Mahaveer Chand, CHENNAI V. JCIT,

ITA 433/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8579 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: D ANAND
• Keywords: Reasonable cause; Onus to prove
• Section: 133A; 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . . !' , # $% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.433/MDS/2016 & '& /ASSESSMENT YEAR : 2009-10 SHRI. MAHAVEER CHAND, PROPRIETOR: M/S. ARIHANT JEWELLERS, NO.38/145, NORTH USMAN ROAD, T.NAGAR, CHENNAI 600 017. PAN : AEOPM0188B V. JOINT COMMISSIONER OF INCOME TAX, RANGE II, MADURAI. ( () /APPELLANT) ( *+() /RESPONDENT) () , - /APPELLANT BY : SHRI. D.ANAND, ADVOCATE *+(),- /RESPONDENT BY : SHRI. SHIVA SRINIVAS ,.# /DATE OF HEARING : 28.07.2016 /0' ,.# /DATE OF PRONOUNCEMENT : 15.09.2016 /O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) -2, CHENNAI DATED 11.11.2015 AND PERTAINS T O ASSESSMENT YEAR 2009-10. 2 I.T.A. NO.433/MDS/2016 2. SHRI. D.ANAND, THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. ACCORDING TO TH E LEARNED COUNSEL, THERE WAS A SURVEY IN THE PREMISES OF M/S.ARIHANT J EWELLERS UNDER SECTION 133A OF THE ACT ON 26.06.2008. THE ASSESSEE IS THE PROPRIETOR OF M/S.ARIHANT JEWELLERS. DURING THE COURSE OF SURV EY OPERATION, THE REVENUE AUTHORITIES FOUND THAT THE STOCK OF GOLD JE WELLERY AS PER THE BOOKS OF ACCOUNT WAS 22,305.129 GRAMS. ON PHYSICAL VERIFICATION, THE REVENUE AUTHORITIES FOUND ONLY 20,250.830 GMS. OF G OLD JEWELLERY. ACCORDING TO THE REVENUE, THERE WAS A SHORTAGE OF 2 054.299 GRAMS OF GOLD JEWELLERY. THE ASSESSEE EXPLAINED BEFORE THE A SSESSING OFFICER, THE SHORTAGE WAS DUE TO NON CONSIDERATION OF THE JEWELL ERY GIVEN TO THE CUSTOMERS ON APPROVAL BASIS ON THE DATE OF SURVEY. THE ASSESSING OFFICER HOWEVER REJECTED THE CLAIM OF THE ASSESSEE AND LEVIED PENALTY. 3. REFERRING TO THE ORDER OF THE ASSESSING OFFICER, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVENUE AUTHORITIES ALSO FOUND AN EXCESS CASH OF RS.8,41,077/-. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE EXCESS CASH WAS ADVA NCE RECEIVED FROM THE CUSTOMERS AGAINST THE GOODS GIVEN ON APPROVAL B ASIS. THIS EXPLANATION OF THE ASSESSEE ALSO WAS REJECTED BY TH E ASSESSING OFFICER WITHOUT ANY REASONABLE CAUSE. THEREFORE, THE ASSESS EE ACCORDING TO 3 I.T.A. NO.433/MDS/2016 THE LEARNED REPRESENTATIVE DISCHARGED HIS OBLIGATIO N. HENCE, THERE CANNOT BE ANY PENALTY UNDER SECTION 271(1)(C). REFE RRING TO THE JUDGMENT OF THE MADRAS HIGH COURT IN CIT VS. GEM GR ANITES REPORTED IN (2013) 86 CCH 0160 CHENHC, A COPY OF WHICH IS FILED BY THE ASSESSEE SUBMITTED THAT WHEN THE ASSESSEE OFFERED AN EXPLANA TION WITH REGARD TO THE SHORTAGE OF GOLD JEWELLERY AND THE EXCESS CASH, THE BURDEN OF PROOF SHIFTS ON THE SHOULDERS OF THE REVENUE. IF THE REVE NUE COULD NOT AGREE WITH EXPLANATION OF THE ASSESSEE, THEN IT IS FOR TH E REVENUE TO PROVE THAT THERE WAS A CONCEALMENT OF THE PARTICULARS OF INCOM E OR THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE ONUS WHICH WAS SHIFTED ON THE REVENUE WAS NOT DISCHARGED. THEREFOR E, THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE A SSESSING OFFICER. 4. ON THE CONTRARY, SHRI SHIVA SRINIVAS, THE LEARNE D REPRESENTATIVE FOR THE DEPARTMENT SUBMITTED THAT, ADMITTEDLY DURIN G THE COURSE OF SURVEY OPERATION, THE REVENUE AUTHORITIES FOUND THE SHORTAGE OF GOLD JEWELLERY AND EXCESS CASH. THEREFORE, THE PRESUMPTI ON IS THAT THE ASSESSEE HAS SOLD JEWELLERY OUTSIDE THE BOOKS OF AC COUNTS AND AN ATTEMPT WAS MADE TO CONCEAL THE ASSESSEES INCOME. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE ASSES SEE VOLUNTARILY OFFERED THE EXCESS GOLD JEWELLERY AND THE EXCESS CA SH FOUND FOR TAXATION. THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE SHORTAGE OF GOLD JEWELLERY A ND EXCESS CASH WAS 4 I.T.A. NO.433/MDS/2016 FOUND BY THE REVENUE AUTHORITIES ONLY DURING THE CO URSE OF SURVEY CONDUCTED BY THE REVENUE IN THE PREMISES OF THE ASS ESSEE. THEREFORE, IT CANNOT BE CONSIDERED THAT THE ASSESSEE HAS VOLUNTAR ILY OFFERED THE VALUE OF THE DEFICIENT STOCK IN GOLD JEWELLERY AND THE EXCESS CASH FOUND DURING THE COURSE OF SURVEY OPERATION. THEREFORE, T HE CIT(A) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING TH E COURSE OF SURVEY OPERATION, A STATEMENT WAS RECORDED FROM THE ASSESS EE. THE ASSESSING OFFICER IN FACT EXTRACTED THE ANSWER OF THE ASSESSE E AT PARAGRAPH 3 OF THE IMPUGNED ORDER OF THE ASSESSMENT. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER EVEN AT THE TIME OF SURVEY TH AT THE DEFICIENT STOCK IN GOLD JEWELLERY WAS BECAUSE OF THE GOLD JEWELLERY GIVEN TO THE CUSTOMERS ON APPROVAL BASIS. WITH REGARD TO THE EXC ESS CASH, THE ASSESSEE EXPLAINED DURING THE EXAMINATION UNDER SEC TION 131 OF THE INCOME TAX ACT THAT IT WAS RECEIVED FROM CUSTOMERS TO WHOM THE JEWELLERY WAS GIVEN ON APPROVAL BASIS. THIS IS THE STATEMENT MADE BY THE ASSESSEE DURING THE COURSE OF SURVEY OPERATION. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT OFFERED ANY EXPLA NATION FOR THE DEFICIENCY IN GOLD JEWELLERY AND EXCESS CASH FOUND DURING THE COURSE OF SURVEY OPERATION. THEREFORE, THE BURDEN OF PROOF SH IFTS ON THE SHOULDER OF THE REVENUE AS FOUND BY THE MADRAS HIGH COURT IN THE CASE OF GEM 5 I.T.A. NO.433/MDS/2016 GRANITES CITED SUPRA. IT IS FOR THE REVENUE TO INVE STIGATE FURTHER AND FIND OUT WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE WAS TRUE OR NOT. THE ASSESSING OFFICER HAS NOT TAKEN ANY PAIN TO MAK E FURTHER INVESTIGATION IN ORDER TO ASCERTAIN THE CORRECTNESS OF THE EXPLANATION OFFERED BY THE ASSESSEE. THEREFORE, THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT HE LEVY OF PENALTY ON THE ASSESSEE IS NOT JUSTIFIED. 6. IT IS WELL SETTLED PRINCIPLES OF LAW THAT THE AS SESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDEN T. EVEN THOUGH, THE ASSESSEE AGREES FOR ADDITION IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WAS EXPECTED TO RE-EXAMINE THE MA TERIAL AVAILABLE ON RECORD DURING THE PENALTY PROCEEDINGS. IN THE CASE BEFORE US, THE ASSESSING OFFICER AS WELL AS CIT (A) FOUND THAT THE DEFICIENT STOCK AND EXCESS CASH WAS FOUND DURING THE COURSE OF SURVEY O PERATION. THEREFORE, IT IS NOT A CASE OF VOLUNTARY DISCLOSE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE JEWELLERY WAS GIVEN TO T HE CUSTOMERS ON APPROVAL BASIS AND THE ADVANCE MONEY WAS COLLECTED AND THIS WAS NOT FOUND TO BE FALSE BY THE ASSESSING OFFICER, THERE I S NO JUSTIFICATION FOR LEVY OF PENALTY BY THE ASSESSING OFFICER UNDER SECT ION 271(1)(C) OF THE ACT. 6 I.T.A. NO.433/MDS/2016 7. IN VIEW OF ABOVE DISCUSSION, THIS TRIBUNAL IS UN ABLE TO UPHOLD THE ORDERS OF LOWER AUTHORITIES. ACCORDINGLY, THE ORDER S OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE PENALTY LEV IED BY THE ASSESSING OFFICER AS CONFIRMED BY CIT(A) UNDER SECTION 271(1) (C) IS DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 15 TH SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- ( . . !' ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) # /ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 1 /DATED, THE 15 TH SEPTEMBER, 2016. SP. , *.!2 32'. /COPY TO: 1. () /APPELLANT 2. *+() /RESPONDENT 3. 4. ( )/CIT(A) 4. 4. /CIT, 5. 25 *. /DR 6. & 6 /GF.