The ITO, 5(2), Indore V. Shri Jayesh Parmar, Indore

ITA 279/IND/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98992 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA
• Keywords: Salary income; Deemed to accrue or arise in india
• Section: 142(1); 131; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO. 279/IND/2013 A.Y. : 2009-10 ITO, SHRI JAYESH PARMAR, 5(2), VS C/O M/S. J.K. ANGADIA SERVICES, INDORE. INDORE APPELLANT RESPONDENT P.A.N. NO BIDPP8535K APPELLANT BY SHRI R.A.VERMA, SR. DR RESPONDENT BY SHRI ASHISH GOYAL AND SHRI N. D. PATWA, ADV. DATE OF HEARING : 2 5 .08.2015 DATE OF PRONOUNCEMENT : 20 .09.2015 -: 2: - 2 O R D E R PER GARASIA, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)II, INDORE, DATED 01.02.2013 FOR THE ASSES SMENT YEAR 2006-07. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUND :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY U/S 2 71(1)(C) OF RS. 17,35,000/-. 3. THE SHORT FACTS OF THE CASE ARE AS UNDER. 4. THE ASSESSEE WAS IN POSSESSION OF RS.28 LAKHS, RETURNING FROM INDORE TO AHMEDABAD BY A BUS WHEN HE WAS CHECKED AND INTERROGATED BY POLICE, CHANDAN NAGAR, INDORE. HE WAS ARRESTED FOR ALLEGED OFFENCE O N 12.12.2008. THE SUM OF RS.28 LAKHS WAS SEIZED BY -: 3: - 3 POLICE DEPARTMENT. THIS AMOUNT WAS HANDED OVER BY POLICE TO THE INCOME TAX DEPARTMENT, INDORE. A NOTIC E U/S 142(1) WAS ISSUED TO THE ASSESSEE IN THE LIGHT OF PROCEEDINGS U/S 102 OF THE IPC INITIATED BY POLICE DEPARTMENT BECAUSE OF SEIZURE OF CASH OF RS.28 LAKH S FROM THE ASSESSEE ON 15.12.2008 AT INDORE. SUMMONS WERE ISSUED TO THE ASSESSEE U/S 131 AND HIS STATEME NT WAS RECORDED. SINCE THE ASSESSEE COULD NOT EXPLAIN THE CASH AND TOOK CONTRARY STAND BEFORE AO, THE AO PASSED AN EX-PARTE ASSESSMENT U/S 144 OF INCOME-TAX ACT, 1961, AND ADDED THIS AMOUNT OF RS.28 LAKHS IN THE HANDS OF THE ASSESSEE U/S 69A OF THE IT ACT. BESIDE THIS HE ALSO ADDED RS. 48,000/- AS SALARY INCOME BECAUSE THE ASSESSEE ADMITTED IN THE STATEMENT RECORDED BY ADIT (INV,)-II, INDORE DT. 16.12.2008 IN REPLY TO Q. NO.2 THAT HE WAS GETTING SALARY OF RS. 4,OOO/- P.M. AS A RESULT, AO ASSESSED THE TOTAL INCOME OF ASSESSEE AT RS. 28,48,000/- AND INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. -: 4: - 4 5. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS CANCELLED THE PENALTY BY OBSERVING AS UNDER :- 3. I HAVE CONSIDERED THE SUBMISSIONS MADE AND PENALTY ORDER PASSED BY AO. THE ADDITIONS MADE IN QUANTUM ASSESSMENT IS A CIVIL LIABILITY WHERE PRINCIPLE OF PREPONDERANCE OF PROBABILITY COULD WORK BUT IN PENALTY PROCEEDINGS THE ONUS SHIFTS ON DEPARTMENT TO PROVE ITS CONTENTION. DEPARTMENT HAS NOT EXAMINED THE CONTENTION OF APPELLANT THAT HE WAS MERELY A CARRIER OF CASH AND THAT CASH BELONGED TO OTHER PARTIES WHOSE NAMES & ADDRESSES WERE GIVEN BY HIM AND YET AO DID NOT EXAMINE THEM. THE DEEMING PROVISION U/S 69A COULD BE VALID BASIS FOR ADDITION OF UNEXPLAINED CASH IN HANDS OF APPELLANT, AS CASH WAS FOUND WITH HIM, BUT SUCH ASSUMPTION COULD NOT MAKE HIM LIABLE FOR PENALTY, UNLESS DEPARTMENT BRING EVIDENCE BY EXAMINATION OF SUCH PARTIES THAT CASH -: 5: - 5 ACTUALLY BELONGED TO HIM. FROM THE FACTS NARRATED ABOVE, EVEN THE AO WAS OF THE VIEW THAT APPELLANT WAS WORKING AS AN EMPLOYEE FOR A MEAGER SALARY OF RS.4000/- PER MONTH AND HENCE CANNOT HAVE EARNED SUCH HUGE SUM. THEREFORE, LEVY OF PENALTY IN THIS CASE, ON THE ADDITION OF CASH FOUND, UNDER DEEMING PROVISION OF SEC. 69A OF THE LT. ACT COULD NOT BE SUSTAINED. FOR THIS PURPOSE RELIANCE IS PLACED ON THE CASE LAWS REFERRED BY APPELLANT WHICH ARE NARRATED ABOVE NAMELY (A) GUJRAT HIGH COURTS DECISION IN THE CASE OF CIT VS. BARODA TIN WORKS, 221 ITR 661 (B) KARNATAKA HIGH COURTS DECISION IN THE CASE OF CIT VS. M.M. GUJAMGADI, 290 ITR 168 (C) DELHI HIGH COURTS DECISION IN THE CASE OF CIT VS. VINOD KUMAR AND (D) ITAT, INDORE IN THE CASE OF DHANNYAKUMAR JAIN, 5 ITR (TRIB.) 497. THE -: 6: - 6 PENALTY U/S 271(1)(C) LEVIED AT RS.17,35,000/- STANDS DELETED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT(A) HAS DELETED THE PENALTY ON THE GROUND THAT THERE WAS A BUS RUNNING FROM INDORE TO AHMEDABAD AND IT WAS CHECKED AND INTERROGATED BY PO LICE, CHANDANNAGAR, INDORE, AND THE ASSESSEE WAS FOUND RS . 28 LAKHS. THE AMOUNT WAS HANDED OVER TO INCOME TAX DEPARTMENT AND THE ASSESSEE COULD NOT EXPLAIN THE C ASH. THEREFORE, THE CASH WAS SEIZED BY THE DEPARTMENT AN D EX PARTE ASSESSMENT U/S 144 OF THE ACT WAS MADE AND THE AMOU NT OF RS. 28 LAKHS WAS ADDED U/S 69A OF THE INCOME-TAX AC T, 1961 AND THE ASSESSEES DEEMED INCOME HAS BEEN ASSESSED BY THE DEPARTMENT. THE LD. CIT(A) HELD THAT WHEN THE ADDIT ION IS MADE UNDER DEEMING PROVISION, THE PENALTY CANNOT BE DELETED. MOREOVER, DURING THE COURSE OF HEARING, THE LD. AUT HORIZED REPRESENTATIVE HAS PRODUCED THE COPY OF THE DECISIO N OF I.T.A.T., CHENNAI BENCH IN THE CASE OF T.KODESWARAN V. ITO, -: 7: - 7 (2009) 123 TTJ 230 (CHENNAI), WHEREIN THE SIMILAR I SSUE HAD COME UP AND SIMILAR FACTS WERE THERE. IN THAT CASE, THE AO HAS PASSED THE ASSESSMENT ORDER EX-PARTE U/S 144 OF THE ACT AND THE AO HAS LEVIED PENALTY U/S 271(1)(C) OF THE ACT, WHICH WAS DELETED AND TRIBUNAL HAS DELETED THE PENALTY BY OBS ERVING AS UNDER :- THE ASSESSEE WAS RIGHT IN SAYING THAT THERE COULD BE NO CONCEALMENT OF INCOME FOR A PARTICULAR YEAR, WITHIN THE MEANING OF SECTION 271(1)(C0, IF FOR THA T YEAR NO RETURN WAS FILED BY THE ASSESSEE. EXPLANATION 5 IS APPLICABLE TO A SITUATION WHERE, I N THE COURSE OF A SEARCH UNDER SECTION J 32, THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAD BEEN ACQUIRED BY HIM BY UTILIZING, WHOLLY OR IN PART, HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAD ALREADY ENDED BEFORE THE DATE OF THE SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH. MANIFESTLY, THE ADDITIONS TO WHICH THE PROVISIONS O F -: 8: - 8 EXPLANATION 5 HAD BEEN APPLIED BY THE COMMISSIONER (APPEALS), DID NOT REPRESENT MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG, OF WHICH THE ASSESSEE WAS FOUND TO BE THE OWNER IN THE COURSE OF SEARCH. THEREFORE, THE COMMISSIONER (APPEALS) ERRED IN APPLYING THE PROVISIONS OF EXPLANATION 5 TO THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIMATED INCOME FROM VARIOUS SOURCES . THE EXPLANATION 5 ENACTS A DEEMING PROVISION HAVING APPLICATION TO A PARTICULAR SITUATION. A DEEMING PROVISION IS A LEGAL FICTION WHICH ASSUMES THE EXISTENCE OF A FACT WHICH DOES NOT REALLY EXIST . A DEEMING PROVISION MAY BE INTENDED TO ENLARGE THE MEANING OF A PARTICULAR WORD OR TO INCLUDE MATTERS WHICH OTHERWISE MAY OR MAY NOT FALL WITHIN THE MAIN PROVISION. IN CONSTRUING A LEGAL FICTION, IT IS NEC ESSARY TO ASSUME ALL THOSE FACTS ON WHICH ALONE THE FICTIO N CAN OPERATE, BUT, IT CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED OR BEYOND THE -: 9: - 9 LANGUAGE OF THE SECTION BY WHICH IT IS CREATED. I T CANNOT BE EXTENDED BY IMPORTING ANOTHER FICTION. A LEGAL FICTION CANNOT BE EXTENDED FURTHER BY SO INTERPRETING IT AS TO GO BEYOND THE LEGISLATURE'S INTENTION IN CREATING THE FICTION. THIS IS BECAUSE LEGAL FICTIONS ARE CREATED ONLY FOR A DEFINITE PURP OSE AND THEY ARE LIMITED TO THE PURPOSE FOR WHICH THEY ARE CREATED AND SHOULD NOT BE EXTENDED BEYOND THEIR LEGITIMATE FIELD. A LEGAL FICTION, NO DOUBT, HAS TO BE CARRIED TO ITS LOGICAL CONCLUSION BUT, THAT MUST BE WITHIN THE FRAMEWORK OF THE PURPOSE FOR WHICH IT IS CREATED. IT CANNOT BE CARRIED TO AN ILLOGICAL LENGT H. ONE SHOULD NOT ALLOW ONESELF TO BE SO CARRIED AWAY BY A LEGAL FICTION AS TO IGNORE THE WORDS OF THE VE RY SECTION WHICH INTRODUCES IT OR ITS CONTENT OR SETTI NG IN THE STATUTE WHICH CONTAINS THAT SECTION. ALSO ONE SHOULD NOT LOSE SIGHT OF THE PURPOSE FOR WHICH THE LEGAL FICTION WAS INTRODUCED. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LEGAL POSITION DISCUSSED ABOVE, THE ORDER O F -: 10: - 10 THE COMMISSIONER (APPEALS) COULD NOT BE SUSTAINED. THE PENALTY WAS, ACCORDINGLY, TO BE CANCELLED. 7. WE, RESPECTFULLY, FOLLOWING THE SAME, CONFIRM THE ACTION OF THE LD. CIT(A). 8. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED . THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 20 TH SEPTEMBER, 2015. CPU* 1016