Shri Baij Nath Pandey, Kanpur V. DY. Commissioner of Income Tax-5, Kanpur

ITA 695/LKW/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0558 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 29-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Search and seizure; Salary income; Period of limitation; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 694/LKW/2016 BLOCK PERIOD : 1/4/1988 TO 26/3/1999 AVINASH PANDEY 127/317 - W BLOCK, KESHAV NAGAR KANPUR V. DY. CIT - 5 KANPUR T AN /PAN : AECPP6835J (APP ELL ANT) (RESPONDENT) ITA NO. 695/LKW/2016 BLOCK PERIOD : 1/4/1988 TO 26/3/1999 LATE KARUNA PANDEY THROUGH L/H BAIJ NATH PANDEY 127/317 - W BLOCK, KESHAV NAGAR KANPUR V. DY. CIT - 5 KANP UR T AN /PAN : AOLPP8182R (APP ELL ANT) (RESPONDENT) ITA NO. 696/LKW/2016 BLOCK PERIOD : 1/4/1988 TO 26/3/1999 ILA PANDEY 127/317 - W BLOCK, KESHAV NAGAR KANPUR V. DY. CIT - 5 KANPUR T AN /PAN : AOLPP8182R (APP ELL ANT) (RESPONDENT) ITA NO. 697/LKW/2016 BLOCK PERIOD : 1/4/1988 TO 26/3/1999 ASHUTOSH PANDEY 127/317 - W BLOCK, KESHAV NAGAR KANPUR V. DY. CIT - 5 KANPUR T AN /PAN : AECPP6834K (APP ELL ANT) (RESPONDENT) [ ITA NO.694, 695, 696, 697 & 698/LKW/2016 ] 2 ITA NO. 698/LKW/2016 BLOCK PERIOD : 1/4/1988 TO 26/3/1999 BAIJNATH PANDEY 127/317 - W BLOCK, KESHAV NAGAR KANPUR V. DY. CIT - 5 KANPUR T AN /PAN : AJYPP2335G (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI A. K. SINGH, CIT (DR) DATE OF HEARING: 14 12 201 7 DATE OF PRONOUNCEMENT: 15 12 201 7 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THESE APPEALS PREFERRED BY DIFFERENT ASSESSEES EMANATE FROM SEPARATE ORDERS OF THE LD. CIT(A) - III, KANPUR, DATED 27/9/2016 AND 26/9/2016 RESPECTIVELY . 2 . SINCE THE FACTS AND THE ISSUES INVOLVED IN THESE APPEALS ARE COMMO N, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. IN ALL THESE CASES, IN THE GROUNDS OF APPEAL, THE ASSESSEES HAVE RAISED IDENTICAL LEGAL GROUNDS AS WELL AS GROUNDS ON MERITS. 3 . FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.694/LKW/2016 WHEREIN GROUND NO. 2 RELATES TO LE GAL ISSUE . THE CONTENTION OF THE ASSESSEE IS THAT THE PENALTY ORDER PASSED UNDER SECTION 158BFA(2) OF THE ACT IS BARRED BY LIMITATION. 4 . THE BRIEF FACTS WITH REGARD TO THE LEGAL ISSUE ARE THAT THE ORIG INAL PROCEEDINGS UNDER SECTION 158BC OF THE ACT WERE CONCLUDED BY THE ASSESSING OFFICER ON 30/3/2001, AGAINST WHICH ASSESSEES APPEAL [ ITA NO.694, 695, 696, 697 & 698/LKW/2016 ] 3 WAS DECIDED BY THE LD. CIT(A) ON 3/4/2006. AGAINST THE ORDER OF THE LD. CIT(A), ASSESSEE AS WELL AS THE REVENUE PREFERRED APPEALS BEFORE THE TRIBUNAL , WHICH CROSS - APPEALS WERE DECIDED BY THE TRIBUNAL VIDE ORDER DATED 6/7/2007 WHEREBY THOUGH THE APPEALS (SPECIALLY THAT OF THE APPELLANT) WERE ALLOWED FOR STATISTICAL