The ACIT, Ahmedabad Circle-3,, Ahmedabad v. Shri Gautam N.Jhaveri, Prop. of M/s. Rajesh N. Jhaveri,, Ahmedabad

MA 344/AHD/2009 | 2001-2002
Pronouncement Date: 23-08-2010 | Result: Dismissed

Appeal Details

RSA Number 34420524 RSA 2009
Assessee PAN ADAPJ5993J
Bench Ahmedabad
Appeal Number MA 344/AHD/2009
Duration Of Justice 10 month(s) 14 day(s)
Appellant The ACIT, Ahmedabad Circle-3,, Ahmedabad
Respondent Shri Gautam N.Jhaveri, Prop. of M/s. Rajesh N. Jhaveri,, Ahmedabad
Appeal Type Miscellaneous Application
Pronouncement Date 23-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 23-08-2010
Assessment Year 2001-2002
Appeal Filed On 09-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI N.S. SAINI A.M.) M.A. NO. 344/AHD/2009 (ARISING OUT OF I.T.A. NO. 1841/AHD./2006) ASSESSMENT YEAR : 2001-2002 DEPUTY COMMISSIONER OF INCOME TAX -VS.- SHRI GAUTAM N. JHAVERI AHMEDABAD CIRCLE-3 AHMEDABAD (PAN : ADAPJ 5993 J) (APPLICANT) (R ESPONDENT) APPLICANT BY : SHRI K.M. MAHES H SR. D.R. RESPONDENT BY : SHRI S.N. SOPARKAR O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER :- THIS MISCELLANEOUS APPLICATION IS FILED BY THE REVENUE POINTING OUT THAT THERE ARE MISTAKES APPARE NT FROM THE RECORD IN THE ORDER OF THE TRIBUNAL DATED 16.01.2009 IN ITA NO. 1841/AHD/2006 FOR THE ASSESSMENT YEAR 2001-02 WHEREBY THE TRIBUNAL HAS CANCELLED THE PENALTY OF R S.34 40 751/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 . 2. THE CONTENTS OF THE MISCELLANEOUS APPLICATION FI LED BY THE REVENUE READS AS UNDER :- SUB : MISC. CIVIL APPLICATION IN THE CASE OF SHR I GAUTAM N JHAVERI PROP M/S. RAJESH N. JHAVERI AHMEDABAD FORA.Y 2001-2002-REGARDING REF ; CIT AHMEDABAD-L AHMEDABAD'S LETTER NO. C IT/ABD 1/66/214 D/2009-10 11/06/2009. KINDLY REFER TO THE HON'BLE FTAT 'D' BENC H AHMEDABAD ORDER BEARING ITA NO. 1841/AND/2006 FOR A.Y 2001-02 DATED 16/01/2009 PASS ED IN THE CASE OF SHRI GAUTAM N JHAVERI PROP. M/S. RAJESH N. JHAVERI AHMEDABAD. 2. THE ASSESSEE IS A SHARE BROKER. THE RETU RN OF INCOME FOR A.Y 2001-02 WAS FILED BY THE ASSESSEE ON 31/10/2001 WITH A RETURNED LOSS OF RS.2 02 64 106/-. ASSESSMENT U/S 143(3) OF THE I.T. ACT WAS COMPLETED ON 31 /03/2004 DETERMINING TOTAL INCOME OF RS.4 45 65 803/-. PENALTY U/S. 271(1)(C) OF THE ACT WERE ALSO INITIATED SIMULTANEOUSLY VIDE NOTICE DATED 31/03/2004 ON THE FOLLOWING ADDITIONS WHICH WERE MADE TO THE RETURN INCOME :- 1. 'SHARE TRADING LOSS' ON ACCOUNT OF DIVID END YIELDING MUTUAL FUNDS RS.96 77 248/- 2. INTEREST EXPENSES PAID TO INVESTMENT IND IA LTD. RS. 66 757/- 3. UNEXPLAINED CASH CREDITS RS. 29 R 500/- 2 M.A. NO. 344/AHD/2009 3. THE ASSESSEE HAD PREFERRED FIRST APPEAL BEFORE THE LD CIT(A). THE LD. CIT(A) VIDE ORDER NO. CIT(A)-VI/CIR 3/103/04-05 DATED 27.10.2004 HAD PARTLY ALLOWED THE APPEAL. THE CIT(A) HAD SUSTAINED FOLLOWING ADDITIONS AND PENALTY U/S. 271( 1)(C) OF THE ACT HAS BEEN LEVIED OF RS.34 40 751/-VIDE ORDER DATED 31.03.2006. 1. 'SHA RE TRADING LOSS 11 ON ACCOUNT OF DIVIDEND YIELDING MUTUAL FUNDS IGNORED RS.96 77 248/- 2. INTEREST EXPENSES PAID TO INVESTMENT INDIA LTD. RS. 66 757/- 4. LEARNED CIT(A) VIDE HIS ORDER DATED 30-5-2006 HA S ALLOWED THE ASSESSEE'S APPEAL & CANCELLED THE PENALTY U/S 271(1)(C). THE HON'BLE ITAT HAS CON FIRMED CLT(A)'S ORDER WITH THE FOLLOWING REMARKS. 'IN CASE OF NATIONAL TEXTILES V CIT 249 ITR 125 (GUJ) THE QUESTION BEFORE THE HON'BLE GUJARAT HIGH COURT WAS ABOUT THE LEVY OF PENALTY U/ S 271(1)(C) IN RESPECT OF THE ADDITION MADE U/S 68 BY RECOURSE TO EXPLANATION 1 BELOW SECT ION 271(1)(C). IN THIS CASE THE HON'BLE GUJARAT HIGH COURT WHILE HOLDING THE IMPOSI TION OF PENALTY WAS NOT JUSTIFIED OBSERVED:- 'IN ORDER TO JUSTIFY THE LEVY OF PENALTY TWO FACTOR S MUST CO-EXIST (I) THERE MUST HE SOME MATERIAL OR CIRCUMSTANCES LEADING TO THE REASONABLE CONCLUSI ON THAT THE AMOUNT DOES REPRESENT THE ASSESSES INCOME. IT IS NOT ENOUGH FOR THE PURPOSE O F PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME FIND (II) THE CIRCUMSTANCES MUST SHOW THAT THE WAS ANIMUS I.E.. CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. EXPLANATION 1 TO SECTION 271(1)(C) HAS NO BEARING ONLY ON FACTOR NO. 1 BUT H AS A BEARING ANY ON FACTOR NO.2. THE EXPLANATION DOES NOT MAKE THE ASSESSMENT ORDER CONC LUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSESSES. NO PENALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMOUNT DOES NOT REPRESENT CONCEALED INCOME WITH THE HYPOTHESIS THAT IT DOES IF THE ASSESSEE G IVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E. IT IS RIOT ACCEPTED BUT CIRCUMSTAN CES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE'S CASE IS FALSE THE EX PLANATION CANNOT HELP THE DEPARTMENT BECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT I N QUESTION WAS THE INCOME ASSESSEE. ALTERNATIVELY TREATING THE EXPLANATION AS DEALING WITH BOTH THE INGREDIENTS (I) AND (II) ABOVE WHERE THE CIRCUMSTANCES DO NOT LEAD TO THE REASONAB LE AND POSITIVE INFERENCE THAT THE ASSESSEE IS EXPLANATION IS FALSE THE ASSESSEE MUST BE HELD TO H AVE PROVED THAT THERE WAS NO MENS REA OR GUILTY MIND ON HIS PART. EVEN IN THIS VIEW OF THE MATTER T HE EXPLANATION ALONE CAN NOT JUSTIFY LEVY OF PENALTY. ABSENCE OF PROOF ACCEPTABLE LO THE DEPARTM ENT CANNOT BE EQUATED WITH FRAUD OR WILLFUL DEFAULT.' IN VIEW OF THESE FACTS AND THE CASE LAW AS RELIED O N BY THE LEARNED AR WE ARE OF THE VIEW THAT NO PENALTY U/S 271(1)(C) CAN BE IMPOSED ON THE ASSESSE E WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CTT(A) IN DELETING THE PENALTY IMPOSED .' 5. AS SEEN FROM THE ABOVE HON'BLE ITAT HAS RELIED ON THE GUJARAT HIGH COURT DECISION IN THE CASE OF NATIONAL TEXTILE V/S CIT 249/ITR/125. HOWEV ER IN VIEW OF THE SUPREME COURT JUDGMENT IN CIT V. GOLD HEALTH FOOD P. LTD.(2008) 304 ITR 308 ( SC) THE SAID DECISION OF NATIONAL TEXTILE IS NO LONGER GOOD LAW. FURTHER THE CONCEALMENT OF INC OME HAS BEEN CLEARLY BROUGHT OUT IN THE ASSESSMENT ORDER AS WELL AS IN THE PENALTY ORDER T HEREFORE THIS FACTOR SHOULD HAVE BEEN APPRECIATED BY THE ITAT THE SUPREME COURT HAS FURTH ER CONFIRMED THAT WILLFUL CONCEALMENT AND MENS REA ARE NOT ESSENTIAL INGREDIENTS FOR ATTRACTI NG CIVIL LIABILITY OF PENALTY AS HELD BY THE APEX 3 M.A. NO. 344/AHD/2009 COURT IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS AND OTHERS - 306 ITR 277 IT APPEARS THAT HON'BLE ITAT MAY NOT HAVE HAD THE BENEFIT OF THIS D ECISION AT THE TIME OF DECIDING THE APPEAL UNDER REFERENCE. 6. CONSIDERING THESE FACTS THE HON'BLE ITAT IS HUM BLY REQUESTED TO RECTIFY ITS ORDER DATED 16/01/2009 IN THE APPEAL ITA NO. 1841/AHD/2006 SO A S TO GIVE EFFECT TO THE SUPREME COURT DECISION REFERRED TO AT 306 ITR 277 FOR WHICH PURP OSE THIS MISCELLANEOUS APPLICATION IS BEING FILLED BEFORE THE HON'BLE ITAT. 3. AT THE TIME OF HEARING BEFORE US ON BEHALF OF R EVENUE SHRI K.M. MAHESH LD. SR. D.R. APPEARED AND RELYING ON THE REASONING GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER POINTED OUT THAT TRIBUNAL MAY RECTIFY ITS ORDER. 4. ON THE OTHER HAND SHRI S.N. SOPARKAR LD. COUNS EL APPEARING ON BEHALF OF THE ASSESSEE POINTED OUT IN THE IMPUGNED ORDER THE TRIBUNAL HAS NOT FOLLOWED THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS.- GOLD HEALTH FOOD P. LTD. [2008] 304 ITR 308 (SC). THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT TRIBUNAL HAS CANCELLED THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) ON THE GR OUND THAT THE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT FOUND FALSE BY THE ASSESSING OFFICE R. THEREFORE THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE BE DISMISSED. 5. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AFTER CAREFULLY GOING THROUGH THE ORDER DATE D 16.01.2009 OF THE ITAT D BENCH AHMEDABAD IN ITA NO. 1841/AHD/2006 WHEREBY IT CANC ELLED THE PENALTY OF RS.34 40 751/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1 )(C) OF THE I.T. ACT IT CAN BE SEEN THAT TRIBUNAL HAS NOT CANCELLED THE PENALTY ONLY ON THE GROUND THAT THE ASSESSED INCOME IS NEGATIVE. AS A MATTER OF FACT TRIBUNAL HAS CANCELLED THE PEN ALTY ON DIFFERENT REASONS. THIS IS EVIDENT FROM THE OBSERVATION OF THE TRIBUNAL ON PAGES 5 TO 7 OF THE TRIBUNALS ORDER. IN VIEW OF THIS IN OUR CONSIDERED OPINION THERE IS NO MISTAKE APPARENT FR OM THE RECORD WITHIN THE MEANING OF SECTION 254(2) OF THE INCOME TAX ACT 1961. 6. IN THE RESULT THE MISCELLANEOUS APPLICATION FIL ED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE COURT ON 13.08.2010 SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13/ 08 / 2010 4 M.A. NO. 344/AHD/2009 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE RESPONDENT 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.