N.Mahalingam (HUF), Virudhunagar V. ITO, Virudhunagar

ITA 291/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77234 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM IRS
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . . !'# , $ #% & BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO. 291(MDS)/2014 $ ' (' / ASSESSMENT YEAR : 2008-09 SHRI N. MAHALINGAM (HUF), SMT. M. PRABHAVATHY (W/O LATE N. MAHALINGAM), 45, MALAIARASAN KOIL STREET, ARUPPUKOTTAI, VIRUDHUNAGAR. PAN : AADHN 3562 R V. THE INCOME TAX OFFICER, WARD I(3), KATCHERY ROAD, VIRUDHUNAGAR 626 001. (*+/ APPELLANT) (-.*+/ RESPONDENT) *+ / / APPELLANT BY : SHRI V.S. JAYAKUMAR, ADVOCATE -.*+ / / RESPONDENT BY : SHRI GURU BHASHYAM, IRS, JCIT 0 / 12 / DATE OF HEARING : 22 ND APRIL, 2014 3'( / 12 / DATE OF PRONOUNCEMENT : 23 RD APRIL, 2014 / O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2008-09. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)I AT - - I.T.A. NO. 291/MDS/14 2 MADURAI, PASSED ON 30.12.2013, AND ARISES OUT OF TH E PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961. 2. THE ASSESSEE IS AN HUF. THE ASSESSEE IS A DEALE R FOR EXIDE BATTERY AND ALSO RUNS A PASSENGER TRANSPORT B USINESS. THE HUF IS MADE UP OF LATE SHRI N. MAHALINGAM AND HIS W IFE M. PRABHAVATHY. 3. THE RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR 2008-09 WAS FILED ON 30.3.2010 ADMITTING A LOSS OF ` 4,68,540/-. THE KARTHA OF HUF SHRI N. MAHALINGAM HAD EXPIRED ON 12.6.2008, EVEN BEFORE FILING OF THE RETURN. 4. ACCORDING TO THE ASSESSING OFFICER, NECESSARY IN FORMATION AND PARTICULARS WERE NOT AVAILABLE FROM THE ASSESSE E AT THE TIME OF SCRUTINY ASSESSMENT. THEREFORE, THE ASSESSING A UTHORITY ESTIMATED THE INCOME AT 8% OF THE GROSS TURNOVER OF THE ASSESSEE. THUS, THE INCOME WAS DETERMINED AT ` 62,86,900/-. 5. WHEN THE MATTER WAS TAKEN IN FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) EXAMINED THE F ACTS OF - - I.T.A. NO. 291/MDS/14 3 THE CASE IN A VERY DETAILED MANNER. THE ASSESSEE W AS ALSO SUCCESSFUL IN PRODUCING THE RELEVANT ACCOUNT STATEM ENT FROM M/S EXIDE INDUSTRIES LTD. AS PER WHICH, THE TURNOVER RE PORTED BY THE ASSESSEE WAS RECONCILED TO A GREAT EXTENT. IN THE LIGHT OF THE STATEMENT OF ACCOUNTS FURNISHED BY M/S EXIDE INDUST RIES LTD., THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT THE ASSESSEES INCOME FROM BATTERY TRADING, WORKS OUT T O ` 50,09,125/-. INSTEAD OF THE ESTIMATION MADE BY THE ASSESSING OFFICER, THE COMMISSIONER OF INCOME TAX (APPEALS) D IRECTED TO ADOPT THE ABOVE STATED AMOUNT OF ` 50,09,125/- AS THE BUSINESS INCOME OF THE ASSESSEE. LOSS REPORTED BY THE ASSES SEE FROM TRANSPORT BUSINESS WAS SET OFF AND FURTHER, HOUSE P ROPERTY INCOME WAS ALSO ADDED. THUS, FINALLY THE COMMISSIO NER OF INCOME TAX (APPEALS) DETERMINED THE TAXABLE INCOME OF THE ASSESSEE AT ` 45,15,861/-. 6. THE ASSESSEE ACCEPTED THE INCOME DETERMINED BY T HE COMMISSIONER OF INCOME TAX (APPEALS) AND THE MATTER ENDED THERE. THERE WAS NO FURTHER APPEAL. - - I.T.A. NO. 291/MDS/14 4 7. IN THE LIGHT OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSING OFFICER INITIATED PENA LTY PROCEEDINGS AND HELD THAT THE ASSESSEE HAD CONCEALE D INCOME AND ITS PARTICULARS TO THE EXTENT OF THE BUSINESS I NCOME DETERMINED BY THE COMMISSIONER OF INCOME TAX (APPEA LS). THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD NOT DE CLARED THAT MUCH INCOME FROM THE BUSINESS CARRIED ON BY WAY OF TRADING IN EXIDE BATTERIES. ACCORDINGLY, HE LEVIED A PENALTY OF ` 25,40,740/- 8. IN FIRST APPEAL, THE PENALTY WAS CONFIRMED. THE REFORE, THE SECOND APPEAL BEFORE US. 9. WE HEARD SHRI V.S. JAYAKUMAR, THE LEARNED COUNSE L APPEARING FOR THE ASSESSEE AND SHRI GURU BHASHYAM, THE LEARNED JOINT COMMISSIONER OF INCOME TAX APPEARING FOR THE REVENUE. 10. WE HEARD BOTH SIDES IN DETAIL. IT IS TO BE SEE N THAT THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE THE RELEV ANT DETAILS AND STATEMENT OF ACCOUNTS IN CONNECTION WITH BATTER Y TRADING BEFORE THE ASSESSING OFFICER. THE CIRCUMSTANCES WE RE SUCH THAT EVEN THOUGH THE RETURN WAS FILED ON 30.3.2010, THE KARTHA OF THE - - I.T.A. NO. 291/MDS/14 5 FAMILY LATE N. MAHALINGAM HAD ALREADY EXPIRED ON 12 .6.2008, BEFORE FILING OF RETURN. THEREAFTER, IT WAS SMT. N . PRABHAVATHY, WIFE OF LATE N. MAHALINGAM, WHO TOOK INITIATIVE TO PRESENT THE MATTER BEFORE THE ASSESSING OFFICER. IN AN HUF, CO NSISTING OF HUSBAND AND WIFE AND AFTER THE DEATH OF HUSBAND, TH E AMOUNT OF DIFFICULTIES UNDERGONE BY THE SURVIVING WIFE TO COL LECT THE BUSINESS PAPERS IS QUITE UNDERSTANDABLE. THE BUSIN ESS PAPERS WERE LOOKED AFTER BY SHRI N. MAHALINGAM WHEN HE WAS ALIVE. WHEN HE PASSED AWAY, THE DUTY CAME OUT TO THE HEAD OF HIS WIFE WHO WAS NOT FAMILIAR WITH THE BUSINESS AND ITS DOCU MENTS. THEREFORE, IT IS TO BE SEEN THAT AT THE TIME OF ASS ESSMENT ITSELF, THE ASSESSEE WAS LEGITIMATELY HANDICAPPED IN PRODUC ING THE RELEVANT DETAILS BEFORE THE ASSESSING OFFICER. IT WAS IN SUCH CIRCUMSTANCES THAT THE INCOME WAS ESTIMATED BY THE ASSESSING OFFICER AT 8% OF THE GROSS TURNOVER. 11. BUT, BY THE TIME WHEN THE APPEAL WAS HEARD BY T HE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE WAS IN A POSITION TO COLLECT THE ACCOUNT STATEMENTS FROM M/S EXIDE BATTERIES LTD. AND PRODUCED THE SAME BEFORE THE COM MISSIONER OF INCOME TAX (APPEALS). IT WAS ON THAT BASIS, THE - - I.T.A. NO. 291/MDS/14 6 COMMISSIONER OF INCOME TAX (APPEALS) HAD DETERMINED THE BUSINESS INCOME AT ` 50,12,678/-. ONCE THE DETAILS WERE COLLECTED AND PRODUCED BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS), IT IS PERTINENT TO NOTE THAT THE ASSESSE E HAD NOT COMPLETELY BLACKED OUT HIS PROFIT OR LOSS ARISING O UT OF THE BUSINESS TRANSACTIONS. ONLY CERTAIN ITEMS OF INCEN TIVES WERE NOT BROUGHT INTO ACCOUNTS. THIS LAPSE ON THE PART OF T HE HUF HAS NECESSARILY TO BE READ IN THE LIGHT OF THE PASSING AWAY OF THE KARTHA OF HUF. IF THE ASSESSEE HAD ALL THE DETAILS WITH HER AT THE TIME OF BEGINNING ITSELF, THOSE DETAILS WOULD HAVE BEEN PRODUCED BEFORE THE ASSESSING OFFICER. AS IT WAS NOT AVAILA BLE AT THAT POINT OF TIME, THE ASSESSEE HAD TO PRESENT THE SAME BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS). 12. THEREFORE, IT IS TO BE SEEN THAT THE DELAY IN P ROCURING AND PRODUCING THE MATERIALS BEFORE THE LOWER AUTHORITIE S AS WELL AS THE INSTANCE OF OMISSION OF INCOME FROM ACCOUNTS, B OTH ARE THE CONSEQUENCES OF THE DEATH OF SHRI N. MAHALINGAM, WH O WAS THE KARTHA OF HUF. BUT FOR THIS ACT OF GOD, IT IS NOT POSSIBLE TO HOLD THAT THERE IS A CASE OF CONCEALMENT OF INCOME OR FU RNISHING OF INACCURATE PARTICULARS OF INCOME. WHEN THE COMMISS IONER OF - - I.T.A. NO. 291/MDS/14 7 INCOME TAX (APPEALS) HAS COMPUTED THE BUSINESS INCO ME VERY FAIRLY ON THE BASIS OF THE DETAILS AVAILABLE, AND T HE SAID QUANTUM OF DETERMINATION OF INCOME BY THE COMMISSIONER OF I NCOME TAX (APPEALS) WAS ACCEPTED BY THE ASSESSEE AND PAID THE TAX AND INTEREST THERE ON, AND WHEN THE ASSESSEE DID NOT GO IN SECOND APPEAL, THEREFORE, THE CONDUCT OF THE ASSESSEE ALSO IS TO BE APPRECIATED FOR ACCEPTING A FAIT ACCOMPLI. IT IS T O BE FURTHER SEEN THAT EVEN THOUGH THE DETAILS WERE NOT AVAILABLE BEF ORE THE ASSESSING OFFICER, WIFE OF LATE KARTHA HAD TAKEN MU CH EFFORTS TO COLLECT THE DETAILS AT LEAST BEFORE THE COMMISSIONE R OF INCOME TAX (APPEALS) . 13. IN THE FACTS AND CIRCUMSTANCES, IT IS A PECULIA R CASE THAT WE ARE NOT IN A POSITION TO CONCLUDE THAT THERE IS ANY CONCEALMENT OF INCOME OR FURNISHING OF ANY INACCURA TE PARTICULARS OF INCOME. IN THE FACTS AND CIRCUMSTAN CES OF THE CASE, WE FIND THAT THE LEVY OF PENALTY UNDER SECTIO N 271(1)(C) IS NOT JUSTIFIED IN THE PRESENT CASE. ACCORDINGLY, IT IS DELETED. 14. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. - - I.T.A. NO. 291/MDS/14 8 ORDER PRONOUNCED ON WEDNESDAY, THE 23 RD OF APRIL, 2014 AT CHENNAI. SD/- SD/- (S.S. GODARA) (DR. O.K. NARAYANAN) ( . . !'#) ( . . . ) $ #% /JUDICIAL MEMBER /VICE-PRESIDENT /CHENNAI, 5# /DATED, THE 23 RD APRIL, 2014. KRI. #6 / -$178 98(1 /COPY TO: 1. *+ /APPELLANT 2. -.*+ /RESPONDENT 3. 0 :1 () /CIT(A)-I, MADURAI 4. 0 :1 /CIT-II, MADURAI 5. 8;! -$1$ /DR 6. !' < /GF.