BHAIRAB KUMAR SAHOO,BHUBANESWAR vs. ITO, WARD-2(2), BHUBANESWAR

These are appeals filed by the assessee against separate orders of CIT(A)-2, Bhubaneswar dated 22.8.2016, 31.8.2016 & 18.8.2016 for the assessment year 2009-10. 2. In ITA No.383/CTK/2016, the first grievance of the assessee is that the CIT(A) erred in confirming the addition of Rs.3,98,652/- as income from other

sources.

authorities and materials available on record. The Assessing Officer found

that there was deposit of Rs.3,98,652/- in Saving Bank Account

No.1082500100236001 in Karnataka Bank vide cheque No.40269 on 31.10.2008. The assessee had shown this as cash received from Mrs Tanulata

Sahoo. Since, ld A.R. of the assessee could not explain the nature of credit

properly, same was added to the income of the assessee.

"that, the appellant has appeared before the Ld. AO through his authorized representative by furnishing the details as per the requirements of the Ld. AO for scrutinization of his case. The Ld. ITO has gone through the Bank A/cs. Maintained by the Appellant out of which in SB A/c. In Karnatak Bank Ltd. Vide SB A/c. No. 1082500100236001 has been vividly examined, where the Ld. AO has pointed out an entry on dt. 31/10/2008 disclosing to Rs. 3,98,652/-, which has deposited in the Bank A/c. of the Appellant in shape of account payee cheque. The Ld. A.O. has asked the details of such depositing in the said Bank A/c. at Rs. 3,98,652/-. The statement of the authorised representative of the appellant in that respect was 'cash received from Mrs. Tanulata Sahoo. But, the facts remains one Santosh Kumar Mohanty has given advance Rs. 4 Lakhs in account payee cheque no. 40269 dt. 30/08/2008 of Bank of India which has deposited in the Bank A/c, of the appellant and the same has cleared at Rs. 3,98,652/- after due discount of the cheque. Hence, it cannot be treated as income in the hand of the appellant which has wrongly held by the Ld. AO. However, Sri Santosh Ku. Mohanty has submitted his confirmation by stating that, the land belongs to Tanulata Sahoo W/o. Sri Bhairab Ku. Sahoo. The said land has sold through Santosh Ku. Mohanty vide RSD No. 16946, 16947 and 16948 and consideration of the said land Rs. 4 lakhs has been paid by Santosh Ku. Mohanty to Tanulata Sahoo which has deposited to the Bank A/c. of the appellant instead of Smt. Tanulata Sahoo being the cheque has issued in the name ofBhairab Ku. Sahoo. The confirmation letter in that support clearly disclosed the said amounts belongs to the Smt. Tanulata Sahoo and Smt, Tanulata Sahoo has confirmed the same. It is a matter on record Smt. Tanulata Sahoo is also an assessee assessed by the IT Deptt. and said sale of plots have clearly disclosed in her IT Return, thereby the Asse ss ment Y ear :20 09- 201 0

addition of Rs. 3,98,652/- is completely non-application of mind by the Ld. A. O. The appellant could not able to submit confirmation letter of Santosh Ku. Mohanty At-Arunodoya Market, Madhupatna, Cuttack at the time of assessment as the said Santosh Ku. Mohanty was not available at that point of time. "

4, The copy of General Power of Attorney provided in the name of Sri Bhairab Kumar Sahoo in Annexure-IV.

In the rejoinder before the CIT(A) on 17.8.2016, it was submitted by the assessee that the amount of Rs.3,98,652/- was the sale proceeds of land.

from Apun Mohapatra of Rs.1,79,400/- has been utilized to give advance of Asse ss ment Y ear :20 09- 201 0

Rs.4,00,000/- by Santosh Kumar Mohanty to the assessee. After deducting

the bank charges, the bank credited an amount of Rs.3,85,652/- to the account of the assessee. The assessee has filed declaration of Shri Santosh

Kumar Mohanty, which reads asunder:

“"I have given an advance of Rs. 4,00,000/-, Vide Ch No-40269 Dt 30.08.2008 Bank of India deposited on Karnatak bank & SBA/c no- 2360 Cuttack Br in favour of Mr. Bhairab Ku Sahoo against sale of land mouza kesura, khata no-514/14, & Khata no-514/78, khata no-514/34 plot no~623, 631, 621 3 plot 3 khata Total area AO 195 die sales to different person by Smt Tanulata Sahoo. But at her request it was issued part payment in the name of her husband Mr. Bhairab Kumar Sahoo. The said advance was adjusted against sale of land. Vide RSD No 16946 A0080. 16947 A0046. 16948 A0069 on 4.11.2008. Santosh Kumar Mohanty At/Po-Arunday Market Ps Madhupatna Dist-Cuttack."

the plots as under:

Name of the person Date of sale Khata No. Plot No. Amount. deeds Smt. Bulbul Mishra 03.11.2008 514/34, 514/14 620,631 Rs. 1,19,600/- Lalit Kumar Dash 03.11.2008 514/78, 514/34 621, 620 Rs. 2,08,000/- Apun Kumar Mahapatra 04.11.2008 514/14 627 Rs, 1,79,400/-

Santosh Kumar Mohanty received cash on 03.11.2008 and 04.11.2008 which is claimed to have been utilized for issue of cheque to the assessee. The Asse ss ment Y ear :20 09- 201 0

cheque was issued on 31.08.2008. It was credited to assessee’s account on 31.10.2008. If the cash is utilised for issue of the cheque then the deposit of cash should be earlier than the credit of the cheque but in this case it is the reverse. Therefore, the CIT(A) observed that it is clear that the assessee has tried to misguide this office and has misrepresented the facts in explaining the source of the cheque in the account of the assessee. He further observed that the assessee has not clarified whether all the above mentioned cash deposits

of Rs. 1,79,400/-, Rs. 2,08,000/- and Rs. 1,19,600/- were deposited in the account of Santosh Kumar Mohanty. Bank statement of Sri Santosh Kumar

Mohanty has not been filed wherein the deposit of three instalments of cash

and issue of cheque could be seen. The CIT(A) further observed that Smt.

Tanulata Sahoo received cash after selling plots . If Rs.4,00,000/- was to be given by Smt. Tanulata Sahoo to the assessee, the cash could have been deposited by her in the account of the assessee. The assessee has not been able to establish any link of cash received from the buyers of the plot, its deposit in the bank account of Sri Santosh Kumar Mohanty and issue of cheque

from this cash received. The declaration of Sri Santosh Kumar Mohanty is false. Therefore, the addition of Rs.3,98,652/- made by the Assessing Officer

is confirmed.

before the lower authorities.

Bank. This amount was on account of cheque No.40269 dt 31.10.2008 for Rs.4,00,000/- claimed by the assessee to have been received from Shri

Santosh Kumar Mohanty and after deducting the bank charges, the bank has credited the balance amount of Rs.3,98,652/- in the bank account of the assessee. The explanation of the assessee is that the cheque was received

from Shri Santosh Kumar Mohanty, who was given the power of attorney by the wife of the assessee, Smt. Tanulata

Sahoo for sale of plots of land. It is also not in dispute that Shri Santosh

Kumar Mohanty has sold land on behalf of the assessee. It is the submission

of the ld A.R. of the assessee that the wife of the assessee was to receive

Rs.1,19,600/- from Smt. Bulbul Mishra, Rs.2,08,000 from Lalit Kumar Dash

and Rs.1,79,400/- from Apun Kumar Mohapatra aggregating to Rs.5,07,000/-

. Against the sale consideration of these plots of land by Shri Santosh Kumar

Mohanty, the power of attorney holder for Smt. Tanulata Sahoo,wife of the assessee gave a cheque of Rs.4 lakhs to the husband of Tanulata Sahoo, the assessee in the present case, which was deposited by him in his bank account

with Karnataka Bank and a sum of Rs.3,98,652/- was credited by the bank

after deducting bank charges. The contention of the revenue is that the cash was received from three persons to whom plots of land were sold on 3.11.2008

and 4.11.2008 by Shri Santosh Kumar Mohanty and the cheque was given to the assessee on 31.10.2008, which was prior to the receipt of cash by Shri

Santosh Kumar Mohanty and, therefore, same was not believed by the revenue. In the above facts and circumstances of the case, I am of the considered view that the assessee gave an explanation for deposit of Rs.3,98,652/- to the revenue in his bank account with Karanataka Bank. The revenue has doubted the receipt on the ground that the cheque was deposited

in the bank account of the assessee on 31.10.2008 which was prior to the receipt of cash from the purchasers of the plots of land on 3.11.2008 and 4.11.2008, which was not possible. The assessee has also filed confirmation

from Shri Santosh Kumar Mohanty, power attorney holder of Smt. Tanulata

Sahoo, wife of the assessee to the effect that he has given Rs.4,00,000/- vide

cheque No.40269 dt.30.8.2009 drawn on Bank of India, which was deposited

by the assessee in his Saving Account with Karnataka Bank. The revenue

thereafter verifying the facts has brought no material on record to show that the explanation of the assessee was false or an afterthought. It is also not the case of the revenue after verifying the bank account of Shri S.K.Mohanty

that Shri S.K.Mohanty did not have sufficient balance in his account before

issuing cheque of Rs.4,00,000/-. In my considered view suspicion howsoever

grave cannot take place of proof. It is an admitted fact that the wife of the assessee has sold plots of land to three persons from whom sum of Asse ss ment Y ear :20 09- 201 0

Rs.5,07,000/- was due through the broker Shri Santosh Kumar Mohanty.

Therefore, in my considered view that the addition of Rs.3,98,652/- was made

only on suspicion and without any proof that Shri Santosh Kumar Mohanty did

not have the capacity to give Rs.3,98652/- to the assessee. My view finds

support from the decision of Hon’ble Supreme Court in the case of Sreelekha

Banerjee vs CIT, (1963), 49 ITR 112 (SC), wherein, Hon’ble Supreme Court

held that the department cannot by merely rejecting a good explanation

unreasonably, convert good proof into no proof. Hence, I set aside the orders

of lower authorities and delete the addition of Rs.3,98,652/- and allow this ground of appeal of the assessee.

authorities and materials available on record. In the instant case, the Assessing Officer found that there was deposit of Rs.1,30,000/- in the saving

bank account No.1618 in Karnataka Bank. The assessee explained the same

as loan from Utkal Marine Primary Fish Production and Marketing Co-operating

Society, Paradip. The assessee furnished copy of loan sanction letter from Utkal Marine Primary Fish Production and Marketing Co-operating Society. It Asse ss ment Y ear :20 09- 201 0

was found from the said sanction letter that the loan had been sanctioned to Smt. Banalate Sahoo for purchase of 4000 liters of diesel to be used for trawler. Therefore, the Assessing Officer concluded that the transaction made

in the above bank as shown by the assessee being loan taken from Utkal

Marine Primary Fish Production and Marketing Co-operating Society, is not correct. He held that the genuineness of above transaction is doubtful and also not proved. Therefore, he added Rs.1,30,000/- to the income of the assessee as income from undisclosed sources.

was sold in the open market out of which Rs.1,30,000/- has been derived as income and this amount represented the income of Smt. Banalata Sahoo alias

Smt. Tanulata Sahoo and has been disclosed in the file of Smt. Banatala Saoo.

that Smt Tanulata Sahoo, wife of the assessee has disclosed income from profits and gains of business of Rs.2,97,450/- and income from other sources

of Rs.1275/- aggregating to Rs.2,98,705/-.

of the Assessing Officer and the assessee during the hearing on 17.8.2016

stated that the trawler was defunct, diesels of 4000 litres was sold in the open

market and Rs.50,000/- were received on 26.7.2008, Rs.20,000/- were received on 13.8.2008 and Rs.60,000/- were received on 3.10.2008 totalling

to Rs.1,30,000/- from sale of diesel.

There is inconsistency in the explanation submitted by the assessee. He noted

that I have perused the statement of income of Mrs Tanulata Sahoo, and it is seen that she has received salary from M/a. Maa Santosh Aqua Culture of Rs.48,000/- and interest received from Maa Santoshi Aqua Culture of Rs.80,630/- and commission of Rs.1,68,800/-. She has disclosed capital gain

of Nil amount and interest from SB Account of Rs.1,275/-. Neither sale

proceeds nor the profit from sale of diesel has been disclosed by Smt. Tanulata

Sahoo. Therefore, he was in agreement with the Assessing Officer that the source of cash deposit of Rs.1,30,000/- remained unexplained and confirmed

the order of the Assessing Officer.

authorities and ld D.R. supported the orders of lower authorities.

account with Karnataka Bank Account No.1618. It is also the submission that the income from sale of 4000 litres diesel has been shown in the income tax

return of Smt. Tanulata Sahoo, wife of the assessee. It is observed from the findings of the CIT(A) that no such income from sale of diesel of 4000 litres

has been shown in the return of income filed by Tanulata Sahoo. This finding

of fact has not been controverted by the ld A.R. of the assessee by bringing

any cogent and relevant material on record. Therefore, I find no good reason

to interfere with the findings of ld CIT(A), which is hereby confirmed and ground of appeal of the assessee is dismissed.

u/s.271(1)(c) of the Act.

be observed from the order dated 28.6.2012 passed u/s.271(1)(c) of the Act for levy of penalty of Rs.1,54,456/-, the Assessing Officer has observed at page 2 para 2 as under:

“Proceedings u/s.271(1)(c) of I.T.Act was initiated for furnishing of inaccurate particulars or concealment of income by the assessee.”

11th January, 2017 passed in Special Leave to Appeal (CC No.11485/2016)

has held that Omission by the AO to explicitly specify in the penalty notice as to whether penalty proceedings are being initiated for furnishing of inaccurate

particulars or for concealment of income makes the penalty order liable for cancellation. Hence, he submitted that the present order dated 28.6.2012

levying penalty u/s.271(1)(c) of Rs.1,52,456/- is, therefore, liable to be cancelled.

penalty of Rs.1,52,456/- observing at page 2 para 2 as under:

“Proceedings u/s.271(1)(c) of I.T.Act was initiated for furnishing of inaccurate particulars or concealment of income by the assessee.”

Therefore, the facts of the present appeal are identical to the facts of the case before the Hon’ble Supreme Court in the case of SSA’s. Emarld

Meadows(supra) and, therefore, the decision of Hon’ble Supreme Court

squarely applies to the case of the assessee. Hence, respectfully following the same, I cancel the levy of penalty of Rs.1,52,456/- u/s.271(1)(c) and allow

the ground of appeal of the assessee.

authorities and materials available on record.

deriving income from house property, salary and interest from partnership

firm. The assessee filed return of income on 16.7.2010 showing total income

of Rs.3,94,200/-. During the course of assessment proceedings, it was found

by the Assessing Officer that the assessee has taken loan of Rs.23,02,363/-

on various dates from Smt. Tanulata Sahoo, wife of the assessee in violation of section 269SS of Income tax Act, 1961. Therefore, the Assessing Officer

levied penalty u/s.271D of the Act of Rs.13,23,711/-.

Before me, ld A.R. of the assessee relied on the order dated 20th

Mohammed Saleem vs ACIT in ITA No.833/Hyd/2008 for A.Y. 2003-04 and submitted that the Tribunal has held that in case of money borrowed from the wife of the assessee, there was only technical and venial breach of section 269SS of the Act. The transaction between husband and wife cannot

constitute a loan transaction, law does not take into account trivialities. In respect of the loan taken from the wife, the said borrowing carries no interest

and no condition regarding the repayment. Therefore, it cannot be construed

to be a transaction borrower and the lender and deleted the levy of penalty

u/s.271D of the Act. He submitted that in the case of the assessee, the facts

are identical and, therefore, the levy of penalty u/s.271D should be deleted

following the decision of Hyderabad Bench of the Tribunal referred above.

breach of the provisions of section 269SS made by the assessee was malafide

and with the sole object to disclose the concealed or undisclosed money,

penalty u/s.271D cannot be levied merely on technical mistake committed by the assessee.

by the appellate authority that the breach u/s.269SS committed by the assessee was malafide with an intention to disclose the concealed undisclosed

money. Hence, the breach was a technical breach for which no penalty

u/s.271D can be visited on the assessee.

(supra), wherein, it has been held that in case of money borrowed from the wife of the assessee, there was only technical and venial breach of section 269SS of the Act and no penalty u/s.271D can be levied as the relationship

does not constitute as one between borrower and lender. Further, there is no finding by the authorities below that the breach of provisions of section 269SS

of the Act by the assessee was malafide and the sole objection to disclose the concealed or undisclosed money by the assessee and, therefore, it is merely

a technical mistake committed by the assessee and, therefore, the assessee

is not liable for penalty u/s.271D of the Act as held by the Hon’ble Jharkhand High Court in the case of Omec Engineers (supra). Hence, I set aside the orders of lower authorities and delete the penalty of Rs.13,23,711/- levied

u/s.271D of the Act and allow the ground of appeal of the assessee.

Order pronounced in the open court on 25/01/2017 in the presence of parties. (N.S Saini) ACCOUNTANT MEMBER Cuttack; Dated 25/01 /2017 B.K.Parida, SPS Copy of the Order forwarded to :