Shri Rohit Devdatt Chawla, Baroda V. The Income Tax Officer, Ward-8(4), Baroda

ITA 887/AHD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94599 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 26-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADIPKUMAR MAJUMDAR
• Keywords: Unexplained cash credit; Bonafide belief; Corroborative evidences; Revised return; Bonafide mistake
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA NO: 887/AHD/2014 (ASSESSMENT YEAR: 2007-0) ROHIT DEVDATT CHAWLA K-1, 23/2, GIDC, RANOLI VADODARA-391 350 V/S INCOME TAX OFFICER, WARD- 8 (4), BARODA (APPELLANT) (RESPONDENT) PAN: AAPPT0319Q APPELLANT BY : NONE (WRITTEN SUBMISSIONS ) RESPONDENT BY : SHRI PRADIP KUMAR MAJUMDAR, SR. D .R. ( )/ ORDER DATE OF HEARING : 12-10-2015 DATE OF PRONOUNCEMENT : 16 -10-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-VI, BARODA DATED 2.12.2013 FOR A.Y. 2007-08. ITA NO 887/ AHD/2014 . A.Y. 2007-0 8 2 2. IN THIS CASE, NONE APPEARED ON BEHALF OF ASSESSEE B UT HOWEVER WRITTEN SUBMISSIONS DATED 25.08.2015 WERE FILED BY THE ASSE SSEE. WE THEREFORE PROCEED TO DECIDE THE APPEAL, EX PARTE QUA THE ASSE SSEE ON THE BASIS OF MATERIAL ON RECORD AND WRITTEN SUBMISSIONS. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIVING INC OME FROM SALARY AND OTHER SOURCES. ASSESSEE FILED HIS RETURN OF INCOME FOR A .Y. 2007-08 ON 15.10.2007 DECLARING TOTAL INCOME OF RS. 1,96,170/- . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAM ED UNDER SECTION 143(3) VIDE ORDER DATED 25.09.2009 AND THE TOTAL INCOME WA S DETERMINED AT RS. 2,78,650/- BY INTERALIA MAKING ADDITION ON ACCOUNT OF SHORT TERMS CAPITAL GAINS OF RS. 77,081/- AND DISALLOWANCE OF EXCESS CO NVEYANCE ALLOWANCE OF RS. 5,400/- THAT WAS CLAIMED BY THE ASSESSEE. ON TH E AFORESAID ADDITIONS, A.O VIDE ORDER DATED 24.02.2010 CONCLUDED THAT ASS ESSEE HAD INTENTIONALLY CLAIMED EXCESS CONVEYANCE ALLOWANCE AND HAD NOT OFF ERED CAPITAL GAINS IN THE ORIGINAL RETURN AND THEREBY ASSESSEE HAD FURNIS HED INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY LEVIED PENALTY OF RS. 8,9 63/- U/S. 271(1)(C) OF THE ACT. AGGRIEVED BY THE PENALTY ORDER OF A.O., ASSESS EE CARRIED THE MATTER BEFORE LD. CIT(A) WHO GRANTED PARTIAL RELIEF BY DEL ETING THE PENALTY OF CONVEYANCE ALLOWANCE BUT UPHELD THE PENALTY ON SHO RT TERMS CAPITAL GAINS BY HOLDING AS UNDER:- 7. I HAVE CAREFULLY CONSIDERED THE FACTS AND THE CIRCU MSTANCES OF THE CASE, THE OBSERVATIONS OF THE ASSESSING OFFICER, THE SUBMISSI ONS OF THE ASSESSEE, MATERIAL AVAILABLE ON RECORD AND THE JUDICIAL PRONOUNCEMENTS ON THE SU BJECT. IN THIS CASE PENALTY WAS LEVIED ON TWO ADDITIONS- (I) EXCESS CLAIM OF CONVEYANCE AL LOWANCE OF RS, 5,400/- AND (II) NON- ITA NO 887/ AHD/2014 . A.Y. 2007-0 8 3 DISCLOSURE OF SHORT TERM CAPITAL GAINS OF RS. 77,08 1/- ON FOREX TRANSACTIONS. AS FAR AS THE FIRST ISSUE OF EXCESS CLAIM OF CONVEYANCE ALLOW ANCE IS CONCERNED, I TEND TO ACCEPT ASSESSEE'S EXPLANATION THAT HE HAD TO SPEND AROUND RS. 2,000/-P.M. ON HIS TRAVELLING FOR BUSINESS PURPOSES AND HE HAD BONAFIDE BELIEF THAT T HE CONVEYANCE ALLOWANCE RECEIVED BY HIM WAS NOT TAXABLE. IN VIEW OF THIS, THE EXPLANATI ON IS CONSIDERED TO BE BONAFIDE AND THE ASSESSEE IS NOT LIABLE TO PENALTY U/S 271(1)(C) ON THE DISALLOWANCE OF RS. 5,400/- ON ACCOUNT OF EXCESS CLAIM OF CONVEYANCE ALLOWANCE. TH E ASSESSING OFFICER IS DIRECTED TO CANCEL THE PENALTY U/S 271(1)(C) ON THE ADDITION OF RS. 5,400/-. 8. AS FAR AS THE ADDITION OF RS. 77,081/- ON ACCOUN T OF UNDISCLOSED STCG IS CONCERNED, THE UNDISPUTED FACT IS THAT THE ASSESSEE HAD OMITTED TO OFFER HIS INCOME FROM SHORT TERM CAPITAL GAINS IN HIS RETURN OF INCOME KN OWINGLY AND DELIBERATELY. ONLY WHEN THE CASE SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER STA RTED HIS INVESTIGATION IN TO THE SOURCES OF HIS INCOME, DID THE ASSESSEE COME WITH T HIS THEORY OF VOLUNTARY ACCEPTANCE AND FURNISHING OF REVISED COMPUTATION (AND NOT REVISED RETURN OF INCOME) DURING THE ASSESSMENT PROCEEDINGS. THE SURROUNDING CIRCUMSTANC ES OF THE CASE CLEARLY INDICATE THAT THIS WAS AN AFTER-THOUGHT TO AVOID PENALTY ON ACCOU NT OF FURNISHING OF INACCURATE PARTICULARS IN THE RETURN OF INCOME AND THE SAME CA NNOT BE GIVEN ANY CREDENCE. ASSESSEE'S EXPLANATION IN THIS REGARD IS NOT FOUND TO BE ACCEPTABLE AS HE HAS FAILED TO SUBSTANTIATE HIS CLAIM THAT IT WAS BY 'MISTAKE' THA T HE FAILED TO DISCLOSE A SUBSTANTIAL CHUNK OF HIS INCOME IN THE RETURN OF INCOME. EXPLAN ATION 1 TO SECTION 271(1 )(C) IS CLEARLY APPLICABLE TO THE CASE OF THE ASSESSEE, AS THE ASSE SSEE HAD FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND HAD FAILED TO SUBSTAN TIATE HIS EXPLANATION IN THIS REGARD. 9. IN CIT VS K.B. MADHUSUDAN 246 ITR 218 (KER), IT HAS BEEN HELD BY HON'BLE SUPREME COURT THAT IF AN AMOUNT IS ADDED OR DISALLO WED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, IT IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FILED. 10. APPELLANT CONTENDS THAT THE PENALTY PROCEEDINGS ARE QUASI-CRIMINAL IN NATURE AND INFERENCE OF MENS REA IS NECESSARY. THIS VIEW IS AL SO NOT TENABLE IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN CIT VS. KALYANDAS RASTOGI, 193 ITR 713 (SC), WHERE HON'BLE SUPREME COURT HELD THAT A PENALTY IMPOSED FOR A TAX DELINQUENCY IS A CIVIL OBLIGATION, REMEDIAL AND COERCIVE IN NATURE AND IS FAR DIFFEREN T FROM PENALTY FOR A CRIME. IN THIS KIND ITA NO 887/ AHD/2014 . A.Y. 2007-0 8 4 OF PENALTY, ELEMENT OF MENS REA IS NOT REQUIRED IN UNION OF INDIA VS DHARMENDRA TEXTILE PROCESSORS [2008] 166 TAXMAN 65 (SC), HON'BLE SUPREME COURT REITERATED THIS POSITION AND HELD THAT PENALTY U/S 271(1)(C) IS A CIVIL LIAB ILITY AND FOR ATTRACTING SUCH CIVIL LIABILITY, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT AS IS CASE IN THE MATTER OF PROSECUTION U/S276C. 11. IT IS NOTICED THAT THE APPELLANT-ASSESSEE HAS ONLY OFFERED AN EXPLANATION REGARDING THE SOURCE OF UNEXPLAINED CASH CREDITS IN HIS BOOKS OF ACCOUNTS BUT HAS FAILED TO SUBSTANTIATE IT WITH SUPPORTING EVIDENCE. IN SUCH A SITUATION, E XPLANATION 1 IS CLEARLY ATTRACTED IN THIS CASE. IN VIEW OF THIS, PENALTY MUST OBLIGATORILY BE IMPOSED IN THIS CASE IN VIEW OF CIT VS LAL CHAND TIRATH RAM, 225 ITR 675 (PUNJ) WHERE IT WAS HELD BY HON'BLE HIGH COURT THAT MERE OFFERING OF AN EXPLANATION WOULD NOT ABSO LVE THE FROM THE LIABILITY OF PENALTY. IT IS NECESSARY FOR THE ASSESSEE TO (I) OFFER AN EXPLA NATION AND (II) SUBSTANTIATE IT. FURTHERMORE, IN CIT VS A.SRINIVASA PAI, [2000] 242 ITR 29 (KER) AND CIT VS GEO SEA FOODS, 244 ITR 44 (KER), IT HAS BEEN HELD THAT THE EXPLANA TION OF THE MUST BE AN ACCEPTABLE EXPLANATION AND IF HE FAILS TO DISCHARGE THE BURDEN, THE PRESUMPTION OF EXPLANATION 1 WILL BE AVAILABLE TO THE ASSESSING OF FICER. 12. IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR TH AT EXPLANATION 1 TO SECTION 271(1)(C) IS ATTRACTED IN THIS CASE AND THE APPELLANT IS LIABLE FOR PENALTY U/S 271(1)(C) SPECIALLY SINCE HE HAS FAILED TO SUBSTANTIATE HIS CLAIM WITH REGARD TO UNDISCLOSED STCG OF RS. 77,081/-. CONSEQUENTLY, THE ORDER OF THE ASSESSING OFFICER WI TH RESPECT TO THE PENALTY ON ABOVE ACCOUNT IS UPHELD. 5. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASS ESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD. CIT(A)-VI, BARODA WAS ERRED IN CONFIRMING PENALTY U/S. 271(1)( C) ON ACCOUNT OF SHORT TERM CAPITAL GAIN ON THE GROUND THAT APPELLANT FAILED TO EXPLAIN THE BONAFIDE MISTAKE EVEN THOUGH APPELLANT HAS GIVEN SUFFICIENT PROOF TO ESTA BLISH HIS BONAFIDE MISTAKE. APPELLANT PRAYS YOUR HONOR TO DELETE PENALTY ON RS. 77,081/-. ITA NO 887/ AHD/2014 . A.Y. 2007-0 8 5 6. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O AND LD. CIT(A). ON THE OTHER HAND IN THE WRITTEN SUBMISSIONS, ASSESSEE HAS CHALL ENGED THE LEVY OF PENALTY AND HAS SUBMITTED THAT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, ASSESSEE HAD FILED REVISED COMPUTATION OF INCOME S UO MOTU AND THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE TO CONCEAL THE CAPITAL GAINS. HE HAS ALSO PLACED RELIANCE ON THE VARIOUS DECISIONS CITED IN THE WRITTEN SUBMISSIONS AND SUBMITTED THAT THE PENALTY BE DELETED. 7. WE HAVE HEARD THE LD. D.R AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE PENALTY U/S. 271(1)(C) HAS BEEN LEVIED ON THE ADDITION MADE ON ACCOUNT OF SHORT TERM CAPITAL GAINS. THE ASSESSEE HAS GIVEN THE EXPLANATION WITH RESPECT TO THE SAME AND THE EXPLANATION OF THE ASSE SSEE HAS NOT BEEN FOUND TO BE FALSE OR HAS NOT BEEN FOUND TO BE NOT A BONA FIDE EXPLANATION. 8. A CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOM E HAS TO BE EVALUATED IN TERMS OF PROVISIONS OF EXPLANATION. 1 TO SECTION. 2 71(1)(C), AS PER WHICH IF IN RELATION TO ANY ADDITION IN THE ASSESSMENT, THE ASSESSEE OFFERS NO EXPLANATION OR OFFERS EXPLANATION WHICH IS FOUND TO BE FALSE OR IS NOT ABLE TO SUBSTITUTE THE EXPLANATION AND IS ALSO NOT ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE, THE ADDITION MADE WOULD AMOUNT TO CONCEAL MENT OF PARTICULARS OF INCOME. IT IS A SETTLED LEGAL POSITION THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS AND THE FINDINGS GIVEN IN THE ASSESSMENT THOUGH IT MAY CONSTITUTE GOOD EVIDENCE BUT SAME IS NOT CONCLUSIVE IN THE PENALTY PROCEEDINGS FURTHER, MERELY BECAUSE ASSESSE E HAS NOT CHALLENGED THE ORDER OF ASSESSMENT LEVYING TAX AND INTEREST AN D HAS PAID TAX AND INTEREST THAT BY ITSELF WILL NOT BE SUFFICIENT FOR THE AUTHO RITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY. WE ARE OF THE VIEW T HAT IN THE ABSENCE OF ITA NO 887/ AHD/2014 . A.Y. 2007-0 8 6 COMPLETE AND CONVINCING CORROBORATIVE EVIDENCE, THE REVENUE MAY JUSTIFY ADDITION, BUT IN THE MATTER OF PENALTY PROCEEDINGS, THE ONUS LIES HEAVILY ON THE REVENUE TO PROVE THAT THE ASSESSEE HAD CONCEALE D ITS INCOME OR HAS FILED INACCURATE PARTICULARS OF ITS INCOME. IN VIEW OF T HE AFORESAID FACTS WE ARE OF THE VIEW THAT IN THE PRESENT CASE NO PENALTY IS LEV IABLE U/S 271(1)(C) AND THEREFORE DIRECT ITS DELETION. THUS THIS GROUND OF ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 10 - 2015. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD