Dr. Harnam Singh, Kanpur V. Astt. Commissioner of Income Tax-3, Kanpur

ITA 85/LKW/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4425 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-04-2016
• Assessment Year: misc
• Appeal Filed On: 29-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers; Document seized; Documents seized

Judgement Text

I.T.A. NO.85/LKW/16 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI P. K. BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ITA NO.85/LKW/2016 BLOCK PERIOD ENDING ON 14/09/2002 DR. HARNAM SINGH, PROP. PRIYA HOSPITAL, D-25, HIG, WORLD BANK SCHEME, KANPUR. PAN:AFJPS0913E VS. A.C.I.T.-3, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER P. K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-I, KANPUR DATED 20/01/2016. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO THE SUSTENANCE OF PENALTY AMOUNTING TO R S.50,000/- LEVIED BY THE ASSESSING OFFICER U/S 158BFA(2). 2. THE BRIEF FACTS OF THE CASE ARE THAT THERE HAS B EEN A SEARCH & SEIZURE OPERATION IN THE CASE OF THE ASSESSEE U/S 132(1) AT HIS RESIDENTIAL PLACE AS WELL AS CLINIC PREMISES. DURING THE COURSE OF SEAR CH, UNEXPLAINED CASH, JEWELLERY, OTHER VALUABLE ASSETS, CERTAIN INCRIMINA TING DOCUMENTS, BOOKS OF ACCOUNT AND LOOSE PAPERS ETC. WERE FOUND. SUBSEQUEN TLY, AFTER GIVING NOTICE TO THE ASSESSEE U/S 158BC, THE ASSESSMENT WAS COMPL ETED BY THE ASSESSING OFFICER FOR THE BLOCK PERIOD ON AN INCOME OF RS.26, 91,135/- AGAINST THE RETURNED INCOME BY THE ASSESSEE IN PURSUANCE TO THE NOTICE U/S 158BC AT APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY DR. A. K. SINGH, CIT, D.R. DATE OF HEARING 27 /04/2016 DATE OF PRONOUNCEMENT 27 / 05 /2016 I.T.A. NO.85/LKW/16 2 RS.3,60,855/-. THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S 158BFA(2) OF THE ACT AS IN HIS OPINION IN CERTAIN L OOSE PAPERS, LP-1 CONTAINS THE PURCHASE OF JEWELLERY ITEMS AMOUNTING TO RS.75, 667/-, WHICH WAS ADDED IN THE TOTAL INCOME OF THE ASSESSEE OF THE BLOCK PE RIOD AS UNDISCLOSED INCOME. WHEN THE ASSESSEE WENT IN APPEAL BEFORE TH E CIT(A), THE CIT(A) CONFIRMED THE ADDITION AND THE TRIBUNAL ALSO SUSTAI NED THE ORDER OF THE CIT(A) IN RESPECT OF THE SAID ADDITION. WHEN SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE, THE ASSESSEE EXPLAINED THAT THE AF ORESAID AMOUNT RELATED TO PURCHASE BILL OF JEWELLERY FOUND AT THE TIME OF SEA RCH. THE SAME DOES NOT RELATE TO THE ASSESSEE BUT IT BELONGS TO THE FAMILY MEMBERS. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSES SEE AND EVEN DID NOT RECORD THE STATEMENT OF THE FAMILY MEMBER BUT LEVIE D THE PENALTY ON THE ASSESSEE AMOUNTING TO RS.50,000/-. THE ASSESSEE WE NT IN APPEAL BEFORE THE CIT(A). THE CIT(A) ALSO CONFIRMED THE ORDER OF THE ASSESSING OFFICER AS THE ADDITION IN QUANTUM APPEAL WAS CONFIRMED BY THE TRIBUNAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, CAREFULLY C ONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. THE LEARNED A.R. DRAWN OUR ATTENTION TOWARDS PARA 8 OF THE ASSESSMENT ORDE R WHICH READS AS UNDER: 8. UNEXPLAINP INVESTMENT IN JEWELLERY :- DURING THE COURSE OF SEARCH AT THE RESIDENCE, CERTA IN LOOSE PAPERS CONTAINED IN ANNEXURE-LP-1 REGARDING PURCHASE OF JE WELLERY ITEMS WERE FOUND AND SEIZED AS UNDER:- ANNEXURE NO. DATE AMOUNT LP-1/15 5.10.1996 13,250/- LP-1/16 - 3,356/- LP-1/18 . 10,414/- I.T.A. NO.85/LKW/16 3 LP-1/19 - 7,178/- LP-1/21 - 7,978/- LP-1/22 - 5,890/- LP-1/23 - 3,728/- LP-1/25 - 17;348/- LP-1/31 - 4,665/- LP-1/33 - 1,600/- LP-1/34 - 260/- TOTAL 75,667/- THE PAPERS BEAR THE WORD 'ESTIMATES'. ALTHOUGH THE DATE OF PURCHASE IS NOT MENTIONED IN IT BUT THE DESCRIPTION, WEIGHT AND VALUE OF JEWELLERY PURCHASED ARE DULY DESCRIBED IN THESE PUR CHASE VOUCHERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS STATED BY THE ASSESSEE THAT THESE JEWELLERY ITEMS WERE PURCHASED OUT OF PERSONAL WITHDRAWALS OF HIS WIFE SMT. SHASHI SINGH. A PERUSAL OF THE DETAILS OF HER HOUSEHOLD EXPENSES FURNISHED BY THE ASSESSEE REVEALED THAT SHE HAS MADE WITHDRAWALS RAN GING RS.30,000/- TO RS.48,000/- DURING A.Y.1997-98 TO 20 00-01 AND RS.60,000/- IN A.Y.2001-02 & 2002-03, WHICH ARE HAR DLY SUFFICIENT FOR MEETING OUT OTHER HOUSEHOLD EXPENSES AND SHE WAS HAVING NO SURPLUS MONEY FOR PURCHASING THE ABOV E JEWELLERY. IN VIEW OF THE ABOVE FACTS THE TOTAL INV ESTMENT OF RS.75,667/- IN THE PURCHASE OF JEWELLERY IS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PE RIOD RELATING TO A. Y.2003-04 (PART PERIOD UPTO 14.9.2002). 3.1 ON THIS BASIS THE ASSESSEE CONTENDED THAT THE J EWELLERY WAS NOT PURCHASED BY HIM NOR WAS FOUND AT THE TIME OF SEARC H, THE BILLS ALSO DID NOT RELATE TO HIM. THE BILLS DID NOT CONTAIN HIS NAME OR ADDRESS AND AS PER THE BILLS FOUND, THEY WERE MERELY 'ESTIMATES' AS MENTIO NED THEREIN AND WERE NOT ACTUAL BILLS. THE SAME DID NOT BELONG TO HIM BU T BELONGED TO HIS WIFE. SIMPLY BECAUSE THE BILLS WERE FOUND AT THE TIME OF SEARCH, IT DID NOT MEAN I.T.A. NO.85/LKW/16 4 THAT THE ASSESSEE HAD PURCHASED THE JEWELLERY AND T HE SAME BELONGED TO HIM. THE PENALTY HAS BEEN IMPOSED MERELY ON PRESUMP TION. NO STATEMENT OF THE ASSESSEE WAS RECORDED AT THE TIME OF SEARCH WITH REFERENCE TO THESE ALLEGED BILLS. EVEN DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE STATEMENT OF THE WIFE OF THE ASSESSEE WAS NOT RECOR DED. OUR ATTENTION WAS ALSO DRAWN TOWARDS THE ORDER OF THE TRIBUNAL IN WHI CH UNDER PARA 23, THE TRIBUNAL HAS HELD AS UNDER: 23. REGARDING JEWELLERY, THE ASSESSING OFFICER NOT ED THAT GOLD JEWELLERY WEIGHING 841 GMS AND SILVER ORNAMENT WEIG HING 4.180 KG AND 91 SILVER COINS TOTAL VALUING AT RS.4, 06,491/- BELONGING TO VARIOUS FAMILY MEMBERS OF THE ASSESSEE WERE FOUND AS PER ANEXURE J-3/1, J-3/2 AND J-3/3 TO THE PANCHNAMA DRAWN. THE ASSESSING OFFICER ACCEPTED EXPLANATION O F THE ASSESSEE THAT THEY BELONGED TO THE FAMILY MEMBERS B UT AS PER SEIZED DOCUMENTS, PURCHASE OF JEWELLERY TO THE EXTE NT OF RS.75,667/- WAS FOUND UNEXPLAINED. THUS, IT WAS CONTENDED THAT THE ADDITION WAS SIMPLY MADE ON THE BASIS OF PROBABILITIES AND PROBABILITIES HOWEVER SO STRONG, IT CANNOT TAKE THE PLACE OF ACTUALITY. LEARNED D. R. RELIED ON THE ORDER OF CI T(A). 4. WE ARE OF THE VIEW THAT THE LEVY OF PENALTY U/S 158BFA(2) IS NOT MANDATORY THAT THE PENALTY HAS TO BE LEVIED IN EACH AND EVERY CASE WHEREVER THE ADDITION HAS BEEN SUSTAINED. THIS IS A CASE WHERE NO DOUBT THE LOOSE PAPER WAS FOUND FROM THE POSSESSION OF TH E ASSESSEE BUT IT DOES NOT PROVE THAT THE ASSESSEE HAS ACTUALLY PURCHASED THE JEWELLERY AND MADE THE INVESTMENT. EVEN WE NOTED THAT NO STATEMENT, A S CONFIRMED BY LEARNED D. R., WAS RECORDED AT THE TIME OF SEARCH OF THE AS SESSEE WITH REGARD TO THESE LOOSE PAPERS. WE NOTED THAT THE INCOME OF TH E ASSESSEE HAS MAINLY BEEN COMPUTED ON THE BASIS OF THE SURRENDER AND SEI ZED PAPERS. THE ASSESSEE HAS ACCEPTED THAT THIS PAPER MAY BELONG TO THE JEWELLERY PURCHASED BY HIS WIFE. THE ASSESSEE AND HIS WIFE B OTH ARE DIFFERENT I.T.A. NO.85/LKW/16 5 ASSESSEES IF AT ALL, IT CAN BE THE INCOME OF THE AS SESSEES WIFE. SINCE THE ADDITION HAS BEEN MADE MERELY ON THE BASIS OF PROBA BILITIES, WE THEREFORE, ARE OF THE VIEW THAT IT IS NOT A FIT CASE WHERE THE PENALTY CAN BE IMPOSED U/S 158BFA(2). OUR AFORESAID VIEW IS DULY SUPPORTED BY THE FOLLOWING DECISIONS: (I) CIT VS. DODSAL LTD. [2009] 312 ITR 112 (BOM) (II) CIT VS. SATYENDRA KUMAR DOSHI AND ANOTHER [2009] 31 5 ITR 172 (RAJ) (III) CIT VS. HARKARAN DAS VED PAL [2009] 222 CTR (DEL) 4 38 (IV) SURESH REDDY VS. ACIT [2009] 308 ITR (AT) 278 (CHEN NAI) (V) DR. HAKEEM S.A. SYED SATHAR VS. ACIT [2009] 314 ITR (AT) 290 (CHENNAI) 5. NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDG E BY LEARNED D. R. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND DE LETE THE PENALTY IMPOSED U/S 158BFA(2) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27/05/2016) SD/. SD/. ( MAHAVIR PRASAD ) ( P. K. BANSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:27/05/2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR