The ACIT,S.K.Circle, Himatnagar V. Shri Kiritkumar R.Mehta, Sabarkantha

ITA 406/AHD/2013

• Counselvise Citation: 40620514 RSA 2013
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-09-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 12-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL SRDR
• Assessee Lawyers: VIVEK CHAVDA
• Keywords: Revised return
• Section: 142(1); 133A

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' &' &' &' ( & ' ( & ' ( & ' ( & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.406/AHD/2013 [ASSTT.YEAR : 2005-2006] & ITA NO.790/AHD/2013 [ASSTT.YEAR : 2006-2007] ACIT, SABARKANTHA, CIRCLE HIMATNAGAR. /VS. SHRI KIRITKUMAR R. MEHTA C/O. PRATAP HIGHSCHOOL IDAR (DIST.S.K.) 383 430. PAN : ABLPM 3044 N ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ( . / &/ REVENUE BY : SHRI P.L. KUREEL, SR-DR 1% . / &/ ASSESSEE BY : SHRI VIVEK CHAVDA 2 . %3'/ DATE OF HEARING : 13 TH SEPTEMBER, 2013. 456 . %3'/ DATE OF PRONOUNCEMENT : 04/10/2013 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THESE TWO APPEALS OF THE REVENUE FOR THE ASSESSMENT YEAR 2005-2006 AND 2 006-2007 ARE ITA NO.406 AND 790/AHD/2013 -2 DIRECTED AGAINST THE ORDERS OF THE CIT(A). THE ONL Y ISSUE IN THE GROUND OF THE REVENUE IS REGARDING THE VALIDITY OF PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. SINCE IDENTICA L ISSUE IS INVOLVED IN THESE TWO APPEALS, THEY ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. 2. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . HE SUBMITTED THAT THE ASSESSEE HAS FILED ITS REVISED R ETURN, AS A CONSEQUENCE OF SURVEY CONDUCTED UNDER SECTION 133A OF THE ACT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 12.1.2007, WHEREIN CERTAIN DOCUMENTS WERE FOUND AND IMPOUNDED. STATEMENT OF T HE ASSESSEE WAS RECORDED AT THE TIME OF SURVEY WHEREIN HE ADMITTED THAT HE HAS SOLD TOTAL NUMBER OF 78 PLOTS OF LAND OF VARIOUS PERSONS TO VARIOUS OTHER PERSONS IN THREE FINANCIAL YEARS. THE ASSESSEE ADM ITTED THAT HE HAS OBTAINED POWER OF ATTORNEY FROM HIS VARIOUS FRIENDS FOR SALE OF THEIR PLOTS AND STATED THAT SALE PRICE RECEIVED IN CHEQUE S WAS GIVEN TO ORIGINAL PLOT HOLDERS, AND PART OF THE SALE PRICE W HICH WAS RECEIVED IN CASH WAS BEING RETAINED BY HIM. THE LEARNED DR SU BMITTED THAT THE ASSESSEE HAS ALREADY REVISED ITS RETURN OF INCOME A DMITTING UNDISCLOSED INCOME, AND THEREFORE, THE PENALTY UNDE R SECTION 271(1)(C) OF THE ACT WAS RIGHTLY IMPOSED FOR BOTH THE YEARS I N APPEAL, AND THE FACTS OF BOTH THESE YEARS ARE SIMILAR. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE AO HAS ADMITTED IN THE ASSESSMENT ORDER THAT THE ASSESSEE WAS NEVER OWNER OF THE PLOTS OF LAND IN QUESTION AT ANY POINT OF TIME. HE SUBMITTED THAT THE OWNERS OF THE PLOT WERE ILLITERATE AND THE ASSE SSEE WAS SCHOOL TEACHER AND WAS ASSESSED TO INCOME-TAX SINCE LONG. HE SUBMITTED THAT THE POWER OF ATTORNEY WAS EXECUTED BY VARIOUS FRIEN DS AND VILLAGERS IN ITA NO.406 AND 790/AHD/2013 -3 FAVOUR OF THE ASSESSEE, AND THAT THE AMOUNT OF SALE PRICE RECEIVED IN CHEQUE OR IN CASH WAS PAID TO THE OWNERS OF THE PLO T. HE SUBMITTED THAT THE ASSESSEE HAS DISCLOSED ADDITIONAL INCOME D URING THE COURSE OF SURVEY SO AS TO AVOID COSTLY AND PROLONGED LITIGATI ON AS WELL AS TO BUY PEACE OF MIND. HE SUBMITTED THAT THERE IS NO MATER IAL BROUGHT ON RECORD ON BEHALF OF THE REVENUE THAT THE ASSESSEE H AS RETAINED CERTAIN PART OF THE CASH COMPONENTS OF SALE PRICE WITH HIMS ELF OR HAS MADE SOME INVESTMENTS IN MOVABLE AND IMMOVABLE PROPERTIE S IN HIS OWN NAME OR IN THE NAME OF THE FAMILY MEMBERS. HE SUBM ITTED THAT THE ASSESSEE HAS NOT RETRACTED FROM THE DISCLOSURE MADE AT THE TIME OF SURVEY, AND THE RETURN OF INCOME WAS REVISED PRIOR TO THE ISSUE OF NOTICE UNDER SECTION 142(1) R.W.S. 143(2) ISSUED TO HIM. THE REVISED RETURN WAS FILED VOLUNTARY AND PRIOR TO ANY DETECTI ON BY THE DEPARTMENT. HE SUBMITTED THAT THE ASSESSEE HAS SUB MITTED CONFIRMATION LETTER OF LAND OWNERS, WHEREIN THEY HA VE CONFIRMED THAT THE POWER OF ATTORNEY WAS GIVEN TO THE ASSESSEE FOR ADMINISTRATION OF PLOTS, AND THE CASH AMOUNT RETAINED BY HIM FOR INCU RRING EXPENSES AND THE ACCOUNT WAS TO BE SETTLED AFTER THE SALE OF ALL THE PLOTS. HE REFERRED TO RELEVANT PORTIONS OF THE ORDER OF THE CIT(A) IN SUPPORT OF THE CASE OF THE ASSESSEE, AND HAS RELIED ON THE ORDER OF THE LEARNED CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY A ND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ONLY ISSUE IN THESE TWO APPEALS OF THE REVENUE IS REGARDING THE VALIDIT Y OF PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. WE FIN D THAT THE FACTS OF THE CASE FOR BOTH THE ASSESSMENT YEARS ARE IDENTICA L, AND ACCORDINGLY DISPOSED OF WITH THIS COMMON ORDER. WE FIND THAT T HE ASSESSEE IS A SCHOOL TEACHER IN SIR PRATAP HIGH SCHOOL IN HIGHER SECONDARY SECTION AND ALSO CARRYING ON DALALI IN LAND TRANSACTIONS ON A SMALL SCALE. A ITA NO.406 AND 790/AHD/2013 -4 SURVEY UNDER SECTION 133A WAS CARRIED OUT AT HIS RE SIDENTIAL PREMISES ON 12.1.2007 AND CERTAIN DOCUMENTS SHOWING SALE OF PLOTS OF LAND BY THE ASSESSEE AS POWER OF ATTORNEY HOLDER WERE FOUND AND IMPOUNDED. THE ASSESSEE HAS EXPLAINED THAT THE VILLAGERS BEING ILLITERATE, POWER OF ATTORNEY WAS EXECUTED IN FAVOUR OF THE ASSESSEE BY THEM TO FACILITATE THE SALE OF THE PLOTS OF LAND. HE HAS SOLD TOTAL 7 8 PLOTS TO VARIOUS PERSONS AND IT IS AN ADMITTED POSITION THAT THE ASS ESSEE WAS NOT THE OWNER OF ANY OF THESE PLOTS. THE ASSESSEE HAS OBT AINED SALE PRICE PARTLY IN CHEQUES, WHICH WERE GIVEN TO THE ORIGINAL PLOT OWNERS, AND PARTLY IN CASH, WHICH HAS BEEN CLAIMED TO HAVE BEEN RETAINED BY HIM TO MEET OUT CERTAIN EXPENSES ETC. DURING THE COURSE OF SURVEY PROCEEDINGS. THE ASSESSEE ACCEPTED CERTAIN ADDITIO NAL INCOME ON ACCOUNT OF CASH COMPONENTS RETAINED BY HIM FOR THRE E ASSESSMENT YEARS, AND HAS PAID THE TAX THEREON, AND THE ASSESS EE HAS NEVER RETRACTED THE DISCLOSURE OF ADDITIONAL INCOME MADE BY HIM. IT IS ALSO A FACT THAT THE ASSESSEE HAS REVISED ITS RETURN OF IN COME PRIOR TO NOTICE OF HEARING ISSUED BY THE DEPARTMENT UNDER SECTION 142( 1) OF THE ACT R.W.S. 143(2) OF THE ACT. WE FIND THAT THE ASSESSE E WAS ASSESSED MORE OR LESS ON THE SAME FIGURE OF RETURN OF INCOME AS P ER THE REVISED RETURN FILED BY HIM. THE CLAIM OF THE ASSESSEE WAS THAT H E HAS MADE THE DISCLOSURE OF ADDITIONAL INCOME DURING THE COURSE O F SURVEY TO AVOID LONG AND EXPENSIVE LEGAL PROCEEDINGS AND TO AVOID M ENTAL TENSION, AND WAS ASSURED BY THE DEPARTMENT DURING THE COURSE OF SURVEY THAT NO PENALTY ACTION IS INITIATED BY THE DEPARTMENT, IF T HE AMOUNT IS DISCLOSED. WE FIND THAT THE REVENUE COULD NOT CONT ROVERT THE CLAIM OF THE ASSESSEE. THE ASSESSEE HAS CLAIMED THAT THE CA SH COMPONENT RECEIVED BY HIM DID NOT BELONG TO HIM, BECAUSE, THE LAND IN QUESTION BELONGED TO THIRD PARTY, AND HE HAD MERELY RENDERED SERVICES TOWARDS SALE OF SAID PLOTS OF LAND ETC. THE ASSESSEE HAS C LAIMED THAT THE AO ITA NO.406 AND 790/AHD/2013 -5 HAS FAILED TO APPRECIATE THAT THE ENTIRE CASH AMOUN T COULD NOT BE TREATED AS INCOME, BUT AT THE MOST, THE PROFIT ELEM ENT ONLY COULD BE SUBJECTED TO TAX AS INCOME. THE ASSESSEE HAS CLAIM ED THAT IT IS PRACTICALLY VERY DIFFICULT TO TAKE ALL THE LAND OWN ERS TO VARIOUS GOVERNMENT OFFICES, COURTS, EXECUTE DECLARATION/AFF IDAVITS ETC., AND HENCE A POWER OF ATTORNEY WOULD SUBSTANTIALLY FACIL ITATE CARRYING OUT SUCH ACTS, BY A SINGLE PERSON RATHER THAN A GROUP O F PERSONS, AND THEREFORE, NO BENEFICIAL INTEREST WAS CREATED IN FA VOUR OF THE ASSESSEE BY EXECUTING POWER OF ATTORNEY FOUND DURING THE SUR VEY. THE ASSESSEE HAS CLAIMED THAT HE HAS ACTED IN GOOD FAITH AND FUL LY COOPERATED WITH THE DEPARTMENT. THE ASSESSEE HAS CLAIMED THAT THER E IS NO MATERIAL TO HOLD THAT CASH COMPONENTS RECEIVED ON BEHALF OF THE LAND OWNERS WAS IN FACT BELONGED TO THE ASSESSEE. THE ASSESSEE H AS FILED REVISED RETURN VOLUNTARILY AND PRIOR TO THE DETECTION OR FO RMATION OF OPINION BY THE DEPARTMENT. WE FIND THAT THE ASSESSEE HAS AS P ER THE LETTER DATED 22.7.2010, WHEREIN CONFIRMATION LETTER DATED 11.7.2 010 OF CERTAIN LAND OWNERS HAVE BEEN FILED, WHEREIN, THEY HAVE CONFIRME D THAT THE POWER OF ATTORNEY WAS GIVEN TO THE ASSESSEE FOR ADMINISTR ATION OF PLOTS, AND CASH AMOUNT WAS RETAINED BY THE ASSESSEE FOR INCURR ING CERTAIN EXPENSES AND ACCOUNT WAS SETTLED AFTER THE SALE OF ALL THE PLOTS. THE CIT(A) HAS RECORDED THAT THE ASSESSEE IN ITS REPLY DATED 22.7.2010 HAS CATEGORICALLY STATED THAT THE CASH AMOUNT WAS SPENT AWAY TOWARDS LEGAL EXPENSES, PERMISSIONS, LEVELLING EXPS. ETC. A ND NO SURPLUS WAS MADE OUT OF IT. THE CIT(A) HAS RECORDED THAT COPY OF THE AGREEMENT BETWEEN THE ASSESSEE AND CERTAIN LAND OWNERS SHOWED THAT THE ASSESSEE WAS APPOINTED TO CARRY OUT VARIOUS ACTS FOR A COMMI SSION INCOME AT 5% , WHICH THE ASSESSEE HAS ALREADY DISCLOSED IN IT S ORIGINAL RETURN OF INCOME. THE CIT(A) HAS RECORDED THAT THE ASSESSEE HAS BROUGHT ON RECORD NECESSARY EVIDENCES RELATING TO CASH AMOUNT SPENT AWAY BY HIM ITA NO.406 AND 790/AHD/2013 -6 AND RESULTING NO SURPLUS OUT OF IT. THE CIT(A) HAS FURTHER RECORDED IN HIS APPELLATE ORDER THAT THE ASSESSEE HAS POINTED O UT THAT THE LAND OWNERS BEING ILLITERATE AND HE BEING TEACHER OF A S MALL VILLAGE, HE ACTED AS POWER OF ATTORNEY HOLDER OF THE OWNERS, WH ICH FACT HAS NOT BEEN DISPUTED BY THE AO, AND THAT IN THE ABSENCE OF ANY CONTRARY MATERIAL EITHER FOUND DURING THE COURSE OF SURVEY O R BROUGHT DURING THE PENALTY PROCEEDINGS, IT COULD NOT BE SAID THAT THE ASSESSEE HAS EARNED THE INCOME BY WAY OF CASH AMOUNT RECEIVED FR OM THE LAND DEALS. WE FIND THAT THE CIT(A) HAS PASSED A WELL R EASONED ORDER ON THIS ISSUE. NO CONTRARY MATERIAL HAS BEEN BROUGHT BEFORE US TO CONTROVERT THE FINDING RECORDED BY THE CIT(A) IN TH IS CASE. WE FIND THAT TO DECIDE THE LEGALITY OF PENALTY IMPOSED UNDE R SECTION 271(1)(C) OF THE ACT, THE OVERALL CONTACT OF THE ASSESSEE HAS TO BE SEEN. WE FIND THAT CONSIDERING THE ENTIRE FACTUAL MATRIX OF THE C ASE, IT IS QUITE POSSIBLE THAT THE ASSESSEE FOR HIS SERVICE RENDERED IN THE MATTER OF SALE OF LAND ON BEHALF OF THE OWNERS OF THE PLOTS OF LAN D, MAY HAVE RETAINED OR HAVE INTENTION TO RETAIN A PART OF THE CASH COMP ONENTS RECEIVED BY HIM FOR SALE OF PLOT OF LAND, AS THE COMMISSION FOR THE SERVICES RENDERED AFTER SPENDING TOWARDS VARIOUS HEADS OF EX PENSES ON BEHALF OF THE LAND OWNERS, BUT THERE IS NO EVIDENCE OR MAT ERIAL ON RECORD TO PROVE CONCLUSIVELY THAT THE ASSESSEE HAS IN FACT RE TAINED CERTAIN PART OF THE CASH COMPONENTS AS HIS INCOME. THE FACTS OF TH E CASE MAY JUSTIFY THE ADDITION IN THE QUANTUM CASE, BUT THE PARAMETER S TO SUSTAIN THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT ARE DIFFERENT, AND THE ASSESSEE IS ENTITLED TO BENEFIT OF DOUBT IN THE ABSENCE OF ANY CONCRETE EVIDENCE TO THE CONTRARY, AND ACCORDINGLY, WE HOLD THAT FACTS OF THE CASE DO NOT JUSTIFY THE IMPOSITION OF PENALT Y UNDER SECTION 271(1)(C) OF THE ACT ON THE ASSESSEE, WHICH IS ACCO RDINGLY CANCELLED, AND THE CIT(A)S ORDER CANCELLING THE PENALTY IS AC CORDINGLY ITA NO.406 AND 790/AHD/2013 -7 CONFIRMED, AND THE GROUND OF THE APPEAL OF THE REVE NUE IN BOTH THE YEARS IS DISMISSED. 5. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD