Shri Manharbhai Hirabhai Patel, Ahmedabad V. The Income tax Officer, Ward-2(2), Ahmedabad

ITA 363/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9401 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 08-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAGENDRA SNGH SR DR
• Assessee Lawyers: ANIL R SHAH
• Keywords: Unexplained cash credit; Income from undisclosed sources

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO. 363/AHD/2012 ( / ASSESSMENT YEAR : 2004-05) SHRI MANHARBHAI HIRABHAI PATEL MOTI BHAGOL AT & PO BHAILLI DIST.BARODA 391 410 / VS. THE INCOME TAX OFFICER WARD-2(2) BARODA ./ ./ PAN/GIR NO. : ACWPP 0651 N ( ' / APPELLANT ) .. ( #' / RESPONDENT ) ' $ / APPELLANT BY : SHRI ANIL R.SHAH, AR #' % $ / RESPONDENT BY : SHRI NAGENDRA SNGH, SR.DR &'( % ) / DATE OF HEARING 16/02/2016 *+, % ) / DATE OF PRONOUNCEMENT 26/02/2016 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-III, BARODA [CIT(A) IN SHORT] DATED 23/12/2011 PERTAINING TO ASSESSMENT Y EAR (AY) 2004-05. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- ITA NO.363/AHD/ 2012 SHRI MANHARBHAI HIRABHAI PATEL VS. ITO ASST.YEAR 2004-05 - 2 - 1. THE CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN UPHOLDING THE LEVY OF PENALTY OF RS. 1,41,800 U/S.271(L)(C ) OF THE ACT WHICH IS VERY ST RONGLY OBJECTED BY YOUR APPELLANT. 2. THE PENALTY PROCEEDINGS INITIATED BY THE ASSESSING OFFICER WERE WITHOUT 'RECORDING SATISFACTION OF CONCEALMENT' WHICH GOES TO THE ROOT OF LEVY OF PENALTY AND THEREFORE YOUR APPELLANT SUBMITS THAT PENALTY IS BA D IN LAW AND VOID. 3. THE SHOW CAUSE NOTICE ISSUED BY THE INCOM E-TAX OFFICER ALONGWITH THE COPY OF ASSESSMENT ORDER WAS VAGUE, CAPABLE OF TWO VIEWS AN D NOT CLEAR AND DEFINITE AS TO WHETHER THE PROPOSED ACTION WAS FOR 'CONCEALING INC OME' OR 'FOR SUBMITTING IN ACCURATE PARTICULARS OF SUCH INCOME' AND THEREBY IT IS SUBMI TTED THAT THE PENALTY PROCEEDINGS ARE BAD IN LAW AND VOID. ON MERITS OF THE CASE: 1. YOUR APPELLANT SUBMITS THAT HE HAS NOT CO NCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND THAT HE HAD SU BMITTED FULL DATA AND INFORMATION WITH REGARD TO HIS AGRICULTURE INCOME WHICH WAS NOT ACCEPTED BY THE I.T.O. AND WAS CONFIRMED AS 'INCOME FROM OTHER SOURCES'. IT IS SUBMITTED THAT YOUR APPELLANT HE HAD FILED FU LL INFORMATION AND PARTICULARS AND PROOF OF HIS EARNING AGRICULTURAL INCOME AND NOT ACCEPTIN G THE SAME DOES NOT ATTRACT LEVY OF PENALTY U/S.271(L)(C). 2. WITH REGARD TO THE MERITS AND NATURE OF A GRICULTURAL INCOME, ON FACTS OF THE CASE THERE ARE TWO VIEWS POSSIBLE AND THE QUESTION OF TR EATING INCOME AS AGRICULTURAL INCOME OR 'INCOME FROM OTHER SOURCES' IS HIGHLY DEBATABLE, AND THEREFORE ALSO PENALTY IS NOT LEVIABLE. 3. WITHOUT PREJUDICE TO ABOVE YOUR APPELLANT SUBMITS THAT RS.2,36,255/-BEING AGRICULTURAL INCOME IS ADJUSTED AGAINST INCOME FROM OTHER SOURCES OF RS.2,31,689/- AND FINAL INCOME OF YOUR APPELLANT AS PER ORDER OF FLAT IS ONLY RS.4,566/- SO PENALTY IF AT ALL LEVIABLE IS ON RS.4,566/-ONLY. IT IS THEREFORE SUBMITTED THAT RELIEF CLAIMED ABOVE BE ALLOWED AND THE ORDER OF THE ASSESSING OFFICER BE MODIFIED ACCORDINGLY. YOUR APPELLANT RESERVES RIGHT TO ADD, ALTER, AMEND TO WITHDRAW ANY OR ALL GROUND OF APPEAL. ITA NO.363/AHD/ 2012 SHRI MANHARBHAI HIRABHAI PATEL VS. ITO ASST.YEAR 2004-05 - 3 - 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 27/12/2006, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE TH E ADDITION OF RS.2,36,255/- ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES. THE AO ALSO MADE ADDITION OF RS.1,60,000/- ON ACCOUNT OF UNEXPLAINED PAYMENT OF HOUSING LOAN AND ADDITIONS O F RS.41,769/- & 29,920/- ON ACCOUNT OF UNEXPLAINED CREDITS IN BANK ACCOUNT. WHILE FRAMING THE ASSESSMENT, THE AO ALSO INITIATED PENAL TY PROCEEDING. SUBSEQUENTLY, THE AO IMPOSED A PENALTY AMOUNTING TO RS.1,41,800/- ON ADDITION OF RS.2,36,255/-. THE ASSESSEE BEING AGGR IEVED BY THE SAID ORDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WH O AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DISMISSED THE APPEA L. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL B EFORE US. 3. THE LD.COUNSEL FOR THE ASSESSEE MADE TWO-FOLD SU BMISSIONS; ONE BEING LEGAL SUBMISSION THAT THE AO HAS NOT RECORDED THE SATISFACTION OF CONCEALMENT OF INCOME AND IN SUPPORT OF THIS CONTEN TION, THE LD.COUNSEL FOR THE ASSESSEE HAD RELIED ON THE JUDGEMENT OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NEW SORATHIA ENGG.CO. VS. CIT REPORTED AT 282 ITR 642 (GUJ.), CIT VS. JYOTI LTD. 216 TAXMAN 64 (G UJ.) AND CIT VS. WHITEFORD INDIA LTD. IN TAX APPEAL NO.498 OF 2013 D ATED 24/06/2013 (GUJARAT HIGH COURT). ITA NO.363/AHD/ 2012 SHRI MANHARBHAI HIRABHAI PATEL VS. ITO ASST.YEAR 2004-05 - 4 - 3.1. ON MERIT, THE LD.COUNSEL FOR THE ASSESSEE SUBM ITTED THAT IN QUANTUM PROCEEDINGS, THE MATTER TRAVELLED UPON TO THE HONB LE TRIBUNAL (ITAT B BENCH AHMEDABAD) AND THE TRIBUNAL IN ITA NO.220 8/AHD/2008 IN THE CASE OF SHRI MANHARBHAI HIRABHAI VS. ITO FOR AY 2004-05 VIDE ORDER DATED 06/02/2009 WAS PLEASED TO RESTRICT THE ADDITION OF RS.2,36,255/- TO THE EXTENT OF RS.4,566/-. IN SUPP ORT OF THIS CONTENTION, THE LD.COUNSEL FOR THE ASSESSEE DRAWN OUR ATTENTION TOWARDS PARA-18 OF THE SAID TRIBUNALS ORDER. 3.2. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENTS/DECISION RELIED UPON BY T HE LD.COUNSEL FOR THE ASSESSEE. THERE IS NO DISPUTE WITH REGARD TO THE F ACT THAT THE ADDITION HAS BEEN MADE PURELY ON THE BASIS OF ESTIMATION. THE A O IN RESPECT OF THE AGRICULTURAL INCOME HAS OBSERVED THAT, AS PER RECOR D, THE GROSS AGRICULTURAL RECEIPT WAS RS.3,41,064/-, WHEREAS THE ASSESSEE HAS CLAIMED A SUM OF RS.4,75,000/-. THEREFORE, THE AO ADOPTED THE AGRICULTURAL INCOME AT RS.2,38,745/- AFTER DEDUCTING EXPENDITURE @ 30% ON GROSS RECEIPT. THERE IS NO DISPUTE WITH REGARD TO THE F ACT THAT THE AO HAD LEVIED PENALTY ON ADDITION OF RS.2,36,255/-. THE M ATTER TRAVELLED UPTO THE ITA NO.363/AHD/ 2012 SHRI MANHARBHAI HIRABHAI PATEL VS. ITO ASST.YEAR 2004-05 - 5 - ITAT AND THE TRIBUNAL IN ITA NO.2208/AHD/2008 FOR A Y 2004- 05(SUPRA) HAS RESTRICTED THE ADDITION TO RS.4,566/- OUT OF RS.2,36,255/- AFTER ALLOWING SET OFF. IN THE PRESENT CASE, THE P ENALTY IS IMPOSED ON THE ENTIRE AMOUNT BUT THE ADDITION WAS SUSTAINED TO THE EXTENT OF RS.4,566/-. THEREFORE, UNDER THE FACTS OF THE PRESENT CASE, TH E AO WAS NOT JUSTIFIED IN LEVYING THE PENALTY ON THE ENTIRE AMOUNT OF RS.2 ,36,255/-. HENCE, WE DIRECT THE AO TO DELETE THE PENALTY. THUS, GROUND RAISED BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 26 TH DAY OF FEBRUARY, 2016 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 26/ 02 /2016 0)..& , '.&../ T.C. NAIR, SR. PS ITA NO.363/AHD/ 2012 SHRI MANHARBHAI HIRABHAI PATEL VS. ITO ASST.YEAR 2004-05 - 6 - !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 123 4 / CONCERNED CIT 4. 4 ( ) / THE CIT(A)- 5. 5'6 &23 , ) 23 , , 1 / DR, ITAT, AHMEDABAD 6. 689 :( / GUARD FILE. / BY ORDER, #5 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 24.2.16 (DICTATION-PAD 7+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..25.2.16 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.26.2.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 26.2.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER