Sh. Surinder Pal Gandhi, Nawanshahr V. The Deputy Commissioner of Income tax , Jalandhar

ITA 524/ASR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1427 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-08-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 09-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: BHAGAT
• Keywords: Business income
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I. T. A. NO. 524/(ASR)/2017 ASSES SMENT YEAR: 2009-10 SURINDER PAL GANDHI, BHATTI COLONY, CHANDIGARH ROAD, NAWANSHAHAR [PAN: AFBPK 5235K] VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. M. R. BHAGAT & RAJIN DER KUMAR CHOPRA RESPONDENT BY: SMT. PARWINDER KAUR, CIT-DR DATE OF HEARING: 07.08.2018 DATE OF PRONOUNCEMENT: 10.09.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE CON FIRMATION OF THE PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 ('THE AC T' HEREINAFTER), LEVIED VIDE ORDER DATED 11.03.2014 IN THE SUM OF RS.42,000/-, B Y THE COMMISSIONER OF INCOME TAX (APPEALS)-5, LUDHIANA (CIT(A) FOR SHORT) VIDE HIS ORDER DATED 03.05.2017. 2. THE FACTS OF THE CASE, IN-SO-FAR AS ARE RELEVANT , ARE THAT THE ASSESSEE, AN INDIVIDUAL, WAS SUBJECT TO SEARCH U/S. 132 OF THE A CT ON 18.02.2010. THE ASSESSEE, WHO DID NOT FURNISH ANY RETURN OF INCOME DESPITE NO TICE U/S. 153A(1) ON 05.10.2010, WAS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ENQUIRED ABOUT THE SOURCE OF REPAYMENT OF RS.1,85,000/- IN HIS LOA N ACCOUNT WITH CENTRAL BANK OF INDIA, NAWANSHAHAR DURING THE YEAR, AND DEEMED AS H IS UNEXPLAINED INCOME (IN THE ITA NO. 524/ASR/2017 (AY 2009-10) SURINDER PAL GANDHI V. DY. CIT 2 SUM OF RS.3,80,127) IN THE ABSENCE OF ANY EXPLANATI ON (REFER PARA 9 OF THE ASSESSMENT ORDER). IN APPEAL, THE FIRST APPELLATE A UTHORITY, NOTING THAT NO EVIDENCE TOWARD THE REPAYMENT OF THE LOAN MADE IN CASH, HAD BEEN FURNISHED, ALLOWED PART RELIEF TO THE ASSESSEE CONSIDERING THAT THE ASSESSE E HAD DISCLOSED AN INCOME OF RS.2.55 LACS AS HIS BUSINESS INCOME, WITH THERE BEI NG WITHDRAWALS FROM THE BUSINESS, AND CONFIRMED THE ADDITION AT RS.1 LAC, W HICH ADJUDICATION HAS SINCE RETAINED FINALITY IN THE ABSENCE OF ITS CHALLENGE B Y EITHER SIDE. PENALTY PROCEEDINGS U/S. 271(1)(C) INITIATED AT THE CONCLUSION OF THE A SSESSMENT (U/S. 153A R/W S. 144, DATED 26.12.2011) WERE ACCORDINGLY PROCEEDED WITH, AND PENALTY LEVIED AT AMOUNT CONFIRMED IN QUANTUM PROCEEDINGS, I.E., RS. 1 LAC, AS NO IMPROVEMENT IN HIS CASE WAS MADE BY THE ASSESSEE IN THE PENALTY PROCEEDINGS , WHICH POSITION CONTINUED TO OBTAIN IN THE APPELLATE PROCEEDINGS AS WELL, RESULT ING IN THE CONFIRMATION OF THE PENALTY BY THE LD. CIT(A), HOLDING AS UNDER: 3.2 GROUND OF APPEAL NO. 2 PERTAINS TO IMPOSITION OF PENALTY AMOUNTING TO RS.42,000/- BY THE AO.. FACTS OF THE CASE, THE BASIS OF PENALTY IMPOSED BY THE AO AND THE ARGUMENTS OF THE AR DURING THE APPELLATE PROCEEDINGS HAVE BEEN CONSI DERED. THE PENALTY HAS BEEN LEVIED FOR THE FACT THAT THE ASSESSEE COULD NOT FULLY EXPLAIN THE SOURCE OF REPAYMENT OF LOAN AMOUNTING TO RS.3,80,127/- . THE EXPLANATION OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT THE REPAYMENT HAS BEEN MADE OUT OF INCOME OF RS. 2,55,152/- FROM THE BUSINESS AND THERE ARE WITHDRAWAL FROM THE BUSINESS AS WELL. HOWEVER, EVEN IF IT IS P RESUMED THAT WHOLE OF THE BUSINESS INCOME WAS UTILIZED FOR REPAYMENT OF LOAN, THERE REMAINS A N UNEXPLAINED AMOUNT OF MORE THAN RS. 1,00,000/-. THE ASSESSEE DID NOT SUBMIT ANY REPLY BEFORE THE AO DURING THE PENALTY PROCEEDINGS AND EVEN DURING THE APPELLATE PROCEEDIN GS NO EXPLANATION HAS BEEN FILED REGARDING THE SOURCE OF REPAYMENT OF LOAN. THE AR H AS REPEATED THE ARGUMENTS AS WERE SUBMITTED BEFORE THE CIT(A) DURING QUANTUM APPEAL. DURING THE PRESENT PROCEEDINGS NOTHING HAS BEEN BROUGHT ON RECORD TO FULLY EXPLAIN THE SOU RCE OF REPAYMENT OF LOAN OF RS. 3,80,127/-. THE PART OF THE LOAN REPAYMENT STILL REMAINS UNEXPL AINED. THIS IS NOT A CASE OF ESTIMATION BY THE CIT(A), RATHER THE CIT(A) HAS GIVEN ALLOWANCE O F THE INCOME DECLARED BY THE ASSESSEE AND THE ADDITION MADE BY THE AO HAS BEEN RESTRICTED TO RS. 1,00,000/- ALTHOUGH THE ASSESSEE HAS EXPLAINED ONLY THE AMOUNT OF RS. 2,55,152/- OUT OF TOTAL REPAYMENT OF LOAN RS.3,80,127/-. UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE AO WAS RIGHT IN LEVING THE PENALTY U/S. 271(1)(C) AND THE ARGUMENTS OF THE AR ARE NOT FOUND ACCEPTABLE. THE PENALTY IMPOSED IS THEREFORE, IS CONFIRMED. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. [EMPHASIS, OURS] ITA NO. 524/ASR/2017 (AY 2009-10) SURINDER PAL GANDHI V. DY. CIT 3 3. BEFORE US, THE THRUST OF THE ASSESSEES CASE WAS THAT NO PENALTY COULD BE LEVIED ON ESTIMATE BASIS. THE ASSESSEE HAD WITHDRAW ALS, WHICH COULD BE REGARDED AS TOWARD THE REPAYMENT OF THE LOAN, WITH NONE OF T HE REVENUE AUTHORITIES RECORDING A FINDING QUA THE HOUSEHOLD WITHDRAWALS, ON ACCOUNT OF WHICH ONL Y THE ASSESSEE HAD NOT BEEN ALLOWED FULL RELIEF IN THE QU ANTUM PROCEEDINGS. THE ASSESSEE WAS CONSTRAINED FOR WANT OF BOOKS OF ACCOUNT SEIZ ED BY THE DEPARTMENT, TO FURNISH THE RELEVANT DETAILS. THE LD. CIT-DR WOULD, ON THE OTHER HAND, RELY ON THE ORDERS BY THE REVENUE AUTHORITIES, FURTHER STATING THAT THE ASSESSEES CASE THROUGHOUT, I.E., BOTH IN THE QUANTUM AS WELL AS TH E PENALTY PROCEEDINGS, HAS BEEN WHOLLY UNSUBSTANTIATED, WITH HE BEING ALREADY ALLOW ED FULL CREDIT FOR THE INCOME DISCLOSED. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 WE THINK THAT WHATEVER THE POSITION MIGHT HAVE BEEN, IT IS, TAKING FACTS AND CIRCUMSTANCES OF THE CASE INTO ACCOUNT, TOO LATE IN THE DAY FOR THE ASSESSEE TO PLEAD THE ABSENCE OF THE BOOKS. THE SAME, RATHER, OUGHT T O HAVE BEEN CALLED FOR AS FAR BACK AS IN OCTOBER, 2010, TO ENABLE THE ASSESSEE T O FILE HIS RETURN OF INCOME AND, IN ANY CASE, DURING THE ASSESSMENT PROCEEDINGS, SO AS TO PRESENT HIS CASE IN ASSESSMENT, WHILE THE INSTANT PROCEEDINGS ARE THE S ECOND APPELLATE STAGE IN THE PENALTY PROCEEDINGS. NOTHING PREVENTED THE ASSESSEE FROM SEEKING THE COPIES OF THE RELEVANT MATERIAL FROM THE REVENUE, FOR WHICH THE S AID MATERIAL IN FACT BECOMES LARGELY IRRELEVANT AFTER THE CONCLUSION OF THE ASSE SSMENT PROCEEDINGS. IN FACT, NO PLEADING TOWARD THE SAME, MUCH LESS AN APPLICATION FOR THE SAME BEFORE THE REVENUE, HAS BEEN BROUGHT TO OUR NOTICE FOR US TO C ONSIDER THE SAME OR ITS IMPLICATION, AS FOR A SET ASIDE TO ENABLE THE ASSES SEE A PROPER OPPORTUNITY TO PLEAD HIS CASE WITH REFERENCE THERETO; THE ASSESSEE, BY O WN ADMISSION, HAVING ACCEPTED ADJUDICATION IN THE QUANTUM. NO IMPROVEMENT IN THI S RESPECT ALSO ATTENDS THE ITA NO. 524/ASR/2017 (AY 2009-10) SURINDER PAL GANDHI V. DY. CIT 4 ASSESSEES CASE EVEN IN THE PENALTY PROCEEDINGS. AL LUDING TO NON-ACCESS TO THE BOOKS OF ACCOUNT IS THUS OF NO CONSEQUENCE, IF NOT ALSO MISCHIEVOUS. 4.2 COMING TO THE MERITS OF THE CASE, THE ASSESSEE HAS, AS OBSERVED BY THE LD. CIT(A), BEEN ALREADY ALLOWED FULL CREDIT, THE REPAY MENT OF THE LOAN BEING AT RS.3,80,187/-, SO THAT THE ASSESSEE HAS BEEN IN FAC T ALLOWED A CREDIT OF RS.2.80 LACS AGAINST THE BUSINESS INCOME OF RS.2.55 LACS ! THE ASSESSEES RAISING THE CONTENTION QUA THE HOUSEHOLD WITHDRAWALS IS THUS WHOLLY INAPPROPR IATE I.E., WITHOUT HIS SHOWING THAT THE REPAYMENT WAS IN FACT AT RS.1.85 L ACS, AS CONTENDED BEFORE US, AND THUS PROPERLY CONTRADICTING THE IMPUGNED ORDER. THE SAME, IN FACT, COULD EASILY BE ON THE BASIS OF THE SAID LOAN ACCOUNT. IN FACT, EVE N CONSIDERING A REPAYMENT OF RS.1.85 LACS, WHICH WOULD, AS AFORE-STATED, NEED TO BE SHOWN, THE ASSESSEES CASE IS OF NO MOMENT IN THE ABSENCE OF HIS MAKING OUT A CAS E QUA THE HOUSEHOLD WITHDRAWALS BEFORE THE REVENUE AUTHORITIES AND, IN FACT, EVEN BEFORE US. THERE IS NO CONTENTION AS TO THE ACTUAL AMOUNT OF WITHDRAWAL S, ONLY WHICH COULD EXPLAIN THE REPAYMENT OF LOAN, WHICH IS THROUGHOUT THE YEAR. TH E MATTER HAS TO BE DECIDED ON THE BASIS OF PROVED FACTS AND, RATHER, IT IS THE AS SESSEES CASE, AND NOT OF THE REVENUE, THAT RESTS ON PRESUMPTIONS. FURTHER, EVEN ASSUMING A COMPLETE WITHDRAWAL OF BUSINESS INCOME (I.E., PRIOR TO THE D ATE/S OF REPAYMENT/S), AS WELL AS A REPAYMENT AT RS. 1,85,000, BOTH UNPROVED, WOULD, GI VEN THE ADDITION OF RS. 1 LAC, IMPLY AN EXPLAINED CREDIT OF RS.85,000/- AND A HOUS EHOLD WITHDRAWAL OF RS.1.70 LACS, WHICH IS FAIRLY REASONABLE. CONSIDERED EITHER WAY, THE ASSESSEES CASE IS WITHOUT SUBSTANCE. 4.3 THE OTHER CONTENTION OF THE PENALTY WORKING TO RS.10,980/- I.E., AS AGAINST AT RS.42,000/- BY THE AO, AS STATED IN THE GROUNDS OF APPEAL, IS, AGAIN, LARGELY INCONSEQUENTIAL. THE SAME IS A MATTER OF CALCULATIO N, FOR WHICH THE ASSESSEE OUGHT TO HAVE MOVED THE AO U/S. 154. IN FACT, THE CALCULA TION AT 100% OF THE TAX SOUGHT ITA NO. 524/ASR/2017 (AY 2009-10) SURINDER PAL GANDHI V. DY. CIT 5 TO BE EVADED, WORKS TO RS.40,675/- (REFER PG. 3 OF PENALTY ORDER), AND WHICH AGREES WITH THE CALCULATION IN-AS-MUCH AS THE BASIS OF THE TWO IS DIFFERENT, I.E., RS.3.80 LACS BY THE AO AND RS.1.0 LAC BY THE ASSESSEE. CLEA RLY, THE PENALTY IMPOSED HAS BEEN AT A LITTLE OVER 100% OF THE TAX SOUGHT TO BE EVADED. 4.4 IN VIEW OF THE FOREGOING, WE CONSIDER IT APPROP RIATE TO RESTRICT THE SAME TO 100% OF THE TAX SOUGHT TO BE EVADED, WHICH STANDS W ORKED OUT BY THE ASSESSEE AT RS.10,980/-. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 10, 2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 10.09.2018 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: SURINDER PAL GANDHI, BHATTI COLONY, CHANDIGARH ROAD, NAWANSHAHAR (2) THE RESPONDENT: DEPUTY COMMISSIONER OF INCO ME TAX, CENTRAL CIRCLE-II, JALANDHAR (3) THE CIT(APPEALS)-5, LUDHIANA (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDE R