DCIT, Trivandrum V. Late S>Varadaraulu rep by L/hr, Kottayam

ITA 361/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64803 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R KRISHNAN

Judgement Text

1 ITA NOS. 361 TO 366/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 361 TO 366/COCH/2011 (ASSESSMENT YEARS 2002-03 TO 2008-09) THE DY.CIT, CENT.CIR.1 VS LATE S VARADARAJULU TRIVANDRUM L/H SHRI SREEUNAN, SREE SYLAM UNION CLUB ROAD, KOTTAYAM PAN : ACGPR0187F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRATAP NARAYAN SHARMA RESPONDENT BY : SHRI R KRISHNAN DATE OF HEARING : 03-09-2012 DATE OF PRONOUNCEMENT : 07-09-2012 O R D E R PER N.R.S. GANESAN (JM) ALL THE SIX APPEALS OF THE REVENUE ARE DIRECTED AG AINST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX(A) CONFIRMI NG THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEARS 2003-0 4 TO 2008-09. SINCE ALL THE APPEALS PERTAIN TO THE SAME TAXPAYER AND THE ISSUE INVOLVED IN THE APPEALS IS COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPEALS W ERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. SHRI PRATAP NARAYAN SHARMA, THE LD.DR SUBMITTED THAT THE TAXPAYER WAS A PARTNER IN M/S PARTHAS TEXTILES, KOTTAYAM AND EXPIRE D SOMETIME IN SEPTEMBER, 2 ITA NOS. 361 TO 366/COCH/2011 2009. THE LD.DR FURTHER POINTED OUT THAT THERE WER E CREDITS IN THE BANK ACCOUNTS OF THE TAXPAYER. SINCE THE TAXPAYER EXPIRED IN THE MONTH OF SEPTEMBER, 2009 THE LEGAL HEIRS OF THE TAXPAYER COULD NOT EXPLAIN PROPE RLY THE NATURE AND SOURCE OF CREDIT FOUND IN THE BANK ACCOUNT. THE LD.DR FURTHER POINTED OUT THAT SINCE NO EXPLANATION WAS OFFERED BY THE LEGAL REPRESENTATIVE IN RESPECT OF CREDITS FOUND IN THE BANK ACCOUNT, THE ASSESSING OFFICER MADE THE ADD ITION WHICH WAS FOUND IN THE BANK ACCOUNT. IN FACT, ACCORDING TO THE LD.DR, THE LEGAL REPRESENTATIVE OF THE TAXPAYER HAS NOT OBJECTED TO THE ADDITION OF THE EN TRIES FOUND IN THE BANK ACCOUNT. AFTER INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, THE ASSESSING OFFICER CALLED FOR EXPLANATION. HOWEVER, THE LEGAL REPRESENTATIVE OF THE TAXPAYER COULD NOT FURNISH ANY SATISFACTORY EXPLANA TION WITH REGARD TO THE CREDITS FOUND IN THE BANK ACCOUNT. THEREFORE, THE ASSESSING OFFICER HAS LEVIED PENALTY FOR CONCEALMENT OF INCOME. 3. ON THE CONTRARY, SHRI R KRISHNAN, THE LD.REPRESEN TATIVE FOR THE TAXPAYER SUBMITTED THAT THE TAXPAYER WAS EXPELLED FROM PARTH AS TEXTILES, THE PARTNERSHIP FIRM, ON THE ALLEGATION OF MISAPPROPRIATION OF FUND S. DURING THE PENDENCY OF THE ASSESSMENT PROCEEDINGS, THE TAXPAYER EXPIRED. SINC E THE TAXPAYER EXPIRED, THE LEGAL REPRESENTATIVE COULD NOT EXPLAIN PROPERLY THE SOURCE FOR CREDIT FOUND IN THE BANK ACCOUNT. THERE WAS DISPUTE BETWEEN THE TAXPAYE R AND THE OTHER PARTNERS OF THE FIRM WHICH WAS REFERRED TO THE ARBITRATION. ONE OF THE ALLEGATIONS AMONGST THE PARTNERS WAS THAT THE TAXPAYER HAS TAKEN AWAY TH E FUNDS OF THE FIRM AND DEPOSITED THE SAME IN HIS INDIVIDUAL ACCOUNT. HOWE VER, THESE FACTS WERE NOT WITHIN THE KNOWLEDGE OF THE LEGAL REPRESENTATIVE. T HEREFORE, IN THE ASSESSMENT PROCEEDINGS, THE LEGAL REPRESENTATIVE HAS NOT CONTE STED THE ADDITION. IT DOES NOT MEAN THAT THE TAXPAYER HAS EARNED UNACCOUNTED MONEY . SINCE THE TAXPAYER IS NO MORE AND THE LEGAL REPRESENTATIVE WAS NOT IN A POSI TION TO EXPLAIN THE SOURCE OF 3 ITA NOS. 361 TO 366/COCH/2011 CREDIT FOUND IN THE BANK ACCOUNT, ACCORDING TO THE L D.REPRESENTATIVE, LEVY OF PENALTY IS NOT JUSTIFIED. THEREFORE, THE COMMISSIO NER OF INCOME-TAX(A) HAS RIGHTLY DELETED THE PENALTY. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS WELL SETTLED PRINCIPLES OF LAW THAT ALL ADDITIONS MADE IN THE ASSESSMENT PROCEEDINGS DO NOT AUTOMATICALLY RES ULT IN LEVY OF PENALTY. THE ASSESSING AUTHORITY IS EXPECTED TO REAPPRECIATE THE EVIDENCE AVAILABLE ON RECORD INDEPENDENTLY IN THE PENALTY PROCEEDINGS AND THEREA FTER IF HE COMES TO THE CONCLUSION THAT THERE WAS CONCEALMENT OF PARTICULAR S OF INCOME OR THE TAXPAYER HAS FURNISHED INACCURATE PARTICULARS WITH REGARD TO THAT INCOME PENALTY U/S 271(1)(C) MAY BE LEVIED. IN THIS CASE, ADMITTEDLY, THE TAXPAYER EXPIRED IN THE MONTH OF SEPTEMBER, 2009. IT IS ALSO NOT IN DISPUT E THAT THE TAXPAYER WAS EXPELLED FROM THE PARTNERSHIP FIRM ON THE ALLEGATIO N OF MISAPPROPRIATION OF FIRMS FUNDS. THE FACTUAL SITUATION COULD HAVE BEEN WELL EXPLAINED BEFORE THE ASSESSING AUTHORITY BY THE TAXPAYER HIMSELF. UNFORTUNATELY, THE TAXPAYER IS NO MORE. THEREFORE, THE LEGAL REPRESENTATIVES OF THE TAXPAYE R WERE PRACTICALLY HANDICAPPED IN EXPLAINING THE REAL SITUATION WHICH RESULTED IN CREDIT OF THE AMOUNT IN THE BANK ACCOUNT. IN SUCH A CIRCUMSTANCE, WE MAY NOT BE ABL E TO BLAME THE LEGAL HEIRS IN NOT FURNISHING A SATISFACTORY EXPLANATION. BY TAKIN G INTO CONSIDERATION THE DEATH OF THE TAXPAYER AND THE PRACTICAL DIFFICULTY FACED BY THE LEGAL HEIRS IN FURNISHING THE REASONS FOR NOT OFFERING THE AMOUNT FOUND IN TH E BANK ACCOUNT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY. THEREFORE, THE COMMISSIONER OF INCOME-TAX(A) HAS RI GHTLY DELETED THE PENALTY. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LO WER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 4 ITA NOS. 361 TO 366/COCH/2011 5. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ST AND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07 TH SEPTEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 07 TH SEPTEMBER, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH