ACIT, Mathura V. M/s Vinayak Properties and Developers (AOP), Mathura

ITA 598/AGR/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6785 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 05-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MISHRA
• Assessee Lawyers: P N AGARWAL
• Keywords: Unexplained cash credit
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.598/AGR/2008 ASST. YEAR: 2005-06 A.C.I.T. - 3, MATHURA. VS. M/S. VINAYAK PROPERT IES & DEVELOPERS (AOP), 47, MAYUR VIHAR, MATHURA. (PAN : AAAAV 4400 E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. MISHRA, SR. D.R. RESPONDENT BY : SHRI P.N. AGARWAL, ADVOCATE ORDER PER P.K. BANSAL, A.M.: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 23.06.2008 BY WHICH THE CIT(A) HAS DELETED THE PENA LTY IMPOSED BY THE A.O. UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (THE ACT HE REINAFTER). 2. THE FACTS OF THE CASE ARE THAT THERE HAD BEEN SU RVEY UNDER SECTION 133A OF THE ACT IN THE PREMISES OF ONE M/S. AGARWAL DEVELOPERS, MATHURA ON 22.11.2006 WHEREIN CERTAIN DOCUMENTS AND PAPERS WERE FOUND WHICH EVIDENCED COLONIZING AN D PROPERTY DEVELOPMENT ACTIVITIES BY THE ASSESSEE. ON 15.01.2007, THE ASSESSEE FILED RETURN DISCLOSING INCOME OF RS.23,80,220/- COMPRISING INVESTMENT IN LAND SURRENDERED AT RS.23, 30,000/- AND NET PROFIT ON SALE OF PLOTS RS.50,220/-. THE ASSESSEE DURING THE COURSE OF ASS ESSMENT PROCEEDINGS ALSO COMMITTED TO PAY 2 TAX ON RS.60,00,000/- OVER THE PERIOD OF ASSESSMENT YEARS 2005-06 TO 2007-08 INCLUDING THE ABOVE RS.23,30,000/- AS SURRENDERED EARLIER. THE A SSESSMENT WAS COMPLETED ON AN INCOME OF RS.26,15,220/- ON 12.06.2007 MAKING AN ADDITION OF RS.1,35,000/- AND RS.1,00,000/- AND THE PROCEEDINGS U/S. 271(1)(C) WAS INITIATED. THE A.O. IMPOSED PENALTY OF RS.8,51,111/- OBSERVING THAT IF THE SURVEY UNDER SECTION 133(3) WAS NOT TAK EN PLACE, THE ASSESSEE WOULD HAVE NOT SUBMITTED THE INCOME-TAX RETURN. THUS, THE ASSESSE E HAS CONCEALED THE INCOME. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). IN RESPECT OF RE TURNED INCOME OF RS.23,80,220/-, THE CIT(A) NOTED THAT THE ASSESSEE FILED THE RETURN ON 15.01.2 007 PRIOR TO INITIATION OF THE ASSESSMENT PROCEEDINGS AND TIME FOR FILING THE RETURN UNDER SE CTION 139(4) HAD NOT EXPIRED. IT WAS ALSO NOTED THAT THE EVEN THE NOTICE UNDER SECTION 143(3)(II) O R 148 HAD BEEN ISSUED TO IT AND THUS HE TOOK THE VIEW THAT UNDER THESE FACTS AND CIRCUMSTANCES, SINC E THE ASSESSEE HAS FILED THE RETURN VOLUNTARILY, NO PENALTY UNDER SECTION 271(1)(C) CAN BE IMPOSED. HENCE THE ADDITION OF RS.1,00,000/- AND RS.15,000/-, IT WAS POINTED OUT THAT HE DELETED THE PENALTY AS THESE ADDITIONS WERE MADE MERELY ON ESTIMATE BASIS. FOR THE ADDITION OF RS.1,05,000 /-, THE CIT(A) OBSERVED THAT THE ABOVE AMOUNTS WERE ADDED AS UNEXPLAINED CASH CREDIT BY TH E A.O. REPRESENTING ADVANCES RECEIVED FOR BOOKING OF THE PLOTS. THIS FACT IS SUBSTANTIATED B Y THE ENTRIES IN THE DOCUMENTS AND PAPERS FOUND AT THE TIME OF SURVEY UNDER SECTION 133A OF THE ACT IN THE CASE OF M/S. AGARWAL DEVELOPERS. EVEN THOUGH THE ADDITION HAS BEEN CONCEDED BY THE A .O. AND CONFIRMED BY THE CIT(A), THE PENALTY UNDER SECTION 271(1)(C) CANNOT BE SUSTAINED . 3. LD. D.R. RELIED ON THE ORDER OF THE A.O. WHILE T HE LD. A.R. RELIED ON THE ORDER OF THE CIT(A). 3 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE H AVE ALSO GONE THROUGH THE CASE LAWS CITED BEFORE US. SECTION 271(1)(C ) READS AS UNDER: 271.(1) IF THE ASSESSING OFFICER OR THE COMMISSION ER (APPEALS) [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDE R THIS ACT, IS SATISFIED THAT ANY PERSON - (A) .. (B) .. (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR (D) .. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, - EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, - (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEA LS) OR THE COMMISSIONER TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND [FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THA T ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. 5. FROM THE PERUSAL OF THE AFORESAID SECTION, IT IS APPARENT THAT PENALTY U/S 271(1)(C ) IS LEVIABLE IF THE A.O. IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS OF THE INCOME. THE PENALTY PROCEEDINGS AND THE ASSESSMENT PROCEEDI NGS, BOTH ARE DIFFERENT. EXPLANATION 1 TO SECTION 271(1)(C) STATES THAT THE AMOUNT ADDED OR D ISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE SHALL BE DEEMED TO BE THE INCOME IN RE SPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THIS DEEMING PROVISION IS NOT ABSOLUTE ONE BUT IS REBUT TABLE ONE. IT ONLY SHIFTED THE ONUS ON THE ASSESSEE. EXPLANATION 1 REFERS TO THE TWO SITUATIONS IN WHICH PRESUMPTION OF THE 4 CONCEALMENT OF THE PARTICULARS OF INCOME IS DEEMED. THE FIRST SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION, WHICH IS FOUND BY THE AO OR THE COMMISSIONER TO BE FALSE. THE SECOND SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY F ACTS MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME OFFERS AN EXPLANATION, WHICH THE ASSESSEE I S NOT ABLE TO SUBSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION WAS BONAFIDE ONE AND TH AT ALL THE FACTS RELATING TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE PRESU MPTION AVAILABLE UNDER EXPLANATION TO SECTION 271(1)(C), CANNOT BE DRAWN UNLESS THE CASE OF THE ASSESSEE FALLS UNDER EITHER OF THE CLAUSES (A) OR (B). 6. IN THIS CASE, WE NOTED THAT THE A.O. HAS NOT BRO UGHT OUT ANY SPECIFIC CHARGE FOR WHICH THE PENALTY HAS BEEN IMPOSED ON THE ASSESSEE UNDER SECT ION 271(1)(C) OF THE ACT. HE HAS NOT BROUGHT OUT WHETHER THE ASSESSEE HAS CONCEALED THE PARTICUL ARS OF INCOME OR WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. 7. WE HAVE GONE THROUGH THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. LTD., 282 ITR 642, IN WHICH IT WAS HELD AS UNDER: IT IS INCUMBENT UPON THE ASSESSING OFFICER TO STATE WHETHER THE PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF INCOME HAD BE EN FURNISHED BY THE ASSESSEE. HELD, THAT THE PENALTY ORDER AND THE ORDER OF THE C OMMISSIONER (APPEALS) SHOWED THAT NO CLEAR CUT FINDING HAD BEEN REACHED. THE TRI BUNAL HAD FAILED TO APPRECIATE THIS LEGAL. ISSUE. THE RATIO IN CIT V. MANU ENGINE ERING WORKS 132 ITR 306(GUJ) WAS APPLICABLE AND THE ORDER OF PENALTY COULD NOT B E UPHELD BY THE TRIBUNAL. THE ORDER WAS INVALID. 5 8. WE NOTED THAT SIMILAR VIEW HAS BEEN TAKEN BY A BENCH OF I.T.A.T. DELHI IN ITA NO.2275/DEL/2009 IN THE CASE OF RAJ RANI MITTAL TO WHICH THE UNDERSIGNED IS THE AUTHOR. SINCE THE A.O. HAS NOT BROUGHT OUT ANY SPECIFIC CHARGE WH ETHER THE PENALTY HAS BEEN IMPOSED ON THE CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME, IN OUR VIEW, THE PENALTY CANNOT BE SUSTAINED. WE HAVE ALSO GONE THR OUGH THE DECISION OF THIS BENCH IN ITA NO.296/AGR./2007 IN THE CASE OF SHRI CHANDRA SHEKHA R GUPTA AND NOTED THAT THE CASE OF THE ASSESSEE IS ALSO COVERED BY THAT DECISION. WE, ACC ORDINGLY, CONFIRM THE ORDER OF THE CIT(A) DELETING THE PENALTY. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.06.2010). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH JUNE, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY