ITO, Palakkad v. Sri.V.R.Rathish, Palakkad

ITA 797/COCH/2013 | 2005-2006
Pronouncement Date: 25-04-2014 | Result: Dismissed

Appeal Details

RSA Number 79721914 RSA 2013
Assessee PAN ADYPR1830J
Bench Cochin
Appeal Number ITA 797/COCH/2013
Duration Of Justice 4 month(s) 5 day(s)
Appellant ITO, Palakkad
Respondent Sri.V.R.Rathish, Palakkad
Appeal Type Income Tax Appeal
Pronouncement Date 25-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 25-04-2014
Date Of Final Hearing 23-04-2014
Next Hearing Date 23-04-2014
Assessment Year 2005-2006
Appeal Filed On 20-12-2013
Judgment Text
1 ITA NO. 797 & 798/COCH/2013 CO 22 & 23/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 797 & 798/COCH/2013 (ASSESSMENT YEARS 2005-06 & 2006-07) THE ITO WD.1 VS SHRI V.R. RATHISH PALAKKAD NARSIMHAPUAM KANJIKODE PALAKKAD PAN : ADYPR1830J (APPELLANT) (RESPONDENT) C.O. NO.22 & 23/COCH/2014 (ARISING OUT OF I.T.A NO. 797 & 798/COCH/2013) (ASSESSMENT YEARS 2005-06 & 2006-07) SHRI V.R. RATHISH VS ITO WD.1 PALAKKAD PALAKKAD (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI K.K. JOHN SR DR RESPONDENT BY : SHRI MOHANAN KUTTICKAT DATE OF HEARING : 22-04-2014 DATE OF PRONOUNCEMENT : 25-04-2014 O R D E R PER N.R.S. GANESAN (JM) THE REVENUE FILED THE PRESENT APPEALS AGAINST THE COMMON ORDER PASSED BY THE CIT(A)-V KOCHI DATED 08-10-2013 CONF IRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF TH E ACT. SINCE COMMON 2 ITA NO. 797 & 798/COCH/2013 CO 22 & 23/COCH/2014 ISSUE ARISES FOR CONSIDERATION IN THE APPEALS FILED BY THE REVENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE WE HEARD TH EM TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. SHRI K.K. JOHN THE LD.DR SUBMITTED THAT THERE W AS A SEARCH IN THE PREMISES OF ONE SHRI V.S. RAMAKRISHNAN ON 24-08-200 5. SHRI V.S. RAMAKRISHNAN IS NONE OTHER THAN THE FATHER OF THE A SSESSEE. ACCORDING TO THE LD.DR THE ASSESSEE HAS NOT FILED RETURNS OF IN COME BEFORE THE DATE OF SEARCH. THE ASSESSEE FILED THE RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 153A R.W.S. 153 C OF THE ACT DISCLOSING A TOTAL INCOME OF RS.13 30 780 AND AGRICULTURAL INCOM E OF RS.48 000 FOR THE ASSESSMENT YEAR 2005-06. FOR THE ASSESSMENT YEAR 2 006-07 THE ASSESSEE DECLARED INCOME OF RS. 9 07 274 ALONGWITH AGRICULTURAL INCOME OF RS.48 000 IN RESPONSE TO NOTICE U/S 142(1). DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASESSEE FILED A STATEME NT OF ASSETS AND LIABILITIES OF HIM AND HIS WIFE AND OFFERED THE SHO RTFALL AS INCOME IN HIS HANDS U/S 69B OF THE ACT. ACCORDING TO THE LD.DR ANY ACCRETION TO THE WEALTH WOULD ATTRACT THE PROVISIONS OF SECTION 271( 1)(C) OF THE ACT. THE ASSESSING OFFICER PLACING RELIANCE ON EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT FOUND THAT THE ASSESSEE HAS NOT DISCLOSED T HE INCREASE IN WEALTH BY NOT FILING THE RETURN BEFORE THE DATE OF SEARCH. THEREFORE HE FOUND THAT 3 ITA NO. 797 & 798/COCH/2013 CO 22 & 23/COCH/2014 THERE WAS A DEEMING CONCEALMENT IN VIEW OF EXPLANAT ION 5 TO SECTION 271(1)(C) OF THE ACT. ACCORDINGLY HE LEVIED PENALT Y U/S 271(1)(C) OF THE ACT AT RS. 4 25 276 FOR THE ASSESSMENT YEAR 2005-06 AND RS.2 36 417 FOR THE ASSESSMENT YEAR 2006-07. ACCORDING TO THE LD.DR TH E CIT(A) FOUND THAT ACCRETION TO WEALTH AND CONSEQUENTIAL LEVY OF PENAL TY WAS NOT REFERRED TO IN THE ASSESSMENT ORDER THEREFORE HE DELETED THE PEN ALTY. ACCORDING TO THE LD.DR THE CIT(A) HAS NOT JUSTIFIED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 4. ON THE CONTRARY SHRI MOHAN KUTTICKAT THE LD.RE PRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT EXPLANATION 5 TO SECTION 27 1(1)(C) OF THE ACT PROVIDES FOR LEVY OF PENALTY IN CASE ANY BULLION M ONEY JEWELLERY OR OTHER VALUABLE ARTICLE OR THING WAS FOUND IN THE POSSESSI ON OR CONTROL OF THE ASSESSEE IN THE COURSE OF SEARCH THEN THERE MAY B E A DEEMED CONCEALMENT OF INCOME. IN THIS CASE ACCORDING TO THE LD.REPRESENTATIVE NO MONEY OR BILLION OR JEWELLERY OR OTHER VALUABLE ART ICLE OR THING WAS FOUND IN THE COURSE OF SEARCH PROCEEDINGS. THE ASSESSEE FIL ED THE RETURN OF INCOME CONSEQUENT TO THE NOTICE RECEIVED U/S 153A OF THE A CT DISCLOSING INCOME OF RS.13 30 780 FOR THE ASSESSMENT YEAR 2005-06. FOR THE ASSESSMENT YEAR 2006-07 THE ASSESSEE HAS DISCLOSED RS. 9 07 274 IN RESPONSE TO NOTICE U/S 142(1) OF THE ACT. THE ASSESSING OFFICER ACCEP TED THE INCOME DECLARED 4 ITA NO. 797 & 798/COCH/2013 CO 22 & 23/COCH/2014 BY THE ASSESSEE IN THE RETURNS OF INCOME FILED AND WHAT WAS DISALLOWED FOR BOTH THE ASSESSMENT YEARS IS AGRICULTURAL INCOME OF RS.48 000 EACH. HOWEVER ON APPEAL BY THE ASSESSEE THE CIT(A) REST RICTED THE AGRICULTURAL INCOME OF RS.24 000 FOR EACH ASSESSMENT YEAR UNDER CONSIDERATION. ACCORDING TO THE LD.REPRESENTAVE IN THE COURSE OF SEARCH PROCEEDINGS NO MONEY OR BULLION OR JEWELLERY OR OTHER VALUABLE ART ICLE OR THING WAS FOUND IN THE POSSESSION AND CONTROL OF THE ASSESSEE THEREFO RE EXPLANATION 5 IS NOT APPLICABLE. THE INCOME DECLARED BY THE ASSESSEE IS ACCEPTED BY THE ASSESSING OFFICER WITH REGARD TO INVESTMENT IN THE WEALTH THEREFORE THE CIT(A) ACCORDING TO THE LD.REPRESENTATIVE HAS RIG HTLY DELETED THE PENALTY. 5. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO CAREFU LLY GONE THROUGH THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT MORE PA RTICULARLY EXPLANATION 5 TO SECTION 271(1)(C). EXPLANATION 5 TO SECTION 271 (1)(C) READS AS FOLLOWS: EXPLANATION 5.- WHERE IN THE COURSE OF A SEARCH IN ITIATED UNDER SECTION 132 BEFORE THE 1 ST DAY OF JUNE 2007 THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY BUL LION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREI NAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILI ZING (WHOLLY OR IN PART) HIS INCOME - 5 ITA NO. 797 & 798/COCH/2013 CO 22 & 23/COCH/2014 (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE TH E DATE OF THE SEARCH BUT THE RETURN OF INCOME FOR SU CH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR WHERE SUCH RETURN HAS BEEN FURNISHED BEFORE THE SAID DATE SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFT ER THE DATE OF THE SEARCH THEN NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH HE SHALL FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME UNLESS - (1) SUCH INCOME IS OR THE TRANSACTIONS RESULTING I N SUCH INCOME ARE RECORD - (I) IN A CASE FALLING UNDER CLAUSE (A) BEFORE THE DATE OF THE SEARCH AND (II) IN A CASE FALLING UNDER CLAUSE (B) ON OR BEFO RE SUCH DATE IN THE BOOKS OF ACCOUNT IF ANY MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE SAID DATE; OR 6 ITA NO. 797 & 798/COCH/2013 CO 22 & 23/COCH/2014 (2) HE IN THE COURSE OF THE SEARCH MAKES A STATEM ENT UNDER SUB-SECTION (4) OF SECTION 132 THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG FOUND IN HIS POSSESSION OR UNDER HIS CONTROL HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SU B- SECTION (1) OF SECTION 139 AND ALSO SPECIFIES IN T HE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX TOGETHER WITH INTERE ST IF ANY IN RESPECT OF SUCH INCOME. 6. THUS EXPLANATION 5 TO SECTION 271(1)(C) IS A DEE MING PROVISION WHICH ENVISAGES FOUR SITUATIONS VIZ. (1) THERE S HOULD BE A SEARCH INITIATED U/S 132 OF THE ACT BEFORE 01-06-2007; (2) IN THE COURSE OF THE SEARCH PROCEEDINGS THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY BULLION JEWELLERY OR ANY OTHER ARTICLE OR THING; ( 3) THE ASSESSEE CLAIMS THAT THE ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING H IS INCOME EITHER PARTLY OR WHOLLY; AND (4) NO RETURN OF INCOME WAS FURNISHE D BEFORE THE DATE OF SEARCH OR IF THE RETURN OF INCOME WAS FURNISHED TH E INCOME WAS NOT DISCLOSED THEREIN. 7. IN THE CASE BEFORE US IT IS NOT THE CASE OF THE REVENUE THAT DURING THE COURSE OF SEARCH PROCEEDINGS THE ASSESSEE WAS FOUND TO BE THE 7 ITA NO. 797 & 798/COCH/2013 CO 22 & 23/COCH/2014 OWNER OF ANY ASSET VIZ. MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED THE STATEMENT OF ASSETS AND LIABILITIES FOR HIMSELF AND HIS WIFE. TO EXPLAIN THE SHORTFALL THE ASSESSEE HAS ALSO OFFERED THE SHORTF ALL AS INCOME U/S 69B OF THE ACT. THE RETURNS FILED BY THE ASSESSEE WITH RE GARD TO INVESTMENT IN THE ASSETS WERE ACCEPTED BY THE ASSESSING OFFICER WITHO UT ANY WHISPER. THE DISALLOWANCE WAS MADE ONLY IN RESPECT OF AGRICULTUR AL INCOME DECLARED BY THE ASSESSEE TO THE EXTENT OF RS.48 000 FOR EACH AS SESSMENT YEAR UNDER CONSIDERATION. HOWEVER THIS WAS RESTRICTED TO RS. 24 000 FOR EACH OF THE ASSESSMENT YEAR BY THE FIRST APPELLATE AUTHORITY. 8. THE QUESTION ARISES FOR CONSIDERATION IS THAT WH EN NO MATERIAL WAS FOUND WITH REGARD TO THE OWNERSHIP OF ANY ASSET BY THE ASSESSE WHETHER EXPLANATION 5 TO SECTION 271(1)(C) WOULD COME INTO OPERATION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT SECTION 271(1)(C) IS A PENAL PROVISION THEREFORE IT HAS TO BE CONSTRUED STRICT LY. WHEN THE LANGUAGE EMPLOYED BY THE LEGISLATURE CLEARLY SUGGESTS THAT F OR THE PURPOSE OF APPLICATION OF A DEEMING PROVISION AS PROVIDED IN E XPLANATION 5 TO SECTION 271(1)(C) IT IS NECESSARY TO ENSURE THAT THE ASSET IS FOUND IN THE COURSE OF SEARCH PROCEEDINGS AND THAT THE ASSESSEE IS THE OWN ER OF THE ASSET. IN CASE NO MATERIAL IS AVAILABLE ON RECORD TO COME TO A CONCLUSION THAT THE 8 ITA NO. 797 & 798/COCH/2013 CO 22 & 23/COCH/2014 ASSESSEE IS THE OWNER OF ANY ASSET THEN THE DEEMI NG PROVISION HAS NO ROLE TO PLAY. IN OTHER WORDS THE DEEMING PROVISIO N CANNOT BE APPLIED WHEN NO MATERIAL WAS FOUND WITH REGARD TO THE OWNER SHIP OF THE ASSET DURING THE COURSE OF SEARCH PROCEEDINGS. 9. IN VIEW OF THE ABOVE THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED B Y THE ASSESSING OFFICER. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE CIT(A). ACCORDINGLY THE SAME IS CONFIRMED. 10. THE ASSESSEE FILED THE CROSS OBJECTIONS ONLY TO SUPPORT THE ORDERS OF CIT(A) THEREFORE THE CROSS OBJECTIONS BECOME INFR UCTUOUS. 11. IN THE RESULT BOTH THE APPEALS OF THE REVENUE AND THE CROSS OBJECTIONS OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH APRIL 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN DT : 25 TH APRIL 2014 PK/- 9 ITA NO. 797 & 798/COCH/2013 CO 22 & 23/COCH/2014 COPY TO: 1. THE ITO WD.1 PALAKKAD 2. SHRI V.R. RATHISH 4/140A NICHOLAS TRADING CO NARSIMHAPURAM KANJIKODE PALAKKAD 3. THE COMMISSIONER OF INCOME-TAX TRICHUR 4. THE COMMISSIONER OF INCOME-TAX(A)-V 7 TH FLOOR KERA BHAVAN OPP. SRV HIGH SCHOOL KOCHI-16 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR INCOME-TAX APPELLATE TRIBUNAL COCHIN BENCH