Vadivel Jayanthkumar, CHENNAI V. ITO, CHENNAI

ITA 324/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8775 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 15-02-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: S VENUGOPALAN
• Keywords: Unexplained cash credit; Capital receipt
• Section: 143(3)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 324 /MDS/201 6 / ASSESSMENT YEAR :20 0 8 - 0 9 SHRI VADIVEL JAYANTHKUMAR, FLAT NO.3, GOLDEN APARTMENTS, 7, STERLING ROAD, 4 TH CROSS, NUNGAMBAKKAM, CHENNAI 34. [PAN:A F K P J0427M ] VS. THE INCOME T AX OFFICER , BUSINESS WARD XV ( 1 ) , NOW ITO, NCR 3(1) CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI S. VENUGOPALAN, C.A. / RESPONDENT BY : SHRI S HIVA SRINIVAS , JCIT / DATE OF HEARING : 1 3 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 05 . 0 8 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 4 , CHENNAI , DATED 2 4 . 11 .20 1 5 RELEVANT TO THE ASSESSMENT YEAR 20 0 8 - 0 9 PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . I.T.A. NO . 324 /M/ 16 2 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN I NDIVIDUAL PROVIDES GOLDRATT MANA GEMENT CONSULTATION S ERVICES AND FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 ON 14.06.2008 ADMITTING A TOTAL INCOME OF . NIL AND AGRICULTURAL INCOME OF .1,00,000/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U NDER SECTION 143(3) OF THE INCOME TAX ACT [ ACT IN SHORT] ON 10. 12.2010 AT AN ASSESSED INCOME OF .24,85, 000 / - . 3. FROM THE PERUSAL OF THE AIR INFORMATION , THE A SSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAD DEPOSITED .24,85,000/ - IN CASH IN HIS SAVING BANK ACCOUNT MAINTAINED WITH THE INDIAN BANK, STERLING ROAD BRANCH, CHENNAI. DURING THE ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO EXPLAIN THE SOURCES OF THE CASH DEPOSITS DULY SUBSTANTIATED WITH MATERIAL EVIDENCES. BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS SUBMITTED THAT HE WAS ENGAGED INTO RUBBER PLANTATION ACTIVITY AND HAD RECEIVED CASH FROM THE SALES OF OLD AND UNPRODUCTIVE RUBBER TREES WHICH WAS DEPOSITED BY HIM IN HIS BANK ACCOUNT AS AND WHEN THE SAME WAS RECEIVED BY HIM. REGARDING THE PRODUCTION OF DOCUMENTARY EVIDENCES TO SUBSTANTIATE THE CLAIM, THE ASSESSEE EXPRESSED HIS INABILITY TO DO SO WITH THIS EXP LANATION THAT THE SALES HAD TAKEN PLACE THREE YEARS BACK AND HE WAS NOT IN POSITION TO PRODUCE THE NAMES AND A D DRESSES OF THE PERSONS WHO HAD PURCHASED THE OLD RUBBER TREES. SINCE THE ASSESSEE HAS NOT DISCHARGE D THE ONUS CAST UPON HIM , I.T.A. NO . 324 /M/ 16 3 THE A SSESSING O FFIC ER ADDED BACK THE ENTIRE AMOUNT OF CASH DEPOSIT OF .24,85,000/ - AND ALSO INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 4. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT (A). THE LD . CIT (A) , BY HIS ORDER DATED 15.02.2012, WORKED OUT THE PEAK VALUE OF CASH CREDITS AN D CONFIRMED THE ADDITION TO THE EXTENT OF .13,81,000/ - BEING A REASONABLE FIGURE AS UNEXPLAINED CASH CREDIT. 5. SINCE THE LD . CIT(A), PARTLY CONFIRMED THE ADDITION MADE BY THE A SSESSING OFFICER , PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT HA S BEEN INITIATED BY ISSUING A SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY PENALTY UNDER SECTION 271(1)(C) OF THE ACT MAY NOT BE LEVIED ON HIM FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND ALSO FOR CONCEALING THE TAXABLE INCOME. DURING THE PENALTY PRO CEEDINGS B EFORE THE ASSESSING OFFICER , THE ASSESSEE REITERATED HIS EARLIER EXPLANATION GIVEN DURING THE ASSESSMENT PROCEEDING AND ALSO STATED THAT THE CASH RECEIPTS WERE IN THE NATURE OF CAPITAL RECEIPTS AND EXEMPT FROM TAXATION. HOWEVER, NO COGENT MATERIA L EVIDENCE WAS FURNISHED TO SUBSTANTIATE THE CONTENTION OF THE APPELLANT REGARDING THE GENESIS OF THESE CASH DEPOSITS. THE ASSESSEE HAD FAILED TO FURNISH THE NAME AND ADDRESS OF THE PERSONS WHO HAD PURCHASED THE UNPRODUCTIVE RUBBER TREES BY MAKING CASH PAY MENTS. THE ASSESSEE ALSO STATED BEFORE THE A SSESSING OFFICER THAT THE LD . CIT (A) HAD ALLOWED PART I.T.A. NO . 324 /M/ 16 4 RELIEF ACCEPTING HIS EXPLANATION. HOWEVER, IT WAS NOTICED BY THE A SSESSING OFFICER THAT THE LD . CIT(A) HAD DISMISSED THE EXPLANATION OFFERED BY THE ASSESSEE THAT THE RECEIPTS WERE CAPITAL IN NATURE. THE L D. CIT(A) DISMISSED THE SAID CONTENTION OF THE ASSESSEE AND, ACCORDINGLY, HAD ADOPTED THE PEAK VALUE OF CASH CREDITS AS BEING A REASONABLE METHOD TO QUANTIFY THE UNEXPLAINED CREDITS. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RELYING UPON THE DECISION OF THE L D. CIT(A) IN QUANTUM ADDITION , THE A SSESSING OFFICER DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND LEVIED PENALTY OF 100% OF THE TAX SOUGHT TO BE EVADED WHICH W AS WORKED OU T AT .4,27,481/ - . 6. AGAINST THE PENALTY ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING VARIOUS DECISIONS, THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING O FFICER. 7. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IN THIS CASE, THE QUANTUM ADDITION MADE BY THE ASSESSING OFFICER AND PARTLY CONFIRMED BY THE LD. CIT(A) WAS PURELY BASED ON THE DETAILS FURNISHED BY THE ASSESSEE AGAINST THE NOTICE UNDER SECTION 143(2) OF THE ACT. NO NEW MATERIAL HAS BEEN UNEARTHED BY THE DEPARTMENT EITHER BY CONDUCTING SURVEY OR SEARCH. SINCE BY NOT COMPLETELY REJECTING THE EXPLANATIONS OFFERED BY THE ASSESSE E DURING I.T.A. NO . 324 /M/ 16 5 THE COURSE OF APPELLATE PROCEEDINGS AGAINST QUANTUM ADDITION, THE LD. CIT(A) ESTIMATED AND ARRIVED AT THE PEAK VALUE AND PARTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. SINCE THE ADDITION WAS PARTLY CONFIRMED ON ESTIMATION BASIS, NO P ENALTY COULD BE LEVIED BY THE ASSESSING OFFICER AND THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE PLEADED THAT THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT MAY KINDLY BE DELETED. 8. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF AUTHORITIE S BELOW. 9. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE ADDITION TO THE EXTENT OF .24,85,000/ - WAS MADE SINCE THE ASSESSEE COULD NOT FILED THE DETAILS OF NAME AND ADDR ESS OF THE PERSONS TO WHOM THE OLD RUBBER TREES SOLD, PAYMENT RECEIPTS AND TOTAL AMOUNT RECEIVED FROM THE PARTIES, ETC. ON APPEAL AGAINST QUANTUM ADDITION, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) , BY ARRIVING THE PEAK VALUE ON EST IMATED BASIS, PARTLY CONFIRMED THE ADDITION TO THE EXTENT OF .13,81,000/ - AND THE REMAINING BALANCE WAS ALLOWED. THEREFORE, IT IS VERY CLEAR THAT THE TRANSACTION AND INCOME OF THE ASSESSEE WAS NOT DOUBTED BY THE LD. CIT(A). THE RUBBER PLANTATION OF THE ASSESSEE IS LOCATED IN RURAL VILLAGE, SOLD THE UNYIELDING RUBBE R TREES AND THE PURCHASER USED TO COME TO THE LAND ITSELF AND CUT AND TAKE THE TREES ONCE NEGOTIATION AND PAYMENTS ARE MADE, WHICH A COMMON I.T.A. NO . 324 /M/ 16 6 PRACTICE IS PREVAILING IN THE VILLAGES. THE UNYIELDING RUBBER TREES ARE NOT HAVING MUCH COMMERCIAL VALUE EXCEPT USIN G IT AS FIRE WOOD. IT IS ALSO NOT POSSIBLE TO GET CASH RECEIPTS OR PAYMENT THROUGH CHEQUE/DD IN VILLAGES FOR BUYING OR SELLING ANY MATERIALS. SINCE THE ASSESSEE COULD NOT ABLE TO FILE DETAILS OF THE PERSONS TO WHOM THE OLD RUBBER TREES SOLD, PAYMENT RECEIP TS AND TOTAL AMOUNT RECEIVED FROM THE PARTIES, ETC. EVEN BEFORE THE LD. CIT(A), BY ADOPTING THE PEAK VALUE AS A REASONABLE METHOD, THE LD. CIT(A) ESTIMATED AND QUANTIFIED THE UNEXPLAINED CREDITS. ONCE THE TRANSACTION WAS NOT DOUBTED AND ADDITION WAS CONFIR MED PARTLY ON ESTIMATED BASIS, WE ARE OF THE OPINION THAT NO PENALTY CAN BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT. IT IS SETTLED LEGAL POSITION THAT WHEN INCOME IS ESTIMATED, THEN THERE CAN BE NO QUESTION OF IMPOSING PENALTY U NDER SECTION 271(1)(C) OF THE ACT. 10. THE HON BLE DELHI HIGH COURT IN CIT VS. AERO TRADERS PVT. LTD. (2010) 322 ITR 316 (DEL.) HAS HELD THAT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT CAN BE IMPOSED WHEN INCOME IS DETERMINED ON ESTIMATE BASIS. THE SIMILAR VIEW HAS BEEN TAKEN BY THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P&H) AND THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SUBHASH TRADING CO. 221 ITR 110 (GUJ.) I.T.A. NO . 324 /M/ 16 7 11. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT CANNOT BE SUSTAINED. THE PENALTY IS THUS, ORDERED TO BE DELETED. 12 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 05 TH AUGUST , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 05 . 0 8 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.