Shri Ranjitsingh Bath , RAJKOT-GUJARAT V. The Assistant Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITSSA 9/RJT/2012

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8593 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 06-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: KALPESH DOSHI A
• Keywords: Unexplained cash credit; Unexplained investment; Depreciation; Income from undisclosed sources; Search and seizure; Corroborative evidences
• Section: 153A; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA, JM AND SHRI B.R.JAIN , AM IT (SS) A NO . 0 9 /RJT / 201 2 / ASSESSMENT YEAR 200 5 - 06 SHRI RANJIT SINGH BATH, GANDHIDHA M, C/O KALPESH S DOSHI & CO. CHARTERED ACCOUNTANT, 411, COSMO COMPLEX, MAHILA COLLEGE CIRCLE, RAJKOT - 360001 PAN: AA LPB1899D ( / APPELLANT) VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1 , RAJKOT . / RESPONDENT A / ASSESSEE BY SHRI. KALPESH DOSHI A / REVENUE BY SHRI AVINASH KUMAR / DATE OF HEARING 4 .12 .2012 / DATE OF PRONOUNCEMENT 14. 12.2012 / ORDER . . , / T. K. SHARMA, J. M . THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 2.3. 2012 OF CIT(A) - IV - AHMEDABAD CONFIRMING THE PENALTY OF RS.6 0,500 / - LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 200 5 - 0 6 . 2. BRIEF LY STATED FACTS ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND DOING THE BUSINESS AS TRANSPORT CONTRACTOR AND FLEET OWNER. HE IS THE PROPRIETOR OF RATAN ENTERPRISES, GANDHIDHAM. A SEARCH ACTION U/S 132 IT(SS)A NO. 0 9 /RJT/2012 2 OF THE INCOME TAX ACT, 1961 (THE ACT) WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 11.10.2006. THEREAFTER THE AO FRAMED THE ASSESSMENT UNDER SECTION 153A(A) OF THE CT ON 30.12.2008 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ASSESSING THE TOTAL INCOME AT RS.31,86,250/ - AS AGAINST THE RETURNED INC OME OF RS.16,99,120/ - . IN THIS ASSESSMENT ORDER, THE AO INITIATED THE PENALTY PROCEEDINGS U/S 153A IN RESPECT OF FOLLOWING ADDITIONS/DISALLOWANCES : DISALLOWANCE OF DEPRECIATION ON AIR CONDITIONERS INSTALLED AT RESIDENCE. BEING UNEXPLAINED FOREIGN CU RRENCY FOUND DURING SEARCH UNEXPLAINED CASH CREDIT DISALLOWANCE OF INTEREST ON CASH CREDIT BEING UNEXPLAINED INVESTMENT IN PURCHASE OF PROPERTIES BEING UNEXPLAINED INVESTMENT IN PURCHASE OF PROPERTIES RS.2,990/ - RS.1,41,000/ - RS.9,25,000/ - RS.3 6,090/ - RS.34,750/ - RS.3,47,300/ - 3. AS AGAINST THE AFORESAID ADDITIONS/DISALLOWANCE, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) VIDE ORDER DATED 14.9.2009 DELETED THE ADDITION OF RS.3,47,300/ - . ON FURTHER APPEAL, TH E TRIBUNAL VIDE ORDER DATED 1.4.2010 DELETED THE ADDITION OF RS.9,25,000/ - AND RS.36,090/ - . THEREFORE, THERE REMAINED FOLLOWING THREE ADDITIONS: I) DISALLOWANCE OF DEPRECIATION ON AIR CONDITIONERS INSTALLED AT RESIDENCE. - RS.2,990/ - II) BEING UNEXPLAINED FOREIGN CURRENCY FOUND DURING SEARCH - RS.1,41,000/ - III) BEING UNEXPLAINED INVESTMENT IN PURCHASE OF PROPERTIES IT(SS)A NO. 0 9 /RJT/2012 3 - .34,750/ - 4. IN RESPONSE TO THE SHOE CAUSE NOTICE ISSUED BEFORE LEVYING PENALTY UNDER SECT ION 271(1)( C), THE ASSESSEE SUBMITTED THAT HE HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS WITH ALL SUPPORTING EVIDENCES. THE BOOKS OF ACCOUNT ARE DULY AUDITED BY A QUALIFIED CHARTERED ACCOUNTANT. NO PENALTY IS LEVIABLE TO THE UNDER SECTION 271(1)( C ) OF THE ACT AS THE ADDITION IS MADE WITHOUT ANY EVIDENCE OR MATERIAL ON RECORD TO SUBSTANTIATE ADDITION AND ALSO, AT NO STAGE THERE IS ANY FINDING ON RECORD THAT THE ASSESSEE HAS C ONSCIOUSLY AND WILLFULLY CONCEALED THE INCOME OR PROVIDED IN ACCURATE PA RTICULARS OF INCOME. 5. THE AO REJECTED THE AFORESAID EXPLANATION HOLDING THAT (I) TH AC IS INSTALLED AT RESIDENCE ON WHICH DEPRECIATION IS CLAIMED (II) ASSESSEE NOWHERE RECORDED THE PAYMENT OF ADDITIONAL STAMP DUTY OF RS.34,750/ - (III) THE ASSESSEE COU LD NOT EXPLAIN THE SOURCE OF FOREIGN CURRENCY SEIZED AND FOUND AT THE TIME TAME OF SEARCH IN RESPECT OF THREE ADDITIONS AMOUNTING TO RS.1,80,492/ - . THE AO LEVIED THE PENALTY OF RS.60,500/ - BEING 100% TAX SOUGHT TO BE EVADE. ON APPEAL, IN THE IMPUGN ED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY OF RS.60,500/ - LEVIED BY THE AO. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, BEFORE US, ON BEHALF OF THE ASSESSEE SHRI KALPESH DOS HI APPEARED AND POINTED OUT THAT THE PENALTY ON DISALLOWANCE OF DEPRECIATION OF RS.2990/ - WAS RIGHTLY LEVIED AS THE IT(SS)A NO. 0 9 /RJT/2012 4 AC IN QUESTION ON WHICH THE DEPRECIATION IS CLAIMED IS INSTALLED AT RESIDENCE. 7. WITH REGARD TO THE FOREIGN CURRENCY, THE LD.COUNSE L OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE RECEIVED THE SAME FROM HIS MOTHER - IN - L AW W HEN SHE VISITED INDIA. IN SUPPORT OF THIS, THE CONFIRMATION LETTER AND OTHER DETAILS WERE FURNISHED. HE SUBMITTED THAT EVEN IF THE ADDITION IS CONFIRMED THE PENALTY CANNOT BE LEVIED ON THIS ADDITION. WITH REGARD TO THE PAYMENT OF STAMP DUTY, THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED AS UNDER : THE PLOT OF LAND ON SURVEY NO.14 IS IN THE NAME OF SON OF SHRI RANJITSINGH BATH, THEREFORE ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. THE SALE DEED IS MADE AS PER THE ACTUAL CONSIDERATION PAID FOR THE PURCHASE OF PLOT. THE ASSESSEE HAS NOT PAID ANY HIGHER AMOUNT FOR THE PURCHASE OF PLOT FOLLOWING DETAILS HAVE BEEN TAKEN INTO CONSIDERATION: SURVEY NO. DUTY PAID AS PER ACCOUNTS AS PER DOCUMENTS ADDITIONAL UNEXPLAINED 178/1 9500 6300 14530 11,330 179/2 13000 8400 7550 2,950 184/1 18500 12600 12650 6,750 TOTAL 34,730 21,030 IT(SS)A NO. 0 9 /RJT/2012 5 8 . THE LD. COUNSEL FOR THE ASSESSEE ACCORDINGLY PRAYED THAT THE PENALTY LEVIED UN DER SECTION 271(1)( C ) BE CANCELLED. 9 . ON THE OTHER HAND, SHRI AVINASH KUMAR, THE LD. DR APPEARED FOR THE REVENUE AND VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT NO CONFIRMATION LETTER WAS FURNISHED BEFORE THE AO. SI MILARLY , IN QUANTUM APPEAL, THE ASSESSEE COULD NOT EXPLAIN, THE SOURCE OF PAYMENT OF STAMP DUTY. HE ACCORDINGLY PLEADED THAT KEEPING IN VIEW AND FINDING RECORDED BY THE LD.CIT(A) AND THE TRIBUNAL, THE PENALTY LEVIED OF RS.60,500/ - BE UPHELD. 10 . HAVING HEA RD BOTH THE SIDES. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. AS PER THE PROVISIONS CONTAINED IN SECTION 3 8 OF THE ACT DEPRECIATION ON THE ASSETS WHICH ARE USED FOR PERSONAL USE IS NOT ALLOWABLE. THEREFORE, PENALTY IN RESPECT OF AC WHICH IS INSTALLED AT THE RESIDENCE WAS RIGHTY LEVIED BY THE AO AND CONFIRMED BY THE CIT(A). WE, THEREFORE, DECLINE TO INTERFERE IN THE ORDER OF THE LD CIT(A. 11 . THE ADDITION OF RS.1,41,000/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF FOREIGN CURRENCY IS DISCUSSED BY THE AO IN PARAGRAPH 4 OF THE ASSESSMENT ORDER. IN THIS PARAGRAPH THE AO HAS CLEARLY MENTIONED THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF FOREIGN CURRENCY. ON APPEAL, THE LD. CIT(A) VIDE PARAGRAPH 3.1 CONFIRMED THE ADDIT ION FOR THE DETAILS REASONS GIVEN IN PARAGRAPH 3.1 AT P A GE 2 OF HIS ORDER DATED 30.11.2009 WHICH IS REPRODUCED BELOW: IT(SS)A NO. 0 9 /RJT/2012 6 3.1 I HAVE CAREFULLY CONSIDER THE SUBMISSION OF THE LD. COUNSEL AS WELL A S THE FINDING OF THE AO RECORDED ON THIS ISSUE. THE APPELLANT HA S CHANGED HIS EXPLANATION DURING THE COURSE OF APPELLATE PROCEEDINGS . THERE IS ENTIRE SHIFT IN THE EXPLANATION FURNISHED BEFORE THE AO AND FILED DURING THE COURSE OF APPELLATE PROCEEDINGS . THE SUBMISSION OF THE LD. COUNSEL DURING THE COURSE OF APPELLATE PR OCEEDINGS IS A BALD STATEMENT WITHOUT ANY EVIDENCE. THE APPELLANT IS OWNER OF FOREIGN CURRENCY BY POSSESSION AND HE HAD TO PROVE THAT HE IS NOT THE OWNER OF THE FOREIGN CURRENCY. NO PROOF OF OTHER FOREIGN CURRENCY OR THE EVIDENCE OF RECEIPT OF GIF T W A S PR ODUCED. IT IS SETTLED PRINCIPLE OF LAW THAT IF THE EXPLANATION OFFERED BY THE ASSESSEE FOR THE UNEXPLAINED MONEY IS NOT FOUND SATISFACTORY BY THE AO, THE SAME MAY BE DEEMED TO BE HIS INCOME FOR SUCH FINANCIAL YEAR. THE EXPLANATION OFFERED BY THE ASSESS EE SHOULD BE PROPER, CONVINCING AND ACCEPTABLE OF THE UNEXPLAINED CASH/CURRENCY. BUT THE EXPLANATION OFFERED BY THE APPELLANT BEFORE DIFFERENT AUTHORITIES WAS DIFFERENT AS DISCUSSED ABOVE AND CANNOT BE SAID TO BE PROPER, CONVINCING AND ACCEPTABLE FO R T H E UNEXPLAINED FOREIGN CURRENCY. THE EXPLANATION OFFERED BY THE APPELLANT THUS CANNOT BE SAID TO BE SATISFACTORY AND THE ADDITION MADE BY THE AO WAS JUSTIFIED. THIS VIEW IS SUPPORTED BY THE DECISION OF THE HON BLE M P HIGH COURT IN DEEPAK CHUGH V/S CIT 290 ITR 541 (MP). OTHERWISE ALSO, THE APPELLANT IS GIV ING DIFFERENT EXPLANATIONS BEFORE DIFFERENT AUTHORITIES ABOUT THE MONEY SEIZED FROM HIM DURING EH SEARCH PROCEEDINGS, HIS EXPLANATION CANNOT BE ACCEPTED AS SATISFACTORY AND ADDITION CAN BE MADE. TH I S VIEW IS SUPPORTED BY THE. HON BLE GUJARAT HIGH COURT IN MANHARLAL C.SONI V/S CIT 215 ITR 634 (GUJ) WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE WAS GIVING DIFFERENT EXPLANATIONS A BOUT THE MONEY SEIZED FROM HIM IN RAID, THE TRIBUNAL WAS JUSTIFIED IN S USTAINING THE ADDITION IN ABSENCE OF SATISFACTORY EXPLANATION. IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT HAS FAILED TO SATISFACTORILY EXPLAIN THE FOREIGN CURRENCIES OF RS.1,41,000/ - FOUND DURING THE COURSE OF SEA RCH. THE AO WAS THUS JUSTIFIED IN MAKING ADDITION OF R S.1,41,000/ - ON ACCOUNT OF UNEXPLAINED FOREIGN CURRENCIES. IN VIEW THEREOF, THE ADDITION MADE IS CONFIRMED. THE SECOND GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 12 . THE AFORESAID VIEW TAKEN BY TH E LD. CIT(A) IS UPHELD BY THE TRIBUNAL VIDE ITS ORDER DATED 1.4.2010. KEEPING IN VIEW THE FINDING RECORDED BY THE TRIBUNAL IN QUANTUM APPEAL, WE ARE OF THE VIEW THAT UNEXPLAINED INVESTMENT IN PURCHASE OF FOREIGN CURRENCY REPRESENTS THE CONCEALED INCOME OF THE ASSESSEE AND THEREFORE , THE PENALTY LEVIED U/S IT(SS)A NO. 0 9 /RJT/2012 7 271(1)( C ) OF THE AO HAS RIGHTLY BEEN CONFIRMED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. WE, THEREFORE , DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A). 13 . COMING TO THE ADDITION OF RS .34,750/ - MADE UNDER SECTION 69B OF THE ACT, ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PROPERTY, WE FOUND THAT THE AO HAS DISCUSSED THIS ADDITION IN PARAGRAPH 6 OF THE ASSESSMENT ORDER. THE AO WAS OF THE VIEW THAT THE APPELLANT PAID ADDITIONAL STAMP DUT Y AMOUNTING TO RS.34,750/ - BUT THE SAME HAS NOT RECORDED IN THE BOOKS OF ACCOUNT. BEFORE THE LD. CIT(A) , THE ASSESSEE SUBMITTED THAT THE PAYMENT OF THE PARTIAL ADDITIONAL STAMP DUTY AND PENALTY WAS MADE BY ONE OF THE DIRECTOR OF THE COMPANY. THE LD. CIT(A) VIDE PARAGRAPH 5 AT PAGE 5 VIDE ORDER DATED 30.11.2009 FOUND THIS EXPLANATION INCORRECT AND HELD THAT THE ADDITIONAL STAMP DUTY WAS MADE FROM UNACCOUNTED INCOME. THIS FINDING OF THE FACT RECORDED BY THE LD. CIT(A) IS CONFIRMED BY THE TRIBUNAL IN ORDER DATED 1.4.2010. WE, THEREFORE, ARE OF THE VIEW THAT THE PENALTY IN RESPECT OF THIS ADDITION OF RS.34,750/ - U/S 271(1)(C ) HAS RIGHTLY BEEN LEVIED BY THE AO AND CONFIRMED BY THE LD. CIT(A). THEREFORE, WE INCLINE TO UPHELD THE SAME. 14 . IN THE RES ULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. S D SD ( B.R.JAIN) (T. K. SHARMA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER IT(SS)A NO. 0 9 /RJT/2012 8 / ORDER DATE 14. 12. 2012. /RAJKOT SRL / COPY OF ORDER FORWARDED TO: - 1. / APPELLANT - , 2. / RESPONDENT - 3. / CONCERNED CIT . 4. - / CIT (A) . 5. , , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , T RUE COPY SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT.