Shri Jitendrabhai B.Sojitra, Surat V. The ACIT.,Cent.Circle-3, Surat

ITSSA 156/AHD/2013

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2453 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 01-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Unexplained expenditure; Income from undisclosed sources
• Section: 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ IT(SS)A.NO.155 AND 156/AHD/2013 / ASSTT. YEAR: 2006-2007 AND 2007-2008 JITENDRA BABUBHAI SOJITRA B-402, GOLDEN PLAZA ANKUR CHAR RASTA VARACHHA ROAD SURAT. PAN : ADAPS 6186 L. VS. ACIT, CIR.3 SURAT. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI M.K PATEL REVENUE BY : SHRI PRASOON KABRA, SR.DR / DATE OF HEARING : 23/11/2016 / DATE OF PRONOUNCEMENT: 24/11/2016 +,/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST SEPARATE ORDERS OF LD.CIT(A)-II, AHMEDABAD OF EVEN DATED 5.3.2013 PASSED FOR THE ASSTT.YEAR 2006-07 AND 2007-08. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) ERRED IN CONFIRMING PENALTY OF RS.5,78,035/- AND RS.10,54,44 8/- IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 BY TH E AO FOR THE ASSTT.YEAR 2006-07 AND 2007-08 RESPECTIVELY. IT(SS)A NO.155 AND 156/AHD/2013 2 3. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT A SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AND SURVEY WAS CARRIED OUT AT DIFFE RENT OTHER PLACES. THE LD.AO HAS PASSED AN ASSESSMENT ORDER ON 26.12.2008 IN BOTH THE YEARS. HE HAS DETERMINED TOTAL TAXABLE INCOME OF THE ASSESSEE AT RS.27,39,060/- IN THE ASSTT.YEAR 2006-07 AND RS.91,19,159/- IN THE ASSTT. YEAR 2007-08. AS FAR AS THE ASSTT.YEAR 2006-07 IS CONCERNED THE AO HAS MADE TWO ADDITIONS I.E. ADDITION OF RS.7,14,901/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY AND ADDITION OF RS.17,34,212/- ON ACCOUNT OF INCOME FROM TUITION FEES. THE LD.CIT(A) HAS CONFIRMED THE ADDITION OF RS.17,34,21 2/-, BUT CONFIRMED ADDITION OF RS.1,02,164/- OUT OF TOTAL ADDITION OF RS.7,14,901/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLER Y. THUS, THE AO HAS CONSIDERED AN AMOUNT OF RS.19,21,992/- FOR VISITING THE ASSESSEE WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. IT HAS BEEN BROUGHT TO OUR NOTICE THAT THE ASSES SEE HAS CHALLENGED THIS ADDITION IN ITA NO.47/AHD/2010 IN THE ASSTT.YEAR 20 06-07. THIS APPEAL OF THE ASSESSEE HAS BEEN ALLOWED BY THE TRIBUNAL VIDE ORDER DATED 18.10.2016. THE FINDING OF THE ITAT, READS AS UNDER: 11. IT IS ALSO AN UNDISPUTED FACT THAT NO ADDITION S HAVE BEEN MADE IN RESPECT OF UNEXPLAINED INVESTMENT ON ACCOUNT OF CAS H AND JEWELLERY FOUND AT THE TIME OF SEARCH. THEREFORE, IT CAN BE S AFELY CONCLUDED THAT THE ALLEGED DISCLOSURE MADE BY THE ASSESSEE IS NOT CORROBORATED BY ANY UNEXPLAINED INVESTMENT/UNEXPLAINED EXPENDITURE. WE, THEREFORE, DO NOT FIND ANY MERIT IN MAKING THE IMPUGNED ADDITION BY T HE A.O. WE ALSO DO NOT FIND ANY MERIT IN THE PART CONFIRMATION OF THE IMPUGNED ADDITION MADE BY THE LD. CIT(A). WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ENTIRE ADDITION OF RS. 24,49,113/-. IT(SS)A NO.155 AND 156/AHD/2013 3 4. ON THE STRENGTH OF THIS ORDER, IT WAS CONTENDED THAT NO PENALTY IS IMPOSABLE IN THE ASSTT.YEAR 2006-07. THE LD.DR WAS UNABLE TO CONTROVERT TO THE CONTENTION OF THE ASSESSEE. 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIOSN AND GO NE THROUGH THE RECORD CAREFULLY. WE FIND THAT S UB-CLAUSE (III) OF SECTION 271(1)(C) PROVIDES MECHANISM FOR QUANTIFICATION OF PENALTY. IT CONTEM PLATES THAT THE ASSESSEE WOULD BE DIRECTED TO PAY A SUM IN ADDITION TO TAXES, IF ANY, PAYABLE HIM, WHICH SHALL NOT BE LESS THAN , BUT WHI CH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED B Y REASON OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, THE QUANTIFICATION OF THE PENALTY IS DEPENDED UPON THE ADDITIONS MADE TO THE INCOME OF THE ASSESS EE. SINCE BASIS FOR VISITING THE ASSESSEE WITH PENALTY HAS BEEN EXTINGU ISHED BY DELETING THE ADDITION, THEREFORE, THERE CANNOT NOT ANY PENALTY UPON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE ACT FOR THE ASSTT.YEAR 200 6-07. 6. AS FAR AS THE ASSTT.YEAR 2007-08 IS CONCERNED, N ATURE OF ADDITION ARE SIMILAR I.E. ON ACCOUNT OF UNEXPLAINED INVESTMENT I N THE JEWELLERY AS WELL AS UNACCOUNTED INCOME FROM TUITION FEES. THE ISSUE WI TH REGARD TO UNEXPLAINED INVESTMENT IN JEWELLERY HAS BEEN SETTLED OUT IN THE QUANTUM PROCEEDINGS AND NO ADDITION REMAINED FOR VISITING THE ASSESSEE WITH PENALTY. AS FAR AS THE ISSUE WITH REGARD TO UNACCOUNTED INCOME ON ACCOUNT OF TUITION ACTIVITIES IS CONCERNED, THIS ISSUE HAS BEEN SET ASIDE TO THE FIL E OF THE AO FOR QUANTIFICATION. THE FINDING OF THE TRIBUNAL IN PAR A 19 OF THE ORDER IS WORTH TO NOTE. IT READS AS UNDER: IT(SS)A NO.155 AND 156/AHD/2013 4 19. THE CREDIT OF EXPENDITURE HAS ALSO NOT BEEN GI VEN BY THE FIRST APPELLATE AUTHORITY. WE, ACCORDINGLY, MODIFY THE FI NDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO ALLOW THE CREDIT OF E XPENDITURE OF RS. 21,35,407/- FROM THE ADDITION OF RS. 32,02,918/- CO NFIRMED BY THE LD. CIT(A), WHICH LEAVES WITH THE ADDITION OF RS. 10,67 ,511/-. WE FURTHER DIRECT THE A.O. TO VERIFY WHETHER ENTRIES FOR RS. 5 ,96,100/- ARE DISCLOSED IN THE HANDS OF THE WIFE OF THE ASSESSEE SMT. KANCH ANBEN SOJITRA; AND IF THE SAME IS FOUND DISCLOSED IN THE HANDS OF SMT. KA NCHANBEN SOJITRA, THE TOTAL ADDITION SHOULD BE MADE AT RS. 4,71,411/- AND IF THE ASSESSEE FAILS TO CONVINCE THE A.O., THEN THE ADDITION SHALL BE AT RS. 10,67,511/- . 7. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD. THE TRIBUNAL HAS SET ASIDE THIS ISSUE TO T HE FILE OF THE LD.AO FOR RECONSIDERATION. THIS ISSUE IS NOW SUBJUDICED BEFO RE THE AO. THEREFORE, QUANTIFICATION OF THE PENALTY IS DEPENDED UPON THE ADDITIONS MADE TO THE INCOME OF THE ASSESSEE. UPTO AND UNTIL , THE ISSUE REGARDING DETERMINATION OF TAXABLE INCOME IS FINALIZED, PENALTY UNDER SECTION 271(1)(C) OF THE ACT CANNOT BE IMPOSED UPON THE ASSESSEE. IT WILL BE IN THE DI SCRETION OF THE AO TO VISIT THE ASSESSEE WITH PENALTY OR NOT. THE LD.AO SHALL PROCEED IN ACCORDANCE WITH LAW AFTER DETERMINATION OF INCOME IN THE QUANTUM PR OCEEDINGS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR TH E ASSTT.YEAR 2006-07 IS ALLOWED AND APPEAL FOR THE ASSTT.YEAR 2007-08 IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 24 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 24/11/2016