ACIT, Hyderabad v. Smt. Lakshmi Kumar Ganesh, Hyderabad

ITA 220/HYD/2010 | 2006-2007
Pronouncement Date: 14-05-2010 | Result: Dismissed

Appeal Details

RSA Number 22022514 RSA 2010
Assessee PAN ACGPG2843R
Bench Hyderabad
Appeal Number ITA 220/HYD/2010
Duration Of Justice 3 month(s) 2 day(s)
Appellant ACIT, Hyderabad
Respondent Smt. Lakshmi Kumar Ganesh, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 14-05-2010
Date Of Final Hearing 06-05-2010
Next Hearing Date 06-05-2010
Assessment Year 2006-2007
Appeal Filed On 11-02-2010
Judgment Text
ITA.220/HYD/2010 SMT. LAKSHMI KUMAR GANESH HYDERABAD IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI N.R.S. GANESAH JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO:220/HYD/2010 ASSTT. YEAR : 2 006-07 ACIT CIRCLE 4 (1) HYDERABAD VS SMT. LAKSHMI KUMAR GANESH HYDERABAD (ACGPG 2843 R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI E.S. NAGENDRA PRASAD DR RESPONDENT BY : SHRI SIVA KUMAR O R D E R PER : CHANDRA POOJARI ACCOUNTANT MEMBER THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER OF THE CIT(A)-V HYDERABAD DATED AND PERTAINS T O THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE E XPLAINED THE CASH CREDITS SATISFACTORILY AND DISCHARGES THE ONUS THEREON. 2. THE CIT(A) ERRED IN NOT APPRECIATING THE FACT T HAT THE ASSESSEE CONCEALED THE INCOME IN THE RETURN TO THE EXTENT OF ADMISSION MADE DURING THE ASSESSMENT. 3. THE CIT(A) ERRED IN NOT APPRECIATING THE FACT T HAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN IN DIVIDUAL DERIVING INCOME FROM CAPITAL GAIN AND INTEREST ON INVE STMENTS. SHE FILED ITA.220/HYD/2010 SMT. LAKSHMI KUMAR GANESH HYDERABAD 2 2 HER RETURN OF INCOME ON 18.10.2006 FOR THE ASSESSMENT YE AR ADMITTING AN INCOME OF RS.5 08 789. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HA D RECEIVED TWO CREDITS RS.20 87 724/- AS GIFT FROM HER BRO THER SRI G.R. KRISHNAN AND RS.4 43 245/- AS CREDIT FROM HER HUSBAND S RI GANESH KUMAR. THE ASSESSING OFFICER DID NOT BELIEVE THE EXPLAN ATION OF THE ASSESSEE AND ADDED THE AFOREMENTIONED AMOUNTS AS UNEXPLAI NED CASH CREDITS UNDER SECTION 68 OF THE ACT GIVING THE FOLLOWIN G REASONS: 3.1 DURING THE COURSE OF SCRUTINY PROCEEDINGS IT IS SEEN THAT THE ASSESSEE HAS RECEIVED A GIFT OF RS.20 87 724/- FROM HIS BROT HER SHRI G.R. KRISHNAN AND RS.4 43 245/- WAS SHOWN AGAINST HER HUSBAND SHRI G ANESH KUMAR AS OUTSTANDING CREDIT BALANCE. WHEN ASKED TO PRODUCE THESE TWO PERSONS THE ASSESSEE FAILED TO PRODUCE THE ABOVE SAID PERSONS F OR CONFIRMING THE ABOVE TRANSACTIONS. HENCE THE SAME WERE DISALLOWED AS U NEXPLAINED CREDITS OF THE ASSESSEE U/S 68 AND ADDED BACK TO THE INCOME RETURN ED . 5. THE ASSESSEE DID NOT FILE ANY APPEAL AGAINST THE QUANTUM ADDITION SINCE SHE DID NOT WANT TO ENTER INTO LITIGAT ION AND ACCEPTED THE ADDITION IN QUANTUM CASE. THEREAFTER THE ASSESSING OFFICE R IMPOSED PENALTY U/S 271(1) ( C) OF THE IT ACT TO THE TUNE OF RS.8 05 439/- . ON APPEAL CIT(A) DELETED THE PENALTY. AGAINST THIS DEL ETION THE REVENUE IS IN APPEAL BEFORE US. 6. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE NOT PROVED THE CREDITS APPEARING IN THE BOOKS OF ACCOUNTS. THE GENUINENESS OF THE CREDIT WAS DOUBTED. BECAUSE THE A SSESSEE COOPERATED WITH THE DEPARTMENT OR NOT FILED APPEAL A GAINST THE QUANTUM ADDITION DOES NOT EXONERATE THE ASSESSEE FROM LEVYING OF PENALTY. EVEN ON AGREED ADDITION PENALTY COULD BE IMPOSED. HE RELI ED ON THE ORDER OF THE TRIBUNAL DATED 31.10.2007 IN ITA NO.522 & 523/HY D/2007 IN THE CASE OF MEKALA KRISHNA REDDY & OTHERS HYDERABAD AND A LSO HE RELIED ON ITA.220/HYD/2010 SMT. LAKSHMI KUMAR GANESH HYDERABAD 3 3 THE ORDER OF THE TRIBUNAL DATED 20.11.2009 IN ITA NO.91/HYD/2009 IN THE CASE M/S MARUTI ORGANIC LIMITED FOR THE PROPOSITION THAT WHEN THE ASSESSEE NOT ABLE TO PROVIDE A BONA FIDE EXPLANATION AN D ALSO FAILURE TO SUBSTANTIATE HIS EXPLANATION WITH THE EVIDENCE SUCH A FA ILURE WILL ATTRACT PENALTY U/S 271 (1) (C ) OF THE IT ACT SINCE THE EXPL ANATION 1 TO THIS SECTION PROVIDES PENALTY IN SUCH AN EVENTUALITY. FURTH ER HE RELIED ON CIT VS. R. KESAVAN NAIR (287 ITR 276 ). (KER HC) WHERE IN IT WAS HELD THAT: THAT THE ASSESSEE HAD MADE A REQUEST TO DROP THE PENAL TY BUT THAT WAS NOT ACCEPTED BY THE ASSESSING OFFICER. IMPOSITION OF PEN ALTY IS NOT DEPENDENT UPON CONSENT OR OTHERWISE OF THE ASSESSEE. THE IMPOSITIO N OF PENALTY WAS VALID . 7. ON THE OTHER HAND LEARNED AR SUBMITTED THAT PE NALTY CANNOT BE IMPOSED AUTOMATICALLY OR MECHANICALLY AFTER AN ADDIT ION HAS BEEN MADE U/S 68 OF THE IT ACT. EVEN ON MATERIAL ON WHICH THE ADDITION WERE MADE HAVE TO BE AGAIN GIVEN A FRESH LOOK FROM THE P OINT OF VIEW OF LEVYING PENALTY WHICH IS NOT THE SAME AS MAKING THOSE AD DITIONS. HE RELIED ON THE ORDER OF THE TRIBUNAL DATED 9.10.2009 IN ITA NO.1367/HYD/2008 IN THE CASE SHRI C.S. CHOUDHARY HYDER ABAD FOR THE PROPOSITION THAT WHEN THE ASSESSEE GIVEN BONA FIDE EXPL ANATION PENALTY COULD NOT BE LEVIED. ACCORDING TO THE LEARNED COUNSEL THE PRIMARY BURDEN CAST UPON THE ASSESSEE WAS DISCHARGED BY GIVING THE R ESIDENTIAL ADDRESS CHEQUE NOS. AND BANKERS NAME OF THE DONORS AND CREDITORS. HE ALSO SUBMITTED THAT THE ASSESSING OFFICER RECEIVED LETTER FROM THE ASSESSEES BANK THAT THE AMOUNT RECEIVED IS BY WAY OF CHE QUE AND CHEQUE IS RECEIVED FROM SHRI G.R. KRISHNANS BANK ACCOUNT AND THE ASSESSEE ALSO REQUESTED THE ASSESSING OFFICER VIDE LETTER DATE D 10.9.2009 THAT THERE IS A DISPUTE WITH HER BROTHER AN D THEY ARE NOT IN TALKING TERMS. THE ASSESSEE ALSO REQUESTED THE ASSESSING OFF ICER TO ITA.220/HYD/2010 SMT. LAKSHMI KUMAR GANESH HYDERABAD 4 4 ISSUE SUMMONS ON HIM AND GET DETAILS OF GIFT. THE SAID G IFT WAS RECEIVED FROM HER BROTHER AS PER THE LAST WISHES OF HER LATE FAT HER. REGARDING ANOTHER CREDIT HE SUBMITTED THAT IT IS FROM HER HUSBA ND WHO IS AN INCOME TAX ASSESSEE. THESE ARE GENUINE CREDITS AND TO BUY PEACE FROM THE DEPARTMENT THE ASSESSEE HAS NOT CONTESTED THE ADDITIO NS BY WAY OF APPEAL. HE SUBMITTED THAT THE CIT(A) RIGHTLY DELETED THE PENALTY. HE RELIED ON ORDER OF THE TRIBUNAL IN THE CASE OF SMT. R AJARANI MITTAL VS. ITO (36 SOT 4) (DEL.) WHEREIN IT WAS HELD THAT WHERE AN ADDITION MADE IN ASSESSMENT ON THE BASIS OF SURRENDER MADE BY ASSESSEE BUT DID NOT BOTHER TO ISSUE SUMMONS TO THE PARTIES SO THAT THEY COULD BE BROUGHT ON RECORD AS REVENUES WITNESS TO PROVE THAT THE ASSESSEE HAD CONCEALED THE INCOME THE PENALTY LEVIED WAS LIABLE TO BE CANCELL ED. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE QUESTION RAISED IN THIS APPEAL IS WHETHER A SSESSEE CAME WITHIN THE MISCHIEF OF SEC.271 (1) (C ) OF THE ACT REA D WITH EXPLANATION THERETO. ADMITTEDLY THERE WAS ADDITION ON ACCOUNT OF UNEXPLAINED CREDIT NAMELY RS.20 87 724/- RECEIVED BY WAY OF GIFT VIDE CHEQUE NO.003757 DATED 13.6.2005 DRAWN ON HDFC BANK FROM HE R BROTHER SHRI G.R. KRISHNAN AND ANOTHER AMOUNT OF RS.4 43 245/- RECE IVED BY WAY OF LOAN FROM HER HUSBAND SHRI GANESH KUMAR. THE FACT OF RECEIVING GIFTS BY WAY OF CHEQUE IS PROVED BY THE LETTER RECEIVED FROM THE BANK AUTHORITIES. THE ASSESSEE ALSO INFORMED THE ASSESSING OFFICE R VIDE HER LETTER DATED 10.9.2006 THAT THERE IS A DISPUTE WITH H ER BROTHER AND THEY ARE NOT IN TALKING TERMS AND ASKED THE ASSESSING OFFICER T O ISSUE SUMMONS ON HIM TO GET DETAILS OF THE GIFT. ANOTHER CRE DIT IS RECEIVED FROM HER HUSBAND WHO IS AN INCOME TAX ASSESSEE WHO HAS PERSO NALLY APPEARED BEFORE THE ASSESSING OFFICER ON 28.11.2008 AND CONFIRMED THE SAME. THE ASSESSEE ALSO FILED HIS INCOME TAX RETURNS AND FINAL ITA.220/HYD/2010 SMT. LAKSHMI KUMAR GANESH HYDERABAD 5 5 STATEMENT BEFORE THE AUTHORITIES. IN SPITE OF THIS T HE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OFFERED BY THE ASSESSEE AN D LEVIED PENALTY. THE AMOUNT ADDED U/S 68 OF THE ACT WAS IN F ACT THE CONCEALED INCOME OF THE ASSESSEE BY VIRTUE OF THE FICTION CREATED I N THE EXPLANATION TO SEC.271 (1) (C ) OF THE ACT. NOW THE QUESTION IS AS T O WHETHER THE ASSESSEE COULD BE PENALIZED U/S 271 (1) (C ) OF THE IT ACT FOR HAVING FAILED TO PROVE THE GENUINENESS OR BONA FIDENESS OF TH E TRANSACTIONS . THE BURDEN OF PROOF OF REASONABLE CAUSE U/S 271 (1) (C ) IS ON THE ASSESSEE AS THE MATTER IS WITHIN HER SPECIAL KNOWLEDGE AND THAT THE BURDEN COULD BE DISCHARGED BY PREPONDERANCE OF PROBABI LITY IS IN A CIVIL CASE AND NOT NECESSARILY BY PROVING BEYOND REASONABLE DOU BT. THE MATERIAL BROUGHT ON RECORD IN THE COURSE OF ASSESSMENT P ROCEEDINGS ARE RELEVANT AND ADMISSIBLE IN THE PENALTY PROCEEDING S THOUGH THEY CANNOT OPERATE AS RES JUDICATA BECAUSE THE CONSIDERATIONS T HAT ARISE IN PENALTY PROCEEDINGS ARE DIFFERENT FROM THOSE IN ASSESSMENT PROCEEDINGS. IT THEREFORE FOLLOWS THAT IN PENALTY P ROCEEDINGS THE MATERIALS ALREADY ON RECORD OR MATERIAL FURNISHED BY THE ASSESSEE HAS TO BE GIVEN A FRESH LOOK BEFORE ARRIVING AT THE QUAN TUM OF PROOF NECESSARY TO DISCHARGE THE INITIAL NEGATIVE BURDEN PLACED ON THE ASSESSEE BY THE EXPLANATION 1 SEC.271 (1) (C ) OF THE IT ACT. AS PER ACT IN EVERY CASE OF PENALTY THE ASSESSEE MUST BE GIVEN A REASONABLE OPPORTUNITY BEING HEARD WHICH IMPLIES THAT THE EXPLAN ATION GIVEN BY THE ASSESSEE ARE ON THE FACTS ON RECORD MUST BE TAKEN INTO CONSID ERATION BEFORE ARRIVING AT A DECISION ADVERSE TO THE ASSESSEE. HEN CE THE EVIDENCE WHICH IS DISCOVERED ARE COME INTO EXISTENCE AFTER THE ASSESSMENT IS COMPLETED CAN BE TAKEN INTO ACCOUNT IN THE PEN ALTY PROCEEDINGS. IN OTHER WORDS PENALTY CANNOT BE IMPOSED AUTOMATICALLY AFTER AN ADDITION HAS BEEN MADE U/S 68 OF THE IT ACT. EVEN THE MATERIAL ON WHICH THE SAID THE ADDITIONS WERE MADE HAVE TO BE AGAIN GIVEN A ITA.220/HYD/2010 SMT. LAKSHMI KUMAR GANESH HYDERABAD 6 6 FRESH LOOK FROM THE POINT VIEW OF LEVYING PENALTY WH ICH IS NOT THE SAME AS MAKING THOSE ADDITIONS. A CERTAIN ITEMS MAY BE ASSESSED AS INCOME OF THE ASSESSEE IF IT SOURCES COULD NOT BE EXPLAINED SATISFA CTORILY. A THING MAY BE SAID TO BE NOT SATISFACTORILY EXPLAINED FO R A NUMBER OF REASONS FOR EXAMPLE LACK OF SUPPORTING EVIDENCE. BUT THAT WOULD NOT LEAD TO THE CONCLUSION THAT THE EXPLANATIONS WAS IMPROB ABLE WHICH IS THE REQUIREMENT FOR IMPOSING THE PENALTY. BEARING THE A BOVE PRINCIPLES IN MIND WE NOW PROCEED TO EXAMINE THE FACTS OF THIS CASE. THE ASSESSEE WAS EARNING INCOME FROM CAPITAL GAINS AND INTEREST ON INVESTMENTS. IN THE ASSESSMENT YEAR UNDER CONSIDERATION ASSESSEE RECEIVED ONE GIFT FROM HER BROTHER SHRI G.R. KRISHNA AS PER THE LAST WISH ES OF HER LATE FATHER AT RS.20 87 724/- AND ALSO RECEIVED A LOAN FROM HER HUSBAND SHRI A. GANESH KUMAR RS.4 43 245/- . THE ASSESSEE GIVEN EXPLA NATION AND ALSO DETAILS OF CHEQUE NOS. BANK DETAILS FOR THE RECEIP T OF GIFTS AND BECAUSE OF HER BROTHER NOT IN TALKING TERMS WITH HER SHE WAS UNABLE TO PRODUCE HER BROTHER BEFORE THE ASSESSING OFFICER. THE RE CEIPT OF LOAN WAS CONFIRMED BY HER HUSBAND. THE ASSESSING OFFICER HELD T HAT THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED SOURCES OF THESE PAY MENTS AND THIS AMOUNT WAS TREATED AS INCOME OF THE ASSESSEE AND CON SEQUENTLY PENALTY U/S 271 (1) (C ) WAS LEVIED. IN OUR OPINION THE ASSESSING OFFICER SHOULD HAVE CONSIDERED THE FACTS ON RECORD AND IN PARTICULAR THE EXPLANATION GIVEN BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS. AFTER ALL ALL THOSE FACTS WERE ALREADY B EFORE HIM AND WITHIN THE KNOWLEDGE OF THE ASSESSING OFFICER. THEY WER E RELEVANT MATERIAL REQUIRED TO BE APPRECIATED AFRESH IN THE COUR SE OF PENALTY PROCEEDINGS. IN SPITE OF ASSESSEE REQUESTING THE ASSESSING OFF ICER TO ISSUE SUMMON TO THE DONOR ASSESSING OFFICER KEPT QUITE AND IMPOSED PENALTY. IN ALL FAIRNESS THE ASSESSING OFFICER SHOULD HAV E CONSIDERED THE EXPLANATION ALREADY ON RECORD BEFORE LEVYING PENALTY . WE FIND THE ORDER ITA.220/HYD/2010 SMT. LAKSHMI KUMAR GANESH HYDERABAD 7 7 OF THE ASSESSING OFFICER IS VERY CRYPTIC TO CARRY ANY CONVICTI ON. AS STATED EARLIER IF THE FACTS REGARDING THE SOURCE OF FUND WER E ALREADY EXPLAINED EITHER IN THE ASSESSMENT PROCEEDINGS OR IN THE PENALTY PR OCEEDINGS THEY WERE WITHIN THE KNOWLEDGE OF THE ASSESSING OFFICER THE ASSESSING OFFICER SHALL REQUIRE TO EXAMINE WHETHER IT IS REAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF LEVYING PENALTY OR NOT. FURTHER THE ASSE SSING OFFICER REQUIRED TO SEE WHETHER THE ASSESSEE DISCHARGE THE INITIAL ONUS THAT LAY ON THE ASSESSEE UNDER THE EXPLANATION TO SEC.271 (1) (C ) OF THE ACT. IT IS TRUE THAT THE RELEVANT MATERIALS ARE ALREADY ON R ECORD BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER CONSIDERED THE FACT T HAT THE ADDITIONS ARE MADE ON THE BASIS OF ACCEPTANCE GIVEN BY THE ASSESSEE DISBELIEVING THE EXPLANATION. CONSIDERING ALL THE FA CTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT THE EXPLANATION GIVEN BY THE ASSESSEE ABOUT THE SOURCES OF CREDIT IS NOT IM PROBABLE. THERE IS AN ADDITION ON ACCOUNT OF INVOKING THE PROVISI ONS OF SEC.68 AND THAT ITSELF CANNOT BE SAID TO HAVE RESULTED OUT OF ANY FRAUD OR GROSS OR WILLFUL NEGLECT ON THE PART OF THE ASSESSEE. WE ARE OF THE OPINION THAT THE ASSESSEE DID DISCHARGE THE INITIAL NEGATIVE ONUS THAT WAS PLACED ON HER BY THE EXPLANATION 1 TO SEC.271 (1 ) (C ) OF THE ACT. ONCE THE ASSESSEE COMES OUT OF THE EXPLANATION THEN THE PROVISION S OF THE MAIN SEC.271 (1) ( C) OF THE ACT COME INTO PLAY. IN OTHER W ORDS IT IS THEN FOR THE REVENUE TO SHOW THAT THE AMOUNTS ASSESSED REALLY REP RESENTED THE ASSESSEES CONCEALED INCOME. WE FIND NOTHING IN THE PENAL TY ORDER OR ON THE RECORD TO SHOW THAT THIS HAS BEEN ESTABLISHED. F OR THE ABOVE REASONS WE INCLINED TO CONFIRM THE ORDER OF THE CIT(A) IN DELETING THE PENALTY. ACCORDINGLY THE DELETION OF PENALTY BY CIT (A) IS JUSTIFIED. ITA.220/HYD/2010 SMT. LAKSHMI KUMAR GANESH HYDERABAD 8 8 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT 14. .5.2010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 14 TH MAY 2010 COPY FORWARDED TO: 1. THE ACIT CIRCLE 4(1) 5 TH FLOOR AYAKAR BHAVAN HYDERABAD. 2. SMT. LAKSHMI KUMAR GANESH 3-6-493A ST.NO.7 HIMAY AT NAGAR HYDERABAD 3. CIT(A)-V HYDERABAD. 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP