ASHA DHANWANI, Jaipur V. ITO, Jaipur

ITA 427/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5007 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 26-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Keywords: Unexplained expenditure; Condonation of delay
• Section: 133A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 427/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SMT. ASHA DDHANWANI PROP.: M/S. TIRUPATI TRADING CORPORATION 3794, VISHNU MARG, GANGORI BAZAR, JAIPUR CUKE VS. THE ITO WARD- 4(1) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAKPD 4590 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MANISH AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI RAJ MEHRA, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30/09/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 5/10/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)-5, JAIPUR DATED 19-01-2016 FOR THE ASSESS MENT YEAR 2009-10 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE PENA LTY LEVIED U/S 271(1)( C) OF THE I.T. ACT, 1961 QUA THE ADDITION O F RS. 65,169/- MADE ON ACCOUNT OF NEGATIVE CASH BALANCE IN SPITE OF THE FACT THAT THERE WAS NO NEGATIVE BALANCE AS PER AUDITED BOOKS OF ACCOUNT AND THE ASSESSEE ACCEPTED THE ADDITION JUST TOTAL INCOM E BUY PEACE OF ITA NO. 427/JP/2016 SMT. ASHA DHANWANI VS. ITO, WARD- 4(1), JAIPUR . 2 MIND AND TO AVOID ANY LITIGATION THUS THE PENALTY U /S 271(1)(C ) SO LEVIED DESERVES TO BE DELETED. 1.1 THAT, THE LD AO HAS GROSSLY ERRED IN RELYING UP ON THE CONCLUSION DRAWN IN ASSESSMENT PROCEEDINGS WITHOUT MAKING INDEPENDENT ENQUIRIES IN PENALTY PROCEEDINGS WHEN T HE PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT PROCEEDING S AND ALSO WITHOUT EVEN STATING ANY REASON AS TO WHY THE SUBMI SSION MADE BY THE ASSESSEE IS NOT SATISFACTORY, THUS THE AO HAS M ISERABLY FAILED TO DISCHARGE THE ONUS CAST UPON BY HIM AND THE CONSEQU ENT ORDER OF LEVY OF PENALTY IS ILLEGAL AND BAD IN LAW. 2.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED THE APPEAL LATE BY 20 D AYS FOR WHICH AN APPLICATION FOR CONDONATION OF DELAY HAS BEEN FILED ALOGNWITH AN AFFIDAVIT OF THE ASSESSEE WITH FOLLOWING PRAYER. (I) THE PENALTY ORDER U/S 271(1) OF THE ACT WAS PA SSED IN MY CASE ON 27-06-2012 FOR A.Y. 2009-10 AGGRIEVED BY WHICH APPEAL WAS PREFERRED BEFORE THE LD. CIT(A)-5, JAIPUR WHO VIDE ORDER DATED 19-01-2016 PARTLY ALLOWED THE APPEAL. (II) THAT AGAINST THE PENALTY SUSTAINED BY THE LD. CIT(A) , THE REQUEST WAS MADE TO ERSTWHILE COUNSEL WHO HAD REPRESENTED ASSESSEE'S CASE BEFORE THE LD. CIT(A) T O FILE APPEAL BEFORE THIS HON'BLE TRIBUNAL THROUGH THE OF FICE OF SHRI O.P. AGARWAL, CA AND ACCORDINGLY ORDER WAS GIV E TO THE LOCAL COUNSEL TO DELIVER IT TO THEIR OFFICE. (III) THAT ON THE RECEIPT OF ORDER AND DIRECTION FO R FILE SECOND APPEAL, THE OFFICE OF SHRI O.P. AGARWAL, FC A PREPARED THE APPEAL AND SENT TO THE OFFICE OF THE R EGULAR COUNSEL OF APPELLANT FOR GETTING THE SIGNATURE ETC. (IV) HOWEVER, WHEN NO RESPONSE WAS RECEIVED REGARDI NG FILING OF APPEAL, ASSESSEE INQUIRED FROM HER LOCAL COUNSEL AND ITA NO. 427/JP/2016 SMT. ASHA DHANWANI VS. ITO, WARD- 4(1), JAIPUR . 3 IT WAS NOTICED THAT APPEAL PAPERS GOT DUMPED IN THE IR OFFICE WHICH WERE SUBSEQUENTLY FORWARDED TO ASSESSEE FOR SIGNATURE. (V) THAT AS SOON AS IT WAS REALIZED THAT THE APPELL ANT HAS NOT BEEN FILED, ARRANGEMENTS WERE MADE TO FILE APPE AL. (VI) THUS THE DELAY OF 20 DAYS OCCURRED IN FILING A PPEAL DUE TO BONA FIDE MISTAKE ON THE PART OF LOCAL COUN SEL AS MUCH AS ASSESSEE HAD DULY HANDED OVER THE ORDER OF ITS COUNSEL. (VII) THAT THE ASSESSEE HAS SUBMITTED AN APPLICATIO N SEEKING CONDONATION OF DELAY AND THIS AFFIDAVIT IS BEING SU BMITTED IN CONFIRMATION THE FACTS NARRATED IN THE APPLICATION SEEKING CONDONATION OF DELAY. TO THIS EFFECT, THE LD. AR OF THE ASSESSEE RELIED O N THE DECISION OF HON'BLE APEX COURT IN THE CASE OF COLLECTOR, LAND ACQUISITI ON VS. MST. KATIJI AND OTHERS, 167 ITR 471 (SC) 2.2 THE LD. DR IS HEARD WHO OPPOSED THE CONDONATION APPLICATION OF THE ASSESSEE. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT IN THE GIVEN FACTS AND CIRCUMSTANCES, THE ASSESSEE WAS PREVENTED BY SU FFICIENT CAUSE WHICH WAS BEYOND HIS CONTROL. THEREFORE, THE DELAY IS CON DONED. 3.1 BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED ITS RETURN OF INCOME ELECTRONICALLY ON 31-03-2010 DECLARING TOTAL INCOME OF RS. 1,79,270/-. A ITA NO. 427/JP/2016 SMT. ASHA DHANWANI VS. ITO, WARD- 4(1), JAIPUR . 4 SURVEY OPERATION U/S 133A OF THE ACT WAS CONDUCTED IN THE ASSESSEE'S CASE ON 18-02-2009 AT THE BUSINESS PREMISES BY THE INVES TIGATION WING, JAIPUR DURING THE VERIFICATION OF CASH BOOK, THE AO OBSERV ED THAT THE ASSESSEE WAS HAVING A NEGATIVE BALANCE OF RS. 65,169/- ON 30 -03-2009 AS PER ITS CASH BOOK. THE AO CONFRONTED THE MATTER WITH THE LD . AR OF THE ASSESSEE BUT NO EXPLANATION WAS PROVIDED BY THE ASSESSEE. TH E AO OBSERVED THAT THE ASSESSEE HAD NOT SUBMITTED ANY EXPLANATION AND SOURCE OF THE AMOUNT INCURRED BY IT WHEN THERE WAS A NEGATIVE BALANCE OF RS. 65,159/-, THE AO THUS ADDED AN AMOUNT OF RS. 65,169/- TO THE INCOME OF THE ASSESSEE TREATING THE EXPENDITURE INCURRED BY IT FROM UNDISC LOSED SOURCES AND INITIATED PENALTY PROCEEDINGS U/S 271(1) OF THE A CT. THE TOTAL INCOME OF THE ASSESSEE WAS WORKED OUT BY THE AO AS UNDER:- RETURNED INCOME RS. 1,79,270/- ADD: TRADING ADDITION AS DISCUSSED RS. 2,00,000/- ADD: UNEXPLAINED EXPENDITURE RS. 65,169/- GROSS TOTAL INCOME RS. 4,44,439/- ROUNDED OFF RS. 4,44,440/- 3.2 IN PENALTY PROCEEDINGS, THE AO CONCLUSIVELY IMP OSED THE PENALTY OF RS. 42,114/- U/S 271(1)( C) OF THE ACT VIDE HER PENALTY ORDER DATED 27-06-2012. ITA NO. 427/JP/2016 SMT. ASHA DHANWANI VS. ITO, WARD- 4(1), JAIPUR . 5 3.3 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) WHO VIDE HIS ORDER DATED 19-01-2016 DELETED THE PEN ALTY IN RESPECT OF TRADING ADDITION OF RS. 2.00 LACS BUT THE CONFIRMED THE PENALTY IN RESPECT OF DISALLOWANCE OF UNEXPLAINED EXPENDITURE OF RS. 65,169/- BY OBSERVING AS UNDER:- 2.4 IN RESPECT OF THE SECOND ITEM OF ADDITION VIZ RS. 65,169/- ON ACCOUNT OF CASH SHORTAGE AND CONSEQUEN T UNEXPLAINED EXPENDITURE, IT IS SEEN THAT THE SAID I TEM REPRESENTS CONCRETE CONCEALMENT OF INCOME ON WHICH THE ASSESSEE'S EXPLANATION WAS FOUND TO BE UNSUBSTANTIA TED. THE SAID ITEM THEREFORE, ATTRACTS PENALTY WITHIN THE ME ANING OF EXPLANATION 1 OF SECTION 271(1)( C). ACCORDINGLY, L EVY OF PENALTY IN RESPECT OF THE SAID ADDITION OF RS. 65, 169/- IS CONFIRMED. 3.4 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE PRAYED FOR DELETION OF PENALTY CONFIRMED BY THE LD. CIT(A) IN RESPECT OF ADDITION OF RS. 65,169/- U/S 271(1) (C) OF THE ACT FOR WHICH TH E LD. AR OF THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION. FACTS PERTAINING TO THIS ADDITION ARE THAT ADDITI ON WAS MADE ON THE ALLEGATION THAT THERE WAS NEGATIVE CASH BALANCE AS ON 31.03.2009, HOWEVER THERE WAS NO NEGATIVE CASH BALANCE AS ON 30.03.2009 AS PER AUDITED BOOKS OF ACCOUNTS. THE FACT IS THAT THE ASSESSEE COULD NOT U NDERSTAND THE REASON OF THE DIFFERENCE. THERE WERE ENTRIES RELATED TO RECEIPT A ND PAYMENTS MADE IN CASH DURING THE ENTIRE DAY AND ALL THE ENTRIES OF ONE DA Y SHOULD HAVE BEEN CONSIDERED AS A WHOLE TO WORK OUT THE CASH AVAILABL E WITH ASSESSEE AT THE END OF THE PARTICULAR DAY AND SINCE THERE WAS POSITIVE CASH BALANCE AS AT THE OPENING AND CLOSING OF THE DAY, THERE WAS NO POSSIB ILITY OF NEGATIVE CASH ITA NO. 427/JP/2016 SMT. ASHA DHANWANI VS. ITO, WARD- 4(1), JAIPUR . 6 BALANCE DURING THE DAY. A CERTIFIED COPY OF CASH BO OK WAS ALSO SUBMITTED BEFORE THE LD. AO WHO FAILED TO POINT OUT ANY SUCH DEFICIENCY IN THE SAME IN PENALTY PROCEEDINGS. SINCE PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT PROCEEDINGS, LD. AO SHOULD HAVE CONSIDERED ALL THE MATERIAL AVAILABLE BEFORE HIM BEFORE REACHING TO THE CONCLUSIONS THAT ASSESSE E HAS CONCEALED CERTAIN INCOME. HONBLE APEX COURT IN THE CASE OF EILLY LIL LY & COMPANY REPORTED IN 312 ITR 225 HAS HELD THAT THE PENALTY PROCEEDINGS I S NOT AN AUTOMATIC OR MANDATORY FALLOUT OF THE ADDITION MADE DURING THE A SSESSMENT PROCEEDINGS, THEREFORE, THE SAME SHOULD NOT BE LEVIED IN ROUTINE MANNER. NEVERTHELESS, THE ASSESSEE HAD ACCEPTED THE ADDITION AND DID NOT FILE ANY FURTHER APPEAL AGAINST THE ADDITION JUST TO SETTLE THE MATTER WHICH DOES N OT TANTAMOUNT TO ACCEPTANCE OF THE FACT THAT THERE WAS NEGATIVE CASH BALANCE OF RS. 65,169/- ON 30.03.2009. IN SUPPORT OF THE CONTENTION MADE HEREIN ABOVE FOLL OWING CASE LAWS ARE RELIED UPON BY THE ASSESSEE. 131 ITR 619 ADDL. CIT VS. AGGARWAL MISTHANBHANDAR [RAJASTHAN HIGH COURT] PENALTY - CONCEALMENT OF INCOME - ASSESSEE A SMALL TRADER, DOING HALWAI BUSINESS - NET PROFIT DECLARED VERY LOW - ES TIMATED HIGHER ASSESSMENT MADE BY ITO ACCEPTED BY ASSESSEE TO AVOID DISPUTES BY WAY OF APPEALS, PENALTIES, ETC. - TRIBUNAL FINDING THAT SUCH BOOKS OF ACCOUNT AS WERE POSSIBLE OR PRACTICABLE IN SUCH BUSINESS WAS MAINTAINED - NO MANIPULATION OR OTHER INDICATION OF CONCEALMENT OF INCOME POINTED OUT BY DEPARTMENT - CO-OPERATION EXTENDED IN COMPLETING ASSESSMENT DOES NOT AMOUNT T O CONFESSION OF CONCEALMENT OF INCOME - LEVY OF PENALTY NOT VALID - INCOME TAX ACT, 1961, S. 271(1)(C). SIR SHADILAL SUGAR & GENERAL MILLS LTD. V/S CIT168 ITR 705/706 713 (SC) FROM THE ASSESSEE AGREEING TO ADDITION TO HIS INCOM E, IT DOES NOT FOLLOW THAT THE AMOUNT AGREED TO BE ADDED WAS CONCEALED IN COME. THERE MAY BE HUNDRED AND ONE REASONS FOR SUCH ADMISSION I.E. WHE N THE ASSESSEE REALISES THE TRUE POSITION, IT DOES NOT DISPUTE CERTAIN DISALLOW ANCES BUT THAT DOES NOT ABSOLVE THE REVENUE FROM PROVING THE MENS REA OF QU ASI CRIMINAL OFFENCE. 271 ITR 138 CIT VS. SUSAIKALYANAMANDAPAM PVT. LTD. (MAD.) PENALTY CONCEALMENT OF INCOME CONDITION PRECEDE NT FOR IMPOSITION OF PENALTY MENS REA NO PRESUMPTION OF MENS REA UNDER EXPLANATION 1 TO ITA NO. 427/JP/2016 SMT. ASHA DHANWANI VS. ITO, WARD- 4(1), JAIPUR . 7 SECTION 271(1) FINDING BY COMMISSIONER (APPEALS) AND APPELLATE TRIBUNAL THAT THERE WAS NO MENS REA PENALTY CANNOT BE IMPO SED INCOME-TAX ACT, 1961, S. 271(1) (C). 3.5 THE LD. DR RELIED ON THE ORDERS OF THE LD. CIT(A) 3.6 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED BY THE AO DURING VERIFICATION OF CASH BOOK THAT THE ASSESSEE WAS HAVING A NEGATIVE BALANC E OF RS. 65,169/- ON 30-03-2009 WHICH COULD NOT BE SUBSTANTIATED BY THE ASSESSEE WHEN IT WAS CONFRONTED BY THE AO AND THUS AO TREATED IT AS UNEX PLAINED EXPENDITURE BY ADDING THE SAME TO THE TOTAL INCOME OF THE ASSES SEE. THE AO THUS INITIATED PENALTY PROCEEDINGS U 271(1) OF THE ACT. IN PENALTY PROCEEDINGS THE AO VIDE HER ORDER DATED 27-06-2012 IMPOSED PENALTY OF RS. 42,114/-. THE LD. CIT(A) IN FIRST APPEAL VIDE H IS ORDER DATED 19-01- 2016 DELETED THE PENALTY IN RESPECT OF TRADING ADD ITION OF RS. 2.00 LACS HOWEVER, CONFIRMED THE PENALTY IN RESPECT OF DISAL LOWANCE OF UNEXPLAINED EXPENDITURE OF RS. 65,169/- U/S 271(1)( C) OF THE ACT. IT IS NOTED THAT THERE WAS NO NEGATIVE CASH BALANCE AS ON 30-03-2009 AS PER AUDITED BOOKS OF ACCOUNT BUT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CASE BEFORE THE AO. THERE WERE ENTRIES RELATED TO RECEIP T AND PAYMENTS MADE IN CASH DURING THE ENTIRE DAY AND ALL THE ENTRIES O F ONE DAY SHOULD HAVE ITA NO. 427/JP/2016 SMT. ASHA DHANWANI VS. ITO, WARD- 4(1), JAIPUR . 8 BEEN CONSIDERED AS A WHOLE TO WORK OUT THE CASH AVA ILABLE WITH THE ASSESSEE AT THE END OF THE PARTICULAR DAY AND SINCE THERE WAS POSITIVE CASH BALANCE AS AT THE OPENING AND CLOSING OF THE DAY, T HERE WAS NO POSSIBILITY OF NEGATIVE CASH BALANCE DURING THE YEAR. THE ASSES SEE SUBMITTED THE CERTIFIED COPY OF CASH BOOK BEFORE THE AO WHO DID N OT POINT OUT ANY SUCH DEFICIENCY IN THE SAME IN PENALTY PROCEEDINGS. IT A PPEARS THAT THE AO HAD NOT TAKEN INTO CONSIDERATION ALL THE MATERIAL FACTS AVAILABLE BEFORE HIM BEFORE DRAWING ANY CONCLUSION THAT THE ASSESSEE HAD CONCEALED THE INCOME. THE HON'BLE SUPREME COURT IN THE CASE OF C IT VS. EILLY & LILLY & COMPANY , (2009) 312 ITR 225 HELD THAT THE PENAL TY PROCEEDINGS IS NOT AUTOMATIC OR MANDATORY FALLOUT OF THE ADDITION MADE DURING THE ASSESSMENT PROCEEDINGS, THEREFORE, THE SAME SHOULD NOT BE LEVIED IN THE ROUTINE MANNER. IN VIEW OF THE ABOVE FACTS AND CIRC UMSTANCES OF THE CASE AS WELL AS THE CASE LAWS CITED (SUPRA), IT DOES NOT ATTRACT THE CONFIRMATION OF IMPOSITION OF PENALTY BY THE LD. CIT(A) U/S 271( 1)(C) OF THE ACT IN RESPECT OF ADDITION OF RS. 65,169/- . HENCE, THE P ENALTY CONFIRMED BY THE LD. CIT(A) U/S 271(1)(C) OF THE ACT ON THE ADDITION OF RS. 65,169/- IS DELETED. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED . ITA NO. 427/JP/2016 SMT. ASHA DHANWANI VS. ITO, WARD- 4(1), JAIPUR . 9 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 5 /10 /2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 5 /10/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. ASHA DHANWANI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO,WARD- 4 (1), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 427/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR