AKBAR J. MOMIN, MUMBAI V. ITO WD 20(3)-1, MUMBAI

ITA 6693/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92374 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68; 2

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A - BENCH . , , BEFORE S/SH. D. MANMOHAN , VICE PRESIDENT & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 6693 /MUM/20 1 1 , / ASSESSMENT YEAR - 200 5 - 06 SHRI AKBAR J. MOMIN C/O. V.B. GOYAL & CO., 102, UNIQUE TOWER, GOREGAON (W) MUMBAI - 400 0 62 . PAN:A A OPM 7808 E VS INCOME TAX OFFICER WARD - 21(3) - 1 BANDRA (E) MUMBAI - 400 0 51 . ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHRI VIMAL PUNMIYA / REVENUE B Y : SHRI ASGHAR ZAIN / DATE OF HEARING : 27 - 0 4 - 2015 / DATE OF PRONOUNCEMENT : 27 - 04 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 8.7.2011 OF CIT(A) - 32 , MUMBAI, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF AP PEAL: 1. THE LD. CIT(A) IS NOT JUSTIFYING THE PENALTY OF RS.2,11,165/ - U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE CRAVES LEAVE TO ADD FURTHER GROUNDS OR TO AMEND OR ALTER THE EXISTING GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. ASSESSEE , AN INDIVIDUAL FILED HIS RETURN OF INCOME ON 17/8/2005 DECLARING TOTAL INCOME AT RS. 2,82,918/ - .THE ASSESSING OFFICER(AO) COMPLETED THE ASSESSMENT ON 15.11.2007 U/S.143 (3) OF THE ACT, DETERMINING INCOME OF THE ASSESSEE AT RS.8,88,920/ - . 2 . EFFECTIVE G ROUND OF APPEAL IS ABOUT LEVY OF PENALTY OF RS.2.11 LACS U/S. 271(1)(C) OF THE ACT. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE DEPOSITED CASH OF RS.26.42 LACS IN HIS BANK ACCOUNT AT D EVELOPMENT CREDIT BANK L TD. W HEN ASKED TO E XPLAIN THE SOURCE OF CASH DEPOSIT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF DEPOSIT TO THE EXTENT OF RS.6.06 LACS. THE AO MADE AN ADDITION OF THE ABOVE SUM U/S. 68 OF THE ACT TREATING IT AS UNEXPLAINED CASH CREDIT. THE ASSESSEE CHALLENGED THE ORDER OF THE AO BEFORE THE FIRST APPELLATE AUTHORITY (FAA), WHO DIS MISSED THE APPEAL FILED BY HIM.IN THE MEANWHILE, THE AO ISSUED A NOTICE U/S. 2 74 R.W.S. 271(1)(C) OF THE ACT. FURTHER A SHOW CAUSE NOTICE DT.19.10. 2010 WAS ISS UED AND SERVED TO THE ASSESSEE. VIDE HIS L ETT ER,DT. 25/3/2010, THE ASSESSEE SUBMITTED THAT HE REQUIRED THE BANK BALANCE FOR THE PURPOSE OF HIS SON WHO WANTED TO GO TO CANADA DURING THE YEAR OF ASSESSMENT ,THAT THE ASSESSEE HAD TIME TO TIME DEPOSITED THE AMOUNT IN HIS BANK ACCOUNT, THAT THERE WA S NO CONCEALMENT OF INCOME OF THE ASSESSEE ,THAT THE PENALTY PROCEEDINGS U/S. 271 (1)(C) OF THE ACT SHOULD BE DROPPED.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ,THE AO HELD THAT HIS EXPLANATION WAS NOT ACCEPTABLE, THAT HE HAD NOT OFFERED INCOME VOLUNTAR ILY AT THE TIME OF FILING RETURN OF INCOME ,THAT O N A SPECIFIC QUERY RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD NOT DISCHARGED THE ONUS TO ESTABLISH THE SOURCE OF SUCH CREDIT APPEARING IN HIS BANK ACCOUNT ,THAT H AD THERE BEEN NO SCR UTINY THE INCOME WOULD HAVE BEEN ESCAPED ASSESSMENT ,THAT THE DISCREPANCY WAS DETECTED ,THAT INCOME WAS ENHANCED DURING THE 2 ITA NO. 6693 /M/ 1 1 AKBAR J. MOIN COURSE OF ASSESSMENT PROCEEDINGS,THAT THE ASSESSEE HAS CONCEALED THE INCOME TO THE EXTENT OF ENHANCED INCOME , THAT IT WAS A FIT CASE F O R LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 3. A GGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,THE ASSESSEE ARGUED THAT PENALTY PROCEEDINGS WE RE DIFFERENT FROM ASSESSMENT PROCEEDINGS ,THA T MERELY BECAUSE OF AN ADDITION PENALTY COULD NOT BE LEVIED AUTOMATICALLY ,THAT THERE WA S NO CONCEALMENT OF INCOME .AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE PENALTY ORDER,THE FAA HELD THAT THE ASSESSEE HAD GIVEN ONLY VAGUE REPLIES WHICH HE HAD NOT BEEN ABLE TO SUBSTANTIATE WITH EVIDENCE ,THAT D URING ASSESSMENT PROCEEDINGS HE SAID THAT THERE WERE CASH WITHDRAWALS FROM WI FE'S A/C. AND ACCOUNT OF M/S. PRINT INDIA WHICH WERE DEPOSITED IN THE PERSONAL ACCOUNT ,THAT THE SAID EXPLANATION WAS FOUND UN SUBSTANTIATED ,THAT THERE WAS V IOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT , THAT THE ASSESSEE DID NOT TRY TO A DDUCE ANY EVIDENCE TO FURTHER TO CORROBORATE HIS EARLIER STAND ,THAT HE WAS NOT ABLE TO EXPLAIN THE SOURCE OF SUCH CREDITS. REFERRING TO T HE CASES OF JEEVAN LAL SHAH( 205 ITR 244), K P MADHUSUDAN(251 ITR 99),MUSSADILAL RAMBHAROSE(165ITR 14 ), HE HELD THAT THE ASSESSEE HAD NOT BEEN ABLE TO REBUT THE PRESUMPTION WITH AN EXPLANATION WHICH COULD BE SAID A BONAFIDE EXPLANATION ,THAT LEVY OF PENALTY WAS JUSTIFIED. 4 .BEFORE US,AUTHORISED REPRESENTATIVE (AR) STATED THAT ASSESSEE HAD FILED EXPLANATION ABOUT THE WITHDRAWAL MADE BY THE WIFE OF THE ASSESSEE, THAT WHILE IMPOSING THE PENALTY THE AO AND THE FAA HAD NOT CONSIDERED THE ENTRIES APPEARING IN HER BAN K ACCOUNT, THAT IF THE EXPLANATION OFFERED ABOUT THE WITHDRAWAL BY HIS WIFE WAS CONSIDERED THERE WOULD BE NO CONCEALMENT OF PARTICULARS OF INCOME, THAT THE WITHDRAWAL AND DEPOSIT OF CASH ARE NECESSITATED BECAUSE OF THE REQUIREMENT OF VISA FORMALITIES TO BE PERFORMED FOR THE SON OF THE ASSESSEE WHO WAS TRAVELLING TO CANADA. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 5 .WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD HELD THAT THE ASSESSEE H AD OFFERED EXPLANATION ABOUT RS.20.36 LAKHS OUT OF THE CASH DEPOSIT OF RS.26.42 LAKHS,THAT A CLAIM ABOUT CASH WITHDRAWAL FROM THE BANK ACCOUNT OF THE WIFE OF THE ASSESSEE WAS MADE BEFORE THE AO AND THE FAA,THAT RELEVANT DOCUMENTS WERE FU RNISHED IN SUPPORT OF THE CLAIM,THAT WHILE LEVYING THE PENALTY THE CASH AVAILABLE IN THE BANK ACCOUNT OF THE WIFE OF THE ASSESSEE WAS NOT CONSIDERED.IF THE PEAK AMOUNT AVAILABLE IN THE BANK ACCOUNT OF THE WIFE OF THE ASSESSEE IS TAKEN IN TO CONSIDERATION IT BECOMES CLEAR THA T THE ASSESSEE HAD LOGICALLY EXPLAINED THE SOURCES OF RS.26.42 LAKHS.THE AO AND THE FAA HAD MIXED THE ISSUE OF SECTION 269SS AND CONCEALMENT PENALTY.WE ARE OF THE OPINION THAT BOTH THE ISSUES ARE SEPARATE AND HAVE NO RELATION.FOR CONTRAVENTION OF THE PROVI SIONS OF SECTION 269SS A PENALTY U/S.271(1)(C) CANNOT BE IMPOSED. ONE OF THE BASIC PRINCIPLE GOVERNING PENALTY PROVISIONS IS THAT AN ADDITION MADE DURING ASSESSMENT PROCEEDINGS SHOULD NOT RESULT IN AUTOMATIC LEVY OF PENALTY.IN THE CASE UNDER CONSIDERATION , THE AO HAD LEVIED THE PENALTY AS A RESULT OF THE ADDITION MADE DURING QUANTUM PROCEEDINGS.BUT,IN OUR OPINION,F OR LEVYING CONCEALMENT PENALTY EXPLANATION OFFERED BY THE ASSESSEE HAS TO BE CONSIDERED AND IT HAS TO BE DECIDED AS TO WHETHER THE EXPLANATION IS PLAUSIBLE OR NOT.IF THE EXPLANATION OF THE ASSESSEE IS SUBSTANTIATED AND IS BONAFIDE,THEN NO PENALTY CAN BE LEVIED FOR CONCEALING THE PARTICULARS OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME.WE FIND THAT THE ASSESSEE HAD OFFERED AN EXPLANATION AND SAME IS SUBSTANTIATED BY THE BANK ACCOUNT OF HIS WIFE. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE,WE ARE REVERSING THE ORDER OF THE FAA AND DECIDING THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE . AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . 3 ITA NO. 6693 /M/ 1 1 AKBAR J. MOIN . ORDER PRO NOUNCED IN T HE OPEN COURT ON 27 TH , APRIL , 2015. 27 TH APRIL , 2015 SD/ - SD/ - ( . / D. MANMOHAN ) ( / RAJE NDRA) / VICE PRESIDENT / ACCOUNTANT MEMBER / MUMBAI, /DATE: 27 .04 .2015 JV. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.