Shri Champaklal V.Patel, Surat V. The ACIT.,Circle-3, Surat

ITA 3367/AHD/2009

• Counselvise Citation: 336720514 RSA 2009
• Duration Of Justice: 2 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-01-2012
• Assessment Year: 1993-1994
• Appeal Filed On: 22-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K PATEL
• Keywords: Unexplained investment; Unexplained expenditure; Gift; Notional interest

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ./ I.T.A. NO.3367/AHD/2009 ( / / / / ASSESSMENT YEAR : 1993-94) CHAMPAKALAL VALLABHBHAI PATEL 28, HAREKRISHNA MASKATI PLOTS PARLE POINT ATHWALINES, SURAT / VS. THE ACIT, CIRCLE-3 SURAT ! ./'# ./ PAN/GIR NO. : AAMPP 2785 P ( $ / // / APPELLANT ) .. ( %&$ / RESPONDENT ) $ ' / APPELLANT BY : SHRI MEHUL K.PATEL %&$ ( ' / RESPONDENT BY : SHRI SAMIR TEKRIWAL, SR. D.R. )* ( +,! / / / / DATE OF HEARING : 09/1/2012 -. ( +,! / DATE OF PRONOUNCEMENT : / / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-II, SURAT DATED 08/10/2009. THE ASSESSEE IS AGGRIEVED BY THE CONF IRMATION OF PENALTY LEVIED U/S.271(1)(C) OF THE I.T.ACT OF RS.95,784/-. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATED 06/1 2/2006 AND PENALTY ORDER U/S.271(1)(C) OF THE I.T.ACT DATED 28/11/2008 WERE THAT INDIVIDUAL CAPACITY RETURN WAS FILED AT RS.1,95,360/-, WHEREAS THE ASSESSMENT WAS MADE ON AN INCOME OF RS.8,17,811/- VIDE ASSESSMENT ORDER PASSED ITA NO.3367/AHD /2009 CHAMPAKALAL VALLABHBHAI PATEL VS. ACIT ASST.YEAR - 1993-94 - 2 - U/S.143(3) DATED 25/03/1996. THAT ORDER WAS CHALLE NGED BEFORE THE LEARNED CIT(APPEALS) WHICH HAS REDUCED THE TOTAL AS SESSED INCOME AT RS.7,40,381/-. THEREAFTER, AN APPEAL WAS FILED BEF ORE THE TRIBUNAL. OUR ATTENTION WAS DRAWN THAT DURING THE RE-ASSESSMENT P ROCEEDINGS, FOLLOWING ADDITIONS WERE UNDER DISPUTE:- [A] INTEREST ASSUMED ON ALLEGED UNACCOUNTED ADVANCES RS.3,00,000/- [B] INTEREST ASSUMED IN UNACCOUNTED INTEREST INCOME RS. 5,560/- [C] INTEREST PAYMENT ON MOTOR CAR.. RS. 18,059/- [D] ALLEGED UNACCOUNTED EXPENDITURE RS. 10,700/- [E] ALLEGED UNACCOUNTED MARRIAGE EXPENSES RS.2,00,0 00/- RS.5,34,319/- 3. IT HAS ALSO BEEN PLACED ON RECORD THAT IN THE PA ST THE MATTER WAS SUBJUDICE BEFORE THE RESPECTED SETTLEMENT COMMISSIO N. THE SETTLEMENT COMMISSION HAD OBSERVED THAT NORMAL AND ROUTINE ADD ITIONS WERE TO BE RETAINED. DUE TO THE SAID OBSERVATION, AN ADDITION OF RS.2 LACS TOWARDS UNACCOUNTED MARRIAGE EXPENSES AND AN ADDITION IN RE SPECT OF INTEREST PAID ON LOAN TAKEN FOR PURCHASE OF MOTOR-CAR OF RS.18,05 9/- AND FURTHER AN ADDITION TOWARDS UNACCOUNTED EXPENSES OF RS.10,700/ - WAS TREATED AS NORMAL ROUTINE ADDITIONS AND SUSTAINED. WHILE LEVY ING THE PENALTY THE ASSESSING OFFICER HAS OBSERVED AS FOLLOWS:- 5. THE REPLY OF THE ASSESSEE LONG WITH ANNEXURE A IS CONSIDERED CAREFULLY. HOWEVER, SAME IS NOT ACCEPTA BLE AS PERUSAL OF ORDER OF HON'BLE SETTLEMENT COMMISSION SHOWS THA T HONBLE SETTLEMENT COMMISSION HAD ACCEPTED THE CONTENTION O F THE ASSESSEE THAT ONLY SOURCE OF INCOME OF ASSESSEE WAS THE RECEIPT OF ITA NO.3367/AHD /2009 CHAMPAKALAL VALLABHBHAI PATEL VS. ACIT ASST.YEAR - 1993-94 - 3 - ON MONEY. THEY ALSO ACCEPTED CASH FLOW STATEMENT SUBMITTED BY THE ASSESSEE, WHICH SHOWS THAT HONBLE SETTLEMEN T COMMISSION ACCEPTED THAT THERE WAS NO OTHER SOURCE OF INCOME O F THE ASSESSEE AND NO OTHER INVESTMENT APART FROM SHOWN IN THE CAS H FLOW STATEMENT WAS MADE BY THE ASSESSEE. THE NOTIONAL I NTEREST EARNED BY THE ASSESSEE WAS ACCEPTED AS EARNED FROM DEPLOYM ENT OF ON MONEY. THE HONBLE SETTLEMENT COMMISSION GAVE CLE AR DIRECTION AS TO WHICH ADDITIONS NEEDED TO BE DELETE D FROM REGULAR ASSESSMENT. THESE INCLUDED ADDITIONS ON ACCOUNT OF BOGUS GIFTS, UNEXPLAINED INVESTMENT IN LAND AND UNACCOUNTED ADVA NCES AS ALSO THE NOTIONAL INTEREST EARNED FROM SUCH ADVANCES. H ENCE, IT IS CRYSTAL CLEAR THAT ASSESSEE HAS INCURRED UNACCOUNTE D EXPENSES OF RS.2,39,461/-. 3.1. ACCORDINGLY, A PENALTY OF RS.95,784/- WAS LEVI ED AND THE SAME WAS CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY. T HE LEARNED CIT(APPEALS) HAS EXPRESSED THAT THE IMPUGNED ADDITI ONS, SUCH AS, UNEXPLAINED MARRIAGE EXPENSES, UNACCOUNTED INTEREST ON CAR LOAN AND UNACCOUNTED EXPENSES WERE OUTSIDE THE PURVIEW OF TH E OBSERVATION OF THE HON'BLE SETTLEMENT COMMISSION. THOSE ADDITIONS WER E REGULAR AND ROUTINE ADDITIONS, THOSE ADDITIONS WERE THEREFORE C ONFIRMED. THE ADDITION WAS MADE BECAUSE THE ASSESSEE HAS FURNISHED INACCUR ATE PARTICULARS. THE LEARNED CIT(APPEALS) HAS HELD THAT THOSE EXPENSES W ERE INCURRED FROM UNDISCLOSED SOURCES OTHER THAN THE ON-MONEY RECEI VED BY THE ASSESSEE. IN THE RESULT, HE HAS CONFIRMED THE PENALTY. 4. WITH THIS FACTUAL BACKGROUND, LD.AR HAS INFORMED THAT THE IMPUGNED QUANTUM ADDITION WAS CHALLENGED BEFORE TH E ITAT AHMEDABAD SMC BENCH IN ITA NO.3714/AHD/2007 FOR A.Y. 1993-94 AND VIDE ORDER DATED 26/12/2007 THE ADDITION WAS CO NFIRMED AS FOLLOWS:- ITA NO.3367/AHD /2009 CHAMPAKALAL VALLABHBHAI PATEL VS. ACIT ASST.YEAR - 1993-94 - 4 - 3.3. BY WRITTEN SUBMISSIONS, ASSESSEE CONTENDS THA T ADDITIONS IN QUESTION ARE NOT ROUTINE ADDITIONS BUT ARE COVERED BY CASH FLOW STATEMENT GIVEN BY ASSESSEE AND REPRESENTS AMOUNTS DEPLOYED OUT OF MONEY RECEIVED WHICH WAS OFFERED FOR TAXATION. 3.4. LEARNED DR, ON THE OTHER HAND VEHEMENTLY RELIE D ON THE ORDERS OF LOWER AUTHORITIES AND CONTENDS THAT ADDIT IONS IN QUESTION ARE ROUTINE ADDITIONS REFERRED TO BY SETTLEMENT COM MISSION, WHICH HAS CLEARLY SPELT OUT WHICH ADDITIONS ARE TO BE DEL ETED FROM REGULAR ASSESSMENT, WHICH INCLUDED BOGUS GIFTS UNEX PLAINED INVESTMENT IN LAND, UNACCOUNTED ADVANCES ETC. ADDI TIONS MADE BY AO ARE NOT COVERED BY SUCH EXCLUSION BY THE SETTLE MENT COMMISSION. 4. I HAVE HEARD LEARNED DR, GONE THROUGH WRITTEN SU BMISSIONS AND MATERIAL AVAILABLE ON RECORD. I FIND NO INFIRM ITY IN THE ORDER OF LOWER AUTHORITIES, AS THE AVAILABLE RECORD INDIC ATES SETTLEMENT COMMISSION HAS SPELT OUT ITEMS TO BE EXCLUDED FROM ADDITIONS AND REST OF THE ITEMS HAVE BEEN TERMS AS ROUTINE ADDITI ONS. SINCE MARRIAGE EXPENSES AND INTEREST ON MOTOR CAR DO NOT APPEAR IN EXCLUDED CATEGORY, LOWER AUTHORITIES ARE JUSTIFIED IN MAKING THESE ADDITIONS.. THEIR ORDERS ARE UPHELD. 5. WITH THIS BRIEF FACTUAL BACKGROUND, LD.AR HAS DR AWN OUR ATTENTION ON THE STATEMENT OF FACTS WHICH WERE FILED BEFORE T HE FIRST APPELLATE AUTHORITY; RELEVANT PORTION IS REPRODUCED BELOW:- IN THE CIRCUMSTANCES, THE GROUP OF THE ASSESSEE AR GUED OUT BEFORE THE HONORABLE SETTLEMENT COMMISSION THAT SUCH ADDITIONS SHOULD NOT BE MADE CONSIDERING THE CASH FLOW STATEMENT AND STATEM ENT OF EMPLOYMENT AND DEPLOYMENT SUBMITTED TO THE HONORABLE SETTLEMEN T COMMISSION WHEREIN THE MARRIAGE EXPENSES OF RS.2,00,000/- IS R EFLECTED AND AMOUNT OF RS.3,31,000/- IS ALSO REFLECTED FOR ANY OTHER DI SCREPANCIES. 6. THE LD.AR HAS ALSO DRAWN OUR ATTENTION ON THE SU MMARY OF EMPLOYMENT AND DEPLOYMENT OF ON-MONEY. THE LD.AR HAS ITA NO.3367/AHD /2009 CHAMPAKALAL VALLABHBHAI PATEL VS. ACIT ASST.YEAR - 1993-94 - 5 - EXPLAINED THAT CONSEQUENT UPON A SEARCH IN THE GROU P A DISCLOSURE OF ON- MONEY OF RS.80 LACS WAS MADE. THE SAID ON-MONEY WAS UTILIZED FOR MARRIAGE EXPENSES OF SON SHRI MAYUR HELD IN 1993 AN D IT WAS EXPLAINED THAT THE MARRIAGE EXPENDITURE OF RS.2 LACS WAS OUT OF THE SAID OFFER OF ON-MONEY. LIKEWISE, TO COVER UP THE DISCREPANCIE S A SUM OF RS.3,31,072/- WAS ALSO STATED TO BE OUT OF THE SAID ON-MONEY. HENCE, THE LD.AR HAS EXPLAINED THAT THE SOURCE OF MARRIAGE EXPENSE AND OTHER EXPENSES WAS VERY MUCH DISCLOSED, HOWEVER, THAT EXP LANATION WAS REJECTED BY THE HON'BLE SETTLEMENT COMMISSION MEREL Y BY STATING THAT THOSE WERE ROUTINE ADDITIONS. THE LD.AR HAS ARGUED THAT OTHERWISE THERE WAS NO DETECTION OF FURNISHING OF INACCURATE PARTI CULARS. 7. FROM THE SIDE OF THE REVENUE, LD.DR MR. SUNIL TE KRIWAL HAS INFORMED THAT AS PER THE VERDICT OF THE HON'BLE SET TLEMENT COMMISSION NO SCOPE WAS LEFT BUT TO ASSESS THE INCOME WHICH WE RE FOUND TO BE ROUTINE ADDITIONS. ACCORDINGLY, THE ASSESSING OFFI CER HAD FINALIZED THE ASSESSMENT AND ON THOSE ADDITIONS PENALTY WAS LEVIE D. THE LD.DR HAS ALSO INFORMED THAT THE ASSESSEE HAS CHALLENGED THE SAID ORDER OF THE TRIBUNAL THROUGH A MISCELLANEOUS PETITION WHICH HAS ALSO BEEN DISMISSED. 8. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTICED THAT THE ASSESSEE HAS FURNISHED THE SUMMARY OF DEPL OYMENT OF ON- MONEY. THE ASSESSEE HAS EXPLAINED THAT MARRIAGE E XPENSES AND OTHER DISCREPANCIES WERE OUT OF THE SAID ON-MONEY WHICH WAS OFFERED FOR TAX PURPOSE. UNDER THESE CIRCUMSTANCES, WE HAVE TO ANS WER A LIMITED QUESTION THAT WHETHER THE SAID EXPLANATION WAS ALTO GETHER FALSE OR BOGUS. ITA NO.3367/AHD /2009 CHAMPAKALAL VALLABHBHAI PATEL VS. ACIT ASST.YEAR - 1993-94 - 6 - THE ASSESSEES PLAIN SUBMISSION WAS THAT THE MARRIA GE EXPENSES AND OTHER EXPENSES WERE OUT OF THE SAID UNACCOUNTED ON -MONEY. THAT EXPLANATION WAS PART AND PARCEL OF RECORDS OF THE A UTHORITIES BELOW AS IT WAS ADMITTED BY THE ASSESSING OFFICER HIMSELF WHILE LEVYING THE PENALTY IN QUESTION. THAT ANNEXURE A WAS ALSO PLACED ALO NG WITH THE STATEMENT OF FACTS AND WRITTEN SUBMISSIONS STATED T O BE FILED BEFORE THE LD.CIT(A). THERE IS NO FINDING OF THE REVENUE THAT IT WAS A FALSE OR AN UNTRUE CLAIM. IT IS AN ESTABLISHED POSITION OF LAW THAT PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND THE OBSERVATIONS MA DE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE OBSERVATIONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS MAY OR MAY NOT AFFECT THE LEVY OF PENALTY. IN THE PRESENT CASE, THOUGH THE SETTLEMENT COMMISSION HAS HELD THAT IT WAS A ROUTINE ADDITION AND THOSE WERE LATER ON MADE BY TH E ASSESSING OFFICER BUT THE SAID SOURCE OF ON-MONEY WHICH WAS ALSO SU BJECT TO TAX WAS NOT ALTOGETHER DISCARDED. IN VIEW OF THIS, WE HEREBY H OLD THAT THE LEVY OF CONCEALMENT PENALTY WAS NOT JUSTIFIED. TOTALITY OF THE CIRCUMSTANCES WARRANTS TO DIRECT TO DELETE THE PENALTY. GROUND I S ALLOWED 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. SD/- SD/ - ( A.L. GEHLOT ) ( M UKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13/ 01 /2012 0,.., .../ T.C. NAIR, SR. PS ITA NO.3367/AHD /2009 CHAMPAKALAL VALLABHBHAI PATEL VS. ACIT ASST.YEAR - 1993-94 - 7 - / ( %+1 2 1+ / ( %+1 2 1+ / ( %+1 2 1+ / ( %+1 2 1+/ COPY OF THE ORDER FORWARDED TO : 1. $ / THE APPELLANT 2. %&$ / THE RESPONDENT. 3. + )3 / CONCERNED CIT 4. )3() / THE CIT(A)-II, SURAT 5. 167 %+ , , / DR, ITAT, AHMEDABAD 6. 78 9* / GUARD FILE. /) /) /) /) / BY ORDER, &1+ %+ //TRUE COPY// : :: :/ // / ' ' ' ' ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..9/1/2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 9/1/2012 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 13.1.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.1.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER