BRIJKISHORE B. AGRAWAL, Nagpur V. JT. CIT-RANGE-8, Nagpur

ITA 38/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1616 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 22-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Bonafide belief; Question of law
• Section: 143(3); 68

Judgement Text

1 ITA NO. 38/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 38/NAG/2014 ASSESSMENT YEAR : 2009 - 10 BRIJKISHORE B. AGRAWAL, JOINT COMMISSIONER OF GONDIA. VS. INCOME - TAX, RANGE - 8, PAN ABJPA 9287H. NAGPUR. . APPELLANT. RESPONDENT. APPELLANT BY : SHRI MUKESH AGRAWAL. RESPONDENT BY : SHRI NARENDRA KANE. DA TE OF HEARING : 21 - 09 - 2015 DATE OF PRONOUNCEMENT : 6 TH NOV. , 2015 O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM AN ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 01 - 10 - 2013 CHALLENGING THE CONFIRMATION OF PENALTY LEVIED U/S 271(1)(C) OF I.T. ACT. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 143(3) DATED 24 - 10 - 2011 AND THE PENALTY ORDER U/S 271(1)(C) DATED 27 - 04 - 2012 WERE THAT THE ASSESSEE IS A CONTRACTOR AND DECLARED AN INCOME OF RS.1,07,24,040/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAD SHOWN LIABILITIES IN THE BALANCE SHEET TOTALLING RS.71,50,000/ - . LIST OF THE PARTIES WERE MENTIONED IN THE IMPUGNED ASSESSMENT ORD ER. THE ASSESSEE WAS ASKED TO FILE THE COPIES OF ACCOUNTS OF AFORESAID PARTIES. 2 ITA NO. 38/NAG/2014 A QUESTION HAS ALSO BEEN RAISED THAT WHETHER THE OUTSTANDING BALANCE REPRESENTED THE LOAN OR THE OUTSTANDING BALANCE WAS A TRADE CRED IT . THE EXPLANATION OF THE ASSESSEE WAS THA T FOR SALE OF AGRICULTURAL LAND AGREEMENT WAS ENTERED AND THE AMOUNT REPRESENTED THE ADVANCE IN CASH RECEIVED IN RESPECT OF THE PROPOSED SALE OF LAND. THE ASSESSEE HAS FURNISHED THE DETAILS OF THE AGREEMENT AND THE AMOUNT RECEIVED IN CASH AS UNDER : N AME OF PURCHASER DATE OF AMOUNT OF AMOUNT N O. AGREEMENT AGREEMENT RECEIVED IN CASH RS . RS. 1 AMIT MISHRA, RAIPUR 04/10/2008 12,00,000/ - 3,50,000/ - - . 2 SMT. KANTA CHHABARIYA, 04/10/2008 12,00,000/ - 4,50,000/ - . RAIPUR 3 A.J. RAO, RAIPUR 04/10/2008 25,00,000/ - 7,50,000/ - 4 BINOD KUMAR RAM 04/10/2008 16,00,000/ - 5,50,000/ - NARAYAN JHA, RAIPUR F -- . 5 SHUBHAH KUMAR NAROTTAM 08/01/2009 26,00,000/ - 6,50,000/ - SONI, RAIPUR 6 RADHE REMAN GIRWARRAM 08/01/2009 28,00,000/ - 7,50,000/ - SHAU, RAIPUR 7 MOHANLAL MANIKLAL JAIN 15/01/2009 16,00,000/ - 4,50,000/ - GUDHIHARI, RAIPUR 8 HARISH KUMAR, RAIPUR : - 69,00,000/ - 32,00,000/ - , ' , 11 ' - ' < N ' ' : ' . . TO VERIFY THE GENUINENESS OF THE TRANSACTION A SURVEY WAS CONDUCTED AT THE OFFICE PREMISES OF THE ASSESSEE AT RAIPUR ON 29 - 09 - 2011. SIMULTANEOUSLY A COMMISSION U/S 131(1)(D) WAS ALSO ISSUED TO EXAMINE THOSE PARTIES. ON VERIFICATION IT WAS FOUND THAT THE AD DRESS WAS INCOMPLETE, HENCE INFORMED THAT IT WAS DIFFICULT TO TRACE THOSE PARTIES. A STATEMENT OF ONE OF THE PARTY, NAMELY, SMT. KANTA CHHABARIYA WAS RECORDED WHO HAD INFORMED THAT THE RETURNS WERE NOT FILED BUT ACCEPTED THAT SHE HAD ENTERED INTO AN AGREE MENT FOR PURCHASE OF 3 ITA NO. 38/NAG/2014 LAND FROM SHRI BRIJKISHORE AGRAWAL (ASSESSEE). HOWEVER, SHE WAS NOT ABLE TO PROVE THE SOURCE OF HER INVESTMENT. SHE HAS ALSO STATED THAT SUBSEQUENTLY THE SAID AGREEMENT WAS CANCELLED AND THE AMOUNT WAS REPAID IN CASH. EVEN A STATEMENT OF THE ASSESSEE WAS ALSO RECORDED ON 29 - 09 - 2011. IN ONE OF THE ANSWER HE HAS STATED THAT THE AGREEMENTS FOR SALE WERE NOT REGISTERED . THE AMOUNT WAS RECEIVED IN CASH AND ON CANCELLATION REPAID LATER ON. THE AO WAS NOT CONVINCED BY THE SAID EXPLANATION OF THE ASSESSEE AND HELD THAT BY PREPONDERANCE OF PROBABILITY THE AGREEMENTS WERE NOT GENUINE. IN THE OPINION OF THE AO THE ASSESSEE HAD INTRODUCED HIS OWN MONEY. THE ASSESSEE THEREAFTER HAS FURNISHED A LETTER BEFORE THE AO DATED 04 - 10 - 2011 ACCORDING TO WHIC H VOLUNTARILY OFFERED A SUM OF RS.,1,50,00000/ - TO BE TAXED IN DIFFERENT ASSESSMENT YEARS WITH A CONDITION THAT NO PENALTY SHOULD BE INITIATED. THE RELEVANT PARAGRAPH OF THE SAID LETTER IS REPRODUCED: . 3. THE ASSESSEE HAS GONE THROUGH THE VARIOUS DOCUMEN TS AND BOOKS OF ACCOUNTS FOUND DURING SURVEY. AFTER CONSIDERING THE DISCREPANCIES/ MISTAKES THAT MIGHT HAVE OCCURRED IN THE BOOKS/DOCUMENTS, THE ASSESSEE VOLUNTARILY AND SUO MOTO OFFERS TO DISCLOSE FOLLOWING ADDITIONAL INCOME IN THE RETURN OF INCOME OF A.Y . 2009 - 10 TO A . Y . 2011 - 12. A.Y. ADDITIONAL INCOME 2009 - 10 RS. 72,00,000.00 2010 - 11 RS. 11,00,000.00 2011 - 12 RS. 67,00,000 . 00 TOTAL RS. RS. 1,50,00,000.00 THE AFORESAID INCOME OF RS . 150 LAKH WILL BE IN ADDITION TO THE NORMAL INCOME AS PER BOOKS OF ACCOUNTS FOR A.Y. 2009 - 10 TO A.Y. 2011 - 12 AND WILL TAKE CARE OF ALL DISCREPANCIES OF THOSE YEAR~. 4IT IS SPECIFICALLY MADE CLEAR THAT THE ASSESSEE IS MAKING ABOVE OFFER TO BUY PEACE OF MIND AND TO AVOID ANY LITIGATION WITH THE 4 ITA NO. 38/NAG/2014 DEPARTMENT IN FUTURE AND ALSO TO COVER UP ANY ERROR OR OMISSION IN BOOKS OF ACCOUNTS ETC. THE ASSESSEE PROMISES THAT THE TAX ON ABOVE ADDITIONAL INCOME INCLUDING NORMAL INCOME SHALL BE PAID BEFORE 31 S T MARCH 2012 AND PROOF OF PAYMENT SHALL BE FURN ISHED TO YOU. THE ASSESSEE REQUESTS THAT THE ASSESSMENT OF ABOVE YEARS MAY BE COMPLETED ACCORDINGLY AND NO PENALTY BE INITIATED FOR AFORESAID DISCLOSURE SINCE IT IS VOLUNTARY'. 2.1 IN COMPLIANCE OF THE SAID OFFER, THE ASSESSEE HAS FURNISHED A STATEMENT OF INCOME FOR ASSESSMENT YEAR 2009 - 10 AND OFFERED AN ADDITIONAL INCOME OF RS.72 LAKHS . ACCORDING TO THE AO THE ASSESSEE WAS AWARE THAT HIS OWN MONEY WAS INTRODUCED IN THE NAME OF F EW PERSONS AND THOSE PERSONS WERE NOT GENUINE. THEREFORE, OFFERED THE AMOUNT. ACCORDING TO THE AO THE LAND TRANSACTION WAS NOT A GENUINE TRANSACTION. FINALLY THE AO HAS TAXED THE SAID SUM OF RS.72 LAKHS AS UNDISCLOSED ADDITIONAL INCOME IN THE HANDS OF THE ASSESSEE. 2.2 WHILE LEVYING THE PENALTY, FASTS AS STATED ABOVE HAV E BEEN REITERATED AND THEREAFTER ARRIVED AT A CONCLUSION THAT WILFULLY INACCURATE PARTICULARS WERE FURNISHED BY THE ASSESSEE AND THE CONCEALED INCOME WAS DETECTED WHICH WAS OFFERED BY THE ASSESSEE BECAUSE HE HAD NO OTHER OPTION. HENCE, INTRODUCTION OF OWN MONEY WAS NOTHING BUT REPRESENTING THE CONCEALED INCOME OF THE ASSESSEE. THEREFORE, A PENALTY OF RS.25 LAKHS WAS IMPOSED. 3. BEFORE THE LEARNED CIT(APPE A LS) IT WAS PLEADED THAT THE AMOUNT WAS OFFERED VOLUNTARILY. THEREFORE, NO PENALTY WAS REQUIRED TO BE LE VIED IN VIEW OF THE DECISION OF SURESH C HANDRA MITTAL 2 5 1 ITR 9. HOWEVER, LEARNED CIT(APPEALS) WAS NOT CONVINCED AND HELD THAT MERE FI LI NG OF AFFIDAVITS HAVE NOT ESTABLISHED THE CREDITWORTHINESS AS WELL AS THE IDENTITY OF THOSE PERSONS. LEARNED CIT(APPEA LS) HAS ALSO DISCUSSED THE STATEMENT OF SMT. KANTA C CHHABARIYA AND HELD THAT A LADY GIVING TUITIONS COULD NOT ADVANCE AN AMOUNT OF 5 ITA NO. 38/NAG/2014 RS.4,50,000/ - . HENCE FINALLY LEARNED CIT(APPEALS) CONFIRMED THE ACTION OF THE AO. 4. FROM THE SIDE OF THE APPELLANT, LEARNE D A.R. MUKESH AGRAWAL APPEARED AND PLEADED BEFORE US THAT THE ADVANCE RECEIVED FROM THOSE PARTIES WERE IN RESPECT OF AN AGREEMENT FOR SALE OF AGRICULTURAL LAND WHICH WAS LATER ON RETURNED TO THOSE PARTIES. AFTER GETTING THEIR MONEY BACK THEY HAVE NOT COOPE RATED.. THE ASSESSEE WAS FACING GRATE DIFFICULTY IN PRODUCING ALL THOSE PARTIES. HOWEVER, SMT. CHHABARIYA WAS PRODUCED WHO HAS AFFIRMED THE TRANSACTION. DURING THE PENALTY PROCEEDINGS THE ASSESSEE HAS TRIED TO OBTAIN AFFIDAVITS OF SOME OF THE PARTIES WHIC H WERE FILED BEFORE THE AO. SURRENDER OF INCOME WAS A VOLUNTARY ACT BY THE ASSESSEE UNDER A BONAFIDE BELIEF THAT NO PENALTY SHALL BE IMPOSED. THE CASE LAW CITED WAS CIT VS. AGGARWAL PIPE CO. 240 ITR 880 (DEL.). OUR ATTENTION HAS ALSO BEEN DRAWN ON THE AUDI TED BALANCE SHEET OF THE ASSESSEE WHICH WAS APPROVED BY THE AUDITOR. A LIST OF LIABILITIES WAS PART OF THE SCHEDULE ANNEXED WITH THE BALANCE SHE ET OF THE AUDITED BALANCE SHEET. LEARNED A.R. HAS ALSO PLEADED THAT THE ADDITION IN QUESTION WAS MADE BY INVOKIN G THE PROVISIONS OF SECTION 68 OF I.T. ACT AND THE PENALTY WAS LEVIED WHICH WAS CHALLENGED AND IN SOME OF THE CASES IT WAS HELD BY THE HONBLE COURTS THAT AN ADDITION BEING MADE U/S 68 WHICH WAS A FICTIONAL ASSESSMENT, HENCE NO PENALTY IS REQUIRED TO BE L EVIED, LISTED AS UNDER : I) 240 ITR 880 (DEL) CIT VS. AGGARWAL PIPE CO. II) 253 ITR 192 (GUJ) CIT VS. JALARAM OIL MILLS. III) 249 ITR 125 (GUJ) NATIONAL TEXTILES VS. CIT. IV) 85 CCH 510 (CHHATISGARH) CIT VS. AGRAWAL ROUSND ROLLINGS. V) ITA NO. 743/RJT/2010 DCIT VS. K. BHANJI VANMALIDAS & SONS. 5. ON THE OTHER HAND, FROM THE SIDE OF THE REVENUE, LEARNED D.R., MR. NARENDRA KANE HAS STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. IN HIS OPINION THE ASSESSEE HAS ADOPTED THE SAME MODES OPERAN DI IN SOME FINANCIAL 6 ITA NO. 38/NAG/2014 YEARS AS WELL BY INTRODUCING THE UNACCOUNTED CASH IN THE GARB OF ADVANCE FROM AGREEMENT. THE ASSESSEE HAS NOT PRODUCED ALL THOSE PARTIES, HENCE NOT DISCHARGED HIS PRELIMINARY ONUS. 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES WE A RE OF THE CONSIDERED OPINION THAT IN A SITUATION WHEN THE ADMITTED FACTUAL POSITION WAS THAT AN ASSESSEE HAPPENS TO BE A CONTRACTOR AND DEALING IN REAL ESTATE, THEREFORE, THE EXECUTION OF AGREEMENT TO SALE COULD NOT BE ALTOGETHER RULED OUT. THE COPIES OF THE AGREEMENT S WERE FILED AND IT IS NOT DENIED THAT THOSE AGREEMENTS WERE NOT FOUND AT THE TIME OF SURVEY. IN THE ASSESSMENT ORDER I T HAS ALSO BEEN MENTIONED THAT SOME OF THE PERSONS WERE NOT IDENTIFIABLE DUE TO NON AVAILABILITY OF PAN BUT SOME OF THE PERS ONS WERE HAVING PAN, HENCE THEIR INVESTMENT IN THE LAND SHOULD NOT HAVE BEEN DOUBTED. IN THE CASE OF JALARAM OIL MILLS, THE HONBLE GUJARAT HIGH COURT IN A REPORTED DECISION IN 253 ITR 192 HELD THAT THE ADDITION MADE U/S 68 WAS A DEEMING FICTION, THAT TH E AMOUNT IN QUESTION WAS THE INCOME OF THE ASSESSEE. HOWEVER, DEHORSE THE SAID PROVISION, IT WAS NOT POSSIBLE TO STATE WITH CERTAINTY THAT THE SAID AMOUNT WOULD BE THE CONCEALED INCOME OF THE ASSESSEE. AFTER ASSIGNING THESE REASONS THE COURT HAS DIRECTED NOT TO IMPOSE THE PENALTY. EVEN IN THE CASE OF CIT VS. AGGARWAL PIPE CO. 240 ITR 880 THE HONBLE HIGH COURT HAS OPINED THAT THE ASSESSEE HAD SURRENDERED THE CASH CREDIT WHICH WAS TAXED TO THE ASSESSEE . WHEN THE MATTER WAS CARRIED BEFORE THE TRIBUNAL IT WAS FOUND THAT THE SURRENDER WAS BONAFIDE WHICH WAS WITHIN THE AMBITS OF THE EXPLANATION TO SECTION 271(1)(C) OF THE ACT. THE HONBLE COURT HAS SAID THAT THERE WAS NO REFERABLE QUESTION OF LAW ARISES FRO M THE ORDER OF THE TRIBUNAL. IF WE EXAMINE THE FACTS OF THIS CASE IN THE LIGHT OF THE CASE LAW CITED, WE CAN SAFELY ARRIVE AT A CONCLUSION THAT AT THE TIME OF SURVEY CERTAIN DOCUMENTS HAVE FOUND WHICH HAVE PROVED THAT THE ASSESSEE HAD TAKEN CASH FROM CER TAIN PARTIES WITH WHOM AN AGREEMENT TO SALE WAS EXECUTED AND IN LIEU OF THAT AGREEMENT A PORTION OF THE AGREED AMOUNT WAS RECEIVED BY THE ASSESSEE. 7 ITA NO. 38/NAG/2014 IT IS ALSO TRUE THAT A DEEMING FICTION OF SECTION 68 WAS INVOKED TO LEVY THE PENALTY OF CONCEALMENT. THE HO NBLE COURTS HAVE HELD THAT FOR THE PURPOSE OF LEVY OF CONCEALMENT PENALTY THERE SHOULD NOT BE ANY FICTIONAL ACTION FROM THE SIDE OF THE REVENUE DEPARTMENT. HENCE CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE PRECE DENTS CITED, WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND DIRECT TO DELETE THE PENALTY. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF NOV ., 2015. SD/ - SD/ - ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER. JUDICIAL MEMBER NAGPUR, DATED: 6 TH NOV. , 2015. COPY FORWARDED TO : 1. BRIJKISHORE B. AGRAWAL C/O R.S. BHATTAD & ASSOCIATES, C.AS., 33, CENTAL BAZAR ROAD, RAMDASPETH, NAGPUR - 10. 2. JCIT, RANGE - 8, NAGPUR. 3. C.I.T., CONCERNED 4. CIT(APPEALS) - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR.