Lingam Satish Babu, Gudivada V. ACIT, Vijayawada

ITA 28/VIZ/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2932 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 12-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Keywords: Source of fund; Additional evidence; Revised return
• Section: 271(1)(c); 143(3); 153A; 131; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.28/VIZAG/2009 ASSESSMENT YEAR : 2007-08 LINGAM SATISH BABU GUDIVADA ACIT, CIRCLE-1(1) VIJAYAWADA (APPELLANT) VS. (RESPONDENT) PAN NO.ACPPL 8316D APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI D.S. SUNDER SINGH, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL OF THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE CIT(A) CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT BY THE A.O. AFTER INVOKING THE PROVISIONS OF EXPLANATION 5 TO S ECTION 271(1)(C) OF THE ACT. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS PLACED ON RE CORD. THE BRIEF FACTS RELATING TO THE IMPUGNED ISSUE ARE THAT ON 7.9.2006 , THE ASSESSEE WAS TO BOARD THE SPICE JET FLIGHT NO.219 FROM NEW DELHI TO HYDERABAD. THE ASSESSEE WAS FOUND CARRYING A CASH OF RS.10,23,000/ - AND CONSEQUENT TO THE EXAMINATION U/S 131 OF THE I.T. ACT, NO TANGIBLE EX PLANATIONS ABOUT SOURCE OF THIS CASH WAS OFFERED. THEREFORE, AN AUTHORIZATION U/S 132 WAS ISSUED BY THE DIRECTOR OF INTELLIGENCE, NEW DELHI AND CASH OF RS. 10 LAKHS WAS SEIZED U/S 132 OF THE I.T. ACT. A NOTICE U/S 153A WAS ISSUED O N 10.10.2007 CALLING FOR RETURNS OF INCOME FOR 6 ASSESSMENT YEARS FROM A.Y. 2001-02 TO 2006-07. IN RESPONSE TO THE NOTICE U/S 153A FOR THE ASSESSMENT YEAR 2007-08, ASSESSEE FILED ITS RETURN ON 10.10.2007 DECLARING THAT INCOM E OF RS.10 LAKHS UNDER THE HEAD INCOME FROM OTHER SOURCES WITH THE REQUEST TO ADJUST THE TAX DUES OF RS.2,53,000/- ON DECLARED INCOME OUT OF THE SEIZED CASH. THE REQUEST OF THE ASSESSEE WAS ACCEPTED BY THE CIT GRANTING SANCTION TO ADJUST RS.2.5 LAKHS OUT OF HIS P.D. ACCOUNT. WHEN THE ASSESSEE WAS FOU ND IN POSSESSING CASH OF RS.10.23 LAKHS, THE DDIT, AIR INTELLIGENCE UNIT, NEW DELHI RECORDED HIS SWORN 2 STATEMENT U/S 131 ON 7.9.2006 AND IN HIS DEPOSITION , ASSESSEE CLAIMED THAT SAID CASH BELONG TO M/S. S.R.M. INFRASTRUCTURE PVT. LTD, NEW DELHI. THIS DEPOSITION OF THE ASSESSEE WAS ALSO CONFIRMED BY HI S ACCOMPLICE SHRI CH. MINI RAO IN HIS DEPOSITION U/S 131. SHRI SANJAY MALHOTR A, S/O SHRI S.R. MALHOTRA WAS ALSO EXAMINED BUT HE HAS SHOWN THE TOTAL IGNORA NCE ABOUT THE CASH GIVEN TO THE ASSESSEE. HE EVEN STATED THAT HE DOES NOT KNOW THE ASSESSEE, L. SATISH BABU. ON 12.9.2006, SHRI S.R. MALHOTRA, MANAGING DIRECTOR OF M/S. S.R.M. INFRASTRUCTURE PVT. LTD. WAS ALSO EXAMINED AN D HE HAD CATEGORICALLY STATED THAT NO CASH WAS GIVEN TO SHRI L. SATISH BAB U. HE ALSO STATED THAT HE DOES NOT KNOW SRI L. SATISH BABU, THE ASSESSEE. TH E A.O. CONCLUDED THE ASSESSMENT U/S 143(3) ON 22.5.2008 ASSESSING THE TO TAL INCOME AT RS.10,63,000/- AGAINST THE RETURNED OF INCOME OF RS .10 LAKHS AND INITIATED THE PENALTY PROCEEDINGS. 3. DURING THE PENALTY PROCEEDINGS, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT DEPARTMENT HAS FAILED IN EVERY ASPECT TO PROVE THAT CASH BELONGS TO THE ASSESSEE. HENCE, THIS ASSESSED INCO ME IS UNPROVED INCOME ONLY AND THE LEVYING OF PENALTY ON AN INCOME FIXED BY AN ASSESSMENT MADE ON THE BASIS OF PRESUMPTION IS BAD IN LAW. HE PLAC ED A RELIANCE UPON THE JUDGEMENT OF THE APEX COURT IN THE CASE OF SRI SUDA RSHAN SILKS & SAREES VS. CIT 169 TAXMAN 321 (SC). 4. THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE AND LEVIED THE PENALTY AT RS.3 LAKHS AFTER HAVING OBSERVED THAT IN ITIALLY THE ASSESSEE DISOWNED THE CASH FOUND IN HIS POSSESSION BUT LATER ON WHEN THE OTHER PERSON REFUSED TO OWN IT, THE ASSESSEE DID NOT BRIN G OUT ANY ADDITIONAL EVIDENCE TO PROVE THAT HE IS NOT THE OWNER OF THE C ASH FOUND IN HIS POSSESSION AND ULTIMATELY HE OFFERED CASH OF RS.10 LAKHS AS AN ADDITIONAL INCOME OF A.Y. 2007-08 AND ALSO AFTER HAVING INVOKE D THE EXPLANATION 5 TO SECTION 271(1)(C) OF THE I.T. ACT. 5. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) WITH THE SUBMISSION THAT ASSESSEE WAS NOT MAN OF MEANS AND H E WAS NEVER ASSESSED TO TAX BEFORE THIS INCIDENT. ASSESSEES MOTHER-IN- LAW WAS SUFFERING WITH CANCER AND SHE WAS IN NEED OF MONEY FOR TREATMENT A ND SHE THEREFORE 3 REQUESTED HER SISTERS SON MR. CHILUKURI RAVI RESID ING IN U.K. TO ACCOMMODATE AN AMOUNT OF RS.10 LAKHS AND MR. CHILUKURI RAVI ACC EPTED HER REQUEST AND DIRECTED THE ASSESSEE TO GO TO DELHI AND CONTACT SR I S.R. MALHOTRA OF M/S. S.R.M. INFRASTRUCTURE PVT. LTD. WHO WILL ARRANGE THE CASH. ACCORDINGLY, ASSESSEE WENT TO DELHI ALONG WITH SRI CH. MINI RAO, BROTHER OF SRI CHILUKURI RAVI. SRI S.R. MALHOTRA REQUESTED THE ASSESSEE TO WAIT IN THE LOBBY OF HOTEL RADDISON AND SENT THE AMOUNT THROUGH A PERSON. SIN CE THIS AMOUNT DOES NOT BELONG TO THE ASSESSEES HE WAS WRONGLY SEARCHED AND THE PENALTY WAS WRONGLY IMPOSED UPON THE ASSESSEE. THE ASSESSEE IN SPITE OF KNOWING THE FACT THAT THERE EXISTS NO POSITIVE INFORMATION WITH THE DEPARTMENT BUT TO PURCHASE THE PEACE HE OFFERED THE ENTIRE AMOUNT OF SEIZED CASH TO TAX. THEREFORE THERE IS NO CONCEALMENT OF FACT UNDER THE NORMAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT. THE A.O. HAS ILLEGAL LY INVOKED THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) WITHOUT OBTAININ G CONCRETE INFORMATION OR THE EVIDENCE TO SUGGEST THAT THE CEASED CASH BELONG TO THE ASSESSEE. 6. THE CIT(A) RE-EXAMINED THE ENTIRE ISSUE OF PENAL TY IN THE LIGHT OF ASSESSEES CONTENTIONS AND THE STATEMENT RECORDED D URING THE COURSE OF SEARCH PROCEEDINGS AND FINALLY APPROVED THE ACTION OF THE A.O. FOR IMPOSING THE PENALTY U/S 271(1)(C) OF THE ACT. 7. THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND HAS REITERATED HIS CONTENTIONS AS RAISED BEFORE THE CIT (A). THE ASSESSEE HAS PLACED A STRONG RELIANCE UPON THE ORDER OF THE TRIB UNAL IN THE CASE OF VINOD GOYAL VS. ACIT 115 TTJ (NAG) 559 AND THE JUDGEMENT OF THE APEX COURT IN THE CASE OF SUDARSHAN SILKS & SAREES VS. CIT (SUPRA ). IT WAS CONTENDED ON BEHALF OF THE ASSESSEES THAT HE WAS NOT MAN OF MEAN S AND HE HAS TAKEN A SUM OF RS.10 LAKHS FOR THE TREATMENT OF HER MOTHER- IN-LAW AND THIS CASH WAS ARRANGED BY HER SISTERS SON MR. CHILUKURI RAVI RES IDENT OF U.K. THROUGH MR. S.R. MALHOTRA OF M/S. S.R.M. INFRASTRUCTURE PVT. LTD . SINCE THE ASSESSEE HAS EXPLAINED THE SOURCE OF FUNDS, PENALTY U/S 271(1)(C ) CANNOT BE LEVIED ONLY FOR THE GROUND THAT THE EXPLANATIONS OF THE ASSESSEE WA S NOT ACCEPTABLE TO THE DEPARTMENT. 