ITO 18(2)(1), MUMBAI V. DILIP S. SHIRODKAR, MUMBAI

ITA 5852/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88299 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 01-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: SACHIN ROMANI
• Keywords: Unexplained investment; Opportunity of being heard
• Section: 143(3); 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI . . , , . , , BEFORE SHRI H.L.KARWA , PRESIDENT AND SHRI D.KARUNAKARA RAO , AM ITA NO. 5852 /MUM/201 3 : ASST.YEAR 2006 - 2007 THE INCOME TAX OFFICER WARD 18(2)(1) MUMBAI. / VS. SHRI DILIP S.SHIRODKAR A - 141, RAMGIRI PARADISE GOKHALE ROAD, DADAR WEST MUMBAI 400 028. PAN : AJCPS9140C . ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI AKHILENDRA YADAV /RESPONDENT BY : S/ SHRI JITENDRA JAIN & SACHIN ROM A NI / DATE OF HEARING : 1 6.02 .201 5 / DATE OF PRONOUNCEMENT : 20 .02.2015 / O R D E R PER H.L.KARWA ( PRESIDENT ) : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME - TAX (APPEALS) 29 , MUMBAI, DATED 18 TH JULY, 2013, CANCELLING THE PENALTY OF RS.18,39,725 LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ), FOR THE ASSESSMENT YEAR 2006 - 2007. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF GOLDSMITH AND HAS BEEN DOI NG JOB WORK FOR VARIOUS JEWELERS OF MUMBAI. FOR THE ASSESSMENT YEAR 2006 - 2007, THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, AT ITA NO. 5852 /MUM/201 3 . SHRI DILIP S.SHIRODKAR 2 AN INCOME OF RS.56,79,284 AS AGAINST THE RETURNED INCOME OF RS.79,890. DURING THE ASSESSMENT YEAR UNDER CONSIDERA TION, THE ASSESSEE HAD PURCHASED A FLAT FOR A CONSIDERATION OF RS.50,34,897. THE ASSESSING OFFICER TREATED THE INVESTMENT IN QUESTION AS UNEXPLAINED AND THEREBY MADE ADDITION OF RS.50,34,897 U/S 69 OF THE ACT, AS THE ASSESSEE HAS FAILED TO FURNISH THE SOUR CE OF THE SAID INVESTMENT. THE A.O. ALSO MADE AN ADDITION OF RS. 5,64,500 U/S 68 OF THE ACT. THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE REGARDING THE CASH DEPOSITS IN HIS BANK ACCOUNT MAINTAINED WITH COSMOS BANK AND BANK OF MAHARASHTRA AMOUNTING TO RS.5,64,500. ACCORDINGLY, THE A.O. ADDED BACK THE AMOUNT OF RS.5,64,500 TO THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. AS REGARDS BOTH THE ABOVE ADDITIONS, THE A.O. INITIATED PENALTY PROCEE DINGS U/S 271(1)(C) OF THE ACT. THE ASSESSMENT MADE BY THE A.O. WAS CHALLENGED IN APPEAL BEFORE THE CIT(A), WHO VIDE HIS ORDER DATED 31 ST AUGUST, 2010, CONFIRMED THE ADDITION OF RS.50,34,897 U/S 69, AS UNEXPLAINED INVESTMENT ON ACCOUNT OF ACQUISITION OF FL AT BY THE ASSESSEE. WITH REGARD TO THE ADDITION MADE AMOUNTING TO RS.5,64,500 U/S 68, THE CIT(A) GAVE RELIEF OF RS. 47,000 AND THE BALANCE ADDITION OF RS.5,17,500 WAS CONFIRMED. THE ASSESSEE FURTHER FILED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE APPELLATE ORDER PASSED BY THE CIT(A). IN THE MEANWHILE, THE A.O. IMPOSED PENALTY OF RS.18,39,725 ON THE ASSESSEE U/S 271(1)(C) OF THE ACT. THE TRIBUNAL DECIDED THE QUANTUM APPEAL VIDE ITS ORDER DATED 12 TH JUNE, 2013 IN ITA NO.8899/MUM/2010. THE TRIBUNAL DELETED THE ADDITION OF RS.50,34,897 BY OBSERVING AS UNDER: - 2.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THIS GROUND AND PERUSED THE MATERIAL ON RECORD. THE FLAT AGREEMENT DATED 07 TH OCTOBER, 2005 BETWEEN THE PROMOTER MS.RAMGIRI ITA NO. 5852 /MUM/201 3 . SHRI DILIP S.SHIRODKAR 3 DEVELOPERS AND THE ASSESSEE CLEARLY INDICATES THAT THE ASSESSEE HAS BEEN IN OCCUPATION OF THE PREMISES ADMEASURING CARPET AREA 49.23 SQ.MTS. 530 SQ.FT. ON GROUND FLOOR AND THE DEVELOPER AGREED TO ACCOMMODATE THE ASSESSEE IN THE NEW BUILDING AT FLOOR NO.14 ADMEASURING 585 SQ.FT. CARPET AREA TO BE CONSTRUCTED UPON THE SAID PROPERTY IN CONSIDERATION OF THE ASSESSEE AGREEING TO VACATE THE PREMISES IN HIS POSSESSION AND SURRENDERING THE TENANCY RIGHTS IN RESPECT OF THE TENANTED PREMISES HELD BY HIM IN FAVOUR OF THE DEVELOPER. THIS INDICATES THAT THE FLAT IN RAMGIRI PARADISE HAS BEEN ACQUIRED BY THE ASSESSEE IN LIEU OF SURRENDER OF HIS TENANCY RIGHT IN THE BUILDING MOGHE BHAVAN. THE PERUSAL OF THE AGREEMENT DATED 09.04.2001 BETWEEN MR.BALKRISHNA GOVIND RATNAPARKHI , MRS. USHA RATNAKAR RATNAPARKHI (TENANTS), THE ASSESSEE (ASSIGNEE) AND THE BUILDERS ALSO SUGGEST THAT THE TENANTS TRANSFERRED THE TENANCY RIGHTS IN RESPECT OF THE SAID PROPERTY TO THE ASSESSEE FOR A CONSIDERATION OF RS.4,00,000/ - . WHEN THE FACTS BEING SO, FIRSTLY THE LOWER AUTHORITIES ARE NOT JUSTIFIED TO OBSERVE THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY DOCUMENTARY PROOF TO ESTABLISH THAT THE ASSESSEE HAS BEEN A TENANT IN THE SAID BUILDING. SECONDLY, AS REGARDS THE REASONING OF THE LD.CIT(A) THAT THE ACQUISITION VALUE OF RS.4,00,000/ - HAS NOT BEEN PAID BY WAY OF CONSTRUCTIVE PAYMENT PAID BY THE BUILDER ON BEHALF OF THE ASSESSEE WHICH IS NOT A NEW PRACTICE OF THE DEVELOPERS IN BUSINESS OF CONSTRUCTION INDUSTRY. THIRDLY, REGARDING THE FINDING OF THE LOWER AUTHORITIES AS TO THE DISPROPORTIONATE VALUES BETWEEN THE CONSIDERATION FOR RELINQUISHMENT OF RIGHTS BY THE OLD TENANT (RS.4,00,000/ - ) AND THE MARKET VALUE OF THE FLAT (MORE THAN 50 LACS) , WE ARE OF THE OPINION THAT IT IS BEYOND THE PURVIEW OF THE L OWER AUTHORITIES TO SUSPECT A TRANSACTION SOLELY ON THE GROUND OF ADEQUACY / INADEQUACY OF CONSIDERATION IN THE ABSENCE OF ANY OTHER CORROBORATING EVIDENCE AND THEREBY MAKING ANY ADVERSE INFERENCES. MOREOVER, THE VALUE AS ADOPTED BY AO IS BASED ON THE VALU ATION DETERMINED BY THE STAMP DUTY AUTHORITIES WHILE REGISTERING THE AGREEMENT DATED 07.10.2005. 2.4 IN VIEW OF THE AFOREMENTIONED DISCUSSION, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW HAVE DONE / CONFIRMED THE ITA NO. 5852 /MUM/201 3 . SHRI DILIP S.SHIRODKAR 4 IMPUGNED ADDITION WITHOUT BRINGING ANY POSITIVE MATERIAL TO HOLD THAT THE INVESTMENT IN THE FLAT IN RAMGIRI PARADISE IS MADE BY THE ASSESSEE OUT OF HIS UNEXPLAINED INCOME. MERE SUSPICION WITHOUT EVIDENCE ON RECORD CANNOT BE BASIS FOR MAKING AN ADDITION TO INCOME U/S 69 OF THE ACT. THE ADDITION IS, THEREFORE, ENTIRELY ON A PRESUMPTIVE BASIS WHICH IS PURELY BASED ON SURMISES. THUS, THE IMPUGNED ADDITION MADE U/S 69 IS DELETED. ACCORDINGLY, GROUND NO.1 IS ALLOWED. 2.1 AS REGARDS THE ADDITION OF RS. 5,17,500 CONFIRMED BY THE CIT(A), THE TRIBUNAL H ELD AS UNDER: - 3 .3 WE HAVE HEARD BOTH THE PARTIES ON THIS GROUND AND PERUSED THE MATERIAL ON RECORD. IT IS OBSERVED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS REPLIED THE QUERY REGARDING SOURCE /EXPLANATION IN RESPECT OF CASH CREDITS. BY S IMPLY RECORDING THAT THE EXPLANATION GIVEN BY THE ASSESSEE IS NOT ACCEPTABLE AS NO CORROBORATIVE EVIDENCE HAS BEEN FURNISHED TO SUBSTANTIATE HIS CLAIM, THE IMPUGNED ADDITION IS MADE BY THE AO. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN TOTO, WE ARE OF THE OPINION THAT IT WOULD BE JUST AND PROPER TO SET ASIDE THIS GROUND TO THE FILE OF THE AO TO DECIDE THE MATTER AFRESH AFTER GIVING ONE MORE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO PLACE ALL THE RECORDS AND MATERIALS IN SUPPORT OF HIS CLAIM. WE ORDER AND DIRECT ACCORDINGLY. GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSE. 3. AFTER HEARING THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES AT LENGTH, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) HAS CORRECTLY HELD THAT THE PENALTY U/ S 271(1)(C) OF THE ACT IN THE CASE OF THE ASSESSEE IS NOT LEVIABLE, AND HENCE, THE CIT(A) WAS JUSTIFIED IN CANCELLING THE IMPUGNED PENALTY. IT IS OBSERVED THAT THE ADDITION MADE BY THE A.O. AMOUNTING TO ITA NO. 5852 /MUM/201 3 . SHRI DILIP S.SHIRODKAR 5 RS.50,34,897 HAS BEEN DELETED BY THE TRIBUNAL IN ITA NO.8899/MUM/2010 VIDE ITS ORDER DATED 12 TH JUNE, 2013 AND THE ANOTHER ADDITION MADE BY THE A.O. AMOUNTING TO RS.5,64,500 ON ACCOUNT OF CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE, THE TRIBUNAL HAS SET ASIDE THE ORDER OF THE CIT(A) AND REMANDED THE MATTER TO THE FILE OF THE A.O. FOR A FRESH DE CISION. IT IS A WELL SETTLED LAW THAT NO PENALTY U/S 271(1)(C) SURVIVES AFTER THE DELETION OF ADDITION. IN FACT THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY FOR CONCEALMENT AND, THEREFORE, IN SUCH A CASE NO SUCH PENALTY CAN SURVIVE AND THE SAME IS LIABLE TO BE CANCELLED. AS REGARDS THE ADDITION MADE U/S 68 OF THE ACT, THE ISSUE HAS BEEN SET ASIDE AND THE MATTER HAS BEEN RESTORED TO THE FILE OF A.O., THERE IS NO QUESTION OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. 3.1 IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 4 . IN THE RESULT, REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF FEBRUARY, 2015 . SD/ - SD/ - ( D. KARUNAKARA RAO ) ( H.L.KARWA ) / ACCOUNTANT MEMBER / PRESIDENT MUMBAI; DATED : 20 TH FEBRUARY, 2015 . DEVDAS* ITA NO. 5852 /MUM/201 3 . SHRI DILIP S.SHIRODKAR 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A) - 29 , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI