Shri Deelip Lalasaheb Deshmukh, Osmanabad V. ITO, Latur

ITA 849/PUN/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85135 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 03-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: S N DOSHI
• Keywords: Income from undisclosed sources; Bonafide belief
• Section: 147; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.848 TO 852/PN/2010 (ASSESSMENT YEARS: 1999-2000 TO 2002-03 & 2004-05) SHRI DEELIP LALSAHEB DESHMUKH HOTEL RAJSAB, MAIN ROAD, OSMANABAD. PAN: AGTPD0776F . APPELLANT VS. THE INCOME TAX OFFICER, WARD 3(4), LATUR . RESPONDENT APPELLANT BY : SHRI S.N. DOSHI RESPONDENT BY : SHRI B.C. MALAKAR DATE OF HEARING : 17-10-2014 DATE OF PRONOUNCEMENT : 27-10-2014 ORDER PER SUSHMA CHOWLA, JM: THIS BUNCH OF FIVE APPEALS IS AGAINST CONSOLIDATED ORDER OF CIT(A), AURANGABAD RELEVANT TO ASSESSMENT YEARS 1999-2000 TO 2002-03 AND 2003-04 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF TH E INCOME TAX ACT. 2. SIMILAR GROUNDS OF APPEAL WERE RAISED IN ALL THE YEARS, WH ICH READ AS UNDER: 1. THE PENALTY ORDER DT. 22.06.2007 U/S 271(1)(C) LEVYING P ENALTY OF RS.1,54,677/- FOR ASSESSMENT YEAR 1999-2000, RS.45,453/- FO R ASSESSMENT YEAR 2000-01, RS.1,21,990/- FOR ASSESSMENT YEA R 2001-02, RS.1,90,540/- FOR ASSESSMENT YEAR 2002-03 AND RS.1,03,325/- FOR ASSESSMENT YEAR 2004-05. ITA NOS.848 TO 852/PN/2010 SHRI DEELIP L DESHMUKH 2 2. AS IN THE PRESENT CASE TAX DETERMINED IS NIL, PENALTY U /S 271(1)(C) CANT BE QUANTIFIED HENCE PENALTY LEVIED AMOUNTING T O RS.1,54,677/- FOR ASSESSMENT YEAR 1999-2000, RS.45,453/- FOR ASSESSMENT YEAR 2000-01, RS.1,21,990/- FOR ASSESSMENT YEA R 2001-02, RS.1,90,540/- FOR ASSESSMENT YEAR 2002-03 AND RS.1,03,325/- FOR ASSESSMENT YEAR 2004-05 DESERVES TO BE DELETED. 3. SUCH OTHER ORDER BE PASSED AS DEEMED FIT AND PROPER. 3. ALL THE APPEALS RELATING TO SAME ISSUE WERE HEARD TOGET HER AND ARE BEING ADJUDICATED BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THE FACTS IN ALL THE YEARS UNDER APPEAL ARE IDENTICAL. HOWE VER, WE MAKE A REFERENCE TO THE FACTS IN ITA NO.848/PN/2010 ON THE ISSUE. 4. THE ONLY ISSUE RAISED IN ALL THE APPEALS IS AGAINST THE L EVY OF PENALTY FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF T HE ACT. THE BRIEF FACTS OF THE CASE ARE THAT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2003-04, THE ASSESSEE WAS FOUND TO HAVE INVESTED RS.5,20,000/- ON 12.05.1998 IN FDRS IN THE NAME OF HIMSELF AND HIS FAMILY MEMBERS. FURTHER, SUM OF RS.50,000/- W AS DEPOSITED ON 25.05.1998 IN THE SAVINGS ACCOUNT NO.1189 OF SAMARTH URBAN BANK LTD., OSMANABAD. THE INTEREST ACCRUED ON TH E SAID FDRS AND SAVINGS ACCOUNT WAS NOT REFLECTED IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 1999-2000. THE ASSESSMENT PROCEEDING S WERE RE- OPENED BY RECORDING REASONS FOR RE-OPENING THE ASSESSM ENT UNDER SECTION 147 OF THE ACT AND BY ISSUE OF NOTICE UNDER SEC TION 148 OF THE ACT. BEFORE THE ASSESSING OFFICER, IN THE STATEMENT RECORD ED UNDER SECTION 131 OF THE ACT, THE ASSESSEE HAD ADMITTED THAT ALL THE INVESTMENTS WERE NOT ACCOUNTED FOR AND ALL THE INVESTMEN TS IN THE NAME OF ASSESSEE AND HIS FAMILY MEMBERS RELATED TO HIM. THE A SSESSING OFFICER HAD MADE VARIOUS ADDITIONS IN THE HANDS OF THE ASSE SSEE IN THIS REGARD. ADMITTEDLY, THE ASSESSEE HAD NOT APPEALED AGAIN ST THE SAID ITA NOS.848 TO 852/PN/2010 SHRI DEELIP L DESHMUKH 3 ADDITIONS IN HIS HANDS. THE ASSESSING OFFICER THUS, LEVIED PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT AS FOLLOWS: PARTICULARS ASSESSMENT YEAR 99-2000 2000-01 2001-02 2002-03 2004-05 PENALTY LEVIED U/S 271(1)(C) 1,54,677 45,453 1,21,990 1,90,540 1,03,325 5. THE CIT(A) HAD CONFIRMED LEVY OF PENALTY UNDER SECTION 2 71(1)(C) OF THE ACT AND THE ASSESSEE IS IN APPEAL AGAINST THE SAID LEVY OF PENALTY FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF THE ACT. 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSE SSEE POINTED OUT THAT THE ASSESSEE HAD EARNED AGRICULTURAL INCOME IN ALL TH E RESPECTIVE YEARS AND THE SOURCE OF MAKING THE SAID INVESTMENTS WAS THE AG RICULTURAL INCOME EARNED BY THE ASSESSEE. FURTHER, IN RESPECT OF THE INTEREST NOT DECLARED ON SUCH FDRS AND SAVINGS ACCOUNT, IT WAS POINTE D OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE SAME WAS NOT DECLARED ON WRONG IMPRESSION THAT THE SAME WAS NOT TAXABLE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTH ER POINTED OUT THAT MERELY BECAUSE THE QUANTUM ADDITIONS HAD BEEN M ADE IN THE HANDS OF ASSESSEE DOES NOT WARRANT LEVY OF PENALTY SINCE BOTH THE ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS WERE DISTINCT. I T WAS ALSO POINTED OUT BY LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT CERTAIN ADDITIONS WERE UPHELD IN THE HANDS OF THE ASSESSEE IN ASSES SMENT YEAR 2003-04 BUT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASS ESSEE ALSO POINTED OUT THAT THE CIT(A) HAD ACCEPTED THE SOURCE OF IN VESTMENTS IN THE FDRS IN ASSESSMENT YEAR 2003-04 TO BE OUT OF THE AGRIC ULTURAL INCOME AND THE SAID ADDITION WAS DELETED BY THE CIT(A), AGAINST W HICH THE REVENUE IS NOT IN APPEAL. FURTHER, THE ADDITION ON ACCOU NT OF INTEREST ITA NOS.848 TO 852/PN/2010 SHRI DEELIP L DESHMUKH 4 INCOME WAS PARTLY UPHELD BY CIT(A) AGAINST WHICH NO PENALT Y UNDER SECTION 271(1)(C) OF THE ACT, HAD BEEN LEVIED BY THE ASSESSING OFFICER. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT BUNCH OF APPEALS IS AGAINST T HE LEVY OF PENALTY FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF T HE ACT. THE SAID PENALTY FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE IN ALL SUCH CASES WHERE THE ASSESSEE EITHER HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. EIT HER OF THE CONDITIONS LAID DOWN IN THE SECTION ARE TO BE SATISFIED BEFORE A PERSO N CAN BE HELD TO HAVE DEFAULTED AND IS LIABLE FOR LEVY OF PENALTY U NDER SECTION 271(1)(C) OF THE ACT. 9. IN THE FACTS OF THE PRESENT CASE WHILE COMPLETING ASSE SSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2003-04, THE ASSESSING OFFICER CAME IN POSSESSION OF CERTAIN INFORMATION THAT THE ASSESSEE HAD M ADE CERTAIN INVESTMENTS IN FDRS AND / OR DEPOSITED CERTAIN AMOUNTS IN THE SAVINGS ACCOUNT AGAINST WHICH IT HAD NO SOURCE OF INVESTMENT. FU RTHER, THE INTEREST ACCRUING ON THE FDRS HELD IN THE NAME OF ASSESS EE AND HIS FAMILY MEMBERS WERE NOT ACCOUNTED FOR OR DECLARED IN TH E RETURN OF INCOME BY THE ASSESSEE. THE ASSESSMENT RELATING TO ASS ESSMENT YEAR 2003-04 WAS COMPLETED BY INCLUDING THE AMOUNT OF INVESTME NTS IN FDRS AS INCOME FROM OTHER SOURCES IN THE HANDS OF ASSESSEE A ND FURTHER, THE INTEREST ACCRUED ON THE FDRS WAS ALSO INCLUDED IN THE HA NDS OF THE ASSESSEE. ANOTHER ADDITION MADE IN THE CASE OF THE ASSE SSEE WAS ON ITA NOS.848 TO 852/PN/2010 SHRI DEELIP L DESHMUKH 5 ACCOUNT OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE W HICH WAS HELD TO BE INCOME FROM OTHER SOURCES. THE CIT(A) WHILE DECIDING THE APPEAL RELATING TO ASSESSMENT YEAR 2003-04, DELETED THE ADDITION MADE ON ACCOUNT OF AGRICULTURAL INCOME AND THE INVESTMENT IN FDRS OF RS.5,00,000/-. HOWEVER, THE INTEREST ACCRUED ON THE FDR S WAS PARTLY UPHELD IN THE HANDS OF THE ASSESSEE AND PARTLY DELETED. THE ASSESSEE HAS POINTED OUT THAT NO PENALTY FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF THE ACT WAS EITHER INITIATED OR LEVIED AGAINST THE ASSESSEE RELATING TO ASSESSMENT YEAR 2003-04. THE LEARNED DEPAR TMENTAL REPRESENTATIVE FOR THE REVENUE WAS ASKED TO VERIFY THE SAID POSITION AND IT WAS POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESEN TATIVE THAT NO PENALTY FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF T HE ACT WAS LEVIED IN THE HANDS OF THE ASSESSEE RELATING TO ASSESSMENT YEAR 200 3-04. 10. WHILE COMPLETING ASSESSMENT FOR ASSESSMENT YEAR 2003 -04, CERTAIN OTHER INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER THA T THE ASSESSEE HAD MADE INVESTMENTS IN THE NAME OF HIMSELF AND HIS FAMILY MEMBERS IN FDRS IN ASSESSMENT YEAR 1999-2000 AND HAD ALSO MADE C ERTAIN DEPOSITS IN SAVINGS ACCOUNT FOR WHICH, IT HAD NO SOURCE OF INCOME. F URTHER, THE INTEREST ACCRUING TO THE ASSESSEE AND HIS WIFE ON THE SA ID FDRS AND SAVING BANK ACCOUNTS WERE NOT DECLARED BY THE ASSESSE E. CONSEQUENT TO THE RECEIPT OF THE SAID INFORMATION, THE ASSESSMENT FOR TH E RELEVANT YEARS STARTING FROM 1999-2000 TO 2002-03 AND 2004-05 WERE R E-OPENED UNDER SECTION 147 / 148 OF THE ACT AND THE SAID INVESTMENTS IN FDRS AND ALSO THE INTEREST ACCRUING ON THE FDRS & BANK ACCOUNTS WER E TREATED AS INCOME FROM UNDISCLOSED SOURCES IN THE HANDS OF THE ASSESSEE. THE Y EAR- WISE BREAK UP OF ADDITIONS IN THE HANDS OF THE ASSESSEE ARE AS UNDER : ITA NOS.848 TO 852/PN/2010 SHRI DEELIP L DESHMUKH 6 PARTICULARS ASSESSMENT YEAR 99-2000 2000-01 2001-02 2002-03 2004-05 A. INVESTMENTS FROM UNDISCLOSED SOURCES - FDR IN OWN NAME 3,25,000 - 1,00,000 - - FDR IN NAME OF WIFE 1,95,000 1,00,000 1,00,000 FDR IN NAME OF SON - - 50,000 DEPOSIT IN SAVINGS ACCOUNT L189 50,000 - - 5,00,000 - SUBTOTAL (A) 5,70,000 1,00,000 2,50,000 5,00,000 - B. UNACCOUNTED INCOME - INTEREST ACCRUED TO APPELLANT 27,730 84,075 1,00,710 1,06,640 67,193 INTEREST ACCRUED TO WIFE. 16,518 52,329 95,507 1,11,703 1,24,392 SUBTOTAL (B) 44,248 1,36,404 1,96,217 2,18,343 1,91,585 TOTAL (A + B) 6,14,248 2,36,404 4,46,217 7,18,343 1,91,585 DEDUCTION U/S 80L 12,000 12,000 12,000 9,000 12,000 NET ADDITION MADE 6,02,248 2,24,404 4,34,217 7,09,343 1,79,585 11. THE ASSESSEE HAD NOT APPEALED AGAINST THE ORDER O F THE ASSESSING OFFICER AND CONSEQUENTLY, PENALTY UNDER SECTION 271(1)(C) OF T HE ACT WAS LEVIED FOR THE RESPECTIVE YEARS AS UNDER: PARTICULARS ASSESSMENT YEAR 99-2000 2000-01 2001-02 2002-03 2004-05 PENALTY LEVIED U/S 271(1)(C) 1,54,677 45,453 1,21,990 1,90,540 1,03,325 12. THE EXPLANATION OF THE ASSESSEE BEFORE US IS THAT IT HAD DECLARED AGRICULTURAL INCOME WHICH WAS ASSESSED IN THE HANDS OF THE ASSESSEE FROM YEAR TO YEAR AND THE SAID AGRICULTURAL INCOME JUSTIFIES THE INVESTMENTS MADE BY THE ASSESSEE IN THE RESPECTIVE FDR S. THE YEAR-WISE BREAK-UP OF THE AGRICULTURAL INCOME AND THE INVESTMENTS MADE BY THE ASSESSEE ARE AS UNDER: PARTICULARS ASSESSMENT YEAR 99-2000 2000-01 2001-02 2002-03 2004-05 AGRICULTURAL INCOME 10,40,380 3,06,346 3,41,253 6,71,576 6,12,620 ADDITIONS IN RESPECT OF INVESTMENTS MADE 5,70,000 1,00,000 2,50,000 5,00,000 NIL ITA NOS.848 TO 852/PN/2010 SHRI DEELIP L DESHMUKH 7 13. THE ASSESSEE HAD BONAFIDE EXPLANATION VIS--VIS SOURC ES OF INVESTMENT IN FDRS & DEPOSITS IN SAVING ACCOUNTS, BUT THE SAME COULD NOT BE EXPLAINED BEFORE THE ASSESSING OFFICER. THE PLEA OF THE ASSESSEE WAS THAT THE SOURCE OF INVESTMENTS IN THE FDRS WAS FROM HIS AGRICULTURAL INCOME HAD BEEN ACCEPTED BY THE CIT(A) IN ASSESSMENT YE AR 2003-04 AND SIMILAR WAS THE POSITION FOR THE CAPTIONED ASSESSMENT YEAR S. MERELY BECAUSE ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSE SSEE ON ACCOUNT OF INVESTMENTS IN FDRS DOES NOT JUSTIFY LEVY OF PENALTY UN DER SECTION 271(1)(C) OF THE ACT, ESPECIALLY IN CASE WHERE, THE ASSESSEE HAS BONAFIDE EXPLANATION WITH REGARD TO THE SOURCE OF INVESTMENTS IN T HE SAID FDRS. MERELY BECAUSE THE ASSESSEE WAS UNABLE TO FURNISH THE COMPLETE PARTICULARS DURING THE ASSESSMENT PROCEEDINGS, WHICH RESU LTED IN THE SAID ADDITION BEING MADE IN THE HANDS OF THE ASSESSEE, DOE S NOT JUSTIFY THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACC ORDINGLY, WE HOLD THAT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THE INVESTMENTS MADE IN FDRS, IS LEVIABLE IN THE HANDS OF THE A SSESSEE. FURTHER, THE SECOND ADDITION MADE IN THE HANDS OF THE AS SESSEE IS ON ACCOUNT OF INTEREST ACCRUED ON THE SAID FDRS IN THE NAM E OF ASSESSEE AND HIS WIFE. THE SAID INCOME WAS NOT DECLARED BY THE ASS ESSEE UNDER A BONAFIDE BELIEF THAT THE SAME WAS EXEMPT FROM TAX. LOOKING AT THE SMALLNESS OF THE ISSUE AND ALSO BECAUSE NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN LEVIED ON THE ASSESSEE AGAINS T THE ADDITION UPHELD ON ACCOUNT OF ACCRUED INTEREST IN ASSESSMENT YE AR 2003-04, WE HOLD THAT THE ASSESSEE IS NOT EXIGIBLE TO LEVY OF PENALTY U NDER SECTION 271(1)(C) OF THE ACT ON SUCH BANK INTEREST NOT DECLARED IN THE RETURN OF INCOME. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELE TE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE GROUNDS OF AP PEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. ITA NOS.848 TO 852/PN/2010 SHRI DEELIP L DESHMUKH 8 14. THE FACTS AND ISSUE IN ITA NOS.849 TO 852/PN/2010 A RE IDENTICAL TO THE FACTS AND ISSUE IN ITA NO.848/PN/2010 AND ONE DE CISION IN ITA NO.848/PN/2010 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.849 TO 852/PN/2010. 15. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF OCTOBER, 2014. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH OCTOBER, 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE