PURSHOTTAM NASIK DESHMUKH ( HUF), THANE V. ITO WD 1(3), THANE

ITA 4820/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9049 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-02-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 10-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH KANOJIA
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C,MUMBAI BEFORE SHRI J. SUDHAKAR REDDY (AM) & SHRI R.S. P ADVEKAR (JM) I.T.A. NO.4820/MUM/2010 (A.Y. 2005-06) PURSHOTTAM N. DESHMUKH (HUF), 231, WANI ALI, BHIWANDI, DIST. THANE-421 302. PAN: AAIHP0844F VS. INCOME-TAX OFFICER, WARD 1(3), 2 ND FLOOR, RANI MANSION, MURBAD RD., KALYAN, DIST. THANE. APPELLANT RESPONDENT APPELLANT BY SHRI SUBODH RATNAPARKHI RESPONDENT BY SHRI M ANISH KANOJIA. DATE OF HEARING 13-02-2012 DATE OF PRONOUNCEMENT 28-03-2012 O R D E R PER R.S. PADVEKAR, JM : IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE IM PUGNED ORDER OF THE LD. CIT(A)-I, THANE, DATED 29-1-2010 FOR THE ASSESSMENT YEAR 2005-06 CONFIRMING THE PENALTY LEVIED BY THE AO U/S. 271(1)(C) OF THE ACT. 2. THE ASSESSEE HAS TAKEN MULTIPLE GROUNDS BUT THE CORE CONTROVERSY IS IN RESPECT OF THE PENALTY OF RS.3,17,358/- LEVIED BY T HE AO U/S. 271(1)(C) OF THE ACT. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MILK DAIRY. SEARCH & SEIZURE OPERATION U/S.132 OF THE I.T. ACT WAS CARRIED OUT A GAINST THE ASSESSEE ON 27-1-2005. ITA NO.4820/MUM/2010 PURSHOTTAM NASIK DESHMUKH (HUF). 2 IN CONSEQUENCE OF NOTICE U/S. 153A, THE ASSESSEE FI LED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.5,57,950/-, INCLUDING AGRICULTURAL INCOME OF RS.4,00,000/-. DURING THE COURSE OF SEARCH, IT WAS FOUND THAT THE ASSESSEE FAMILY HAS INVESTED RS.16,00,000/- IN KISAN VIKAS PATRAS ( KVPS). IT APPEARS THAT THE MEMBER OF THE ASSESSEE HUF, SHRI KANTILAL P. DESHMU KH, HAD ADMITTED THAT THE INVESTMENTS IN KVPS WERE FROM UNDISCLOSED INCOME. THE KVPS WERE PURCHASED ON THE NAMES OF DIFFERENT FAMILY MEMBERS. IN THE BALAN CE-SHEET, THE ASSESSEE HAS SHOWN THE INVESTMENT IN KVPS AT RS.9,00,000/-. THE AO MADE ADDITION OF RS.9,00,000/- TREATING THE SAME AS UNEXPLAINED INVE STMENT AS THE ASSESSEES UNDISCLOSED INCOME. THE AO LEVIED PENALTY U/S.271(1 )(C) OF THE ACT OF RS.3,17,358/-. 4. THE ASSESSEE CHALLENGED THE PENALTY BEFORE THE L D. CIT(A) BUT WITHOUT SUCCESS AS THE PENALTY ORDER WAS CONFIRMED. NOW, THE ASSESS EE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE LD. COUNSEL SUBMITS THAT IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS NO SUFFICIENT SOURCES TO MAKE THE INVESTMENT OF RS.9,00,000/- IN KVPS. HE SUBMITS THAT THERE IS NO JUSTIFICATION TO MAKE ADDITION OF RS.9,00,000/- AS IT WAS REFLECTED IN THE ASSETS SIDE OF THE BALANCE- SHEET. HE SUBMITS THAT THOUGH THE QUANTUM ADDITION IS CONFIRMED, THAT DOES NOT MEAN THAT PENALTY IS LEVIABLE U/S.271(1)(C) AND THE ASSESSEE CAN IN DEFENCE MAKE OUT A CASE FOR NON-LEVY OF PENALTY BY SHOWING THAT THE ASSESSEE HAD SUFFICIENT FUNDS AVAILABLE FOR MAKING THE SAID INVESTMENT. HE SUBMIT S THAT THE INVESTMENTS IN KVPS ARE MADE ON THE NAMES OF DIFFERENT MEMBERS OF ASSES SEE H.U.F AND THE ASSESSEE HAD DEMONSTRATED THAT THERE WERE SUFFICIENT FUNDS W ITH THE ASSESSEE TO COVER UP THE INVESTMENTS. WE FIND THAT AS NOTED BY THE AO THE AS SESSEE HAS SHOWN THE INVESTMENT OF RS.9,00,000/- IN THE BALANCE-SHEET. T HE ASSESSEE HAS ALSO ACCEPTED THE DECISION OF THE LD. CIT(A) IN THE QUANTUM APPEA L BY NOT CONTESTING IN FURTHER ITA NO.4820/MUM/2010 PURSHOTTAM NASIK DESHMUKH (HUF). 3 PROCEEDINGS. IN OUR OPINION, MERELY BECAUSE THE ASS ESSEE HAS ACCEPTED THE QUANTUM ADDITION, THAT WILL NOT PUT FETTERS ON THE RIGHT OF THE ASSESSEE TO DEMONSTRATE IN THE PENALTY PROCEEDING THAT THERE WE RE SUFFICIENT FUNDS TO COVER UP THE INVESTMENTS. ON PERUSAL OF THE PENALTY ORDER, W E FIND THAT THE AO HAS MERELY REPRODUCED THE RELEVANT SECTION AND NOTED THAT THE ASSESSEE HAS FAILED TO OFFER SATISFACTORY EXPLANATION. THERE IS NO FURTHER DISCU SSION ON THE CONTENTION OF THE ASSESSEE THAT THERE WERE SUFFICIENT FUNDS TO COVER UP THE INVESTMENTS MADE ON THE NAMES OF DIFFERENT MEMBERS OF THE HUF. IN OUR OPINI ON, THIS ISSUE NEEDS RE- CONSIDERATION AS THE SAID INVESTMENT IS REFLECTED I N THE BALANCE-SHEET. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) A ND RESTORE THE ISSUE TO THE FILE OF THE AO TO CONSIDER THE CONTENTION OF THE ASSESSEE T HAT THE ASSESSEE HAD SUFFICIENT FUNDS TO COVER UP THE INVESTMENTS IN KVPS. NEEDLESS TO SAY THE AO SHOULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE AND DECIDE THE ISSUE BY PASSING A SPEAKING ORDER. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 28TH DAY OF MARCH, 201 2. SD/- SD/- ( J. SUDHAKAR REDDY ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 28TH MARCH , 2012 . NG: ITA NO.4820/MUM/2010 PURSHOTTAM NASIK DESHMUKH (HUF). 4 COPY TO : 1. ASSESSEE. 2. DEPARTMENT. 3 CIT(A)-I, THANE. 4 CIT-II, THANE. 5.DR,C BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, / / TRUE COPY / / ASST.REGISTRAR, ITAT, MUMBAI.