PURPOSES, BUT CERTAIN ISSUES WERE SET ASIDE TO THE FILE OF TH E ASSESSING OFFICER. IN PURSUANCE TO THE ORDER OF THE TRIBUNAL, THE ASSESSING OFFICER RECOMPUTED THE INCOME OF THE ASSESSEE ON 30/12/2008, AGAINST WHICH ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WHO DECIDED THE APPEAL ON 29/11/2013. THE ASSESSING OF FICER THEREAFTER PASSED THE PENALTY ORDER ON 28/2/2014. THE ASSESSING OFFICER OBSERVES THAT LIMITATION TO LEVY PENALTY HAS TO BE SEEN IN THE CONTEXT OF APPEAL DECIDED BY THE LD. CIT(A) IN THE SECOND INNING AND NOT IN REFERENCE TO THE ORDER OF THE TRIBUNAL IN THE FIRST INNING BECAUSE OF THE FACT THAT THE TRIBUNAL BY THAT ORDER HAS JUST SET ASIDE THE ISSUES TO THE ASSESSING OFFICER. ACCORDING TO THE ASSESSING OFFICER, PENALTY HAS BEEN LEVIED WITHIN THE LIMITATION OF SIX MONTHS. ACCORDING TO THE ASSESSEE, L IMITATION HAS TO BE CALCULATED IN REFERENCE TO THE DATE OF ITAT ORDER WHICH DATE WAS 6/7/2007 , WHICH SAID TO HAVE BEEN RECEIVED BY THE CIT, KANPUR ON 21/8/2007 (WHICH DATE HAS BEEN ASCERTAINED BY THE ASSESSEE ON THE BASIS OF INFORMATION FURNISHED BY ITAT, LUCKNOW I.E. DATE OF DISCHARGE OF THE ORDER). THE ASSESSEE SAYS THAT LIMITATION EXPIRED ON 28/2/2008 WHEREAS THE ORDER IS SEEN TO HAVE BEEN PASSED ON 28/2/2014. THE LD. CIT(A) ON THIS ISSUE HAS HELD THAT LEVY OF PENALTY BY THE ASSESSING OFFICER WAS DONE WITHIN THE PERIOD OF LIMITATION PRESCRIBED UNDER THE LAW AND THE CONTENTIONS OF THE ASSESSING OFFICER WAS UPHELD. 5 . WE HAVE PERUSED THE CASE RECORD, HEARD THE RIVAL CONTENTIONS AND WE FIND THAT THE MUTE QUESTION TO BE DECIDED IS WHICH ORDER WHETHER THE O RDER OF ITAT OR THAT OF THE LD. CIT(A) IN THE SECOND INNING [ ITA NO.694, 695, 696, 697 & 698/LKW/2016 ] 4 IS RELEVANT FOR THE PURPOSE OF CALCULATING THE PERIOD OF LIMITATION FOR LEVYING THE PENALTY UNDER SECTION 158BFA(2) OF THE ACT. UNDISPUTEDLY, THE LAW ITSELF PERMITS THE ASSESSING OFFICER TO KEEP LEVY OF PENALTY IN ABEYANCE TILL APPEAL PROCEEDINGS ARE DECIDED BY THE LD. CIT(A) OR BY THE ITAT. THE UNDISPUTED FACT IS THAT ITAT VIDE ITS ORDER DATED 6/7/2007 HAS RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE ABOUT THE UNDISCLOSED INCOME OF THE ASSESSEE IN BLOCK PERIOD IN ACCORDANCE TO CERTAIN DIRECTIONS/FINDINGS. PASSING OF SUCH DIRECTIONS AND RESTORING THE MATTER TO THE ASSESSING OFFICER CLEARLY MEANS THAT ALL THE EARLIER PROCEEDINGS OF ASSESSMENT HAVE GONE INTO LIMBO. TILL THE ORDER IS PASSED AFRESH BY THE ASSESSING OFFICER IN THE PROCEEDINGS RESTORED BY THE TRIBUNAL TO HIM, THE VERY QUANTUM OF UNDISCLOSED INCOME IN REFERENCE TO THE PENALTY HAS TO BE COMPUTED HAS CLEARLY BECOME UNCERTAIN AND WHEN QUANTUM WAS UNCERTAIN, IT WAS NO T POSSIBLE FOR THE ASSESSING OFFICER TO LEVY PENALTY. THE QUANTUM OF UNDISCLOSED INCOME GETS CRYSTALLIZED ONLY WHEN THE ASSESSING OFFICER HAS CARRIED OUT DIRECTIONS OF THE ITAT WHEREBY THE MATTERS WERE RESTORED TO THE FILE OF THE ASSESSING OFFICER. THIS , IN OTHER WORDS , MEANS THAT ALL EARLIER ASSESSMENT ORDERS AND SUBSEQUENT APPEALS IN PURSUANCE TO THE ORIGINAL ASSESSMENT ORDER WERE NO MORE RELEVANT. THE ASSESSING OFFICER RE - COMPUTED THE INCOME PURSUANT TO THE ORDER OF THE TRIBUNAL DATED 30/12/2008 WHICH ATTAINED FINALITY IN APPEAL DECIDED BY THE LD. CIT(A) ON 29/11/2013. IN THIS VIEW OF THE MATTER, W E ARE OF THE CONSIDERED VIEW THAT THE MATERIAL DATE , IN REFERENCE TO WHICH LIMITATION HAS TO BE CONSIDERED , IS 29/11/2013 AND, THEREFORE, THE ORDER PASSED B Y THE ASSESSING OFFICER IN LEVYING THE PENALTY IS WITHIN THE PERIOD OF LIMITATION PRESCRIBED UNDER T HE LAW. THUS, THE LEGAL GROUND (GROUNDS NO. 2 ) TAKEN BY THE ASSESSEE IS DISMISSED. [ ITA NO.694, 695, 696, 697 & 698/LKW/2016 ] 5 6 . GROUNDS NO. 1, 3, 4, 5 AND 6 ARE ON MERIT AND THEY RELATE TO THE GRIEVANCE OF THE ASSESSEE AGAINST IMPOSITION OF PENALTY UNDER SECTION 158BFA(2) OF THE ACT. 7 . THE BRIEF FACTS REGARDING THESE GROUNDS ARE THAT A SEARCH AND SEIZURE OPERATIONS UNDER SECTION 131(1) OF THE ACT WERE CARRIED OUT IN THE SUB - POST OFFICE, KIDWAI NAGAR, KANPU R ON 26/3/1999 AND KISAN VIKASH PATRA (KVPS) HAVING FACE VALUE OF RS.12,71,000/ - (INCLUDING KVPS OF RS.5,61,000/ - ALREADY ENCASHED EARLIER) WERE FOUND IN THE SUB - POST OFFICE, KIDWAI NAGAR, KANPUR. THESE KVPS WERE FOUND IN THE NAME OF FAMILY MEMBERS OF THE ASSESSEE IN JOINT NAMES WITH DIFFERENT PERMUTATIONS AND COMBINATIONS. AN ASSESSMENT ORDER UNDER SECTION 158BC (C) OF THE ACT DATED 30/3/2001 WAS PASSED BY THE DCIT, CC - III, KANPUR ASSESSING THE UNDISCLOSED INCOME OF THE ASSESSEE AT RS.12,85,590/ - . THE AS SESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) - I, KANPUR, WHO PASSED AN ORDER ON 3/4/2006 GIVING DIRECTIONS TO CALCULATE THE IN VESTMENT IN KVPS AND INTEREST EARNED THEREON ACCORDING TO THE NAMES APPEARING ON THE KVPS INSTEAD OF THE DISTRIBUTION SUGGESTED IN THE W ILL OF THE LATE SHRI BAIKUNTH NARAIN PANDEY DATED 10/10/1995. 8 . FURTHER BEING AGGRIEVED, THE ASSESSEE AS WELL AS THE DEPARTMENT FILED APPEALS BEFORE THE CO - ORDINATE ITAT LUCKNOW BENCH. THE TRIBUNAL DECIDED BOTH THE APPEALS FILED BY THE ASSESSEE A S WELL AS THE DEPARTMENT VIDE COMMON ORDER DATED 26/7/2007 RESTORING THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE ABOUT DISCLOSING INCOME IN BLOCK PERIOD IN ACCORDANCE WITH CERTAIN FINDINGS AND DIRECTIONS. ACCORDINGLY, NOTICES UNDER SECTION 1 43(2)/142(1) OF THE ACT FOR THE BLOCK PERIOD W ERE ISSUED. IN COMPLIANCE TO THESE NOTICES, THE LD. A.R. OF THE ASSESSEE ATTENDED AND THE CASE WAS DISCUSSED. AS PER [ ITA NO.694, 695, 696, 697 & 698/LKW/2016 ] 6 DIRECTIONS OF THE TRIBUNAL, CONSIDERING ALL THE FACTS AND SUBMISSIONS MADE BY THE ASSESSEE, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS. 73,725 / - AND PENALTY PROCEEDINGS WERE INITIATED UNDER SECTION 158BFA(2) OF THE ACT. 9 . AGGRIEVED BY THIS ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) - II, KANPUR DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT ASSESSEE COULD NOT PRODUCE ANY DETAIL AND EVIDENCE IN SUPPORT OF HIS CLAIM. PENALTY NOTICE UNDER SECTION 158BFA DATED 30.12.2008 WAS ISSUED FIXING THE DATE OF HEARING. ON THE SCHEDULE DATE I.E. 12.2.2014 , WHICH WAS THE LAST OPPORTUNITY TO THE ASSESSEE, THE ASSESSEE HAS FURNISHED HIS WRITTEN SUBMISSION AND OPPOSED THE PENALTY PROCEEDINGS UNDER SECTION 158BFA(2) OF THE ACT. THE SUBMISSIONS OF THE ASSESSEE INCLUDED THAT ITAT, LUCKNOW BENCH HAS GIVEN SUBSTANTIAL REL IEF AND THIS SHOWS GENUINENESS OF GROUND AND ALL OTHER ADDITIONS ON ACCOUNT OF TECHNICALITIES INVOLVED IN FILING OF INCOME TAX RETURN OF BLOCK ASSESSMENT PERIOD AND THE TRIBUNAL NEVER REJECTED THE SUBMISSION OF THE ASSESSEE THAT ASSESSEE HAS FILED HIS RETU RN AND DETAILS OF HIS INVESTMENT IN KVPS AND INCOME FROM SALARY AND INTEREST ACCRUED ON KVPS BEFORE THE DATE OF SEARCH AND THIS ACCEPTANCE OF ITAT, LUCKNOW BENCH PROVE S THAT ASSESSEE IS BONA - FIDE AND ASSESSEE AND HIS FAMILY MEMBERS MADE INVESTMENT IN KVPS AS PER WILL OF THEIR GRANDFATHER IN GOOD FAITH. THE ASSESSEE FURTHER SUBMITTED THAT IN THE WILL ITSELF , IT IS CLEAR THAT ALL THE KVPS WERE GIVEN AS GIFT BY THE GRANDFATHER OF THE ASSESSEE TO THE ASSESSEE AND TO OTHER FAMILY MEMBERS. THE SOURCE, THEREFORE , IS EXPLAINED. THE DEPARTMENT HAS FURTHER ACCEPTED KVPS IN THE NAME OF THE GRANDFATHER BUT HAS ONLY DISPUTED KVPS IN THE NAME OF THE ASSESSEE AND IN THE NAMES OF OTHER FAMILY MEMBERS AND THEREBY ADDITION AND PENALTY WAS IMPOSED. THE [ ITA NO.694, 695, 696, 697 & 698/LKW/2016 ] 7 ASSESSEE RELIED UPON VARIOUS CASE LAWS WHEREBY IT WAS SUBMITTED THAT PENALTY IMPOSED UNDER THE SAID PROVISION WAS NOT MANDATORY/COMPULSORY/AUTOMATIC. WHEN THE SOURCE OF KVPS THROUGH WILL OF THE GRANDFATHER IS ESTABLISHED, IMPOSITION OF PENALTY WAS NOT JUSTIFIED. THE SUBMISS IONS OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER AND PENALTY WAS IMPOSED ON THE ASSESSEE. THEREAFTER, ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND THE LD. CIT(A) , AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E AND THE ASSESSMENT ORDER, SUSTAINED THE PENALTY LEVIED AS PER REASONING APPEARING IN HIS ORDER. BEING FURTHER AGGRIEVED, THE ASSESSEE HAS PREFERRED APPEAL BEFORE US. 10 . WE HAVE PERUSED THE CASE RECORD, HEARD THE RIVAL CONTENTIONS AND CONSIDERED THE JUDICIA L PRONOUNCEMENTS PLACED BEFORE US. IN THE CASES OF PALAKKARAN BANKERS & CHIT FUNDS VS. DCIT IN IT(SS)A NO.03/COCH/2014 DECIDED BY THE COCHIN BENCH OF ITAT ; HARI OM VERMA VS. DCIT IN ITA NO.768/LKW/2016 DECIDED BY THE LUCKNOW BENCH OF ITAT AND CIT VS. SATYE NDRA KUMAR DOSI IN ITA NO.195 OF 2008 DECIDED BY HON'BLE BOMABY HIGH COURT , THE PROPOSITION OF LAW IS THAT PENALTY IMPOSED UNDER THE PROVISIONS OF SECTION 158BFA(2) IS NOT AUTOMATIC. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DODSAL LTD., 218 C TR 430 (BOMBAY) HAS HELD THAT SECTION 158BFA(2) OF THE ACT PROVIDES DISCRETION TO THE ASSESSING OFFICER FOR LEVY OF PENALTY AND WHAT IS TO BE EXAMINED IS WHETHER THERE EXIST S APPROPRIATE REASON FOR LEVY OF PENALTY . THE FACT THAT ADDITION HAS BEEN CONFIRME D IN THE QUANTUM PROCEEDINGS WOULD NOT BY ITSELF BE THE BASIS FOR SUSTAINING THE PENALTY UNDER SECTION 158BFA(2) OF THE ACT. IN THE CASE OF THE ASSESSEE, CERTAIN KVPS WERE FOUND IN THE COURSE OF SEARCH. THE DEPARTMENT HAS ALREADY ACCEPTED THE KVPS IN THE NAME OF THE GRANDFATHER OF THE ASSESSEE WHO HAS [ ITA NO.694, 695, 696, 697 & 698/LKW/2016 ] 8 EXECUTED A WILL. WE HAVE PERUSED THE WILL AND WE FOUND THAT , AS WRITTEN THEREIN , THE KVPS HAVE BEEN GIVEN BY THE GRANDFATHER TO THE ASSESSEE AND OTHER FAMILY MEMBERS. THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANY APPROPRIATE REASON FOR LEVY OF PENALTY. THERE IS A CLINCHING EVIDENCE TO DEMONSTRATE THAT SOURCE OF KVPS IS EXPLAINED THROUGH WILL EXECUTED BY THE GRANDFATHER. THE ASSESSEE COULD NOT FORESEE THAT INVESTMENT DISCLOSED IN THE WILL OF HIS GRANDFATHE R AND INVESTMENT MADE ACCORDING TO THE WISHES EXPRESSED BY HIS GRANDFATHER UNDER THE WILL COULD BECOME A REASON FOR IMPOSITION OF PENALTY UNDER SECTION 158BFA(2) OF THE ACT. THE WILL WAS ALSO ACCEPTED BY THE CO - ORDINATE BENCH OF ITAT LUCKNOW AND ITS GENUI NENESS WAS NEVER CHALLENGED ANYWHERE. THERE IS NO MALAFIDE ELEMENT FOR IMPOSIT ION OF PENALTY IN THIS CASE OF THE ASSESSEE. WE ARE OF THE CONSIDERED VIEW THAT AS FOR THE FACTS AND JUDICIAL PRONOUNCEMENTS AS DISCUSSED HEREINABOVE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE PENALTY LEVIED UNDER SECTION 158BFA(2) OF THE ACT. THE ASSESSEE , THEREFORE, SUCCEEDS IN THE GROUNDS ON MERIT. 11 . IN OTHER ASSESSEES APPEALS ALSO, AS WE OBSERVED HEREINABOVE IN ITA NO.694/LKW/2016 , GROUND NO.2 RELATING TO LEGAL ISSUE IS DISMISSED WHEREAS GROUNDS RAISED ON MERIT ARE ALLOWED AND PENALTY IS DELETED. 12 . IN THE RESULT, APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 /12/ 201 7 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] A CCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH DECEMBER , 2017 JJ: 1412 [ ITA NO.694, 695, 696, 697 & 698/LKW/2016 ] 9 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR