Shri Chittusinh M.Chauhan, Dadra & Nagar Haveli V. The ACIT.,Cent,Circle-2, Surat

ITA 839/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73151 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 24-03-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 22-03-2013
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: HARDIK N VORA
• Keywords: Document seized; Documents seized
• Section: 69C

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , , , . .. . . . . . , , , , !' !' !' !' ! # ! # ! # ! # BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ././ ./ ITA NO. 839/AHD/2013 % &% % &% % &% % &% / // / ASSESSMENT YEAR 2003-04 CHITTUSINGH M. CHAUHAN AVDHESH MANSION, PLOT NO. 262/4/26-A, P.W.D. ROAD, SILVASA, DAMAN & NAGAR HAVELI PAN: ABNPC6044J VS ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2 SURAT. '(/ APPELLANT )*'( / RESPONDENT REVENUE BY : SH. P.L. KUREEL, SR. DR ASSESSEE(S) BY : SH. HARDIK N. VORA, AR + , -'/ // / DATE OF HEARING : 24/03/2014 ./& , -' / DATE OF PRONOUNCEMENT : 31/03/2014 !0 !0 !0 !0/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 31.01.2013. 2. THE SOLE GROUND OF APPEAL RAISED BY THE ASSESSE E IS THAT THE LD. CIT(A) ERRED IN CONFIRMING PENALTY OF RS 1,35,800/ - U/S 271(1)(C) OF THE ACT. ITA NO. 839/AHD/2013 CHITTUSINGH M CHAUHAN VS. ACIT, CENT. CIR.-2, SURAT . FOR A.Y. 2003-04 - 2 - 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, PENALTY OF RS 1,35,800/- WAS LEVIED U/S 271(1)(C) B Y THE ASSESSING OFFICER IN RESPECT OF THE ADDITION OF RS 3,94,439/- MADE DURIN G THE COURSE OF THE ASSESSMENT ON THE BASIS OF SEIZED DOCUMENTS MARKED AS A-1 PAGE NOS. 66- 75 AND A-1 PAGE NOS. 388-390. 4. BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED T HAT THE DOCUMENT MARKED AS A-1 PAGE NOS. 66-75 ON THE BASIS OF WHICH ADDITION OF RS 2,68,376/- WAS MADE DOES NOT RELATE TO THE ASSES SMENT YEAR IN QUESTION AND THEREFORE, PENALTY U/S 271(1)(C) FOR THE YEAR I N QUESTION CANNOT BE LEVIED ON THE BASIS OF THE SAME. 5. FURTHER, DOCUMENT MARKED AS A-1 PAGE NOS. 388-3 90 EVIDENCES PURCHASES OF DRAFTS OF RS 63,000/- AND NOT RS 1,26, 063/- AND THE ASSESSEE HAS DISCLOSED INCOME OF RS 63,000/- IN THE RETURN O F INCOME AND THEREFORE, PENALTY IN RESPECT OF RS 1,26,063/- IS ALSO LIABLE TO BE DELETED. 6. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BY OBSERVING AS UNDER: 3.3.1 THE APPELLANTS CONTENTION AT THIS STAGE THAT THE DOCUMENTS AT A1 PAGE NO 66 TO 75 DOES NOT RELATE TO CURRENT YEAR BUT SUCCEEDING YEAR, CANNOT BE ACCEPTED AS THE APPELLAN T HAS NOT OFFERED INCOME ON THE BASIS OF THIS UNACCOUNTED TRANSACTION IN ANY OF THE YEARS OF THE ASSESSMENT. IN REGARDS TO ADDITION OF TWO DRAFTS OF RS. 63,0007-, THE APPELLANT HAS NOT BEEN ABLE TO PROVE THAT HE HAS MADE ONLY ONE UNACCOUNTED DRAFT NEITHER BEFORE THE ASSES SING OFFICER NOR BEFORE THE APPELLATE PROCEEDING. 3.3.2 THE CASE LAWS RELIED BY THE APPELLANT ARE NOT RELEVANT TO THE FACT OF THE CASE AS THE ADDITION OF UNACCOUNTED TRANSACT ION IS MADE BASED ON DOCUMENTS SEIZED DURING THE SEARCH. THE POSITIO N OF LAW WITH REGARD TO LEVY OF PENALTY U/S 271(1)(C) HAS UNDERGO NE A SUBSTANTIAL CHANGE AFTER THE INSERTION OF EXPLANATION (1) TO SE CTION 271(1)(C) W.E.F 01.04.1976. EXPLANATION (1) TO SECTION 271(1)(C) R AISES A PRESUMPTION THAT AS AND WHEN ANY AMOUNT IS ADDED OR DISALLOWED IN ITA NO. 839/AHD/2013 CHITTUSINGH M CHAUHAN VS. ACIT, CENT. CIR.-2, SURAT . FOR A.Y. 2003-04 - 3 - COMPUTING THE TOTAL INCOME, THE SAME SHALL BE DEEME D OR REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEE N CONCEALED. FURTHER W.E.F. 10.09.1986, AMENDMENT HAS BEEN MADE IN EXPLANATION 1-B TO SECTION 271(1)(C). AFTER THIS AMENDMENT, FU RTHER ONUS HAS BEEN PLACED ON THE ASSESSEE TO PROVE THAT THE EXPLA NATION FURNISHED BY HIM WAS BONAFIDE. THE POSITION NOW IS THAT UNLES S AND UNTIL THE ASSESSEE SUBSTANTIATES THE EXPLANATION AND PROVES T HAT SUCH AN EXPLANATION WAS BONAFIDE THE ADDITION MADE TO HIS I NCOME SHALL BE DEEMED TO REPRESENT THE CONCEALED INCOME. ON THE AN ALYSIS OF THE PROVISIONS .OF SECTION 271(1)(C), IT IS OBSERVED TH AT THE EXPLANATION 1 TO SECTION 271(1)(C) PROVIDES FOR THE SITUATION WHE RE NO EXPLANATION FOR THE FAILURE IS OFFERED BY THE ASSESSEE OR WHERE THE EXPLANATION THAT HAS BEEN OFFERED IS FOUND TO BE FALSE OR WHERE THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION OFFERED BY HIM. IN ALL THESE CASES, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL I NCOME OF SUCH PERSON SHALL BE DEEMED TO REPRESENT THE INCOME IN R ESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. AS PER THE PROVISO TO THIS EXPLANATION, THE ONUS TO ESTABLISH THAT THE EXPLANA TION OFFERED WAS BONAFIDE AND FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS INCOME HAVE BEEN DISCLOSED BY HI M WILL BE ON THE PERSON CHARGED FOR CONCEALMENT. AS PER THE PROVISIONS OF EXPLANATION (1)(B), NOW TH E ENTIRE ONUS IS ON THE ASSESSEE TO NOT ONLY OFFER AN EXPLANATION BUT A LSO TO SUBSTANTIATE IT AND TO PROVE THAT THE PRESUMPTION WAS BONAFIDE. AT THE SAME TIME THE PRESUMPTION SO RAISED BY THE EXPLANATION (1) IS REB UTTABLE. THE EFFECT IS THAT UNLESS AND UNTIL THE ASSESSEE REBUTS THE PR ESUMPTION, HE WOULD BE LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF TH E ACT. IT IS NOW AN ESTABLISHED LAW THAT THE PRESUMPTION WOULD NOT STAN D REBUTTED MERELY BY FURNISHING ANY GENERAL OR FANTASTIC OR FANCIFUL OR UNREASONABLE EXPLANATION BY ASSESSEE. THE EXPLANATION SHOULD BE BASED ON COGENT AND RELEVANT MATERIAL AND SHOULD BE ACCEPTABLE TO T HE AUTHORITIES. IN THIS CONNECTION REFERENCE MAY BE MADE TO THE DELHI HIGH COURT'S DECISION IN THE CASE OF CIT VS. GURBACHAN LAL REPOR TED IN 250 ITR 157(DEIHI) 3.3.3 THE APEX COURT HAD APPROVED THE INTERPRETATIO N PLACED UPON THE EXPLANATION BY A FULL BENCH OF THE PUNJAB AND HARYA NA HIGH COURT IN VISWAKARMA INDUSTRIES VS. CIT (1982) 135 ITR 652. 3.3.4 SIMILAR VIEW HAS BEEN EXPRESSED BY THE KERA LA HIGH COURT IN THE CASE OF CIT VS. K.P. MADHUSUDANA REPORTED IN 24 6 ITR 218. THIS DECISION HAS BEEN AFFIRMED THE SUPREME COURT IN 251 ITR 99. AFFIRMING THE AFORESAID DECISION, THE HON'BLE SUPRE ME COURT HAS FURTHER HELD THAT AFTER INSERTION OF EXPLANATION IT S EARLIER DECISION IN THE CASE OF SIR SHADI LAL SUGAR AND GENERAL MILLS LTD. VS. CIT REPORTED IN 168 ITR 705 BC) WAS NO LONGER APPLICABLE. THE KERAL A HIGH COURT AT PAGE 244 HAS OBSERVED AS TIER 'THE QUESTION OF ONUS IS OF PRIMARY AND ADDED IMPORTANCE IN LEGAL ACRIMONY. IN CIT VS. ANWA R ALI (1970) 76 ITR 696, THE APEX COURT LAID DOWN THAT, BEFORE A PE RSON COULD BE VISITED WITH A PENALTY FOR CONCEALMENT, ETC., THE R EVENUE MUST PROVE ITA NO. 839/AHD/2013 CHITTUSINGH M CHAUHAN VS. ACIT, CENT. CIR.-2, SURAT . FOR A.Y. 2003-04 - 4 - THAT THE AMOUNT IN QUESTION WAS THE INCOME OF THE A SSESSEE AND THAT HE HAD CONCEALED IT WITH A MOTIVE. IT WAS FURTHER H ELD THAT PENALTY COULD NOT BE IMPOSED MERELY BECAUSE ANY EXPLANATION GIVEN BY THE ASSESSEE IN REGARD TO THE ITEMS IN QUESTION WAS NOT BELIEVED TO BE TRUE. THE POSITION OF LAW ON OR AFTER APRIL 1, 1976 , IS THAT WHERE IN RESPECT OF ANY ITEM OF CREDIT.(A) THE ASSESSEE FAIL S TO OFFER AN EXPLANATION OR (B) THE ASSESSEE OFFERS AN EXPLANATI ON WHICH THE TAXING OFFICER CONSIDERS TO BE FALSE, OR (C) THE ASSESSEE OFFERS AN EXPLANATION BUT NO MATERIAL OR EVIDENCE TO SUBSTANTIATE IT, HE SHALL BE DEEMED TO HAVE CONCEALED SUCH \INCOME WITHIN THE MEANING OF S ECTION 271 (1)(C). WHAT SECTIONS 68, 69,69A, 696 AND 69C DEEM FOR THE PURPOSE OF ASSESSMENT WAS INJECTED FOR THE PURPOSE OF PENAL TY BY OPERATION OF A DEEMING PROVISION. A PROVISO WAS ADDED TO THE NEW EXPLANATION. IT CONCERNS CASES WHERE THE ASSESSEE OFFERS AN EXPLANA TION WHICH HE IS NOT ABLE TO SUBSTANTIATE. CONSEQUENTIALLY, THE PROV ISIONS ARE INTENDED TO SAVE SUCH AMOUNT FROM IMPOSITION OF PENALTY ALTH OUGH THE SAME HAD BEEN ADDED TO THE ASSESSEE'S INCOME IN THE ASSE SSMENT. IF THE ASSESSEE'S EXPLANATION IS FOUND TO BE BONAFIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM.' THE VIEWS SIMILAR TO THE ABOVE DECISION OF DELHI AN D KERALA HIGH COURTS WERE EXPRESSED BY THE ALLAHABAD HIGH COURT I N THE CASE OF SUSHIL KUMAR SHARAD KUMAR 232 ITR 588 (ALLD). 3.3.5 SIMILARLY, THE DELHI HIGH COURT IN THE CASE O F CIT VS. SOHAN SINGH 254 ITR 170 HAS HELD THAT FOR THE PURPOSE OF PENALTY MATTER HAS TO BE EXAMINED IN THE BACKGROUND OF EXPLANATION TO SECTION 271 (1(C). IT HAS ALSO BEEN HELD THAT EVIDENCE RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THROUGH NOT CONCLUSIVE, ARE NOT TOTALLY IRRELEVANT. THEY COULD BE TAKEN NOTE OF. ACCORDING TO THE HIGH COURT WHAT WAS REQUIRED WAS THAT THE ASSESSEE MUST OFFER AN EXPLANATION WHICH, IF FOUND TO BE UNTENABLE OR UNACCEPTABLE, TH EN THE PENALTY CAN BE LEVIED UNDER SECTION 271 (1)(C) OF THE IT. ACT. IN THE PRESENT CASE, THE APPELLANT HAS FAILED TO PR OVIDE ANY BONAFIDE EXPLANATION REGARDING UNACCOUNTED TRANSACTION RS 3, 94,439/-. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN L EVYING THE PENALTY OF RS 1,35,800/- U/S 271(1)(C) OF THE I.T. ACT. ACCOR DINGLY, THE GROUND OF APPEAL IS REJECTED. 7. BEFORE US, THE ASSESSEE REITERATED HIS SUBMISSI ONS MADE BEFORE THE LD. CIT(A). 8. WE FIND THAT THE COPY OF SEIZED DOCUMENT MARKED AS A-1 PAGE NOS. 66-75 IS PLACED AT PAGE NO. 7 TO 15 OF THE PAP ER BOOK FILED BY THE ASSESSEE. A PERUSAL OF THE SAME SHOWS THAT THEY R ELATE TO PURCHASE OF SAND ITA NO. 839/AHD/2013 CHITTUSINGH M CHAUHAN VS. ACIT, CENT. CIR.-2, SURAT . FOR A.Y. 2003-04 - 5 - ETC. AND THE DATE MENTIONED THEREIN ARE 23.09.2003, 20.10.2003, 27.09.2003, 27.09.2003, 20.10.2003, 25.07.2003, 19. 01.2004. THE TOTAL AMOUNT REPRESENTED BY SEIZED DOCUMENT MARKED AS A- 1 PAGE NOS. 66-75 IS RS 2,68,376/-. THUS, WE FIND FORCE IN THE CONTENTI ON OF THE ASSESSEE THAT AS THIS DOCUMENT DID NOT RELATE TO THE YEAR UNDER CONS IDERATION, PENALTY U/S 271(1)(C) CANNOT BE LEVIED FOR THE YEAR UNDER CONSI DERATION ON THE BASIS OF THESE DOCUMENTS. 9. THE LD. DR ARGUED THAT THE ASSESSEE COULD NOT P OINT OUT THE ASSESSMENT YEAR IN WHICH INCOME REPRESENTED BY SEIZ ED DOCUMENT WERE DISCLOSED BY THE ASSESSEE. 10. IN OUR CONSIDERED OPINION, MERELY BECAUSE THE ASSESSEE HAS NOT DISCLOSED THE ASSESSMENT YEAR IN WHICH INCOME RELAT ING TO THESE DOCUMENTS WERE DISCLOSED BY THE ASSESSEE DOES NOT EMPOWER THE REVENUE TO LEVY PENALTY U/S 271(1)(C) IN A YEAR TO WHICH IT IS EVID ENCED THAT THESE DOCUMENTS HAVE NO RELEVANCE. THE LD. DR COULD NOT POINT OUT HOW THESE DOCUMENTS MARKED AS A-1 PAGE NOS. 66-75 ARE RELEVAN T TO THE ASSESSMENT YEAR 2003-04 AND HOW ON THE BASIS OF THESE DOCUMENT S PENALTY U/S 271(1)(C) CAN BE LEVIED FOR THE ASSESSMENT YEAR 200 3-04. 11. WE THEREFORE FIND THAT THE PENALTY LEVIED IN R ESPECT OF ADDITION OF RS 2,68,376/- FOR THE YEAR UNDER CONSIDERATION IS N OT SUSTAINABLE. 12. FURTHER, WE FIND THAT THE SEIZED DOCUMENTS MAR KED AS A-1 PAGE NO. 388-390 ARE PLACED AT PAGE NO. 16 TO 18 OF THE PAPER BOOK FILED BY THE ASSESSEE. THE SEIZED DOCUMENT FILED AT PAGE NO. 38 8 CONTAINS TWO DRAFTS BOTH DATED 03.01.2003 FOR RS 40,000/- AND RS 23,000 /- ISSUED BY INDUSTRIAL COOPERATIVE BANK LIMITED. FURTHER, SEIZED DOCUMENT S AT PAGE NO. 389 IS A SLIP EVIDENCING PURCHASE OF DRAFT FROM INDUSTRIAL C OOPERATIVE BANK LIMITED ON 03.01.2003 FOR RS 40,000/-. SIMILARLY, SEIZED D OCUMENT AT PAGE NO. 390 ITA NO. 839/AHD/2013 CHITTUSINGH M CHAUHAN VS. ACIT, CENT. CIR.-2, SURAT . FOR A.Y. 2003-04 - 6 - IS ANOTHER SLIP EVIDENCING PURCHASE OF DRAFT FROM I NDUSTRIAL COOPERATIVE BANK LIMITED ON 03.01.2003 FOR RS 23,000/-. THUS, A PER USAL OF THESE DOCUMENTS EVIDENCES INVESTMENT OF RS 63,070/- AND NOT RS 1,26 ,063/-. THEREFORE, WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE THAT S EIZED DOCUMENTS MARKED AS A-1 PAGE NOS. 388-390 EVIDENCES INVESTMENT OF RS 63070/- AND NOT RS 1,26,063/-. 13. FURTHER, THE ASSESSEE CONTENDED BEFORE US THAT PENALTY IN RESPECT OF RS 63,070/- ALSO CANNOT BE SUSTAINED AS INCOME OF RS 63,070/- REPRESENTED BY THESE DRAFTS WAS ALREADY DISCLOSED B Y THE ASSESSEE IN THE RETURN OF INCOME. HOWEVER, WE FIND THAT THE ASSESS EE COULD NOT BRING ANY MATERIAL BEFORE US TO SHOW THAT INCOME REPRESENTED BY THE AFORESAID DRAFTS OF RS 63,070/- WAS DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME. IN THE CIRCUMSTANCES, WE FIND THAT SEIZED DOCUMENT MARKED AS A-1 PAGE NO. 388- 390 IS IN RESPECT OF INVESTMENT OF RS 63,070/- ONLY AND NOT RS 1,26,063/-. THEREFORE, IN OUR CONSIDERED OPINION, PENALTY U/S 2 71(1)(C) CAN BE SUSTAINED ONLY IN RESPECT OF INCOME OF RS 63,070/- IN PLACE O F INCOME OF RS 1,26,063/-. WE, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AU THORITIES AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE PENALTY U/S 271(1 )(C) IN RESPECT OF INCOME OF RS 63,070/- ONLY IN PLACE OF PENALTY LEVIED WITH RE SPECT TO THE INCOME OF RS 3,94,439/-. THUS, THIS GROUND OF APPEAL OF THE ASS ESSEE IS PARTLY ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON MONDAY, THE 31 ST OF MARCH, 2014 AT AHMEDABAD. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 31/03/2014 GHANSHYAM MAURYA, SR. P.S.