HAIDER ABBAS, MUMBAI V. ITO 20(1)(3), MUMBAI

ITA 7202/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1492 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 08-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VISHWAS JADHAVDR
• Keywords: Income from undisclosed sources; Salary income
• Section: 68

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.7202/ MUM/2014 ( / ASSESSMENT YEAR : 2009-10) HAIDER ABBAS, 201, D1/1, YAMUNA NAGAR, OFF. LINK ROAD, NEAR LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI 400 053. / V. INCOME TAX OFFICER- 20(1)(3), ROOM NO. 607, 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, LOWER PAREL, MUMBAI 400 012. ./ PAN :AACPA8285H ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI VISHWAS JADHAV,DR / DATE OF HEARING : 08-11-2016 / DATE OF PRONOUNCEMENT : 21-12-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 7202/MUM/2014, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 8 TH SEPTEMBER, 2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 31, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2009- 10, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE PENALTY ORDER DATED 20 TH MARCH, 2012 PASSED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 7202/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- I) THE ASSESSEE IS A BONAFIDE TAX PAYER SINCE THE Y EAR 1994.HE IS FILING THE INCOME TAX RETURN REGULARLY SINCE 1994.AS HE IS NOT FROM THE COMMERCE BACKGROUND, FOR FILING THE INCOME TAX REGULA RLY HE USED TO TAKE THE SERVICES OF A CHARTERED ACCOUNTANT, MR MEHBO OB. MR MEHBOOB USED TO DO ALL THE TAX RELATED MATTERS SUCH AS FILING RETURNS, PAYING INCOME TAX ETC. HOWEVER, SUDDENLY HE DIED IN THE MONTH OF APRIL 2006. 2) THE ASSESSEE DEALS WITH THE CLIENTS WHO WANT TO GET TH EIR WORK DONE EXPEDITIOUSLY AND HENCE THEY GIVE CASH FOR EXPE NSES PURPOSES ONLY. THIS CANNOT BE CONSIDERED AS INCOME AND IF FOR ANY REASONS WORK IS NOT DONE, THE SAME HAS TO BE REFUNDED. 3) AFTER THE DEATH OF MR MEHBOOB, HIS WIFE USED TO SE E ALL THE MATTERS. THE ASSESSEE WAS OF THE VIEW THAT HIS WIFE I S ALSO A CHARTERED ACCOUNTANT. SHE WAS APPOINTED FOR PREPARING INCOME TA X RETURNS FOR THREE FINANCIAL YEARS ( 2006-2009) BUT LATER ON IT WA S FOUND THAT SHE HERSELF IS NOT A CA. AS A RESULT, IN THE INCOME TAX RE TURN FILED BY HER, THERE WAS MISSING SOME OF THE CASH DEPOSIT ISSUES, AL THOUGH THE ASSESSEE HAD PROVIDED THE BANK STATEMENTS TO HER FOR TH E ASSESSMENT YEAR. 4) IT WAS DUE TO HER FAULT THAT THE CASH DEPOSIT WAS NO T REFLECTED IN THE ORIGINAL RETURN. THE ASSESSEE HAD NEVER THE INTEN TION OF HIDING THE INCOME FROM TAX. 5) SO, WHEN THE ASSESSING OFFICER ASKED ABOUT THE CASH DEPOSIT DETAILS, THE ASSESSEE IMMEDIATELY EXPLAINED THE DISCR EPANCY VOLUNTARILY. 6) SO, ALTHOUGH THERE WAS SOME CASH DEPOSIT NOT REFLE CTED IN THE RETURN, IT WAS ONLY DUE TO THE CIRCUMSTANCES EXPLAINED A BOVE, BEYOND THE CONTROL OF THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER ERRED IN INITIATING THE PENALTY PROCEEDINGS FOR CONCEALMENT. 7) THE ASSESSEE HAD NEVER THE INTENTION OF HIDING TH E INCOME FROM TAX. 8) SO, FROM THE FACTS & GROUNDS MENTIONED ABOVE, THE PENALTY PROCEEDINGS SHOULD NOT BE LEVIED AGAINST THE ASSESSEE AS THE OMISSION WAS NOT INTENTIONAL BUT MERELY IT WAS AN ACCIDENTAL. 9) SO IT IS HUMBLY PRAYED THAT THE PENALTY RAISED BY THE ASSESSING OFFICER SHOULD BE DELETED BY THE LEARNED ITAT. ITA 7202/MUM/2014 3 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IN THIS CASE IS AGGRIEVED BY THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. T HE ONLY ADDITION MADE IN THIS CASE IS ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE WITH ICICI BANK AMOUNTING TO RS. 9,18,775/ -. THE ASSESSEE IS ENGAGED IN THE CONSULTANCY OF COMPUTER SOFTWARE AND ALSO EARNED INCOME FROM SALARY. IT WAS OBSERVED BY THE A.O. THAT THE ASSESSEE HAD DEPOSITED TOTAL CASH AMOUNT OF RS. 15,60,281/- IN HIS SAVING BANK A CCOUNT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE NATURE AND SOURCE OF THE SAID CASH DEPOSITS IN HIS BANK ACCOUNT AND IN REPLY THE ASSESSEE COULD EXPLAIN THE SOURCE OF CASH DEPOS IT TO THE EXTENT OF RS. 6,41,506/- ONLY AND FOR THE BALANCE DEPOSITS OF RS. 9,18,775/-, THE ASSESSEE COULD NOT OFFER ANY SATISFACTORY EXPLANATION. ACCO RDINGLY, THE A.O. TREATED BALANCE CASH DEPOSIT OF RS. 9,18,775/- AS UNEXPLAIN ED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE , AGAINST WHICH PENALTY PROCEEDINGS WE RE INITIATED BY THE AO U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. NOT ICE DATED 23 RD SEPTEMBER, 2011 WAS ISSUED TO THE ASSESSEE WHEREBY THE ASSESSE E WAS ASKED TO EXPLAIN WHY PENALTY U/S 271(1)(C) OF THE ACT SHOULD NOT BE LEVIED ON THE ASSESSEE. HOWEVER, THE ASSESSEE COULD NOT FURNISH ANY EXPLANA TION IN THIS REGARD HENCE THE A.O. HELD THAT THE ASSESSEE HAS NO PLAUSIBLE EX PLANATION TO OFFER WITH REGARD TO THE CASH DEPOSIT OF RS.9,18,775/-. ACCOR DINGLY, MINIMUM PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED AMOUNTING TO RS . 2,93,036/- WAS LEVIED BY THE AO ON THE ASSESSEE VIDE PENALTY ORDER DATED 20 TH MARCH, 2012 PASSED U/S 271(1)(C) OF THE ACT. ON THE FIRST APPEAL FILE D BY THE ASSESSEE BEFORE THE LEARNED CIT(A), THE LD. CIT(A) CONFIRMED THE SAME V IDE APPELLATE ORDER DATED 08-09-2014 , BY HOLDING AS UNDER:- IN THE PRESENT CASE, PENALTY HAS BEEN LEVIED ON THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE BANK ACC OUNT MAINTAINED BY THE APPELLANT WITH ICICI BANK LTD. DURING ASSESSM ENT PROCEEDINGS, ITA 7202/MUM/2014 4 IT WAS EXPLAINED BY THE APPELLANT THAT THESE CASH DEPO SITS WERE SOURCED FROM CASH WITHDRAWALS MADE BY HIM FROM THE SAME ACCOU NT. THE AO TOOK THE SAID EXPLANATION INTO ACCOUNT AND FOUND THAT THE WITHDRAWALS EXPLAINED ONLY AN AMOUNT RS. 6,41,506/- LEAVING AN A MOUNT OF RS.9,59,647/- AS INCOME FROM UNDISCLOSED SOURCES. I N APPEAL IT HAS ONLY BEEN STATED THAT THE APPELLANT WAS FILING RETURNS FROM 1994 ONWARDS AND THAT HIS REGULAR CHARTERED ACCOUNTANT DIE D IN APRIL 2006. IT WAS FURTHER STATED THAT THEREAFTER THE LATE A.R.'S W IFE FILED THE RETURN AND MADE THE MISTAKE SINCE SHE WAS NOT A QUALIFIED CA. IT WAS FURTHER STATED THAT THE APPELLANT GAVE THE EXPLANATION DURING ASS ESSMENT PROCEEDINGS AND THE ERROR WAS UNINTENTIONAL. THUS THE MAIN PLANK OF THE APPELLANT'S DEFENSE IS THAT THE MISTAKE THAT LED TO THE E XCLUSION OF THE CASH DEPOSITS IN THE BANK ACCOUNT IN THE RETURN FILE D BY THE APPELLANT WAS DUE TO THE LACK OF COMPETENCE OR QUALIFI CATION OF THE PERSON PREPARING THE RETURN I.E. THE LATE CA'S WIFE. HOWEVER IT IS SEEN THAT THE RETURN IN WHICH THE CASH DEPOSITS WERE FOUND TO BE OMITTED WAS FOR THE A.Y. 2009-10 WHEREAS THE A.R. WAS SAID TO HAVE PASSED AWAY IN 2006. THUS, THERE IS SUBSTANTIAL TIME LAG BETWE EN THE DEMISE OF THE AR AND THE OCCURRENCE OF THE SO-CALLED INADVERTENT ERROR. ALSO, THE APPELLANT HAS NOT EXPLAINED WHY THIS REASON WAS NOT PU T FORWARD DURING THE SCRUTINY PROCEEDINGS WHEN THE CASH DEPOSITS WERE CONFRONTED TO THE APPELLANT. IN SUCH A SITUATION, THE APPELLANT CANNOT BE SAID TO HAVE DISCHARGED THE ONUS CAST UPON HIM BY T HE STATUTE AND IS EXIGIBLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE GROUNDS RAISED BY THE APPELLANT ARE DISMISSED AND TH E LEVY OF PENALTY IS UPHELD. 4. AGGRIEVED BY THE APPELLATE ORDER DATED 08-09-201 4 PASSED BY THE LD. CIT(A), THE ASSESSEE FILED SECOND APPEAL BEFORE THE TRIBUNA L. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE, HENCE, WE PROCEED TO DISPOSE OF THE APPEAL AFTER HEARING THE LD. D.R. AND MATERI AL AVAILABLE ON RECORD. 6. THE LD. D.R. SUBMITTED THAT THE PENALTY ORDER U/ S 271(1)(C) OF THE ACT WHICH WAS CONFIRMED BY THE LD. CIT(A) WAS WITH RESP ECT TO THE CASH DEPOSIT OF RS.9,59,647/- AS THE ASSESSEE COULD NOT EXPLAIN TH E SOURCE SATISFACTORILY OF THE REMAINING AMOUNT OF CASH DEPOSIT OF RS. 9,59,64 7/-. THE LD DR SUBMITTED THAT THE ASSESSEE HAD EXPLAINED BEFORE TH E AUTHORITIES BELOW THAT THE CHARTERED ACCOUNTANT OF THE ASSESSEE EXPIRED IN APRIL, 2006 AND THE WIFE OF THE C.A. WAS LOOKING AFTER THE SAME. THE LD. D. R. CONTENDED THAT THIS IS NOT ITA 7202/MUM/2014 5 A BONAFIDE EXPLANATION AS THE C.A. OF THE ASSESSEE EXPIRED IN THE YEAR 2006 WHILE THE IMPUGNED ASSESSMENT YEAR IS 2009-10 WHICH IS AFTER EXPIRY OF MORE THAN THREE YEARS , AND THE RETURN OF INCOME WAS FIL ED AFTER THREE YEARS OF PASSING AWAY OF THE C.A. THE ASSESSEE STATED THAT T HE ASSESSEE HAD HIRED THE SERVICES OF WIFE OF THE C.A. WHO IS NOT QUALIFIED H ENCE ERROR HAD TAKEN PLACE, WHICH IS NOT A BONA-FIDE EXPLANATION. THE LD. D.R. RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA PRIVA TE LIMITED V. CIT (2013) 38 TAXMANN.COM 448(SC). 7. WE HAVE HEARD THE LD. D.R. AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING CASE LAW RELIED UPON . WE HAVE OB SERVED THAT THE ASSESSEE HAS DEPOSITED CASH AMOUNTING TO RS. 15,60,281/- IN SAVINGS BANK ACCOUNT BEING MAINTAINED WITH ICICI BANK , OUT OF WHICH AN AMOUNT OF RS. 6,41,506/- WAS EXPLAINED REGARDING SOURCE OF CASH DEPOSIT WHIL E THE BALANCE AMOUNT OF RS. 9,18,775/- REMAINED UNEXPLAINED AS THE ASSESSEE COULD NOT SUBSTANTIATE THE SOURCES OF SAID CASH DEPOSITS. THE ASSESSEE CO ULD NOT COME FORWARD BEFORE THE AUTHORITIES BELOW TO EXPLAIN THE SOURCE OF CASH DEPOSIT OF BALANCE AMOUNT OF RS. 9,18,775/- AND WHY THE SAME HAS NOT I NCORPORATED IN THE RETURN OF INCOME FILED WITH THE REVENUE. THE ASSES SEES CONTENTION THAT THE C.A. OF THE ASSESSEE EXPIRED IN APRIL, 2006 AND THE ASSESSEE HAS ENGAGED THE SERVICES OF WIFE OF THE DECEASED C.A., WHO IS NOT A QUALIFIED C.A. HENCE THE ERROR HAD OCCURRED, COULD NOT BE ACCEPTED AS BONAFI DE EXPLANATION TO TAKE THE ASSESSEE OUT OF CLUTCHES OF PENAL PROVISIONS AS CON TAINED IN SECTION 271(1)(C) OF THE ACT, AS THE ASSESSEE HAS MORE THAN THREE YEA RS AFTER DEATH OF HIS CA TO HAVE ARRANGED HIS AFFAIRS SO THAT TRUE AND CORRECT RETURN COULD BE FILED WITH THE REVENUE WHICH IS THE OBLIGATION OF THE ASSESSEE AND THE ONUS IS ON THE ASSESSEE TO HAVE FILED TRUE AND CORRECT RETURN OF I NCOME , AS THREE YEAR PERIOD AFTER THE DEATH OF CA IS MORE THAN SUFFICIENT PERI OD AVAILABLE TO THE ASSESSEE TO HAVE ARRANGED HIS AFFAIRS. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE IN JUNE, 2009 WHEREBY THERE WAS A GAP OF MORE THAN THREE YEARS WHEN THE CA ITA 7202/MUM/2014 6 EXPIRED ON APRIL 2006. IN OUR CONSIDERED VIEW, THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT BONAFIDE AND THE SAID EXPLANATION W AS RIGHTLY REJECTED BY THE AUTHORITIES BELOW. IT IS INCUMBENT ON THE ASSESSEE TO ESTABLISH PROPERLY THE SOURCES OF CASH DEPOSIT AND DISCHARGE THE ONUS CAS T UPON HIM WHICH THE ASSESSEE FAILED TO DO SO. IN OUR CONSIDERED VIEW, THE LD. CIT(A) HAS PASSED A WELL REASONED ORDER WHICH DOES NOT REQUIRE OUR INTE RFERENCE AND THAT THIS CASE IS A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C) OF TH E ACT AND WE UPHOLD THE APPELLATE ORDERS OF THE LEARNED CIT(A). WE ORDER AC CORDINGLY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA NO. 7202/MUM/2014 FOR THE ASSESSMENT YEAR 2009-10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DECEMBER, 2016. # $% &' 21-12-2016 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 21-12-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI