Sri. K. Narayana Gowda, Bangalore v. ACIT, Bangalore

ITSSA 4/BANG/2011 | misc
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 421116 RSA 2011
Assessee PAN ADMPN2370D
Bench Bangalore
Appeal Number ITSSA 4/BANG/2011
Duration Of Justice 1 year(s) 2 month(s) 3 day(s)
Appellant Sri. K. Narayana Gowda, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-03-2012
Date Of Final Hearing 08-02-2012
Next Hearing Date 08-02-2012
Assessment Year misc
Appeal Filed On 27-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N. BARAT H VAJA SANKAR VICE - PRESIDENT A ND SMT. P.MADHAVI DEVI JUDICIAL MEMBER IT(SS)A NO.04(BANG)/2011 (BLOCK PERIOD: FROM 1-4-1996 TO 18-12-2002) SHRI K.NARAYANA GOWDA NO.193 3 RD MAIN 5 TH CROSS CHAMARAJPET BANGALORE. PAN: ADMPN 2370 D VS. APPELLANT ASST. COMMISSIONER OF INCOME - TAX CIRCLE 3(1) BANGALORE. RESPONDENT APPELLANT BY: SHRI S.PARTHASARATHI ADVOCATE . RESPONDENT BY : SHRI F ARAHAT HUSSAIN QURESHI CIT - II DATE OF HEARING: 08 - 02 - 2012 DATE OF PRONOUNCEMENT: 30 - 03 - 2012 O R D E R PER N.BARATHVAJA SANKAR VP: THIS IS AN APPEAL PREFERRED BY SHRI K.NARAYANA GOW DA OF BANGALORE FOR THE BLOCK PERIOD 1-4-1996 TO 18-12-20 02 AGAINST THE ORDER DATED 29-10-2010 OF THE CIT(A)-II BANGAL ORE CONFIRMING THE PENALTY LEVIED U/S 158BFA(2) OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED TO AS 'THE ACT']. IT(SS)A 04(BANG)/2011 PAGE 2 OF 5 2. THE GROUNDS OF APPEAL OF THE ASSESSEE READ AS U NDER: 1 TH E LEARNED COMMISSIONER OF INCOME-TAX(A) ERRED IN CO NFIRMING ORDER OF THE ASSESSING OFFICER U/S.158BFA(2) LEVYIN G PENALTY IN THE MANNER IN WHICH HE DID. 2 THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING AUTHORITY UNDER SECTION 158BFA(2) WHICH WAS PASSED WITHIN THE PERIOD OF LIMITATION AND THE ORDER LEVYING PENALTY IS BAD IN LAW AS THE SAME WAS BARRED BY LIMITATION . 3 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE PE NALTY UJS.158BFA (2) WAS NOT AUTOMATIC WHEN IMPUGNED ADDI TIONS ARE MADE TO THE DECLARED INCOME AS HELD IN THE FOLLOWIN G CASES AND OUGHT TO HAVE REFRAINED FROM LEVYING PENALTY UJS.15 8BFA(2) OF THE ACT . CIT VS . MORADABAD GENERAL ART METAL MILLS (2006) 282 ITR 510 (ALL) SURESH REDDY VS. ACIT (2009) 308 ITR( AT) 278 (CHENNAI) ENFIELD INDUSTRIES LTD VS. DCIT (2008) 296 ITR (AT )136 (KOL) SALUJA HIRE PURCHASE LTD VS . ACIT (2008) 305 ITR(AT) 39 (LUCKNOW) 305 DCIT VS. KOATEX INFRASTRUCTURE LTD (2006) 286 ITR (AT)40 (MUM) SUPER METAL INDUSTRIES VS. DCIT (2 0 09) 23 DTR 249 (THIRD MEMBER) (MUM) 4 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT W HILE SELLING THE APPELLANT DID NOT CONVERT THE LAND TO NON - AGRICULTURAL PURPOSES; THE LAND WAS SITUATED BEYOND THE CITY LIM ITS AND THAT PROPERTY AT KARUDAPALLI VILLAGE DID NOT BELONG TO T HE APPELLANT ; THE PROPERTY AT CHAMRAJPET WHICH WAS IMPROVED BY THE AP PELLANT WAS SMALL AND NOT HABITABLE AND THEREFORE THE APPELLANT ' S CLAIM FOR EXEMPTION UJS.54F WAS VALID AND CONSEQUENTLY NO PEN ALTY U J S.158BFA(2) WAS ELIGIBLE. 5 WITHOUT PREJUDICE THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE UNDISCLOSED INCOME HAVING BEEN WORKED OUT ON AN ESTIMATE BASIS PENALTY U/S . 158BFA(2) WAS NOT EXIGIBLE AND OUGHT TO HAVE REFRAINED FROM CONFIRMING THE PENALTY. 6 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT T HE APPELLANT FILED HIS RETURN OF INCOME U/S.158C OF THE ACT AND HAD ALSO EXPLAINED THE VARIOUS SOURCES OF INCOME AND INVESTM ENTS MADE AND HAD FILED CASH FLOW STATEMENT WHICH INCLUDED SU BSTANTIAL AGRICULTURAL INCOME WHICH WERE AVAILABLE FOR VARIOU S INVESTMENTS MADE BY HIM . THUS THERE WAS NO CONCEALMENT OF INCOME WHILE FILING THE RETURN AND MERE DISALLOWANCE OF THE CLAI M OF THE APPELLANT DID NOT JUSTIFY THE LEVY OF PENALTY . IT(SS)A 04(BANG)/2011 PAGE 3 OF 5 7 WITHOUT PREJUDICE THE PENALTY LEVIED IS ARBITRARY EXCESSIVE AND THE SAME IS LIABLE TO BE DELETED IN TOTO. 3. AT THE TIME OF HEARING LEARNED COUNSEL FOR AS SESSEE SUBMITTED THAT THE HONBLE HIGH COURT OF KARNATAKA IN ITA NO.37/2011 C/W ITA NOS.38 & 44/2011 DATED 13-09-201 1 HAD SET ASIDE THE ORDER OF THE TRIBUNAL ON THE QUANTUM ADDITION TO THE ASSESSING AUTHORITY FOR REDOING THE WHOLE THING IN THE LIGHT OF THEIR OBSERVATIONS THEREIN. HENCE HE REQUESTED THAT PENALTY MATTER MAY ALSO BE RESTORED TO THE AO WITH A DIRECT ION TO TAKE UP THE SAME AFTER DECIDING THE QUANTUM APPEAL AS DI RECTED BY THE HONBLE HIGH COURT OF KARNATAKA. HE ALSO FILED ON RECORD COPY OF THE HIGH COURT ORDER. WE HAVE ALSO HEARD T HE LEARNED DEPARTMENTAL REPRESENTATIVE WHO SUPPORTED THE ORDER OF THE CIT(A) AND THE AO. 4. WE HAVE GONE THROUGH THE ORDER OF THE HONBLE HIGH COURT WHICH WAS FILED AT THE TIME OF HEARING AND PL ACED AT PAGES 71 TO 80 OF THE PAPER BOOK. ON GOING THROUGH THE ORDER OF THE HONBLE HIGH COURT WE FIND THAT THE MATTER WAS REMITTED BACK TO THE APPELLATE AUTHORITY FOR RECORDING THE W HOLE THING IN LIGHT OF THEIR OBSERVATIONS (VIDE PARA 9 OF THE HI GH COURT ORDER). WHEN THE SAME WAS BROUGHT TO THE NOTICE OF THE LEARNED COUNSEL FOR THE ASSESSEE IT WAS SUBMITTED THAT IT WAS A TYPOGRAPHICAL ERROR IN THE ORDER OF THE HIGH COURT AND HE WOULD GET IT CORRECTED AND FILE A CORRECTED COPY. ON 22- 3-2012 THE JUNIOR OF LEARNED COUNSEL FOR THE ASSESSEE PLACED O N RECORD A RECTIFIED COPY OF THE HIGH COURTS ORDER IN ITA NO. 37/2011 C/W IT(SS)A 04(BANG)/2011 PAGE 4 OF 5 ITA NOS.38 & 44/2011 ON WHICH THERE IS AN ENDORSEME NT OF THE LEARNED DEPARTMENTAL REPRESENTATIVE HAVING RECEIVED A COPY OF THE ORDER. ON GOING THROUGH THIS CORRECTED ORDER WE FIND THAT THE HONBLE HIGH COURT HAS RECTIFIED THE TYPOGRAPHI CAL MISTAKE BY REPLACING THE WORDS ASSESSING AUTHORITY IN PLA CE OF APPELLATE AUTHORITY AT PAGE 9 OF THE SAID ORDER. AT PARAGRAPHS 7 AND 8 OF THE ORDER OF THE HONBLE HIGH COURT IT IS OBSERVED AS UNDER: 7. THE FACT THAT HE OWNED THREE PROPERTIES IS NOT DISPUTED. BUT WHAT IS DISPUTED IN THOSE THREE PROPE RTIES ARE RESIDENTIAL PROPERTIES. ON THIS ASPECT THE AUTHORITIES HAVE NOT APPLIED THEIR MIND. IF AS ON 1-4- 2001 THE ASSESSEE OWNS THREE RESIDENTIAL PROPERTIE S AND IF HE HAS ACQUIRED ONE MORE RESIDENTIAL PROPERT Y SUBSEQUENT THEREOF THEN AS PER THE AMENDMENT ON 1- 4-2001 HE WOULD NOT BE ENTITLED TO THE EXEMPTION O F CAPITAL GAINS TAX. IF AS ON 1-4-2001 THE ASSESSEE OWNS ONE RESIDENTIAL PROPERTY AND OUT OF THE SALE PROCEE DS IN THE SALES EFFECTED SUBSEQUENT TO 1-4-2001 HE HAS ACQUIRED ON MORE RESIDENTIAL PROPERTY TO THE EXTEN T OF ACQUISITION OF ONE MORE RESIDENTIAL PROPERTY HE IS ENTITLED TO EXEMPTION UNDER SECTION 54 OF THE ACT. THIS EXERCISE HAS TO BE DONE BY THE AUTHORITIES BY PROPE RLY LOOKING INTO THE MATERIALS PRODUCED BY THE ASSESSEE AND IF HE SATISFIES THE CONDITIONS MENTIONED THEREIN TH EN ONLY HE WILL BE ENTITLED TO THE RELIEF. AS THIS EX ERCISE HAS NOT BEEN DONE WE SET ASIDE THAT PORTION OF THE ORDER AND REMAND THE MATTER TO THE APPELLATE AUTHOR ITY FOR UNDERTAKING THAT EXERCISE. EXTRACT 8. INSOFAR AS THE TOTAL AMOUNT OF UNDISCLOSE D INCOME ARRIVED AT BY THE AUTHORITIES IN THESE THREE APPEALS IS CONCERNED THOUGH THE ASSESSEE HAS NOT F ILED THE RETURNS FOR THE RELEVANT YEARS ALL THE INCOME CANNOT BE TREATED AS UNDISCLOSED INCOME. WHEN ONCE THE ASSESSEE HAS FILED THE RETURNS SHOWED ALL THE INCO ME AND SHOWED ALL THE INVESTMENTS THE AUTHORITIES HAV E TO LOOK INTO THE SOURCE OF THOSE INVESTMENTS AND IF TH AT SOURCE IS ALREADY DISCLOSED CERTAINLY THAT CANNOT F ORM PART OF UNDISCLOSED INCOME. OTHERWISE TELESCOPING HAS TO BE DONE WHICH EXERCISE ALSO HAS NOT BEEN DONE B Y THE AUTHORITIES. IF THE ASSESSEE IS ABLE TO SHOW T HAT HE IT(SS)A 04(BANG)/2011 PAGE 5 OF 5 HAD INCOME AND OUT OF THAT INCOME HE HAD MADE INVESTMENTS AND IT IS ONLY OVER AND ABOVE THE INCOM E IF THE INCOME IS DISCLOSED THAT WOULD CONSTITUTE UNDISCLOSED INCOME. ANYHOW THIS IS PURELY A QUESTI ON OF FACT TO BE DETERMINED AFTER LOOKING INTO THE ENTIRE MATERIAL ON RECORD. THE AUTHORITIES HAVE ALSO NOT PROPERLY APPLIED THEIR MIND IN THIS REGARD. THEREFO RE THE SAID FINDING ALSO REQUIRES TO BE SET ASIDE. TH E MATTER HAS TO BE REMANDED BACK TO THE ASSESSING AUTHORITY FOR REDOING THE WHOLE THING IN THE LIGHT OF THE ABOVE OBSERVATIONS. SINCE THE QUANTUM ORDER OF THE TRIBUNAL HAS BEEN RE STORED TO THE FILE OF THE AO WE DEEM IT FIT AND PROPER TO RE STORE THIS PENALTY MATTER ALSO TO THE FILE OF THE ASSESSING AU THORITY TO INITIATE NECESSARY ACTION AFTER COMPLETING THE QUAN TUM PROCEEDINGS AS DIRECTED BY THE HONBLE HIGH COURT. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH 2012. SD/- SD/- (SMT. P.MADHAVI DEVI) JUDICIAL MEMBER (N .BARATHVAJA SANKAR) VICE-PRESIDENT EKS COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR ITAT BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE