Mr. Avinash Singh Grewal, Chandigarh V. ITO, Chandigarh

ITA 608/CHANDI/2011

• Counselvise Citation: 60821514 RSA 2011
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY SHARMA
• Assessee Lawyers: J B BHASIN
• Keywords: Income from undisclosed sources; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: CHANDIGARH BENCH B BEFORE MS SUSHMA CHOWLA, JM AND SHRI MEHAR SINGH, AM ITA NO. 608/CHANDI/2011 ASSESSMENT YEAR 2005-06 AVINASH SINGH GREWAL V I.T.O. WARD 5(1), SCO 59, 2 ND FLOOR, MADHYA MARG CHANDIGARH SECTOR 26 CHANDIGARH PAN: ACFPG 8979 B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.B. BHASIN RESPONDENT BY: SHRI AJAY SHARMA DATE OF HEARING: 21.9.2011 DATE OF PRONOUNCEMENT: .9.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE FOR ASSES SMENT YEAR 2005- 06, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), CH ANDIGARH DATED 1.3.2011 U/S 250 (6) OF THE INCOME-TAX ACT (IN SHORT THE AC T). 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1 THE ITO HAS ERRED IN IMPOSING PENALTY OF RS. 3,1 3,500/- ON AN ADDITION OF RS. 9,50,000/- U/S 68/69 OF THE ACT AS INCOME FROM OTHER SOURCES, WHILE THE LD. CIT(A) HAS FURTHER ERR ED IN UPHOLDING THE PENALTY WITHOUT CONSIDERING THE APPLICATION FOR ADDITIONAL EVIDENCE AS PER RULE 46A OF THE ACT FILED ON 14.2.2 011. 2 THE ITO HAS ERRED IN IMPOSING THE PENALTY OF RS. 71,803/- AND THE LD. CIT(A) HAS FURTHER ERRED IN UPHOLDING T HE PENALTY ON AN ADDITION OF RS. 6,40,055/- ON ACCOUNT OF SHORT TER M CAPITAL GAINS FROM MUTUAL FUNDS AND S HARES U/S 111A OF THE ACT. 3 THE ITO HAS ERRED IMPOSING THE PENALTY ORDER ON 30.9.2009 FOR WHICH NO NOTICE AFFORDING A FINAL OPPORTUNITY T O THE ASSESSEE WAS ISSUED AFTER 12.8.2009. ITA NO. 608/CHANDI/2011 AVINASH SINGH GREWAL V. ITO 2 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, IT WAS CONCEDED BY THE LD AR FOR THE ASSESSEE THAT SHORT TERM CAPITA L GAINS HAS NOT BEEN DISPOSED OFF IN THE RETURN OF INCOME. AS REGARDS T HE OTHER GROUNDS OF ADDITION AND LEVY OF PENALTY, THE LD AR FOR THE A SSESSEE REFERRED TO THE EVIDENCES FILED AND PRAYED THAT SUBJECT MATTER OF T HE ADDITION FALLS BEYOND THE PURVIEW OF THE PROVISIONS OF THE ACT. 4. THE DR, ON THE OTHER HAND, CONTENDED THAT THE AS HAD CONCEDED NON DISCLOSURE OF SHORT TERM CAPITAL GAINS. HE REFERRE D TO PAGE 5, PARA 2.3 OF PAPER BOOK. THE RELEVANT EXTRACT OF THE SAME IS R EPRODUCED HEREUNDER:- 2.3 AN APPEAL WAS PREFERRED BY THE ASSESSEE AGAINS T THIS ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. HOWEVER, IN VIEW OF THE OTHER MONSTROUS ADDITIONS MADE DURING SCRUTINY PROCEEDIN GS (AS DETAILED IN PARA 1.9 SUPRA) AN EARLY HEARING ON THE APPEAL W AS PREFERRED BEFORE THE LD. CIT(A) AT THE INSTANCE OF THE DEPART MENT, FIXED FOR HEARING ON 11.2.2008. HARD PRESSED FOR TIME, THE A SSESSEE COULD NOT OFFER ANY FURTHER EXPLANATION OR ADDUCE FURTHER EVI DENCE TO SUBSTANTIATE HIS CLAIM REGARDING THE SOURCE OF THIS CASH DEPOSIT. ACCORDINGLY, THE ADDITION MADE BY THE AO ON THIS AC COUNT WAS UPHELD BY THE LD. CIT(A) VIDE ORDER U/S 250(6) OF T HE ACT DATED 25.3.2008, COPY OF RELEVANT EXTRACT OF WHICH IS ENC LOSED AS ANNEXURE E. 5. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND THE PAPER BOOK FILED BY THE ASSESSEE. THE LD. C IT(A) UPHELD THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN VIEW OF ADMI SSION BY THE ASSESSEE OF NON DISCLOSURE OF THE SHORT TERM CAPITAL GAINS. DU RING ASSESSMENT PROCEEDINGS THE AO RECORDED THE CONCLUSIVE FINDING THAT THE ASSESSEE HAD FILED SHORT TERM CAPITAL GAINS OF RS. 9064/- FROM S ALE OF SHARES IN HIS RETURN OF INCOME. CONSEQUENTLY, THE AO INITIATED P ENALTY PROCEEDINGS IN RESPECT OF SUCH ADDITION OF RS. 6,40,055/- AND LEVY PENALTY AT RS. 71,803/- . THE RELEVANT PARA 9 OF THE LD. CIT(A) ORDER WHIC H CONTAINS FINDINGS IS REPRODUCED HEREUNDER:- 9 AFTER TAKING INTO CONSIDERATION THE RIVAL SUBMIS SIONS AND THE ORDER OF THE AO, I FIND THAT THE APPELLANT HAS CONC EALED PARTICULAR ITA NO. 608/CHANDI/2011 AVINASH SINGH GREWAL V. ITO 3 OF INCOME AND NOT SHOWN THE SAME IN THE RETURN OF I NCOME. THE APPELLANT WAS EARNING HUGE AMOUNT OF INCOME BUT NOT SHOWING IN THE RETURN OF INCOME. THE CONTENTION OF THE APPELL ANT THAT BEING A LAYMAN HE WAS NOT AWARE OF HIS TAXABILITY IS NOT AC CEPTED, SPECIALLY KEEPING IN VIEW THE MODE OF INVESTMENT WHERE INCOME WAS INVESTED BY THE APPELLANT. MOREOVER THE APPELLANT FILED APP EAL BEFORE THE LD. CIT(A) AGAINST THE ORDER OF THE AO AND SAME WAS CON FIRMED. 5.1 IN VIEW OF THE SELF ADMISSION OF NON DISCLOSURE OF SHORT TERM CAPITAL GAINS BY THE ASSESSEE, SUBJECT MATTER OF SUCH ADDIT ION AND LEVY OF IMPUGNED PENALTY PATENTLY FALLS UNDER THE PROVISION S OF SECTION 271(1)(C) OF THE ACT. THE FINDINGS OF LD. CIT(A) ARE UPHELD AND GROUND NO. 2 OF ASSESSEES APPEAL IS DISMISSED. 6. THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT IN RESPECT OF CASH OF RS. 9,50,000/- DEPOSITED IN TH E BANK ACCOUNT WHICH REMAINED UNEXPLAINED. THE LD. CIT(A) UPHELD THE AD DITION VIDE ORDER DATED 25.3.2008 AND THE RELEVANT FINDINGS OF THE OR DER AT PARA 21 ARE REPRODUCED HEREUNDER:- 21 THE AO MADE ADDITION OF RS. 9,50,000/- AFTER FI NDING THAT THE ASSESSEE COULD NOT EXPLAIN THE DEPOSITS PLACED IN T HE BANK ACCOUNT OF THE ASSESSEE ON 14.3.2005. THE AO HAS DISCUSSED THIS ISSUE IN PARA 3 OF ITS ORDER WHICH IS REPRODUCED AS UNDER:- 3 ON 20.12.2007, THE ASSESSEE FILED A COPY OF CURR ENT (DOMESTIC) BANK ACCOUNT IN CITIBANK NEW DELHI. ON THE PERUSAL OF BANK ACCOUNT IT WAS NOTICED THAT HE DEPOSITED AN AM OUNT OF RS. 9,50,000 IN CASH IN THE ACCOUNT ON 14.3.2005. THE LD. COUNSEL FOR THE ASSESSEE AS PER ORDER SHEET ENTRY DATED 20.12.2 007, WAS REQUESTED TO EXPLAIN THE SOURCE OF THIS DEPOSIT. O N NEXT DATED I.E. 24.12.2007, NO REPLY IN THIS REGARDS WAS FILED. MA TTER WAS DISCUSSED WITH SHRI AVINASH SINGH GREWAL, WHO ATTEN DED THE ASSESSMENT PROCEEDINGS ON 24.12.2007. THE ASSESSEE IN VERBAL DISCUSSION EXPLAINED THAT THIS AMOUNT WAS DEPOSITED OUT OF ADVANCE RECEIVED ON SALE OF HIS AGRICULTURAL LAND AT HARIAH ERA TEHSIL SOHANA. HE WAS REQUESTED TO FILE DOCUMENTARY EVIDENCE I.E. COPY OF AGREEMENT ETC. IN SUPPORT OF HIS CLAIM. ON 26.12. 2007, LD. COUNSEL FOR THE ASSESSEE EXPRESSED HIS INABILITY TO FURNISH THE DOCUMENTARY EVIDENCE AS 25.12.2007 WAS A HOLIDAY. HE REQUESTED FOR ONE DAY MORE TIME TO FILE NECESSARY DOCUMENTS. ON 27.12.20 07, SHRI ATUL BHASIN, LD. COUNSEL FOR THE ASSESSEE AGAIN ATTENDED AND EXPRESSED HIS INABILITY TO FURNISH DOCUMENTARY EVIDENCE IN FA VOUR OF THEIR CLAIM OF ADVANCE RECEIVED FROM SALE OF LAND AT HARI HERA. AS IT IS A TIME BARRING ASSESSMENT NO MORE TIME COULD BE ALLOW ED TO THE ASSESSEE TO FILE THE EXPLANATION. THE VERBAL EXPLA NATION OFFERED BY ITA NO. 608/CHANDI/2011 AVINASH SINGH GREWAL V. ITO 4 THE ASSESSEE HAS DULY BEEN CONSIDERED AND IS NOT AC CEPTABLE ON THE FOLLOWING GROUNDS:- A) THE AS HAS NOT FURNISHED ANY DOCUMENTARY EVIDENC EIN SUPPORT OF THE CLAIM THAT ANY LAND WAS SOLD BY HIM B) THE ASSESSEE HAS DECLARED AGRICULTURAL INCOME FR OM LAND AT VILLAGE BIR ASHWANI AND VILLAGE KHERI IN HI S RETURN. LAND OF HARIHEERA (WHICH IS CLAIMED TO BE SOLD AND ADVANCE RECEIVED) HAS NOT EVEN BEEN MENTIONED IN THE RETURN . C) HE HAS COMPLETELY FAILED TO ESTABLISH THE IDENTI TY OF PERSON TO WHOM LAND IS CLAIMED TO BE SOLD. HE HAS ALSO FAILED TO FILE ANY CONFIRMATION FROM THE SAID PERSON. D) IT HAS ALSO NOT BEEN BROUGHT ON RECORD, WHEN THE FINAL SALE DEED WAS EXECUTED FOR THE SAID LAND. E) OBSERVATIONS OF HON'BLE APEX COURT IN CIT V. DUR GA PRASAD MORE (1971) 82 ITR 540 (SC) CAN ALSO BE RELI ED UPON FOR TAKING FURTHER DECISION IN THIS CASE. THE PRIN CIPAL HAS BEEN EXPOSITED BY THE HON'BLE APEX COURT AS UNDER:- IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REA L UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE AP PARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH O F THOSE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SE LF-SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSE E WHO WANTS TO EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOC UMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR TH EN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APP ARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQU IRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUND ING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITA LS MADE IN THOSE DOCUMENTS. F) IT IS ALSO WELL SETTLED LAW THAT SECTIONS SUCH A S 68/69 OF THE ACT ENACT GOLDEN RULES OF EVIDENCE AND GIVE STA TUTORY RECOGNITION TO THE PRINCIPLE THAT CREDITS OR MONEY WHICH ARE NOT SATISFACTORILY EXPLAINED MAYBE ASSESSED AS INCO ME IRRESPECTIVE OF THE FACT THAT CREDIT ENTRY IS IN TH E NAME OF A THIRD PARTY. THE INITIAL BURDEN SQUARELY LIES UPON THE ASSESSEE TO EXPLAIN THE CREDIT ENTRY. G) THE ASSESSEE HAS DECLARED AN AGRICULTURAL INCOME OF RS. 12,00,000/-. THE POSSIBILITY OF THAT AMOUNT TO BE DEPOSITED IN THE BANK WAS ALSO LOOKED INTO. AS PER WRITTEN REPL Y OF THE AE THAT AMOUNT HAS BEEN EXPLAINED TO BE UTILIZED FOR P AYMENT AGAINST SOME CREDIT CARDS. THUS THE CASH DEPOSITED IN THE BANK CAN NOT BE OUT OF AGRICULTURAL INCOME. ITA NO. 608/CHANDI/2011 AVINASH SINGH GREWAL V. ITO 5 3.1 KEEPING IN VIEW THE FACTS NARRATED ABOVE, THE AMOUNT OF RS. 9,50,000/- DEPOSITED AS CASH IN BANK ACCOUNT OF THE ASSESSEE ON 14.3.2007, IS HELD TO BE UNDISCLOSED INCOME OF THE ASSESSEE FROM OTHER SOURCES U/S 68/69 OF THE ACT. IN THE YEAR UND ER CONSIDERATION AND TOTAL INCOME OF THE ASSESSEE IS COMPUTED AFTER INCLUDING THE SAME. SINCE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULAR OF INCOME TO THE EXTENT OF RS. 9,50,000/- SO PENALTY P ROCEEDINGS U/S 271(1)(C) ARE BEING INITIATED. 22. DURING THE COURSE OF APPELLATE PROCEEDINGS, NO FRESH SUBMISSIONS HAVE BEEN MADE BY THE ASSESSEE TO EXPLA IN THE SOURCE OF RS. 9,50,000/-. I AM IN AGREEMENT WITH THE OBSE RVATIONS OF THE AO AND ALSO HIS REASONING TO HOLD THE UNEXPLAINED D EPOSITS AS INCOME FROM UNDISCLOSED SOURCES. THE ONUS IS ON TH E ASSESSEE TO PROVE THE GENUINENESS AND SOURCE OF THE DEPOSIT IN HIS BANK ACCOUNT WHICH THE ASSESSEE HAS FAILED TO DO SO. 23. IN VIEW OF THE DISCUSSION MADE BY THE AO IN HIS ORDER AND ALSO FAILURE OF THE ASSESSEE TO PRODUCE EVIDENCE EV EN BEFORE ME, THE ADDITION MADE BY THE AO IS SUSTAINED AND THIS GROUN D OF THE ASSESSEE IS DISMISSED. 7. THE LD. CIT(A) AFTER DISCUSSING VARIOUS LAWS SUC H AS (I) PREMPAL GANDHI V. CIT (2009) TAXMAN 64 (P &H); (II) ACIT V. MCLEOD RUSSEL (I) LTD (2006) 101 ITD 39; (III) K.P. MADHUSUDAN, 251 I TR 99 (SC); (IV) UNION OF INDIA V. BANWAI LAL AGARWAL (1999) 238 ITR 461; (V) CIT V. DKB & CO. (2000) 243 ITR 618 (KER) AND SIR SHADILAL SUGAR & GENERAL MILL LTD V. CIT (1987) 168 ITR 705. 7.1 THE LD. CIT(A) UPHELD THE PENALTY PROCEEDINGS V IDE PARA 15 OF THE HIS ORDER AND THE SAME IS REPRODUCED HEREUNDER:- IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED ON .9.2011 (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNANT MEMBER CHANDIGARH, THE .9.2011 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE CIT(A) / THE DR ITA NO. 608/CHANDI/2011 AVINASH SINGH GREWAL V. ITO 6