Shri Nilesh R.Gupta, Bhavnagar V. The Income tax Officer, Wrd-1(3), Bhavnagar

ITA 282/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0018 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-10-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 01-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Keywords: Unexplained investment; Gift
• Section: 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.282/AHD/2012 / ASSTT. YEAR: 2000-2001 SHRI NILESH R. GUPTA RADHAKRISHNA 12/A, ANJESHWAR PARK TILAKNAGAR BHAVNAGAR 364 001. PAN : ABSPG 8546 L VS ITO, WARD - 1(3) BHAVNAGAR. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI DHIREN SHAH, AR REVENUE BY : SHRI ANTONY PARIATH, SR.DR / DATE OF HEARING : 16/10/2016 / DATE OF PRONOUNCEMENT: 23/11/2016 $%/ O R D E R ASSESSEE IS IN APPEAL AGAINST ORDER OF THE LD.CIT(A )-XX, AHMEDABAD DATED 15.11.2011 PASSED FOR THE ASTT.YEAR 2000-01. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.45,285/- UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. ASSESSEE AT THE RELEVANT TIME WAS EMPLOYED AS AN INSPECTOR IN THE DEPARTMENT OF CUSTOM AND CENTRAL EXCISE, GOVT. OF I NDIA AT BHAVNAGAR. HE HAS FILED HIS RETURN OF INCOME ON 26.6.2000 DECLARI NG TOTAL INCOME AT RS.99,597/-. THIS RETURN WAS PROCESSED UNDER SECTI ON 143(1) OF THE INCOME TAX ACT, 1961 ON 1.1.2002. IT EMERGES OUT THAT TWO MONTHS PRIOR TO 3.11.2011 ITA NO.282/AHD/2012 2 TWO TRUCKS OF ONE FIRM OF ARVINDBHAI KANTILAL ANGAD IA CAME FROM AHMEDABAD LOADED WITH GOODS OF BUSINESSMEN REACHED RAJKOT MORBI OCROI NAKA. THE ASSESSEE ALONGWITH OTHER OFFICIAL EXAMIN ED THESE TRUCKS, AND THEREAFTER INTIMIDATED THE TRUCK OWNERS AND OTHER ANGADIA THAT IF THEY WOULD PAY A SUM OF RS.2 LAKHS THEN CUSTOM DEPARTMENT WILL NOT INTERFERE IN THEIR WORK. IT EMERGES OUT FROM THE RECORD THAT ANGADIA HAVE MADE COMPLAINT TO ANTI-CORRUPTION BUREAU AND ULTIMATELY A SEARCH WAS CARRIED OUT AT THE RESIDENCE OF THE ASSESSEE AS WELL AS A TRAP WAS LAI D TO CATCH THE ASSESSEE RED- HANDED FOR ACCEPTING A SUM OF RS.80,000/-. CRIMINA L CASE BEARING ACB NO.13/2003 WAS INSTITUTED AGAINST THE ASSESSEE AND CHARGE-SHEET WAS FRAMED. IT APPEARS THAT IN CONSEQUENCE OF THE SEARCH BY ACB AT THE RESIDENCE OF THE ASSESSEE, THE AO HAS GOT INFORMATION AND ASSESSMENT OF THE ASSESSEE WAS REOPENED BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT ON 12.5.2004. IN THE RE-ASSESSMENT ORDER, THE LD.AO H AS MADE TWO ADDITIONS I.E. A SUM OF RS.36,500/- WHICH WAS FOUND TO BE DEPOSITE D IN THE BANK ACCOUNT OF THE ASSESSEE ON 30.4.1999. THE AO ALSO MADE AN ADD ITION OF RS.1,15,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE LAND. IT EMERGE OUT FROM THE RECORD THAT DURING THE COURSE OF SEARCH BY ACB AN UNREGIST ERED SALE DEED WAS FOUND EXHIBITING THE FACT THAT A PIECE OF LAND COMPRISING AT SURVEY NO. 392/3 JAMNAGAR RAJKOT AHMEDABAD HIGH-WAY WAS PROPOSED TO BE PURCHASED IN THE NAME OF ASSESSEES WIFE SMT.NILABEN TRIVEDI. THIS DEED WAS NOT MATERIALIZED AND ULTIMATELY CANCELLED. ON THE BASIS OF THIS DOC UMENT, IT WAS HARBOURED BY THE AO THAT THE ASSESSEE HAD MADE PAYMENT OF RS.1,1 5,000/- OUT OF UNEXPLAINED SOURCE, AND THEREFORE, AN ADDITION EQUI VALENT TO THIS AMOUNT DESERVES TO BE MADE IN THE INCOME OF THE ASSESSEE. BOTH THESE ADDITIONS WERE UPHELD BY THE CIT(A) AS WELL AS BY THE ITAT. ITA NO.282/AHD/2012 3 3. THE LD.AO HAS INITIATED PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) OF THE INCOME TAX ACT. HE ULTIMATELY IMPOSED A PENALT Y OF RS.45,285/-. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSES SEE. 4. THE LD.COUNSEL FOR THE ASSESSEE HAS CONTENDED TH AT THE ASSESSEE HAS BEEN ACQUITTED FROM CHARGES UNDER THE PREVENTION OF CORRUPTION ACT. HE PLACED ON RECORD COPY OF DECISION RENDERED BY THE S PECIAL JUDGE OF JAMNAGAR AT JAMNAGAR. THIS JUDGMENT HAS BEEN PASSED ON 25.7. 2011 I.E. AFTER THE DECISION OF THE ITAT IN THE QUANTUM APPEAL. THE TRI BUNAL HAS DECIDED THE APPEAL OF THE ASSESSEE BEARING ITA NO.2182/AHD/2006 ON 23.4.2010. THIS JUDGMENT WAS CHALLENGED BY STATE GOVERNMENT IN CRIM INAL APPEAL NO.1391 OF 2011. THE HONBLE GUJARAT HIGH COURT HAS REJECT ED THE APPEAL OF THE STATE GOVERNMENT AND UPHELD THE ACQUITTAL OF THE ASSESSEE VIDE ORDER DATED 7.3.2012. THE JUDGMENT OF THE HONBLE HIGH COURT W AS CHALLENGED BEFORE THE HONBLE SUPREME COURT IN CRLMP NO.24543/2014. THE HONBLE SUPREME COURT HAS DISMISSED THE SLP OF THE STATE GOVERNMENT VIDE ORDER DATED 18.12.2014. COPY OF THE HONBLE SUPREME COURTS OR DER HAS ALSO BEEN PLACED ON RECORD. ON THE STRENGTH OF THESE DOCUMENTS, IT HAS BEEN CONTENDED THAT NO DISPROPORTIONATE ASSETS ALLEGED TO BE PROCURED BY T HE ASSESSEE, WAS UPHELD. THE PROSECUTION HAS FAILED PROVE THAT THE ASSESSEE HAS DEMANDED ANY BRIBE OR HAS ACCEPTED A SUM OF RS.80,000/- FROM THE COMPLAIN ANT. 5. THE LD.COUNSEL FOR THE ASSESSEE FURTHER CONTENDE D THAT EXPLANATION OF THE ASSESSEE WITH REGARD TO DEPOSIT OF RS.36,000/- WAS THAT THESE AMOUNTS WERE RECEIVED ON SECOND BIRTH-DAY OF HIS SON FROM H IS RELATIVES AS GIFT AND THE ASSESSEE HAS MADE DEPOSITS. SIMILARLY, WITH REGARD TO THE INVESTMENT IN LAND, THE CASE OF THE ASSESSEE IS THAT NO SUCH INVESTMENT WAS EVER MADE. IT WAS AN UNREGISTERED SALE DEED, WHICH WAS CANCELLED IN THE MONTH OF MARCH, 2000 I.E. WHICH PRIOR TO THE ACTION TAKEN BY THE ACB. HAD IT BEEN NOT CANCELLED, THEN ITA NO.282/AHD/2012 4 ACB WOULD HAVE FILED CHARGE SHEET AGAINST THE ASSES SEE ON ACCUMULATION OF DISPROPORTIONATE ASSETS. NO SUCH PLEA HAS BEEN RAI SED AGAINST THE ASSESSEE. HE PRAYED THAT PENALTY IMPOSED BY THELD.AO AND CONF IRMED BY THE LD.CIT(A) BE DELETED. 5. ON THE OTHER HAND, THE LD.DR CONTENDED THAT ADDI TION HAS BEEN CONFIRMED BY THE ITAT BY LOOKING INTO PERIPHERAL CI RCUMSTANCES. THUS, IT HAS BEEN HELD THAT THE ASSESSEE HAS MADE UNEXPLAINED IN VESTMENT. HE DESERVES TO BE VISITED WITH PENALTY. 6. I HAVE CONSIDERED RIVAL CONTENTIONS AND GONE THR OUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE ACT HAS A DIRE CT BEARING ON THE CONTROVERSY WHICH READS AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE C OMMISSIONER (APPEALS) OR THE CIT IN THE OF COURSE OF ANY PROCEE DINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B) ** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LE SS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR ITA NO.282/AHD/2012 5 (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FI DE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OR SUCH PE RSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF TH IS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICU LARS HAVE BEEN CONCEALED.' 7. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM SH OULD BE SATISFIED THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100 % TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OT HER MOST IMPORTANT FEATURE OF THIS SECTION IS DEEMING PROVISIONS REGARDING CON CEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUTORY DEEM ING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATION-1 TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FI RST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCO ME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE AS SESSEE FAILS, TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF THE TOTAL INCOME. ITA NO.282/AHD/2012 6 UNDER FIRST SITUATION, THE DEEMING FICTION WOULD CO ME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSE E IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAV E BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANAT ION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMIN G FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE I NCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 8. IN THE LIGHT OF THE ABOVE, IF WE EXAMINE THE FAC TS OF THE PRESENT, THEN IT WOULD REVEAL THAT WHEN QUANTUM WAS DECIDED, ITAT WA S NOT HAVING THE BENEFIT OF JUDGMENT RENDERED BY THE SPECIAL JUDGE, JAMNAGAR DEALING WITH THE SPECIAL CASE NO.ACB NO.13/2003 INSTITUTED AGAINST T HE ASSESSEE BY THE ACB. THE EXPLANATION OF THE ASSESSEE IS THAT SUM OF RS.3 6,000/- WAS DEPOSITED OUT OF THE GIFTS RECEIVED ON THE BIRTH-DAY OF HIS SON. SUCH GIFTS WERE RECEIVED FROM RELATIVES. AS FAR AS SECOND ADDITION IS CONCE RNED, IT IS BASED ON A DOCUMENT WHICH WAS FOUND DURING THE COURSE OF SEARC H AT THE RESIDENCE OF THE ASSESSEE. THIS DOCUMENT IS UNREGISTERED SALE DEED. AN UNREGISTERED SALE DEED DOES NOT CONFER ANY TITLE. THERE IS NOTHING ON REC ORD WHICH CAN CONCLUSIVELY SAY THAT TITLE OF THIS LAND VESTED WITH THE ASSESSE E, MORE SO, IT WAS CANCELLED. SECTION 17 OF THE REGISTRATION ACT CONTEMPLATES THA T ANY IMMOVABLE PROPERTY ITA NO.282/AHD/2012 7 HAVING VALUE OF MORE THAN RS.100/- CANNOT BE TRANSF ERRED UNLESS IT IS REGISTERED. THEN, WHAT WOULD BE EVIDENTIARY VALUE OF SUCH DOCUMENT. IT APPEARS THAT AUTHORITIES HAVE BEEN INFLUENCED IN TH E QUANTUM PROCEEDINGS BY THE PENDENCY OF CRIMINAL PROCEEDINGS FOR PROSECUTIO N OF THE ASSESSEE ON ACCOUNT OF CORRUPTION. ALLEGATION AGAINST THE ASSE SSEE WAS THAT HE WAS ACCEPTING RS.80,000/- AS BRIBE. THIS APPEARS TO BE MAIN REASONS FOR MAKING ADDITION ON THE BASIS OF CIRCUMSTANTIAL EVIDENCE. TO MY MIND, THE AO FAILED TO PROVE THAT EXPLANATION OF THE ASSESSEE WAS FALSE . THERE IS NO CONCRETE POSITIVE EVIDENCE AGAINST THE ASSESSEE EXHIBITING U NEXPLAINED INVESTMENT, EXCEPT UNREGISTERED SALE DEED, WHICH DOES NOT CONFE R ANY TITLE. ADDITION MIGHT HAVE BEEN CONFIRMED, BUT THIS TYPE OF EVIDENC E WOULD NOT BE SUFFICIENT TO VISIT THE ASSESSEE WITH PENALTY, THEREFORE, I AL LOW THE APPEAL OF THE ASSESSEE AND DELETE PENALTY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 23 RD NOVEMBER, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 23/11/2016 $% & ''() *$)' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A) 5. $%& '' , / DR, ITAT, 6. &)* + / GUARD FILE. $% + / BY ORDER, ,/ - ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD