Shri Tulsidas J. Talavia, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(3), RAJKOT-GUJARAT

ITA 333/RJT/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2386 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 10-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K CHAKRAVARTY
• Assessee Lawyers: RD LALCHANDANI
• Keywords: Unexplained investment; Deemed to accrue or arise in india
• Section: 143(3); 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA NO: 333/RJT/2013 (ASSESSMENT YEAR: 2007-08) SHRI TULSIDAS J. TALAVIA C/O. M/S. PATEL TIMBER MART 8- LATI PLOT, KUVADVA ROAD, RAJKOT V/S THE INCOME TAX OFFICER WARD 1(3), RAJKOT (APPELLANT) (RESPONDENT) ITA NO: 331/RJT/2013 (ASSESSMENT YEAR: 2007-08) SHRI GHANSHYAMBHAI H. TALAVIA C/O. M/S. PATEL TIMBER MART 8- LATI PLOT, KUVADVA ROAD, RAJKOT V/S THE INCOME TAX OFFICER WARD 1(3), RAJKOT (APPELLANT) (RESPONDENT) ITA NO: 330/RJT/2013 (ASSESSMENT YEAR: 2007-08) SHRI ROHITBHAI T. TALAVIA, C/O. M/S. PATEL TIMBER MART 8- LATI PLOT, KUVADVA ROAD, RAJKOT V/S THE INCOME TAX OFFICER WARD 1(3), RAJKOT (APPELLANT) (RESPONDENT) ITA NOS. 330 , 331 & 333/RJT/2013 . A.Y. 2007-08 2 APPELLANT BY : SHRI R.D. LALCHANDANI, ADV . RESPONDENT BY : SHRI V.K. CHAKRAVARTY, D.R. ( )/ ORDER DATE OF HEARING : 30-12-201 5 DATE OF PRONOUNCEMENT : 08 -01-2016 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THESE 3 APPEALS FILED BY THE ASSESSEE ARE AGAINST T HE ORDER OF CIT(A)-I, RAJKOT DATED 28.06.2013 FOR A.Y. 2007-08. 2. BEFORE US, AT THE OUTSET THE LD. A.R. SUBMITTED THA T THOUGH THE APPEALS OF ASSESSEE RELATES TO 3 DIFFERENT ASSESSEES BUT THE A SSESSEES ARE RELATED, FACTS AND CIRCUMSTANCES OF ALL THE CASES ARE SIMILAR EXC EPT FOR THE ASSESSEES AND AMOUNTS AND THE SUBMISSIONS ARE ALSO COMMON FOR ALL THE APPEALS AND THEREFORE ALL THE APPEALS CAN BE HEARD TOGETHER. LD D.R DID NOT OBJECT TO THE AFORESAID SUBMISSIONS OF LD. A.R. WE THEREFORE PROC EED TO DISPOSE OF ALL THE APPEALS TOGETHER FOR THE SAKE OF CONVENIENCE AND PR OCEED WITH THE FACTS IN THE CASE OF SHRI TULSIDAS J. TALAVIA FOR A.Y. 2007- 08 IN ITA NO. 333/RJT/2013. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE HAVING INCOM E FROM SALARY FROM FIRM, INCOME FROM OTHER SOURCES AND CAPITAL GAINS. A SEAR CH ACTION U/S. 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 22.12.2006 AND THEREAFTER PROCEEDINGS, U/S. 153A WERE INITIATED. A SSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 07-08 ON 05.02.2008 DECLARING TOTAL INCOME AT RS. 20.290/- ITA NOS. 330 , 331 & 333/RJT/2013 . A.Y. 2007-08 3 IN ADDITION TO AGRICULTURE INCOME OF RS. 1,23,268/- . THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 30.12.2008 AND THE TOTAL TAXABLE INCOME WAS DETERMINED AT RS. 3,55,391/- INTERALIA B Y MAKING ADDITION OF RS. 3,35,101/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLARY U/S. 68 OF THE ACT. AGAINST THE AFORESAID ADDITION, THE MATTER WAS CARRIED BEFORE LD. CIT(A) WHO VIDE ORDER DATED 30.12.2008 RESTRICTED THE ADDI TION TO RS. 2,51,701/-. THEREAFTER THE MATTER WAS CARRIED BEFORE HONBLE TR IBUNAL WHERE THE ADDITION WAS REDUCED TO 50% OF RS. 2,51,701/-. ON T HE ADDITION OF RS. 1,25,850/- THAT WAS CONFIRMED BY HONBLE ITAT, A.O VIDE ORDER DATED 30.12.2010 LEVIED PENALTY OF RS. 11,400/- U/S. 271( 1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 28.06.2013 UPHELD THE L EVY OF PENALTY BY HOLDING AS UNDER:- 5.0 AFTER CONSIDERING THE SUBMISSION MADE BY THE AP PELLANT AND PERUSING THE MATERIAL ON RECORD INCLUDING THE IMPUGNED PENALTY ORDER, THE FO LLOWING GROUND OF APPEAL IS DISCUSSED AND DECIDED TOGETHER FOR THE SAKE OF CONVENIENCE. 1.THE ASSESSING OFFICER ERRED IN LEVYING PENALTY U/ S. 271(1)(C) OF THE ACT ON THE APPELLANT. THE LEVY OF PENALTY IS NOT JUSTIFIED. 2.WITHOUT PREJUDICE TO GROUND NO. 1 THE LEVY @ RS. 11400/- IS TOO HEAVY AND ARBITRARY AND NOT WARRANTED BY THE FACTS OF THE CAS E. 5.1THE BASIS OF LEVY OF PENALTY U/S.271(L )(C) IN T HIS CASE IS THE MADE BY THE A.O. U/S.69 WHICH WAS. ULTIMATELY, RESTRICTED BY THE HON'BLE 1T AT TO RS.1,25,850/-. NO SATISFACTORY EXPLANATION HAS BEEN GIVEN BY THE APPELLANT REGARDI NG THE INVESTMENT. THOUGH S.69 IS A DEEMING PROVISION, STILL PENALTY IS LEVIABLE AS HEL D BY THE HON'BLE SUPREME COURT IN THE CASE OF CHUHARMAL VS. CIT (SC) 172 II R 250 AND BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ABOO MOHMED (KAR) 160 CTR 12 8. MOREOVER, THE UNEXPLAINED INVESTMENT IS DEEMED TO BE INCOME FOR THE PURPOSE O F LEVYING PENALTY IF NO SATISFACTORY EXPLANATION REGARDING INVESTMENT IS OFFERED AS HELD IN THE FOLLOWING CASES :- * LOKNATH CHOVVDHARY VS. CIT (CAL.) 155 ITR 291 ITA NOS. 330 , 331 & 333/RJT/2013 . A.Y. 2007-08 4 * RAHMAT DEV. & ENGG. CORPN. VS. CIT (CAL) 130 ITR 602 * CIT VS. RATTAM SINGH GREWAL (P&H) 304 ITR 75 * CHARUDULT H. DANGET VS. ITO (ITAT, MUM) 126 ITD 4 83 5.2 IN THE PRESENT CASE, THE LD. CIT(A) AFTER GIVIN G SET OFF TO THE EXTENT OF PRESCRIBED LIMIT FOR JEWELLERY AS PER THE CBDT CIRCULAR, WORKED OUT THE UNEXPLAINED JEWELLERY WEIGHING 301.800 GMS. AND THEREFORE HE RESTRICTED THE ADDITI ON TO RS.2,51,701/- (301.800 GMS. X RS.834 PER GM). THE HONBLE ITAT RESTRICTED THE ADD ITION TO 50% OF RS.2,51,701/- WORKED OUT BY THE ID. CIT(A). THEREFORE, IT CAN BE SAID THAT THE AMOUNT OF RS. 1.25,850/- REPRESENTS DEEMED INCOME OF THE APPELLANT FOR WHICH NO EXPLANATION WAS FURNISHED. THUS, THIS CAN BE TREATED AS CONCEALED INCOME OF THE APPE LLANT AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME TO THAT EXTENT. THE APPELLANT FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS FOR COMPUTATION OF HIS INCOME AND TH EREFORE PENALTY IS LEVIABLE. THEREFORE, THE PENALTY LEVIED BY THE A.O. IS HEREBY CONFIRMED. ALSO THE ADDITION CONFIRMED BY THE HON'BLE ITAT IS BASED ON FACTS AND NOT ESTIMATES. T HEREFORE, THE APPELLANT'S CONTENTION CANNOT BE SAID TO BE APPLICABLE IN THIS CASE. 4. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), AS SESSEE IS NOW IN APPEAL BEFORE US. 5. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT DURING THE COURSE OF SEARCH JEWELLERY BELONGING TO VARIOUS FAMILY MEMBERS WAS FOUND AND A SSESSEE HAD GIVEN EXPLANATION WITH RESPECT TO THE JEWELLERY. HE FURTH ER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAD ALSO FILED AFFIDAVITS OF THE FAMILY MEMBERS TO SUPPORT THE CLAIM THAT THE OR NAMENTS BELONG TO VARIOUS FAMILY MEMBERS AND THERE WAS NO JUSTIFICATI ON FOR MAKING THE ADDITION OR JEWELLERY IN THE HANDS OF THE ASSESSEE. HE FURTHER SUBMITTED THAT THE ADDITION HAS BEEN MADE ON ESTIMATED BASIS AND T HE PROVISONS OF SECTION 271(1)(C) OF THE ACT ARE NOT ATTRACTED WHERE THE IN COME OF THE ASSESSEE IS ITA NOS. 330 , 331 & 333/RJT/2013 . A.Y. 2007-08 5 ASSESSED ON ESTIMATED BASIS. HE FURTHER RELIED ON T HE VARIOUS DECISIONS THAT WAS CITED BEFORE A.O AND LD. CIT(A). HE THUS SUBMIT TED THAT THE PENALTY U/S. 271(1)(C) BE DELETED. LD. D.R. ON THE OTHER HAND SU PPORTED THE ORDER OF A.O AND LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT LEVY OF PENA LTY U/S. 271(1)(C) ON THE ADDITION MADE U/S. 69A OF THE ACT. IT IS AN UNDISPU TED FACT THAT A.O WHILE FRAMING THE ASSESSMENT HAD MADE ADDITION OF RS. 3,3 5,101/- WHICH WAS REDUCED TO 2,51,701/- BY LD. CIT(A) AND WAS FURTHER REDUCED TO RS. 1,25,850/- BY THE TRIBUNAL AND FURTHER THE ADDITION HAS BEEN MADE ON ESTIMATE BASIS. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSEE HAD GIVEN THE EXPLANATION ABOUT THE JEWELLERY AND H AD ALSO FILED THE AFFIDAVITS OF THE VARIOUS FAMILY MEMBERS WHEREIN TH E FAMILY MEMBERS HAVE CONFIRMED TO BE THE OWNERS OF THE JEWELLERY. T HE SUBMISSIONS OF THE ASSESSEE HAVE NOT BEEN FOUND TO BE INCORRECT OR FAL SE. FURTHER THERE IS NO MATERIAL ON RECORD TO PROVE THAT THE AFFIDAVITS FIL ED BY THE VARIOUS FAMILY MEMBERS WERE FOUND TO BE FALSE OR INCORRECT. IT IS A SETTLED LAW THAT WHEN THE ADDITION IS MADE ON THE ESTIMATE BASIS, NO PENA LTY ON ACCOUNT OF CONCEALMENT OF INCOME U/S.271(1)(C) IS SUSTAINABLE. FURTHER, IT IS AN ADMITTED PROPOSITION IN LAW THAT THE FINDING IN THE QUANTUM PROCEEDING IS NOT A FACTOR FOR DETERMINING THE QUESTION FOR THE PURPOSE OF IMP OSING PENALTY. QUESTION OF PENALTY HAS TO BE DECIDED INDEPENDENT OF SUCH FI NDING. IT IS WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FO R ADDITION MADE IN THE ASSESSMENT CASE OF THE ASSESSEE IS DIFFERENT FROM T HE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURA TE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALL Y BE MADE IN THE ITA NOS. 330 , 331 & 333/RJT/2013 . A.Y. 2007-08 6 ASSESSMENT PROCEEDING ON THE PREPONDERANCE OF PROBA BILITIES, BUT NO PENALTY COULD BE IMPOSED U/S 271(L)(C) OF THE ACT ON THE PR EPONDERANCE OF PROBABILITIES. IN THE CASE OF CIT VS. SANGRUR VANASPATI MILLS LTD. (2008) 303 ITR 53 (P & H) IT HAS BEEN HELD THAT THE PROVISIONS OF SEC. 271(1)(C) OF THE ACT ARE NOT ATTRACTED TO CASES WHERE THE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND ADDITIONS ARE MADE THEREIN. IN THE PRESENT CASE SINCE THE ADDITIONS HAVE BEEN MADE ON ESTIMATE BASIS, WE THER EFORE RELYING ON THE AFORESAID DECISION OF HON'BLE HIGH COURT IN THE CAS E OF SANGUR VANASPATI(SUPRA), ARE OF THE VIEW THAT NO PENALTY O N ACCOUNT OF CONCEALMENT OF INCOME U/S. 271(1)(C) OF THE ACT CAN BE LEVIED I N THE PRESENT CASE. WE THUS DELETE THE PENALTY LEVIED BY THE A.O. THUS THE GROUND OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. NOW WE TAKE UP ASSESSEES APPEAL IN ITA NOS. 330 & 331/RJT/2013 (FOR A.Y. 2007-08) 8. IN THE PRESENT CASES, SINCE BOTH THE PARTIES BEFORE US HAVE ADMITTED THAT THE FACTS AND CIRCUMSTANCES OF ALL THE CASES ARE IDENTI CAL TO THAT OF SHRI TULSIDAS J. TALAVIA IN ITA NO. 333/RJT/2013 WHICH WE HAVE DE CIDED HEREINABOVE, WE THEREFORE FOR THE SIMILAR REASONS STATED HEREINABOV E WHILE DECIDING THE APPEAL FOR A.Y. 2007-08 IN ITA NO. 333/RJT/2013 (SU PRA) AND FOR SIMILAR REASONS ALLOW THE GROUND OF ASSESSEE IN THE PRESENT APPEALS. ITA NOS. 330 , 331 & 333/RJT/2013 . A.Y. 2007-08 7 9. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 08 - 01 - 2016. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD