Loading judgment…
No AI summary yet for this case.
आदेश/Order PER ANNAPURNA GUPTA, A.M. : The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-3, Ludhiana (in short CIT(A) dated 27.7.2017 passed u/s 250(6) of the Income Tax Act, 1961 (in short referred to as ‘Act’), confirming the levy of penalty u/s 271(1)(c) of the Act.
The grounds raised by the assessee read as under:
l. That the order of the AO is bad in the eyes of law as well as against the facts of the case. 2. That the penalty has wrongly been imposed on the assesse.
3.That the order is bad to the extend that the documents as provided under Rule 46 where simply brushed aside by announcing that the same were not provided during the hearing before the AO as well as during the quantum proceedings before the CIT(A) . Both the authorities ignore the fact that the assesse was under medical supervision and was going kidney treatment and was under regular dialysis , therefore had to visit hospital for his
2 ITA No.1458/Chd/2017 A.Y.2009-10
treatment twice a week /every week. The fact was also brought during the hearing before the CIT( A).
4.That the assesse craves to amend , alter , delete or supplement any grounds of appeal before the appeal is finally heard and disposed off. 3. None appeared on behalf of the assessee. On going through the grounds raised before us as reproduced above we find that in ground No.3 the assessee has challenged the order passed by the CIT(A) confirming the levy of penalty, without admitting the additional evidences filed by the assessee and ignoring the plea of the assessee that he had reasonable cause for not filing the same before the revenue authorities in quantum proceedings being under medical supervision undergoing the treatment for kidney ailment.
On perusing the order of the Assessing Officer in quantum proceedings we noted that the same was passed ex parte u/s 144 of the Act. It was noted from the order that the notice u/s 143(2) was issued to the assessee on 30.8.2010 and served by affixture on 27.9.2010. Several notices thereafter were issued u/s 142(1) of the Act which remained unresponded and, therefore, since the assessee did not cooperate in the assessment proceedings the A.O. proceeded to frame ex-parte assessment making addition of cash deposited in bank to the extent of Rs.30,01,000/- and investment in property to the extent of Rs.10,60,000/- treating the same as income of the assessee since the sources for both remained unexplained.. The matter was carried in appeal before the CIT(A) where also, we find, none appeared and the case was decided ex-parte again, upholding the order of the A.O.
Thereafter notices for initiating penalty proceedings were issued by the AO which remained unresponded. When final opportunity was given to the assessee to file his response, the assessee filed his submissions in writing stating that the addition made in quantum proceedings did not tantamount to admission as he had fallen sick during the course of proceedings and, therefore, no penalty could
3 ITA No.1458/Chd/2017 A.Y.2009-10
be levied on the same. The A.O. brushed aside the contention of the assessee and levied penalty on the additions made of Rs.40,61,000/- (Rs.30,0100 + Rs.10,60,000), being 100% of the tax sought to be evaded on the same amounting to Rs.19,07,516/-.
The matter was carried in appeal before the Ld.CIT(A), where the assessee, we find, made detailed submissions for his non attendance in quantum proceedings and also explained the source of cash deposits and investment in property,all duly substantiated with evidences. The assessee stated that since he was undergoing medical treatment for kidney ailment, the assessment proceedings could not be attended and no explanation, therefore, could be offered for the source of the cash deposited in the bank and the investment in property. Medical reports of the Clinics/hospitals where the treatment was taken was filed. He further stated that the source of cash deposit in bank and the investment in property,amounting in all to Rs.40,61,000/- ,was from the sale of a property for Rs. 50 lacs. It was contended that the assessee had entered into an agreement to sell his property to two persons jointly,Sh.Avinash Jain & Sh.Prabhjeet Singh,for Rs.50 lacs, vide agreement dated16-12-08, receiving full amount from them and that a General Power of Attorney was executed in their name. Copies of the agreement to sell and duly attested power of attorneys were filed. It was this amount,the assessee contended, which had been deposited in bank and invested in property. It was further contended that the sale of the property was registered in the succeeding year on 14-10-09,by the assessee on behalf of the Power of attorney holders and cheques received for consideration. Ld.Counsel contended that the AO had mistaken this payment as received by him on sale of property and therefore rejected the assessees explanation of source of deposit in bank and investment as being from sale of his property ,while the fact was that the assessee had
4 ITA No.1458/Chd/2017 A.Y.2009-10
already received payment in the impugned year on entering into an agreement to sell. The contention raised by the assessee as reproduced in the order of the CIT(A) at para 3.2 of his order are as under:
3.2. At the time of appellate proceedings, the Ld. Counsel of the assessee has filed written submission on 14.10.2014 which are as under:-OUR SUBMISSION:-
Sir , your attention is invited toward the following facts which are very much incidental to the facts as well as circumstance of the case which passing the order U/s 143(3) as well as thereafter passing of the order U/s 271(1) (c ) of the I.TaxAct:-
Notice U/s 143(2) was issued on 30.08.2010 and was served by affixture on 27.09.2010 and thereafter the case was transferred to Range II from Range VI as the juhsdiction falls under Range II Ludhiana at that time.
Notice U/s 142(1) along with notice U/s 143(2) was issued on 27.10.2011 for 12.08.2011 and was served upon the assesse on 27.10.2011 for 02.11.2011 as he could not attend the proceedings, again notice U/s 142(1) was issued on 04.11.2011 for 18.11.2011, though again he could not provide the required documents.
Again notice was issued on 01.12.2011 U/s 142(1) for 09.12.2011 . Copy of the bank statement along with copy of the title deed was provided to the A.O at the time of assessment. The A. O was very well aware of the circumstance of the assessee as at on difference occasion the notice server reported at the house was locked or assessee not available at the place, in fact the assessee was hospitalized number of time for his dialysis .
That it was already reported by the notice server order page 2 para 4 of the body of the order that “He went at the given address and the assessee was not available and his wife refused to receive the notice".
That it was again reported by the notice server on 22.12.2011 was "no one opened the door of the notice as he knocked the door twice".
The assessee has been undergoing treatment since 2008 within the city from difference hospitals. That during the period of assessement and even before and after he had been undergoing treatment, the details as :-
DMC -Hero Heart Ludhiana Dt 11.11.2008 Kidney Hypertension Clince Dt 21.11.2011 Ludhiana Mediways Dt 29.11.2011 Ludhiana Mediciti Dt 19.12.2011
Attached vide Paper Book SrNo 1
That the counsel of the assessee appeared on 09.12.2011 and produced the copy of the saving account with Syndicate Bank Miller Ganj Ludhiana a/c no 81532010004980 and was asked to produce the source of deposit in the saving account of the assessee.
That the information relating the cash deposit by the assessee into his saving account with Syndicate Bank miller Ganj Ludhiana to the tune of Rs 30,01,000/-along with the copy of the sale deed was provided to the A. O on 20.12.2011 which has already been admitted by the A.O as per his order U/s 143(3) page No 2 para 5.
Hence the copy of the bank statement, Sale Deed of plot situated at H.No 244-H BRS Nagar Ludhiana measuring 400 Sq yds amounting to Rs 50 lacs as well as Title deed for plot purchased measuring 530 Sy yds at Village Thareekay Tensil Distt Ludhiasna forRs 10,60,000/- (Ex- Stamp Value) was provided by the counsel of the assesee on 20.12.2011 . As the assessee had been undergoing treatment he could not appear before the A.O at the time of assessement to explain the full details.
5 ITA No.1458/Chd/2017 A.Y.2009-10
While going through the sale deed of H.No 244-H Bhai Randhir Singh Nagar Ludhiana , the A.O took that the sale proceed of the plot had been received by the assessee vide Cheque No 519807, 519805 and 519806 for Rs 20 lacs , Rs 5 lacs and Rs 25 lacs respectively was completely wrong, though as per the title deed the seller received the amount (Not not the appellant) but the sale deed was made by the assessee on behalf of the power of attorney holder, the same has already been reiterated in the title deed itself the same was ignored by the A.O The sale deed of the property at H .No 244-H BRS Nagar Ludhiana has been executed by S Kuldip Singh on behalf of General Power of Attorney 'holder S Prabhjit Singh S/o S Karnail Singh resident of Guru Arjun Dev Nagar Samrala Road Ludhiana and Sh Pardeep Sharma S/o Sh Desraj resident of Janta Nagar Gill Road Ludhiana vide POAdt 17/1'2/2008 no 3810 Vasika No 22 Sub Registrar Ludhiana.
The AO had failed to appreciate the same , hence the penalty imposed by the AO is wrong .unlawful and uncalled for and liable to be deleted.
THAT THE THIRD GROUND OF APPEAL IS THAT NO VERIFICATON HAS BEEN MADE BY THE A. O WHILE IMPOSING /INSHIATING THE PENALTY.
Our Submission:-
That the Sale Deed of the property situated at H.No 244-H Bhai Randhir Singh Nagar Ludhiana had been sold by S Kuldip Singh S/o S Avtar Singh on behalf of the General Power Of Attorney holder S Prabhjit Singh S/o S Karnial Singh and Sh Pardeep Sharma S/o S Desraj vide POA no 6810 dt 17.12.2008 and already stated in the deed that the POA holder are still alive and the POA had not been cancelled by the S Kuldip Singh.
Sale was made to Smt Amarjit Kaur W/o Late S Ranjod Singh S/o S Batchattar Singh and the sale deed was executed on 14.10.2009. The A.O misunderstood and took the different view that the amount of the deposit of Rs 30,01,000/-had not been reflected in the sale deed rather the sale deed was for Rs 50 lacs and S Kuldip Singh has received the same by way of payee account cheque as already mentioned in the body of the assessment order.
The detail of the transaction executed by S Kuldip Singh S/o S Avtar Singh are as under , which could not be provided at the time of assessement as he was not well and was hospitalized (details already provided) .
Assessee had entered into agreement for sale of property No 244- H BRS Nagar with Sh Ashwani Jain & Sh Pardeep Sharma jointly for Rs 50 Lacs vide agreement dt 16.12.2008 (Full and final payment received vide Sale Agreement stamp paper no H647167, H 647170 and H 647169 )
Attached vide Paper Book No 2
Copy of the Power Of Attorney executed jointly in favor of (1) Sh Avinash Jain S/o Sh Diwan Chand Jain and (2) Sh Pardeep Sharma S/oSh Des Raj executed on stamp paper of Rs 15 vide no 2487 and Stamp Paper purchased through stamp vendor Sh Tarsem Kumar Gupta L.No 22 and the POA attested by Executive Magistrate Teshil Ludhiana and recorded vide Affidavit No 207.910 dt 18/12/2008 , (S. Kuldip Singh had himself appeared before the Mageristate).
Attached vide Paper Book No 3
Copy of Self Declaration of S Kuldip Singh S/o S Avtar Singh dt 17.12.2008 stating that he was the absolute owner of the property situated at 244 H BRS Nagar Ludhiana and that he has sold the property jointly to Sh Avinash Jain and Sh Prbahjeet Singh and received the full and final payment and further stated that he shall be held responsible for the old title deed if misused . The same was executed on stamp per ofRs 15 No 12648. The stamp paper were purchased through Stamp Vendor Sukhpal Singh Uppal LNo 20 Distt
6 ITA No.1458/Chd/2017 A.Y.2009-10
Court Ludhiana . The same had been recorded as Affidavit No 207.908 dt 18/12/2008 with Executive Mageristate Ludhiana .
Attached vide Paper Book No 4
Therefore the sale amount of Rs 50 lacs had been received by S Avtar Singh as per the copy of the agreement executed on 16.12,2008 with Sh Avinash Jain and Sh Pardeep Sharma and out of the sale proceed the amount of Rs 30 lacs was deposited into his saving account no 801532010004980 with Syndicate Bank Miller Ganj Ludhiana on 17.12.2008
THE PENALTY HAS ALSO BEEN RAISED / IMPOSED THAT ASSESSEE HAD PURCHASED A LAND FOR RS 10.60.000/- on 17.12.2008
Our Submission :-
As S Kuldip Singh S/o S Avtar Singh had received the sale proceed from sale of H.No 244-H BRS Nagar Ludhiana for Rs 50 lacs and out of the same Rs 30,01,000/- had been deposited in the saving account and that out of the sale proceeds / balance amount the available with the appellant the amount had been utilized for the purchase of the property situated at Village Threeka Ludhiana
Therefore it is prayed that the penalty imposed by the A.O be deleted in full.
SrNo Date Details of Transaction Amount Net 17.04.1990 1,01,250/- 2,96,120/- Purchased Plot at 244-H BRS 1. Nagar Ldh
-- 7,50,000/- Self Investments 2. 06.12.2006 9,99,900/- Housing Loan raised from 3. Syndicate Bank 4 15.12.2006 2,00,000/- Do Do 5 15.11.2007 3,00,000/-
6 31.03.2008 2,00,000/- Self Investments 23,99,900/- 7. 17.12.2008 Sale of Unit as per agreement 50,00,000/- 8 16.12.2008 Loan Settled Syndicate Bank 14,51,172/- Village Threeka, Ludhiana (Cost plus Stamp Duty) 9 19.12.2008 11,48,800/- Spend on Construction (With drawals as per bank statement) 31.03.2009 Housing Loan raised from LIC 10 15,00,000/- To Housing Finance Ltd. Rs. 26 Lac 31.03.2010 07.06.2010 Deposited Rs. 20 lacs in 11 Syndicate Bank a/c no 81532010004980 17.02.2011 Housing Loan raised and 12. 7,00,000/- deposited into Saving a/c with IOB 351100001 11.03.2011 Do 13. 3,00,000/-
3,00,000/-
7 ITA No.1458/Chd/2017 A.Y.2009-10
Additional evidences,by way of copy of agreement to sell dated 16-12-08 , general power of attorney in the names of Sh. Avinash Jain & Sh.Pradeep Sharma,cop of self declaration of the assesseethat he was absolute owner of the property and that he had sold the same to the two persons and received full and final payment from them, were filed by the assessee to substantiate its explanation for the source of cash deposited and the investment in property. The Ld.CIT(A) refused to admit the additional evidence stating that adequate opportunity had been given to the assessee earlier. The relevant portion of the CIT(A)’s order in this context at para 6 of the order is as under:
“6. I have gone through the rival submission. I have also gone through the penalty order under section 271(1) (c). I have also gone through the basic facts of the case under section 143 (3) as stated by the appellant during the course of appellate proceedings. I have come to the conclusion that the appellant does not have any regard to words any income tax proceedings either at the time of assessment of quantum under section 143 (3) of appellate proceedings of quantum before CIT appeal. The appellant did not file any additional evidence before the CIT appeal at the time of appellate proceedings for deciding quantum appeal. It is surprising to note that after passing so many years now the appellant has filed additional evidence without giving any cogent and reasonable reason for nonproduction of this additional evidence under 46A. The appellant filed application additional evidence wide its written submission dated 1 September 2014. The assessing officer was asked to send his comments on the written submission which have been received vide letter dated 15 October 2014. As reproduced above the assessing officer is perfectly that the appellant was given sufficient opportunity at the time of assessment and as well as the proceedings before CIT appeal for decision of quantum u/s 143(3). I have also gone through the detailed and is seen that although the appellant is reiterated that the appellant was the as under medication during year 2008 and later on in financial year 2011-2012 as the medical reports filed by the appellant during the course of appellate proceedings now. I have carefully gone through these details and further seen that the appellant proceedings have taken place at later stages wherein the appellant was not prevented to file these details and additional evidence. Even at the time of penalty proceedings when the order is dated 16 January 2014 the appellant deliberately chose not to respond with regard to show cause for levying of penalty under section 271(1) (c). The
8 ITA No.1458/Chd/2017 A.Y.2009-10
assessing officer has mentioned that written submission of the appellant filed at the time of penalty proceedings. During this period when will was not prevented file such additional evidence and additional facts then also the appellant did not file any additional evidence or document and did not come with the proper facts therefore the assessing officer has rightly levied penalty under section 271(1) (c).” 8. Thus the CIT(A) refused to admit the additional evidences as above and went ahead to confirm the levy of penalty u/s 271(1)(c) of the Act.
Before us the Ld. DR relied upon the order of the CIT(A).
We have gone through the orders of authorities below and heard the Ld. DR and we find that in the facts of the present case the CIT(A) has grossly erred in not admitting the additional evidences. The assessee, we find, had demonstrated reasonable cause for not producing the same before the lower authorities being sick with kidney ailment and undergoing treatment for the same and duly substantiated the same with evidence. This fact was time and again reiterated before the revenue authorities who have failed to controvert the same. Moreover,the assessee explained the source of cash deposited in bank and the investment made in property as being from sale of property and filed additional evidences to substantiate the same.The additional evidences filed by way of agreement to sell the property entered into in the impugned year,the power of attorney executed in the names of persons with whom the agreement to sell was entered into ,are all necessary for deciding whether the source of cash deposits in bank and investments made by the assessee stood explained and therefore whether it was a fit case for levy of penalty for concealing/furnishing inaccurate particulars of income. It is settled law that the additions made in quantum proceedings do not automatically lead to the levy of penalty and the assessee can offer explanation during assessment proceedings to save itself from the rigours of penalty ,since penalty proceedings are distinct and separate from the
9 ITA No.1458/Chd/2017 A.Y.2009-10
quantum proceedings. In view of the same, we find that the CIT(A) in the present case has done gross injustice by not admitting the additional evidences filed by the assessee when the assessee had demonstrated reasonable cause for not adducing the same earlier and had also demonstrated that the additional evidences went to the root of the matter and were relevant for adjudicating the issue of levy of penalty. The act of the Ld.CIT(A), we find, is against all principles of natural justice. We, therefore, set aside the order of the CIT(A) in not admitting the additional evidences filed and direct admission of the same. The issue of levy of penalty is further restored to the CIT(A) to verify the evidences filed by the assessee and thereafter adjudicate the same in accordance with law after giving due opportunity of hearing to the assessee.
In the result, the appeal filed by the assessee is, therefore, allowed for statistical purposes.
Order pronounced in the Open Court.
Sd/- Sd/- �दवा �संह अ�नपणा� ग�ता (ANNAPURNA GUPTA) (DIVA SINGH) �याय�क सद�य/ Judicial Member लेखा सद�य/ Accountant Member �दनांक /Dated: 30th November, 2018 *रती* आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :
अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आय�त / CIT 4. आयकर आय�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File