PARAMJIT SINGH, JALANDHAR V. INCOME TAX OFFICER WARD -1(3), JALANDHAR

ITA 491/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7074 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-01-2019
• Assessment Year: 2005-2006
• Appeal Filed On: 24-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VEDPAL SINGH
• Section: 271(1)(c); 143(1); 148

Judgement Text

PAGE | 1 ITA NO. 491/ASR/2017 A.Y. 2005-06 PARAMJIT KUMAR VS. INCOME TAX OFFICER IN THE INCOME TAX APPELLATE TRIBUNAL CAMP BENCH AT JALANDHAR BEFORE SHRI N.K. SAINI, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.491/ASR./2017 (ASSESSMENT YEARS: 2005-06) PARAMJIT KUMAR H. NO. 97, LANE NO. 4, FRIENDS COLONY, JALANDHAR VS. INCOME TAX OFFICER, WARD-1(3), JALANDHAR PAN AFWPK4932J (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ASHRAY SARNA, A.R. RESPONDENT BY: SHRI VED PAL SINGH, D.R DATE OF HEARING: 08.01.2019 DATE OF PRONOUNCEMENT: 15.01.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-1, JALANDHAR, DATED 02.06.2017, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT I.T. ACT), DATED 24.02.2017. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER PASSED BY THE WORTHY CIT(A), JALANDHAR DATED 02.06.2017 IS AGAINST THE LAW AND FACTS OF THE CASE. 2.(A) THAT THE WORTHY CIT(A), JALANDHAR IS ERRED IN LAW IN UPHELD THE PENALTY IMPOSED BY THE LD. ASSESSING OFFICER, IGNORING THE FACT THAT THE LD. ASSESSING OFFICER INITIATED PENALTY U/S 271(1)(C) OF THE ACT ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IMPOSED PENALTY ON ACCOUNT OF CONCEALMENT OF INCOME. 3. THAT THE WORTHY CIT(A), JALANDHAR IS ERRED IN LAW IN UPHELD THE PENALTY IMPOSED BY THE LD. ASSESSING OFFICER IGNORING THE FACT THAT ASSESSMENT IN THE CASE OF ASSESSEE WAS FRAMED PURELY ON ESTIMATION BASIS. PAGE | 2 ITA NO. 491/ASR/2017 A.Y. 2005-06 PARAMJIT KUMAR VS. INCOME TAX OFFICER 4. THAT ASSESSEE REQUEST TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD AND DISPOSED OFF. 2. APART THEREFROM, THE ASSESSEE HAD FILED AN APPLICATION FOR ADMISSION OF THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN PASSING THE IMPUGNED ASSESSMENT ORDER U/S 271(1)(C) AND WITHOUT COMPLYING WITH THE MANDATORY CONDITIONS U/S 271 AS ENVISAGED UNDER THE INCOME TAX ACT, 1961. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN PASSING THE IMPUGNED ASSESSMENT ORDER U/S 271(1)(C) WITHOUT CONSIDERING THE FACT THAT NOTICE ISSUED U/S 274 R.W.S. 271 DATED 04.03.2013 IS NOT SPECIFIC THAT ON WHICH LIMB OF SECTION 271(1)(C) PENALTY IS INITIATED. 3. WE SHALL FIRST ADVERT TO THE ADDITIONAL GROUNDS OF APPEAL THAT HAVE BEEN RAISED BY THE ASSESSEE BEFORE US. THE ASSESSEE BY FILING THE AFORESAID ADDITIONAL GROUNDS APPEAL HAD ASSAILED THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O FOR IMPOSING PENALTY UNDER SEC. 271(1)(C) OF THE I.T ACT. IT WAS AVERRED BY THE LD. A.R THAT AS THE A.O HAD FAILED TO DELETE THE IRRELEVANT DEFAULT IN THE BODY OF THE SHOW CAUSE NOTICE (FOR SHORT SCN), THEREFORE, HE HAD WRONGLY ASSUMED JURISDICTION AND IMPOSED PENALTY IN THE HANDS OF THE ASSESSEE. IN RESPECT OF HIS AFORESAID CONTENTION THE LD. A.R HAD DRAWN OUR ATTENTION TO THE SCN, DATED 04.03.2013 (PAGE 32 ) OF THE ASSESSES PAPER BOOK (FOR SHORT APB). IT WAS SUBMITTED BY THE LD. A.R THAT THE DEFAULT FOR WHICH THE ASSESSEE WAS PUT TO NOTICE AND THEREIN CALLED UPON EXPLAIN AS TO WHY PENALTY UNDER SEC.271(1)(C) MAY NOT BE IMPOSED ON HIM WAS NOT DISCERNIBLE FROM A PERUSAL OF THE SCN. HOWEVER, WE FIND THAT THE A.O HAD PRIOR TO IMPOSING OF PENALTY UNDER SEC.271(1)(C), HAD SUBSEQUENT TO THE AFORESAID SCN, DATED 04.03.2013, ALSO ISSUED TWO OPPORTUNITY NOTICES DATED 26.06.2015 AND 26.12.2016. THE LD. A.R ON BEING CONFRONTED WITH THE SAID FACT, HOWEVER FAILED TO ASSAIL THE VALIDITY OF THE SAID NOTICES. WE ARE OF THE CONSIDERED VIEW THAT AS THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O FOR IMPOSING PENALTY UNDER SEC. 271(1)(C) WOULD ALSO REQUIRE A PERUSAL OF THE AFORESAID OPPORTUNITY NOTICES, DATED 26.06.2015 AND 26.12.2016, THE VALIDITY OF WHICH HAS NOT BEEN ASSAILED BY THE LD. A.R BEFORE US, THEREFORE, THE AFOREMENTIONED ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE PAGE | 3 ITA NO. 491/ASR/2017 A.Y. 2005-06 PARAMJIT KUMAR VS. INCOME TAX OFFICER CANNOT BE ADMITTED. WE THUS DECLINE TO ADMIT THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE BEFORE US. 4. WE SHALL NOW ADVERT TO THE MERITS OF THE CASE. BRIEFLY STATED, THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR A.Y. 2005-06 ON 30.07.2005, DECLARING TOTAL INCOME AT RS.75,700/-. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE I.T. ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED BY THE A.O THAT THE ASSESSEE WAS MAINTAINING BANK ACCOUNT NO. 415B14149668 WITH CENTURIAN BANK OF PUNJAB, BRS NAGAR, LUDHIANA AND SAVING BANK ACCOUNT NO.042010100091154 WITH AXIS BANK LTD. JALANDHAR, WHEREIN THERE WERE CASH DEPOSITS OF RS.44,40,000/- AND RS.45,78,000/-, RESPECTIVELY, PERTAINING TO THE YEAR UNDER CONSIDERATION, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SEC.147 OF THE I.T ACT. IN COMPLIANCE TO THE NOTICE ISSUED BY THE A.O UNDER SEC.148, THE ASSESSEE FILED HIS RETURN OF INCOME ON 07.02.2013, DECLARING TOTAL INCOME AT RS.3,46,300/-. THE ASSESSEE HAD DECLARED A NET INCOME RS.73,200/- FROM PROPERTY BUSINESS AFTER DEDUCTING THE EXPENSES THAT WERE INCIDENTAL TO EARNING OF THE SAID INCOME. ON BEING CONFRONTED WITH THE CREDITS IN HIS AFORESAID BANK ACCOUNTS VIZ. (I). BANK ACCOUNT NO. 415B14149668 WITH CENTURIAN BANK OF PUNJAB, BRS NAGAR, LUDHIANA(RS.53.902 LAC) AND (II). SAVING BANK ACCOUNT NO. 042010100091154 WITH AXIS BANK LTD. JALANDHAR (RS. 48.79 LAC), IT WAS THE CLAIM OF THE ASSESSEE THAT DEPOSITS OF RS. 27 LAC IN HIS BANK ACCOUNTS WAS THE SALE CONSIDERATION OF A PROPERTY SOLD BY HIM ON 26.05.2004. IT WAS STATED BY HIM THAT THE AFORESAID PROPERTY WAS PURCHASED BY HIM ON 27.09.1999 FOR A CONSIDERATION OF RS. 24.50 LAC. APART THEREFROM, IT WAS SUBMITTED BY HIM THAT THE CASH DEPOSITS IN THE AFOREMENTIONED BANK ACCOUNTS PERTAINED TO THE PROPERTY TRANSACTIONS THAT WERE CARRIED OUT BY HIM IN THE COURSE OF HIS AFORESAID BUSINESS AS THAT OF A PROPERTY DEALER ON COMMISSION BASIS. THE ASSESSEE HAD IN HIS RETURN OF INCOME FILED IN COMPLIANCE TO NOTICE UNDER SEC. 148 HAD DISCLOSED AN ADDITIONAL INCOME OF RS. 2,70,600/-. PAGE | 4 ITA NO. 491/ASR/2017 A.Y. 2005-06 PARAMJIT KUMAR VS. INCOME TAX OFFICER 5. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE A.O THAT THE TOTAL DEPOSITS IN THE BANK ACCOUNT VIZ. (I) CENTURIAN BANK OF PUNJAB (NOW HDFC BANK LTD.): RS.55.90 LACS (INCLUSIVE OF TRANSACTIONS/DEPOSITS BY CHEQUES); AND (II) BANK ACCOUNT WHIT AXIS BANK LTD.: RS.48.79 LACS, WHICH THEREIN AGGREGATED TO AN AMOUNT OF RS.102.69 LACS. IN THE BACKDROP OF THE AFORESAID FACTS, THE A.O WAS OF THE CONSIDERED VIEW THAT THE ADDITIONAL INCOME OF RS.2,70,660/- DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SEC.148 TOWARDS PROFIT/INCOME EARNED FROM THE PROPERTY TRANSACTIONS OF RS.102.69 LACS (APPRO.) WORKED OUT TO 3% ONLY, WHICH IN THE VIEW OF THE A.O WAS SUBSTANTIALLY LOW. THE A.O HOLDING A CONVICTION THAT THE PROFITABILITY IN THE BUSINESS OF PURCHASE/SALE OF PROPERTY COULD SAFELY BE ESTIMATED @ 6% OF THE TOTAL TRANSACTION OF RS.102.96 LACS, THUS MADE AN ADDITION OF RS.6,16,140/- IN THE HANDS OF THE ASSESSEE. THE A.O WHILE CULMINATING THE ASSESSMENT ALSO INITIATING PENALTY PROCEEDINGS UNDER SEC.271(1)(C) FOR DEFAULT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. THE ASSESSEE ASSAILED THE ASSESSMENT FRAMED BY THE A.O IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING AT LENGTH ON THE CONTENTIONS ADVANCED BY THE ASSESSEE OBSERVED, THAT IT WOULD BE REASONABLE IF THE PROFITS FROM THE PROPERTY BUSINESS WERE TAKEN AT 5% WERE TOTAL BANK DEPOSITS OF RS.1,02,69,000/- (AS AGAINST 6% APPLIED BY THE A.O). ON THE BASIS OF THE AFORESAID DELIBERATIONS, THE PROFITS FROM THE PROPERTY BUSINESS OF THE ASSESSEE WAS WORKED OUT BY THE CIT(A) AT RS.5,13,450/-, AS AGAINST THAT DECLARED BY THE ASSESSEE AT RS.2,70,600/-. IN SUM AND SUBSTANCE, THE CIT(A) RESTRICTED THE ADDITION TO RS.2,42,850/-, AS AGAINST THAT OF RS. 3,45,540/- MADE BY THE A.O ON THE SAID COUNT. RESULTANTLY, PURSUANT TO THE ORDER OF THE CIT(A) THE ASSESSEE STOOD ENTITLED TO A CONSEQUENTIAL RELIEF OF RS.1,02,600/- [RS.3,45,540/- (-) RS.2,42,850/-]. AFTER GIVING EFFECT TO THE ORDER OF THE CIT(A), THE INCOME OF THE ASSESSEE WAS FINALLY DETERMINED AT RS.5,91,730/-. SUBSEQUENTLY, THE A.O IMPOSED A PENALTY OF RS. 1,50,410/-IN RESPECT OF THE AFORESAID INCOME OF THE ASSESSEE FROM BUSINESS OF PROPERTY PAGE | 5 ITA NO. 491/ASR/2017 A.Y. 2005-06 PARAMJIT KUMAR VS. INCOME TAX OFFICER DEALER ON COMMISSION BASIS UNDER SEC. 271(1)(C) OF THE I.T ACT, VIDE HIS ORDER DATED 24.02.2017. 7. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). HOWEVER THE CIT(A) NOT BEING PERSUADED TO SUBSCRIBE TO THE CONTENTIONS ADVANCED BY THE ASSESSEE THAT NO PENALTY UNDER SEC.271(1)(C) WAS LIABLE TO BE IMPOSED IN HIS HANDS, REJECTED THE SAME AND UPHOLD THE ORDER OF THE A.O. 8. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE ADVERTING TO THE MERITS OF THE ADDITION, TO THE EXTENT THE SAME HAD BEEN SUSTAINED BY THE CIT(A) SUBMITTED, THAT AS THE ADDITION IN THE HANDS OF THE ASSESSEE WERE ADMITTEDLY MADE BY THE A.O ON AN ESTIMATE BASIS BY WORKING OUT THE PROFITS FROM THE PROPERTY BUSINESS @ 6% OF THE TOTAL BANK DEPOSITS OF RS,1,02,69,000/-, WHICH THEREAFTER WAS SCALED DOWN BY THE CIT(A) AND WAS SUBSTITUTED BY AN ESTIMATE OF 5% OF THE AFORESAID BANK DEPOSITS BY HIM, HENCE NO PENALTY UNDER SEC.271(1)(C) IN RESPECT OF THE AFORESAID ESTIMATED ADDITION WAS CALLED FOR IN THE HANDS OF THE ASSESSEE, PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 9. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE A.O HAD SUBSTITUTED THE PROFITS DECLARED BY THE ASSESSEE AT RS.2,70,600/- FROM PROPERTY BUSINESS, BY RS. 6,16,140/- BY ADOPTING AN ESTIMATE OF 6% OF THE TOTAL BANK DEPOSITS OF RS.1,02,69,000/-. SUBSEQUENTLY, THE AFORESAID ESTIMATE AS THAT OF THE A.O WAS SUBSTITUTED BY THAT OF THE CIT(A) AT RS. 5,13,450/- I.E @ 5% OF THE AFORESAID BANK DEPOSITS. BE THAT AT IT MAY, IT IS A FACT BORNE FROM THE RECORDS THAT THE ADDITION MADE IN THE HANDS OF THE ASSESSEE PURSUANT TO THE ORDER OF THE CIT(A) WAS PASSED ON A MERE ESTIMATE BASIS AND NOT ON ANY CONCRETE OR IRREFUTABLE DOCUMENTARY EVIDENCE. IN OUR CONSIDERED VIEW, NO PENALTY UNDER SEC.271(1)(C) CAN VALIDLY BE IMPOSED IN A CASE WHERE THE ADDITION IN ITSELF IS MERELY BACKED BY AN ESTIMATE OR GUESS WORK, AND NOT ON THE BASIS OF ANY PAGE | 6 ITA NO. 491/ASR/2017 A.Y. 2005-06 PARAMJIT KUMAR VS. INCOME TAX OFFICER CLINCHING EVIDENCE CORROBORATING OR SUPPORTING THE SAME. WE THUS ARE OF A STRONG CONVICTION THAT THE PENALTY OF RS.1,50,410/- IMPOSED BY THE A.O UNDER SEC.271(1)(C) IN RESPECT OF THE ADDITION SUSTAINED BY THE CIT(A) ON AN ESTIMATE BASIS BY SUBSTITUTING THE ESTIMATE AS THAT MADE BY THE A.O, CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS SET ASIDE THE ORDER OF THE CIT(A) AND QUASH THE PENALTY IMPOSED BY THE A.O UNDER SEC.271(1)(C). 10. THE APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 15.01.2019 SD/- SD/- ( N.K. SAINI) (RAVISH SOOD) VICE PRESIDENT JUDICIAL MEMBER PLACE: JALANDHAR; DATE 15 .01.2019 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , / DR, ITAT, CAMP BENCH, JALANDHAR. 6. [ / GUARD FILE. //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) /ITAT, CAMP BENCH, JALANDHAR. PAGE | 7 ITA NO. 491/ASR/2017 A.Y. 2005-06 PARAMJIT KUMAR VS. INCOME TAX OFFICER SR.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS 15.1.19 SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON 15.1.19 SR.PS/PS 7 FILE SENT TO THE BENCH CLERK 16.1.19 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH OF ORDER