Manila Velijinhai Patel,, Jalgaon v. Joint Commissioner of Income-tax,,

ITA 142/PUN/2014 | 2010-2011
Pronouncement Date: 31-07-2015 | Result: Allowed

Appeal Details

RSA Number 14224514 RSA 2014
Assessee PAN AAVPP2075R
Bench Pune
Appeal Number ITA 142/PUN/2014
Duration Of Justice 1 year(s) 6 month(s) 8 day(s)
Appellant Manila Velijinhai Patel,, Jalgaon
Respondent Joint Commissioner of Income-tax,,
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 31-07-2015
Date Of Final Hearing 29-07-2015
Next Hearing Date 29-07-2015
Assessment Year 2010-2011
Appeal Filed On 22-01-2014
Judgment Text
] IQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE ! ' BEFORE SHRI R.K. PANDA AM AND SHRI VIKAS AWASTHY JM / ITA NO.142/PN/2014 !# $ %$ / ASSESSMENT YEAR : 2010-11 SHRI MANILA VELLJINHAI PATEL PROP. OM MARBLES AND STONES TIMBER MARKET SHIVAJI NAGAR JALGAON 414 206 PAN NO.AAVPP2075R . / APPELLANT V/S JCIT RANGE-1 JALGAON . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / DEPARTMENT BY : SHRI . RAJESH DAMOR & / ORDER PER R.K. PANDA AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 04-12-2013 OF THE CIT(A)-II NASHIK RELATING TO AS SESSMENT YEAR 2010-11. 2. LEVY OF PENALTY OF RS.75 000/- U/S.271(1)(C) OF THE I.T. AC T BY THE AO AND UPHELD BY THE CIT(A) IS THE ONLY ISSUE IN THE GROU NDS RAISED BY THE ASSESSEE. / DATE OF HEARING :29.07.2015 / DATE OF PRONOUNCEMENT:31.07.2015 2 ITA NO.142/PN/2014 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A N INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN MARBLE ON WHOLESALE BASIS AND TRADING IN SHARES. HE FILED HIS RETURN OF INCOME ON 15-10-2 010 DECLARING TOTAL INCOME AT RS.42 22 740/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT ASSESSEE HA S RECEIVED LOAN OF RS.2 50 000/- FROM THE HUF OF THE ASSESSEE. ON BEING QU ESTIONED BY THE AO IT WAS SUBMITTED THAT THE AMOUNT HAS BEEN R ECEIVED BY CHEQUE. THE ASSESSEE FURNISHED THE COPIES OF THE BANK A CCOUNT INCOME-TAX RETURNS BALANCE SHEET COPY OF PAN CARD ETC. OF THE HUF AND IT WAS SUBMITTED THAT THE HUF IS ALSO ASSESSED TO T AX. IT WAS ARGUED THAT THE HUF HAS DEPOSITED THE INCOME OF THE YE AR IN THE BANK AND THE LOAN IS ADVANCED. IT WAS FURTHER SUBMITTED THAT THE LOAN IS GENUINE. HOWEVER TO MAINTAIN GOOD RELATION WITH THE DEPAR TMENT AND TO AVOID LENGTHY LITIGATION THE ASSESSEE AGREED TO PAY TA X ON THE SAME SUBJECT TO NON INITIATION OF PENALTY U/S.271(1)(C) OF THE I.T. ACT. 4. HOWEVER THE AO NOTED THAT THE HUF HAS NO SOURCE OF INCOME. WHATEVER INCOME THE HUF HAS OFFERED IS THE INTEREST INCOM E ONLY. THE HUF DOES NOT HAVE ANY SPECIFIC BUSINESS OR PROFESSION AND THE INCOME WHATEVER IS GENERATED IS FROM THE OTHER INDIVIDUAL ACCOUNT S TO WHOM LOAN IS GIVEN BY THE HUF AND THE SO-CALLED INTEREST INCOM E IS EARNED. HE ACCORDINGLY HELD THAT THE HUF LOAN IS NOTHING BUT THE LOAN/FUNDS DIVERTED THROUGH SUCH OTHER ACCOUNTS. HE THEREFORE HE LD THAT THE AMOUNT OF RS.2 50 000/- RECEIVED FROM THE HUF IS NOTHING B UT THE INCOME OF THE ASSESSEE. HE ACCORDINGLY ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE AND THEREAFTER INITIATED PENALTY PROCEEDING S. 5. DURING PENALTY PROCEEDINGS THE ASSESSEE REITERATED T HE SAME ARGUMENTS AS ADVANCED DURING ASSESSMENT PROCEEDINGS. HOWEVER THE 3 ITA NO.142/PN/2014 AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE AS SESSEE AND LEVIED PENALTY OF RS.75 000/- U/S.271(1)(C) OF THE I.T. ACT BEING THE MINIMUM PENALTY OF 100% OF TAX SOUGHT TO BE EVADED. 6. BEFORE CIT(A) IT WAS ARGUED THAT THE ASSESSEE HAS NO T CONCEALED INCOME OR FURNISHED ANY INACCURATE PARTICULARS OF ITS INCOME AND THEREFORE NO PENALTY IS LEVIABLE IN CASE OF CONDITIONAL OFFER. I T WAS ARGUED THAT THE ASSESSEE HAS PROVED THE IDENTITY AND CREDIT WORTHINESS OF THE LOAN CREDITOR AND GENUINENESS OF THE TRANSACTION. RELYING ON VARIOUS DECISIONS IT WAS ARGUED THAT NO PENALTY U/S. U/S .271(1)(C) OF THE I.T. ACT IS LEVIABLE. 7. HOWEVER THE LD.CIT(A) WAS NOT SATISFIED WITH THE ARGUM ENTS ADVANCED BY THE ASSESSEE AND UPHELD THE PENALTY LEVIED BY THE AO U/S. U/S.271(1)(C) OF THE I.T. ACT. WHILE DOING SO HE NOTED THAT THE AO IN HIS ORDER HAS OBSERVED THAT THERE IS NO RECORD AS T O HOW THE HUF WAS FORMED. FURTHER WHATEVER INCOME THE HUF HAS SHOWN HAS COME FROM THE INDIVIDUAL MEMBER WHICH IS DIVERTED TO THE HUF. THE HUF HAS NOT EXPLAINED THE SOURCE OF ITS INCOME AND THEREFORE THE LOAN GIVEN TO THE ASSESSEE CANNOT BE SAID TO HAVE BEEN EXP LAINED. ACCORDING TO THE CIT(A) THE ASSESSEE AND HIS HUF ARE CLO SELY CONNECTED. SINCE THE ASSESSEE COULD NOT EXPLAIN THE SOU RCE OF FUND OF HUF FOR GIVING LOAN TO THE ASSESSEE PROPERLY THEREFORE T HE AO IS JUSTIFIED IN LEVYING PENALTY U/S. U/S.271(1)(C) OF THE I.T. ACT. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FURN ISHED ALL THE 4 ITA NO.142/PN/2014 DETAILS REQUIRED TO PROVE THE IDENTITY AND CREDIT WORTHINE SS OF THE LOAN CREDITOR AND THE GENUINENESS OF THE TRACTION. HOWEVER FOR SOME REASON OR OTHER THE ASSESSEE HAD ADMITTED FOR ADDITION OF THE SAID AMOUNT. THAT DOES NOT MEAN THAT PENALTY IS AUTOMATIC. 10. REFERRING TO THE DECISION OF THE NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MALU ELECTRODES PVT. LTD. REPORTED IN 127 TTJ 599 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HE LD MERE FACT OF AGREED ADDITION DOES NOT RESULT INTO A CONCLUSION THAT THE AMOUNT AGREED TO BE ADDED AS INCOME IS CONCEALED INCOME. IN SU CH A CASE THE AO SHOULD FURTHER BRING SOME MATERIAL ON RECORD SO THAT IT IS CONCLUSIVELY ESTABLISHED THAT SUCH SURRENDER INFACT REPRE SENTED THE REAL INCOME OR UNDISCLOSED INCOME OF THE ASSESSEE. THE PE NALTY LEVIED U/S. U/S.271(1)(C) BY THE AO WHICH WAS DELETED BY THE CIT (A) WAS UPHELD BY THE TRIBUNAL AND THE APPEAL FILED BY THE REVENUE WAS DISMISSED. 10.1 REFERRING TO THE DECISION OF THE HONBLE MADRAS HIGH C OURT IN THE CASE OF CIT VS. GEM GRANITES (KARNATAKA) REPORTED IN 42 TAXMANN.COM HE SUBMITTED THAT THE HONBLE HIGH COURT AFT ER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF MAK DATA PVT. LTD. VS. CIT REPORTED IN 38 TAXMANN.COM 4 48 HAS HELD THAT QUANTUM ASSESSMENT CANNOT HAVE A DIRECT IMPACT A UTOMATICALLY LEADING TO INFERENCE OF CONCEALMENT AND CONSEQUENT IMPOSITIO N OF PENALTY. MERELY BECAUSE THE DEPARTMENT DID NOT AGREE WITH THE EXPLANATION THEN THE ONUS WAS ON THE DEPARTMENT TO PR OVE THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INAC CURATE PARTICULARS OF INCOME. ONCE THE ASSESSEE DISCHARGES THAT BURDEN THE ONUS SHIFTS TO THE DEPARTMENT. REFERRING TO THE PAGES 2 7 TO 63 OF THE 5 ITA NO.142/PN/2014 PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE COPIES OF INCOME AND EXPENDITURE ACCOUNT B ALANCE SHEET AND ACKNOWLEDGEMENT OF INCOME-TAX RETURNS FILED IN THE CAS E OF THE HUF FROM A.Y. 2005-06 TO 2010-11 HE SUBMITTED THAT THE COPIES OF SUCH INCOME-TAX RETURNS ARE IN THE RECORDS OF THE DEPA RTMENT. THEREFORE IT CANNOT BE SAID THAT THE HUF DOES NOT EXIST . HE SUBMITTED THAT DUE TO SOME REASON AND MISTAKE ON THE PART OF TH E AUTHORIZED REPRESENTATIVE WHO APPEARED BEFORE THE AO THE ASSESSE E ACCEPTED THE ADDITION OF LOAN OF RS.2 50 000/- OBTAINED FROM THE HUF. TH AT MAY BE SUFFICIENT FOR MAKING THE ADDITION IN THE QUANTUM PROCEEDINGS . HOWEVER THE SAME CANNOT BE A GROUND FOR LEVYING PENALTY U/S. 271(1)(C) OF THE I.T. ACT. 11. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO C ONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTA NT CASE THE ASSESSEE HAS ACCEPTED A LOAN OF RS.2 50 000/- FROM THE HU F NAMELY SHRI PATEL MANILAL VELJIBHAI HUF. THE AMOUNT HAS BEEN RECE IVED BY ACCOUNT PAYEE CHEQUE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS ALSO PRODUCED THE BANK ACCOUNT COPY INCOME-TAX RETURNS BALANCE SHEET COPY OF PAN CARD ETC. OF THE HUF AND IT WAS ALSO BROUGHT TO THE NOTICE OF THE AO THAT THE HUF IS AS SESSED TO TAX. HOWEVER SIMULTANEOUSLY THE ASSESSEE AGREED FOR ADDITION OF THE SAME. UNDER THESE CIRCUMSTANCES THE QUESTION THAT ARISES IS A S TO WHETHER PENALTY U/S. 271(1)(C) OF THE I.T. ACT CAN BE LEVIED. FROM T HE PAPER 6 ITA NO.142/PN/2014 BOOK FILED BEFORE US WE FIND THE HUF OF THE ASSESSEE FROM W HOM LOAN HAS BEEN OBTAINED IS REGULARLY FILING THE RETURN OF INCOME FROM A.Y. 2005-06 TILL A.Y. 2010-11 THE COPIES OF WHICH ARE PLACED IN T HE PAPER BOOK FROM PAGES 35 TO 63. WE FIND FOR A.Y. 2005-06 THE HU F HAS FILED THE RETURN OF INCOME ON 24-08-2005 VIDE ACKNOWLEDGEMENT NO.0112101365 DISCLOSING TOTAL INCOME OF RS.86 153/-. SIMILARL Y FOR A.Y. 2006-07 THE HUF HAS FILED ITS RETURN OF INCOME ON 19-0 7-2006 VIDE ACKNOWLEDGEMENT NO.0112100714 DISCLOSING TOTAL INCOME OF RS.40 690/-. SIMILARLY FOR A.Y. 2007-08 THE RETURN HAS BEEN FILED ON 28-07-2007 VIDE ACKNOWLEDGEMENT NO.0112100755 DISCLOSING TOTAL INCOME OF RS.44 600/-. FOR A.Y. 2008-09 THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 31-07-2008 VIDE ACKNOWLEDGEMENT NO.0112101260 DECLARING NIL INCOME AFTER CLAIMING SET OFF OF T HE BUSINESS LOSSES. SIMILARLY FOR A.Y. 2009-10 THE HUF HAS FILED THE RETURN OF INCOME ON 29-07-2009 DECLARING NIL INCOME AFTER CL AIMING SET OFF OF BROUGHT FORWARD LOSS. THEREFORE WHEN THE RETURNS W ERE REGULARLY FILED BY THE HUF IT IS NOT CORRECT ON THE PART OF THE REV ENUE AUTHORITIES TO SAY THAT THE HUF IS NOT IN EXISTENCE. FURTHER THE A SSESSEE HAS RECEIVED THE LOAN FROM THE HUF BY ACCOUNT PAYEE CHEQUE . THEREFORE MERELY BECAUSE ADDITION HAS BEEN MADE IN THE QUANTUM P ROCEEDINGS PENALTY U/S. 271(1)(C) OF THE I.T. ACT IN OUR OPINION CANNOT BE AUTOMATIC. IN THE INSTANT CASE THE ADDITION MADE BY T HE AO MAY BE JUSTIFIED UNDER THE FACTS AND CIRCUMSTANCE OF THE CASE. HOWEVER THE ADDITION IN OUR OPINION DOES NOT CALL FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE I.T. ACT ESPECIALLY WHEN THE HUF IS REGULARLY FILING R ETURN OF INCOME COPIES OF WHICH ARE PLACED IN THE PAPER BOOK FROM A .Y. 2005- 06 ONWARDS AND THE AMOUNT HAS BEEN RECEIVED BY THE A SSESSEE BY ACCOUNT PAYEE CHEQUE FROM THE BANK ACCOUNT OF THE HUF . IN THIS VIEW 7 ITA NO.142/PN/2014 OF THE MATTER AND CONSIDERING THE SMALLNESS OF THE AMOUN T OBTAINED FROM THE HUF FOR WHICH ALL POSSIBLE DETAILS HAVE BEEN FILED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS AS WELL AS PENALT Y PROCEEDINGS WE ARE OF THE OPINION THAT THIS IS NOT A FIT CA SE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE I.T. ACT. WE ACCORDINGLY SE T ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO CANCEL THE PENA LTY SO LEVIED. GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 13. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31-07-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) ! / JUDICIAL MEMBER / ACCOUNTANT MEMBER IQ.KS PUNE ; !' DATED : 31 ST JULY 2015. LRH'K &'(!)*+%) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ $ % ( ) -II ( / THE CIT(A)-II NASHIK 4. $ $ % - II ( / THE CIT-II NASHIK 5. 6. )*+ -. $ -. IQ.KS / DR ITAT A PUNE; +01 2 / GUARD FILE. &# / BY ORDER ) //TRUE C ) //TRUE COPY// 345 6 -7 / SR. PRIVATE SECRETARY $ -. IQ.KS / ITAT PUNE