Sahadeva Sahoo, Bhubaneswar v. ITO, Bhubaneswar

ITA 189/CTK/2010 | 2005-2006
Pronouncement Date: 16-09-2011

Appeal Details

RSA Number 18922114 RSA 2010
Assessee PAN ABVPS4956R
Bench Cuttack
Appeal Number ITA 189/CTK/2010
Duration Of Justice 1 year(s) 4 month(s) 6 day(s)
Appellant Sahadeva Sahoo, Bhubaneswar
Respondent ITO, Bhubaneswar
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 16-09-2011
Date Of Final Hearing 12-09-2011
Next Hearing Date 12-09-2011
Assessment Year 2005-2006
Appeal Filed On 10-05-2010
Judgment Text
IN THE INC O ME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE : SHRI K.K.GUPTA AM AND SHRI K.S.S.PRASAD RAO JM ITA NO. 189/CTK/2010 (ASSESSMENT YEAR 2005 - 06) SAHADEVA SAHO D - 3 BJB NAGAR BHUBANESWAR 751 014 PAN: ABVPS 4956 R VERSUS INCOME - T AX OFFICER WARD 1(3) BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: NONE FOR THE RESPONDENT SHRI S.C.MOHANTY DR DATE OF HEARING : 12.09.2011 DATE OF PRONOUNCEMENT : 16.09.2011 ORDER SHRI K.S.S.PRASAD RAO JM : THIS APPEAL IS F ILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT. 16.2.2010 FOR THE ASSESSMENT YEAR 2005 - 06 IN CASE OF THE ASSESSEE. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL (1) THAT THE ASSES SEE HAS NOT PREFERRED THE APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL) AGAINST THE ASSESSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT 1961 PASSED BY THE LEARNED ASSESSING OFFICER FOR THE REASON TO BUY PEACE AND THIS SHOULD NOT HAVE BEEN CONSTRUED AS TOTALLY CONCEALMENT OF THE PARTICULARS OF INCOME TO INVOKE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961. (2) THAT THE ASSESSEE HAD FILED THE INCOME TAX RETURN UNDER HUF FOR THE ASSESSMENT YEAR 2005 - 06 SHOWING TOTAL INCOME OF THE RENT RECEIVED IN T HE STATUS OF HU F AND ALSO CLAIMED THE DEDUCTION TOWARDS TOTAL INTEREST PAID ON THE HOUSING LOAN AND HAVE PAID THE TAXES THEREON. (3) THAT THE ASSESSEE HAD ALSO CLAIMED THE INTEREST PAID ON THE HOUSING LOAN AVAILED OF 54 173 BEING MONEY BORROWED BY THE ASSESSEE IN THE HUF RETURN. (4) THAT THE ASSESSING OFFICER WHILE ASSESSING OF INDIVIDUAL RETURN HAVE TAKEN 50% OF THE RENTAL INCOME AND HAS NOT CONSIDERED THE INTEREST PAYMENT ON THE HOUSING LOAN MADE BY THE ASSESS EE AMOUNTING TO 54 173 THEREBY THE COMPUTATION OF INCOME SHOULD HAVE BEEN REDUCED BY 54 173. (5) THAT THE ASSESSEE HAS NOT OFFERED A SUM OF 73 431 BEING INTEREST ACCRUED ON THE FIXED DEPOSIT WITH ORISSA STATE CO.OPERATIVE BANK AS THE SAME HAS BEEN DISCLOSED IN THE ITA NO.189/CTK/2010 2 INCOME TAX RETURN OF SUBSEQUENT ASSESSMENT YEAR 2006 - 07 AMOUNTING TO 1 20 883 ON RECEIPT OF THE TOTAL INTEREST FROM THE SAID BANK . U NDER THE SITUATION THE LEARNED ASSESSING OFFICERS INCLUSION OF THE AMOUNT OF 73 431 ON THE BASIS OF A CCRUAL IS UNJUST AND THE ASSESSEE HAVE BEEN THEREBY SUFFERS DOUBLE TAXATION. ACCORDINGLY THE COMPUTATION OF INCOME SHOULD HAVE BEEN INCREASED BY THIS AMOUNT 73 431. (6) THAT THE DIFFERENCE BETWEEN THE GROSS TOTAL INCOME OF THE RETURN FILED BY THE ASSES SEE 1 66 425 WITH THAT OF THE COMPUTATION OF THE LEARNED ASSESSING OFFICER ON ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT. 1961 3 33 436/ - IS 1 67 011. THE SAME IS REDUCIBLE BY THE AFORESAID SUM OF 54 173 BEING THE INTEREST ON THE HOUSING LOAN BEI NG NOT CONSIDERED BY THE LEARNED ASSESSING OFFICER PLUS 73 431 THE INTEREST ACCRUED ON FIXED DEPOSIT BEING DOUBLE TAXED WHICH AMOUNTS TO 1 27 604 AND THEREBY THE DIFFERENCE IS REDUCED TO 39 407 BETWEEN INCOME RETURNED WITH THAT OF THE ASSESSED INCOME U/S 143(3) OF THE INCOME TAX ACT. 1961. 3 . ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL THE FACTS UNDISPUTED ARE THAT THE ASSESSEE HAD CONSTRUCTED A THREE STORIED BUILDING AT D - 3 B.J.B.NAGAR BHUBANESWAR OVER A PLOT OF LAND WHICH WAS PURCHASED BY HIM IN HIS OWN NAME. T HE GROUND FLOOR WAS CONSTRUCTED BY HER WIFE LATE SUMITRA SAHOO AND THE OTHER TWO FLOORS WERE CONSTRUCTED BY THE ASSESSEE. THE GROUND FLOOR AND FIRST FLOOR WERE GIVEN ON RENT TO PRICE WATERHOUSE COOPERS (P) LTD IDCOL HOUSE UNIT - 2 BHUBANESWAR WHOSE HEAD OFFICE IS AT KOLKATA SINCE 1995. THE ASSESSEE USED THE THIRD FLOOR AS RESIDENCE. FOR THE PERIOD UNDER CONSIDERATION THE ASSESSEE FILED A RETURN ON 01.07.05 ON A TOTAL INCOME OF 84 420 AND A REVISED RETURN ON 31.03.06 DISCLOSING INCOME OF 1 44 430 . IN SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS F ILED ANOTHER RETURN ON 23.07.06 SHOWING STATUS AS HUF AND CLAIMED REFUND OUT OF TDS U!S.194 - I OF THE INCOME - TAX ACT 1961 TOWARD S HOUSE RENT RECEIVED. AFTER EXAMINING THE DETAILS OF DOCUMENTS FILED / COLLECTED ASSESSMENT WAS COMPLETED U/S.143(3) ON 20.12.07 ADDING BACK THE UNDISCLOSED INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY OF 1 24 416/ - AND INTEREST OF 92 286 UNDER THE HEAD ITA NO.189/CTK/2010 3 INCOME FROM OTHER SOURCES RESULTING AN EXTRA DEMAND WHICH WAS FULLY PAID BY THE ASSESSEE ON 18.01.08. SINCE THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE KNOWINGLY AND WILLFULLY HAS NOT DI SCLOSED THE RENTAL INCOME OF 1 24 416 AND I NTEREST INCOME OF 92 286 IN HIS RETURN HE INITIATED PENALTY PROCEEDINGS ULS.271 (1) (C) OF THE ACT. IN REPLY TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER THE ASSESSEE FILED WRITTEN SUBMISSION ON 10.3.2008 CONTENDING INTERALIA THAT AS REGA RDS THE ADDITION OF INCOME UNDER HOUSE PROPERTY THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS BUT SHOWN THE INCOME UNDER HUF OF WHICH THE ASSESSEE IS A MEMBER AND AS REGARDS THE INTEREST ACCRUED ON FIXED DEPOSITS THE ASSESSEE PLANNED IT TO SHOW THE SAME AS INCOME AT THE TIME OF MATURITY. AS THIS EXPLANATION WAS FOUND NOIT CONVINCING THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DELIBERATELY AND WILLFULLY NOT DISCLOSED THE INCOME FROM HOUSE RENT OF 1 24 416 AND INTEREST OF 92 286 TO REDUCE THE TAX BURDEN AND TO GET REFUND OUT OF THE TAX DEDUCTED AT SOURCES U/S.194 - I SHOWING STATUS AS HUF. AFTER HEARING THE ASSESSEE AND CONSIDERING THE JUDICIAL PRONOUNCEMENTS RELIED ON BY THE ASSESSEE THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE BEING A HIGHLY LEARNED PERSON HAVING KNOWLEDGE ABOUT THE LAWS OF THE LAND HAS DELIBERATELY AND WILLFULLY CONCEALED THE INCOME OF 92 286 IN RESPECT OF INTEREST AND FURNISHED INACCURATE PARTICULARS IN RESPECT OF HOUSE RENT OF 1 24 416 WHICH WAS NOT DISCLOSED IN THE RETURN OF INCOME. THEREFORE HE LEVIED PENALTY OF 64 453 U/S.271(1)(C) OF THE INCOME - TAX ACT 1961. IN APPEAL THE ASSESSEE BEING UNSUCCESSFUL HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 4. NONE APPEARED ON BEHALF OF THE ASSE SSEE THOUGH NOTICE WAS SENT TO THE ASSESSEE IN THE ADDRESS GIVEN IN FORM 36. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ISSUES RAISED IN THE GROUNDS OF ITA NO.189/CTK/2010 4 APPEAL WE FIND THAT THE APPEAL CAN BE DISPOSED EXPARTE QUA ASSESSEE BY HEARING THE LEARNED DR. ACCORDINGLY THE LEARNED DR WAS HEARD. 5. THE LEARNED DR HAS VEHEMENTLY ARGUED SUPPORTING THE IMPUGNED ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES CONTENDING INTERALIA THAT THE ASSESSEE HAS WILLFULLY NOT SHOWN THE RENTAL INCOME O F A PORTION OF THE BUILDING SO ALSO THE INTEREST ON FDS WITH ORISSA STATE CO - OP. BANK. THEREFORE THE DEPARTMENTAL AUTHORITIES ARE VERY MUCH RIGHT IN IMPOSING THE DISPUTED PENALTY U/S.271(1)(C) OF THE INCOME - TAX ACT 1961. ACCORDINGLY HE SOUGHT FOR UPHOLDI NG THE IMPUGNED ORDERS OF THE DEPARTMENTAL AUTHORITIES BY DISMISSING THE APPEAL OF THE ASSESSEE. 6. ON CAREFUL ANALYSIS OF THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES IN THE LIGHT OF MATERIAL MADE AVAILABLE TO THE TRIBUNAL WE FIND THAT UNDISPUTEDLY THE BUILDING IN QUESTION WAS CONSTRUCTED BY THE ASSESSEE AND HIS WIFE AND THE CONSTRUCTION OF SUCH BUILDING WAS COMPLETED DURING THE YEAR 1993 - 94. IN THE RETURN FILED BEFORE THE DEPARTMENT AND ALSO INTIMATION GIVEN TO THE STATE GOVERNMENT THE ASSESSEE HAS CONSISTENTLY CLAIMING THAT THE INVESTMENT HAS BEEN MADE JOINTLY BY HIM AND HIS WIFE MORE OR LESS IN EQUAL AMOUNT . THE GROUND FLOOR BELONGS TO HIS WIFE AND THE FIRST FLOOR BELONGS TO THE ASSESSEE. THE STATUS CONTINUED IN THE AGREEMENTS ARRIVED AT WITH TH E TENANT. AFTER THE DEATH OF HIS WIFE THE ASSESSEE DISCLOSED A TOTAL INCOME IN THE RETURN IN THE STATUS OF HUF AND CLAIMED REFUND FROM TDS DEDUCTED FROM RENT IN THE HANDS OF THE HUF. THESE FACTS WERE CLEARLY MENTIONED BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER IN PARAGRAPH 4 AT PAGE 2. FROM THESE UNDISPUTED FACTS IT IS CLEAR THAT THE ASSESSEE IS FILING RETURNS INDIVIDUALLY AS WELL AS HUF ALSO SHOWING THE RENT DERIVED FROM THE HOUSE PROPERTY OF THE PORTION BELONGED TO HIM IN HIS INDIVIDUAL RETURN AND OF T HE PORTION BELONGED TO THE DECEASED WIFE IN THE HUF RETURN AS BOTH OF HIS WIFE AND HIMSELF AND HIS ITA NO.189/CTK/2010 5 SON BEING MEMBERS OF HUF DERIVED THE PROPERTY OF DECEASED WIFE JOINTLY AND FILING THE RETURN AS HUF. THIS FACT OF FILING OF THE HUF RETURN IS NOT DENIED BY T HE DEPARTMENT AND IT IS CLEAR FROM THE OBSERVATION IN THE IMPUGNED ORDER THAT THE DEPARTMENT HAS ACCEPTED THE HUF RETURN FILED BY THE ASSESSEE AND GAVE THE REFUND ALSO REGARDING THE TDS AMOUNT DEDUCTED FROM THE RENT. FROM THIS IT IS CLEAR THAT THE DEPARTMENT HAS ACCEPTED THE RETURN OF HUF WHEREIN PART OF THE HOUSE RENT IS SHOWN AS INCOME THEREFORE CANNOT BE SAID UNDER ANY STRETCH IMAGINATION THAT THE ASSESSEE HAS CONCEALED THAT PORTION OF THE RENT SHOWN AS HUF INCOME AND RETURN FI LED BY HIM AND ACCEPTED BY THE DEPARTMENT AND REFUND OF THE TDS DEDUCTED FROM THE RENTAL INCOME. SO THIS AMOUNT CANNOT BE TERMED AS CONCEALED INCOME. MORE SO IN HIS REPLY TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER FOR INITIATING PENALTY PR OCEEDINGS THE ASSESSEE HAS EXPLAINED ITS STAND STATING THAT THE INCOME WAS SHOWN AS INCOME IN HUF RETURN TO WHICH THE ASSESSEE IS A MEMBER. 7. NOW COMING TO THE NEXT ADDITION OF 92 286 THE ASSESSEE IN HIS REPLY TO THE SHOW CAUSE NOTICE ISSUED BY THE AS SESSING OFFICER INITIATING THE PENALTY PROCEEDINGS CATEGORICALLY MENTIONED THAT THIS INTEREST ACCRUED ON FDS AND THE ASSESSEE PLANNED TO SHOW THE SAME AT THE TIME OF FDS MATURITY. ACCORDINGLY HE HAS SHOWN THIS INTEREST AMOUNT IN THE INCOME TAX RETURN OF SUBSEQUENT ASSESSMENT YEAR 2006 - 07 AMOUNTING TO 1 20 883 ON RECEIPT OF THE TOTAL INTEREST FROM THE ORISSA STATE CO - OPERATIVE BANK. SO FROM THIS EXPLANATION GIVEN BY THE ASSESSEE AND WITHOUT BRINGING ANY MATERIAL CONTRARY TO IT IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE INCOME OR PARTICULA RS OF INCOME. MORE SO WHEN THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT FOUND BY THE DEPARTMENTAL AUTHORITIES AS NOT BONAFIDE WE ARE OF THE CONSIDERED VIEW THAT NO PENALTY U/S.2711)(C) CAN BE LEVIED ONLY ON THE BASIS OF FINDING IN THE ASSESSMENT ORDER. IN THE CASE OF CIT V. ANWAR ALI [1970] 76 ITA NO.189/CTK/2010 6 ITR 696 (SC). IT WAS HELD THAT THE FINDING GIVEN IN THE ASSESSMENT PROCEEDINGS FOR DETERMINING OR COMPUTING THE TAX IS NOT CONCLUSIVE. HOWEVER IT IS GOOD EVIDENCE. BEFORE PENALTY CAN BE IMPOSED THE ENTIRETY OF CI RCUMSTANCES MUST REASONABLY POINT TO THE CONCLUSION THAT THE DISPUTED AMOUNT REPRESENTED INCOME AND THAT THE ASSESSEE HAS CONSCIOUSLY CONCEALED THE PARTICULARS OF HIS INCOME OR HAS DELIB ERATELY FURNISHED INACCURATE PARTICULARS. IN THE PRESENT CASE IN HAND THE DEPARTMENT IS NOT ABLE TO MAKE OUT ANY SUCH THIN G S. THEREFORE THE PENALTY LEVIED AGAINST THE ASSESSEE IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. APART FROM THAT UNDISPUTEDLY THE ASSESSEE HAS OFFERED THE TOTAL INTEREST ACCRUED ON FDS IN THE NEXT FINANC IA L YEAR RELEVANT TO THE ASSESSMENT YEAR 2006 - 07 AND IT IS NOT THE CASE OF THE DEPARTMENT THAT THEY HAVE NOT ACCEPTED THAT INCOME TOTALLY. IN THAT VIEW OF THE MATTER IF THIS PORTION OF INTEREST INCOME IS INCLUDED IN THIS ASSESSMENT YEAR IT WILL AMOUNT TO LE VY OF DOUBLE TAXATION ON THE SAME AMOUNT. IN THAT VIEW OF THE MATTER SIMPLY BECAUSE THE ASSESSEE HAS NOT APPEALED AGAINST THE ADDITION CANNOT BE TAKEN AS THE BASIS FOR IMPOSITION OF PENALTY U/S.271(1)(C) OF THE ACT. 8. FOR THE REASONS DISCUSSED IN THE F OREGOING PARAGRAPHS WE HOLD THAT THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) IS NOT JUSTIFIED. WE CANCEL THE SAID PENALTY BY ALLOWING THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT THE A PPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 16 TH SEPTEMBER 2011 H.K.PADHEE SENIOR PRIVATE SECRETARY. ITA NO.189/CTK/2010 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SAHADEVA SAHO D - 3 BJB NAGAR BHUBANESWAR 751 014 2. THE RESPONDENT: INCOME - TAX OFFICER WARD 1(3) BHUBANESWAR. 3. THE CIT 4. THE CIT(A) 5. THE DR CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY.