Shri Mukesh Girdharlal Padalia, Rajkot V. The Income Tax Officer, Ward-1(2)(5), Rajkot

ITA 62/RJT/2019

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7692 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-04-2024
• Assessment Year: 2008-2009
• Appeal Filed On: 25-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV RANJAN
• Assessee Lawyers: KALPESH PAREKH
• Keywords: TDS; FORM 26AS
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted through E-Court at Ahmedabad) BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . No . 62 /R j t/ 2 0 1 9 ( A s se ss m e nt Y e a r : 20 08- 09 ) Sh r i M u ke sh G ir d h ar l a l P ad a li ya , J . P. T ow e r , O f f ic e No . 2 1 1 , Tag or e R o ad , Ra j k o t- 3 6 00 01 Vs .The I nc o me Ta x Of f ic e r , War d - 1 ( 2 ) (5 ) , R aj k o t [ P A N N o. A I V P P5 3 99 J ] (Appellant) .. (Respondent) I .T .A . N o . 84 /R j t/ 2 0 1 8 ( A s se ss m e nt Y e a r : 20 08- 09 ) Sh r i M u ke sh G ir d h ar l a l P ad a li ya , J . P. T ow e r s , O f fi c e N o. 2 11 , Tag or e R o ad , Ra j k o t- 3 6 00 01 Vs .The I nc o me Ta x Of f ic e r , War d - 1 ( 4 ) , R aj k o t [ P A N N o. A I V P P5 3 99 J ] (Appellant) .. (Respondent) Appellant by : Shri Kalpesh Parekh, A.R. Respondent by: Shri Sanjeev Ranjan, Sr. DR D a t e of H ea r i ng 10.04.2024 D a t e of P r o no u n ce me nt 24.04.2024 O R D E R PER SIDDHARTHA NAUTIYAL, J.M.: These are appeals filed by the Assessee against orders passed by Ld. Commissioner of Income Tax (Appeals), Jamnagar & Ld. Commissioner of Income Tax (Appeals)-I, Rajkot (in short “CIT(A)”), vide orders dated 23.01.2019 & 18.06.2014 for A.Y. 2008-09. 2. The Assessee has taken the following grounds of appeals:- ITA Nos. 62/Rjt/2019 & 84/Rjt/2018 Shri Mukesh Girdharlal Padalia vs. ITO Asst.Year –2008-09 - 2 - ITA No. 62/Rjt/2019 (A.Y. 2008-09) “1. The assessment order passed by the Assessing Officer, u/s. 271(1)(c) is erroneous, unjustified and bad in law. 2. The A.O. has erred in law as well as on facts in levying penalty Rs. 1,27,645/- on account of concealment of particulars of income u/s. 271(1)(c) of the I. T. Act, 1961. The learned CIT(A) has erred in law as well as on the facts in confirming the penalty u/s. 271(1)(c) of Rs. 1,27,645/-.” ITA No. 84/Rjt/2018 (A.Y. 2008-09) “1. The order u/s. 143(3) is bad in law. 2. The A.O. has erred in law as well as on facts in making addition of Rs. 1,05,827/- in respect of contract receipt on account of difference in 26AS and receipt shown in books of accounts. The ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs. 1,05,827/-. 3. The A.O. has erred in law as well as on facts in making addition of Rs. 2,00,500/0 in respect of purchase of agriculture land from the cash balance available on record. The ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs. 2,00,500/-. 4. The A.O. has erred in law as well as on facts in making lumpsum addition of Rs. 1,05,879/- in respect of various expenses for want of vouchers. The ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs. 1,05,879/-. The appellant craves leave to add, alter, amend, delete or withdraw one or more grounds of appeal.” 3. The first order pertains to quantum proceedings, wherein Ld. CIT(A) has confirmed the additions made by the Assessing Officer. The second order passed by Ld. CIT(A) in respect of which the assessee is in appeal before us pertains to penalty confirmed by Ld. CIT(A) in respect of two additions which were made by the Assessing Officer in quantum proceedings referred to above. 4. Before us, the Counsel for the assessee submitted that since small amount of quantum additions were confirmed by Ld. CIT(A), accordingly, in order to by peace of mind, the assessee is not inclined to contest the ITA Nos. 62/Rjt/2019 & 84/Rjt/2018 Shri Mukesh Girdharlal Padalia vs. ITO Asst.Year –2008-09 - 3 - quantum additions before the Income Tax Appellate Tribunal. The Counsel for the assessee submitted that he shall be only putting forth his argument with respect to levy of penalty under Section 271(1)(c) of the Act in respect of two additions, which were subsequently confirmed by the Ld. CIT(A). 5. In view of the submissions of the Ld. Counsel of the assessee before us, the appeal of the assessee with respect to quantum additions (ITA No. 84/Rjt/2018) is being dismissed as not pressed. 6. Now we shall discuss the assessee’s appeal with respect to levy of penalty under Section 271(1)(c) of the Act, in respect of two additions which were confirmed by Ld. CIT(A). Levy of penalty on account of purchase of agricultural land. 7. The brief facts in relation to this ground of appeal are that during the course of assessment proceedings, the Assessing Officer observed that the assessee had purchased agricultural land worth Rs. 2,00,500/-. The assessee could not explain the source of this investment and agreed for an addition of Rs. 2,00,500/-. The Assessing Officer added an amount of Rs. 2,00,500/- to the income of the assessee and also initiated penalty proceedings under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income and thereby concealment of income. 8. In quantum appeal, the assessee submitted that the agricultural land was duly shown by the assessee in his books of accounts and payments duly reflected in the cash book. However, Ld. CIT(A) did not accept the contention of the assessee and confirmed the additions. ITA Nos. 62/Rjt/2019 & 84/Rjt/2018 Shri Mukesh Girdharlal Padalia vs. ITO Asst.Year –2008-09 - 4 - 9. In the appeal against imposition of penalty under Section 271(1)(c) of the Act on the aforesaid addition, the Counsel for the assessee submitted that this is not a fit case for levy of penalty since firstly the payment for agricultural land was made from cash balances available with the assessee at the relevant point in time. Secondly, the aforesaid agricultural land was clearly shown by the assessee in his books of accounts as well as in the Audit Report. Accordingly, the assessee submitted that once the land is purchased from cash available with the assessee (duly supported by furnishing of cash book by the assessee during the course of assessment proceedings) and the said agricultural land is also reflecting in the books of accounts of the assessee, which have been duly audited, then there is no question of levy of penalty. The assessee further submitted that the assessee is a civil contractor and during the impugned year under consideration, the assessee had contractual receipts of 2,14,08,976/- and therefore, the assessee had sufficient liquidity of cash funds so as to purchase the aforesaid property amounting to Rs. 2,00,500/- only. Accordingly, the assessee submitted that no penalty may be levied on account of purchase of agricultural land. However, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:- “5.1 The second issue in the case of appellant is related to levy of penalty u/s 271(1)(c) of the Act on addition of Rs. 200500/- as made by the Assessing Officer on account of unexplained sources of investment in purchase of agricultural land. As per the Assessing Officer the appellant during the course of assessment proceedings was asked to explain the sources of investment on purchase of land. As per the Assessing Officer in respect of giving ample opportunity to explain this issue the appellant failed to explain the sources of investment and agreed for addition of this amount of Rs. 2,00,500/- on total income and penalty proceedings u/s 271(1)(c) of the Act were initiated for furnishing of inaccurate particulars of income. The contention of AR of the appellant as per his written submission is that the payment of purchase of agricultural land was made from the cash balance at that point of time. As per the appellant this agricultural land was clearly shown in the books of account as well as in the audit report. Surprisingly the appellant failed to attend the office of the Assessing Officer during the course of penalty ITA Nos. 62/Rjt/2019 & 84/Rjt/2018 Shri Mukesh Girdharlal Padalia vs. ITO Asst.Year –2008-09 - 5 - proceedings in response to show cause notice of the Assessing Officer and no any explanation was made before the Assessing Officer and no any written submission was also filed. Thus the appellant has failed to explain the sources of investment as made in purchase of land either at the time of assessment proceedings or at the time of penalty proceedings. Even at appellate stage a/so appellant could not substantiate this claim i.e. the payment for agriculture land was made from the cash balance which was available at that point of time before the CIT(A). Considering these facts, it can be said that the appellant has filed inaccurate particulars of income so far as levy of penalty u/s 271(1)(c) of the Act on this addition of Rs. 200500/- is concerned and therefore this levy of penalty of appeal 2,00,500 as levied by the AO u/s 271(1)(C) of the act is hereby confirmed. Thus the ground of appeal of the appellant is dismissed.” 10. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) confirming the levy of penalty. Before us, the Counsel for the assessee reiterated the submissions made before Ld. CIT(A) which are primarily to the effect that the aforesaid agricultural land was clearly shown by the assessee in the books of accounts as well as in the Audit Report. Secondly, the assessee is a civil contractor and had shown contractual receipts of Rs. 2,14,08,976/-. Accordingly, it was submitted that the assessee was having sufficient liquidity of cash funds so as to make investments in the aforesaid property. Thirdly, the Counsel for the assessee submitted that the cash book extracts showing entries were also submitted during the course of assessment proceedings which clearly showed that sufficient cash balance was available in the cash book of the assessee for purchasing the aforesaid land. Therefore, looking into the instant facts there is no question of levy of penalty under Section 271(1)(c) of the Act for concealment of income / furnishing inaccurate particulars of income. 11. In response, Ld. D.R. placed reliance on the observations made by the Ld. CIT(A) in the appellate order. ITA Nos. 62/Rjt/2019 & 84/Rjt/2018 Shri Mukesh Girdharlal Padalia vs. ITO Asst.Year –2008-09 - 6 - 12. We have heard the rival contentions and perused the material on record. On going through the instant facts, we are of the considered view that this is not a fit case of levy of penalty. The assessee has shown contractual receipts of Rs. 2,14,08,976/- and had also produced copy of cash book, which showed that the assessee was having sufficient cash balance for the purpose of purchasing the aforesaid property. Further, the above agricultural land was also shown by the assessee in the books of accounts as well as in the Audit Report. Penalty under Section 271(1)(c) of the Act cannot be levied simply on the basis that the assessee has agreed to additions / not contested additions made in quantum proceedings. Accordingly, looking into the instant facts, just because the assessee as agreed to the aforesaid addition in quantum proceedings, would itself not justify imposition / levy of penalty. 13. In the result, Ground No. 1 of the assessee’s appeal is allowed. Ground No. 2:- Levy of penalty in respect of addition of Rs. 1,05,827/- on account of contractual receipts. 14. The brief facts in relation to this ground of appeal are that the assessee has shown total income of Rs. 2,14,08,976/- in the books of accounts, whereas in Form 26AS, the income of the assessee was reflecting at a figure of Rs. 2,15,15,062/-. 15. During the course of assessment proceedings, the assessee failed to provide explanation on this issue and he agreed for addition of the aforesaid amount to his income. As per the Assessing Officer, since the assessee ITA Nos. 62/Rjt/2019 & 84/Rjt/2018 Shri Mukesh Girdharlal Padalia vs. ITO Asst.Year –2008-09 - 7 - failed to provide any plausible explanation, penalty under Section 271(1)(c) of the Act was also imposed on the assessee for furnishing inaccurate particulars of income. 16. In appeal before CIT(A), against the imposition of penalty under Section 271(1)(c) of the Act, the assessee submitted that this difference of Rs. 1,05,827/- is essentially on account of accounting practices followed by the assessee with respect to recognition of Revenue. The assessee submitted that as per the accounting practices followed by the assessee, the revenue / amounts are booked only when the assessee gets bills approved from the contractee / customers. Therefore, there may be some instances where bills are placed before the customers which have not been approved. Hence, there remains the possibility that the assessee has not recorded the same as income in the particular year, but the assessee has recorded that income in the next year, whereas the customers has deducted TDS and in Form 26AS has claimed the same as expenses in the particular year itself. The difference between the Revenue and the books of accounts of the assessee and in Form 26AS was only on account of a difference in methods of accounting, and timing of booking the invoices by the customers. The assessee had no mala fide intention to conceal the Revenue and further, the difference was also of a megre amount of Rs. 1,05,827/- as against the total contractual receipts declared by the assessee amounting to Rs. 2,14,08,976/- in the books of accounts. Therefore, from the aforesaid facts, it is evident that the assessee had no mala fide intention to conceal the Revenue. 17. However, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:- ITA Nos. 62/Rjt/2019 & 84/Rjt/2018 Shri Mukesh Girdharlal Padalia vs. ITO Asst.Year –2008-09 - 8 - “As per the AR on the basis of this method, the appellant has not considered the revenue and related expenses of work of Rs. 105827/- in AY 2008-09. As per the AR this bill generally booked only when the appellant gets bill approved from the contractee institute. As per the AR there remains the possibility that the appellant has not recorded the same as income in particular year, but he has recorded that income in the next year whereas the customers has deducted the TDS and has shown in 26AS form to claim the expenses in the particular year. But this entire submission of the appellant is not supported by any evidence. The AR of the appellant has not been able prove that this contract income of Rs. 1,05,827/- has properly been booked in consecutive, financial year. It may be mentioned that the Ld. CIT(A) has also confirmed this addition of Rs. 105827/- for want of evidences in details. Considering the facts it can be said that the appellant has concealed the particular of income and therefore the Assessing Officer has correctly levied the penalty u/s 271(1)(c) on this addition of Rs. 1,05,827/- and the same is hereby confirmed.” 18. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) confirming the levy of penalty under Section 271(1)(c) of the Act, on the addition of Rs. 1,05,827/-. 19. Before us, the Counsel for the assessee primarily reiterated the submissions which were made by the assessee before Ld. CIT(A). 20. In response, Ld. D.R. placed reliance on the observations made by the Ld. CIT(A) in the appellate order. 21. We have heard the rival contentions and perused the material on record. On going through the facts of the instant case, the totality of circumstances, the explanation given by the assessee on account of the possible cause of mismatch between the Revenue recognized by the assessee and the amount reflecting in Form 26AS, looking into the fact that the mismatch was only of a meagre amount of Rs. 1,05,827/- against the total contractual receipts of Rs. 2,14,08,976/- shown by the assessee as his contractual receipts, we are of the considered view that this is not a fit case for levy of penalty under Section 271(1)(c) of the Act. From the facts ITA Nos. 62/Rjt/2019 & 84/Rjt/2018 Shri Mukesh Girdharlal Padalia vs. ITO Asst.Year –2008-09 - 9 - placed on record, apparently the assessee has no mala fide intention to conceal the Revenue or furnish inaccurate particulars of his Revenue. In the result, levy of penalty with respect to addition on account of contractual receipts is hereby directed to be deleted. 22. In the result, the appeal of the assessee is allowed in ITA No. 62/Rjt/2019. 23. In the combined result, the appeal filed by the assessee in ITA No. 62/Rjt/2019 for A.Y. 2008-09 is allowed and the appeal filed by the assessee in ITA No. 84/Rjt/2018 for A.Y. 2008-09 is dismissed as not pressed. This Order pronounced in Open Court on 24/04/2024 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 24/04/2024 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/ Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, राजोकट / DR, ITAT, Rajkot 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार Dy./Asstt.Registrar) आयकर अपील य अ धकरण, राजोकट / ITAT, Rajkot