ITO, BEHROR vs. RAMESH CHAND SONI, KOTPUTLI

PDF · subscribers
ITA 87/JPR/2011Status: DisposedITAT Jaipur16 February 2017AY 2002-036 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the AO was not justified in levying penalty on income that was duly disclosed in the return, even if it was disclosed after a survey. However, for certain additions sustained by the Tribunal and where the issue was debatable, the penalty was upheld.

What were the facts?

A survey was conducted at the assessee's business premises, where undisclosed income was admitted. The Assessing Officer (AO) imposed a penalty under Section 271(1)(c) based on additions made to the assessee's income. The Commissioner of Income Tax (Appeals) partly restricted the penalty.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable on income disclosed post-survey, and whether penalty is justified on additions sustained by higher authorities or where the issue is debatable.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 133A,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR

Before: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM vk;dj vihy la-@ITA No.87/JP/2011

For Respondent: Shri R.A. Verma (Addl. CIT) fu/kZkfjrh dh vksj ls@ Assessee by :, Shri Mahendra Gargieya (Advocate)
Hearing: 06.02.2017Pronounced: 16.02.2017

Heard together (2 matters)

ITA No.87/JP/2011
ITA No.1430/JP/2010

Read from the judgment's own cause title. This page is filed under one of them.

PER SHRI KUL BHARAT, JM. These two cross appeals by the revenue and the assessee are directed

against the order of Ld. Commissioner of Income Tax (Appeals), Alwar, dated 2/11/2010 pertaining to the assessment year 2002-03. First, we take up revenue’s

appeal in ITA No. 87/JP/2011. The revenue has raised following grounds of appeals :-

1.

“That the Ld. CIT(A) has erred in law as well as on the facts and circumstances in restricting the penalty to Rs. 370280/- from Rs. 1382826/- imposed u/s 271(1)(c) of I.T. Act, 61 by A.O. 2. The Department reserve its right to add, alter, modify, delete or amend all or any of the grounds of appeal before or at the time of hearing of appeal.”

2.

The only effective ground in this appeal is against restricting the penalty of

Rs. 3,70,280/- from Rs. 13,82,826/-.

3.

Briefly stated the facts are that a survey under Section 133A of the Income

Tax Act, 1961 (hereinafter referred to as the Act) was carried out at the business

premises of the assesee on 10/8/2001. During the course of survey, the assessee

admitted, undisclosed income at Rs. 47 lacs but in the Income Tax return he

disclosed only Rs. 27,85,500/-. Subsequently, the assessment was completed under

Section 143(3) on 30/3/2005 and assessed the total income at Rs. 78,33,390/- as

against declared income of Rs. 30,83,000/-. In appeal, the Ld. CIT (Appeals)

confirmed the addition to the extent of Rs. 48,46,227/- including returned income.

The Assessing Officer also initiated penalty proceedings and imposed penalty vide order dated 17th March, 2008 of Rs. 13,82,626/-. The assessee aggrieved by this,

preferred an appeal before Ld. CIT (Appeals) who after considering the submissions

partly allowed the appeal thereby the Ld. CIT (Appeals) deleted the penalty in

respect of the amount invested in the building. The ld. CIT (A), however, affirmed

the action of the Assessing Officer in respect of the undisclosed Income of Rs.

9,00,000/-. It is observed by Ld. CIT (A) that out of addition of Rs. 14,03,225/-, the

addition of Rs. 6,53,225/- was confirmed by the Tribunal. Out of addition of Rs.

4,33,825/-, the ld. CIT( Appeals) restricted the penalty of Rs. 67,500/- and Rs.

1,41,900/- in respect of the concealed income. Aggrieved by this order, both the

revenue and the assessee have filed the appeals before this Tribunal.

4.

The ld. D/R supported the order of AO and submitted that the ld. CIT (A) was

not justified in restricting the penalty.

5.

The ld. Counsel for the assessee reiterated submission as made in the

written submissions, he submitted that so far revenue’s appeal is concerned, he

supported the order of ld. CIT(A).

6.

We have heard rival contentions, perused the material available on record

and gone through the orders of the lower authorities. There is no dispute with

regard to the fact that the AO levied penalty on sum of Rs. 27,48,500/- which was

duly disclosed in the return of income on the ground that had survey would have

not taken place, the assessee might have not disclosed this income. In our view,

this act of AO is contrary to the provisions of law and settled law. Therefore, we do

not see any infirmity into the order of Ld. CIT (A). Hence, the appeal of the

Revenue is dismissed.

7.

Now, we take up the assessee’s appeal in ITA No. 1430/JP/2010, wherein

the assessee has taken following grounds of appeals.

1.

“The ld. AO has erred in imposing penalty under section 271 (1) (c) on addition of Rss. 600000/- on account of repayment of loans. CIT(A) has erred in confirming the same. 2. The ld AO has erred in imposing penalty under section 271(1) (c) on addition of Rs. 300000/-on account of repayment of loans. CIT (A) has erred in confirming the same. 3. The ld. AO has erred in imposing penalty under section 271(1)(c) on addition of Rs. 67,500/- on account of interest earned. CIT(A) has erred in confirming the same. 4. The Ld. AO has erred in imposing penalty under Section 271(10 (c) on addition of Rs. 141900/- on account of sale proceed of old tyres. CIT(A) has erred in confirming the same. 5. Any other ground of appeal at the time hearing.”

8.

Apropos the ground nos. 1 and 2, ld. Counsel for the assessee reiterated the

submissions as made in the written submissions and additional written submission.

It is contended that the assesesse had filed the return of income declaring income

of Rs. 30,83,000/-. The Assessing Officer, however, assessed the income at Rs.

78,33,390 and capital of Rs. 14,66,000/-. The matter travelled up to the stage of

Tribunal. The disallowances of addition as sustained by the Hon’ble ITAT have been

tabulized by the Assessing Officer at page nos. 1 and 2 of his order. He Submitted

that it was contended before the ld. CIT(A) that assessing officer do not appreciate

the factual aspect that the assessee in answer to question no. 2 of his statement

dated 21/08/2008 has clearly stated that the source of purchases of these trucks

was a loan raised from the friends. He submitted that sole reliance of the statement

as taken during the course of survey is not correct, on the part of the assessing

officer, he further submitted that it is settled position of law that there is no

evidential value of statement taken during the survey. He submitted that merely

because the assessee had not raised this ground against the addition of Rs.

9,00,000/-, it can not be inferred against the assessee.

9.

On the Contrary, the ld. Departmental Representative supported the order of

the Ld. CIT(A).

10.

We have heard the rival contentions, perused the material available record

and gone through the orders of the authorities below. We find that there is no

dispute with regard to the fact that qua these two additions same have been

sustained till the stage of ITAT and the ld. CIT(A) has given a finding of fact in his

order that this was not raised before the Tribunal. Therefore, the addition as made

was the part of the concealed income cannot be disputed. We therefore find no

infirmity into the order of the ld. CIT(A), the same is hereby affirmed. Ground no. 1

and 2 of the assessee’s appeal are dismissed.

11.

Ground no. 3 is against imposition of penalty of Rs. 67,500/-. The Ld.

Counsel for the assessee relied upon the submission made before the ld. CIT(A).

12.

On the contrary, the ld. D/R supported the orders of the authorities below.

13.

We have heard the rival contentions. We find that the Assessing Officer made

this addition of Rs. 67,500/- on the basis that the assessee had given a loan of Rs.

5 lakhs to shri Ashok which was not given for the purpose of business. Hence,

computed the notional income @ 1.5%. In our considered view, since this issue is

debatable with regard to interest rate to be charged, hence imposition of penalty on

this addition is not justified. We therefore direct the Assessing Officer to delete the

penalty on the amount of Rs, 67,500/-.

14.

Ground no. 4, is against sustaining the penalty on the addition of Rs.

1,41,900/- on account of sale proceeds of old tyres. The Ld. Counsel for the

assessee relied upon the submissions made before the Ld. CIT(A) and submitted

that the Ld. CIT(A) did not judicially appreciate that the assessee having declared

the income under section 40A on the estimated basis on the trucks. Under

consideration, there was no necessity of making any separate disallowance or

addition which is a law well settled.

15.

On the Contrary, ld. Departmental Representative supported the orders of

the authorities below.

16.

We have heard the rival contentions. We are unable to agree with the

contention of the Ld. Counsel for the Assessee that merely because the assessee has

been showing income on estimated basis, he was not required to disclose the

receipts on account of sale of old tyres. Therefore, we see no infirmity into the

order of the ld. CIT(A). This ground of the assessee’s appeal is rejected.

17.

Ground no. 5 in general in nature and needs no separate adjudication. The

appeal of the Assessee is partly allowed.

18.

In the combined result, appeal of the revenue is dismissed whereas appeal of

the assess is partly allowed.

Order is pronounced in the open court on: 16.02.2017.

Sd/- Sd/- ( HkkxpUn ½ ( dqy Hkkjr) ( BHAGCHAND) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 16.02.2017. POOJA:- आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

1.

The Appellant- Income Tax Officer, Behror. 2. The Respondent – Shri Ramesh Chand Soni, Kotpuri. 3. The CIT(A). 4. The CIT, 5. The DR, ITAT, Jaipur 6. Guard File (ITA No. 87/JP/2011)

vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →