The DCIT, Circle-2(1)., Vijayawada v. M/s Nadella Madhava Rao., Vijayawada

ITA 250/VIZ/2008 | 2004-2005
Pronouncement Date: 06-01-2010 | Result: Allowed

Appeal Details

RSA Number 25025314 RSA 2008
Assessee PAN AARPN3713C
Bench Visakhapatnam
Appeal Number ITA 250/VIZ/2008
Duration Of Justice 1 year(s) 7 month(s) 24 day(s)
Appellant The DCIT, Circle-2(1)., Vijayawada
Respondent M/s Nadella Madhava Rao., Vijayawada
Appeal Type Income Tax Appeal
Pronouncement Date 06-01-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 06-01-2010
Assessment Year 2004-2005
Appeal Filed On 12-05-2008
Judgment Text
PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 250/VIZAG/2008 ASSESSMENT YEAR: 2004-05 DCIT CIRCLE-2(1) VIJAYAWADA VS. NADELLA MADHAVA RAO VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO. AARPN 3713 C APPELLANT BY: SHRI G.S.S. GOPINATH DR RESPONDENT BY: SHRI G.V.N. HARI CA ORDER PER SHRI B R BASKARAN ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 29.02.2008 PASSED BY THE LD CIT (A) VIJAYAWADA AND IT RELATES TO THE ASSESSMENT YEAR 2004- 05. 2. PENALTY OF RS.11 97 000/- LEVIED U/S 271(1)(C) O F THE ACT HAVING BEEN DELETED BY THE LD CIT (A) THE REVENUE IS IN APPEAL BEFORE US. 3. THE FACTS RELATING TO THE ISSUE ARE SET OUT IN B RIEF. THE ASSESSEE INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING A LOSS OF RS.19.31 LAKHS. DURING THE RELEVANT YEAR THE ASSESSEE HAD BORROWED A SUM OF RS.39.90 LAKHS FROM 15 PERSONS. DURING THE C OURSE OF ASSESSMENT PROCEEDING THE ASSESSEE WAS ASKED TO PROVE THE LOA N CREDITORS IN TERMS OF SEC.68 OF THE ACT. AFTER AVAILING TWO OPPORTUNITIE S THE ASSESSEE FILED A SET OF 15 CONFIRMATION LETTERS THROUGH TAPAL ON 18.12.2006 I. E. ABOUT 10 DAYS PRIOR TO THE DATE OF COMPLETION OF THE ASSESSMENT. THE AO NOTICE D THAT NONE OF THE LOAN CREDITORS EXCEPT ONE ARE ASSESSED TO INCOME TAX. ALL THE SAID 14 PERSONS CLAIMED THE SOURCES AS SAVINGS GIFTS ETC. EVEN IN RESPECT OF THE CREDITOR FOR WHOM PAN WAS GIVEN THE IMPUGNED LOAN TRANSACTION W AS ROUTED THROUGH THE PAGE 2 OF 4 BANK ACCOUNT OF THE CREDITORS FATHER THAT TOO AFT ER THE DEATH OF THE FATHER. HENCE THE AO FELT THAT THE ASSESSEE HAS FAILED TO D ISCHARGE THE ONUS PLACED UPON HIM TO PROVE THE LOAN CREDITORS AND ACCORDINGLY ADD ED A SUM OF RS.39.90 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. WHILE THE ASSESSE ES APPEAL ON QUANTUM ASSESSMENT WAS PENDING BEFORE THE LD CIT (A) THE A O INITIATED THE PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT AND LEVIED A MI NIMUM PENALTY OF RS.11.97 LAKH ON THE ABOVE SAID ADDITION OF RS.39.90 LAKHS. IT IS PERTINENT TO NOTE THAT THE ASSESSEE FILED A REPLY IN RESPONSE TO THE PENALTY N OTICE BUT THE AO FELT THAT THE ASSESSEE IN HIS REPLY HAS MERELY STATED THAT THE GROUNDS ON WHICH THE IMPUGNED LOANS WERE TREATED AS UNEXPLAINED CASH CRE DITS. AGGRIEVED BY THE PENALTY ORDER THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE LD CIT (A). 4. IN THE APPEAL FILED BEFORE THE LD CIT (A) ON THE QUANTUM PROCEEDING THE ASSESSEE FILED CERTAIN ADDITIONAL EVIDENCES CONCERN ING THE IMPUGNED LOAN CREDITORS. THE LD CIT (A) CALLED FOR A REMAND REPOR T FROM THE AO. THE AO IN HIS REPORT DATED 29.01.2008 ACCEPTED THE GENUINENESS O F 3 CREDITORS I.E. TO THE EXTENT OF RS.17.05 LAKHS. ACCORDINGLY THE LD CIT(A) VIDE HIS ORDER DATED 29.02.2008 SUSTAINED THE ADDITION TO THE EXTENT OF RS.22.40 LAKHS IN THE QUANTUM APPEAL. 5. IN THE APPEAL FILED BY THE ASSESSEE AGAINST THE P ENALTY ORDER THE LD CIT (A) AFTER NARRATING THE FACTUAL MATRIX OF THE CASE AS STATED ABOVE DELETED THE PENALTY OF RS.11.97 LAKHS WITH THE FOLLOWING OBSERV ATIONS: THE PENALTY PROCEEDINGS ARE ALTOGETHER DIFFERENT F ROM ASSESSMENT PROCEEDINGS. IN ASSESSMENT PROCEEDINGS ONUS IS ON T HE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITORS CREDIT WORT HINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. IN P ENALTY PROCEEDINGS ONUS IS ON THE AO TO PROVE THAT THERE WAS A CONCEALMENT OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME. THE PROVISIONS OF PENALTY ARE SEVERE AND THEREFORE ONUS IS ON THE AO TO ESTABLISH INTENTION BEHIND CONCEALMENT OF PAR TICULARS OF INCOME. IN THIS CASE THE ASSESSEE HAS FILED CONFIR MATIONS AND THE AO HAS EXAMINED 11 CREDITORS. THE AO HAS NOT BROUGH T ON RECORD ANY EVIDENCE SUBSTANTIATING THAT THERE IS CONCEALME NT OF PARTICULARS OF INCOME. THUS IT IS NOT A FIT CASE FOR LEVYING A PENALTY U/S 271(1) (C). THEREFORE THE PENALTY OF RS.11 97 000/- IS HE REBY DELETED. AGGRIEVED BY THE ORDER OF THE LD CIT (A) THE REVEN UE IS IN APPEAL BEFORE US. PAGE 3 OF 4 6. THE LD DR SUBMITTED THAT THE LD CIT (A) IS E RRED IN LAW IN STATING THAT THE ONUS IS ON THE AO TO PROVE THAT THERE WAS A CONCEALMENT OF INCOME. HE FURTHER SUBMITTED THAT AFTER INSERTION OF EXPLANATION TO SEC.271 TH E PRESUMPTION ABOUT CONCEALMENT IS RAISED AND IT IS FOR THE ASSESSEE TO PROVE THAT THE RE WAS NO CONCEALMENT IN TERMS OF EXPLANATION TO SECTION 271. IN THIS REGARD THE LD D R RELIED UPON THE FOLLOWING DECISIONS OF HONBLE SUPREME COURT: I) ACIT VS.JEEVAN LAL SAH (1994) CTR (SC) 130: (199 4) 250 ITR 244(SC): (1994) 73 TAXMAN 182. II) B.A.BALASUBRAMANIAM & BROS. CO. VS. CIT (1999) 157 CTR (SC) 556: (1999) 236 ITR 977 (SC): (2001) 116 TAXMAN 842 (SC) III) UNION OF INDIA AND OTHERS V DHARMENDRA TEXTILE S PROCESSORS AND OTHERS 306 ITR 277(SC) 7. ON THE CONTRARY THE LD AR CONTENDED THAT THE ADDITION MADE U/S 68 OF THE ACT DOES NOT ALWAYS CALL FOR LEVY OF PENALTY. IN THIS RE GARD THE LD AR RELIED UPON THE DECISION OF ITAT MUMBAI IN THE CASE OF MRS. NAJMA M KANCHWALA (24 DTR) (MUMBAI) (TRIB) (369). WITH REGARD TO THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES THE LD AR SUBMITTED THAT THE H ONBLE APEX COURT IN ITS SUBSEQUENT DECISION IN THE CASE OF UNION OF INDIA VS . RAJASTHAN SPINNING & WEAVING MILLS IN CIVIL APPEAL NO.3527 OF 2009 HAS MADE IT C LEAR THAT THE DECISION IN DHARMENDRA TEXTILES IN ONLY WITH REGARD TO SEC.11 A C OF THE CENTRAL EXCISE ACT AND THE APEX COURT DECLINED TO OBSERVE ABOUT ITS APPLIC ATION WITH REGARD TO THE OTHER STATUTORY PROVISIONS. 8. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. WE NOTICE THAT THE LD CIT (A) HAS RENDERED HIS DECISION ON THE PRE SUMPTION THAT IN THE PENALTY PROCEEDING THE ONUS IS ON THE AO TO PROVE THAT THE RE WAS CONCEALMENT OF INCOME. AS POINTED OUT BY THE LD DR THE BURDEN OF PROOF IS PL ACED UPON THE ASSESSEE AFTER THE INSERTION OF EXPLANATION TO SEC.271. THIS POSITION OF LAW HAS BEEN MADE CLEAR BY THE HONBLE SUPREME COURT IN THE CASE LAW RELIED UPON B Y THE LD DR AND ALSO IN THE CASE OF K.P. MADHUSUDANAN VS. CIT (251 ITR 99). SINCE T HE LD CIT (A) HAS ARRIVED AT THE CONCLUSION OF WRONG PRESUMPTION OF LAW THE MATTER REQUIRES RE-ADJUDICATION IN THE PAGE 4 OF 4 LIGHT OF THE CORRECT PRINCIPLES OF LAW. ACCORDINGL Y WE SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE ISSUE TO THE FILE OF LD CIT (A) FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW. NEEDLESS TO MENTION THE AS SESSEE SHOULD BE GIVEN PROPER OPPORTUNITY OF BEING HEARD. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 06-01-2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM 6 TH JANUARY 2010. COPY TO 1 THE DCIT CIRCLE-2(1) VIJAYAWADA 2 SHRI NADELLA MADHAVA RAO 40-15-9/10 CHANDRA BUIL DINGS GREENLANDS ROAD LABBIPET BRINDAVAN COLONY VIJAYAWADA 520 01 0 3 THE CIT VIJAYAWADA 4 THE CIT(A) VIJAYAWADA 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM