Shri Firozkhan Anvarkhan Pathan, Ahmedabad V. Income Tax Officer, Ward-2(3), Baroda

ITA 3237/AHD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0554 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 13-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: U S BHATI
• Section: 133(6)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.3237/AHD/2015 / ASSTT. YEAR: 2007-2008 SHRI FIROZKHAN ANVARKHAN PATHAN C/68, MARYAM PARK TANDALJA, VADODARA. PAN : AJUPP 0812 C VS ITO, WARD - 2(3) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI U.S. BHATI (CA) REVENUE BY : SHRI SATISH SOLANKI, SR.DR / DATE OF HEARING : 09/08/2016 / DATE OF PRONOUNCEMENT: 08/09/2016 $%/ O R D E R ASSESSEE IS IN APPEAL AGAINST ORDER OF THE LD.CIT(A )-5, BARODA DATED 17.8.2015 PASSED FOR THE ASTT.YEAR 2007-08. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING PENALTY OF RS.4.00 LAKHS IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 31.3.2008 DECLARING TOTAL INCOME AT RS.92 ,540/-. THE AO GOT INFORMATION FROM AIR WING THAT THE ASSESSEE HAS MAD E DEPOSITS OF MORE THAN RS.10 LAKHS IN AXIS BANK DURING THIS ACCOUNTING YEA R. THE AO ACCORDINGLY, ITA NO.3237/AHD/2015 2 ISSUED NOTICE UNDER SECTION 143(2) OF THE ACT, WHIC H WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THE QUERY OF THE AO, IT W AS CONTENDED BY THE ASSESSEE THAT HE WAS WORKING AS A COMMISSION AGENT FOR PURCHASE AND SALE OF OLD VEHICLES. HIS JOB WAS TO REPAIR VEHICLE DAMAG ED BY ACCIDENT AND FIND OUT A SUITABLE PERSON TO SELL THE VEHICLE. THE OWNERSH IP OF THE VEHICLE REMAINS WITH PERSONS WHO OWNED THEM I.E. VEHICLE WAS NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THE ASSESSEE HAS GIVEN LIST OF CA RS WHICH WAS SOLD BY HIM ON COMMISSION BASIS. THE LD.AO HAS ISSUED NOTICES UND ER SECTION 133(6) OF THE ACT TO THE ALLEGED PURCHASERS OF THE CAR, BUT SUCH NOTICE REMAINED UN- COMPLIED WITH. IN ONE CASE, SHRI YASIN SULEMANBHAI MULTANI HAS DISCLOSED THAT HE HAS NOT DONE ANY TRANSACTION THROUGH THE AS SESSEE. ACCORDINGLY, THE AO HAS TREATED DEPOSITS MADE IN THE BANK AS UNEXPLA INED, AND MADE ADDITION OF RS.12,51,300/-. HE INITIATED PENALTY PROCEEDING S UNDER SECTION 271(1)(C) OF THE ACT, AND ULTIMATELY IMPOSED PENALTY OF RS.4. 00 LAKHS, WHICH IS EQUIVALENT TO THE TAX SOUGHT TO BE EVADED ON THE AD DITION. 4. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. I HAVE CONSIDERED RIVAL CONTENTIONS AND GONE THR OUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE ACT HAS A DIRE CT BEARING ON THE CONTROVERSY WHICH READS AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE C OMMISSIONER (APPEALS) OR THE CIT IN THE OF COURSE OF ANY PROCEE DINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B) ** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** ITA NO.3237/AHD/2015 3 (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL N OT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULA RS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME OR SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 6. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM SH OULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100 % TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OT HER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CON CEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUTORY DEEM ING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATION-1 TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FI RST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCO ME UNDER THE PROVISIONS OF ITA NO.3237/AHD/2015 4 THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE AS SESSEE FAILS, TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF THE TOTAL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD CO ME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSE E IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAV E BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMIN G FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE I NCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 7. IN THE LIGHT OF THE ABOVE, LET ME EXAMINE THE FA CTS OF THE PRESENT CASE. IN THE PAPER BOOK, THE ASSESSEE HAS FILED COMPLETE DETAILS OF MOTOR CAR PURCHASED AND SALES THROUGH HIM. HE PRODUCED COPY OF THE SALE AGREEMENT, RTO CERTIFICATES, CHEQUES, AFFIDAVITS, PAN COPY OF THE ALLEGED SELLER AS WELL ITA NO.3237/AHD/2015 5 AS PURCHASER, AS DETAILED IN TABULAR FORM EXHIBITIN G SERIAL NO., DATE OF TRANSACTION, VEHICLE REGISTRATION NO., SELLER DETAI LS, PURCHASE DETAILS, COMMISSION AND MODE OF PAYMENT HAS BEEN PLACED AT P AGE NO.8 OF THE PAPER BOOK. FOR EXAMPLE, SR.NO.8, SHRI KALYANBHAI PATEL, GODHA ROAD, BHAVNAGAR HAS SOLD VEHICLE BEARING REGISTRATION NO.GJ-4-D-703 4 ON 16.1.2007. IT WAS SOLD TO SHRI JAGDISHBHAI PARMAR, HEMDIP SOCIETY, DI WALIPURA, BARODA FOR A CONSIDERATION OF RS.1.60 LAKHS AND COMMISSION OF TH E ASSESSEE WAS RS.8,000/- AND THE TRANSACTION WAS IN CASH. THE ASSESSEE HAS PLACED ON RECORD COPY OF THE PAN OF SHRI JIGNESH PARMAR AT PAGE NO.20. HE HAS PLACED A CONFIRMATION ALSO WHEREIN SHRI JIGNESH HAS CONFIRME D THAT AMOUNT WAS PAID TO SHRI FIROZKHAN PATHAN. THE ASSESSEE HAS DEPOSIT ED THIS AMOUNT IN HIS BANK ACCOUNT ON 17.1.2007. HE HAS PLACED ON RECORD COPY OF DEPOSIT SLIP. THE AO OUGHT TO HAVE WROTE A LETTER TO THE RTO AND FIND OU T OWNERSHIP OF CAR NO.GJ- 4-D-7034 WAS WITH KALYANBHAI PATEL AND IT WAS EVER TRANSFERRED EITHER TO JAGDISHBHAI PARMAR. HE SIMPLY WROTE LETTERS TO FE W INDIVIDUALS, WHO ACCORDING TO THEIR OWN UNDERSTANDING OF APPRECIATIN G MATTERS, MIGHT HAVE NOT BEHAVED IN RESPONSIBLE WAY ON SUBMITTING THE INFORM ATION. ONCE COPY OF THE PAN WAS FILED BEFORE THE AO, THEN, IDENTITY AND ADD RESS OF OTHER INDIVIDUAL CANNOT BE DOUBTED. HAD THE AO ISSUED EITHER SUMMON S OR WARRANTS, PRESENCE OF JAGDISHBHAI PARMAR COULD BE SECURED. IF PENALTY IS BEING CONFIRMED, THEN ASSESSEE COULD BE EXPOSED TO CRIMINAL PROCEEDINGS A LSO. THEREFORE, SUCH TYPE OF PENALTY CANNOT BE LEVIED ON AN INQUIRY CONDUCTED IN VERY LIGHTER MANNER, SIMPLY BY OBSERVING THAT NOTICE ISSUED UNDER SECTIO N 133(6) WAS REMAINED UN- COMPLIED WITH, THEREFORE, THE ASSESSEE FAILED TO DI SCLOSE THE SOURCE AND ALSO DESERVES TO BE VISITED WITH PENALTY. TO MY MIND, T HE ASSESSEE HAS GIVEN AN EXPLANATION ABOUT THE SOURCE OF DEPOSITS. HE BUTTR ESSED THAT EXPLANATION BY SUBMITTING THE DETAILS. THE AO HAS MERELY ISSUED N OTICE, BUT DID NOT CROSS- ITA NO.3237/AHD/2015 6 VERIFY VIGOROUSLY AND DID NOT PROVE IT FALSE. IN T HIS SITUATION, I ALLOW THE APPEAL OF THE ASSESSEE AND DELETE PENALTY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 8 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 08/09/2016