HARMEET SINGH SABLOK, MUMBAI V. INCOME TAX OFFICER 22(1)(5), MUMBAI

ITA 476/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0045 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 22-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c); 69C; 68; 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 476 /MUM/20 1 8 ( / ASSESSMENT YEAR: 2009 - 10 ) MR. HARMEET SINGH SABLOK A/24, QUEENS PARK PREMISES CHS LTD. JUHU, SANTACRUZ (W), MUMBAI - 400049 . / VS. THE ITO WARD - 22(1)(5) PIRAMAL CHAMBERS, LALBAUG, MUMBAI - 400012. ./ ./ PAN/GIR NO. : ALRPS3621D ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 28 .0 3 .201 9 / DATE OF PRONOUNCEMENT : 29. 0 3 .2019 / O R D E R PER AMARJIT SINGH, J M: THE A SSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 30 . 11 .2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 34 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2009 - 10 IN WHICH THE PENALTY LEVIED BY THE AO HAS BEEN ORDE R TO BE CONFIRM . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER THAT THE APPELLANT HAD CONCEALED THE INCOME BY NOT DISCLOSING THE ACCOUNTS WITH STANDARD CHARTERED BANK. ASSESSEE BY : SHRI S. S. PHADK AR (AR) REVENUE BY: SHRI M. K. SINGH (DR) ITA. NO . 476 /M/201 8 A.Y. 2009 - 10 2 II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS.5,63,401/ - SUBJECT TO REWORKING OF THE PENALTY AS PER THE HON 'BLE I.T.A.T. IN QUANTUM APPEAL IN ITA NO. 7580/M/2013, BY REJECTING THE APPELLANT SUBMISSION THAT NO PROCEEDINGS U/S 271(1)(C) ARE CALLED FOR SINCE THE INCOME IS DETERMINED ON THE ESTIMATE BASIS AND, THEREFORE, NO CHARGE EITHER OF CONCEALMENT OR OF FURNIS HING INACCURATE PARTICULARS OF INCOME COULD BE LEVIED ON THE APPELLANT. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T.(A) ERRED IN NOT CONSIDERING THE FACT THAT THE APPELLANT HAS NOT MAINTAINED BOOKS OF ACCOUNTS BECAU SE OF SMALLNESS OF THE BUSINESS AND THE INCOME WAS, THEREFORE, TO BE ESTIMATED U/S 44AF OF THE INCOME TAX ACT 1961., NO PENALTY U/S. 271(1)(C) IS, THEREFORE, LEVIABLE. IV) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY GROUND(S) OF APPEAL EI THER BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. ' 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S 143 OF THE ACT ON 08.12.2011 DETERMINING TOTAL INCOME TO THE TUNE OF RS.19,74,710/ - AGAINST THE RETURNED IN COME OF RS.1,51,677/ - RAISING THE ADDITION U/S 69C OF THE ACT TO THE TUNE OF RS. 18,23,034/ - . IN FACT, THE ASSESSEE FAILED TO DISCLOSE THE DEPOSIT AMOUNT IN SUM OF RS.18,23,034/ - IN STANDARD CHARTERED BANK. THE PENALTY WAS INITIATED IN THE ASSESSMENT ORDER. THEREAFTER, THE PENALTY WAS INITIATED AND AFTER THE REPLY OF THE ASSESSEE, THE PENALTY IN SUM OF RS.5,63,401/ - WAS LEVIED. FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO RESTRICTED THE PENALTY ON THE AMOUNT OF RS.4,55,759/ - INSTEAD OF RS.18,23,034/ - IN VIEW OF THE ORDER OF THE ITA. NO . 