Income-tax Officer, Dhule V. Vinod Kewalchand Bafna, Nandurbar

MA 79/PUN/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6485 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-02-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 24-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARI KRISHAN
• Keywords: Initiation of penalty proceedings; Revised return
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE , , , BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / MA NO. 79 /PUN/201 7 (ARISING OUT OF ITA NO .935/PUN/2014 ) / ASSESSMENT YEAR : 200 9 - 10 INCOME TAX OFFICER, WARD 4, DHULE ....... / APP LICANT / V/S. VINOD KEWALCHAND BAFNA, 20, MAHAVIR MARG, SHARDA NAGAR, NANDURBAR - 425412 PAN : ADIPJ6709L / RESPONDENT ASSESSEE BY : S HRI HARI KRISHAN REVENUE BY : SHRI A JAY MODI / DATE OF HEARING : 23 - 02 - 2018 / DATE OF PRONOUNCEMENT : 23 - 0 4 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH IS MISCELLANEOUS APPLICATION HAS BEEN FILED BY THE REVENUE U/S. 254(2) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WITH A PRAYER TO RECALL THE ORDER IN ITA NO. 935/PUN/2014 FOR THE ASSESSMENT YEAR 2009 - 10 DECIDED ON 18 - 01 - 2017 BY THE TRIBUNAL. 2 MA NO. 79/PUN/2017, A.Y. 2009 - 10 2. SHRI AJAY MODI REPRESENTING THE DEPARTMENT SUBMITTED THAT THE TRIBUNAL HAS ALLOWED THE APPEAL OF ASSESSEE BY DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT ON ACCOUNT OF ISSUANCE OF DEFECTIVE NOTICE U/S. 274 R.W.S. 271(1)(C) OF THE ACT , AS WELL AS , ON MERITS. TH E LD. DR REITERATING THE SUBMISSIONS MADE IN THE DETAILED APPLICATION. FOR THE SAKE OF COMPLETENESS THE APPLICATION FILED BY THE REVENUE SEEKING RECALLING OF THE ORDER OF TRIBUNAL IS REPRODUCED HERE - IN - BELOW : 1. THE HON'BLE ITAT HAS PASSED AN ORDER ON 18.01.2017 IN ITA NO. N O. 935/PUN/2014 IN THE CASE OF SHRI VINOD KEWALCHAND BAFNA VS. ITO WD. 3(4), DHULE. THE HON'BLE ITAT VIDE ABOVE ORDER HAS ALLOWED THE ASSESSEE'S APPEAL BY DELETING THE PENALTY LEVIED U/S 271 ( 1)(C ) OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS.2,28,572/ - . THE FACTS OF THE CASE IS AS UNDER - THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF PLOTS AND IS ALSO HAVING AGRICULTURAL INCOME. THE ASSESSEE FILED HIS RETURN OF INCOME FOR AY 2009 - 10 ON 29 - 03 - 2010 DECLARING INCOME OF RS.2,52,920/ - AND AGRICULTURAL INCOME OF RS.8,29,374/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO MADE FOLLOWING ADDITIONS - (I) UNEXPLAINED CASH DEPOSITS RS.4,05,000/ - (II) UNDISCLOSED CLOSING CREDIT BALANCE IN ICICI BANK RS .10,777/ - . (III) UNDISCLOSED INVESTMENT IN PLOTS OF RS .2,15,070/ - . (IV) PURCHASE OF SCOOTER OF R S.41,378/ - . THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT AND SUBSEQUENTLY LEVIED THE PENALTY OF RS.2,28,572/ - U/S 271(1)(C) OF THE ACT. THE LD. CIT(A) CONFIRMED THE PENALTY, THEREFORE, THE ASSES S EE FILED AN APPEAL BEFORE THE HON'BLE ITAT. THE HON'BLE ITAT BENCH 'A' HAS DELETED THE PENALTY VIDE ORDER IN ITA NO. 93 5/PUN/2014 DATED 18 - 01 - 2017 ON THE GROUNDS THAT 'AS THE NOTICE ISSUED FOR LEVY OF PENALTY U/S 271(1)( C) DOES NOT CLEARLY SPELL OUT THE CHARGE FOR LEVY OF PENALTY, THEREFORE, THE SAME IS DEFECTIVE, NULL AND VOID AND THE SUBSEQUENT PROCEEDINGS ARISING TH ERE FROM ARE VITIATED.' THE ISSUE WISE DECISION OF THE HON'BLE ITAT IS AS UNDER - (I) UNEXPLAINED CASH DEPOSITS R S.4,05,000/ - IN THIS REGARD, THE HON'BLE ITAT HAS ADJUDICATED THAT THE BANK PASSBOOK IS NOT PART OF BOOKS OF ACCOUNT OF THE ASSESSE E , THEREFORE, THE ADDITION MADE U/S 68 ON THE BASIS OF ENTRIES IN THE BANK PASSBOOK IS NOT SUSTAINABLE, THEREFORE, THERE IS NO QUESTION OF LEVY OF PENALTY ON THIS ADDITION. 3 MA NO. 79/PUN/2017, A.Y. 2009 - 10 (II) UNDISCLOSED CLOSING CREDIT BALANCE IN ICICI BANK RS.10,777/ - . IN THIS REG ARD, THE HON'BLE ITAT HAS HELD THAT THE DEPOSITS MADE IN THE BANK ACCOUNT WERE NOT ROUTED THROUGH CASH BOOK OF THE ASSESSEE; THE ENTRIES ARE MADE IN THE BANK PASS BOOK AND THERE ARE NO CASH CREDIT ENTRIES IN THE CASH BOOK OF THE ASSESSEE, THEREFORE THE A DDITION MADE U/S 68 IS NOT SUSTAINABLE AND THEREFORE THERE IS NO QUESTION OF LEVY OF PENALTY ON THIS ADDITION. (III) UNDISCLOSED INVESTMENT IN PLOTS OF RS.2,15,070/ - IN THIS REGARD, THE HON'BLE ITAT HAS HELD THAT THE POSSESSION OF THE PLOTS WAS TAKEN IN NEXT FINANCIAL YEAR I.E. FY 2009 - 10, WHEREAS THE SALE DEED OF THE PLOT WAS REGISTERED ON 17 - 03 - 2009 I.E. DURING THE FY 2008 - 09, HENCE THE HON'BLE ITAT HAS ADJUDICATED THAT UNDER SUCH CIRCUMSTANCES, NO PENALTY IS TO BE LEVIED ON SU CH ADDITION WHERE THE DISPUTE IS WITH REGARD TO YEAR OF TAXABILITY. (IV) PURCHASE OF SCOOTER OF RS .41,378/ - IN THIS REGARD, THE HON'BLE ITAT HAS HELD THAT ON PERUSAL OF BANK ACCOUNT OF ICICI BANK, IT IS CLEAR THAT RS.4 1,378/ - HAS BEEN DEBITED FROM TH E ACCOUNT ON 13 - 08 - 2008 FOR PAYMENT TO NILESH MOTORS. SINCE THE PAYMENT HAS BEEN MADE FROM SAME BANK ACCOUNT FOR PURCHASE OF SCOOTER, THIS WOULD RESULT IN DOUBLE ADDITION, THEREFORE, SUCH ADDITION IS NOT SUSTAINABLE AND THEREFORE DOES NOT ATTRACT PENALTY U /S 271(1)(C) OF THE ACT. 2. THE DECISION OF THE HON'BLE ITAT IS NOT ACCEPTABLE FOR FOLLOWING REASONS - (1) UNEXPLAINED CASH DEPOSITS RS .4,05,000/ - THE HON'BLE ITAT HAS HELD THAT THE ASSES S EE HAS SUBSTANTIAL AGRICULTURAL INCOME AND THE DEPOSITS HAVE BEEN MADE OUT OF SALE OF AGRICULTURAL PRODUCT ONLY. THE BANK PASS BOOK IS NOT PART OF BOOKS OF ACCOUNT, THEREFORE, THE ADDITION MADE U/S 68 OF THE ACT ON THE BASIS OF ENTRIES IN THE BANK PASS BOOK ARE NOT SUSTAINABLE. DURING THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE HAD SUBMITTED DETAILS OF AGRICULTURAL RECEIPTS AND EXPENDITURE, WHICH WAS VERIFIED AND THE RECEIPTS ON SALE OF AGRICULTURAL PRODUCTS HAVE BEEN DEBITED IN CASH BOOK AND EXPENDITURE HAS BEEN CREDITED. THE DETAILS ARE GIVEN IN THE ASSESSMENT ORDER AS WELL AS IN PENALTY ORDER. THE AMOUNT OF RECEIPTS ARE CREDITED IN THE CAPITAL ACCOUNT AND EXPENDITURE THEREON ARE DEBITED I N THE SAME ACCOUNT. THUS, IT IS CLEAR THAT THE TOTAL AGRICULTURAL ACTIVITIES ARE RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, SO CONSIDERING THE DECISION OF THE HON'BLE ITAT THAT THE DEPOSITS MADE IN THE BANK ACCOUNT ARE OUT OF SALE OF AGRICULTURAL PRODUCT, THEN THE SAME SHOULD HAVE BEEN RECORDED IN THE CASH BOOK. NEITHER THE TRANSACTION OF CASH DEPOSIT IS RECORDED IN BOOKS OF AC COUNT, NOR THE BANK ACCOUNT HAS BEEN SHOWN IN THE BALANCE SHEET OF THE ASSESEE, THIS PROVES THAT THIS AMOUNT IS THE CONCEALED INCOME OF THE ASSESSEE. HENCE, THE AO HAS RIGHTLY LEVIED THE PENALTY ON THIS ISSUE. 4 MA NO. 79/PUN/2017, A.Y. 2009 - 10 (II) UNDISCLOSED CLOSING CREDIT BALANCE IN ICICI BANK RS .10,777/ - THE HON'BLE ITAT HAS HELD THAT THE DEPOSITS MADE IN THE BANK ACCOUNT WERE NOT ROUTED THROUGH CASH BOOK OF THE ASSESEE. HOWEVER, IT IS MENTIONED IN THE ASSESSMENT ORDER AS WELL AS IN PENALTY ORDER THAT ALL ENTRIES IN THE BOOKS OF ACC OUNT HAVE BEEN VERIFIED AND NOWHERE THE REFLECTION OF THIS BANK ACCOUNT IS FOUND. IN THE BALANCE SHEET, THERE ARE NO DETAILS OF THIS ACCOUNT. HENCE, THE AO HAS RIGHTLY LEVIED THE PENALTY ON THIS ISSUE. (III) UNDISCLOSED INVESTMENT IN PLOTS OF RS .2,15,07 0/ - THE HON'BLE ITAT HAS HELD THAT SINCE THERE IS DISPUTE WITH REGARD TO YEAR OF TAXABILITY, NO PENALTY IS LEVIABLE. AS THE PAYMENT HAS BEEN MADE DURING THE YEAR UNDER CONSIDERATION, THESE PLOTS SHOULD HAVE REFLECTED IN THE BALANCE SHEET EITHER AS ASSET WITH THE VALUE OF TRANSACTION WITH EXPENDITURE THEREON OR IN THE NATURE OF ADVANCES GIVEN TO THE SELLER. THEREFORE, THE AO HAS RIGHT LEVIED THE PENALTY ON THIS ISSUE. (IV) PURCHASE OF SCOOTER OF R S.41 , 378/ - THE PENALTY HAS BEEN DELETED BY THE HON'BLE I TAT IN RESPECT OF PURCHASE OF SCOOTER, THE PAYMENT OF WHICH HAS BEEN MADE FROM ICICI BANK ACCOUNT, CONSIDERING THAT SINCE THE PAYMENT HAS BEEN MADE FROM SAME BANK ACCOUNT, THIS WOULD RESULT INTO DOUBLE ADDITION. IT IS SUBMITTED THAT EITHER THE BANK BALANCE SHOULD BE REFLECTED IN BALANCE SHEET OR THE ASSET (SCOOTER) SHOULD BE REFLECTED IN BALANCE SHEET. NONE OF THE ABOVE ITEMS IS REFLECTED IN BALANCE SHEET, HENCE THIS INVESTMENT IS MADE OUTSIDE THE BOOKS OF ACCOUNT, HENCE THE AD HAS RIGHT LEVIED THE P ENALTY ON THIS ADDITION. 3. FURTHER, WHILE DECIDING THE ISSUE, THE HON'BLE ITAT HAS HELD THAT THE PENALTY NOTICE ISSUED BY THE AD DOES NOT CLEARLY SPELL OUT THE CHARGE FOR LEVY OF PENALTY, THE SAME IS DEFECTIVE, NULL AND VOID, THEREFORE, SUBSEQUENT PROCEE DINGS ARE VITIATED. IT IS HUMBLY SUBMITTED THAT THE HON'BLE ITAT HAS NOT APPRECIATED THE FACT THAT THE AD HAD CLEARLY MENTIONED IN THE ASSESSMENT ORDER THAT PENALTY PROCEEDINGS ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LAPS OCCURRE D IS 'PROCEDURAL' ONLY. MERE TECHNICAL LAPS ON THE PART OF THE AD IN INITIATION OF PENALTY PROCEEDINGS WILL NOT VITIATE THE ENTIRE PENALTY LEVIED. IN THIS RESPECT, THE HON'BLE JURISDICTIONAL BOMBAY HIGH COURT, IN ITS DECISION IN THE CASE OF DAYABHAI GIRDHA RIBHAI VS. COMMISSIONER OF INCOME TAX (32 ITR 677) HAS HELD THAT 'NOW, IT IS PERFECTLY TRUE THAT EVERY ASSESSEE HAS THE RIGHT TO SUBMIT A REVISED RETURN IF HE DISCOVERS ANY OMISSION OR WRONG STATEMENT IN HIS ORIGINAL RETURN BEFORE THE ASSESSMENT IS MADE . BUT, THE OMISSION OR WRONG STATEMENT MAY BE ACCIDENTAL OR DELIBERATE. WHERE IT IS ACCIDENTLY, NO RESULT MAY ENSUE BY REASON OF THE OMISSION, BUT WHERE THE OMISSION IS DELIBERATE, THE RESULTS OF SUCH DELIBERATE OMISSION CANNOT BE GOT RID OF MERELY BY FILI NG A REVISED RETURN. IF THE OMISSION IS DELIBERATE, THEN IN RESPECT OF THE ORIGINAL RETURN THE PROVISIONS OF SECTION 271(1)( C) APPLY, BECAUSE THAT SUB SECTION PROVIDES THAT 5 MA NO. 79/PUN/2017, A.Y. 2009 - 10 THE INCOME TAX OFFICER, IF HE IS SATISFIED THAT THE ASSESSEE 'HAS CONCEALED THE PA RTICULARS OF HIS INCOME OR DELIBERATELY FURNISHED INACCURATE PARTICULARS OF HIS INCOME', HE MAY BE SUBJECTED TO A PENALTY. THEREFORE, WHERE THE CONCEALMENT IS NOT AN ACCIDENTAL OMISSION, BUT IS A DELIBERATE CONCEALMENT, THE PENALTY IS ATTRACTED NOTWITHSTA NDING THE FACT THAT THE RETURN HAS BEEN SUBSEQUENTLY CORRECTED. ' FURTHER, THE DECISION DELIVERED BY THE APEX COURT IN THE CASE OF CIT VS. ATUL MOHAN BINDAL (317 ITR 001) SUPPORTS THE DEPARTMENTS V IEW. 4 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, I T IS PRAYED THAT THE ABOVE ORDER MAY KINDLY BE RECALLED AND THE PENALTY LEVIED U/S 271(1)( C) MAY BE CONFIRMED. THE LD. DR FURTHER SUBMITTED THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SHRI ARUNKUMAR J. MUCHHALA VS. COMMISSIONER OF INCOME TAX IN INCOME TAX APPEAL NO. 363 OF 2015 DECIDED ON 24 - 08 - 2017 HAS DISTINGUISH THE JUDGMENT RENDERED IN THE CASE OF BALADIN RAM VS. COMMISSIONER OF INCOME TAX REPORTED AS 71 ITR 427 AND HAS HELD THAT THE ADDITION U/S. 68 CAN BE MADE ON THE BASIS OF TRANSACTIONS RECORDED IN BANK PASS BOOK. 3. ON THE OTHER HAND SHRI HARI KRISHAN APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY DEFENDED THE ORDER OF TRIBUNAL DATED 18 - 01 - 2017. THE LD. AR SUBMITTED THAT THE REVENUE HAS FAILED TO POINT OUT ANY APPARENT MISTAKE WHICH REQUIRES RECTIFICATION. THE DEPARTMENT IS SEEKING REVIEW OF THE ORDER WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF SECTION 254(2) OF THE ACT. THE LD. AR SUBMITTED THAT THE TRIBUNAL HAS NOT ONLY DELETED THE PENALTY ON TECHNICAL GROUND BUT HAS ALSO DEA LT WITH THE MERITS. 4. BOTH SIDES HEARD. THE REVENUE HAS FILED THIS MISCELLANEOUS APPLICATION FOR RECALLING OF THE ORDER OF TRIBUNAL DATED 18 - 01 - 2017 IN ITA NO. 935/PUN/2014 (SUPRA). THE TRIBUNAL HAS DELETED THE LEVY OF PENALTY 6 MA NO. 79/PUN/2017, A.Y. 2009 - 10 U/S. 271(1)(C) ON THE G ROUND OF DEFECT IN NOTICE ISSUED U/S. 274 R.W.S. 271(1)(C) , AS WELL AS ON MERITS. THE LD. DR HAS FAILED TO POINT OUT ANY MISTAKE APPARENT ON RECORD THAT WARRANTS RECTIFICATION IN THE ORDER . IN MISCELLANEOUS APPLICATION THE DEPARTMENT HAS TRIED TO REARGUE THE APPEAL. THUS, THE FILING OF MISCELLANEOUS APPLICATION U/S. 254(2) BY THE DEPARTMENT I S AN ATTEMPT TO SEEK REVIEW OR THE ORDER WHICH IS BEYOND THE SCOPE OF SECTION 254(2) OF THE ACT. 5. THE LD. DR HAS PLACED RELIANCE ON THE DECISION OF SHRI ARUNKUMAR J. MUCHHALA VS. COMMISSIONER OF INCOME TAX (SUPRA) TO CONTEND THAT ADDITION U/S. 68 CAN BE MADE ON THE BASIS OF TRANSACTION RECORDED IN BANK PASS BOOK. WE FIND THAT THE FACTS IN THE SAID CASE ARE DISTINGUISHABLE. THE HONBLE HIGH COURT IN A CASE W H ERE T HE ASSESSEE HAD NOT MAINTAINED BOOKS OF ACCOUNT AND HUGE AMOUNTS WERE CREDITED TO THE BANK ACCOUNT OF ASSESSEE WHICH WAS DISC OVERED FROM BANK PASS BOOK UPHELD THE ADDITION MADE BY REVENUE U/S. 68. IN THE PRESENT CASE THE ASSESSEE WAS MAINTAINING BOOKS OF ACCOUNT AND THE SAME WERE NEVER REJECTED BY ASSESSING OFFICER. HENCE, THE RATIO LAID DOWN IN SHRI ARUNKUMAR J. MUCHHALA VS. COMMISSIONER OF INCOME TAX (SUPRA) WOULD NOT APPLY IN THE FACTS OF PRESENT CASE. 6. WE DO NOT FIND ANY MERIT IN THE APPLICATION FILED BY THE DEPARTMENT. THE LD. DR HAS NOT BEEN ABLE TO POINT OUT ANY MISTAKE MUCH LESS ANY APPARENT MISTAKE THAT REQUIRES RECTIFICATION. ACCORDINGLY, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE SANS MERIT, HENCE, DISMISSED. 7 MA NO. 79/PUN/2017, A.Y. 2009 - 10 7. IN THE RESULT, T HE MISCELLANEOUS APPLICATION OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON MONDAY, T HE 23 RD DAY OF APRIL, 201 8 . SD/ - SD/ - ( / ANIL CHATURVEDI ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 23 RD APRIL, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - I, NASHIK 4. / THE CIT - I, NASHIK 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE