Babitha, CHENNAI V. ACIT, CHENNAI

ITA 2596/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9469 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 14-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: T VASUDEVAN
• Keywords: Corroborative evidences
• Section: 143(3); 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2596/MDS/2015 ( / ASSESSMENT YEAR: 2005-06) MS. BABITHA, 16, RAJAJI STREET, RED HILLS, CHENNAI-600 052. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-IV(2), CHENNAI. PAN: AAGPB7175F ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. T.VASUDEVAN, ADVOCATE /RESPONDENT BY : MR. P.RADHAKRISHNAN, JCIT /DATE OF HEARING : 17 TH FEBRUARY, 2016 /DATE OF PRONOUNCEMENT : 22 ND APRIL, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX-APP EALS (CENTRAL)-I, CHENNAI, DATED 19.08.2014 IN ITA NO.3/ 2013-14 PASSED UNDER SECTION 271(1)(C) R.W.S.250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS A PPEAL, HOWEVER THE CRUX OF THE ISSUE IS AS FOLLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE MINIMUM PENALTY OF ` 3,90,456/- LEVIED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME BY THE ASSESSEE 2 ITA NO.2596 /MDS/2014 3. BRIEF FACTS OF THE CASE ARE THAT SEARCH ACTION U NDER SECTION 132 OF THE ACT WAS CONDUCTED ON 03.08.2005 IN THE CASE OF SRI VIMAL KUMAR GADHIYA AND IN CONSEQUENCE THEREOF NOTICE UNDER SECTION 153A R.W.S 153 OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOT ICE, THE ASSESSEE FILED HER RETURN OF INCOME ON 31.05.2006 DECLARING INCOME OF ` 20,80,063/- WHICH INCLUDED ADDITIONAL INCOME OF ` .20,06,019/- OFFERED DURING THE COURSE OF SURVEY UN DER SECTION 133A(6) OF THE ACT UNDER THE HEAD INCOME F ROM OTHER SOURCES. THEREAFTER THE LEARNED ASSESSING OFFICER HAD COMPLETED THE ASSESSMENT UNDER SECTION 153C R.W.S. 153A & 143(3) OF THE ACT BY MAKING ADDITION OF ` 13,85,000/- ON ACCOUNT OF POTLI LOAN [OUT OF WHICH THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) HAS GRANTED RELIEF OF RS.6, 50,000/-] AND ` 4,25,000/- IN RELATION TO KHATA PETTI LOAN DOUBTING THE GENUINESS OF THE CREDITORS, WHICH WAS FURTHER CONFI RMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AG AINST WHICH NO APPEAL IS FILED. THE LEARNED ASSESSING OFF ICER ALSO INITIATED SEPARATE PENALTY PROCEEDINGS UNDER SECTIO N 271(1)(C) OF THE ACT AND SUBSEQUENTLY LEVIED MINIMU M PENALTY ON THE ADDITION OF RS.11,60,000/- (735,000/ - + 3 ITA NO.2596 /MDS/2014 4,25,000) BEING 100% TAX SOUGHT TO BE EVADED WHICH WORKS TO RS.3,90,456, BECAUSE THE ASSESSEE COULD NOT PROD UCE SATISFACTORY EXPLANATION WITH DOCUMENTARY EVIDENCE REGARDING THE SOURCE OF LOAN. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- 7. I HAVE PERUSED THE PENALTY ORDER, GROUNDS OF APPEAL AND THE CONTENTIONS OF THE AR IN THIS REGARD . IT IS SEEN FROM THE FACTS OF THE CASE THAT THE APPELLA NT FILED HER RETURN OF INCOME FOR THE A.Y 2005-06 ADMITTING AN INCOME OF RS.20,80,063/-. SUBSEQUENTLY , THE AO COMPLETED THE ASSESSMENT U/S 153A R.W.S 143(3) OF THE ACT, DETERMINING THE TAXABLE INCOME A T RS.38,90,063/-. DURING THE SCRUTINY PROCEEDINGS, TH E AO MADE AN ADDITION OF RS.13,85,000/- ON ACCOUNT OF POTLI LOAN AND RS4,25,000/- ON KHATA PETTI LOAN AS THE APPELLANT FAILED TO SATISFACTORILY EXPLAIN WITH DOCUMENTARY EVIDENCE WITH REGARD TO THE SOURCES OF THE SAID LOANS. AGGRIEVED BY THIS, THE APPELLANT HA S GONE BEFORE THE CIT(A). THE CIT(A)-I, CHENNAI VIDE ORDER IN ITA NO.182,183/07-08 DATED 17-10-2011, CONFIRMED AN AMOUNT OF RS. 7,35,000/- OUT OF POTLI LOAN OF RS.13,85,000/-. SINCE THE APPELLANT FAILED ONCE AGAIN BEFORE THE AO, DURING REMAND PROCEEDINGS, TO FURNISH SATISFACTORY EXPLANATION WI TH SUPPORTING EVIDENCE, IN RESPECT OF KHATA PETTI LOAN OF ` 4,25,000/-, THE CIT(A) CONFIRMED THIS ADDITION. CONSEQUENTLY THE AO LEVIED PENALTY U/S 271(1)(C) ON THE SAID ADDITION TOTALING TO RS.11,60,000/- (RS.7,35,000 + 4,25,000). AGGRIEVED BY THE AO'S ACTION THE APPELLANT FILED THE PRESENT APPEAL. 7.1. AFTER CONSIDERING THE ABOVE FACTS, I AM OF THE CONSIDERED OPINION THAT THE AO'S ACTION IN LEVYING 4 ITA NO.2596 /MDS/2014 PENALTY OF RS.3,90,456/- U/S 271(1) OF THE ACT IS JUSTIFIED AS THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME. AS PER THE PROVISIONS OF SEC TION 271(1)(C), IF THE AO OR THE CIT(A) OR THE CIT, IN COURSE OF ANY PROCEEDINGS UNDER THE ACT, IS SATISFI ED THAT ANY PERSON HAS EITHER CONCEALED THE PARTICULAR S OF HIS INCOME OR (II) FURNISHED INACCURATE PARTICUL ARS OF SUCH INCOME, HE MAY, IN ADDITION TO THE TAX, IF ANY PAYABLE, DIRECT THAT SUCH PERSON SHALL PAY BY WAY O F PENALTY A SUM WHICH SHALL NOT BE LESS THAN, BUT WHI CH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF CONCEALMENT OF PARTICULARS OF HIS INCOME OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. 7.2. THE APPELLANT HAS NOT SUBSTANTIATED WITH COGENT EVIDENCE WITH REGARD TO THE SOURCES FOR THE ABOVE SAID LOANS. THE APPELLANT HAS FAILED TO OFFER SATISFACTORY EXPLANATION WITH ANY SUPPORTING EVIDENCES. THEREFORE, THE AO HAS MADE AN ADDITION OF RS. 11,60,000/- (RS.7,35,000 + RS4,25,000). IN VIEW OF THE ABOVE, THE APPELLANT'S CONTENTIONS ARE NOT ACCEPTED AS THE AO HAD MADE A FINDING THAT THERE HAD BEEN CONCEALMENT, THAT WOULD BE SUFFICIENT TO SUSTAIN THE PENALTY. AS PER THE EXPLANATION 1 CONTAINED IN SECTION 271(1) IS SELF CONTAINED IN T HE SENSE THAT IT TREATS EVERY DIFFERENCE BETWEEN THE REPORTED AND THE ASSESSED INCOME AS CONCEALED INCOME. BUT, AT THE SAME TIME, IT PROVIDES THE CRIT ERIA WHERE PENALTY WOULD BE WARRANTED. PENALTY IS LEVIABLE FOR CONCEALMENT, WHERE AN ASSESSEE FAILS TO OFFER A NY EXPLANATION FOR THE DIFFERENCE OR OFFERS AN EXPLANATION, WHICH IS FOUND TO BE FALSE. IN THESE CASES, PENALTY CAN BE TREATED AS MANDATORY. 7.3. THUS, IT IS CLEAR FROM THE ABOVE, THE ADDITIONAL INCOME WHICH WAS SUSTAINED BY THE CIT(A) TO THE EXTENT OF RS.11,60,000/- WAS ADDED BY THE AO, ON VERIFICATION OF THE MATERIALS DURING THE COURSE OF SCRUTINY. IN VIEW OF THE ABOVE, THE APPELLANT'S SUBMISSIONS ARE NOT ACCEPTED AS THE AO HAD THE RECORD WHICH CAN SUSTAIN THE FINDING THAT THERE HAD BEEN CONCEALMENT, THAT WOULD BE SUFFICIENT TO SUSTA IN THE PENALTY. 7. 4 FURTHER DURING APPEAL PROCEEDINGS ALSO, THE AR OF THE APPELLANT HAS NOT SUBSTANTIATED THE CONTENTIONS RAISED IN THE APPEAL WITH ANY COGENT 5 ITA NO.2596 /MDS/2014 EVIDENCE. THEREFORE THE CONCEALMENT OF RS.11,60,000/- HAS BEEN POSITIVELY ESTABLISHED BY T HE ASSESSING OFFICER WARRANTING LEVY OF PENALTY U/S.271(1)(C) ON THIS ADDITION OF RS.11,60,000/- IS IN ORDER. HENCE THE PENALTY OF RS.3,90,456/- UNDER SECTION 271(1)(C) LEVIED BY THE ASSESSING OFFICER I S HEREBY CONFIRMED. ALL THE GROUNDS RAISED IN THIS REGARD ARE HEREBY DISMISSED. 5. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED BEFORE US THAT THE ASSESSEE HAD FURNISHED THE CONFI RMATION LETTERS FROM THE CONCERNED CREDITORS BEFORE THE REV ENUE AND THOSE CREDITORS APPEARED BEFORE THE LEARNED ASSESSI NG OFFICER AND CONFIRMED THAT THEY HAVE ADVANCED CASH TO THE ASSESSEE. HOWEVER, WITHOUT FURTHER VERIFYING THE S TATEMENTS GIVEN BY THE CREDITORS OF THE ASSESSEE, THE LEARNED ASSESSING OFFICER HAD LEVIED PENALTY ON THE ASSESSEE WHICH IS ERRONEOUS. IT WAS THEREFORE PLEADED THAT THE PENAL TY LEVIED BY THE LEARNED ASSESSING OFFICER WHICH WAS FURTHER CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MAY BE DELETED. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE R EVENUE. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. FROM THE ORDER OF THE 6 ITA NO.2596 /MDS/2014 LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN PAR A 6 AT PAGE NO.4 IT IS APPARENT THAT THE ASSESSEE HAD PROD UCED CONFIRMATION LETTERS WITH RESPECT TO POTLI LOAN REC EIVED OF RS.7,35,000/- AND THE TRANSACTION RELATING TO RS.4 ,25,000/- WERE ROUTED THROUGH BANK. THE RELEVANT PORTION OF T HE ORDER IS REPRODUCED HEREIN BELOW:- 4. COMING TO THE MERITS OF THE LEVY OF PENALTY, P ENALTY HAS BEEN LEVIED IN RESPECT OF TWO ADDITION- RS. 7, 35,000 UNDER THE HEAD PATTI LOANS, AND RS.4,25,000 BEING K HATTA PETTI LOANS. 5. AS REGARDS THE SOURCE FOR POTTI LOANS OF RS.7,35 ,000, IT CONSISTS OF RS.2,35,000/- BEING ADVANCES RECEIVED F ROM 4 PERSONS FOR SALE OF JEWELLERY , AND RS.5,00,000 BEI NG ADVANCE RECEIVED FOR SALE OF AN IMMOVABLE PROPERTY. THE APPELLANT HAD PRODUCED CONFIRMATION LETTERS FROM TH E PERSONS CONCERNED. THIS FACT IS CONFIRMED BY THE ASSESSING OFFICER IN HER REMAND REPORT DATED 20-7- 2011. THE EVIDENCE PRODUCED, ACCORDING TO THE ASSESSING OFFICER WAS NOT ACCEPTABLE. THE APPELLANT SUBMITS THAT WHEN THE PARTIES HAD APPEARED BEFORE THE ASSESSING OFFICER AND CONFIRMED THAT THEY HAD ADVANCED MONIES TO THE APPELLANT, THE COURSE OPEN T O THE ASSESSING OFFICER WAS NOT TO PUNISH THE APPELLA NT, BUT TO PROCEED AGAINST THOSE PERSONS [ (CIT VS VALU E CAPITAL SERVICES PVT LTD 307 ITR 334(DELHI)). THE APPELLANT SUBMITS THAT THE VERDICT OF THE COMMISSIO NER OF INCOME TAX(APPEALS) WHO ALLOWED PARTIAL RELIEF TO T HE APPELLANT HAS BEEN ACCEPTED BY THE APPELLANT NOT BE CAUSE THE ADVANCES WERE NOT GENUINE, BUT BECAUSE THE APPE LLANT WONTED TO GIVE A QUIETUS TO THE ISSUE BY AVOIDING F URTHER LITIGATION. THE APPELLANT HAS ALSO THEREFORE PAID T HE TAX DUE. IT IS SUBMITTED THAT EVEN THOUGH THE ADDITIONS HAVE BEEN CONFIRMED, THAT CANNOT BE A REASON FOR LEVYING PENALTY BECAUSE THE EVIDENCE REQUIRED FOR LEVY OF P ENALTY IS DIFFERENT FROM THAT AT THE ASSESSMENT STAGE (CIT VS MATA PRASAD [278 ITR 354 (AII]. IT IS ACCORDINGLY SUBMITTED THAT THE COMMISSIONER OF INCOME TAX MAY BE PLEASED TO DELETE PENALTY LEVIED. 7 ITA NO.2596 /MDS/2014 6. COMING TO THE ADDITION OF RS. 4,25, 000/- WHICH HAS ALSO BEEN CONSIDERED FOR LEVY OF PENALTY, TOTAL OF KHATA PETTI LOANS ASRS.24,60,000/. OUT OF THIS, RS.L,50,000/- R ELATED TO ASSESSMENT YEAR 2004-05, RS.4,25,000/- WAS AN ADVAN CE GIVEN BY ACCOUNT PAYEE CHEQUE, AND THE BALANCE OF RS.18,75,000/- WAS OFFERED FOR TAXATION BY THE APPE LLANT. AS REGARDS THIS AMOUNT, I.E RS.4,25,000/- THE ADVA NCES WERE THROUGH ACCOUNT PAYEE CHEQUES. SINCE THERE WER E SEVERAL PARTIES, THE APPELLANT COULD NOT ORGANISE A LL OF THEM AND PRODUCE BEFORE THE ASSESSING OFFICER. HERE AGAIN, SINCE THE OPPEL/ANT ACCEPTED THE ADDITION TO AVOID FURTHER LITIGATION AND NOT BECAUSE THE TRANSACTIONS WERE NOT GENUINE. THE APPELLANT SUBMITS THAT JUST BECAUSE SH E HAS ACCEPTED THE ADDITION, IT CANNOT BE CONSTRUED THAT SHE HAD CONCEALED THE INCOME ATTRACTING LEVY OF PENALTY. 7. FROM THE ABOVE, IT IS EVIDENT THAT THE LEARNED A SSESSING OFFICER HAS MADE THE ADDITION WITHOUT VERIFYING THE CONFIRMATION LETTERS BY ISSUING SUMMONS TO THE CRED ITORS AND ALSO WITHOUT VERIFYING THE BANK TRANSACTIONS. NO DO UBT, THE ASSESSEE WAS NOT ABLE TO COMPLETELY SATISFY THE REV ENUE ON THE VERACITY OF HER CLAIM, BUT IT IS THE DUTY OF TH E REVENUE TO VERIFY THE BANK TRANSACTIONS AND CONFIRMATION BALAN CE STATEMENTS ISSUED BY THE CREDITORS BEFORE LEVYING P ENALTY, THOUGH THE ADDITIONS MADE WERE SUSTAINABLE. 8. PROBABLY, IT WOULD BE JUSTIFIABLE ON THE PART OF REVENUE TO MAKE THE ADDITIONS ON THE PREMISES THAT THE CRED ITORS OR THE TRANSACTIONS ARE NOT GENUINE BUT FOR LEVY OF PE NALTY THE 8 ITA NO.2596 /MDS/2014 REVENUE SHOULD HAVE GONE ONE STEP FURTHER BY AT LEA ST VERIFYING THE CONFIRMATION STATEMENT FURNISHED BY T HE ASSESSEE AND BY EXAMINING THE CREDITORS. IF THE LEA RNED ASSESSING OFFICER IS NOT CONVINCED WITH THE APPEARA NCE AND STATEMENTS GIVEN BY THE CREDITORS OF THE ASSESSEE, THEN HE OUGHT TO HAVE REJECTED THE CREDITORS BY A REASONED SPEAKING ORDER WHICH IN THE PRESENT CASE, THE LEARNED ASSESS ING OFFICER FAILED TO DO SO. THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) HAS ALSO NOT LOOKED INTO THESE ASPECT S. CONSIDERING THESE FACTS THAT THE REVENUE HAS MADE A DDITIONS AND SUSTAINED THE SAME ONLY FOR THE REASON THAT THE ASSESSEE COULD NOT CONVINCE THE REVENUE WITH RESPECT TO HER CLAIM THOUGH SHE HAD PRODUCED CONFIRMATION STATEMENTS FRO M THE CREDITORS AND THE REVENUE ON THEIR PART FAILED TO A SCERTAIN THE DOCUMENTARY EVIDENCE FURNISHED BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE LEVY OF PENALTY BY THE LEARNED AS SESSING OFFICER IS NOT JUSTIFIABLE. IN THE PRESENT CASE BEF ORE US WE FIND THAT THE REVENUE DID NOT MAKE ANY EFFORT TO VERIFY THE GENUINESS OF THE CREDITORS OF THE ASSESSEE THOUGH T HE NAMES, ADDRESS AND OTHER PARTICULARS WERE BEFORE THEM BY W AY OF CONFIRMATION STATEMENT. FOR THE ABOVE STATED REASON S, WE ARE 9 ITA NO.2596 /MDS/2014 OF THE CONSIDERED VIEW THAT THE PENALTY LEVIED BY T HE LEARNED ASSESSING OFFICER IS NOT MAINTAINABLE. THE DECISION CITED BY THE REVENUE IN THE CASE OF DHARMENDRA TEXTILES REPO RTED IN 306 ITR 279 IS NOT RELEVANT TO THE PRESENT CASE BEF ORE US BECAUSE THEY ARE NOT ON IDENTICAL FACTS. THEREFORE, IN THE INTEREST OF JUSTICE, WE HEREBY DELETE THE PENALTY O F RS. 3,90,456/- LEVIED BY THE LEARNED ASSESSING OFFICER WHICH WAS FURTHER CONFIRMED BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS). 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND APRIL, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 22 ND APRIL, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /