Rajshekhar Hnamant Kalal., Belgaum V. The Income Tax Officer, Ward-2 (1), Belgaum., Belgaum

ITA 304/PAN/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1349 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 28-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIDDAPP A JI R N
• Keywords: Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON'BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 304/PNJ/2015 : (A.Y 2009 - 10) RAJSHEKHAR HANAMANT KALAL PROP. POORNIMA BAR, MAHANTESH NAGAR, BELGAUM 590 016. PAN : AIAPK8189Q (APPELLANT) VS. INCOME TAX OFFICER, WARD - 2(1), BELGAUM (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SIDDAPPAJI R.N, DR DATE OF HEARING : 05/10/2015 DATE OF PRONOUNCEMENT : 05/10/2015 O R D E R PER GEORGE MATHAN : 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), BELAGAVI IN ITA NO. 16/BGM/2012 - 13 DT. 01.06.2015 FOR THE A.Y 2009 - 10 AGAINST THE CONFIRMATION OF PENALTY LEVIED U/S 271(1)( C) OF THE ACT. NONE REPRESENTED ON BEHALF OF THE ASSESSEE. AN ADJOURNMENT LETTER HAS BEEN FILED BY ONE SHRI JAYANT D. KALPAVIRKSHA, CA REQUESTING FOR ADJOURNMENT. THE SAME HAS BEEN REJECTED AND THE APPEAL IS BEING DISPOSED OFF ON MERITS. THE REVENUE IS REPRESENTED BY SHRI SIDDAPPAJI R.N, LD. DR. 2. IT WAS SUBMITTED BY THE LD. DR THAT THE ASSESSEE IS AN INDIVIDUAL WHO HAS BUSINESS OF RUNNING OF LODGE AND BAR. THE ASSESSEE HAD FILED HIS RETURN OF INCOME DECLARING AN INCOME OF RS. 8,79,740/ - . IT WAS THE SUBMISSION THAT THE 2 ITA NO. 304 /PNJ/2015 (A.Y : 20 09 - 1 0 ) RETURN FILED BY THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND IT WAS NOTICED THAT THE ASSESSEE HAD SOLD AN IMMOVEABLE PROPERTY ON 14.8. 2008 FOR A CONSIDERATION OF RS. 8,91,000/ - . THE SAID AMOUNT WAS SHOWN IN THE BOOKS OF ACCOUNTS, HOWEVE R, THE CAPITAL GAINS WAS NOT OFFERED TO TAX IN THE RETURN OF INCOME. CONSEQUENTLY, THE CAPITAL GAINS WAS ASSESSED AT RS. 4,10,518/ - . IT WAS THE FURTHER SUBMISSION THAT ON VERIFICATION OF THE SUNDRY CREDITORS THERE WAS A DIFFERENCE BETWEEN TWO SUNDRY CRED ITORS AS PER THE LEDGER ACCOUNT OF THE PARTY AND AS RECORDED IN THE BALANCE - SHEET OF THE ASSESSEE TO AN EXTENT OF RS. 66,172/ - WHICH WAS ALSO ADDED AS UNEXPLAINED INCOME OF THE ASSESSEE. IT WAS THE SUBMISSION THAT IN RESPECT OF THE SAID TWO ADDITIONS, PEN ALTY PROCEEDINGS HAD BEEN INITIATED U/S 271(1)(C) OF THE ACT. IT WAS THE SUBMISSION THAT THE ASSESSEE IN HIS LETTER DT. 8.6.2012 HAD SUBMITTED AS FOLLOWS : 1. I AM AN ASSESSEE REGULARLY ASSESSED TO TAX. I AM MAINTAINING THE REGULAR BOOKS OF ACCOUNTS AND RECORDS. MY ACCOUNTS ARE SUBJECT TO AUDIT. MY CASE HAS BEEN SELECTED FOR SCRUTINY FOR THE ASSESSMENT YEAR 2009 - 10 AND DURING THE COURSE OF SCRUTINY I HAVE BEEN ASKED TO SUBMIT THE VARIOUS DETAILS. WHILE SUBMITTING THE DETAILS I HAVE ALSO FURNISHED THE DET AILS REGARDING THE SALE OF LAND. THE SALE TRANSACTION HAS BEEN DULY ACCOUNTED IN THE BOOKS OF ACCOUNTS AND RECORDS. HOWEVER IN ADVERTENTL Y WHILE FILING THE RETURN OF INCOME THE SAME COULD NOT BE DECLARED B Y MY CONSULTANT. WHEN I ASKED M Y CONSULTANT HE SAID THE SAME HAS BEEN ESCAPED HIS ATTENTION DUE TO OVERSIGHT. THEREFORE THERE IS NO CONFIDE INTENTION ON MY BEHALF TO EXCLUDE THE SALE TRANSACTION. IN FACT I HAVE SUBMITTED ALL THE DETAILS REGARDING THE SALE OF LAND. AS SUCH IT IS A MISTAKE BY MY CONSULTANT A ND FOR HIS MISTAKE I SHALL NOT BE PENALIZED. THIS FACT HAS BEEN BROUGHT TO YOUR KNOWLEDGE DURING THE COURSE OF HEARING ALSO. TO ADD TO THIS I HAVE VOLUNTARILY ADMITTED THIS FACT SUBJECT TO CONDITION THAT THE PENAL PROCEEDINGS SHALL NOT BE INITIATED. THE DI CTIONARY MEANING OF CONCEALMENT IS TO KEEP SECRET OR TO HIDE. I HAVE NOT HIDE OR KEPT ANYTHING SECRET. IN SUPPORT OF THIS I WOULD LIKE TO RELY ON THE DECISION OF MOHAMAD IBRAHIM AZIMULLA V/S CIT (1981)131 ITR 680(ALL.) 2. SECONDLY, MERELY THERE IS A WRONG CLAIM DOES NOT AMOUNT THAT THERE IS A CONCEALMENT OF INCOME. A MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE 3 ITA NO. 304 /PNJ/2015 (A.Y : 20 09 - 1 0 ) IN LAW BY ITSELF WILL NOT AMOUNT FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. THIS IS SUPPORTED BY THE DECISION IN CASE OF R ELIANCE PETROPRODUCTS ( P ) LTD. (2010) 189. 3. 3. THIRDLY REGARDING THE ADDITIONS ON ACCOUNT OF SUNDRY CREDITORS AMOUNTING TO RS. 66,172/ - . I WISH TO SUBMIT YOUR HONOUR THAT I HAVE TO PAY THEM THIS AMOUNT. BUT DUE TO FINANCIAL DIFFICULTIES I COULD N OT PAY THEM THE SAID AMOUNT. ALSO THE ACCOUNTANT HAS NOT RECONCILED THE ACCOUNTS DUE TO SHORT OF TIME. AS THE ASSESSMENT WAS GETTING TIME BARRED AND IN ORDER TO PURCHASE PEACE AND CO - OPERATE THE DEPARTMENT I HAVE ACCEPTED THE SAME AND PAID THE TAXES DUE TH EREON. THEREFORE THIS DOES NOT LEAD TO CONCEALMENT OF INCOME OR FURNISHING THE INACCURATE PARTICULARS OF INCOME. HENCE, THE SAME BE CONSIDERED LENIENTLY. 4. FOURTHLY THERE IS AN ADDITIONS ON ACCOUNT OF DISALLOWANCE OF EXPENSES ON THE GROUND THAT THERE IS A PERSONAL USE. THE VEHICLE HAS BEEN USED PURELY FOR BUSINESS PURPOSE AND NO ELEMENT OF PERSONAL NATURE INVOLVED. AS SUCH THE SAME DOES NOT AMOUNT TO CONCEALMENT OF INCOME. DISALLOWANCE OF EXPENSES WILL NOT PER SE AMOUNT TO CONCEALMENT OF INCOME. MERELY BE CAUSE ASSESSEE HAS CLAIMED EXPENDITURE WHICH WAS NOT ACCEPTED OR NOT ACCEPTABLE TO REVENUE, THAT ITSELF WOULD NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 AS DECIDED IN CASE OF RELIANCE P ERTOPRODUCTS (P) LTD. (CIVIL APPEAL NO 246 3 OF 2010 DATED 17/3/2010 (SC) ALSO IN CASE OF CIT V/S AJAIB SINGH AND CO(2002) 254 ITR 630 (PU N J. & H AR.) THEREFORE DISALLOWANCE OF EXPENSES WILL NOT ATTRACT THE PENAL PROVISIONS. UNDER THE CIRCUMSTANCES EXPLAINED ABOVE I HOPE YOUR HONOUR WILL ALSO AG REE THAT THE PENAL PROVISIONS ARE NOT ATTRACTED IN THE INSTANT CASE. THEREFORE THE ABOVE EXPLANATIONS MAY KINDLY BE CONSIDERED LENIENTLY, JUDICIOUSLY AND SYMPATHETICALLY AND THE PENALTY PROCEEDINGS MAY KINDLY BE DROPPED. FOR THIS ACT OF KINDNESS I SHALL BE GRATEFUL TO YOUR KIND HONOUR. THIS ALONE WILL MEET THE END OF JUSTICE. IT WAS THE SUBMISSION THAT ON APPEAL THE LD. CIT(A) HAD CONFIRMED THE PENALTY AS THE ASSESSEE COULD NOT SUBSTANTIATE HIS EXPLANATION. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE CONFIRMED. 4 ITA NO. 304 /PNJ/2015 (A.Y : 20 09 - 1 0 ) 3. WE HAVE CONSIDERED THE SUBMISSIONS. WE HAVE ALSO PERUSED THE PENALTY ORDER, THE ORDER OF THE LD. CIT(A) AS ALSO THE ASSESSMENT ORDER. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT IN THE COURSE OF THE ASSESSMENT IN RESPECT OF THE ISSUE OF CAPITAL GAINS, THE ASSESSEE HAS SPECIFICALLY STATED THAT HE HAS INADVERTENTLY NOT INCLUDED THE LONG TERM CAPITAL GAINS THOUGH THE SAME HAS BEEN CLEARLY SHOWN IN THE BOOKS OF ACCOUNTS. IN RESPECT OF THE SUNDRY CREDITORS, A PERUSAL OF THE PENALTY ORDER SHOWS THAT THE ASSESSEE HAS ATTEMPTED TO RECONCILE THE DIFFERENCES, HOWEVER, IT WAS ONLY ON ACCOUNT OF SHORTAGE OF TIME AND NON - COOPERATION FROM THE SUNDRY CREDITORS THAT THE RECONCILIATION WAS NOT IMMEDIATELY POSSIBLE. THE EXPLANATION GIVEN BY THE ASSESSEE HAS BEEN BRUSHED ASIDE AND THE PENALTY HAS BEEN LEVIED. IN FACT, THE EXPLANATION GIVEN BY THE ASSESSEE HAS NOT BEEN FOUND TO BE FALSE O R NOT POSSIBLE. A PERUSAL OF THE PROVISIONS OF SEC. 271(1)(C) OF THE ACT, MORE SO, EXPLANATION 1 THERETO IN SUB - CLAUSE (A) PROVIDES THAT IF THE ASSESSEE FAILS TO OFFER AN EXPLANATION, WHICH IS NOT THE CASE HERE, OR OFFERS AN EXPLANATION WHICH IS FOUND B Y THE AO OR THE CIT(A) TO BE FALSE, WHICH IS ALSO NOT THE CASE HERE. IN FACT, THE AO AND THE LD. CIT(A) HAVE NOWHERE SAID THAT THE EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IT HAS NOT BEEN FOUND, MUCH LESS THERE IS EVEN A WHISPER THAT IT IS FALSE. A FUR THER PERUSAL OF THE EXPLANATION 1 IN SUB - CLAUSE (B) PROVIDES THAT SUCH PERSON OFFERING THE EXPLANATION IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT THE EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUT ATION OF HIS TOTAL INCOME HAS BEEN DISCLOSED BY HIM. HERE, THE ASSESSEE HAS SHOWN THE SALE CONSIDERATION OF THE PROPERTY IN HIS BOOKS OF ACCOUNTS WHICH ITSELF SHOWS THAT NON - COMPUTATION OF THE CAPITAL GAINS IN HIS COMPUTATION OF INCOME COULD ONLY BE AN ER ROR AND IN RESPECT OF THE SUNDRY CREDITORS, ALL DETAILS HAVE BEEN PROVIDED BY THE ASSESSEE AND WHETHER THE ERROR IN THE DECLARATION OF THE SUNDRY CREDITORS IS A MISTAKE IN THE HANDS OF THE ASSESSEE OR THE MISTAKE IN THE HANDS OF THE SUNDRY CREDITORS HAS AL SO NOT BEEN SHOWN BY 5 ITA NO. 304 /PNJ/2015 (A.Y : 20 09 - 1 0 ) THE AO OR CONSIDERED BY THE LD. CIT(A). THUS, CLEARLY THE EXPLANATION GIVEN BY THE ASSESSEE IS ABSOLUTELY BONA FIDE EXPLANATION AND A POSSIBLE EXPLANATION AND IS ALSO SUBSTANTIATED AND ALL FACTS ARE AVAILABLE ON RECORD . IN THESE CIRC UMSTANCES, WE ARE OF THE VIEW THAT THE PENALTY AS LEVIED BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) IS UNSUSTAINABLE ON THE FACTS OF THE CASE AND CONSEQUENTLY, THE SAME STANDS DELETED. OUR VIEW ALSO FINDS SUPPORT FROM THE DECISION OF THE HON'BLE SUPREM E COURT IN THE CASE OF PRICE WATERHOUSE COOPERS (P.) LTD. REPORTED IN [2012] 25 TAXMANN.COM 400 (SC) . 4 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/10/2015. S D / - (N.S. SAINI) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 05/10/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 6 ITA NO. 304 /PNJ/2015 (A.Y : 20 09 - 1 0 ) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 05/10/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05/10/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 05/10/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 05/10/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 05/10/2015 SR.PS 6. DATE OF PRONOUNCEMENT 05/10/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 05/10/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER