Smt. Rekhaben Thakkar, Ahmedabad V. The ACIT.,Cent.Circle-1, Baroda

ITSSA 672/AHD/2010

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2185 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 23-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Income from undisclosed sources

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., , !' BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. ./ I.T.A. NO.3094/AHD/2008 2. (SS) ./ I.T(SS).A. NO.672/AHD/2010 ( / ASSESSMENT YEARS : 2005-06 ) 1&2. SMT.REKHABEN THAKKAR PROP.M/S.DURGA FINANCE GENDIGATE, BARODA / VS. 1&2. ASST.CIT CENTRAL CIR-1 BARODA $ ./ ./ PAN/GIR NO. : ABLPT 0083 E ( $' / APPELLANT ) .. ( ()$' / RESPONDENT ) $'* / APPELLANT BY : SHRI S.N. SOPARKAR, AR ()$'+* / RESPONDENT BY : SHRI R.I. PATEL, CIT-DR ,+ / DATE OF HEARING 08/06/2016 -./+ / DATE OF PRONOUNCEMENT 23/06/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : BOTHE THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(A PPEALS)-IV/V, AHMEDABAD DATED 05/02/2008 AND DATED 02/07/2010 FOR ASSESSMENT YEARS (AY) 2005-06. OUT OF THESE TWO APPEALS; ONE APPEAL PERTAINS TO QUANTUM AND ANOTHER ONE PERTAINS TO LEVY OF PENALTY U/S 271(1)(C) ON THE ITA NO.3094/AHD /2008 AND IT(SS)A NO.672/AHD/2010 SMT. REKHABEN THAKKAR VS. ACIT AY 2005-06 - 2 - QUANTUM ADDITION. SINCE THE ISSUES IN BOTH THE APPE ALS ARE INTERCONNECTED, THEREFORE FOR THE SAKE OF CONVENIENCE, BOTH THE APP EALS ARE DECIDED TOGETHER. 2.2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATE RIALS ON RECORD ARE AS UNDER:- 2.3. ASSESSEE IS AN INDIVIDUAL STATED TO BE PROPRIE TOR OF M/S.DURGA FINANCE. A SEARCH U/S.132 OF THE INCOME TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS 'THE ACT') WAS CONDUCTED IN THE GROU P OF SHRI KABHAI CHAUHAN ON 04/03/2005 AND CONSEQUENTLY A SURVEY U/S .133A WAS CARRIED OUT ON 30/03/2005 IN THE CASE OF ASSESSEE AS PAPERS RELATED TO THE ASSESSEE WERE FOUND IN COURSE OF SEARCH. THEREAFTER NOTICE U/S.142(1) OF THE ACT WAS ISSUED ON 07/09/2006 BUT ASSESSING OFFICER (AO) NOTES THAT NO RETURN OF INCOME WAS FILED BY THE ASSESSEE. THEREAF TER, ASSESSMENT WAS FRAMED U/S.144 OF THE ACT VIDE ORDER DATED 29/12/20 06 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,15,77,855/-. ON THE A DDITIONS THAT WERE MADE BY THE AO, AO VIDE ORDER DATED 30.3.2010 HELD THAT ASSESSEE HAS CONCEALED AND FURNISHED INACCURATE PARTICULARS OF I NCOME TO THE TUNE OF RS 1,15,77,855 AND WAS THEREFORE LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT AND ACCORDINGLY LEVIED PENALTY OF RS 38,67,935. AGGRIEVED BY THE ORDERS OF AO ON THE ISSUE OF QUANTUM ADDITION AND L EVY OF PENALTY, ASSESSEE CARRIED THE MATTERS BEFORE THE LD.CIT(A). LD CIT(A) VIDE ORDER ITA NO.3094/AHD /2008 AND IT(SS)A NO.672/AHD/2010 SMT. REKHABEN THAKKAR VS. ACIT AY 2005-06 - 3 - DATED 05/02/2008 (IN APPEAL NO. CIT(A)-IV/289.B/CC- 1/06-07) ON THE QUANTUM ADDITION, DISMISSED THE APPEAL OF THE ASSES SEE. SIMILARLY, CIT(A) VIDE CONSOLIDATED ORDER FOR VARIOUS ASSESSME NT YEARS DATED 2.7.2010 CONFIRMED THE LEVY OF PENALTY U/S 271(1)(C ) OF THE ACT. AGGRIEVED BY THE ORDERS OF LD.CIT(A), ASSESSEE IS N OW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUNDS:- 2.4. IN ITA NO.3094/AHD/2008 FOR AY 2005-06 (WITH RESPECT TO QUANTUM ADDITION) I. ON LEGALITY OF ORDER 1) THE ASSESSING OFFICER HAS ERRED IN INITIATING PROCEEDINGS U/S.153C IN THE CASE OF THE APPELLANT SINCE THE PRO VISIONS OF SECTION 153C ARE NOT APPLICABLE ON FACTS AND CIRCUM STANCE OF THE CASE. 2) THE ORDER PASSED BY THE INCOME-TAX OFFICER IS BAD IN LAW SINCE THE PRECONDITION OF ISSUE OF NOTICE U/S.151(1) I.E. APPROVAL U/S.153D IS NOT TAKEN COPY OF THE SAME IS NOT SUPPL IED TO APPELLANT THOUGH ASKED FOR. 3) THE ORDER PASSED BY THE INCOME-TAX OFFICER IS ALSO BAD IN LAW SINCE COPY OF AUTHORIZATION U/S.132 OF THE ACT IS N OT SUPPLIED AND HAS ALSO NOT GIVEN REASONS RECORDED FOR JUSTIFICATI ON OF SEARCH U/S.132 OF THE ACT. 4) THE ORDER PASSED BY THE INCOME-TAX OFFICER IS ALSO BAD IN LAW SINCE HE HAS RELIED ON STATEMENT OF SHRI HARIN THAK KAR WITHOUT SUPPLYING COPY OF THE STATEMENT AND ALSO NOT SUPPLY ING STATEMENT OF APPELLANT PLACED IN THE FILE OF SHRI BRIJESH CHA UHAN. ITA NO.3094/AHD /2008 AND IT(SS)A NO.672/AHD/2010 SMT. REKHABEN THAKKAR VS. ACIT AY 2005-06 - 4 - 5) THE ORDER OF ASSESSING OFFICER IS BAD IN LAW S INCE THE NOTICE U/S.143(2) DATED 4-11-06 IS NOT SERVED ON YOUR APPE LLANT OR HER AUTHORISED REPRESENTATIVE. II. ON MERITS 1. THE ASSESSING OFFICER HAS ERRED IN NOT APPRECIATING THE NATURE OF BUSINESS AND THE RELEVANT FACTS OF THE APPELLANTS C ASE AND HAS MADE ARBITRARY ADDITION OF RS.1,15,77,855 TO THE TOTAL I NCOME UNDER THE HEAD ADDITION OF INTEREST/COMMISSION INCOMES ON E RRONEOUS AND UNJUSTIFIED PRESUMPTIONS @ 1.25% OF THE TOTAL AMOUN T OF DEPOSITS IN ALL THE BANK ACCOUNTS INSTEAD OF ADOPTING EXACT AND ACTUAL INCOME EARNED BY THE APPELLANT DULY DECLARED BY HER IN RET URN OF INCOME. 2.5. IN IT(SS)A NO.672/AHD/2010 FOR AY 2005-06 (AGA INST LEVY OF PENALTY U/S 271(1)(C): ON LEGALITY OF PENDING ORDER :- 1. THE CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN CO NFIRMING LEVY OF PENALTY OF RS.38,67,935/- LEVIED BY THE ASSESSING O FFICER U/S.271(1)(C) VIDE HIS ORDER DATED 30-3-2010. 2. YOUR APPELLANT SUBMITS THAT ON FACTS OF THE CASE YO UR APPELLANT HAS NOT CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND THEREFORE PENALTY U/S.271(1)(C) IS NOT LEVIABLE. 3. THE ASSESSING OFFICER HAS PASSED ORDER IN HASTE AND HURRY WITHOUT APPLICATION OF MIND AND DISREGARDING THE FACTS OF T HE CASE, PROVISIONS OF LAW AND VARIOUS OBJECTIONS TAKEN BY Y OUR APPELLANT IN REPLY TO THE SHOW CAUSE NOTICE. 4. YOUR APPELLANT SUBMITS THAT NOTICE OF PENALTY U/S.2 71(1)(C) ISSUED BY THE ASSESSING OFFICER DATED 29-12-06 IS BAD IN LAW AND VOID IT BEING VAGUE, NOT CLEAR AS TO WHETHER HE IS PROPOSING TO L EVY OF PENALTY FOR CONCEALING OF INCOME OR FURNISHING INACCURATE PA RTICULARS OF SUCH INCOME AND THEREFORE LEVY OF PENALTY IS BAD-I N-LAW AND VOID. 5. YOUR APPELLANT FURTHER SUBMITS THAT THE ASSESSING O FFICER HAS NOT RECORDED SATISFACTION OF CONCEALMENT DURING COURS E OF ASSESSMENT PROCEEDINGS AND IF SUCH SATISFACTION IS RECORDED A COPY ITA NO.3094/AHD /2008 AND IT(SS)A NO.672/AHD/2010 SMT. REKHABEN THAKKAR VS. ACIT AY 2005-06 - 5 - OF THE SAME IS NOT SUPPLIED TO YOUR APPELLANT THOUG H ASKED FOR AND THEREFORE LEVY OF PENALTY IS BAD-IN-LAW AND VOID. ON MERITS : 1. YOUR APPELLANT SUBMITS THAT THE VARIOUS ADDITION M ADE BY THE ASSESSING OFFICER IS ON GUESS WORK, PRESUMPTION, FO R NOT ACCEPTING EXPLANATION GIVEN BY THE APPELLANT AND THAT THE ADD ITION IS ON ESTIMATE AND ON PROBABILITIES AND THEREFORE YOUR AP PELLANT VERY STRONGLY OBJECTS AND ON SUCH ADDITION OF INCOME PEN ALTY U/S.271(1)(C) CANNOT BE LEVIED. 2. YOURS APPELLANT SUBMIT THAT SHE HAS BEEN MAINTAININ G REGULAR AND PROPER BOOKS OF ACCOUNTS DULY AUDITED U/S.44AD AND KEEPING IN MIND THE NATURE OF BUSINESS, THE VOLUME OR BUSINESS AND VARIOUS TRANSACTIONS ENTERED INTO BY THE APPELLANT WITH ILL ITERATE AND UN- EDUCATED CONSTITUENTS PROVES BEYOND DOUBT THAT THE ADDITION TO INCOME IS ON ACCOUNT OF NOT BELIEF OF EXPLANATION A ND NOT FOR CONCEALING INCOME OR FURNISHING INACCURATE PARTI CULARS OF SUCH INCOME AND THEREFORE THE PENALTY OF RS.38,67,935/- IS REQUIRED TO BE DELETED. 3. BEFORE US, AT THE OUTSET, LD.AR SUBMITTED THAT G ROUND NOS.1, 2, 3 & 5 IN ITA NO.3094/AHD/2008 FOR AY 2005-06 MAY BE TRE ATED AS NOT PRESSED AND, THEREFORE, WE ARE LEFT FOR ADJUDICATI ON REMAINING GROUNDS AND SINCE THE REMAINING GROUNDS ARE INTER-CONNECTED , ALL ARE CONSIDERED TOGETHER. 3.1. ASSESSEE IS STATED TO BE IN THE BUSINESS OF C HEQUE DISCOUNTING, WHEREIN THE ASSESSEE DISCOUNTS THE CHEQUES OF THE C USTOMERS FOR WHICH SHE(ASSESSEE) EARNS COMMISSION/DISCOUNTING CHARGES. THE LD.AR SUBMITTED THAT DURING THE COURSE OF SURVEY, CERTAIN BANK ACCOUNTS IN THE ITA NO.3094/AHD /2008 AND IT(SS)A NO.672/AHD/2010 SMT. REKHABEN THAKKAR VS. ACIT AY 2005-06 - 6 - NAME OF ASSESSEE AND RELATED PERSONS WERE FOUND (TH E DETAILED LIST IS AT PAGE 16 AND 17 OF ANNEXURE 1 OF THE AO ORDER). AO O N THE BASIS OF MATERIALS FOUND AT THE TIME OF SURVEY AND ON THE BA SIS OF INQUIRIES CARRIED OUT BY HIM POST SURVEY, CONSIDERED THE AGGREGATE DE POSITS IN ALL THE BANK ACCOUNTS (I.E. THE BANK ACCOUNTS IN THE NAME OF THE ASSESSEE AND THAT OF HER RELATIVES AND ASSOCIATES) TO BE THE DEPOSITS OU T OF UNACCOUNTED INCOME OF THE ASSESSEE. AO FURTHER CONSIDERED THAT SINCE A SSESSEE IS ALSO IN MONEY LENDING BUSINESS, WHERE THE MONEY IS LENT AT THE RATE OF 1.25% PER MONTH, HE THEREFORE BY APPLYING THE INTEREST RATE O F 1.25% PER MONTH ON THE AGGREGATE DEPOSITS IN VARIOUS BANK ACCOUNTS, WO RKED OUT THE INTEREST INCOME FOR THE YEAR UNDER CONSIDERATION AT RS.1,15, 77,855/- AND MADE ITS ADDITION. THE ADDITION MADE BY AO WAS CONFIRMED BY LD.CIT(A). BEFORE US, LD.AR SUBMITTED THAT AO HAD PROCEEDED TO CALCULATE THE INTEREST FOR THE ENTIRE YEAR WHICH IS FACTUALLY INC ORRECT BECAUSE THE ASSESSEE WOULD BE EARNING THE INTEREST ONLY FOR A P ERIOD ON WHICH THE MONEY WAS LENT. HE SUBMITTED THAT IN THE CHEQUE DIS COUNTING BUSINESS THE MONEY IS GENERALLY LENT OUT FOR 2 TO 3 DAYS AND THE REFORE THE ASSESSEE EARNS INTEREST AT 1.25% FOR ONLY 2 TO 3 DAYS AND TH EREFORE THE BASIS OF ADDITION OF INTEREST INCOME FOR THE ENTIRE MONTH IS WRONG. HE SUBMITTED THAT AO HAS CONSIDERED EVEN THE DEPOSITS IN THE BAN K ACCOUNT OF THE RELATIVES/ASSOCIATES OF THE ASSESSEE AS INCOME OF T HE ASSESSEE. HE FURTHER SUBMITTED THAT THOUGH THE AO WAS INFORMED ABOUT THE BANK ACCOUNTS OF HER RELATIVES WHICH ARE LISTED AT PAGE NO.64 OF THE PAPER-BOOK, CANNOT BE ITA NO.3094/AHD /2008 AND IT(SS)A NO.672/AHD/2010 SMT. REKHABEN THAKKAR VS. ACIT AY 2005-06 - 7 - CONSIDERED THE BANK ACCOUNT OF THE ASSESSEE, AO IGN ORED THE SAME AND CONSIDERED THE INCOME FROM THOSE BANK ACCOUNTS ALSO AS THE INCOME OF THE ASSESSEE AND ON THOSE ADDITIONS, LEVIED PENALTY U/S 271(1)(C). HE THEREFORE SUBMITTED THAT IN THE INTEREST OF JUSTICE , THE MATTER MAY BE REMITTED BACK TO THE FILE OF AO TO DETERMINE THE CO RRECT INCOME. HE FURTHER GAVE AN ASSURANCE THAT ASSESSEE WOULD COOPE RATE BY PROMPTLY SUBMIT ALL THE REQUIRED DETAILS CALLED FOR BY THE A O AND EXTEND THE NECESSARY CO-OPERATION TO THE AO. 3.2. THE LD.CIT-DR, ON THE OTHER HAND, SUPPORTED TH E ORDERS OF THE AO AND LD.CIT(A) AND POINTED OUT THAT THE ORDER BY THE AO WAS FRAMED U/S.144 OF THE ACT, MEANING THEREBY THAT ASSESSEE H AS NOT COOPERATED NOR HAD FURNISHED THE REQUIRED DETAILS CALLED FOR BY TH E AO. HE THEREFORE SUBMITTED THAT, IN SUCH A SITUATION, THE AO ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND INFORMATION AVAILABLE WITH HIM, WAS FULLY JUSTIFIED IN ESTIMATING THE INCOME ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. HE OBJECTED TO THE GRANTING OF THE SECOND INNINGS TO THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO THE AD DITION OF INTEREST INCOME WHICH HAVE BEEN MADE ON THE BASIS OF DEPOSITS IN TH E VARIOUS BANK ACCOUNTS FOUND AT THE TIME OF SURVEY. ON PERUSING THE ANNEXURES-1 TO ITA NO.3094/AHD /2008 AND IT(SS)A NO.672/AHD/2010 SMT. REKHABEN THAKKAR VS. ACIT AY 2005-06 - 8 - THE ASSESSMENT ORDER, IT IS SEEN THAT AO HAS CONSID ERED THE BANK ACCOUNTS OF THE ASSESSEE AS WELL AS HER RELATIVES AND ASSOCI ATES. BEFORE US, NO MATERIAL HAS BEEN PLACED ON RECORD BY THE REVENUE A UTHORITIES TO PROVE THAT THE BANK ACCOUNT STANDING IN THE NAME OF THE R ELATIVES/ASSOCIATES OF THE ASSESSEE DID NOT BELONG TO THOSE PERSONS BUT BE LONGED TO THE ASSESSEE. AT THE SAME TIME, ASSESSEE HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE INCOME FROM THE BANK ACCOUNTS STANDING IN THE NAME OF RELATIVES/ASSOCIATES HAVE BEEN CONSIDERED AS INC OME IN THEIR RESPECTIVE HANDS. IN VIEW OF THE AFORESAID FACT AND IN VIEW OF THE UNDERTAKING GIVEN BY LD AR THAT THE ASSESSEE WILL COOPERATE BY FURNIS HING ALL THE REQUIRED DETAILS BEFORE AO, WE ARE OF THE VIEW THAT IN THE L ARGER INTEREST OF JUSTICE THE ASSESSEE BE GRANTED ONE MORE OPPORTUNITY. WE T HEREFORE REMIT THE ISSUE BACK TO THE FILE OF AO TO DECIDE THE ISSUE DE NOVO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. NEEDLESS TO STATE THAT AO SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN VIEW OF THE UNDERTAKING GIVEN BEFORE US BY THE LD AR, THE ASSES SEE IS ALSO DIRECTED TO COOPERATE BY PROMPTLY FURNISHING ALL THE REQUIRE D DETAILS, PRODUCE THE BOOKS OF ACCOUNTS AND DETAILS OF ALL BANK ACCOUNTS AND SUCH OTHER DETAILS CALLED FOR BY THE AO FOR DETERMINING THE INCOME. IN CASE THE ASSESSEE FAILS TO FURNISH THE REQUIRED DETAILS CALLED FOR BY THE AO, AO SHALL FREE TO PROCEED ON THE BASIS OF MATERIAL AVAILABLE ON RECOR D AND DECIDE THE ISSUE. SINCE THE ISSUE OF QUANTUM ADDITION HAS ITSELF BEEN RESTORED BY US TO THE FILE OF AO, WE ARE OF THE VIEW THAT THE ISSUE OF LE VY OF PENALTY ITA NO.3094/AHD /2008 AND IT(SS)A NO.672/AHD/2010 SMT. REKHABEN THAKKAR VS. ACIT AY 2005-06 - 9 - U/S.271(1)(C) ON THE QUANTUM ADDITION CANNOT BE CON SIDERED IN ISOLATION AND THEREFORE THE ISSUE OF PENALTY ALSO NEEDS TO BE RESTORED TO THE FILE OF AO FOR HIM TO DECIDE IT AFRESH ON THE BASIS OF THE QUANTUM PROCEEDINGS. IT IS LEFT TO THE WISDOM OF THE AO TO INITIATE OR NOT INITIATE PENALTY PROCEEDINGS AFTER FINALIZATION OF THE QUANTUM ADDIT ION AND IN ACCORDANCE WITH THE PROVISIONS OF LAW. IN VIEW OF OUR DECISION TO RESTORE THE ISSUES TO THE FILE OF AO, WE ARE NOT ADJUDICATING ON MERITS T HE OTHER GROUNDS OF THE APPEAL RAISED BY THE ASSESSEE. 5. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 23 /06 /2016 SD/- SD/- .. () () ( R.P. TOLANI) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 23/ 06 /2016 3..,.../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ()$' / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-IV/V, AHMEDABAD 5. 89:(56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=, / GUARD FILE. / BY ORDER, )8( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD