Swarnaben M.Khanna, Surat v. The Dy.CIT.,Cent.Circle-2,, Surat

ITA 2834/AHD/2009 | 2006-2007
Pronouncement Date: 29-01-2010 | Result: Allowed

Appeal Details

RSA Number 283420514 RSA 2009
Assessee PAN ADTPK8860B
Bench Ahmedabad
Appeal Number ITA 2834/AHD/2009
Duration Of Justice 3 month(s) 14 day(s)
Appellant Swarnaben M.Khanna, Surat
Respondent The Dy.CIT.,Cent.Circle-2,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 29-01-2010
Assessment Year 2006-2007
Appeal Filed On 15-10-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD. BEFORE: HON'BLE SHRI T.K. SHARMA JUDICIA L MEMBER AND HON'BLE SHRI D.C. AGRAWAL ACCOUNTANT MEMBER ITA NOS.2823 2825 2827 2829 2831 & 2834/AHD/200 9 ASSESSMENT YEARS : 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2006-2007 SWARNABEN M. KHANNA SURAT (PAN : ADTPK 8860 B) VERSUS DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 SURAT (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI C.K. MISHRA SR. D.R. FOR THE RESPONDENT : S/SHRI RASESH SHAH AND HARD IK VORA ORDER PER BENCH :- THESE ARE THE SIX APPEALS FILED BY THE ASSESSEE AG AINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-II AHMEDABAD D ATED 01.07.2009. THE FIRST FIVE APPEALS FOR THE ASSESSMENT YEARS 2000-01 TO 20 04-05 ARE THROUGH A COMMON ORDER WHEREAS APPEAL BEING ITA NO. 2834/AHD/2009 F OR THE ASSESSMENT YEAR 2006- 07 IS THROUGH A SEPARATE ORDER. ALL THESE APPEALS I NVOLVED COMMON FACTS AND COMMON ISSUES AND HENCE THEY ARE TAKEN UP TOGETHER FOR TH E SAKE OF CONVENIENCE. 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 18.01.2006. NOTICE UNDER SECTION 153A(A) WAS ISSUED TO THE ASSESSEE ON 09.11.2006. THE RETURN OF INCOME WAS FILED ON 27.11.2006 GIVING DETAILS AS UNDER :- A.Y. DECLARED INCOME DATE OF RETURN FILED DATE OF ASSESSMENT ASSESSED INCOME ADDITION PENALTY LEVIED 2000- 01 RS.53 040/- 27.11.06 28.12.2007 RS.78 540/- RS.25 500/- RS.4 078/- 2001- 02 RS.77 370/- 27.11.06 28.12.2007 RS.1 78 488/- R.1 01 118/- RS.26 389/- 2002- 03 RS.79 020/- 27.11.06 28.12.2007 RS.91 154/- RS.12 134/- RS.2 275/- 2003- 04 RS.90 110/- 27.11.06 28.12.2007 RS.3 66 400/- RS.2 76 290/- RS.80 740/- 2004- 05 RS.75 320/- 27.11.06 28.12.2007 RS.1 88 320/- RS.1 13 000/- RS.25 496/- 2006- 07 RS.2 45 410/- 27.11.206 28.12.2007 RS.5 99 030/- RS.3 53 620/- RS.1 16 409/- THE REASONS FOR ADDITION IN RESPECT OF YEARS ARE SU MMARIZED AS UNDER :- 2 ITA NOS.2823 2825 2827 2829 2831 & 2834AHD/2009 ASSESSMENT YEAR : 2000-2001 : DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. FOUND THAT ASSESSEE HAS GIVEN A LOAN OF RS.25 500/-. NO EXPLANATION OF THIS LOAN WAS GIVEN. THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) ALSO NOTED THAT NO EXPLANATION BEFORE HIM HAS BEEN GIVEN. ON THE OTHER HAND THE LD. A.R. SUBMITTED THAT SUN DRY LOANS OF RS.25 500/- WAS REFLECTED IN THE BALANCE-SHEET WHICH WAS FILED ALO NGWITH THE RETURN OF INCOME PRIOR TO SEARCH. THE A.O. HAS NOT DOUBTED THE FINANCIAL STAT EMENTS FILED BY THE ASSESSEE AND THE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF LOA NS REFLECTED IN THE BALANCE-SHEET. IN FACT THESE LOANS ARE ASSETS OF THE ASSESSEE AND NO ADDITION CAN BE MADE UNDER SECTION 68. HE FURTHER SUBMITTED THAT THESE LOANS ARE EXPLA INED BY CAPITAL AND OTHER CREDITS IN THE BALANCE-SHEET. IN ANY CASE THE ASSESSEE HAS NO T CONTESTED THE ADDITION SO AS TO AVOID LITIGATION AND TO BUY PEACE. ASSESSMENT YEAR : 2001-2002 :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE A.O. THAT ASSESSEE HAS DEPOSITED A SUM OF RS.1 01 118/- IN MRINAL DYES & CHEMICALS. THE ASSESSEE DID NOT FURNISH ANY EXPLA NATION OF THIS INVESTMENT EITHER BEFORE THE A.O. OR BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). ASSESSMENT YEAR : 2002-2003 :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE A.O. THAT ASSESSEE HAS MADE AN INVESTM ENT OF RS.12 134/- IN MRINAL DYES & CHEMICALS. THE ASSESSEE DID NOT FURNISH ANY EXPLANATION OF THIS INVESTMENT EITHER BEFORE THE A.O. OR BEFORE THE LEARNED COMMIS SIONER OF INCOME TAX(APPEALS). THE LD. A.R. SUBMITTED IN RESPECT OF ASSESSMENT YE ARS 2001-02 AND 2002-03 THAT BOTH THE SUMS ARE STANDING AS ASSETS IN THE BA LANCE-SHEET AND ARE EXPLAINED BY VARIOUS CREDITS AND CAPITAL OF THE ASSESSEE. THEREF ORE THEY CANNOT BE SAID TO BE UNEXPLAINED. THE A.O. HAS MADE THE ADDITION FOR THE SAKE OF ADDITION AND THE ASSESSEE HAS NOT CONTESTED JUST FOR BUYING PEACE. ASSESSMENT YEAR : 2003-2004 :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE A.O. THAT ASSESSEE HAS MADE AN INVESTM ENT OF RS.2 76 290/- IN PURCHASE OF PLOT OF LAND AT SURAT. THE ASSESSEE DID NOT FURN ISH ANY EXPLANATION OF THIS 3 ITA NOS.2823 2825 2827 2829 2831 & 2834AHD/2009 INVESTMENT EITHER BEFORE THE A.O. OR BEFORE THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS). THE LD. A.R. SUBMITTED THAT THIS AMOUNT IS ALSO RE FLECTED IN THE BALANCE-SHEET AS INVESTMENT PRIOR TO SEARCH AS PER THE RETURN FIL ED BY THE ASSESSEE. IT COULD NOT BE SAID TO BE UNEXPLAINED. THE ADDITION WAS NOT CONTES TED TO BUY PEACE. ASSESSMENT YEAR : 2004-2005 :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE A.O. THAT ASSESSEE HAS DEPOSITED A SUM OF RS.42 000/- IN A BANK A/C. AND ALSO FOUND TO HAVE GIVEN LOAN OF RS.71 000/- AS UND ER TO VARIOUS AUTHORITIES :- SR. NO. NAME OF THE PERSON AMOUNT OF LOAN 1. KEKULBHAI CHOKSI RS.17 000/- 2. HEMABEN CHOKSI RS.18 000/- 3. EKTA CHOKSI RS.18 000/- 4. SANGETA KHANNA RS.18 000/- TOTAL RS.71 000/- THE ASSESSEE DID NOT FURNISH ANY EXPLANATION OF THI S DEPOSIT AND INVESTMENTS EITHER BEFORE THE A.O. OR BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE LD. A.R. SUBMITTED THAT THE AMOUNT DEPOSITED I N THE BANK WAS REFLECTED IN THE BALANCE-SHEET AS CASH BALANCE AND THEREFORE I T COULD NOT BE TREATED AS UNEXPLAINED. THE ADDITION WAS MADE ONLY ON THE BASI S THAT IT WAS CASH AND DEPOSITED IN THE BANK. IN FACT THE ASSESSEE HAD ALSO GIVEN L OAN TO VARIOUS PARTIES FROM THIS BANK ACCOUNT WHICH IS REFLECTED AS INVESTMENT. THE FINA L BALANCE AT THE END OF THE YEAR IS REFLECTED AS CASH AT BANK IN THE BALANCE-SHEET. THE RE IS NOTHING EXPLAINED IN THESE DEPOSITS. THE ADDITION HAS NOT BEEN CONTESTED FOR E NDING THE LITIGATION. ASSESSMENT YEAR : 2006-2007 :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE A.O. THAT ASSESSEE WAS IN POSSESSION O F CASH OF RS.24 000/- AT THE TIME OF SEARCH AND ALSO UNACCOUNTED JEWELLERY AMOUNTING TO RS.3 29 620/-. THE ASSESSEE FAILED TO FURNISH ANY JUSTIFICATION FOR THE CASH SO FOUND OR THE JEWELLERY ON HER POSSESSION. IT WAS JUST EXPLAINED THAT ENTIRE JEWEL LERY BELONGS TO HERSELF AND HER DAUGHTER IN LAW SMT. SANGITA KHANNA AND THEREFORE EQUAL ADDITION BE MADE. SINCE DURING THE COURSE OF SEARCH THE ASSESSEE WAS FOUND TO BE THE OWNER OF TOTAL JEWELLERY OF RS.15 66 527/- BUT FAILED TO FURNISH ANY JUSTIFI CATION ABOUT THE JEWELLERY OF RS.6 59 245/-. THE A.O. WAS ASKED TO EXPLAIN THE SO URCE OF THIS JEWELLERY AND IN 4 ITA NOS.2823 2825 2827 2829 2831 & 2834AHD/2009 RESPONSE TO WHICH THE ASSESSEE REQUESTED AS THE JEW ELLERY BELONGED TO HERSELF AND HER DAUGHTER-IN-LAW THEREFORE ADDITION SHOULD BE MADE ON EQUAL AMOUNT I.E. HALF IN THE HANDS OF HERSELF AND HALF IN THE HANDS OF HER DAUGH TER-IN-LAW. ACCORDINGLY THE A.O. ADDED A SUM OF RS.3 29 620/- IN HER HAND AND ALSO I NITIATED PENALTY PROCEEDINGS. NO EXPLANATION WAS FURNISHED EITHER BEFORE THE A.O. OR BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN RESPECT OF THESE ADDITION S FOR LEVYING PENALTY. IN THIS YEAR THE LD. A.R. SUBMITTED THAT CASH AND JEWELLERY WAS FOUND DURING THE SEARCH. THE ADDITION WAS AGREED WITH THE A.O. NO MATERIAL WAS COLLECTED BY HIM TO SHOW THAT IT IS UNEXPLAINED. ACCORDING TO LD. A. R. JEWELLERY IS REFLECTED IN THE BOOKS OF ACCOUNTS OF ASSESSEES HUSBAND AND SON BUT THERE IS NO NARRATION OF ITEMS IN THE BOOKS AND HENCE ADDITION WAS MADE. 3. SINCE NO EXPLANATION WAS FURNISHED IN RESPECT OF ABOVE ADDITION BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE LE ARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE PENALTY PROCEEDIN GS. HE REJECTED THE CONTENTION OF THE ASSESSEE THAT HER CASE IS COVERED BY THE DEC ISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS.- CIT [(2006) 282 ITR 642] (GUJ.). IN THIS REGARD HE OBSERVED THAT A.O. HAS I NITIALLY PENALTY PROCEEDINGS BOTH FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME. IN THIS REGARD WE RE-PRODUCE PARA 6 FROM THE ORDER OF LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) AS UNDER :- 6. THE RATIO OF THE CASE LAW RELIED UPON BY THE AP PELLANT IS NOT APPLICABLE IN THIS CASE. IN THAT CASE (NEW SORA THIA ENGINEERING VS.- CIT) THE A.O. LEVIED THE PENALTY FOR USING THE WORD CONCEALMENT OF INCOME OR FURNISHING INACCURAT E PARTICULARS OF INCOME. IT WAS UPHELD BY THE C.I.T. (A) AND TRIBUNAL AND ON THOSE FACTS THE HON'BLE HIGH COURT HELD THAT LOWER AUTHORITY HAS NOT DISCUSSED WHETHER PENALTY I S FOR CONCEALMENT OF INCOME OR IT IS FOR INACCURATE PARTI CULARS OF INCOME AND THE PENALTY WAS NOT SUSTAINED. HOWEVER IN THE PRESENT CASE THE FACT IS THAT PENA LTY IS LEVIABLE BOTH FOR CONCEALMENT OF INCOME AND FOR FIL ING INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE THE A.O . HAS USED THE WORDS CONCEALMENT OF INCOME/FURNISHING INACCURATE PARTICULARS OF INCOME. IN ENGLISH LANGUAGE THE / IS ALSO USE D FOR CONJUNCTION AND FOR EXAMPLE HE IS INTELLIGENT/ HANDSOME PERSON MEANS HE IS INTELLIGENT AND ALSO HANDSOME P ERSON. THE 5 ITA NOS.2823 2825 2827 2829 2831 & 2834AHD/2009 FACTS OF THE PRESENT CASE SUGGESTS THAT THE A.O. HA S USED THE / FOR DENOTING AND. THEREFORE PENALTY IS LEVIED BOTH F OR CONCEALMENT OF INCOME AND FURNISHED INACCURATE PARTICULARS OF I NCOME. THE PENALTY IS ALSO LEVIABLE UNDER EXPLANATION 5 TO SEC TION 271(1)(C) OF THE ACT. IN VIEW OF THESE FACTS IT IS HELD THAT LEVY OF PEN ALTY IS JUSTIFIED AND THE SAME IS CONFIRMED. THIS PARA IS COMMON IN BOTH THE APPELLATE ORDERS. 4. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIAL AVAILABLE ON RECORD. THE CASE OF THE ASSESSEE IS THAT THE FACTS OF THIS CASE ARE SQUARELY COVERED BY THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN T HE CASE OF NEW SORATHIA ENGINEERING CO. (SUPRA). IT IS INCORRECT ON THE PAR T OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) TO HOLD OTHERWISE. THE A.O. IS REQUIRED TO GIVE SPECIFIC FINDING AS TO WHETHER THE CASE IS COVERED BY MAIN PROVISION OR BY EXPLANATION. HE HAS TO SPECIFICALLY MENTION WHETHER THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN THI S REGARD SIMILAR DECISION DATED 17.09.2009 HAS BEEN TAKEN BY THE HON'BLE ITAT B BENCH AHMEDABAD IN THE CASE OF SHREEJI GAS AGENCY VS.- ACIT IN ITA NO. 1518/AH D/2009. 5. AGAINST THIS THE LD. DEPARTMENTAL REPRESENTATIV E SUBMITTED THAT THE ABOVE ORDER OF TRIBUNAL CANNOT BE RELIED UPON IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF K.P. MADHUSUDANAN VS. - CIT (2001) 251 ITR 99 WHICH HAS NOT BEEN REFERRED BY THE TRIBUNAL IN THEI R ORDER. IN OTHER WORDS IF PENALTY NOTICE IS ISSUED THEN LEVY OF PENALTY HAS TO BE CO NSIDERED BOTH IN TERMS OF MAIN SECTION AS WELL AS WITHIN THE MEANING OF EXPLANATIO N TO SECTION 271(1)(C). THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NEW SORAT HIA ENGINEERING CO. VS.- CIT ALSO DID NOT CONSIDER THE DECISION OF THE HON'BLE S UPREME COURT THEREFORE THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF NEW SORATHIA ENGINEERING CO. (SUPRA) WOULD NOT BE BINDING AS AGAINST THIS L EVY OF PENALTY HAS TO BE EXAMINED BOTH IN TERMS OF MAIN PROVISION OF SECTION 271(1)(C ) AS WELL AS EXPLANATION TO THAT SECTION. 6 ITA NOS.2823 2825 2827 2829 2831 & 2834AHD/2009 6. AFTER EXAMINING THE ISSUE WE INTEND TO AGREE WI TH THE LD. D.R. THAT THE DECISION OF THE TRIBUNAL IN SHREEJI GAS AGENCYS CA SE (SUPRA) WILL NOT BE SQUARELY APPLICABLE. 6.1. HOWEVER IN THE PRESENT CASE WE FIND THAT OTH ER LOANS/ INVESTMENTS ARE REFLECTED IN THE BALANCE-SHEET FILED BY THE ASSESSE E PRIOR TO SEARCH AND IT IS ONLY AFTER EXAMINING THE BALANCE-SHEET THE A.O. SOUGHT AN EXP LANATION FROM THE ASSESSEE WHICH WAS EXPLAINED AS COMING OUT OF THE FUNDS AS REFLECT ED IN THE BALANCE-SHEET. THE A.O. CONSIDERED THAT NO SPECIFIC EXPLANATION HAS BEEN FU RNISHED IN RESPONSE TO PENALTY NOTICE ISSUED BY HIM AND ACCORDINGLY LEVIED THE PEN ALTY AND SO THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE S AME ON THE SIMILAR GROUND. IN OUR CONSIDERED VIEW WHEN ITEMS OF INVESTMENTS ARE REFLECTED IN BALANCE-SHEET FILED PRIOR TO THE SEARCH THEN THE QUESTION OF CONSIDERI NG THEM UNEXPLAINED DOES NOT ARISE. THE ADDITION HAS BEEN MADE FOR WANT OF SOME SPECIFI C EXPLANATION SO AS TO IDENTIFY SPECIFIC SOURCE OF FUNDS FOR MAKING INVESTMENT OR G IVING LOAN. BUT THAT WILL NOT BE SUFFICIENT FOR THE PURPOSE OF LEVYING PENALTY. WHAT IS REQUIRED TO BE SHOWN BY THE A.O. IS THAT THE ASSESSEE WITHHELD CERTAIN MATERIAL FACT WHICH RESULTED IN THE INVESTMENT NOT BEING SATISFACTORILY EXPLAINED. HOWE VER WHEN APPARENTLY THERE IS NO REASON FOR SUSTAINING ADDITION THEN EXPLANATION OF THE ASSESSEE THAT IT HAS AGREED TO THE ADDITION TO BUY PEACE AND TO PUT AN END TO THE LITIGATION IS APPARENTLY BONAFIDE AND THEREFORE THE CASE OF THE ASSESSEE CANNOT BE BROUGHT WITHIN THE MISCHIEF OF MAIN PROVISION OF SECTION 271(1)(C) OR THE EXPLANATION ( 1) THEREOF. THUS IN OUR CONSIDERED VIEW PENALTY FOR THE ASSESSMENT YEARS 2000-01 TO 2 004-05 CANNOT BE LEVIED. IN RESPECT OF ASSESSMENT YEAR 2006-07 THE EXPLANATION OF THE ASSESSEE IS THAT THIS JEWELLERY IS REFLECTED IN THE BOOKS OF ACCOUNTS OF THE HUSBAND THOUGH THERE IS NO DIRECT NEXUS. THE EXPLANATION OF THE ASSESSEE IS AP PARENTLY BONAFIDE THOUGH MAY NOT BE SUFFICIENT FOR NOT MAKING ADDITION. BUT FOR LEVY ING PENALTY IT HAS TO BE SHOWN THAT NOT ONLY THE EXPLANATION OF THE ASSESSEE IS NOT BON AFIDE BUT ALSO THAT IT HAS WITHHELD SOME MATERIAL FACTS FROM THE A.O. SINCE THERE IS NO SUCH FINDING THE CASE OF THE ASSESSEE CAN ALSO NOT BE BROUGHT INTO THE MISCHIEF OF EXPLANATION (1) TO SECTION 271(1)(C). IN OUR CONSIDERED VIEW THE EXPLANATION GIVEN BY THE ASSESSEE NOT ONLY DURING PENALTY PROCEEDINGS BUT ALSO DURING ASSESSM ENT PROCEEDINGS SHOULD BE CONSIDERED WHILE LEVYING PENALTY UNDER EXPLANATION (1) TO SECTION 271(1)(C) OF THE 7 ITA NOS.2823 2825 2827 2829 2831 & 2834AHD/2009 INCOME TAX ACT 1961. IN VIEW OF THIS WE CANCEL TH E PENALTY FOR THE ASSESSMENT YEAR 2006-07 ALSO. 7. IN THE RESULT ALL THE SIX APPEALS FILED BY THE ASSESSEE ARE ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 29 TH JANUARY 2010. SD/- SD/- SS (D.C. AGRAWAL) (T.K. SHARMA) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATED: 29 /01/2010 COPY OF THE ORDER IS FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER // TRUE COPY // ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT AHMEDABAD BENCHES AHMEDABAD. LAHA/SR. P.S.