Sh. Karamjit Singh, Amritsar. V. The Asstt. Commissioner of Income-tax, Amritsar.

ITA 437/ASR/2014

• Counselvise Citation: 43720914 RSA 2014
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 02-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.437(ASR)/2014 ASSESSMENT YEAR:2009-10 PAN :AJNPS8632C SH.KARAMJIT SINGH VS. THE ASSTT. COMMR. OF INCOM E TAX, VPO NAG KALAN, MAJITHA, CIRCLE V, AMRITSAR. DISTT. AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.PADAM BAHL, CA RESPONDENT BY: SH.TARSEM LAL, DR DATE OF HEARING: 04/02/2015 DATE OF PRONOUNCEMENT:11/02/2015 ORDER PER B.P.JAIN,AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), AMRITSAR, 03.04.2014 FOR THE ASSESSMENT YEAR 2009-1 0. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A), AMRITSAR HAS GROSSLY ERRED IN CONFIRMING THE PENALTY LEVIED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE V, AMRITSAR U/S 271(1)(C) AT RS.93,470/ -. 2. THAT BOTH THE LD. CIT(A) AND ACIT, CIRCLE V, AMR ITSAR HAVE FAILED TO APPRECIATE THAT THE ASSESSEE HAD OFFERED CAPITAL GAIN ON SALE OF RAHON ROAD IN THIS CAPITAL A/C AND THE SUM OF RS.2,75,000/- WAS OFFERED VOLUNTARILY. ITA NO.437(ASR)/2014 2 3. THAT BOTH THE LD. CIT(A) AND ACIT, CIRCLE V, AMRITS AR HAVE FAILED TO APPRECIATE THAT THE ADDITION OF RS.1,00,0 00/- ON ACCOUNT OF DIARY BUSINESS AND ADDITION OF RS.1,01,526/- ON ACC OUNT OF DISALLOWANCES WOULD OFFSET THE ADDITION OF RS.2,75, 000/- TO THE EXTENT OF RS.2,01,526/-. 2. THE BRIEF FACTS OF THE CASE AS ARISING FROM THE ORDER OF THE AO U/S 271(1)(C) OF THE ACT, ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT IN THE CAPITAL ACCOUNT, THE ASSESSEE HAS CREDITED RS.6 ,79,500/-. FURTHER THE ASSESSEE IN HIS CAPITAL ACCOUNT HAS SHOWN PROFI T ON RHON LAND AT RS.40,500/- AND PROFIT ON ZIRAKPUR LAND AT RS.45,00 0 TOTAL OF WHICH COMES TO RS.7,65,000/-. WHEN ASKED TO EXPLAIN THE CREDIT ENTIRES OF THE CAPITAL ACCOUNT, THE ASSESSEE IS SUBMITTED THAT CREDIT OF RS.4,90,000/- WAS ON ACCOUNT OF SALE OF RAHON ROAD LAND WHICH WAS PURCHASED IN THE YEAR 31.03.2005 FOR RS.3,59,500/-. COPIES OF PURCHASE & SALE DEEDS WERE FURNISHED. THE INDEXED C OST OF THE LAND COMES TO RS.4,35,894/- AND LONG TERM CAPITAL GAIN ON SALE OF LAND WAS THUS COMPUTED AT RS.54,106/-. THUS AMOUNT OF LONG T ERM CAPITAL GAIN WAS NOT SHOWN IN THE COMPUTATION OF INCOME AND HENC E THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. AS REGARDS THE BALANCE AMOUNT ( I.E. RS.7,65,000/- MINUS RS.4,90,000/-) OF RS.2,75,000/- CREDITED IN CAPITAL ACCOUNT, THE ASSESSEE ADMITTED THAT THIS CREDIT WAS WITHOUT ANY BASIS OR SUPPORTING EVIDENCE. ACCORDINGLY, THIS AMOUNT OF RS.2,75,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE KEEPING IN VIEW THE PROVISIO NS OF SECTION 68 OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT THERE WAS NO SALE OF ANY LAND IN ZIRAKPUR. FOR CONCEALING THE PARTICULARS OF INCOME AS STATED ABOVE PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIA TED WHILE COMPLETING THE ASSESSMENT PROCEEDINGS U/S 143(3) VI DE ORDER DATED 21.12.2011. PENALTY NOTICE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT DATED 21.12.2011 WAS INITIATED AND WAS DULY SERVED UPON THE ASSESSEE ON 28.12.2011. IN RESPONSE THE ASSESSEE HAS FILED HIS WRITTEN SUBMISSION ON 03.01.2012. FRESH OPPORTUNITY OF HEARING WAS ALS O OFFERED TO THE ITA NO.437(ASR)/2014 3 ASSESSEE VIDE THIS OFFICE LETTER DATED 15.05.2012 W HICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE, THE ASSESSEE FILED WRITTEN REPLY DATED 22.05.2012, ON 23.05.2012. IN HIS REPLY ASSES SEE HAS SUBMITTED AS UNDER: THAT THE ASSESSEE FILED A WRITTEN SUBMISSION WITH YOUR HONOUR NARRATING THEREIN THE DETAILS OF CREDIT OF RS.76500 0/- APPEARING IN HIS CAPITAL ACCOUNT IN THE BOOKS OF K H MEMORIAL HOSPITAL AS UNDER: A) RS.54106/- LTCG ON LAND SOLD. B) RS.43594/- INDEXED COST OF ASSET SOLD ON WHICH LTCG AT A) WAS THERE. C) RS.275000/- BEING BALANCING FIGURE SHOWN AS INCOME. IN THE ABOVE LETTER THE ASSESSEE SUBMITTED TAT THE ABOVE 2 INCOMES OF RS.54106/- AND RS.275000/- MAY KINDLY BE ADDED TO THE INCOME FOR TAX WITH NO PENAL ACTION. PAPERS REL ATING TO THE ABOVE WERE ALSO ENCLOSED WITH THE ABOVE SUBMISSION. THE ABOVE SUBMISSION WAS FILED WITH YOUR HONOUR VOL UNTARILY AND THE SAME WAS PLACED ON RECORDS BY YOUR HONOUR. THAT SUBSEQUENT TO THE ABOVE SUBMISSION WHEN YOUR HONOUR ASKED ABOUT THE CREDIT OF RS.765000/- IN CAPITAL AC COUNT OF THE ASSESSEE IT WAS REPLIED THAT THE ASSESSEE HAD ALREA DY MADE A WRITTEN SUBMISSION WITH YOUR HONOUR AS DETAILED ABO VE. I HAVE CONSIDERED THE REPLY OF THE ASSESSEE CAREFUL LY. THE ASSESSEE HAS TAKEN THE PLEA THAT DISCLOSURE OF EXCESS CREDIT OF RS.765000/- AND LONG TERM CAPITAL GAIN OF RS.54106/- WAS VOLUNTARILY. TH ERE IS NO EXPLANATION ON THE PART OF THE ASSESSEE TO JUSTIFY AS TO HOW CASH CREDIT OF RS.2,75,000/- DULY UTILIZED BY THE ASSESSEE WAS INTRODUCED IN THE BOOKS WITHOUT ANY BASIS. THE BOGUS CASH CREDIT AS W ELL AS NON DISCLOSURE OF LONG TERM CAPITAL GAIN ON SALE OF LAN D WAS DETECTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHILE E XAMINING THE ACCRETION TO THE CAPITAL ACCOUNT OF THE ASSESSEE. T HE ASSESSEE WAS LEFT WITH NO OTHER ALTERNATIVE BUT TO ADMIT THAT THE EX CESS CASH CREDIT INTRODUCED IN THE CAPITAL ACCOUNT WAS WITHOUT ANY B ASIS AND HENCE THE SAME WAS DISCLOSED AS ADDITIONAL INCOME. THE CASH C REDIT REPRESENTED PARTICULARS OF INCOME CONCEALED BY THE ASSESSEE. TH E CASH CREDIT OF ITA NO.437(ASR)/2014 4 RS.2,75,000/- INTRODUCED IN THE CAPITAL ACCOUNT WAS DULY UTILIZED FOR MAKING INVESTMENT AS PER THE BALANCE SHEET. THERE I S NO DOUBT THAT THE ASSESSEE HAS KNOWINGLY CONCEALED THE PARTICULARS OF INCOME ON ACCOUNT OF CASH INTRODUCED IN THE BOOKS OF ACCOUNT AND FOR LONG TERM CAPITAL GAIN ON SALE OF LAND. HAD THE CASE WAS NOT EXAMINED IN SCRUTINY THE PARTICULARS OF INCOME SO CONCEALED WOU LD HAVE GONE UNDETECTED AND THEREBY THE ASSESSEE WOULD HAVE BEEN SUCCESSFUL IN EVADING THE TAX ON THE ACCOUNT. THUS, IT IS A FIT CASE FOR LEVY OF PENALTY FOR CONC EALING PARTICULARS OF HIS INCOME AS STATED ABOVE. I, THEREFORE, HOLD THE ASSESSEE IN DEFAULT FOR CONC EALING PARTICULARS OF INCOME ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF RS. 2,75,000/- AND LONG TERM CAPITAL GAIN OF RS.54,106/-. IN VIEW OF ABOVE, I THEREFORE IMPOSE PENALTY OF RS .93,470/- CALCULATED AS UNDER FOR EVADING THE TAX. 3. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR. PADAM BAHL , CA AT THE OUTSET ARGUED WITH REGARD TO GROUND NO.3 THAT APART FROM A DDITIONS ON WHICH PENALTY U/S 271(1)(C) HAVE BEEN CONFIRMED RAISED IN GROUND NOS. 1 & 2, THE AO HAS ALSO MADE ADDITIONS WITH REGARD TO DAIRY IN COME AMOUNTING TO RS. 1 LAC IN THE ABSENCE OF ANY RECORD MAINTAINED BY TH E ASSESSEE. THERE WAS FURTHER DISALLOWANCE OF EXPENSES BEING 20% OF RS.5 ,07,632/- AT RS.1,01,526/- ON ACCOUNT OF PERSONAL USE AND UNVOUC HED EXPENSES. THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE TOTAL AMOUNT OF RS.2,01,526/- IS AVAILABLE AS CASH AS AGAINST THE A DDITIONS OF RS.2,75,000/- BEING THE CONCEALED INCOME ON ACCOUNT OF UNEXPLAINE D CASH CREDIT OF ITA NO.437(ASR)/2014 5 RS.2,75,000/-. ACCORDINGLY, THE SAID CASH AVAILABLE SHOULD BE OFFSET AGAINST THE SAID CONCEALED INCOME OF UNEXPLAINED CASH CREDI T IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ANANTHA RAM VEERASINGHAIAH & CO. VS. COMMISSIONER OF INCOME TAX REPORTED IN 123 ITR 457. 5. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSES SEE HAS CONCEALED THE CASH CREDIT TO THE EXTENT OF RS.2,75,000/- AND LONG TERM CAPITAL GAIN OF RS.54,106/- AND ACCORDINGLY THE ASSESSEE DID NOT PU RSUE THE GROUNDS NO. 1 & 2. BUT AT THE SAME TIME, THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT OTHER ADDITIONS ON ACCOUNT OF DAIRY BUSINESS AND DISALLOW ANCES OF EXPENSES AMOUNTING TO RS. 1 LAC AND RS.1,01,526/- RESPECTIVE LY WERE MADE AND TO THAT EXTENT AMOUNT OF RS.2,01,526/- WAS AVAILABLE TO OFF SET THE CONCEALED INCOME OF RS.2,75,000/-. HE RELIED UPON THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF ANANTHARAM VEERASINGHAIAH & CO. VS. COMMISSIONER OF INCOME TAX (SUPRA) IN THIS REGARD. ON THIS ISSUE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS INCURRED EXPENSES OF RS.6,80,632/- OU T OF WHICH 80% OF THE EXPENSES HAVE BEEN USED FOR BUSINESS PURPOSES AND 20% FOR PERSONAL PURPOSES. IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE ASSESSEE IS NOT LEFT ITA NO.437(ASR)/2014 6 WITH ANY CASH AVAILABLE TO OFFSET THE SAME AS AGAI NST THE CONCEALED INCOME OF CASH CREDIT. AS REGARDS THE DISALLOWANCE OF RS. 1 LAC BEING AN INTANGIBLE ADDITION, THE CASH BECOMES AVAILABLE WITH THE ASSE SSEE AND IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F ANANTHARAM VEERASINGHAIAH & CO. VS. COMMISSIONER OF INCOME TAX (SUPRA), WE DIRECT THE AO TO OFFSET RS.1 LAC AGAINST THE CONCEALED IN COME ON ACCOUNT OF CASH CREDIT OF RS.2,75,000/- AND ACCORDINGLY THE PENALTY WITH REGARD TO THE CASH CREDIT OF (RS.2,75,000/- - RS.1,00,000) I.E. RS.1,7 5,000/- CAN BE LEVIED AND ACCORDINGLY ORDER OF LD. CIT(A) IS MODIFIED AND THE AO IS DIRECTED TO LEVY THE PENALTY ON A CONCEALED INCOME OF RS.1,75,000/- ON ACCOUNT OF CASH CREDIT. FURTHER, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY CONFIRMED THE PENALTY ON RS.54,106/- WITH R EFERENCE TO CONCEALMENT OF LONG TERM CAPITAL GAINS. THE AO IS DIRECTED TO A CT ACCORDINGLY. ACCORDINGLY, GROUNDS NO. 1, 2 & 3 OF THE ASSESSEE A RE PARTLY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.437(ASR)/2014 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH FEBRUARY, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11TH FEBRUARY, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: ITA NO.437(ASR)/2014 7 1. THE ASSESSEE:SH.KARAMJIT SINGH, VPO NAG KALAN, MAJI THA. 2. THE ACIT, CIR.V, AMRITSAR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.