4 8. THE LD. D.R. ON THE OTHER HAND HAS CONTENDED THA T THE ASSESSEE HIMSELF HAS ADMITTED THAT HE WAS NOT A MAN OF MEANS AND BEFORE THIS INCIDENT HE WAS NEVER ASSESSED TO TAX. IT IS AGAIN ST THE HUMAN PROBABILITIES THAT A SUM OF RS.10 LAKHS WAS GIVEN TO A PERSON WHO IS NOT A MAN OF MEANS AND DOES NOT HAVE ANY CAPACITY TO REPAY THE SAID AM OUNT. MOREOVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS EXAMINED SRI S.R. MALHOTRA OF M/S. S.R.M. INFRASTRUCTURE PVT. LT D. AND HIS SON AND THEY BOTH HAVE CATEGORICALLY REFUSED TO OWN THE SAID AMO UNT. THERE IS A PRESUMPTION U/S 132(4A) THAT THE CASH OR DOCUMENTS BELONGS TO THE PERSON FROM WHOM IT IS SEIZED DURING THE COURSE OF SEARCH. THE LD. D.R. FURTHER CONTENDED THAT THE ADDITION WAS NOT MADE ON ACCOUNT OF PRESUMPTION BUT THE ASSESSEE HIMSELF HAS OFFERED THE SUM OF RS.10 LAKHS AS AN INCOME FROM OTHER SOURCES WHILE FILING A RETURN FOR A.Y. 2007-08. ON CE THE ASSESSEE HIMSELF HAS ACCEPTED THE OWNERSHIP OF THE CASH AND OFFERED IT T O TAX, THE REVENUE HAS RIGHTLY LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT . 9. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE RECORD, WE FIND THAT WHILE FILING THE RETURN IN RES PONSE TO NOTICE U/S 153A, THE ASSESSEE HIMSELF HAS ADMITTED THE OWNERSHIP OF THIS CASH AND HAS OFFERED THIS AMOUNT OF RS.10 LAKHS TO TAX FOR THE ASSESSMENT YEA R 2007-08. THE ONUS IS UPON THE ASSESSEE TO PROVE BY PLACING AN EVIDENCE O N RECORD THAT THIS SEIZED AMOUNT DOES NOT BELONG TO HIM AND IT BELONGS TO SOM E OTHER PERSON. THOUGH HE HAS STATED DURING THE COURSE OF EXAMINATI ON U/S 131 OF THE ACT THAT IT BELONGS TO SRI S.R. MALHOTRA OF M/S. S.R.M. INFRASTRUCTURE PVT. LTD. BUT IT WAS DENIED BY MR. S.R. MALHOTRA. AFTER THE DENI AL, THE ASSESSEE DID NOT BRING ANYTHING ON RECORD TO SUBSTANTIATE THAT THIS MONEY BELONGS TO MR. S.R. MALHOTRA AND NOT TO HIM. HE HAS SIMPLY PUT FORTH A STORY THAT HE HAS TAKEN THIS AMOUNT OF RS.10 LAKHS AS CASH FROM MR. MALHOTR A FOR THE TREATMENT OF HIS MOTHER-IN-LAW WHO WAS SUFFERING WITH CANCER. IT IS AN UNDISPUTED FACT THAT ASSESSEE IS NOT A MAN OF MEANS AND IN THAT SITUATIO N, IT IS AGAINST THE HUMAN PROBABILITY THAT SOME ONE WILL GIVE A SUM OF RS.10 LAKHS AS A LOAN FOR THE TREATMENT FOR HIS MOTHER-IN-LAW KNOWING FULLY WELL THAT ASSESSEE HAS NO CAPACITY TO RETURN THE AMOUNT TO THE PAYER. MOREOV ER, THE ASSESSEE HIMSELF HAS FINALLY ACCEPTED THE OWNERSHIP OF THIS AMOUNT. ON THE ACCEPTANCE OF THE OWNERSHIP THE REVENUE STOPPED ITS ENQUIRY OR INVEST IGATION IN ORDER TO DIG OUT 5 THE CORRECT FACTS AS TO WHOM THIS MONEY RELATES AND NOW THE ASSESSEE WANTS TO TAKE THE BENEFIT OF NON-ACTION OF THE ASSESSING OFFICER. WE HAVE ALSO EXAMINED THE PROVISIONS OF EXPLANATION 5 OF SECTION 271(1)(C) OF THE I.T. ACT, ACCORDING TO WHICH WHERE IN THE COURSE OF SEARCH IN ITIATED U/S 132 BEFORE THE FIRST DATE OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OF TH INGS AND THE ASSESSEE CLAIMS THAT SUCH ASSET HAVE BEEN ACQUIRED BY HIM BY UTILIZ ING (WHOLLY OR IN PART) HIS INCOME (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BE FORE THE DATE OF SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR WHERE SUCH RETURNS HAVE BEEN FURNISHED BEFO RE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) FOR A NY PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH, THEN NOT WIT HSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHE D ON OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSE OF IMPOSITION OF P ENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 MAY DEEMED TO HAVE C ONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS O F SUCH INCOME, UNLESS CERTAIN CONDITIONS ARE FULFILLED. IN THE INSTANT C ASE UNDISPUTEDLY, THE ASSESSEE WAS FOUND WITH THE CASH OF RS.10.23 LAKHS AND DURIN G THE COURSE OF SEARCH, HE FURNISHED CERTAIN EXPLANATIONS WHICH WERE NOT FO UND TO BE TRUE AND FINALLY HE OWNED THE MONEY FOUND WITH HIM. HE HAS NEVER RA ISED A CLAIM THAT THIS MONEY WAS ACQUIRED BY HIM IN EARLIER YEARS. THEREF ORE HIS CASE FALLS WITHIN THE PARAMETERS OF EXPLANATION 5 TO SECTION 271(1)(C ) OF THE ACT. UNDER THIS EXPLANATION CERTAIN EXCLUSIONS WERE GIVEN BUT THE A SSESSEES CASE DOES NOT FALL IN THOSE EXCLUSIVE CLAUSE. 10. WE HAVE ALSO EXAMINED THE JUDGEMENT OF THE APEX COURT IN THE CASE OF SUDARSHAN SILKS & SAREES VS. CIT (SUPRA) AND WE FIN D THAT IN THAT CASE THAT PENALTY WAS LEVIED ON THE BASIS OF THE ESTIMATED IN COME DISCLOSED BY THE ASSESSEES IN THE REVISED RETURN. THE FACTS OF THE CASE ARE ENTIRELY DIFFERENT WITH THE PRESENT CASE AS IN THE PRESENT CASE THE AD DITIONS WERE NOT MADE ON ESTIMATION BUT THE ASSESSEE WAS FOUND WITH CASH OF RS.10 LAKHS WHICH WAS FINALLY ADMITTED BY THE ASSESSEE TO BE AN INCOME FR OM OTHER SOURCES. THEREFORE NO ASSISTANCE CAN BE DRAWN FROM THIS JUDG EMENT IN FAVOUR OF THE ASSESSEES. LIKEWISE, THE OTHER ORDER OF THE TRIBUN AL IN THE CASE OF VINOD GOYAL VS. ACIT (SUPRA) RELIED ON BY THE ASSESSEE IS ALSO ON DIFFERENT FACTS. 6 IN THAT CASE THE CASH WAS NOT FOUND DURING THE COURS E OF SEARCH. IT WAS RATHER REQUISITIONED U/S 132A OF THE I.T. ACT. IN T HAT CASE THE TRIBUNAL HAS HELD THAT THE EXPLANATION 5 CANNOT BE INVOKED AS TH ERE WAS NO SEARCH CONDUCTED U/S 132 OF THE ACT. BUT IN THE PRESENT C ASE THE SEARCH WAS CONDUCTED U/S 132 OF THE ACT. THEREFORE, THE RATIO LAID DOWN IN THE CASE OF VINOD GOYAL CANNOT BE APPLIED TO THE PRESENT CASE. THEREFORE, THE PRESENT CASE IS TO BE EXAMINED INDEPENDENTLY ON ITS OWN FAC TS AND ITS FACTS CLEARLY SUGGEST THAT THIS UNEXPLAINED INCOME OF THE ASSESSE E WAS NEVER DISCLOSED TO THE DEPARTMENT AND IT SQUARELY FALLS WITHIN THE PUR VIEW OF EXPLANATION 5 TO SECTION 271(1)(C). THEREFORE THE ASSESSEE IS DEEME D TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME AND IS LIABLE FOR THE PEN ALTY. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAS RIGHTL Y CONFIRMED THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON 12.8.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 12 TH AUGUST, 2010 COPY TO 1 LINGAM SATISH BABU, D.NO.13/148-1, PATIMEEDA, GUD IVADA-521 301 2 ACIT, CIRCLE-1(1), VIJAYAWADA 3 THE CIT, VIJAYAWADA 4 THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM