Prakash Kesharimal Sancheti, Jalna V. Additional Commissioner of Income-tax,

ITA 890/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2901 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K SRINIVASAN
• Keywords: Income from undisclosed sources; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM ITA NO. 890 /PN/201 4 ASSESSMENT YEAR: 200 6 - 07 SHRI PRAKASH KESHARIMAL SANCHETI, PROP. WARDHAMAN GARMENTS, OPP. SINDHI PANCHAYAT, DEVALGAON RAJA ROAD, JALNA 431 203 PAN NO.ACYPS9947A . APPELLANT VS. ADDL. CIT , RANGE - 1, AURANGABAD . RESP ONDENT / APPELLANT BY : SHRI K. SRINIVASAN / APPELLANT BY : SHRI K. SRINIVASAN / RESPONDENT BY : SHRI ABHIJIT HALDER / DATE OF HEARING : 07 . 0 1. 201 6 / DATE OF PRONOUNCEMENT: 15 .01.2016 / ORDER PER SUSHMA CHOWLA, JM : TH I S APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A), AURANGABAD RELATING TO ASSESSMENT YEAR 200 6 - 07 AGAINST ORDER PASSED UNDER SECTION 271D OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL AND ALL THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AGAINST LEVY OF PENALTY U/S.271D OF THE ACT AT RS.2 LAKHS. 2 ITA NO . 890 /PN/2014 3. BRIEF, IN THE FACTS OF THE PRESENT CASE, A SEARCH - CUM - SURVEY ACTION WAS CONDUCTED AT THE PREMISES OF ONE SHRI K.N. MUTHA ON 02 - 02 - 2006. THE SAID P ERSON WAS GIVING LOANS OF HUNDIS OUT OF HIS UNACCOUNTED INCOME AND HE ACCEPTED AND DECLARED AS HIS INCOME FOR THE BLOCK PERIOD. THE AO RECEIVED THE INFORMATION THAT THE ASSESSEE HAS TAKEN CASH LOAN OF RS.5 LAKHS FROM SHRI K.N. MUTHA DURING THE A.Y. 2006 - 0 7 AGAINST HUNDI ACCEPTED ON DIFFERENT DATES. THE SAID DETAILS ARE TABULATED AT PAGE 2 OF THE ORDER LEVYING PENALTY U/S.271D OF THE ACT. THE PERUSAL OF THE SAID DETAILS REFLECTS THAT THE AMOUNT RELATING TO A.Y. 2006 - 07 TOTAL ED TO RS.2 LAKHS AND THE AMOUNT RELATING TO A.Y. 2007 - 08 TOTAL ED TO RS.3 LAKHS. THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE, HOWEVER, NOBODY ATTENDED AND IN VIEW OF THE ENQUIRIES FROM THE OFFICE OF SHRI K.N. MUTHA AND THE ACCEPTANCE OF THE INCOME IN THE HANDS OF THE SAID PERSON, THE AO HELD THAT THE ASSESSEE HAD BORROWED A SUM OF R S .2 LAKHS BY SIGNING HELD THAT THE ASSESSEE HAD BORROWED A SUM OF R S .2 LAKHS BY SIGNING THE HUNDIS IN THE YEAR BEFORE THE DATE OF SURVEY. HOWEVER, AT THE TIME OF SURVEY SOME OTHER HUNDI S DULY SIGNED BY THE ASSESSEE WAS ALSO FOUND AND IMPOUNDED , W HICH B O RE THE DATES WITHIN 17 - 04 - 2006 TO 17 - 05 - 2006 AGGREGAT ING TO RS.3 LAKHS. THE INFERENCE DRAWN BY THE AO IN THIS REGARD WAS THAT THE ASSESSEE HAD TAKEN LOAN AGGREGATING TO RS. 5 LAKHS FROM SHRI K.N. MUTHA AND SINCE THE CHEQUES/HUNDIES WERE CANCELLED AND THE PERIOD OF VALIDITY STILL SUBSISTED, THE AMOUNTS WERE HELD NOT TO HAVE BEEN RETURNED BY THE ASSESSEE TO THE MONEY LENDER. UNDER THESE CIRCUMSTANCES THE AO HELD THAT THE ASSESSEE HAD ACCEPTED THE LOAN OR DEPOSIT OF RS.5 LAKHS IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269S S AND THEREFORE HELD TO BE LIABLE TO PENALTY U/S.271D OF THE ACT TO THE EXTENT OF RS. 5 LAKHS. 3 ITA NO . 890 /PN/2014 4. THE CIT(A) AFTER NOTING THE FACTS OF THE CASE CONSIDERED THE FIRST CONTENTION OF THE ASSESSEE THAT THE ORDER LEVYING THE PENALTY WAS BARRED BY LIMITATION AS THE SAME WAS INITIATED AND LEVIED AFTER 4 YEARS FROM THE END OF THE RELEVANT FINANCIAL YEAR. THE CIT(A) HELD THAT SINCE NO TIME LIMIT WAS PRESCRIBED FOR PASSING THE ORDER LEVYING THE PENALTY U/S.271D OF THE ACT, THEREFORE, THE CONTENTION RAISED BY THE ASSESSEE WAS REJECTED. SINCE VARIOUS OPPORTUNITIES WERE GIVEN T O THE ASSESSEE DURING THE APPELLATE PROCEEDINGS, THE SECOND CONTENTION OF THE ASSESSEE THAT IT WAS NOT PROVIDED SUFFICIENT OPPORTUNITY BY THE ADDL.CIT BEFORE LEVYING PENALTY WAS ALSO REJECTED. 5. ANOTHER CONTENTION RAISED BY THE ASSESSEE THAT SINCE SHRI K.N. MUTHA HAD ONLY OFFERED TO TAX A SUM OF RS.2 LAKHS IN A.Y. 2006 - 07 THERE WAS NO MERIT IN LEVYING THE PENALTY U/S.271D OF THE ACT AT RS.5 LAKHS. THIS CONTENTION OF THE ASSESSEE WAS ACCEPTED AND THE PENALTY TO THE EXTENT OF RS.3 LAKHS WAS CANCELLED. HOWEVER, SINCE THE ASSESSEE HAD ACCEPTED THE CASH LOAN AS HE WAS IN URGENT NEED OF FUNDS FOR PERSONAL PURPOSES, THE PENALTY FOR THE SAID CASH TRANSACTION WAS HELD TO BE LIABLE TO THE EXTENT OF RS .2 LAKHS. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE CIT(A). THE LD. AR FOR THE ASSESSEE IN THE FIRST INSTANCE POINTED OUT THAT SUFFICIENT OPPORTUNITY WAS NOT GRANTED BY THE AO BEFORE LEVYING THE PENALTY U/S.271D OF THE ACT. OUR ATTENTION WAS DRAWN TO THE FACTS SHEET FILED BY THE ASSESSEE IN THIS REGARD THAT IN RESPONSE TO THE FIRST SHOW CAUSE NOTICE THE ASSESSEE HAD ATTENDED THE PROCEEDINGS BUT THE SAME WAS NOT HEARD AS THE AO WAS PREOCCUPIED. FURTHER, IN BETWEEN NOTICES HAVE NOT BEEN RECEIV ED BY THE ASSESSEE AND ON 26 - 11 - 2010 THE ORDER LEVYING THE PENALTY U/S.271D OF THE ACT WAS PASSED WITHOUT GIVING PROPER OPPORTUNITY TO THE ASSESSEE. 4 ITA NO . 890 /PN/2014 7. THE FIRST CONTENTION RAISED BY THE ASSESSEE IN THIS REGARD WAS SINCE THE ORDER LEVYING PENALTY U/S.271D OF THE ACT WAS PASSED AFTER CONSIDERABLE LAPSE OF TIME, THE SAME WAS BAD IN LAW AND SINCE THE ASSESSEE WAS NOT HEARD , THERE WAS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. FURTHER, THE ASSESSEE REFERRED TO THE MERITS OF THE ADDITION AND THE VARIOUS EVIDE NCES FILED BEFORE THE CIT(A) INCLUDING THE AFFIDAVIT THAT THE LOAN WAS NOT TAKEN BY THE ASSESSEE BUT WAS ACCEPTED BY HIS FATHER AND HE HAD ONLY STOOD AS SURETY FOR THE MONEY TAKEN BY HIS FATHER. ANOTHER CONTENTION RAISED BY THE ASSESSEE WAS THAT THE AO HI MSELF HAD DROPPED THE PENALTY PROCEEDINGS U/S.271E OF THE ACT ON BEING SATISFIED THAT THE REPAYMENT WAS DONE BY HIS FATHER. 8. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND P ERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE LEVY OF PENALTY U/S.271D OF THE ACT, WHERE THE ASSESSEE WAS HELD TO HAVE VIOLATED THE PROVISIONS OF SECTION 269SS OF THE ACT IN ACCEPTING CASH LOAN OF RS. 2 LAKHS. THE AO HAD LEVIED PENALTY U/S.271D OF THE ACT UPON THE ASSESSEE ON THE INFORMATION RECEIVED AFTER SEARCH - CUM - SURVEY PROCEEDINGS ON ONE SHRI K.N. MUTHA, WHO WAS ENGAGED IN GIVING CASH LOANS ON HUNDI OUT OF HIS UNACCOUNTED INCOME. SINCE SHRI K.N. MUTHA HAD ACCEPTED THE SAID CASH TRANSACTION AND DECLARED THE SAID RECEIPT AS HIS INCOME, THE FALLOUT WAS THAT THE LIST OF THE PERSON TO WHOM SHRI K.N. MUTHA HAD GIVEN THE LOANS WERE HELD TO HAVE ACCEPTED CASH LOANS FROM HIM. DURING THE COURSE OF SEARCH CERTAIN HUNDIS ACCEPTED BY THE ASSESSEE WERE FOUND FROM THE POSSESSION OF 5 ITA NO . 890 /PN/2014 SHRI K.N. MUTHA AND THE PRESUMPTION WAS THAT THE SAID H U ND I S WERE ACCEPTED BY THE ASSESSEE IN VIEW OF CASH LOAN RECEIVED BY HIM. THE TOTAL OF THE SAID TRANSACTION FOR THE YEAR UNDER CONSIDERATION WERE RS.2 LA KHS, THE DETAILS OF WHICH ARE TABULATED AT PAGE 2 OF THE ORDER LEVYING PENALTY U/S.271D OF THE ACT. 10. THE ISSUE ARISING BEFORE US IS OF TWO FOLDS, I.E. NON - ALLOWANCE OF OPPORTUNITY OF HEARING BY THE AO BEFORE LEVYING PENALTY U/S.271D OF THE ACT AND T HE ISSUE ON MERITS, I.E. THE CLAIM OF THE ASSESSEE THAT HE HAD NOT ACCEPTED THE CASH LOAN BUT THE SAID CASH LOAN WAS ACCEPTED BY HIS FATHER AND HE HAD ONLY STOOD AS SURETY TO THE SAID CASH LOAN. A PERUSAL OF THE PENALTY ORDER PASSED BY THE ADDL.CIT REFLEC TS THAT THERE IS ALLEGATION OF NON - APPEARANCE DURING THE PROCEEDINGS. ON THE OTHER HAND, THE CLAIM OF THE ASSESSEE IS THAT HE HAD APPEARED FROM TIME TO TIME BUT HIS ATTENDANCE WAS NOT RE CORDED AND FURTHER CERTAIN NOTICES WERE NOT RECEIVED BY HIM AND THE P ENALTY WAS LEVIED WITHOUT GIVING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. THE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT SUFFICIENT OPPORTUNITY OF HEARING SHOULD BE AFFORDED TO THE ASSESSEE IN ORDER TO BRING ON RECORD THE DOCUMENTS/EVIDENCES IN S UPPORT OR AGAINST THE ALLEGATIONS MADE BY THE REVENUE AUTHORITIES. THE SAID PRINCIPLES OF NATURAL JUSTICE ARE PARAMOUNT AND FOREMOST. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES THOUGH THE CIT(A) HAS CONSIDERED THE EXPLANATION OF THE ASSESSEE BUT WE A RE OF THE VIEW THAT THE COMPLETE DETAILS HAVE NOT BEEN CONSIDERED BY THE CIT(A) AND BEFORE THE ADDL.CIT, THERE WAS AN ALLEGATION OF NON - APPEARANCE BY THE ASSESSEE. IN VIEW THEREOF, WE REMIT THIS ISSUE BACK TO THE FILE OF THE ADDL.CIT WITH A DIRECTION TO A LLOW REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND ALSO CONSIDER THE VARIOUS SUBMISSIONS AND EVIDENCES AVAILABLE WITH THE 6 ITA NO . 890 /PN/2014 ASSESSEE BEFORE CONCLUDING THE ISSUE OF LEVY OF PENALTY U/S.271D OF THE ACT. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE TO TH E NOTICES OF HEARING BY APPEARING BEFORE THE ADDL. CIT WITH REGARD TO THE PROCEEDINGS LEVYING PENALTY ORDER U/S.271 OF THE ACT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS SET ASIDE TO THE FILE OF ADDL.CIT. 1 1 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THIS THE 15 TH DAY OF JANUARY, 2016 SD/ - SD/ - ( PRADIP KUMAR KEDIA ) ( SUSHMA CHOWLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE ; DATED : 15 TH JANUARY, 2016. / GCVSR / COPY OF THE ORDER FORWARDED TO : / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. THE CIT (A), AU RANGABAD THE CIT, AURANGABAD 5. 6. , , / DR, ITAT, A PUNE; / GUARD FILE . / BY ORDER, //TRUE COPY// // TRUE C OPY // // //TRUE C / SR. PRIVATE SECRETARY , / ITAT, PUNE