Sh. Subhashchand Chaurasiya, Guna V. A.C.I.T., Circle-3, Gwalior

ITA 63/AGR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9966 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 18-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 133A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO.63/AG/2014 ASSESSMENT YEAR:2006-07 SH. SUBHASH CHAND CHAURASIYA, VS. THE ACIT GUNA CIRCLE-3 GWALIOR PAN NO. ABRPC1960H (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MAHESH AGRAWAL RESPONDENT BY : SH. WASEEM ARSHAD DATE OF HEARING : 27/01/2016 DATE OF PRONOUNCEMENT : 09/02/2016 ORDER PER ANNAPURNA MEHROTRA A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE LD. CIT(A) GWALIOR DT. 24/10/2013 , CONFIRMING THE LEVY OF PENALTY AMOUNTING TO RS. 32,850/- LEVIED UNDER SECTION 271(1)(C). 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: (1) THE LEARNED CIT(APPEALS) HAS ERRED WHILE CONFIR MING THE PENALTY OF RS. 32,850/- U/S 271(1) (C) OF INCOME-TAX ACT ON DIFFE RENCE OF SURRENDERED AND RETURNED INCOME OF RS. 10,95,00/-. (2) THE LEARNED CIT(APPEALS) HAS ERRED WHILE CONFIR MING PENALTY U/S 271(1)(C) OF INCOME TAX ACT DISREGARDING JUDGMENTS OF JURIS DICTIONAL HIGH COURT AND JUDGMENT OF HONBLE SUPREME COURT OF INDIA WHERE IT HAS BEEN HELD THAT SURRENDERED INCOME IS NOT A UNDISCLOSED INCOME OF A SSESSEE. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT RETURN OF INCOME WAS FILED ON 31/03/2007 DECLARING TOTAL INCOME OF RS. 17,23,442/ -. A SURVEY UNDER SECTION 133A WAS CONDUCTED ON 10/11/2015, AND THE ASSESSSEE WAS FOUND TO BE IN POSSESSION OF UNACCOUNTED CASH, UNRECORDED STOCK AN D UNEXPLAINED INVESTMENT IN CONSTRUCTION OF HOUSE PROPERTY. WHILE RECORDING THE STATEMENT OF THE ASSESSEE HE SURRENDERED FOLLOWING AMOUNT FOR IN CLUSION IN HIS TOTAL INCOME:- (I) UNACCOUNTED CASH : RS/. 46,800/- (II) UNRECORDED STOCK IN TRADE : RS. 5,00,590/- (III) UNEXPLAINED INVESTMENT IN : RS. 10,80,590/- CONSTRUCTION OF H.P. : RS. 16,28,245/- WHILE COMPUTING THE TOTAL INCOME THE ASSESSEE REDUC ED THE AMOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF HOUSE PRO PERTY FROM RS. 10,80,590/- TO RS. 9,71,090/- BY RELYING UPON REPORT OF A CHARTERE D VALUER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE INVESTMENT IN THE CONSTRUCTION OF HOUSE PROPERTY WAS WORKED OUT AT RS . 19,21,550/- WHEREFROM RS. 3 4,86,910/- WAS REDUCED ON ACCOUNT OF EXPLAINED INVE STMENT AND BALANCE AMOUNT OF RS 14,34,640/- WAS ADDED TO THE TOTAL INC OME OF THE ASSESSEE AS AGAINST RS. 9,71,090/- DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ABOVE ASSE SSMENT ORDER WHERE IN THE LD. CIT(A) RESTRICTED THE ADDITION ON ACCOUNT OF UN EXPLAINED INVESTMENT IN HOUSE PROPERTY TO RS. 1,09,500/- BEING THE DIFFEREN CE BETWEEN THE AMOUNT SURRENDERED BY THE ASSESSEE I.E; RS. 10,80,590/- AN D THAT DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME BEING RS. 9,71,090 /-. PENALTY PROCEEDINGS WERE INITIATED THEREON DURING THE COURSE OF WHICH NO SUB MISSIONS WERE MADE BY THE ASSESSEE AND THEREFORE THE LD. AO HELD THAT TO THE EXTENT OF UNEXPLAINED INVESTMENT IN HOUSE PROPERTY UPHELD BY THE LD. CIT( A) AMOUNTING TO RS. 1,09,500/-. THE ASSESSEE HAD FURNISHED INACCURATE P ARTICULARS OF INCOME AND THEREFORE LEVIED PENALTY UNDER SECTION 271(1)(C). T HE MATTER WAS CARRIED IN APPEAL BEFORE LD. CIT(A) BEFORE WHOM THE ASSESSEE ARGUED THAT THERE NO CONCEALMENT OF INCOME SINCE LESS FIGURE OF INVESTME NT IN HOUSE PROPERTY WAS TAKEN ON THE BASIS OF THE REPORT OF A CHARTERED ENG INEER. THE ASSESSEE FURTHER STATED THAT MERELY BECAUSE SURRENDER HAD BEEN MADE BY THE ASSESSEE DID NOT MEAN THAT THE ASSESSEE HAD UNDISCLOSED INCOME. LD. CIT(A) BRUSHED ASIDE THE ASSESSEES CONTENTION AND HELD THAT THE ASSESSEE HA D CONCEALED PARTICULARS OF INCOME AND THEREFORE UPHELD THE LEVY OF PENALTY UND ER SECTION 271(1)(C). LD. CIT(A) HELD AT PARA 4 OF HIS ORDER AS FOLLOWS: 4 4. I HAVE GONE THROUGH THE PENALTY ORDER, WRITTEN S UBMISSIONS, REMAND REPORT AND REJOINDER. DURING THE COURSE OF PENALTY PROCEED INGS, THE APPELLANT DID NOT FURNISH ANY EXPLANATION. EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS ALSO, THE ASSESSEE HAS MERELY CITED SOME CASE LAWS. THESE CASE LAWS HAVE BEEN GIVEN ON DIFFERENT SET OF FACTS AND ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT. THE APPELLANT HAS NOT DISPUTED THE FACT THAT THE ASSESS EE HAS SHOWN HIS INCOME ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION O F HOUSE AT RS. 9,71,090/- IN PLACE OF THE CORRECT AMOUNT OF RS. 10,80,590/-. AS THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME UNDER THE HEAD UNEXPLAINE D INVESTMENT IN THE CONSTRUCTION OF HOUSE, THEREFORE, I AM OF THE CONSI DERED OPINION THAT THE A.O. HAS RIGHTLY LEVIED PENALTY U/S 271(1)(C). THE CASE OF T HE APPELLANT IS FULLY COVERED UNDER EXPLANATION 1 TO SECTION 271(1)(C). 6. AGGRIEVED BY THE SAME THE ASSESSEE FILED THE PRE SENT APPEAL BEFORE US. 7. BEFORE US LD. AR PLEADED THAT NO INACCURATE PART ICULARS RELATING TO INVESTMENT IN CONSTRUCTION OF HOUSE PROPERTY HAD BE EN FURNISHED BY THE ASSESSEE. IN FACT THE LD. AR SUBMITTED THAT THE ASS ESSEE HAD HIMSELF SURRENDERED AN AMOUNT OF RS. 10,80,590/- DURING THE COURSE OF S URVEY ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HOUSE PROPERTY BUT LATER ON WHEN IT HAD GOT THE COST OF CONSTRUCTION IN HOUSE PROPERTY VALUED BY A REGIS TERED VALUER HE FOUND THAT THE INVESTMENT IN THE CONSTRUCTION OF HOUSE PROPERT Y AMOUNTED TO ONLY RS. 9,71,090/- AND ACCORDINGLY REDUCED THE UNDISCLOSED INVESTMENT IN HOUSE PROPERTY. LD.AR STATED THAT THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THIS CASE SINCE THE INVESTMENT IN CONSTRU CTION OF HOUSE PROPERTY HAD BEEN DISCLOSED RELYING UPON THE REPORT OF THE REGIS TERED VALUER WHILE THE ADDITION HAD BEEN UPHELD MERELY ON THE BASIS OF SUR RENDER MADE DURING THE COURSE OF SURVEY WITHOUT APPRECIATING THE REPORT OF THE REGISTERED VALUER IN THIS 5 CONTEXT. THE LD. AR STATED THAT AT THE TIME OF MAKI NG SURRENDER THE ASSESSEE HAD MERELY ESTIMATED THE COST OF CONSTRUCTION IN THE HO USE PROPERTY. LD. AR DREW OUR ATTENTION TO THE STATEMENT RECORDED OF THE ASSESSEE DURING THE COURSE OF SURVEY ON 10/11/2005, MORE SPECIFICALLY T O THE SECOND STATEMENT RECORDED ON 10/11/2005 WHEREIN REPLY TO QUESTION NO . 3. THE ASSESSEE HAD STATED THE INVESTMENT MADE IN HOUSE PROPERTY AND TH E AMOUNT OF UNDISCLOSED INVESTMENT IS THE SAME. QUESTION NO. 3 & ITS REPLY IS REPRODUCED HERE UNDER: 3- , ! ' & ? '- (, ) 31/03/2005 2 . '. 