Shri Nirav Ashok Shah, Surat V. The Income Tax Officer,Ward-3(3), Surat

ITA 569/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2187 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-04-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 24-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R MEENA
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained investment; Gift; Search and seizure; Peak credit; Bonafide belief; Capital receipt
• Section: 271(1)(c)

Judgement Text

NIRAV ASHOK SHAH VS. ITO, WARD-3(3), SURAT /I.T.A. NO.569/AHD/2014/SRT/A.Y.:2007-08 PAGE 1 OF 6 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./I.T.A NO.569/AHD/2014/SRT /ASSESSMENT YEAR : 2007-08 NIRAV ASHOK SHAH, 2-A, PRADAKSHINA APARTMENT, PRATISTHAN COMPLEX, PARLE POINT, SURAT. [PAN: APRPS 0912 H] VS. THE INCOME TAX OFFICER, WARD 3(3), SURAT. APPELLANT /RESPONDENT /ASSESSEE BY SHRI RASESH SHAH CA /REVENUE BY SHRI S.R.MEENA SR.DR / DATE OF HEARING: 08 .0 8 .2018 /PRONOUNCEMENT ON 18 .0 9 . 2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV, SURAT(IN SHORT THE CIT (A)) DATED 19.12.2013 PERTAINING TO ASSESSMENT YEAR 2007-08, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-3(3), SURAT (IN SHORT THE AO) DATED 07.03.2012 UNDER SECTION 271(1)(C) OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). NIRAV ASHOK SHAH VS. ITO, WARD-3(3), SURAT /I.T.A. NO.569/AHD/2014/SRT/A.Y.:2007-08 PAGE 2 OF 6 2. GROUND RAISED BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY OF RS.4,01,730/- U/S/.271(1)(C) OF THE I.T.ACT, 1961. 2. IT IS THEREFORE PRAYED THAT ABOVE PENALTY LEVIED BY ASSESSING OFFICER AND CONFIRMED BY CIT(A) MAY PLEASE BE DELETED. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AO HAS MADE ADDITION OF RS.12,88,000/- ACCOUNT OF UNEXPLAINED INVESTMENT U/S.69 OF THE ACT ON WHICH PENALTY U/S.271(1)(C) OF THE ACT. THE AO HAS ALSO INITIATE SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME IN RESPECT OF SAID ADDITION. 4. IT WAS NOTICED THAT THE ASSESSEE HAS DEPOSITED CASH OF RS.12,88,000/- IN THE SURAT CO-OPERATIVE BANK LTD. BANK ACCOUNT WHICH IS HELD BY THE ASSESSEE SHRI D.K.PANDYA THERE WERE TOTAL CREDIT OF RS.17,13,928/- OUT OF CASH OF RS.12,88,000/- ARE DEPOSITED. IT WAS SUBMITTED THAT SAID BANK ACCOUNT WAS NOT REFLECTED BY THE ASSESSEE. 5. AGGRIEVED WITH THE ORDERS OF THE ASSESSMENT, ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A)-2, SURAT WHO HAD ALSO DISMISSED APPEAL OF THE ASSESSEE. IN VIEW OF THESE FACTS, THE ASSESSING NIRAV ASHOK SHAH VS. ITO, WARD-3(3), SURAT /I.T.A. NO.569/AHD/2014/SRT/A.Y.:2007-08 PAGE 3 OF 6 OFFICER LEVIED PENALTY OF RS.4,01,730/- BEING 100% TAX SOUGHT TO BE EVADED. 6. AGGRIEVED WITH THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE CIT(A) WHEREIN IT WAS CLAIMED THAT THE ASSESSEE HAS MADE AN EXPLANATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS REGARDING THE SOURCE OF AMOUNT DEPOSITED IN BANK ACCOUNT AND SAID EXPLANATION WAS NOT FOUND TO BE FALSE AND THEREFORE NO PENALTY CAN BE LEVIED. HOWEVER, THE CIT(A) DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND PENALTY LEVIED WAS CONFIRMED. 7. BEING AGGRIEVED THAT THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. THE LD.AR SUBMITTED THAT THE BANK ACCOUNT WAS JOINTLY HELD BY THE ASSESSEE SHRI DHAWAL PANDYA AND THIS BANK ACCOUNT WAS USED FOR ESPECIALLY TRANSACTION THROUGH BANKS. THE AMOUNT DEPOSITED THEREIN WAS ON ACCOUNT OF GIFTS RECEIVED FROM VARIOUS CLOSE RELATIVES AND THE ADDITION MADE ON THE BASIS OF SAID ACCOUNT IS NOT THE INCOME OF THE ASSESSEE. HOWEVER, TO BUY THE PEACE OF MIND AND TO AVOID LONG DRAWN PROCESS OF LITIGATION THE ASSESSEE OFFERED THE SAME FOR TAXATION. THEREFORE, THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT AS THE GIFTS WERE CAPITAL RECEIPTS AND NOT CHARGEABLE TO TAX AND SAME WERE NOT SHOWN BY HIM IN THE RETURN NIRAV ASHOK SHAH VS. ITO, WARD-3(3), SURAT /I.T.A. NO.569/AHD/2014/SRT/A.Y.:2007-08 PAGE 4 OF 6 OF INCOME. IT WAS FURTHER SUBMITTED THAT THE AO HAS TOOK UP SAME ENTRIES PERTAINING TO CASH DEPOSITS AND COMPLETELY IGNORED REST OF THE ENTRIES AS WELL AS EXPENSES, INCOME/LOSS ARISING THEREFROM. THEREFORE, IT WAS ERRED THAT PEAK CREDIT COULD HAVE BEEN ADDED HAS ARGUED BEFORE THE TRIBUNAL. FURTHER, HON'BLE TRIBUNAL COUNT NOT CONVINCED THAT THE PEAK CREDIT THEORY AND SUSTAINED THE ADDITION MADE BY THE LOWER AUTHORITIES. THE LD.AR ALSO SUPPORTED THAT NO PENALTY WILL BE LEVIABLE IN THE LIGHT OF IN THE CASE OF SHRI OJAS ASHOKBHAI VS. ITO 296 & 297/AHD/2013 FOR A.Y.2008-09; KRUNAL JAYVADAN ROTLIWALA VS ITO, WARD-2(2), SURAT 295/AHD/2013 AND MURARILAL RATANLAL AGARWAL VS. ACIT IN ITA NO.573 & 615/AHD/2012. 8. ON THE OTHER HAND, THE LD.DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE PERUSAL OF THE ASSESSMENT ORDER AND PENALTY ORDER REVEALS THAT THE AO HAS REJECTED THE CONTENTION OF THE ASSESSEE ON THE BASIS THAT THE ASSESSEE HAS ADMITTED THE CASH DEPOSITS FOUND IN THE BANK ACCOUNT HELD JOINTLY. WE FIND THAT THE ASSESSEE HAS CONTENDED BEFORE THE TRIBUNAL ONLY PEAK CREDIT CAN NIRAV ASHOK SHAH VS. ITO, WARD-3(3), SURAT /I.T.A. NO.569/AHD/2014/SRT/A.Y.:2007-08 PAGE 5 OF 6 BE ADDED WHERE THE BANK ACCOUNT CONTAINS CASH DEPOSITS AS WELL AS WITH DRAWALS THEREON, IT WAS ALSO EXPLAINED THAT THE DEPOSITS APPEARING IN THE BANK ACCOUNT ARE OUT OF GIFTS RECEIVED FROM HIM AND SAME WERE NO INCOME OF THE ASSESSEE, THOUGH THE ASSESSEE HAS VOLUNTARILY OFFERED THE SAME FOR TAXATION. THOUGH THE FINDINGS RECORDED IN THE ASSESSMENT WAS IS NOT CONCLUSIVE FOR IMPOSITION OF PENALTY BUT HAS PERSUASIVE VALUE. THE PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE PROCEEDINGS FROM ASSESSMENT. IN THIS CASE THE ASSESSEE HAS OFFERED EXPLANATION DURING THE COURSE OF PENALTY PROCEEDINGS AND SAME WAS NOT FOUND TO BE FALSE. THEREFORE, THE CASE OF THE ASSESSEE IS NOT COVERED EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT. THE LD.AR HAS OFFERED RELIANCE IN THE CASE OF SHRI OJAS A.MEHTA IN WHICH THE HON'BLE TRIBUNAL AS HELD AS UNDER : 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IN THE CASE OF MURARILAL RATANLAL AGARWAL VS. ACIT (SUPRA), THE FACTS AS NOTED BY THE TRIBUNAL WERE THAT A SEARCH AND SEIZURE ACTION WAS TAKEN WHEREIN ONE BANK ACCOUNT WAS FOUND. ON BEING CONFRONTED, THE ASSESSEE ADMITTED THAT IT IS HIS BENAMI BANK ACCOUNT AND ALSO ADMITTED THAT ALL THE TRANSACTIONS REFLECTED IN THIS BANK ACCOUNT BELONGED TO HIM. THE ASSESSEE DECLARED RS.5.50 LACS ON THIS ACCOUNT BUT THE A.O.NOTED THAT A SUM OF RS.60,000/- WAS INTRODUCED BY THE ASSESSEE AS SEED MONEY AND HE WORKED OUT THE PEAK AT RS.14,45,702/- TOTAL RS.15,05,702/- AND AFTER DEDUCTING RS.5.50 LACS, HE MADE ADDITION OF RS.9,55,702/-. FOR THIS, HE IMPOSED A PENALTY OF RS.507,300/- U/S.271 (1)(C) OF I T ACT SINCE, THE ADDITION WAS UPHELD BY LEARNED CIT (A). UNDER THESE FACTS, PENALTY WAS DELETED BY THE TRIBUNAL. IN THE PRESENT CASE ALSO, AN ADDITION OF RS.22,72,788/- WAS MADE ON THE BASIS OF PEAK OF UNDISCLOSED BANK ACCOUNT AND A FURTHER ADDITION OF RS.2,48,208/- WAS MADE IN RESPECT OF ALLEGED INCOME AFTER THE PEAK DATE FOR THE SAME BANK ACCOUNT. IN THAT CASE, THE UNDISCLOSED BANK ACCOUNT WAS FOUND AFTER SEARCH BUT IN THE PRESENT CASE, THE SAME WAS NIRAV ASHOK SHAH VS. ITO, WARD-3(3), SURAT /I.T.A. NO.569/AHD/2014/SRT/A.Y.:2007-08 PAGE 6 OF 6 FOUND ON THE BASIS OF AIR. THE TOTAL CREDIT IN THIS BANK ACCOUNT WAS OF RS.139.69 LACS BUT THE ADDITION IS MADE ON THE BASIS OF PEAK WORKING AND SOME ESTIMATED INCOME AFTER PEAK DATE. FROM THE ABOVE ANALYSIS, IT COMES OUT THAT THE FACTS IN THE PRESENT CASE ARE SIMILAR IF NOT IDENTICAL WITH THE FACTS IN THE CASE OF MURARILAL RATANLAL AGARWAL VS. ACIT (SUPRA). SINCE PENALTY WAS DELETED BY THE TRIBUNAL IN THAT CASE AND FACTS ARE SIMILAR IN THE PRESENT CASE, WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THE PRESENT CASE. HENCE, BY RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION, WE DELETE THE PENALTY. 10. IN THE LIGHT OF THE FACTS OF THE CASE, AND RATIO LAID DOWN IN ABOVE DECISION OF CO-ORDINATE BENCH, WE HOLD THAT AO WAS NOT JUSTIFIED IN LEVYING OF PENALTY U/S.271(1)(C), AS EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND TO BE FALSE. THEREFORE, THIS GROUND OF APPEAL IS ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 12. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18-09-2018. SD/- SD/- ( . . /C.M. GARG) ( . . / O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / SURAT, DATED : 18 TH SEP , 2018/ S.GANGADHARA RAO, SR.PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT