Sh. Ashwani Kumar, Bhadson V. ITO, Nabha

ITA 58/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6621 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 06-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KUMAR SHARMA ACI
• Assessee Lawyers: K P BAJAJ
• Keywords: Unexplained cash credit
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.58/CHD/2017 (ASSESSMENT YEAR : 2009-10) SHRI ASHWANI KUMAR VS. THE INCOME TAX OFFICER, C/O SAI PLANT PROTECTORS, NABHA. THANA ROAD, BHADSON. PAN: AAZPK6954A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.P. BAJAJ, ADVOCATE RESPONDENT BY : SHRI PAWAN KUMAR SHARMA, ACI DR DATE OF HEARING : 26.09.2017 DATE OF PRONOUNCEMENT : 17.11.2017 ORDER PER ANNAPURNA GUPTA, A.M. : THIS APPEAL FILED BY THE ASSESSEE HAS BEEN PREFERRE D AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS), PATIALA (HEREINAFTER REFERRED TO AS CIT(APPEALS)) DATED 18.11.2016, RELATING TO ASSE SSMENT YEAR 2009-10, CONFIRMING LEVY OF PENALTY U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT. 2. BRIEFLY STATED, ASSESSMENT IN THE PRESENT CASE W AS MADE U/S 143(3) MAKING ADDITION ON ACCOUNT OF CASH DEPOSITS OF RS.70,41,000/-, TREATING THE SAME AS UNEXPLAINED. THE SAID ADDITION WAS CONFIRMED BY TH E LD.CIT(APPEALS) AND ALSO BY THE TRIBUNAL. THEREAFT ER THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, ON THE ADDITION SO MADE. THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO KEEP THE PENALTY 2 PROCEEDINGS IN ABEYANCE PLEADING THAT HE WAS GOING TO FILE AN APPEAL IN THE HIGH COURT AGAINST THE ORDER PASSE D BY THE I.T.A.T. THE ASSESSING OFFICER DID NOT ACCEPTED TH E PLEA AND LEVIED PENALTY U/S 271(1)(C) @ 300% OF THE TAX SOUGHT TO BE EVADED AMOUNTING TO RS.69,72,671/-. THE MATT ER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHO CO NFIRMED THE LEVY OF PENALTY. 3. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US, RAISING FOLLOWING GROUNDS: 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE CIT(A) IS BAD IN LAW AND AGAINST THE FA CTS OF THE CASE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS NOT DISMISSING THE APPEAL AND UPHOLDING THE PENALTY LEVIED AT 300% OF THE TAX ALLEGED TO HAVE BEEN CONCEALED. 3. THAT WITHOUT PREJUDICE THE ID. CIT(A) DID NOT ADJUDICATE ON THE ALTERNATIVE PLEA SET FORTH BEFORE HIM FOR EXPLANATION OF DEPOSITS IN BANK ACCOUNT TO THE TUN E OF RS.70,41,000/- 4. THAT THE QUANTUM OF PENALTY LEVIED AND UPHELD IS RIGHTLY EXCESSIVE. 4. AT THIS STAGE, THE RELEVANT FACTS LEADING TO THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS OF RS.70,41,000/- IN THE BANK ACCOUNT OF THE ASSESSEE ARE BEING BROUGHT OUT. DURING ASSESSMENT PROCEEDINGS W HEN THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THE SE DEPOSITS, HE STATED THAT THE SAME WERE ON ACCOUNT O F FORFEITURE OF ADVANCES RECEIVED FROM TWO PERSONS FO R THE SALE OF HIS IMMOVABLE PROPERTIES, SINCE THE OTHER PARTY DID NOT APPEAR ON THE DATE OF REGISTRATION OF THE SALE DEED . THE ASSESSEE CONTENDED THAT THE FIRST AGREEMENT WAS ENT ERED 3 INTO WITH ONE SHRI MANDEEP SINGH S/O SHRI SINGARA S INGH, R/O VILLAGE CHILLAN TEHSIL & DISTRICT MOHALI FOR SA LE OF HIS IMMOVABLE PROPERTY FOR A CONSIDERATION OF RS.70 LAC S. THE AGREEMENT TO SELL WAS ENTERED INTO, AS PER THE ASSE SSEE, ON 19.6.2008 WHILE THE DATE OF REGISTRATION WAS FIXED FOR 27.6.2008. AN ADVANCE OF RS.35 LACS WAS STATED TO HAVE BEEN RECEIVED FROM THE SAID SHRI MANDEEP SINGH WHIC H WAS FORFEITED/CONFISCATED WHEN HE DID NOT APPEAR ON THE DATE OF REGISTRATION OF THE SALE DEED. THEREAFTER THE ASSE SSEE CONTENDED, THAT ANOTHER AGREEMENT TO SELL WAS ENTER ED INTO WITH ONE SHRI DHANNA SINGH S/O SHRI DALIP SINGH S/O SARAIN SINGH R/O KABULPUR, TEHSIL RAJPURA, DISTRICT PATIALA ON 24.6.2008 FOR A CONSIDERATION OF RS.60 LACS AGAI NST WHICH ADVANCE OF RS.30 LACS WAS RECEIVED ON THE SAM E DAY AND THE DATE OF REGISTRATION FIXED WAS 27.6.2008, W HICH AGAIN WAS FORFEITED/CONFISCATED ON ACCOUNT OF NON APPEARANCE OF THE PARTY ON THE DATE OF REGISTRATION OF THE SALE DEED. PHOTOCOPIES OF BOTH THE AGREEMENTS WERE FILED BEFORE THE ASSESSING OFFICER. THUS THE ASSESSEE AT TRIBUTED THE CASH DEPOSITED IN THE BANK AS BEING ON ACCOUNT OF ADVANCES RECEIVED FROM THE AFORESAID TWO PERSONS AG AINST AGREEMENT TO SELL LAND, WHICH WERE FORFEITED BY HIM . FURTHER INVESTIGATIONS DURING THE COURSE OF ASSESSM ENT PROCEEDINGS TO ESTABLISH THE GENUINENESS OF THE SAI D TRANSACTION WERE CARRIED OUT BY THE ASSESSING OFFIC ER ASKING THE ASSESSEE TO PRODUCE THE SAID PERSONS, ISSUING S UMMONS TO THEM AND MAKING FURTHER ENQUIRIES ALL OF WHICH Y IELDED NO RESULT. THE ASSESSEE COULD NOT PRODUCE THE SAID PERSON, 4 NONE APPEARED IN RESPONSE TO THE SUMMONS ISSUED BY THE ASSESSING OFFICER AND ENQUIRY CONDUCTED BY THE ASSE SSING OFFICER REVEALED THAT ONE OF THE PERSONS SHRI MANDE EP SINGH FROM WHOM THE ADVANCE OF RS.35 LACS WAS RECEIVED WA S NOT A RESIDENT OF VILLAGE CHILLAN WHICH WAS THE ADDRESS GIVEN IN THE AGREEMENT. SIMILARLY, THE OTHER PERSON SHRI DH ANNA SINGH FROM WHOM RS.30 LACS WAS STATED TO HAVE BEEN RECEIVED BY WAY OF ADVANCE WAS FOUND IN THE COURSE OF ENQUIRY TO HAVE LEFT THE VILLAGE A FEW YEARS BACK B Y SELLING OFF HIS PROPERTIES. IN THIS BACKDROP THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD NOT BEEN ABLE TO EXPLAIN THE SOURCE OF THE CASH DEPOSITS AND ACCORDINGLY ADDITIO N OF THE SAME WAS MADE TO THE INCOME OF THE ASSESSEE WHICH W AS UPHELD BY BOTH THE APPELLATE AUTHORITIES. 5. BEFORE US, DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR ASSESSEE PLEADED THAT THOUGH THE ASSESS EE HAD NOT BEEN ABLE TO CATEGORICALLY PROVE THE SOURCE OF THESE DEPOSITS BY WAY OF ADVANCE RECEIVED AS EXPLAINED BY HIM TO THE LOWER AUTHORITIES BUT THE SAID DEPOSITS WERE OT HERWISE EXPLAINABLE WITH THE BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE OF BUSINESS. THE LD. COUNSEL FOR AS SESSEE SUBMITTED THAT THE ENTIRE DEPOSITS WERE ATTRIBUTABL E TO THE CASH WITHDRAWN FROM HIS BANK ACCOUNTS. THE LD. COU NSEL FOR ASSESSEE STATED THAT AN EXPLANATION TO THIS EFF ECT WAS FILED BEFORE THE LD.CIT(APPEALS) ALSO BY WAY OF WRI TTEN SUBMISSIONS REPRODUCED AT PAGES 19 TO 20 OF THE PAP ER BOOK ALONGWITH A CHART SHOWING MOVEMENT OF DEPOSITS AND 5 WITHDRAWALS IN VARIOUS BANK ACCOUNT MAINTAINED BY T HE ASSESSEE FOR EXPLAINING THE SOURCE OF THE DEPOSIT I N THE ORIENTAL BANK OF COMMERCE OF THE ASSESSEE. COPIES OF BANK ACCOUNT OF THE ASSESSEE WERE ALSO STATED TO HAVE BE EN FILED BEFORE THE CIT(A). THE LD. COUNSEL FOR ASSESSEE CO NTENDED THAT THE LD.CIT(APPEALS) HAD WITHOUT CONSIDERING TH IS ALTERNATE EXPLANATION OF THE ASSESSEE, UPHELD THE P ENALTY LEVIED MERELY ON ACCOUNT OF THE FACT THAT EARLIER E XPLANATION OF THE SOURCE OF DEPOSIT WAS REJECTED RIGHT UP BY T HE I.T.A.T. THE LD. COUNSEL FOR ASSESSEE PLEADED THAT PENALTY PROCEEDINGS WERE SEPARATE PROCEEDINGS AND THE ASSES SEE WAS ENTITLED TO TAKE UP FRESH CONTENTIONS IN PENALT Y PROCEEDINGS TO SAVE ITSELF FROM THE LEVY OF PENALTY . 6. THE LD. DR, ON THE OTHER HAND, CONTENDED THAT TH E ASSESSEE COULD NOT COME UP WITH NEW EXPLANATION IN PENALTY PROCEEDINGS AND THE EARLIER EXPLANATION HAVING BEEN FOUND TO BE UNSUBSTANTIATED, PENALTY HAD BEEN RIGHTLY LEV IED AND CONFIRMED BY THE LD.CIT(APPEALS). 7. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S. 8. WE FIND MERIT IN THE CONTENTIONS OF THE LD.COUNS EL FOR THE ASSESSEE. PENALTY IN THE PRESENT CASE HAS BEEN LEVIED ON THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH DE POSITS IN BANK, WHICH HAS BEEN CONFIRMED BY THE CIT(A) HOL DING THAT THE EXPLANATION GIVEN BY THE ASSESSEE FOR THE CASH DEPOSITS REMAINED UNSUBSTANTIATED IN QUANTUM PROCEE DINGS RIGHT UPTO THE I.T.A.T. .BUT AT THE SAME TIME, UNDE NIABLY THE ASSESSEE HAD GIVEN AN ALTERNATE EXPLANATION FOR THE SAID 6 DEPOSITS DURING APPELLATE PROCEEDINGS BEFORE THE CI T(A) ON THE LEVY OF PENALTY, ATTRIBUTING THEM TO THE ROTATI ON OF CASH IN THE VARIOUS BANK ACCOUNTS MAINTAINED BY HIM. COP IES OF THE BANK ACCOUNTS AND A CASH FLOW STATEMENT WAS ALS O FILED TO SUBSTANTIATE THE EXPLANATION. BUT SURPRISINGLY , WE FIND ,THAT THE CIT(A) DID NOT EVEN CONSIDER THE SAME AT ALL AND FOR NO APPARENT REASON . 9. IT IS TRITE LAW THAT PENALTY PROCEEDINGS ARE DIS TINCT AND SEPARATE FROM QUANTUM PROCEEDINGS. THE STANDARD OF PROOF FOR IMPOSITION OF PENALTY IS DIFFERENT FROM THAT ON WHICH QUANTUM OF AN ADDITION OF INCOME CAN BE SUSTAINED. THE FINDINGS GIVEN IN ASSESSMENT ORDER ARE RELEVANT AND ADMISSIBLE MATERIAL IN PENALTY PROCEEDINGS BUT THES E FINDINGS CANNOT OPERATE AS RES JUDICATA SINCE CONSI DERATION THAT ARISES IN PENALTY PROCEEDINGS ARE DIFFERENT FR OM THOSE IN ASSESSMENT PROCEEDINGS. IN THE CASE OF CIT VS. G OKULDAS HARIVALLABHDAS 34 ITR 98, THE HONBLE BOMBAY HIGH C OURT HELD THAT ASSESSMENT PROCEEDINGS ARE TAXING PROCEED INGS WHILE PENALTY PROCEEDINGS ARE CRIMINAL PROCEEDINGS BY NATURE AND A DECISION GIVEN IN ASSESSMENT PROCEEDIN G CANNOT POSSIBLY BE BINDING ON THE AUTHORITY WHO TRI ES THE ASSESSEE FOR AN OFFENCE. THIS VIEW WAS CONFIRMED B Y THE APEX COURT IN ANWAR ALIS CASE 76 ITR 696 WHEREIN I T WAS HELD THAT FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS WERE NOT CONCLUSIVE THOUGH IT WAS A GOOD PIECE OF EVIDENCE. FOLLOWING THE AFORESAID TWO DECISIONS, THE HONBLE BOMBAY HIG H COURT IN THE CASE OF JAINARAYAN BABULAL VS CIT REPORTED AT 69 7 CTR 201, WHILE DEALING WITH AN IDENTICAL ISSUE OF L EVY OF PENALTY ON UNEXPLAINED CASH CREDITS FOR WHICH SOME OTHER CONTENTIONS WERE RAISED IN PENALTY PROCEEDINGS, HEL D THAT IT WAS OPEN TO THE ITO TO CONSIDER HIS EARLIER FINDING IN QUANTUM PROCEEDINGS BUT WAS NOT BOUND BY IT AND IF ANY OTHER EVIDENCE WAS PRODUCED IN PENALTY PROCEEDINGS IT WAS OPEN FOR HIM TO COME TO A DIFFERENT CONCLUSION. THE RELEVANT FINDINGS OF THE HONBLE HIGH COURT ARE AS UNDER: IN GOKULDAS HARIVALLABHDAS CASE (SUPRA), CHAGLA C.J., SPEAKING FOR THE BENCH, OBSERVED THAT 'THE PROCEEDIN GS UNDER S. 28(1)(C), IN THEIR VERY NATURE, ARE PENAL PROCEEDINGS AND THE ELEMENTARY PRINCIPLES OF CRIMINAL JURISPRUDENCE MUST AP PLY TO THESE PROCEEDINGS, AND NOTHING IS MORE ELEMENTARY, A T LEAST IN THIS COUNTRY IN CRIMINAL JURISPRUDENCE, THAN THE PRINC IPLE THAT THE BURDEN OF PROVING THAT THE ACCUSED IS GUILTY IS ALWAYS UPON THE PROSECUTION...' ASSESSMENT PROCEEDINGS ARE TA XING PROCEEDINGS AND PENALTY PROCEEDINGS ARE CRIMINAL PROC EEDINGS IN THEIR VERY NATURE. A DECISION GIVEN IN AN ASSESSM ENT PROCEEDING CANNOT POSSIBLY BE BINDING UPON THE AUTH ORITY WHO TRIES THE ASSESSEE FOR AN OFFENCE. THEREFORE, IT WAS OPEN TO THE ITO IN THE PENALTY PROCEEDINGS TO CONSIDER HIS EARL IER FINDING THAT A PARTICULAR RECEIPT CONSTITUTED INCOME FOR A P ARTICULAR ASSESSMENT YEAR, BUT HE WAS NOT BOUND BY THAT FINDING. IF A NY OTHER EVIDENCE WAS PRODUCED IN PENALTY PROCEEDINGS, IT WAS OPEN TO THE ITO TO COME TO A DIFFERENT CONCLUSION. 10. UNDOUBTEDLY, IN THE PRESENT CASE THE EXPLANATIO N OFFERED BY THE ASSESSEE IN QUANTUM PROCEEDINGS COUL D NOT BE ADEQUATELY SUBSTANTIATED BY HIM BUT THIS FACT AL ONE WOULD NOT AUTOMATICALLY LEAD TO THE LEVY OF PENALTY . PENALTY PROCEEDINGS BEING SEPARATE AND DISTINCT FROM ASSESS MENT PROCEEDINGS THE ASSESSEE IS ENTITLED TO GIVE ALL PO SSIBLE EXPLANATIONS IN SUPPORT OF HIS CONTENTIONS. AS OBSE RVED EARLIER BY US, THE FINDINGS IN QUANTUM PROCEEDINGS WILL NOT OPERATE AS RES JUDICATA. THE ASSESSEE CANNOT BE ST OPPED FROM RAISING NEW CONTENTIONS WHICH HE HAD NOT RAISE D IN QUANTUM PROCEEDINGS. THE LD.CIT(APPEALS), THEREFOR E, IN 8 THE PRESENT CASE, WE HOLD, OUGHT TO HAVE CONSIDERED THE ALTERNATE EXPLANATION GIVEN BY THE ASSESSEE REGARDI NG THE SOURCE OF CASH DEPOSITED IN HIS BANK, BEFORE ADJUDI CATING ON THE LEVY OF PENALTY. WE, THEREFORE, CONSIDER IT FI T TO RESTORE THE MATTER BACK TO THE FILE OF THE LD.CIT(APPEALS) TO CONSIDER THE EXPLANATION OFFERED BY THE ASSESSEE AN D THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. WE MAY ADD THAT THE ASSESSEE BE GIVEN DUE OPPORTUNITY OF H EARING IN THIS REGARD. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAN DS ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17 TH NOVEMBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)S 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH