Dharmichand Sirvi, R.R.Dist, Hyderabad V. ITO, Ward-1, Vikarabad, Vikarabad

ITA 964/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6035 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 29-06-2016
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: S RAMA RAO
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 964/HYD/2016 ASSESSMENT YEAR: 2008-09 DHARMICHAND SIRVI, SHANKERPALLY, [PAN: ADRPS6066Q] VS THE INCOME TAX OFFICER, WARD-1, VIKARABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SMT. SUMAN MALIK, DR DATE OF HEARING : 01-11-2016 DATE OF PRONOUNCEMENT : 04-11-2016 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-10, HYDERABAD DATED 15-02-2016. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDI VIDUAL, DERIVING INCOME FROM BUSINESS OF PAWN BROKING AND S ALE OF JEWELLERY. ASSESSEE FILED RETURN OF INCOME FOR AY. 2008-09 DECLARING INCOME AT RS. 14,37,241/-, WHICH INCLUDED AN ADMITTED INCOME OF RS. 11,50,250/- ON ACCOUNT OF SURVEY CONDU CTED DURING THE FINANCIAL YEAR. ASSESSMENT U/S. 143(3) OF THE INC OME TAX ACT [ACT] WAS HOWEVER, COMPLETED DETERMINING THE TOTAL INCO ME AT RS. 37,34,560/- INTER ALIA MAKING ADDITIONS OF RS. 8,06,060/- CONSIDERED TO BE A BOGUS PURCHASE FROM M/S. SHAGUN J EWELLERS, AN AMOUNT OF RS. 12,23,000/- REJECTING THE BORROWALS FROM MAHESH I.T.A. NO. 964/HYD/2016 DHARMICHAND SIRVI :- 2 -: BANK AND OTHER RELATIVES, AN AMOUNT OF RS. 3,50,000/- BEING LOANS BORROWED FROM RELATIVES IN RAJASTAN FOR CONSTRUCTION OF HOUSE. DURING THE PENDENCY OF THE APPEAL BEFORE THE ITAT ON A SSESSMENT, AO FINALISED PENALTY U/S 271(1)(C) CONSIDERING THAT I NCOME HAS ESCAPED TO AN EXTENT OF RS. 33,65,730/- AND LEVIED PE NALTY OF RS. 11,44,010/-. HAVING CONFIRMED THE ADDITIONS MADE IN THE ASSESSMENT, LD.CIT(A) AS CONSEQUENCE, UPHELD THE PENA LTY ALSO. 3. IN THE MEAN TIME, QUANTUM APPEAL IN ITA NO. 1837/HYD/2012 HAS BEEN CONSIDERED BY THE CO-ORDINAT E BENCH AND VIDE ORDER DT. 21-10-2016, PURCHASE OF JEWELLERY FROM M/S. SHAGUN JEWELLERS (RS. 8,06,161/-) WAS HELD TO BE GE NUINE. LIKE- WISE, THE BORROWALS OF RS. 12,23,000 FROM MAHESH BAN K AND FROM OTHER RELATIVES AT HYDERABAD WERE ALSO CONSIDERED AS GENUINE. WITH REFERENCE TO THE STATED BORROWALS FROM RELATIVES AT RAJASTHAN OF RS.3,50,000, THE SAME WAS NOT ACCEPTED, AS ASSESSE E COULD NOT FURNISH PROPER CONFIRMATION LETTERS OR ANY OTHER EVIDE NCE FOR ITS GENUINENESS. ACCORDINGLY, TWO OF THE AMOUNTS CONSID ERED BY AO FOR PENALTY DO NOT SURVIVE. 4. LD. COUNSEL SUBMITTED THAT AO HAS CONSIDERED EVEN THE DECLARED INCOME I.E., ADMITTED ADDITIONAL INCOME IN SU RVEY OF RS. 11,50,250/- ALSO FOR LEVYING THE PENALTY U/S. 271(1 )(C). IT WAS SUBMITTED THAT THIS AMOUNT, THOUGH ADMITTED IN THE COURSE OF SURVEY, WAS INCLUDED IN THE RETURN OF INCOME FILED AN D TAXES WERE PAID. THEREFORE, THE PENALTY CANNOT BE LEVIED ON THE ADMITTED INCOME IN THE RETURN OF INCOME. WITH REFERENCE TO THE C REDITS OF RS. 3,50,000/- BEING NOT ACCEPTED, IT WAS SUBMITTED THAT ASS ESSEE DID INDEED BORROW THE AMOUNTS BUT COULD NOT FURNISH NECESSA RY I.T.A. NO. 964/HYD/2016 DHARMICHAND SIRVI :- 3 -: EVIDENCES DUE TO HIS INABILITY, BEING SICK, AND THIS SHOULD NOT BE CONSIDERED FOR LEVY OF PENALTY AS THE CONTENTIONS OF ASSESSEE WERE NOT PROVED OTHERWISE. 5. LD. DR HOWEVER, RELIED ON THE ORDERS OF THE AO AND CIT(A). 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS PLACED ON RECORD. AS FAR AS LEVY OF PENALTY ON ADMITTED INCOME OF RS. 11,50,250/- IS CONCERNED, THE SAME CAN NOT BE TAKEN AS ESCAPED INCOME, AS ASSESSEE HAS ADMITTED INCOME IN THE RETURN OF INCOME FILED. THERE IS NO PROVISION FOR LEVY OF CONCEALMENT PENALTY ON ADMITTED INCOME IN SURVEY, WHICH HAPPENED DURING THE COURSE OF FINANCIAL YEAR AND ASSESSEE ADMITS THAT AFTE R THE END OF THE YEAR WHILE FILING THE RETURN OF INCOME. THIS ISS UE WAS ELABORATELY CONSIDERED BY THE CO-ORDINATE BENCH IN TH E CASE OF GODAVARI TOWNSHIPS PVT. LTD., VS. DCIT, [148 ITD 04 63 (VISAKHAPATNAM)]. RESPECTFULLY FOLLOWING THE CO-ORDI NATE BENCH DECISION, I AM OF THE OPINION THAT THIS AMOUNT CANNOT B E CONSIDERED AS CONCEALED INCOME, AS THE SAME WAS ADMI TTED BY ASSESSEE IN THE RETURN OF INCOME. THE LEVY OF PENALT Y U/S 271(1)(C) ON THIS AMOUNT IS NOT APPROPRIATE BOTH FACTUALLY AND LEG ALLY. 6.1. THAT LEAVES ME WITH THE PENALTY ON AN AMOUNT OF R S. 3,50,000/-, AS THE OTHER TWO AMOUNTS CONSIDERED BY THE AO WERE ALREADY DELETED BY THE CO-ORDINATE BENCH IN THE ORDER REFERRED SUPRA. WITH REFERENCE TO THIS AMOUNT OF RS. 3,50,000/- , THE ITAT CONFIRMED THE AMOUNT AS ASSESSEE DID NOT FURNISH APP ROPRIATE CONFIRMATION LETTERS AND ESTABLISH THE LOANS. HOWEVER, THIS MAY BE GOOD FOR AN ADDITION OF INCOME BUT NOT SUFFICIENT FOR CONSIDERING I.T.A. NO. 964/HYD/2016 DHARMICHAND SIRVI :- 4 -: LEVY OF PENALTY. ASSESSEES CONTENTION THAT THE AMOU NT WAS BORROWED WAS NOT DISPROVED. JUST BECAUSE ASSESSEE C OULD NOT SUBSTANTIATE THE CREDITWORTHINESS OR FACT OF RECEIVING LOANS, IT CANNOT BE STATED THAT THE SAME WILL LEAD TO FOR PENALTY F OR CONCEALMENT OF INCOME. GIVEN THE FACTS OF THE CASE AND ORDERS OF THE CO-ORDINATE BENCHES ON THE ISSUE, I AM OF THE OPINI ON THAT NO PENALTY CAN BE LEVIED EVEN ON THIS AMOUNT. HENCE, PE NALTY LEVIED BY THE AO IS CANCELLED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH NOVEMBER, 2016 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 4 TH NOVEMBER, 2016 TNMM COPY TO : 1. DHARMICHAND SIRVI, SHANKERPALLY. C/O. R. JASRAJ & CO., ADVOCATES, 15-1-91/4/A/1, 2 ND FLOOR, PAPALAL PLAZA, OLD FEELKHANA, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-1, VIKARABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-10, HYDERABA D 4. COMMISSIONER OF INCOME TAX (IT & TP), HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.