Shri Dashrathbhai Narandas Patel, Kalol V. The Income Tax Officer, Ward-1, Mehsana

ITA 2788/AHD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94654 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADIPKUMAR MAJUMDAR
• Keywords: Additional evidence; Agreed addition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA NO: 2788/AHD/2013 (ASSESSMENT YEAR: 2009-10) DASHRATBHAI NARANDAS PATEL 29, ARJUN NAGAR SOCIETY, NR. AMBICA BUS STAND, HIGHWAY, KALOL (N.G.), DIST: GANDHINAGAR V/S INCOME TAX OFFICER, WARD- 1, MEHSANA (APPELLANT) (RESPONDENT) PAN: ABNPP2765M APPELLANT BY : SHRI PARIMAL SINH B. PARMAR, AR RESPONDENT BY: SHRI PRADIPKUMAR MAJUMDAR, SR. D.R . ( )/ ORDER DATE OF HEARING : 14-10-2015 DATE OF PRONOUNCEMENT : 30 -10-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-III, AHMEDABAD DATED 17.10.2013 FOR A.Y. 2009-10. ITA NO 2788/ AHD/2013 . A.Y. 2009-10 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE A TEACHER AN D HAVING FROM SALARY AND AGRICULTURAL INCOME. ASSESSEE FILED HIS RETURN OF I NCOME FOR A.Y. 2009-10 ON 11.05.2009 DECLARING TOTAL INCOME AT RS. 1,45,660/- . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAM ED UNDER SECTION 143(3) VIDE ORDER DATED 09.12.2011 AND THE TOTAL INCOME WA S DETERMINED AT RS. 04,87,170/- INTERALIA BY DISALLOWING THE CLAIM OF D EDUCTION AND OTHER ADDITIONS. ON THE DISALLOWANCE AND THE ADDITIONS AG GREGATING TO RS. 3,45,383/- THAT WAS MADE BY A.O, HE VIDE ORDER DATE D 28.05.2012 HELD THAT ASSESSEE HAD CONCEALED THE INCOME AND HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY THE ASSESSEE WAS LIABLE T O PENALTY U/S. 271(1)(C) OF THE ACT. HE ACCORDINGLY LEVIED PENALTY OF RS. 97 ,251/- U/S. 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE C ARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 17.10.2013GRANTED P ARTIAL RELIEF TO THE ASSESSEE BY DIRECTING THE A.O TO DELETE THE PENALTY ON THE DISALLOWANCE OF DEDUCTION U/S. 80D (RS. 4401) AND ON THE ADDITION O F RS. 64,717/- ON ACCOUNT OF ADDITIONAL INCOME BUT HOWEVER CONFIRMED THE PENA LTY ON THE ADDITION OF UNSECURED LOAN (RS. 72,250/-) AND ADDITION OF OPENI NG CASH BALANCE (RS. 2,04,015) BY HOLDING AS UNDER:- 13. WHEN THE PRESENT CASE IS EXAMINED IN VIEW OF TH IS LEGAL POSITION, IT IS FOUND THAT IN THIS CASE APPELLANT FAILED TO OFFER ANY EXP LANATION REGARDING OPENING CASH BALANCE RS. 204,015/- BEFORE AO DURING ASSESSMENT A ND PENALTY PROCEEDINGS. ANOTHER ADDITION OF RS. 72,250/- WAS MADE ON ACCOUN T OF UNSECURED LOANS SHOWN BY APPELLANT. IN RESPECT OF THESE LOANS, APPE LLANT FAILED TO PROVE THEIR GENUINENESS BEFORE AO. THIS CANNOT BE CONSIDERED A BONA FIDE OMISSION OR MISTAKE ON THE PART OF APPELLANT. IN SUCH A SITUATI ON, CASE OF APPELLANT CLEARLY FALLS IN THE CATEGORY (B) OF PARA 12 AS MENTIONED ABOVE. I THEREFORE HOLD THAT LEVY OF ITA NO 2788/ AHD/2013 . A.Y. 2009-10 3 PENALTY U/S. 271(L)(C) IS FULLY JUSTIFIED IN THIS C ASE IN VIEW OF DECISION, OF HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE. IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. NOW A DAYS ONLY A MICROSCOPIC MINORITY OF RETURNS ARE SELECTED FOR DETAILED SCRUT INY. THE TAXPAYERS ARE AWARE OF THIS AND MANY OF THEM TRY TO TAKE UNDUE ADVANTAGE O F THIS BY FILING INCORRECT INCOME. THIS TENDENCY NEEDS TO BE STRONGLY DISCOURA GED. IT IS THEREFORE NECESSARY THAT CONCEALMENT OF INCOME IS PENALIZED S UITABLY SO THAT IT ACTS AS EFFECTIVE DETERRENCE FOR OTHER TAXPAYERS. KEEPING I N VIEW ALL THESE FACTS, I HOLD THAT LEVY OF PENALTY U/S. 271(L)(C) IS JUSTIFIED IN THIS CASE. HOWEVER, AO IS DIRECTED TO EXCLUDE AMOUNTS OF RS. 4401/- ON ACCOUNT OF DISA LLOWANCE OF DEDUCTION U/S. 80D AND RS. 64,717/- ON ACCOUNT OF ADDITIONAL INCOM E OFFERED FOR COMPUTATION OF PENALTY U/S. 271(1)(C), BECAUSE PENALTY U/S. 271(1) (C) IS NOT LEVIABLE IN RESPECT OF THESE TWO AMOUNTS. A.O IS DIRECTED TO RESTRICT PENA LTY U/S. 271(1)(C) ACCORDINGLY, GROUND NO. 1 OF APPEAL IS THUS PARTLY ALLOWED. 4. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), AS SESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ID. COMMISSIONER OF INCOME TAX (APPEAL): II, AHMEDABAD [FOR SHORT CIT (A)] HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CO NFORMING THE PENALTY U/S. 271(1)(C) ON THE AGREED ADDITION U/S. 68 OF RS. 72, 250/- IN TOTAL DISREGARD OF THE FACTS OF THE CASE AND ADDITIONAL EVIDENCE BROUG HT ON RECORD IN THE COURSE OF PENALTY PROCEEDINGS. 2. THE ID. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THE PENALTY U/S. 271(1)(C) ON AGREED ADDITION OF RS. 2, 04,015/-, BEING CASH BALANCE AS ON 07-12-2007, ON THE GROUND THAT THE SA ID CASH BALANCE WAS GENERATED OUT OF LOAN TAKEN IN CASH DURING THE PREV IOUS YEAR RELEVANT TO A.Y. 2008-2009 AND WAS REFLECTED IN THE OPENING CASH BAL ANCE AS ON 01-04-2008, IN TOTAL DISREGARD OF THE FACT THAT THE SUM WHICH C ANNOT BE TAXED AS INCOME IN THE RELEVANT PREVIOUS YEAR THE PENALTY U/S. 271(1)( C) CAN NEVER BE IMPOSED ON SUCH ADDITION. ITA NO 2788/ AHD/2013 . A.Y. 2009-10 4 5. AT THE OUTSET, LD. A.R. SUBMITTED THAT THOUGH ASSES SEE HAS RAISED TWO GROUNDS BUT THE SOLITARY ISSUE TO BE DECIDED IS ABO UT THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 6. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND WITH RESPECT TO THE ADDITION OF UNSECURE D LOAN OF RS. 72,250/- SUBMITTED THAT ASSESSEE HAD RECEIVED LOAN FROM SHRI RAJENDRA PATEL ON 3.05.2008 AND THE SAME WAS ALSO REPAID BY CHEQUE ON 01.09.2008. HE FURTHER SUBMITTED THAT SINCE RAJENDRA PATEL WAS AT THAT TIM E RESIDING IN U.S.A. , ASSESSEE WAS UNABLE TO PLACE THE CONFIRMATION AND T O COOPERATE, ASSESSEE HAD OFFERED THE SUM TO TAX. HE SUBMITTED THAT ASSES SEE HAD FULLY DISCHARGED THE ONUS CAST UPON HIM AND HAD NEITHER CONCEALED TH E PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS. WITH RESPECT TO THE ADDITION ON ACCOUNT OF OPENING CASH BALANCE OF RS. 2,04,015/-, HE SUBMI TTED THAT THE CASH BALANCE WAS OPENING CASH BALANCE WHICH WAS DULY REFLECTED I N THE STATEMENT OF CASH FOR A.Y. 2007-08 & 2008-09 AND THE ADDITION MADE BY THE A.O WAS ACCEPTED BY THE ASSESSEE AND WAS NOT CHALLENGED IN APPEAL. HE SUBMITTED THAT MERELY BECAUSE THE ADDITION HAS BEEN ACCEPTED AND NOT CHALLENGED THE ADDITIONS CANNOT BE CONSTRUED TO BE UNDISCLOSED INC OME. HE FURTHER SUBMITTED THAT THE PENALTY PROCEEDINGS AND ASSESSME NT PROCEEDINGS ARE DISTINCT AND SEPARATE AND MERELY BECAUSE ADDITION H AS BEEN MADE WOULD NOT MAKE ASSESSEE LIABLE FOR PENALTY U/S. 271(1)(C) OF THE ACT. HE THEREFORE PRAYED THAT THE PENALTY BE DELETED. LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY O F PENALTY U/S. 271(1)(C). THE ITA NO 2788/ AHD/2013 . A.Y. 2009-10 5 PENALTY UNDER S. 271(L)(C) OF THE ACT IS LEVIABLE I F THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT THAT ANY PE RSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. 8. THE NECESSARY INGREDIENTS FOR ATTRACTING EXPLANATIO N 1 TO SECTION. 271(L)(C) ARE THAT: (I) THE PERSON FAILS TO OFFER THE EXPLANA TION, OR (II) HE OFFERS THE EXPLANATION WHICH IS FOUND BY THE AO OR THE LD. CIT (A) OR THE LD. CIT TO BE FALSE, OR (III) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM. IF THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE THREE CATEGORIES, TH EN ACCORDING TO THE DEEMING PROVISION PROVIDED IN EXPLANATION 1 TO SECTION. 271 (L)(C) THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME SHALL B E CONSIDERED AS THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED, FOR THE PURPOSES OF CLAUSE (C) OF SECTION. 271(1), AND THE PENALTY F OLLOWS. ON THE OTHER HAND, IF THE ASSESSEE IS ABLE TO OFFER AN EXPLANATION, WH ICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE, AND ASSESSEE HAS BEEN ABLE TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS REL ATING TO THE SAME HAVE BEEN DISCLOSED BY HIM, THEN IN THAT CASE PENALTY SHALL N OT BE IMPOSED. 9. IN THE PRESENT CASE THE ASSESSEE HAD DISCLOSED THE MATERIAL FACTS BEFORE THE AO. WHEN THE ASSESSEE HAS MADE A PARTICULAR CLAIM I N THE RETURN OF INCOME AND HAS ALSO FURNISHED ALL THE MATERIAL FACTS RELEV ANT THERETO, THE DISALLOWANCE OF SUCH CLAIM CANNOT AUTOMATICALLY LEA D TO THE CONCLUSION THAT THERE WAS CONCEALMENT OF PARTICULARS OF HIS INCOME BY THE ASSESSEE OR FURNISHING INACCURATE PARTICULARS THEREOF. WHAT IS TO BE SEEN IS WHETHER THE SAID CLAIM MADE BY THE ASSESSEE WAS BONA FIDE AND W HETHER ALL THE MATERIAL ITA NO 2788/ AHD/2013 . A.Y. 2009-10 6 FACTS RELEVANT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED, THE ASSESSEE CANNOT BE HELD LIABLE FOR CONCEALMENT PENA LTY U/S. 271(1) (C) OF THE ACT. 10. A CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOM E HAS TO BE EVALUATED IN TERMS OF PROVISIONS OF EXPLANATION. 1 TO SECTION. 2 71(1)(C), AS PER WHICH IF IN RELATION TO ANY ADDITION IN THE ASSESSMENT, THE ASSESSEE OFFERS NO EXPLANATION OR OFFERS EXPLANATION WHICH IS FOUND TO BE FALSE OR IS NOT ABLE TO SUBSTITUTE THE EXPLANATION AND IS ALSO NOT ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE, THE ADDITION MADE WOULD AMOUNT TO CONCEAL MENT OF PARTICULARS OF INCOME. IT IS A SETTLED LEGAL POSITION THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS AND THE FINDINGS GIVEN IN THE ASSESSMENT THOUGH IT MAY CONSTITUTE GOOD EVIDENCE BUT SAME IS NOT CONCLUSIVE IN THE PENALTY PROCEEDINGS FURTHER, MERELY BECAUSE ASSESSE E HAS NOT CHALLENGED THE ORDER OF ASSESSMENT LEVYING TAX AND INTEREST AN D HAS PAID TAX AND INTEREST THAT BY ITSELF WILL NOT BE SUFFICIENT FOR THE AUTHO RITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY. IN THE PRESENT CASE, WE ARE OF THE VIEW THAT IN THE ABSENCE OF COMPLETE AND CONVINCING CORROBORATIV E EVIDENCE, THE REVENUE MAY JUSTIFY ADDITION, BUT IN THE MATTER OF PENALTY PROCEEDINGS, THE ONUS LIES HEAVILY ON THE REVENUE TO PROVE THAT THE ASSESSEE HAD CONCEALED ITS INCOME OR HAS FILED INACCURATE PARTICULARS OF ITS I NCOME. 11. IN VIEW OF THE AFORESAID FACTS WE ARE OF THE VIEW T HAT IN THE PRESENT CASE NO PENALTY IS LEVIABLE U/S 271(1)(C) AND THEREFORE DIR ECT ITS DELETION. THUS THIS GROUND OF ASSESSEE IS ALLOWED. ITA NO 2788/ AHD/2013 . A.Y. 2009-10 7 12. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30- 10 - 2015. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD