Dilip Aakaram Gayakwad, Ahmedabad V. The Deputy Commissioner of Income Tax, Central Circle-1(3), Ahmedabad

ITA 443/AHD/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5894 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 21-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANITA SURESH HARDASANI
• Assessee Lawyers: B R POPAT
• Keywords: Unexplained cash credit; Revised return
• Section: 139(5)

Judgement Text

,, IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD .., , BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.443/AHD/2017 ( / ASSESSMENT YEAR : 2012-13) DILIP AAKARAM GAYAKWAD C/O. B.R. POPAT & CO. 326, GALAXY MALL, 3 RD FLOOR ABOVE BANK OF INDIA SATELLITE ROAD NEHRUNAGAR AHMEDABAD-380 015 / VS. THE DY.CIT CENTRAL CIRCLE-1(3) AHMEDABAD $ ./ ./ PAN/GIR NO. : AHVPG 1630 J ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : SHRI B.R. POPAT, AR ($'*) / RESPONDENT BY : SMT. ANITA SURESH HARDASANI, SR.DR +,*- / DATE OF HEARING 26/04/2017 ./0*- / DATE OF PRONOUNCEMENT 17/ 05/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-11, AHME DABAD [CIT(A) IN SHORT] DATED 21/12/2016 FOR THE ASSESSMENT YEAR (AY) 2012-13. ITA NO.443/AHD/ 2017 DILIP AAKARAM GAYAKWAD VS.DCIT ASST.YEAR 2012-13 - 2 - 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY T HE ORDER OF THE ASSESSING OFFICER (AO) IN IMPOSING PENALTY UNDER S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'T HE ACT') QUANTIFIED AT RS.12,34,900/- WHICH IS ALLEGED TO BE WRONGLY SUSTA INED BY THE CIT(A). 3. THE RELEVANT FACTS CONCERNING THE CASE IN B RIEF ARE THAT CASH TO THE TUNE OF RS.53,01,000/- BELONGING TO ASSESSEE WAS INTER-ALIA WAS SEIZED BY THE CUSTOM DEPARTMENT, JAMNAGAR ON 03/01/2012 WH ICH WAS REQUISITIONED BY THE INCOME TAX DEPARTMENT UNDER S. 132A OF THE ACT ON 16/01/2012 AND 07/02/2012. SUBSEQUENT TO THE AFORE SAID EVENT, THE ASSESSEE FILED ORIGINAL RETURN OF INCOME FOR AY 201 2-13 UNDER S.139(1) ON 29/09/2012 DECLARING INCOME OF RS.7,28,490/- AND AGRICULTURE INCOME OF RS.1,59,680/-. THE CASE WAS SELECTED FOR SCRUTI NY ASSESSMENT. A NOTICE UNDER S.143(2) OF THE ACT WAS ISSUED ON 16/0 9/2013. AFTER THE ISSUANCE OF AFORESAID NOTICE UNDER S.143(2), THE AS SESSEE FILED REVISED RETURN ON 28/09/2013 DECLARING REVISED INCOME PEGGE D AT RS.46,71,330/-. THE AFORESAID REVISED RETURN ALSO INCLUDED AN INCO ME OFFERED RS.34,92,076/- ON THE PREMISE THAT ASSESSEE IS NOT IN A POSITION TO FURNISH CONFIRMATION OF UNSECURED LOANS CLAIMED TO BE RECEI VED FROM SEVEN PARTIES DURING THE YEAR UNDER CONSIDERATION. AN AN OTHER AMOUNT OF RS.4,51,065/- WAS ALSO OFFERED UNDER S.41(1) OF THE ACT IN THE REVISED RETURN ON THE GROUND THAT CERTAIN LIABILITIES CEAS ED TO EXIST AS PAYABLE. THE AO REFUSED TO ACCEPT THE REVISED RETURN ON THE GROUND THAT THE ITA NO.443/AHD/ 2017 DILIP AAKARAM GAYAKWAD VS.DCIT ASST.YEAR 2012-13 - 3 - ASSESSEE DID NOT PAY TAXES DUE ON THE ADDITIONAL IN COME DECLARED IN THE REVISED RETURN AND THUS AO HELD THE REVISED RETURN AS DEFECTIVE UNDER S.139(9) OF THE ACT. IN RESPONSE, THE ASSESSEE SUB MITTED THAT CASH SEIZED BY THE CUSTOM DEPARTMENT AND THE REQUISITIONED BY T HE INCOME TAX DEPARTMENT UNDER S.132A OF THE ACT MAY BE APPROPRIA TED AGAINST SELF ASSESSMENT LIABILITY DETERMINED BY THE ASSESSEE. H AVING HELD THE REVISED RETURN AS INVALID RETURN IN THE EYES OF LAW, THE AO PROCEEDED ON THE BASIS OF ORIGINAL RETURN AND FOUND THAT THE CASH CREDITS APPEARING IN THE BOOKS OF ACCOUNTS ARE DEVOID OF ANY EXPLANATION TOWARDS I DENTITY, CREDITWORTHINESS AND GENUINENESS OF SUCH CREDITS. THUS, THE ONUS WHICH REST UPON THE ASSESSEE TO PROVE THE NATURE AND SOUR CE OF CREDITS WAS NOT DISCHARGED. THE AO CONSEQUENTLY IMPOSED PENALTY ON SUCH UNEXPLAINED CREDITS. SIMILARLY, BROUGHT FORWARD OUTSTANDING LI ABILITIES WERE ALSO ASSESSED AS OFFERED IN THE REVISED RETURN AND PENAL TY THEREON WAS ALSO IMPOSED. 4. THE CIT(A) CONFIRMED THE ACTION OF THE AO AGAINS T WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THIS STAGE, WE FIRST TAKE NOTICE OF THE LEGAL OBJECTION RAISED ON BEHALF OF THE ASSESSEE THAT THE PENALTY WAS INITIAT ED ON THE GROUND THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF I NCOME, WHEREAS THE PENALTY WAS IMPOSED BY THE AO UNDER S.271(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSEE IS GUILTY OF CONCEALMENT O F PARTICULARS OF ITA NO.443/AHD/ 2017 DILIP AAKARAM GAYAKWAD VS.DCIT ASST.YEAR 2012-13 - 4 - INCOME. WE HAVE PERUSED THE ASSESSMENT ORDER AS W ELL AS THE PENALTY ORDER. HOWEVER, WE DO NOT FIND ANY SUBSTANCE IN SU CH PLEA. THE PENALTY WAS INITIATED AND IMPOSED ON THE SAME CHARGE I.E. F URNISHING OF INACCURATE PARTICULARS OF INCOME. THUS, THE LEGAL PLEA OF THE ASSESSEE IS FOUND TO BE A DAMP SQUIB. 6. DURING THE COURSE OF HEARING, THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE SUO MOTU FILED THE REVISED RETURN AND DECLARED THE ADDITIONAL INCOME WHICH WAS ASSESSED AND ON WHICH T HE PENALTY HAS BEEN IMPOSED. IT WAS ASSERTED THAT THERE IS NO FURTHER EVIDENCE IN THE POSSESSION OF THE REVENUE TO JUSTIFY THE ADDITIONS MADE TO THE TOTAL INCOME. THE REVISED RETURN HAS BEEN REJECTED ON A TECHNICAL GROUND. THE LD.AR SUBMITTED THAT THE ASSESSEE WAS ENTITLED TO F ILE THE REVISED RETURN WHEN THE MISTAKE IN THE ORIGINAL RETURN CAME TO HIS NOTICE. AS THE CASH SEIZED WAS LYING IN THE CUSTODY OF INCOME TAX DEPAR TMENT, THE COMPLIANCE FOR PAYMENT FOR SELF ASSESSMENT TAX COUL D NOT BE INSISTED IN VIEW OF SECTION 132B OF THE ACT. THE LD.AR SUBMITT ED THAT IN VIEW OF VOLUNTARY DECLARATION OF UNEXPLAINED CASH CREDITS I N THE REVISED RETURN, THERE IS NO JUSTIFICATION FOR THE REVENUE TO INVOKE PENAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT. ON ENQUIRY FROM THE BENCH, THE LD.AR SUBMITTED THAT THE FRESH LOANS UNDER CONSIDERATION WHICH WERE ADVERSELY VIEWED AS UNEXPLAINED WERE ADMITTED TO BE OBTAINED IN CASH. THE AUDITED BALANCE-SHEET FOR THE FINANCIAL YEAR ENDING 31/03/2 011 AS WELL AS ITA NO.443/AHD/ 2017 DILIP AAKARAM GAYAKWAD VS.DCIT ASST.YEAR 2012-13 - 5 - 31/03/2012 WERE ALSO PLACED ON RECORD. AS REGARDS ADDITION UNDER S.41(1) OF THE ACT, THE LD.AR POINTED OUT THAT IT I S ONLY THE ADMISSION OF THE ASSESSEE IN THE REVISED RETURN WHICH IS FORMING THE BASIS FOR THE QUANTUM ADDITION ON THIS SCORE. THE PARTICULARS OF EXISTING LIABILITIES ARE ON RECORD AND THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OR ANY CONCEALMENT THERETO PER SE . THE LD.AR ACCORDINGLY PLEADED FOR CANCELLATION OF PENALTY PURPOSES ON BOTH COUNTS. 7. THE LD.DR RELIED UPON THE ORDERS OF THE AO AND T HE CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE FACTS ON RECORD. THE PENALTY HAS BEEN IMPOSED FOR TWO ADDITIONS; VIZ.(1) TOWARDS UNEXPLAINED CASH CREDIT RS.34,92,07 6/- STATED TO HAVE BEEN RECEIVED IN CASH FROM SEVEN PARTIES AS LISTED IN PARA-4 OF THE QUANTUM ASSESSMENT UNDER S.143(3) ORDER DATED 14/03 /2014 AND (2) ADDITION UNDER S.41(1) OF THE ACT TOWARDS EXISTING LIABILITY NO LONGER THAN PAYABLE TO THE EXTENT OF RS.4,51,065/-. THE ASSESS EE HAS CALLED INTO QUESTION THE IMPOSITION OF PENALTY UNDER S.271(1)(C ) OF THE ACT ON THE AFORESAID QUANTUM ADDITIONS IN THE PRESENT APPEAL. 8.1. WE SHALL FIRST ADDRESS THE FIRST ITEM OF ADDIT ION NOTED ABOVE. ON CLOSE SCRUTINY OF THE FACTS IN TOTALITY, WE FIND TH AT THE ENTIRE ACTION OF THE ASSESSEE IS SYSTEMATIC AND A CONCERTED ACTION. I N THIS CASE, CASH TO THE ITA NO.443/AHD/ 2017 DILIP AAKARAM GAYAKWAD VS.DCIT ASST.YEAR 2012-13 - 6 - TUNE OF RS.53.01 LAKHS WAS CONFISCATED BY CUSTOM AU THORITIES ON 03/01/2012. IT IS PERTINENT TO NOTE THAT THE ASSES SEE AS ON 01/04/2011 HOLDS MEAGRE CASH OF RS.31,425/- ONLY AS PER ITS B ALANCE-SHEET. AS WE TRAVERSE THE FACTS, IT BECOMES MANIFEST THAT TO JUS TIFY THE SOURCE OF CASH SEIZED, THE ASSESSEE HAS CONVENIENTLY INTRODUCED TH E NAME OF SEVEN MYSTERIOUS PERSONS AS PURPORTEDLY HAVING GRANTED HU GE AMOUNT OF CASH AS LOAN IN DEFIANCE OF ALL STATUTORY RESTRICTIONS A ND PROHIBITIONS. THE ASSESSEE IN SPITE OF HAVING BEEN SADDLED WITH THE C HARGE OF UNACCOUNTED CASH CONTINUED TO REMAIN DEFIANT AND FILED A RETUR N WITHOUT ADDRESSING THE CASH DETECTED. HOWEVER, IMMEDIATELY ON RECEIPT OF NOTICE UNDER S.143(2) IT CAME TO REALIZE THAT HE IS LEFT WITH NO ESCAPE ROUTE. CONSEQUENTLY, HE OFFERED THESE APPARENTLY UNEXPLAIN ED CASH ENTRIES RECEIPTS AS INCOME OF THE ASSESSEE IN THE GARB OF V OLUNTARY DISCLOSURE BY WAY OF REVISED RETURN. IT IS DIFFICULT TO BELIEVE THIS ACT OF ASSESSEE AS A MERE CORRECTION OF OMISSION OR MISTAKE UNDER S.139( 5) OF THE ACT WHICH WAS CLAIMED TO HAVE BEEN DISCOVERED AFTER THE FILIN G OF THE ORIGINAL RETURN. NEEDLESS TO SAY, THE LEEWAY AVAILABLE TO AN ASSESSEE UNDER S.139(5) TO FILE THE REVISED RETURN IS NOT PLENARY BUT IS DICTATED BY THE DISCOVERY OF OMISSION OR ANY WRONG STATEMENTS IN TH E ORIGINAL RETURN. THUS, IT SEEKS TO ENABLE THE ASSESSEE TO CORRECT TH E ERROR CAUSED DUE TO BONAFIDE INADVERTENCE OR MISTAKE. A CASE OF WILLFU L CONCEALMENT OR FALSE STATEMENT CANNOT BE RECTIFIED UNDER S.139(5) OF THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE EVEN AFTER HAVING BEEN F OUND TO BE IN ITA NO.443/AHD/ 2017 DILIP AAKARAM GAYAKWAD VS.DCIT ASST.YEAR 2012-13 - 7 - POSSESSION OF HUGE CASH DID NOT COME WITH CLEAN HAN DS BEFORE THE REVENUE WHILE FILING THE ORIGINAL RETURN OF INCOME. IT IS ONLY AFTER THE ISSUANCE OF NOTICE UNDER S.143(2), THE ASSESSEE REA LIZED SO-CALLED OMISSION/MISTAKE IN THE ORIGINAL RETURN AND CAME OU T IN OPEN TO FILE THE REVISED RETURN. THE ENTIRE STORY OF INTRODUCING UN IDENTIFIED CASH LOANS WAS TO SIMPLY JUSTIFY THE CASH FOUND BY THE CUSTOM AUTHORITIES AND TO GET AWAY WITHOUT PAYING TAXES ON SUCH UNDISCLOSED INCO ME IF THE CASE IS NOT SUBJECTED TO SCRUTINY. HAVING BEEN LEFT WITH NO VI ABLE ALTERNATIVE, THE ASSESSEE SOUGHT TO MERRILY OFFER THE AFORESAID CASH LOANS AS INCOME OF THE ASSESSEE SEEKING TO GIVE IT A COLOUR OF VOLUNTARY DISCLOSURE. IN ESSENCE, LEFT WITH NO ALTERNATIVE, THE ASSESSEE HAS GRUDGING LY OFFERED UNIDENTIFIABLE CASH LOANS AS UNDISCLOSED INCOME WHI CH IN ANY CASE WAS UNEXPLAINED. THE ENTIRE ACT OF SEEKING REFUGE OF S ECTION 139(5) WAS TO ESCAPE CLUTCHES OF POTENT PROVISIONS OF 271(1)(C) OF THE ACT. WE ARE FLUMMOXED BY SUCH ACT OF HIDE AND SEEK INDEED. WE FIND NO CREDIBLE POSSIBILITY IN THE EXPLANATION OFFERED BY THE ASSES SEE. ACCORDINGLY, WE DECLINE TO INTERFERE WITH THE ORDER OF THE AO OR T HE CIT(A) IN SO FAR AS PENALTY ON ADDITION TOWARDS UNEXPLAINED CASH CREDIT S ARE CONCERNED. 8.2. AS REGARDS PENALTY ON ADDITION UNDER S.41(1) O F THE ACT IS CONCERNED, WE FIND MERIT IN THE CASE OF THE ASSESSE E. A LIABILITY WHICH WAS EXISTING ON THE RECORD HAS BEEN BROUGHT TO TAX UNDER S.41(1) OF THE ACT. IT IS A CASE OF A MERE JOURNAL ENTRY INVOLVED IN TRANSFERRING A ITA NO.443/AHD/ 2017 DILIP AAKARAM GAYAKWAD VS.DCIT ASST.YEAR 2012-13 - 8 - LIABILITY OF EARLIER YEARS TO THE INCOME BY INVOKI NG A DEEMING FICTION. THE REVENUE HAS MERELY RELIED UPON THE DECLARATIONS MADE BY THE ASSESSEE ON THIS SCORE WITHOUT BRINGING ON RECORD A NY MATERIAL TO PROVE THAT THE EXISTING LIABILITIES SO TRANSFERRED UNDER S.41(1) OF THE ACT AS INCOME WERE NOT BONAFIDE OR GENUINE AT THE FIRST IN STANCE. IN THE ABSENCE OF SUCH FINDING, WE DO NOT FIND ANY CULPABILITY PER SE . THUS, PENALTY IMPOSED ON THIS GROUND CANNOT BE SUSTAINED IN LAW. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 17/ 05/2017 SD/- SD/- (..) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 17/ 05 /2017 4..+,.+../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567- 8- / CONCERNED CIT 4. 8- ( ) / THE CIT(A)-11, AHMEDABAD 5. 9:-+67 , 670 , 5 / DR, ITAT, AHMEDABAD 6. <, / GUARD FILE. / BY ORDER, (9-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD