Dr T.Ravi Kumar, Hyderabad V. ACIT, Nellore

ITA 568/HYD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6407 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-08-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 20-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL BABU KE
• Assessee Lawyers: S RAMA RAO
• Keywords: Income from undisclosed sources; Retraction
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMEBR ITA NO.177/HYD/10 : ASSTT. YE AR 2000-01 ITA NO.178/HYD/10 : ASSTT. YE AR 2001-02 ITA NO.179/HYD/10 : ASSTT. YE AR 2002-03 ITA NO.180/HYD/10 : ASSTT. YE AR 2003-04 ITA NO.181/HYD/10 : ASSTT. YE AR 2004-05 ITA NO.182/HYD/10 : ASSTT. YE AR 2005-06 ITA NO.567/HYD/10 : ASSTT. YE AR 1998-99 ITA NO.568/HYD/10 : ASSTT. YEA R 1999-2000 DR.T, RAVI KUMAR, NELLORE. ( PAN ABIPT 6661 M ) V/S. ASSTT. COMMISSIONER OF INCOME- TAX, CIRCLE-II, NELLORE. (APPELLANT) (RESPONDENT) AND ITA NO.278/HYD/10 : ASSTT. YE AR 2000-01 ITA NO.279/HYD/10 : ASSTT. YE AR 2001-02 ITA NO.280/HYD/10 : ASSTT. YE AR 2002-03 ITA NO.281/HYD/10 : ASSTT. YE AR 2003-04 ITA NO.282/HYD/10 : ASSTT. YE AR 2004-05 ITA NO.283/HYD/10 : ASSTT. YE AR 2005-06 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 1, NELLORE. V/S. DR.T, RAVI KUMAR, NELLORE. ( PAN ABIPT 6661 M ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.RAMA RAO DEPARTMENT BY : SHRI SUNIL BABU K.E. ITA NO177./HYD/10 AND 13 OTHERS DR.T, RAVI KUMAR, NELLORE. 2 O R D E R PER BENCH: THERE ARE FOURTEEN APPEALS IN ALL IN THIS BUNCH. THE Y ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A) IN THE CONTE XT OF PENALTIES IMPOSED UNDER S.271(1)(C) OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEARS 1998-99 TO 2005-06. WHILE ASSESSEE ALONE H AS FILED APPEALS FOR THE ASSESSMENT YEARS 1998-99 AND 1999-2000, T HERE ARE CROSS-APPEALS, VIZ. ONE BY THE ASSESSEE AND THE OTHER BY T HE REVENUE, FOR THE ASSESSMENT YEARS 2000-01 TO 2005-06. SINCE FACTS OF TH E CASE AND ISSUES INVOLVED IN ALL THESE APPEALS ARE COMMON, THESE APP EALS ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CON VENIENCE. ASSESSEE'S APPEALS: ITA NO.177/HYD/10 : ASSTT. YEAR 2000-01 ITA NO.178/HYD/10 : ASSTT. YEAR 2001-02 ITA NO.179/HYD/10 : ASSTT. YEAR 2002-03 ITA NO.180/HYD/10 : ASSTT. YEAR 2003-04 ITA NO.181/HYD/10 : ASSTT. YEAR 2004-05 ITA NO.182/HYD/10 : ASSTT. YEAR 2005-06 ITA NO.567/HYD/10 : ASSTT. YEAR 1998-99 ITA NO.568/HYD/10 : ASSTT. YEAR - 1 999-2000 2. IDENTICAL GROUNDS ARE RAISED BY THE ASSESSEE IN ALL TH ESE APPEALS. GROUND OF APPEAL NO.1 IS GENERAL AND NEEDS N O ADJUDICATION. GROUND OF APPEAL NO.2 OF THE ASSESSEE IN THESE APPEALS RE ADS AS FOLLOWS- 'THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE AMOUNT OF 15% OF THE DEPOSITS MADE INTO THE BANK ACCOUNT WOULD REPRESENT THE CONCEALED INCOME O F THE APPELLANT. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE DETAILED EXPLANATION S UBMITTED AND CANCELLED THE PENALTY LEVIED U/S. 271(1)(C) OF THE I.T. ACT.' 