The DCIT, Circle-3, Ahmedabad V. Shri Mukesh Kalubhai Prajapati, Ahmedabad

ITA 300/AHD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8579 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 05-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Section: 133(6); 68

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.300/AHD/2016 ( / ASSESSMENT YEAR : 2007-08) THE DY.CIT CIRCLE-1(3) AHMEDABAD-380 015 / VS. SHRI MUKESH KALUBHAI PRAJAPATI 1345, NAGARBHAI NI POLE RAIPUR, AHMEDABAD # ./ ./ PAN/GIR NO. : APXPP 5410 K ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI DEEPAK SUTARIA, SR.DR &#%(' / RESPONDENT BY : -NONE- )*(+ / DATE OF HEARING 23/08/2017 ,-./(+ / DATE OF PRONOUNCEMENT 06/09/2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-10, AHMEDABAD [CIT(A) IN SHORT] DATED 14/12/2015 FOR THE ASSESSMENT YEAR (AY) 2008-09 CHALLENGING THE DELETION OF PENALTY IMPOSED UNDER S .271(1)(C) ON ADDITION OF RS.43 LAKHS MADE UNDER S.68 OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'). ITA NO.300/AHD/ 2016 DCIT VS. SHRI MUKESH KALUBHAI PRAJAPATI ASST.YEAR 2007-08 - 2 - 2. BRIEFLY STATED, IT WAS NOTICED BY ASSESSING OF FICER (AO) IN THE COURSE OF SCRUTINY ASSESSMENT FOR THE AY 2008-09 TH AT ASSESSEE HAS OBTAINED UNSECURED LOAN OF RS.43 LAKHS FROM ONE M/S .SUDARSHAN ENTERPRISE. THE AO ON VERIFICATION OF PAN DATA ON COMPUTER FOUND THAT THE PAN OF THE DEPOSITOR M/S.SUDARSHAN ENTERPRISE M ENTIONED IN THE CONFIRMATION FILE DOES NOT PERTAIN TO IT. THEREFOR E TO VERIFY THE GENUINENESS OF THE TRANSACTIONS, A NOTICE UNDER S.1 33(6) OF THE ACT WAS ISSUED TO M/S.SUDARSHAN ENTERPRISE. IN RESPONSE THEREOF, M/S.SUDARSHAN ENTERPRISE DENIED HAVING MADE ANY TRANSACTION WITH THE ASSESSEE AS CLAIMED. SHOW-CAUSE NOTICE WAS ACCORDINGLY ISSUED TO THE ASSESSEE FOR EXPLANATION ON THE ENQUIRIES CONDUCTED. THE ASSESS EE FILED VAGUE REPLY AND FINALLY CAME FORWARD TO ADMIT THE SAID LOAN AS UNEXPLAINED INCOME. THE ASSESSEE HOWEVER IN THE SAME VAIN SUBMITTED THA T THE ADMISSION WAS MADE TO BUY PEACE AND AVOID PROLONGED LITIGATION. THE ASSESSEE CLAIMED THAT DISCLOSURE HAS BEEN MADE VOLUNTARILY AND REQUE STED FOR NON-INITIATION OF PENALTY. IN THESE CIRCUMSTANCES, THE ADDITIONS WERE MADE AND PENALTY WAS IMPOSED THEREON. 3. IN THE FIRST APPEAL, THE CIT(A) FOUND MERIT AND DELETED THE PENALTY OF RS.14,61,570/- LEVIED BY THE AO UNDER S.271(1)(C ) OF THE ACT. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) IS REPRODUCED HEREUNDER:- ITA NO.300/AHD/ 2016 DCIT VS. SHRI MUKESH KALUBHAI PRAJAPATI ASST.YEAR 2007-08 - 3 - DECISION: 4. THE SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CONSIDERED WITH REFERENCE TO THE PENALTY ORDER PASSED. THE ONLY EFFECTIVE GROUND OF APPEAL IS AGAINST THE LEVY OF PENALTY OF RS.14,61,570/- U/S 271(1)(C) OF THE ACT. THE FACTS OF THE CASE IS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICE D THAT THE APPELLANT HAS TAKEN LOAN OF RS.43 LAKHS FROM M/S SUDARSHAN ENTERPRISE. THE APPELLANT FILED CONFIRMATION NAME, ADDRESS AND PAN OF M/S SUDARSHAN ENTERPRISE B EFORE THE AO TO SUBSTANTIATE THE CREDITS IN THE BOOKS OF ACCOUNT. ON VERIFICATIO N U/S 133(6) OF THE ACT DONE BY THE AO, M/S SUDARSHAN ENTERPRISE DENIED TO HAVE ANY TRA NSACTIONS WITH THE APPELLANT. THEREFORE, DURING THE ASSESSMENT PROCEEDINGS THE AP PELLANT ADMITTED RS.43 LAKHS AS HIS UNDISCLOSED INCOME AND PAID TAXES UPON IT. THE AO MADE ADDITION U/S 68 OF THE ACT AND PENALTY PROCEEDINGS U/S 271(1)(C) WERE INIT IATED BY ISSUING NOTICE U/S 274 R.W.S. 271(1)(C)OF THE ACT. 4.1 THE APPELLANT FILED APPEAL BEFORE THE CIT(A) AGAINST THE INITIATION OF PENALTY U/S 271(1)(C) WHICH WAS DISMISSED BY CIT(A)-VI, AHMEDAB AD VIDE ORDER DTD. 16-02-2012 STATING THAT NO APPEAL LIES AGAINST THE INITIATION OF PENALTY. 4.2 ON DISPOSAL OF THE APPEAL OF THE APPELLANT AS MENTIONED ABOVE BY CIT(A), THE AO IMPOSED PENALTY UNDER CONSIDERATION VIDE ORDER D ATED 20-03-2014. THE APPELLANT OBJECTED AGAINST THE IMPOSITION OF PENALTY ON THE F OLLOWING GROUNDS : I) THE PENALTY IMPOSED BY THE AO IS BARRED B Y LIMITATION OF TIME PERIOD, AS NOTICE FOR IMPOSITION OF PENALTY WAS ISSUED ON 28-10-2010, WHEREAS PENALTY WAS IMPOSED ON 20-03-2014. THE CONTENTION OF THE APPELLANT IS NOT AS PER THE PROVISIONS OF THE ACT, AS THE APPEAL FILED BY THE APPELLANT WAS PENDING BEFOR E THE CIT(A), WHICH WAS DECIDED ON 16-04-2012 AND THE PENALTY HAS, BEEN IMPOSED ON 20-03-2014 WHICH IS WITHIN THE TIME PERIOD ALLOWED U/S 275 OF THE ACT. THEREFORE, THIS CONTENTION OF THE ASSESSEE IS DISMISSED. II) THE SECOND ARGUMENT TAKEN BY THE APPELLA NT IS THAT THE NOTICE DTD, 28-10-2010 ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT, IT HAS NOT BEEN MENTIONED SPECIFICALLY THAT WHETHER THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE APPELLAN T RELIED UPON THE JUDGEMENT OF CIT VS. WHITE FORD INDIA LTD. DELIVERED BY THE HIGH COURT OF GUJARAT, AHMEDABAD IN TAX APPEAL NO.498 OF 2013. ITA NO.300/AHD/ 2016 DCIT VS. SHRI MUKESH KALUBHAI PRAJAPATI ASST.YEAR 2007-08 - 4 - THE CONTENTION OF THE APPELLANT HAS BEEN CAREFULLY EXAMINED. THE COPY OF THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) DTD. 28-10-2010 HAS BEEN GONE THROUGH AND FOUND THAT THE AO HAS NOT SPECIFICALLY MENTIONED WHETHER THE A PPELLANT CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. EVEN IN THE PENALTY ORDER DTD. 20-3-2014, THERE IS NO MENTION FOR WHICH DEFAULT THE PENALTY HAS BEEN IMPOSED. AS MENTIONED BY THE APPEL LANT, THE JURISDICTIONAL HON'BLE HIGH COURT OF GUJARAT, AHMEDABAD IN THE CASE OF CIT VS. WHITE FORD INDIA LTD. ADJUDICATED THAT WHERE NO CLEAR FINDING WAS RECORDE D BY THE AO WHETHER ASSESSEE WAS GUILTY OF CONCEALING OF INCOME OR FURNISHED INA CCURATE PARTICULARS OF INCOME, TRIBUNAL WAS JUSTIFIED IN DELETING PENALTY U/S 271( 1)(C) LEVIED BY THE AO. RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HON'BLE HIGH COURT O F GUJARAT, AHMEDABAD, THIS CONTENTION OF APPEAL OF THE APPELLANT IS ALLOWED AS FACTS OF THE CASE ARE IDENTICAL TO THE FACTS OF THE CASE DECIDED BY THE JURISDICTIONAL HIGH COURT. III) THE NEXT CONTENTION OF THE APPELLANT IS THAT THE APPELLANT HAS AGREED FOR THE ADDITIONS DURING THE COURSE OF ASSESSMENT PROCEEDIN GS WITH SPECIFIC REQUEST TO BUY PEACE OF MIND AND AVOID FURTHER LITIGATION. THE APP ELLANT RELIED UPON THE CASE OF SIR SHADI LAL SUGAR & GENERAL MILLS LTD. (168 ITR 705) (SC) IN WHICH IT HAS BEEN HELD THAT THERE MAY BE 101 REASONS FOR AGREEING TO ADDIT IONS BUT THAT DOES NOT FOLLOW THE CONCLUSION THAT AMOUNT AGREED TO BE ADDED WAS CONCE ALED INCOME. ON GOING THROUGH THE ASSESSMENT ORDER AND PENALTY ORDER, IT IS FOUND THAT THE APPELLANT HAS AGREED FOR THE ADDITIONS WITH THE SPECIFIC REQUEST THAT PENALT Y U/S 271(1)(C) WILL NOT BE INITIATED. KEEPING IN VIEW THESE FACTS AND THE CASE LAWS CITED BY THE APPELLANT, THIS CONTENTION OF THE APPELLANT IS ALLOWED. IV) THE APPELLANT FURTHER CONTENDED THAT THE ADDITIONS WERE MADE U/S 68 OF THE ACT WHICH JS A DEEMING PROVISION FOR ADDITIONS MADE UND ER DEEMING PROVISIONS, PENALTY U/S 271(1)(C) IS NOT LEVIABLE AS DECIDED BY THE HON 'BLE ITAT, AHMEDABAD 'D' BENCH IN THE CASE OF ITO VS. HARIBHAI DEVRAJBHAI BABRIYA IN ITA NO.96/AHD/2011. KEEPING IN VIEW THE FACTS OF THE CASE AND CASE LAWS CITED, THE PENALTY LEVIED BY THE AO IS NOT FOUND JUSTIFIED, THEREFORE, IT IS DELETED. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE T RIBUNAL. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE. IT IS SEEN FROM THE RECORD THAT THE NOTICES WERE SENT ON VARIOUS OCCASIONS IN THE PAST TO THE ASSESSEE. ITA NO.300/AHD/ 2016 DCIT VS. SHRI MUKESH KALUBHAI PRAJAPATI ASST.YEAR 2007-08 - 5 - HOWEVER, THE ASSESSEE HAS FAILED TO APPEAR ON THE A PPOINTED DATE. THE NOTICE WAS SERVED THROUGH THE INCOME TAX DEPARTMENT ALSO WITHOUT ANY AVAIL. IN THESE CIRCUMSTANCES, WE ARE CONSTRAINED TO PROCEED EX-PARTE IN THE ABSENCE OF THE ASSESSEE. 6. THE LD.DR FOR THE REVENUE CONTENDED THAT THE CIT (A) HAS COMMITTED ERROR IN GRANTING RELIEF TO THE ASSESSEE WHERE THE ASSESSEE HAD INITIALLY ATTEMPTED TO MISLEAD THE INCOME TAX DEPAR TMENT AND WAS LEFT WITH NO CHOICE HAD TO FINALLY CONCEDE THE INCOME WH EN NO SHELTER WAS AVAILABLE IN SIGHT TO THE ASSESSEE WITH A VIEW T O ESCAPE THE CLUTCHES OF PENALTY. THE LD.DR SUBMITTED THAT THE DISCLOSURE M ADE WAS NOT VOLUNTARILY AT ALL. THE REQUEST OF THE ASSESSEE NO T TO IMPOSE PENALTY WAS NOT ACCEPTED BY THE AO AT ALL. THE LD.DR REFERRED TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA PVT L TD. VS. CIT 358 ITR 593(SC) AND SUBMITTED THAT THE AFORESAID DECISI ON SQUARELY GOVERNS THE ISSUE. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AS WELL AS THE SUBMISSIONS MADE ON BEHALF OF THE REVEN UE. WE OBSERVE THAT THE ADDITIONS HAVE BEEN MADE UNDER S.68 OF THE ACT AS PURPORTED LENDER M/S.SUDARSHAN ENTERPRISE DENIED HAVING BEEN LENT TH E MONEY TO THE ASSESSEE. AS A CONSEQUENCE OF THE REVELATIONS ON E NQUIRY, THE ASSESSEE GRUDGINGLY CAME FORWARD FOR ADMISSION OF THE AFORES AID LOAN AS ITA NO.300/AHD/ 2016 DCIT VS. SHRI MUKESH KALUBHAI PRAJAPATI ASST.YEAR 2007-08 - 6 - UNEXPLAINED INCOME. THUS, PLEA OF THE ASSESSEE THA T THE DISCLOSURE WAS MADE VOLUNTARILY OR IN GOOD FAITH IS DIFFICULT TO A PPRECIATE. ADISCLOSURE MADE UNDER THE FEAR OF A PLAUSIBLE PENALTY OR OTHER PROCEEDINGS CANNOT BE TERMED VOLUNTARY OR MADE IN GOOD FAITH. THE DEPART MENT WAS IN POSSESSION OF DEFINITE PROOF THAT PURPORTED LENDER AS REFLECTED IN THE BOOKS OF ACCOUNTS HAS NOT LENT MONEY AT ALL. IN TH ESE CIRCUMSTANCES, THE RELIANCE PLACED BY THE CIT(A) IN THE CASE OF SHADIL AL SUGAR MILLS (168 ITR 705)IS NOT CONTEXTUALLY APPLICABLE. MERE REQUE ST FOR NON-INITIATION OF PENALTY ON THE GROUND OF DISCLOSURE BRANDING THE SAME TO BE VOLUNTARY WITH A VIEW TO BUY PEACE AND AVOID LITIGATION WILL NOT TAKE THE ASSESSEE OUT OF THE SCOPE AND AMBIT OF EXPLANATION-1 TO SECT ION 271(1)(C) OF THE ACT. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE OBSERVATIONS OF THE HONBLE SUPREME COURT IN MAK DATA PVT.LTD. (SC) WHERE HONBLE SUPREME COURT OBSERVED THAT THE STATUTE DOES NOT RE COGNIZE DEFENCES LIKE VOLUNTARY DISCLOSURE, BUY PEACE, AVOID LITIGAT ION, AMICABLE SETTLEMENT ETC. THUS, EVEN VOLUNTARY SURRENDER O F INCOME WILL NOT ALWAYS NECESSARILY RESCUE THE ASSESSEE FROM THE PE NALTY PROVISIONS WHICH ARE IN THE NATURE OF REMEDY FOR LOSS OF POSSI BLE REVENUE. IN THE INSTANT CASE, THE SURRENDER HAS BEEN MADE LATER DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS AFTER DETECTION OF UNTRUTHF ULNESS OF THE VERSION OF THE ASSESSEE. IN THESE CIRCUMSTANCES, THE VIE W ADOPTED BY THE CIT(A) OF FAVOURABLE TREATMENT TO SUCH ASSESSEE CANNOT BE ENDORSED. WE ALSO NOTICE THAT THE PENALTY HAS BEEN IMPOSED FOR CONCEA LMENT OF PARTICULARS ITA NO.300/AHD/ 2016 DCIT VS. SHRI MUKESH KALUBHAI PRAJAPATI ASST.YEAR 2007-08 - 7 - OF INCOME WHICH IS CONSISTENT WITH THE FACTS OF THE CASE. THE ASSESSEE HAS NOT EXPRESSED ITS HANDICAP ANYWHERE BEFORE THE LOWE R AUTHORITIES ON THE ALLEGED VAGUENESS OF NOTICE ISSUED UNDER S.274 R.W. S.271(1)(C) WHICH PREVENTED HIM IN HIS RESPONSE IN ANY MANNER. THE O NUS WHICH LAYS UPON THE ASSESSEE TO REBUT THE PRESUMPTION OF CONCEALMEN T UNDER EXPLANATION- 1 TO S.271(1)(C) HAS NOT BEEN DISCHARGED. UNDER TH E CIRCUMSTANCES, THE ORDER OF THE CIT(A) IS REQUIRES TO BE REVERSED AND THE PENALTY ORDER OF THE AO REQUIRES TO BE UPHELD. 8. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 06 / 0 9 /201 7 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 06/ 09 /2017 3..),.)../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-10, AHMEDABAD 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD