Shri Vinod C Gnadhi L/h of late Chandrakant A.Gnadhi, Ahmedabad v. The ACIT.,Circle-3,, Ahmedabad

ITSSA 594/AHD/2012 | misc
Pronouncement Date: 04-10-2013 | Result: Allowed

Appeal Details

RSA Number 59420516 RSA 2012
Assessee PAN AJUPG6416F
Bench Ahmedabad
Appeal Number ITSSA 594/AHD/2012
Duration Of Justice 9 month(s) 29 day(s)
Appellant Shri Vinod C Gnadhi L/h of late Chandrakant A.Gnadhi, Ahmedabad
Respondent The ACIT.,Circle-3,, Ahmedabad
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 04-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 04-10-2013
Date Of Final Hearing 26-09-2013
Next Hearing Date 26-09-2013
Assessment Year misc
Appeal Filed On 05-12-2012
Judgment Text
A IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH . .. . . .. . !' !' !' !' #$ %&'( #$ %&'( #$ %&'( #$ %&'( )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA VICE-PRESIDENT AND ANIL CHATURVEDI ACCOUNTANT MEMBER) IT(SS)A NO.594/AHD/2012 [BLOCK PERIOD 1.4.1986 TO 1.8.1996] LATE SHRI CHANDRAKANT A. GANDHI BY L/H. SHRI VINOD C. GANDHI 119 BRAHMPURI NI POLE PATASA POLE GANDHI ROAD AHMEDABAD 380 001. PAN : AJUPG 6416 F /VS. THE ACIT CIR.3 AHMEDABAD. ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) 1& 2 3 )/ ASSESSEE BY : SHRI S.N. DIVETIA + 2 3 )/ REVENUE BY : SHRI O.P. BATHEJA SR.DR. 5 2 &(*/ DATE OF HEARING : 26 TH SEPTEMBER 2013 678 2 &(*/ DATE OF PRONOUNCEMENT : 04.10.2013 )9 / O R D E R PER G.C. GUPTA VICE-PRESIDENT : THIS APPEAL BY THE ASSESSEE FOR THE BLOCK PERIOD 1.4.1986 TO 1.8.1996 IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XXI AHMEDABAD DAT ED 6.11.2012. IT(SS)A NO.594/AHD/2012 -2- 2. THE ONLY ISSUE IN THIS APPEAL IS REGARDING VALID ITY OF PENALTY LEVIED UNDER SECTION 158BFA(2) OF THE I.T.ACT 1961 . THE GROUND NO.2.1 IS A LEGAL ISSUE RAISED BY THE ASSESS EE AND IS BEING TAKEN UP FIRST FOR DISPOSAL. THE GROUND NO.2.1 OF THE ASSESSEE IS AS UNDER: 2.1 THE IMPUGNED ORDER PASSED BY THE AO ON THE DECEASED ASSESSEE LATE SHRI CHANDRAKANT A. GANDHI IS BAD IN LAW AND ILLEGAL BECAUSE HIS SON SHRI VINOD C . GANDHI WAS BROUGHT ON RECORD AS HIS LEGAL HEIR AND REPRESENTATIVE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE PENALTY ORDER PASSED UNDER SECTION 158BFA(2) OF THE ACT WAS ON THE DEAD PERSON LATE SHRI CHANDRAKANT A. GANDHI. HE SUBMITTED THAT THE FACT THAT THE ASSESSEE HAS EXPIRED WAS BRO UGHT TO THE NOTICE OF THE AO TIME AND AGAIN AND STILL THE AO P ASSED PENALTY ORDER IN THE NAME OF DEAD ASSESSEE. HE REFERRED TO THE SHOW CAUSE NOTICE ISSUED BY THE AO DATED 1.3.2011 IN THE NAME OF THE DEAD ASSESSEE. HE REFERRED TO THE COPY OF THE RECT IFICATION APPLICATION DATED 17.2.2011 FILED BY THE SON OF THE DECEASED ASSESSEE WITH THE AO INTIMATING THAT THE ASSESSEE SHRI CHANDRAKANT A. GANDHI HAS EXPIRED. HE SUBMITTED TH AT LAW IS SETTLED ON THIS ISSUE THAT THE PENALTY IMPOSED ON D EAD PERSON IS NULL AND VOID. THE LEARNED DR HAS OPPOSED THE SUBM ISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT NOT MENTIONING THE NAME OF SON OF LATE ASSESSEE AS LEGA L HEIR OF HIS FATHER IS MERELY A CLERICAL AND TYPOGRAPHIC MISTAKE WHICH DOES NOT RENDER THE ORDER IMPOSING THE PENALTY AS NULL A ND VOID. HE IT(SS)A NO.594/AHD/2012 -3- SUBMITTED THAT THE AO HAS ALLOWED OPPORTUNITY OF HE ARING TO THE ASSESSEE AND THAT THE CLERICAL ERROR HAS NOT RESUL TED IN ANY ADVERSE EFFECT ON THE PROCEEDINGS WITHIN THE MEANIN G OF SECTION 292B OF THE ACT. HE RELIED ON THE FOLLOWING DECISI ONS:- I) SMT. SWARAN KANTA VS. CIT 44 TAXMAN 68 (PUNJ. & HAR.); II) CIT VS. JAGAT NOVEL EXHIBITORS P. LTD. 18 TAXMANN.COM 138 (DELHI); III) SMT. TAPATI PAL VS. CIT 124 TAXMAN 123 (CAL); IV) ACIT VS. NAGESHWAR PRASAD 63 ITD 29 (PAT.)(TM); IN SUPPORTED THE CASE OF THE REVENUE. HE RELIED ON THE ORDER OF THE AO AND THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ORDER IMPOSING PENALTY UNDER SECTION 158BFA(2) OF THE ACT HAS BEEN PASSED IN THE NAME OF THE ASSESSEE LATE SHRI CHANDRAKANT A. G ANDHI. WE FIND THAT SON OF LATE SHRI CHANDRAKANT A. GANDHI WA S NOT IMPLEADED AS A LEGAL HEIR IN THE ORDER IMPOSING PEN ALTY ON THE LATE ASSESSEE. WE FIND THAT IT IS WELL SETTLED THAT NO PENALTY CAN BE LEGALLY IMPOSED ON DEAD PERSON AND THE ORDER IMPOS ING PENALTY ON A DECEASED PERSON SHALL BE NULL AND VOID. THE D ECISIONS RELIED UPON BY THE LEARNED DR ARE CLEARLY DISTINGUISHABLE. IN SMT.SWARAN KANTA VS. CIT (SUPRA) THE FACTS WERE TH AT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 4.9.1975 AND DURING THE PENDENCY OF THE ASSESSMENT PROCEEDINGS HE DIED ON 7.3.1997. HOWEVER IN THE ASSESSMENT PROCEEDINGS HIS WIDOW WA S IT(SS)A NO.594/AHD/2012 -4- IMPLEADED AND NOTICE WAS ISSUED TO HER AS LEGAL HEI R OF THE ASSESSEE . THE ASSESSMENT WAS FINALISED IN THE PRESENCE OF WIDOW OF THE ASSESSEE ON 10.3.1978 AND IN THESE FACTS T HE HONBLE HIGH COURT HELD THAT MERELY BY VIRTUE OF MISTAKE THE NAM E OF THE DECEASED WAS WRITTEN AT THE TOP OF THE ASSESSMENT O RDER WHICH WAS SIMPLY A CLERICAL ERROR WHICH HAS NO ADVERSE EF FECT ON THE PROCEEDINGS WITHIN THE MEANING OF SECTION 292B OF T HE ACT. HOWEVER THE HONBLE HIGH COURT IN THE SAME PARA-3 OF ITS ORDER HAS MADE IT CLEAR THAT NO DOUBT AN ORDER PASSED O N A DEAD PERSON IS NULL AND VOID BUT IN THE CASE IN HAND OR DER WAS NOT PASSED ON THE DEAD PERSON BUT ON THE LEGAL HEIR OF THE DECEASED. THE HONBLE HIGH COURT FURTHER OBSERVED THAT THE SI TUATION WOULD HAVE BEEN DIFFERENT IF THE ITO HAD NOT IMPLEADED T HE LEGAL HEIR AND IF HE HAD NOT GIVEN ANY HEARING TO THE LEGAL HE IR AND IN THAT EVENT IT COULD HAVE BEEN SAID THAT THE ORDER WAS P ASSED ON THE DECEASED. WE FIND THAT IN THE CASE BEFORE US SHRI VINOD C. GANDHI SON OF THE DECEASED ASSESSEE WAS NEVER IMPL EADED AS A LEGAL HEIR OF HIS DECEASED FATHER. WE FIND THAT RE VENUE HAS NOT PLACED ANY MATERIAL BEFORE US TO SUGGEST THAT ANY O RDER BRINGING THE LEGAL HEIR OF THE DECEASED ASSESSEE ON RECORD WAS PASSED BY THE AO EVEN IN THE ORDER SHEET MAINTAINED BY HIM AND INTIMATED TO THE LEGAL HEIR OF THE ASSESSEE. THE FACTS OF TH E CASE BEFORE US ARE CLEARLY AT VARIANCE WITH THE FACTS OF THE CASE BEFORE THE HONBLE HIGH COURT. IN THE CASE BEFORE THE HONBLE HIGH COURT DURING THE PENDENCY OF THE ASSESSMENT PROCEEDINGS THE WIDOW OF THE DECEASED ASSESSEE WAS IMPLEADED AS A LEGAL HEIR AND IT(SS)A NO.594/AHD/2012 -5- THEREAFTER A FINDING HAS BEEN RECORDED THAT THE IT O FOLLOWED THE PROCEDURE CORRECTLY AS PROVIDED BY SECTION 159 AND COMPLETED THE PROCEEDINGS. THE HONBLE COURT FOUND THAT TITLE O F THE ORDER WHICH WAS NOT HAPPILY WORDED WOULD NOT MAKE THE AS SESSMENT ORDER INVALID. IN THE CASE BEFORE THE HONBLE HIG H COURT IT WAS SPECIFICALLY RECORDED BY THE HONBLE HIGH COURT THA T THE ORDER WAS NOT PASSED ON THE DEAD PERSON BUT ON THE LEGAL HEIR OF THE DECEASED. NO SUCH FACTS ARE PRESENT IN THE CASE BE FORE US. THERE IS NOTHING ON RECORD TO SUGGEST THAT AT ANY POINT O F TIME DURING THE PENDENCY OF PENALTY PROCEEDINGS THE LEGAL HEIR OF THE DECEASED ASSESSEE WAS IMPLEADED AND BROUGHT ON RECO RD. WE FIND THAT IN THE FACTS OF THE CASE OF THE ASSESSEE THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT RATHER SUPPORT S THE CASE OF THE ASSESSEE. IN THESE FACTS OF THE CASE WE CO NCLUDE THAT IT WAS NOT MERELY A CLERICAL MISTAKE BUT SINCE THE ORDER IMPOSING THE PENALTY WAS PASSED ON THE DEAD PERSON THE SAME IS NULL AND VOID AND PENALTY IS LIABLE TO BE CANCELLED ON THIS GROUN D ALONE. 5. IN THE CASE OF CIT VS. JAGAT NOVEL EXHIBITORS (P ) LTD. (SUPRA) RELIED UPON BY THE LD. DR THE ISSUE BEFOR E THE HONBLE HIGH COURT WAS DIFFERENT AND THE ISSUE WAS THAT RE GARDING OBJECT AND PURPOSE BEHIND SECTION 292B IS THAT TECHNICAL P LEAS ON THE GROUND OF MISTAKE DEFECT OR OMISSION IN SUMMONS/NO TICE SHOULD NOT INVALIDATE ASSESSMENT PROCEEDINGS WHEN NO CONF USION OR PREJUDICE IS CAUSED DUE TO NON-OBSERVANCE OF TECHNI CAL FORMALITIES. IN THIS CASE BEFORE THE HONBLE HIGH COURT THE PLEA OF THE ASSESSEE WAS THAT THE NOTICE WAS ISSUED UNDE R SECTION 148 IT(SS)A NO.594/AHD/2012 -6- WERE DEFECTIVE AS THE WORDS PRIVATE LIMITED WERE MISSING. HOWEVER THE ADDRESS MENTIONED ON ALL NOTICES WAS C ORRECT. IN THESE FACTS THE HONBLE HIGH COURT HELD THAT THE P ROVISION OF SECTION 292B SHALL APPLY AND THE OBJECT AND PURPOSE BEHIND SECTION 292B IS TO ENSURE THAT THE TECHNICAL PLEA O N THE GROUND OF MISTAKE DEFECT OR OMISSION IN SUMMONS/NOTICE WOULD NOT INVALIDATE THE ASSESSMENT PROCEEDINGS WHEN NO CONF USION OR PREJUDICE IS CAUSED DUE TO NON-OBSERVANCE OF TECHNI CAL FORMALITIES. IN THE CASE BEFORE US THE ISSUE IS T OTALLY DIFFERENT AND THE ISSUE IS WHETHER THE ORDER IMPOSING PENALTY COULD VALIDLY BE PASSED ON THE DECEASED ASSESSEE AND IN VIEW OF THE FACT THAT LEGAL HEIR WAS NEVER BROUGHT ON RECORD. 6. IN THE CASE OF SMT.TAPATI PAL VS. CIT (SUPRA) RE LIED UPON BY THE LEARNED DR THE FACTS WERE THAT ONE DR.G.C. NANDI DIED ON 28.7.1985 AND THE ASSESSMENTS WERE COMPLETED ON 25.3.1986 ON THE LEGAL HEIR SMT.TAPATI PAL AND THE PENALTY P ROCEEDINGS WERE ALSO INITIATED AGAINST LEGAL REPRESENTATIVE. THE HONBLE HIGH COURT APPROVED THE ORDER OF THE TRIBUNAL HOLDI NG THAT THE LEGAL HEIR IS FULLY RESPONSIBLE FOR DEFAULT COMMITT ED BY THE DECEASED AS LAID DOWN BY SECTION 159 AND THE ASSES SEE IS LIABLE TO BE TAXED AND BE TREATED AS DEEMED ASSESSEE AFTER DEATH OF HER FATHER AND UNDER THE PROVISIONS OF SECTION 159 THE RE WAS NOTHING WRONG IN INITIATING PENALTY PROCEEDINGS AGAINST ASS ESSEE AFTER THE DEATH OF HER FATHER. IN THIS CASE THE ASSESSMENT PROCEEDINGS WERE COMPLETED ON LEGAL HEIR OF THE DECEASED PERSON ITSE LF AND THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE IT(SS)A NO.594/AHD/2012 -7- INITIATED AGAINST THE LEGAL HEIR SMT. TAPATI PAL AND THEREFORE IN OUR VIEW THE FACTS OF THIS CASE ARE IN TOTAL VARIA NCE WITH THE FACTS OF THE CASE BEFORE US. 7. IN THE CASE OF ACIT VS. NAGESHWAR PRASAD (SUPRA) RELIED UPON BY THE LD. DR THE ISSUE WAS THAT WHETHER THE PENALTY PROCEEDINGS CAN VALIDLY BE INITIATED AND PENALTY CA N BE LEVIED ON LEGAL HEIRS WHEN RETURN OF INCOME WAS FILED BY THE DECEASED DURING HIS LIFE TIME AND WHEN INACCURATE PARTICULA RS AS TO HIS INCOME WERE FURNISHED BY THE DECEASED IN THE SAID R ETURN. WE FIND THAT IN THIS CASE BEFORE ITAT PATNA BENCH T HE PENALTY PROCEEDINGS WERE INITIATED AND PENALTY WAS LEVIED O N THE LEGAL HEIRS AND THEREFORE THE TRIBUNAL FOUND THAT THERE IS NO INFIRMITY IN THE ORDER IMPOSING PENALTY ALTHOUGH THE ORIGIN AL RETURN OF INCOME WAS FILED BY THE DECEASED. IN THE CASE BEFO RE US PENALTY PROCEEDINGS WERE NEVER INITIATED OR PENALTY LEVIED ON THE LEGAL HEIRS OF THE DECEASED AND IN FACT THE LEGAL HEIRS WERE NOT BROUGHT ON RECORD BY THE AO BEFORE LEVY OF IMPUGNED PENALTY . THE FACTS OF THE CASE OF THE ASSESSEE BEFORE US ARE ENTIRELY DIFFERENT FROM THE FACTS OF THE CASE BEFORE THE HONBLE HIGH COURT AND THEREFORE THE CASE RELIED UPON BY THE LD. DR IS OF NO HELP TO THE CASE OF THE REVENUE. 8. IN THE CASE BEFORE US THE LEGAL HEIR WAS NEVER IMPLEADED OR BROUGHT ON RECORD. THE SHOW CAUSE NOTICE FOR PENAL TY WAS NOT ISSUED AS LEGAL HEIR OF THE DECEASED AND THEREFOR E IT CANNOT BE SAID THAT NON-MENTIONING OF THE NAME OF THE LEGAL H EIR AND WRITING IT(SS)A NO.594/AHD/2012 -8- OF NAME OF THE DECEASED AT THE TOP OF THE PENALTY O RDER IS MERELY A CLERICAL ERROR. IN OUR CONSIDERED VIEW WHERE LEGA L HEIRS OF THE DECEASED WAS BROUGHT ON RECORD AND WAS IMPLEADED IN THE PROCEEDINGS AS LEGAL HEIR AND ONLY MISTAKE IS IN W RITING OF THE NAME OF THE DECEASED ON THE TOP OF THE ORDER PASSED BY THE AO THE SAME SHALL BE SIMPLY A CLERICAL ERROR AND SHALL HAVE NO ADVERSE EFFECT ON THE PROCEEDINGS WITHIN SECTION 29 2B OF THE ACT. HOWEVER IF THE AO HAS FAILED TO BRING THE LEGAL HE IRS ON RECORD AND THE LEGAL HEIRS HAS NOT BEEN IMPLEADED IT CANN OT BE SAID THAT IT IS MERELY A CLERICAL ERROR TO BE SAVED BY THE PR OVISION OF SECTION 292B OF THE ACT AND SUCH AN ORDER PASSED ON THE DE AD PERSON SHALL BE NULL AND VOID AND HAS TO BE QUASHED. IN T HIS CASE THE FACTS OF THE CASE LEAVES TO ONLY CONCLUSION THAT TH E ORDER IMPOSING PENALTY WAS PASSED ON THE DECEASED AND THEREFORE IS NULL AND VOID AND THE PENALTY ON THE DEAD PERSON IS LIABLE TO BE CANCELLED ON THIS GROUND ALONE AND ACCORDINGLY WE CANCEL THE PENALTY LEVIED UNDER SECTION 158BFA(2) OF THE ACT. 9. THE ASSESSEE HAS TAKEN OTHER GROUNDS OF APPEAL O N MERITS OF THE CASE AS UNDER: 1.1 THE ORDER PASSED U/S.250 CONFIRMING THE PENALT Y OF RS.9 04 473/- LEVIED U/S.158BFA(2) ON 18.3.2011 FOR BLOCK PERIOD BY ACIT CIR.3 AHMEDABAD IS WHOLLY ILLEGAL UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUST ICE. 1.2 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O R ON FACTS IN PASSING THE IMPUGNED ORDER WITHOUT CONSIDE RING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENC E PRODUCED BY THE APPELLANT. IT(SS)A NO.594/AHD/2012 -9- 3.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN UPHOLDING THAT THE APPELLANT HAD WILLFULLY EVADED THE UNDISCLOSED INCOME AND THE EXPLANATION OFFERED WAS NOT SATISFACTORY. 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD.CIT(A) OUGHT TO HAVE UPHELD THAT THE APPELLANT HAD COMMITTED DEFAULT U/S.158BFA(2) BY WI LLFULLY EVADING THE UNDISCLOSED INCOME. 3.3 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN HOLDING T HAT THE APPELLANT HAD COMMITTED DEFAULT U/S.158BFA(2) A ND THEREBY LEVIED PENALTY OF RS.9 04 473/- 10. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN ON MERITS OF THE CASE THE ASSESSEE IS NOT LIABLE TO P ENALTY AS ONLY SOURCE OF INCOME OF THE ASSESSEE IS AGRICULTURE AS SESSED BY THE DEPARTMENT OVER NUMBER OF YEARS YEAR AFTER YEAR A ND NO OTHER SOURCE OF INCOME CAN BE ESTABLISHED BY THE DEPARTME NT. ACCORDINGLY EVEN IF THE SOME DEPOSIT IS FOUND TO B E NOT SATISFACTORILY EXPLAINED BY THE ASSESSEE THE SAME COULD NOT BE ASSESSED AS UNDISCLOSED INCOME OF THE ASSESSEE. HE SUBMITTED THAT ITAT AHMEDABAD IN THE QUANTUM APPEAL OF THE A SSESSEE HAS ALLOWED ONLY THE CREDIT OF ITS AGRICULTURAL INCOME DECLARED IN THE INCOME-TAX RETURN FOR THE BLOCK PERIOD AND CREDIT OF EARLIER YEARS (PRIOR TO BLOCK PERIOD) INCOME WAS NOT ALLOWED TO T HE ASSESSEE. HE SUBMITTED THAT ITAT HAS DIRECTED THE AO TO COMPU TE UNDISCLOSED INCOME BY TAKING THE FIGURE OF SAVINGS FROM AGRICULTURAL INCOME AT 40% FOR SOME YEARS 60% FOR SOME OTHER YEARS AND 80% IN SUCCEEDING YEARS. HE SUBMITTED TH AT THE BASIS OF DETERMINING THE SAVING FIGURES OF THE ASSESSEE F OR THE BLOCK IT(SS)A NO.594/AHD/2012 -10- PERIOD IS MERELY ON ESTIMATE AND THAT NO PENALTY U NDER SECTION 158BFA(2) WAS IMPOSABLE WHERE THE PART OF THE ADDI TION HAS BEEN SUSTAINED ON MERELY ESTIMATE BASIS. HE SUBMIT TED THAT IMPOSITION OF PENALTY IN THE FACTS OF THE CASE OF T HE ASSESSEE IS NOT MANDATORY AS HELD BY HONBLE APEX COURT IN HINDUSTA N STEEL LTD. VS STATE OF ORISSA 83 ITR 26 (SC). 11. THE LEARNED DR VEHEMENTLY OPPOSED SUBMISSIONS O F THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THA T FIVE DIARIES WERE SEIZED HAVING BUSINESS TRANSACTION WITH ONE L. T.SHROFF OF THE ASSESSEE AND THE TRIBUNAL HAS RESTRICTED THE A DDITION TO THE EXTENT OF RS.15 07 455/- BY HOLDING THAT THE SAME A S NOT AGRICULTURE INCOME OF THE ASSESSEE. HE SUBMITTED THAT THE PROVISO TO SECTION 158BFA(2) MAKES THE LEVY OF PENA LTY MANDATORY ONCE THE ASSESSED INCOME IS FOUND TO BE MORE THAN RETURNED INCOME. HE RELIED ON SERIES OF DECISIONS IN SUPPORT OF HIS CASE VIZ. (I) CIT VS. BECHARBHAI P. PARMAR 341 ITR 499 (GUJ) KANDOI BHOGI LAL MOOL CHAND VS. DCIT 341 IT R 271 (GUJ) MEENABEN J. BHANSALI VS. ACIT IT(SS)A.NO.55/AHD/2009 (ITAT AHMEDABAD) CIT VS. H EERA CONSTRUCTION CO. (P.) LTD. 337 ITR 359 (KER) (IV) SMT.MADHUBEN R. BAROT VS. ACIT 18 TAXMANN.COM 227 (AHD) (V) CIT VS. SMT.ANJU R. INNANI 191 TAXMAN 350 (BOM ) IN SUPPORT OF THE CASE OF THE REVENUE. 12. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE P ERUSED THE COPIES OF VARIOUS DOCUMENTS AND CASE LAWS FILED BY BOTH THE IT(SS)A NO.594/AHD/2012 -11- PARTIES. WE FIND THAT THE ASSESSEE IS LIABLE TO S UCCEED ON MERITS OF THE CASE ALSO. THE ASSESSEE HAS ONLY SOURCE OF AGRICULTURAL INCOME AND NO OTHER SOURCE OF INCOME COULD BE ESTA BLISHED BY THE DEPARTMENT. ACCORDINGLY EVEN IF CERTAIN PART OF THE ASSESSEES EXPLANATION WITH REGARD TO DEPOSITS WITH SOME FINANCIAL ENTITY IS NOT PROVED SINCE THE ASSESSEE HAS ONLY AGRICULTURE INCOME UNPROVED PART OF THE DEPOSITS C OULD BE ARGUABLY CLAIMED TO BE OUT OF AGRICULTURE INCOME ON LY. MOREOVER WE FIND THAT THE TRIBUNAL IN THE QUANTUM APPEAL OF THE ASSESSEE HAS ALLOWED THE BENEFIT OF CREDIT OF AGRIC ULTURE INCOME OF THE ASSESSEE RELATING TO THE BLOCK PERIOD ONLY. TH E CLAIM OF THE ASSESSEE IS THAT THE CREDIT FOR THE AMOUNT AVAILABL E WITH THE ASSESSEE OUT OF SAVINGS FROM AGRICULTURE INCOME OF PAST MANY YEARS AS ON THE FIRST DATE OF BLOCK PERIOD WAS NO T ALLOWED BY THE TRIBUNAL. WE FIND THAT IN THE QUANTUM APPEAL OF TH E ASSESSEE THE TRIBUNAL HAS DIRECTED TO TAKE THE SAVINGS FROM THE AGRICULTURE INCOME AT 40% FOR PERIOD UPTO THE ASSESSMENT YEAR 1 992-93 AND AT 60% FOR THE ASSESSMENT YEARS 1993-94 AND 1994-95 AND IN THE SUBSEQUENT YEARS AT 80% OF THE AGRICULTURAL INCOME WAS DIRECTED TO BE TAKEN AS SAVINGS OF AGRICULTURE INCOME OF THE ASSESSEE AND THE AO WAS DIRECTED TO GIVE CREDIT TO THE ASSESSEE ACCORDINGLY. WE FIND THAT THE TOTAL UNDISCLOSED INCOME UNDER SEC TION 158BD WAS DETERMINED AT RS.36 47 355/- BY THE AO AND AFTE R ALLOWING APPEAL-EFFECT BY THE ITAT THE SAME WAS REDUCED TO RS.15 07 455/-. WE FIND THAT THE FACTS OF THE CASE MAY JUSTIFY THE PART OF THE ADDITION TO THE EXTENT OF RS.15 07 455/ - SUSTAINED BY IT(SS)A NO.594/AHD/2012 -12- THE TRIBUNAL BUT IN OUR VIEW ARE NOT SUFFICIENT T O JUSTIFY THE IMPOSITION OF PENALTY UNDER SECTION 158BFA(2) OF TH E ACT. IT IS WELL SETTLED NOW THAT THE ASSESSMENT PROCEEDINGS AN D PENALTY PROCEEDINGS ARE DIFFERENT AND INDEPENDENT TO EACH O THER. THE ADDITION OR PART OF THE ADDITION COULD BE SUSTAINED ON THE PREPONDERANCE OF PROBABILITIES BUT IN PENALTY PROC EEDING SOME PROOF IS REQUIRED TO IMPOSE PENALTY ON THE ASSESSE E. WE FIND THAT THE SAVINGS OF THE ASSESSEE FROM AGRICULTURE INCOME HAVE BEEN DETERMINED BY THE TRIBUNAL BY FIXING CERTAIN PERCEN TAGE RANGING FROM 40% TO 80% FOR DIFFERENT YEARS INVOLVED IN THE BLOCK PERIOD AND THAT IS BY WAY OF ESTIMATION ONLY. IN CIT VS. DR.GIRIRAJ AGARWAL GIRI (2012) 253 CTR (RAJ) 109 HONBLE RAJ ASTHAN HIGH COURT HELD THAT WHERE THE ADDITIONS ARE BASED ON ESTIMATION ONLY IT CAN BE SAID TO BE CORRECT AND IT CAN BE IN CORRECT ALSO AND THEREFORE THE PENALTY WAS WRONGLY IMPOSED BY THE A O UNDER SECTION 158BFA(2) OF THE ACT AND NO SUBSTANTIAL QUE STION OF LAW IS INVOLVED IN THE PRESENT CASE. IN SHRI YOGESH M. SHAH VS. DCIT IT(SS)A.NO.605/AHD/2011 VIDE THEIR ORDER DATE D 7.9.2012 AHMEDABAD TRIBUNAL CANCELLED THE PENALTY LEVIED UNDER SECTION 158BFA(2) BY HOLDING THAT THE CONDUCT OF THE ASSESSEE DOES NOT SEEM TO BE MALA FIDE AND THAT EXP LANATION FILED BY THE ASSESSEE IN THIS REGARD WAS FOUND TO BE BONA FIDE. IT IS WELL SETTLED THAT THE PENALTY PROCEEDINGS ARE PENAL IN NATURE AND ONUS OF PROVING THE ASSESSEE TO BE GUILTY IS ON THE REVENUE IN ORDER TO IMPOSE THE PENALTY ON THE ASSESSEE. WE AR E NOT IMPRESSED WITH THE ARGUMENT OF THE LEARNED DR THAT IN IT(SS)A NO.594/AHD/2012 -13- ACCORDANCE WITH THE PROVISION OF SECTION 158BFA TH E IMPOSITION OF PENALTY IS MANDATORY. IN HINDUSTAN STEEL LTD. V S. STATE OF ORISSA 83 ITR 26 (SC) THE HONBLE SUPREME COURT H ELD AS UNDER: 'AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMI NAL PROCEEDING AND PENALTY WILL NOT ORDINARILY BE IMPO SED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIO US OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF ITS O BLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAI LURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EV EN IF A MINIMUM PENALTY IS PRESCRIBED THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FRO M A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE.' WE FIND THAT VERY PURPOSE OF ALLOWING OPPORTUNITY O F HEARING TO THE ASSESSEE IMPLIES THAT AUTHORITIES MAY REFUSE TO IMPOSE THE PENALTY WHERE THERE IS TECHNICAL OR VENIAL BREACH OF PROVISION OF THE ACT AND THE CONDUCT OF THE ASSESSEE IS BONA FIDE AND ANY OTHER INTERPRETATION SHALL RENDER THE PROVISION OF ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE AS FUTILE. IN THIS CASE BEFORE US THE ONLY SOURCE OF INCOME BEING AGRICULT URE AND THAT THE CREDIT FOR PAST SAVINGS FROM AGRICULTURE INCOME PRIOR TO THE BLOCK PERIOD HAVING NOT BEEN ALLOWED IN THE QUANTU M PROCEEDINGS AND FIGURE OF ADDITION HAVING BEEN DET ERMINED ON IT(SS)A NO.594/AHD/2012 -14- ESTIMATE BASIS APPLYING THE AVERAGE RATE OF 40% 6 0% AND 80% FOR WORKING OUT THE FIGURES OF SAVINGS FROM AGRICUL TURAL INCOME IN DIFFERENT YEARS OF BLOCK PERIOD AND THE PART OF TH E ADDITION HAVING BEEN SUSTAINED BY THE TRIBUNAL ON ESTIMATION ONLY WE HOLD THAT PENALTY IMPOSED UNDER SECTION 158BFA(2) I S LIABLE TO BE CANCELLED ON MERITS ALSO AND IS ACCORDINGLY CANC ELLED THE GROUNDS OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD