Shri Ratilal Becharbhai Patel, Anand V. The Dy.CIT, Anand Circle, Anand

ITA 2893/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9603 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 15-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D V SINGH
• Assessee Lawyers: S N DIVATIA
• Keywords: Income from undisclosed sources; Deemed dividend

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER ./ ITA NO. 2893/AHD/2015 / ASSESSMENT YEAR: 2011-12 RATILAL BECHARBHAI PATEL, PROP. DHAVAL DYES, C-1/5, GIDC ESTATE, VITTHAL UDYOG NAGAR, TAL & DIST. ANAND .. APPELLANT PAN : AHMPP 1223 H VS DCIT, ANAND CIRCLE, ANAND .. RESPONDENT ASSESSEE(S) BY : SHRI S.N. DIVATIA, AR REVENUE BY : SHRI D.V. SINGH , DR / DATE OF HEARING 06/01/2016 /DATE OF PRONOUNCEMENT 03/02/2016 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-4, VADODARA DATED 01.06.2015 FOR ASSESSMENT YEAR 2011-12, UPHOL DING THE PENALTY OF RS.2,71,660/- LEVIED BY THE ASSESSING OF FICER U/S 271(1)(C) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND ENGAGED IN THE MANUFACTURING AND EXP ORT OF PHARMACEUTICALS INTERMEDIARIES. HE FILED HIS E-RETU RN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 16.09.2011 DECL ARING TOTAL INCOME OF RS.17,82,400/-. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS HOLDING SUBSTANTIAL INTEREST IN DIVINE ORGANICS LTD. AS ITS (SMC) ITA NO. 2893/AHD/2015 RATILAL BECHARBHAI PATEL VS. DCIT AY : 2011-12 2 SHARE HOLDERS. THE SAID COMPANY HAD GIVEN ADVANCE T O THE ASSESSEE WHICH WAS SQUARELY COVERED BY SECTION 2(22 )(E) AS DEEMED DIVIDEND. HOWEVER, IT WAS RESTRICTED TO THE ACCUMULATED PROFIT OF RS.5,79,146/-. THE ASSESSING OFFICER FURT HER NOTICED THAT THE ASSESSEE HAS MADE CAPITAL CONTRIBUTION OF RS. 3 LACS IN HIS PROPRIETARY CONCERN CONSISTING OF RS. 2 LACS ON 29.10.2010 AND RS. L LAC ON 31.10.2010. HE CONCLUDED THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF CAPITAL ADDITIO N AND AS SUCH MADE ADDITION AS INCOME FROM UNDISCLOSED SOURCES. T HE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S . 271(L)(C) FOR THE ALLEGED DEFAULT OF FURNISHING INACCURATE PARTIC ULARS WITH REGARD TO THE AFORESAID BOTH THE ADDITIONS. THE ASS ESSEE FURNISHED REPLY CHALLENGING THE PENALTY PROCEEDINGS . HOWEVER, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE H AS FAILED TO OFFER ANY TANGIBLE EXPLANATION REGARDING HIS FAILUR E TO OFFER THE INCOME ON ACCOUNT OF DEEMED DIVIDEND AND UNEXPLAINE D INVESTMENT. HENCE, PENALTY OF RS. 2,71,660/- WAS LE VIED. 3. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY WHO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CONFIRMED THE IMPUGNED PENALTY IN RESPEC T OF BOTH THE ADDITIONS MAINLY FOR THE REASON THAT THE IGNORA NCE ABOUT THE PROVISION OF SECTION 2(22)(E) WAS NOT TENABLE. 4. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THIS ISSUE OF LEVY OF PENALTY WITH REGARD TO QUANTUM ADD ITION U/S 2(22)(E) OF THE ACT IS COVERED IN FAVOUR OF THE ASS ESSEE BY THE DECISION OF ITAT C BENCH, AHMEDABAD IN THE CASE O F ITO VS. (SMC) ITA NO. 2893/AHD/2015 RATILAL BECHARBHAI PATEL VS. DCIT AY : 2011-12 3 SHRI JASHBHAI TRIBHUVANDAS PATEL IN ITA NO.667/AHD/ 2013, WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- 4. ON CAREFUL PERUSAL OF THE IMPUGNED ORDERS, WE H AVE NOTED THAT THE FACTS IN RESPECT OF THE LOAN TAKEN F ROM M/S.TULSI HOSTELS PVT.LTD. WAS PART OF THE BALANCE- SHEET AND VERY MUCH IN THE KNOWLEDGE OF THE REVENUE DEPARTMENT. WHICH MEANS THAT ALL THE NECESSARY INFORMATION WAS WITHIN THE KNOWLEDGE OF THE AO AND NO PART OF THE PARTICULARS OF THE SAID AMOUNT WAS CONC EALED BY THE ASSESSEE. RATHER, IN OUR HUMBLE UNDERSTANDIN G, THIS IS A SITUATION WHERE THE AO HAD FORMED AN OPIN ION THAT THE SAID TRANSACTION WAS IN THE NATURE OF DEEM ED DIVIDEND. THEREFORE, THE UNDISPUTED FACT IS THAT TH E ADDITION WAS MADE AFTER INVOKING THE DEEMING PROVIS IONS OF THE IT ACT. WHETHER BY INVOKING A DEEMING PROVIS ION AN ADDITION HAS BEEN MADE WOULD QUALIFY FOR IMPOSITION OF CONCEALMENT PENALTY HAS BEEN ANSWERED BY FEW ORDERS OF THE TRIBUNAL, VIZ. SUNILCHANDRA VOHRA, 32 SOT 365 (MUM.), GITANJALI GHATE - ITA NO.6560/MUM./2010 DAT ED 23.05.2012 (MUMBAI BENCH). LD.CIT(A) HAS FOLLOWED T HESE DECISIONS AND DIRECTED TO DELETE THE PENALTY. WE FI ND NO FALLACY IN SUCH DIRECTIONS OF LD.CIT(A). THE VIEW T AKEN BY LD.CIT(A) IS HEREBY CONFIRMED AND THE GROUND OF THE REVENUE IS REJECTED. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. 5. NOTHING CONTRARY WAS BROUGHT TO MY KNOWLEDGE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOLLOWING T HE SAME REASONING, I HEREBY DELETE THE PENALTY TO THE EXTEN T LEVIED WITH REGARD TO QUANTUM ADDITION MADE UNDER PROVISO TO SE CTION 2(22)(E) OF THE ACT, FOR THE REASONS DISCUSSED ABOV E. 6. REGARDING OTHER COMPONENT OF PENALTY WITH REGARD TO UNEXPLAINED CAPITAL INTRODUCTION OF RS.3 LACS, I FI ND THAT THE (SMC) ITA NO. 2893/AHD/2015 RATILAL BECHARBHAI PATEL VS. DCIT AY : 2011-12 4 ASSESSEE HAS NOT FURNISHED ANY TANGIBLE EXPLANATION WITH REGARD TO THE SOURCE OF THIS CAPITAL INTRODUCTION E ITHER BEFORE THE ASSESSING OFFICER OR CIT(A) OR EVEN BEFORE THE TRIBUNAL. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN L EVYING THE PENALTY TO THIS COUNT AND HAS RIGHTLY BEEN CONFIRME D BY THE CIT(A). I, THEREFORE, UPHOLD THE PENALTY IMPOSED B Y THE ASSESSING OFFICER TO THIS EXTENT, I.E., WITH REGARD TO THE UNEXPLAINED CAPITAL INTRODUCTION OF RS.3 LACS. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 3RD FEBRUARY, 2016 AT AHMEDABAD. SD/- ( SHAILENDRA K. YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED 03/02/2016 BIJU T., PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' ' # / CONCERNED CIT 4. ' ' # ( ) / THE CIT(A) 5. &'( ! , ' ! , / DR, ITAT, AHMEDABAD 6. (- . / GUARD FILE. / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) !', / ITAT, AHMEDABAD