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

ITA 2881/AHD/2009 | 2004-2005
Pronouncement Date: 29-01-2010 | Result: Allowed

Appeal Details

RSA Number 288120514 RSA 2009
Assessee PAN ADTPK8861B
Bench Ahmedabad
Appeal Number ITA 2881/AHD/2009
Duration Of Justice 3 month(s) 13 day(s)
Appellant Kaushal 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 2004-2005
Appeal Filed On 16-10-2009
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. 2879 & 2881/AHD/2009 ASSESSMENT YEARS : 2003-2004 & 2004-2005 KAUSHAL M. KHANNA SURAT (PAN : ADTPK 8861 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 TWO APPEALS FILED BY THE ASSESSEE AG AINST THE COMMON ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-II AHMEDABAD DATED 01.07.2009 FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05. BOTH THESE APPEALS INVOLVED COMMON FACTS AND COMMON ISSUES AND HENCE THEY ARE TAKEN U P TOGETHER FOR THE 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 2003- 04 RS.1 24 660/- 27.11.06 28.12.2007 RS.2 38 360/- RS.1 13.700/- RS.33 754/- 2004- 05 RS.1 28 280/- 27.11.06 28.12.2007 RS.1 68 480/- RS.40 000/- RS.9 828/- THE REASONS FOR ADDITION IN RESPECT OF YEARS ARE SU MMARIZED AS UNDER :- ASSESSMENT YEAR : 2003-2004 : DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. FOUND THAT ASSESSEE HAS DEPOSITED A SUM OF RS. 1 13 700/- IN BANK A/C.. NO EXPLANATION OF THIS UNACCOUNTED CASH DEPOSIT IN BAN K A/C. WAS GIVEN AND FOR WHICH PENALTY WAS LEVIED AT RS.33 754/-. THE LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) ALSO NOTED THAT NO EXPLANATION BEFORE HIM HAS BEEN GIVEN. 2 ITA NOS.2879 & 2881/AHD/2009 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.40 000/- IN BANK A/C.. NO EXPLANATION OF THIS UNACCOUNTED CASH DEPOSIT IN BAN K A/C. WAS GIVEN AND FOR WHICH PENALTY WAS LEVIED AT RS.9 828/-. THE LEARNED COMMI SSIONER OF INCOME TAX(APPEALS) ALSO NOTED THAT NO EXPLANATION BEFORE HIM HAS BEEN GIVEN. THE LD. A.R. SUBMITTED THAT THE SUM OF RS.1 13 700 /- AND RS.40 000/- FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIVELY WAS DEPOSITED IN THE BANK A/C. WHICH IS REFLECTED IN THE BALANCE-SHEET. THE DEPOSI T WAS UTILIZED FOR MAKING INVESTMENTS WHICH ARE REFLECTED IN THE BALANCE-SHE ET AND IS SUPPORTED BY VARIOUS CREDITS IN CAPITAL ACCOUNT AS APPEARING IN THE BALA NCE-SHEET AGAINST WHICH THE ASSETS INCLUDING CASH DEPOSITED AND INVESTMENTS ARE EQUATE D IN THE BALANCE-SHEET. THE ASSESSEE AGREED FOR ADDITION BUT IT CANNOT BE A CAS E FOR LEVYING PENALTY. 3. SINCE NO EXPLANATION WAS FURNISHED IN RESPECT OF ABOVE ADDITIONS 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 HIS 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 3 ITA NOS.2879 & 2881/AHD/2009 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 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. THE LD. A.R. ARGUED THAT THE FACTS OF THE CASE A RE SQUARELY COVERED BY THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF NEW SORATHIA ENGINEERING CO. (SUPRA). IT IS INCORRECT ON THE PART OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) TO HOLD OTHERWISE. THE A.O. IS REQUIRE D 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 HE SUBMITTED 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.- A CIT IN ITA NO. 1518/AHD/2009. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. IN FACT ASSESSEE HAS FURNISHED AN EXPLA NATION THOUGH DURING ASSESSMENT PROCEEDINGS AS CONTENDED BY THE LD. A.R. IN RESPECT OF VARIOUS ADDITIONS. WE ARE OF THE VIEW THAT THIS EXPLANATION SHOULD HAVE BEEN ALS O CONSIDERED BY THE A.O. BEFORE LEVYING THE PENALTY UNDER SECTION 271(1)(C). IT WOU LD BE INCORRECT TO PRESUME THAT ONLY THE EXPLANATION FURNISHED IN RESPONSE TO NOTICE UND ER SECTION 271(1)(C) SHOULD ALONE BE SUFFICIENT FOR CONSIDERING THE CASE UNDER EXPLAN ATION (1) TO SECTION 271(1)(C). THE LEVY OF PENALTY IS CIVIL LIABILITY AND ALSO IN THE NATURE OF COMPENSATION FOR CIVIL WRONG THEN BEFORE ARRIVING TO THE CONCLUSION THAT A WRONG HAS BEEN COMMITTED BY THE ASSESSEE THEREFORE A CARE HAS TO BE EXERCISED. TH E EXPLANATION FURNISHED BY HIM AT WHATEVER STAGE SHOULD BE CONSIDERED. EVEN IF THE EX PLANATION FURNISHED AT THE STAGE OF ASSESSMENT IS A PLAUSIBLE EXPLANATION AND EXPLAINS SATISFACTORILY WHY PENALTY SHOULD NOT BE LEVIED ON HIM SUCH EXPLANATION SHOULD BE GI VEN DUE WEIGHTAGE AND IF REALLY 4 ITA NOS.2879 & 2881/AHD/2009 THERE IS NO CASE FOR LEVYING PENALTY THEN PENALTY SHOULD NOT BE LEVIED MERELY BECAUSE TECHNICALLY THERE IS NO EXPLANATION IN RESPONSE TO NOTICE UNDER SECTION 271(1)(C). AS WE HAVE OBSERVED ABOVE THE ASSESSEE HAD IN FACT FU RNISHED AN EXPLANATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND APPARENTLY THE SE ARE THE CASES WHERE AMOUNT ADDED HAS BEEN REFLECTED IN THE BALANCE-SHEET AND P RIMA FACIE THERE IS NO CASE FOR EVEN SUSTAINING ADDITION THEN MERELY BECAUSE THE ASSESSE E HAS ACCEPTED THE ADDITION AND FAILED TO FURNISH ANY EXPLANATION IN RESPONSE TO NO TICE UNDER SECTION 271(1)(C) PENALTY SHOULD NOT BE LEVIED. THERE IS NOTHING IN THE PENAL TY ORDER OR IN THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WHICH COULD SH OW THAT THE ASSESSEE HAS DONE ANY CONTUMACIOUS CONDUCT. THERE IS NOTHING TO SHOW THAT THE ASSESSEE HAS WITHHELD ANY MATERIAL FACT FROM THE ASSESSEE OR THAT EXPLANA TION FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IS NOT BONAFIDE. 6. IN VIEW OF THE ABOVE WE ARE OF THE CONSIDERED V IEW THAT EXPLANATION (1B) CANNOT BE INVOKED AS ALL THE THREE INGREDIENTS OF T HAT EXPLANATION (1B) ARE NOT SATISFIED. EXPLANATION (1A) ALSO CANNOT BE INVOKED BECAUSE THE ASSESSEE HAS IN FACT GIVEN SOME EXPLANATION THOUGH DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AS A RESULT WE HOLD THAT NO CASE IS MADE OUT FOR LEVY O F PENALTY ON MERIT. 7. IN THE RESULT BOTH THE APPEALS FILED BY THE ASS ESSEE 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 AHM EDABAD BENCH 6. THE GUARD FILE. BY ORDER // TRUE COPY // ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT AHMEDABAD BENCHES AHMEDABAD. LAHA/SR. P.S.