Devendra Puri, CHITTORGARH V. ITO, CHITTORGARH

ITA 291/JODH/2009

• Counselvise Citation: 29123314 RSA 2009
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 20-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Unexplained cash credit
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (JODH[PUR BENCH: JODHPUR) BEFORE SHRI RAJPAL YADAV AND SHRI K.D. RANJAN ITA NO. 291/JDP/2009 ASSESSMENT YEAR: 2003-04 DEVENDRAPURI, VS. INCOME-TAX OFFICER, PROP. M/S. VINAYAK COMPLEX, WARD 1, CHITTORGARH. CHITTORGARH. (PAN: AHZPP8612R) (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI NA JOSHI, DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 24.02.2009 PASSED FOR ASSESSMENT YEAR 2003-04. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE PENALTY OF RS.30,300 IMPOSED UNDER S EC. 271(1)(C) OF THE INCOME-TAX ACT, 1961 BY THE ASSESSING OFFICER. 2. THE BRIEF FACTS OF THE CASE ARE THAT HAS FILED H IS RETURN OF INCOME ON 29.3.2004 DECLARING AN INCOME OF RS.1,17,597. AN AS SESSMENT ORDER WAS PASSED UNDER SEC.143(3) ON 28.3.2006. ASSESSING OFF ICER HAS DETERMINED THE INCOME OF ASSESSEE AT RS.9,19,194. HE HAS MADE VARI OUS ADDITIONS. THE MAJOR ADDITIONS HAVE BEEN MADE WITH REGARD TO UNEXP LAINED CASH CREDITS 2 APPEARING AGAINST THE NAME OF EIGHT INDIVIDUALS WHO APPEAR TO HAIL FROM ONE FAMILY. THE ADDITIONS HAVE BEEN ULTIMATELY BEEN DEL ETED BY THE LEARNED CIT(APPEALS) EXCEPT IN RESPECT OF TWO PERSONS, NAME LY, PUYUSH PURI RS.80,000 AND RAJU BHAI RS.35,000. THE ORDER OF THE LEARNED CIT(APPEALS) HAS BEEN UPHELD BY THE ITAT. ASSESSING OFFICER HAS INITIATED THE PENALTY PROCEEDINGS QUA THESE TWO UNEXPLAINED CASH CREDITS ADDED IN THE INCOME OF THE ASSESSEE. IN THE PENALTY PROCEEDINGS, ASSESSEE HAS CONTENDED THAT HE HAS FILED AN AFFIDAVIT FROM THE DEPOSITORS AND ALSO PRO DUCED THE DEPOSITORS BEFORE THE ASSESSING OFFICER FOR RECORDING THEIR STATEMENT S. THEY COULD NOT REPLY THE QUESTIONS PROPERLY AND, THEREFORE, AN ADDITION HAS BEEN MADE. ASSESSING OFFICER HAS OBSERVED THAT THE DEPOSITORS THOUGH GIV EN AFFIDAVITS AND CONFIRMATION ALSO, BUT WHEN THEIR STATEMENTS WERE R ECORDED, THEY WERE UNABLE TO GIVE SPECIFIC REPLY RATHER SHRI PUYUSH PU RI HAD STATED THAT HE HAS GIVEN LOAN IN 2005 AND NOT IN 2002. ACCORDING TO TH E ASSESSING OFFICER, ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOM E. HE IMPOSED A PENALTY OF RS.30,300 WHICH IS EQUIVALENT TO THE TAX SOUGHT TO BE EVADED. 3. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. IN RESPONSE TO THE NOTICE OF HEARING, ASSESSEE H AS SENT AN APPLICATION FOR ADJOURNMENT, HOWEVER, CONSIDERING THE FACTS AND CIRCUMSTANCES, WE DO 3 NOT SEE ANY REASON TO ADJOURN THE HEARING. WE HAVE GONE THROUGH THE RECORD WITH THE ASSISTANCE OF LEARNED DR AND PROCEED TO DE CIDE THE APPEAL EX PARTE. 5. ON DUE CONSIDERATION OF THE RECORD, WE ARE OF TH E VIEW THAT SECTION 271(1)(C) OF THE ACT HAS A DIRECT BEARING ON THE CO NTROVERSY AND, THEREFORE, IT IS SALUTARY UPON US TO TAKE NOTE OF THE RELEVANT PR OVISIONS OF SECTION 271(1)(C) ALONG WITH EXPLANATION 1 WHICH READ AS UN DER: 271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1). IF THE ASSESSING OFFICER OR THE COMMISSIONER ( APPEALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS 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 LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: 4 EXPLANATION 1.- WHERE IN RESPECT OF ANY FACTS MATER IAL 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 COMMISSIONER(APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE N, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O F SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHI CH PARTICULARS HAVE BEEN CONCEALED. 6. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THAT FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS B EFORE THEM SHOULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUA NTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UNDER THIS SECTION C AN 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 OTHER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH 5 THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERTAIN SITUATION, EVEN WITHOUT THERE BEING ANYTHIN G TO INDICATE SO, STATUTORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INT O PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATION I TO SECTION 271(1)( C) POSTULATES TWO SITUATIONS; (A) FIRST WHETHER IN RESPECT OF ANY FAC TS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISION S OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OF FERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARN ED CIT(APPEALS); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPU TATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NO T ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS TO PROVE THAT SU CH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS R ELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME. UN DER FIRST SITUATION, THE DEEMING FICTION WOULD COME TO PLAYA IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO TH E COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDING TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEE MING FICTION WOULD COME TO PLAY BY THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL IN COME AND IN ADDITION TO THIS 6 THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANA TION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. T HESE TWO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1 )(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN T HE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUT ING THE TOTAL INCOME OF THE ASSESSEE, FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCUR ATE PARTICULARS HAVE BEEN FURNISHED. 7. ADVERTING TO THE FACTS OF THE PRESENT CASE, IT W OULD REVEAL THAT ASSESSEE HAS PRODUCED BOTH THE CREDITORS BEFORE THE ASSESSIN G OFFICER. THEY HAVE FILED CONFIRMATION IN SUPPORT OF THE ASSESSEE, SOME HOW, IN THEIR EXAMINATION, THEY COULD NOT GIVE PROPER REPLY WHICH GOAD THE ASS ESSING OFFICER TO DISBELIEVE THE CONTENTIONS OF THE ASSESSEE. IN OUR OPINION, THAT CONCLUSION MIGHT BE JUSTIFIABLE FOR MAKING THE ADDITION ON ACC OUNT OF UNEXPLAINED CREDIT BUT IT IS NOT SUFFICIENT TO VISIT THE ASSESSEE WITH THE PENALTY ALSO. THE ADDITION WOULD NOT AUTOMATICALLY ENABLE THE ASSESSING OFFICE R TO VISIT THE ASSESSEE WITH PENALTY. THE ASSESSEE HAS GIVEN AN EXPLANATION THAT AMOUNTS HAVE BEEN RECEIVED FROM THESE TWO PERSONS. THEY HAVE FILED CO NFIRMATIONS. THE QUALITY 7 OF EVIDENCE PRODUCED BY THE ASSESSEE WAS NOT SUFFIC IENT TO DISCHARGE HIS BURDEN BUT THAT DOES NOT GOAD ANY AUTHORITY TO SAY THAT IT WAS A DELIBERATE ATTEMPT AT THE END OF THE ASSESSEE FOR INTRODUCING HIS UNEXPLAINED INCOME BY WAY OF A LOAN FROM THESE TWO PERSONS. THEREFORE, TA KING INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES, WE ALLOW THE APPEA L OF THE ASSESSEE AND DELETE THE PENALTY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 29.08.2011 SD/- SD/- ( K.D. RANJAN ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29/08/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR