NARENDRA P.MUSALE,,NASHIK vs. INCOME TAX OFFICER,, NASHIK

आदेश / ORDER

PER BENCH :

These bunch of appeals preferred by the assessee emanates from the different orders of the Ld. CIT(Appeals) for separate assessment years as per grounds of appeal on record.

These cases were heard together. Since facts are similar and issues are common, these appeals are being disposed of vide this consolidated order. We would first take the appeal in ITA No.2226/PUN/2016.

2 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

ITA No.2226/PUN/2016 A.Y.2011-12

under:

“1) In the facts and in law the CIT(A) has erred in confirming addition of Rs.53,63,000/- on account of unexplained cash deposits in bank accounts.

2) On the facts and in law the CIT(A) has erred in not appreciating the fact that the amount of Rs.53,43,000/- has been deposited out of advance received in respect of agreement to sale of ancestral land at village mauje Vakhari Tal. Deola Dist. Nashik. The CIT(A) has erred in not appreciating the fact that there is also cash withdrawal of Rs. 40,50,000/- in the said bank accounts and the closing balance is not much.

3) On the facts and in law the CIT(A) has erred in considering the cash deposits at Rs.53.63,000/- as against Rs.53,43,000/- due to calculation mistake.

4) On the facts and in law the CIT(A) has erred in making addition of Rs.25,200/- on account of deemed value of the flat which has been used mainly for the purpose of business.

5) On the facts and in law the CIT(A) has erred in making enhancement of income by Rs.64,36,209/- in respect of alleged unexplained deposits in Bank of Baroda, which were already assessed by the A.O. u/s. 143(3) r.w.s. 147 of the Act and the above fact was pointed out to the CIT(A) in written submission filed.

6) On the facts and in law the CIT(A) and A.O. have erred in considering the total deposits in bank as income of the appellant without considering the fact that cheques deposited were dishonored.

7) On the facts and in law the CIT(A) has erred in not accepting the fact that the undisclosed deposits in bank accounts represent sale proceeds of the goods traded and hence only profit @ 11 % should be added as income and not entire deposits in banks.

8) On the facts and in law the CIT(A) should have at the most confirmed the addition of peak deposits i.e. peak balance in the bank accounts not disclosed in the books of accounts after reducing the peak balance in undisclosed bank accounts to be taxed in preceding years and income offered to tax in the preceding years and current year.

9) Your appellant craves leave to add, alter above or any other ground/s of appeal.”

assessee has filed affidavit along with petition regarding condonation of delay.

We have perused the documents and are convinced with the reasons

3 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

submitted before us. The Ld. DR has also conceded to condonation of the

delay. We, therefore, in view of the relevant documents placed before us and

the justified reasons therein and the submissions of the parties condone the

delay and admit the appeal for hearing on merits.

that as per AIR information received the assessee has deposited cash in three

saving bank account with Vishwas Co-operative bank. Information u/s.133(6)

of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was

requisitioned from the bank and the same is as under:

Account No. Total receipts

23/2259 Rs.20,62,071/-

23/6/30 Rs.10,31,867/-

23/2322 Rs.33,58,992/-

In the third account the Assessing Officer has stated that

Rs.10,51,207/- are transferred from the first and second account. Therefore

the Assessing Officer has inferred that, deleting the amount total of the

receipts comes to Rs.54,01,723/-. Out of the amount Rs.57,930/- is the

interest paid to the assessee. Hence, the Assessing Officer has taken total

cash deposit at Rs.53,63,000/- and has added it to the total income under

section 69 of the Act. The assessee stated that the cash deposit in the bank

account was out of the transaction from sale of land that he entered with

Girish Popat Musale for Gat No.1362, 274, 278, 339 at Pimplegaon, Vakhari

for 68 Lacs. Shri Girish Musale paid 59 Lacs in cash. The Saate Khat was

executed on 3.05.2010. This transaction was not registered. At the time of

remand proceedings on examination by the Assessing Officer Shri Girish

Popat Musale admitted that he has paid cash of Rs.59 Lacs to the assessee

4 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

sourced out of his agricultural income and pensionery benefit of his father.

However, no evidences were produced before the Assessing Officer to

substantiate its statement. Shri Girish Popat Musale is neither assessed to

tax nor files his return of income. The Assessing Officer in the remand

proceedings came to the conclusion that after going through the Sathe khat,

Gat No.1362, 274, 278 & 339 are the same Gat Nos. which was yet to be

purchased by Shri Girish Popat Musale and therefore, the sources stated by

Shri Girish Popat Musale are ambiguous.

Officer. The Ld. CIT(Appeals) observed that the entire transaction is carried

out in cash. He further observed that in the instant case no document has

been placed in respect of sale of agricultural produce. No documentary

evidence has been produced during the course of any proceeding before the

Assessing Officer or before him to explain the availability of cash with Shri

Girish Popat Musale and belongs to assessee’s extended family. There was no

direct evidence produced before the Ld. CIT(Appeals) to substantiate the

genuineness of transaction of sale of land to Shri Girish Popat Musale from

whom he has allegedly received advance for sale of co-percernary land. Shri

Girish Popat Musale is neither assessed to tax nor files his return of income.

The Ld. CIT(Appeals) after analysing the entire facts of the case came to the

conclusion that the source of cash alleged to have been given to the assessee

by Shri Girish Popat Musale was not convincingly answered and that the

genuineness of transaction is not proved and therefore, it is clear case of

unexplained cash deposits. The Ld. CIT(Appeals) in his elaborate order,

thereafter, goes on to refer various judicial pronouncements on the subject

and ultimately has upheld the addition u/s.69 of the Act made by the

Assessing Officer.

5 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

circumstances in this case and have given considerable thought to the

findings of the Ld. CIT(Appeals). The facts reveal that the assessee is doing

regular deposits in the aforesaid accounts without disclosing them in his

return of income and thus evading tax. It was first through the AIR

information that he was taken into task in 2011-12 and thereafter, he has

executed Saate Khat with his relative which was also not registered and was

later cancelled. The entire transaction was carried in cash so that any trail of

money cannot be established. For the cash deposit in same account during

147 proceedings and in preceding year and in succeeding year the assessee

has stated that the deposits are result of its unaccounted purchase and sales

and has offered it for taxation under section 44AD of the Act. These are some

of the facts which comes from the findings of the Ld. CIT(Appeals). In

consideration of the totality of facts and circumstances, we do not find any

infirmity with the findings of the Ld. CIT(Appeals) in respect of these grounds

and the same is therefore, upheld. Thus, ground Nos. 1, 2 and 3 raised in

appeal by the assessee are dismissed.

ground No.4 is dismissed as ‘not pressed’.

before us in the paper book, the copy of order passed by the Pune Bench of

the Tribunal in ITA Nos.1517 to 1519/PUN/2016 for the assessment years

2008-09 to 2010-11 in assessee’s own case wherein on the same issue, the

Co-ordinate Bench of the Tribunal has applied GP rate @15% with regard to

the additional income in the hands of the assessee. The Ld. AR of the

assessee prayed that this decision may be followed in the interest of justice.

6 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

find that on the similar issue, the Pune Bench of the Tribunal in assessee’s

own case has observed and held as under:

“9. On perusal of the record and after hearing rival contentions, the issue which is raised for adjudication is on account of credits in the bank accounts maintained by the assessee, but undisclosed in the return of income. The assessee explained the nature of credits and debits of the said bank accounts and claimed that the same related to his business of sale and purchase of hardware items. Undisputedly, the said bank account with Bank of Baroda was undisclosed bank account and the said receipts need to be included in the total receipts declared for the year under consideration. The assessee in response to the notice issued u/s 148 of the Act, had declared gross profit on the said receipts and had filed additional income in this regard. In the assessment year 2008- 09, the GP declared in the books of account was 9.03% and on the additional sales, assessee declared GP of 8%. Similarly, in assessment year 2009-10, the GP originally declared by the assessee on account of sales was 9.40% and in assessment year 2010-11, it was 9.38%. However, the GP declared on the additional sales in both these assessment years was at the rate of 11%. The assessee has filed the copy of bank statements at page No. 26-39 of the paper book. On perusal of the said bank statement reflects that against the credits on different dates, there were withdrawals also from said bank account on day to day basis. Some of the withdrawals were in cheques issued to different parties and some of the withdrawals were on account of cash withdrawal. The assessee systematically followed this procedure from month to month and year to year. In the totality of the above said facts and circumstances, there is merit in the plea of the assessee that said bank account i.e Bank of Baroda was used for both unaccounted sales and purchases. Accordingly, credit of purchases made from that account is to be allowed in the hands of the assessee. However, since complete details were not available, the income in the hands of the assessee on accounts of said unaccounted business needs to be estimated.

Respectfully following the aforesaid decision in respect of unexplained

deposit in Bank of Baroda, we direct the Assessing Officer to apply GP rate at

15% to work out additional income in the hands of the assessee. Thus,

ground Nos. 5 to 8 raised in appeal by the assessee are partly allowed.

required.

7 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

partly allowed.

ITA No.1520/PUN/2016 A.Y.2011-12

completed u/s.143(3) r.w.s.147 of the Act wherein same additions are made

as in ITA No. 2226/PUN/2016. That even, the enhancement and the

additions upheld by the Ld. CIT(Appeals) are also same. That for the same

grievance, no two appeals can be preferred before this August Forum. That

since we have already decided the issue in ITA No.2226/PUN/2016, therefore,

on the same additions in ITA No.1520/PUN/2016 becomes infructuous and

hence, is dismissed.

dismissed.

ITA No.1521/PUN/2016 ITA No.153/PUN/2017 A.Ys. 2012-13 & 2013-14

delay of 20 days. The assessee has filed affidavit along with petition regarding

condonation of delay. We have perused the documents and are convinced

with the reasons submitted before us. The Ld. DR has also conceded to

condonation of the delay. We, therefore, in view of the relevant documents

placed before us and the justified reasons therein and the submissions of the

parties condone the delay and admit the appeal for hearing on merits.

passed an ex-parte order. With respect to the additions, though written

submissions were filed, it was only statement on facts that were considered

and there was no separate written submissions filed before the Ld.

8 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

CIT(Appeals). Therefore, rights and liabilities of the parties were yet to be

decided on merits by the First Appellate Authority. The Ld.AR of the assessee

prayed that one final opportunity may be provided to the assessee so that he

can represent the case on merits before the Ld.CIT(Appeals) with requisite

documentary evidences and details.

ITA No.1521/PUN/2016 and ITA No.153/PUN/2017. We find that the Ld.

CIT(Appeals) passed an ex-parte order wherein rights and liabilities of the

parties herein are yet to be determined. That after hearing both the parties

and in the interest of justice, we set aside the orders of the Ld. CIT(Appeals)

in both the appeals in ITA No. 1521/PUN/2016 and ITA No.153/PUN/2017

and restore the same to the file of the Ld. CIT(Appeals) for readjudication after

complying with the principles of natural justice.

No.153/PUN/2017 are allowed for statistical purposes.

ITA No.1853/PUN/2016 A.Y.2011-12

that while initiating penalty proceedings u/s.271(1)(c) of the Act, the

Assessing Officer mentioned that penalty proceedings u/s.271(1)(c) are

initiated for concealment of income. However, in the penalty order, the

Assessing Officer mentioned both the limbs of section 271(1)(c) of the Act i.e.

‘concealment of income’ and ‘furnishing of inaccurate particulars of income’.

The Ld. AR contended that it is settled principle of law if the charge is not

specific then the penalty u/s.271(1)(c) of the Act cannot be levied. That in

support of his contentions, the Ld. AR of the assessee relied on the decision of

9 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

Hon'ble Jurisdictional High Court in the case of CIT Vs. Samson Perinchery

in ITA No.1154 of 2014 and the decision of Hon'ble Karnataka High Court in

the case of CIT Vs. Manjunath Cotton and Ginning Factory reported as 359

ITR 565 wherein it has been held that the satisfaction of the Assessing Officer

with regard to only one of the two breaches u/s.271(1)(c) of the Act for

initiation of penalty proceedings would not permit penalty being imposed for

the other breach. Thus, the order imposing penalty was to be made only on

the ground on which the penalty proceedings were initiated and it could not

be a fresh ground of which the assessee had no notice.

pronouncement placed before us. The facts reveal that initiation of penalty

proceedings u/s. 271(1)(c) of the Act as well as penalty order, the charge for

which penalty u/s.271(1) (c) of the Act has been levied, is not specific. It

appears that while initiating penalty proceedings, the Assessing Officer

mentioned one limb i.e. concealment of income but at the time of levying

penalty, he mentioned both the limbs i.e. ‘concealment of income’ and

‘furnishing of inaccurate particulars of income’. It is apparent that there is

ambiguity in the mind of Assessing Officer as to which limb/charge, penalty

is to be levied.

That taking guidance from the decision of the Hon'ble Bombay High

Court in the case of CIT Vs. Samson Perinchery (supra.) wherein the Hon'ble

Bombay High Court has considered the decision of Hon'ble Karnataka High

Court in the case of CIT Vs. Manjunath Cotton and Ginning Factory (supra.),

the legal proposition that comes out and which is binding in nature is that

the Assessing Officer should be clear as to which of the two limbs under

which penalty is imposable, has been contravened or indicate that both have

been contravened while initiating penalty proceedings. It cannot be that the

initiation would be only on one limb i.e. for furnishing inaccurate particulars

10 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

of income while imposition of penalty on the other limb i.e. concealment of

income.

is that the assessee under the scheme of welfare legislation which is

embedded in the Income Tax Act, 1961 should get an opportunity to prepare

himself for the defense as regards to the exact charge on which penalty is

imposed upon him u/s. 271(1)(c) of the Act. In the instant case, the charge is

vague and therefore, levy of penalty is not warranted. Taking totality of facts

and legal scenario into consideration, we set aside the order of the Ld.

CIT(Appeals) and direct the Assessing Officer to delete the penalty from the

hands of the assessee.

allowed.

ITA 2226/PUN/2016 Partly allowed

ITA 1520/PUN/2016 Dismissed

ITA 1521/PUN/2016 Allowed for statistical purpose. ITA 153/PUN/2017 Allowed for statistical purpose ITA 1853/PUN/2016 Allowed

Order pronounced on 27th day of March, 2019.

Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 27th March, 2019. SB

11 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-1, Nashik. 4. The Pr. CIT-1, Nashik. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.

12 Narendra P. Musale A.Ys.2011-12, 2012-13 & 2013-14

Date 1 Draft dictated on 25.03.2019 Sr.PS/PS 2 Draft placed before author 26.03.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order