KANTABEN K. SHETH, MUMBAI V. DCIT CIR-1, MUMBAI

ITA 4409/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55503 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 22-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARTHASARTHI NAIK
• Keywords: Business income; Salary income; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A NOS.4407, 4408 & 4409/ MUM/2009 ASSESSMENT YEARS: 2000-01, 2001-02 & 2003-04 KANTABEN K SHETH, .. APPELLANT 66/142, F, LALBAWA MANDIR, BHULESWAR, MUMBAI PA NO.ANEPS 0336 A VS DCIT, CIRCLE -1, .. RESPONDEN T AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: VIJAY MEHTA, FOR THE APPELLANT PARTHASARTHI NAIK, , FOR THE RESPONDENT DATE OF HEARING : 10.8.2011 DATE OF PRONOUNCEMENT : 12 -10-2011 O R D E R PER PRAMOD KUMAR: 1. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICATE IN THESE APPEALS IS WHETHER OR NOT CIT(A) WAS JUSTIFIED IN UPHOLDING PEN ALTY IMPOSED ON THE ASSESSEE U/S.271(1)(C) OF THE INCOME TAX ACT, 1961, FOR THE A SSESSMENT YEARS, 2000-01, 2001- 02 & 2003-04, RESPECTIVELY. I.T.A NOS.4407, 4408 & 4409/ MUM/2009 ASSESSMENT YEARS: 2000-01, 2001-02 & 2003-04 2 2. SINCE FACTS ARE IDENTICAL IN ALL THE ASSESSMENT YEARS UNDER APPEAL, WE TAKE UP APPEAL FOR CONSIDERATION FOR THE ASSESSMENT YEAR 2000-20 01 AND THE DECISION WILL BE APPLICABLE TO OTHER ASSESSMENT YEARS. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HER ORIGIN AL RETURN OF INCOME ON 27.6.2001 DECLARING INCOME FROM SALARY AT RS.58,800 A ND FROM OTHER SOURCES AT RS.7,131. A SEARCH WAS CONDUCTED AT THE PREMISES OF THE ASSESSEES FAMILY MEMBERS AND BASED ON THE PAPERS FOUND DURING THE COURSE OF SEAR CH OPERATION, A NOTICE U/S.153C WAS ISSUED. IN RESPONSE TO NOTICE, THE ASSESSEE F ILED HER RETURN ON 18.12.2007 AT AN INCOME OF RS.1,16,780. THE DIFFERE NCE IN THE ORIGINAL RETURN OF INCOME AS FILED BY THE ASSESSEE AND SUBSEQUENT RETURN AFTE R SEARCH IS ON ACCOUNT OF INCOME FROM PROPERTY WHICH HAS BEEN SHOWN AT RS.45,000 , WHICH WAS NOT DISCLOSED EARLIER. THE AO WAS OF THE OPINION THAT THE ADDITIO NAL INCOME WHICH WAS NOT DISCLOSED AT THE TIME OF ORIGINAL RETURN COULD BE BRO UGHT TO TAX AFTER THE DETAILED INVESTIGATION DONE BY DEPARTMENT AFTER SEARCH PROCEED INGS. IT WAS IN THIS BACKDROP THAT THE PROPERTY INCOME AS DISCLOSED BY THE ASSESSEE WAS A SSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST INCOME FROM HO USE PROPERTY SHOWN BY THE ASSESSEE BY THE ASSESSING OFFICER. THE AO ALSO INITIATED P ENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. IN RESPONSE TO PENALTY P ROCEEDINGS, THE ASSESSEE SUBMITTED THAT SHE HAD DISCLOSED ALL THE INCOME IN THE REVISED RETURN AND IT WAS NOT THE CASE THAT THE INCOME WAS DETECTED BY THE AO. THE EXPLANATION FURNISHED BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER. T HE AO WAS OF THE OPINION THAT AS PER NOTICE UNDER SECTION 153C THE ASSESSEE HAD TO FILE RETURN ON OR BEFORE 10.11.2007 WHEREAS THE ASSESSEE FLED RETURN ON 18.1.2.2 007 AND THE ASSESSEE CAME FORWARD TO FILE THE TURN OF INCOME ONLY AFTER THE I NCOME DETECTED BY THE DEPARTMENT. HE ACCORDINGLY, LEVIED PENALTY UNDER SECTION 271(1(C ) FOR DELIBERATE CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOM E. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. 4. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE ASSESSEE IS THE SISTER OF LATE DILIP K SHETH WHO EXPIRED O N 4.3.2006. BEING UNMARRIED SHE RESIDES ALONGWITH THE FAMILY OF LATE DI LIP K. SHETH. THE BANKING, I.T.A NOS.4407, 4408 & 4409/ MUM/2009 ASSESSMENT YEARS: 2000-01, 2001-02 & 2003-04 3 ACCOUNTING AND TAX AFFAIRS OF THE ASSESSEE WERE LOOKED A FTER BY LATE DILIP K. SHETH AND HE WAS FULLY AWARE ABOUT THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE IN THE ACCOUNT. HE ALSO SUBMITTED THAT EVEN THE RECORDS PERT AINING TO THE TRANSACTIONS WERE IN THE POSSESSION OF LATE DILIP K. SHETH. HE SUBMI TTED THAT ON ACCOUNT OF THE DEATH OF SHRI DILIP K. SHETH, SOME OF THE DEPOSITS IN THE BANK ACCOUNT COULD NOT BE IDENTIFIED AT THE TIME OF FILING THE RETURN OF INCO ME. HOWEVER, WHEN THIS WAS TRACED OUT, THE SAID AMOUNT WAS DECLARED IN THE REVISED RETUR N. THEREFORE, THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME. HE ALSO FILED A DECISION DATED 8.10.2010 OF A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DAKSH A D SHETH IN ITA NOS,286,287 & 288 FOR THE ASSESSMENT YEARS 2000-2001 TO 2002-03, WHE REIN, THE ASSESSEES EXPLANATION THAT HER HUSBAND LATE DILIP K. SHETH HAD EXPIRED JUST 15 DAYS BEFORE SEARCH AND HENCE, THIS LAPSE HAS OCCURRED ON THE PART O F THE ASSESSEE. HOWEVER, THE INCOME OFFERED BY THE ASSESSEE SUO MOTO WAS ACCEPTED BY T HE TRIBUNAL AND, THE PENALTY IMPOSED ON THE SAME SET FACTS, WAS DELETED. 5. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PER USED THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IN THE ORIGINAL RETU RN COULD NOT DISCLOSE AN AMOUNT OF RS.45,000 EARNED OUT OF HOUSE PROPERTY. THE ASSESSING OFFICER TREATED THE SAID AMOUNT AS INCOME FROM OTHER SOURCES AND LEVIED PENAL TY ON THE GROUND THAT THE ASSESSEE CONCEALED THE SAID INCOME. HOWEVER, IT WAS THE CONTENTION OF THE ASSESSEE THAT SHE WAS RESIDING WITH HIS BROTHER LATE DILLIP K. SHETH AND ALL HER ENTIRE DOCUMENTS AND RECORDS WEE MAINTAINED AND LOOKED AFTE R HER BROTHER. DUE TO HIS DEATH, SOME OF THE INCOME COULD NOT BE IDENTIFIABLE AND, ACCORDINGLY, COULD NOT SHOWN IN THE ORIGINAL RETURN OF INCOME. HOWEVER, WH EN IT CAME TO THE KNOWLEDGE OF THE ASSESSEE THAT INADVERTENTLY THE INCOME FROM HOUSE PR OPERTY WAS NOT SHOWN IN THE ORIGINAL RETURN, SHE IMMEDIATELY SHOWN IT IN THE REVISED RETURN. ON SIMILAR FACTS, A COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES GROUP CONCERN VIDE ORDER DATED 8.10.2010, DELETED THE PENALTY, INTER ALIA, OBSERVING AS UNDER: 4 IT WAS SUBMITTED THAT THE ENTIRE BUSINESS CONCERN WAS MANAGED BY HER LATE HUSBAND SHRI DILIP K.SHETH, WHO ALONE HAD THE K NOWLEDGE OF THE ACTIVITIES CARRIED OUT, DOCUMENTS, AND RECORDS MAINTAI NED, ETC. HOWEVER, DUE TO HIS SUDDEN DEATH ON 4.3.2006, THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY OF THE DETAILS. I.T.A NOS.4407, 4408 & 4409/ MUM/2009 ASSESSMENT YEARS: 2000-01, 2001-02 & 2003-04 4 11. .. THE ASSESSEES EXPLANATION THAT HER HUSBAND HAD E XPIRED JUST 15 DAYS BEFORE SEARCH AND HENCE THIS LAPSE HAS OCCURRED ON PAT OF THE ASSESSEE. HOWEVER, THE ASSESSEE HAS OFFERED THE INCOME SUO MOTO AND EXPLANATION GIVEN BY THE ASSESSEE APPEARS REASONABLE. HENCE, WE ARE OF THE OPINION THAT THE PRESENT CASE IS NOT THAT OF CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME FOR IT TO ATTRACT T HE PROVISION OF SECTION 271(1)(C) OF THE ACT. 6. TE ASSESSEES EXPLANATION THAT SHE WAS RESIDING WITH HE R BROTHER DILIP K. SHETH, WHO WAS LOOKING AFTER HER ENTIRE BUSINESS ACTIV ITIES AND DOCUMENTS. UPON HIS DEATH BEFORE THE SEARCH, THE ASSESSEE COULD NOT FILE TH E INCOME EARNED FROM HOUSE PROPERTY AND FURNISHED THE SAME IN THE REVISED INCOME. SINCE THE FACT IS IDENTICAL TO THE CASE OF `DAKSHA D SHETH (SUPRA), WE FOLLOWING THE DECISION OF THE TRIBUNAL, HOLD THAT THE ASSESSEES CASE IS NOT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME ATTRACTING PENAL PROVISIONS UNDE R SECTION 271(1)(C) OF THE ACT. WE, ACCORDINGLY DIRECT THE AO DELETE THE IMPUGNED P ENALTY. 7. FACTS FOR THE ASSESSMENT YEAR 2001-02 ARE SIMILAR TO THAT OF A.Y. 2000-2001. IN LINE WITH OUR DECISION, WE DIRECT THE AO TO DELET E THE PENALTY FOR THIS YEAR ALSO. 8. FACTS AS SET OUT IN THE ASSESSMENT YEAR 2003-04 ARE TH AT THE ASSESSEE HAD FILED HER RETURN OF INCOME ORIGINALLY, INTER ALIA , DECLARING TOTAL INCOME FROM HOUSE PROPERTY IN RESPECT OF RECEIPTS FROM RELIANCE WEB STORES P.LTD. , AT RS.48,000/-, WHICH WAS ENHANCED TO RS.1,20,000/- IN THE RETURN FILED U/S.153A. THE AO EXAMINED THE COPY OF THE AGREEMENT DATED 1.11.2002 ENTERED INTO BETWEEN THE ASSESSEE AND M/S. RELIANCE WEB STORES P.LTD., AND AFTER CONSIDERING THE RECITALS A ND COVENANTS OF THE AGREEMENT, CONCLUDED THAT THE AGREEMENT DID NOT INDICATE THAT THE PAYMENT WAS TOWARDS RENT. HE, ACCORDINGLY, TREATED THE RECEIPTS FROM M/S. RELIANC E WEB STORES P.LTD., AS INCOME FROM BUSINESS. THE AO ALSO LEVIED PENALTY UNDER SECTION 271(1((C) OF THE ACT. ON APPEAL, THE CIT(A) CONFIRMED THE STAND SO TAKEN BY THE AO. I N THE QUANTUM APPEAL, THE INCOME SO TREATED BY THE AO INCOME FROM BUSINESS ASSESSED A S INCOME FROM HOUSE PROPERTY BY THE TRIBUNAL VIDE ORDER DATED 6.10.2009. 9. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE FIND THAT THE VERY BASIS OF IMPOSITION OF PENALTY U NDER SECTION 271(1)(C) THAT THE INCOME I.T.A NOS.4407, 4408 & 4409/ MUM/2009 ASSESSMENT YEARS: 2000-01, 2001-02 & 2003-04 5 FROM RENT TREATED BY THE AO AS BUSINESS INCOME HA S BEEN HELD TO BE INCOME FROM HOUSE PROPERTY BY THE TRIBUNAL VIDE ORDER DATED 6.10.200 9. THEREFORE, THE PENALTY ORDER OF ASSESSING OFFICER CEASES TO BE DEVOID OF LEGALLY SUSTAINABL E BASIS. WE, ACCORDINGLY DIRECT THE AO DELETE THE PENALTY. 10. IN THE RESULT, APPEALS ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2011 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 12 TH OCTOBER, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),C-1, MUMBAI 4. COMMISSIONER OF INCOME TAX, CENT-1), MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH A MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI