SHRI DURGA PRASAD YADAV, Jaipur V. ITO, Alwar

ITA 550/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54267 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-11-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 01-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Difference of opinion
• Section: 271(1)(c); 143(3); 143(1); 274

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L. KALRA) ITA NO.550/JP/2011 ASSESSMENT YEAR : 2003-2004 SH. DURGA PRASAD YADAV VS. INCOME TAX OFFICER, HUF, VILLAGE ULAHERI WARD-BEHROR, MUNDAWAR, ALWAR. ALWAR. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE (ADJ. APPLICATION REJECTED) RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING: 16.11.2011 DATE OF PRONOUNCEMENT : 22.11.2011 ORDER PER SHRI N.L. KALRA, A.M. 1. THE ASSESSEE HAS FILED AN APPEAL AGAINST ORDER O F LD. CIT (A) ALWAR DATED 07.03.2011. THE GROUNDS OF APPEAL RAISED ARE AS UND ER: UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE P ENALTY ORDER PASSED BY ASSESSING OFFICER U/S 271(1)(C) IS BAD IN LAW AND V OID-AB-INTIO. THAT THE LEARNED C.I.T, (APPEALS) HAS ERRED IN CONF IRMING THE PENALTY OF RS.1,31,991/- LEVIED BY THE LEARNED ASSESSING OFFIC ER. 2. THE ASSESSEE FILED RETURN OF INCOME ON 30.1.2004 DECLARING TOTAL INCOME OF RS.11,237/- AND AGRICULTURAL INCOME RS.12,50,000/-. THE RETURN WAS PROCESSED U/S 143(1) ON THE DECLARED INCOME. THE ASSESSMENT WAS COMPLETE D U/S 143(3) OF THE ACT ON TOTAL INCOME OF RS.5,61,237/- + AGRICULTURAL INCOME RS.7, 00,000/- VIDE ASSESSMENT ORDER DT. 30.3.2006. THE FOLLOWING ADDITION WAS MADE TO THE R ETURNED INCOME. 2 OUT OF TOTAL AGRICULTURAL INCOME SHOWN BY THE ASSES SEE OF RS.12,50,000/-, RS.5,50,000/- HAS BEEN CONSIDERED AS INCOME FROM UN DISCLOSED INCOME AND AGRICULTURAL INCOME WAS TAKEN AT RS.7,00,000/-. THUS AN ADDITION OF RS.5,50,000/- WAS MADE. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), AL WAR. THE LD. CIT(A), VIDE HIS ORDER DATED 6.2.2007 CONSIDERED THE AGRICULTURAL IN COME OF THE ASSESSEE AT RS.7,92,220/- AND CONFIRMED THE ADDITION OF RS.4,57,776/-. THE ASSESSEE PREFERRED APPEAL BEFORE THE HONBLE IT AT, JAIPUR BENCH, JAIPUR AGAINST THE APPELLATE ORDER OF LD. CIT (A), ALWAR. THE HONBLE ITAT JAIPUR BENCH VIDE ITS ORDER DATED 31.7.2008 HAS DISMISSED THE APPEAL OF THE ASSESSEE. PENALTY PROCEEDINGS WERE INITIATED BY THE A.O. BY I SSUE OF NOTICE U/S 274 DATED 30.3.2006 FOR CONCEALMENT OR INCOME/FURNISHING INAC CURATE PARTICULARS OF INCOME. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY T HE A.O. THE ASSESSEE VIDE LETTER DATED 12.3.2009 SUBMITTED AS UNDER: THAT IN THE CASE THERE IS NO SPECIFIC INCOME WHICH WAS CONCEALED BY THE ASSESSEE. IN THE CASE OF CIT V/S K.R. CHINI KRISHANA CHETTY ( 2000) 246 ITR 21 (MAD) THE HONBLE COURT DECIDED THAT DEFINITE FINDI NGS ABOUT CONCEALMENT IS NECESSARY. THE MERE REVISION OF THE INCOME TO A HIGHER FIGURE BY THE ASSESSING AUTHORITY DOES NOT AUTOMATICALLY WARRANT OF AN INFE RENCE OF CONCEALMENT OF THE EXPENDITURE ON THE CONSTRUCTION. THAT WHERE ADDITION WAS MADE ON THE BASIS OF ESTIMA TE AND NOT ON ANY CONCRETE EVIDENCE OF CONCEALMENT OF OR FURNISHING O F INACCURATE PARTICULARS, LEVY OF PENALTY IS NOT JUSTIFIED. LIKE WISE THE ADDITION MADE ON ACCOUNT OF DIFFERENCE OF OPINION ABOUT ESTIMATE RAT ES OF INCOME AND EXPENDITURE WILL NOT JUSTIFY LEVY OF PENALTY-CIT V/ S RAVAIL SINGH & CO. 122 TAXMAN 831 (P&H). IN THE RECENT REPORTED CAS OF DILIP N. SHROFF V/S J CIT (2007) 161 TAXMAN 218 (SC) AND AN ANOTHER CASE T.ASHOK PAI V/S CIT (2 007) 161 TAXMAN 340 (SC) THE HONBLE SUPREME COURT OF INDIA DECIDED THAT ORDER IMPOSING 3 PENALTY IS QUASI-CRIMINAL IN NATURE AND, THUS, BURD EN LIES ON DEPARTMENT TOESTABKLISH THAT ASSESSEE HAD CONCEALED HIS INCOME . THE RELIANCE IS PLACED ON FOLLOWING DECISIONS ALSO:- GUJRAT VASWANI V/S ACIT (ITSSA NO.21/JP/06) SMT. BITOLI DEVI V/S ACIT (2007) 110 TTJ 735 (LUC K) CIT V/S RAHAMAN KHAN BIRBAL KHAN BADRUDDIN PARTY 240 ITR 778 (RAJ.) 4. THE A.O. OBSERVED THAT ADDITION HAS BEEN MADE BE CAUSE THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM WITH CORPORATIVE EVIDENCE. T HE ASSESSEE HAS TRIED TO GIVE COLOUR TO ITS UNDISCLOSED INCOME INTO AGRICULTURAL INCOME. AC CORDING TO THE A.O., THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF LD. CIT (A) AND IT MEANS THAT THE ASSESSEE HAS NOT SHOWN ITS INCOME CORRECTLY THE LD. A.O. RELIED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAGHUVIR SONI V/S ACIT 25 8 ITR 239 IN WHICH IT HAS BEEN HELD THAT PENALTY IS LIVABLE IF THE ASSESSEE FAILED TO F URNISH AN EXPLANATION OR OFFERED AN EXPLANATION WHICH IS FALSE OR THE ASSESSEE IS NOT A BLE TO SUBSTAINABLE IT. ACCORDINGLY THE A.O. IMPOSED PENALTY. 5. THE LD. CIT (A) HAS REFERRED TO THE DECISIONS RE LIED ON BY THE ASSESSEE BEFORE A.O. AND ALSO BEFORE HIM. AFTER REFERRING TO SUCH DECISI ONS, THE LD. CIT (A) CONFIRMED THE PENALTY AFTER OBSERVING AS UNDER: I HAVE CONSIDERED THE PENALTY ORDER AS WELL AS WRIT TEN SUBMISSION OF THE AR AND CASE RELIED UPON, THE LD. AO CONSIDERED THE CASE OF HONBLE RAJ. HIGH COURT WHERE THE FACTS WERE CASH OF RS.2.3 LAC WERE SEIZED BY THE CUSTOM AUTHORITY WHICH WAS ALLEGED TO BE TAKEN FROM THE LENDER WHO WERE CROSS EXAMINED BY THE A.O. AT THE TIME IMPOSITION O F PENALTY THE ASSESSEE DID NOT FURNISH ANY EXPLANATION AND ONLY RELIED ON THE EXPLANATION FILED AT THE TIME OF ASSESSEMENT WHICH WAS FOUND FALSE BY TH E CIT (A). THE CLAUSE A OF EXPLANATION 1 WAS APPLICABLE BUT CLAUSE B OF E XPLANATION 1 COMES INTO OPERATION WHERE THE ASSESSEE IS UNABLE IS SUBS TANTIATE THE EXPLANATION FURNISHED BY THE ASSESSEE IN RESPECT OF THE ADDITIO NS OR DISALLOWANCES OR ANY AMOUNT. THIS EXPLANATION FILED WAS TREATED CATE GORY OF EFFECT NOT PROVED RELEVANT TO A.Y. 1990-91. 4 IN CASE OF T.ASHOK PAI VS. CIT (2007) 161 TAXMAN 34 0 (SC), THE ASSESSEE HAD AUTHORIZED A LAW AGENCY DIVISION OF SYNDICATE B ANK TO FILED THE IT RETURNS. THE ASSESSEE FILED THE RETURN FOR AY 1985- 86 ON THE BASIS OF INCOME CALCULATED BY THE LAW AGENCY ON SALE PURCHAS E OF THE SHARES THROUGH BANK. THE ASSESSEE REVISED THE IT RETURNS T WICE WHICH HAS BEEN ACCEPTED BY THE AO BUT PENALTY U/S. 271(1)(C) WAS I MPOSED. THE HONBLE SC HAD DELETED THE PENALTY AS THERE WAS A LACK OF I NTENTION TO CONTRA-VINE OR EXISTENCE OF BONA-FIDE AND HELD PENALTY IMPOSED FOR BREACH OR CONTRAVENTION OF A COMMERCIAL STATUTE. IN CASE OF UNION OF INDIA DHARMENDRA TEXTILES PROCE SSORS AND OTHERS, HONBLE SC HAS HELD THAT WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING FOR CIVIL LIABILITIES AS IN THE CASE IN THE MATTER OF PROSECUTION U/S. 276C. IN THIS CASE THE ASSESSEE DID NOT HAVE ANY EVIDENCE PURCHASE OF FERTILIZER, SEEDS, LABOUR EVEN ELECTRICITY AND TRACTOR. HE HAD FILED THE IT RETURNS ON ESTIMATE BASIS AND CROP HAD BEEN SOLD ON CASH. THER EFORE, THE EXPLANATION OF THE ASSESSEE HAD NOT SUBSTANTIATED. THEREFORE, A O RIGHTLY IMPOSED PENALTY U/S. 271(1)(C) BUT IT IS HIGHER SIDE. THUS, IT IS RESTRICTED TO RS.1,31,991/-. THE ASSESSEE GETS RELIEF OF RS.18,00 9/-. 6. WE HAVE HEARD THE LD. D/R. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ESTIMATED THE PRODUCTION OF VARIOUS AGRICULTUR AL COMMODITIES ON THE BASIS OF DATA OBTAINED FROM DY. DIR (AGRICULTURED). ON THIS BASIS THE A.O. ESTIMATED THE AGRICULTURAL INCOME AFTER GIVING DEDUCTION OF 30% FOR EXPENSES A T RS.3,22,623/-. INCOME FROM PRODUCTION OF BY PRODUCTS LIKE CATTLE FEED AND FODD ER WAS ESTIMATED AT RS.2,17,224/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE FILED AFFIDAVIT TO CLAIM THAT AGRICULTURAL INCOME IN THE PRECEDING YEAR WAS SHOWN ON RECEIPT BASIS AND AGRICULTURAL PRODUCE OF THE EARLIER YEAR HAS ALSO BEE SOLD DURIN G THE YEAR. IT WILL BE USEFUL TO REPRODUCE THE FACTS GIVEN IN THE AFFIDAVIT AS MENTIONED IN TH E ASSESSMENT ORDER AND THE FINDING OF A.O. VIDE AFFIDAVIT SUBMITTED ALONGWITH SUBMISSION DATED 20.02.2006, ASSESSEE STATED THAT THE CROP GROWN IN F.Y. 2001-02 WERE NOT SOLD IN THE SAME YEAR BECAUSE OF LOWER RATES OF CROPS AND THESE WERE SOLD DURING THE YEAR UNDER 5 CONSIDERATION. ASSESSEE GAVE ARGUMENT IN SUPPORT IN CLAIM THAT HE HAS SHOWN INCOME OF RS.4,19,000/- ONLY IN A.Y. 2002-03 DUE TO THIS REASON ONLY. IT IS VERIFIABLE FROM RETURN OF INCOME THAT I N THE IMMEDIATE PRECEDING YEAR AGRICULTURE INCOME HAS BEEN SHOWN AT RS.4,10,0 00/-. ASSESSEE WAS HAVING EQUAL LAND HOLDING IN THAT YEAR ALSO, RABI C ROP GET READY IN THE MONTH OF MARCH/APRIL AND IT IS PRACTICE OF THE BIG FARMERS THAT THEY SELL THEIR CROPS WHEN THE PRICES SUITED TO THEM. AS PER DATA GATHERED FROM KRISHI UPAJ MANDI SAMITI, ALWAR, IT IS NOTICED THAT RATE OF MUSTARD CROPS WAS BETWEEN 1021/- TO 1091/- PER QNTL. DURING F.Y. 01-02 WHEREAS IT WAS BETWEEN RS.1551/- TO 1851/- DURING F.Y. 2002-03. HO WEVER, THE ASSESSEE HAS NOT SUBMITTED ANY DOCUMENTARY EVIDENCE IN SUPPO RT OF HIS CLAIM AND ALSO NOT MENTIONED THE QUANTUM OF VALUE OF CROPS SO LD IN NEXT YEAR I.E. THE YEAR UNDER CONSIDERATION, YET I FIND IT MOST FAIR A ND REASONABLE TO ADOPT INCOME OF RS.1 LAC FROM SALE OF OLD STOCK OF AGRICU LTURE PRODUCTS. ASSESSEE ALSO CLAIMED THROUGH AFFIDAVIT SUBMITTED O N 20.02.2006 THAT DURING F.Y. 2002-03 FIRE WOOD AND WOOD FOR USE OF F URNITURE AND CHHAL ( NKY )OF TREES, AMOUNTING TO RS.1,50,000/- WAS SOLD. NO EVIDENCE IN SUPPORT OF THIS CLAIM HAS BEEN FURNISHED BY THE ASS ESSEE, THOUGH CALLED SPECIFICALLY VIDE ORDER SHEET ENTRY DATED 20.02.200 6. IT WILL BE IN THE FITNESS OF THINGS THAT A CREDIT OF RS.50,000/- IS G IVEN TO THE ASSESSEE ON THIS COUNT. IN VIEW OF ABOVE DISCUSSION, TOTAL AGRICULTURE INCO ME IS COMPUTED AS UNDER:- S.NO. DESCRIPTION OF INCOME AMOUNT (RS.) 1 FROM SALE OF AGRICULTURAL CROPS 332635/- 2 FROM SALE OF BY-PRODUCTS 217224/- 3 FROM SALE OF OLD STOCK 100000/- 4 FROM SALE OF WOOD 50000/- 5 TOTAL INCOME 699859/- R/O 700000/- 7. THE ASSESSEE HAS GIVEN EXPLANATION AND WAS ABLE TO SUBSTANTIATE. IN THE IMMEDIATELY PRECEDING YEAR, THE AGRICULTURAL INCOME WAS SHOWN AT RS.4,19,000/- AS PART OF THE AGRICULTURAL PRODUCE WAS NOT SOLD. THE EXPLA NATION IS NOT FALSE. AGRICULTURAL INCOME ON THE BASIS OF PRODUCTION DURING THE YEAR W AS ESTIMATED BY A.O. AT RS.7,00,000/-, WHILE THE LD. CIT (A) ESTIMATED AT R S.7,92,220/-. THE A.O. HAS ACCEPTED THE CONTENTION BUT ESTIMATED THE RECEIPTS FROM CROP OF LAST YEAR AT RS.1,00,000/-. IT MEANS 6 EXPLANATION WAS NOT CONSIDERED FALSE. IT IS NOT UNN ATURAL FOR A PROGRESSIVE FARMER TO KEEP ITS PRODUCE SO AS TO SELL THE SAME AS AND WHEN PRIC ES ARE FAVORABLE. WE THEREFORE FEEL THAT LD. CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE PEN ALTY. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWE D. THE ORDER IS PRONOUNCED IN OPEN COURT ON 22.11.201 1 SD/- SD/- (R.K.GUPTA) (N.L.KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22.11.2011 *S.KUMAR* COPY FORWARDED TO:- 1. SHRI DURGA PRASAD YADAV (HUF), MUNDAWAR, ALWAR 2. INCOME TAX OFFICER, WARD-BEHROR, ALWAR. 3. THE CIT 4. THE CIT(A), 5. THE D/R, ITAT, JAIPUR 6. THE GUARD FILE IN ITA NO.550/JP/2011 BY ORDER SR. PRIVATE SECRETARY I.T.A.T., JAIPUR