A.S. ABDUS SAMAD, ERODE V. ACIT, CIRCLE-1, ERODE

ITA 3177/CHNY/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4428 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 22-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Valuation report; Revised return; TDS

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , . , ! BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER , AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.3177 & 3178/CHNY/2018 /ASSESSMENT YEARS: 2012-13 & 2013-14 DR.A.S.ABDUS SAMAD, C/O. BHARATHI HOSPITAL, POWER HOUSE ROAD, ERODE. VS. THE ASST. COMMISSIONER OF - INCOME TAX, CIRCLE-I, ERODE. [PAN: AGHPA 3362 L ] ( % /APPELLANT) ( &'% /RESPONDENT) % ( / APPELLANT BY : MR.S.SRIDHAR, ADV. &'% ( /RESPONDENT BY : MR.CLEMENT RAMESH KUMAR, ADDL.CIT ( /DATE OF HEARING : 21.03.2019 ( /DATE OF PRONOUNCEMENT : 21.03.2019 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, COIMBATORE, IN ITA NO.80/17- 18 DATED 08.10.2018 FOR THE AY 2012-13 & IN ITA NO. 370/16-17 DATED 08.10.2018 FOR THE AY 2013-14. 2. MR. CLEMENT RAMESH KUMAR, ADDL.CIT., REPRESENTED ON BEHALF OF THE REVENUE AND MR. S.SRIDHAR, ADV., REPRESENTED ON BEH ALF OF THE ASSESSEE. ITA NOS.3177 & 3178/CHNY/2018 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE IS AN ALLOPATHIC DOCTOR BY PROFESSION. THERE WAS A SURVEY ON THE PR EMISES OF THE ASSESSEE ON 12.09.2012. IT WAS A SUBMISSION THAT F OR THE AY 2012-13 CONSEQUENTLY, THE AO HAD MADE VARIOUS ADDITIONS, MA IN ADDITION BEING IN RESPECT OF THE COST OF CONSTRUCTION IN RESPECT OF H OSPITAL BUILDING CONSTRUCTED BY THE ASSESSEE. IT WAS A SUBMISSION T HAT THE ASSESSEE HAD STARTED CONSTRUCTION OF HOSPITAL BUILDING DURING TH E AY 2009-10 AND THE SAME WAS COMPLETED DURING THE AY 2012-13. THE ASSE SSEE HAD DISCLOSED THE BUILDING COST AT RS.1,42,92,362/-. THE AO HAD BASED ON THE VALUATION REPORT OF THE DVO ADOPTED THE COST AT RS.2,18,04,46 8/- AND THE DIFFERENCE OF RS.1,06,21,006/- WAS TREATED AS UNDIS CLOSED INVESTMENT OF THE ASSESSEE. IT WAS A SUBMISSION THAT ON APPEAL, THE LD.CIT(A) HAD DELETED VARIOUS ADDITIONS AND HAD ALSO REDUCED THE ADDITION ON ACCOUNT OF THE DIFFERENCE IN THE COST OF CONSTRUCTION. IT WAS A FURTHER SUBMISSION THAT ON FURTHER APPEAL BEFORE THE ITAT, THE ADDITION WAS FURTHER REDUCED AND FINALLY SETTLED AT RS.33,60,827/-. IT WAS A SUBMISS ION THAT ON ACCOUNT OF THIS ADDITION OF RS.33,60,827/- SUSTAINED ON ACCOUN T OF THE DIFFERENCE OF THE COST OF CONSTRUCTION, THE PENALTY HAD BEEN LEVI ED BY THE AO AND UPHELD BY THE LD.CIT(A). IT WAS A SUBMISSION THAT THE ASSESSEE HAD SPECIFICALLY REPLIED TO THE PENALTY NOTICE AND HAD MENTIONED THAT THE DIFFERENCE IS ON ACCOUNT OF ESTIMATION AND ON ACCOU NT OF ADHOC DISALLOWANCE AND NO PENALTY WAS LIABLE TO BE LEVIED . THE ASSESSEE HAD RELIED ON THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT V. APSARA TALKIES REPORTED IN 155 ITR 303. IT WAS A SUBMISSION THAT ITA NOS.3177 & 3178/CHNY/2018 :- 3 -: THE VALUATION ITSELF IS ERRONEOUS IN SO FAR AS PWD RATES HAVE NOT BEEN APPLIED. IT WAS A SUBMISSION THAT THE PENALTY AS L EVIED BY THE AO AND AS CONFIRMED BY THE LD.CIT(A) WAS LIABLE TO BE DELETED . 4. IN REPLY, THE LD.DR SUBMITTED THAT IN THE COURSE OF SURVEY SUBSTANTIAL EVIDENCE HAS BEEN FOUND TO SHOW THAT TH E ASSESSEE HAS NOT DISCLOSED HIS PROFESSIONAL INCOME. IT WAS A SUBMIS SION THAT THESE UNDISCLOSED PROFESSIONAL RECEIPTS OF THE ASSESSEE W HICH HAS BEEN USED FOR CONSTRUCTION OF THE HOSPITAL BUILDING AND CONSEQUEN TLY, THE PENALTY WAS LIABLE TO BE CONFIRMED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 6. AT THE OUTSET, WHAT IS NOTICED THAT THE SUBSTANT IAL PORTION OF THE ADDITIONS MADE BY THE AO IN THE COURSE OF THE ASSES SMENT PROCEEDINGS HAVE BEEN DELETED IN APPELLATE PROCEEDINGS. OUT OF THE TOTAL ADDITION OF NEARLY RS.2,00,40,000/- WHAT REMAINS NOW IS ONLY AN AMOUNT OF RS.34,70,000/- AND THIS IS ALSO ON ACCOUNT OF ESTIM ATION IN RESPECT OF THE VALUATION OF THE HOSPITAL BUILDING AND AN ADHOC DIS ALLOWANCE IN RESPECT OF THE REPAIRS AND MAINTENANCE. IN FACT, THERE IS NO EVIDENCE OTHER THAN THE VALUATION REPORT TO SAY THAT THE ASSESSEE HAS MADE UNEXPLAINED INVESTMENTS IN THE HOSPITAL BUILDING. A PERUSAL OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AP SARA TALKIES SHOWS THAT THE HONBLE HIGH COURT HAS HELD AS FOLLOWS: ITA NOS.3177 & 3178/CHNY/2018 :- 4 -: 4. WE AGREE WITH THE REASONING AND CONCLUSION OF TH E TRIBUNAL. THE WHOLE BASIS FOR REJECTING THE ASSESSEE'S RETURN WAS THE DEPARTMENTA L VALUER'S ESTIMATE OF THE COST OF CONSTRUCTION OF THE THEATRE. WE, HOWEVER, FAIL TO S EE HOW A FINDING OF CONCEALMENT OF INCOME CAN BE FOUNDED ON A VALUER'S ESTIMATE. IT IS JOCULARLY SAID THAT A VALUER IS ONE WHO, IF YOU HAVE FORGOTTEN YOUR TELEPHONE NUMBER, W ILL ESTIMATE IT FOR YOU. THE TRUTH BEHIND THIS UTTERANCE IS THAT A VALUATION IS, EVEN IN THE MOST EXPERT HANDS, AN INEXACT INSTRUMENT OF MEASUREMENT. IT IS ONLY AN ESTIMATE A ND NO TWO VALUERS WILL AGREE ON THE SAME SUBJECT. IN THIS VERY CASE, THERE WERE AS MANY AS THREE DIFFERENT VALUATION REPORTS. ONE WAS BY AN EXECUTIVE ENGINEER OF THE PU BLIC WORKS DEPARTMENT. HIS ESTIMATE OF THE THEATRE WAS AT RS. 2,64,557. THERE WAS ANOTHER ESTIMATE BY AN APPROVED VALUER WHICH PUT THE COST AT RS. 3,10,541. AS EARLIER MENTIONED, THE DEPARTMENTAL VALUER PUT THE FIGURE AT RS. 5,67,300. AS IF THESE WERE NOT ENOUGH, THE ITO HIMSELF PUT HIS VALUATION AT RS. 5,55,580. IN T HIS WELTER OF ESTIMATES, THERE IS NO SCOPE WHATEVER FOR DRAWING THE INFERENCE THAT THE A SSESSEE'S BOOK FIGURE OF COST AT RS. 4,41,280 WAS NOT ONLY AN UNDERSTATEMENT BUT IT INVO LVED AN ACTUAL CONCEALMENT OF INCOME. 5. THERE IS NO EVIDENCE IN THIS CASE TO SHOW THAT T HE ASSESSEE HAD UNDERSTATED THE CONSTRUCTION EXPENSES IN ITS ACCOUNTS. THE ONLY BAS IS FOR THE ADDITION IN THE ASSESSMENT AS WELL AS FOR THE LEVY OF PENALTY IS TH AT FURNISHED BY THE DEPARTMENT VALUER'S ESTIMATED FIGURE. WE ARE SATISFIED THAT A VALUATION ESTIMATE, WITHOUT MORE, CANNOT JUSTIFY A FINDING OF CONCEALMENT. 7. IN THE PRESENT CASE ALSO CLEARLY THERE IS NO EVI DENCE TO SAY THAT THE ASSESSEE HAS UNDERSTATED THE COST OF CONSTRUCTION I N ITS ACCOUNTS. THE ONLY BASIS FOR THE ADDITION IN THE COURSE OF ASSESS MENT AS WELL AS FOR LEVY OF PENALTY IS THAT OF THE ESTIMATED FIGURE FURNISHE D BY THE DEPARTMENT VALUER. THIS WOULD NOT BE ADEQUATE FOR LEVY OF PEN ALTY U/S.271(1)(C) ON ACCOUNT OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS BEING SO, WE ARE OF THE VIEW THAT THE NO PENAL TY U/S.271(1)(C) IS LEVIABLE. IN THESE CIRCUMSTANCES, PENALTY U/S.271( 1)(C) AS LEVIED BY THE AO AND AS CONFIRMED BY THE LD.CIT(A) IS LIABLE TO B E DELETED. 8. IN REGARD TO AY 2013-14, IT WAS SUBMITTED BY THE LD.AR THAT THE PENALTY U/S.271(1)(C) HAS BEEN LEVIED ON ACCOUNT OF UNDERSTATED SALARY TO THE EXTENT OF RS.2,40,000/- AND ON ACCOUNT OF DOUBL E CLAIM IN RESPECT OF ITA NOS.3177 & 3178/CHNY/2018 :- 5 -: THE INTEREST OF RS.68,898/-. IN RESPECT OF THE UNDE RSTATED SALARY, IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE HAD ADMITT ED AN INCOME OF RS.3,60,000/- UNDER THE HEAD SALARY ON THE BASIS OF ACCOUNT COPY FURNISHED BY THE EMPLOYER. HOWEVER, AS PER FORM 26 AS, THE SALARY WAS SHOWN AT RS.6.00 LAKHS AND TDS HAS ALSO BEEN DEDUCT ED AT RS.60,000/-. IT WAS A SUBMISSION THAT THE ASSESSEE HAD FILED HIS RE TURN OF INCOME ON THE BASIS OF THE ACCOUNT STATEMENT FURNISHED BY THE EMP LOYER AND BY THE TIME, THE ASSESSEE RECOGNIZED THE MISTAKE WHEN COMP ARED TO THE FORM 26AS, THE DUE DATE FOR FILING OF THE REVISED RETURN HAD EXPIRED AND CONSEQUENTLY, THE ASSESSEE HAD OFFERED THE SAME TO TAX IN THE COURSE OF THE ASSESSMENT. IT WAS A SUBMISSION THAT THE TDS O F RS.60,000/- HAD ALSO BEEN DONE IN RESPECT OF THE SALARY PAID AND CO NSEQUENTLY, THIS WAS A GENUINE MISTAKE WHICH TOOK PLACE ON ACCOUNT OF THE WRONG ACCOUNT STATEMENT GIVEN BY THE EMPLOYER. IT WAS A SUBMISSI ON THAT THIS IS NOT A CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PAR TICULARS BUT A GENUINE MISTAKE ON ACCOUNT OF THE WRONG ACCOUNT DETAILS PRO VIDED BY THE EMPLOYER TO THE ASSESSEE. IN RESPECT OF THE INTEREST PORTIO N, IT WAS SUBMITTED THAT WHEN FILING THE RETURN, THE ASSESSEE HAD CLAIMED TH E DEDUCTION IN RESPECT OF THE INTEREST PAID ON THE HOUSING LOAN TWO TIMES. IT WAS A SUBMISSION THAT THE INTEREST HAD ERRONEOUSLY BEING CLAIMED AS AN EXPENDITURE IN THE INCOME EXPENDITURE ACCOUNT AND FOR THE SECOND TIME AGAINST THE HOUSING LOAN. IT WAS A SUBMISSION THAT THIS WAS A GENUINE MISTAKE AND THIS MISTAKE HAD ALSO OCCURRED FOR THE EARLIER AY AND TH E EXPLANATION GIVEN BY THE ASSESSEE FOR THE EARLIER ASSESSMENT HAD BEEN AC CEPTED AND PENALTY ITA NOS.3177 & 3178/CHNY/2018 :- 6 -: HAD NOT BEEN LEVIED BY THE AO DURING THE EARLIER AY . IT WAS A PRAYER THAT THE PENALTY U/S.271(1)(C) MAY BE DELETED. 9. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE ORD ER OF THE AO AND THE LD.CIT(A). 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 11. A PERUSAL OF THE ACCOUNT STATEMENT AS PROVIDED BY THE EMPLOYER TO THE ASSESSEE WHICH WAS SHOWN AT PAGE NO.13 OF THE P APER BOOK SHOWS THAT THE AMOUNT SHOWN AS DIRECTORS REMUNERATION IS OF RS.3,60,000/- WHEREAS IN FORM 26AS SHOWN AS RS.6,00,000/-. A PER USAL OF THE FORM 26AS SHOWS THAT THE AMOUNT OF RS.3.00 LAKHS HAS BEE N BOOKED ON 03.05.2013 FOR THE TRANSACTION DATE OF 30.09.2012 A ND 30.06.2012. THE ACCOUNT STATEMENT GIVEN TO THE ASSESSEE IS FOR THE PERIOD OF 31.03.2013. THUS, CLEARLY THE CLAIM OF THE ASSESSEE IS THAT THE ACCOUNT STATEMENT DEFERRED FROM FORM 26AS STANDS SUPPORTED. FURTHER, EVEN IN THE PENALTY PROCEEDINGS, THE ASSESSEE HIMSELF HAS STATED THAT T HESE TWO MISTAKES MENTIONED FOR THE PURPOSE OF LEVY OF PENALTY WERE A PPARENT MISTAKES, NOTICED AND IT WAS BROUGHT TO THE ATTENTION OF THE AO AS THE TIME FOR FILING REVISED RETURN EXPIRED ON 31.03.2015. THIS IS ALSO MENTIONED IN THE PENALTY ORDER AT PAGE NO.2. ADMITTEDLY, THESE ARE TWO MISTAKES NOTICED BY THE ASSESSEE AND WHICH HAVE ALSO BEEN OFFERED TO TAX BY THE ASSESSEE. THIS BEING SO, IT CANNOT BE SAID THAT THE ASSESSEE HAS ATTEMPTED TO ITA NOS.3177 & 3178/CHNY/2018 :- 7 -: CONCEAL PARTICULARS OF HIS INCOME OR FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME, WHEN IT A FACT THAT THE ASSESSEE HAS BR OUGHT THE TWO MISTAKES TO THE ATTENTION OF THE AO. THIS BEING SO, WE ARE OF THE VIEW THAT NO PENALTY IS LEVIABLE IN RESPECT OF THE SAID MISTAKES . FURTHER, THE EXPLANATION GIVEN BY THE ASSESSEE HAS ALSO NOT BEEN FOUND TO BE FALSE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE PE NALTY U/S.271(1)(C) IS NOT LEVIABLE ON THE FACTS OF THE CASE AND CONSEQUEN TLY DELETE THE PENALTY AS LEVIED BY THE AO AND AS CONFIRMED BY THE LD.CIT( A). 12. IN THE RESULT, THE APPEALS FILED BY THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 21 ST DAY OF MARCH, 2019 IN CHENNAI. SD/- SD/- ( . ) ( A. MOHAN ALANKAMONY ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 0 /DATED: 21 ST MARCH, 2019. TLN ( &12 32 /COPY TO: 1. % /APPELLANT 4. 4 /CIT 2. &'% /RESPONDENT 5. 2 & /DR 3. 4 ( ) /CIT(A) 6. /GF