ACIT, Bangalore v. Sri G. Dasharatharami Reddy (HUF), Bangalore

ITA 822/BANG/2009 | 1999-2000
Pronouncement Date: 19-05-2010 | Result: Allowed

Appeal Details

RSA Number 82221114 RSA 2009
Bench Bangalore
Appeal Number ITA 822/BANG/2009
Duration Of Justice 9 month(s) 1 day(s)
Appellant ACIT, Bangalore
Respondent Sri G. Dasharatharami Reddy (HUF), Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 19-05-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 19-05-2010
Date Of Final Hearing 04-05-2010
Next Hearing Date 04-05-2010
Assessment Year 1999-2000
Appeal Filed On 17-08-2009
Judgment Text
PAGE 1 OF 7 ITA NOS.822 & 823/BANG/2009 1 IN THE INOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SMT. P MADHAVI DEVI J.M. AND SHRI A MOHAN ALANKAMONY A.M. ITA NOS.822 & 823/BANG/2009 (ASST. YEARS 1999-2000 & 2005-06) THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-1(2) BANGALORE. -APPELLANT VS SHRI G DASHARATHARAMI REDDY (HUF) G-1 EDEN AULAC APARTMENTS OLD MADRAS ROAD INDIRANAGAR BANGALORE. - RESPONDENT APPELLANT BY : SMT. V S SREELEKHA ADDL. CIT RESPONDENT BY : SHRI H N KHINCHA C.A. O R D E R PER BENCH : THESE ARE THE APPEALS FILED BY THE REVENUE AGAIN ST THE ORDER OF CIT(A)-VI BANGALORE DATED 27.4.2009. 2. IN BOTH THE APPEALS EXCEPT FOR THE QUANTUM TH E GROUNDS OF APPEAL RAISED ARE COMMON. THEREFORE THE GROUNDS OF APPEAL RAISED FOR THE ASST. YEAR 1999-2000 ARE REPRODUCED BELOW:- 2) THE LEARNED CIT(A) ERRED IN DELETING THE PENALTY OF RS.38 450/- LEVIED U/S 271(1)(C) OF THE IT ACT 196 1 BOTH ON TECHNICAL GROUNDS AND ON MERITS. PAGE 2 OF 7 ITA NOS.822 & 823/BANG/2009 2 3) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT TH E DIRECTION FOR INITIATION OF PENALTY IN THE ASSESSME NT ORDER IS A DIRECTION TO THE OFFICE. 4) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT TH E ASSESSMENT ORDER DEMAND NOTICE AND SHOW CAUSE NOTICE U/S 274 RWS 271 HAVE BEEN DULY SERVED TOGETH ER WITHIN THE DUE DATE I.E. BEFORE 31/12/2006 AND THE ASSESSEE HAS COMPLIED TO THE SHOW CAUSE NOTICE. 5) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT IN VIEW OF SECTION 292B THE INITIATION OF PENALTY IS VALID. 6) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT ADDITION OF RS.1 50 000/- AS UNEXPLAINED CASH CREDI T WERE MADE IN THE ASSESSMENT ORDER ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS. 7) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT ADDITION IS MADE AFTER GIVING OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE NOTINGS AND THE INVESTMENTS MADE. 8) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT TH E ASSESSEE WOULD NOT HAVE AGREED THE INVESTMENTS MADE AS ADDITIONAL INCOME BUT FOR THE SEARCH ACTION U/S 132. 9) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT TH E ADDITIONS MADE IN THE ASSESSMENT ORDER ARE IN ADDIT ION TO THE RETURNED INCOME WHICH THE ASSESSEE HAS NOT DECLARED IN THE RETURNS FILED IN RESPONSE TO THE NO TICE ISSUED U/S 153C. 10) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF UNION OF INDIA AND OTHERS V DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC) ARE APPLICABLE IN THIS CASE. PAGE 3 OF 7 ITA NOS.822 & 823/BANG/2009 3 11) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT SECTION 292C IS APPLICABLE IN THE INSTA NT CASE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A HUF. A SEARCH U/S 132 WAS CONDUCTED ON 23.7.2004 IN THE PR EMISES OF THE ASSESSEE DURING WHICH CERTAIN INCRIMINATING DOCUMENTS CASH AND GOLD JEWELLERY WERE FOUND. THEREAFTER THE ASSESSING OFFICER MADE CERTAIN ADDITIONS TO THE INCOME RETURNED U/S 153C OF THE I T ACT IN EACH OF THE ASST. YEAR INVOLVED AND ALSO LEVIED PENALTY U/S 271(1)(C) OF T HE I T ACT. 4. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) BOTH ON THE GROUND OF VALIDITY OF THE JURISDICTION OF THE ASSES SING OFFICER TO LEVY THE PENALTY AS WELL AS MERITS OF THE PENALTY. 5. AS REGARDS THE VALIDITY OF JURISDICTION ASSUMED BY THE ASSESSING OFFICER FOR INITIATION OF PENALTY PROCEED INGS U/S 271(1)(C) OF THE I T ACT THE CIT(A) FOLLOWED HIS OWN ORDERS IN THE CASE OF SHRI B P SRINIVAS RAJU IN ITA NOS.86 87 88 89 90/ACIT/CC 1(2)/BLORE/CIT/(A)-VI/2007-08 FOR THE ASST. YEARS 1999-2000 & 2005-06 FOR COMING TO THE CONCLUSION THAT THE DIRECTION FOR CHARGING OF INTEREST AND INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) MU ST PRECEDE THE WORDS ISSUE DN&C WHICH IS NOT THE CASE HERE. HE THERE FORE HELD THAT THE PENALTY PROCEEDINGS HAVE NOT BEEN VALIDLY INITIATED AT ALL IN THESE CASES AND THE LEVY OF PENALTY IS WITHOUT JURISDICTION. HE TH EREFORE ANNULLED THE PENALTY. 6. AS REGARDS THE LEVY OF PENALTY FOR A.Y. 1999-20 00 ON THE ADDITION MADE ON ACCOUNT OF CASH CREDIT AS WELL AS THE JEWELS FOUND DURING PAGE 4 OF 7 ITA NOS.822 & 823/BANG/2009 4 THE COURSE OF ASSESSMENT PROCEEDINGS THE CIT(A) CA ME TO THE CONCLUSION THAT PENALTY IS NOT LEVIABLE U/S 271(1)(C) OF THE I T ACT BECAUSE TO EACH QUERIES ON NOTING OF SEIZED DOCUMENTS EXPLANATION HAS BEEN OFFERED ALONG WITH AGREEMENT FOR ADDITION AND IT IS GOOD REASON F OR ADDITION IN ASSESSMENT PROCEEDING BUT NOT GOOD ENOUGH TO LEVY P ENALTY BECAUSE NO FINDING HAS BEEN GIVEN ON THE VERACITY OF THE EXPLA NATION. HE ALSO FOLLOWED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF VIRTUAL SOFT SYSTEMS LTD. V CIT 289 ITR 83. ACCORDINGLY H E DELETED THE PENALTY FOR ASST. YEAR 1999-2000. 7. AS REGARDS LEVY OF PENALTY FOR ASST. YEAR 2005- 06 HE HELD THAT EXPLANATION 5 TO SECTION 271(1)(C) OF THE I T ACT C OMES INTO PLAY AND THE ASSESSEE GROUP HAD SURRENDERED RS.15 50 000/- ON UN ACCOUNTED GOLD JEWELLERY AND PAID TAXES THEREON WHEREAS GOLD JEWEL LERIES WORTH RS.6 06 790/- CLAIMED TO BE BELONGING TO THE ASSES SEE ARE ANCESTRAL BELONGINGS AND ACCOUNTED. HE HELD THAT THE EXPLANA TION 5 TO SECTION 271(1)(C) CREATES A STATUTORY PRESUMPTION THAT SUCH IS UNACCOUNTED AND CONCEALED INCOME UNLESS REBUTTED WITH CONCRETE AND STRICT EVIDENCE. AS NO CONCRETE EVIDENCE COULD BE SHOWN BY THE ASSESSEE EI THER AT ASSESSMENT OR PENALTY OR APPELLATE STAGE HE UPHELD THE PENALTY L EVIED FOR ASST. YEAR 2005- 06. HOWEVER ON TECHNICAL GROUND HE ALLOWED THE P ENALTY APPEAL. 8. AGGRIEVED BY THE ORDER OF THE CIT(A) FOR BOTH T HE ASST. YEARS 1999-2000 AND 2005-06 THE REVENUE IS IN APPEAL BEF ORE US. 9. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY ADMITTED THAT THE TECHNICAL ISSUE IN GROUNDS OF APPEAL 2 3 4 AND 5 I.E. WHETHER PENALTY PROCEEDINGS WERE VALIDLY INITI ATED DURING THE COURSE OF PAGE 5 OF 7 ITA NOS.822 & 823/BANG/2009 5 ASSESSMENT PROCEEDINGS OR NOT IS COVERED IN FAVOUR OF THE REVENUE BY THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI JOHN MOHAN REDDY IN ITA NOS.834 TO 838/BANG/2009 FOR THE ASST. YEARS 1999- 00 TO 2004-05 AND COPY OF THE SAID ORDER IS PRODUCE D BEFORE US. 10. ON GOING THROUGH THE SAID ORDER WE FIND THAT THE TRIBUNAL HAS CONSIDERED THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF KALYANKUMAR RAY V CIT 193 ITR 634 AND ALSO THE DECI SION OF THE HONBLE HIGH COURT OF HIMACHAL PRADESH IN THE CASE OF RAJA RANA YOGENDRA CHANDRA V CIT 117 ITR 473 TO COME TO THE CONCLUSION THAT THE CIT(A) IS NOT JUSTIFIED IN CANCELING THE PENALTY ORDER ON THE TECHNICAL PLEA OF THE ASSESSEE THAT NO PENALTY PROCEEDINGS ARE INITIATED IN THE COURSE OF ASSESSMENT PROCEEDINGS. 11. THE LEARNED DR ALSO RELIED ON THE SAID ORDER A ND TAKING NOTE OF THE DECISION OF THE COORDINATE BENCH TO WHICH O NE OF US I.E. ACCOUNTANT MEMBER IS THE PARTY WE ALLOW THE GROUNDS OF APPEA L NO.2 3 4 & 5 OF THE REVENUE AS REGARDS THE VALIDITY OF THE PENALTY LEVI ED IS CONCERNED. 12. AS REGARDS THE CONFIRMATION OF PENALTY FOR AS ST. YEAR 2005-06 IS CONCERNED IN GROUNDS 6 TO 11 WE FIND THAT THE A SSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE BEFORE THE LOWER AUTHORITIE S IN SUPPORT OF HIS EXPLANATION ABOUT THE CASH CREDIT. HOWEVER BEFORE US THE ASSESSEE HAS FILED AN APPLICATION UNDER RULE 29 OF THE INCOME TA X APPELLATE RULES 1963 SEEKING ADMISSION OF ADDITIONAL EVIDENCES IN SUPPORT OF HIS CONTENTION AS REGARDS TO ADVANCE OF RS.1 50 000/- F ROM ONE SHRI MUSALA REDDY. THE ASSESSEE HAS FILED A COPY OF THE LEDGER EXTRACT FOR SUNDRY PAGE 6 OF 7 ITA NOS.822 & 823/BANG/2009 6 CREDITORS ALONG WITH CONFIRMATION OF THE PARTY TO T HE EFFECT THAT ANCESTRAL AGRICULTURAL LAND WAS HYPOTHECATED TO SHRI MUSALA R EDDY FOR AN ADVANCE OF RS.1 50 000/- TAKEN ON 19.7.1997. A COPY OF THE AG REEMENT IN TELUGU AND ENGLISH TRANSLATION THEREOF IS ALSO ENCLOSED. IT W AS SUBMITTED THAT THESE EVIDENCES ARE VERY MUCH ESSENTIAL FOR ADJUDICATION OF THIS ISSUE AND THE ASSESSEE IS ENTITLED TO FILE THESE EVIDENCES EVEN D URING PENALTY PROCEEDINGS. HE THEREFORE PRAYED THAT THE EVIDENCES MAY BE ADMIT TED AND CONSIDERED. 13. THE LEARNED DR HOWEVER OPPOSED THE ADMISSION OF ADDITIONAL EVIDENCES ON THE GROUND THAT THE ASSESSE E HAS FAILED TO PRODUCE THE SAME BEFORE THE LOWER AUTHORITIES INSPITE OF SE VERAL OPPORTUNITIES GIVEN DURING THE ASSESSMENT PROCEEDINGS AND FIRST APPELLA TE PROCEEDINGS AND EVEN DURING THE PENALTY PROCEEDINGS. 14. HAVING HEARD BOTH THE PARTIES WE FIND THAT TH OUGH THE ASSESSEE IS ENTITLED TO PRODUCE THE EVIDENCES EVEN DURING THE PENALTY PROCEEDINGS THE ASSESSEE HAS FAILED TO DO SO. HOW EVER HAVING GONE THROUGH THE ADDITIONAL EVIDENCES FILED BEFORE US W E FIND THAT THEY ARE VERY ESSENTIAL FOR PROPER ADJUDICATION OF THE PROCEEDING S PARTICULARLY BECAUSE PENALTY PROCEEDINGS ARE QUASI-CRIMINAL IN NATURE BU T THEY NEED VERIFICATION BY THE ASSESSING OFFICER. THEREFORE IN THE INTERE ST OF JUSTICE WE DEEM IT FIT AND PROPER TO ADMIT THE ADDITIONAL EVIDENCES AN D REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND DENOVO CONSIDERATION IN ACCORDANCE WITH LAW. THUS GROUNDS 6 TO 11 ARE ALLO WED FOR STATISTICAL PURPOSES. PAGE 7 OF 7 ITA NOS.822 & 823/BANG/2009 7 15. AS REGARDS GROUNDS 6 TO 11 ON THE MERITS OF TH E PENALTY FOR ASST. YEAR 1999-2000 WE FIND THAT THE ASSESSEE HAS NOT FILED ANY DETAILS BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS OR DURING THE PENALTY PROCEEDINGS. NO EVIDENCE IS FILED BEFO RE US EITHER. THEREFORE THIS GROUND OF APPEAL IS ALLOWED AND ORDER OF ASSES SING OFFICER IS RESTORED. GROUNDS OF APPEAL 6 TO 11 ARE THUS ALLOWED. 16. IN THE RESULT THE REVENUES APPEAL FOR THE AS ST. YEAR 1999-2000 IS ALLOWED AND FOR ASST. YEAR 2005-06 THE APPEAL I S PARTLY ALLOWED. THE ORDER PRONOUNCED ON WEDNESDAY THE 19TH. OF MAY 2010 AT BANGALORE. SD/- SD/- (A MOHAN ALANKAMONY) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL ME MBER COPY TO : 1) THE ASSESSEE (2) THE REVENUE (3) TH E CIT(A) CONCERNED. (4) THE CIT CONCERNED. (5) THE DR (6) GUARD FILE. (7) GUARD FILE NEW DELHI. MSP/17.5 BY ORDER ASST. REGISTRAR ITAT BANGALORE.