NAMITA DEEPAK KHANNA, MUMBAI V. ITO (IT) 3(1), MUMBAI

ITA 3882/MUM/2013

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5614 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 16-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABDUL HAKEEM M
• Assessee Lawyers: S C KAPADIA; RAHUL KAPADIA
• Keywords: Set aside; Capital Gains
• Section: 271(1)(c); 201; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 3882 /MUM/20 1 3 (ASSESSMENT YEAR 20 0 5 - 0 6 ) SMT. NAMITA DEEPAK KHANNA 132, BUENA VISTA GEN. J.B. MARG, NARIMAN POINT, MUMBAI - 400 021. PAN : AGRPK3856B VS. ITO (IT) - 3(1) SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI RAHUL KAPADIA & SHRI S.C. KAPADIA DEPARTMENT BY SHRI ABDUL HAKEEM M. DATE OF HEARING 0 5 . 11 . 201 8 DATE OF PRONOUNCE MENT 16 . 1 1 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 26.3.2013 PASSED BY THE LEARNED CIT(A) - 10, MUMBAI CONFIRMING THE PENALTY OF RS 9,90,000/ - LEVIED BY THE ASSESSING OFFICER U/S. 271(1 )(C) OF THE ACT. 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A NON - RESIDENT AND SHE FILED HER RETURN OF INCOME DECLARING A TOTAL INCOME OF RS . 2,56,270/ - CONSISTING OF INCOME FROM HOUSE PROPERTY, INCOME FROM CAPITAL GAINS AND INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CREDITED A SUM OF RS 30 LAKHS IN HER CAPITAL ACCOUNT UNDER NARRATION FOREIGN REMITTANCE - PAINTING PURCHASE. THE ASSESSING OFFIC ER ASKED THE ASSESSEE TO PROVE THE CREDIT OF RS 30 LAKHS. THE ASSESSEE SUBMITTED THAT SHE PURCHASED A PAINTING OUTSIDE INDIA FOR US$ 68326 AND THE PAYMENT FOR PAINTING WAS MADE IN FOREIGN CURRENCY OUTSIDE INDIA. IT WAS SUBMITTED THAT THE PAINTING WAS PURCH ASED OUT OF HER INCOME EARNED OUTSIDE INDIA. SINCE THE PAINTING WAS BROUGHT IN TO INDIA, THE ASSESSEE HAS ACCOUNTED THE PAINTING IN HER BOOKS AT A VALUE OF SMT. NAMITA DEEPAK KHANNA 2 RS.30.00 LAKHS BY GIVING CORRESPONDING CREDIT TO HER CAPITAL ACCOUNT. T HE ASSE SSEE INITIALLY FURNI SHED COPY OF PROF O RMA INVOICE, WHICH CONTAINED THE NAME OF HER HUSBAND. LATER SHE FURNISHED THE COPY OF INVOICE, WHICH CONTAINED HER NAME ALONG WITH THE NAME OF HER HUSBAND. HOWEVER THE PRICE OF PAINTING WAS DIFFERENT IN PROFORMA INVOICE AND ACTUAL INVOIC E. THE ASSESSEE, HOWEVER, COULD NOT FURNISH THE EVIDENCES AS TO HOW THE PAYMENT WAS MADE FOR PURCHASE OF PAINTING. HENCE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NOT PROVED THE CASH CREDIT TO HIS SATISFACTION. ACCORDINGLY, HE ASSESSED THE AMOUNT OF RS 30 LAKHS AS INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LEARNED CIT(A) AS WELL AS BEFORE ITAT. THE TRIBUNAL, VIDE ITS ORDER D ATED 7.5.2010 PASSED IN ITA NO. 816/MUM/2009 , CONFIRMED THE ADDITION. THEREAFTER, THE ASSESSING OFFICER PASSED THE PENALTY ORDER U/S. 271(1)(C) OF THE ACT , WHEREIN HE LEVIED PENALTY OF RS 9,90,000/ - FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LEARNED CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 3. T HE U NDISPUTED FACT IS THAT THE ASSESSEE IS A NON - RESIDENT AND SHE HAS PURCHASED A PAINTING OUTSIDE INDIA FOR US$ 68326, WHICH WAS EQUIVALENT TO INR 30 LAKHS. THERE IS NO DISPUTE THAT THE PAYMENT WAS ALSO MADE OUTSIDE INDIA, EVEN THOUGH THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF PAYMENTS AND SOURCES THEREOF. S INCE THE PAINTING WAS BROUGHT IN TO INDIA , THE ASSESSEE HAS ACCOUNTED FOR THE SAME IN HER BOOKS BY CREDITING CAPITAL ACCOUNT WITH THE AMOUNT OF RS 30 LAKHS AND DEBITING PAINTING ACCOUNT AS HER ASSET . THE AO HAS EXAMINED THE CREDIT OF RS.30.00 LAKHS MADE INTO THE CAPITAL ACCOUNT OF THE ASSESSEE. SINCE THE EXPLANATION S AND EVIDENCE S FURNISHED BY THE ASSESSEE WITH REGARD TO CREDIT OF RS 30 LAKHS IN HER CAPITAL ACCOUNT WERE NOT CONVINCING TO THE ASSESSING OFFICER, HE HAS ASSESSED THE SAME AS INCOME OF THE ASSESSEE U/S. 68 OF THE ACT. 4. THE IMPUGNED ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER U/S. 68 OF THE ACT, WHICH IS A DEEMING PROVISION FOR ASSESSING CASH CREDIT . EVEN IF THE ASSESSING OFFICER IS NOT SATISFIED WITH THE EXPLANATION S FURNISHED BY THE SMT. NAMITA DEEPAK KHANNA 3 ASSESSEE, STILL THE PROVISIONS OF SECTION 68 OF THE ACT GIVE AN OPTION TO THE ASSESSING OFFICER NOT TO ASSESS CASH C REDIT AS INCOME OF THE ASSESSEE, MEANING THEREBY, THE PROVISIONS OF SEC.68 SHOULD B E INVOKED DEPENDING UPON FACTS AND CIRCUMSTANCES OF THE CASE. IN THE INSTANT CASE, W E NOTICED THAT THE ASSESSEE HAS OFFERED AN EXPLANATION AND FURNISHED EVIDENCES TO PROVE THE FACTUM OF PURCHASES. TH E EXPLANATION S AND EVIDENCES WERE NOT ACCEPTED BY THE T AX AUTHORITIES ONLY FOR THE REASON THAT THE ASSESSEE HAS NOT FURNISHED THE PAYMENT DETAILS . HOWEVER THERE IS NO DISPUTE THAT THE ASSESSEE IS A NON - RESIDENT; THE PAINTING WAS PURCHASED OUTSIDE INDIA AND THE PAYMENTS WERE ALSO MADE OUTSIDE INDIA . THERE IS A LSO NO DISPUTE THAT THE AMOUNT OF RS.30.00 LAKHS CREDITED TO THE CAPITAL ACCOUNT , WHICH WAS ASSESSED U/S 68 OF THE ACT, REPRESENTS THE VALUE OF THE VERY SAME PAINTING PURCHASED OUTSIDE INDIA. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT IT CANNOT BE SAID THAT THE EXPLANATION S FURNISHED BY THE ASSESSEE WERE ALTOGETHER FALSE EXPLANATION. FROM THE PAPER BOOK, WE NOTICE THAT THE ASSESSEE HAS FURNISHED CERTAIN DOCUMENTS TO PROVE HER SOURCES, BUT THE ASSESSEE HAS NOT FURNISHED HER BANK STATEMENTS, WHICH WO ULD HAVE CORROBORATED HER SOURCES. BE THAT AS IT MAY, IT CANNOT BE DENIED THAT THE ASSESSEE HAS MADE THE PAYMENT S OUTSIDE I NDIA OUT OF HER SOURCES AVAILABLE OUTSIDE INDIA. THE ADDITION WAS MADE UNDER DEEMING PROVISIONS OF SEC.68 OF THE ACT, SINCE THE EXPL ANATIONS OF THE ASSESSEE WERE NOT UPTO THE SATISFACTION OF THE AO. THERE SHOULD NOT BE ANY DISPUTE THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS AND THE FINDINGS GIVEN IN THE ASSESSMENT ORDER CAN ONLY BE TAKEN AS GUIDE IN THE PENALTY PROCEEDINGS. IF WE TAKE INTO ACCOUNT THE FACT THAT THE IMPUGNED INCOME HAS BEEN ASSESSED UNDER DEEMING PROVISIONS OF SECTION 68 OF THE ACT ; THE FACT THAT THE CASH CREDIT WAS BROUGHT INTO BOOKS BY WAY OF JOURNAL ENTRY AND ALSO THE FACT THAT TH E EXPLANATIONS WERE NOT ALTOGETHER FALSE, WE ARE OF THE VIEW THAT THE IMPUGNED ADDITION CANNOT BE CONSIDERED AS A CASE OF FURNISHING OF INACCURATE PARTICULARS. ACCORDINGLY WE ARE OF THE VIEW THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENAL TY LEVIED U/S. 271(1)(C) OF THE ACT. SMT. NAMITA DEEPAK KHANNA 4 5 . ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 6 . DURING THE COURSE OF HEARING LEARNED AR ALSO RAISED CERT AIN LEGAL ISSUES. SINCE WE HAVE DELETED THE PENALTY LEVIED ON MERITS, WE DO NOT FIND IT NECESSARY TO ADDRESS THOSE LEGAL ISSUES. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 16 . 1 1 .201 8 . SD/ - SD/ - (SANDEEP GOSAIN ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 16 / 1 1 / 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. TH E APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI