Sri V Kumarasawmy Naidu, Chttoor District v. ITO, Chittoor

ITA 108/HYD/2009 | 2005-2006
Pronouncement Date: 14-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 10822514 RSA 2009
Bench Hyderabad
Appeal Number ITA 108/HYD/2009
Duration Of Justice 1 year(s) 3 month(s) 17 day(s)
Appellant Sri V Kumarasawmy Naidu, Chttoor District
Respondent ITO, Chittoor
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 14-05-2010
Date Of Final Hearing 06-05-2010
Next Hearing Date 06-05-2010
Assessment Year 2005-2006
Appeal Filed On 27-01-2009
Judgment Text
ITA NO.108/HYD/2009 SHRI KUMARASWAMY CHITTOR IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.:108/HYD/2009 ASSTT. YEAR 200 5-06 SHRI V. KUMARA SWAMY NAIDU CHITTOR VS ITO WARD 1 CHITTOR (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. NEERAJA RESPONDENT BY : SMT. NIVEDITA BISWAS DR O R D E R PER: CHANDRA POOJARI ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER PASSED BY THE CIT(A) THIRUPATHI DATED 28.11.2 008 AND PERTAINS TO THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE CIT(A) IN UPHOLDING THE MAXIMU M PENALTY OF RS.50 040/- LEVIED U/S 271 (1) ( C) IS ERRONEOUS BO TH IN LAW AND ON FACTS. 2. THE CIT(A) OUGHT TO HAVE CONSIDERED THAT THE AS SESSEE ACCEPTED ALL THE ADDITIONS MADE IN THE ASSESSMENT ORDER TO PURCH ASE PEACE WITH THE DEPARTMENT AND TO AVOID PROTRACTED LITIGATION IN AP PEALS PARTICULARLY IN VIEW OF THE SMALL TAX EFFECT INVOLVED WHICH DOES N OT AMOUNT TO CONCEALMENT. 3. THE MERE FACT THAT THE ASSESSEE COULD NOT PRODU CE ACCEPTABLE EVIDENCE IN SUPPORT OF THE CLAIM OF DEVELOPMENTAL C HARGES OF RS.45 000/- BEFORE THE ASSESSING OFFICER DOES NOT A UTOMATICALLY AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALM ENT OF INCOME. ITA NO.108/HYD/2009 SHRI KUMARASWAMY CHITTOR 2 2 4. IN ANY CASE THE CIT(A) IS NOT JUSTIFIED IN UPH OLDING THE LEVY OF MAXIMUM PENALTY OF RS.50 040/- AS AGAINST THE MINIM UM PENALTY LEVIABLE OF RS.16 680/-. 5. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE ADV ANCED AT THE TIME OF HEARING THE ASSESSEE PRAYS THAT THE PENALTY OF RS.50 040/- LEVIED MAY KINDLY BE DELETED OR ALTERNATIVELY MAY BE SUITA BLY REDUCED TO MINIMUM. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN I NDIVIDUAL DERIVING INCOME FROM POULTRY FARMING. BEFORE THE A SSESSING OFFICER THE ASSESSEE HAS SHOWN TO HAVE PURCHASED A SITE PROPERTY AT CHEN NAI IN THE ASSESSMENT YEAR 1994-95 AND DEVELOPMENT CHARGES FOR THE SA ID PROPERTY WERE STATED TO HAVE BEEN SPENT DURING THE PE RIOD RELEVANT TO THE ASSESSMENT YEAR 1995-96. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE INDEXED COST OF THE SAID DEVELOPMENT CHARGES WERE TAKEN AT RS.83 398/- FOR THE PURPOSE OF WORKING OUT T HE CAPITAL GAINS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2005-06 IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE SA ID DEVELOPMENT CHARGES WERE NOT SHOWN EITHER IN THE BALAN CE SHEET OR CASH FLOW STATEMENT ATTACHED TO THE RETURN OF INCOME FIL ED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1995-96. HENCE THE ASSESSING O FFICER HAS REJECTED THE CLAIM OF THE ASSESSEE FOR CONSIDERING THE I NDEXED VALUE OF THE SAID DEVELOPMENT CHARGES AND THE CAPITAL GAINS ON THE SAID PROPERTY WAS COMPUTED ACCORDINGLY. SIMULTANEOUSLY THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS U/S 271 (1) ( C) FOR CONCEALMENT OF INCOME BY WAY OF FALSE CLAIM UNDER THE HEAD DEVELO PMENT CHARGES. ITA NO.108/HYD/2009 SHRI KUMARASWAMY CHITTOR 3 3 IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING O FFICER IN THIS RESPECT THE ASSESSEE HAS REPLIED THAT MOST OF THE AD DITIONS MADE IN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 WERE ACCEPTED BY HIM BUT CLAIMED THAT THE DEVELOPMENT CHARGES WERE MET OUT OF EGG COLLECTIONS DURING THE RELEVANT PERIOD AND THEREFORE R EQUESTED FOR DROPPING OF THE PENALTY PROCEEDINGS. HOWEVER THE ASSE SSING OFFICER WAS NOT SATISFIED WITH THE SAID EXPLANATION BECAUSE THE A SSESSEE HAS NEITHER SHOWN ANY INCOME FROM SUPPLY OF EGGS TO CHENNAI NR ANY EXPENDITURE TOWARDS DEVELOPMENT CHARGES WERE REFLECTED IN THE BALANCE SHEET OR CASH FLOW STATEMENT. IN VIEW OF THIS THE ASSESSI NG OFFICER HAS CONCLUDED IN THE PENALTY ORDER THAT THE ASSESSEE HAS FURNI SHED INACCURATE PARTICULARS THEREBY CONCEALING THE TRUE INCO ME OF THE ASSESSEE. HENCE PENALTY U/S 271 (1) ( C) OF THE IT ACT WAS L EVIED AT MAXIMUM PENALTY OF RS.50 040/-. 4. AGAINST THIS THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) WHO HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGG RIEVED AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE MAIN CONTENTION OF THE ASSESSEES COUNSEL IS TH AT THE ASSESSEE HAS CO-OPERATED WITH THE DEPARTMENT IN THE COURSE OF ITA NO.108/HYD/2009 SHRI KUMARASWAMY CHITTOR 4 4 ASSESSMENT PROCEEDINGS THE ASSESSEE ALSO PAID THE DUE TAX. BECAUSE OF THE SMALLNESS OF AMOUNT INVOLVED THE ASSESSEE HAS NOT F ILED AN APPEAL IN THE CASE OF QUANTUM ADDITION. THE ASSESSEE HA S GIVEN BONA FIDE EXPLANATION FOR THE LAPSE WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THAT ITSELF CANNOT BE A REASON FOR LEVYING P ENALTY. ALTERNATIVELY SHE PRAYED TO LEVY MINIMUM PENALTY. ADMITTEDLY IN THE PRESENT CASE THE ASSESSEE HAS CLAIMED DEVELOPMENT EXPENDITURE W.R.T. CAPITAL ASSETS WHICH WAS NOT ABLE TO SUBSTANTIATE WITH THE EVIDENCE IN SPITE OF GIVING OPPORTUNITY TO THE ASSESSEE. HAVING REGARD TO THESE CIRCU MSTANCES THE ASSESSING OFFICER REACHED THE CONCLUSION THAT THE ASSESSEE HAS F URNISHED INACCURATE PARTICULARS OF INCOME THEREBY IT LEAD TO CONCEA LMENT OF TRUE INCOME AND LEVIED MAXIMUM PENALTY U/S 271 (1) ( C ) OF THE INCOME TAX ACT. WE HAVE CAREFULLY GONE THROUGH THE FACTUAL POSIT ION OF THE CASE. THE ASSESSING OFFICER HAS GIVEN AMPLE OPPORTUNITY TO THE ASSESSEE TO PROVE THE EXPENSES INCURRED TOWARDS THE DEVELOPMENT CHA RGES. THE ASSESSEE HAD NOT FURNISHED ANY EVIDENCE. THE PRIMARY BUR DEN CAST UPON THE ASSESSEE WAS NOT DISCHARGED. IN THESE CIRCUM STANCES IT IS TO BE CONSTRUED THAT ASSESSEE HAS CONCEALED HIS INCOME AND THERE IS A PROVISION REGARDING DEEMED CONCEALMENT IN THE FORM OF EXPLANATION IN SECTION 271 (1) (C) OF THE IT ACT WHICH READS AS FOLLOWS: EXPLANATION 1: WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE OR ITA NO.108/HYD/2009 SHRI KUMARASWAMY CHITTOR 5 5 (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE A ND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THEN THE AMOUNT ADDED OR DISALLO WED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHA LL FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB SECTION BE DEEMED TO REPRES ENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 6. IT IS CLEAR FROM THE ABOVE EXPLANATION THAT TH E STATUTE VISUALIZED THAT THE ASSESSMENT AND PENALTY PROCEEDINGS TO BE WHOLLY DISTINCT AND INDEPENDENT OF EACH OTHER. PART B OF TH E EXPLANATION IS THAT THE PERSON MUST PROVIDE AN EXPLANATION WHICH IS BONA F IDE AND HE SHOULD SUBSTANTIATE THAT EXPLANATION BY SOME EVIDENCE WI TH HIM. IF HE FAILS TO DO SO HIS EXPLANATION IS TREATED AS UNTENABLE . ONLY WHEN THE ASSESSEE IS ABLE TO OFFER REASONABLE EXPLANATION BASED O N SOME EVIDENCE THE ASSESSING OFFICER CANNOT INVOKE PART B OF T HE EXPLANATION UNLESS THE ASSESSING OFFICER HAS GIVEN FINDING BASED ON SOME CONTRADICTORY EVIDENCE TO DISPROVE THAT EXPLANATION OF FERED BY THE ASSESSEE FALSE. WHEN THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND FAILED TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL T O THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THEN THE AM OUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE A S A RESULT THEREON SHALL BE DEEMED TO BE REPRESENT INCOME IN RE SPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN THE PRESENT CASE ASSESSEE IS NOT ABLE TO SUBSTANTIATE HIS CLAIM OF EXPENDITURE WITH ANY EVIDENCE AND IN ITA NO.108/HYD/2009 SHRI KUMARASWAMY CHITTOR 6 6 THE CIRCUMSTANCES WE ARE OF THE OPINION THAT PENALTY IS LEVIABLE U/S 271 (1) (C) OF THE ACT. 7. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE WE DIRECT THE ASSESSING OFFICER TO LEVY MINIMUM PENALTY AT 100% OF TAX TO BE EVADED INSTEAD OF MAXIMUM PENALTY AT 300%. A CCORDINGLY THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 14:5:2010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 14 TH MAY 2010 COPY FORWARDED TO: 1. SHRI V. KUMARASWAMY NAIDU MANGALA PALLI VILLAGE & POST BANGARUPALYEM MANDAM CHITTOR DISTRICT. 2. ITO WARD 1 CHITTOR 3. CIT(A)- HYDERABAD & THIRUPATHI 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP