GURDASMAL B CHAWLA, MUMBAI V. DCIT CEN CIR 10, MUMBAI

ITA 860/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8242 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 23-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACHCHIDANAND DUBE
• Keywords: Unexplained investment; Search and seizure; Salary income; Principle of natural justice
• Section: 80C; 2

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . , . , BEFORE SHRI D. MANMOHAN , VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, AM ./I.T.A. NO. 860/M/2013 (AY:2007 - 2008) SHRI GURDASMAL B. CHAWLA, JEEVAN NIWAS 5 TH FLOOR, KHAN ABDUL GAFFER KHAN ROAD, WORLI SEA FACE, MUMBAI 400 025. VS. DCIT, CENTRAL CIRCLE 10, MUMBAI. ./ PAN : AABPC1547P ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SATISH R. MODY / RESPONDENT BY : SHRI SACHCHIDANAND DUBE, DR / DATE OF HEARING : 23.09.2014 / DATE OF PRONOUNCEMENT : 31 .10.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 1.2.2013 IS AGAINST THE ORDER OF THE CIT (A) - 37, MUMBAI DATED 30.11.2012 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. LD AO/CIT (A) HAS ERRED IN LEVYING PENALTY U/S 271(1)(C) F THE ACT OF RS. 1,74,800/ - AGAINST THE PRINCIPLE OF EQUITY & NATURAL JUSTICE & AGAINST THE STATED POSITION OF LAW. 2. LD AO/CIT (A) HAS ERRED IN IMPOSING PENALTY U/S 271(1)(C) WITHOUT BRINGING ANYTHING ON RECORDS THAT ASSESSEE HAS CONCEALED TRUE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF INCOME. 3. LD AO HAS FAILED TO APPRECIATE THAT LOOSE DIAMONDS WERE PURCHASED THROUGH NORMAL BANK ACCOUNT WHICH WAS DISCLOSED BEFORE INCOME TAX DEPARTMENT. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE EARNED INCOME FROM SALARY AND THE OTHER SOURCES DURING THE YEAR . ASSESSEE FILED THE RETURN OF INCOME ORIGINALLY DECLARING THE TOTAL INCOME OF RS. 4,93,990/ - . THERE WAS A SEARCH AND SEIZURE ACTION ON THE ASSESSEE ON 14.6.2006. SUBSEQUENTLY, A SSESSEE FILED THE REVISED INCOME INCLUDING AN AMOUNT OF RS. 1,10,15,280/ - I.E., THE INCOME DECLARED 2 U/S 132(4) OF THE ACT. IN THE ASSESSMENT, AO M ADE ADDITION OF RS. 42,23,122/ - . O N ACCOUNT OF UNEXPLAINED INVESTMENT IN THE EXCESS CASH A ND DIAMONDS U/SS 60 AND 69A OF THE ACT. ASSESSED INCOME WA S DETERMINED AT RS. 1,52,38,410/ - AFTER ALLOWING DEDUCTION U/SS 80D AND 80C OF THE ACT . THIS ADDITION OF RS. 42,23,122/ - WAS QUESTIONED BY THE ASSESSEE BEFORE THE CIT (A). DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE FILED DETAILS RECONCILING THE DISCREPANCIES. AFTER ACCEPTING THE ASSESSEES RECONCILIATIONS PARTLY , CIT (A) GRANTE D PART RELIEF AND CONFIRMED THE ADDITION TO THE EXTENT OF RS. 5,82,900/ - ONLY . BEFORE THE CIT (A), IN RELAGTIN TO THE SAID SUM OF RS. 5,82,900/ - , THE ASSESSEE SUBMITTED THAT MR. A ARTI CHAWLA AND POOJA CHAWLA PURCHASED DIAMONDS WORTH RS. 3,03,800/ - AND RS. 2,70,611/ - RESPECTIVELY OUT OF THEIR FUNDS . IT WAS SUBMITTED THAT AN AMOUNT OF RS. 2,70,611/ - (DIAMONDS OF MS. POOJA CHAWLA) WAS CONSIDERED BY THE AO IN THE ASSESSMENT AS THE DIAMONDS OF ASSESSEE IGNORING THE FACT THAT THE RELEVANT PURCHASE BILLS ARE RAIS ED IN HER NAME. MS. POOJA CHAWLA PURCHASED THE DIAMONDS IN HER NAME AND PAYMENTS ARE MADE BY CHEQUES INVOLVING BANKING CHANNELS . IT WAS SUBMITTED THAT MS. POOJA CHAWLA FILED THE RETURN OF NET WEALTH , BUT , THE SAME WERE NOT INCLUDED IN HER NET WEALTH INAD VERTENTLY. FURTHER, THE AMOUNT OF RS. 3,03,800/ - WAS CONSIDERED AS THE INCOME OF THE ASSESSEE MERELY FOR THE REA SON THAT MS. AARTI CHAWLA DID NOT FILE THE RETURN OF NET WEALTH , WHEN HER NE T WEALTH IS BELOW TAXABLE LIMIT . OTHERWISE, THE SAID AMOUNT WAS J INCURRED ON PURCHASE OF DIAMONDS BY MS. POOJA CHAWLA. DESPITE THE ASSESSEES EXPLANATION , THE CIT (A) CONFIRMED THE ABOVE SAID ADDITIONS. BOTH THE ASSESSEE AND THE REVENUE WERE IN APPEAL ON MERITS BEFORE THE TRIBUNAL VIDE ITA NO S .3946/M/2009 AND 4010/M/2009 AND THE TRIBUNAL PASSED ORDER ON 24.11.2010 DISMISSING BOTH THE APPEALS. THUS, THE TRIBUNAL CONFIRMED THE ADDITION OF RS. 5,82,900/ - . THIS ADDITION OF RS. 5,82,900/ - IS THE SUBJECT MATTER OF THE PENALTY U/S 271(1)(C) OF THE ACT. 4. AO PASSED THE PENALTY ORDER ON 24.3.2011 AFTER HEARING THE ASSESSEE AND AFTER CONSIDERING HIS EXPLANATION. REGARDING THE ADDITION OF RS. 2,70,611/ - , ASSESSEE SUBMITTED THAT MS. POOJA CHAWLA (W/O. OMPRAKASH CHAWLA) I.E., WIFE OF HIS BROTHER, PURCHASED IMPUGNED LOOSE DIAMONDS ON 1.3.2003 FROM SAMBHAV DIAMONDS, SURAT . HOWEVER, IMPUGNED DIAMOND S WERE OMITTED FROM INCLUSION IN THE LIST OF ITEMS IN 3 WEALTH TAX RETURN INADVERTENTLY. OTHERWISE, ASSESSEE FILED SALE BILLS AND BANK STATEMENT EVIDENCING THE PURCHASE OF DIAMONDS BY MS. POOJA CHAWLA . REGARDING THE OTHER SUM OF RS. 3,03,800/ - , ASSESSEE SUBMITTED THAT THE SAME BELONGS TO MS. AARTI CHAWLA (DAUGHTER OF POOJA CHAWLA) AND THE RELEVANT DIAMONDS ARE PURCHASED ON 14.11.2005 FROM SURYA DIAMO ND MANUFACTURER & IMPORTER. AO REJECTED THE SAME AND LEVIED THE PENALTY OF RS. 1,74,800/ - . CIT (A) CONFIRMED THE SAME. AGGRIEVED WITH THE ABOVE CONCLUSIONS OF THE CIT (A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE EXPLA INED THE FLATS OF THE CASE AND SUBMITTED THAT THE IMPUGNED INVESTMENTS IN DIAMONDS PURCHASED BY MS. POOJA CHAWLA AND MS. AARTI CHAWLA BY ISSUE OF CHEQUES FROM THEIR RESPECTIVE BANK ACCOUNTS. MS. AARTI CHAWLA DOES NOT HAVE THE TAXABLE NET WEALTH AND THEREF ORE, FILING OF WEALTH TAX RETURN BY HER DOES NOT ARISE. FURTHER, LD COUNSEL REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. AS PER THE LD COUNSEL, IT IS NOT A FIT CASE FOR LEVY OF PENALTY. TRIBUNALS DECISION ON MERITS OF ADDITION IS NO GR OUND FOR CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT. 6. PER CONTRA, LD DR FOR THE REVENUE HEAVILY RELIED ON THE ORDER OF THE AO AND THE CIT (A). 7. ON HEARING BOTH THE PARTIES AND PERUSING THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND THAT THE DIAMON DS IN QUESTION ARE PURCHASED BY MS. AARTI CHAWLA AND MS. POOJA CHAWLA BY ISSUING CHEQUES FROM THEIR RESPECTIVE BANK ACCOUNTS. IN OUR OPINION, THESE BANK TRANSACTIONS MAKE T HE TRANSACTION ACCOUNTED FOR AND THERE IS NO CONCEALMENT OF PARTICULARS. ASSESSEE HAS GIVEN THE REASONS FOR NOT FILING THE RETURN OF NET WEALTH AND FOR NOT INCLUDING THE ITEMS IN THE RETURN AS THE CASE MAY BE. THE REVENUE HAS NOT REBUTTED THE ABOE SUBMISSIONS OF THE ASSESSEE. IN SUCH CIRCUMSTANCES, THE ASSESSEE CANNOT BE HELD TO HAVE CO NCEALED THE PARTICULARS OF INCOME OR FURNISHED THE INACCURATE PARTICULARS IN THE RETURN OF INCOME. THUS, THE EXPLANATION GIVEN BY THE ASSESSEE IS A POSSIBLE ONE , MAKING THE ISSUE DEBATABLE. IT IS A SETTLED PROPOSITION IN LAW THAT THE PENALTY IS NOT TO BE IMPOSED WHEN THE ISSUE IS DEBATABLE. THEREFORE, IN OUR OPINION, IT IS NOT A FIT CASE FOR 4 INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 S T OCTOBER, 2014. S D / - S D / - (D. MANMOHAN ) (D. KARUNAKARA RAO ) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; 31/10/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI