Mahesh Prasad Aarwal, v. ITO, Phulbani

ITA 320/CTK/2011 | 2001-2002
Pronouncement Date: 30-11-2011

Appeal Details

RSA Number 32022114 RSA 2011
Assessee PAN ABZPA1752B
Bench Cuttack
Appeal Number ITA 320/CTK/2011
Duration Of Justice 5 month(s) 17 day(s)
Appellant Mahesh Prasad Aarwal,
Respondent ITO, Phulbani
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 30-11-2011
Date Of Final Hearing 30-11-2011
Next Hearing Date 30-11-2011
Assessment Year 2001-2002
Appeal Filed On 13-06-2011
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. 320 AND 347/CTK/2011 (ASSESSMENT YEAR 2001 - 02) MAHESH PRASAD AGARWAL PURUNA KATAK DIST. BOUDH PAN: ABZPA 1752 B VERSUS I NCOME - TAX OFFICER PHULBANI WARD PHULBANI. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI D.K.SETH AND K.SETH ARS FOR THE RESPONDENT SHRI S.C.MOHANTY DR. DATE OF HEARING : 30.11.2011 DATE OF PRONOUNCEMENT : 30.11.2011 ORDER S HRI K.K.GUPTA AM : THESE APPEALS ARE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) CONFIRMING THE PENALTY SO LEVIED U/S.271(1)(C) OF THE INCOME - TAX ACT 1961 FOR THE ASSESSMENT YEAR 2001 - 02. 2. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ITA NO.347/CTK/2011 IS INFRUCTUOUS TO THE EXTENT THAT THE DEFICIENCY SO REMOVED ON HAVING FILED APPEAL BEING ITANO.320/CTK/2011 WAS RECTIFIED BY THE ASSESSEE IN THE REGISTRY IN THE APPEAL MEMO ITSELF THEREFORE DID NOT REQUIRE TH E LATER APPEAL TO HAVE BEEN FILED FOR DISPOSAL . THE APPEAL BEING ITA NO.347/CTK/2011 THEREFORE MAY KINDLY BE TAKEN AS INFRUCTUOUS FOR DISMISSAL. FINDING THIS SUBMISSION OF THE ASSESSEE TO BE TRUE ITA NO.347/CTK/2011 IS DISMISSED BEING INFRUCTUOUS. 3. TH E LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THAT THE ASSESSEE RENDERS INCOME FROM SALE OF SEASONAL GOODS TRUCK PLYING INCOME FROM OTHER SOURCES AND CAPITAL GAINS WHEN IT FILED RETURN OF INCOME OF 1 39 540 WHICH WAS SCRUTINIZED UNDER THE PROVISIONS OF SECTION 143(3) AND THE INCOME WAS ASSESSED AT 20 14 040 WHEN AN ADDITION OF 18 74 000 WAS MADE BEING UNEXPLAINED INVESTMENT IN HOUSE CONSTRUCTION U/S.69. BASICALLY HE POINTED OUT THAT THIS ADDITION WAS ON ACCOUNT OF 2 INVESTMENT CLAIMED BY THE ASSESSEE IN THE CONSTRUCTION OF ITS HOUSE FOR CLAIMING DEDUCTI ON U/S.54F WHEN THE ASSESSEE HAD FILED THE RETURN OF INCOME COMPUTING NIL INCOME UNDER THE HEAD CAPITAL GAINS AS IT HAD EARNED LONG TERM CAPITAL GA IN AMOUNTING TO 18 18 329 WHICH WERE AFTER ADJUSTMENT OF LONG TERM CAPITAL LOSS WAS SOUGHT EXEMPTED FOR UTILISING TH E CONSIDERATION IN HOUSE CONSTRUCTION U/S.54 OF THE INCOME - TAX ACT 1961. 4. HE SUBMITTED THAT THE ASSESSEE WAS DENIED EXEMPTION U /S.54F AND FOR VARIOUS TE CHNICAL INFIRMITIES IN THE CLAIM OF THE ASSESSEE THE ASSESSE CHOSE NOT TO AGITATE THIS ADDIT IO N IN ANY FURTHER APPEAL. THE ASSESSING OFFICER IN HIS ORDER HAS TRIED TO LEVY PENALTY ON THE ISSUE THAT THE ASSESSEE COULD NOT HAVE BEEN SAID TO HAVE EARNED THE LONG TERM CAPITAL GAIN WHICH WAS UTILISED BY THE ASSESSEE FOR THE CONSTRUCTION OF ITS PROPERTY. HE CONSIDERED THAT THE AMOUNT OF CONSTRUCTION WAS THEREFORE MADE FROM UNDISCLOSED INCOME WHICH WAS APPROPRIATE FOR LEVY OF PENALTY. THE ASSESSEE APPEALED BEFOR E THE FIRST APPELLATE AUTHORITY WHO CONFIRMED THE ACTION OF THE ASSESSING OFFICER INSPITE OF BRINGING ON RECORD THAT IT WAS NEITHER A CASE OF CONCEALMENT OF INCOME NOR A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME RIPE FOR LEVY OF PENALTY. TAKIN G RECOURSE TO CERTAIN CASE LAWS THE LEARNED CIT(A) TRIED TO INTERPRET THE FACTS IN THE LINE OF THE CITED DECISIONS BY CONCLUDING THAT PENALTY U/S.271(1)(C) WAS FOR DELIBERATE FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME WAS THEREFORE EXIGIBLE. 5. TH E LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE HAD GENUINE CLAIM AND IT DISCLOSED ALL THE MATERIAL FACTS IN THE RETURN OF INCOME AND DURING THE ASSESSMENT PROCEEDINGS. UNDER THESE CIRCUMSTANCES AS ENUMERATED ABOVE THE CLAIM CANNOT BE CONSIDER ED AS CONCEALMENT OF INCOME EVEN IF THE ASSESSEES CLAIM WAS TO BE REJECTED. HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. IFCI LTD (328 ITR 611 ) HAVE HELD THAT MERE 3 CONFIRMATION OF THE ADDITION AND ACCEPTABLE TO THE ASSESSEE WOULD NOT MAKE IT LIABLE FOR PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE THEREFORE SUBMITTED THAT HAVING DECLARED INCOME FROM SALE OF SHARES AS LONG TERM CAPITAL GAIN WAS CONSIDERED AS BOGUS INSPITE OF THE D OCUMENTARY EVIDENCES PRODUCED WAS HELD AS BOGUS ONLY BECAUSE THE EXCHANGE AND BROKERS WERE HELD AS BOGUS IN SOME OTHER CASES WHICH THE AUTHORITIES HAVE RELIED UPON. SIMILARLY THE CONSTRUCTION OF HOUSE PROPERTY FROM THE SAID AMOUNT WAS ACCEPTED BUT THEIR R ECEIPTS RENDERED TO TAX BY THE ASSESSEE WAS UNDER THE HEAD CAPITAL GAIN. THEREFORE THE CASE LAWS RELIED UPON BY THE LEARNED CIT(A) I.E. D.GUPTA V. ASST. COMMISSIONER OF INCOME - TAX [269 ITR (AT) 143] WAS NOT PROPER AS IN THAT CASE THE ASSESSEE HAD CLAIM ED EXEMPTION BY DISCLOSING WRONG AND FALSE FACTS WHICH WAS RECTIFIED BY FILING REVISED RETURNS. ON THE ISSUE OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME HONBLE SUPREME COURT HAS CLARIFIED THE STAND TO THE EXTENT THAT NEIT HER CONCEALMENT COULD BE ESTABLISHED NOR THE ASSESSING AUTHORITIES SHOULD HAVE ACCEPTED THE PARTICULARS AS FURNISHED BY THE ASSESSEE FOR ONLY TO IMPOSE PENALTY BY WAY OF A MECHANICAL PROCEDURE AND NOT THAT THEY HAVE ESTABLISHED THAT THE PARTICULARS ARE FAL SE. IN FACT THE AUTHORITIES HAVE NOT ADDED ANY CORROBORATIVE EVIDENCE TO ESTABLISH THAT THE INCOME COULD BE HELD AS ONLY FROM UNDISCLOSED SOURCES NOR CAN THE CLAIM BE FOUND ILLEGAL TO THE EXTENT THAT THE VERY RECEIPTS HAVE BEEN ACKNOWLEDGED BY THEM AS HAVI NG BEEN UTILISED FOR THE PURPOSE OF CLAIMING EXEMPTION U/S.54F. 6. CONCLUDING HIS ARGUMENT HE SUBMITTED THAT HONBLE APEX COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD [322 ITR 158 (SC)] HAS PARTICULARLY HELD THAT THE CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME HAS TO BE ESTABLISHED BEYOND DOUBT WHEN THE PENALTY 4 CAN ONLY BE LEVIED ON SUCH CONCEALMENT OF INCOME AND THE TAX SOUGHT TO BE EVADED. HE ALSO PERUSED THE DECISION OF ITAT CUTTACK BENCH IN THE CASE OF INCOME - TAX OFFICER V. LOKNATH ENGG. IN ITA NOS.11 & 12/CTK/2010 DT.30.7.2010 WHEREIN IT WAS OBSERVED BY THE TRIBUNAL THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN HIS RETURN ARE FOUND TO BE INCORRECT ERRONEOUS OR FALSE THERE IS NO QUESTION OF LEVYING PENALTY U/S.271(1)(C). A MERE MAKING OF A CLAIM WHICH MAY NOT BE SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO SUBMISSION OF INACCURATE PARTICULARS OF INCOME. THE LEARNED CIT(A)S ACTION OF CHOOSING THE WORD DELI BERATELY FURNISHED INACCURATE PARTICULARS THEREFORE REQUIRES EXPUNCTION TO THE EXTENT THAT FROM FACTS NOTED BY THE ASSESSING OFFICER AS WELL AS BY THE LEARNED CIT(A) CANNOT MAKE THEM BELIEVE THAT IT WAS DELIBERATE. 7. THE LEARNED DR POINTED OUT THAT THE ASSESSING OFFICER HAS ESTABLISHED THAT THE AMOUNT HAD NOT BEEN RECEIVED FROM THE PURPORTED LONG TERM CAPITAL GAIN. THEREFORE THE ASSESSING OFFICER SOUGHT TO TAX THE INVESTMENT IN CONSTRUCTION OF HOUSE AS FROM UNDISCLOSED SOURCES HAD RIGHTLY PROCEEDED TO LEVY PENALTY U/S.271(1 )(C) WHICH IS LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HAVING ESTABLISHED THAT THE SALE OF SHARES WAS BOGUS THE ASSESSEE OUGHT NOT TO HAVE UTILISED THE DEEMED INCOME FOR CONSTRUCTION OF ITS HOUSE FOR CLAIMIN G EXEMPTION U/S.54F. THE LEARNED CIT(A) THEREFORE RIGHTLY RELYING ON THE CASE LAWS AS CAN BE PERUSED IN HIS ORDER HELD THAT THE ASSESSEE WAS NOT ENTIT LED FOR CLAIMING EXEMPTION/S.54 F AND WAS THEREFORE ONLY A DEVICE FOR PAYING TAX AND INTEREST ON THE PURPO RTED INCOME WITHOUT BEING SUBJECTED TO LEVY OF PENALTY U/S.271(1)(C). THE PARTICULARS FURNISHED WERE INACCURATE BECAUSE THE ASSESSEE WAS NOT HAVING THE SAID INCOME FOR TAXABILITY. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL 5 AVAILABLE O N RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS WE ARE INCLINED TO FIND A MEANING IN THE CASE LAWS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE VIS - - VIS IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT LTD [322 ITR 158 (SC)]. THE ASSESSING AUTHORI TIES HAVE TAKEN COGNIZANCE OF THE FACTS BROUGHT ON RECORD BY THE ASSESSEE WHILE FILING ITS RETURN AND HAVE RELIED ON EXTRANEOUS SOURCES TO ESTABLISH THAT THE AMOUNT COULD NOT BE FROM SALE OF SHARES. HOWEVER ON OUR PERUSAL OF THE ASSESSMENT ORDER IT TRANSP IRES THAT THE ENQUIRY WITH RESPECT TO THE RECEIPTS OF CONSIDERATION ON SALE O F SHARES WA S ONLY A CONCLUSION BY THE ASSESSING OFFICER WHICH HAD BEEN RENDERED TO TAX BY THE ASSESSEE O N THE BASIS OF MATERIAL AVAILABLE TO IT IN ACCORDANCE WITH THE PROVISIONS O F THE I.T.ACT. THEREFORE HE SOUGHT TO ADJUDICATE THE ISSUE REGARDING UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF THE HOUSE BY FINDING A DIFFERENCE IN THE CONSTRUCTION VALUE WHICH AGAIN RESULTED IN ADDITION OF A FURTHER SUM OF 1 02 000 AS UNEXPLAINED IN VESTMENT TO BE ADDED U/S.69 OF THE I.T.ACT. ALL THESE FACTS THEREFORE CLEARLY INDICATE THAT THE ASSESSEE HAD CLAIMED AND FURNISHED PARTICULARS IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT AND NOT BECAUSE THE ASSESSING OFFICER HAS ADOPTED THE VERY EARNI NG OF INCOME AND SUBSEQUENT INVESTMENT THEREOF OTHERWISE . THE SHARES WERE AVAILABLE THEY WERE SOLD THE AMOUNT WAS RECEIVED THE AMOUNT WAS INVESTED IN CONSTRUCTION OF HOUSE AND A CLAIM WAS MADE FOR EXEMPTION U/S.54F AS IF THE CONDITIONS INCOMPLIANCE TO T HE EXEMPTION HAD BEEN MADE WITH. FOR REASON BEST KNOWN TO THE ASSESSEE THE ADDITION WAS ACCEPTED AND NOT APPEALED F URTHER. THIS COULD NOT BE HELD AS GUILT OF THE ASSESSEE FOR THE ASSESSING OFFICER TO CLINCH TO THE FACT THAT THE ASSESSING OFFICERS ENQUIRY LEADING TO BOGUS SHARE TRANSACTIONS ONLY LEAD TO THE ESTABLISHING OF CONCEALMENT OF INCOME IN THE HANDS OF THE ASSESSEE OR FOR THAT MATTER OF HAVING FURNISHED INACCURATE PARTICULARS OF INCOME. THE LEARNED DRS 6 INSISTENCE THAT IT WAS FURNISHING OF INACCURA TE PARTICULARS WAS TO BE M ET WITH LEVY OF PENALTY U/S.271(1)(C) ALSO HAS NO BASIS INSOFAR AS THE ASSESSING OFFICER HAS NOT BROUGHT ANY CONTRADICTORY MATERIAL BUT HAS ADDED THE AMOUNT AS DECLARED BY THE ASSESSEE U/S.69 ONLY CONFORMS TO THE FACTS THAT IT WAS THE INVESTMENT IN THE CONSTRUCTION OF A HOUSE WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. A MERE COMPUTATION FOR TAX PLANNING WHICH HAS BEEN DISCLOSED PROPERLY BY THE ASSESSEE CANNOT BE HELD AGAINST HIM EITHER AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE THEREFORE DO NOT FIND ANY MERIT IN THE ORDER OF THE LEARNED CIT(A) ADDING THE WORD DELIBERATELY IN UPHOLDING THE PENALTY SO LEVIED AS FOR FURNISHING INACCURATE PARTICULARS OF INCOME IN THE RETURN. THERE WAS NO DELIBERATE ATTEMPT WHICH WAS A MATTER OF ADJUDICATING THE CLAIM WHICH IN THIS CASE WAS REJECTED AND ACCEPTED BY THE ASSESSEE AND NOT APPEALED AGAINST THEREFORE CANNO T BE HELD AGAINST THE ASSESSEE FOR LEVY OF PENALTY U/S.271(1)(C) IN THE LIGHT OF T HE DECISION IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD [322 ITR 158 (SC)]. IN VIEW OF THE ABOVE THE PENALTY OF 5 87 340 LEVIED U/S.271(1)(C) FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS CANCELLED. 9. IN THE RESULT ITA NO. 320/CTK/2011 IS ALLOWED AND ITA NO.347/CTK/2011 IS DISMISSED AS INFRUCTUOUS. SD/ - SD/ - (K.S.S.PRASAD R AO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 30 TH NOVEMBER 2011 H.K.PADHEE SENIOR PRIVATE SECRETARY. 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: MAHESH PRASAD AGARWAL PU RUNA KATAK DIST. BOUDH 2. THE RESPONDENT: INCOME - TAX OFFICER PHULBANI WARD PHULBANI. 3. THE CIT 4. THE CIT(A) 5. THE DR CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY BY ORDER