SMT. MANISHA JAITHA, MUMBAI V. ASST CIT CIRCLE-26(1), MUMBAI

ITA 497/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6851 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 21-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: THARIAN OOMMEN
• Keywords: Unexplained cash credit
• Section: 271(1)(c); 143(3); 274; 147

Judgement Text

SMT. MANISHA JAITHA VS. ASST. CIT, MUMBAI ITA NOS. 497 TO 505/MUM/2020 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NOS. 497 TO 505 /MUM/20 20 (ASSESSMENT YEAR S : 2005 - 06 TO 2013 - 14 ) SMT. MANISHA JAITHA 2B, BRIGHTON NO. 2, 68 - D RUNGTA LANE, VS. NEPEAN SEA ROAD MUMBAI 400 0 06 ASST. COMMISSIONER OF INCOME - TAX , CIRCLE 26(1), 1 ST FLOOR , ROOM NO. 107, PIRAMAL CHAMBERS, PAREL MUMBAI 400 0 12 PAN AACPJ8155F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJESH P. SHAH , A.R RESPONDENT BY : SHRI THARIAN OOMMEN , D.R DATE OF HEARING : 29 .0 7 .202 1 DATE OF PRONOUNCEMENT : 02 . 0 8 .202 1 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER PASSED BY THE CIT(A) - 38 , MUMBAI, DATED 31.10.2019 , WHICH IN TURN ARISES FROM THE RESPECTIVE ORDERS PASSED BY THE A.O UNDER SEC. 271(1)(C) OF THE INCOME TAX 1961 (FOR SHORT ACT), DATED 24.11.2015 FOR A.Y 2005 - 06 TO A.Y 2013 - 14 . AS A COMMON ISSUE IS INVOLVED IN THE CAPTIONED APPEALS , THEREFORE, THE SAME ARE BEING TAKEN UP AND DISPOSED OFF BY WAY OF A COMMON O RDER. WE SHALL FIRST TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y 2005 - 06 IN ITA NO. 497/MUM/2020 , WHEREIN THE IMPUGNED ORDER HAS BEEN ASSAILED BEFORE US ON THE FOLLOWING GROUNDS : SMT. MANISHA JAITHA VS. ASST. CIT, MUMBAI ITA NOS. 497 TO 505/MUM/2020 2 1. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEAR NED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN CASE WHERE THE SATISFACTION OF TE A.O WHILE INITIATING THE PENALTY PROCEEDINGS U/S 271(10(C) IS WITH REGARD TO ALLEGED CONCEALMENT OF INCOME BY THE APPELLANT WHEREAS THE IMPOSITION OF PEN ALTY MENTIONED IN THE NOTICE IS CONCEALED THE PARTICULARS OF YOUR INCOME I.E WITHOUT STRIKING OFF THE RELEVANT OPTION, THE LEVY OF SUCH PENALTY IS NOT SUSTAINABLE. 2. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF LEVYING A PENALTY OF RS. 93,528/ - (BEING PENAL AMOUNT AT 100% OF ALLEGED TAX SOUGHT TO BE EVADED) U/S 271(1)(C) OF I.T ACT. 3. ON THE FACTS AND UNDER THE CIRCU MSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF REJECTING THE EXPLANATIONS FURNISHED BY THE APPELLANT AND CONFIRMING THE PENALTY U/S 271(10(C). 4. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF LEVYING THE PENALTY U/S 271(10(C) IN RESPECT OF INTEREST AMOUNT OF RS. 93,528/ - BEING 50% OF THE TOTAL INTEREST OF RS. 1,87,056/ - EARNED ON THE FOREIGN BANK ACC OUNT ON THE FOLLOWING GROUNDS : (A). ON THE GROUND THAT APPELLANT WAS A JOINT ACCOUNT HOLDER EXERCISING FULL OWNERSHIP AND CONTROL RIGHTS OVER THE FUNDS IN THE BANK ACCOUNT WITHOUT APPRECIATING THE FACT THE APPELLANT WAS A NOMINEE TO THE FOREIGN BANK ACC OUNT AND HER NAME WAS ADDED ONLY FOR CONVENIENCE AS HER MOTHER IS A SENIOR CITIZEN. (B). ON THE GROUND THAT APPELLANT HAS NOT OFFERED INTEREST INCOME FOR TAXATION WITHOUT APPRECIATING THE FACT THAT ALL THE CREDIT TRANSACTIONS IN THE SAID BANK ACCOUNT AN D THE SOURCE THEREOF BELONGED TO APPELLANT MOTHER MRS. BHATIA PUSHPA NARENDRA KHIMJI ONLY AND NOT THE APPELLANT AND HENCE ANY CONSEQUENTIAL INTEREST INCOME WOULD BELONG TO HER MOTHER AND NOT APPELLANT HERSELF. 2. BRIEFLY STATED, THE ASSESSEE WHO IS A RE SIDENT INDIVIDUAL HAD FILED HER RETURN OF INCOME FOR A.Y 2005 - 06 ON 28.10.2005, DECLARING A TOTAL INCOME OF RS. 2,76,558/ - . SUBSEQUENTLY, ON THE BASIS OF IMPUGNED INFORMATION RECEIVED BY THE A.O THAT THE ASSESSEE WAS HOLDING A FOREIGN BANK ACCOUNT, VIZ. ACCOUNT NO. 10388171 (CLIENT NO. 2080079, REF 35896ZRG) WITH HSBC PRIVATE BANK, ZURICH, AND HAD NOT DISCLOSED THE DEPOSITS AND INTEREST INCOME DERIVED FROM THE SAID BANK ACCOUNT FOR THE PURPOSE OF TAXATION, HER CASE WAS REOPENED UNDER SEC. 147 R.W EXPLANAT ION 2(D) OF THE ACT. ASSESSMENT WAS FRAMED BY THE A.O VIDE HIS ORDER PASSED U/S 143(3) R.W.S 147, DATED 28.05.2015 AND THE INCOME OF SMT. MANISHA JAITHA VS. ASST. CIT, MUMBAI ITA NOS. 497 TO 505/MUM/2020 3 THE ASSESSEE WAS ASSESSED AT RS. 3,29,93,780/ - , AFTER MAKING THE FOLLOWING ADDITIONS : SR. NO. PARTICULARS AMOUNT 1. INT EREST FROM FOREIGN BANK RS. 1,87,056/ - 2. UNEXPLAINED EXPENSE ON FOREIGN TRAVEL RS. 6,00,000/ - 3. UNEXPLAINED CREDITS IN FOREIGN BANK ACCOUNTS RS. 3,19,30,169/ - THE A.O WHILE CULMINATING THE ASSESSMENT ALSO ISSUED NOTICE UNDER SEC. 274 R.W.S 271(1)(C) OF THE ACT. 3. SUBSEQUENTLY, THE A.O VIDE HIS ORDER PASSED UNDER SEC. 271(1)(C) IMPOSED A PENALTY OF RS. 3,32,29,602/ - I.E @300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE. 4. ON APPEAL, THE CIT(A) TAKING COGNIZANCE OF THE FACT THAT HE HAD WHILE DISPOSING OFF THE QUANTUM APPEAL OF THE ASSESSEE VIDE HIS ORDER DATED 31.10.2019 HE HAD DELETED THE ADDITION OF RS. 3,19,30,169/ - THAT WAS MADE BY A.O TOWARDS UNEXPLAINED CREDIT IN THE FOREIGN BANK ACCOUNT, THUS, DIRECTED THE A.O TO VACATE THE PENALT Y VIS - A - VIS THE SAID ADDITION. A S REGARDS THE ADDITION OF RS. 6,00,000/ - THAT WAS MADE BY THE A.O TOWARDS UNEXPLAINED EXPENSES ON FOREIGN TRAVEL, IT WAS OBSERVED BY THE CIT(A) THAT AS THE SAID ADDITION WAS VACATED BY HIM WHILE DISPOSING OFF THE ASSESSEES QUANTUM APPEAL VIDE HIS ORDER DATED 31.10.2019 , THEREFORE, HE DIRECTED THE AO TO VACATE THE PENALTY TO THE EXTENT RELATABLE THERETO. AS REGARDS THE PENALTY THAT WAS IMPOSED BY THE A.O IN RESPECT OF THE ADDITION OF THE INTEREST INCOME ON THE FOREIGN BANK AC COUNT, VIZ. HSBC BANK, ZURICH, THE CIT(A) OBSERVED THAT AS HE HAD WHILE DISPOSING OFF THE QUANTUM APPEAL SCALED DOWN THE ADDITION MADE BY THE A.O QUA THE INTEREST INCOME TO 50% OF THE TOTAL INTEREST INCOME PERTAINING TO THE YEAR UNDER CONSIDERATION I.E AN AMOUNT OF RS. 93,528/ - (50% OF RS. 1,87,056/ - ), THEREFORE, HE THOUGH PRINCIPALLY UPHELD THE PENALTY IMPOSED BY THE A.O U/S 271(1)(C) AS SMT. MANISHA JAITHA VS. ASST. CIT, MUMBAI ITA NOS. 497 TO 505/MUM/2020 4 REGARDS THE SAID ADDITION, BUT DIRECTED HIM TO BRING THE SAME IN CONFORMITY WITH THE ADDITION THAT WAS SUSTAINED BY HIM WHILE DISPOSING OFF THE QUANTUM APPEAL. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) TO THE EXTENT HE HAD SUSTAINED THE PENALTY UNDER SEC. 271(1)(C) HAS CARRIED THE MATTER IN APPEAL BEFORE US. AS OBSERVED BY US HEREINABOVE, THE CIT(A ) HAD SUSTAINED THE PENALTY ONLY W.R.T THE ADDITION OF 50% OF THE INTEREST INCOME ON THE FOREIGN BANK ACCOUNT, VIZ. HSBC BANK, ZURICH. HOWEVER, AS WE HAVE WHILE DISPOSING OFF THE ASSESSEES QUANTUM APPEAL FOR A.Y 2005 - 06 IN ITA NO. 342/MUM/2020 VACATED THE ADDITION OF 50% OF THE INTEREST INCOME THAT WAS SUSTAINED BY THE CIT(A), THEREFORE, THE PENALTY IMPOSED BY THE A.O QUA THE SAID AMOUNT CANNOT SURVIVE ON A STANDALONE BASIS AND HAS TO MEET THE SAME FATE. ACCORDINGLY, THE PENALTY IMPOSED BY THE A.O UNDER SE C. 271(1)(C) TO THE EXTENT THE SAME WAS SUSTAINED BY THE CIT(A) IS HEREIN QUASHED. THE GROUND OF APPEAL NO. 4 IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 6. AS WE HAVE VACATED THE PENALTY IMPOSED BY THE A.O TO THE EXTENT THE SAME WAS UPHELD BY THE CIT(A), THEREFORE, WE REFRAIN FROM ADVERTING TO AND THEREIN ADJUDICATING THE CONTENTIONS RAISED BY THE ASSESSEE ON THE BASIS OF WHICH THE VALIDITY OF THE PENALTY IMP OSED BY THE A.O UNDER SEC. 271(1)(C) HAVE BEEN ASSAILED BEFORE US, WHICH, THUS, ARE LEFT OPEN. THE GROUNDS OF APPEA L NOS. 1 TO 3 ARE DISPOSED OFF IN TERMS OF OUR AFORESAID OBSERVATIONS AND ARE LEFT OPEN. 7 . THE APPEAL FILED BY THE ASSESSEE FOR A.Y 2005 - 06 IN ITA NO. 497/MUM/2020 IS ALLOWED. ITA NOS. 498 TO 505 /MUM/20 20 (ASSESSMENT YEAR S : 2005 - 06 TO 2013 - 14 ) 8 . AS THE FACTS AND THE ISSUE INVOLVED IN THE CAPTIONED APPEALS OF THE ASSESSEE I.E LEVY OF PENALTY UNDER SEC. 271(1)(C) REMAINS THE SAME , AS WERE THERE BEFORE US IN HER AFORESAID APPEAL FOR A.Y 2005 - 06 IN ITA NO. SMT. MANISHA JAITHA VS. ASST. CIT, MUMBAI ITA NOS. 497 TO 505/MUM/2020 5 497 /MUM/2020, THEREFORE, OUR ORDER THEREIN PASSED WHILE DISPOSING OFF THE SAID APPEAL SHALL APPLY MUTATIS MUTANDIS FOR THE PURPOSE OF CAPTIONED APPEALS VIZ. ITA NOS. 498 TO 505 /MUM/2020 FOR ASSESSMENT YEARS: 2006 - 07 TO 2013 - 14 . ACCORDINGLY, ON THE SAME TERMS THE PENALTY UNDER SEC. 271(1)( C) IMPOSED BY THE A.O TO THE EXTENT THE SAME HAD BEEN SUSTAINED BY THE CIT(A) FOR THE CAPTIONED YEARS I S VACATED. 9 . THE CAPTIONED APPEALS OF THE ASSESSEE VIZ. ITA NOS. 498 TO 505 /MUM/2020 FOR ASSESSMENT YEARS: 2006 - 07 TO 2013 - 14 ARE ALLOWED IN TERMS OUR AFORESAID OBSERVATIONS. 1 0 . RESULTANTLY, ALL THE APPEALS OF THE ASSESSEE VIZ. ITA NOS. 497 TO 505 /MUM/2020 FOR ASSESSMENT YEARS: 200 5 - 0 6 TO 2013 - 14 ARE ALLOWED IN TERMS OUR AFORESAID OBSERVATIONS. ORDER PRO NOUNCED IN THE OPEN COURT ON 02 /0 8 /2021. SD/ - SD/ - ( RAJESH KUMAR ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 02 .0 8 .2021 PS: ROHIT 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// (SR. PRIVATE SECRETARY) ITAT, MUMBAI