KASTURBEN V. FARIA, MUMBAI V. DCIT CEN CIR 4(4) CEN RG 4, MUMBAI

ITA 7668/MUM/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9122 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 30-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MICHAEL JERALD
• Keywords: Unexplained cash credit; Business income; Search and seizure; Opportunity of being heard; Corroborative evidences
• Section: 271(1)(c); 142(1); 133A; 274; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER , AND SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO . 7668 / MUM . /2016 ( ASSESSMENT YEAR : 20 06 07 ) KASTURBEN V. FARIA FLAT NO.3, FAIRY MANOR 13, GUNBLOW STREET FORT, MUMBAI 400 001 PAN AAAPF0990Q . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 4(4), MUMBAI . RESPONDENT ASSESSEE BY : MS. HIRAL SEJPAL REVENUE BY : SHRI S. MICHAEL JERALD DATE OF HEARING 11 .09.2019 DATE OF ORDER 25.09.2019 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER DATED 2 ND SEPTEMBER 2016, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 52, MUMBAI, PARTLY CONFIRMING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT, 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 2006 07. 2 KASTURBEN V. FARIA 2 . BRIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL. A SURVEY UNDER SECTION 133A OF THE ACT FOLLOWED BY A SEARCH AND SEIZURE OPERATION UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED IN THE BUSINESS AND RESIDENTIAL PREMISES OF VINOD FARIA AND MILAN DALAL GROUP ON 30 TH MAY 2008. ON THE BASIS OF INFORMATION GATHERED DURING THE SURVEY AND SEARCH OPERA TION, PROCEEDING UNDER SECTION 153C OF THE ACT WAS INITIATED AGAINST THE ASSESSEE. THE ASSESSEE FILED HER RETURN OF INCOME DECLARING TOTAL INCOME OF ` 1,07,265. SINCE, T HE RETURN OF INCOME WAS FILED BELATEDLY , THE ASSESSING OFFICER DECLARED IT INVALID . FUR THER , SINCE THE ASSESSEE DID NOT COMPLY TO THE NOTICES ISSUED UNDER SECTION 142(1) OF THE ACT AND DID NOT FURNISH VARIOUS INFORMATION S CALLED FOR , THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT TO THE BEST OF HIS JUDGMENT UNDER SECTION 144 R/W SECTION 153C OF THE ACT. WHILE DOING SO, THE ASSESSING OFFICER ESTIMATED THE BUSINESS INCOME AT ` 2 LAKH. FURTHER, FROM THE MATERIAL ON RECORD, HE FOUND THAT THE ASSESSEE HAS SHOWN UNSECURED LOAN OF ` 2,38,000. IN THE ABSENCE OF ANY SUPPORTING EVIDENCE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AS WE LL AS THE GENUINENESS OF THE LOAN, THE ASSESSING OFFICER TREATED THE UNSECURED LOAN AS UNEXPLAINED CASH CREDIT AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THE ADDITIONS MADE BY THE ASSESSI NG OFFICER WERE CONFIRMED BY LEARNED FIRST APPELLATE AUTHORITY AND THE ASSESSEE DID NOT CONTEST THE DECISION OF LEARNED COMMISSIONER 3 KASTURBEN V. FARIA (APPEALS) . ON THE BASIS OF SUCH ADDITION S , THE ASSESSIN G OFFICER INITIATED PROCEEDING FOR IMPOSITION OF PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT ALLEGING CONCEALMENT OF INCOME AND ISSUED A SHOW CAUSE NOTICE UNDER SECTION 274 OF THE ACT . AS ALLEGED BY THE ASSESSING OFFI CER, EXCEPT FILING A SUBMISSION RELYING UPON CERTAIN JUDICIAL PRECEDENTS THE ASSESSEE DID NOT FURNISH ANY VA LID EXPLANATION AGAINST IMPOSITION OF PENALTY. THUS, ULTIMATELY, THE ASSESSING OFFICER PROCEEDED TO IMPOSE PENALTY @ 200% OF THE TAX COMPUTED ON THE ADDITIONS MADE , WHICH WORKED OUT TO ` 2,68,056. CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3 . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, L EARNED COMMISSIONER (APPEALS) DELETED PENALTY ON THE ESTIMATED ADDITION OF ` 2 LAKH ON ACCOUNT OF BUSINESS INCOME. HOWEVER, HE SUSTAINED LEVY OF PENALTY IN RESPECT OF THE ADDITION MADE OF ` 2,38,000, ON ACCOUNT OF UNEXPLAINED CASH CREDIT. BESIDES THE GROUNDS RAISED ON MERIT S , THE ASSESSEE HAS FILED ADDITIONAL GROUND CHALLENGING THE VALIDITY OF THE PENALTY ORDER PASSED UNDER SECTI ON 271(1)(C) OF THE ACT ON THE ISSUE OF NON MENTIONING OF SPECIFIC LIMB OF SECTION 271(1)(C) OF THE ACT IN THE SHOW CAUSE NOTICE FOR WHICH THE ASSESSING OFFICER INTENDED TO LEVY PENALTY. 4 KASTURBEN V. FARIA 4 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , BEFORE THE FIRST AP PELLATE AUTHORITY ASSESSEE HAD FURNISHED AN EXHAUSTIVE WRITTEN SUBMISSION BOTH ON LEGAL ISSUE OF VALIDITY OF PENALTY ORDER AS WELL AS ON MERIT. SHE SUBMITTED , LEARNED COMMISSIONER (APPEALS) HAS COMPLETELY IGNORED ASSESSEES SUBMISSIONS ON THE LEGAL ISSUE OF NON MENTIONING THE SPECIFIC LIMB OF SECTION 271(1)(C) OF THE ACT IN THE SHOW CAUSE NOTICE WHILE DISPOSING OF ASSESSEES APPEAL. FURTHER, SHE SUBMITTED , VARI OUS SUBMISSIONS MADE BY THE ASSESSEE ON MERITS ALSO WERE NOT PROPERLY CONSIDERED BY LEARNED COMMISSIONER (APPEALS) . THUS, S HE SUBMITTED , IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT JUSTIFIED. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUB MITTED , IF ASSESSEES SUBMISSIONS ON VARIOUS ISSUE HAVE NOT BEEN PROPERLY CONSIDERED BY LEARNED COMMISSIONER (APPEALS), THE BETTER COURSE WOULD BE TO RESTORE THE ISSUE TO LEARNED COMMISSIONER (APPEALS) FOR FRESH ADJUDICATION. 6 . WE HAVE CONSIDERED RIVAL SUB MISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, IN THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER HAS MADE A SPECIFIC ALLEGATION THAT THE ASSESSEE HAD NOT FURNISHED PROPER EXPLANATION BEFORE HIM TO PROVE THE FACT THAT SHE HAS NEITHER 5 KASTURBEN V. FARIA CONCEALED THE INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. HOWEVER, IT IS THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE DID FURNISH HER EXP LANATION AGAINST LEVY OF PENALTY. FURTHER, ON A PERUSAL OF THE MATERIAL ON RECORD, IT IS NOTICED THAT THOUGH THE ASSESSEE HAD NOT RAISED SPECIFIC GROUND BEFORE LEARNED COMMISSIONER (APPEALS) REGARDING NON MENTIONING OF SPECIFIC CHARGE IN THE SHOW CAUSE NOT ICE ISSUED UNDER SECTION 274 OF THE ACT WITH REGARD TO THE EXACT OFFENCE COMMITTED BY THE ASSESSEE, HOWEVER, IN THE WRITTEN SUBMISSIONS FILED BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAS MADE SUBMISSIONS IN THIS REGARD. IT IS FURTHER OBSERVED , L EARNED COMMISSIONER (APPEALS) HAS NOT AT ALL DEALT WITH THE AFORESAID SUBMISSION OF THE ASSESSEE. HOWEVER, WHEN CALLED UPON BY THE BENCH TO FURNISH THE ORIGINAL NOTICE ISSUED UNDER SECTION 274 R/W SECTION 271(1)(C) OF THE ACT TO THE FACTUALLY VERIFY THE CL AIM OF THE ASSESSEE , BOTH, LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS LEARNED DEPARTMENTAL REPRESENTATIVE EXPRESSED THEIR INABILITY TO FURNISH THE ORIGINAL NOTICE ISSUED UNDER SECTION 274 R/W SECTION 271(1)(C) OF THE ACT. THUS, IN THE ABSENCE OF ORIGINAL SHOW CAUSE NOTICE , WE ARE NOT IN A POSITION TO RENDER ANY CONCLUSIVE FINDING ON THE ISSUE AS IT REQUIRES FACTUAL VERIFICATION. MOREOVER, IT IS ALSO THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE THAT LEARNED COMMISSIONER (APPEALS) HAS 6 KASTURBEN V. FARIA ALSO FAILED TO CONSIDER IN PROPER PERSPECTIVE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE ON MERIT AS WELL. THUS, IN THE AFORESAID PREMISES, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE S RELATING TO LEVY OF PENALTY ON THE ADDITION OF ` 2.38 LAKH MADE ON ACCOUNT OF UNE XPLAINED CASH CREDIT NEEDS TO BE RESTORED BACK TO THE FILE OF LEARNED COMMISSIONER (APPEALS) FOR DE NOVO ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREFORE, THOUGH, WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE, HOWEVER, T HE ISSUES ARE RESTORED BACK TO THE FILE OF LEARNED COMMISSIONER (APPEALS) FOR FRESH ADJUDICATION IN THE TERMS INDICATED ABOVE. GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN C OURT ON 25.09.2019 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 25.09.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI