE IS EITHER FALSE OR NOT BONAFIDE. THE PENALTY WAS LEVIED WITH THE REMA R K THAT THE ASSESSEE WOULD NOT HAVE OFFERED THIS I NCOME FOR TAXATION , HAD SURVEY NOT BEEN CARRIED OUT ON HIM. THE ASSESSING OFFICER HAS ALSO NOT BROUGHT ANY NEW FACTS OR MATERIAL ON RECORD IN THE PENALTY PROCEEDINGS AND, THEREFORE , THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. SURESH CHAND BANSAL REPORTED IN 329 ITR 330 , WHEREIN IT WAS HELD THAT ASSESSEE OFFERED A DDITIONAL INCOME , WHICH WAS ACCEPTED IN ITS ENTIRETY AND LEVY OF PENALTY ON SUCH OFFER WAS NOT JUSTIFIED WITHOUT DETAILED DISCUSSION ABOUT THE DOCUMENTS AND THE EXPLANATION WHICH COMPELLED OFFER OF ADDITIONAL INCOME. FURTHER, COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PENALTY O N ADDITION OF RS. 50,000/ - ON THE GROUND THAT IT WAS A N ACCOUNTING ERROR BY THE ASSESSEE AND THERE WAS NO MOTIVE OF CONCEALMENT IN THE SAME. 12 . FURTHER, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT REPORTED IN 249 ITR 125 HAS HELD THAT NO PENALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH 6 ITA NO. 258/PNJ/2013 THE HYPOTHESIS THAT THE AMOUNT DOES NOT REPRESENT CONCEALED INCOME AS WITH THE HYPOTHESIS THAT IT DOES. IF AN ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROV ED I.E., IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEES CASE IS FALSE, THE E XPLANATION CANNOT HELP THE DEPARTMENT BECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS THE I NCOME OF THE ASSESSEE. 13 . FURTHER, THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT REPORTED IN (2012) 211 T AXMAN 40 (SC) HAS HELD THAT WHERE THE TAX AUDIT REPORT FILED ALONG WITH THE RETURN UNEQUIVOCALLY STATED THAT THE PROVISION FOR PAYMENT OF GRATUITY WAS NOT ALLOWABLE UNDER S EC. 40A(7) OF THE ACT , BUT DUE TO A BONAFIDE AND INADVERTENT ERROR, THE ASSESSEE FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME , THE ASSESSEE COULD NOT BE HELD TO BE GUILTY OF FU RNISHING INACCURATE PARTICULARS OF THE INCOME FOR LEVYING PENALTY UNDER SEC. 271(1)(C) OF THE ACT. 14 . IN VIEW OF THE FOREGOING, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON THURSDAY , THE 1 6 TH DAY OF JULY , 201 5 AT GOA . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 1 6 TH JU LY , 201 5 . VR/ - 7 ITA NO. 258/PNJ/2013 COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 8 ITA NO. 258/PNJ/2013 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 1 6 .0 7 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 17 .07 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 17 /07 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 17 /0 7 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 17 /07 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 16 /0 7 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 2 0 /07 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER