ACIT, Bangalore v. Sri G. Dasharatharami Reddy, Bangalore

ITA 824/BANG/2009 | 1999-2000
Pronouncement Date: 19-05-2010 | Result: Allowed

Appeal Details

RSA Number 82421114 RSA 2009
Bench Bangalore
Appeal Number ITA 824/BANG/2009
Duration Of Justice 9 month(s) 1 day(s)
Appellant ACIT, Bangalore
Respondent Sri G. Dasharatharami Reddy, 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.824 TO 830 & 874 TO 877/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.824 TO 830/BANG/2009 (ASST. YEARS 2000-01 TO 2005-06) THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-1(2) BANGALORE. -APPELLANT VS SHRI G DASHARATHARAMI REDDY G-1 EDEN AULAC APARTMENTS OLD MADRAS ROAD INDIRANAGAR BANGALORE. - RESPONDENT ITA NOS.874 TO 877/BANG/2009 (ASST. YEARS 2002-03 TO 2005-06) THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-1(2) BANGALORE. -APPELLANT VS SHRI G DASHARATHARAMI REDDY L/R OF LATE SHRI G PAPI REDDY G-1 EDEN AULAC APARTMENTS OLD MADRAS ROAD INDIRANAGAR BANGALORE. - RESPON DENT 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 DELETING THE P ENALTY LEVIED U/S PAGE 2 OF 7 ITA NOS.824 TO 830 & 874 TO 877/BANG/2009 2 271(1)(C) OF THE I T ACT BOTH ON TECHNICAL GROUND A S WELL AS ON MERITS. THE COMMON GROUNDS OF APPEAL AS RAISED FOR ASST. YEAR 2 000-01 ARE AS UNDER:- 2) THE LEARNED CIT(A) ERRED IN DELETING THE PENALTY OF RS.13 500/- LEVIED U/S 271(1)(C) OF THE IT ACT 196 1 BOTH ON TECHNICAL GROUNDS AND ON MERITS. 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.67 000/- AS UNEXPLAINED CASH CREDIT WAS 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 PAGE 3 OF 7 ITA NOS.824 TO 830 & 874 TO 877/BANG/2009 3 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. 11) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT SECTION 292C IS APPLICABLE IN THE INSTANT CASE. 2. IN ALL THESE APPEALS BRIEF FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DIRECTOR OF M/S MAHASAI DEVELOPERS P VT. LTD. AND A DEALER IN REAL ESTATE. A SEARCH U/S 132 OF THE I T ACT WA S CONDUCTED ON 23.7.2004 IN THE PREMISES OF THE ASESSEE AND SOME DOCUMENTS W ERE SEIZED. ON THE BASIS OF THE SEIZED DOCUMENTS THE ASSESSING OFFICE R MADE ADDITIONS TO THE INCOME RETURNED U/S 153A OF THE I T ACT IN EACH OF THE ASSESSMENT YEARS INVOLVED AND ALSO LEVIED PENALTY U/S 271(1)(C) OF T HE I T ACT. THE ADDITIONS ARE MAINLY ON ACCOUNT OF CASH CREDITS WH ICH THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN BY FILING ANY CONFIRMATIONS AN D OTHER DETAILS. THE ASSESSEE ACCEPTED THE ADDITIONS AND PAID THE TAXES THEREON. HOWEVER EVEN DURING THE PENALTY PROCEEDINGS THE ASSESSEE COULD NOT FILE ANY DETAILS AND THE ASSESSING OFFICER LEVIED THE PENALTY. 3. ON APPEAL THE ASSESSEE TOOK OBJECTION ON THE G ROUND OF VALIDITY OF INITIATION OF PENALTY PROCEEDINGS AS WE LL AS MERITS OF THE LEVY OF PENALTY. 4. AS REGARDS THE VALIDITY OF JURISDICTION ASSUMED FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I T ACT T HE CIT(A) FOLLOWED HIS PAGE 4 OF 7 ITA NOS.824 TO 830 & 874 TO 877/BANG/2009 4 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 A SST. YEARS 1999- 2000 & 2005-06 FOR COMING TO THE CONCLUSION THAT THE DIRECTION FOR CHARGING OF INTEREST AND INITIATION OF PENALTY PROC EEDINGS U/S 271(1)(C) MUST PRECEDE THE WORDS ISSUE DN&C WHICH IS NOT T HE CASE HERE. HE THEREFORE HELD THAT THE PENALTY PROCEEDINGS HAVE NO T BEEN INITIATED AT ALL IN THESE CASES AND THE LEVY OF PENALTY IS WITHOUT JURI SDICTION. HE THEREFORE ANNULLED THE PENALTY. 5. AS REGARDS TO LEVY OF PENALTY ON THE ADDITION M ADE ON ACCOUNT OF CASH CREDIT AS WELL AS THE JEWELS FOUND DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE CIT(A) CAME TO THE CONCLUSION THAT PENALTY IS NOT LEVIABLE U/S 271(1)(C) OF THE I T ACT BECAUSE TO EACH QUERIE S ON NOTING OF SEIZED DOCUMENTS EXPLANATION HAS BEEN OFFERED ALONG WITH AGREEMENT FOR ADDITION AND THOUGH IT IS GOOD REASON FOR ADDITION IN ASSESS MENT PROCEEDING IT IS NOT GOOD ENOUGH FOR LEVY OF PENALTY BECAUSE NO FINDING HAS BEEN GIVEN ON THE VERACITY OF THE EXPLANATION. HE ALSO FOLLOWED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF VIRTUAL SOFT SYSTEMS L TD. V CIT 289 ITR 83. ACCORDINGLY HE DELETED THE PENALTY FOR ASST. YEAR 1999-2000. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) FOR ALL TH E ASST. YEARS THE REVENUE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY ADMITTED THAT THE GROUNDS 3 TO 5 RELATES TO TECHNICAL ISSUE I.E. WHETHER PENALTY PROCEEDINGS WERE VALIDLY INITIATED DURING T HE COURSE OF ASSESSMENT PROCEEDINGS OR NOT IS COVERED IN FAVOUR OF THE REV ENUE BY THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHR I JOHN MOHAN REDDY IN PAGE 5 OF 7 ITA NOS.824 TO 830 & 874 TO 877/BANG/2009 5 ITA NOS.834 TO 838/BANG/2009 FOR THE ASST. YEARS 19 99-00 TO 2004-05 AND COPY OF THE SAID ORDER IS PRODUCED BEFORE US. 8. ON GOING THROUGH THE SAID ORDER WE FIND THAT T HE 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. 9. THE LEARNED DR ALSO RELIED ON THE ABOVE 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 APPEAL OF THE REVENUE I.E. 3 4 & 5 AS REGARDS THE VALIDITY OF THE PENALTY LEVIED . 10. AS REGARDS THE MERITS OF LEVY OF PENALTY FOR ALL THE ASST. YEARS CONCERNED IN GROUNDS 6 TO 11 WE FIND THAT THE ASSE SSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE BEFORE THE LOWER AUTHORITIES I N SUPPORT OF HIS CONTENTION BUT CIT(A) HAS DELETED THE PENALTY HOLDI NG THAT ASSESSING OFFICER HAS NOT GIVEN ANY FINDING ON THE VERACITY O F THE EXPLANATION GIVEN BY THE ASSESSEE. HOWEVER BEFORE US THE ASSESSEE HAS FILED AN APPLICATION UNDER RULE 29 OF THE INCOME TAX APPELLATE RULES 19 63 SEEKING ADMISSION OF ADDITIONAL EVIDENCES IN SUPPORT OF HIS CONTENTION. THE ASSESSEE HAS FILED A COPY OF THE LEDGER EXTRACT FOR SUNDRY CREDITORS ALONG WITH THEIR CONFIRMATIONS. IT WAS SUBMITTED THAT TH ESE EVIDENCES ARE VERY PAGE 6 OF 7 ITA NOS.824 TO 830 & 874 TO 877/BANG/2009 6 MUCH ESSENTIAL FOR ADJUDICATION OF THIS ISSUE AND T HE ASSESSEE IS ENTITLED TO FILE THESE EVIDENCES EVEN DURING PENALTY PROCEEDING S. HE THEREFORE PRAYED THAT THE EVIDENCES MAY BE ADMITTED AND CONSIDERED. 11. THE LEARNED DR HOWEVER OPPOSED THE ADMISSION O F ADDITIONAL EVIDENCES ON THE GROUND THAT THE ASSESSEE HAS FAILE D TO PRODUCE THE SAME BEFORE THE LOWER AUTHORITIES INSPITE OF SEVERAL OPP ORTUNITIES GIVEN DURING THE ASSESSMENT PROCEEDINGS AND FIRST APPELLATE PROC EEDINGS AND EVEN BEFORE US. 12. HAVING HEARD BOTH THE PARTIES WE FIND THAT IT IS THE DUTY OF THE ASSESSEE TO SUBSTANTIATE ITS CLAIM WITH NECESSARY E VIDENCE AND MERE EXPLANATION IS NOT SUFFICIENT AND THE ASSESSEE IS E NTITLED TO PRODUCE THE EVIDENCES EVEN DURING THE PENALTY PROCEEDINGS. THE ASSESSEE HAS FAILED TO DO SO. HOWEVER HAVING GONE THROUGH THE ADDITIONAL EVIDENCES FILED BEFORE US WE FIND THAT THEY NEED VERIFICATION BY THE ASSE SSING OFFICER AND ARE VERY ESSENTIAL FOR PROPER ADJUDICATION OF THE ISSUE PARTICULARLY BECAUSE PENALTY PROCEEDINGS ARE QUASI-CRIMINAL IN NATURE. THEREFORE IN THE INTEREST OF JUSTICE WE DEEM IT FIT AND PROPER TO ADMIT THE ADDITIONAL EVIDENCES AND REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICE R FOR VERIFICATION AND DENOVO CONSIDERATION IN ACCORDANCE WITH LAW. THESE GROUNDS I.E. GROUNDS 6 TO 11 ARE ACCORDINGLY ALLOWED FOR STATISTICAL PUR POSES. 13. IN THE RESULT THE REVENUES APPEALS FOR ALL T HE ASST. YEARS CONCERNED ARE PARTLY ALLOWED. PAGE 7 OF 7 ITA NOS.824 TO 830 & 874 TO 877/BANG/2009 7 THE ORDER PRONOUNCED ON WEDNESDAY THE 19TH OF MA Y 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.