DULI CHAND vs. C I T UDAIPUR and ORS

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ITA/135/2002HC RajasthanRJHC02019462200009 September 20162 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the assessee had not properly explained the source of gold and silver ornaments found during the search, thus justifying the AO's imposition of penalty on the unexplained investment. However, the Tribunal also noted that in view of its order in other related appeals (ITA Nos. 792, 796, 798, 800 & 802/JP/93), the penalty under Section 271(1)(c) on account of the difference in share income from a registered firm was not leviable. Consequently, the AO was directed to recompute the penalty amount solely on the concealed income from the unexplained investment in gold and silver ornaments and impose the minimum penalty. The High Court found no reason to interfere given the concurrent findings of the authorities and answered the question in favour of the department.

What were the facts?

This appeal by the assessee, Shri Duli Chand, challenges a judgment and order of the Income Tax Appellate Tribunal (ITAT). The ITAT had partly allowed the assessee's appeal and confirmed the order of the Commissioner of Income Tax (Appeals). The Assessing Officer (AO) had imposed a penalty of Rs. 1,02,796/- under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was related to undisclosed income found during a search under Section 132(4). The CIT(Appeals) noted that the assessee and a firm were engaged in extensive business in silver outside the books of account, justifying additions. The ITAT, while examining the facts, found that the assessee had not properly explained the source of gold and silver ornaments found during the search.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining a penalty of Rs. 1,02,796/- under Section 271(1)(c) of the Income-Tax Act, 1961? Assessee's Contention: The assessee contended that the penalty was contrary to law. The jewellery or stock of jewellery found were assets of the family members and represented undisclosed income. The AO considered the statement recorded under Section 132(4) and the CIT(Appeals) observed that the addition was justified given the extensive business in silver outside the books. Revenue's Contention: The judgment does not explicitly record the revenue's specific arguments on this issue. However, the findings of the lower authorities and the Tribunal suggest the revenue supported the imposition of penalty based on unexplained investments.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 132(4)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. D.B. Income Tax Appeal No.135/2002 Shri Duli Chand Vs. The Commissioner of Income Tax & Anr. DATE OF JUDGMENT ::: 9th September, 2016 HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE BANWARI LAL SHARMA Mr. P.K. Kasliwal, for the appellant. Ms. Parinitoo Jain, for the respondents. ***** (1) By way of this appeal, the assessee has challenged the judgment & order of the Income Tax Appellate Tribunal whereby the Tribunal has partly allowed

the appeal preferred by the assessee and confirmed the order of the CIT (Appeals).

1.

1 While admitting the appeal, this court framed the following substantial question:- “1. Whether on the facts and in the circumstances of the case, the tribunal was justified

in sustaining

penalty

of Rs.1,02,796/- u/s 271(1)(c) of the Income- Tax Act, 1961?”

2.

1 Counsel for the appellant contended that the penalty which was imposed is contrary as well as the jewellery or stock of jewellery or any other material which was found the assets of the family members and it was undisclosed income. The Assessing Officer while considering the penalty has considered the statement recorded u/s 2 132(4) and after considering the same out of 23 kg 430 gram and after considering the same even CIT (Appeals) in para no.7 has observed as under:- “7. I have considered the basis of the addition as well as the arguments of the assessee. During the course of the proceedings it was noted that the appellant and the firm was carrying on the extensive business in silver outside the books of account. In such a course it is natural to build a stock of silver either for the purpose of business or for the purpose of security. Considering all the facts addition is justified and no interference is called.”

3.

The Tribunal in para no.8 held as under:- “8. We have considered the rival submissions of the parties. On examination of facts, we are of the opinion that assesee has not properly explained the source of requisition of gold and silver ornaments which were found at the time of search. Therefore, the AO has rightly imposed the penalty on the unexplained investment in gold and silver ornaments. However, we hold that in view of our order in ITA No.792, 796, 798, 800 & 802/JP/93 of even date the penalty under Sec.271(1)(c) on account of difference in share income from registered firm is not leviable. The AO is directed to recompute the amount of penalty on the concealed income of unexplained investment in gold and silver ornaments and impose minimum penalty.”

4.

In view of concurrent findings of all authority, no interference is required in the matter. Hence, the question is answered in favour of the department against the assessee. (Banwari Lal Sharma), J. (K.S. Jhaveri), J. Brijesh74.

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