The DCIT, Circle-12, Ahmedabad V. Shri Lalchand Bhagchand Vasvani, Ahmedabad

ITA 3956/AHD/2008

• Counselvise Citation: 395620514 RSA 2008
• Duration Of Justice: 3 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-02-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 04-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: A C SHAH
• Keywords: Unexplained cash credit; Gift

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI MUKUL KR. SHRAWAT - JM AND SHRI B P JAIN AM ITA NO.3956/AHD/2008 (ASSESSMENT YEAR:-2003-04) THE DEPUTY COMMISSIONER OF INCOME- TAX, CIRCLE-2, AHMEDABAD V/S SHRI LALCHAND BHAGCHAND VASVANI, 107-108, GOPAL TOWER, STATION ROAD, MANINAGAR, AHMEDABAD PAN: AAMPV 7549 R [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI RAHUL KUMAR, SR. DR ASSESSEE BY:- SHRI A C SHAH, AR DATE OF HEARING:- 16-02-2012 DATE OF PRONOUNCEMENT:- 26-03-2012 O R D E R PER MUKUL KR. SHRAWAT (JM) :- THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHICH HAS EMANATED FROM THE O RDER OF CIT(A)-XX, AHMEDABAD DATED 07-08-2008. THROUGH SEVE RAL GROUNDS OF APPEAL, THE REVENUE HAS CHALLENGED THE D ELETION OF PENALTY OF RS.3,55,000/- LEVIED U/S 271(1)(C) OF TH E INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] FO R ASSESSMENT YEAR (AY) 2003-04. 2 THE FACTS IN BRIEF AS EMERGING FROM THE CORRESPON DING PENALTY ORDER PASSED U/S 271(1)(C) READ WITH SECTIO N 274 DATED 28-02-2008 AND THE ASSESSMENT ORDER PASSED U/S 143( 3) DATED 24- 03-2006 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACI TY WAS 2 SUBJECTED TO SURVEY ON 18-12-2002. ON ACCOUNT OF SU RVEY, CERTAIN DISCREPANCIES WERE NOTED BETWEEN THE VALUE OF THE S TOCK AS PER THE BOOKS OF ACCOUNT OF THE ASSESSEE AS AGAINST THE VALUE OF PHYSICAL STOCK PREPARED ON THE BASIS OF INVENTORY O F THE STOCK BY THE SURVEY PARTY. THAT DIFFERENCE WAS TREATED AS UN EXPLAINED INVESTMENT OF RS.7,48,922/- WHICH WAS TAXED BY INVO KING THE PROVISIONS OF SECTION 69B OF THE ACT. THE FACTS OF THE CASE HAVE REVEALED THAT AS PER THE ASSESSEES VERSION FINISH ED STOCK WAS AT RS.51,39,878/- ON THE DATE OF SURVEY I.E. ON 18- 12-2002. HOWEVER, ON PHYSICAL VERIFICATION AND AFTER TAKING THE SALE PRICE AS PER THE STICKERS ON THE ARTICLES AND ALSO AFTER DEBITING THE GROSS PROFIT AT 20%, THE SURVEY TEAM HAS VALUED THE FINIS HED STOCK AT RS.56,88,800/-. IN THIS MANNER A DIFFERENCE IN THE VALUE OF THE STOCK TO THE EXTENT OF RS.5,48,922/- WAS CALCULATED . HOWEVER, WHILE IMPOSING THE PENALTY, THE AO HAS INITIATED CO NCEALMENT PENALTY ON THE GROUND THAT THE TOTAL CORRECT INCOME WAS FINALLY ASSESSED AT RS.19,43,963/- AS AGAINST THE TOTAL INC OME DISCLOSED BY THE ASSESSEE AT RS.8,11,602/-. ACCORDING TO THE AO, TAX ON ASSESSED INCOME WAS RS.5,85,007/- AND TAX ON THE DE CLARED INCOME WAS AT RS.2,33,193/-, THEREFORE, THE DIFFERE NCE BETWEEN THE TWO, TAX SOUGHT TO BE EVADED WAS RS.3,51,814/-. ACCORDINGLY, A PENALTY OF RS.3,55,000/- WAS IMPOSED. BEING AGGRI EVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHO RITY. 3 BEFORE THE LEARNED CIT(A), A DETAILED EXPLANATION WAS FURNISHED AND ON EXAMINATION OF THOSE FACTS, THE PE NALTY WAS DELETED AFTER ASSIGNING THE FOLLOWING REASONS:- 3 3.3 SO FAR AS UNEXPLAINED CREDITS ARE CONCERNED, T HE COPIES OF ACCOUNTS OF CONCERNED PARTIES AND CONFIRMATIONS W ITH ADDRESS AND SIGNATURES HAVE BEEN GIVEN BY THE APPELLANT AS APPE ARING ON PAGE NO. 50 TO 80 OF THE PAPER BOOK. THEREFORE, THE INITIAL BURDEN HAS BEEN DISCHARGED BY THE APPELLANT FOR EXPLAINING THE RELE VANT CREDITS. THE ASSESSING OFFICER HAS NOT BROUGHT ANY FURTHER MATER IAL OR EVIDENCE TO ESTABLISH THAT THE APPELLANT HAS CONCEALED THE INCO ME TO THAT EXTENT AND THAT THE AMOUNT REPRESENTING SUCH CREDITS IS REALLY BELONGS TO THE APPELLANT ONLY. AS SUCH, NO SPECIFIC CHARGE TO ESTA BLISH CONCEALMENT HAS BEEN BROUGHT BY THE ASSESSING OFFICER. ALSO THE MENS-REA HAS NOT BEEN PROVED WHILE LEVYING THE PENALTY WITH CONCLUSI VE FINDINGS. THE PENALTY PROCEEDINGS BEING SEPARATE AND DISTINCT, PR OCEEDINGS CANNOT BE TREATED AT PAR WITH ASSESSMENT PROCEEDINGS. THOUGH ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER AND TO SOME EXTENT, T HE ADDITION HAS BEEN CONFIRMED BY THE FIRST APPELLATE AUTHORITY, IN ABSENCE OF SPECIFIC CHARGE OF CONCEALMENT, PENAL PROVISIONS CONTAINED I N SECTION 271(1)(C) OF THE ACT ARE IN FACT NOT ATTRACTED IN T HE PRESENT CASE. 3.4 AS REGARDS THE ADDITION MADE BY THE ASSESSING O FFICER BY NOT ACCEPTING THE AMOUNT OF GIFTS OF RS.5 LAKHS AND MAK ING THE ADDITION OF THE SAME, THE PENAL PROVISIONS OF SECTION 271(1)(C) OF THE IT ACT, CANNOT BE APPLIED IN ITS TRUE SPIRIT ONLY ON THE BA SIS OF ADDITION MADE BY THE ASSESSING OFFICER AND THAT IT HAS BEEN CONFI RMED BY THE CIT(A). THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ONLY BY MENTIONING THAT DONOR IS NOT RELATIVE. FROM THE FAC TS, IT REVEALS THAT A DETAILED EXPLANATION REGARDING GIFT HAS BEEN SUBMIT TED BY THE APPELLANT WHICH EVEN IF NOT ACCEPTED TO THE FULL SATISFACTION OF THE ASSESSING OFFICER AND BY THE CIT(A) AND THE ADDITION HAS BEEN SUSTAINED BUT PENAL PROVISIONS UNDER SECTION 271(1)(C) OF THE ACT CANNOT BE APPLIED. IN THIS CASE, THE GIFT DECLARATION IS THERE, GIFT H AS BEEN MADE BY CHEQUE, DONOR IS ASSESSED TO TAX AND STATEMENT OF INCOME HA S BEEN FURNISHED. THE FINDINGS OF CIT(A) ONLY SUGGESTS THAT THE EXPLA NATION OF THE APPELLANT HAS NOT BEEN .ACCEPTED AND THE ADDITION M ADE HAS BEEN UPHELD ON REASONS AS STATED BY THE CIT(A), BUT AT N O ANY STAGE, ANY SPECIFIC CHARGE OF CONCEALMENT COULD BE ESTABLISHED ON THIS ISSUE. 3.5 IT IS CLEAR IN THIS CASE THAT DETAILED EXPLANAT ION HAS BEEN OFFERED E APPELLANT AND VARIOUS CONTENTIONS HAVE BEEN PUT F ORTH IN SUPPORT OF HIS CLAIM. IT MAY BE SUFFICIENT FOR ADDITION IN QU ANTUM BUT NOT FOR LEVY OF PENALTY. THE ASSESSING OFFICER HAS NOT BROUGHT A NY ADDITIONAL MATERIAL SO AS TO ESTABLISH THE SPECIFIC CHARGE OF CONCEALMENT FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN VIEW OF FACTS 4 NARRATED AND EXPLANATION GIVEN BY THE APPELLANT AND THAT NO CLEAR CHARGE OF CONCEALMENT HAS BEEN ESTABLISHED, PENALTY FOR CONCEALMENT CANNOT BE IMPOSED. 3.5 THEREFORE, IT IS CLEARLY COMING FROM THE FACTS AND PENALTY ORDER PASSED BY THE AO THAT NO SPECIFIC CHARGE OF CONCEAL MENT HAS BEEN PROVED AND ALSO NO WILLFUL OR CONSCIOUS ATTEMPT TO CONCEAL ANY INCOME HAS BEEN ESTABLISHED BY THE AO AGAINST THE APPELLAN T. THEREFORE, THE PENALTY IMPOSED BY THE AO IS HELD NOT TO BE JUSTIFI ED AND THE PENALTY SO LEVIED IS HEREBY CANCELLED. 4 FROM THE SIDE OF THE REVENUE, THE LEARNED DR MR. RAHUL KUMAR AND FROM THE SIDE OF THE RESPONDENT-ASSESSEE MR. A C SHAH HAVE APPEARED AND RESPECTIVELY PLACED RELIANCE ON THE ORDERS OF AO AND CIT(A). 5 HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, W E ARE OF THE VIEW THAT AS FAR AS THE QUESTION OF VALUATION O F THE STOCK IS CONCERNED, THE DIFFERENCE WAS ONLY ON ACCOUNT OF AD OPTION OF PROFIT RATE ON A PARTICULAR DATE I.E. THE DATE OF S URVEY. THIS IS NOT A CASE OF THE REVENUE THAT UNRECORDED OR UNDISCLOSE D STOCK WAS UNEARTHED. THE DIFFERENCE WAS ONLY DUE TO THE METHO D OF VALUATION WHICH ACCORDING TO US IS NOT A SOUND REAS ON FOR LEVY OF CONCEALMENT PENALTY. AS REGARDS THE UNEXPLAINED DEP OSITS, THE CONFIRMATIONS AND THE STATEMENTS OF THOSE DEPOSITOR S WERE PLACED BEFORE THE REVENUE AUTHORITIES. THE ASSESSEE HAS DI SCHARGED HIS PRIMARY ONUS TO PLACE ON RECORD THE IDENTITY OF THO SE PERSONS ALONG WITH THE SOURCE OF DEPOSITS. EVEN WHEN THE RE MAND REPORT WAS CALLED, THEN THE BASIC FACT ABOUT THE FILING OF CONFIRMATION WAS NOT DENIED. A MAJOR PORTION OF THE ADDITION WAS DELETED. LIKEWISE IN RESPECT OF UNEXPLAINED GIFT OF RS.5 LAK HS, THE REMAND 5 REPORT HAS AFFIRMED THAT THE GIFT DEED WAS FILED AL ONG WITH THE CONFIRMATION OF THE DONOR AND THE PA NUMBER HAS ALS O BEEN INFORMED. ON ACCOUNT OF THESE FACTS, A VEHEMENT CON TENTION WAS RAISED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE HAS OFFERED AN EXPLANATION, HOWEVER, PART OF IT WAS MERELY DISBELI EVED WITHOUT ANY BASIS. FROM THE ORDERS OF THE AUTHORITIES BELOW , THE ADMITTED FACTUAL POSITION IS THAT THE ASSESSEE HAS OFFERED T HE EXPLANATION IN RESPECT OF ALL THE IMPUGNED ADDITIONS WHICH WAS NOT FOUND TO BE ALTOGETHER FALSE OR INCORRECT. THERE WAS A DIFFEREN CE OF OPINION IN RESPECT OF THE METHOD OF VALUATION ON ONE HAND AND ON THE OTHER HAND, THERE WAS DISBELIEF OF EXPLANATION IN RESPECT OF CONFIRMATION PLACED ON RECORD ALONG WITH THE COGENT EVIDENCE PERTAINING TO THE GIFT AND THE DEPOSITS. ON APPRECI ATION OF THE MATERIAL FACTS, IN OUR CONSIDERED OPINION, THE LEAR NED CIT(A) HAS RIGHTLY DIRECTED THE AO TO CANCEL THE PENALTY. ACCO RDING TO US, IN THE LIGHT OF EXPLANATION 1 (A) AND (B) ANNEXED TO S ECTION 271(1)(C) THIS IS NOT A FIT CASE FOR LEVY OF CONCEA LMENT PENALTY. WE HEREBY AFFIRM THE FINDINGS OF THE LEARNED CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 6 IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 26-03-2012 SD/- SD/- (B P JAIN) ACCOUNTANT MEMBER (MUKUL KR. SHRAWAT) JUDICIAL MEMBER DATE : 26-03-2012 6 COPY OF THE ORDER FORWARDED TO: 1. SHRI LALCHAND BHAGCHAND VASVANI, 107-108, GOPAL TOWER, STATION ROAD, MANINAGAR, AHMEDABAD 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XX, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD