SHRI NAVEEN GOYAL, Indore V. THE ITO 5(3), Indore

ITA 460/IND/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4433 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER SHRI NAVEEN GOYAL, 450, BHOJ MARG, CHUDI GALI, MHOW DIST.INDORE. PAN: AJZPG6571C VS. ITO, 5(3), INDORE. APPELLANT RESPONDENT APPELLANT BY SMT. RICHA PARWAL, CA RESPONDENT BY SHRI MOHD. JAVED, SR. DR DATE OF HEARING 06.09.2016 DATE OF PRONOUNCEMENT 23.09.2016 O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-II, INDORE [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 30.01 .2015 AND PERTAINS TO ASSESSMENT YEAR 2009-10 AS AGAINST APPE AL DECIDED IN ASSESSMENT ORDER DATED 30.12.2011 OF IT O WARD 5(3) INDORE [HEREINAFTER REFERRED TO AS THE AO]. I.T.A. NO. 460/IND/2015 ASSESSMENT YEAR: 2009-10 ITA NO.460/IND/15 AY :2009-10 SH. NAVEEN GOYAL PAGE 2 OF 11 2. THE ASSESSEE HAS TAKEN AS MANY AS FIVE GROUNDS OF APPEAL. HOWEVER, THE EFFECTIVE GROUNDS STATE THAT O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE PENALTY O F RS. 9.50 LAKHS CONFIRMED BY THE CIT(A)-II, INDORE, VIDE HIS ORDER DATED 30.01.2015 IS CONTRARY TO THE LAW, UNJUSTIFIED AND M ATERIALLY INCORRECT AND DESERVES TO BE QUASHED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND SHOWN INCOME FROM SALA RY, BUSINESS INCOME AND INCOME FROM OTHER SOURCES. THE RETURN OF INCOME WAS FILED ON 29.09.2009 DECLARING INCOME OF R S. 1,33,650/-. THE ASSESSMENT WAS MADE U/S 143(3), ASSE SSING THE TOTAL INCOME AT RS. 10,74,210/- BY MAKING ADDIT ION OF RS. 24,90,727/- ON ACCOUNT OF CASH DEPOSIT, REDUCING TH E LOSS OF SHARE TRANSACTION FROM RS. 20,85,622/- TO RS. 12,55 ,809/- AND UNEXPLAINED INCOME FROM INTRADAY TRANSACTION OF RS. 21,737/-. THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) ON ACCOUNT OF AFORESAID ADDITIONS. THE PE NALTY ORDER U/S 271(1)(C) WAS PASSED ON 18.06.2012 BY HOLDING TH AT THE AFORESAID ADDITIONS AMOUNT TO FURNISHING OF INACCUR ATE PARTICULARS OF INCOME. ITA NO.460/IND/15 AY :2009-10 SH. NAVEEN GOYAL PAGE 3 OF 11 4. AGGRIEVED WITH THE ABOVE ORDER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) OBSERV ED THAT THE ASSESSEE HAS SOME LOSS IN BUSINESS IN SHARE TRANSAC TION AT RS. 20,85,710/- WHICH WAS REDUCED TO RS. 12,55,809/-. FUR THER, THE AO DISALLOWED LOSS OF RS. 8,29,813/-. THE LD. C IT(A) HAS ALSO OBSERVED THAT THE ASSESSEE HAS NOT FILED ANY E VIDENCE TO PROVE THAT THE FURTHER APPEAL HAS BEEN FILED ON THE ISSUES OF ADDITIONS. THEREFORE, IT BECOMES CLEAR THAT VARIOUS ADDITIONS MADE IN THE ASSESSMENT ORDER HAVE BEEN ACCEPTED BY THE ASSESSEE. ACCORDINGLY, THE LD. CIT(A) WAS OF THE VI EW THAT THE PENALTY IS LEVIABLE IN TERMS OF SEC 271(1)(C) OF TH E INCOME-TAX ACT, 1961. ACCORDINGLY, THE PENALTY SO LEVIED WAS C ONFIRMED. 5. NOT SATISFIED WITH THE FINDINGS OF THE AO AND CIT(A) , THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 6. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS DEPOSITED CASH OF R S. 35,59,000/- IN UCO BANK. THIS ACCOUNT WAS DULY EXPLA INED AND SHOWN IN THE COMPUTATION OF INCOME ALREADY FILED . THE SOURCE OF CASH DEPOSIT IN THE BANK ACCOUNT WAS FROM COMMISSION INCOME AS ESTATE BROKER. THE ASSESSEE HA S ITA NO.460/IND/15 AY :2009-10 SH. NAVEEN GOYAL PAGE 4 OF 11 RECONCILED THE CASH DEPOSITS WITH COMMISSION INCOME BY FILING LIST OF PARTIES ALONG WITH ADDRESS, DATE AND AMOUNT FROM WHOM COMMISSION WAS RECEIVED. COPY OF CONFIRMATION WAS ALS O FILED AT PAPER BOOK PAGES 119 TO 281, LIST OF PARTIES AT PAPER BOOK PAGES 55 TO 118. THE COMMISSION WAS EARNED ON SALE/PURCHASE OF AGRICULTURAL LAND AND CALCULATED A S A PERCENTAGE OF THE TOTAL SALE CONSIDERATION AGREED B ETWEEN THE PARTIES. SINCE THE PARTIES INVOLVED ARE AGRICULTURI STS, WHO GENERALLY HAVE NO BANK ACCOUNTS. THEREFORE, THE ENT IRE COMMISSION WAS RECEIVED IN CASH ON EXECUTION OF THE DEAL/REGISTRY. IT WAS ALSO EXPLAINED TO THE AO THAT AS A GENERAL TRADE PRACTICE, THE COMMISSION AGENTS GET THEIR COM MISSION BASED ON THE MUTUAL UNDERSTANDING AND THEY DO NOT DEMAND/RECEIVE A COPY OF THE REGISTRY FROM THE SELL ER OR PURCHASERS. THE LD. AUTHORIZED REPRESENTATIVE OF TH E ASSESSEE FURTHER SUBMITTED THAT THE AO WITHOUT ASSIGNING ANY DEFECTS, REJECTED THE ASSESSEES VALUATION OF STOCK AT COST OR MARKET VALUE WHICHEVER IS LOWER AND VALUED THE STOCK AT COS T PRICE FOLLOWING FIFO METHOD AND RECALCULATED THE LOSS AT R S. 12,55,809/- AS AGAINST THE COMPUTATION OF LOSS BY T HE ITA NO.460/IND/15 AY :2009-10 SH. NAVEEN GOYAL PAGE 5 OF 11 ASSESSEE AT RS. 20,85,710/-. THEREFORE, IT WAS ARGUE D THAT ALL THE MATERIAL FACTS WERE AVAILABLE BEFORE THE AO, BU T THE AO CONSIDERED THE LOSS BY APPLYING THE FIFO METHOD ARB ITRARILY WITHOUT ASSIGNING ANY REASON OF THE DEFECT IN THE ME THOD OF ACCOUNT REGULARLY EMPLOYED BY THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ALSO PLAC ED RELIANCE ON THIS ISSUE IN THE CASE OF INVESTMENT LIMITED VS. CIT, (1970) 77 ITR 533 (S.C.), WHEREIN IT WAS HELD THAT THE TAX P AYER IS FREE TO EMPLOY, FOR THE PURPOSE OF HIS TRADE, HIS OWN MET HOD OF KEEPING ACCOUNTS, AND FOR THAT PURPOSE TO VALUE HIS STOCK-IN- TRADE EITHER AT COST OR MARKET PRICE. A METHOD OF A CCOUNTING ADOPTED BY THE TRADER CONSISTENTLY AND REGULARLY CA NNOT BE DISCARDED BY THE DEPARTMENTAL AUTHORITIES ON THE VI EW THAT HE SHOULD HAVE ADOPTED A DIFFERENT METHOD OF KEEPING A CCOUNT OR OF VALUATION. IN SUPPORT FURTHER, THE LD. AUTHORIZE D REPRESENTATIVE OF THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF MKB ASIA PRIVATE LIMITED, (2008) 167 TA XMAN 256 (GAU), CIT VS. MARGADARSI CHIT FUNDS (P) LIMITED, ( 1985) 155 ITR 442 (A.P.) AND CHAINRUP SAMPATRAM VS. CIT, (195 3) 24 ITA NO.460/IND/15 AY :2009-10 SH. NAVEEN GOYAL PAGE 6 OF 11 ITR 481 ( S. C.) AND IN THE CASE OF CIT VS. RELIANC E PETRO PRODUCTS PRIVATE LIMITED, 322 ITR 158 (S.C.). 7. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT THE INTRADAY PROFIT OF RS. 2 1,737/- WAS DULY ACCOUNTED FOR AND IT WAS EXPLAINED TO THE AO TH AT THE LOSS AT RS. 20,85,710/- IS AFTER SET OFF PROFIT OF RS. 21,737/-. TO SUPPORT THIS CLAIM, THE LD. AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE FILED COMPUTATION AT PAPER BOOK PAGE 125 & 127. AS REGARDS OBSERVATION OF THE AO THAT THE ASSESSEE COU LD NOT SUBSTANTIATE THE SOURCE OF INCOME OF RS. 24,90,727/ - WITH SUPPORTING DOCUMENTARY EVIDENCES, THE LD. AUTHORIZE D REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THE A SSESSEE HAS MADE FULL DISCLOSURE OF ACCOUNTS SO RECEIVED AS STATE BROKER IN HIS COMPUTATION OF INCOME DURING THE FIRS T AGE PLATFORM WHERE DETAILS REGARDING INCOME COULD BE FUR NISHED AND EXPLAINED AND ALSO FILED LIST OF PERSONS FROM WH OM COMMISSION WAS RECEIVED ALONGWITH THE ADDRESSES. IN S UPPORT OF THIS, THE LD. AUTHORIZED REPRESENTATIVE OF THE A SSESSEE ALSO PLACED RELIANCE IN THE CASE OF CIT VS. S. V. ELECTR ICALS PVT.LTD., (2005) 274 ITR 334 (MP), WHEREIN THE JURISDICTIONAL HIGH COURT HAS HELD THAT WHEN THE ASSESSEE SURRENDERED TH EIR FULL INCOME, THERE WAS NO QUESTION OF ANY CONCEALMENT ON THEIR PART. THIS WAS ONE OF THE FACTORS WHICH WEIGHED IN TH E MIND OF CIT(A) IN SETTING ASIDE THE PENALTY IMPOSED BY THE ASSESSING OFFICER. IN SUBSTANCE, THERE WAS NO DELIBERATE INTEN TION TO ITA NO.460/IND/15 AY :2009-10 SH. NAVEEN GOYAL PAGE 7 OF 11 EVADE PAYMENT OF LAWFUL TAX BY INDULGING IN CONCEALM ENT OF TRUE INCOME. WHEN THE DISCLOSURE WAS TOTAL THOUGH AT A LATER STAGE, THE AUTHORITIES IN THEIR DISCRETION DID NOT CONSIDER IT PROPER TO IMPOSE ANY PENALTY U/S 271(1)(C) OF THE I NCOME-TAX ACT, 1961, IBID AS A CASE OF CONCEALMENT. THEREFORE , IT WAS PRAYED TO DELETE THE PENALTY. 8. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE A LSO RELIED IN THE CASE OF CIT VS. PUNJAB TYRES, 162 ITR 517 (MP), WHEREIN IT WAS HELD THAT IN VIEW OF THE DECISION OF TH E COURT IN ADDL. CIT VS. BHARTIYA BHANDAR, (1980) 122 ITR 622 (MP), IT MUST BE HELD THAT WHEN A SURRENDER IS MADE TO PURCHA SE PEACE OR FOR OTHER SIMILAR REASONS, THE SURRENDER C ANNOT AMOUNT TO AN ADMISSION, CONSTITUTING AN EVIDENCE OF CONCEALMENT IN PENALTY PROCEEDINGS. PER CONTRA, THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER S OF THE LOWER AUTHORITIES. 9. WE HAVE CONSIDERED THE FACTS AND PERUSED THE MATERI AL ON RECORD. THE PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSEE HAS DEPOSITED THE CASH TO THE TUNE OF RS. 42,09,000/- IN THE BANK ACCOUNT APART FROM VARIOUS CREDITS MADE THROUGH CHEQUES. THE ASSESSEE HAS SUBMITTED A LIST CONTAINI NG NAMES, ADDRESSES FROM WHOM BROKERAGE RECEIVED HAVE BEEN CL AIMED TO HAVE RECEIVED AS PER ANNEXURE A ENCLOSED WITH THE ASSESSMENT ORDER. IN SUPPORT OF THE CLAIM, THE ASSE SSEE HAS ITA NO.460/IND/15 AY :2009-10 SH. NAVEEN GOYAL PAGE 8 OF 11 ALSO FURNISHED A COPY OF THE HAND WRITTEN RECEIPTS T O DEMONSTRATE THAT THE RECEIPTS ARE ON ACCOUNT OF STA TE BROKERAGE INCOME. HOWEVER, THIS SUBMISSION OF THE A SSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER AN D SAID RECEIPTS WERE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. WE FURTHER FIND THAT THE AO HAS TAKEN THE VALUE OF SHARES SOLD IN FIFO METHOD AND DETERMINED THE LOSS FROM SHARE TRANSACTIONS AT RS. 12,55,809/- AS AGAINST THE CLAI M OF LOSS OF RS. 20,85,622/-. THE AO ALSO ADDED A NET INCOME FRO M INTRADAY TRANSACTION FROM RS. 21,737/- WHICH, ACCORD ING TO THE ASSESSEE WAS DULY SHOWN AS AGAINST THE WORKING OF LOSS OF RS. 20,85,622/-. WE ARE OF THE OPINION THAT THE ASS ESSEE HAS COMPUTED LOSS ON ACCOUNT OF MARKET PRICE AND COST P RICE WHICHEVER IS LESS, WHEREAS THE AO HAS COMPUTED A LOSS ON THE BASIS OF FIFO METHOD. THEREFORE, THE LOSS SO COMPUT ED WAS ON THE BASIS OF DETAILS FURNISHED BY THE ASSESSEE, WHIC H CANNOT BE SAID THAT FURNISHING OF INACCURATE PARTICULARS OF I NCOME OR CONCEALING PARTICULARS OF INCOME. SIMILARLY, THE AS SESSEE HAS DISCLOSED RS. 24,90,727/- AS CASH RECEIPTS ON ACCOU NT OF COMMISSION FROM STATE AGENTS. THE ASSESSEE HAS ALSO FILED LIST ITA NO.460/IND/15 AY :2009-10 SH. NAVEEN GOYAL PAGE 9 OF 11 OF PERSONS FROM WHOM THE COMMISSION WAS EARNED IN CA SH AND THE SAME WAS DEPOSITED IN HIS BANK ACCOUNT. THIS BA NK ACCOUNT WAS DULY DISCLOSED AND NET PROFIT WAS COMPUTE D BY THE ASSESSEE. HOWEVER, THE AO WAS OF THE VIEW THAT THE ENTIRE AMOUNT IS UNDISCLOSED AND ,ACCORDINGLY, CONSIDERED THE SAME AS UNDISCLOSED INCOME. THEREFORE, WE FIND THAT THE A DDITIONS HAVE BEEN MADE ON THE BASIS OF FACTS DISCLOSED BY T HE ASSESSEE IN THE RETURN OF INCOME AND ALSO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS AND WHEN DEMANDED BY THE ASSESSING OFFICER. IT IS TRITE LAW THAT PENALTY PROC EEDINGS ARE DISTINCT AND SEPARATE PROCEEDINGS FROM ASSESSMENT PROCEEDINGS. THE FINDINGS RECORDED IN THE ASSESSMEN T ORDER IS NOT CONCLUSIVE FOR DECIDING THE IMPOSITION OF PENAL TY AND IT HAS, THEREFORE, HAS A PERSUASIVE VALUE. ANY FINDING RECORDED IN THE ASSESSMENT ORDER DOES NOT MEAN THAT THE PENALTY HAS TO BE IMPOSED AUTOMATICALLY. CLAUSE (A) OF EXPLANATION 1 TO SECTION 271(1)(C) PROVIDES THAT THE PENALTY WOULD BE DEEMED TO ATTRACT WHERE EITHER NO EXPLANATION IS OFFERED OR EX PLANATION OFFERED IS FOUND TO BE FALSE. FURTHER CLAUSE (B) OF EXPLANATION, PROVIDES THAT WHERE THE ASSESSEE IS NOT ABLE TO SUBS TANTIATE ITS ITA NO.460/IND/15 AY :2009-10 SH. NAVEEN GOYAL PAGE 10 OF 11 EXPLANATION AND FAILS TO PROVE THAT SUCH EXPLANATIO N IS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME HAVE BE EN DISCLOSED, THE PENALTY IS LEVIABLE. IN THIS CASE, THE ASSESSE E HAS SUBSTANTIATED HIS CLAIM REGARDING RS. 24,90,727/- AS CASH RECEIPTS ON ACCOUNT OF COMMISSION FROM STATE AGENTS . THE ASSESSEE HAS ALSO FILED LIST OF PERSONS FROM WHOM TH E COMMISSION WAS EARNED IN CASH AND THE SAME WAS DEPOSI TED IN HIS BANK ACCOUNT. THIS BANK ACCOUNT WAS DULY DISC LOSED AND NET PROFIT WAS COMPUTED BY THE ASSESSEE. THEREFO RE, THE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS, BUT SOME WERE NOT FOUND ACCEPTABLE BY THE AO, DOES NOT MEAN THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. THE LD. AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE HAS ALSO RELIED ON THE DECISION IN THE CAS E OF CIT VS. RELIANCE PETRO PRODUCTS (P) LIMITED, 323 ITR 158 ( S.C. ), WHEREIN THE HON'BLE SUPREME COURT HAS HELD THAT MERE LY BECAUSE THE ASSESSEE HAS CLAIMED THE EXPENDITURE, WH ICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE BY THE REVENUE, PENALTY U/S 271(1)(C) CANNOT BE ATTRACTED AND MERE DISALLOWANCE OF CLAIM OF ASSESSEE DOES NOT AMOUNT FU RNISHING ITA NO.460/IND/15 AY :2009-10 SH. NAVEEN GOYAL PAGE 11 OF 11 OF INACCURATE PARTICULARS OF INCOME, UNLESS INFORMA TION GIVEN IN RETURN WAS INCORRECT. IN VIEW OF THE ABOVE FACTS A ND CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT PEN ALTY U/S 271(1)(C) IS NOT EXIGIBLE IN THIS CASE AND WE DIREC T THE AO TO DELETE THE PENALTY LEVIED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON TH E 23 RD SEPTEMBER, 2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED : 23 RD SEPTEMBER, 2016. CPU*