Shri Rajubhai S.Patel, Anand V. The Income tax Officer,(Intl.Taxn.), Baroda

ITA 904/AHD/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2414 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-02-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 27-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA HARDASANI
• Keywords: Unexplained investment; Corroborative evidences
• Section: 69; 148

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA.NO.904 AND 905/AHD/2014 / ASSTT. YEAR: 2002-03 AND 2003-04 RAJUBHAI S. PATEL C/O. HASMUKHBHAI M. PATEL PUJA BUNGALOWS KARAMSAD-VIDHYANAGAR ROAD KARAMSAD, DIST. ANAND PAN : AZPPPP 5546 G VS ITO, (INTL.TAXN.) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI ASEEM THAKKAR, CA REVENUE BY : ANITA HARDASANI, SR.DR / DATE OF HEARING : 29/02/2016 / DATE OF PRONOUNCEMENT: 01/03/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: AGGRIEVED WITH THE SEPARATE ORDERS OF THELD.CIT(A), GANDHINAGAR DATED 20.12.2013 PASSED IN THE ASSTT.YEARS 2002-03 AND 20 03-04, THE ASSESSEE IS IN APPEALS BEFORE US. 2. THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT (A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.1,50,00/- AND RS.20,00 0/- IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT IN THE ASSTT.YEA RS 2002-03 AND 2003-04 RESPECTIVELY. ITA NO.904 AND 905/AHD/2014 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A NON-RESIDENT INDIAN. HE HAS FDRS. WITH DENA BANK IN FCNR NRE CATEGORY. THE INTEREST INCOME OUT OF THESE FDRS IS EXEMPT FROM TAX. AGAINST THESE FD S., AN OVERDRAFT FACILITY ACCOUNT WAS OPENED. THE ASSESSEE HAS GIVEN POWER O F ATTORNEY TO ONE SHRI HASMUKHBHAI PATEL WHO HAS MAINTAINED FDR/OD ACCOUNT WITH FIXED DEPOSIT OVERDRAFT FACILITY. ACCORDING TO THE AO, CERTAIN A MOUNTS HAVE BEEN DEPOSITED IN FD/OD ACCOUNT. HE, THEREFORE, RECORDED REASONS A ND REOPENED THE ASSESSMENT IN BOTH THESE YEARS BY ISSUANCE OF NOTIC E UNDER SECTION 148 ON 27.2.008 AND 16.3.2009 FOR THE ASSTT.YEARS 2002-03 AND 2003-04 RESPECTIVELY. IN RESPONSE TO THE NOTICE RECEIVED U NDER SECTION 148 OF THE INCOME TAX ACT, THE ASSESSEE HAS FILED RETURNS OF I NCOME DECLARING NIL INCOME, BECAUSE THE INTEREST INCOME FROM FDS. WAS E XEMPT FROM TAX. THE AO HAS PASSED THE ASSESSMENT ORDER FOR THE ASSTT.YE AR 2002-03 ON 29.12.2008. HE DETERMINED THE TAXABLE INCOME OF TH E ASSESSEE AT RS.30,99,810/- ON THE GROUND THAT DEPOSITS HAVE BEE N MADE IN FD/OD ACCOUNT WHICH REMAINED UNEXPLAINED. HE MADE ADDITION WITH THE HELP OF SECTION 69 ON ACCOUNT OF UNEXPLAINED INVESTMENTS. 4. DISSATISFIED WITH THE ADDITION, THE ASSESSEE CAR RIED THE MATTER BEFORE THE CIT(A). THE LD.FIRST APPELLATE AUTHORITY HAS DELET ED THE ADDITION OF RS.25,99,806/- AND CONFIRMED ADDITION OF RS.5 LAKHS . 5. IN THE ASSTT.YEAR 2003-04, THE LD.AO HAS MADE AN ADDITION OF RS.1,50,000/-. THE LD.AO HAS INITIATED PENALTY PRO CEEDINGS IN BOTH THE YEARS UNDER SECTION 271(1)(C) OF THE ACT AND IMPOSED PEN ALTY OF RS.1,50,000/- IN THE ASSTT.YEAR 2002-03 AND RS.20,000/- IN THE ASSTT .YEAR 2003-04. ITA NO.904 AND 905/AHD/2014 3 6. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. ON PERUSAL OF THE ASSESSMENT ORD ER PASSED IN THE ASSTT.YEAR 2002-03, WE FIND THAT THE LD.AO HAS TABULATED DETAI LS OF AMOUNTS DEPOSITED IN FD/OD ACCOUNT IN PARA 4.2 OF THE ASSESSMENT ORDER. A PERUSAL OF THOSE DETAILS REVEALED THAT ON THIRTEEN OCCASIONS THE AMOUNTS HAV E BEEN DEPOSITED IN THIS ACCOUNT. OUT OF THESE THIRTEEN OCCASIONS, CASH WAS DEPOSITED ON SIX OCCASIONS. A MAJOR AMOUNT OF RS.12 LAKHS WAS DEPOS ITED THROUGH BANK TRANSFER ON 9.4.2011. THEN AGAIN RS.7.00 LAKH WAS DEPOSITED THROUGH TRANSFER ON 10.4.2001. SIMILARLY ON 24.10.2001, RS.5 LAKHS WAS TRANSFERRED THROUGH BANK. THE CIT(A) HAS DELETED ALL THESE ADDITIONS O N THE GROUND THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF DEPOSITS. THE ONLY ADDITION CONFIRMED WAS A SUM OF RS.5.00 LAKHS WHICH WAS DEPOSITED ON 2 7.4.2001 BY TRANSFER FROM BANK. BUT THE ASSESSEE COULD NOT FILE CONFIRM ATION. HAD THE ASSESSEE FILED THE CONFIRMATION FROM M/S.SHRINATHJI CORPORAT ION, THEN THE ADDITION WOULD HAVE BEEN DELETED. IN OTHER WORDS, THE AMOUN T HAS BEEN TRANSFERRED FROM THE ACCOUNT OF M/S.SHRINATHJI CORPORATION, THR OUGH BANKING CHANNEL. BUT IN ORDER TO SUBSTANTIATE THE SOURCE OF DEPOSITS THE ASSESSEE COULD NOT FILE CONFIRMATION. THE CASE OF THE ASSESSEE IS THAT HE HAS GIVEN AN EXPLANATION ABOUT THE SOURCE OF DEPOSITS. THE AMOUNTS HAVE BEE N DEPOSITED THROUGH BANKING CHANNELS, AND THE AO FAILED TO COLLECT ANY EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE HAS TAXABLE INCOME IN INDIA OR EXPLANATION GIVEN BY HIM IS FALSE. 7. AS FAR AS THE FACTS IN THE ASSTT.YEAR 2003-04 AR E CONCERNED, A SUM OF RS.3.50 LAKHS WAS GIVEN TO SHRI ANVARBHAI KAPADIA. HE HAS REPAID RS.1.50 LAKHS. THE ASSESSEE HAS DEPOSITED THIS AMOUNT IN T HE FD/OD ACCOUNT. THE AO HAS REJECTED THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE ITA NO.904 AND 905/AHD/2014 4 ASSESSEE COULD NOT PROVE THAT SAME AMOUNT WAS DEPOS ITED BY HIM. IN OTHER WORDS, THE ASSESSEE FAILED TO PROVE THAT SHRI ANVAR BHAI KAPADIA HAS ENCASED THE CHEQUE GIVEN BY THE ASSESSEE, AND THEREAFTER, W ITHDREW THE AMOUNT REFUNDED TO THE ASSESSEE AND THAT VERY AMOUNT WAS D EPOSITED IN THE ACCOUNT. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD. SECTION 271(1)(C) OF THE ACT HAS A DIRECT BEARING O N THE CONTROVERSY WHICH READS AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE C OMMISSIONER (APPEALS) OR THE CIT IN THE OF COURSE OF ANY PROCEE DINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B) ** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL N OT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULA RS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME OR SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' ITA NO.904 AND 905/AHD/2014 5 9. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM SH OULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100 % TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OT HER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CON CEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUTORY DEEM ING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATION-1 TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FI RST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCO ME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE AS SESSEE FAILS, TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF THE TOTAL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD CO ME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE ITA NO.904 AND 905/AHD/2014 6 DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSE E IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAV E BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANAT ION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMIN G FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE I NCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 10. IN THE LIGHT OF THE ABOVE, IF WE EXAMINE THE FA CTS IN THE PRESENT TWO APPEALS, THEN IT WOULD REVEAL THAT THE ASSESSEE HAS GIVEN EXPLANATION ABOUT THE SOURCE OF DEPOSITS IN THE ACCOUNTS. THE EXPLANATIO N COULD NOT BE SUBSTANTIATED WITH THE SUPPORTING EVIDENCE, BUT THE EXPLANATION W AS NOT HELD BY THE AO AS FALSE. HAD THE ASSESSEE GAVE CONFIRMATION FROM M/S .SHRINATHJI CORPORATION IN THE ASSTT.YEAR 2002-03, THEN THE ADDITION ITSELF WO ULD HAVE BEEN DELETED, BUT THE AO HAS NOT ISSUED ANY NOTICE TO M/S.SHRINATHJI CORPORATION IN ORDER TO FIND OUT WHETHER THE EXPLANATION GIVEN BY THE ASSES SEE IS FALSE OR NOT. SIMILARLY, IN THE ASSTT.YAR 2003-04, THE EXPLANATIO N GIVEN BY THE ASSESSEE IS THAT HE HAS RECEIVED BACK RS.1.50 LAKHS FROM SHRI A NVARBHAI KAPADIA AND THAT AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT. THE AO H AS ACCEPTED THE FACTS THAT A SUM OF RS.3.00 LAKHS ADVANCED BY THE ASSESSE E, BUT DISBELIEVED THE EXPLANATION OF RS.1.50 LAKHS. AGAIN THE EXPLANATIO N OF THE ASSESSEE WAS NOT HELD TO BE FALSE. THEREFORE, IN VIEW OF OUR DISCUS SION, WE ARE OF THE VIEW THAT THE ASSESSEE DOES NOT DESERVE TO BE VISITED WITH PE NALTY UNDER SECTION ITA NO.904 AND 905/AHD/2014 7 271(1)(C) OF THE ACT, AND ACCORDINGLY IMPUGNED PENA LTY IN BOTH THE APPEALS ARE CANCELLED. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 1 ST MARCH, 2016 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER