Smt Balwinder Kaur, Phagwara V. The Income-tax Officer, Phagwara

ITA 697/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8878 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 21-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TARUNDEEP KAURDR
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Proportionate interest; Difference of opinion
• Section: 143(3); 142(1); 147; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.697(ASR)/2014 ASSESSMENT YEAR:2005-06 PAN: SMT. BALWINDER KAUR VS. INCOME TAX OFFICER, PHAGWARA. WARD-1, PHAGWARA (APPELLANT) (RESPONDENT) APPELLANT BY:SH. TARUN BANSAL, ADVOCATE RESPONDENT BY:SMT. TARUNDEEP KAUR,DR DATE OF HEARING: 16/11/2015 DATE OF PRONOUNCEMENT: 08/02/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2005-06 AGAINST THE CONFIRMATION OF LEVY OF CONCEALMENT PE NALTY OF RS.79,000/- ON THE ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE WAS MAINTAINING A SAVINGS BANK ACCOUNT WITH PUNJAB NATIONAL BANK, BAN GA ROAD, PHAGWARA, IN WHICH, THE ASSESSEE HAD, INTER-ALIA, M ADE CASH DEPOSITS OF RS.4,00,000/- ( LATER FOUND TO BE RS.4,40,000/-) D URING THE YEAR UNDER CONSIDERATION. IN ORDER TO VERIFY THE SOURCE OF THE DEPOSITS, THE AO ISSUED ENQUIRY LETTER TO THE ASSESSEE ON 14.4.2008, BUT TH E ASSESSEE FAILED TO TURN UP ON THE DATE OF HEARING I.E. 25.3.2008. THE AO AFFORDED ANOTHER OPPORTUNITY TO THE AO FIXING THE CASE FOR 11.04.20 08, BUT THE ASSESSEE FAILED TO AVAIL OF THIS OPPORTUNITY ALSO. AS PER TH E DATA AVAILABLE WITH THE INCOME TAX DEPARTMENT, THE AO NOTICED THAT NEITHER THE ASSESSEE WAS ITA NO.697(ASR)/2014 A.Y. 2005-06 2 ASSESSED TO INCOME TAX, NOR ANY RETURN OF INCOME F OR THE ASSESSMENT YEAR UNDER CONSIDERATION HAD BEEN FILED BY THE AS SESSEE. THE AO, THEREFORE, RECORDED THE REASONS WITH REGARD TO ESCA PEMENT OF INCOME OF THE ASSESSEE TO THE EXTENT OF RS.4,00,000/- FOR THE FINANCIAL YEAR 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06 AND REOPENED TH E ASSESSMENT UNDER THE PROVISIONS OF SECTION 147 OF THE ACT BY I SSUE OF NOTICE U/S 148 OF THE ACT VIDE LETTER DATED 2.5.2008, WHICH WAS DU LY SERVED UPON THE ASSESSEE ON 7.5.2008. AS THERE WAS NO RESPONSE TO T HE NOTICE U/S 148 OF THE ACT, THE AO ISSUED ANOTHER NOTICE U/S 142(1) OF THE ACT, DATED 12.6.2009, FIXING THE DATE FOR 13.7.2009. HOWEVER, ON THE SAID DATE NEITHER ANYBODY ATTENDED, NOR FILED ANY INFORMATION . FURTHER, DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE TOT AL DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE WERE AT RS.4,40,000/-. AS NO EXPLANATION WITH REGARD TO SOURCE OF CASH SAID DEPOSITS WAS F ILED BY THE ASSESSEE, THE AO MADE, AN ADDITION OF RS.4,40,000/- TO THE RE TURNED INCOME OF THE ASSESSEE. ANOTHER ADDITION OF RS.14,363/- WAS ALS O MADE WHICH REPRESENTED UNDISCLOSED INTEREST INCOME EARNED ON THE DEPOSITS IN THE BANK. IN TOTO, THE AO MADE ADDITION OF RS.4,54,363 /-. 3. AGGRIEVED, THE ASSESSEE FILED A PETITION U/S 264 OF THE ACT BEFORE THE LD. CIT(A), WHO ALLOWED PARTIAL RELIEF TO THE A SSESSEE AND REDUCED THE ASSESSED INCOME TO RS.3,50,000/-. 4. VIDE THE PENALTY ORDER, THE PENALTY WAS LEVIED B Y THE AO BY OBSERVING AS FOLLOWS: ITA NO.697(ASR)/2014 A.Y. 2005-06 3 AS PER THE INFORMATION AVAILABLE WITH THE DEPARTMEN T, THE ASSESS WAS FOUND TO MAINTAIN SAVING BANK ACCOUNT WITH PUNJAB N ATIONAL BANK, BANGA ROAD, PHAGWARA IN WHICH THE ASSESSEE HAD, INTER- ALIA, MA DE CASH DEPOSITS AMOUNTING TO RS. 4,00,000/- DURING THE ACCOUNTING PERIOD 01.0 1.2004 TO 31.03.2005. TO VERIFY THE SOURCE OF THE AFORE- MENTIONED DEPOSITS ENQUIRY LETTER WAS ISSUED TO THE ASSESSEE ON 13.03.2008. THE ASSESSEE FAILED TO TURN UP ON THE DATE OF HEARING I.E. 25.03.2008. IN THE INTEREST OF NATURAL JUSTICE, ANO THER OPPORTUNITY WAS ALLOWED TO THE ASSESSEE VIDE LETTER DATED 03.04.2008 FIXING TH E CASE FOR 11.04.2008. THIS OPPORTUNITY WAS ALSO NOT AVAILED BY THE ASSESSEE. A S PER THE DATA BASE AVAILABLE WITH THIS OFFICE NEITHE THE ASSESSEE IS ASSESSED TO INCOME TAX NOR ANY RETURN FOR ASSESSMENT YEAR UNDER CONSIDERATION HAVE BEEN FILED BY HIM. THUS, AS THE INCOME TO THE TUNE OF RS. 4,00,000/- FOR THE FINANCIAL YEA R 2004-05 RELEVANT TO THE ASSESSMENT YEAR 2005-06 HAD ESCAPED ASSESSMENT, NOT ICE U/S 148 WAS ISSUED ON 02.05.2008, WHICH WAS DULY SERVED UPON THE ASSESSEE ON 07.05.2008. AS THERE WAS NO COMPLIANCE TO THE NOTICE U/S 148 AN D NO RETURN IN RESPONSE TO NOTICE U/S 148 OF THE I.T. ACT, 1961 WAS FILED, ANO THER NOTICE U/S 142(1) DATED 12.06.2009 WAS ISSUED ALONG THE COPY OF THE REASONS RECORDED FOR REOPENING THE CASE U/S 148. THIS NOTICE WAS SERVED ON THE ASSESS EE ON 06.07.2009 FOR 13.07.2009. HOWEVER, ON THE SAID DATE NEITHER ANYBO DY ATTENDED THE OFFICE NOR ANY INFORMATION WAS FILED. FURTHER, DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, PERUSAL OF ASSESSEES SAVING BANK ACCOUNT NO. 08200 00100358944 IN PUNJAB NATIONAL BANK, BANGA ROAD, PHAGWARA REVEALED THAT T HE TOTAL CASH DEPOSITS IN THE SAVING BANK ACCOUNT WERE RS. 4,40,000/- AS DETA ILED BELOW (AND NOT RS. 4,00,000/- AS PER THE REASONS RECORDED U/S 148). S.NO. DATE AMOUNT 1. 02.04.2004 RS. 1,00,000/- 2. 09.04.2004 RS. 40,000/- 3. 05.06.2004 RS. 1,00,000/- 4. 05.08.2004 RS. 2,00,000/- TOTAL RS. 4,40,000/- SUBSEQUENTLY, DETAILED QUESTIONNAIRE ALONG WITH ANO THER NOTICE U/S 142(WAS ISSUED AND SERVED UPON THE ASSESSEE, SMT. BALWINDER KAUR W HO ATTENDED THE OFFICE ON 09.09.2009 FOR 05.10.2009 TO FILE THE FOLLOWING DET AILS:- ITA NO.697(ASR)/2014 A.Y. 2005-06 4 1. DOCUMENTARY EVIDENCE REGARDING SOURCE OF CASH DEPOS ITS AMOUNTING TO RS. 4,40,000/- IN THE SAVING BANK ACCOUNT MAINTAINED BY ASSESSEE FOR THE PERIOD 01.04.2004 TO 31.03.2005. 2. COPY OF ALL BANK ACCOUNT MAINTAINED BY THE ASSESSEE IN HER NAME OR JOINTLY WITH ANY OTHER FAMILY MEMBERS. ON THE FIXED DATE, THE ASSESSEE ATTENDED THE OFFICE BUT NO INFORMATION WAS FILED BY HER AND THE CASE WAS ADJOURNED TO 28.10.2009 ON REQ UEST AND THE ASSESSEE WAS AFFORDED FINAL OPPORTUNITY TO FILE THE REQUISITE DE TAILS. HOWEVER , AGAIN ON THE SAID DATE, THERE WAS NON COM PLIANCE ON THE PART OF ASSESSEE, AS NEITHER ANYBODY ATTENDED THE OFFICE NO R ANY INFORMATION, WAS FILED. AS NO RETURN HAS BEEN FILED BY THE ASSESSEE FOR THE ASSTT. YEAR 2005-06 AND NO EXPLANATION REGARDING THE SOURCE OF CASH DEPOSITS H AS BEEN GIVEN BY THE ASSESSSEE, THUS, THE ASSESSING OFFICER WAS LEFT WIT H NO ALTERNATIVE BUT TO MAKE THE ASSESSMENT ON THE BASIS OF INFORMATION/ MATERIAL AV AILABLE ON RECORD. HENCE, THE CASH DEPOSITS AMOUNTING TO RS. 4,40,000/- REMAINING UNEXPLAINED WERE TREATED AS THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES FOR THE ASSESSMENT YEAR 2005-06 AS PER THE PROVISIONS OF SECTION 69A OF IT. ACT, 1961 AND TAXED ACCORDINGLY. FURTHER, THE ASSESSSEE HAD ALSO EARNED INTEREST AMOUNTING TO RS. 14,363/- ON THIS SAVING BANK ACCOUNT, WHICH WAS TRE ATED AS THE INCOME FROM OTHER SOURCES AND ACCORDINGLY, THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 4,54,363/- VIDE ORDER U/S 147/143(3) OF IT. ACT, 19 61 PASSED ON 20.10.2009 AND PENALTY PROCEEDINGS U/S 271(1) OF THE I.T. ACT, 196 1 WERE INITIATED SEPARATELY FOR CONCEALING THE PARTICULARS OF INCOME. THE ASSESSEE FILED A REVISION PETITION U/S 264 OF T HE I.T. ACT, 1961 WITH THE CIT-II, JALANDHAR ON 31.03.2010 AGAINST THE ASSESSMENT ORDE R. THE LD. CIT-II, JAL. VIDE HIS ORDER U/S 264 OF THE IT. ACT, 1961 DATED 14.03. 2011 HAS ORDERED AS UNDER: I HAVE GONE THROUGH ALL THE SUBMISSIONS OF THE ASS ESSEE AND I FIND THAT THE ASSESSEE HAS TRIED TO MAKE OUT A CASE THAT THE MONE Y DEPOSITED BY HER IN HER BANK ACCOUNT ON VARIOUS DATES REPRESENTED BASICALLY THE MONEY REMITTED BY HER HUSBAND FROM ABROAD AND SOME PART OF IT WAS OUT OF THE INCOME EARNED FROM THE DAIRY BEING RUN BY THE ASSESSEE AND ALSO THE CULTIV ATION OF AGRICULTURE LAND BELONGING JOINTLY TO ASSESSEES IN LAWS (INCLUDING HER HUSBAND).BESIDES THE ASSESSEE HAS ALSO TAKEN CERTAIN TECHNICAL GROUNDS L IFE BAS SERVICE OF SOME NOTICES, WRONG CHARGING OF INTEREST AND ALSO RELIED ON SOME CASE LAWS. COMING FIRST TO THE OBJECTIONS OF THE ASSESSEE ON T ECHNICAL GROUNDS, I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE AND ALSO THE FACTUAL POSITION. I FIND THAT NONE OF THE PLEAS OF THE ASSESSEE CAN BE ACCEPTED AS THE FACTS DO NOT SUPPORT THE CONTENTION OF THE ASSESSEE. SIMILARLY T HE CASE LAWS RELIED UPON BY THE ASSESSEE ALSO DO NOT COME TO ASSESSEES RESCUE BECA USE OF THE DIFFERENCE IN BASIC FACTS OF THE CASE. THE REASON WHY ASSESSEES PLEA R EGARDING THE SOURCE OF DEPOSITS IN HER BANK ACCOUNT CANT BE FULLY ACCEPTED IS: (I) THERE IS NO NEXUS BETWEEN THE DATES OF SO CALLED REMITTANCES FROM ABROAD BY T HE ASSESSEES HUSBAND AND THE DATES ON WHICH THE AMOUNTS WERE DEPOSITED BY THE AS SESSEE IN HER BANK ACCOUNT, (II) THERE IS NO DIRECT EVIDENCE TO SHOW THAT THE ASSESSEES HUSBAND WAS ITA NO.697(ASR)/2014 A.Y. 2005-06 5 EARNING ENOUGH WHILE ABROAD WHEREBY HE COULD BE REM ITTING MONEY TO INDIA. (III) IT IS UNDERSTOOD WHY COULD ASSESSEES HUSBAND NOT R EMIT MONEY DIRECTLY FAVOURING HIS WIFE(ASSESSEE) THROUGH SOME BANKING OR MORE AUT HENTIC CHANNEL WHEREBY IT DID NOT LEAVE ANY DOUBT ABOUT SOURCE? (IV) IF THE DEPOSITS MADE BY THE ASSESSEE IN HER BA NK ACCOUNT WERE OUT OF THE CASH RECEIVED THROUGH REMITTANCES FROM HER HUSBAND ABROA D, WHY WERE THE RESTRICTED ONLY TO THE PERIOD FROM APRIL, 2004 TO AUGUST, 2004 ? WHAT ABOUT THE PERIOD BEFORE AND AFTER THESE DATES ? (V) WHY WERE THE DEPOSITS MADE ONLY IN ROUND FIG URES? (VI) IF THE DEPOSITS HAD SOME ELEMENT OF INCOME EAR NED FROM DAIRY BUSINESS AND AGRICULTURAL INCOME, WHAT HAPPENED TO SUCH INCOME I N THE REMAINING MONTHS? IT IS THEREFORE, VERY OBVIOUS THAT THERE ARE GAPING HOLES IN THE ASSESSEES VERSION AND IT HARDLY SOUND CONVINCING. HOWEVER, KEEPING IN VIEW THE TOTALITY OF CIRCUMSTANCES, SUBMISSIONS BY THE ASSESSEE AND TAKI NG A VERY LIBERAL VIEW BY GIVING SOME BENEFITS OF DOUBT TO THE ASSESSEE, I HO LD THAT OUT OF THE TOTAL INCOME (INCLUDING THE INTEREST EARNED BY THE ASSESSEE OVER HER DEPOSITS IN BANK) OF RS. 4,54,363/- A SUM OF RS. ONE LAKH BE TREATED OUT OF THE POSSIBLE REMITTANCES BY HER HUSBAND FROM ABROAD AND INCOME FROM DAIRY AND CULTI VATION OF FAMILYS AGRICULTURAL INCOME AND ANOTHER SUM OF RS. 4,363/- BEING THE PROPORTIONATE INTEREST OVER THIS AMOUNT WHILE THE REMAINING AMOUN T OF RS. 3,50,000/- WILL BE TREATED AS THE INCOME OF THE ASSESSEE OUT OF UNDISC LOSED SOURCES AND ASSESSED ACCORDINGLY. -AS, NO REPLY HAD BEEN FILED BY THE ASSESSEE, IN RE SPONSE TO PENALTY PROCEEDINGS U/S 271(1) OF THE I.T. ACT, 1961 INITIATED SEPARAT ELY FOR CONCEALING PARTICULARS OF INCOME VIDE NOTICE U/S 271(1) DATED 29.10.2009 FIXI NG THE CASE FOR 30.11.2009, FINAL SHOW CAUSE WAS ISSUED TO THE ASSESSEE ON 02.0 8.2011 FIXING THE CASE FOR HEARING ON 12.08.2011. THE ASSESSEE SOUGHT ADJOURNM ENT AND FILED A REPLY ON 05.09.2011 WHICH IS REPRODUCED AS BELOW: PLEASE REFER TO YOUR NOTICE DATED 02.08.2011 U/S 1 29 OF THE INCOME-TAX ACT READ WITH 271(1) OF THE INCOME TAX ACT, 1961, IN THIS RE GARD MY HUMBLE SUBMISSION IS AS UNDER: 1. THAT THE ASSESSEE HAS NOT CONCEALED ANY PARTICU LARS OF INCOME. THAT THE NOTIDE DATED 09.04.2010 AND 02.08.2010 DOES NOT CON TAIN THE PARTICULARS OF INCOME ALLEGED TO HAVE BEEN CONCEALED BY MY CLIENT. THE REFERENCE MAY BE TO THE BANK DEPOSITS OF RS. 4,40,000/- DEPOSITED ON DI FFERENT DATED BY MY CLIENT IN SAME BANK ACCOUNT NO. 0820000100358944 PUNJAB NA TIONAL BANK, BANGA ROAD, PHAGWARA. IF MY CLIENTS PRESUMPTION IS INCOR RECT, KINDLY INFORM THE SPECIFIC ITEMS OF INCOME ALLEGEDLY CONCEALED BY MY CLIENT. 2. AS REGARDS THE SAID BANK DEPOSIT OF RS. 4,40,000/- TREATED AS MY INCOME VIDE YOUR ASSESSMENT ORDER DATED 20.10.2009. MY HUMBLE S UBMISSION IS THAT THE SAID ASSESSMENT ORDER IS BAD IN LAW, AS THE SAME HA S BEEN PASSES U/S 143(3) OF THE INCOME TAX ACT, 1961 WHICH IS WRONG. ALSO TH E BANK DEPOSIT OF RS. 4,44,000/- HAS BEEN TAXED AS INCOME OF MY CLIENT BY APPLYING THE PROVISION OF ITA NO.697(ASR)/2014 A.Y. 2005-06 6 SECTION 69A , WHICH IS TOTALLY UNJUSTIFIED AND AGAI NST THE FACTS OF THE CASE. SO , THE INITIATION OF THE PENALTY PROCEEDINGS ON THE BA SIC OF AN ILLEGAL ASSESSMENT ARE WITHOUT JURISDICTION AND PENALTY CAN NOT BE IMP OSED ON SUCH INITIATION. IN THIS REGARD, MY HUMBLE SUBMISSION IS THAT PENALTY P ROCEEDINGS ARE DISTINCT FROM ASSESSMENT PROCEEDINGS AND ONE IS INDEPENDENT OF OTHER AND THEREFORE ANY ADDITION MADE IN EXPARTE ASSESSMENT PROCEEDINGS MAY NOT BY ITSELF JUSTIFY IMPOSITION PENALTY MERELY BECAUSE ADDITION WAS NOT DISPUTED IN APPEAL. IT IS WELL SETTLED THAT A FINDING IN AN ASS ESSMENT PROCEEDINGS THAT A PARTICULAR RECEIPT IS INCOME CAN NOT AUTOMATICALLY BE ADOPTED FOR THE PURPOSE OF SECTION 271(1) OF THE INCOME TAX ACT, 1961 AND IT IS ALSO NOW A WELL SETTLED A PRINCIPAL OF LAW THAT MORE STRINGENT THE LAW MORE STRICT CONSTRUCTION THEREOF WOULD BE NECESSARY. RELIANCE IS PLACED ON: DALIP N. SHROFF V. CIT[2007] 161 TAXMAN 218(SC). 3. THE ASSESSEE WAS AN ILLITERATE LADY LIVING IN A VIL LAGE. SHE RECEIVED THIS AMOUNT PARTLY FROM HER HUSBAND WHO WAS LIVING ENGLAND IN T HAT TIME DURING THAT PERIOD AND PARTLY ON ACCOUNT OF THE PREVIOUS YEARS SAVINGS FROM AGRICULTURE AND DAIRY INCOME. IT IS PERTINENT TO MENTION HERE T HAT ON THE VERY 2 ND OF APRIL,2004 RS. 1 LAC WAS DEPOSITED IN BANK ON ACCOU NT OF SAVINGS OF PREVIOUS YEAR ONLY, HOWEVER SAME HAS ALSO BEEN TREATED AS IN COME OF THIS YEAR. THE LADY WAS RUNNING A DAIRY AT VILLAGE PANDORI AND THI S FACT WAS IN THE KNOWLEDGE OF INCOME TAX DEPARTMENT BUT NO BENEFIT W AS GIVEN AT THE TIME OF ASSESSMENT ON ACCOUNT OF DAIRY INCOME AND AN ADDITI ON WAS MADE IN A MECHANICAL MANNER WITHOUT MAKING ANY EFFORT TO BEAR ING ANY MATERIAL ON RECORD. IN THIS REGARD I WOULD LIKE TO REFER TO THE EXTRACT FROM THE ASSESSMENT ORDER PAGE NO. 3 AS UNDER: THUS I AM LEFT WITH NO ALTERNATIVE BUT TO MAKE THE ASSESSMENT ON THE BASIS OF THE INFORMATION/MATERIAL AVAILABLE ON THE RECORD. HENCE THE CASH DEPOSITS AMOUNTING TO RS. 4,40,000/- REMAINING UNEXPLAINED, ARE TREATED AS THE INCOME OF THE ASSESSEE FROM UNEX PLAINED SOURCES FOR THE ASSESSMENT YEAR 2005-06 AS PER THE PROVISION OF SEC TION 69A OF I.T. ACT, 1961 AND IS TO BE ACCORDINGLY TAXED. FURTHER, THE ASSESS EE HAS ALSO EARNED INTEREST AMOUNTING TO RS. 14,363/- ON THIS SAVING BANK ACCOU NT, WHICH IS BEING TREATED AS THE INCOME FROM THE OTHER SOURCES AND ACCORDINGL Y , THE INCOME OF THE ASSESSEE IS COMPUTED AS UNDER: UNEXPLAINED CASH CREDIT IN THE BANK A/C DISCUSSED : 4,40,000 ADD INTEREST ON SAVING BANK A/C DISCUSSED : 14,363 ASSESSED INCOME 454363 ITA NO.697(ASR)/2014 A.Y. 2005-06 7 4. HOWEVER, THE ASSESSMENT ORDER WAS CHALLENGED BEFORE LD. CIT, JALANDHAR WHO HAS ACCEPTED THE SOURCE OF INCOME OF THE LADY FROM MILK DAIRY AND AGRICULTURE AND REDUCED THE ADDITION BY APPLYING HIS OWN ESTIMA TES. THE OBSERVATION OF LD. CIT AT PAGE NO. 6 OF HIS ORDER DATED 14.03.2011 ARE AS UNDER: IT IS THEREFORE, VERY OBVIOUS THAT THERE ARE GAPING HOLES IN THE ASSESSEES VERSION AND IT HARDLY SOUNDS CONVINCING. HOWEVER, KEEPING I N VIEW THE TOTALITY OF CIRCUMSTANCES. SUBMISSIONS BY THE ASSESSEE, AND TAK ING A VERY LIBERAL VIEW BY GIVING SOME BENEFITS OF DOUBT TO THE ASSESSEE. I HO LD THAT OUT OF THE TOTAL INCOME (INCLUDING THE INTEREST EARNED BY THE ASSESS EE OVER OF THE BENEFITS IN BANK) OF RS. 4,54,363/- A SUM OF RS. ONE LAKH BE TR EATED OUT OF THE POSSIBLE REMITTANCES BY HER HUSBAND FROM ABROAD AND INCOME F ROM DAIRY AND CULTIVATION OF FAMILYS AGRICULTURAL AND ANOTHER SU M OF RS. 4,363/- BEING THE PROPORTIONATE INTEREST OVER THIS AMOUNT WHILE THE R EMAINING AMOUNT OF RS. 3,50,000/- WILL BE TREATED AS THE INCOME OF ASSESSE E OUT OF UNDISCLOSED SOURCES AND ASSESSES ACCORDINGLY. 5. ASSESSEE WAS UNREPRESENTING DURING THE ASSESSMENT P ROCEEDINGS. SO, NO EVIDENCE WITH REGARD TO THE INDEPENDENT SOURCE OF I NCOME AND FOREIGN REMITTANCE COULD BE PLACED BEFORE THE LD. ASSESSING OFFICER AT THE SAME TIME OF ASSESSMENT. EVEN THE INSPECTOR AND THE NOTICE SE RVER WHO WENT TO HOUSE OF THE LADY IN THE VILLAGE PANDORI TO SERVE OF NOTICES FAILED TO BRING ON RECORD THE FACTUM OF DAIRY AT AGRICULTURE INCOME OF THE LADY. HAD THIS FACT BEEN BROUGHT BY THE INSPECTOR, NOTICE SERVER OR CLERK ON THE REC ORD AT THE TIME OF ASSESSMENT. THE ASSESSEE LADY WOULD HAVE BEEN ENTIT LED TO CONSEQUENTIAL BENEFITS OF THE SAME, SO MERELY BECAUSE AN ERROR HA S OCCURRED DURING THE ASSESSMENT AND ADDITION HAS BEEN MADE PENALTY FOR C ONCEALMENT SHOULD NOT BE IMPOSED ON THAT ADDITION. 6. SINCE, AS PER THE FINDINGS OF LD. CIT, JALANDHAR I N REVISION PETITION THE ADDITION MADE IN ASSESSMENT HAS BEEN PARTLY DELETED AND THE REMAINING ADDITION HAS BEEN SUSTAINED ON THE ESTIMATED BASIS ONLY. THE PEN ALTY FOR CONCEALMENT IS NOT IMPOSSIBLE ON THE BASIS OF ESTIMATED ADDITION. RELIANCE IS PLACED ON: WHERE ADDITION WAS MADE ON THE BASIS OF ESTIMATE AND NOT ANY CONCRETE EVIDENCE OF THE CONCEALMENT OR BURNISHING OF INACCURATE PARTICULARS LEVY OF PENALTY IS NOT JUSTIFIED. LIKEW ISE THE ADDITION WAS MADE ON ACCOUNT OF DIFFERENCE OF OPINION ABOUT ESTIMATED RA TES INCOME AND EXPENDITURE, WILL NOT JUSTIFY LEVY OF PENALTY- CIT V RAVAIL SINGH & CO.[2002] ITA NO.697(ASR)/2014 A.Y. 2005-06 8 122 TAXMAN 831 (PUNJ. & HAR.) CIT V. SANGRUR VANASP ATI MILLS LTD. [2008] 171 TAXMAN 320 (PUNJ. & HAR.) 7. NO PENALTY U/S 271(1) IS IMPOSSIBLE ON ESTIMATED AD DITION BECAUSE FACTOR OF EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURN ISHING INCITE PARTICULARS OF INCOME , IS NOT PROVED-HARI OM KUMAR UMESH CHAND V. ITO[2002] 124 TAXMAN 213(AGRA) (MAG.) 8. THE MERE FACT THAT THE EXPLANATION OF THE ASSESSEE, WAS FOUND UNSATISFACTORY AND THAT DEEMING PROVISION OF SECTION 69A COULD BE INVOKED DOES NOT NECESSARILY MEAN THAT HE HAS NOT DISCHARGED THE BU RDEN CAST UPON HIM BY THE EXPLANATION-CIT V. VINAYCHAND HARILAL (1979) 12 0 ITR 752 (GUJ.). 9. IF THE AO CANNOT PROVE THAT THE ADDITIONS MADE ON E STIMATE BASIS ARE AS THE RESULT OF GROSS OR WILLFUL NEGLECT ON PART OF THE A SSESSEE, IMPOSITION OF PENALTY WAS NOT JUSTIFIED- DR. RAVI PAUL V. ASST. CIT [2002 ] 254 ITR 191 [P&H]. 10. IN SUPPORT OF MY CONTENTION THAT THE DEPOSIT REPRES ENTED PARTLY FROM FOREIGN REMITTANCE AND PARTLY FROM AGRICULTURE AND DAIRY IN COME IN INDIA, I HEREBY SUBMIT THE FOLLOWING EVIDENCE: (I) FARAD OF AGRICU LTURE LAND, (II) CERTIFICATE OF DAIRY IN VILLAGE PANDORI, (III) CONSTRUCTION SKILL/ REVENUE OFFICE IDENTITY CARD OF HUSBAND IN U.K. IN VIEW OF ABOVE SINCE THERE IS NO CONCEALMENT OF P ARTICULAR AND ADDITION HAD BEEN MADE ON THE ESTIMATED BASIS ONLY AND PENALTY P ROCEEDING HAS BEEN WRONGLY INITIATED. I PRAY THAT PENALTY PROCEEDING M AY KINDLY DROPPED. THE ABOVE CONTENTION OF THE ASSESSEE IS NOT ACCEPTA BLE IN VIEW OF THE FACTS DETAILED ABOVE AND IN VIEW OF THE ORDER OF THE LD. CIT-II, JALANDHAR DATED 14.03.2011 PASSED U/S 264 OF THE I.T. ACT. 1961, WH EREIN THE LD. CIT-II, JAL. HAS THOROUGHLY DISCUSSED/ EXAMINED ALL THE FACTS OF THE CASE AND ORDERED THAT AN AMOUNT OF RS. 3,50,000/- BE TREATED AS THE INCOME O F ASSESSEE FROM UNDISCLOSED SOURCES AND ASSESSED ACCORDINGLY. FURTH ER, THE FACTS OF THE CASE LAWS CITED BY THE COUNSEL OF THE ASSESSEE ARE DIFFE RENT FROM THOSE OF THE ASSESSEES CASE. THUS, IN VIEW OF THE FACTS DISCUSS ED IN DETAIL ABOVE, IT IS CLEAR THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME REGARDING SOURCE OF CASH DEPOSITS AMOUNTING TO RS. 3,40,000/- IN HIS SAVING BANK ACCOUNT, AND AN INTEREST ON THIS SAVING BANK ACCOUN T AMOUNTING TO RS. 10,000/-. HENCE, I AM SATISFIED THAT THIS IS A FIT CASE FOR LEVY OF PENALTY. ACCORDINGLY, PENALTY U/S 271(1)(C) IS LEVIABLE IN T HIS CASE. HENCE, MINIMUM ITA NO.697(ASR)/2014 A.Y. 2005-06 9 PENALTY U/S 271(1)(C) OF THE I.T. ACT, 1961 AMOUNTI NG TO RS. 79,000/- IS HEREBY LEVIED BEING 100% OF THE TAX SOUGHT TO BE EVADED. 5. VIDE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED TH E PENALTY OBSERVING AS FOLLOWS: 5.2 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASS ESSING OFFICER AS MADE BY HER IN THE ASSESSMENT AS WELL AS PENALTY ORDER. I H AVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE VIDE DATE D 12.09.2014. I HAVE FURTHER CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE. ON CAREFUL CONSIDERATION OF THE RIVAL CON TENTIONS, I AM ALSO OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS VEHEMENTLY FAILED TO EXPLAIN THE SOURCES OF CASH DEPOSITS IN HER BANK ACCOUNT TO THE EXTENT OF RS. 3,50,000/- . THE SATISFACTION OF THE ASSESSING OFFICER WITH REGA RD TO CONCEALMENT OF INCOME IS ALSO DISCERNIBLE FROM THE ASSESSMENT ORDE R. MOREOVER, NO BENEFITS CAN BE ALLOWED TO THE ASSESSEE WITH REGARD TO IGNOR ANCE OF LAW. THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE ARE ALSO ENTIRELY ON DIFFERENT FACTS FROM THAT OF THE FACTS OF THE CASE OF THE ASS ESSEE. HERE THE ADDITION MADE BY THE ASSESSING OFFICER IS ALSO NOT ON ESTIMA TED BASIS. MOREOVER, IT HAS NOT BEEN DEMONSTRATED BY THE LD. AR OF THE ASSE SSEE THAT AS TO HOW THE FACTS OF VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPO N BY THE ASSESSEE ARE SIMILAR TO THE FACTS OF THE CASE OF THE ASSESSEE. T HE EXPLANATION OFFERED BY THE ASSESSEE DURING PENALTY PROCEEDINGS HAS ALSO BE EN DULY CONSIDERED BY THE ASSESSING OFFICER. IT HAS ALSO BEEN NOTICED THA T ASSESSING OFFICER HAS PROPERLY APPLIED HIS MIND BEFORE LEVYING THE PENALT Y AND HAS ALSO ALLOWED REASONABLE OPPORTUNITY OF BEING HEARD. 5.3 IN THE ABOVE STATED FACTS AND IN THE CIRCUM STANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS VEHEMENTLY FAILED TO EXPLAIN THE SOURCES OF CASH DEPOSITS TO THE EXTENT OF RS. 3,50,000/- IN HER BANK ACCOUNT AND HAS CERTAINLY CONCEALED THE PARTICULARS OF HER INCOME TO THIS EXT ENT. THE PENALTY OF RS. 79,000/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF TH E ACT IN THIS CASE IS, THEREFORE, UPHELD. IN THE RESULT, GROUNDS NO. 1 TO 15 OF APPEA L TAKEN BY THE ASSESSEE ARE DISMISSED. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT THE AO HAS ERRED IN IMPOSING PENALTY WITHOUT GIVING ANY FINDIN G WHETHER IT IS A CASE OF CONCEALMENT OR INACCURATE PARTICULARS OF INCOME. FURTHER, THE AO ALSO ERRED IN IMPOSING THE PENALTY IN A MECHANICAL MANNE R JUST BECAUSE THE ITA NO.697(ASR)/2014 A.Y. 2005-06 10 ADDITION MADE HAD BEEN PARTLY SUSTAINED BY THE CIT( A) ON ESTIMATED BASIS. THE AO HAS NOT EVEN APPRECIATED THE FACT TH AT THE AGRICULTURE PRODUCE FROM THREE ACRES OF LAND SUPPORTED WITH J F ORMS WAS AGRICULTURE INCOME OF THE ASSESSEE AND THE HUSBAND OF THE ASSES SEE WAS IN THE U.K. AND THE REMITTANCES WERE RECEIVED FROM ABROAD, FROM TIME TO TIME. HE CONTENDED THAT THE ORDER OF THE LD. CIT(A) IN CONFI RMING THE IMPOSITION OF PENALTY OF RS.79,000/- IS ILLEGAL, ARBITRARY AND AG AINST THE FACTS. HE ACCORDINGLY PLEADED THAT THE PENALTY IMPOSED MAY BE DELETED. 7. IT HAS FURTHER BEEN CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT NEITHER THE LD. CIT(A) HAS DISCUSSED, NOR GIVE N ANY CALCULATION AS TO HOW THE FIGURE OF RS.1 LAC WAS ARRIVED AT FROM 20 ACRES OF AGRICULTURAL LAND PLUS INCOME OF DAIRY PLUS REMITTANCES FROM ABR OAD; ANDTHAT THE LD. CIT(A) HAS TOTALLY IGNORED THE ASSESSEES LETTER DA TED 25.11.2010, WHEREIN, IN PARA 3.2, THE ASSESSEE HAD CATEGORICALL Y SUBMITTED THAT SHE HAD 10 MILK YIELDING CATTLE. 8. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELI ANCE ON THE FOLLOWING CASE LAWS: I) CIT VS. ANWAR ALI, 76 ITR 696 (SC) II) CIT VS. VINAY CHAND HIRALAL, 120 ITR 752 (GU J.) III) ACIT VS. ALLIED CONSTRUCTION, 291 ITR (AT) 16 (D ELHI) (SB) IV) DR. RAVI PAUL VS. ACIT, 74 TTJ (ASR-TRIB.) 146 V) DCIT VS. AUTUR HOLDINGS P. LTD., 1 SOT 101 (MUM. ). ITA NO.697(ASR)/2014 A.Y. 2005-06 11 9. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT IT REMAI NS UNDISPUTED THAT THE ASSESSEE MISERABLY FAILED TO EXPLAIN THE SOURCE OF CASH DEPOSITS AMOUNTING TO RS.3,50,000/-; THAT THE ASSESSEE HAS ALSO NOT BEEN ABLE TO SHOW AS TO HOW THE ADDITION WAS MADE ON ESTIMATED B ASIS; AND THAT THE PENALTY WAS CORRECTLY LEVIED AND CONFIRMED AFTER DU LY TAKING INTO CONSIDERATION THE EXPLANATION OFFERED BY THE ASSESS EE, WHICH, HOWEVER, WAS NOT FOUND TENABLE. 10. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD, IT IS SEEN THAT THE PENALTY IN TH IS CASE WAS LEVIED ON THE BASIS OF THE ORDER PASSED U/S 264 OF THE ACT BY THE LD. CIT(A), WHEREBY, THE INCOME OF RS.3.50 LACS WAS CONFIRMED IN THE HA NDS OF THE ASSESSEE. THIS WAS DONE ON THE BASIS OF ESTIMATION OF INCOME, AS IS EVIDENT FROM THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT, P ASSED U/S 264 OF THE ACT, WHEREIN, IT WAS OBSERVED THAT ..IT IS, THER EFORE, VERY OBVIOUS THAT THERE ARE GAPING HOLES IN THE ASSESSEES VERSION AN D IT HARDLY SOUNDS CONVINCING. HOWEVER, KEEPING IN VIEW THE TOTALITY O F CIRCUMSTANCES, SUBMISSIONS BY THE ASSESSEE AND TAKING A VERY LIBER AL VIEW BY GIVING SOME BENEFIT OF DOUBT TO THE ASSESSEE, I HOLD THAT OUT OF THE TOTAL INCOME (INCLUDING THE INTEREST EARNED BY THE ASSESSEE OVER HER DEPOSITS IN BANK OF RS.4,54,363/-), A SUM OF RS.1 LAKH BE TREATED O UT OF THE POSSIBLE REMITTANCES BY HER HUSBAND FROM ABROAD AND INCOME F ROM DIARY AND CULTIVATION OF FAMILYS AGRICULTURAL INCOME AND ANO THER SUM OF RS.4,363/- ITA NO.697(ASR)/2014 A.Y. 2005-06 12 BEING THE PROPORTIONATE INTEREST OVER THIS AMOUNT W HILE THE REMAINING AMOUNT OF RS.3,50,000/- WILL BE TREATED AS THE INCO ME OF THE ASSESSEE OUT OF UNDISCLOSED SOURCES AND ASSESSED ACCORDINGLY .. 11. THUS, IT IS EVIDENTLY CLEAR THAT THE ADDITION, AS SUSTAINED BY THE LD. CIT(A) IN PURSUANCE OF THE ORDER PASSED U/S 264 OF THE ACT, WAS ON THE BASIS OF ESTIMATION BASIS. THE PENALTY IN QUESTION, AMOUNTING TO RS.79,000/- WAS LEVIED ON THIS AMOUNT OF RS.3,50,00 0/- ONLY. 12. WHILE OBSERVING THAT THE ADDITION WAS NOT MADE ON THE BASIS OF ESTIMATION BASIS, THE LD. CIT(A), IN THE IMPUGNED O RDER HAS NOT GIVEN ANY BASIS FOR THIS OBSERVATION. THE SPECIFIC OBSERVATIO N OF THE LD. CIT(A), AS REPRODUCED HEREIN ABOVE, IN THE ORDER PASSED U/S 26 4 OF THE ACT, HAS NOT EVEN BEEN REFERRED TO BY THE LD. CIT(A) IN THE IMPU GNED ORDER. THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD IS CORRECT . 13. NOW, IN THE CASE OF CIT VS. RAVAIL SINGH & CO. , 122 TAXMAN 831 (P&H) AND IN CIT VS. SANGRUR VANASPATI MILLS LTD. , 171 TAXMAN 302 (P&H), BOTH RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT, IT HAS BEEN HELD THAT WHERE THE ADDITION IS MADE ON THE B ASIS OF ESTIMATION AND NOT ON ANY CONCRETE EVIDENCE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS, LEVY OF PENALTY IS NOT JUST IFIED. 14. IN HARI OM KUMAR UMESH CHAND VS. ITO, 124 TAX MAN 213 (AGRA), IT HAS BEEN HELD THAT NO PENALTY U/S 271(1) (C) OF THE ACT IS IMPOSABLE ON ESTIMATED ADDITION, BECAUSE THE FACTOR OF EITHER ITA NO.697(ASR)/2014 A.Y. 2005-06 13 CONCEALMENT OF PARTICULARS OF INCOME, OR OF FURNISH ING OF INACCURATE PARTICULARS OF INCOME, DOES NOT STAND PROVED. 15. IN CIT VS. VINAYCHAND HARILAL, 120 ITR 752 (G UJ.), IT HAS BEEN HELD THAT THE MERE FACT THAT THE EXPLANATION OF TH E ASSESSEE WAS FOUND UNSATISFACTORY AND THAT THE DEEMING PROVISION OF SE CTION 69A COULD BE INVOKED, DOES NOT NECESSARAILY MEAN THAT HE HAS NOT DISCHARGED THE BURDEN CAST UPON HIM BY THE EXPLANATION TO SECTION 271(1)(C) OF THE ACT. 16. IN DR. RAVI PAUL VS. ASST. CIT, 254 ITR 191 ( P&H), THE HONBLE JURISDICTIONAL HIGH COURT AGAIN HELD THAT IF THE A O CANNOT PROVE THAT THE ADDITIONS MADE ON ESTIMATE BASIS ARE THE RESULT OF FRAUD OF GROSS OR WILLFUL NEGLECT ON THE ART OF THE ASSESSEE, IMPOSIT ION OF PENALTY IS NOT JUSTIFIED. 17. IN CIT VS. ANWAR ALI, 76 ITR 696 (SC), THE HO NBLE SUPREME COURT HAS HELD THAT THE FINDINGS GIVEN IN THE ASSESSMENT ORDER ARE NOT CONCLUSIVE QUA CONCEALMENT OF PENALTY, THOUGH THEY MAY BE OF EVIDENTIARY VALUE. 17. ALL THE ABOVE DECISIONS WERE CITED BY THE ASSE SSEE BEFORE THE LD. CIT(A). HOWEVER, THE LD. CIT(A) HAS WRONGLY BRUSHED ASIDE THE SAME BY MERELY OBSERVING THAT THAT THE FACTS THEREIN WERE D IFFERENT FROM THOSE OF THE ASSESSEE, WHEREAS, AS DISCUSSED, THE FACTS OF T HE ASSESSEES CASE ARE QUITE IN PARA-MATERIA WITH THOSE OF THE ABOVE CASE S. 18. IN VIEW OF THE ABOVE, FINDING MERIT IN THE GRI EVANCE OF THE ASSESSEE, IT IS HELD THAT NO CONCEALMENT PENALTY IS LEVIABLE IN THE CASE OF THE ITA NO.697(ASR)/2014 A.Y. 2005-06 14 ASSESSEE, AS THE ADDITION HAS BEEN MADE ON THE BASI S OF MERE ESTIMATION. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND THE PENALTY IS DELETED. THE ORDER OF THE LD. CIT(A) IS REVERSED AND THE GROUNDS TAKEN BY THE ASSESSEE ARE ACCEPTED. 19. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/02/2016. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 08/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE: SMT. BALWINDER KAUR, PHAGWARA. 2. THE ITO, WARD-1, PHAGWARA. 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.