K. Manohar, Hindupur, Hindupur V. ITO, Ward-1, Hindupur, Hindupur

ITA 468/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6237 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: A C GANGAIAH

Judgement Text

ITA NO 468 OF 2016 K MANOHAR HINDUPUR PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.468/HYD/2016 (ASSESSMENT YEAR: 2009-10) SHRI K. MANOHAR HINDUPUR PAN: ALIPM 6622 P VS INCOME TAX OFFICER WARD-1 HINDUPUR,A AANTHAPUR DISTT FOR ASSESSEE: SHRI A.C. GANGAIAH FOR REVENUE: SHRI K.J. RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10 AGAINS T THE ORDER OF THE CIT (A) IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, DERIVED INCOME BY WAY OF SALARY. HE FIL ED HIS RETURN OF INCOME FOR THE RELEVANT A.Y ADMITTING AN INCOME OF R S.1,75,800 UNDER THE HEAD SALARY AND RS.1.00 LAKH AS AGRICU LTURAL INCOME. DURING THE ASSESSMENT PROCEEDINGS U/S 143( 3) OF THE ACT, THE AO OBSERVED THAT THERE WERE VARIOUS CASH D EPOSITS INTO ASSESSEES BANK A/C WITH KARUR VYSYA BANK, HINDUPUR . THE ASSESSEE WAS THEREFORE, ASKED TO EXPLAIN THE SOURCE S OF DEPOSITS. THE ASSESSEE WAS EXPLAINED THAT IN VIEW OF THE REAL ESTATE BOOM, SOME OF HIS FRIENDS AND RELATIVES HAVE GIVEN HIM AD VANCES FOR DATE OF HEARING : 14.09.2016 DATE OF PRONOUNCEMENT : 21.09.2016 ITA NO 468 OF 2016 K MANOHAR HINDUPUR PAGE 2 OF 4 PURCHASE OF SITES ON THEIR BEHALF AT VARIOUS PLACES AND THE SAME WERE DEPOSITED IN HIS BANK A/C. AO OBSERVED THAT TH E ASSESSEE HAS NOT FURNISHED ANY EVIDENCE FOR THE DEPOSITS OF RS.4,07,000 FROM ALLEGEDLY ONE SHRI H. SHIVAPPA. ASSESSEE EXPRE SSED HIS INABILITY TO PRODUCE THE SAID PERSON AS HE WAS NOT READILY AVAILABLE, AS HE HAD TO GO OUT OF STATION FOR HIS B USINESS PURPOSES. ASSESSEE REQUESTED TIME TO PRODUCE HIM. AO HOWEVER, OBSERVED THAT THE ASSESSMENT IS GETTING TIME BARRED AND THAT THERE IS NO CHANCE OF GIVING EVEN A DAY OF TIME, COMPLETED ASSE SSMENT BY TREATING THE SUM OF RS.4,07,000 AS UNEXPLAINED INCO ME OF THE ASSESSEE. THE ASSESSEE ACCEPTED THE SAID ADDITION A ND DID NOT FILE ANY APPEAL BEFORE THE CIT (A). 3. MEANWHILE THE AO INITIATED PENALTY PROCEEDINGS U /S 271(1)(C) OF THE ACT BY ISSUING A NOTICE AS TO WHY PENALTY SHOULD NOT BE LEVIED. ASSESSEE DID NOT REPLY TO THE AO AND THEREFORE, THE AO LEVIED THE MINIMUM PENALTY OF RS.1,04,000. AGGRI EVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) ALO NG WITH DETAILED SUBMISSIONS AS TO WHY THE PENALTY IS NOT LEVIABLE I N HIS CASE. ASSESSEE ALSO FILED AN AFFIDAVIT OF SHRI H. SHIVAPP A CONFIRMING THE DEPOSIT OF RS.4,07,000 INTO THE BANK A/C OF THE ASS ESSEE FOR PURCHASE OF SITE ON HIS BEHALF AND EXPLAINED THE SO URCE OF THE FUND TO BE HIS AGRICULTURAL INCOME. ASSESSEE ALSO F IELD THE LEASE DEED IN FAVOUR OF MR.H. SHIVAPPA AND THE LANDHOLDIN G CERTIFICATE OF THE LESSOR. THE CIT (A) HOWEVER, CONFIRMED THE O RDER OF THE AO HOLDING THAT THE ASSESSEE HAS FAILED TO ESTABLISH T HE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS. AGAINST THIS ORD ER OF THE CIT (A), ASSESSEE IS IN APPEAL BEFORE US. ITA NO 468 OF 2016 K MANOHAR HINDUPUR PAGE 3 OF 4 4. THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REIT ERATING THE SUBMISSIONS MADE BEFORE THE CIT (A), SUBMITTED THAT THOUGH THE ASSESSEE HAD ACCEPTED THE ADDITION SINCE HE HAS NOT BEEN ABLE TO PRODUCE THE PARTY AT THE RELEVANT POINT OF TIME BUT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. HE SUBMITTED THAT THE PEN ALTY PROCEEDING IS INDEPENDENT OF THE ASSESSMENT PROCEEDINGS AND TH E ASSESSEE, HAVING PRODUCED THE PARTY BEFORE THE CIT (A), THE C IT (A) OUGHT TO HAVE CONSIDERED THE SAME. HE PLACED RELIANCE UPON T HE DECISION OF THE SMC BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI K. N. SRINIVASA REDDY, ALLEGEDLY THE ASSESSEES BROTHER, WHEREIN UN DER SIMILAR CIRCUMSTANCES, THE PENALTY LEVIED U/S 271(1)(C) HAS BEEN QUASHED IN ITA NO.469/HYD/2016 DATED 17.06.2016. THE LEARNE D DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORI TIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS DURI NG THE ASSESSMENT PROCEEDINGS AND HAD SOUGHT TIME TO PRODU CE THE PARTY. BUT THE AO HAS DECLINED THE ASSESSEES REQUE ST ON THE GROUND THAT THE ASSESSMENT IS GETTING TIME BARRED. DURING THE PENALTY PROCEEDINGS ALSO, THE ASSESSEE FAILED TO OF FER ANY EXPLANATION BEFORE THE AO BUT BEFORE THE CIT (A), T HE ASSESSEE HAS FILED A CONFIRMATION LETTER AND ALSO THE RELEVANT M ATERIAL TO EXPLAIN THE SOURCE OF THE SAID CREDITOR. THE CIT (A), INSTE AD OF VERIFYING THE SAME HAS ONLY CONFIRMED THE ORDER OF THE AO BY RELY ING UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE M AK DATA P LTD VS. CIT (358 ITR 593). WE FIND THAT THE DECISIO N OF THE HON'BLE SUPREME COURT IS NOT APPLICABLE TO THE CASE BEFORE US BECAUSE IN THE SAID CASE, THE SUPREME COURT WAS DEALING WITH T HE CASE OF AN OFFER OF ADDITIONAL INCOME BY THE ASSESSEE AFTER DE TECTION OF THE ITA NO 468 OF 2016 K MANOHAR HINDUPUR PAGE 4 OF 4 SAME DURING THE SEARCH PROCEEDINGS, WHEREAS IN THE CASE BEFORE US THERE IS NO DETECTION OF INCOME PURSUANT TO ANY SEARCH PROCEEDING, BUT IS ADDED DUE TO THE INABILITY OF TH E ASSESSEE TO PRODUCE THE PARTY DURING THE ASSESSMENT PROCEEDINGS . WE FIND THAT THE ASSESSEE HAS FILED THE RELEVANT DETAILS BE FORE THE CIT (A). WE AGREE WITH THE CONTENTION OF THE ASSESSEE THAT T HE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEE DINGS AND THE ASSESSEE IS AT LIBERTY TO PRODUCE THE RELEVANT DETA ILS EVEN DURING THE PENALTY PROCEEDINGS. THE ASSESSEE HAS PRODUCED THE SAME BEFORE THE CIT (A), BUT THE CIT (A) HAS NOT VERIFIE D THE SAME NOR HAS FOUND FAULT WITH THE SAME. THEREFORE, WE AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THE PENALTY SHOULD NOT HAVE BEEN CONFIRMED. UNDER SIMILAR CIRCUMSTANCES, WE FIND THA T THE SMC BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI K. N. SR INIVASA REDDY HAS DELETED THE PENALTY. IN VIEW OF THE SAME, WE DE LETE THE PENALTY. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2016. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 21 ST SEPTEMBER, 2016. VINODAN/SPS COPY TO: 1 SHRI K. MANOHAR, H.NO.9-1-58/53, 1 ST CROSS, PANDURANGANAGAR HINDUPUR 2 INCOME TAX OFFICER WARD-1 HINDUPUR 3 CIT (A)-KURNOOL 4 PR. CIT - KURNOOL 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER