DCIT,Central Circle-I, Nashik V. Shri Bhausaheb Punjaji Sangle, Nashik

ITA 827/PUN/2009

• Counselvise Citation: 82724514 RSA 2009
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 10-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI G.S. PANNU, AM. I.T.A. NO. 827 AND 828/PN/2009 A.Y. 2002-03 AND 2003-04 DY. CIT CENT. CIR. 1, NASIK .. APPELLANT VS. SHRI BHAUSAHEB P. SANGLE PROP. M/S. B.P. SANGLE PLOT NO. 13, SHIVAJINAGAR SINNAR PAN ACNPS 1628 K .. RESPONDE NT APPELLANT SMT. L. SUNITA RAO RESPONDENT BY: SHRI NIKHIL PATHAK ORDER PER SHAILNDRA KUMAR YADAV, JM THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE AG AINST THE RESPECTIVE ORDERS OF THE CIT(A)-I NASIK DATED 2 4-4-2009 ON THE POINT OF PENALTY LEVIED U/S 271(1)(C) OF THE AC T FOR A.Y. 2002-03 AND 2003-04. 2. IN THIS CASE, SEARCH U/S 132(1) OF THE ACT WAS C ARRIED ON 21-1-2004. IN THE COURSE OF SEARCH, THE ASSESSEE O FFERED ADDITIONAL INCOME ON ACCOUNT OF CERTAIN UN-VOUCHED EXPENDITURE. THE ASSESSEE OFFERED TO TAX THE AMOUN T DECLARED IN SEARCH. HOWEVER, AT THE TIME OF FILING THE RETU RN, THE ASSESSEE CARRIED FORWARD THE AMOUNT DECLARED ONLY T O BUY PEACE AND TO CO-OPERATE WITH THE DEPARTMENT. THE ASSESSEE ITA NO. 827 & 828/PN/2009 BHAUSAHEB P. SANGLE A.Y. 2002-03 AND 2003- 04 2 HAS ALSO SUBMITTED THAT IN FACT, THE ALLEGED UNVOUC HED AND UNRECORDED EXPENDITURE WERE FOUND RECORDED IN DIARI ES OF SHRI H.T. GABHANE AND MR. CHOKSI AND NO ADDITION COULD B E MADE IN THE HANDS OF HE ASSESSEE ON THE BASIS OF THE SAI D DIARIES. ACCORDING TO THE ASSESSEE, NO ADDITION COULD BE MAD E ON THE BASIS OF EVIDENCE FOUND WITH THE THIRD PARTY AND TH EREFORE, THERE WAS NO REASON TO LEVY THE PENALTY. 3. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT A ND ACCEPTED THE AMOUNT OFFERED TO TAX BY THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICER ALSO LEVIED PENAL TY U/S 271(1)(C) OF THE ACT IN RESPECT OF THESE TWO YEARS. THE ASSESSING OFFICER HAS INVOKED EXPLANATION 5 TO SECT ION 271(1)(C) OF THE ACT AND STATED THAT SINCE THE AMOU NT DECLARED PERTAINED TO EARLIER YEARS, PENALTY WAS LEVIABLE. THE ASSESSING OFFICER HAS STATED THAT THE IMMUNITY UNDER EXPLANAT ION 5 IS APPLICABLE ONLY FOR THE YEAR FOR WHICH THE RETURN I S NOT DUE OR THE YEAR IS NOT COMPLETE. 4. IN APPEAL, THE CIT(A) DELETED THE PENALTY LEVIED FOR THE YEARS UNDER CONSIDERATION. ACCORDING TO THE CIT(A) , THE ASSESSEE HAD DECLARED THE AMOUNT IN THE COURSE OR S EARCH AND THE SAME WAS ALSO OFFERED IN THE RETURNS, HENCE NO PENALTY COULD BE LEVIED. THE CIT(A) HELD THAT THE IMMUNITY UNDER EXPLANATION 5 IS AVAILABLE FOR ALL THE PAST YEARS A LSO IF THE ASSESSEE MAKES THE DECLARATION IN THE COURSE OF SEA RCH AND ITA NO. 827 & 828/PN/2009 BHAUSAHEB P. SANGLE A.Y. 2002-03 AND 2003- 04 3 OFFERS THE AMOUNT OF TAX. THE CIT(A) HAS DONE SO R ELYING ON THE DECISION OF I.T.A.T. PUNE IN THE CASE OF SARLA M. AHUJA, KOLHAPUR VS. DCIT KOLHAPUR IN ITA NO. 1301 TO 1308/PN/2007 DATED 26-10-2007. IN SUBSEQUENT DEVELOPMENT THE DECISION OF I.T.A.T. PUNE IN THE CA SE OF SARLA M. AHUJA (SUPRA) HAS BEEN REVERSED BY ITAT PUNE IN THE CASE OF DCIT VS. OMKARESHWAR R. KALANTRI & OTHERS (42 DT R 489), SUBMITTED ON BEHALF OF THE ASSESSEE. 5. HAVING SAID SO, THE ASSESSEE SUBMITTED THAT BOTH THE ASSESSING OFFICER AND THE CIT(A) HAVE WRONGLY INVOK ED THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. IT WAS SUBMITTED THAT EXPLANATION 5 IS APPLICABLE WHEN IN THE COURSE OR SEARCH, THE ASSESSEE IS FOUND TO BE THE O WNER OF MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE S OR THINGS. HOWEVER, IN THE ASSESSEES CASE, THE AMOUNT OFFERED TO TAX BY THE ASSESSEE IS ON ACCOUNT OF UNVOUCHED EXPENDITURE PERTAINING TO AMBA CONSTRUCTION AND OTHER UNVOUCHED EXPENDITURE AS WELL. SO THERE WAS NO ISSUE OF MONE Y, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS FOUN D DURING THE COURSE OF SEARCH. THEREFORE, THERE WAS NO OCCASION TO INVOKE EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT AT RE LEVANT POINT OF TIME. ITA NO. 827 & 828/PN/2009 BHAUSAHEB P. SANGLE A.Y. 2002-03 AND 2003- 04 4 6. IN THIS REGARD, THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. MOHAN LAL SHARMA (281 ITR 384) WHEREIN THE FIXED DEPOSITS RECEIPTS WERE FOUND IN THE COURSE OF SEARCH WITH THE ASSESSE E. IN SUCH A SITUATION, HONBLE ALLAHABAD HIGH COURT HELD THAT FDRS ARE NOT MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLES OR THINGS AND THEREFORE, EXPLANATION 5 IS NOT APPLICABLE. SIMILA R VIEW HAS BEEN TAKEN BY ITAT CHENNAI BENCH IN THE CASE OF T. KODEESWARAN L/H OF LATE A. THANGAM VS. ITO (123 TTJ 230). IN THE SAID CASE, ESTIMATED ADDITION WAS MADE AND T HE TRIBUNAL HELD THAT EXPLANATION 5 IS NOT APPLICABLE FOR ESTIMATED ADDITION. IT WAS ALSO POINTED OUT ON BEH ALF OF THE ASSESSEE THAT THE EXPLANATION 5A HAS BEEN INSERTED IN RESPECT OF SEARCH CARRIED OUT AFTER 1-6-2007 WHEREIN IT IS PROVIDED THAT WHERE ANY INCOME IS DECLARED BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTIONS, PEN ALTY CAN BE LEVIED. HENCE, IN VIEW OF EXPLANATION 5A, IT IS SUBMITTED THAT NO PENALTY CAN BE LEVIED UNDER EXPLANATION 5 O N ACCOUNT OF SOME UNRECORDED EXPENSES AT RELEVANT POINT OF T IME. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER AND THE CI T(A) HAVE WRONGLY INVOKED EXPLANATION 5. IT WAS THEREFORE, S UBMITTED THAT THE MATTER SHOULD BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE WHETHER PENALTY IS LEVI ABLE AS PER EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. ITA NO. 827 & 828/PN/2009 BHAUSAHEB P. SANGLE A.Y. 2002-03 AND 2003- 04 5 7. AFTER GOING THROUGH THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT I NITIALLY THE ASSESSING OFFICER LEVIED THE PENALTY BY INVOKING EX PLANATION 5 TO SECTION 271(1)(C) OF THE ACT WHICH WAS DELETED B Y THE CIT(A) RELYING ON THE DECISION OF PUNE BENCH OF THE TRIBUN AL IN THE CASE OF SARLA M. AHUJA (SUPRA). HOWEVER, SUBSEQUENT LY THE DECISION OF THE TRIBUNAL IN THE CASE OF SARLA M. AH UJA (SUPRA) HAS BEEN REVERSED BY DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF OMKARESHWAR R. KALANTRI (SUPRA). IN FACT, EXPLANATION 5 IS INVOKED FOR MONIES, BULLIONS, JEWE LLERY OR VALUABLE ARTICLES OR THINGS WHICH IS NOT THE CASE I N THE INSTANT CASE, BECAUSE THE ADDITION IS MADE ON THE BASIS OF CERTAIN UNACCOUNTED EXPENDITURE WHICH IS THE BASIS FOR PENA LTY IN QUESTION. NOW THE QUESTION ARISES UNDER WHAT PROVI SIONS OF SECTION 271(1)(C) OF THE ACT PENALTY CAN BE INVOKED ON ACCOUNT OF ADDITIONAL INCOME ON ACCOUNT OF CERTAIN UNVOUCHE D EXPENDITURE WHICH HAS NOT BEEN ADJUDICATED BY THE A SSESSING OFFICER OR THE CIT(A). THIS NEEDS PROBE INTO MATTE R. MOREOVER, THE LEARNED AR FOR ASSESSEE WAS FAIR ENOUGH TO REQU EST FOR REMAND OF THIS MATTER TO ASSESSING OFFICER TO APPRE CIATE THE FACTS ON MERITS. IN THE INTEREST OF JUSTICE THEREFO RE, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WIT H A DIRECTION TO DECIDE THE SAME AS PER FACT AND LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. SINCE WE A RE RESTORING ITA NO. 827 & 828/PN/2009 BHAUSAHEB P. SANGLE A.Y. 2002-03 AND 2003- 04 6 THIS ISSUE TO THE ASSESSING OFFICER ON THE PRELIMIN ARY ISSUE, SO WE ARE REFRAINED TO COMMENT ON THE MERITS OF THE IS SUE AT HAND. 8. AS REGARDS APPEAL IN ITA NO. 828/PN/2009 FOR A.Y . 2003- 04, FACTS ARE SIMILAR TO THOSE IN ITA NO. 827/PN/82 8 FOR A.Y. 2002-03. SO FOLLOWING THE REASONING MENTIONED IN T HE PRECEDING PARAGRAPHS, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR THIS YEAR AS WELL, WITH A DIR ECTION TO DECIDE THE SAME AS PER FACT AND LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. SINCE WE A RE RESTORING THIS ISSUE TO THE ASSESSING OFFICER ON THE PRELIMIN ARY ISSUE, SO WE ARE REFRAINED TO COMMENT ON THE MERITS OF THE IS SUE AT HAND FOR THIS YEAR AS WELL. 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 25 TH MAY 2011. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE: DATED: 25 TH MAY, 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A) I NASIK 4. THE CIT, I NASIK 5. THE D.R, B BENCH, PUNE TRUE COPY BY ORDER ITA NO. 827 & 828/PN/2009 BHAUSAHEB P. SANGLE A.Y. 2002-03 AND 2003- 04 7 ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE