Raj Kumar Jallan, Sirsa V. DCIT, Chandigarh

ITA 914/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95447 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 28-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Gift; Income from undisclosed sources; Search and seizure; Agreed addition
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 914/CHD/2014 (ASSESSMENT YEAR: 2004-05) ITA NO. 915/CHD/2014 (ASSESSMENT YEAR: 2005-06) ITA NO. 907/CHD/2014 (ASSESSMENT YEAR: 2006-07) ITA NO. 908/CHD/2014 (ASSESSMENT YEAR: 2007-08) RAJ KUMAR JALLAN, VS. THE DCIT, CENTRAL CIRCLE, 1 #E-140, NEW ANAJ AAYAKAR BHAWAN, SEC.17E MANDI, SIRSA. CHANDIGARH. HARYANA,125055. PAN: ACPPJ0350H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.R. SHARMA, ADV. RESPONDENT BY : SHRI MANJIT SINGH, DR. DATE OF HEARING : 04.08.2015 DATE OF PRONOUNCEMENT: 10.08.2015 O R D E R PER BHAVNESH SAINI,J.M. : ALL THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE OR DERS OF CIT(A), CENTRAL, GURGAON DATED 08.09.2014 FOR THE RESPECTIV E ASSESSMENT YEARS 2004-05 TO 2007-08, CONFIRMING THE PENALTY UNDER S ECTION 271(1) (C) OF THE ACT LEVIED BY THE ASSESSING OFFICER. 2. FOR THE ASSESSMENT YEAR 2004-05, ITA NO. 914/CHD/ 2 014, THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE AC TION U/S 132(1) OF THE INCOME TAX ACT WAS CONDUCTED AT THE RESIDENTIAL PR EMISES OF THE ASSESSEE AS ON 25.03.2008. CERTAIN PAGES PERTAINING TO PURCHASE OF JEWELLERY AND EXPENSES INCURRED BY THE ASSESSEE OUT OF BOOKS OF ACCOUNTS WERE SEIZED. DURING THE COURSE OF ASSESSMENT THE ASSESS EE WAS ASKED TO 2 EXPLAIN THE SOURCE OF INVESTMENT MADE IN JEWELLERY AND EXP ENSES. TOTAL COST OF JEWELLERY ITEMS AND EXPENSES INCURRED BY THE ASS ESSEE FOUND TO BE RS.90,400/-. THE ASSESSEE EXPLAINED THAT HE WITHDREW RS. 79,666/- FOR HOUSEHOLD EXPENSES FROM HIS CAPITAL ACCOUNT AND RS.40,000/ - WAS CONTRIBUTED BY HIS WIFE. HE FURTHER EXPLAINED THAT A SUM O F RS.73,900/- WAS WITHDRAWN FROM HUF ACCOUNT AND THUS TOTAL WITHDRAW AL FOR HOUSEHOLD EXPENSES FOR THE YEAR UNDER CONSIDERATION WAS 1,93,566/-. HE ALSO STATED THAT HE HAS TWO MINOR CHILDREN AND ARE STUD YING IN ST. XAVIER SCHOOL, SIRSA AND HIS WIFE HAD RECEIVED CASH GIFTS OF RS.25,000 /- TO 50,000 FROM HER PARENTS. THE ASSESSING OFFICER NOTICED THAT THE CHILDREN OF THE ASSESSEE ARE STUDYING IN A WELL KNOWN SCHOOL AND A T LEAST RS.50,000/- EXPENSES WERE NECESSARY TO BE INCURRED FOR THEIR STUDY. IT WAS ALSO OBSERVED THAT FROM THE REMAINING AMOUNT OF RS.1,4 3,566/- HE WOULD NOT HAVE INCURRED EXPENSES OF RS.90,400/- FOR PURC HASE OF JEWELLERY. ON THE BASIS OF THESE FACTS THE ASSESSING OFFICER HELD THAT THE JEWELLERY ITEMS AND EXPENSES INCURRED BY THE ASSESSEE W ERE MADE OUT OF UNDISCLOSED INCOME EARNED BY THE ASSESSEE DURING THE Y EAR. AN ADDITION OF RS.90,400/- WAS OFFERED BY THE ASSESSEE FOR TAXATION AS HIS ADDITIONAL INCOME SUBJECT TO NO PENAL ACTION. FURTHER, THE ASSESSEE WAS ASKED TO PRODUCE THE EVIDENCE OF OTHER GIFTS RECEIVED HAVING REFLEC TED IN HIS CAPITAL ACCOUNT. OUT OF TOTAL GIFTS OF RS.2,07,000/- HE COULD NOT PRO DUCE ANY SUPPORTING DOCUMENTARY EVIDENCE FOR THE GIFT OF RS.7,000/-. THE ASSESSEE OFFERED THIS AMOUNT OF RS. 7,000/- ALSO FOR TAXATION SUBJECT TO NO PENAL ACTION. 3. THE PENALTY PROCEEDING UNDER SECTION 271(1) (C) WERE INITIA TED. THE ASSESSEE REITERATED THE ARGUMENTS THAT WERE SUBMITTED BY HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IN THE PENALTY PRO CEEDING ALSO. THE ASSESSING OFFICER FOUND THE EXPLANATION SO OFFERED BY TH E ASSESSEE WAS NOT SATISFACTORY. IT WAS ALSO OBSERVED THAT ALTHOUGH THE ASSESSEE PLEADED FOR THE ADDITION OF INCOME DURING THE COURSE OF AS SESSMENT 3 PROCEEDINGS SUBJECT TO NO PENAL ACTION, THE REQUEST OF T HE ASSESSEE IS NOT ACCEPTABLE AS THE EVASION OF TAXES/CONCEALMENT OF INCOME WAS TRACED BY THE ASSESSING OFFICER AFTER IN DEPTH ANALYSIS OF THE SEIZED RECORD AND DUE APPLICATION OF MIND AND APPRECIATION OF FACTS. THE ASSESSING O FFICER WAS OF THE VIEW THAT THE FACT THAT ASSESSEE AGREED TO THE ABOVE ADDITION ESTABLISHES CONCEALMENT BY THE ASSESSEE. THE DISCLOSURE MADE BY THE ASSESSEE BEING MADE UNDER FEAR OF ADVERSE ACTION BY THE DEPARTMENT CANNOT BE STATED TO BE BONAFIDE. FURTHER HOLDING THAT TH E CASE OF THE ASSESSEE ALSO SQUARELY FALLS WITHIN THE PURVIEW OF EXPLANATIO N-5A TO SECTION 271(1) (C), THE ASSESSING OFFICER HELD THAT THE ASSES SEE HAS WILLFULLY AND INTENTIONALLY CONCEALED THE PARTICULARS OF INCOME . ON THE BASIS OF THIS HE LEVIED THE PENALTY AMOUNTING TO RS.28,500/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. 4. SIMILARLY, FOR ASSESSMENT YEAR 2005-06, ITA NO.915/CHD/2 014, THE PAGES PERTAINING TO PURCHASES OF JEWELLERY AMOUNTING TO RS.5,191/- WERE SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OP ERATION. THE SOURCE OF THESE COULD NOT BE SUBSTANTIATED BY THE ASSE SSEE. AN INCOME RS.5,191/- WAS OFFERED FOR TAXATION SUBJECT TO NO PENAL A CTION. PENALTY UNDER SECTION 271(1) (C) READ WITH EXPLANATION 5A AMOUNTING TO RS.1,576/- WAS IMPOSED, WHICH GOT CONFIRMED BY THE CIT(A). 5. FOR THE ASSESSMENT YEAR 2006-07, ITAT NO. 907/CHD/ 2014, A BILL OF RS.11,835/- PERTAINING TO HOTEL EXPENSES WAS FOUND DURIN G THE COURSE OF COURSE OF SEARCH. THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF THE SAME. AN INCOME OF RS.11,835/- WAS OFFERED FOR TAXATION SU BJECT TO NO PENAL ACTION. PENALTY AMOUNTING TO RS.3,984/-WAS LEVIED BY T HE ASSESSING OFFICER UNDER SECTION 271 (1) (C), READ WITH EXPLANA TION 5A WHICH GOT CONFIRMED BY THE CIT(A). 4 6. FOR ASSESSMENT YEAR 2007-08, ITA NO.908/CHD/2014, P AGES PERTAINING TO PURCHASES OF JEWELLERY ITEMS AMOUNTING TO RS .92,773/- AND EXPENSES AMOUNTING TO RS.18,006 WERE SEIZED DURING THE COURSE OF SEARCH. THE ASSESSEE FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE TO PROVE THE SAID EXPENSES AND OFFERED AN AMOUNT OF RS.1,10,7 76/- FOR TAXATION SUBJECT TO NO PENAL ACTION. FURTHER AS ASSESS EE COULD NOT PRODUCE THE BILL VOUCHERS OF PETTY EXPENSES, AN ADDITION O F RS.20,000/- WAS MADE AN ACCOUNT OF OTHER EXPENSES. IN THIS WAY, AN ADDITION OF RS.1,30,776/- WAS OFFERED FOR TAXATION SUBJECT TO NO PENA L ACTION. PENALTY AMOUNTING TO RS.36,740/- WAS LEVIED BY THE ASSESS ING OFFICER, U/S 271(1)(C) READ WITH EXPLANATION 5A WHICH GOT CONFIRMED BY THE CIT(A). 7. SINCE, THE ISSUES RAISED IN ALL THE FOUR APPEALS ARE SIMILA R, THE SAME ARE CONSIDERED TOGETHER HEREUNDER. 8. THE ASSESSEE WENT INTO APPEAL BEFORE THE CIT(A) AGAINS T THE PENALTY SO LEVIED BY THE ASSESSING OFFICER. AGAIN THE SAME CONTENTIO NS WERE REITERATED BEFORE THE CIT(A). THE CIT(A) HELD THAT ADDITIO NAL SURRENDERED INCOME WAS NOT DECLARED IN RETURN UNDER SE CTION 139(1) AND 153A THEREFORE IT WAS QUITE EVIDENT FROM THE FACTS THAT T HE ASSESSEE HAD NO OTHER ALTERNATIVE BUT TO SURRENDER THE SAID AMOUNTS FOR TAXATION SINCE HE COULD NOT SUBSTANTIATE THE SAME. IT WAS ALSO HELD THA T THE ASSESSEE NEITHER ADDUCED SUFFICIENT EXPLANATION FOR OMISSION NOR DECLA RED THESE AMOUNTS IN HIS REGULAR RETURN. THE CIT(A) WAS ALSO OF THE V IEW THAT THE ASSESSEE HAD DUTY TO PERFORM, I.E., STATING THE REASONS FOR NOT HAVING DISCLOSED THE INCOME EARLIER, BESIDES EXPLAINING THE SOURCES OF THE EXPENDITURE, WHICH HAS NOT BEEN DONE. IT IS THE BURDEN O N THE ASSESSEE TO DISCHARGE THE PRIMARY ONUS WITH COGENT EXPLANATION WIT H REGARD TO THE ISSUES IN HANDS. IN VIEW OF THIS CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY UNDER SECTION 271(1)(C ). 5 9. NOW THE ASSESSEE HAS COME IN APPEALS BEFORE US, AGAIN ST THE SAID ORDERS OF THE CIT(A). 10. THE LEARNED COUNSEL OF THE ASSESSEE ARGUED THAT TH E ASSESSEE HAD GIVEN PROPER EXPLANATION AS REGARDS THE PURCHASE OF JEW ELLERY AND EXPENSES BEING MADE OUT OF HIS WITHDRAWALS DURING THE COU RSE OF ASSESSMENT PROCEEDINGS AS WELL AS IN THE PENALTY PROCEED INGS. FURTHER, IT WAS ALSO STATED THAT THE AGREED ADDITIONS WERE MADE ON THE CONDITIONS OF NO PENAL ACTION BEING INITIATED AGAINST THE ASSESSEE. IN V IEW OF THIS, IT WAS PRAYED TO DELETE THE PENALTY. 11. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND CIT(A). 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIALS ON RECORD. IT IS A FACT ON RECORD THAT SOME INCRIMINATING P APER SHOWING THE JEWELLERY PURCHASED & OTHER EXPENSES INCURRED BY THE A SSESSEE WERE FOUND DURING THE COURSE OF SEARCH. IT WAS THE ONUS OF TH E ASSESSEE TO EXPLAIN THE SOURCE OF SUCH EXPENDITURE TO THE SATISFACTIO N OF ASSESSING OFFICER. THE ASSESSEE HAS TRIED TO EXPLAIN THAT THE JEW ELLERY SO PURCHASED AND EXPENSES INCURRED ON VARIOUS ITEMS WERE OUT OF WITHDRAWALS MA DE BY HIMSELF, HIS WIFE AND HUF. HOWEVER, NO EVIDENCE WAS FILED TO SUBSTANTIATE SUCH EXPLANATION BEFORE THE ASSESSING OFFICER AT THE ASSESSMENT STAGE. WHEN ASSESSEE FAILED TO SUBSTANTIATE A NY PLEA TAKEN BEFORE THE AUTHORITIES BELOW AND NO EVIDENCE WAS FILED IN SU PPORT OF THE EXPLANATION THEN THE ASSESSEE SURRENDERED THE AMOUNTS IN QUESTION ON WHICH PENALTY WERE IMPOSED FOR THE PURPOSES OF TAXATION. T HUS, IT IS PROVED ON RECORD THAT ASSESSEE FAILED TO PROVE THE EXP LANATION TO THE SATISFACTION OF AUTHORITIES BELOW. THUS JEWELLERY PURCHASED A ND OTHER EXPENSES INCURRED ETC. WERE OUT OF UNDISCLOSED SOURCE OF INCOME. SINCE IT 6 WAS INCOME FROM UNDISCLOSED SOURCES THEREFORE ASSESSING O FFICER HAD NO OPTION EXCEPT TO MAKE ADDITION AGAINST THE ASSESSEE. IT IS ALSO A FACT THAT FOR THE ASSESSMENT YEARS IN QUESTIONS DUE DATE OF FILING OF THE RETURN UNDER SECTION 139(1) HAS EXPIRED ON THE DATE OF THE SEAR CH I.E., ON 25 TH MARCH, 2008. IT IS ALSO A FACT THAT THE SURRENDER OF ADD ITIONAL INCOME ON ACCOUNT OF JEWELLERY ETC. HAD NOT BEEN DECLARED BY THE A SSESSEE IN THE RETURN FILED UNDER SECTION 139(1) AND UNDER SECTION 153A O F THE INCOME TAX ACT. THE EXPLANATION 5A TO SECTION 271(1) (C) OF THE ACT THUS WOULD APPLY AGAINST THE ASSESSEE FOR LEVY OF PENALTY AND IT WO ULD BE A CASE OF DEEMED CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHIN G INACCURATE PARTICULARS OF SUCH INCOME. THE LEARNED CIT(A) TH US CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES HAD RIG HTLY CAME TO THE CONCLUSION THAT THE ASSESSEE HAS CONCEALED THE PAR TICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. EVEN DURING T HE COURSE OF ARGUMENT, LEARNED COUNSEL FOR THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY EVIDENCE OR MATERIAL ON RECORD IN SUPPORT OF ANY CONTENT ION THAT THE JEWELLERY PURCHASED AND EXPENDITURE WERE INCURRED FROM THE KNOWN SOURCES. SINCE THE ASSESSEE MADE SURRENDERED AT THE ASSESSMEN T STAGE OF THE PROPOSED ADDITIONS THEREFORE, IT IS CLEAR THAT THE AS SESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND ALSO FILED INACCURAT E PARTICULARS OF INCOME. NO ERROR HAVE POINTED OUT IN THE ORDER OF THE LEARNED CIT(A) IN CONFIRMING THE LEVY OF PENALTY IN ALL THE ASSESSMENT YEARS. 13 THE PLEA OF THE ASSESSEE THAT THE INCOME WAS SURRENDERED T O BUY PEACE OF MIND, PENALTY SHOULD NOT BE LEVIED IS ALSO UNTENABLE IN VIEW OF THE JUDGEMENT OF THE APEX COURT IN THE CASE OF MAK DATA PRIVATE LTD. VS. CIT (2013) 358 ITR 593 (SC), WHEREBY IT HAS BEEN HELD THAT THE VOLUNTARY DISCLOSURE/ SURRENDER MADE IN VIEW OF DETECTION BY THE AS SESSING OFFICER IN THE SEARCH CONDUCTED DOES NOT RELIEVE THE ASSESSEE FROM THE MISCHIEF OF THE PENALTY PROCEEDING. 7 14 SINCE THE ISSUES IN ALL THE APPEALS ARE THE SAME, ABO VE STATED FINDINGS HOLD GOOD FOR ALL THE FOUR APPEALS. 15. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF CIT(A) IN CONFIRMING THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 16. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSEE ARE DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH AUGUST, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 10.08.2015 PRAMOD/P.S. COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR ITAT, CHANDIGARH