476 /M/201 8 A.Y. 2009 - 10 3 HONBLE ITAT. SINCE THE ASSESSEE WAS NOT SATISFIED, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4 . ALL THE ISSUES ARE IN CONNECTION WITH THE CONFIRMATION OF THE PENALTY LEVIED BY THE AO. TH E LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE AO RAISED THE ADDITION IN VIEW OF THE PROVISIONS U/S 6 9 OF THE ACT. HOWEVER, IN APPEAL THE CIT(A) HAS SUSTAINED THE ADDITION IN VIEW OF THE PROVISIONS U/S 68 OF THE I.T. ACT AND THE ASSESSEE WAS NOT MAINTAINING THE BOOKS OF ACCOUNT BECAUSE OF SMALLNESS OF THE TRADERS, THEREFORE, IN THE SAID CIRCUMSTANCES, NO PENALTY IS LEVIABLE. IT IS ALSO SPECIFICALLY ARGUED THAT THE HONBLE ITAT HAS RESTRICTED THE ADDITION TO THE EXTENT OF 25% OF THE AMOUNT OF RS.18 ,23,034/ - AND ASSESSED THE PROFIT ON ESTIMATION BASIS, THEREFORE, IN THE SAID CIRCUMSTANCES , THE PENALTY IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. IN SUPPORT OF THESE CONTENTIONS, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON TH E ORDER PASSED BY THE HONBLE ITAT AHMEDABAD BENCH IN THE CASE OF DINESHBHAI DHANSUKHLAL MITHAIWALA VS. ITO (2014) 49 TAXMANN.COM 583. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. THE FACTUAL POSITIO N IS THAT THE ASSESSEE IS A SMALL TRADERS WHO FILED HIS RETURN OF INCOME DECLARING HIS TOTAL INCOME TO THE TUNE OF RS.1,51,677/ - . THEREAFTER, IT CAME INTO NOTICE THAT THE ASSESSEE FAILED TO DISCLOSED THE AMOUNT LIES WITH STANDARD CHARTERED BANK IN WHICH AN AMOUNT OF RS.18,23,034/ - WAS FOUND DEPOSITED. THEREAFTER, ITA. NO . 476 /M/201 8 A.Y. 2009 - 10 4 THE ADDITION WAS RAISED IN VIEW OF THE PROVISIONS U/S 69 OF THE ACT. T HE CIT(A) HAS CONFIRMED THE ADDITION IN VIEW OF THE PROVISIONS U/S 68 OF THE ACT. THE ASSESSEE PREFERRED APPEAL BEFORE THE HON BLE ITAT AND THE HONBLE ITAT HAS RESTRICTED THE ADDITION TO THE EXTENT OF 25% OF THE ADDITION IN SUM OF RS.18,23,034/ - . THE FINDING OF THE HONBLE ITAT IS HEREBY MENTIONED BELOW.: - 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALSO GONE THROUGH THE REC ORDS. ADMITTEDLY, THE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT. THE ASSESSEE HAS EXPLAINED THE NATURE OF SOURCE OF INCOME TO THE AO THAT HE IS A SMALL TIME TRADER IN THE BUSINESS OF SELLING OF AUTO SPARE PARTS. HE HAS ALREADY RETURNED THE INCOME OF RS.2,55,633/ - FROM THE SAID BUSINESS. THE ASSESSEE HAS DISCLOSED HIS THREE ACCOUNTS BUT THE ACCOUNT WITH STANDARD CHARTERED BANK HAD NOT BEEN DISCLOSED. AFTER CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING THE NATURE OF BUSINE SS OF THE ASSESSEE BEING A SMALL TIME TRADER IN SALE OF AUTO SPARE PARTS, THE TRANSACTIONS RELATING TO WHICH ARE GENERALLY DEPENDING UPON CASH TRANSACTIONS BASIS, IN OUR VIEW, THE ENTIRE DEPOSIT MADE IN STANDARD CHARTERED BANK CANNOT BE ADDED AS UNEXPLAINE D INVESTMENT. THE SAID DEPOSITS, IN OUR VIEW, CAN BE RELATED TO THE BUSINESS TRANSACTIONS OF THE ASSESSEE AND THE REASONABLE INCOME OUT OF THE TOTAL DEPOSITS WAS REQUIRED TO BE ASSESSED NOT THE ENTIRE DEPOSITS AT ALL. HENCE, CONSIDERING THE OVERALL FACTS A ND CIRCUMSTANCES OF THE CASE, THE ADDITIONS IN THIS RESPECT ARE RESTRICTED TO 25% OF THE TOTAL DEPOSITS OF RS.18,23,034/ - IN THE STANDARD CHARTERED BANK. ORDERS ACCORDINGLY. 5. UNDOUBTEDLY, THE ADDITION WAS RAISED TO THE EXTENT OF RS.25% OF THE TOTAL ADDI TION IN SUM OF RS.18,23,034/ - ON ESTIMATION BASIS. IN SIMILAR CIRCUMSTANCES, THE HONBLE AHMEDABAD BENCH HAS PASSED THE ORDER IN WHICH THE PENALTY LEVIED BY THE AO HAS BEEN ORDERED TO BE DELETED. THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 15, 16, 17, 18, 19, 20 & 21 WHICH IS HEREBY REPRODUCED AS UNDER.: - ITA. NO . 476 /M/201 8 A.Y. 2009 - 10 5 15. THIS APPEAL IS AGAINST PENALTY ORDER PASSED ON 28.03.2011 PASSED UNDER SECTION 271(1)(C) LEVYING A PENALTY OF RS.7 , 76,283/ - WAS LEVIED AND THE SAME WAS CONFIRMED BY THE CIT(A) VIDE ORDER DATED 9 .11.2012. 16. IN THIS CASE PENALTY WAS LEVIED WITH RESPECT TO TWO ADDITIONS FIRST ADDITION BEING OF RS.3,25,000/ - WHICH WAS MADE BY ESTIMATING PROFIT ON ESTIMATED SALES OF RS.65 LAKHS AND THE SECOND ADDITION OF RS.22,12,915/ - WHICH WAS MADE FOR UNEXPLAINED CASH DEPOSITS IN HDFC BANK ACCOUNT. THE CIT(A) VIDE HIS ORDER DATED 9.11 .2012 CANCELLED THE PENALTY ON THE ESTIMATED PROFITS ON ESTIMATED SALES OF RS.65 LACS BUT HOWEVER UPHELD THE PENALTY ON THE CASH DEPOSITS IN HDFC BANK ACCOUNT. 17. BEFORE US THE LEAR NED AR SUBMITTED THAT THE HDFC BANK ACCOUNT WERE SHOWN REGULARLY BY THE ASSESSEE III THE BALANCE SHEET IN ALL THE EARLIER YEARS AND SUBSEQUENT YEARS AND THE OMISSION TO DISCLOSE THE BANK' ACCOUNT WAS DUE TO THE DISTURBED STATE OF MIND ON ACCOUNT OF FLOODS. THE OMISSION WAS INADVERTENT AND WITHOUT ANY MOTIVE TO CONCEAL THE TURNOVER. HE FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS ACCEPTED THE CREDITS IN BANK ACCOUNT TO BE SALES AND ALSO OFFERED THE SAME TO BE TAXED AT 3 PER CENT OF THE TURNOVER. HE THUS SUBMITTED THAT THERE WAS NO MALA FIDE INTENTION ON THE PART OF THE ASSESSEE AND THEREFORE THE PENALTY BE DELETED. 18. THE LEARNED D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF ASSESSING OFFICER AND THE CIT(A). 19. WE HAV E HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL OF RECORD. IT IS AN UNDISPUTED FACT THAT THE DEPOSITS IN HDFC ACCOUNT WAS NOT CONSIDERED AS INCOME BY THE ASSESSEE WHILE COMPUTING THE RETURN OF INCOME. WHILE DECIDING THE QUANTUM APPEAL ON THE AFORESA ID ADDITION (IN ITA NO. 555/AHDJ201 0) WE HAVE DIRECTED THE ENTIRE CREDITS IN THE BANK ACCOUNT CANNOT BE CONSIDERED AS INCOME BUT ONLY 3.5 PER CENT OF THE SALE IS TO BE ESTIMATED AS INCOME. 20. SIMILARLY AGAINST THE ESTIMATION OF 5 PER CENT OF THE ESTIMATE D SALES OF RS. 65 LACS MADE BY ASSESSING OFFICER WE HAVE DIRECTED THE ADDITION TO BE ESTIMATED AT 3.5 PER CENT OF THE ESTIMATED SALES. SINCE THE 4UANTUM OF ADDITION ON WHICH THE PENALTY HAS BEEN LEVIED U/S 271(1)(C) ITSELF HAS BEEN REDUCED BY OUR' ORDER IN ITA NO. 555/AHD/2010 HEREINABOVE, WE ARE OF THE VIEW THAT THE PRESENT PENALTY DOES NOT SURVIVE MD HENCE DIRECT ITS DELETION. 21. THUS THIS APPEAL OF THE ASSESSEE IS ALLOWED. ITA. NO . 476 /M/201 8 A.Y. 2009 - 10 6 6 . ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE HONBLE ITAT HAS DELETED THE PENALTY IN SIMILAR CIRCUMSTANCES, THEREFORE, BY HONORING THE ORDER PASSED BY HONBLE ITAT AHM E DABAD IN THE CASE OF DINESHBHAI DHANSUKHLAL MITHAIWALA (SUPRA) . W E DELETE THE PENALTY. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HERE BY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 29 .03 .2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH ) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 29. 03. 2019 . V IJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI