Shyam Lal Athwal, Kaithal V. ITO, Kaithal

ITA 270/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81108 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 08-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: PARMIL GOEL
• Keywords: Unexplained investment; Business income; Opportunity of being heard; Initiation of penalty proceedings
• Section: 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 270/CHD/2013 ASSESSMENT YEAR: 2007-08 SHRI SHYAM LAL ATHWAL, V THE ITO, MAIN BAZAR, WARD 4, PAI, KAITHAL. KAITHAL. PAN: AHEPA5474F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARMIL GOEL RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 23.12.2014 DATE OF PRONOUNCEMENT : 31.12.2014 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) KARNAL DATED 06.12.2012 FOR ASSESSMENT YEAR 2007-08 CHALLENGING THE LEVY OF PENALTY UNDER SECTI ON 271(1)(C) OF THE INCOME TAX ACT. 2. BRIEF FACTS ARE THAT A RETURN OF INCOME DECLARING INCOME OF RS.92,000/- WAS FILED ON 30.11.2007, WHIC H WAS PROCESSED U/S 143(1) ON 24.03.2008. LATER ON, INF ORMATION WAY RECEIVED FROM THE CIB WING THAT THE ASSESSEE HA S PURCHASED A CAR FOR RS.2,88,696/- ON 28.04.2006. BE SIDES, THERE WAS INFORMATION THAT THE ASSESSEE WAS ALLOTTE D A VEND BY THE DIETC (EXCISE), KAITHAL AT PAI. THE ASSESSEE W AS REQUIRED 2 TO EXPLAIN THE SOURCE OF INVESTMENT THROUGH A QUERY LETTER DATED 11.06.2008. BUT NO EVIDENCE REGARDING THE SOU RCE WAS FILED. EVEN NO REPLY WAS FILED IN RESPONSE TO A REMINDER LETTER SENT SUBSEQUENTLY ON 17.07.2008. THE IN FORMATION WAS NOT VERIFIABLE FROM THE RETURN OF INCOME FI LED BY THE ASSESSEE AS NO DOCUMENT RELATING TO PURCHASE, SALE, TURNOVER OR COPY OF BANK ACCOUNT WAS FILED WITH THIS RETURN OF INCOME. IN VIEW OF ABOVE BACK GROUND PROCEEDINGS U/S 147 OF TH E I.T. ACT WERE INITIATED TO BRING TO TAX THE INCOME FROM WINE BUSINESS AND THE INVESTMENT IN CAR OF RS.2,88,696/-. A NOTIC E U/S 148 OF THE I.T. ACT WAS ISSUED ON 10.10.2008, WHICH WA S SENT THROUGH REGISTERED POST AND WAS DULY SERVED ON THE ASSESSEE AS PER AD PLACED ON THE FILE. NO COMPLIANCE OF NOTICE U/S 148 OF THE I.T. ACT WAS MADE IN SPITE OF REPEATED REQUEST AND OPPORTUNITIES AFFORDED. ACCORDINGLY, THE ASSESSMENT WAS COMPLETED EX-PARTE U/S 144 R.W.S. 147 ASSESSING THE TOTAL INCOME AT RS.9,98,000/- AS AGAINST RETURNED IN COME OF RS.92,000/-. THE FOLLOWING ADDITIONS WERE MADE TO THE INCOME OF THE ASSESSEE, WHICH WERE CONSIDERED AS CONCEALED INCOME AND PENALTY PROCEEDINGS U/S 271(1) (C) WERE INITIAT ED : I) INVESTMENT IN PURCHASE OF CAR RS. 3,03,6 96/- AND EXPENDITURE AS REGISTRATION/ INSURANCE AS PER PARA 4 OF THE ASSESSMENT ORDER II) LICENSE FEE PAID FOR THE FIRST TWO RS. 2,00,000/- INSTALLMENTS PAID DURING F.Y. 2006-07 HELD AS CONCEALED INCOME AS PER PARA 5.1 OF THE ASSESSMENT ORDER III) INITIAL INVESTMENT IN THE STOCK, RS. 2,00,00 0/- FURNITURE, FIXTURE, ADVANCE RENT OF SHOP FOR STARTING A NEW BUSINESS ESTIMATED AT RS. 2 LACS AND ADDITION 3 MADE ACCORDINGLY, AS PER PARA 5.2 IV) PROFIT FROM L-2, BUSINESS COMPUTED RS. 1,75,000/-BY APPLYING PROVISION OF SECTION 44AF, SALES ESTIMATED AT RS. 35 LACS NET PROFIT @ 5% AND ASSESSED ACCORDINGLY. 3. THE ASSESSEE CHALLENGED THE ABOVE ADDITIONS BEFO RE LD. CIT(APPEALS), WHO HAS VIDE ORDER DATED 16.02.2011 A LLOWED A RELIEF OF RS. 63,476/-. ACCORDINGLY, OUT OF THE TO TAL ADDITION OF RS. 8,78,696/- A RELIEF OF RS. 63,476/- WAS ALLOWED BY LD. CIT(APPEALS) CONFIRMING THE BALANCE ADDITION OF RS. 8,15,220/-. THE ASSESSING OFFICER INITIATED THE PENALTY PROCEED INGS UNDER SECTION 271(1)(C) OF THE ACT ON ALL THE ABOVE FOUR ADDITIONS FOR CONCEALMENT OF INCOME. THE ASSESSING OFFICER ISSUE D SHOW CAUSE NOTICE FOR PENALTY ON 16.08.2011 AND ALLOWED THE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BUT NO C OMPLIANCE WAS MADE. HOWEVER, AN ADJOURNMENT APPLICATION HAS BEEN RECEIVED IN DAK ON 30.08.2011 WHICH WAS UNSIGNED. NO EXPLANATION ABOUT CONCEALED INCOME HAS BEEN OFFERED . THEREFORE, THE ASSESSING OFFICER HELD THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND LEVIED 100% PENALTY AGAINST THE ASSESSEE. 4. THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEFO RE LD. CIT(APPEALS) AND WRITTEN SUBMISSION OF THE ASSESSEE IS INCORPORATED IN THE IMPUGNED ORDER IN WHICH ASSESSE E STATED THAT NOTICE DATED 19.08.2009 WAS CONTAINING THE FAC T THAT ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND FU RNISHED INACCURATE PARTICULARS OF INCOME, THEREFORE THERE I S NO DEFINITE FINDING OF INITIATION OF PENALTY PROCEEDINGS FOR BO TH THE ITEMS 4 AND NOTHING WAS SPECIFICALLY NOTED IN THE NOTICE DA TED 19.08.2009. THE ASSESSING OFFICER ALSO SUBMITTED R EMAND REPORT. 5. THE LD. CIT(APPEALS) EXAMINED THE ISSUE IN DETAI L. THE LD. CIT(APPEALS) NOTED THAT THE ASSESSMENT ORDER UNDER SECTION 144/147 OF THE ACT HAS BEEN PASSED ON 19.08.2009 AN D NOTICE OF PENALTY WAS ALSO ISSUED ON THE SAME DAY ON 19.08 .2009 AND IN THE ASSESSMENT ORDER, ASSESSING OFFICER HAS SPEC IFICALLY NOTED THAT PENALTY UNDER SECTION 271(1)(C) OF THE A CT HAS BEEN INITIATED FOR CONCEALMENT OF INCOME. THEREFORE, TH E NOTICE OF PENALTY COULD NOT BE DIVORCED FROM THE ASSESSMENT O RDER. THE SATISFACTION IS TO BE FOUND FROM THE ASSESSMENT ORD ER. THE LD. CIT(APPEALS) ALSO DISCUSSED THE MERITS OF THE CASE AND FOUND THAT ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOUR CE OF INVESTMENT ETC., THEREFORE, PENALTY WAS CORRECTLY I NITIATED AND FURTHER NO EXPLANATION HAS BEEN GIVEN AT THE PENALT Y STAGE. THEREFORE, LEVY OF THE PENALTY WAS FOUND JUSTIFIED. THE LD. CIT(APPEALS) ALSO NOTED THE ORDER OF THE TRIBUNAL I N THE CASE OF THE ASSESSEE IN WHICH PART ADDITION WAS ALSO DELETE D. THEREFORE, ASSESSING OFFICER WAS DIRECTED TO REVISE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND COMPUTE THE PENALTY ON THE ADDITIONS FOR CONCEALMENT OF INCOME, UPHELD BY THE TRIBUNAL. THE APPEAL OF THE ASSESSEE WAS ACCORDING LY PARTLY ALLOWED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT ASS ESSMENT ORDER DATED 19.08.2009 WAS PASSED EX-PARTE UNDER SECTION 144/147 5 OF THE ACT MAKING FOUR ADDITIONS AGAINST THE ASSESS EE AS NOTED ABOVE FOR UNEXPLAINED INVESTMENT IN CAR AND LICENCE FEE PAID ALONGWITH UNEXPLAINED INVESTMENT IN STOCK/FURNITURE ETC. AND FOR CONCEALING THE BUSINESS INCOME IN LIQUOR VEND. IT IS ALSO ADMITTED FACT THAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE, THE ABOVE INFORMATIONS HAVE BEEN CONCEALED FROM THE REVENUE DEPARTMENT AND IT IS ONLY LATER ON, INFORMATION WAS RECEIVED FROM CIB WING THAT ASSESSEE HAS PURCHASED CAR AND T HAT ASSESSEE HAS PURCHASED CAR AND THAT ASSESSEE HAS BE EN ALLOTTED A LIQUOR VEND. THE SOURCE OF THE SAME WER E ALSO NOT EXPLAINED. THEREFORE, IT IS A CLEAR CASE OF CONCEA LMENT OF INCOME FROM THE REVENUE DEPARTMENT. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS SPECIFICALLY MENTIONED TO HAVE INITIATED THE PENALTY PROCEEDINGS FOR CONCEALMENT O F INCOME UNDER SECTION 271(1)(C) OF THE ACT. THE NOTICE OF THE PENALTY PROCEEDINGS WAS INITIALLY ISSUED ON 19.08.2009 AND LATER ON, FRESH NOTICE WAS ALSO ISSUED ON 16.08.2011 AS IS ME NTIONED IN THE PENALTY ORDER WHICH WAS NOT RESPONDED TO BY THE ASSESSEE AND NO EXPLANATION HAS BEEN FILED TO EXPLAIN THE CO NCEALED INCOME. THE ASSESSING OFFICER, THEREFORE, LEVIED T HE PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. THEREFORE, IT IS CLEAR THAT EVEN ON A SUBSEQUENT NO TICE, THE ASSESSEE HAS NOT EXPLAINED ANYTHING BEFORE ASSESSIN G OFFICER TO EXPLAIN THE CONCEALED INCOME. THE EXPLANATION-I TO SECTION 271(1)(C) OF THE ACT PROVIDES AS UNDER : WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT,- 6 (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 7. THE ABOVE EXPLANATION-I IS CLEARLY ATTRACTED IN THE CASE OF THE ASSESSEE BECAUSE ASSESSEE FAILED TO OFFER ANY E XPLANATION BEFORE THE AUTHORITIES BELOW TO EXPLAIN CONCEALED I NCOME EVEN AT THE PENALTY STAGE. IT IS WELL SETTLED LAW THAT IF NO EXPLANATION IS GIVEN AT THE PENALTY STAGE, THE PENA LTY HAS TO BE CONFIRMED. WE RELY UPON DECISIONS OF MADHYA PRADES H HIGH COURT IN THE CASES OF VIMAL GINNING AND PRESSING FA CTORY V. CIT [2005] 279 ITR 100 (MP), RUKMINI BAI V. COMMISS IONER OF INCOME-TAX [2005] 276 ITR 650 (MP) AND DECISION OF THE ALLAHABAD HIGH COURT IN THE CASE OF SOM ENGINEERING CORPORATION V. COMMISSIONER OF INCOME-TAX [2005] 27 7 ITR 92. 8. CONSIDERING THE ABOVE DISCUSSION IN THE LIGHT OF THE FINDINGS OF AUTHORITIES BELOW, WE DO NOT FIND ANY M ERIT IN THE APPEAL OF THE ASSESSEE BECAUSE EVEN BEFORE US, THE ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION WITH REGARD TO THE ADDITIONS MAINTAINED FOR WHICH PENALTY HAS BEEN LEVIED AGAINS T THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY JUSTIFICA TION TO 7 INTERFERE WITH THE ORDER OF THE LD. CIT(APPEALS). THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER,2014. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST DECEMBER,2014. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH