The DCIT, Circle-14, Ahmedabad V. Shri Prashant C.Chaudhari, Ahmedabad

ITA 3000/AHD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50657 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 02-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G M CHAUHAN
• Keywords: Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI T. K. SHARMA, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.3000 / AHD/2010 (ASSESSMENT YEAR 2007-08) DCIT, CIRCLE 14, AHMEDABAD VS. SHRI PRASHANT C. CHAUDHARI, C-101, ROSE WOOD ESTATE, JODHPUR GAM, SATELLITE, AHMEDABAD PAN/GIR NO. : AFAPC5046H (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI G M CHAUHAN, SR. DR RESPONDENT BY: SHRI SANJAY R. SHAH, AR DATE OF HEARING: 02.09.2011 DATE OF PRONOUNCEMENT: 09.09.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) XXI, AHMEDABAD DATED 11.08.2010 FOR THE ASSE SSMENT YEAR 2007- 08. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO DELETE THE PENALTY OF RS.2 ,52,940/- LEVIED U/S 271(1)(C) OF THE ACT. 2. THE LEARNED CIT(A) HAS FAILED TO TAKE INTO CON SIDERATION THE REASONS/GROUNDS AS DISCUSSED BY THE ASSESSING OFFIC ER IN PARA- 6 OF THE PENALTY ORDER DATED 25/06/2010. I.T.A.NO.3000 /AHD/2010 2 3. THE ADDITION OF RS.7,02,300/- MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF UNDISCLOSED INCOME HAS BEEN CONFIRMED BY THE CIT(A) VIDE HIS ORDER NO.CIT(A) XXI/114/09-10 DATED 29/01/2010 BASED ON WHICH PENALTY U/S. 271(L)(C) HA S BEEN LEVIED, 4. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE CANCELLED AND THAT THE ORDER OF THE ASSESSING OFFIC ER BE RESTORED. 2. THE FACTS TILL THE STAGE OF LEVY OF PENALTY BY T HE A.O. ARE NOTED BY LD. CIT(A) IN PARA 3 TO 3.3 OF HIS ORDER, WHICH ARE REPRODUCED BELOW: 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: 3.1. THE APPELLANT WAS WORKING AS AN EMPLOYEE WITH GE CAPITAL TRANSPORTATION FINANCIAL SERVICES LIMITED IN THE CA PACITY OF A MANAGERIAL POST AT SURAT DURING THE YEAR UNDER CONS IDERATION. UP TO A.Y. 2006-07 THE APPELLANT HAD ONLY SALARY INCOM E AND RETURNS WERE FILED DISCLOSING THE AMOUNT EARNED BY WAY OF S ALARY INCOME. DURING THE YEAR UNDER CONSIDERATION ALSO THE APPELL ANT FILED RETURN OF INCOME SHOWING SALARY INCOME ONLY RETURNING AN I NCOME OF RS.6,66,260/-. THE ID. ASSESSING OFFICER CALLED FOR VARIOUS DETAILS IN THE COURSE OF SCRUTINY ASSESSMENT AND WHILE GOIN G THOUGH THE BANK STATEMENT OF HDFC BANK IN RESPECT OF ACCOUNT N O. 0061050030254 HE FOUND THAT THERE WERE A CASH DEPOS IT OF RS.7,02,300/- FOR WHICH HE CALLED FOR AN EXPLANATIO N FROM THE ASSESSEE VIDE HIS LETTER DATED 26-10-2009. IN RESPO NSE TO THIS LETTER, THE ASSESSEE CONTENDED THAT AMOUNT WAS DEPOSITED FR OM WITHDRAWAL FROM ABN AMRO BANK IN WHICH THE FUNDS RECEIVED BY W AY OF PERSONAL LOANS FROM DIFFERENT FINANCIAL INSTITUTION S. THE LEARNED A.O. OBSERVED IN HIS ASSESSMENT ORDER THAT THE ASSE SSEE COULD NOT SUBSTANTIALLY EXPLAIN THE SAID DEPOSIT WITH SUFFICI ENT EVIDENCES AND HENCE HE MADE AN ADDITION OF RS.7,02,300/- AS INCOM E OF THE ASSESSEE AS INCOME FROM UNDISCLOSED SOURCE. THE LEA RNED A.O. ALSO MADE AN ADDITION OF RS.3,752/- BY WAY OF INTEREST I NCOME BEING INTEREST ON SAVINGS BANK ACCOUNT FROM HDFC AND ABN AMRO BANK, WHICH WAS NOT OFFERED IN THE RETURN OF INCOME BY THE ASSESSEE. THE LEARNED A.O. ALSO INITIATED PENALTY U /S 271 (1) (C) OF I.T.A.NO.3000 /AHD/2010 3 THE ACT IN RESPECT OF THE ABOVE ADDITIONS MADE TO T HE RETURNED INCOME. 3-2 THE ASSESSEE FILED AN APPEAL BEFORE CIT (A) WHICH CAME TO BE DISMISSED BY THE CIT(A) VIDE HIS ORDER DATED 29- 01-2010. THEREAFTER THE LEARNED A.O. ISSUED SHOW CAUSE NOTIC E FOR PENALTY U/S 271 (1) (C) TO THE ASSESSEE CALLING FOR HIS EXP LANATION AS TO WHY THE PENALTY SHOULD NOT BE LEVIED IN RESPECT OF THE ADDITIONS MADE IN THE RETURNED INCOME. THE ASSESSEE REPLIED TO THE A. O. VIDE HIS LETTER DATED 16-06-2010 AND FILED WRITTEN SUBMISSIO NS ALONG WITH NECESSARY EVIDENCES IN THE FORM OF RECONCILIATION O F THE WITHDRAWAL OF CASH FROM ASSESSEE'S ACCOUNT IN ABN AMRO BANK AN D FROM HDFC BANK BESIDES FILING THE EVIDENCES SHOWING THE SALE OF TRUCKS TO THE FIVE PARTIES AS WELL AS THE CORRESPONDENCE F ROM THE DIFFERENT FINANCIAL INSTITUTIONS AND BANKS SHOWING THE BORROW INGS MADE BY HIM INITIALLY FOR PURCHASE OF TRUCKS AND THEREAFTER THE PAYMENT OF THE SAME TO SQUARE OFF THE LOAN ACCOUNT TO EXPLAIN THE UNEXPLAINED AMOUNT OF RS.7,02,300/-. THIS COULD BE SEEN FROM TH E OBSERVATIONS MADE BY THE A.O. IN PARA 5 OF HIS PENALTY ORDER. TH US THE ASSESSEE TRIED TO EXPLAIN THE ALLEGED UNEXPLAINED AMOUNTS WI TH THE EVIDENCES IN HIS POSSESSION.- 3.3 THE LEARNED A.O., HOWEVER, NOT SATISFIED WI TH THE REPLY OF THE ASSESSEE AND THE EVIDENCES LED BY ASSESSEE LEVI ED PENALTY OF RS.2,52,940/- MAINLY ON THE GROUND THAT THE ASSESSE E HAS NOT FILED ANYTHING NEW IN SUPPORT OF HIS CONTENTIONS TO DROP THE PENALTY PROCEEDINGS AND THAT THE ASSESSMENT ORDER IN QUANTU M PROCEEDINGS HAS BEEN UPHELD BY CIT (A). 3. BEING AGGRIEVED AGAINST THE PENALTY ORDER, THE A SSESSEE CARRIED THE MATER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THIS PENALTY AND NOW, THE REVENUE IS IN APPEAL BEFORE US. 4. LD. D.R. OF THE REVENUE SUPPORTED THE PENALTY OR DER WHEREAS LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT (A). IT IS ALSO SUBMITTED THAT IN THE PENALTY PROCEEDINGS, THE ASSE SSEE HAS DULY RECONCILED THE SOURCES OF CASH DEPOSITS INTO HDFC B ANK AND SUCH I.T.A.NO.3000 /AHD/2010 4 RECONCILIATION IS AVAILABLE ON PAGE 52 OF THE PAPER BOOK. THE RELEVANT BANK STATEMENT OF HDFC BANK IN WHICH CASH DEPOSIT W AS MADE BY THE ASSESSEE IS AVAILABLE ON PAGES 83-96 OF THE PAPER B OOK AND COPY OF THE BANK STATEMENT OF ABN AMRO BANK IS ON PAGES 97-100 OF THE PAPER BOOK. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THE ADDITION WAS MADE ON ACCOUNT OF CASH DEPOS ITED INTO HDFC BANK OF RS.7,20,300/- ON VARIOUS DATES. IN THE PENALTY ORDER, IT IS NOTED BY THE A.O. ON PAGE 3 THAT THE ASSESSEE HAS FURNISHED RECO NCILIATION OF WITHDRAWAL OF CASH FROM ASSESSEES ACCOUNTS IN ABN AMRO BANK AND FROM HDFC BANK EXPLAINING DEPOSITS OF RS.7,20,300/- IN THE ASSESSEES BANK ACCOUNT WITH HDFC BANK. THEREAFTER, ON PAGE 4 OF THE PENALTY ORDER, THE A.O. HAS STATED THAT ON GOING THROUGH TH E SUBMISSIONS OF THE ASSESSEE DATED 16.6.2010, IT IS SEEN THAT THE ASSES SEE HAS NOT FILED ANYTHING NEW IN SUPPORT OF HIS CONTENTION DURING TH E PENALTY PROCEEDINGS EXCEPT THOSE DOCUMENTS AND EVIDENCE SUBMITTED EARLI ER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BY MAKING THESE OBSERV ATIONS, THE A.O. IMPOSED THE PENALTY. WE FAIL TO UNDERSTAND THAT EVE N IF THE RECONCILIATION OF WITHDRAWAL OF CASH FROM ABN AMRO BANK AND HDFC B ANK TO EXPLAIN DEPOSITS IN HDFC BANK HAS BEEN FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SAME WAS AGAIN FILED IN PENALTY PROCEEDINGS, IT WAS REQUIRED TO BE APPRECIATED BEFORE IMPOSITION OF THE PENALTY. HOWEVER, A COPY OF THIS RECONCILIATION IS AVAILABLE ON PAGE 52 OF PAPER BOOK. AS PER THE SAME, WE FIND THAT SOURCE OF CASH DEPOSIT IN HD FC BANK OF RS.77,800/- IN THE MONTH OF APRIL 2006 HAS BEEN EXP LAINED BY WAY OF CASH WITHDRAWAL FROM HDFC BANK OF RS.50,000/- ON 16 .03.2006 AND I.T.A.NO.3000 /AHD/2010 5 RS.25,000/- ON 15.04.2006 AND THE BALANCE OF RS.2,8 00/-HAD BEEN EXPLAINED OUT OF AVAILABLE CASH IN HAND. REGARDING DEPOSITS OF RS.1,49,500/- IN THE BANK ON 03.05.2006, IT IS EXPL AINED THAT THERE IS WITHDRAWAL OF RS.1.70 LACS ON THE SAME DATE FROM AB N AMRO BANK AND SIMILARLY FOR DEPOSIT OF RS.49,500/- IN HDFC BANK O N 04.05.2006, IT IS EXPLAINED THAT RS.55,000/- WAS WITHDRAWN FROM ABN A MRO BANK ON THE SAME DATE. THERE IS DEPOSIT OF RS.1.72 LACS DURING 09.05.2006 TO 16.05.2006 AND REGARDING ITS SOURCE, IT IS EXPLAINE D THAT RS.49,500/- WAS WITHDRAWN FROM ABN AMRO BANK ON 05.05.2006, RS.1.25 LACS WAS WITHDRAWN FROM THE BANK ON 9.5.2006 AND RS.50,000/- WAS WITHDRAWN FROM THE SAME BANK ON 11.05.2006 TOTALLING RS.1,89, 500/-. IN THIS MANNER, THE ASSESSEE HAS FURNISHED COMPLETE RECONCI LIATION REGARDING THE TOTAL CASH DEPOSIT IN HDFC BANK OF RS.7,20,300/-, W HICH IS SHOWN TO BE OUT OF WITHDRAWAL FROM HDFC BANK AND ABN AMRO BANK. AS PER THE COPY OF THE BANK STATEMENT OF HDFC BANK, AVAILABLE ON PAGES 83-87 OF THE PAPER BOOK, WE FIND THAT ALTHOUGH THIS BANK ACC OUNT OF THE ASSESSEE IS WITH AHMEDABAD BRANCH OF HDFC BANK BUT AS PER NARRA TION AVAILABLE IN THE BANK STATEMENT, THESE CASH DEPOSITS WERE MADE I N SURAT BRANCH OF HDFC BANK ON MOST OF THE DATES. BRANCH OF ABN AMRO BANK FROM WHICH CASH WAS WITHDRAWN BY THE ASSESSEE IS IN SURA T AND HENCE, EVEN THE WITHDRAWAL OF THE SAME DATE CAN BE DEPOSITED BACK I N HDFC BANK ON THE SAME DATE BECAUSE BOTH THE WITHDRAWALS AND DEPOSITS ARE IN SURAT. UNDER THESE FACTS, WE FEEL THAT ALTHOUGH THE ADDITION HAS BEEN UPHELD BECAUSE THE ASSESSEE COULD NOT PROPERLY EXPLAIN THE CASH DE POSIT IN THE BANK, BUT IT IS BY NOW A SETTLED POSITION OF LAW THAT PENALTY PR OCEEDINGS AND ASSESSMENT PROCEEDINGS ARE DISTINCT AND EVEN IF THE ASSESSEE CAN EXPLAIN THE SOURCES OF CASH DEPOSITS IN PENALTY PROCEEDINGS , PENALTY IS NOT I.T.A.NO.3000 /AHD/2010 6 JUSTIFIED ALTHOUGH THE ADDITION HAS BEEN UPHELD. I N THE LIGHTS OF THE FACTS OF THE PRESENT CASE, WE FIND THAT THE ASSESSEE HAS GIVEN EXPLANATION AND HAS SUBMITTED RECONCILIATION TO SHOW THE SOURCES OF CASH DEPOSITS IN HDFC BANK OUT OF CASH WITHDRAWN FROM ABN AMRO BANK AND HDFC BANK. THESE EXPLANATIONS WERE NOT FOUND TO BE FALS E ALTHOUGH NOT ACCEPTED. IN OUR OPINION IN THE FACTS OF THE PRESE NT CASE, IT IS A BONA FIDE EXPLANATION AND HENCE PENALTY IS NOT JUSTIFIED. LD . CIT(A) HAS DELETED THE PENALTY ON THIS VERY BASIS THAT IN THE PENALTY PROC EEDINGS, ASSESSEE HAD BEEN ABLE TO EXPLAIN THE SOURCES OF CASH DEPOSITS I N THE BANK. THE RELEVANT PARA OF THE ORDER OF LD. CIT(A) IS PARA 10 , WHICH IS REPRODUCED BELOW: 10. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE LEARNED A.R,, THE WRITTEN SUBMISSIONS FILED BEFORE ME ALONG WITH THE NECESSARY EVIDENCES AND DOCUMENTS AND HAVE ALSO GONE THROUGH THE CASES RELIED UPON BY HIM. IT IS A FACT THAT IN THE ASSESSMENT ORDER THE LEARNED A.O. HAS MADE ADDITION OF RS.7,02,3007- ON THE GROUND THAT THE ASSESSEE WAS N OT ABLE TO EXPLAIN THE DEPOSITS IN HIS BANK ACCOUNT, WHICH HAS BEEN CONFIRMED BY THE CIT(A) IN QUANTUM PROCEEDINGS. HOWEVER, PENA LTY PROCEEDINGS U/S 271 (1) (C) ARE DIFFERENT AND DISTI NCT PROCEEDINGS AND THE APPELLANT CAN LEAD FURTHER EVIDENCES DURING THE COURSE OF PENALTY PROCEEDINGS. THE APPELLANT HAS FILED RECONC ILIATION OF SUCH UNEXPLAINED AMOUNT ALONG WITH THE NECESSARY WITHDRA WALS FROM HIS HDFC BANK ACCOUNT AS WELL AS ABN AMRO BANK ACCOUNT WHICH EXPLAINS SO CALLED UNEXPLAINED DEPOSITS WHICH COULD NOT BE EXPLAINED IN THE ASSESSMENT PROCEEDINGS. THE APPELL ANT HAS ALSO GIVEN REASONS IN PARA NO. 3 OF HIS SUBMISSIONS AS T O WHY HE COULD NOT PRODUCE SOME OF THE EVIDENCES TO CORROBORATE AB OVE DURING THE ASSESSMENT PROCEEDINGS. THUS THE AMOUNT FOR WHICH A DDITION HAS BEEN MADE IN THE QUANTUM PROCEEDINGS STANDS EXPLAIN ED WITH REFERENCE TO THE DOCUMENTARY EVIDENCES, AND THE APP ELLANT HAS BEEN ABLE TO SUBSTANTIATE THE SAME. FURTHER, THE EXPLANA TION OF THE APPELLANT THAT SINCE HE IS HAVING SALARY INCOME AND SINCE HE HAS INCURRED LOSS IN THE TRANSPORT BUSINESS, THE SAME C ANNOT BE SET OFF I.T.A.NO.3000 /AHD/2010 7 U/S 71 (2A) IS ALSO BORNE OUT FROM THE READING OF S ECTION 71 (2A). THE SAID EXPLANATION ALSO CANNOT BE SAID TO BE LACK ING BONO FIDE. THUS SINCE ALL THE PARAMETERS OF THE TRANSPORT BUSI NESS HAVE BEEN FULLY EXPLAINED AND HAVING BEEN FULLY DISCLOSED BY THE APPELLANT, THE LEARNED A.O. SHOULD NOT HAVE LEVIED THE PENALTY WITHOUT GIVING THE FINDINGS AS TO HOW THE ASSESSEE IS HIT BY MAIN PROVISION OF SECTION 271 (1) (C) OR THE EXPLANATION 1 READ WITH THE SAME. THE LEARNED A.O. LEVIED THE PENALTY ONLY ON THE GROUND THAT THE ADDITION HAVE BEEN CONFIRMED IN THE FIRST APPEAL WI THOUT DISCHARGING THE ONUS THAT LAY ON HIM BY THE PROVISI ONS OF SECTION 271 (1) (C) READ WITH EXPLANATION THEREOF. 6. IN SPITE OF THIS CLEAR FINDING OF THE LD. CIT(A), T HAT THE ASSESSEE HAD BEEN ABLE TO EXPLAIN THE SOURCES OF CASH DEPOSI TS IN HDFC BANK OUT OF THE DETAILS FROM HDFC AND ABN AMRO BANK ACCOUNTS , NOTHING HAD BEEN BROUGHT OUT ON RECORD BY LD. D.R. TO SHOW ANY MISTAKE IN THE FINDINGS OF LD. CIT(A). IN THE PAPER BOOK, THE ASS ESSEE HAS FURNISHED RECONCILIATION STATEMENT ALONG WITH COPY OF BANK ST ATEMENTS OF BOTH HDFC AND ABN AMRO BANK AND FROM THE SAME ALSO, LD. D.R. COULD NOT POINT OUT ANY INCONSISTENCY IN THE RECONCILIATION S TATEMENT. UNDER THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN TH E ORDER OF LD. CIT(A) ON THIS ISSUE. WE UPHOLD THE SAME. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DIS MISSED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH SEP., 2011. SD./- SD./- (T. K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 09.09. 2011 SP I.T.A.NO.3000 /AHD/2010 8 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 5/9 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 6/9 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 7/9 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 09/09 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 09/09 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09/09/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..