V.G.Vasanthamani, Coimbatore V. ACIT, Coimbatore

ITA 548/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6155 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Reasonable cause
• Section: 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NOS.546, 547, 548, 549 & 550/MDS/2017 / ASSESSMENT YEARS : 2007-08, 2008-09, 2009-10, 201 0-11 & 2011-2012. SMT. V.G. VASANTHAMANI, 2/182, KUMARAPURAM, NARASIMHANACIKENPALAYAM, COIMBATORE 641 017. [PAN ADJPV1013C] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2, COIMBATORE. ./I.T.A. NOS.551, 552, 553, 554 & 555/MDS/2017. / ASSESSMENT YEARS : 2007-08, 2008-09, 2009-10, 201 0-11 & 2011-2012. V.G. VASANTHA MANI, REPRESENTED FOR V.P. VENUGOPAL (LATE) 2/182, KUMARAPURAM, NARASIMHANACIKENPALAYAM, COIMBATORE 641 017. [PAN ABSPV6371Q] VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2, COIMBATORE. ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI. G. RAMASAMY, FCA. /RESPONDENT BY : SHRI. A.R.V. SREENIVASAN, JCIT /DATE OF HEARING : 30.08.2017 ! /DATE OF PRONOUNCEMENT : 20.09.2017 ITA NOS. 546 TO 555/MDS/2017 :- 2 -: / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ASSESSEES THROUGH THESE APPEALS ASSAILS LEVY OF PE NALTY U/S. 271(1) (C) FOR THE IMPUGNED ASSESSMENT YEARS. 2. FACTS APROPOS ARE THAT ONE SHRI. V.P. VENUGOPAL WHO WAS DOING A REAL ESTATE BUSINESS WAS SUBJECTED TO A SUR VEY U/S.133 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 06.0 1.2011. IT SEEMS DURING THE COURSE OF SEARCH VARIOUS DOCUMENTS REGAR DING TRANSACTIONS IN IMMOVABLE PROPERTY IN THE NAME OF SHRI. V.P. VEN UGOPAL AS WELL AS HIS WIFE SMT. VASANTHAMANI WERE FOUND. ACCORDINGLY, NOTICES U/S. 148 OF THE ACT WERE ISSUED TO BOTH SHRI. V.P. VENUGOPAL AND SMT. VASANTHAMANI FOR THE IMPUGNED ASSESSMENT YEARS. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, IT SEEMS SHRI. V.P. VENU GOPAL EXPIRED AND WAS LATER REPRESENTED BY HIS LEGAL HEIR SMT. V.G. V ASANTHAMANI. ASSESSEES LD. AUTHORISED REPRESENTATIVE FILED BANK STATEMENTS, PROFIT AND LOSS ACCOUNT AND OTHER DETAILS FOR EACH OF THE IMPUGNED ASSESSMENT YEARS. LD. ASSESSING OFFICER THEREAFTER COMPLETED ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEARS, FOR B OTH THE ASSESSEES, BY MAKING ADDITION FOR SUNDRY CREDITORS SHOWN IN THE ACCOUNTS. AS PER LD. ASSESSING OFFICER NO EVIDENC E WAS PRODUCED BY ITA NOS. 546 TO 555/MDS/2017 :- 3 -: THE ASSESSEES IN SUPPORT OF THE AMOUNT SHOWN AS SU NDRY CREDITORS. THE ADDITIONS MADE FOR THE IMPUGNED ASSESSMENT YEAR S WERE AS UNDER;- V.G. VASANTHAMANI. ASSESSMENT YEAR AMOUNT ADDED 2007-08 3,05,809 2008-09 2,55,002 2009-10 9,17,744 2010-11 33,12,554 2011-12 38,52,491 LATE V.P. VENUGOPAL REPRESENTED BY LEGAL HEIR SMT. V.G. VASANTHAMANI. ASSESSMENT YEAR AMOUNT ADDED 2007-08 1,92,822 2008-09 2,46,458 2009-10 5,10,720 2010-11 4,49,880 2011-12 9,51,210 3. THEREAFTER PROCEEDINGS, WERE INITIATED FOR LEVY OF PENALTY U/S. 271 (1) ( C) OF THE ACT BY ISSUING NOTICES U/S . 274 R.W.S 271 OF THE ACT. REPLY OF SMT. V.G. VASANTHAMANI WAS THAT HER HUSBAND LATE V.P. VENUGOPAL WAS DOING REAL ESTATE BUSINESS AND SHE W AS NOT AWARE OF HIS BUSINESS TRANSACTIONS. ACCORDING TO HER, HE WAS UNWELL FOR THREE YEARS SUFFERING FROM HEPATITIS C, AND HAD FINALL Y PASSED AWAY ON 04.06.2013. ACCORDING TO HER, THERE WAS NO INTENTI ON TO CONCEAL ANY INCOME OR TO FURNISH ANY INACCURATE PARTICULARS. H OWEVER, LD. ITA NOS. 546 TO 555/MDS/2017 :- 4 -: ASSESSING OFFICER WAS NOT IMPRESSED BY THE ABOVE AR GUMENTS. ACCORDING TO HIM, LATE V.P. VENUGOPAL AND SMT. V.G . VASANTHAMANI WERE REAPING HUGE PROFITS IN REAL ESTATE BUSINESS A ND THERE WERE ON- MONEY TRANSACTIONS WHICH WERE NEVER RECORDED IN T HE BOOKS. FURTHER, ACCORDING TO HIM, ASSESSEE HAD FAILED TO P ROVIDE EVIDENCE FOR SUNDRY CREDITORS. HE HELD THAT ASSESSEE HAD FURNIS HED INACCURATE PARTICULARS OF INCOME, FOR THE BALANCES SHOWN AS SUNDRY CREDITORS FOR IMPUGNED ASSESSMENT YEARS. PENALTY WAS LEVIED AT THE MINIMUM LEVEL OF 100% OF TAX SOUGHT TO BE EVADED. 4. AGGRIEVED, ASSESSEES MOVED IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). ARGUMENT OF SMT. V.G. VASANTHAMANI BEFORE THE LD.CIT(A) WAS THAT SHE WAS NOT INVOLVED IN THE BUSINESS WHICH WAS BEING DONE BY HER LATE HUSB AND. ACCORDING TO HER, LD. ASSESSING OFFICER HAD FAILED TO GIVE A CORRECT FINDING AS TO WHO HAD CARRIED ON THE BUSINESS. HOWEVER, LD. COM MISSIONER OF INCOME TAX (APPEALS) WAS NOT IMPRESSED BY THE ARGUM ENTS. ACCORDING TO HIM, ASSESSEES CHOSE TO WORK OUT A PRO FIT AND DECLARE THEIR INCOME, ONLY WHEN NOTICES WERE ISSUED U/S. 14 8 OF THE ACT. LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT BUT FOR THE SURVEY, ASSESSEES WOULD NOT HAVE FILED RETURNS AT ALL. HE CONFIRMED THE ORDERS LEVYING PENALTY. ITA NOS. 546 TO 555/MDS/2017 :- 5 -: 5. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE STRONG LY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBMI TTED THAT THERE WAS NO CLEAR FINDING AS TO WHY THE PENALTY WAS LEVIE D. ACCORDING TO HIM, ASSESSEE SMT. V.G. VASANTHAMANI WAS NOT INVOLVED I N THE BUSINESS CARRIED ON BY LATE SHRI. V.P. VENUGOPAL AT ALL. FU RTHER, AS PER LD. AUTHORISED REPRESENTATIVE EXPLANATION OFFERED BY T HE SMT. V.G. VASANTHAMANI WAS NEVER FOUND TO BE INCORRECT. T HE ADDITION AS PER THE LD. AUTHORISED REPRESENTATIVE WAS ONLY FOR SUN DRY CREDITORS WHICH AROSE DURING THE ORDINARY COURSE OF BUSINESS. ASSE SSEES FAILURE TO PROVE THE SUNDRY CREDITORS, WOULD NOT AS PER LD. AU THORISED REPRESENTATIVE MEAN THAT THE CLAIM ITSELF WAS WRON G. IN ANY CASE, ACCORDING TO HIM, NOTICES ISSUED TO HIM U/S. 271 ( 1) (C) R.W.S. 274 OF THE ACT WERE VAGUE AND DID NOT SPELL OUT THE FAULT OF THE ASSESSEE. ACCORDING TO HIM, BY VIRTUE OF JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF C IT VS. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 A VAGUE NOTICE WILL INVALIDATE THE PENAL PROCEEDI NGS. 6. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTING THE ORDERS OF THE LOWER AUTHORITIES SUBM ITTED THAT CO- ORDINATE BENCH IN THE CASE OF SHRI. RAMADURAI RAVI CHANDRAN VS. ACIT (IN ITA NO. 2673/MDS/2016, DATED 03.05.2017) HAD HE LD THAT PENALTY ORDERS COULD NOT BE INVALIDATED FOR A DEFECT IN NO TICE ISSUED U/S. ITA NOS. 546 TO 555/MDS/2017 :- 6 -: 274 R.W.S 271 OF THE ACT. FURTHER, ACCORDING TO HIM , THERE WAS CLEAR FAILURE ON THE PART OF THE ASSESSEES TO RETURN THE IR INCOME TRULY AND CORRECTLY. AS PER LD. DEPARTMENTAL REPRESENTATIVE , THE PENALTY WAS RIGHTLY LEVIED ON THE ASSESSEES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. THE ADDITIONS WHIC H WERE SUBJECTED TO THE PENAL PROCEEDINGS WERE SUNDRY CREDITORS APPEARI NG AT THE END OF THE RELEVANT PREVIOUS YEARS, IN THE ACCOUNTS OF THE ASSESSEES. LD. COMMISSIONER OF INCOME TAX (APPEALS), AT PARA 4.5 O F HIS ORDER HAS GIVEN A CLEAR FINDING THAT SUCH BALANCE OUTSTANDING AGAINST SUNDRY CREDITORS AROSE ON ACCOUNT OF CERTAIN PURCHASE CLAI MED TO HAVE BEEN MADE OR FOR AVAILING CERTAIN SERVICES FOR WHICH CH ARGES HAD TO BE PAID. IT MAY BE TRUE THAT ASSESSEE WAS NOT BE ABLE TO PRO VE SUNDRY CREDITORS BY PRODUCING CONFIRMATIONS. HOWEVER, ONC E IT IS ACCEPTED THAT SUNDRY CREDITORS AROSE ON ACCOUNT OF TRADING T RANSACTIONS OF THE ASSESSEE, WE CANNOT SAY THAT THERE WAS CONCEALMENT OF ANY PARTICULARS DONE BY THE ASSESSEE. THERE IS NO FIND ING BY THE LOWER AUTHORITIES THAT SUNDRY CREDITORS SHOWN BY THE ASS ESSEES WERE NONEXISTENT. LOWER AUTHORITIES HAD DISBELIEVED THE SUNDRY CREDITORS ONLY FOR A REASON THAT ASSESSEE WAS UNABLE TO PRODU CE EVIDENCE IN ITA NOS. 546 TO 555/MDS/2017 :- 7 -: SUPPORT. THAT APART, NOTICES ISSUED BY THE LD. ASS ESSING OFFICER INITIATING THE PENAL PROCEEDINGS READ AS UNDER:- WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FO R THE ASSESSMENT YEAR 2011-12, IT APPEARS TO ME THAT YOU: - * HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDER SECTION 22(1)/22(2)/34 OF THE IN DIAN INCOME TAX ACT, 1922 OR WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139(1) OR BY A NOTICE GIVEN U NDER SECTION 139(2)/148 OF THE INCOME TAX ACT, 1961, NO. DATED OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND THE MANNER REQUIRED BY THE SAI D SECTION 139(1) OR BY SUCH NOTICE. * HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH A NOTICE UNDER SECTION 22(4)/23(2) OF THE INDIAN INCO ME TAX ACT, 1922 OR UNDER SECTION 142(1)/143(2) OF THE INC OME TAX ACT, 1961. HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FU RNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11. 00 AM ON 08.04.2014 AND SHOW CAUSE WHY AN ORDER IMPOSI NG A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 2 71 OF THE INCOME TAX ACT, 1961. IF YOU DO NOT WISH TO AVA IL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERS ON OR THROUGH AUTHORISED REPRESENTATIVE, YOU MAY SHOW CAU SE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CO NSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271. IT DOES NOT SPECIFICALLY STATE WHAT WAS THE REASO N WHY LD. ASSESSING OFFICER INITIATED THE PENALTY U/S. 271 (1) ( C) OF THE ACT. HONBLE ITA NOS. 546 TO 555/MDS/2017 :- 8 -: KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS HELD THAT A VAGUE NOTICE WILL INVALIDATE PENAL TY PROCEEDINGS. NO DOUBT THE CO-ORDINATE BENCH IN THE CASE OF SHRI. RAMADURAI RAVICHANDRAN (SUPRA) HAD HELD THAT FAILU RE TO STRIKE OFF THE COLUMNS FROM THE PRINTED NOTICE WOULD NOT PERS E INVALIDATE THE NOTICE. HOWEVER, IN THE SAID CASE, PENALTY WAS IMP OSED BOTH FOR FURNISHING INACCURATE PARTICULARS AS WELL AS CONCEA LMENT OF INCOME. THERE IS NO SUCH CONCLUSION DRAWN BY THE LD. ASSES SING OFFICER IN THE IMPUGNED ORDERS BEFORE US. AS A RESULT, WE HAVE NO HESITATION TO DELETE THE PENALTY LEVIED ON THE ASSESSEES FOR THE IMPUGNED ASSESSMENT YEARS. 8. IN THE RESULT, THE APPEALS OF THE ASSESSEES STAND ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 20TH DAY OF SEP TEMBER, 2017, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 20TH SEPTEMBER, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF