Bhavnaben H. Patel, Ahmedabad V. The Income Tax Officer, Ward-7(2), Ahmedabad

ITA 665/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8954 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: S N DIVETIA

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA NO.665/AHD/2014 / ASSTT. YEAR: 2009-2010 BHAVANABEN H. PATEL B-5, SOMESHWAR COMPLEX 132 FEET RING ROAD SATELLITE AHMEDABD 380 0015. PAN : ABXPP 1793 M VS. ITO, WARD-7(2) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA, AR REVENUE BY : MS. SONIA KUMAR, SR.DR ! / DATE OF HEARING : 22/03/2017 '#$ ! / DATE OF PRONOUNCEMENT: 23/03/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-XXI, AHMEDABAD DATED 26.12.2013 PASSED FO R THE ASSTT.YEAR 2009-10. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING PENALTY AMOUNTING TO RS.55,533/- IMPO SED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . ITA NO.665/AHD/2014 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HER RETURN OF INCOME ON 21.1.2010 DECLARING TOTAL INCOME AT RS.4, 47,550/-. ON SCRUTINY OF THE ACCOUNTS IT REVEALED TO THE AO THAT THE ASSESSEE HAD INTEREST INCOME FROM FIXED DEPOSITS WITH BANK, INVE STMENT IN BONDS OF NATIONAL HIGHWAY AUTHORITY OF INDIA. WHEN THE ASSE SSEE WAS CONFRONTED WITH REGARD TO THE ABOVE, SHE REVISED TH E COMPUTATION OF INCOME AND OFFERED A SUM OF RS.1,97,191/- FOR TAXAT ION. THE LD.AO HAS ACCORDINGLY DETERMINED THE TAXABLE INCOME OF THE AS SESSEE AT RS.6,44,750/- AS AGAINST RS.4,47,550/-. HE INITIAT ED PENALTY PROCEEDINGS AGAINST THE ASSESSEE UNDER SECTION 271( 1)(C) OF THE ACT AND ULTIMATELY IMPOSED PENALTY OF RS.55,533/-. APP EAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE LEVY OF PENALTY CONTENDED THAT THESE INVESTMENTS WERE MADE BY FATHER OF THE ASSESSEE. HER HUSBAND HAS FILED EXPLANATION BEFORE THE AO DURING THE PENALTY PROCEEDINGS CONTENDING THEREIN THAT RELATIO NSHIP WITH HIS FATHER- IN-LAW WAS NOT CORDIAL AND HE WAS NOT GIVEN DETAILS OF THE INVESTMENT BY THE ASSESSEE. THESE WERE COME TO THE NOTICE, WHEN THE AO HAS CONFRONTED THE ASSESSEE. THE ASSESSEE HAS NOT RAIS ED ANY DISPUTE THEREAFTER, AND RIGHTLY OFFERED IT FOR TAXATION. T HE LD.COUNSEL HAS PLACED ON RECORD SUBMISSION GIVEN ON OATH BY SHRI HIMANSHU I. PATEL BEFORE THE AO. 5. ON THE OTHER HAND, THE LD.DR CONTENDED THAT THIS EXPLANATION WAS OFFERED BY THE ASSESSEE WHEN SHE WAS CORNERED. SH E HAS NOT VOLUNTARILY DISCLOSED INCOME. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 HAS ITA NO.665/AHD/2014 3 DIRECT BEARING ON THE CONTROVERSY. THEREFORE, IT I S PERTINENT TO TAKE NOTE OF THE SECTION. '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B)** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: 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 O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE N, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O R SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 7. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS B EFORE THEM SHOULD ITA NO.665/AHD/2014 4 BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UN DER THIS SECTION CAN RANGE IN BETWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FE ATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCO ME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HA S CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUT ORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEE MING FICTION, BY WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATE S TWO SITUATIONS; (A) FIRST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO T HE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE A SSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE AS SESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEA L); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS, TO PROVE THAT S UCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL T HE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOT AL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE ITA NO.665/AHD/2014 5 FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. THESE T WO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWAN CE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SEC TION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 8. IN THE LIGHT OF THE ABOVE, IF WE EXAMINE THE FAC TS OF THE PRESENT CASE, THEN IT WOULD REVEAL THAT THERE WAS NO MALA FIDE INTENTION AT THE END OF THE ASSESSEE. SHE FAILED TO OFFER THIS INCO ME BECAUSE SHE HAD NO KNOWLEDGE ABOUT THESE INVESTMENTS, AND THERE WERE S TRAINED RELATIONSHIP BETWEEN FATHER-IN-LAW AND SON-IN-LAW. ON ACCOUNT OF THIS FAMILY DISHARMONY SHE FAILED TO OFFER THIS AMOUNT F OR TAXATION. DURING THE ASSESSMENT PROCEEDINGS, WHEN THE AO HAS POINTED OUT THIS ASPECT, SHE IMMEDIATELY OFFERED THE AMOUNT FOR TAXATION. I N VIEW OF THE ABOVE SITUATION, WE ARE OF THE VIEW THAT THERE IS NO DELI BERATE ATTEMPT AT END OF THE ASSESSEE TO CONCEAL THE INCOME. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE PENALTY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 23 RD MARCH, 2017. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 23/03/2017