Mr. M. Ganesan, CHENNAI V. ACIT, CHENNAI

ITA 2605/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6336 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 07-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: G BASKAR
• Keywords: Salary income; Onus to prove

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO.2605/MDS/2016 / ASSESSMENT YEAR : 2012-2013. SHRI.M. GANESAN, NO. 3, 4 TH CROSS STREET, MANIAMMAL STREET, KAMARAJAPURAM MADINA NAGAR, RAJAKILPAKKAM, CHENNAI 600 073. [PAN AANPM 6438K] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(1) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. G. BASKAR, ADVOCATE /RESPONDENT BY : SHRI. B SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 28-08-2017 !' /DATE OF PRONOUNCEMENT : 29-08-2017 % / O R D E R IN THIS APPEAL, ASSESSEE ASSAILS LEVY OF PENALTY U /S. 271(1) (C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) WHICH WAS CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEALS)-8, CHENNAI THROUGH HIS ORDER DATED 21.06.2016. 2. FACTS APROPOS ARE THAT ASSESSEE HAD FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSING INCOME FROM SALARY, HOUSE PROPERTY AND BUSINESS. DURING THE COURSE OF ASSESSMENT ITA NO.2605/MDS/2016. :- 2 -: PROCEEDINGS, IT WAS NOTED BY THE LD. ASSESSING OFFI CER THAT ASSESSEE HAD PURCHASED AN IMMOVABLE PROPERTY. SOURCE FOR TH IS PURCHASE WAS ENQUIRED BY THE LD. ASSESSING OFFICER. ASSESSEE TH EREUPON CLAIMED THAT HE HAD SOLD GOLD WORTH E4,70,000/- ON 16.08.20 11 AND UTILIZED THIS SUM FOR PURCHASING THE PROPERTY. ASSESSEE AL SO OFFERED LONG TERM CAPITAL GAINS OF E2,49,306/- ARISING FROM SALE OF GOLD. CONTENTION OF THE ASSESSEE WAS THAT GOLD WHICH WAS SOLD WAS PURCH ASED IN FINANCIAL YEAR 1995-96. LD. ASSESSING OFFICER WAS OF THE OPI NION THAT ASSESSEE WAS UNABLE TO SHOW ANY EVIDENCE FOR PURCHASE OR POS SESSION OF THE GOLD. HE MADE AN ADDITION OF E4,70,000/- AS INCOME FROM OTHER SOURCES. IT SEEMS ASSESSEE DID NOT MOVE ANY APPEA L ON THE ASSESSMENT. 3. THEREAFTER NOTICE WAS ISSUED TO THE ASSESSEE U/S. 271(1) (C) OF THE ACT FOR LEVY OF PENALTY FOR FURNISHING INACC URATE PARTICULARS OF INCOME WITH REGARD TO THE GOLD. EXPLANATION OF THE ASSESSEE WAS THAT GOLD WHICH WAS SOLD BY HIM WAS MORE THAN TWENTY YEA RS OLD AND NO EVIDENCE WAS READILY AVAILABLE FOR PURCHASE THEREOF . HOWEVER, SUCH EXPLANATION WAS NOT ACCEPTED BY THE LD. ASSESSING O FFICER. ACCORDING TO HIM, MERELY BY GIVING AN EXPLANATION, WITHOUT SATIS FYING THE LD. ASSESSING OFFICER, WOULD NOT RELIEVE THE ASSESSEE F ROM PENAL PROCEEDINGS. ACCORDING TO THE LD. ASSESSING OFFICER , ASSESSEE COULD NOT PRODUCE ANY EVIDENCE FOR PURCHASE OF JEWELLERY. HE THUS HELD THAT ITA NO.2605/MDS/2016. :- 3 -: ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME FOR A SUM OF E2,20,694/-. THE SAID AMOUNT WAS ARRIVED AT BY DEDU CTING LONG TERM CAPITAL GAINS OF E2,49,306/- OFFERED BY THE ASSESSE E, FROM THE TOTAL CONSIDERATION OF E4,70,000/- CLAIMED TO HAVE RECEIV ED ON SALE OF GOLD. PENALTY OF E1,00,000/- WAS LEVIED U/S. 271(1) (C) O F THE ACT. 4. ASSESSEE MOVED IN APPEAL BEFORE THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) BUT DID NOT MEET WITH ANY SUCC ESS. LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT BY V IRTUE OF JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT VS. MAK DATA (P) LTD 358 ITR 593, SURRENDERING OF ADDITIONAL INCOME MERELY WITH A V IEW TO AVOID LITIGATION OR FOR BUYING PEACE, COULD NOT RELIEVE AN ASSESSEE FROM THE RIGOURS OF PENALTY U/S. 271(1)(C) OF THE ACT. AS PER LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE HAD AGREED FOR THE DISALLOWANCE MADE BY THE LD. ASSESSING OFFICER FOR PURCHASING PE ACE WITH THE DEPARTMENT AND THEREFORE PENALTY U/S. 271(1)(C) OF THE ACT WAS RIGHTLY LEVIED. 5. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE STRO NGLY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBMI TTED THAT LONG TERM CAPITAL GAINS ARISING FROM THE SALE OF GOLD WAS SHO WN BY THE ASSESSEE AND ACCEPTED. ACCORDING TO HIM, ONCE THE SALE OF G OLD WAS ACCEPTED NO PART OF THE CONSIDERATION RECEIVED ON SALE OF TH E GOLD COULD BE ITA NO.2605/MDS/2016. :- 4 -: DISBELIEVED. ACCORDING TO HIM, JUST BECAUSE EXPLAN ATION GIVEN BY THE ASSESSEE WAS REJECTED, PENALTY COULD NOT HAVE BEEN LEVIED U/S. 271(1)(C) OF THE ACT. 6. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE ONC E AGAIN RELYING ON THE JUDGMENT OF HONBLE APEX COURT IN T HE CASE OF MAK DATA (P) LTD (SUPRA) SUBMITTED THAT ASSESSEE COULD NOT SHOW ANY EVIDENCE FOR PURCHASE OF JEWELLERY. THEREFORE, ACC ORDING TO HIM, SALE AS SUCH WAS NOT CONSIDERED AS GENUINE BY THE LOWER AUTHORITIES. ACCORDING TO HIM, PENALTY WAS LEVIED SINCE ASSESSEE COULD NOT FURNISH ANY PARTICULARS REGARDING SOURCE FOR ACQUIRING THE GOLD JEWELLERY CLAIMED TO HAVE BEEN SOLD. 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERU SED THE ORDERS OF THE AUTHORITIES BELOW. LD. ASSESSING OFFI CER HAD LEVIED PENALTY ONLY ON A SUM OF E2,20,694/-. IN OTHER WORD S, LD. ASSESSING OFFICER HAD DEDUCTED LONG TERM CAPITAL GAINS OF E2, 49,306/- ADMITTED BY THE ASSESSEE FROM THE CONSIDERATION OF E4,70,000 /- CLAIMED TO HAVE BEEN RECEIVED ON SALE OF GOLD. THERE IS NO FINDING IN THE PENALTY ORDER THAT CLAIM OF SALE OF GOLD ON 16.08.2011 WAS A FAR CE. THE REASON WHY PENALTY WAS LEVIED IS THAT ASSESSEE COULD NOT FURNI SH ANY EVIDENCE FOR PURCHASE OF JEWELLERY. RELEVANT PARA AS IT APPEARS IN PENALTY ORDER IS REPRODUCED HEREUNDER:- WHEN EXPLANATION IS CALLED FOR FROM THE ASSESSEE ITA NO.2605/MDS/2016. :- 5 -: WITH REGARD TO THE EVIDENCE FOR PURCHASE OF JEWELLE RY, THE ASSESSEE WAS NOT ABLE TO PRODUCE THE SAME STATING THAT IT WAS PURCHASED LONG BACK I.E., IN 1995- 96 AND COULD NOT PRODUCE THE SAME. NOW THE BURDEN IS ON THE ASSESSEE TO PROVE HIS STAND WITH EVIDENCE . TILL THEN THE BURDEN OF PROOF LIES WITH THE ASSESSE E TO PROVE THAT THE FAILURE TO RETURN CORRECT INCOME DID NOT ARISE FROM FRAUD OR GROSS OR WILFUL NEGLECT AS LAID DOWN IN ADDL. CIT VS. JEEVANLAL SHAH IN 245 ITR 244 (SC) . THE ASSESSEE IN THIS CASE, HAS NOT GIVEN THE PROPER DOCUMENTARY EVIDENCE FOR THE PURCHASE OF THE JEWELLERY. MERE GIVING OF EXPLANATION FOR THE SOURC E NOT TO THE SATISFACTION OF THE AO WILL NOT RELIEVE THE ASSESSEE FROM PENAL PROCEEDINQS, AS LAID DOWN IN CIT VS. A. SREENIVASAPAI(2002) IN 242 ITR 29,36 (KER), THE EXPLANATION OFFERED BY THE ASSESSEE SHOULD BE ACCEPTABLE TO THE FAULT FINDING AUTHORITY. THUS, THE QUESTION BEFORE ME IS WHETHER ASSESSEES INABILITY TO PRODUCE EVIDENCE FOR PURCHASING JEWELLERY CLAIMED TO HAVE BEEN SOLD WOULD BE SUFFICIENT TO LEVY PENALTY U/S. 271(1) (C) OF THE ACT. IN MY OPINION TO SAY THAT GOLD JEWELLERY WHICH WAS SOLD WAS PURCHASED IN THE VERY SAME YEAR IS BEYOND PREPONDERANCE OF PROBA BILITY. ASSESSEE COULD HAVE VERY WELL NOT PURCHASED THE JEWELLERY BU T USED THE AMOUNT FOR ACQUIRING THE IMMOVABLE PROPERTY. THE PREPONDE RANCE OF PROBABILITY IS THAT JEWELLERY WOULD HAVE BEEN PURC HASED PRIOR TO THE RELEVANT PREVIOUS YEARS. IN ANY CASE IN SUCH A SIT UATION, I CANNOT SAY THAT EXPLANATION OFFERED BY THE ASSESSEE WAS NOT A PLAUSIBLE ONE. NO DOUBT AS POINTED OUT BY THE LD. DEPARTMENTAL REPRES ENTATIVE, ADMISSION OF INCOME MERELY FOR PURCHASING PEACE FRO M THE DEPARTMENT WOULD NOT BE A GOOD REASON FOR NOT LEVYING PENALTY BY VIRTUE OF ITA NO.2605/MDS/2016. :- 6 -: JUDGMENT OF HONBLE APEX COURT IN THE CASE OF MAK DATA (P) LTD (SUPRA ). HOWEVER, HONBLE APEX COURT IN THE CASE CIT VS. RELIANCE PETROPRODUCTS (P) LTD 322 ITR 158 HAS CLEARLY HELD THAT DISALLOWANCE OF A CLAIM BY ITSELF, COULD NOT BE A REASON TO LEVY P ENALTY U/S. 271(1) (C) OF THE ACT. IN THE CASE BEFORE ME, HAVING ACCEPTED THE SALE OF JEWELLERY, THE PRESUMPTION OF PURCHASE OF JEWELLER Y TO HAVE BEEN MADE IN THE SAME YEAR, IS NOT A PROBABLE ONE. EXP LANATION OFFERED BY THE ASSESSEE MAY NOT BE SUFFICIENT TO AVOID AN ADDI TION OF INCOME, BUT, IN MY OPINION IT DOES NOT COME WITHIN THE MEANING OF FURNISHING INACCURATE PARTICULARS OF INCOME. LEVY OF PENALTY IN MY OPINION WAS NOT WARRANTED CONSIDERING THE FACTS AND CIRCUMSTANC ES OF THE CASE. SUCH LEVY OF PENALTY STANDS DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASS ESSEE IS ALLOWED. ORDER PRONOUNCED ON TUESDAY, THE 29 TH DAY OF AUGUST , 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:29TH AUGUST, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF