Rupaben D.Shah, Anand V. The Income tax Officer,Ward-2, Anand

ITA 329/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60265 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-03-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 02-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Section: 143(3); 68

Judgement Text

ITA NO.3 29/AHD/2010 ASSESSME NT YEAR 2002-03 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T.A. NO.329/AHD/2010 (ASSESSMENT YEAR: 2002 - 03) SMT. RUPABEN D. SHAH, PROP. AVDHOOT TRADERS, 89/90, G.I.D.C. ,V U NAGAR, ANAND. (APPELLANT) VS. INCOME TAX OFFICER, WARD 2, INCOME TAX OFFICE, ANAND. (RESPONDENT) PAN: AFAPS 2595D APPELLANT BY : SHRI S.N.DIVATIA. RESPONDENT BY : SHRI SAMIR TEKRIWAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 29-3-2012 DATE OF PRONOUNCEMENT : 20-4-2012 PER: SHRI ANIL CHATURVEDI,A.M. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT (A)- IV, BARODA DATED 17-11-2009 FOR THE ASSESSMENT YEAR 2002-03. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS AS UNDER:- ITA NO.3 29/AHD/2010 ASSESSME NT YEAR 2002-03 . 2 THE ORDER PASSED U/S.250 OF THE ACT ON 17-11-2009 FOR A.Y. 2002-03 BY CIT(A)-IV, BARODA CONFIRMING THE ORDER P ASSED BY A.O. LEVYING PENALTY OF RS.1,37,700/- U/S. 271(1)(C ) IS WHOLLY AND ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NAT URAL JUSTICE. 3. BRIEF FACTS OF THE CASE ARE THAT RETURN OF INCOM E DECLARING TOTAL INCOME OF RS.2,16,980/- WAS FILED ON 22-10-2002. OR IGINALLY THE ASSESSMENT ORDER U/S 143(3) WAS PASSED BY THE A.O. ON 24.11.2004 WHEREIN THE TOTAL INCOME WAS DETERMINED AT RS 2,32, 132/-. THE SAID ASSESSMENT WAS SET ASIDE BY CIT U/S.263 OF THE I.T. ACT VIDE ORDER DATED 2-12-2005. PURSUANT TO THE DIRECTIONS OF CIT, ORDER WAS PASSED U/S. 143(3) R.W.S. 263 ON 27-12-2006 WHEREIN THE TO TAL INCOME WAS DETERMINED AT RS.6,82,130/- BY MAKING AN ADDITION O F RS.4,50,000/- U/S 68 OF THE I.T. ACT. A.O. INITIATED PENALTY PROCEEDINGS WITH RESPECT TO THE LOAN OF RS. 4,50,000 WHICH WAS ADDED U/S 68 BY THE A.O. BEFORE A.O. THE ASSESSEE CONTENDED THAT THE LOAN WAS OBTAINED BY DEMAND DRAF T FROM MR. THAKORBHAI SHAH, THE FATHER IN LAW OF THE ASSESSEE. THE ASSESSEE ALSO FURNISHED THE CONFIRMATION AND FUND FLOW STATEMENT. THE A.O. DISREGARDED THE SUBMISSIONS MADE BY THE ASSESSEE AN D OBSERVED THAT THE ASSESSEE FAILED TO ADDUCE ANY CONVINCING E VIDENCE AT THE TIME OF ASSESSMENT TO PROVE CREDITWORTHINESS OF THE PERSON AND THE GENUINENESS OF THE TRANSACTION AND THEREBY THE A.O. HELD THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY HE LEVIED PENALTY OF RS. 1,37,700/- U/S 271(1)(C) O F THE I.T.ACT. ITA NO.3 29/AHD/2010 ASSESSME NT YEAR 2002-03 . 3 4. AGGRIEVED BY THE DECISION OF THE A.O. TO LEVY PE NALTY, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). BEFORE THE CIT(A), A.R. OF THE ASSESSEE SUBMITTED THAT ASSESSM ENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND FRESH FINDINGS OF CONCEALMENT OF INCOME OR FURNISHING INA CCURATE PARTICULARS OF INCOME WERE REQUIRED FOR IMPOSITION OF PENALTY. ASSESSEE RELIED UPON THE DECISION OF GUJARAT HIGH C OURT IN THE CASE OF NATIONAL TEXTILES, 249 ITR. HE ALSO SUBMITTED TH AT ASSESSEE WAS NOT UNDER AN OBLIGATION TO ESTABLISH THE SOURCE OF THE SOURCE AND SINCE SHE HAD PRODUCED CONFIRMATION OF SHRI THAKORBHAI SH AH HAVING FUNDS FLOW IN HIS CONFIRMATION, FUNDS WERE RECEIVED THROU GH DEMAND DRAFTS, PENALTY COULD NOT BE IMPOSED. HE ALSO CONTENDED THA T AS PER PRINCIPLE ESTABLISHED BY HONBLE GUJARAT HIGH COURT IN THE CA SE OF NATIONAL TEXTILES (SUPRA), A.O. CANNOT IMPOSE PENALTY BY INV OKING EXPLANATION 1 TO SECTION 271(1)(C) SIMPLY ON THE GROUND THAT AD DITIONS WERE CONFIRMED IN APPEAL. AS PER ASSESSEE, SHE HAD DISCH ARGED INITIAL BURDEN AND THE A.O. FAILED TO PROVE THAT THERE WAS CONCEALMENT OF INCOME. IT WAS SUBMITTED THAT THE ASSESSEE GAVE PROPER EXPL ANATION AND THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE FAL SE, INCORRECT OR BOGUS. IT WAS ALSO SUBMITTED THAT THE CONSIDERATION S THAT ARISE IN THE PENALTY PROCEEDINGS ARE DIFFERENT THAN THOSE THAT A RISE IN PENALTY PROCEEDINGS. THE LD CIT(A) OPINED THAT THE ASSESSEES CASE FELL UNDER EXPLANATION 1 TO SECTION 271(1)(C) I.E. FAILURE OF THE ASSESSEE TO SUBSTANTIATE THE EXPLANATION IN RESPECT OF ADDITION MADE TO HER INCO ME. HE FURTHER HELD ITA NO.3 29/AHD/2010 ASSESSME NT YEAR 2002-03 . 4 THAT THE ASSESSEE FAILED TO SUBSTANTIATE HER CLAIM REGARDING THE CAPACITY OF SHRI THAKORLAL SHAH TO ADVANCE SUCH AMO UNT, ADDITION WAS MADE TAKING THE SAME AS ASSESSEES INCOME. FURT HER, RELYING ON THE DECISION OF HBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 WHERE IT WAS HELD THAT WILLFUL OR CONSCIOUS CONCEALMENT IS NOT AN ESSENTIAL INGREDIEN T FOR ATTRACTING PENALTY U/S 271(1)(C), LD. CIT(A) CONFIRMED THE PEN ALTY OF RS. 1,33,700/-. AGGRIEVED BY THE DECISION OF CIT(A), THE ASSESSEE I S NOW IN APPEAL BEFORE US. THE A.R. FURNISHED BEFORE US CONFIRMATION LETTER FR OM SHRI THAKORLAL SHAH, SUMMARY OF INCOME, EXPENSES, SAVINGS FROM THE YEAR 89-90 TO 2001-02, LEDGER ACCOUNT IN THE BOOKS OF AVDHOOT TR ADERS FOR AY 2002- 03 TO 2007-08. IT WAS FURTHER STATED FOR THE QUANTU M ADDITION, AGAINST THE ORDER OF CIT (A), THE ASSESSEE PREFERRED APPEAL BEFORE TRIBUNAL. THE TRIBUNAL IN ITA NO 394-395/AHD/2009 VIDE ORDER DATED 21.6.2010 GAVE PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS U NDER: WE ARE OF THE VIEW THAT THE ASSESSEE COULD HAVE AD VANCED A SUM OF RS 1.50 LAKH IN ENTIRELY AND ACCORDINGLY, WE ACCEPT THE SUM OF RS. 1.50 LAKH AS EXPLAINED AND THE BALANCE SUM OF RS 3 LAKH IS TREATED AS UNEXPLAINED AND TO THAT EXTENT WE UPHOLD THE ORDER OF CIT(A) IN PART ITA NO.3 29/AHD/2010 ASSESSME NT YEAR 2002-03 . 5 THE LD. A.R. FURTHER STATED THAT THE ASSESSEE GAVE PROPER EXPLANATION AND THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND T O BE FALSE, INCORRECT OR BOGUS. IT WAS ALSO SUBMITTED THAT THE CONSIDERATIONS THAT ARISE IN THE PENALTY PROCEEDINGS ARE DIFFERENT THAN THOSE THAT ARISE IN PENALTY PROCEEDINGS. THE LD. A.R. THEREFORE URGED F OR DELETION OF PENALTY. ON THE OTHER HAND THE LD. D.R. RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND STRONGLY URGED THAT THE A.O. WAS RI GHT IN LEVYING THE PENALTY. HE STRONGLY URGED THAT THE ORDER OF THE AO SHOULD BE UPHELD. 9. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD. BEFORE US, THE ASSESSEE HAS PRODUCED THE CO PY OF CONFIRMATION LETTER OF SHRI THAKORELAL R. SHAH, COP Y OF LEDGER ACCOUNT FOR 1-4-2001 TO 31-3-2002, 1-4-2001 TO 31-3-2003, 1 -4-2003 TO 31-3-2004 AND COPY OF LEDGER ACCOUNT SHOWING LOANS (LIABILITY ) FOR 1-4-2004 TO 31-3-2005, 1-4-2005 TO 31-3-2006 AND 1-4-2006 TO 31 -3-2007. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE GAVE EXP LANATION AND THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE FAL SE, INCORRECT OR BOGUS. IT IS ALSO AN UNDISPUTED FACT THAT IN QUANTU M APPEAL, SOME ADDITIONS HAVE BEEN DELETED. THE EVIDENCE ON RECORD CLEARLY SUGGEST THAT THE EXPLANATION OF THE ASSESSEE WAS BONAFIDE A ND WAS NOT FOUND TO BE BOGUS OR FALSE. THE CREDIT IN QUESTION WAS DI SCLOSED IN THE BOOKS OF ACCOUNT AND WAS ALSO EXPLAINED BEFORE THE AO AT ASSESSMENT AS WELL AS PENALTY STAGE. A FINDING IN Q UANTUM ASSESSMENT IS NOT BINDING IN PENALTY PROCEEDINGS. I N QUANTUM PROCEEDINGS A PARTICULAR PROVISION MIGHT BE ATTRACT ED FOR ADDITION TO ITA NO.3 29/AHD/2010 ASSESSME NT YEAR 2002-03 . 6 THE INCOME OF THE ASSESSEE. BUT WHEN IT COMES TO TH E QUESTION OF IMPOSITION OF PENALTY, THEN INDEPENDENT OF THE FIND INGS ARRIVED AT IN THE QUANTUM PROCEEDINGS, THE AUTHORITY HAS TO FIND CONCLUSIVELY THAT THE ASSESSEE OWNS THE CONCEALED AMOUNT. IT IS SETTL ED LAW THAT BOTH PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND INDEPENDENT PROCEEDINGS THOUGH FINDINGS RECORDED IN THE ASSESSMENT ORDER LAY DOWN A FOUNDATION FOR LEVY OF PENALTY U/S 271(1)(C). MERELY BECAUSE THE ADDITIONS HAVE BEEN U PHELD DOES NOT IPSO FACTO ATTRACT LEVY OF PENALTY U/S 271(1)(C). HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIAN CE PETROPRODUCTS 322 ITR 158(SC) HELD THAT: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F THE INCOME TAX ACT, 1961, SUGGEST THAT IN ORDER TO BE C OVERED BY IT, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF THE I NCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. THE MEANING O F THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBR ACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIV EN IN THE RETURN IS FOPU8ND TO BE INCORRECT OR INACCURATE, TH E ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIONS, THE PENALTY PRO VISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEN D UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE O NLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF H IS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, T HE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACC ORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT THE DETAILS ITA NO.3 29/AHD/2010 ASSESSME NT YEAR 2002-03 . 7 SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVIT ING THE PENALTY UNDER SECTION 271(1) (C). A MERE MAKING OF A CLAIM WHICH ISNOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. DECISION OF THE GUJARAT HI GH COURT AFFIRMED. IN VIEW OF THE TOTALITY OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT BE HELD GUILTY OF FILING INACCU RATE PARTICULARS OR CONCEALMENT OF INCOME. WE ACCORDINGLY SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY LEVIED U/S . 271(1)(C) OF THE ACT. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 20-4 - 2012. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. ITA NO.3 29/AHD/2010 ASSESSME NT YEAR 2002-03 . 8 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) IV, BARODA. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. 1.DATE OF DICTATION 18 - 4 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 19 / 4 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..