Ravindra Reddy Pallavalli, Hyd, Hyderabad V. ITO, Ward-8(2), Hyderabad, Hyderabad

ITA 763/HYD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2385 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: S RAMA RAO
• Section: 80C; 143(3)

Judgement Text

ITA NO 763 OF 2016 RAVINDRA REDDY PALLAVALLI HYDERABAD. PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.763/HYD/2016 (ASSESSMENT YEAR: 2009-10) SHRI RAVINDER REDDY PALLAVALI HYDERABAD PAN: AMHPP 1849 B VS INCOME TAX OFFICER WARD 8(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SMT. N. SWAPNA, DR O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10 AGAIN ST THE LEARNED CIT (A)-2, HYDERABAD, DATED 22.02.2016. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, DERIVING INCOME FROM COMMISSION AND SUB -CONTRACTS, FILED HIS RETURN OF INCOME FOR THE A.Y 2009-10 ON 2 6.03.2010 DECLARING A TOTAL INCOME OF RS.2,85,000. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO REQUIRED THE ASSESSEE TO FILE CERTAIN INFORMATION PARTICULARLY, WITH REGARD TO THE DEPOSITS INTO THE BANK A/C OF THE ASSESSEE IN ING VYSYA BANK LTD, KHAIRATABAD BRANCH, HYDERABAD AND ALSO THE SOURCES FOR PURCHASE OF PLOT NO.70 ADMEASURING 1000 SQ. YARDS I N SURVEY NO.41/PART & 43 SITUATED AT BANDLAGUDA JAGIR VILLAG E. THE DATE OF HEARING: 15.03 . 201 8 DATE OF PRONOUNCEMENT: 28.03.2018 ITA NO 763 OF 2016 RAVINDRA REDDY PALLAVALLI HYDERABAD. PAGE 2 OF 7 ASSESSEE WAS ALSO ASKED TO FILE EVIDENCE FOR PAYMEN TS CLAIMED AS DEDUCTION U/S 80C OF THE ACT. 3. IN RESPONSE TO THE SHOW-CAUSE NOTICE, THE ASSESS EE FILED A LETTER DATED 21.09.2011 STATING THAT HE IS A SMALL CONTRACTOR AND IS EXECUTING SMALL WORK AND THE AMOU NTS DEPOSITED IN THE BANK A/C ARE NOTHING BUT THE MONEY RECEIVED FROM HIS FAMILY MEMBERS WHO ARE AGRICULTURISTS AND ALSO THAT HE HAS GIVEN LOANS TO THE FARMERS AND THE SAME WERE CO LLECTED DURING THE YEAR. HE ALSO FILED STATEMENTS AND CASH FLOW ST ATEMENTS BEFORE THE AO. THE AO, WAS HOWEVER, NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. THE ASSESSEE THEREFORE, CAME FORWARD TO ADMIT AN ADDITIONAL INCOME OF RS.15.00 LAKHS AND PR OMISED TO PAY TAXES. AS THE ASSESSEE VOLUNTARILY ADMITTED, TH E ASSESSMENT WAS COMPLETED BRINGING RS.15.00 LAKHS ALSO TO TAX. THE ASSESSEE ACCEPTED THE SAID ASSESSMENT AND DID NOT FILE ANY A PPEAL BEFORE THE CIT (A). 4. THEREAFTER, THE AO INITIATED THE PENALTY PROCEED INGS U/S 271(1)(C) OF THE ACT. RELYING UPON THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SANGAME SHWARA ASSOCIATES, WHEREIN IT WAS HELD THAT DESPITE THE IN COME BEING OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME FIL ED IN RESPONSE TO THE NOTICE U/S 148, IT ATTRACTS THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, THE AO LEVIED THE MINIMUM PENALTY OF RS.4, 90,000. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS I N SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS O F APPEAL: ITA NO 763 OF 2016 RAVINDRA REDDY PALLAVALLI HYDERABAD. PAGE 3 OF 7 1. THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS B OTH ON FACTS AND IN LAW. 2. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTI ON OF THE AO IN LEVYING PENALTY U/S 271(1)(C) OF RS.4,90,000/- 3. THE LEARNED CIT (A) OUGHT TO HAVE SEEN THAT THER E IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THEREFORE, PENALTY U/S 271(1)(C) IS NOT LEVIABLE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD ADMITTED ADDITIONAL INCOME BECAUSE THE ASSESSEE DID NOT HAVE THE NECESSARY CONFIRMATION LE TTERS FROM THE PARTIES AND THE AO HAS BROUGHT THE SAME TO TAX ON V OLUNTARY ADMISSION OF THE ASSESSEE. HE SUBMITTED THAT THE PE NALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE ATTRACTED ONLY WHEN THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. ACCORDING TO HIM, THE AO HAS NOT BEEN AB LE TO FIND ANY POSITIVE EVIDENCE TO HOLD THAT THE ASSESSEE HAS FUR NISHED ANY INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED H IS INCOME. THEREFORE, ACCORDING TO HIM, THE PENALTY IS LIABLE TO BE DELETED. 7. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS ADMITTED THE ADDITIONAL INCOME ONLY WHEN HE WAS CONFRONTED AND DIRECTED TO PRODUCE THE NECESSARY EVIDENCE TO S UBSTANTIATE HIS CLAIM DURING THE ASSESSMENT PROCEEDINGS. HE SUB MITTED THAT THE VOLUNTARY DISCLOSURE OF HIGHER INCOME ALSO ATTR ACTS PENALTY U/S 271(1)(C) OF THE ACT AND RELIED UPON THE DECISI ON OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ITA NO 763 OF 2016 RAVINDRA REDDY PALLAVALLI HYDERABAD. PAGE 4 OF 7 SANGAMESHWARA ASSOCIATES (SUPRA) FOR COMING TO THIS CONCLUSION. SHE ALSO PLACED RELIANCE UPON THE FOLLOWING OTHER D ECISIONS: A) MAK DATA (P.) LTD. V. COMMISSIONER OF INCOME-TAX II REPORTED IN 358 ITR 593 (S.C) B) CIT VS. RAKESH SURI REPORTED IN 331 ITR 458 ( ALL ) 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE CASE BEFORE US, THE A SSESSEE WAS DIRECTED TO EXPLAIN THE SOURCES FOR THE DEPOSITS IN TO HIS BANK A/C AND THE ASSESSEE HAD EXPLAINED THAT THESE ARE THE A MOUNTS GIVEN TO HIM BY THE FAMILY MEMBERS AND ALSO THE LOANS RET URNED BY SOME OF THE FARMERS TO WHOM HE HAD ADVANCED THE LOA NS EARLIER. THE ASSESSEE ALSO FILED STATEMENT BEFORE THE AO. IT IS THE CASE OF THE ASSESSEE THAT HE COULD NOT SUBSTANTIATE SUCH CL AIM AND THEREFORE, HE OFFERED THE ADDITIONAL INCOME OF RS.1 5.00 LAKHS. AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE AO HAS DISBELIEVED THE STATEMENT OF THE ASSESSEE AN D IT IS NOT PROVED THAT THE STATEMENT GIVEN BY THE ASSESSEE IS FALSE OR INCORRECT. IT IS SETTLED LAW THAT EVERY ADDITION WI LL NOT AUTOMATICALLY ATTRACTS PENALTY. IN THE ABSENCE OF A NY EVIDENCE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OR HAS CONCEALED HIS INCOME, I DO NOT AGREE WITH THE PENAL TY ORDER PASSED BY THE AO AND CONFIRMED BY THE CIT (A). THE DECISIONS RELIED UPON BY THE LEARNED DR ARE DISTINGUISHABLE O N FACTS. IN THE CASE OF MAK DATA (SUPRA), THERE WAS A SURVEY U/S 13 3A ON THE ASSESSEE AND CERTAIN DOCUMENTS WERE IMPOUNDED, BUT THE ITA NO 763 OF 2016 RAVINDRA REDDY PALLAVALLI HYDERABAD. PAGE 5 OF 7 ASSESSEE DID NOT OFFER ANY INCOME THEREON IN HIS RE TURN OF INCOME FILED THEREAFTER, BUT OFFERED ADDITIONAL INCOME, WH EN CONFRONTED DURING THE ASSESSMENT PROCEEDINGS. IN THE CASE OF R AKESH SURI (SUPRA), THE ASSESSEE THEREIN HAD OFFERED THE INCOM E AFTER THOROUGH AND DEEP ENQUIRY AND FINDING THAT THE TRAN SACTION HAD NOT TAKEN PLACE. 9. IN THE CASE OF CIT VS. SANGAMESHWARA ASSOCIATES (SUPRA), THE HON'BLE KARNATAKA HIGH COURT WAS DEALI NG WITH THE CASE OF AN ASSESSEE, WHO HAD DISCLOSED THE INCOME P URSUANT TO A SEARCH CONDUCTED AT THE PREMISES OF THE ASSESSEE, A ND IT WAS HELD TO BE CONCEALMENT OF INCOME, EVEN IN A SITUATION WH ERE THE ASSESSEE HAD FILED A RETURN AFTER THE SEARCH BUT BE FORE THE RECEIPT OF A NOTICE. THE CASE BEFORE US IS NOT A CASE OF SE ARCH OR SURVEY, BUT IS A CASE OF REGULAR ASSESSMENT, WHERE THE ASSE SSEE WAS ASKED TO EXPLAIN THE SOURCES OF CASH DEPOSITS INTO HIS BANK A/C AND ON NOT BEING ABLE TO SUBSTANTIATE THE SAME, OFF ERED RS.15.00 LAKHS AS HIS INCOME. IN MY OPINION, THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS REPORTED IN (2010) 322 ITR 0158, IS APPLICABLE TO THE FACTS OF THE CASE BEFORE ME. THE HON'BLE SUPREME COURT HAD HELD THAT EVEN AN INCORRECT CLAIM IN THE RETURN OF INCOME WILL NOT AMOUNT TO CO NCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE RELEVANT PARAGRAPHS ARE REPRODUCED HEREUNDER FOR RE ADY REFERENCE: 7. AS AGAINST THIS, LEARNED COUNSEL APPEARING ON BE HALF OF THE RESPONDENT POINTED OUT THAT THE LANGUAGE OF SECTION 271(1)(C) HAD TO BE STRICTLY CONSTRUED, THIS BEING A TAXING STATU TE AND MORE PARTICULARLY THE ONE PROVIDING FOR PENALTY. IT WAS POINTED OUT THAT UNLESS THE WORDING DIRECTLY COVERED THE ASSESSEE AN D THE FACT SITUATION HEREIN, THERE COULD NOT BE ANY PENALTY UN DER THE ACT. IT ITA NO 763 OF 2016 RAVINDRA REDDY PALLAVALLI HYDERABAD. PAGE 6 OF 7 WAS POINTED OUT THAT THERE WAS NO CONCEALMENT OR AN Y INACCURATE PARTICULARS REGARDING THE INCOME WERE SUBMITTED IN THE RETURN. SECTION 271(1)(C) IS AS UNDER:- '271(1) IF THE ASSESSING OFFICER OR THE COMMISSIONE R (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN OR DER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF T HE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. PRESENT IS NOT THE CASE OF CONCEALMENT OF THE INCOME. THAT IS NOT THE CASE OF THE REVENUE EIT HER. HOWEVER, THE LEARNED COUNSEL FOR REVENUE SUGGESTED THAT BY MAKIN G INCORRECT CLAIM FOR THE EXPENDITURE ON INTEREST, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF THE INCOME. AS PER LAW LE XICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DET AILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITE MS OF AN ACCOUNT. THEREFORE, THE WORD 'PARTICULARS' USED IN THE SECTI ON 271(1)(C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLA IM MADE. IT IS AN ADMITTED POSITION IN THE PRESENT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR IN ACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS . THE LEARNED COUNSEL ARGUED THAT 'SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPENDITURE ON INTEREST WOULD AMOUNT TO GIVING INAC CURATE PARTICULARS OF SUCH INCOME'. WE DO NOT THINK THAT S UCH CAN BE THE INTERPRETATION OF THE CONCERNED WORDS. THE WORDS AR E PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENA LTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENA LTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, M AKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISH ING INACCURATE PARTICULARS. IN COMMISSIONER OF INCOME TAX, DELHI V S. ATUL MOHAN BINDAL [2009(9) SCC 589], WHERE THIS COURT WAS CONS IDERING THE SAME PROVISION, THE COURT OBSERVED THAT THE ASSESSI NG OFFICER HAS TO BE SATISFIED THAT A PERSON HAS CONCEALED THE PARTIC ULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THIS COURT REFERRED TO ANOTHER DECISION OF THIS COURT IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS [2008(13) SCC 369], AS ALSO, THE DECISION IN UNION OF INDIA VS.RAJASTHAN SPG. & WVG. MILLS [2009(13) SCC 448] AND REITERATED IN PARA 13 THAT:- '13. IT GOES WITHOUT SAYING THAT THAT FOR APPLICABI LITY OF SECTION 271(1)(C), CONDITIONS STATED THEREIN MUST EXIST.' ITA NO 763 OF 2016 RAVINDRA REDDY PALLAVALLI HYDERABAD. PAGE 7 OF 7 10. RESPECTFULLY FOLLOWING THE SAME, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 11. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH, 2018. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 28 TH MARCH 2018. VINODAN/SPS COPY TO: 1 SHRI S.RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYA'S ELEGANCE, 3-6- 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2 ITO WARD 8(2) SIGNATURE TOWERS, KONDAPUR, HYDERAB AD 3 CIT (A) - 2 HYDERABAD 4 PR. CIT 2 HYDERABAD 5 THE DR, ITAT HYDERABA D 6 GUARD FILE BY ORDER