SHRI RAMASWAMY NOHOHARAN, Indore V. THE ITO 4(1), Indore

ITA 636/Ind/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8843 (ITAT-INDORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2018
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NOS.635 & 636/IND/2018 ASSESSMENT YEAR: 2009-10 RAMASWAMY MANOHARAN C/O R.S. BANSAL & CO. CHARTERED ACCOUNTANTS 104, URVASHI COMPLEX 3, JAORA COMPOUND, INDORE / VS. ITO 4(1) INDORE ( APPELLANT ) ( RE VENUE ) PAN: AGKPM9960D APPELLANT BY SHRI VIJAY BANSAL , CA RE VENUE BY SHRI K.G. GOYAL, SR. DR DATE OF HEARING: 19.06.2019 DATE OF PRONOUNCEMENT: 26 .06.2019 / O R D E R PER MANISH BORAD, A.M: THESE TWO APPEALS BY ASSESSEE PERTAINING TO A.Y. 2009-10 ARE DIRECTED AGAINST THE SEPARATE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-II, INDORE, (IN SHORT CIT(A)), DATED 11.04.2018 ARISING OUT OF THE ORDER S U/S RAMASWAMY MANOHARAN ITANO.635 & 636/IND/2018 2 271(1)(C) & 271A OF THE INCOME TAX ACT 1961(HEREINAF TER CALLED AS THE ACT) FRAMED ON 27.11.2012 & 22.03.2016 BY ITO-4(1) RESPECTIVELY. THE ASSESSEE HAS RAISED GROUNDS OF APPEAL IN ITANO.635/IND/2018 1.THAT THE ORDER PASSED BY LD. CIT(A) IS BAD IN LA W AND AGAINST THE FACTS OF THE CASE. 2.THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE P ENALTY OF RS.25,000/- U/S 271(1)(C) ON ESTIMATION OF TURNOVER , WHICH IS QUITE UNJUST, ILLEGAL AND AGAINST THE FACT OF THE C ASE. 3.THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING PENAL TY OF RS.25,000/- U/S 271(1)(C), WHERE THE LD. AO HAS IMP OSED THE PENALTY ON BOTH THE LIMPS I.E. CONCEALMENT OF INCOM E AND FILING OF INACCURATE PARTICULARS OF INCOME, WHICH IS QUITE UNJUST, ILLEGAL AND AGAINST THE FACT OF THE CASE. 4. THE APPELLANT CRAVES TO LEAVE, ADD, AMEND, ALTER OR MODIFY OF NAY GROUND BEFORE FINAL DATE OF HEARING. THE ASSESSEE HAS RAISED GROUNDS OF APPEAL IN ITANO.636/IND/2018 1. THAT THE ORDER PASSED BY LD. CIT(A) IS BAD IN L AW AND AGAINST THE FACTS OF THE CASE. 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY U/S 271A CONSIDERING THE CASH DEPOSIT OF RS.42,59,900/- BY THE APPELLANT AS TURNOVER WHICH IS QUITE UNJUST, ILLEGA L AND AGAINST THE FACT OF THE CASE. 3.THE APPELLANT CRAVES TO LEAVE, ADD, AMEND, ALTER OR MODIFY OF NAY GROUND BEFORE FINAL DATE OF HEARING. 2. BRIEF FACTS RELATING TO THESE TWO APPEALS AS CULLED O UT FROM THE RECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL EARNING COMMISSION INCOME FROM TRADING OF SABUDANA. INCOME OF RS.1,80,510/- DECLARED IN THE INCOME TAX R ETURN FILED ON 11.12.2009. ON ACCOUNT OF AIR INFORMATION RE LATING RAMASWAMY MANOHARAN ITANO.635 & 636/IND/2018 3 TO ASSESSEE FOR CASH DEPOSITED IN THE BANK ACCOUNT, CASE WAS SELECTED FOR SCRUTINY AND NECESSARY NOTICE U/S 143 (2) OF THE ACT WAS SERVED UPON THE ASSESSEE. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS LD. ASSESSING OFFICER (IN SHORT LD. AO) OBSERVED THAT CASH OF RS.42,59,900/- WAS DEPOSITED IN THE SAVING BANK ACCOUNT MAINTAINED WITH CORPORATION BANK, INDORE. ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH. THE ASSESSEE CONTENDED THAT CASH WAS RECEIVED TOWARDS AMOUNT RECEIVED FROM BUYERS AND RTGS/NEFT WAS MADE TO MANUFACTURERS AND HE EARNED INCOME FROM COMMISSION FROM PURCHASE AND SALE OF SABUDANA. VARIOUS INFORMATION RELATING TO RESPECTIVE PARTIES WERE FILED BY THE ASSESSEE. REPLY FROM THESE PARTIES WERE NOT CONVINCING TO THE ASSESSING OFFICER AND HE ESTIMATED INCOME @ 5% OF THE CASH DEPOSIT TREATING IT AS TURNOVER AND CALCULATED INCOME AT RS.2,12,995/-. AFTER GIVING SET OFF FOR COMMISSION INCOME OF RS.88,500/- DISCLOSED IN INCOME TAX RETURN, MADE ADDITION FOR RS.1,24,495/-. THE ADDITIONS WERE ALSO MADE FOR UNEXPLAINED INVESTMENT AT RS.44,000/- AND LOW HOUSE HO LD WITHDRAWALS AT RS.25,000/-. INCOME ASSESSED AT RS.3,74,005/- LD. AO ALSO INITIATED PENALTY PROCEEDING S U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE RAMASWAMY MANOHARAN ITANO.635 & 636/IND/2018 4 PARTICULARS OF INCOME AND CONCEALING THE INCOME AND ALSO U/S 271A OF THE ACT FOR NON-MAINTENANCE OF BOOKS OF ACCOUNTS U/S 44AA OF THE ACT ON OBSERVING THAT THE TR ADING RECEIPT EXCEEDS RS.40,00,000/- DURING THE YEAR. 3. SUBSEQUENTLY, THE PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT WERE COMPLETED ON 22.03.2006 LEVYING PENALTY OF RS.25,000/- ON THE ADDITIONS OF RS.1,64,495/- AND PE NALTY OF RS.25,000/- WAS LEVIED U/S 271A OF THE ACT FOR NO N- MAINTENANCE OF BOOKS OF ACCOUNT U/S 44AA OF THE ACT. 4. AGAINST BOTH THE PENALTIES ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) BUT FAILED TO SUCCEED. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE LD. TRIBUN AL AGAINST THE FINDING OF THE LD. CIT(A) CONFIRMING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AT RS.25,000/-AND U/S 271A OF THE ACT AT RS.25,000/-. 6. LD. COUNSEL FOR THE ASSESSEE PRAYED FOR DELETION OF BOTH THE PENALTIES SUBMITTING THAT THE INCOME FROM BUSINE SS WAS MERELY ESTIMATED @ 5% WHICH WAS SUBSEQUENTLY SUSTAINED @ 3% OF THE CASH DEPOSIT BY THE HON'BLE TRI BUNAL ORDER DATED 20.06.2016. 7. AS REGARDS PENALTY U/S 271A OF THE ACT LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REGULAR BOOKS OF ACCOUN TS RAMASWAMY MANOHARAN ITANO.635 & 636/IND/2018 5 WERE MAINTAINED AND TRADING PROFIT AND LOSS ACCOUNT AND BALANCE SHEET WERE FILED. 8. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY ARGUED AND SUPPORTING THE ORDERS OF L OWER AUTHORITIES. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE REC ORD PLACED BEFORE US. 10. APROPOS TO ITANO.635/IND/2018 WHEREIN THE ASSESS EES SOLE GRIEVANCE IS AGAINST THE FINDING OF THE LD. CIT( A) CONFIRMING THE PENALTY OF RS.271(1)(C) OF THE ACT AT RS.25,000/-, WE FIND THAT THE ASSESSEE HAS SHOWN INCOM E FROM COMMISSION FROM PURCHASE AND SALE OF SABUDANA. PARTY WISE DETAILS WERE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS HOWEVER THE ASSESSING OFFICER ESTIMATED INCOME @ 5% OF THE TOTAL CASH DEPOSITS TREATI NG THE ASSESSEE AS A TRADER. IN THE SUBSEQUENT APPEAL BEFORE THE TRIBUNAL THE ASSESSEE GOT PART RELIEF AS TRIBUNAL VI DE ORDER DATED 20.06.2016 SUSTAINED THE ADDITION @ 3% OF THE CASH DEPOSIT. 11. IN THESE GIVEN FACTS AND CIRCUMSTANCES WHEREAS THE INCOME HAS BEEN ESTIMATED BY THE LD. AO AND HAS BEEN FURTHER SCALED DOWN BY THE TRIBUNAL CAN IPSO FACTO CANNOT LEAD LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. SIMILAR VIEW RAMASWAMY MANOHARAN ITANO.635 & 636/IND/2018 6 WAS TAKEN IN THE CASE OF SHIVSHAKTI LAND & FINANCE & OTHER VS. ACIT (2015) 26 ITJ 237 AND ALSO IN THE CASE OF SATYA PRAKASH TIWARI VS. ITO (2015) 26 ITJ 377. WE, THEREFORE, DELETE THE PENALTY OF RS.25,000/- LEVIED U/S 271(1)(C) OF THE ACT AND ALLOW THE ASSESSEES APPEAL ITANO.635/IND/2018. 12. APROPOS SECOND ITANO.636/IND/2018 FOR THE LEVY OF PENALTY AT RS.25,000/- U/S 271A OF THE ACT FOR NON- MAINTENANCE OF THE BOOKS OF ACCOUNT, WE FIND THAT THE ASSESSEE HAS MAINTAINED COMPLETE DETAILS OF PARTY WISE AMOUNT RECEIVED FOR PURCHASE AND SALE. THESE DETAILS WER E FORWARDED TO THE ASSESSING OFFICER AND SOME OF THE PART IES HAVE GIVEN REPLY TO IT. TRADING, PROFIT AND LOSS ACCOU NT AND BALANCE SHEET WERE PLACED BEFORE THE ASSESSING AUTHORI TY WHICH ARE NORMALLY PREPARED ON THE BASIS OF REGULAR BOOK S OF ACCOUNT. ASSESSEE HAS FILED DETAILS OF THE BANK ACCOU NT MAINTAINED BY IT. ASSESSEE HAS SHOWN INCOME FROM COMMISSION BASED ON SUCH BOOKS OF ACCOUNTS. HOWEVER, LD. AO COMPUTED THE INCOME BY APPLYING 5% RATE OF NET PROFIT ON THE TOTAL CASH DEPOSITED IN THE BANK ACCOUNT. 13. IN OUR CONSIDERED VIEW LEVY OF PENALTY BY THE LD . AO U/S 271A OF THE FOR NON-MAINTENANCE OF BOOKS OF ACCOUN T RAMASWAMY MANOHARAN ITANO.635 & 636/IND/2018 7 AT RS.25,000/- WAS NOT JUSTIFIED, AS IT WAS BASED MERE LY ON THE OBSERVATION THAT SOME OF THE PARTIES DID NOT RESPO ND TO THE ASSESSING OFFICERS LETTER CALLING DETAILS OF PURC HASE AND SALE. APART FROM THIS ALL OTHER DETAILS WERE FILED BEFO RE THE ASSESSING OFFICER ON THE BASIS OF WHICH INCOME WAS COMPUTED BY THE ASSESSEE. IN OUR CONSIDERED VIEW NO PENALTY WAS LEVIABLE U/S 271A OF THE ACT AND THE SAME DESERVES TO BE DELETED. ACCORDINGLY, APPEAL OF THE ASS ESSEE VIDE ITANO.636/IND/2018 IS ALLOWED. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AR E ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 26 .06.2 019. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 26/06/2019 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR