Asst. CIT, Circle 3(1), Dhule V. Shri Chandrakant Kashinath Kele, Dhule

ITA 804/PUN/2013

• Counselvise Citation: 80424514 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Unexplained investment; Unexplained expenditure; Loose papers
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.804/PN/2013 BLOCK PERIOD 1990-91 TO 2000-01 (UPTO 02.02.2000 & 03.02.2000 TO 31.03.2000) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-3(1), DHULE. . APPELLANT VS. SHRI CHANDRAKANT KASHINATH KELE, SHREE DINESH COMPLEX, AGRA ROAD, DEOPUR, DHULE 424 002. PAN : ABCPK8875G . RESPONDENT DEPARTMENT BY : SHRI B. C. MALAKAR ASSESSEE BY : SHRI SUNIL PATHAK DATE OF HEARING : 21-01-2015 DATE OF PRONOUNCEMENT : 13-03-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, NASHIK DATED 24.01.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 30.09.2011 PASSED BY THE ASSESSING OFFICER U/S 158BFA(2) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE BLOCK PERIOD 1990-91 TO 2000-01 U PTO 02.02.2000 & 03.02.2000 TO 31.03.2000. 2. IN THIS APPEAL, REVENUE IS AGGRIEVED BY THE ACTI ON OF THE CIT(A) IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICE R U/S 158BFA(2) OF THE ACT WITH RESPECT TO THE ADDITIONS OF (I) RS.11,71,687/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HOUSE PROPERTY; AND, (II) RS.1,96,335 /- ON ACCOUNT OF UNEXPLAINED MARRIAGE EXPENDITURE. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE RESPON DENT-ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CONSTRUCTION, PURCHASE AND SALE OF PLOTS ITA NO.804/PN/2013 AND IS A PARTNER IN PARTNERSHIP FIRMS. A SEARCH AC TION U/S 132(1) OF THE ACT WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 02.02.2000 , AS A CONSEQUENCE OF WHICH THE ASSESSING OFFICER FINALIZED A BLOCK ASSES SMENT U/S 158BC R.W.S. 143(3) OF THE ACT DATED 27.02.2002 FOR THE BLOCK PE RIOD COMPRISING OF ASSESSMENT YEARS 1990-91 TO 2000-01 (UPTO 02.02.200 0 & 03.02.2000 TO 31.03.2000) WHEREBY THE TOTAL UNDISCLOSED INCOME WA S ASSESSED AT RS.1,62,93,506/-. THE AFORESAID ASSESSMENT WAS SUB JECT-MATTER OF APPEAL BEFORE THE CIT(A) AS WELL AS BEFORE THE TRIBUNAL. AS A RESULT OF THE ORDER OF THE TRIBUNAL DATED 28.02.2011 CERTAIN ADDITIONS WERE SU STAINED. THE ASSESSING OFFICER THEREAFTER HAS PASSED AN ORDER U/S 158BFA(2 ) OF THE ACT DATED 30.09.2011 LEVYING PENALTIES WITH RESPECT TO THE AD DITIONS OF RS.11,71,687/- AND RS.1,96,335/- SUSTAINED BY THE TRIBUNAL ON ACCO UNT OF UNEXPLAINED INVESTMENT IN HOUSE PROPERTY AND UNEXPLAINED MARRIA GE EXPENDITURE RESPECTIVELY. THE ASSESSING OFFICER IMPOSED A PENA LTY OF RS.8,20,814/- WHICH WAS CARRIED IN APPEAL BEFORE THE CIT(A). THE CIT(A ) VIDE HIS IMPUGNED ORDER HAS DELETED THE PENALTY LEVIED BY THE ASSESSING OFF ICER WITH RESPECT TO THE AFORESAID TWO ADDITIONS. THE CIT(A) HAS DELETED TH E PENALTY PRIMARILY ON THE GROUND THAT BOTH THE ADDITIONS WERE MADE ON THE BAS IS OF ESTIMATION AND THUS PENALTY U/S 158BFA(2) OF THE ACT WAS NOT MAINTAINAB LE. AGAINST THE AFORESAID ORDER OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US . 4. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE A PPEARING FOR THE REVENUE CONTENDED THAT THE CIT(A) ERRED IN DELETING THE PENALTY BECAUSE THE ADDITIONS IN THIS CASE WERE BASED ON MATERIAL SEIZE D DURING THE COURSE OF SEARCH ACTION U/S 132(1) OF THE ACT. ACCORDING TO THE LD. DEPARTMENTAL REPRESENTATIVE, THE ASSESSING OFFICER FINALIZED THE ASSESSMENT U/S 158BC R.W.S. 143(3) OF THE ACT BASED ON THE SEIZED MATERI AL FOUND DURING THE COURSE OF SEARCH AS ALSO THE STATEMENTS OF THE ASSESSEE AN D THEREFORE IT COULD NOT BE SAID THAT THE ADDITIONS HAVE BEEN MADE ENTIRELY ON ESTIMATE BASIS. ITA NO.804/PN/2013 5. ON THE OTHER HAND, THE LD. REPRESENTATIVE FOR TH E RESPONDENT-ASSESSEE VEHEMENTLY POINTED OUT THAT THE CIT(A) WAS JUSTIFIE D IN DELETING THE PENALTY FOR THE REASONS STATED IN THE IMPUGNED ORDER. AS PER T HE LD. REPRESENTATIVE, THE ADDITION WITH RESPECT TO THE UNEXPLAINED INVESTMENT IN HOUSE PROPERTY WAS PRIMARILY BASED ON ESTIMATION AND THAT THERE WAS NO CLINCHING EVIDENCE FOUND IN THE COURSE OF SEARCH WHICH SHOWED ANY UNEXPLAINE D INVESTMENT. EVEN WITH REGARD TO THE UNEXPLAINED EXPENDITURE INCURRED ON T HE MARRIAGE OF ASSESSEES DAUGHTERS, IT WAS POINTED OUT THAT THE ADDITION WAS MADE ON THE BASIS OF ESTIMATE ONLY. THE LD. REPRESENTATIVE SUBMITTED TH AT LEVY OF PENALTY U/S 158BFA(2) OF THE ACT IS DIRECTORY AND NOT MANDATORY AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DODSAL LTD ., (2008) 218 CTR 430 (BOM). IN THE PRESENT CASE, THE CIT(A) HAS APPROPR IATELY FOUND IT FIT TO DELETE THE PENALTY IN THE FACTS AND CIRCUMSTANCES OF THE P RESENT CASE. THE LD. REPRESENTATIVE ALSO RELIED UPON THE JUDGEMENT OF TH E HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. DR. GIRIRAJ AGARWAL GI RI, (2012) 346 ITR 152 (RAJ) FOR THE PROPOSITION THAT PENALTY U/S 158BFA(2) OF T HE ACT CANNOT BE IMPOSED ON ESTIMATED ADDITIONS. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE CIT(A) IN THIS CASE HAS DELETED THE PENALTY IMPOSED BY THE ASSESSI NG OFFICER U/S 158BFA(2) OF THE ACT ON THE GROUND THAT THE UNDISCLOSED INCOM E ASSESSED BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTM ENT IN HOUSE PROPERTY OF RS.11,71,687/- AND UNEXPLAINED MARRIAGE EXPENDITURE OF RS.1,96,335/- WAS DETERMINED ON THE BASIS OF ESTIMATION. IN THIS CAS E, WE FIND THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF DR. GIRIRAJ AGA RWAL GIRI (SUPRA) HAS UPHELD THE PROPOSITION THAT PENALTY U/S 158BFA(2) OF THE A CT IS NOT IMPOSABLE ON ADDITIONS WHICH WERE BASED ON ESTIMATION ONLY. APA RT FROM THAT, IT IS ALSO A WELL-SETTLED PROPOSITION THAT IMPOSITION OF PENALTY WOULD DEPEND ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DODSAL LTD. (SUPRA) HELD IN THE CONTEXT OF SECTI ON 158BFA(2) OF THE ACT THAT ITA NO.804/PN/2013 THE SECTION PROVIDES A DISCRETION TO THE ASSESSING OFFICER IN LEVY OF PENALTY. IN THE BACKGROUND OF THE AFORESAID LEGAL POSITION WHAT IS REQUIRED TO BE EXAMINED IS AS TO WHETHER THE CIT(A) HAS RECORDED APPROPRIAT E REASONS FOR EXERCISE OF DISCRETION OF DELETING THE PENALTY, HAVING REGARD T O THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. IN THE ABOVE CONTEXT, WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE PENALTY PROCEEDINGS AS WELL AS IN THE QUANTUM ASSESSMENT PROCEEDINGS. WITH RESPECT TO THE ADDITION ON ACCOU NT OF UNEXPLAINED INVESTMENT IN HOUSE PROPERTY OF RS.11,71,687/-, THE RELEVANT FACTS ARE THAT IN THE BOOKS OF ACCOUNT ASSESSEE HAD SHOWN INVESTMENT OF RS.18,29,313/- PRIOR TO THE SEARCH ACTION. THE ASSESSING OFFICER ESTIMA TED THE INVESTMENT IN THE HOUSE PROPERTY KNOWN AS CHANDRAVEL BUNGALOW AT RS .40 LAKHS. THE ASSESSEE RELIED UPON THE REPORT OF AN APPROVED VALU ER WHO VALUED THE INVESTMENT IN PROPERTY AT RS.17,01,401/- AND ACCORD INGLY ASSESSEE HAD SUBMITTED THAT THE INVESTMENT OF RS.18,29,313/- SHO WN IN THE ACCOUNT BOOKS WAS PROPER. THE CIT(A) HAD NOTED THAT THE DEPARTME NTAL VALUATION OFFICER (DVO) ESTIMATED THE INVESTMENT IN PROPERTY AT RS.19 ,64,000/-. IT IS ALSO NOTED THAT IN THE QUANTUM PROCEEDINGS, CIT(A) ESTIMATED T HE INVESTMENT IN PROPERTY AT RS.30,00,000/- AND HE SUSTAINED THE ADDITION OF RS.11,71,687/- BEING THE DIFFERENCE BETWEEN RS.30,00,000/- AND RS.18,29,313/ - DECLARED BY THE ASSESSEE IN THE ACCOUNT BOOKS. THE TRIBUNAL VIDE I TS ORDER DATED 28.02.2011 (SUPRA) HAS CONFIRMED THE AFORESAID ADDITION. IT I S ALSO NOTICED THAT THE CIT(A) WHILE UPHOLDING THE ADDITION OF RS.11,71,687/- NOTE D THAT THE LOOSE PAPERS FOUND IN THE COURSE OF SEARCH INDICATED AN EXPENDIT URE ON CONSTRUCTION OF RS.9.99 LAKHS. 8. THE PLEA OF THE ASSESSEE ON THIS ASPECT HAS BEEN THAT NO EVIDENCE WAS FOUND IN THE COURSE OF SEARCH TO DEMONSTRATE THAT A SSESSEE HAD INCURRED ANY UNACCOUNTED EXPENDITURE ON CONSTRUCTION OF THE HOUS E PROPERTY IN QUESTION. ITA NO.804/PN/2013 IN THE COURSE OF HEARING BEFORE US ALSO, THE LD. RE PRESENTATIVE EXPLAINED THAT THE LOOSE PAPERS FOUND OF RS.9.99 LAKHS PERTAINED T O THE CONSTRUCTION BEING CARRIED OUT BY THE ASSESSEE AT THE RELEVANT POINT O F TIME AT THREE DIFFERENT LOCATIONS NAMELY, (I) THE BUNGALOW IN QUESTION; (II ) DINESH COMPLEX; AND, (III) FACTORY OF VISHALSAGAR HOME & AGRO PRODUCTS LTD.. SINCE NO PROPER BOOKS OF ACCOUNT WERE MAINTAINED BY THE ASSESSEE, THE LOOSE PAPERS FOUND IN THE COURSE OF SEARCH COULD NOT BE RECONCILED AND THE AD DITION HAS BEEN SUSTAINED. HOWEVER, IT WAS POINTED OUT THAT THE LOOSE PAPERS D ID NOT CLINCHINGLY SUGGEST THAT THE EXPENDITURE WAS RELATABLE TO THE CONSTRUCT ION IN THE IMPUGNED PROPERTY AND THAT THE VALUATION MADE BY THE DVO AT RS.19.64 LAKHS ALSO JUSTIFIES THE INVESTMENT SHOWN IN THE ACCOUNT BOOKS, WHICH IS ALM OST NEAR ABOUT THE VALUE OF INVESTMENT ESTIMATED BY THE DVO. THE LD. REPRES ENTATIVE POINTED OUT THAT IF THE EXPENDITURE REFERRED TO IN THE LOOSE PAPERS OF RS.9.99 LAKHS PERTAINED TO THE CONSTRUCTION OF THE IMPUGNED PROPERTY THEN THE REPORT OF THE DVO WOULD HAVE BEEN MUCH HIGHER THAN RS.19.64 LAKHS. IT WAS POINTED OUT THAT ASSESSEE COULD NOT CO-RELATE THE LOOSE PAPERS FOUND IN THE C OURSE OF SEARCH VIS--VIS THE ACCOUNT BOOKS MAINTAINED AND THEREFORE THE ADDITION WAS SUSTAINED. 9. IN OUR CONSIDERED OPINION, THE FACT THAT THE ADD ITION HAS BEEN SUSTAINED IN THE QUANTUM PROCEEDINGS CANNOT IPSO FACTO BE A BASIS FOR SUSTAINING PENALTY U/S 158BFA(2) OF THE ACT, WHOSE APPLICATION IS NOT MANDATORY AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DODSAL LTD . (SUPRA). THE MANNER IN WHICH THE ADDITION HAS BEEN MADE IN THE COURSE OF T HE QUANTUM ASSESSMENT PROCEEDINGS CLEARLY SHOWS THAT THE UNEXPLAINED INVE STMENT IN HOUSE PROPERTY OF RS.11,71,687/- HAS BEEN ARRIVED AT ON AN ESTIMAT E BASIS. IN SO FAR AS THE REFERENCE MADE BY THE REVENUE TO THE LOOSE PAPERS F OUND OF RS.9.99 LAKHS IS CONCERNED, IT IS QUITE CLEAR THAT THE ADDITION HAS NOT BEEN MADE WITH REFERENCE TO THE SAID LOOSE PAPERS FOUND IN THE COURSE OF SEA RCH. OSTENSIBLY, REVENUE HAS JUSTIFIED THE ADDITION IN THE QUANTUM PROCEEDIN GS ON THE BASIS OF ESTIMATION AND SO FAR AS THE ESTIMATION IS CONCERNE D, EVEN THE DVO HAS ITA NO.804/PN/2013 ESTIMATED THE INVESTMENT IN THE PROPERTY NEAR ABOUT THE SAME AMOUNT AS DECLARED BY THE ASSESSEE IN THE ACCOUNT BOOKS. THE CIT(A) IN THE QUANTUM PROCEEDINGS ESTIMATED THE VALUE OF INVESTMENT AT RS .30 LAKHS AS AGAINST RS.40 LAKHS MADE BY THE ASSESSING OFFICER. UNDER T HESE CIRCUMSTANCES, IN OUR VIEW, THE CIT(A) HAS CORRECTLY APPRECIATED THE FACTS AND CIRCUMSTANCES OF THE CASE AND HELD THAT THE IMPUGNED ADDITION ON ACC OUNT OF UNEXPLAINED INVESTMENT IN HOUSE PROPERTY OF RS.11,71,687/- WAS ON ESTIMATION BASIS AND NOT ON THE BASIS OF ANY CONCRETE EVIDENCE FOUND IN THE COURSE OF SEARCH TOWARDS INCURRENCE OF UNACCOUNTED EXPENDITURE QUA T HE IMPUGNED PROPERTY. THEREFORE, HAVING REGARD TO THE FACTS AND CIRCUMSTA NCES OF THE PRESENT CASE, WE AFFIRM THE ACTION OF THE CIT(A) IN DELETING THE PENALTY WITH RESPECT TO THE ADDITION OF RS.11,71,687/- ON ACCOUNT OF UNEXPLAINE D INVESTMENT IN HOUSE PROPERTY. 10. WITH RESPECT TO THE ADDITION ON ACCOUNT OF UNEX PLAINED MARRIAGE EXPENDITURE OF RS.1,96,335/-, IN THIS REGARD THE RE LEVANT FACTS ARE AS FOLLOWS. THE QUANTUM ASSESSMENT PROCEEDINGS REVEALED THAT IN THE COURSE OF SEARCH CERTAIN LOOSE PAPERS WERE FOUND WHICH INDICATED MAR RIAGE EXPENSES AND ON THE BASIS OF WHICH THE ASSESSING OFFICER ESTIMATED THE EXPENDITURE AT RS.12,00,000/-. ON THE OTHER HAND, ASSESSEE HAD S HOWN AN EXPENDITURE ON ACCOUNT OF MARRIAGE AT RS.5,26,712/- AND THEREFORE THE ASSESSING OFFICER MADE AN ADDITION OF RS.6,73,228/-. IN THE APPELLAT E PROCEEDINGS, THE ESTIMATION OF TOTAL MARRIAGE EXPENDITURE WAS SCALED DOWN TO RS.7,34,047/- AS AGAINST RS.12,00,000/- MADE BY THE ASSESSING OFFICE R AND AS A CONSEQUENCE ADDITION ON ACCOUNT OF UNEXPLAINED MARRIAGE EXPENDI TURE CAME TO RS.1,96,335/-. ON THE AFORESAID RESULTANT ADDITION , ASSESSING OFFICER HAS IMPOSED PENALTY U/S 158BFA(2) OF THE ACT. THE EXPE NDITURE HAS BEEN ESTIMATED FOR MARRIAGE OF TWO DAUGHTERS OF THE ASSE SSEE. THE CIT(A) HAS REPRODUCED THE SUBMISSIONS OF THE ASSESSEE IN PARA 6.2 OF THE IMPUGNED ITA NO.804/PN/2013 ORDER ON THE BASIS OF WHICH HE HAS INFERRED THAT TH E ADDITION OF RS.1,96,335/- HAS BEEN MADE ON ESTIMATE BASIS ONLY. 11. WE HAVE PERUSED THE CASE SETUP BY THE ASSESSEE BEFORE THE CIT(A) AND FIND THAT THE CIT(A) HAS THOROUGHLY EXAMINED IT AND HIS INFERENCE THAT ADDITION IS BASED ON ESTIMATE BASIS IS A REASONED O NE. BEFORE US, NO COGENT MATERIAL OR REASONING HAS BEEN ADVANCED BY THE LD. DEPARTMENTAL REPRESENTATIVE TO SAY THAT ANY DOCUMENT OR EVIDENCE WAS FOUND IN THE COURSE OF SEARCH WHICH WOULD INDICATE CLINCHINGLY INCURREN CE OF UNACCOUNTED EXPENDITURE ON MARRIAGE OF ASSESSEES DAUGHTERS. M ERELY BECAUSE, ASSESSEES EXPLANATION WITH RESPECT TO THE LOOSE PA PERS WAS REJECTED IN THE QUANTUM PROCEEDINGS AND THE MARRIAGE EXPENSES ESTIM ATED CANNOT BE A GROUND TO LEVY PENALTY U/S 158BFA(2) OF THE ACT IN THE CONTEXT OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THEREFORE, ORDE R OF THE CIT(A) ON THIS ASPECT IS ALSO HEREBY AFFIRMED. 12. THUS, WE FIND NO REASONS TO INTERFERE WITH THE DECISION OF THE CIT(A) WHICH IS HEREBY AFFIRMED AND ACCORDINGLY, REVENUE F AILS IN ITS APPEAL. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON 13 TH MARCH, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 13 TH MARCH, 2015. SUJEET ITA NO.804/PN/2013 COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE