Sh. Madan Lal Bassi, Ludhiana V. ACIT, Ludhiana

ITA 78/CHANDI/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60946 (ITAT-CHANDIGARH)
• Duration Of Justice: 42 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: D K GOYAL
• Keywords: Source of fund; Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI H.L. KARWA, VP AND SHRI T.R. SOOD, AM ITA NO. 78/CHD/2010 ASSESSMENT YEAR: 1997- 98 MADAN LAL BASSI V A.C.I.T. C.C.-II PROP. M/S SURAJ UDYOG LUDHIANA C-106, FOCAL POINT LUDHIANA ABFPB 7839 N (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI D.K. GOYAL RESPONDENT BY: SHRI N.K. SAINI DATE OF HEARING: 9.07.2012 DATE OF PRONOUNCEMENT: 13 .07.2012 ORDER PER T.R. SOOD, A.M IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN RAISED ON LY DISPUTE IS REGARDING CONFIRMATION OF PENALTY AMOUNTING TO RS. 40,000/- U/S 271(1)(C) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSME NT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAS INTRODUCED SUM OF RS. 1.00 LAKH IN CASH ON 10.4.2006. IN RESPONSE TO THE QUERY REGARDING SOUR CE OF CASH IT WAS EXPLAINED AS UNDER: SHRI MADAN LAL BASSI MADE WITHDRAWALS OF RS. 5,65, 140/- FOR THE PURCHASE OF AGRICULTURAL LAND AT KOHARA DURING THE ASSESSMENT YEAR 1995-96. THE DETAILS ARE ALREADY GIVEN IN THE COPY OF CAPITAL ACCOUNT F OR THE ASSESSMENT YEAR 1995-96. DURING SEARCH DEPARTM ENT FOUND CASH OF RS. 1,05,250/- WHEREAS ACTUAL CLOSING CASH IN HAND AS ON 10.8.95 WAS RS. 3,50,115/-. NO QUESTION ON THE SHORT CASH WAS ASKED FOR NOR THERE WAS NEED TO TELL THE DEPARTMENT WHERE THE CASH IN H AND IS KEPT. THE DEPARTMENT HAS ALREADY ACCEPTED THE ABOVE FIGURES D URING BLOCK PERIOD ASSESSMENT. THE LAND WAS PURCHASED FOR 5,65,140/- OUT OF WHICH RS. 1,64,000/- WAS RECEIVED BACK ON 9.1.95 AS PER MUTUA L UNDERSTANDING OF CANCELLATION OF DEED NO. 29032 DATED 6.12.94. THE PHOTOCOPY OF CONTENTS WRITTEN ON THE BACK SIDE OF SALE DEED ALON G WITH THE SALE DEED IS ATTACHED. IT HAS ALREADY BEEN STATED THAT RS. 64,0 00/- WAS UTILIZED FOR THE CONSTRUCTION OF WALL BEFORE 11.8.95 AND RS. 1,0 0,000/- WAS USED ON 10.4.96. THIS FACT HAS BEEN STATED IN OUR LETTER D ATED 24.11.99 ON THE BASIS OF WHICH YOUR HONOUR HAS RAISED THE QUERY. I T IS A STATED FACT THAT RS. 1,64,000/- WHICH WAS RECEIVED BACK ON THE CANCE LLATION OF REGISTRATION DEED WAS BEING KEPT AS CASH IN HAND FR OM 9.1.95 AND RS. 64,000/- WAS USED BEFORE 11.8.95 FOR CONSTRUCTION O F WALL AND RS. 2 1,00,000/- WHICH WAS STILL LYING AS CASH IN HAND HA S BEEN UTILIZED ON 10.4.96. YOUR HONOUR HAS STATED ABOUT THE SEARCH O N 11.8.95 AND ACCORDING TO YOUR GOODSELFS VIEW THE CASH WAS NOT AVAILABLE DURING SEARCH. THIS QUERY HAS BEEN RAISED DURING ASSESSME NT YEAR 1997-98 ALTHOUGH THE COMPLETE INFORMATION WAS GIVEN DURING BLOCK PERIOD ASSESSMENT. HOWEVER, ONCE AGAIN IT IS STAT ED THAT THE CLOSING BALANCE OF CASH IN HAND ON 10.8.95 WAS RS. 3,50,115/- AS PE R CASH BOOKS OF M/S SURAJ UDYOG BUT ACTUALLY CASH FOUND WAS RS. 1,05,25 0/-. THIS SHOWS THAT THE ASSESSEE WAS KEEPING CASH SOMEWHERE ELSE A LONG WITH RS. 1,00,000/- ALREADY RECEIVED BACK ON 9.1.95. NO QUE STION WAS ASKED BY THE DEPARTMENT ON THIS ISSUE. FURTHER ONE REGISTRA TION DEED DATED 29.12.94 IN ORIGINAL WAS NOT CAUGHT BY THE DEPARTME NT THE REASONS BEST KNOWN TO THE DEPARTMENT. FURTHER IF SOMETHING IS N OT CAUGHT BY THE DEPARTMENT DURING SEARCH, THE ASSESSEE WILL NOT OFF ER TO SAY THAT IT IS AVAILABLE OR KEPT. THUS THE CONTENTION DOES NOT AP PEAR TO BE GENUINE IN VIEW OF THE ABOVE EXPLANATION. 3. THE ASSESSING OFFICER DID NOT FIND ANY JUSTIFICA TION IN THE ABOVE EXPLANATION BECAUSE DURING SEARCH CERTAIN DOCUMENTS RELEVANT TO ACTUAL COST OF AGRICULTURAL LAND WERE FOUND AND ASSESSMENT WAS COM PLETED U/S 158 BA AND THE AMOUNT AS PER AGREEMENT WAS TREATED AS PAYMENT MADE BY THE ASSESSEE AND DIFFERENCE OF RS. 76,66,115/- WAS TREATED AS UN EXPLAINED INVESTMENT. SIMILARLY ACCORDING TO THE ASSESSING OFFICER THE AS SESSEE HAD NOT SHOWN ANY SOURCE OF FUND FOR CONSTRUCTION OF BOUNDARY WALL AN D FURTHER ADDITION OF RS. 2.00 LAKHS WAS MADE TOWARDS BOUNDARY WALL IN ASSESSMENT YEAR 2006-07. IT WAS ALSO OBSERVED THAT THE CANCELLATION OF OLD AGREEMEN T HAD HAPPENED ON 9.1.95 AND WHEN THE SOURCE OF RS. 64,000/- WAS SHOWN IN AS SESSMENT YEAR 2006-07 THE SAME WAS NOT ACCEPTED. BECAUSE OF THESE REASO NS THE ADDITION OF RS. 1.00 LAKH WAS MADE AND PENALTY PROCEEDINGS U/S 271 (1)(C) WAS INITIATED. IN RESPONSE TO THE SHOW CAUSE NOTICE SOME TECHNICAL IS SUES WERE RAISED LIKE (I) THE ASSESSING OFFICER HAS NOT RECORDED THE SATISFAC TION (II) THE ASSESSING OFFICER HAS NOT MENTIONED PARTICULAR ITEMS OF 271(1)(C) WH ICH IS APPLICABLE BECAUSE IN THE NOTICE TWO ITEMS ARE MENTIONED (CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME) AND THE ASSESSING OFFICER HAS NOT STRUCK ANYONE OF THEM. FURTHER THE DEPARTMENT HAD ALREADY ACCEPTED THE EXPLANATION REGARDING RS. 64,000/-. THESE OBJECTIONS WERE NOT ACCEPTED AND AFTER DETAILED DISCUSSION PENALTY WAS LEVIED. 4. BEFORE THE LD. CIT(A) SIMILAR OBJECTIONS WERE RA ISED AND THE LD. CIT(A) REJECTED FIRST OBJECTION REGARDING SATISFACTION BY OBSERVING THAT SUB-SECTION (1B) 3 HAS BEEN INSERTED BY FINANCE ACT, 2008 WITH RETROSP ECTIVE EFFECT BY WHICH IT HAS BEEN PROVIDED THAT THE DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS SHALL BE DEEMED TO BE THE SATISFACTION. REGARDING OBJECTION NO. (II) HE OBSERVED THAT ONCE BOTH THE INGREDIENTS I.E. THE ASSESSEE HAS CON CEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E ARE SATISFIED THEN THERE WAS NO NEED TO STRIKE ANYONE OF THEM. HE DID NOT F IND FORCE IN THE CONTENTIONS THAT THE DEPARTMENT HAS ALREADY ACCEPTED THE SUM OF RS. 64,000/- BECAUSE THERE WAS NO RESJUDICATA IN INCOME-TAX PROCEEDINGS. AFTER REJECTING THESE OBJECTIONS AND EXTRACTING OBSERVATIONS OF THE TRIBU NAL, THE LD. CIT(A) CONFIRMED THE LEVY OF PENALTY. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE MAINL Y SUBMITTED THAT SOURCE OF MONEY WAS OUT OF CANCELLATION OF THE AGREEMENT F OR PURCHASE OF LAND BY WHICH THE ASSESSEE HAD RECEIVED A SUM OF RS. 1,64,0 00/- ON 9.1.95 OUT OF WHICH A SUM OF RS. 64,000/- WAS USED FOR CONSTRUCTI ON OF BOUNDARY WALL AND RS. 1.00 LAKH WAS STILL AVAILABLE AS CAPITAL WITH THE A SSESSEE.. THEREFORE, THE ASSESSEE HAS FILED AN EXPLANATION WHICH HAS NOT BEE N PROVED TO BE UNTRUE, THEREFORE, LEVY OF PENALTY WAS NOT JUSTIFIED. 6. ON THE OTHER HAND, LD. DR FOR THE REVENUE SUBMIT TED THAT THE ASSESSEE HAD SUBMITTED THAT RS. 1,64,000/- WAS RECEIVED ON 9 .1.95 THEN HOW THIS CASH COULD BE AVAILABLE TILL 10.4.1996. THEREFORE, LEV Y OF PENALTY WAS JUSTIFIED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AN D FIND THAT THE TRIBUNAL HAS CONFIRMED THE ADDITION OF RS. 1.00 LAKH BUT THA T DOES NOT MEAN LEVY OF PENALTY BECOMES AUTOMATIC. THE ASSESSEE HAS FURNIS HED EXPLANATION THAT THE CASH WAS RECEIVED ON CANCELLATION OF AGREEMENT DATE D 9.1.95. TOTAL OF RECEIPTS WERE SHOWN AT RS. 1,64,000/- OUT OF WHICH ONLY RS. 64,000 WAS SHOWN TO HAVE BEEN USED FOR CONSTRUCTION OF BOUNDARY WALL. IT IS VERY MUCH POSSIBLE THAT THE ASSESSEE MIGHT HAVE KEPT THE CASH AT SOME OTHER PLA CE AND MADE USE OF THE SAME FOR INTRODUCTION OF CAPITAL. THUS THE EXPLANA TION HAS NOT BEEN PROVED TO BE UNTRUE. SINCE PENALTY PROCEEDINGS ARE NOT AUTOM ATIC AND THE ASSESSEE HAS 4 FURNISHED AN EXPLANATION, IN OUR OPINION, THIS IS N OT A FIT CASE FOR LEVY OF PENALTY AND ACCORDINGLY WE DELETE THE PENALTY. 8 IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 13.07.2012 SD/- SD/- (H.L. KARWA) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 13 .07.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 5