DCIT, CHENNAI V. T.Jayaraman, CHENNAI

ITA 770/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77375 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMOD NANGIA
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Question of law; Initiation of penalty proceedings; Tax effect

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI . . . , !' , # $! % BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 770/MDS/2013 / ASSESSMENT YEAR : 2008-09 DEPUTY COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-V, AAYAKAR BHAVAN, NEW BLOCK, 6 TH FLOOR, 121, M.G. ROAD, CHENNAI-600 034 ( '& /APPELLANT) VS M/S.T.JAYARAMAN, NEW NO.9, K.R.KOIL STREET, WEST MAMALAM, CHENNAI-33 [PAN: AAAFT 3416 D] ( '('& /RESPONDENT) REVENUE BY : SHRI PRAMOD NANGIA, CIT ASSESSEE BY : SHRI A.S. SRIRAMAN, ADVOCATE / DATE OF HEARING : 22-05-2014 / DATE OF PRONOUNCEMENT : 07-07-2014 $) / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE REVENUE ASSAILING THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VI II, CHENNAI, DATED 16-01-2013 PASSED U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). THE REVENUE HAS IMPUGNED DELETING OF PENALTY LEVIED ON THE ASSESSEE IN THE ASSESSMENT YEAR (AY) 2008-09. I.T.A. NO. 770/MDS/2013 2 2. THE FACTS AS EMANATING FROM THE DOCUMENTS ON REC ORD ARE: A SURVEY U/S.133A WAS CONDUCTED IN THE PREMISES OF TH E ASSESSEE ON 21-02-2008. THE ASSESSEE FILED HIS RETURN OF IN COME FOR THE AY.2008-09 ON 28-08-2008 DECLARING HIS INCOME AS ` 3,01,24,320/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY AND NOTICE U/S. 143(2) WAS ISSUED TO THE A SSESSEE ON 08-09-2009. THE ASSESSING OFFICER ACCEPTED THE RET URN FILED BY THE ASSESSEE BUT MADE THE FOLLOWING OBSERVATIONS IN THE ASSESSMENT ORDER: DURING THE SURVEY, IT WAS FOUND THAT THE ASSESSEE WAS DISBURSING LOANS AT A RATE HIGHER THAN WHAT WAS REF LECTED IN BOOKS OF ACCOUNTS, WHICH HAD LED TO THE SUPPRESSION OF INCOME TO THE TUNE OF ` 65 LAKHS. THE TAX EFFECT THEREON ALONG WITH INTEREST LEVIABLE IS ` 22.09 LAKHS, ` 65,00,000/- WAS FOUND TO HAVE BEEN RETURNED IN THE RETURN OF INCOME DATED . 01.12.2009. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEE DINGS U/S.271(1)(C) AGAINST THE ASSESSEE. THE ACIT, BUSI NESS CIRCLE-V, CHENNAI VIDE ORDER U/S.271(1)(C) DT.29-06-2011 LEVI ED PENALTY OF ` 20,08,500/- ON THE ASSESSEE. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) H ELD THAT LEVY OF PENALTY U/S.271(1)(C) IS NOT JUSTIFIED AS CONCEA LMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME IN T HE RETURN FILED BY I.T.A. NO. 770/MDS/2013 3 THE ASSESSEE IS NOT ESTABLISHED. THE FIRST APPELLA TE AUTHORITY DELETED THE PENALTY AND ALLOWED THE APPEAL OF THE A SSESSEE. NOT SATISFIED WITH THE ORDER OF FIRST APPELLATE AUT HORITY, THE REVENUE HAS COME IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI PRAMOD NANGIA, APPEARING ON BEHALF OF THE R EVENUE SUBMITTED THAT, THE ASSESSEE OFFERED ADDITIONAL INC OME OF ` 65.00 LAKHS IN THE RETURN OF INCOME ONLY AS A RESULT OF S URVEY OPERATION. OTHERWISE THE ASSESSEE WOULD NOT HAVE DISCLOSED THE ADDITIONAL INCOME AND THE SAME WOULD HAVE ESCAPED WITHOUT TAX. THE LD.DR FURTHER SUBMITTED THAT THE ASSESSEE HAS ADMITTED TH E SAID ADDITIONAL INCOME IN A STATEMENT MADE DURING SURVEY . HE VEHEMENTLY SUPPORTED THE PENALTY ORDER AND PRAYED F OR SETTING ASIDE OF THE IMPUGNED ORDER. 4. ON THE OTHER HAND, SHRI A.S.SRIRAMAN, ADVOCATE A PPEARING ON BEHALF OF THE ASSESSEE STRONGLY SUPPORTING THE O RDER OF CIT(APPEALS) CONTENDED THAT THERE WAS NO CONCEALMEN T OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME I N THE RETURN FILED BY THE ASSESSEE. THE INCOME HAS BEEN OFFERED BY TH E ASSESSEE IN REGULAR RETURN FILED WITHIN THE STATUTORY TIME LIMI T. THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER WITHOUT MAKI NG ANY ADDITION OR DIS-ALLOWANCE. THE ASSESSING OFFICER H AD ERRED IN NOT I.T.A. NO. 770/MDS/2013 4 APPRECIATING THE FACT THAT DURING SURVEY, NO MATERI AL EVIDENCE WAS GATHERED WARRANTING LEVY OF PENALTY. IN ORDER TO S UPPORT HIS SUBMISSIONS, THE LD.COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN TA X CASE (APPEAL) NO.472 OF 2010 IN THE CASE OF CIT VS. M/S.MUTHUMANI FINANCE DECIDED ON 15-06-2010 AND IN THE CASE OF CIT VS. S.KHADER KHAN SON REPORTED AS 300 ITR 157 (MAD). 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE ALSO PER USED THE ORDERS OF THE AUTHORITIES BELOW, AS WELL AS THE JUDGMENTS ON WHICH THE PARTIES HAVE PLACED RELIANCE. THE UN-DISPUTED FACT S IN THE CASE ARE, THAT THE SURVEY WAS CONDUCTED AT THE PREMISES OF ASSESSEE ON 21-02-2010 I.E., IN THE FINANCIAL YEAR (FY) 2007-08 . THE ASSESSEE IN THE RETURN OF INCOME FOR AY.2008-09 DISCLOSED IN COME OF ` 3,01,24,320/- INCLUDING ADDITIONAL INCOME OF ` 65.00 LAKHS. THE SAID AMOUNT WAS CREDITED IN THE P&L A/C FOR THE FY ENDED ON 31-03-2008 UNDER THE HEAD INCOME OFFERED AS PER PR OPOSAL. THE ASSESSING OFFICER ACCEPTED THE RETURN FILED BY ASSE SSEE AND COMPLETED THE ASSESSMENT U/S.143(3). PENALTY PROCE EDINGS HAVE BEEN INITIATED ONLY ON THE GROUND THAT THE AMOUNT O F ` 65.00 LAKHS WAS OFFERED AS INCOME BY THE ASSESSEE ONLY ON ACCOU NT OF SURVEY I.T.A. NO. 770/MDS/2013 5 OPERATION. BUT FOR SURVEY, THE ASSESSEE WOULD NOT HAVE OFFERED THE SAID AMOUNT FOR TAXATION. 6. IT IS UN-DISPUTED THAT THE ASSESSEE HAS FILED HI S RETURN OF INCOME WITHIN THE STIPULATED TIME LIMIT AS PRESCRIB ED UNDER THE ACT. AS PER THE PROVISIONS OF SECTION 271(1)(C), PENALTY PROCEEDINGS CAN BE INITIATED AGAINST THE ASSESSEE IF, THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER IN THE C OURSE OF ANY PROCEEDINGS UNDER THE ACT IS SATISFIED THAT THE ASS ESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS FURN ISHED INACCURATE PARTICULARS OF HIS INCOME. WE OBSERVE THAT IN THE PRESENT CASE, THE REVENUE HAS NOT ALLEGED THAT THERE HAS BEEN CONCEAL MENT OF ANY INCOME OR THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF HIS INCOME. THE REASON FOR INITIATING PENALTY PROCEEDI NGS, THAT THE ASSESSEE HAS OFFERED ` 65.00 LAKHS AS INCOME ONLY ON ACCOUNT OF SURVEY, IS NOT CONVINCING. THE ASSESSEE FOR THE PR EVIOUS YEAR 2007-08 I.E., PERIOD RELEVANT TO THE AY.2008-09, FI LED RETURN OF INCOME ON 29-08-2008, WHEREAS, SURVEY WAS CONDUCTED ON 21-02-2008. IT WAS PRE-MATURE FOR THE ASSESSING OF FICER TO COME TO SUCH A CONCLUSION THAT THE ASSESSEE WOULD NOT HA VE OFFERED INCOME OF ` 65.00 LAKHS IN HIS RETURN OF INCOME. THE ASSESSING OFFICER PROCEEDED ON SURMISES AND CONJECTURES TO CO ME TO SUCH A I.T.A. NO. 770/MDS/2013 6 VIEW. AS FAR AS THE STATEMENT OF THE ASSESSEE DURI NG SURVEY PROCEEDINGS IS CONCERNED, THE HON'BLE MADRAS HIGH CO URT IN THE CASE OF CIT VS. S.KHADER KHAN SON (SUPRA) HAS MADE IT CLEAR, THAT THE STATEMENT MADE U/S.133A IS NOT CONCLUSIVE UNLES S SUBSTANTIATED BY MATERIAL EVIDENCE. THEREFORE, IN OUR CONSIDERED OPINION INITIATION OF PENALTY PROCEEDINGS U/S.271(1 )(C) OF THE ACT WAS WITHOUT ANY CREDIBLE BASIS. 7. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. M/S.MUTHUMANI FINANCE (SUPRA), WHILE DEALING WITH SIMILAR CASE, UPHELD THE FINDINGS OF CIT(APPEALS) AND TRIBUNAL IN DELETING PENALTY. IN THE SAID CASE, SURVEY WAS CONDUCTED ON 15-02-2005 I.E., FY.2004-05. IN THE RETURN OF INCOME FILED BY THE ASSESSEE, WHATEVER DISCREPANCIES WERE ALLEGED, WERE DULY DISC LOSED. THE RETURN FILED BY THE ASSESSEE WAS ALSO NOT REVISED. HOWEVER, PENALTY U/S.271(1)(C) WAS LEVIED ON THE ASSESSEE. T HE CIT(APPEALS) DELETED THE PENALTY. THE ORDER OF CIT (APPEALS) WAS UPHELD BY THE TRIBUNAL. THE HON'BLE HIGH COURT WHIL E CONFIRMING THE ORDER OF TRIBUNAL HELD AS UNDER: 3.WE ARE IN FULL AGREEMENT WITH THE CONCLUSION OF THE CIT(A) AS WELL AS THAT OF THE TRIBUNAL INASMUCH AS IT IS NOT IN DISPUTE THAT WITHIN THE PRESCRIBED TIME FOR SUBMISS ION OF RETURN, THE ASSESSEE DISCLOSED THE ALLEGED CONCEALM ENT OF I.T.A. NO. 770/MDS/2013 7 INCOME AND THAT THE SAID RETURN WAS ALSO NOT REVISE D BY THE AUTHORITY CONCERNED. IN THE CIRCUMSTANCES, THERE W AS NO QUESTION OF INVOKING PENAL PROVISION UNDER SECTION 271(1)(C) OF THE ACT AS HELD BY THE LOWER AUTHORITIES. WE THERE FORE, DO NOT FIND ANY QUESTION OF LAW, MUCH LESS SUBSTANTIAL QUE STION OF LAW IN ORDER TO ENTERTAIN THIS APPEAL. APPEAL FAILS AN D THE SAME IS DISMISSED. 8. THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THE ONE ADJUDICATED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S.MUTHUMANI FINANCE (SUPRA). IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, WE DO NOT FIND A NY REASON TO INTERFERE WITH THE FINDINGS OF THE CIT(APPEALS). THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOI D OF MERIT. ORDER PRONOUNCED ON MONDAY, THE 07 TH JULY, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( !' ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) / VICE PRESIDENT ! / JUDICIAL MEMBER '# /CHENNAI, $ /DATED: 07 TH JULY, 2014 TNMM #% & '( )#( /COPY TO: 1. *+ /APPELLANT 2. &,*+ /RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. (01 & 2 /DR 6. 13 4 /GF