S.Tirumala Prasad, Hyd, Hyderabad v. ITO, Ward-6(2), Hyd, Hyderabad

ITA 323/HYD/2016 | 2003-2004
Pronouncement Date: 28-10-2016 | Result: Allowed

Appeal Details

RSA Number 32322514 RSA 2016
Assessee PAN AINPS9263N
Bench Hyderabad
Appeal Number ITA 323/HYD/2016
Duration Of Justice 7 month(s) 10 day(s)
Appellant S.Tirumala Prasad, Hyd, Hyderabad
Respondent ITO, Ward-6(2), Hyd, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 28-10-2016
Assessment Year 2003-2004
Appeal Filed On 18-03-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SMT P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN ACCOUNTANT MEMBER ITA NOS. 323 & 324/HYD/2016 ASSESSMENT YEARS: 2003-04 & 2004-05 S. TIRUMALA PRASAD HYDERABAD. PAN AINPS 9263 N VS. INCOME TAX OFFICER WARD 6(2) HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO. 322/HYD/2016 ASSESSMENT YEAR: 2003-04 S. DHANALAKSHMI HYDERABAD. PAN AINPS 9265 L VS. INCOME TAX OFFICER WARD 6(3) HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING 27-07-2016 DATE OF PRONOUNCEMENT 28-09-2016 O R D E R PER S. RIFAUR RAHMAN A.M.: THESE APPEALS FILED BY THE ASSESSEES HEREIN ARE DIRECTED AGAINST THE ORDERS PASSED BY THE CIT(A)-9 HYDERABA D ALL DATED 29 TH JANUARY 2016 FOR THE AYS 2003-04 AND 2004-05. AS I DENTICAL ISSUE IS INVOLVED IN THESE APPEALS WE FIND IT CONVENIENT TO DISPOSE OF THESE APPEALS BY WAY OF CONSOLIDATED ORDER. 2 ITA NOS 322 TO 324 /HYD/16 S. TIRUMALA PRASAD AND S. DHANALAKSHMI 2. TO DISPOSE OF THESE APPEALS WE REFER TO THE FAC TS IN CASE OF S. DHANALAKSHMI IN ITA NO. 322/HYD/16. 2.1 A SEARCH AND SEIZURE OPERATION U/S 132(1) OF TH E IT ACT WAS CONDUCTED IN THE CASE OF ASSESSEE ALONG WITH THE GR OUP COMPANIES OF SUJANA GROUP ON 07.10.2004. DURING THE COURSE OF SE ARCH PROCEEDINGS VARIOUS DOCUMENTS WERE SEIZED. WHEN TH E ASSESSEE WAS CONFRONTED WITH THE MATERIAL SEIZED THE ASSESS EE SUBMITTED THAT THE MATERIAL SEIZED DO NOT PERTAIN TO HER. SINCE TH E ASSESSEE IS NON COOPERATIVE THROUGHOUT THE PROCEEDINGS THE AO ISSU ED A QUESTIONNAIRE ON 24.10.2006 WHEREIN VARIOUS AMOUNTS MENTIONED AS PER THE SEIZED MATERIAL WERE CLEARLY BROUGHT TO THE NOTICE OF THE ASSESSEE AND ASKING TO FURNISH THE CLARIFICATIONS O F THE SAID AMOUNTS. SINCE THE REPLIES OF THE ASSESSEE ARE VAGUE THE AO HAD ADDED VARIOUS AMOUNTS TO THE INCOME RETURNED I.E. INTERES T RECEIVED OF RS. 81 60 000/- CHIT COMMISSION OF RS. 2 00 000/- AND UNACCOUNTED PAYMENTS AS CHIT CONTRIBUTIONS OF RS. 30 50 000/-. 2.2 THE CIT(A) WHILE DISPOSING OF THE APPEALS FILED BY THE ASSESSEE CONSIDERED TOTAL MATERIAL SEIZED AND OBSE RVED THAT IT IS NOT CORRECT TO ADD THE AMOUNTS ONCE IN THE HANDS OF SR I PV RAMANA REDDY AND SECONDLY IN THE HANDS OF THE ASSESSEE AS HE HAD OBSERVED THAT THE SAME AMOUNTS WERE ADDED IN THE HANDS OF SR I PV RAMANA REDDY ANOTHER PERSON WHO WAS ALSO SEARCHED ALONGWI TH THE ASSESSEE. ACCORDINGLY HE DELETED ALL OTHER ADDITIO NS EXCEPT THE CONTRIBUTIONS MADE TO CHITS AND COMMISSION ALLEGED TO HAVE EARNED FROM MAINTAINING CHITS. EVEN FOR THE AMOUNTS ADDED AS CHIT CONTRIBUTIONS ALSO THE CIT(A) OBSERVED THAT SOME A MOUNTS MENTIONED IN THE SAME SEIZED MATERIAL HAVE BEEN ADDED IN THE HANDS OF SRI S.TIRUMALA PRASAD HUSBAND OF THE ASSESSEE. ACCORDI NGLY HE FOUND AN AMOUNT OF RS. 7 39 500/- IS ADDED IN THE HANDS O F THE ASSESSEE'S HUSBAND FOR THE YEAR UNDER CONSIDERATION. HE THERE FORE DIRECTED TO REDUCE THE SAID AMOUNT OF RS. 7 39 500/- FROM THE A MOUNT ADDED 3 ITA NOS 322 TO 324 /HYD/16 S. TIRUMALA PRASAD AND S. DHANALAKSHMI UNDER THIS HEAD. THUS THE ADDITION SUSTAINED BY TH E CIT(A) COMES TO RS. 23 10 500/- UNDER THE HEAD CHIT CONTRIBUTIONS. HE HOWEVER SUSTAINED THE ADDITION MADE ON ACCOUNT OF CHIT COMM ISSION ALSO. THE ASSESSEE PREFERRED FURTHER APPEAL BEFORE ITAT ALSO ON THE ADDITIONS SUSTAINED BY THE CIT(A). HOWEVER SHE IS SUCCESSFUL IN HER ATTEMPTS ONLY IN RESPECT OF CHIT COMMISSION. THUS THE ADDITI ON SUSTAINED BY CIT(A) REGARDING CHIT CONTRIBUTIONS IS DEEMED TO HA VE BEEN CONFIRMED AND ACCEPTED BY THE ASSESSEE ALSO. 3. THEREAFTER THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) AND ISSUED A SHOW CAUSE NOTICE DATED 02.03.2010 TO ASSESSEE CALLING FOR HER OBJECTIONS FOR THE PROPOSED LEVY OF PENALTY U/S 271(1)(C). THE ASSESSEE VIDE LETTER DATED 18.03.20 10 SUBMITTED THAT SHE HAD NOT CONCEALED ANY INCOME NOR FURNISHED INAC CURATE PARTICULARS. SHE FURTHER ARGUED THAT SHE HAD FURNIS HED ALL THE PARTICULARS FOR COMPLETION OF ASSESSMENT. SHE ADDED TO MENTION THAT A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSION VERI OR SUGGESTION FALSI. SHE FURTHER A RGUED THAT IN ORDER TO JUSTIFY THE LEVY OF PENALTY TWO FACTORS MUST CO- EXIST THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO THE REASO NABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT THE ASSESSEE'S INCOM E. THE ASSESSEE FINALLY ARGUED THAT THE REVENUE SHOULD HAVE PROVED THAT THE ASSESSEE HAS MENS-REA OR GUILTY MIND ON ITS PART TO SHOW THA T IT IS CONCEALMENT OF INCOME. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E THE AO OBSERVED THAT THE ARGUMENTS OF THE ASSESSEE WERE NO T TENABLE FOR THE REASON THAT THE ADDITIONAL INCOME ASSESSED IS NOT V OLUNTARILY OFFERED OR ACCEPTED BY THE ASSESSEE. BUT FOR THE SEARCH ACT ION CONDUCTED AND BUT FOR THE EFFORTS OF THE DEPARTMENT ANALYZING THE SEIZED MATERIAL THE ADDITIONAL INCOME WOULD NOT HAVE BEEN ASSESSED. FUR THER THE ASSESSEE IS NOT AT ALL COOPERATIVE THROUGHOUT THE P ROCEEDINGS. AS HAS BEEN HELD BY THE APEX COURT IN THE CASE OF M/S DHAR MENDRA TEXTILES 4 ITA NOS 322 TO 324 /HYD/16 S. TIRUMALA PRASAD AND S. DHANALAKSHMI (306 ITR 277) PENALTY U/S 271(1)(C) IS A CIVIL LIAB ILITY AND MENS-REA IS NOT AN ESSENTIAL INGREDIENT FOR THE PENALTIES WHICH ARE CIVIL LIABILITIES. THEREFORE IT CAN BE CONCLUDED THAT IT IS NOT NECES SARY TO PROVE THAT THE ASSESSEE IS GUILTY OR MENS-REA AS HAS BEEN ARGU ED BY THE ASSESSEE. ACCORDINGLY AO LEVIED A PENALTY OF RS. 7 30 000/- U/S 271(1)(C) OF THE ACT. 5. ON AN APPEAL BEFORE THE CIT(A) THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE PENA LTY LEVIED BY THE AO BY HOLDING THAT THE ASSESSEE HAS NOT DISCLOSED T HE INCOME FROM CHIT CONTRIBUTION IN THE RETURN OF INCOME AND THIS FACT HAS COME TO LIGHT ONLY SUBSEQUENT TO THE SEARCH AND SEIZURE OPE RATIONS AND ENQUIRIES CONDUCTED THEREIN BASED ON THE SEIZED MAT ERIAL. 6. AGGRIEVED BY THE ACTION OF THE CIT(A) IN CONFIRM ING THE PENALTY LEVIED BY THE AO THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL WHICH ARE COMMON IN AL L THE THREE APPEALS EXCEPT THE QUANTUM OF PENALTIES LEVIED: 1. THE ORDER OF THE LD. CIT(A)-9 HYDERABAD IS ERR ONEOUS BOTH ON FACTS AND IN LAW. 2. THE LD. CIT(A) ERRED IN UPHOLDING THE PENALTY LE VIED U/S 271(1)(C) FOR RS.7 30 000/ -. 3. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT TH E ASSESSEE HAS NOT MADE DELIBERATE ATTEMPT TO CONCEAL ANY INCO ME AND THAT THERE IS NO CONCLUSIVE EVIDENCE TO SHOW THAT THE AS SESSEE HAS ACTUALLY CONCEALED THE INCOME. 4. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT ME RE ADDITION TO THE INCOME IS NOT ENOUGH FOR LEVY OF PENALTY AND THAT CIRCUMSTANCES MUST SHOW THAT THERE IS CONSCIOUS CON CEALMENT OR ACT OF FURNISHING INACCURATE PARTICULARS ON THE PAR T OF THE ASSESSEE. 5. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT TH E DISCREPANCIES RELIED ON BY THE AO ARE JUST SUFFICIE NT TO MAKE AN ADDITION IN THE ASSESSMENT THAT THE SAME IS NOT EN OUGH TO 5 ITA NOS 322 TO 324 /HYD/16 S. TIRUMALA PRASAD AND S. DHANALAKSHMI ATTRACT THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT AND THAT LEVY OF PENALTY IS NOT AUTOMATIC. 6. THE LD.CIT(A) ERRED IN DISMISSING THE APPEAL BY CONSIDERING ONLY PART OF THE APPELLANTS SUBMISSIONS AND NOT THE ENTIRE SUBMISSIONS MADE BEFORE HER ON 16-10-2014. 7. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT TH E ADDITION IN THE ASSESSMENT RELEVANT TO THE IMPUGNED PENALTY HAS BEEN MADE BY THE ASSESSING OFFICER BY DECIPHERING OR INTERPRE TING THE CODE 'SDL' WRITTEN IN THE SEIZED DAIRY MARKED AS ANNEXUR E A/STP/6 WHICH CANNOT BE TREATED AS A CONCLUSIVE PROOF FOR T HE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 8. THE LD. CIT(A) ERRED IN NOT ADJUDICATING ON THE CASE LAWS RELIED ON BY THE APPELLANT IN THE WRITTEN SUBMISSIO NS MADE BEFORE HER. 7. THE LD. AR SUBMITTED THAT THE AO IS WRONG IN LEV YING PENALTY ON THE GROUND THAT THE ASSESSEE HAS NOT PRESSED THE AD DITION MADE BY HIM AND CONFIRMED BY THE CIT(A) BEFORE THE ITAT WH ICH PROVES THE MENS-REA OF THE ASSESSEE. THE LD. AR CONTENDED THAT MERELY ACCEPTING THE ADDITION DOES NOT TANTAMOUNT TO THE C ONCEALED INCOME AND THEREBY LEVYING FOR PENALTY U/S 271(1)(C) OF TH E ACT. HE THEREFORE PLEADED THE BENCH THAT THE PENALTY LEVIED MAY BE CA NCELLED. LD. AR RELIED ON THE FOLLOWING CASES: 1. RAGHUVEER SINGH VS. DCIT ITA NO. 522/HYD/15 2. SOUTH INDIA FINANCE VS. ITO 39 ITD 370 3. NUTAN GUPTA VS. DCIT ITA NO. 4728/DEL/2011 4. CIT VS. MOHAN LAL SHARMA 149 TAXMAN 6 5. SATYAVATHI VS. ACIT 1085/BANG/2009 6. CIT VS. MANJUNATHA COTTON & GINNING FACTORY 35 TAXMANN.COM 250 7. CIT VS. RELIANCE PETROPRODUCTS 189 TAXMAN 322 (SC) 8. S. PRASAD RAO VS. DCIT ITA NO. 338/HYD/2006. 8. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDE RS OF REVENUE AUTHORITIES. 9. CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL FACTS ON RECORD AS WELL AS THE ORDERS OF R EVENUE AUTHORITIES. WE HAVE ALSO GONE THROUGH THE CASE LAW CITED BY THE LD. AR. IT IS A 6 ITA NOS 322 TO 324 /HYD/16 S. TIRUMALA PRASAD AND S. DHANALAKSHMI FACT THAT THE AO MADE ADDITION AFTER SEARCH AND SEI ZURE OPERATION AND U/S 153C ASSESSMENT TO THE EXTENT OF RS. 114.10 LAKHS AND SUBSEQUENTLY CIT(A) DELETED THE ADDITION OF RS. 81 .60 LAKHS OF INTEREST RECEIPT AND COORDINATE BENCH OF THIS TRIBU NAL DELETED RS. 9 39 500/- OF CHIT COMMISSION AND CHIT CONTRIBUTION . THE REMAINING ADDITION OF RS. 23 10 000/- IS TOWARDS CHIT CONTRIB UTION. WE ARE NOT CLEAR WITH REGARD TO THIS ADDITION WHETHER THESE C ONTRIBUTIONS ARE FROM EARLIER YEAR DECLARED INCOME OR OUT OF CONCEAL ED INCOME. IT WAS NOT BROUGHT ON RECORD EITHER BY ASSESSEE OR BY AO. SINCE THE ADDITION WAS CONFIRMED BY ITAT THIS ADDITION MAY B E ASSESSABLE TAX BUT WHETHER IT WILL ATTRACT PENALTY. IT IS NOT NECE SSARY THAT ADDITION SUSTAINED SHOULD BE LIABLE FOR PENALTY. 9.1 LD. AR RELIED ON VARIOUS CASE LAWS LET US ANAL YSE THE SAME AS UNDER: A) RAGHUVEER SINGH VS. DCIT (SUPRA): THERE IS NO SEARCH IN THE ASSESSEES PLACE EXPLANATION 5A CANNOT BE INVOKED. IN THE PRESENT CASE THE SEARCH WAS CONDUCTED ON 07/10/2004 THIS EXPLANATION CAME INTO FORCE ONLY FROM 2007. IT HAS NO RELEVANCE . B) SOUTH INDIA FINANCE (SUPRA): IN THIS CASE IT WAS HELD THAT THE DOCUMENTS FOUND IN THE COURSE OF SEARCH WILL NOT A TTRACT EXPLANATION 5 OF SECTION 271(1)(C) OF THE ACT. DUE TO THE FACT THAT THE WORDS USED ARE ANY MONEY BULLION JEWELLERY OR OTHER VALUABL E ARTICLE OR THING. IT DOES NOT INCLUDE THE TERM DOCUMENT. IN THE PRESEN T CASE AO FOUND ONLY THE DOCUMENT RELATING TO CHIT FUND CONTRIBUTIO N. WE MAY AGREE WITH THE COUNSEL OF THE ASSESSEE THAT THE DEPARTMEN T HAS NOT FOUND ANY VALUABLE ITEMS DURING SEARCH. C) S. SATYAVARTHI VS. DCIT (SUPRA): IT WAS HELD THAT THE ADDITIONS ARE MAINLY ON ACCOUNT OF INABILITY OF THE ASSESSEE TO P RODUCE THE CREDITORS AND SUBSTANTIATE THE CLAIM. IT WAS OBSERVED THAT RE VENUE HAS NOT BEEN ABLE TO BRING OUT ANY EVIDENCE OF THE INTENTIO N OF THE ASSESSEE TO CONCEAL THEIR INCOME OR FURNISHED INACCURATE PAR TICULARS OF INCOME. IT HAS TO BE ESTABLISHED THAT THE ASSESSEE HAS CONC EALED THE INCOME 7 ITA NOS 322 TO 324 /HYD/16 S. TIRUMALA PRASAD AND S. DHANALAKSHMI OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. MERELY NOT AGREEING TO THE CLAIM OF THE ASSESSEE AND MAKING AD DITION WOULD NOT ATTRACT THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. IN THE PRESENT CASE THE ADDITION WAS MADE ON ACCOUNT OF CHIT FUND CONTRIBUTION. THE ABOVE INCOME WAS CONFIRMED BY THE ITAT DUE TO THE F ACT THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE CLAIM TH E ADDITION WAS CONFIRMED. IT MAY BE REASONABLE TO ASSESS TO THE TA X BUT MAY NOT ATTRACT PENALTY. 9.2 IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE VIEW THAT THE ADDITION WAS CONFIRMED BY THE ITAT DUE TO THE FACT THAT THE ASSESSEE WAS NOT IN A POSITION TO SUBSTANTIATE ITS CLAIM. MO REOVER THE ASSESSEE HAS ACCEPTED THE ADDITION AND PAID THE REL EVANT TAX. IN THE PRESENT CASE THE ADDITION WAS MADE DUE TO 153C ASS ESSMENT AFTER SEARCH U/S 132. IN THE SEARCH THE DEPARTMENT HAS S EIZED SOME DOCUMENTS RELATING TO CHIT FUND CONTRIBUTION TO AT TRACT EXPLANATION 5 OF SECTION 271(1)(C) THE TERM DOCUMENT WAS NOT MEN TIONED IN THE EXPLANATION BUT THE OTHER TERMS ARE MENTIONED LIKE MONEY BULLION JEWELLERY OR ANOTHER VALUABLE ARTICLE OR THING. BY RELYING ON THE DECISION IN THE CASE OF SOUTH INDIA FINANCE (SUPRA) WE ARE OF THE VIEW THAT EVEN THOUGH EXPLANATION 5 WILL NOT ATTRAC T IN THE PRESENT CASE STILL ASSESSEE HAS PAID THE TAX WITH INTERES T. IN OUR CONSIDERED VIEW PROVISIONS OF SECTION 271(1)(C) ARE NOT APPLI CABLE TO THE FACTS OF THE PRESENT CASE IN VIEW OF THE ABOVE DISCUSSION. A CCORDINGLY THE PENALTY LEVIED IS DELETED. 10. THE FACTS IN ITA NOS. 323 & 324/HYD/2016 IN CAS E OF S. TIRUMALA PRASAD FOR AYS 2003-04 AND 2004-05 ARE MAT ERIALLY IDENTICAL TO THAT OF ITA NO. 322/HYD/16 IN CASE OF S. DHANALA KSHMI (SUPRA) FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DELETE THE PENALTIES LEVIED BY THE AO U/S 271(1)(C) IN THE SAID AYS AND ALLOW THE APPEALS OF THE ASSESSEE. 8 ITA NOS 322 TO 324 /HYD/16 S. TIRUMALA PRASAD AND S. DHANALAKSHMI 11. IN THE RESULT ALL THE APPEALS UNDER CONSIDERAT ION ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD DATED: 28 TH SEPTEMBER 2016 KV COPY TO:- 1) S. TIRUMALA PRASAD 2) S. DHANALAKSHMI C/O P. MURALI & CO. CAS. 6-3-655/2/3 1 ST FLOOR SOMAJIGUDA HYDERABAD 500 082 3) ITO WARD 6(2) HYDERABAD 4) CIT(A) - 9 HYDERABAD 5) PR. CIT - 1 HYDERABAD 6) THE DEPARTMENTAL REPRESENTATIVE I.T.A.T. HYDE RABAD. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER