Smt. Suchitra S. Dhanani, Indore V. The ACIT, Circle-1(1)(2), Vadodara

ITA 293/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2893 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 03-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMUGYAN PAL
• Assessee Lawyers: DIVYAKANT PARIKH
• Keywords: Unexplained investment
• Section: 271(1)(c); 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 293/AHD/2017 (ASSESSMENT YEAR: 2010-11) SMT. SUCHITRA S. DHANANI, BF- 8/9, SCHEME NO. 74C, VIJAY NAGAR, INDORE- 452010 V/S ACIT, CIRCLE-1(1)(2), VADODARA (APPELLANT) (RESPONDENT) PAN: ACTPD 1159Q APPELLANT BY : SHRI DIVYAKANT PARIKH, AR RESPONDENT BY : MS. SOMUGYAN PAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 06 -02-201 9 DATE OF PRONOUNCEMENT : 10 -04-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-1, VADODARA DATED 03.10.2016 PERTAINING TO A .Y. 2010-11 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 293/ AHD/2017 . A.Y. 2010-11 2 1. THE ID. CIT(A)-1, VADODARA HAS ERRED IN LAW AN D FACTS IN PARTLY CONFIRMING THE PENALTY IMPOSED BY THE ID. AO IN RESPECT OF ADDITIO N ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY OF RS. 11,54,0527-. THE ID. CIT(A)-1 HAS FAILED TO APPRECIATE THE FACT THAT THE ADDITION ON ACCOUNT JE WELLERY WAS MORE ON ACCOUNT OF THE APPELLANT'S LACK OF KNOWLEDGE OF HER OWN FIN ANCIAL AFFAIRS, WHICH WERE HANDLED BY HER LATE HUSBAND, WHO HAVING EXPIRED COU LD NOT BE PRESENT AT THE TIME OF ASSESSMENT PROCEEDINGS TO EXPLAIN THE SAID INVESTMENT. THE PENALTY CONFIRMED BY THE CIT(A)-1 IS WITHOUT APPRECIATING T HE FACTS OF THE CASE AND PREVAILING LAW AND JUDICIAL DECISIONS ON THE MATTER . THE ADDITION CONFIRMED BY THE ID. CIT(A)-I, VADODAR A IS WITHOUT APPRECIATING THE FACTS OF THE CASE ARID THE PREVAILING LAW AND JUDIC IAL DECISIONS ON THE MATTER. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DE LETE, CHANGE OR MODIFY ANY OR ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF THE HEARING . 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZU RE ACTION U/S 132 OF THE I T ACT WAS CARRIED OUT AT THE RESIDENCE AS WELL AS THE BUSINESS PREMISES OF (DHANANI GROUP) ON 11-02-2011. ACCORDINGLY, NOTICES U/S L53A(A) THE RETURN OF INCOME WAS ISSUED TO THE APPELLANT. THE RETURN OF INCOME WAS FURNISHED ON 13.2.2013 DECLARING TOTAL INCOME OF RS. 5,93,640/-. THE ASSESSMENT WAS FINALIZED U/S. 153A R.W.S. 143(3) OF THE ACT ON 31. 03.2013 ASSESSING THE TOTAL INCOME OF RS. 21,67,690/-, WHILE FINALIZING THE A SSESSMENT ORDER, ASSESSING OFFICER MADE AN ADDITION OF RS. 4,20,000/- ON ACCOU NT OF UNEXPLAINED HOUSE HOLD EXPENSES AND RS. 11,54,050/- ON ACCOUNT OF UNE XPLAINED INVESTMENT IN JEWELLERY. WHILE FRAMING THE SAID ORDER, PENALTY U/ S. 271(L)(C) INITIATED ON THE BOTH ADDITION. THE APPELLANT DID NOT FILE ANY APPE AL M RELATION TO THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY, ON ACCOUNT OF HOUSEHOLD EXPENSES WAS REDUCED TO RS. 1,80,000/- BY CIT(A)-I, BARODA. THEREAFTER, THE AO PROVIDED ANOTHER OPPORTUNITY OF BEING HE APPELLA NT AND THEN HE IMPOSED THE PENALTY OF RS. 4,12,300/- U/S 271(1)(C) OF THE ACT, AGAINST WHICH, THIS APPEAL HAS BEEN FILED. ITA NO. 293/ AHD/2017 . A.Y. 2010-11 3 3. AGAINST THE ORDER OF THE IMPOSITION OF PENALTY, ASS ESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. NOW APPELLANT HAS COME BEFORE US BY WAY OF SECOND A PPEAL. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. IN THIS CASE, ASSESSEE IS A WIDOW AND ON 11.02.2011, SEARCH PROCE EDING U/S. 132 WERE INITIATED ON THE DHANANI GROUP. THE RESIDENTIAL PRE MISES TO THE APPELLANTS HUSBAND WERE ALSO COVERED U/S. 132 AND THE LOCKER O F THE APPELLANT WERE ALSO SEARCHED. THEREAFTER, NOTICE U/S. 153A WAS ISSUED O N THE APPELLANT AND IN RESPONSE TO THE NOTICE, SHE REITERATED HER ORIGINAL RETURN OF RS. 5,93,639/-. THEREAFTER, A.O. FRAMED ASSESSMENT ON 31.03.2013 AN D MADE FOLLOWING ADDITIONS: (A) UNEXPLAINED INVESTMENT IN JEWELLERY RS. 11,54, 050/- (B) ALLEGED UNDISCLOSED HOUSEHOLD EXPENSES RS. 4,20 ,000/- 6. THEREAFTER APPELLANT FILED AN APPEAL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL BY RESTRICTING THE ADDITION TO RS. 1,80, 000/-. 7. AND APPELLANT CONTENTION IS THAT HER HUSBAND SHRI S AJID DHANANI WAS HANDLING THE FINANCIAL AFFAIRS AND HE PASSED AWAY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HENCE, SHE COULD NOT PROVIDE THE COMPL ETE DETAILS DURING THE ASSESSMENT PROCEEDINGS AND ACCORDINGLY ACCEPTED THE ADDITION ON THE SAID ACCOUNT. ITA NO. 293/ AHD/2017 . A.Y. 2010-11 4 8. IN SUPPORT OF ITS CONTENTION, ASSESSEE CITED AN ORD ER OF HONBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF NATIONAL TEXTILE VS. CI T WHEREIN IT IS HELD: 9. LIKE ABOVE SAID CASE, IT WAS A CASE WHERE THERE WAS NO CIRCUMSTANCES TO LEAD TO A REASONABLE AND POSITIVE INFERENCE THAT THE ASSESS EES CASE- THAT THE CASH CREDITS WERE ARRANGED AS TEMPORARY LOANS, WAS FALSE. THE FA CTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT IT COUL D HAVE BEEN SUNDRY LOANS IN SMALL AMOUNTS OBTAINED FROM DIFFERENT PARTIES. THER EFORE, EVEN TAKING RECOURSE TO EXPLANATION 1, SAME CIRCUMSTANCES OR STATE OF EV IDENCE ON WHICH THE CASH CREDITS WERE TREATED AS INCOME, COULD NOT BY THEMSE LVES JUSTIFY THE IMPOSITION OF PENALTY WITHOUT ANYTHING MORE ON RECORD PRODUCED BY THE ASSESSEE OR THE DEPARTMENT. 10. AND APART FROM ABOVE SAID, LD. A.O. HAS IMPOSED PEN ALTY ON BOTH THE COUNT THAT FURNISHING INACCURATE PARTICULARS OF CONCEALME NT OF INCOME FOR WHICH ASSESSEE IS LIABLE FOR PENALTY U/S. 271(1)(C). 11. IN SUPPORT OF ITS CONTENTION, LD. A.R. CITED AN ORD ER OUR BENCH IN THE MATTER OF SHRI HATISH PRABHUDAS CHAUDHARY VS. ITO IN ITA NO. 3557/AHD/2016 DATED 19.06.2018 WHEREIN WE HELD: COUPLE WITH THIS, WE SIMULTANEOUSLY NOTICE THAT TH E ACTION OF THE AO IS QUITE VAGUE. THE 'SATISFACTION' IN THE COURSE OF THE ASSE SSMENT WAS FORMED FOR ALLEGED 'FURNISHING OF INACCURATE PARTICULARS OF INCOME'. T HE PENALTY NOTICE DOES NOT SPECIFY THE NATURE OF DEFAULT AND THUS SUFFERS FROM VICE OF AMBIGUITY. THE AO, HOWEVER, IN DEPARTURE WITH THE SATISFACTION FORMED IN THE ASSESSMENT PROCEEDINGS, WENT ON TO IMPOSE PENALTY ON A DIFFERE NT GROUND I.E. CONCEALMENT OF PARTICULARS OF INCOME. OSTENSIBLY, THE ORIGINAL BAS IS OF INITIATION OF PENALTY HAS BEEN ALTERED IN A SIGNIFICANT WAY BY THE AO HIMSELF BY IMPOSING THE PENALTY. THE ITA NO. 293/ AHD/2017 . A.Y. 2010-11 5 BASIS FOR FORMATION OF SATISFACTION, THUS, WAS ALTE RED AND RENDERED NONEXISTENT. HENCE, IN THE ABSENCE OF CONTINUITY IN THE SATISFAC TION OF THE AO AT THE QUANTUM STAGE VIS--VIS PENALTY STAGE, THE PENALTY ORDER PA SSED BY THE AO IS LIABLE TO BE STRUCK DOWN ON THIS GROUND ALSO. FOR SUCH A VIEW, W E MAY USEFULLY REFER TO THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF NEW SORATHIA ENGINEERING CO. (SUPRA) AS WELL AS ANOTHER DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MANU ENGINEERING WORKS (1980) 122 ITR 306 (GUJ). THUS, IN TOTALITY, PENAL ACTION UNDER S.271(1)(C) O F THE ACT IS NOT SUSTAINABLE IN LAW. 12. RESPECTFULLY FOLLOWING THE HONBLE GUJARAT HIGH COU RT ORDER AS WELL AS IN PARITY WITHOUT OWN BENCH ORDER, WE DELETE THE PENAL TY IMPOSED AND CONFIRMED BY THE REVENUE. 13. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 04- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 10 /04/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD