SHRI SURESH SHARMA, Mhow V. The DCIT 5(1), Indore

ITA 710/IND/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0468 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 11-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Assessee Lawyers: PANKAJ SHAH CAS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.710/IND/2014 A.Y. : 2010-11 SHRI SURESH SHARMA, DY. CIT, 673, DHAN GALI, MHOW VS. 5(1), INDORE. APPELLANT RESPONDENT PAN NO. AEXPS 9304N APPELLANT BY : SHRI MANOJ GUPTA AND SHRI PANKAJ SHAH, CAS RESPONDENT BY : SHRI R. R. MEENA, DR DATE OF HEARING : 1 6 . 0 6 .201 5 DATE OF PRONOUNCEMENT : 1 6 . 0 6 .201 5 -: 2: - 2 O R D E R PER GARASIA, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A)-II, INDORE, DATED 28.08.2014 FOR THE ASS ESSMENT YEAR 2010-11. 2. THE FOLLOWING GROUND HAS BEEN TAKEN BY THE ASSES SEE :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF AO FOR IMPOSING PENALTY U/S 271(1)(C) OF T HE INCOME-TAX ACT, 1961, OF RS. 10,00,000/-. THE PENALTY CONFIRMED BY CIT(A) IS MORE THAN 150 % REQUIRES TO BE DELETED IN FULL. 3. THE ASSESSEE IS AN INDIVIDUAL PERSON. HE IS A GOVER NMENT CONTRACTOR AND IS IN THE BUSINESS OF CARRYING ON CI VIL CONSTRUCTION ACTIVITY. HE HAD FILED HIS RETURN OF I NCOME ON 15.10.2010. THE RETURN WAS PROCESSED U/S 143(1). DU RING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS AGREED F OR ADDITION -: 3: - 3 OF RS. 19,80,000/- MADE ON ACCOUNT OF ALLEGED EXPEN SES OF BANK DEPOSIT U/S 69A OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE T O EXPLAIN THE DEPOSITS IN HIS BANK ACCENT. THE ASSESSEE EXPLA INED THAT CASH DEPOSIT WAS SOURCED BY WITHDRAWAL OF SAME AMOU NT FROM HIS OVER DRAFT ACCOUNT WITH ORIENTAL BANK OF COMMER CE WAS UTILIZED FOR PAYMENT TO VARIOUS SUPPLIERS OF BUSINE SS. THE ASSESSEE CONTENDED THAT HE HAS WITHDRAWN THE CASH F ROM OVER DRAFT ACCOUNT WITH THE SAME BANK ON THE SAME DATE A ND DEPOSITED THE SAME IN THE SAVING ACCOUNT, BUT DUE T O MISTAKE OF ACCOUNTANT, THE SAME HAS BEEN ENTERED INTO CASH BOOK OF THE ASSESSEE. THEREFORE, THE AO HAS LEVIED THE PENA LTY OF RS. 14 LACS U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 4. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) HA S DISMISSED THE APPEAL OF THE ASSESSEE. 5. DURING THE COURSE OF HEARING, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS WITH DRAWN THIS AMOUNT FROM THE BANK FOR BUSINESS PURPOSES, BU T DUE TO THE MISTAKE OF THE ACCOUNTANT THE CASH WAS SHOWN IN LEDGER BOOK AND THAT MISTAKE WAS FOUND OUT DURING ASSESSME NT -: 4: - 4 PROCEEDINGS AND ASSESSEE HAS AGREED FOR THE SAME AD DITION. THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE IS AN INDIVIDUAL AND HE IS ENGAGED IN CIVI L CONSTRUCTION WORK FOR GOVERNMENT DEPARTMENT. THE AS SESSEE HAS WITHDRAWN THE CASH FROM O.D. ACCOUNT WITH THE S AME BANK ON THE SAME DATE AND DEPOSITED THE SAME IN ABO VE SAVING BANK ACCOUNT, BUT DUE TO MISTAKE OF THE ACCO UNTANT, THE SAME HAS BEEN ENTERED INTO CASH BOOK OF THE ASS ESSEE AS CASH RECEIVED AND UTILIZED FOR PAYMENT OF VARIOUS E XPENSES. THE MISTAKE WAS UN-INTENTIONAL AND CAUSED DUE TO MI STAKE OF THE ACCOUNTANT. THE LD. AUTHORIZED REPRESENTATIVE H AS FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT CONCEALED ANY I NCOME OR SUBMITTED INACCURATE PARTICULARS OF INCOME. THE LD. AUTHORIZED REPRESENTATIVE ALSO RELIED UPON THE DECISION OF HON 'BLE M.P. HIGH COURT IN THE CASE OF ADDL.CIT VS. BHARTIYA BHA NDAR,122 ITR 622, IN WHICH IT WAS HELD THAT WHEN A SURRENDER IS MADE TO PURCHASE PEACE OR FOR OTHER SIMILAR REASONS OR T O AVOID BOTHERATION, THE SURRENDER CANNOT AMOUNT TO AN ADMI SSION CONSTITUTING EVIDENCE OF CONCEALMENT IN PENALTY PRO CEEDINGS. SIMILARLY SINCE THE ASSESSEE HAS NOT PREFERRED AN A PPEAL, IT -: 5: - 5 WOULD NOT TANTAMOUNT TO ADMISSION OF CONCEALMENT. I T IS MERE FACT THAT THE ASSESSEE DOES NOT WANT PROTRACTED LIT IGATION. MERE FACT OF SURRENDER COULD NOT NECESSARILY BE AN ADMIS SION OF ASSESSEE THAT AMOUNT SURRENDERED WAS UNDISCLOSED IN COME AND LIABLE TO BE SUBJECTED TO PENALTY. SIMILARLY, H E HAS ALSO RELIED ON THE JUDGEMENT OF HON'BLE MUMBAI HIGH COUR T IN THE CASE OF DELOITTE CONSULTING INDIA PVT.LIMITED, IN W HICH IT WAS HELD THAT EVEN IF QUANTUM APPEAL HAD BEEN REJECTED BY THE LD. CIT(A) AND THE I.T.A.T. THAT IN ITSELF WOULD NOT AM OUNT TO A VALID JUSTIFICATION FOR IMPOSITION OF A PENALTY. SI MILARLY, HE HAS ALSO RELIED UPON THE DECISION OF HON'BLE MUMBAI HIG H COURT IN THE CASE OF CIT VS. SHIVLAL DESAI & SONS, (1978) 11 4 ITR 388, AND SUBMITTED THAT DUE TO SOME ADDITIONS OR DISALLO WANCES, THE PENALTY IS NOT AUTOMATIC. MOREOVER, HE HAS ALSO RELIED UPON THE DECISION OF CIT VS. SIDDHARTH ENTERPRISES AND SUBMITTED THAT WHILE DECIDING THE PENALTY U/S 271(1 )(C), THE APPROACH OF THE TRIBUNAL SHOULD BE DIFFERENT AND AL TERNATIVELY, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E PENALTY WAS IMPOSED AT 150%. IT SHOULD BE RESTRICTED TO 100 % ONLY. -: 6: - 6 6. THE LD. SENIOR D.R. RELIED UPON THE DECISION OF HON 'BLE SUPREME COURT IN THE CASE OF MAK DATA PRIVATE LIMIT ED VS. CIT, 358 ITR 593, WHEREIN THE HON'BLE SUPREME COURT HAS HELD THAT VOLUNTARY DISCLOSURE DOES NOT RELEASE ASS ESSEE FROM MISCHIEF OF PENAL PROCEEDINGS. THE SURRENDER OF INC OME WAS NOT VOLUNTARY AS IT WAS MADE AFTER DETECTION BY THE ASSESSING OFFICER. THEREFORE, THE PENALTY IS LEVIABLE. HON'BL E SUPREME COURT HAS ALSO HELD THAT THE AO SHALL NOT BE CARRIE D OUT BY THE PLEA OF ASSESSEE LIKE VOLUNTARY DISCLOSURE TO BUY P EACE, TO AVOID LITIGATION, TO EXPLAIN HIS CONDUCT. THE LD. S ENIOR D.R. SUBMITTED THAT BY THIS JUDGMENT, WHICH CLARIFIES TH E POSITION OF LAW REGARDING PLEA LIKE VOLUNTARY DISCLOSURE, BU Y PEACE, AVOID LITIGATION SHOULD NOT BE TAKEN INTO CONSIDERA TION WHILE IMPOSING THE PENALTY. IN THIS JUDGEMENT, THE HON'BL E SUPREME COURT HAS ALSO RELIED UPON THE DECISION OF UOI VS. DHARMENDRA TEXTILE PROCESSORS 306 ITR 277 (SC) AND CIT VS. ATUL MOHAN BINDAL 317 ITR 1 (SC). HE CONCLUDED THAT THE PENALTY WAS RIGHTLY LEVIED AT 150 %. -: 7: - 7 7. LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THA T MINIMUM PENALTY OF 100 % OF THE TAX SHOULD BE IMPOS ED ON THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. WE HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIE S. DUE TO THE INQUIRY BY THE DEPARTMENT, THE ASSESSEE MADE SURRENDER OF THIS INCOME. WE FIND THAT THE ASSESSEE DID NOT OBJECT TO IT. WE ARE OF THE VIEW THAT THE LD. CIT(A ) HAS GIVEN PART RELIEF TO THE ASSESSEE AND REDUCED THE PENALTY AT MORE THAN 150 %. THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. WE HAVE GONE THROUGH THE ORDER OF THE PENALTY, WHEREIN THE AO HAS LEVIED PENALTY AT 200 %, WHICH H AS BEEN REDUCED AT MORE THAN 150% BY THE LD. CIT(A), IS ON HIGHER SIDE. THEREFORE, WE REDUCE IT AT MINIMUM PENALTY. T HEREFORE, WE MODIFY THE ORDER OF THE AO & LD. CIT(A) AND AO I S DIRECTED TO REDUCE PENALTY AT MINIMUM I.E. @ 100% OF THE TAX WORKED OUT TO RS. 6,53,400/-. -: 8: - 8 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED :16 TH JUNE, 2015. CPU* 2.7