186910 2 ; '. 3 ) != ; ; > 1650 350 = B. 5,77,500/- ( SQ. FT.) 1650 300 = B. 4,95,000/- ( SQ. FT.) FG 1650 300 = B. 4,95,000/- B. 15,67,500/- H ' 15,67,500/- ; '. 4,86,910/- (18691 0+300000) K '. 1080590/- & 2 L MH G 2 2006 . 4- L 2 L K F K ! ; ; ! B 3 K ? '- (, 2 G 2 K != QR : 2 3 ) K & ( T . REFERRING TO THE SAME LD. AR STATED THAT IT IS CLEA R FROM THE ABOVE THAT THE ASSESSEE HAD ESTIMATED THE INVESTMENT IN HOUSE PROP ERTY AT 15,67,500/- BY 6 APPLYING A RATE OF RS. 350/- TO RS. 300/- TO THE AR EA CONSTRUCTED ON THE DIFFERENT FLOORS. LD. AR STATED THAT IT WAS NOT AN EXACT FIGU RE OF COST OF CONSTRUCTION. THEREAFTER LD. AR DREW OUR ATTENTION TO QUESTION N O. 2 TO THE THIRD STATEMENT RECORDED DURING SURVEY ON 10/11/2005, REPRODUCED AT PAGE 14 OF THE PAPER BOOK AS FOLLOWS: 2- ; DR. Y.S. AGRAWAL ; ! ' G ! ) U K. '- (, H W ; AREA 55 X 40 TX 2200 ; 55 X 30 = 1650 SQ.FT ; 2 ! 2 2 ! 4950 SQ.FT ; 2 2 ! 2 2 ! Z = 2 ; [L PVC & ' ; LATRINE BATHROOM ; TILES & ( H 2 ; INVEST ! 2 K U & K K VALUATION OFFICER REFERRING TO THE SAME LD. AR SUBMITTED THAT EVEN DU RING THE COURSE OF SURVEY WHEN THE STATEMENT OF THE ABOVE WAS RECORDED THE AS SESSEE HAD CATEGORICALLY SUBMITTED THAT THE CORRECT VALUATION OF THE PROPERT Y COULD BE DONE ONLY BY THE VALUATION OFFICER. LD. AR THEREFORE SUBMITTED THAT HAVING THEREAFTER DETERMINED THE VALUATION OF CONSTRUCTION ON THE BASIS OF THE R EGISTERED VALUER REPORT AND DISCLOSING THE UNDISCLOSED INVESTMENT IN HOUSE PROP ERTY ON THE BASIS OF ITS REPORT IT COULD NOT BE SAID THAT THE ASSESSEE HAD FURNISHE D ANY INACCURATE PARTICULARS OF INCOME, SO AS TO MAKE IT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C). 7 8. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER O F LD. AO/CIT(A) AND HELD THAT BY NOT DISCLOSING THE AMOUNT SURRENDERED BY TH E ASSESSEE ON ACCOUNT OF INVESTMENT IN HOUSE PROPERTY, THE ASSESSEE HAD CLEA RLY FURNISHED INACCURATE PARTICULARS OF INCOME AND IT WAS A FIT CASE FOR LEV Y OF PENALTY UNDER SECTION 271(1)(C). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND THE ORDE RS OF THE AUTHORITIES BELOW AND ALSO THE DOCUMENTS PRODUCED BEFORE US. 10. THE FACTS EMERGING IN THE PRESENT CASE ARE THAT DURING THE COURSE OF SURVEY THE ASSESSSEE HAD SURRENDERED AN AMOUNT OF R S. 10,80,590/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF HOUSE PROPERTY. THE UNEXPLAINED INVESTMENT HAD BEEN WORKED OUT AS THE TOTAL INVESTM ENT IN HOUSE PROPERTY WAS TAKEN AT RS. 15,67,500/- AGAINST WHICH THE DISCLOSE D INVESTMENT WAS SHOWN OF RS. 4,86,910/- RESULTING IN UNEXPLAINED INVESTMENT OF R S. 10,80,590/-. THEREAFTER THE ASSESSEE ENGAGED THE SERVICES OF REGISTERED VALUER FOR ESTIMATING THE COST OF CONSTRUCTION IN THE IMPUGNED PROPERTY WHO WORKED OU T A TOTAL INVESTMENT IN THE PROPERTY AT RS. 14,58,000/-. RELYING UPON THE SAME THE UNDISCLOSED INVESTMENT IN HOUSE PROPERTY WAS SHOWN IN THE RETURN OF INCOME FI LED BY THE ASSESSEE TO BE RS. 9,71,090/-. THE REDUCTION IN VALUE OF INVESTMENT WA S NOT ACCEPTED BY THE ASSESSING AUTHORITY AND THE APPELLATE AUTHORITY WHO HELD THAT THE INVESTMENT IN THE CONSTRUCTION OF THE HOUSE PROPERTY WAS TO BE TA KEN AT THE AMOUNT DISCLOSED BY THE ASSESSEE AND SURRENDERED DURING THE COURSE O F SURVEY AND ACCORDINGLY ADDITION OF RS. 1,09,500/- WAS CONFIRMED, TO THE IN COME OF THE ASSESSEE. PENALTY 8 U/S 271(1)(C)HAS BEEN LEVIED ON THIS AMOUNT. IN THE BACK DROP OF THE FACTS STATED ABOVE, IT HAS TO BE EXAMINED WHETHER THE ASS ESSEES CASE FALLS WITHIN THE PARAMETERS SET OUT UNDER SECTION 271(1)(C) FOR THE LEVY OF PENALTY. UNDISPUTEDLY PENALTY UNDER SECTION 271(1)(C) IS LEV IED FOR CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF I NCOME. IN THE PRESENT CASE AS PER THE PENALTY ORDER, THE PENALTY HAS BEEN LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IT HAS NOW TO BE EXAMINED WH ETHER THE ASSESSEE HAS INFACT FURNISHED INACCURATE PARTICULARS OF INCOME. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD HIMSELF SURRENDERED AN AMOUNT OF RS. 1 0,80,590/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HOUSE PROPERTY. IT IS ALS O NOT IN DISPUTE THAT THERE WAS A REGISTERED VALUER REPORT PROCURED BY THE ASSESSEE HIMSELF WHICH VALUED THE HOUSE PROPERTY AT A LESSER FIGURE AND ESTIMATED THE UNDISCLOSED INVESTMENT AT RS. 9,71,090/-. IT IS ALSO NOT IN DISPUTE THAT THE INVESTMENT WHICH WAS STATED BY THE ASSESSEE TO HAVE BEEN MADE IN THE CONSTRUCTION OF H OUSE PROPERTY DURING SURVEY WAS NOT BASED ON ANY EVIDENCE BUT WAS A CALC ULATION BASED UPON A RATE APPLIED TO THE AREA CONSTRUCTED. THE STATEMENT OF THE ASSESSEE RECORDED ON 10/11/2005 AND REPRODUCED ABOVE CLEARLY BRINGS O UT THIS FACT THAT THE ASSESSEE HAD APPLIED THE RATE OF RS. 350 TO ESTIMAT E THE COST OF CONSTRUCTION OF 1650 SQ. FT OF GROUND FLOOR. THE ASSESSEE HAD FURTH ER APPLIED A RATE OF RS. 300 TO ESTIMATE THE COST OF CONSTRUCTION OF FIRST FLOOR AN D THE SECOND FLOOR WHICH WAS AGAIN 1650 SQ. FT. IT IS ALSO EVIDENT THAT THE ASSE SSEE HAD ADMITTED DURING THE COURSE OF RECORDING OF STATEMENT DURING SURVEY ITSE LF THAT THE CORRECT VALUE OF 9 THE PROPERTY COULD BE ESTIMATED BY THE VALUER ONLY. THE RELEVANT QUESTION RAISED ON THE ISSUE AND REPLY IS REPRODUCED ABOVE. FROM THE ABOVE FACT IT IS EVIDENT THAT THE SURRENDE R HAD BEEN BASED ON AN ESTIMATE MADE BY THE ASSESSEE WHICH WAS RESTRICTED TO THE EXTENT OF VALUE CALCULATED AFTER GETTING THE PROPER VALUATION DONE BY THE REGISTERED VALUER. IN SUCH CIRCUMSTANCES THE ASSESSEE WAS WELL WITHIN HIS LIMITS TO HAVE HARBORED A BELIEF THAT THE CORRECT VALUE OF INVESTMENT IN THE HOUSE PROPERTY WAS THAT WHICH WAS DETERMINED BY THE REGISTERED VALUER AND ACCORDI NGLY THE DISCLOSURE OF UNDISCLOSED INVESTMENT IN THE HOUSE PROPERTY BASED ON THE SAME WAS NOT DONE WITH INTENTION TO DEFRAUD THE REVENUE. IT CANNOT IN SUCH CIRCUMSTANCES BE SAID THAT THE ASSESSEE HAD FURNISHED ANY INACCURATE PART ICULARS OF INCOME SINCE THE PARTICULARS OF INCOME FURNISHED BY HIM WERE BASED O N A REGISTERED VALUER REPORT WHICH HAS NOT BEEN REJECTED BY ANY AUTHORITY BELOW. IN VIEW OF THE SAME WE HOLD THAT THE ASSESSE HAVING NOT FURNISHED ANY INAC CURATE PARTICULARS OF INCOME, LEVY OF PENALTY UNDER SECTION 271(1)(C) IS UNCALLED FOR AND OUGHT TO BE DISMISSED. 11. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09/02/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, THE CIT( A), THE DR