SRIKISHAN AGARWAL, Sikar V. DCIT, Sikar

ITA 69/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5329 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 21-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEPH JCIT DHK
• Assessee Lawyers: RAJIV SOGANI
• Keywords: Business expenditure; Charitable institution; Opportunity of being heard; Additional evidence
• Section: 143(3)

Judgement Text

K;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 69/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2006-07 SRIKISHAN AGARWAL, THROUGH (L/H) VISHNU AGARWAL, OPP. RAILWAY SATE, NEEM KA THANA, SIKAR. CUKE VS. DCIT, CIRCLE-SIKAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ABMPA 9845 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJIV SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : MRS. NEENA JEPH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22/03/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 06/05/2016 VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 21/11/2012 OF THE LEARNED CIT(A)-III, JAIPUR FOR A.Y . 2006-07. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ID. CIT (A) HAS ERRED IN CONFIRMING THE ACTION O F THE ID. AO IN IMPOSING PENALTY U/S 271(1)(C) OF INCOME TAX ACT. 1961 AMOUNTING TO RS. 2,44,937/-. THE ACTION OF 2 ITA NO. 69/JP/2013 SRIKISHAN AGARWAL VS DCIT THE ID. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY A ND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE PENALTY OF RS.2,44,937/- IMPOSED U/S 271(1)(C). 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ID. CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F THE ID. AO IN IMPOSING PENALTY U/S 271(1)(C) OF INCOME TAX ACT, 1961 AMOUNTING TO RS. 2,44,937/-ON A DEAD PERSON. THE ACTION OF THE ID. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE PENALT Y ORDER. 2. IN THIS CASE, THE ASSESSEE FILED RETURN ON 29/07 /2006. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT) ON 17/12/2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF CO ST OF MARBLE AT RS. 6,09,534/- AND DISALLOWANCE OF EXPENDITURE AT RS. 61 ,018/-. THE ASSESSEE CHALLENGED THESE ADDITIONS BEFORE THE HON BLE ITAT, WHICH HAS BEEN CONFIRMED. THE LD ASSESSING OFFICER INITIATED THE PENALTY PROCEEDING FOR CONCEALMENT OF TRUE INCOME AND FURNI SHING INACCURATE PARTICULARS OF SUCH INCOME. THE LD ASSESSING OFFICER BEFORE IMPOSING PENALTY, GAVE REASONABLE OPPORTUNITY OF BEING HEARD . THE ASSESSEE FILED REPLY VIDE LETTER DATED 18/2/2011, WHICH HAS BEEN CO NSIDERED BY THE ASSESSING OFFICER. AFTER CONSIDERING THE ASSESSEES REPLY, HE HAS HELD 3 ITA NO. 69/JP/2013 SRIKISHAN AGARWAL VS DCIT THAT THE ASSESSEE HAS DECLARED INCOME FROM CONSTRUC TION AND SALE OF SHOPS DURING THE YEAR. THE ASSESSEE HAS CLAIMED BOGU S EXPENSES OF RS. 6,09,534/- AS COST OF MARBLE. THE ASSESSEE HAD DEBI TED TOTAL EXPENDITURE AT RS. 22,16,592/- IN THE P&L ACCOUNT A S PER CONSTRUCTION ACCOUNT FILED WITH THE RETURN OF INCOME. THE EXPENDIT URE DEBITED ON ACCOUNT OF COST OF MARBLE WAS NOT FOUND TO THE ASSES SING OFFICER FOR BUSINESS PURPOSES. THE ASSESSEE COULD NOT PRODUCE AN Y EVIDENCE FOR CLAIMING THIS EXPENDITURE. SPOT INQUIRY GOT CONDUCT ED THROUGH THE INSPECTOR LEVEL THAT NO SUCH WORK WAS DONE BY THE ASS ESSEE. THE ASSESSEE COULD NOT EVEN SPECIFIED IN WHICH PARTICULA R SHOP OR PLACE, THE MARBLE WAS USED. THE ASSESSEE HAD THUS FAILED TO ESTA BLISH THE GENUINENESS OF THE EXPENDITURE OF RS. 6,09,534/-. W HILE COMPUTING HIS TOTAL INCOME, THE ASSESSEE HAD CLAIMED FURTHER EXPE NSES OF RS. 61,018/- ON ACCOUNT OF BANK COMMISSION AND OTHER EXPENSES AN D DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HIMS ELF ADMITTED THAT THESE EXPENSES WERE PERSONAL NATURE AND WERE INADMISS IBLE. THEREFORE, THE LD ASSESSING OFFICER IMPOSED PENALTY AT RS. 2,4 4,937/- U/S 271(1)(C) OF THE ACT, WHICH IS 100% OF TAX SOUGHT TO BE EVADED . 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD DISMISSED THE 4 ITA NO. 69/JP/2013 SRIKISHAN AGARWAL VS DCIT APPEAL BY OBSERVING THAT THE FINDINGS OF THE ASSESS ING OFFICER ARE BASED ON THE SPOT INQUIRY MADE BY HIM AND THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY TO PRODUCE THE EVIDENCE OF THE USE OF M ARBLE. IN THE STATEMENT RECORDED ON 05/12/2008, SHRI JAGDISH PRAS AD JANGIR, WHO WAS LOOKING AFTER THE CONSTRUCTION WORK OF THE ASSESSEE AND WAS ALSO HAVING POWER OF ATTORNEY FROM THE ASSESSEE, COULD NOT SPECI FY IN WHICH PARTICULAR SHOP OR PLACE THE MARBLE WAS USED. THE AS SESSEE WAS ALSO GIVEN AN OPPORTUNITY BY THE ASSESSING OFFICER TO FI LE AN AFFIDAVIT STATING THAT THE MARBLE WAS ACTUALLY USED AND IDENTIFY THE P ARTICULAR SHOP OR PLACE WHERE IT WAS USED. THE ASSESSEE REFUSED TO DO SO VIDE HIS LETTER DATED 17/08/2008. THEREFORE, DISALLOWANCE WAS NOT MAD E ON ACCOUNT OF LACK OF EVIDENCES BUT NO MARBLE WAS USED BY THE ASSE SSEE. THE ADDITIONAL EVIDENCES FILED IN THE FORM OF PHOTO COP IES OF SELF MADE VOUCHERS AND PAYMENT SLIPS DO NOT PROVE THE USE OF MARBLE IN THE CONSTRUCTION OF COMPLEX. THE ASSESSEE COULD NOT PROD UCE ORIGINAL COPY OF THE EVIDENCES BEFORE THE ASSESSING OFFICER FOR V ERIFICATION. PAGE NO. 1 OF ADDITIONAL EVIDENCES FILED, A SELF MADE VOUCHER OF RS. 4,11,608/-, WHICH WAS DATED 31/3/2008 WHEREAS THE CORRESPONDING BI LL OF LADING AT PAGE NO. 2 WAS DATED 3/2/2006. HENCE HE HAS NOT ADMI TTED THE ADDITIONAL EVIDENCE AS GENUINE AND VALID EVIDENCE. THUS, EVIDENCES 5 ITA NO. 69/JP/2013 SRIKISHAN AGARWAL VS DCIT WERE NOT MADE AVAILABLE DURING THE QUANTUM PROCEEDIN GS BEFORE THE HONBLE ITAT. THE LD ASSESSING OFFICER HAD PROVED BEY OND DOUBT THAT THE MARBLE WAS NO WHERE USED IN THE CONSTRUCTION OF C OMPLEX. THEREFORE, THE ASSESSEE CLAIMED BOGUS EXPENSES. LD C IT(A) UPHELD THE PENALTY U/S 271(1)(C) OF THE ACT. HE ALSO CONSIDERE D THE VARIOUS CASE LAWS ON DISALLOWANCE OF BUSINESS EXPENSES. THE ISSUE O F PENALTY CAN BE IMPOSED ON THE EXPIRED PERSON, HAS ALSO CONSIDERED BY THE LD CIT(A). HE HELD THAT THE ASSESSMENT PROCEEDINGS WAS COMPLETE D AT THE TIME WHEN HE WAS ALIVE EVEN UP TO LD CIT(A). IN THIS CASE, THE ASSESSEE HIMSELF FILED THE RETURN NOT BY THE LEGAL HEIRS. THE CASE LAWS REFERRED BY THE ASSESSEE ARE ALSO NOT CONVINCED HIM THAT PENALT Y CANNOT BE IMPOSED ON THE EXPIRED ASSESSEE. THEREFORE, HE CONFIRMED THE PENALTY. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE MARBLE EXPENDITURE WAS DULY REFLECTED IN THE REGULARLY MAINTAINED BOOKS OF ACCOUNT OF KAM LA MODI MARKET. THE MARBLE WAS PURCHASED BY THE ASSESSEE ON 03/2/2006 FR OM WONDER GRANITE PVT. LTD., GURGAON, HARYANA. HE HAS DRAWN OU R ATTENTION ON PAGE NO. 9 OF THE PAPER BOOK TO CONFIRM THE MARBLE PURCHASE. THIS EVIDENCE PROVED BEYOND DOUBT THAT THIS EXPENDITURE WAS GENUINE AND 6 ITA NO. 69/JP/2013 SRIKISHAN AGARWAL VS DCIT INCURRED BY THE ASSESSEE. THE MARBLE EXPENDITURE WAS RELATED TO THAT PORTION OF PROPERTY, WHICH WAS SOLD DURING THE YEAR. THEREFORE, THE SAME WAS DIRECTLY DEBITED TO THE P&L ACCOUNT OTHERWIS E ALSO THE METHOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE IS NOT RELEV ANT FOR CLAIMING ANY EXPENDITURE. BEFORE THE ASSESSING OFFICER IN ASSESS MENT PROCEEDINGS, HAS FURNISHED PHOTO COPIES OF BILLS BUT ORIGINAL BI LLS COULD NOT BE PRODUCED BEFORE HIM. AS THE ASSESSEE ALREADY EXPIRE D, THEREFORE, ORIGINAL VOUCHERS COULD NOT BE PRODUCED. THE LEGAL H EIRS OF THE ASSESSEE MADE VARIOUS EFFORTS TO TRACE OUT THE ORIGINAL VOUC HER BUT THEY WERE ALSO HELPLESS TO PRODUCE THESE VOUCHERS BUT AT THE STAGE OF THIS APPEAL, THEY HAVE BEEN PRODUCED BEFORE THE HONBLE BENCH. THE LD CIT(A)S OBSERVATION IS ALSO NOT RIGHT THAT PHOTO COPIES OF THE BILLS ARE NOT GENUINE. IF ANY DOUBTS WERE IN THE MIND OF THE LD CI T(A) OR LD ASSESSING OFFICER THEY HAVE POWER TO ISSUE SUMMON TO MARBLE SU PPLIER. AT THE TIME OF SPOT INQUIRY CONDUCTED THROUGH THE INSPECTO R, THE MARBLE WAS NOT FOUND FIXED IN THE CONSTRUCTED AREA, IT IS CLAI MED THAT THERE IS POSSIBLE TO ALTER THE MARBLE FIXED BY THE ASSESSEE BY THE BUYER AS MARBLE WAS PLACED IN THE FEBRUARY, 2006 WHEREAS INQUI RY WAS MADE IN DECEMBER, 2008. THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT IS NOT AUTOMATIC. THE LD ASSESSING OFFICER DISALLOWED THE EX PENSES, DOES NOT 7 ITA NO. 69/JP/2013 SRIKISHAN AGARWAL VS DCIT MEAN THAT THE ASSESSEE HAD CONCEALED THE PARTICULAR S OF INCOME. HE RELIED ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF AJAIB SINGH & CO. (2002) 253 ITR 630 (P&H). IT IS FURTHER SUBMITTED THAT MERELY MAKING A CLAIM, WHICH IS NOT S UBSTANTIAL BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. HE PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (P) LTD . (2010) 322 ITR 158 (SC). IT IS FURTHER ARGUED THAT ON DEAD PERSON, NO PENALTY CAN BE IMPOSED, WHICH DEALS WITH THE OBLIGATION OF THE LEGAL REPRESENTATIVES OF THE DECEASED PERSON. AS PER SUB-SECTION (1), THE LE GAL REPRESENTATIVE HAS OBLIGATION TO PAY ANY SUM. SUB-SECTION (2) DEAL S WITH ASSESSMENT AGAINST THE LEGAL REPRESENTATIVE AND RECOVERY OF SU M FROM HIM. SUB- SECTION (2) PROVIDES FOR ASSESSMENT OF INCOME ONLY AND DOES NOT PROVIDE FOR LEVY OF PENALTY. THUS, IF PENALTY WAS LEVIED ON THE ASSESSEE WHILE HE WAS ALIVE THE LIABILITY TO PAY THE SAID SUM WOULD BE ON THE LEGAL REPRESENTATIVES IN TERMS OF SUB-SECTION (1). HOWEVER , IF PENALTY WAS NOT LEVIED WHEN THE ASSESSEE WAS ALIVE THE SAME CANNOT BE LEVIED ON THE LEGAL REPRESENTATIVE OF THE DECEASED ASSESSEE AS NO SUCH AUTHORITY IS GIVEN UNDER SUB-SECTION (2). HE FURTHER ARGUED THAT AS PER SECTION 159(2)(B) READ WITH SUB-SECTION (1) AND (2) ANY PROC EEDING WHICH COULD 8 ITA NO. 69/JP/2013 SRIKISHAN AGARWAL VS DCIT HAVE BEEN TAKEN AGAINST THE DECEASED IF HE HAD SURV IVED MAY BE TAKEN AGAINST THE LEGAL REPRESENTATIVE, WOULD MEAN THAT FO R RECOVERY OF SUM AS PER SUB-SECTION (1) ANY PROCEEDINGS I.E. RECOVERY B UT NOT INCLUDE THE IMPOSITION OF PENALTY. THE LD AR FURTHER RELIED ON T HE DECISION IN THE CASE OF BHUBAN MOHAN MITTER CHARITABLE TRUST VS ITO (1993) 45 IRD 617 (CAL.) WHEREIN THE HON'BLE HIGH COURT HAS HELD T HAT PENALTY PROCEEDINGS ARE QUASI CRIMINAL IN NATURE. IN CRIMIN AL JURISPRUDENCE, A CRIME DIES WITH A MAN AND THE LEGAL REPRESENTATIVE O F THE DECEASED OFFENDER OR CRIMINAL LEGAL HEIRS CANNOT BE PENALIZE D FOR THE OFFENCES OR CRIMES COMMITTED BY THE DECEASED. THEREFORE, PENALTY PROCEEDINGS ABATE ON THE DEATH OF THE ASSESSEE. HE FURTHER REL IED ON THE DECISION IN THE CASE OF BHAGWANSINGH SHRIRAMSINGH L/H DINESH BHA WAN SINGH VS ITO (2006) 9 SOT 73 (MUM)(URO) WHEREIN IT HAS BEEN HEL D THAT PENALTY PROCEEDINGS ARE DIFFERENT AND DISTINCT IN NATURE T HAN TAX WHILE TAX ARE PRICE PAID FOR BUYING CIVILIZATION. PENALTIES ARE L EVIED FOR THE CONTUMACIOUS CONDUCT OF THE WRONG DOER, WHO IS DECEAS ED IN THE CASE BEFORE IT. THE HONBLE ITAT DELETED THE PENALTY ON DECEASED PERSON. HE FURTHER RELIED ON THE DECISION IN THE CASE OF V.P. SHARMA (2006) 154 TAXMAN 34 (ITAT DELHI) WHEREIN THE COORDINATE BENCH HA S CONSIDERED THE PHRASE ANY SUM GIVEN IN SECTION 159(1) AND HE LD THAT WHICH 9 ITA NO. 69/JP/2013 SRIKISHAN AGARWAL VS DCIT INCLUDES ONLY TAX NOT PENALTY PROCEEDINGS. ACCORDIN GLY, IT ALLOWED THE APPEAL OF THE ASSESSEE. HE ALSO DISTINGUISHED THE C ASE LAW RELIED UPON BY THE LD CIT(A) I.E. SMT. TAPTI PAL VS CIT (2002) 124 TAXMAN 123 (CAL) AND FINALLY HE PRAYED TO CANCEL THE PENALTY CONFIRM ED BY THE LD CIT(A). 5. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE EXPIRED ON 22/11/2010. IN THIS CASE, T HE ASSESSMENT WAS COMPLETED ON 17/12/2008 AND PENALTY WAS IMPOSED ON 0 1/3/2011. IT MEANS THAT AFTER THE DEATH OF ASSESSEE. THE ASSESSEE CLAIMED EXPENDITURE OF RS. 6,09,534/- IN THE P&L ACCOUNT, WH ICH HAS BEEN DISALLOWED BY THE ASSESSEE. SAME HAS BEEN CONFIRMED BY THE ITAT VIDE ORDER DATED 26/11/2010. THE ASSESSEE CLAIMED THAT TH IS MARBLE WAS FIXED IN THE CONSTRUCTION MADE IN KAMLA MODI MARKET WHICH WAS PURCHASED ON 03/2/2006. COPY OF BILL PLACED BEFORE US ON PAGE NO. 9 OF THE PAPER BOOK, WHICH IS COPY OF BILL OF LADING FOR PURCHASE OF MARBLE AT RS. 4,11,608/- ON WHICH REGISTRATION NUMBER OF THE SELLER AND NAME OF THE TRANSPORTER HAS BEEN GIVEN. THE EVIDENCE PLACED FOR REMAINING EXPENSES ALSO PERUSED AND WE FIND THAT THE ASSESSEE COULD NOT PRODUCE 10 ITA NO. 69/JP/2013 SRIKISHAN AGARWAL VS DCIT THESE ORIGINAL EVIDENCES AT THE TIME OF QUANTUM PRO CEEDINGS BUT PRODUCED DURING THE PENALTY PROCEEDINGS BEFORE THE LD CIT(A) BUT HE HAS NOT TAKEN ANY COGNIZANCE. HE SIMPLY TREATED THE M AS NON-GENUINE. THE LD CIT(A) HAS COTERMINOUS POWER WITH ASSESSING OFFI CER AS PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT ORDER, HE COULD HAVE SENT THESE EVIDENCES TO THE ASSESSING OFFICER FOR VERIFI CATION. THE INQUIRY MADE BY THE INSPECTOR IN DECEMBER, 2008 TO VERIFY T HE MARBLE FIXED IN THE CONSTRUCTED AREA. THE CASE LAW REFERRED BY THE A SSESSEE PARTICULARLY THE DECISION OF MUMBAI ITAT BENCH IN THE CASE OF BHA GWANSINGH SHRIRAMSINGH L/H DINESH BHAWAN SINGH VS ITO (SUPRA) IS SQUARELY APPLICABLE AS ANY SUM REFERRED IN SECTION 159(1) DO ES NOT INCLUDE THE PENALTY PROCEEDINGS ON THE LEGAL REPRESENTATIVE U/S 159(2) OF THE ACT. THEREFORE, PENALTY IMPOSED ON LEGAL HEIR IS NOT JUST IFIED. ACCORDINGLY, WE REVERSE THE ORDER OF THE LD CIT(A). 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/05/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 06 TH MAY, 2016 RANJAN* 11 ITA NO. 69/JP/2013 SRIKISHAN AGARWAL VS DCIT VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SRIKISHAN AGARWAL, SIKAR. 2. IZR;FKHZ @ THE RESPONDENT- THE DCIT, CIRCLE-SIKAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 69/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR