RAJENDRA KUMAR CHOUDHARY,JAIPUR vs. ITO, KISHANGARH

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh Hkkxpan] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM vk;dj vihy la-@ITA No. 559/JP/2014 fu/kZkj.k o"kZ@Assessment Year : 2005-06 cuke Shri Rajendra Kumar Choudhary, Income-tax Officer, Hamir Colony, Opp. Railway Station, Vs. Ward- Kishangarh. Madanganj, Kishangarh-305801. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAKPC 5942 K vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.L. Poddar & Isha Kanungo (Adv.) jktLo dh vksj ls@ Revenue by : Shri R.A. Verma (Add’l CIT) lquokbZ dh rkjh[k@ Date of Hearing : 30/01/2018 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 02/02/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, JM

This Appeal by the Assessee is directed against the order dated

30.06.2014 of Ld. CIT(A), Ajmer arising from penalty order passed u/s

271(1)(c) of the Income Tax Act, for the Assessment Year 2005-06. The

assessee has raised the following grounds of appeal:-

“1. Under the facts and circumstances of the case the Penalty order passed by Assessing Officer U/s 271(1)(c) is bad in law and void- ab-intio.

2 ITA No. 559/JP/2014. Shri Rajendra Kumar Choudhary.

of Rs. 1,33,931/-. Subsequently, the AO received AIR information and found

that the assessee has deposited Rs. 19,51,090/- in Saving Bank Account of

the assessee with IDBI Bank. The AO proposed to reopen the assessment by

issuing a notice u/s 148 on 03.04.2008. There was no compliance made by

the assessee of the notice issued u/s 148. However, in response to the

notices issued u/s 142(1) the assessee has offered an additional income of Rs.

3,23,943/-. The AO while completing the reassessment made the assessment

of the entire amount of Rs. 19,51,090/- deposited in the bank account. On

appeal, the Ld. CIT(A) accepted the income offered by the assessee to the

extent of Rs. 3,23,943/- by applying a GP Rate of 16.61% on the undisclosed

turnover found deposited in the bank account. The AO consequently levied

the penalty u/s 271(1)(c) in respect of the addition sustained by the Ld.

CIT(A) of Rs. 3,23,943/- vide order dated 23.3.2012 passed u/s 271(1)(c) of

the Act. The assessee challenged the action of the AO, levying the penalty of

Rs. 1,01,391/- before the Ld. CIT(A). However, the Ld. CIT(A) was not

impressed with the contention and explanation of the assessee and confirmed

the penalty levied by the AO.

small time commission agent in the line of retail business of marbles. The

assessee itself has declared the additional income of Rs. 3,23,943/- on

3 ITA No. 559/JP/2014. Shri Rajendra Kumar Choudhary.

account of deposits in the bank account. He has further contended that the

addition on which the penalty has been levied by the AO is passed on

estimation of income by the Ld. CIT(A) by adopting the GP Rate of 16.61%.

Therefore, no penalty can be levied on the addition based on estimation of

income. In support of his contention, he has relied upon the decision of

Hon’ble jurisdictional High Court in the case of CIT vs. Krishi Tyre Retarding

and Rubber Industries 263 CTR 484 as well as the decision in the case of CIT

vs. Mahendra Singh Khedla 71 DTR 189. The next contention of the Ld. AR is

that when the assessee itself has offered the said income to tax and there is

no difference between the income offered by the assessee and income

assessed by the AO, then the penalty cannot be levied u/s 271(1)(c) of the

Act. He has relied upon the decision of the Hon’ble Delhi High Court in the

case of CIT vs. SAS Pharmaceuticals 335 ITR 259 and submitted that the

Hon’ble High court has held that when the assessee disclosed the income in

return of the income subsequent to the survey, the penalty cannot be levied

on surmises, conjectures and on the possibilities, that the assessee would not

have offered the same if no survey had been carried out. Thus, the Ld. AR

has contended that the penalty levied by the AO may be deleted.

concealment of income. The assessee has not disclosed the bank account

while filing his original return of income but only when the Assessing Officer

4 ITA No. 559/JP/2014. Shri Rajendra Kumar Choudhary.

received the AIR information about the deposits made in the IDBI Bank the

assessee surrendered the income during the course of assessment

proceedings. Therefore, the assessee has intentionally not disclosed the

deposits made in the bank account maintained with IDBI Bank and also not

disclosed his correct turn over. Hence, it is a clear case of concealment of

particulars of income and therefore the penalty levied by the AO is justified.

on record. The assessee filed its original return of income on 12.12.2005

declaring income of Rs. 1,33,931/-. There is no dispute that the assessee did

not disclose his bank account maintained with IDBI Bank wherein a cash

deposited of Rs. 19,51,090/- was made during the year under consideration.

Only during the reassessment proceedings u/s 147 read with section 143(3)

the assessee surrender the extra income of Rs. 3,23,943/-. Thus, it is not a

case of surrender and disclosure of income in the original return of income

but only when the AO reopened the assessment on the basis of the material

disclosing the cash deposits in the bank account of the assessee which was

not disclosed by the assessee along with the original return of income, the

assessee came forward to offer the extra income of Rs. 3,23,943/- Therefore,

the decisions relied upon by the Ld. AR are not applicable in the case of the

assessee, as it is not the voluntarily surrender of the assessee in the original

return of income. Though, the Ld. CIT(A) has deleted the addition made by

5 ITA No. 559/JP/2014. Shri Rajendra Kumar Choudhary.

the AO and accepted the surrendered made by the assessee however, the

reasoning for accepted the surrender given by the Ld. CIT(A) was that this

income of Rs. 3,23,943/- is equivalent to GP Rate 16.61% on the undisclosed

turn over being the deposits made in the bank account. Hence, the Ld.

CIT(A) has not made any separate addition but the addition made by the AO

was deleted by giving this reasons. It is a clear case of surrender of the

income which was not disclosed by the assessee in the original return of

income and therefore the technical objection raised by the Ld. AR of the

assessee cannot be accepted. The Ld. CIT(A) while passing the impugned

order considered this issue in para 3.3 as under:-

“3.3 I have considered the contentions of the appellant as well as penalty order. It is seen that assessee's contention that assessee has voluntarily disclosed the income to purchase peace of mind has been adequately dealt with by the as reproduced above in Para 3.1. Though the AO had reopened the case in view of the AIR information received by the AO regarding cash deposits of Rs. 19,51,090/- assessee's account, assessee did not filed any return in response to notice u/s 148. So the above IDBI bank account in which cash of Rs. 19,51,090 was deposited was not disclosed in the original return and no return was filed in response to notice u/s 148. In view of the findings of the AO and above discussion, it cannot be said that assessee has voluntarily offered the additional income for tax. As regarding the assessee's contention that the addition has been made on the estimate basis, it may be mentioned that in the original balance sheet filed along with the return of income on 12.12.2005, the assessee

6 ITA No. 559/JP/2014. Shri Rajendra Kumar Choudhary.

had not shown the saving bank account in the IDBI bank in his return of income. In fact assessee had not filed any return even in response to notice u/s 148 including above bank account. During reassessment proceedings, the assessee merely filed the computation offering the additional income of Rs. 3,23,943/- as other income. The CIT(A) in the quantum appeal has accepted this other income as being income from unaccounted turnover of the assessee of Rs. 19,50,500 based on the transactions shown in the above bank account. As such, it is apparent that the transactions shown in the IDBI bank account were not shown by the assessee in the original return and the Ld. CIT(A) has considered the same to be unaccounted turnover of the assessee liable to tax on the income @16.61% as shown by the assessee himself in the computation filed during the reassessment proceedings. In view of above, it is apparent that the above transactions as well as additional income shown by the assessee during reassessment proceedings cannot be held to be merely a estimate without any basis. In fact, the AO has made the addition based on the incriminating bank account of the assessee and income has been accepted by the assessee himself on the above transactions. The said income was not shown in the original return. The case laws relied upon by the assessee are on their own facts and are distinguishable as in those cases the income has been enhanced merely after rejecting books of accounts u/s 145(3) or no incriminating material was found to make the addition. In view of above discussions and findings of the AO, the penalty levied by the AO is confirmed.”

7 ITA No. 559/JP/2014. Shri Rajendra Kumar Choudhary.

5.1 The facts recorded by the Ld. CIT(A) has not disputed by the assessee

excepted the contention that the assessee’s bank account was used by other

persons which in the absence of any supporting evidence cannot be accepted

as a bonafide explanation at this stage. Hence, in the facts and

circumstances of the case, we do not find any error or illegality in the orders

of the authorities below in levy the penalty u/s 271(1)(c) of the Act.

Order pronounced in the open court on 02/02/2018. Sd/- Sd/- ¼Hkkxpan ½ ¼fot; iky jko½ (Bhagchand) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 02/02/2018. Pooja/- आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Rajendra Kumar Chaudhary, Kishangarh. 2. izR;FkhZ@ The Respondent- ITO, Ward- Kishangarh. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File [ITA No. 559/JP/2014] vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत