Dr. S.S. Gulati, Sirsa V. ITO, Sirsa

ITA 765/CHANDI/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9152 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-03-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 25-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Assessee Lawyers: S K MUKHI
• Keywords: Gift; Income from undisclosed sources; Search and seizure
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SH.MAHARISH PRASHANT KUMAR, ACCOUNTANT MEMBER ITA NO. 765/CHD/2011 ASSESSMENT YEAR: 2004-05 DR. S.S.GULATI, VS THE ITO, PROP. M/S GULATI NURSING HOME, WARD 2, MANDI DABWALI, SIRSA. SIRSA. PAN: ABEPG4394G & ITA NO. 807/CHD/2011 ASSESSMENT YEAR: 2004-05 THE ITO, VS DR. S.S.GULATI, WARD 2, PROP. M/S GULATI NURSING HOME SIRSA. MANDI DABWALI, SIRSA. PAN: ABEPG4394G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MUKHI RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 04.08.2016 DATE OF PRONOUNCEMENT : 09.08.2016 O R D E R PER BHAVNESH SAINI, JM BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) ROHTAK DATED 03.06.2011 F OR 2 ASSESSMENT YEAR 2004-05 RELATING THE PEALTY UNDER SECTION 271(1)(C) OF THE ACT. 2. THE BRIEF FACTS ARE THAT SURVEY OPERATION UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON M/S GULATI NURSING HOME, PROPRIETOR DR. S.S.GULATI ON 11.09.20 03. ON THE DISCREPANCIES AND ADVERSE MATERIAL FOUND DUR ING SURVEY OPERATIONS, THE ASSESSEE VOLUNTARILY OFFERED ADDITIONAL INCOME OF RS. 30,10,000/- UNDER VARIOUS HEADS INCLUDING RS. 15 LACS ON ACCOUNT OF UNEXPLAIN ED EXPENDITURE FOR SEEKING ADMISSION OF HIS SON TO MDS CURSE AND RS. 2 LACS ON ACCOUNT OF UNEXPLAINED EDUCATIONAL EXPENSES. THE ASSESSEE EXPLAINED DURIN G SURVEY OPERATIONS THAT HIS SON GOT ADMISSION IN MDS IN YAMUNA NAGAR IN EARLIER ASSESSMENT YEARS AND THAT CERTAIN LOANS AND GIFTS WERE RAISED TO PAY FEES TO OBTAIN ADMISSION UNDER NRI QUOTA. HE ADMITTED THAT SUCH LOANS AND GIFTS RAISED IN THE NAME OF HIS SON WERE INFACT RETURNED TO THE RESPECTIVE PERSONS BY HIM AMOUNTING TO RS. 15 LACS DURING THE YEAR OUTSIDE THE BOOKS OF AC COUNT OUT OF HIS SELF UNACCOUNTED INCOME. HE SUBMITTED T HAT THE SAID AMOUNTS WERE COMPENSATORY PAYMENTS. HE AL SO ADMITTED THAT EDUCATION EXPENSES OF HIS SON AND GRA ND CHILDREN DURING THE YEAR UNDER CONSIDERATION OF RS. 2 LACS WAS INCURRED BY HIM FROM UNDISCLOSED SOURCES. IN THIS MANNER, WHILE RS. 15 LACS WAS OFFERED FOR TAXA TION ON ACCOUNT OF ADMISSION OF HIS SON IN MDS AND RS. 2 LACS WAS OFFERED FOR EDUCATIONAL PURPOSES AND THE 3 REMAINING UNDER THE HEADS MENTIONED IN THE IMPUGNED ORDERS. 2(I) THE ASSESSEE DELIVERED THREE POST DATED CHEQUE S OF RS. 3,31,000/- EACH IN FAVOUR OF THE DEPARTMENT TOW ARDS THE TAX LIABILITY FOR ABOVE MENTIONED ADDITIONAL IN COME OFFERED, HOWEVER, THESE CHEQUES WERE NOT PRESENTED FOR ENCASHMENT. THE ASSESSEE HIMSELF PAID ADVANCE TAX OF RS. 10,11,000/-. THOUGH, THE RETURN OF INCOME WAS DUE ON 31.07.2004, THE ASSESSEE FILED IT ONLY ON 30.03. 2005 DECLARING ADDITIONAL INCOME OF ONLY RS. 8.51 LACS, THEREBY PARTLY RETRACTING FROM THE VOLUNTARY DISCLO SURE MADE DURING THE SURVEY OPERATIONS. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143( 3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 31,34,920/- AS AGAINST RETURNED INCOME OF RS. 9,35,200/- AND INITIATED THE PENALTY PROCEEDINGS UN DER SECTION 271(1)(C) OF THE ACT. THE LD. CIT(APPEALS) CONFIRMED THE ADDITIONS OF RS. 15 LACS AND RS. 2 LA CS ABOVE TOTALING TO RS. 17 LACS. THE APPEALS OF THE ASSESSEE BEFORE TRIBUNAL AND HON'BLE HIGH COURT HAV E BEEN DISMISSED. THE ASSESSING OFFICER IMPOSED MAXIMUM PENALTY OF 300% UNDER SECTION 271(1)(C) OF THE ACT ON THE CONCEALED INCOME OF RS. 17 LACS IN A SUM OF RS. 16,83,000/-. 3. AS REGARDS THE SOURCE FOR EXPENDITURE OF RS. 15 LACS FOR ADMISSION OF HIS SON IN MDS COURSE, ASSESS EE STATED DURING SURVEY OPERATIONS THAT SOME LOANS/GIF TS 4 WERE ARRANGED/MANAGED FROM VARIOUS PERSONS AND CREDITED IN THE ACCOUNT OF HIS SON. HE WAS, HOWEVE R, NOT ABLE TO GIVE IDENTIFICATION OF THE PERSONS FROM WHOM ALLEGED LOANS/GIFTS WERE TAKEN. FURTHER, HE ADMITT ED THAT THESE WERE COMPENSATORY LOANS/GIFTS AND REPAID BY HIM OUT OF HIS UNDISCLOSED INCOME. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, AMPLE OPPORTUNITY WAS ALLOWED TO THE ASSESSEE TO PROVE HIS CONTENTION FOR RETRACTING FROM HIS OFFER/SURRENDER MADE EARLIER AT THE TIME OF SURVEY BUT ASSESSEE FAILED TO DO SO. SIMIL ARLY, AS REGARDS THE EDUCATION EXPENSES OF RS. 2 LACS ON ACCOUNT OF THE EDUCATION OF SON/GRAND CHILDREN, BOT H THE SONS OF THE ASSESSEE WERE LIVING OUTSIDE AND GR AND CHILDREN WERE LIVING WITH THE ASSESSEE AND DAY TODA Y EXPENSES WERE MADE BY THE ASSESSEE. THE GRAND CHILDREN WERE GETTING EDUCATION IN REPUTED SCHOOLS IN PRIVATE SECTOR. FURTHER, THE EXPENSES OF STUDY OF HIS SON WERE ALSO BORNE BY THE ASSESSEE. IT WAS FOR TH IS REASON, ASSESSEE ADMITTED DURING THE COURSE OF SURV EY THAT HE HAD INCURRED RS. 2 LACS ON THE EDUCATION OF HIS GRAND SON OUT OF HIS UNDISCLOSED INCOME. THE ASSES SING OFFICER DID NOT ACCEPT CONTENTION OF THE ASSESSEE A ND LEVIED 300% PENALTY. 4. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE LD. CIT(APPEALS) AND SUBMITTED THAT ASSESSEE FILED THE DOCUMENTS REGARDING RECEIPT OF THE GIFTS SUCH AS BA NK ACCOUNTS OF THE DONORS, THEIR CONFIRMATIONS AND 5 RELATIONSHIP WITH SON OF THE ASSESSEE TO WHOM THE G IFTS WERE MADE. THE UNEXPLAINED EXPENSES WERE EXPLAINED AND ADDITION WAS MADE ON ESTIMATED BASIS. THEREFOR E, NO PENALTY IS LEVIABLE. IT WAS ALSO CLAIMED THAT 3 00% PENALTY IS EXCESSIVE. THE ASSESSEE FURTHER EXPLAIN ED THAT NO DOCUMENTS WERE FOUND DURING THE COURSE OF SURVEY AND THAT SON OF THE ASSESSEE IS INCOME TAX ASSESSEE AND ALL SOURCES OF THE GIFTS WERE FILED TH EREFORE, PENALTY IS NOT LEVIABLE. 5. THE LD. CIT(APPEALS) CONSIDERING FACTS OF THE CA SE AND MATERIAL ON RECORD CONFIRMED THE LEVY OF PENALT Y IN PRINCIPLE, HOWEVER, REDUCED THE PENALTY @ 100%. HI S FINDINGS IN PARAS 6 TO 7 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER : 6. I HAVE CAREFULLY CONSIDERED THE ISSUE AND THE SUBMISSIONS MADE BY THE AR. THE APPELLANT MADE VOLUNTARY DISCLOSURE DURING THE SURVEY OPERATIONS ON ACCOUNT OF VARIOUS INCRIMINATING/AD V ERSE MATERIAL FOUND. HE PAID THE ADVANCE TAX ON THE AMOUNT VOLUNT ARILY SURRENDERED DURING THE SURVEY OPERATIONS. IT IS ONLY AS AN AFTE R THOUGHT AFTER A GAP OF MORE THAN 1 YEARS THAT THE APPELLANT HAD PARTL Y RETRACTED FROM THE ADMISSION MADE DURING THE SURVEY OPERATIONS. THE AD MISSION MADE BY THE APPELLANT MAY NOT BE CONCLUSIVE BUT IT IS CERTA INLY A RELEVANT PIECE OF EVIDENCE. THE ONUS IS CLEARLY ON THE APPELLANT T O ESTABLISH THAT THE ADMISSION MADE WAS WRONG OR WAS BASED ON A N INCORRECT APPRECIATION OF FACTS OR LAW. 6.1 IN SO FAR AS THE SURRENDER OF C 15.00 LACS FOR THE ADMISSION OF HIS SON IN MDS IS CONCERNED, THE SAME WAS BASED ON THE PLEA THAT THE GIFTS RECEIVED BY THE SO N OF THE APPELLANT IN THE PAST TO RAISE FUNDS FOR PAYMENT OF ADMISSION 6 FEE ETC. HAVE BEEN RETURNED BY THE ASSESSEE TO THE RESPECTIVE DONORS DURING THE YEAR FROM SOURCES OUTSIDE THE BOO KS OF ACCOUNTS. THE FACTUM OF THE ASSESSEE HAVING RETUR NED SUCH AMOUNTS OUTSIDE THE BOOKS OF ACCOUNTS CAN ONLY IN H IS KNOWLEDGE. IT IS A SPECIALIZED KNOWLEDGE TO WHICH O NLY THE ASSESSEE IS PRIVY. 6.2 THOUGH THE AR TRIED HARD TO DRIVE HIS POINT THAT NO PENALTY IS LEVIABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM AFRAID THAT THE ARGUMENTS ARE NOT VALID. THE CASE LAWS CITED BY THE AR ARE DISTINGUI SHABLE ON FACTS. HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, IT IS HELD THAT PENALTY U/S 271 (1) (C) IS LE VIABLE. HOWEVER, THE FACTS DO NOT CERTAINLY WARRANT IMPOSIT ION OF MAXIMUM PENALTY @ 300%. THEREFORE, THE QUANTUM OF PENALTY IS REDUCED TO THE MINIMUM PENALTY LEVIABLE @ 100%. THE GROUNDS OF APPEAL ARE DISPOSED OFF AS INDICATED ABOVE. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWE D. 6. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS ADMITTED FACT THAT DURING THE COURSE OF SURVEY ON 11.09.2003, CERTAIN INCRIMINATING AND ADVERSE MATER IAL WAS FOUND AGAINST THE ASSESSEE ON WHICH ASSESSEE VOLUNTARILY OFFERED ADDITIONAL INCOME UNDER VARIOUS HEADS INCLUDING THE SURRENDER OF RS. 15 LACS AND RS . 2 LACS IN REFERENCE UNDER PENALTY ABOVE. THE ASSESSE E DID NOT RETRACT FROM HIS EARLIER SURRENDER BUT FOR THE FIRST TIME WHEN FILED THE RETURN OF INCOME BELATEDLY ON 30.03.2005, DID NOT SURRENDER THE ENTIRE SURRENDERE D AMOUNT IN THE RETURN OF INCOME. NO REASONS WERE EXPLAINED AS TO WHY ASSESSEE DID NOT RETRACT FROM T HE 7 EARLIER STATEMENT MADE DURING THE COURSE OF SURVEY IMMEDIATELY. IT IS ALSO ADMITTED FACT THAT BOTH TH E ABOVE ADDITIONS HAVE BEEN CONFIRMED BY THE TRIBUNAL . THE ORDER OF THE TRIBUNAL HAVE BEEN PLACED ON RECOR D IN WHICH ALSO IT WAS NOTED THAT ASSESSEE HAS HANDED OVER THE CHEQUES FOR PAYMENT OF THE TAXES ON SURRENDERED INCOME BUT LATER ON, PAID THE ADVANCE T AX OF RS. 10,11,000/-. THE TRIBUNAL HAS CONSIDERED T HE EXPLANATION OF THE ASSESSEE WITH REGARD TO ADMISSIO N AND HAS HELD, IN OUR VIEW, THE ADMISSION OF THE ASSESSEE MADE AT THE TIME OF SURVEY CANNOT BE DISREGARDED. IT WAS ALSO NOTED IN THE ORDER OF THE TRIBUNAL THAT ASSESSEE TOOK A VERY LONG GAP FOR RETRACTING FROM THE ADMISSION AND THAT ASSESSEE HAS NOT PRODUCED ANY MATERIAL TO PROVE THAT ANY COERCION O R DURESS WAS EXERCISED BY THE DEPARTMENT AT THE TIME OF CONDUCTING SURVEY OR RECORDING HIS ADMISSION. HON' BLE PUNJAB & HARYANA HIGH COURT CONFIRMED THE FINDINGS OF THE TRIBUNAL. IT, THEREFORE, STANDS PROVED ON RECO RD THAT ASSESSEE MADE VOLUNTARY DISCLOSURE DURING SURV EY OPERATION ON WHICH ABOVE TWO ADDITIONS HAVE BEEN MA DE ON WHICH ASSESSEE ALSO PAID ADVANCE TAX VOLUNTARILY . THE AUTHORITIES BELOW WERE, THEREFORE, JUSTIFIED IN HOLDING THAT IT WAS ONLY AFTER THOUGHT THE ASSESSEE TRIED TO RETRACT FROM THE EARLIER STATEMENT BY NOT DISCLO SING COMPLETE SURRENDE4RED INCOME IN THE RETURN OF INCOM E FILED ON 30.03.2005 BELATEDLY. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO ADDITION COULD BE MADE O N 8 THE BASIS OF ADMISSION AND THAT ASSESSEE TRIED TO EXPLAIN THE SOURCE OF THE GIFTS AND EDUCATION EXPEN SES OF THE GRAND CHILDREN. HOWEVER, THE SAME PLEA OF T HE ASSESSEE HAVE ALREADY BEEN TURNED DOWN IN THE QUANT UM PROCEEDINGS. NO NEW EXPLANATION OR MATERIAL HAVE B EEN PRODUCED BEFORE US TO EXPLAIN THE ISSUE OF LEVY OF PENALTY. IT IS WELL SETTLED LAW THAT FINDINGS RECO RDED IN THE QUANTUM ORDERS ARE RELEVANT AND HAVE PROBATIVE VALUE. IN THE ABSENCE OF ANY PLAUSIBLE EXPLANATION OR EVIDENCE ON RECORD, ASSESSEE FAILED TO PROVE THE EXPLANATION THROUGH ANY MATERIAL ON RECORD. WHATEV ER CONTENTIONS HAVE BEEN RAISED BY THE ASSESSEE DURING THE COURSE OF ARGUMENTS, HAVE ALREADY BEEN FOUND TO BE INCORRECT AND FALSE AND QUANTUM ADDITION STANDS CONFIRMED UPTO THE STAGE OF THE FINAL APPEAL BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT. THEREFORE, IN OUR VIEW IT IS A FIT CASE OF LEVY OF PENALTY FOR CONCEALMENT OF INCOME. THE ASSESSEE DELIBERATELY DI D NOT HONOUR HIS COMMITMENT TO SURRENDER THE ADDITION AL INCOME IN THE RETURN OF INCOME DESPITE PAYING THE T AXES ON THE SAME. WE ARE, THEREFORE, NOT INCLINED TO IN TERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW IN LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FURTHE R, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , WE FIND THAT LD. CIT(APPEALS) WAS JUSTIFIED IN REDUCIN G THE MAXIMUM PENALTY OF 300% TO 100%. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(APPEALS) IN CONFIRMING THE LEVY OF PENALTY AND 9 REDUCING THE QUANTUM OF PENALTY. WE CONFIRM THE ORD ER OF LD. CIT(APPEALS) AND DISMISS BOTH THE CROSS APPE ALS. 7. IN THE RESULT, BOTH THE CROSS APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (MAHARISH PRASHANT KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH AUGUST,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD