Rakesh Jain, Ghaziabad V. DCIT, Ghaziabad

ITA 3543/DEL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5881 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Salary income; Reasonable cause; Accommodation entries
• Section: 153A; 69; 27; 132

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3543&3544/DEL/2016 (ASSESSMENT YEAR: 2008 - 09 & 2009 - 10 ) RAKESH JAIN, 12/40, RAJ NAGAR, GHAZIABAD PAN: ADBPJ5838K VS. DCIT, CENTRAL CIRCLE, GHAZIABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY: SHRI S.S. RANA, CIT DR DATE OF HEARING 13/03 / 2018 DATE OF PRONOUNCEMENT 3 0 / 05 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. TH ESE ARE THE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT (A) - IV, KANPUR DATED 31.03.2016 FOR ASSESSMENT YEAR 2008 09 AND 2009 10 WHERE IN PENALTY LEVIED F OR BOTH ASSESSMENT YEAR S UNDER SECTION 271B OF THE INCOME TAX ACT 1961 IS CONFIRMED. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR THE ASSESSMENT YEAR 2008 - 09: - 1. THE PENALTY ORDER OF ASSESSING OFFICER IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. THE PENALTY NEEDS DELETION AS BUSINESS TURNOVER WAS NIL. A IS DOING NO BUSINESS OR PROFESSION & HENCE NOT COVERED BY PROVISION OF TAX AUDIT REPORT. A HAS BEEN OFFERED FOR TAXATION UNDER THE HEAD INCOME FROM SALARY AND INCOME FROM OTHER SOURCE ONLY. 3. TH E ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR THE ASSESSMENT YEAR 2009 - 10: - 1. THE PENALTY ORDER OF ASSESSING OFFICER IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. THE PENALTY NEEDS DELETION AS BUSINESS TURNOVER WAS NIL. A IS DOING NO BUSINESS OR PROFESSION & HENCE NOT COVERED BY PROVISION OF RAKESH JAIN VS. DCIT ITA NO. 3543&3544/DEL/2016 (ASSESSMENT YEAR: 2008 - 09 & 2009 - 10) PAGE | 2 TAX AUDIT REPORT. A HAS BEEN OFFERED FOR TAXATION UNDER THE HEAD INCOME FROM SALARY AND INCOME FROM OTHER SOURCE ONLY. 4. THE BRIEF FACTS OF THE CASE OF THE APPELLANT ARE THAT SEARCH U/ S 132 OF THE INCOME TAX ACT WAS CARRIED OUT ON 9/9/2010 AT THE OFFICE AND RESIDENTIAL PREMISES OF MR. MANISH JAIN,, SH. NEERAJ JAIN, SH. RAKESH JAIN (APPELLANT) AND OTHERS . D URING THE COURSE OF SEARCH IT WAS FOUND THAT ALL THESE PERSONS HAVE MADE HUGE CASH TR ANSACTIONS FOR THE LAST SEVERAL YEARS IN THE MORE THAN 6 6 DIFFERENT FIRMS AND CONCERN S OPERATED FROM SEVERAL ADDRESSES IN GHAZIABAD . NONE OF THE FIRMS WAS FOUND EXISTING THERE NEITHER AT THE TIME OF THE SEARCH OR AT THE TIME OF ASSESSMENT PROCEEDINGS. THER EFORE NOTICES UNDER SECTION 153A WERE ISSUED FOR FILING RETURN OF INCOME TO THE ASSESSEE AND CONSEQUENTLY ASSESSMENT FOR ASSESSMENT YEAR 2008 09 WAS COMPLETED ON 31/3/2013 AT THE TOTAL INCOME OF RS. 2, 69, 75, 717/ . THERE WERE HUGE CASH DEPOSITS IN THE BANK ACCOUNT OF APPROXIMATELY RS. 2, 55, 35, 800/ - . THE TOTAL CREDIT AMOUNTS WERE RS. 2, 67, 65, 360/ . SAME WERE ADDED AS UNEXPLAINED INCOME OF THE ASSESSEE U/S 69 OF THE ACT. 5. AS ACCORDING TO THE LD. AO THE TURNOVER OF THE ASSESSEE IS MORE THAN SPEC IFIED AMOUNT UNDER SECTION 44AB OF THE ACT , NOTICE UNDER SECTION 271B WAS ISSUED ON 31/3/2013 . HO WEVER, NONE ATTENDED BEFORE THE ASSESSING OFFICER DESPITE ADEQUATE OPPORTUNITY ON TWO DIFFERENT OCCASIONS. HOWEVER, LATER ON ASSESSEE SUBMITTED THAT AS THE ASS ESSEE IS A COMMISSION AGENT AND HIS TURNOVER CANNOT INCLUDE TURNOVER ON BEHALF OF HIS PRINCIP ALS THE PENALTY UNDER SECTION 271B CANNOT BE LEVIED. 6. THE LD. ASSESSING OFFICER REJECTED THE SUBMISSION OF THE ASSESSEE AND HELD THAT AMOUNT OF CREDITS IN THE BANK ACCOUNT HAS BEEN CONSIDERED AS INCOME OF THE ASSESSEE AS ASSESSEE COULD NOT SHOW ANY PRINCIPAL. AS THE GROSS RECEIPTS OR CREDITS IN THE BANK ACCOUNT EXCEEDED THE PRESCRIBED LIMIT UNDER SECTION 44 AB OF THE ACT THE ASSESSEE WAS SUPPOSED TO GET HIS ACCOU NTS AUDITED AND THEREFORE THE LD. ASSESSING OFFICER LEVIED PENALTY AT THE RATE OF 0.5% OF THE TURNOVER AMOUNTING TO RS. 1,33,830/ - AS ASSESSE RAKESH JAIN VS. DCIT ITA NO. 3543&3544/DEL/2016 (ASSESSMENT YEAR: 2008 - 09 & 2009 - 10) PAGE | 3 DID NOT FURNISH ANY REASONABLE CAUSE. SUCH ORDER OF PENALTY WAS LEVIED FOR ASSESSMENT YEAR 2008 09 ON 27/9/201 3. 7. THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE LD. AO PREFERRED APPEAL BEFORE THE LD. CIT (A) WHO DECIDED THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 09 AND 2009 10 AS THE FACTS ARE SIMILAR IN BOTH THE CASES OF LEVY OF PENALTY UNDER SECTION 27 1B OF THE ACT FOR ASSESSMENT YEAR 2009 10 THE LD. AO LEVIED PENALTY UNDER SECTION 271B OF THE ACT VIED ORDER DATED 27/9/2013 CONSIDERING THE IDENTICAL FA CTS AND CIRCUMSTANCES OF RS. 1, 50,000/ BEING THE MAXIMUM PENALTY LEVIABLE UNDER THAT SECTION AS IN T HAT PARTICULAR YEAR THE TOTAL AMOUNT CREDITED IN THE BANK ACCOUNT WAS RS. 5,39,69, 613/ . BEFORE THE LD. CIT ( A), THE ASSESSEE IS REITERATED THE SAME SUBMISSION STATING THAT HE WAS NOT CARRYING ANY BUSINESS OR PROFESSION AND FURTHER SUBMITTED THAT THE ASSES SEE CANNOT ANTICIPATE ANY ADDITION AND THEN FILE THE TAX AUDIT REPORT. HE THEREFORE REQUESTED FOR DELETION OF THE PENALTY, 8. THE LD. CIT (A) HELD THAT, AS THERE WERE HUGE CASH DEPOSITS AT REGULAR INTERVALS IN THE BANK ACCOUNTS OF THE APPELLANT ARE ASSESSED A S UNDISCLOSED INCOME , THERE IS TURNOVER EXCEEDING SPECIFIED LIMIT U/S 44AB OF THE ACT. HE HELD THAT THE LD. AO HAS LEVIED PENALTY UNDER SECTION 271B BY GIVING A FINDING THAT THESE UNDISCLOSED DEPOSITS IN THE BANK REPRESENTS THE TURNOVER OF THE APPELLANT. HE FURTHER STATED THAT THE EXPLANATION GIVEN BY THE ASSESSEE IS NOT CORRECT AND IS EVASIVE. HE FURTHER STATED THAT THE CLAIM OF THE ASSESSEE THAT HE HAS NOT CARRIED ON ANY BUSINESS OR PROFESSION CANNOT BE ACCEPTED BECAUSE HE WAS NOT ABLE TO COME OUT WITH ANY COMMITTAL REPLY REGARDING THE SOURCE OF DEPOSITS BEFORE THE AO. HE THEREFORE CONFIRMED THE PENALTY FOR BOTH THE YEARS. 9. DESPITE INTIMATION OF THE DATE OF HEARING FIXED FOR TODAY WAS GIVEN ON 13/1/2018 TO THE COUNSEL OF THE ASSESSEE MR. ASHOK KUMAR AGGAR WAL, CHARTERED ACCOUNTANT, WHO APPEARED ON 13/01/2018 FOR SEEKING ADJOURNMENT ON THAT DATE, NEITHER HE NOR ANYBODY ELSE FROM THE SIDE OF THE ASSESSEE APPEARED ON THE APPOINTED DATE OF HEARING ON 13/3/2018. RAKESH JAIN VS. DCIT ITA NO. 3543&3544/DEL/2016 (ASSESSMENT YEAR: 2008 - 09 & 2009 - 10) PAGE | 4 THEREFORE, WE DO NOT HAVE ANY OTHER OPTION BUT TO DECIDE THE ISSUE INVOLVED IN THIS APPEAL ON MERITS OF THE CASE AS PER FACTS AVAILABLE ON RECORD. 10. THE LD. CIT DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUBMITTED THAT THE AMOUNT DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE IS HELD TO BE INCOME OF THE ASSESSEE . HE FURTHER SUBMITTED THAT THE INCOME OF THE ASSESSEE IS EQUIVALENT TO THE AMOUNT OF TURNOVER FOR THE PURPOSE OF PROVISIONS OF SECTION 44AB OF THE INCOME TAX ACT. HE EVEN OTHERWISE STATED THAT AMOUNT OF TURNOVER CANNOT BE LESS THAN THE AMOUNT OF INCOME TA XED IN THE HANDS OF THE ASSESSEE. HE FURTHER SUBMITTED THAT AS THE ASSESSEE HAS FAILED TO SHOW THE SOURCE OF CASH DEPOSITED IN HIS BANK ACCOUNTS FOR BOTH THE YEARS IT WERE CONSIDERED AS INCOME OF THE ASSESSEE. HE FURTHER STATED THAT ASSESSEE HAS NOT CHALLE NGED THE ORDERS OF THE LD. AO BEFORE THE HIGHER APPELLATE AUTHORITIES IN QUANTUM PROCEEDINGS. HE FURTHER REFERRED TO THE PROVISIONS OF SECTION 271B OF THE INCOME TAX ACT AND SUBMITTED THAT ASSESSEE HAS NOT SHOWN ANY REASONABLE CAUSE FOR NOT GETTING HIS ACC OUNTS AUDITED IN TERMS OF THE PROVISIONS OF SECTION 44AB OF THE INCOME TAX ACT. HE THEREFORE SUBMITTED THAT AS THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING BOGUS ACCOMMODATION ENTRIES AS IT CAN BE EASILY INFERRED FROM THE BANK ACCOUNT OF THE ASSESS EE, AS THE ASSESSEE HAS FAILED TO GIVE ANY INFORMATION WITH RESPECT TO FOR WHOM HE HAS DEPOSITED THE CASH AND FOR WHOM HE HAS WITHDRAWN THE CHEQUES, HE CANNOT BE HELD TO BE A COMMISSION AGENT BUT THE OWNER OF THE SUMS DEPOSITED IN THE BANK ACCOUNT. HE FURT HER STATED THAT WHEN THE QUANTUM ADDITION HAS BEEN MADE BY THE LD. AO WHERE NO REPLY THERE BEEN FILED BY THE ASSESSEE WITH RESPECT TO THE QUANTUM ADDITION, THE PENALTY UNDER SECTION 271B OF THE INCOME TAX ACT DESERVES TO BE CONFIRMED AND NO FAULT CAN BE FO UND WITH THE ORDERS OF THE LOWER AUTHORITIES. 11. WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LD. DEPARTMENTAL REPRESENTATIVE AND THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES. WE HAVE ALSO CONSIDERED THE ORDERS PASSED BY THE RAKESH JAIN VS. DCIT ITA NO. 3543&3544/DEL/2016 (ASSESSMENT YEAR: 2008 - 09 & 2009 - 10) PAGE | 5 LOWER AUTHORITIES ON PENALTY PROCEEDINGS UNDER SECTION 271B OF THE INCOME TAX ACT. ACCORDING TO THE PROVISIONS OF SECTION 44AB OF THE INCOME TAX ACT ANY PERSON WHO IS CARRYING ON BUSINESS OR PROFESSION IF HIS TURNOVER, GROSS RECEIPTS EXCEEDS SPECIFIED AMOUNT THE N HE IS REQUIRED TO GET HIS ACCOUNTS AUDITED IN THE PRESCRIBED MANNER AND SUBMIT THE AUDIT REPORTS BEFORE THE ASSESSING OFFICER. IF HE FAILS TO COMPLY WITH THIS PROVISION THEN HE IS SUBJECT TO PENALTY UNDER SECTION 271B OF THE INCOME TAX ACT AT THE RATE OF 0.5% OF SUCH TURNOVER OR GROSS RECEIPT OR RS. 1, 50, 000/ WHICHEVER IS LOWER. SUCH PENALTIES CAN ONLY BE NOT LEVIED IF THE LD ASSESSING OFFICER IS SHOWN A REASONABLE CAUSE FOR SUCH FAILURE BY THE ASSESSEE. IN THE PRESENT CASE, THE AMOUNT DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE WAS TREATED AS THE INCOME OF THE ASSESSEE AS ASSESSEE FAILED TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSITS. THEREFORE, THE WALL AMOUNT DEPOSITED IN THE BANK ACCOUNT AS ASSESSEE DID NOT EXPLAIN FROM WHOM SUCH MONEY IS RECEIVED AND WHY SUCH CASH DEPOSITS WERE MADE IN HIS BANK ACCOUNT THE ABOVE AMOUNTS WERE TREATED AS TURNOVER OF THE ASSESSEE. THE ASSESSEE HAS MERELY GIVEN A N EXPLANATION THAT HE IS A COMMISSION AGENT AND THE MONEY BELONGS TO THE PRINCIPLE. HOWEVER, HE DID NOT SPECIFY WHO THE PRINCIPLES ARE AND WHO ARE THE BENEFICIARIES OF THE CHEQUE ISSUED FROM THAT BANK ACCOUNT. FURTHER THE EXPLANATION OF THE ASSESSEE THAT A SSESSEE CANNOT ANTICIPATE THE ADDITION TO BE MADE BY THE LD. OFFICER AND THEREFORE THE ACCOUNTS WERE NOT AUDITED. THIS EXPLANATION HAS RIGHTLY BEEN REJECTED BY THE LOWER AUTHORITIES BECAUSE THE ASSESSEE WAS FOUND TO BE DEPOSITING HUGE CASH IN HIS BANK ACCO UNTS AND THEREFORE IT IS HIS DUTY TO EXPLAIN THE SOURCE OF CASH DEPOSIT IN BANK ACCOUNTS WHICH HE FAILED TO DO SO, AND THEREFORE THEY HAVE BEEN TAXED IN THE HANDS OF THE ASSESSEE, EVEN OTHERWISE THE ABOVE EXPLANATION CANNOT STAND THE TEST OF REASONABLE CA USE BECAUSE IT IS THE DUTY OF THE ASSESSEE TO SHOW THAT AMOUNT CREDITED IN THE BANK ACCOUNT IN CASH IN SUCH A HUGE MAGNITUDE CAME FROM WHERE AND WHOM THE CHEQUES WERE ISSUED AFTER DEPOSITING SUCH CASH. THE ASSESSEE IS MISERABLY FAILED TO DO SO. IN VIEW OF THIS THE RAKESH JAIN VS. DCIT ITA NO. 3543&3544/DEL/2016 (ASSESSMENT YEAR: 2008 - 09 & 2009 - 10) PAGE | 6 EXPLANATION GIVEN BY THE ASSESSEE OF BEING THE ONLY A COMMISSION AGENT IS TOTALLY FALSE AND CANNOT BE ACCEPTED AS A REASONABLE CAUSE. IN VIEW OF OTHER FACTS SURROUNDING THE CASE, WHICH HAVE BEEN DESCRIBED BY THE LD. AO IN THE PENALTY ORDER, SHOWS THAT ASSESSEE ALONG WITH OTHERS OPERATING MORE THAN 66 CONCERNS FROM THE ADDRESS, WHICH WERE NOT FOUND EXISTING. THEREFORE, THE ACTIVITIES OF THE ASSESSEE ARE DUBIOUS AND DO NOT INSPIRE ANY CONFIDENCE IN THE EXPLANATION GIVEN BY THE ASSESSEE. AS STATED BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT A THE AMOUNT CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE BOTH THE YEARS WAS HIGHER THAN THE MAXIMUM AMOUNT SPECIFIED UNDER SECTION 44AB OF THE ACT. THEREFORE, ACCORDING TO US THERE IS A CLEAR - CUT DE FAULT WITHOUT REASONABLE CAUSE COMMITTED BY THE ASSESSEE FOR NOT GETTING HIS ACCOUNTS AUDITED UNDER SECTION 44AB OF THE INCOME TAX ACT LEVIABLE FOR PENALTY UNDER SECTION 271B OF THE INCOME TAX ACT, WE FIND NO INFIRMITY IN THE ORDERS OF LOWER AUTHORITIES. H ENCE, BOTH THE PENALTY ORDERS FOR ASSESSMENT YEAR 2008 09 AND 2009 10 ARE CONFIRMED. 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 / 05 / 2018 . - S D / - - S D / - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 / 05 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI