K. Hemalatha, Hyd, Hyderabad v. ACIT, Central Circle-2, Hyderabad, Hyderabad

ITA 551/HYD/2016 | 2005-2006
Pronouncement Date: 05-10-2016

Appeal Details

RSA Number 55122514 RSA 2016
Assessee PAN AQLPK6573D
Bench Hyderabad
Appeal Number ITA 551/HYD/2016
Duration Of Justice 5 month(s) 14 day(s)
Appellant K. Hemalatha, Hyd, Hyderabad
Respondent ACIT, Central Circle-2, Hyderabad, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 05-10-2016
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 05-10-2016
Date Of Final Hearing 18-08-2016
Next Hearing Date 18-08-2016
Assessment Year 2005-2006
Appeal Filed On 21-04-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B HYDERABAD BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER I.T.A. NO. 551/HYD/2016 ASSESSMENT YEAR: 2005-06 K. HEMALATHA HYDERABAD [PAN: AQLPK6573D] VS ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P.V.S.S. PRASAD AR FOR REVENUE : S HRI K.J. RAO D R DATE OF HEARING : 0 1 - 0 9 - 201 6 DATE OF PRONOUNCEMENT : 05 - 1 0 - 201 6 O R D E R PER B. RAMAKOTAIAH A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX (APPEALS)-9 HYDERABA D DATED 29-02-2016 CONFIRMING THE PENALTY OF RS. 1 77 473/ - U/S. 271(1)(C) OF THE INCOME TAX ACT [ACT]. 2. BRIEFLY STATED FACTS AS MENTIONED IN THE ORDER O F CIT(A) ARE AS UNDER: '1.0 THE APPELLANT SMT K. HEMALATHA IS AN INDIVIDUA L. A SEARCH OPERATION WAS CONDUCTED ON THE APPELLANT'S SON-IN-L AW SHRI K. SRINIVASA RAO AT HIS RESIDENCE SITUATED AT PLOT NO.1219 ROAD NO 36 JUBILEE HILLS HYDERABAD ON 09-10-2007. CONSEQUENT TO SEARCH OPERA TION NOTICE UNDER SEC.153C DATED 26-06-2008 WAS ISSUED FOR THE AY 200 5-06 TO THE APPELLANT. APPELLANT FILED HER RETURN OF INCOME ON 01-08-2008 BY ADMITTING TOTAL INCOME OF RS 89 310/- AND AN AGRICULTURAL INC OME OF RS 1 26 500/-. LEARNED DCIT CENTRAL CIRCLE -2 HYDERABAD (AO) ISS UED NOTICE UNDER SEC I.T.A. NO. 551/HYD/2016 K. HEMALATHA :- 2 -: 143(2) AND SEC 142(1) DATED 06-04-2009 AND CONDUCTE D THE SCRUTINY PROCEEDING CALLING FOR INFORMATION AND DETAILS FROM TIME TO TIME. APPELLANT SUBMITTED DETAILS CALLED FROM TIME TO TIME BEFORE T HE LEARNED AO. 1.1 THE LEARNED AO QUESTIONED THE APPELLANT AS TO T HE SOURCE OF OPENING BALANCE OF HER CAPITAL ACCOUNT AMOUNTING TO RS 22 9 4 430/-. APPELLANT EXPLAINED THAT OUT OF THE SAID AMOUNT OF RS. 11 00 000/- PERTAIN TO THE SALE PROCEEDS OF HOUSE SOLD AT KOVVURU ANDHRA PRAD ESH WHICH AS DECLARED IN THE ACCOUNTING YEAR RELEVANT TO THE A.Y . 2004-05. IN RESPECT OF BALANCE AMOUNT OF RS 11 94 000/- IT WAS EXPLAINED THAT IT WAS ACCUMULATION OF AGRICULTURAL INCOME TERMINAL BENEF ITS RECEIVED ON THE DEMISE OF APPELLANT'S HUSBAND SHRI KESAVA RAO AND O THER MISCELLANEOUS INCOME. SUCH VALID EXPLANATION HAS BEEN REJECTED BY THE LEARNED AO AND ADDED THE SAID AMOUNT OF RS 11 94 000/- AS UNEXPLAI NED CASH CREDIT UNDER SEC.68 OF THE ACT. 1.2 AGGRIEVED BY THE ADDITION OF RS 11 94 000/- MAD E BY THE LEARNED AO THE ASSESSEE WENT ON APPEAL AGAINST THE ORDER OF TH E LD AO BEFORE THE CIT(A). 1.3 THE LEARNED CIT(A) IN HIS ORDER GAVE RELIEF FOR AN AMOUNT OF RS 3 53 000/- OUT OF ADDITION OF RS 11 94 000/- AND CO NFIRMED THE ADDITION FOR THE BALANCE OF AMOUNT OF RS 8 40 500/-. 2. AGGRIEVED BY THE CONFIRMATION OF ADDITION OF RS 8 40 500/- THE ASSESSEE HAS COME ON APPEAL BEFORE THE HON'BLE TRIBUNAL. 3. THE HON'BLE TRIBUNAL VIDE ITS ORDER DT 16-11-201 1 GAVE FURTHER RELIEF OF RS 2 10 000/- AND CONFIRMED THE BALANCE ADDITION OF RS 6 30 500/-. 4. AS PART OF THE ADDITION OF RS 6 30 500/- AS MENT IONED ABOVE WAS CONFIRMED BY THE APPELLATE AUTHORITY THE ASSESSEE R ECEIVED A NOTICE U/S 274 READ WITH SECTION 271 (1)(C) DATED 09-02-2012. 5. THE ASSESSEE VIDE HER LETTER DATED 22-02-2012 ST ATED THAT EVEN THOUGH THE HON'BLE TRIBUNAL SUSTAINED ADDITION OF RS 6 30 500/- THE FACT IS THAT THERE IS NO CONCEALMENT OF INCOME. THE AGRICULTURAL INCOME EARNED YEAR AFTER YEAR HAD BEEN ACCUMULATED IN HER CAPITAL ACCO UNT OVER A PERIOD OF 12 YEARS AND SALE PROCEEDS OF HOUSE AT KOVVURU WERE AL SO CREDITED TO THE CAPITAL ACCOUNT. SHE WAS UNABLE TO PRODUCE PROOF OF THE AGRICULTURAL INCOME THOUGH IT WAS REALLY EARNED. HENCE THERE IS NO CONCEALMENT OF INCOME. 6. THE LD AO OUGHT TO HAVE APPRECIATED THAT EVEN IN THE ABSENCE OF RETURNS OF INCOME PRIOR TO THE ASSESSMENT YEARS 200 2-03 THE APPELLANT WOULD HAVE MADE SAVINGS OVER HER LIFE TIME FROM AGR ICULTURAL INCOME ETC. WHICH WOULD HAVE CONTRIBUTED TO HER CAPITAL BALANCE AS ON 1-4-2004. I.T.A. NO. 551/HYD/2016 K. HEMALATHA :- 3 -: 7. THE APPELLANT DID NOT HAVE ANY INCOME OTHER THAN AGRICULTURAL INCOME PRIOR TO THE AY 2002-03. HENCE THERE WAS NO REQUIRE MENT TO FILE RETURN OF INCOME FOR THE YEARS PRIOR TO AY 2002-03. 8. IN RESPONSE TO THE NOTICE THE ASSESSEE FILED A R EPLY DATED 22-02-2012 WHEREIN THE ABOVE FACTS WERE STATED THAT THE LEVY O F PENALTY IS NOT AUTOMATIC WHEN AN ADDITION IS MADE AND CITED VARIOU S CASE LAWS WHEREIN PENALTY WAS NOT LEVIED. 3. LD. CIT(A) CONFIRMED THE PENALTY STATING AS UNDE R: 4.1 I HAVE CAREFULLY CONSIDERED THE PENALTY ORDER THE SUBMISSIONS OF THE ASSESSEE AND THE FACTS OF THE CASE. THE ONLY ISSUE INVOLVED IS THIS CASE IS THE LEVY OF PENALTY U/S. 271(1)(C) OF THE I T. ACT OF RS. 1 77 473/- FOR THE A.Y. 2005-06. THE BRIEF FACTS OF THE CASE ARE W HILE COMPLETING THE ASSESSMENT FOR THE A.Y. 2005-06 U/S 143(3) R.W.S. 1 53C OF THE I.T. ACT ON 24.12.2009 THE ASSESSING OFFICER MADE AN ADDITION OF RS. 11 94 000/- AS UNEXPLAINED CREDIT AS THE ASSESSEE FAILED TO ADDUC E ANY EVIDENCE IN SUPPORT OF HER CONTENTIONS THAT THIS AMOUNT OF RS. 11 94 000/- REPRESENTS HER ACCUMULATED SAVINGS. ON APPEAL THE CIT (APPEAL S) HAS GIVEN RELIEF TO THE EXTENT OF RS. 3 53 500/- AND CONFIRMED THE REMA INING ADDITION OF RS. 8 40 500/-. ON FURTHER APPEAL THE HON'BLE ITAT GAV E FURTHER RELIEF OF RS 2 10 000 AND CONFIRMED THE BALANCE OF RS 6 30 500/- . THEREFORE PENALTY U/S 271(1)(C) WAS LEVIED BY THE ASSESSING OFFICER I N RESPECT OF INCOME OF RS. 6 30 500/- BY RELYING ON THE EXPLANATION 1(A) T O SEC. 271(1)(C). 4.2 DURING THE COURSE OF THE APPELLATE PROCEEDINGS THE ASSESSEE CONTENDED THE EVEN THOUGH THE HON'BLE ITAT SUSTAINE D THE ADDITION OF RS. 6 30 500/- THERE IS NO CONCEALMENT OF INCOME AS TH E ASSESSEE HAD ACCUMULATED AGRICULTURAL INCOME OVER A PERIOD OF 12 YEARS ALONG WITH SALE PROCEEDS OF HOUSE AT KOVURU AND FURTHER SUBMITTED THAT SHE IS UNABLE TO PRODUCE PROOF OF THE SAME. THE ASSESSEE RELIED ON T HE FOLLOWING CASE LAWS IN SUPPORT OF IN HER CONTENTION. 1. JASBIR SINGH SAINI VS. INCOME TAX OFFICER [2015] 61 TAXMANN. COM 230 (CHANDIGARH- TRIBE.). 2. KANBAY SOFTWARE INDIA (P) LTD VS. DCIT PUNE [200 9] 131 SOT 153 (PUNE). 3. DCIT VS. KOATEX INFRASTRUCTURE LTD [2006] 100 IT D 510(MUM.). 4. DCIT VS SARAYA INDUSTRIES [2007]14 SOT 55 (DELHI ) (URO). I.T.A. NO. 551/HYD/2016 K. HEMALATHA :- 4 -: 4.3 HOWEVER THE ASSESSEE'S CONTENTIONS ARE NOT AC CEPTABLE AS THE ASSESSEE HAS NOT EXPLAINED PROPERLY THE SOURCES FOR THE SAID ACCUMULATED SAVINGS. AFTER VERIFYING THE FACTS AND THE CONTENTI ONS OF THE ASSESSEE THE HON'BLE ITAT HYDERABAD CONFIRMED THE ADDITION OF RS . 6 30 500/-. EVEN DURING THE APPELLATE PROCEEDINGS THE ASSESSEE SUBM ITTED THAT SHE IS UNABLE TO PRODUCE ANY PROOF OF THE SAME. THEREFORE IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE THE ASSESSEE'S CLAIM CANNOT B E ACCEPTED. AS RIGHTLY STATED BY THE ASSESSING OFFICER THE ASSESS EE IS VERY MUCH HIT BY THE EXPLANATION 1(A) TO SEC. 271 (1)(C) OF THE IT A CT WHICH CLEARLY STIPULATES THAT WHEN A PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE THEN SUCH INCOME SHALL BE DEEMED TO BE CONCEALED INCOME. THEREFORE AS THE ASSESSEE HAS FA ILED TO SUBSTANTIATE HER CLAIM WITH RESPECT TO THE AMOUNT OF RS.6 30 500 /- THE SAME BEING CONFIRMED BY THE HON'BLE ITAT THE ASSESSEE CAN BE SAID TO HAVE CONCEALED THE PARTICULARS OF THE INCOME TO THAT EXT ENT. MOREOVER THE FACTS OF THE CASE LAWS AS RELIED UPON BY THE ASSESSEE ARE DIFFERENT FROM THE FACTS OF THE INSTANT CASE AND HENCE CANNOT COME TO HER RESCUE. FURTHER I PLACE RELIANCE ON THE FOLLOWING CASE LAWS: (I) LOKNATH CHOWDHARY VS. CIT (CAL) 155 ITR 29. (II) RAHMAT DEVFT & ENGINEERING CORPORATION VS. CIT (CA L) 130 ITR 602. (III) CIT VS. RATTAM SINGH GREWAL (P&H) 304 ITR 75. (IV) CHARNDATT H. DANGET VS. INCOME TAX OFFICER (ITAT MUMBAI) 126 ITO 483. IN THE ABOVE CASES IT WAS HELD THAT UNEXPLAINED IN VESTMENT IS DEEMED TO BE INCOME FOR THE PURPOSE OF LEVYING PENALTY IF NO SATISFACTORY EXPLANATION IS OFFERED AND PENALTY IS LEVIABLE. THE SE DECISIONS ARE APPLICABLE IN THE ASSESSEE'S CASE AS HE HAS NOT FUR NISHED SATISFACTORY EXPLANATION EITHER DURING THE ASSESSMENT PROCEEDING S OR THE APPELLATE PROCEEDINGS. 4.4 IN VIEW OF THE ABOVE MENTIONED FACTS AND CIRCUM STANCES I AM OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS R IGHTLY LEVIED THE PENALTY U/S 271(1)(C) OF THE IT ACT AND THEREFORE PENALTY LEVIED OF RS. 1 77 473 IS HEREBY UPHELD. 4. LD. COUNSEL SUBMITTED THAT THE ADDITION WAS OPEN ING BALANCE OF THE CAPITAL OF ASSESSEE AND FILED THE DETAILS OF ASSETS HELD BY ASSESSEE AT THE BEGINNING OF THE BLOCK PERIOD AS UN DER: I.T.A. NO. 551/HYD/2016 K. HEMALATHA :- 5 -: S.NO DATE OF ACQUISITION NAME OF THE ASSET SURVEY NO. AREA IN AC. GUNTAS PURCHASE VALUE 1 BEFORE 99 POOPPALAGUDA 294(294/2) 5AC 56 000.00 2 19-JAN-99 VATTINGULPALLY 213 15 GUNTAS 25 251.00 3 03-MAR-99 NANAKRAM GUDA 95/AA/P 3 AC 24 GUNTAS 2 12 621.00 4 16-JUN-99 VATTINGULPALLY 225/P 10AC 3 56 771.00 5 26-JUN-99 NANAKRAM GUDA 95/ A/P 1 AC 2 23 271.00 6 12-NOV-99 YELLAREDDYGUD DA 44 & 45 FLAT 4 26 721.00 7 21-JUN-00 VATTINGULPALLY 173 8 AC 6 GUNTAS 4 54 636.00 8 25-SEP-00 MANIKONDA 124 14 GUNTAS 39 471.00 9 15-MAR-04 VATTINGULPALLY 203 & 204 21 GUNTAS 1 11 600.00 10 29-MAR-04 VATTINGULPALLY 213(PART) 19 GUNTAS 46 485.00 TOTAL 19 52 827.00 LIST OF CURRENT ASSETS S.NO DATE NAME OF THE ASSET AMOUNT (RS) REMARKS 1 AS AT 31-03- 2004 CASH IN HAN D 1 06 839.00 2 BANK ACCOUNT 72 568.86 3 FD WITH P.O. (13447) 2 50 000.00 DATE OF DEPOSIT: 12.08.2003 4 FD WITH P.O. (13459) 40 000.00 DATE OF DEPOSIT: 12.08.2003 4.1. IT WAS CONTENDED THAT THE ASSETS ARE ACQUIRED MUCH EARLIER INCLUDING THE CURRENT ASSETS AND IT WAS UNFORTUNATE THAT SAME AMOUNT GOT CONFIRMED IN APPEAL. HE REFERRED TO THE RELIEF GIVEN BY LD. CIT(A) AND ITAT AND SUBMITTED THAT THE ADDITION IN ASSESSMENT DOES NOT LEAD TO PENALTY AS CONCEALMENT OF INCOME . 5. LD. DR HOWEVER RELIED ON THE ORDERS OF AO AND L D. CIT(A) TO CONTEND THAT PENALTY U/S. 271(1)(C) IS ATTRACTED ON THE FACTS OF THE CASE. I.T.A. NO. 551/HYD/2016 K. HEMALATHA :- 6 -: 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE ORDERS INCLUDING THE APPEALS IN QUANTUM PROCEEDINGS . THERE IS NO DISPUTE THAT ASSESSEE HAS SHOWN OPENING BALANCE OF RS. 22 94 430/- WHICH IS THE VALUE OF VARIOUS ASSETS A CQUIRED MUCH EARLIER. THESE INCLUDE FIXED ASSETS OF RS. 19 52 8 27/- AND BALANCE CURRENT ASSETS. EVEN THOUGH AO MADE ADDITION OF EN TIRE AMOUNT ASSESSEE GOT SUBSTANTIAL RELIEF AND ONLY RS. 6 30 0 00/- CONFIRMED BY ITAT IN APPEAL. HOWEVER THE FACT THAT THESE AS SETS WERE ACQUIRED IN EARLIER YEARS WERE NOT NOTICED. WHATEV ER MAY BE THE REASON FOR CONFIRMING PART OF THE AMOUNT IN ASSESSM ENT THE SAME DOES NOT AUTOMATICALLY LEAD OF LEVY OF PENALTY U/S. 271(1)(C). ASSESSEE CAN QUESTION THE ADDITION ITSELF IN PENALT Y PROCEEDINGS SO AS TO JUSTIFY NON-LEVY OF PENALTY. CONSIDERING THE FACT THAT THESE ASSETS ARE ACQUIRED MUCH EARLIER AND ASSESSEE HAS S HOWN THEM AS OPENING BALANCE ONLY IN OUR OPINION THE MERE ADDIT ION OF PART OF THE AMOUNT DOES NOT ATTRACT PENALTY FOR CONCEALMENT . CONSIDERING THESE FACTS OF THE CASE THE PENALTY U/S. 271(1)(C) IS NOT WARRANTED. ACCORDINGLY THE SAME IS SET ASIDE. 7. IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH OCTOBER 2016 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD DATED 05 TH OCTOBER 2016 TNMM I.T.A. NO. 551/HYD/2016 K. HEMALATHA :- 7 -: COPY TO : 1. K. HEMALATHA HYDERABAD. C/O. PRASAD & PRASAD CHARTERED ACCOUNTANTS FLAT NO. 301 MJ TOWERS 8-2 -698 ROAD NO. 12 BANJARA HILLS HYDERABAD. 2. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -2 HYDERABAD. 3 . CIT (APPEALS) - 9 HYDERABAD. 4. THE PR. CIT - 6 HYDERABAD. 5. D.R. ITAT HYDERABAD. 6. GUARD FILE.