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THER E WAS A SEARCH ACTION AT THE RESIDENCE OF THE ASSESSEE AND HOSPITAL P REMISES ITA NO177./HYD/10 AND 13 OTHERS DR.T, RAVI KUMAR, NELLORE. 3 UNDER S.132 OF THE ACT ON 3.12.2004. DURING THE COUR SE OF SEARCH PROCEEDINGS, PAY-IN-SLIPS RELATING TO KARNATAKA BANK LI MITED NELLORE, WERE FOUND IN THE NAMES OF FOUR PERSONS, WHICH COULD NO T BE IDENTIFIED. HE SUBMITTED THAT THE ADDITIONS WERE MADE BY THE ASSESSIN G OFFICER IN THE ASSESSMENT OF THE ASSESSEE OF THE AGGREGATE OF ALL TH E AMOUNTS REPRESENTED BY THE PAY-IN-SLIPS RELATING TO KARNATAKA BANK LTD. IN THE NAMES OF THE FOUR PERSONS IN THE HANDS OF THE ASSESSEE ONL Y. THE ASSESSEE HAS RETRACTED FROM HIS INITIAL STATEMENT AND CONSEQU ENTLY NO AMOUNT WAS OFFERED AS INCOME ON ACCOUNT OF THESE PAY-IN- SLIPS IN THE RETURNS OF INCOME FILED AFTER THE SEARCH OPERATIONS. T HE ASSESSING OFFICER REJECTED THE RETRACTION MADE BY THE ASSESSING OFF ICER AND MADE THE ADDITION OF THE ENTIRE AMOUNTS REPRESENTED BY THE PAY-IN-SLIPS. THE TRIBUNAL, IN THE QUANTUM APPEALS, VIDE ITS ORDER DATE D 26.6.2009 ESTIMATED THE INCOME OF THE ASSESSEE OUT OF THE AMOUNTS M ENTIONED IN THE PAY-IN-SLIPS RELATING TO KARNATAKA BANK AT 15% OF THE TOTAL DEPOSITS AND THE ADDITIONS MADE WERE REDUCED ACCORDINGLY. IN T HE PENALTY APPEALS, THE CIT(A) HAS UPHELD THE LEVY OF PENALTY UN DER S.271(1)(C) OF THE ACT ON THE UNDISCLOSED INCOME WORKED OUT AT 15% OF THE DEPOSITS AS PER PAY-IN-SLIPS RELATING TO KARNATAKA BANK LTD, AND ALSO DIRECTED THE ASSESSING OFFICER TO REDUCE THE AMOUNTS OF PENALTY TO 100 % OF THE TAX SOUGHT TO BE EVADED AFTER GIVING EFFECT TO THE DIRECTI ONS OF THE TRIBUNAL, AND ACCORDINGLY PARTLY ALLOWED THE APPEALS OF THE ASSESSEE . THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE RELEVANT PARAS OF THE TRIBUNAL ORDER IN THE QUANTUM APPEALS OF THE ASSESSEE IN SUPPORT O F HIS SUBMISSIONS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO MATERIAL BROUGHT ON RECORD ON BEHALF OF THE REV ENUE TO SUGGEST THAT THE ADDITIONS SUSTAINED BY THE TRIBUNAL BY WAY OF ESTI MATION OF INCOME ACTUALLY BELONGS TO THE ASSESSEE AND NOT TO THE HOSPITAL, WHICH IS A SEPARATE CORPORATE ENTITY AND IN FACT, THE ASSESSEE HAS NO INDEPENDENT ITA NO177./HYD/10 AND 13 OTHERS DR.T, RAVI KUMAR, NELLORE. 4 MEDICAL PRACTICE OF HIS OWN AND WAS ONLY AN EMPLOYEE OF THE COMPANY RUNNING THE HOSPITAL. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS OPPOSE D THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMI TTED THAT BUT FOR THE SEARCH OPERATIONS, THE INCOME ADDED IN THE HANDS OF THE ASSESSEE WOULD HAVE ESCAPED ASSESSMENT AND THEREFORE THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURA TE PARTICULARS OF INCOME. HE SUBMITTED THAT THE DEPARTMENT HAS NOT ACCEPTE D THE TRIBUNAL ORDER IN THE QUANTUM PROCEEDINGS OF THE ASSESSEE, ESTIMATI NG THE INCOME OF THE ASSESSEE AT 15% OF THE TOTAL DEPOSITS MADE WITH TH E KARNATAKA BANK LTD. REPRESENTED BY THE PAY-IN-SLIPS FOUND AT T HE TIME OF SEARCH, AND HAS PREFERRED AN APPEAL TO THE HON'BLE HIGH COUR T. HE SUBMITTED THAT THE TRIBUNAL HAS NO WHERE HELD THAT THE AMOUNTS MENTIONED IN THE PAY-IN-SLIPS RELATING TO KARNATAKA BANK LTD. DOES NOT REPRESENT UNDISCLOSED INCOME OF THE ASSESSEE AND IT HAS MERELY REDUCED THE QUANTUM OF ADDITION RELATING THERETO. HE SUBMITTED T HAT THE RETRACTION OF THE ASSESSEE FROM HIS INITIAL STATEMENT CAME ABOUT EIGHT A ND HALF MONTHS AFTER THE INITIAL STATEMENT MADE BY THE ASSESSEE. HE REF ERRED TO THE RELEVANT PARAS OF THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) IN SUPPORT OF HIS SUBMISSION THAT THE AMOUNTS MENTIONED IN T HE PAY-IN-SLIPS RELATING TO KARNATAKA BANK IN FACT REPRESENTS THE UND ISCLOSED INCOME OF THE ASSESSEE FROM HIS MEDICAL PROFESSION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY AN D HAVE PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) . WE HAVE ALSO PERUSED THE COPIES OF THE STATEMENTS MADE BY THE ASSESSEE, HIS WIFE RECORDED BY THE DEPARTMENT. WE FIND THAT THE ASSESSEE COU LD NOT IDENTIFY THE FOUR PERSONS WHOSE NAME WAS RECORDED IN THE PAY-IN-S LIPS RELATING TO THE KARNATAKA BANK FOUND DURING THE COURSE OF SEARCH. A SSESSEE HAS ITA NO177./HYD/10 AND 13 OTHERS DR.T, RAVI KUMAR, NELLORE. 5 ADMITTED THAT HE HAS OPENED THESE S.B. ACCOUNTS IN THE NAME OF NON- EXISTENT PERSONS AND THE TRANSACTIONS IN THESE ACCOUNTS WE RE DEPOSITS OF HIS UNACCOUNTED INCOME. THE RETRACTION OF THE ASSESSEE FRO M THE ORIGINAL STATEMENT CAME NEARLY EIGHT-AND-HALF MONTHS AFTER THE ORIGINAL STATEMENT WAS RECORDED BY THE DEPARTMENT. THE TRIBUNAL IN THE Q UANTUM APPEALS OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS, CONSIDERED TH E ENTIRE GAMUT OF THE CASE OF THE ASSESSEE AND HAS CONCLUDED THAT THE ASSESSEE'S ONLY SOURCE OF INCOME IS HIS MEDICAL PROFESSION, BESIDES AGR ICULTURAL INCOME RECEIVED FROM THE HUF. THE TRIBUNAL CONCLUDED TH AT IN THE ABSENCE OF ANY OTHER EVIDENCE OR MATERIAL TO SHOW THAT THE ASSESSEE RECEIVED INCOME FROM ANY OTHER SOURCE, PRESUMPTION IS TH AT THE MONEY GENERATED IN THE MEDICAL PROFESSION FROM THE HOSPITAL M IGHT HAVE BEEN DEPOSITED IN DIFFERENT NAMES. THE TRIBUNAL AFTER CONSI DERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, ESTIMATED THE INCOME REFLECT ED BY THE PAY-IN-SLIPS RELATING TO KARNATAKA BANK LTD, AT 15 % OF THE TOTAL DEPOSITS MADE IN THAT BANK ACCOUNT. FACTS OF THE CASE MAY JUSTIF Y THE ADDITIONS UPHELD AT 15% OF THE TOTAL DEPOSITS MADE IN THE S.B . ACCOUNT WITH KARNATAKA BANK LTD., AS INCOME OF THE ASSESSEE, BUT IN OU R CONSIDERED VIEW THAT WOULD NOT BE SUFFICIENT TO HOLD THE ADDITIO NS MADE IN THAT BEHALF REPRESENT THE CONCEALED INCOME OF THE ASSESSEE. WE FIND TH AT THE ASSESSEE HAS RETRACTED FROM HIS ORIGINAL STATEMENT, AFTER A GAP OF EIGHT AND HALF MONTHS AFTER THE RECORDING OF THE ORIGINAL ST ATEMENT BY THE DEPARTMENT. ASSESSEE ADMITTEDLY IS AN EMPLOYEE OF THE COMPANY RUNNING THE HOSPITAL AND THERE IS NO MATERIAL BROUGHT ON RECORD BY THE DEPARTMENT TO SUGGEST THAT THE ASSESSEE HAS SOME INDEPENDE NT PRACTICE OF HIS OWN; AND THAT THE AMOUNTS MENTIONED IN THE PA Y-IN-SLIPS RELATING TO KARNATAKA BANK LTD. WERE THE RECEIPTS RELATING TO THE ASSESSEE AND WERE NOT THE RECEIPTS OF THE COMPANY RUNNING THE HOSPIT AL. FOR THE IMPOSITION OF PENALTY, IT HAS TO BE PROVED BEYOND REA SONABLE DOUBT THAT THE DISPUTED INCOME REPRESENTS THE CONCEALED INCOME OF T HE ASSESSEE. ITA NO177./HYD/10 AND 13 OTHERS DR.T, RAVI KUMAR, NELLORE. 6 THE ADDITIONS IN THE QUANTUM APPEALS OF THE ASSESSEE COUL D BE SUSTAINED ON THE PREDOMINANCE OF THE PROBABILITIES. BUT FOR IMP OSING PENALTY FOR CONCEALMENT OF INCOME OR FOR FILING INACCURATE PARTICULA RS OF INCOME UNDER S.271(1)(C), MERE PROBABILITY OF THE INCOME RELATING TO THE ASSESSEE IS NOT SUFFICIENT AND IT HAS TO BE ESTABLISHED THAT THE DISPUTED INCOME BELONGS TO THE ASSESSEE. IN THE ABSENCE OF ANY SUCH MATERIA L, WE HOLD THAT IT COULD NOT BE PROVED IN THIS CASE BY THE DEPAR TMENT THAT THE ADDITIONS PARTLY SUSTAINED BY THE TRIBUNAL BY ESTIMATIN G THE ASSESSEE'S INCOME AT 15% OF THE TOTAL DEPOSITS IN THE KARNATAKA BANK LTD. REPRESENTED BY THE PAY-IN-SLIPS FOUND AT THE TIME OF SEARCH REPRESENT THE CONCEALED INCOME OF THE ASSESSEE. ACCORDINGLY, WE HOLD TH AT IT IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER S.271(1)(C ) OF THE ACT ON THE ASSESSEE. ACCORDINGLY, THE PENALTIES IMPOSED UNDER S.271(1)(C) ON THE ASSESSEE FOR ALL THESE ASSESSMENT YEARS ARE CANCELLED AND THE GROU NDS OF THE ASSESSEE IN THESE APPEALS ARE ALLOWED. REVENUE'S APPEALS ITA NO.278/HYD/10 : ASSTT. YEAR 2000-01 ITA NO.279/HYD/10 : ASSTT. YEAR 2001-02 ITA NO.280/HYD/10 : ASSTT. YEAR 2002-03 ITA NO.281/HYD/10 : ASSTT. YEAR 2003-04 ITA NO.282/HYD/10 : ASSTT. YEAR 2004-05 ITA NO.283/HYD/10 : ASSTT. YEAR 2005-06 6. IDENTICAL GROUNDS ARE RAISED BY THE REVENUE IN THE SE APPEALS. GROUND NO.1 IS GENERAL IN NATURE AND NEEDS NO SEPARATE ADJUDICATION. GROUNDS OF APPEAL NO.2 AND 3 ARE AS UNDER- '2. THE CIT(A) ERRED IN GIVING RELIEF TO THE ASSESS EE BY GIVING COGNIZANCE ONLY TO THE ORDER OF THE HON'BLE ITAT IN ASSESSEE'S CASE WHICH IS FURTHER APPEALED AND YET TO BE DECIDED BY THE HON'BLE HIGH COURT WITHOUT GOING INT O THE FACTS OF THE CASE AND WITHOUT MAKING ANY SPECIFIC A ND INDIVIDUAL COMMENTS ON THE ISSUES DEALT IN. ITA NO177./HYD/10 AND 13 OTHERS DR.T, RAVI KUMAR, NELLORE. 7 3. THE LD. CIT(A) ERRED IN ALLOWING RELIEF TO THE A SSESSEE BY TOTALLY IGNORING THE ORDER OF THE CIT(A). TIRUPAT I IN ASSESSEE'S CASE FOR THE SAME YEAR WHEREIN THE ASSES SEE'S APPEAL ON THE SAME ISSUES FILED AGAINST THE ORDER U /S. 143(3) R.W.S.153A WAS DISMISSED BY THE LEARNED LD. CIT(A) BY ADVANCING PROPER REASONING AND BY MAKING INDIVID UAL AND SPECIFIC COMMENTS ON EACH ISSUE.' 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN QUANTUM AP PEALS IN RESTRICTING THE ADDITION TO 15% OF THE AMOUNT OF DEPO SITS MADE IN KARNATAKA BANK LTD. THROUGH PAY-IN-SLIPS FOUND AT THE TIME OF SEARCH, WAS NOT ACCEPTED BY THE DEPARTMENT AND THE DEPARTMENT HAS PREFERRED FURTHER APPEAL AGAINST THE ORDER OF THE TRIBUNAL TO THE HON'BLE HIGH COURT AND THEREFORE, THE PENALTIES UNDER S.271(1)(C) SHOULD HAVE BEEN SUSTAINED BY THE CIT(A) ON THE ENTIRE AMOUNTS OF ADDIT IONS MADE BY THE ASSESSING OFFICER FOR THESE YEARS. HE SUBMITTED THAT THE TR IBUNAL HAS GIVEN A FINDING IN THE QUANTUM APPEALS OF THE ASSESSEE T HAT THE AMOUNTS MENTIONED IN THE PAY-IN-SLIPS REPRESENTS THE UNDISCLOSE D INCOME OF THE ASSESSEE. HE RELIED ON THE ORDERS OF THE ASSESSING OFFICER A ND THE CIT(A). 8. THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. HE SUBMITTED THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER S.271(1)(C) OF THE ACT AND THE REVENUE'S APPEALS ARE DEVOID OF MERIT, AS THE CIT(A) HAS MERELY DIRECTED TO RESTRICT THE QUANTUM OF PENALTY TO TAX SOUG HT TO BE EVADED AFTER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL IN QUANTUM PROCEEDINGS. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND T HAT IN VIEW OF OUR DECISION IN THE ASSESSEE'S APPEALS FOR THESE VER Y ASSESSMENT YEARS, HOLDING THAT NO PENALTY UNDER S.271(1)(C) WAS L EVIABLE ON THE ITA NO177./HYD/10 AND 13 OTHERS DR.T, RAVI KUMAR, NELLORE. 8 ASSESSEE IN THESE CASES, FOR THE REASONS DISCUSSED AT LENGTH IN PARA 5 OF THIS ORDER IN THAT CONTEXT, WE HOLD THAT THERE IS NO MERIT IN THE PRESENT APPEALS PREFERRED BY THE REVENUE. EVEN OTHERWISE, THE CIT(A) HAS MERELY DIRECTED THE ASSESSING OFFICER TO REDUCE THE QUANTUM OF P ENALTIES IMPOSED TO THE AMOUNTS OF TAX SOUGHT TO BE EVADED AFTE R GIVING EFFECT TO THE DIRECTIONS OF THE TRIBUNAL IN THE QUANTUM APPEALS OF THE ASSESSEE. THERE IS NO MISTAKE WHATSOEVER IN THE ORDER OF THE CI T(A) IN GIVING DIRECTIONS TO GIVE EFFECT TO THE ORDER OF THE TRIBUNAL AND REDUCE THE QUANTUM OF PENALTIES. WE ACCORDINGLY HOLD THAT THE GR OUNDS OF APPEAL PREFERRED BY THE REVENUE, BEING DEVOID OF MERIT, AR E LIABLE TO BE REJECTED. ACCORDINGLY THEY ARE REJECTED. 10. IN THE RESULT, ASSESSEE'S APPEALS ARE ALLOWED AND TH E APPEALS PREFERRED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 31.8.2010 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 31ST AUGUST, 2010 COPY FORWARDED TO: 1. DR.T, RAVI KUMAR,( NELLORE) C/O. SHRI S.RAMA RAO , FLAT NO.102, SHIRYA'S ELEGANCE, NO.3-6-643, STREET N O.9, HIMAYATNAGAR, HYDERABAD 500029. 2. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-1, NELLORE . 3. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-2, NELLORE . 4. COMMISSIONER OF INCOME-TAX (APPEALS) GUNTUR 5. COMMISSIONER OF INCOME-TAX, GUNTUR 6. THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S .